Watch out, they are comming for you

The cost of innovation is going down, barriers to entry are falling

Keeping it special

If you work in heavy industry and are near technology, you will know that there are some very robust pieces of kit out there. What I’ve always been surprised at is:

1. how simple many of the devices are in terms of functionality; and

2. how “special” they are in terms of obfuscating the obvious.

The effects of these two factors has been, for years, to reduce competition. By making it difficult to get hold of units (via price) and creating a jargon around the obvious configuration/deployment it has promoted a closed shop approach.

Keeping up standards

In some ways keeping out the riff-raff can be promoted as a good thing – it provides assurances around quality and safety. But it slows down innovation. You might say that perhaps this is good. Maybe you don’t want to be too innovative around safety and compliance systems. Afterall making mistakes is expensive and dangerous.

Keep up!

One of the aspects of the 4th industrial revolution that will challenge that thinking is simulation. I used to think that digital twins, virtual worlds and simulation would help reduce the cost of maintenance, let the experts create new ways to work and basically bring down the operating costs for the incumbents.

What if it leads to a whole new raft of competitors? What if anyone can have low-cost access to a virtual oil rig, or virtual power station, or virtual chemical plant? Not only will they learn how it’s supposed to work, they can try things and see what happens – learn by doing, learn by breaking, but do it virtually. Perhaps this will lead to:  

  1. they might come up with much better ways to operate it that you do; and
  2. train themselves to operate it before you hired them

Result: Better ways of working, access to more talent, incumbents get beaten.

If you have ever witnessed teenagers playing fortnite, you will know how fast their thinking can become and how fast their brain-hand connetion is. Imagine how quickly they will be able to react to real-world situations and think through the information being thrown at them.

Examples

I’ll provide two examples of where “public access” and “new ways of working” are already influencing established hierarchies. It won’t be long before these mechanisms appear in heavy industry.

Don’t expect today’s engineers to enter the workforce unprepared nor unwilling to take on the establishment. Watch out for competition from smart people who are not part of the established hierarchy. Don’t think the way you work today, will be the way you work tomorrow.

Example 1: Team Huub-Watt bike

I was lucky enough to see this cycle team win gold at the Track Cycling World Cup in December 2019. The team is comprised soley of amateur racers and they ran a completely novel strategy calculated using simulations and software. Their budget is £15,000 per year. They beat Team GB who have the best coaches, facilities and trainers available – and a budget this year of £26m. That’s over 1,000 fold decrease in cost and substatially BETTER performance.

Response from the establishment was to change the rules, enforce the status quo. This may not work forever. It probably won’t work for you.

https://www.tri247.com/triathlon-features/interviews/huub-wattbike-uci-interview

They were not, however, afraid to make use of the technology for their own ends. Zwift is a cycle simulator that people can use at home and join in real-time cycle events and ride-outs while collecting performance statistics. It is now being used by pro-teams to identify and recruit talent.

https://www.cyclingweekly.com/news/latest-news/i-want-to-ride-in-the-worldtour-how-british-cycling-are-using-zwift-to-help-identify-young-talent-454806

Example 2: British Touring Car Championship

In the gentleman’s toilet at the Royal Automobile Club in Pall Mall – in the heart of establilshment London – there are a series of framed caricatures of some of motor racing’s greats from the last 100 years. These include W.O. Bentley and Mike Hawthorn. Motor racing is glamourous. And costly. The money needed to race in formula 1 are legendary, but even the karting in a 125cc class will likely cost you the best part of £50K a season. Developing cars, tracks and drivers costs money.

So what do you think will be the outcome of last weekends win for James Baldwin in the first of the British GT Touring Car championship races? It’s a pretty big series, and winning a race is not easy.

Especially if it’s your first race you’ve ever competed in.

James honed his skill as a driver in a simulator he set up at home for under £1,000. And his talent was found when he entered a competition in an “E-Sports” event.

Turns out that the simulation prepared him surprisingly well.

https://www.goodwood.com/grr/race/modern/2020/8/worlds-fastest-gamer-wins-on-british-gt-debut/

https://www.bbc.co.uk/news/newsbeat-53554245

Responding to the Crisis: Leader’s Handbooks

What should we be doing right now?

It’s an economic emergency. Every company is having to rethink what they do and how they operate. Together with AGM Transitions we’ve asked our networks to share their recent experiences. We’ve written three guides:

COVID – Responding to the crisis – Leaders Handbook

COVID – The Transformation Handbook

COVID – Remote Working Handbook

What happened?

