The Digital Oil Field Hype Cycle:

An Assessment of where the Oil & Gas efforts are today

Baker Hughes Innovation ForumHouston, TX

December 10, 2013

Agenda

• The Future of the Digital Oil Field• The Digital Oil Field Hype Cycle• Barriers to Adoption– The “Integration” Challenge– The “Innovation” Challenge– The “Complexity” Challenge– The “Data Foundation” Challenge

• How do you talk to a Digital Engineer? The “Knowledge Exchange” Challenge

THE FUTURE OF THE DIGITAL OIL FIELD

ObservationsResistance if Futile

• The trend of field automation, real-time systems and earth & reservoir modeling suggests that the Digital Oil Field is a reality

• New engineers and earth scientists are entering the workforce with high digital literacy (from lifelong experiences with consumer IT) and with some training in programming

• More and more petroleum engineering and earth science “intellectual property” comes in the shape of software

But, Houston we have a problem• Most of the “innovation” comes from end users or consultants working on

project, the impact of central research groups are decreasing, most of the execution & support details are left to local IT

• Significant gaps continue to surface (lack of reuse, fragile integration, poor data foundation, lack of end-to-end system design)

THE EMERGING WORLD OF THE DIGITAL ENGINEER

10

T-shaped expertise

Business Models &

Processes

Science &

Technology

People&

Culture

SSMESSME

Business Models &

Processes

Science &

Technology

People&

Culture

SSMESSME

Business Models &

Processes

Science &

Technology

People&

Culture

SSMESSME

Business Models &

Processes

Science &

Technology

People&

Culture

SSMESSME

A mix of technology/science, business and management will ready future innovators for the big challenges presented by a knowledge-driven economy.

"IT professionals will need to possess expertise in multiple domains. Technical aptitude alone will no longer be enough. IT professionals must prove they can understand business realities – industry, core processes, customer bases, regulatory environment, culture and constraints. Versatility will be crucial.“ – Gartner Group IT Professional Outlook

DEEP

BROAD

THE DIGITAL OIL FIELD HYPE CYCLE

Technology Hype Cycle

Gartner 2010 Emerging Technologies Hype Cycle

The Digital Oil Field Hype Curve 2013

y6

1

23

4

5

6

7

8

910

11

12

13

1. Real-Time Drilling2. Equipt. Health Monitoring3. Heavy Oil4. Artificial Lift5. EOR6. Production Surveillance7. Reservoir Performance8. IO Center9. Big Data Analytics10. Born Smart facilities11. Logistics12. Advanced Process Control13. Remote Operations

Barriers to Adoption

THE INTEGRATION CHALLENGE

The “Integration” Challenge

• From Field to Office• From Reservoir to Well to Facilities• Regional, between similar fields• Along the Supply Chain• Fully Integrated Operations

THE COMPLEXITY CHALLENGE

THE INNOVATION CHALLENGE

Types of Innovation

• “Do New Things”: Invention• “Do Things Better or Faster”: Continuous

Improvement / Lean Sigma• “Do Things Cheaper”: Frugal Innovation• “Do Things Differently”: Transformation

Where does Innovation Happen?

• Invention in the Center (R&D department)• Commercialization (productization) in the

center (economies of scale)• Adoption at the edge (business units)• Innovation could happen anywhere– Lease Innovation (external consultants)– Buy Innovation (from market suppliers)– Problem Solvers are usually at the edge where the

problems are

THE DATA FOUNDATION CHALLENGE

Information Quality Train

Wrecks

THE KNOWLEDGE EXCHANGE CHALLENGE

THE FUTURE BELONGS

TO THE DIGITAL ENGINEER

JIM CROMPTONDIGITAL OILFIELD USA SUMMIT

DECEMBER 10, 2013