The Top Trends in 2012 for the Oil & Gas Industry

The oil and gas sector is experiencing unprecedented opportunity around the world. From deep-water drilling in Brazil, West Africa and the Gulf of Mexico to the new U.S. unconventional oil and gas plays such as the Bakkan, Marcellus and Eagle Ford to the oil sands in Canada, the oil and gas industry is being transformed like never before.

On an economic and financial front, the oil and gas sector is booming. Oil and gas stocks outperformed the S&P 500 by a wide margin this past year, worldwide oil consumption is expected to grow by 1.4 million barrels per day in 2011 and 2012, and the U.S. rig counts are above pre-recession levels.

Alongside the financial success, there are significant operational and technology challenges that need to be met. With these challenges, three important technology trends have emerged. These include:

1. The need for high-performance data management

The thriving exploration and production (E&P) business environment demands more efficiency in harsher operating climates, reduction of risks, and more transparency across internal lines of business, partners, and regulators. This transparency results in the expectation that a full, 360-degree view of operations will be used in decision making. Increasing data volumes across traditional and new data types have created the well-known data explosion facing petroscientists. In addition, real-time drilling, completion and production data are overwhelming companies’ operational ability to analyze and execute on business plans. Managing this data along with unstructured and transactional business data is increasingly difficult.

In 2012 and beyond, E&P, drilling, and service companies will be applying analytics to data from sensors, mobile devices, and SCADA and Enterprise Asset Management (EAM) systems to optimize asset management processes and move decision-making toward real-time, thereby enabling operators to identify problems before breakdowns and potential safety issues occur.

2. The need for an optimum energy trading platform

The boom experienced by the energy markets over the past few years, and the emergence of new financial players boosting volumes and introducing new instruments, have re-shaped the commodities environment and brought about a significant change in energy trading risks. In an environment where market accessibility is crucial, the convergence between real-time processing and real-time complex analytics places incompatible demands on traditional solutions to meet those challenges, while minimizing risks.

Furthermore, new scrutiny from regulatory agencies, the emergence of carbon and emission trading in Europe and Australia, market volatility, and competitive pressures from multiple players have created the need for real-time reporting and the ability to access multiple sources of data for compliance purposes.

3. The need for safety and regulatory compliance tools

In 2010, drilling in the Gulf of Mexico was effectively shut down pending the formulation and implementation of new U.S. federal requirements. In November 2011, Brazil faced a major offshore oil spill. Similar regulatory pressures are occurring in the unconventional oil and gas space. Hydraulic fracturing (fracking) has received increased scrutiny and regulation on the local, state and federal levels. In some countries in Europe, the process has been banned outright. The resulting regulatory and compliance change in the landscape requires operators and their suppliers to meet new stringent requirements throughout the life of the asset.

Paralleling the Sarbanes Oxley Act of 2002, CEOs are tasking their entire organization with a new degree of compliance management. E&P CEOs are even requiring key service, drilling and suppliers of critical equipment to meet regulatory compliance criteria as part of the contract. As a result, oil and gas companies need to invest in achieving a holistic view of assets, people and operations. Safety monitoring will be the top smart technology investment which will include integrated applications for health, safety and environment, incident management and maintenance management.

Around the world, the oil and gas sector is expanding in more distant and challenging environments than at any time in its history. As we enter the second year of the second decade of the 21st century, the industry is addressing these challenges by embarking on plans to leverage enterprise data and real-time analytics for data management, energy trading and safety and regulatory compliance in order to reduce time to first oil or gas, optimize production output, lower operating costs and ensure safety performance.

Charles Karren is senior director of oil and gas industry strategy at Oracle.