Since I published my post on March 9th the world turned upside down. Covid-19 is a “big one”, certainly when considering the economic impact of the measures taken to stop its spread.

Couple that with the shocks to both supply and demand in the oil world and members of the Bestem Network have been left slightly shell shocked.

What will happen next?

We are starting to understand where we are – but we’re battling to understand where we will need to go.

As Gordon Ballard said in the FT on Saturday: “In the past, activity decreased then picked up again — each time, we saw it come back,” he said. “Now it’s not entirely clear if things just come back as normal. Everything has changed.” [Link]

For some context however I should point out that even with 30% drop in oil demand we are now only at the level that was normal in 1996 [Link]

What have I been up to?

Alongside my hour’s cycling, home cooking, housework and playing with electronics:

  • Looking after my clients
  • Contributing my skills to my community to innovate systems to support neighbours in need; and
  • Working out what we have to do to come out of this ready for the next phase.

Stay Safe, together we will get through this.

 

Will Santa be good to us?

I hear that 2020 is shaping up to be quite the year in the North Sea with many projects ready for approval and a glut of maintenance around the planned Forties pipeline upgrade.

New offshore wind farms are being commissioned, cables are being laid.

My EPC friends tell me they are entering 2020 with healthy back-logs of business.

The OGA are show-casing energy transition plans including “gas to wire” where generation is performed offshore with associated carbon captured and pumped back into the reservoir.

Things are looking up. Merry Christmas everyone.

Petropolitics – 2019 style

As I write this in Late November 2019, we are in the middle of the oddest British general election campaign I can recall. It is by no means clear what the outcome is going to be, and the choice seems to be choosing an irrelevant option or picking a party that might be the least damaging.

We are in an era defined by what (or who) people are against, not what they are for. Debate is framed by blaming the “others” for what they have done/will do and simply stating that you are for the opposite of that. None of the political parties offer policies that stack up using the accepted logic or economics of the late 20’th century. Nor are they willing to justify them in those terms. This is a dangerous time where sub-groups (old, young, migrants, followers of religions, business owners, workers, environmentalists, the fossil fuel industry, etc.) are at risk of being pitted against one another – each blaming the other for causing the situation they believe is comming. Fearful that one group has stolen the others’ hope.

We are in globally unstable times. Perhaps energy supply is a contributory factor.

The UK became a net exporter of Oil in 1979 and our economy boomed. In 2005 we became an importer again. Things became bleaker. Shale Oil has recently led to the USA becoming self-sufficient for the first time since the second world-war. China is an importer of energy.

The USA have no energy-related interest to protect by managing global tensions but perhaps China now does. Could this be part of the reason that the world feels less stable?  Look across Europe, North and South America, Hong-Kong Australia and the Arab World and see how divisive and “entitled” the politics and associated direct-action has become.

One area where there is broad agreement, however, is on climate change. We are in a net carbon zero goal-setting race. And we’re in good company – other countries are falling over themselves to do likewise (with notable exceptions of course).

This is a topic that the world has rallied around to fight a common “enemy”. Big themes (such as the previous “war on terror”) can be used to justify the case for actions that are irrational if viewed using other frameworks – such as logic, or economics.

Is it right that we permit large nations to pollute our planet and if not, how can we stop it? As an example, today’s FT reports that the Permian basin is set to flare 7BCM of associated gas this year – for comparison, the whole UK gas sector produces 45BCM per year.

Weighing up the pro’s and con’s of reduced carbon emissions, understanding the winners and losers and the national self-interests is not easy, and the result will not be determined only by logic and economics. Politics and the opinions of the uninformed could be decisive. And disastrous.

Currently, anyone expressing a view other than that we should halt emissions and reverse climate change is lambasted. The Oil and Gas industry needs to be careful to understand and react to the political climate (i.e. the opinions of others) and not rely on the logic of days-past and the economic models from the 70’s. Lip service, ignorance or faux-concern is the wrong approach.

We risk losing the license to operate in the UK and this will damage us all.

Looking for inspiration

I like to look across sources for analogy and stimulating ideas. A couple of things have recently caught my eye.

I find it amazing how hard it is for people (including me) to see the implications of new technologies and ways of working. In retrospect, once a change has happened, it’s obvious what the outcome would have to be. But when the change is happening it’s not so clear.

