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Introduction
When you hear "innovation in oil and gas," your first thoughts might go to
hardwarebigger, faster, deeper drilling; more powerful pumping equipment;
and bigger transportor to the "shale revolution"unconventional wells,
hydraulic fracturing, horizontal drilling, and other enhanced oil recovery (EOR)
techniques. But, just like any other industry where optimization is important
and due to large capital investment and high cost of error, its perhaps even
more important in oil and gas than in most other industriesthe potential
benefits of predictive analytics, data science, and machine learning, along with
rapid increases in computer processing power and speed, greater and cheaper
storage, and advances in digital imaging and processing, have driven innovation
and created a rich and disruptive movement among oil and gas companies and
their suppliers.
The truth is, the oil and gas industry has been dealing with large amounts of
data longer than most, some even calling it the "original big data
industry."Karren, Charles. "Insight Report: Data Centre Developments Get up
Close and Personal."OFFCOM News. CTLD Publishing Ltd. Web. 20 Mar.
2015.Boman, Karen. "What Upstream Oil, Gas Can Learn About Big Data from
Social Media."Rigzone News. Dice Holdings, Inc., 10 Dec. 2014. Web. 20 Mar.
2015.Large increases in the quantity, resolution, and frequency of seismic data,
OECD/IEA, 1 Jan. 2014. Web. 20 Mar. 2015.Where we see big data fitting in,
continues Thasarathar, isif you look at the performance for those big
projects, its pretty much a horror story in terms of how its dropped off over the
last 1520 years, and the root cause of that is, theres so much that project
teams need to understand and assimilate in terms of information to make the
right decision.
But exploration and production arent the only areas that can benefit from
innovative data and data science driven solutions. From health, safety, and
environmental, to cyber security, to transportation and manufacturing
opportunities to create greater efficiencies exist throughout the entire
hydrocarbon production and delivery cycle.
Overview
The oil and gas industry is traditionally broken down into three broader
categories: upstream, which includes exploration, discovery, and both land and
sea drilling and production; midstream, which includes transportation, wholesale
markets, and manufacturing and refinement of crude; and downstream, which is
primarily concerned with the delivery of refined products to the consumer. The
majority of big and fast data related innovation is found upstream, in the
discovery and exploration phase, where risk and uncertainty are high,
conditions can beto put it mildlychallenging, and where failure is very
expensive.
The industry is a mature and unique one, built on experience and hard-won
knowledge, and employing the worlds leading geological scientists and
engineers. Theyre very good at what they do, and theyve been doing it for a
long time, but there is an imperative to add more big data and data science
skills like machine learning and predictive analytics into the mix, skills that oil
companies havent traditionally and broadly had in-house. According to Boaz
Nur, former VP of Energy at data science startup Kaggle, energy analysts think
big data and analytics are the next frontier in oil and gas, but theyre only now in
the early adoption phase. They [oil and gas companies] don't shy away from
technology, theyre just careful, Nur says. A lot of snake oil has been sold to
the oil and gas companies over the years. Theyve also historically done a pretty
good job of producing oil. Theyre [already] doing OK; what were proposing will
help them take it up to the next level. Adds Nur: Theyre cautious but theyre
optimistic.
EBOOK
Remote standalone locations and physical records and manuals also hamper
efforts to digitally connect a companys systems and assetsthe much
discussed "digital oilfield" idea, where systems are integrated and automated to
tune and optimize operations across the breadth of the production cycle. The
move to digital operations is increasing steadily, but theres an awful lot of
legacy out there, things going back decades, where the drawings were done
with, literally, pen and paper, says Neale Stidolph, Head of Information
Management at Lockheed Martin and based in Aberdeen, where he primarily
deals with North Sea oil fields, including many older legacy wells. A large part
of the industry is very much tied to documents and records. So, theres still a
need to maintain vast physical archivesof boxes full of old information. And
theres a need to analyze and strip that to get more value. And since many of
the physical sites involved are isolated, supplying their own power, without
modern communication networks, there are additional barriers to fully digitizing
operations. One of the factors the rigs have to cope with is what they call a
black start, says Stidolph. If your rig goes down, it means youve lost
everything: youve lost all power generation, all connectivity, all systems of every
type. You need a flashlight and you need a manual to be able to see how to get
this thing operational again. Many of these rigs are in hazardous and remote
environments, so off-the-shelf connectivity solutions arent typically sufficient.
