Yes, it is winter.
But this year, it is winter in more ways than just the season. This time of year, the landscape is gray with leaves off of all trees except the arborvitae in central Texas, but the abandoned lots of rusting equipment and for sale signs on the gates of oil field service companies are indicators that the oil patch is entering another phase of a downturn in the industry, last seen in the early 1980’s.
A depression for the oil and gas industry?
Economic depression is defined in Business.Dictionary.com, as “A state of the economy resulting from an extended period of negative economic activity as measured by GDP. It is often described as a more severe form of a recession that leads to extended unemployment, a spike in credit defaults, broad declines in income and production, currency devaluation and a deflationary economy.”
According to Wikipedia, “In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than an economic recession, which is a slowdown in economic activity over the course of a normal business cycle.”
After a year of falling prices, oil is over 40% down from 2014 high’s, depending on the day, with no real signs of recovery in sight; with this, we expect to see this distinct disruption turn into some disintegration and decay, especially where equipment for drilling and operating wells and facilities can no longer be maintained by companies in bankrupt situations, waiting on judgement and due process.
Let’s get back to that good old “people-process-technology” triad. Just enter “people process technology” into your search box in your browser. There is much in the returns related to organizational and enterprise architecture, all indicating the best practices of utilizing the P-P-P in design strategies… However, business people who are looking to move assets from owner A to owner B are generally not thinking about the magic triad of the triple P’s. They are more often scurrying around looking to put together “packages” for asset sales that preserve the highest value possible of said assets that will change hands, mainly for the seller, who is watching his company vanish before his very eyes. Is this the person who would entertain using (yet) another technology in this business activity? Probably not.
Whereas in the 1980’s our geospatial capability was far less than what we have today, we can now imagine a number of ways that this technology can be put to work to lessen the detrimental impact of the downturn, and enable the conditions we see evolving to be managed more efficiently by those who hold guardianship of oil field investment assets while they are going through the rough seas of turbulent times.
Learning from history
After the bust of the early 1980’s we saw oil and gas related assets change hands via various means as the industry rode the waves to eventual recovery. These asset types ranged from whole companies, parts of companies, down to fields, leases, wells, and even equipment.
Today, by comparison we may find that due to advances in technology of all types, transaction times are being shortened. This applies to every aspect of the business, even difficult ones. When bad news hits, it has an immediate effect. Volatility has increased due to the real-time communication capability introduced by the “social network” as it has integrated into business technology and communication.
When prices of commodities rise and fall, the news is instantaneous. The pulse of the market responds accordingly. The minute a bankruptcy filing hits the alerts, everyone in the industry knows. The information driven emotional response sends shockwaves across the whole market in such a fashion that sellers and buyers of oil industry assets can be sent into the valley of uncertainty in a heartbeat. What happens as a result? How do we move towards stability? We hear a lot of doom and gloom, but we do not hear suggestions for what to do in the meantime, or how to survive through the turbulence.
People Processes Technology
People are charged with finding the right process to evaluate the oil-field assets of various types or even their whole company value. This is not an easy task where the assumptions and dynamics are changing each day in an extremely volatile business environment. The ideal of people-processes-technology in an enterprise environment may be fractured, shattered, or lost entirely. Most often it is “git ‘er done” with an attitude of haste.
Technology has progressed to being within quite a different landscape today than it was in the past “busts” of the petroleum industry. The last time the duration of a bust was of this magnitude, in the early 1980’s, we were still very analog and paper based. Integration of information from disparate sources, the good, the bad, and the ugly, do have an impact that was not experienced in the bust of the 1980’s and the slow, years-long recovery from that market downturn.