Going up

Ground floor
Perfumery, stationary, and leather goods, wigs and haberdashery, kitchenware and food. Going up…

Can you remember the theme tune to Are You Being Served?

I’m old enough to remember the lift operators in Aberdeen’s E&M and Watt & Grant department stores. They were replaced by automated lifts in about 1980. The stores have both succumbed – one to the shopping mall, the other a victim to digital retail.

Being a lift operator was a skilled profession, making sure that you stopped the elevator car level with the floor and opening the concertina iron-work doors with the brass handles.  Apparently New York’s last lift operator was only made redundant in 2009 Link

The Economist 1843 magazine just ran a story making the connection between the elevator operators strike and the adoption of self-driving cars. We could probably do the same with roles in the oil field.

The elevator strikes in 1945-47 crippled the city, and led to calls to redesign the city so that only low-rise development was permitted – to reduce the power of unions.

Of course, the answer was – as we know – automated elevators. But a lot of change management was required before people started to use them. Innovations such as emergency stop buttons, telephones for help and recorded announcements all came about in this time.

I’ll wager that we will look back at some of the manual ways of operating an oilfield we use today in the same way was we look back at the anachronism of the elevator operator.

Electricity – who’d want that?

Another story that I picked up on and found illustrated a point was this one [Link]. It’s written by the BBC’s Tim Harford. He asked and answered the question why did it take so long for electricity to displace steam in the factories in the North of England. It was decades after the invention that it was fully adopted.

He explained that it required a redesign of factories before the economics made enough sense for people to abandon centrally powered manufacturing and move to individually powered machines. We’ll see the same adoption economics in oil field operations and technologies such as 3D printing.

Digital Marketing – a lesson for oil and gas?

Today I found another article that resonated. This one is from Marketing Week [Link]

Mark Ritson makes the case that the separation between Digital Marketing teams and Traditional Marketing is ridiculous. What I think he’s saying echoes my point that there should be no separation between “IT” and “The Business”, because IT needs to be just how things are done around here. It’s true in Marketing, it’s true in Oil and Gas too.

“… On the one hand you need to avoid being precious about your digital creds. Signal early you are entirely comfortable losing the D prefix from your title and, for good measure, add something re-assuring like ‘I do not even know what digital means anymore’ or ‘isn’t everything digital now?’.

The merger process means that anyone who is a member of the extreme digerati will be the victim of the new regime. You know the type: obsessed with AI, convinced in the long-term value of VR, boastful that they don’t own a TV. They will be the first to go when the revolution comes.

Digital experience is a prerequisite

But make no mistake, it’s no good proclaiming that digital is wank and it’s time to get back to basics, pull all the money from Facebook and get it back into ‘proper’ media. The post-digital era cuts both ways.

While idiot digerati will be exposed, so too will those who aren’t open to the potential of all the new research and media options that have appeared over the past decade. When Alastair Pegg, the leading marketer at Co-op Bank, noted that that there was “no such thing as digital marketing” he followed up with the corollary that “all marketing is digital marketing”.

I think I can see the parallels between what he’s saying is happening in Marketing now, and what will overtake the world of Oil and Gas operations in the next 3-5 years. What do you think?

To innovation and beyond – 2019+

My first post of the year – a look ahead for 2019 – was a bit tongue-in-cheek. Now The World Economic Forum (WEF) is meeting in Davos, Switzerland, I thought I would provide a more insightful analysis.

The WEF will be considering the implications of the 4th Industrial Revolution as the headline theme for their annual conference. If you’re new to all this here is a I4.0 primer from CNBC [Link]. 2019 is going to be a year where industrial innovation takes centre stage. 

The thinking from WEF is always good, detailed thorough. I think that some of the crucial themes for unlocking innovative value will be focussed around opportunities and risks. Here are some of my current favourites.