But, challenges and cultural resistance aside, big data methods are changing
how the industry does business, and these changes will ultimately result in a
changed oil and gas industry.
EBOOK
Upstream
As previously mentioned, oil and gas has long been familiar with large and
diverse datasets, and improvements in technology and methodology are driving
an exponential increase in the amount of data being collected.
In the exploration space, for example, due to advances in seismic acquisition
methodology, storage capabilities, and processing power, data gathered via
connected arrays, newer microsensors can communicate with each other and
with external networks.
From exploration to the gas pump, there are opportunities to use networked
devices. Offshore, submersible devices that gather information can be remotely
controlled and are safer alternatives to human-piloted crafts. Pumps can be
remotely monitored and adjusted, and can be far more economical than manual
maintenance. Midstream in the transportation phase, networked devices can
help track resources through the many and various stages and handoffs that
happen throughout the crude transport process. Pipelines and remote
equipment can be monitored and even maintained remotely. Biomonitoring
workers could increase safety. Gartner has predicted as many as 30 billion
connected devices by 2020, with 15% of those in the manufacturing sector.van
der Meulen, Rob. "Gartner Says Personal Worlds and the Internet of Everything
Are Colliding to Create New Markets." Gartner.com. Gartner, Inc., 11 Nov. 2013.
Web. 20 Mar. 2015.
The data gathered from all these devices will be valuable for predictive analytics
and other applications: from well sensor data that can be analyzed to help
optimize productivity, to operations data that can monitor and calibrate
operational systems, to transportation data that can help identify bottlenecks
and inefficiencies, to workforce data that can help drive safety. But, as
Halliburtons Priyadarshy points out, with those benefits also come some new
challenges; for example, sensor data veracity in different physical environments:
Imagine a situation where you build a sensor for Texas weather. If you were to
take it to some Middle Eastern country like Kuwait, where temperatures are
[significantly] higherif the sensor starts sending data and you are trying to
predict based on what you know from Texas, then you may be in deep trouble.
Security
As discussed, there is significant pressure to lower costs and optimize, and
remote-controlled and network-attached devices of all types are a means to that
end. The downside is, the more connected you are, the more vulnerable you are
to network intrusions, intentional or otherwise. And while remote monitoring is
also crucial to improved security, it can open holes itself. There are gains from
the automation; you can get more protection, you can do better sensing of
whats happening along your line, theres lots and lots of opportunities for
managing and monitoring the line using automation, says industrial and oil and
gas cyber-security expert Eric Byres, but your automation system, which is
supposed to be protecting your pipeline, [can become] the problem.
A series of events and attacks have made the oil and gas industry keenly aware
of the need to dramatically improve their cyber-security. After 9/11, the industry
became more concerned about intentional and coordinated attacks, but it wasnt
until the Stuxnet worm attack in 2010 that they started to really address the
problem. Stuxnet hit an Iranian nuclear facility in 2010, causing the failure of
uranium-enriching centrifuges. Written specifically to exploit Microsoft and
Siemens vulnerabilities, Stuxnet was the first prominent attack against the
PLC/SCADA (programmable logic controller/supervisory control and data
acquisition) systems used by industrial plants of all types, including the oil and
gas industry, and previously assumed to be safe from cyber attack. To make
things even scarier, Stuxnetwidely reported to be a joint Israeli/US made
cyber-weaponfound its way onto the Natanz enrichment facility while not
connected to the Internet, via sneakernet, on USB drives. In the case of
Stuxnet, the collateral damageand what might even be called friendly fire in
this new battlefieldspread into the wider industrial ecosystem, infecting
Chevron, with unconfirmed reports of at least three other major oil companies
being affected as well.Sale, Richard. "Stuxnet Hit 4 Oil
Companies." Isssource.com. Industrial Safety and Security Source, 15 Nov.
