Oil/Gas & Utilities: Finding the Value of Analytics

The oil/gas and utility industries create prodigious amounts of data each and every minute they produce their respective commodities, but where does it all go? What could and should the data do once itís there, if there is anywhere?

The utility industry has its vision of a smart grid where devices up and down the generation-to-consumer value chain produce data that helps optimize every single utility operation, from the integration of renewable but variable generation sources into the must-run grid to customer service practices that align with regulatorsí understanding of electricity as an essential commodity to every living person.

The oil/gas industry has its vision of a smart field where devices down the hole in far-flung places connect to digitalized hubs for exploration and production decision making. But unconventional resources requiring new extraction techniques push that vision to the edge, challenging the industry to deliver expensive extraction operations at lowest possible costs.

But vision is vision, and putting rubber to the road is a different matter.

Questions of performance and progress can be measured in many different ways, but what are they and who is defining them? If the vision works in one place, or one industry, would it work in another? What tools create performance and progress for the smart grid -- and for the smart oilfield? How do companies and the general public define success for pursuit of these visions?

If these questions sound broad, they are intended to. The oil/gas and utility industries are immense, and the diversity of their operations mind-boggling. The role of analytics is shaped differently in each, to say the least. Broad, open-ended questions best suit not only the application of analytics to those industries, but also discussion in blogs like this.

But here are some general statements borne out of my quick observations.

The utility industry has hyped the smart grid heavily over the last six years, but in its earliest days only envisioned collecting and connecting data. No participants really talked about how they'd accomplish that connectivity or the best-practices for doing something with the data. The industry has evolved and it recognizes not only the value of connecting the dots of data through analysis but also its primary importance to the future of the smart grid.

Look at the EnergyCentral list of Webcast events today and notice the focus on analytics, analytics, analytics: "Demystifying Utility Analytics -- What it's all about, where it's going and how to get started," "Customer Analytics Issues, Trends, & Drivers," "Smart Grid Analytics: All that Remains to be Ready is You." A SAS survey conducted last year confirms the utility industry's belief that analytics can improve network reliability, quality, and efficiency and integrate renewable generation onto the grid. The pump is primed in the utility industry, so to say, and I'll explore that progress in this blog.

But is the pump similarly primed in the oil and gas industry? Google "smart oilfield" and you'll see no real sense of momentum for that term. Yes, the digital oilfield is robust, but is anybody really defining a smart oilfield? Check the event's page for Oil & Gas Journal, the industry bible. See anything that's "analytics" or "smart-oilfield" oriented? Is that industry behind in its acceptance of analytics as the next great tool for progress? Maybe so, maybe not. Chevron is busy at work at the University of Southern California Center For Energy Informatics developing a smart-oilfield concept. Is there a similar university-connected smart grid effort in the utility industry? Iíll discuss these sorts of similarities and differences as well in this blog.

Regardless of their packaging, I'll also look at the implementation of analytics in both industries. No doubt I'll see similarities and differences in their implementations and adoption of analytics. Who knows, maybe one can learn from the other? The utility industry is already immensely interested in the use of analytics in the financial services sector to help it with fraud detection. What might the oil/gas industry learn from the manufacturing community about the use of analytics for predictive asset management?

Stick with this blog and we'll drive through these broad questions -- with broad observations. The nature of analytics itself requires us to approach it this way, and we will.

Joe Gimenez, Freelance Writer, Oil/Gas/Utility Industries

Joe Gimenez is a freelance writer on issues important to the oil, gas, and utility industries. His familiarity with the capabilities and value of analytics and business intelligence in those industries has developed through his work with IT and management consultancy Capgemini, ETRM solutions provider RiskAdvisory, and analytics software solutions provider SAS. His writing has been noted for its unique observations and insights based on his own analysis of available facts. And his clients retain his services for his ability to describe the intersections of data with practical knowledge in a business context. Gimenez has honed his writing skills as a journalist and editor at various publications. His 2008 article, "On the $100/barrel Highway: The Energy Industry's Roadmap to the Future," in Business Baylor Review was prescient on the role that new technology and discoveries would play in the future of the oil industry and the retreat of the Peak Oil theory, especially with an influx of a new, nascent workforce thinking across disciplines.

How BI Becomes Analytics at a Utility

Utilities can answer a lot of forward-looking questions with their backward-looking data.

Analytics Key for Electricity Rate Relief

Watch for pricing transformation in the 26 states where public utility commissions monitor and set electricity rates.

Re: Welcome!
  • 6/4/2012 10:03:50 PM

Joe, this is a fascinating time for these industriies, indeed! Interesting to watch, of course, given the critical nature of the products these industries deliver -- both at a personal level but from the broader eco perspective. How much does the drive for analytics marry to the push for greener operations, I wonder.

Re: Welcome!
  • 6/4/2012 3:21:01 PM

It sounds like the oil/gas and utilities industry is in an akward situation. Having the gun go off and saying "ready, set, go!" and still standing at the start line.  They know they need, they want it but not sure how. 

So it seems they need outside help.  SAS has presented at the SPE Digital Energy Conference back in April 2011 on how oil companies can more accuratley forcast well performance. IBM and Shell are using analytics to find more gas and oil.  Oil companies shouldn't hesitate to utilize the expertise of these companies. 

Re: Welcome!
  • 6/4/2012 1:20:06 PM

Thank you Beth! It's exciting to be on board. This is an exciting time in the history of the Oil/gas and Utility industries and I'm happy to play a part in its development. Again, thank you for having me on board! Best regards, Joe Gimenez

  • 6/1/2012 9:09:02 AM

Hi Joe! Let me be the first to welcome you to the AllAnalytics.com blog roll. You ask some intriquing questions about the role of analytics in the oil/gas and utility industries. Can't wait to read more over time. Cheers!