The Opportunities

  1. Using information and reconfigurable platforms to provide new solutions to stakeholder experience. This will establish new ways to create, deliver and consume the core outputs from industrial processes.
  2. Removing the idea of separation between “IT and the Business”. The two are now conjoined. Being good at tech will be a prerequisite of being good in business. Technology will be embedded in every way that work is done, products are created, consumed and delivered.
  3. Empowering the front-line will be crucial. The winners will be faster organisations where workers make autonomous decisions and are rewarded for outcomes. As an analogy think of Deliveroo drivers. For many reasons, more refined models of work-coordination are required but the core autonomous nature of the work is being previewed here. Decentralised decision-making and autonomous action guided by technology removes many of the tasks performed by middle management. I hope we will start to see teachers, dentists, doctors and nurses no longer filling in spreadsheets and working as relecutant automatons directed by ill-informed command-and-control resource-allocation systems.
  4. With power comes responsibility. Without middle management, new forms of controls (and motivation) will be needed to spot problems and reward behaviour. Surprisingly for some, I don’t believe it is the front-line worker, but middle management, that is most under threat from AI, visual computing and big-data. I hope the CFO won’t push progress only on AIQ but that marketing and talent managers will push the AEQ agenda. It’s important we understand not only economics but also pride, satisfaction and feelings of accomplishment.
  5. Innovation may not be in new forms of technology. The tech available to us now is far ahead of our application of it. Deployment options are already available but not used. Innovation will come from the application of existing technology to new areas of business. Those stuck with old infrastructure will not be able to reconfigure fast enough to keep up. Value will arise from designing new ways of working. Capturing the value will rest on finding ways to get the rest of us to work that way too.

And now the risks

  1. Innovation will come from networks. Big companies will look to small companies for ideas, small companies will be formed from collaborative networks of individuals. Ideas will be mashed-up to cross-fertilise creativity. Guards must be in place to avoid exploitative situations – if they arise unchecked it will mean that the small-guys can’t and won’t play for long. Without them, brilliant ideas will never be used. Rights management is crucial for the distribution of the value created. In the way that song-writing credits generate performance fees for artists. Licenses for ways-of-working are needed to stimulate innovation, and society needs to enable easy access to legal enforcement to uphold claims against copying without permission.
  2. Massive generalisation follows: Young people are frustrated by old-people’s inability to embrace new ways of working. Technology savvy folks are orders of magnitude more productive than their peers. They are quicker to make decisions and to multi-task. This leads to not only high-productivity but also to high-error rates. Iterative short-cycle experimentation and learning-by-doing is the hall-mark of agile strategy. This is not an approach that has been adapted to high-risk industrial work-settings. This leads to a clash of culture and an inability to attract and retain talent.
  3. Innovative individuals will continue to pursue independent careers in increasing numbers. Old industries will die, vested interests will be disenfranchised. The world of work, taxation, social contracts, pensions and access to finance will have to evolve to cope with this. To create a consensus and establish a sense of fairness new-politicians will need not only wisdom but also to deploy the old-tools of oratory and persuasion. There will be big disagreements across society and between nations. It will be necessary to create hope for those who fear being disenfranchised. They will not go quietly into that good night.
  4. Politics of property will come to the fore – the control of assets will be important. Whether that is physical real-estate where low-paid important workers are unable to afford to live where the people who need them reside; property from an accumulation of historical data that provides an unassailable lead and monopoly positions; or the “IDEA” that one person has spent 10 years creating that is exploited by a large corporation without reward. Society will need to find ways to address the control and distribution of property in a world where labour and working-time may not function as a distribution & motivation method.

I will spend time exploring these themes during the year – I have a number of initiatives already kicking off for the year and I hope that you’ll be able to help.

2019 – The Year Ahead

Happy New Year

As we enter 2019 I’ve managed to already break my first resolution – to get this blog post out before everyone gets back to work. As an excuse I’ve had a very busy start to the new year. As a warning, I think we will all have a busy year this year.

When looking forward, I often find it useful to reflect first on the past and see how thoughts are changing.  After you’ve read this post, please revisit this one [link]. It was written in March 2016 – Trump had not been elected, the Brexit Referendum had not occurred, Cambridge Analytics had not been exposed and Russian interference in the US election was not known about. An extract from the post reads as follows:

With modern communications and the ability to mobilise quickly we’ve already seen massive changes in the way the people (or, in Greek, demos) interact with conventional democratic systems and capitalism. [….] Whether that’s the Arab spring, so-called ISIS, Brexit, the mass-migration of populations or the astonishing rise of Donald Trump, things are getting decidedly odd in traditional politics. […..]

Cyber-politics is a whole new dimension. Whether cyber aggression is aimed at accessing private information, denying or altering the dissemination of information or compromising the physical integrity of machine-based systems the ability of people to alter the course of events through “hacking” has never been so great.

As the 4th Industrial revolution unfolds there will be more disruption ahead.