2012. Web. 20 Mar. 2015.,King, Rachael. "Virus Aimed at Iran Infected Chevron
Network." Wall Street Journal. Dow Jones and Company, Inc., 9 Nov. 2012.
Web. 20 Mar. 2015.
EBOOK
Since Stuxnet, there have been other attacks, including the Shamoon virus that
hit Saudi Aramco in 2012. Initiated by a "disgruntled insider," Shamoon wiped
out the contents of between 30,000 and 55,000 Saudi Aramco workstations.
These attacks, coupled with environmental and PR disasters like Deepwater
Horizon, have given the industry all the motivation it needs to get serious about
security. I do think the oil and gas industry is ahead of all the other companies
[in terms of security], continues Byres. There is a real serious attempt to try
and get security under controlthats the good news. But while the majors like
Shell, Exxon, Chevron, Total, and in particular BP (where Paul Dorey was an
early and vocal security advocate) have become very serious about security,
youre only as strong as your weakest link, and the industry is dependent on and
tightly integrated with suppliers, contractors, and vendors, many with less
sophisticated approaches to security. That terrifies the guys at BP, thats why
they started becoming evangelists in 2006, 2005because they realized they
could do a good job on their site, and gain nothing because of the integration to
all the other companies around them. The other companies were so insecure.
And its not just production that is threatened. The Night Dragon attacks
thought to be started in Chinatargeted intellectual property.Kirk,
Jeremy. "Night Dragon" Attacks from China Strike Energy
Companies." PCWorld.com. IDG, 12 Feb. 2011. Web. 20 Mar. 2015.In the PR
space, a Sony-type attack on internal email and proprietary information systems
could also have huge ramifications in a competitive and secretive industry.
While some facilities remain off the net by virtue of being old and isolated, and
instances of air-gapped systems may persist, in general the digitally attached
genie is out of the bottle: the industry is moving rapidly toward digital openness,
and it wont be going back. As Byres notes, The reality is, modern networks in
the oil and gas industry need a steady diet of data. Data going in and out;
security patches, lab results, remote maintenance, [and] interactions with
customers. So, theres no way you can isolate a refinery anymore. Theres just
too much need for data on the plant floor now with the way weve built our
systems.
Technology might not always be the best solution in an industry as
fundamentally physical as this one. Byres relates a story of how one Nigerian
delta oil company battled the theft of sections of pipe that were being taken and
sold as scrap metal. They started making them heavy enough to sink the boats
that were used to carry them off, and the thefts stopped. But anecdotes aside,
security is now primary for oil and gas IT, and while prevention is still important,
most now agree that 100% impenetrability is unlikely, and rapid detection is the
most important security tool. This is an area where data science and threat
analytics can possibly help. Applying machine learning and pattern recognition
to noisy and ever-larger data streams can preemptively detect anomalies and
identify attacks. But Byres thinks the complexity of the problem means the
industry is a ways off from really leveraging big data and data science solutions
in the security space: There is an opportunity, theres no questionbut were
still a few years away before anyone uses it effectively.
Emerging Tech
Things are changing within the sector, where cluster compute platforms,
massive and affordable storage, and new techniques have enabled companies
to evolve their existing tools and methods. Data science as a practice is being
adopted within the industry, but many companies lack the needed internal data
science resources. While they have abundant expertise in geosciences and
engineering, among other things, they dont typically have big and unstructured
data, machine learning, predictive analytics, artificial intelligence, or other data
science specific expertise. Theyre recognizing that they have a lot of data, both
historical as well as new, that they arent getting everything they can out of,
says Kaggles Nur. So oil and gas related companies are taking different
approaches, building out data science teams internally or turning to outside
companies for expertise. Lets take a look at some of these outside companies.
