The main IT challenges for the oil and gas industry relate to the amount of data that is routinely produced, and by the fact that the work crosses borders around the world.
The amount of data produced by exploration and production (E&P) companies is huge. The geological and geophysical surveys needed to find oil and gas produce thousands of terabytes of seismic data, which has to be safely stored and readily accessible. To give you an idea of their difficulties, in almost any other company with, say, around 100 employees, the average amount of storage needed is only between 100-200 gigabytes!
The hard drive infrastructure needed to store this kind of space-guzzling information is complex and costly. There is the additional problem of backing up the data, and making it available across the multiple sites around the world that the company could be operating from.
A few years ago, many E&Ps actually found it cheaper to pay for a junior member of staff to fly between sites with the information on a hard drive, rather than install expensive fibre optic links with a large enough bandwidth to carry the information needed.
Technical software licences can cost oil and gas companies hundreds of thousands of pounds, which companies are obviously reluctant to pay. Thankfully there is a way of cutting licensing costs. Given that the industry works around the world, a company can use the different time zones as part of its licensing strategy as people doing the same job will not be working at the same time.
One area that has become hugely problematic for the oil and gas industry is maintaining consistency in the management of the thousands of pieces of documentation. Previously, data librarians would have been in charge of storing and retrieving information, ensuring consistency in how files are named, making retrieval very efficient. However, the sheer volume of data and the speed at which data started to be produced meant the task became unmanageable on a human scale.
It was then up to the individuals saving the data to make sure it was in a format that made sense to colleagues who would need to retrieve it at a later date. Whilst this system worked amongst small teams, the system tended to break down because of the number of people who need to deal with the huge quantity of files that are in daily use.
There are now document management platforms that store and retrieve documents automatically. If used properly, they are very effective and the ‘off the shelf’ versions are more than suitable for the industry. However, they are only as efficient as the operators, and E&Ps are finding there is resistance from users who do not like change and continue to use their old systems.
The multinational nature of oil and gas exploration can be quite problematic for E&Ps. Some governments – emerging economies in particular – are very protective of their assets and will not allow data out of the country. These geographical constraints can be quite vexing if analysts are based in a different country to the exploration.
In some countries, what is known as ‘cost recovery management’ can also be a major headache. The operation of an E&P company is licensed by the government of the country the exploration is undertaken in, but the company bears the cost of the work. If the exploration is unsuccessful, the company does not see a return on its investment. However, if oil or gas is discovered, the company can claim back the costs of its exploration, after which the profits are shared between the company and the government.
In some countries, especially in South East Asia, the E&P company is obliged to work under a government contract which initially involves a lengthy tendering process. This means, in effect, that the government owns all the equipment relating to the work, including computer hardware and even office furniture. When it’s time to update the hardware, the government simultaneously doesn’t want the old equipment, but won’t allow the company to get rid of it. This has resulted in companies having to go to imaginative lengths, such as renting houses which are filled to the brim with old computers and broken desks, until the end of the contract when they can finally be disposed of.
Finally, companies in the oil and gas industry are on generally listed on stock market, which means confidentiality is a huge issue. If an E&P has spent hundreds of millions of pounds on exploration but come up against a dry well, the share price goes down. If it discovers a massive source of oil or gas, as soon as the results are made public, the share price will rise.
Because of the huge amounts of money that can be made or lost on such deals, the stock market is highly regulated. As insider trading is illegal and carries a hefty prison sentence, oil and gas companies are keen to minimise the number of people who have access to their data. However, IT is a critical part of the business, with those managing it needing as much access to the data as possible. The resulting compromise is a restricted access model for IT service providers that allows access only to the bare minimum of vetted people required to look after the data with the maximum efficiency.
If your company is facing some of the most common IT challenges for the oil and gas industry, or you would simply like to discuss how we can help with IT management, cloud solutions, as well as back-up and business continuity planning, contact us to book an appointment.