On the positive front, last year we saw the unveiling of the first industrial strategy for Britain for a generation link. I’m seeing the ripples of this throughout the industrial landscape of Britain, including a member of the Bestem network  who told me about some very innovative work he’s doing with the railways – all funded from central government. The funding he has access to is much larger than the whole OGTC [link] annual budget and he just needs to fill in a form to get it. It’s very light weight, no committees, websites, offices, equipment, industry sponsors – just get on with it. And he has. Big time. Oil and Gas is still not innovating, but we are good at committees and wasting each-other’s time.

My top predictions for 2019

  1. Attention will continue to swing away from economics & finance and towards science, inventiveness and engineering (genetic, information, computing, transport).

  2. Competition between nations will intensify with value-capture swinging towards creators and away from traders and rent-seekers.

  3. Politics will continue its rise – no more will debates be settled on the economic benefits of an argument. Politicians will start to use emotive language more. Manuals on speech-writing for rhetoric, bathos and pathos will be dusted off along with words and phrases including: trade, craft, pride, sacrifice, service, future, humanity, community, future-generations and “for-our-nations-children”.

  4. Language will continue its progression-regression. Old words take on new meanings. In my field the fourth industrial revolution became digitalisation, I am sensing that this is now becoming “innovation”. Again.

  5. Productivity will increase and the british economy will grow. Not, you understand, because it will objectively do so – but because the way we decide to measure it will change. We are already moving to double-deflation accounting in April [link] . You can expect more of this type of thing. It may be good for us.

  6. The Oil business will still be ruled by old-world economics and yesteryear-practices. I remember the dot-com boom in the late 1990s when there was genuine fear in my part of the Schlumberger world that we may be acquired by  Yahoo. Now Google (which was only formed in 1998 and not floated until 2004) could swallow Schlumberger many times over – but frankly, my dear, doesn’t give a damn. It’ll be the same this cycle, the Oil business will still work, be profitable and vital – but paradoxically become increasingly (and proportionally) less relevant to measured world economic activity.

  7. The Big-Oil innovation committee will, after a multi-year tender programme, finally hold a committee meeting to issue the PO for the automated remote light switch. After their youngest member retires on full final-salary and is the last to leave the building this will be used to turn off the lights. By SMS. Sent by his secretary. From the last electrons of his dying Blackberry.

  8. Elon Musk will either be killed in a freak mid-air collision between him and Richard Branson, or will buy a small nation (to be called Matrix) and will be joined John McAfee [link] and Larry Ellison. They will declare independence.

2019 looks like it will be a fascinating, scary, depressing, joyful and amazing ride. Strap-on, tune-in and don’t drop-off. All the best my friends, it’s going to be a wild-one.

Self driving and the digital avalanche

Justin Rowlatt just published an interesting article (he admits it is provocatively one sided) about the inevitability of self driving cars and the disruption it will cause. The article can be found here: https://www.bbc.co.uk/news/business-45786690.

I urge you to read the article, because it describes accurately the confluence of forces that causes avalanches and a split between the new and the old. When technologies hit a certain point the economies of network, scale and of learning kick-in to reduce the cost and increase the convenience of switching to the new, while the exact opposite happens to the old – making the switch happen in a non linear avalanche of change.

Justin’s article includes a photo of a New York street in 1900 and then in 1913 – in the first, the street is full of horse buggies and one car, in the latter the situation is reversed. The Model T Ford motor car was introduced in 1908.

For electric cars – just like in parts of the world where you still find many horse (and Ox) drawn carriages – motor cars as we know them will not disappear; the rate of manufacturing switch will be slower and cars bought today will still work in 20 years time.

A few years ago I made a calculation that, because of these and other factors, the internal combustion engine would take 50 years to be replaced even if the rate of uptake of electric vehicles accelerated. Justin makes a great point that, because of the effects of self-driving, we need, perhaps, only 10% of the current fleet to change and we’re done. Economics will kill the current car and nothing else matters.

This reminds me of why Amazon can (and has) destroyed the high-street. It doesn’t need to take 100% of the business, but – because bricks-and-motar retail has high fixed costs and low margins – they only need to take 10% of the revenue and Mrs. Smith’s Bookshop is toast.

The Fourth Industrial Revolution will be made on lots of changes like this. The facilities that the self driving car will enable (and the infrastructure needed to support them, and spin offs around that) will mean new industries emerge and old ones die. And it will happen quicker than we imagine.