Hortonworks
Hortonworks is a leading provider of Hadoop solutions, well known in the tech
sector, but relatively new to oil and gas. They bring technical expertise and
provide solutions with a toolset that oil and gas isnt familiar with, and they bring
an open-source approach to a sector that isnt known for its openness or its
willingness to share. But thats changing as the industry starts to understand the
potential in data science and predictive analytics. They all want to get into a
modern data architecture, and they realize Hadoop is a cornerstone for that,
says Ofer Mendelevitch, Hortonworks Director of Data Science. Hortonworks
sees opportunities to provide insight throughout the upstream sector, from using
predictive analytics to improve production optimization by providing a better
sense of when a well might go down, to being better able to predict and
proactively handle safety and environmental hazards, to providing a broader
and more multidimensional dashboard, including services like weather and
social feeds.
Mendelevitch also sees potential in niche cases, like automatically processing
LAS (Log ASCII Standard) files, using algorithms and fitting curves to identify
redundancy and greatly reduce work currently done manually. In addition, with a
lot of buzz around data security and Internet of Things, they see companies
adjusting their IT processes to collect more and new data, and becoming more
in touch with their social media streams and presence. And there are
opportunities midstream and downstream as well, in areas like equipment
failure prediction, safety analytics, and portfolio analysis.
Kaggle
SparkBeyond
Unlike some pure data science oriented startups, SparkBeyond uses domain
area experts to work with their data scientist team, to help ask the right
questions and pick the right inputs for their models and machine learning. They
emphasize the value of expertise, and stress sound methodology when building
complex models. They use Apache Spark, yes, but many other tools as well,
and apply a broad multidisciplinary approach and diverse datasets to their oil
and gas sector work, a sector full of uncertainty throughout the entire production
chain. In addition to standard seismic, production, operational, and log data,
they pull from a variety of other sources. You need to incorporate weather data
and APIs with geological data, financial data with news articles to see how
geopolitical events can affect (production) cycles, says Sagie Davidovich,
SparkBeyonds CEO. They also incorporate data from other energy sectors,
since it has a direct impact on oil and gas cost/benefit models.
Currently most of the work they do is in the unconventional well space, which
makes building models challenging because of the relatively small and
incomplete sample set for wells of the shale boom era. Wells drilled since, say
2009, 2010are very different from the wells drilled 20 years ago, says Meir
Maor, SparkBeyonds Chief Architect. So, theres actually less relevant data to
learn from, and most of these wells have not completed their lifetime, [which
makes ultimate recovery predictions difficult]. Were looking for the areas where
there is a lot of uncertainty in the exploration processhow much oil is going to
be produced, how fast its going to come out, says Meir, and were also looking
for places that decisions can be made, that if we can manage to lower that
uncertainty with a predictive model, it will be actionable. And with so many new
techniques and methods emerging in the unconventional oil space, how one
drills is becoming as much of an issue as if and where to drill. When you are
talking about extracting hydrocarbons from solid rock, it becomes exponentially
more difficult. The techniques have advanced, so there are many different ways
[to drill], which can behave differentlyso the decision space is wide and there
is a lot of money at stake and a lot of uncertainty as to what will come out.
Given the high cost of error in the industry, trust and adoption of new
technologies doesnt come easily. Even if you have sound predictive models,
actual economic success can take years to prove. So, in the meantime,
SparkBeyond works hard to remain transparent and to build models that are
easy to understand. Says Davidovich: What we learned is that being 3040%
more successful than our competitors is only the first step to get in the door,
then you go through other steps.