Elon musk, for all his bluster about electric cars, is really re-inventing manufacturing [Link]. Not only will his disruption hit the auto industry, but any form of manufactured assembly of mass-produced product. And that’s just about everything consumers buy.

Get ready now!.

The Fourth Musk(eteer)

Introduction

Amazon reinvented how we bought books. In the process they re-invented the way we enable people to find and order almost any type of goods. Once ordered, the company arranges to have to have our orders despatched and delivered. Amazon seems to have become an unstoppable force in the world of retail – laying waste to high-streets, department stores and shopping malls along the way.

I see something similar beginning to happen at Tesla. Elon musk has moved on from innovative products such as the electric car and is now on the cusp of reinventing manufacturing. Few people seems to have noticed how general his approach can be and how it can be applied to making just about anything, and making it anywhere.

Innovator’s Dilemma

If you haven’t read “The innovators’ Dilemma” by Clay Christiansen [LINK]  it may be time to do so, or if you have brush up on the contents again. This book was first published 1997, as the world was going internet and computer crazy. It has stood the test of time.

The basic premise of the book is that industry incumbents tend to innovate by making their products better. All their customer focussed research and development is structured to avoid making products that are demonstrably worse than what they have in almost every way. But upstarts can and often do launch products like that to serve market segments uninteresting to the incumbent.

But innovation, it turns out, is dynamic and pretty soon the upstart is learning to get better to the point that their offering becomes “good enough” for a large slice of the market served by main suppliers.  The most demanding customers will still be pushing for extra features from the incumbent but this becomes increasingly difficult to achieve and scale economies fade (as the mass-market defects). This leads to the demise of the once dominant generation and the rise of the innovator.

The examples that Clay based most of his early published research on where the manufacturers of disk drives in Silicon Valley. But he drew the parallels in other industries. The book considered end-product (the disk drive), whereas now I am seeing the same market dynamics emerge in processes and services. Where the first steps of the new methods are not quite as good as the traditional, but the direction of travel means that the inevitable result will be an unstoppable revolution in the way things are done and the way things are made.

Amazon warehouse success and Tesla’s manufacturing innovation

Earlier I wrote about the innovation that was happening in the Ocado warehouse. [LINK] Amazon has quite a lot to say about efficient warehousing but (I don’t think) are licensing their technology to others. The innovation that has happened here has digitalised the warehouses and made them more efficient.

Elon Musk is doing this for manufacturing. What I find interesting about the approach to manufacturing in the Giga Factory [LINK] [LINK] is that it’s fundamentally different approach than updating a car manufacturing plant to become digital. It’s the reverse. Let me explain.

Amazon didn’t apply digitalisation of retail to book buying, they applied book buying to a digital retail and supply chain – once perfected it was instantly ready to serve across categories. Tesla is doing the same in manufacturing. Once you’ve learned to manufacture in an automated way – it’s a small step from cars to any other type of product.

A good place to start

Books were a good place for Amazon as it was a very inefficient process and bad for the customer. It turns out that car manufacturing is also a great product to choose to apply to digital manufacturing because there is demonstrable market for the finished goods. They are poorly served by the current process and the incumbents are being held back by two big forces – the internal combustion value-chain, and the clogged thinking born of mass employment and model for command-and-control distribution of labour and “industrial man”.  See “My Years at General Motors” Alfred P. Sloan [Link]  for insights on what the world of manufacturing has been striving to emulate since the 2nd industrial revolution started.

How does this apply to oil and gas?

There are two reasons why this is relevant to Oil and Gas.

  • firstly we are organised very much along the lines of division of labour and command and control described by Sloan. If this model is now under threat from people like Musk then we can assume that world of work as we know it in our industry will also change;
  • secondly as Patrick Von Pattay said in my interview with him [Link], perhaps the threat is not going to come from an incumbent applying digitalisation to make their existing oil and gas operations better, but perhaps it will come from someone who has learned to be an efficient operator of facilities who is now going to include oil and gas to their process. Like Amazon starting to sell electronics as well as books.

Conclusion

For the next 25 years, I suggest closely following the advances in automated manufacturing which is happening in Nevada right now, and imagine how such changes in working practice can affect our industry. Because they will.

Get out of the way of digital Chris

A friend of mine runs operations for one of the larger players in the North Sea. He has a chap who works for him. For the purposes of anonymity, I’ll call him Digital Chris.

Digital Chris is a very valuable person. He’s what’s referred to as a “Barrel Chaser” he’s the trouble shooter, the ideas man, the guy that gets things done. Digital Chris adds thousands of barrels of production each year. Production that would otherwise be locked up due to process constraints, lost through shut-in’s and trips or lost through delays getting things back on-line. Digital Chris probably contributes a few million pounds of cash that drops straight to the bottom line.

It’s odd then that not everyone is like Digital Chris and that people like him are so rare. I remember there was a chap I met who worked at Elf in the 1990’s who I’ll now refer to as “Digital Martyn”. I hope he won’t mind me name checking him – Martyn Beardsell – https://www.linkedin.com/in/martyn-beardsell-5639aa1/

Digital Martyn worked as a reservoir engineer and seemed to be able to use software tools he had available to construct answers to geological modelling and reservoir production questions in ways that others couldn’t. He could take information from many different disciplines, combine them and use it to solve sub-surface puzzles in new and imaginative ways.

Digital Martyn and Digital Chris are digital pioneers, a different type of digital twin if you will. They may not think of themselves this way but they are. The problem-solving results they achieve are not only orders of magnitude faster & better than whole departments of people, but I’d go as far as to say that they spot and solve problems to unlock opportunities that would otherwise be lost forever in the fog of bureaucracy.

What’s interesting now is that if you walk into a G&G department they are no longer divided by discipline as they were once: Geology, Petrophysics, Geophysics, Reservoir (with geochemists and bathymetry not knowing where to report); instead they are organised as “Subsurface” and divided by business objective Exploration, Development and Production.  Computing power and data was the underpinning of this change. All companies now organise their G&G departments and behave in the way that Digital Martyn pioneered 25 years ago. I suspect 25 years from now all operations groups will organise and behave in ways that Digital Chris, and those like him, are pioneering today.

The BBC reported that there will be a requirement for 10,000 digital workers in Oil and Gas in the next 20 years. http://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-44067949 On average that means each of the 50 or so operators need to find 10 Digital Chris clones each year. My friend has only found one in the last 15 years.

If Martyn and Chris are twins separated by 25 years and, if Digital Chris is a pioneer, there are three things the wise oil company executive should do: Learn to spot more digital pioneers; develop and grow them; and help them be successful in their roles.

To help you spot them, here are the traits of a digital pioneer:

  1. Is technically advanced in area of specialty
  2. Is a creative problem-solver
  3. Maintains broad overview of situation
  4. Prioritises attention to areas that maximise value
  5. Digs into extreme detail when required
  6. Tests Hypotheses with data, discarding ideas when necessary
  7. Develops networks and creates social and political capital
  8. Naturally works across organisational boundaries
  9. Can’t stand bureaucracy and form filling

 

Once you’ve found them here’s a few suggestions to help them develop and grow

  1. Develop tools to gauge the business impact of decisions
  2. Create common language to enable discussions on relative value
  3. Share strategic vision and what will be considered “good”
  4. Reward the identification and quantification of problems
  5. Provide unfiltered access to whatever information is needed, even if only needed for curiosity
  6. Encourage diversity of approach and non-conforming ideas
  7. Ensure that safety is not compromised by new ideas without killing the idea-generation process itself

As they develop, it’s your responsibility to help them be successful in their roles

  1. Prevent nay-sayers from using trivial detail to thwart progress
  2. Align interests by addressing the gap between process-driven functions like finance, procurement and IT and those working in the white-heat of operational time-frames
  3. Deploy technology that reduces information-friction and promotes transparency
  4. Try to work with the minimum of forms, reports, emails or meetings

 

It’s going to be a long process to re-equip the whole workforce with digital skills, some of that will happen naturally as new workers enter the industry. There will be a need for conversion to new ways of working to be established within existing workers as well.  The challenge is going to be attracting new people with digital skills, embracing those new skills and associated ways of working (letting them flourish and keeping work meaningful and not frustrating) then combining them with the know-how from established practices in the industry.

In the short run we’re going to need to work in teams – and teams with diversity of thought and approach. Not the sort of team I’ve seen (and experienced) where all new digital methods are pooh-poohed. Not the type of “team” where the old guard try to reprogramme the progressive new digital guys to adopt the way it’s done here – and the digital guys opt out and are replaced with IT people (who haver IT skills but are not Digital, see traits above). The IT guys end up going off on IT projects for their own sake and impose so many restrictions on technology adoption by the operations teams that the whole thing falls flat and fails.

Be Digital!