But theyre seeing things change, partly due to external forces. If you think
about it, the big data hype actually creates a lot of pressure on companies to
introduce predictive analyticsand the oil and gas industry is no different, says
Davidovich, and thats an exciting prospect to him. There are so many new
undiscovered opportunities to bring more certainty to this space, which affects
every aspect of our lives. Adds Maor: Whats even more interesting is, when
our client actually acts on thiswhen the insights we deliver drive action to
change the world in a meaningful way.
WellWiki
Joel Gehman started the WellWiki project when he was a grad student, at a
time when the Pennsylvania Marcellus Formation and debates around fracking
first appeared in mainstream consciousness. Hoping to become the Wikipedia
for wells, WellWiki scrapes public databases to compile a wiki of North
American well info. They then combine the database feed with contributions
from the community to create a structured dataset tied to user-driven narrative
content. The goal is to have information on all the wells4 million by Gehmans
estimatedrilled in North America since the Drake Well in 1859. Neither a
watchdog nor industry-backed entity, WellWiki remains neutral while trying to
provide information and bring transparency to a fragmented and controversial
space. I think of it as giving wells biographies. Gehman says, Every well has a
story.
VIDEO
was the first to publicly challenge BPs inaccurate reports of the rate of oil
spilling into the Gulf.
Other Disruptors
There are other relatively new technologies beginning to be adopted that may
impact niche segments of the industry. 3D printing has the potential to bring
disruption to the supply chain. Drones are beginning to be used to acquire aerial
images and remote-sensor data. Crowd-funding platforms like
crudefunders.com allow individuals to participate directly in the oil business. DIY
spill cleanup and monitoring organizations have sprung up in the aftermath of
the Deepwater Horizon spill.
Summary
Its early times, but one of the important things to remember is this is iterative,
[its] low hanging fruit at first, but over time you can really dial in models to
become really good at predicting, safety, or maintenance, says Hortonworks
Mendelevitch, and the capabilities of these new tools and platforms are in turn
changing the way oil and gas does business; for example, cheaper storage
allows them to change retention policies, and keep more data longer. In the
past, a lot of this data was thrown away pretty quickly, because the cost of
storing it was very high. Thats the disruptive part of Hadoopdata storage is so
inexpensive.
Its really important to understand the industry well and the pain points of the
industry in order to develop the appropriate solutions, says Kaggles Nur,
adding that cultural differences dont matter if you deliver. If you have a solution
that creates value, and is proven, then clients will use it.
Despite its massive size, the oil and gas industry operates on small margins,
and depends on efficiency and optimization for profitability. Given extraordinary
capital costs, a wide and deep array of risk, and high cost of error, machine
learning and predictive analyticsdriven by faster, distributed cluster computing
and larger, cheaper storagebecomes an increasingly important factor to
address the efficiency and optimization required to extract profits along with
hydrocarbons.
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Post-Mortem
The falling price of crude is already having an impact on data science forays into
the industry. Kagglementioned earlier in this articlerecently eliminated their
energy-industry consulting business.McMillan, Robert. "DATA-SCIENCE
DARLING KAGGLE CUTS A THIRD OF ITS STAFF."Wired.com. Cond Nast, 9
Feb. 2015. Web. 20 Mar. 2015.In addition to falling prices, its possible that
petro companies were uncomfortable with Kaggles "competition-based"
business model, which could require them to share their private data with the
data science community. While Kaggles innovative algorithms and predictive
expertise may very well have contributed insights and improved efficiencies to
the century-old effort of supplying petroleum to the industrial world, it seems that
not enough companies were willing to make that leap quite yet, particularly
given the current environment. In the data era, however, we look forward to
seeing more experimentsand successesin this high-stakes industry.
Article image:
Daniel Cowles
Dan Cowles is a writer, filmmaker, and data geek who has worked in the tech
sector for the last 20 plus years. Dan is interested in human beings and their
stories, and all manner and method of telling them. He lives in Berkeley, CA with
his wife and son.
https://www.oreilly.com/ideas/oil-gas-data