The sheer amount of data converted from analog to digital has increased now, such that analog is likely in the minority of data types within most companies. Newer companies likely may not have much at all. We have now been digital for many years. We slice, dice, and combine data into visualization interfaces today that were unheard of back in the 1980’s in the corporate environment. The internet did not exist. We utilized mainframes, and were beginning to move to PC’s back then, but networks were still mostly analog, and computing power was not what it is today. Any computer mapping in the 1980’s was labor intensive and output was completed via pen-plotters. The equipment for visualizing the sub-surface came later. It was several years later that the widespread use of visualizing data on computer screens came into more common use.
Today we are better at utilizing sensor data for asset management, and data with more volume and velocity than ever before.
However, in our geospatial space, we are still learning about how to apply the integration of newer data visualization technologies with GIS in the oil patch. Despite what the “hype-sters” tell prospective technology buyers, there is definitely a learning curve in managing “big data”, and as usual, people often discover how “dirty” their data is in the process. The “hype” can die down even faster if the business is under duress. If data is not accurate, this can have serious side-effects on anything from the valuation of assets, to sales, to closing transactions and beyond.
The big question is when and how to interject the use of a technology into a process that generally is managed by people who mainly view rows and columns?
To whom should the suggestion be made to use GIS and geospatial technology? Who are the main people managing the movement of the assets of the industry, and are they clued up in the value of using geospatial technology for decision support? What about the financially oriented people such as accountants – how receptive are they to utilizing new tools? What about lawyers? Asset clearinghouse managers? These may not be your typical users of GIS and geospatial technology.
These folks depend on others when they need help, and usually, it is not a strategic question, but more closely related to a 911 call, or “secret squirrel”. At times like these, such analyses are “hush hush” until the “for sale” sign goes up. Those doing analysis may not reach out to any support people unless they get into a bind, or someone decided that having a technologist on the team is probably a good idea. Whether the technologist will have geospatial skills is yet another question. Some of the most complex calls to our GIS support people have come from business efforts such as these.
GIS User Profiles – Ever Changing
The deviation from the “normal” user profiles of GIS in oil and gas poses some interesting questions and scenarios. How many have already embraced the use of GIS in navigating through these changing times in the petroleum industry? Is this new territory for geospatial technology or does the use of it transition from existing use of GIS in the traditional areas of the business who typically use geospatial data and GIS to do their normal jobs? The answer is that some have been exposed to the use and power of GIS, and some have not heard of it, or if they have, think it is something that geoscientists use.
The short of this scenario is that once again it is likely to be an “introduction of new technology”, meaning new to these users. The need to explain what GIS is will certainly be one of the first discussions, if the discussion ever comes.
Where does GIS and location intelligence sit in this scene? Where can it add value?
Where do the typical non-GIS users come for help when they need information to flow from the correct systems, or new information added, in order to make quick decisions? IT. And many IT people may not be savvy to the geospatial technology stack. A fair number are not, or at a minimum have misconceptions about what it is, and how it works.
For many straight-up “IT” folks inexperienced in utilizing these technologies, GIS and geospatial technology integration activities are met with fear and trepidation. “It’s too hard. It’s too complex. It’s too expensive.” These are three statements heard over and over when IT people who do financial software support hear about the potential of using GIS with their rows and columns, their cubes and dimensions. Mindsets get fixed and sometimes it seems that opinions are impossible to reframe.
GIS still has an identity problem.
We should be able to do this – to leverage the integration of GIS into our “asset management mixture” of technology tools. After all, an “asset” is a represented by points or polygons or a lines with some data – how difficult can this be? This begs the question, how do we break down these walls? Are we any better off than we were in 2000 in this lack of “synchronization in understanding”? Than in 2005? Or in 2010? Or even since a year ago?
Yes, those silos intensify during tough times. People cling to the walls of their home silo and are reluctant to take on change believing that it is too risky to do this when there are so many unknowns about the future, and the stability of the very company where they are employed is threatened. This problem is not new. Yet, we hear that during difficult times, people will innovate – after they calm down some and realize that panic is not helping.
Those of us familiar with what can be done with GIS and geospatial integration with various systems and data, at times have difficulty understanding why everyone cannot see the same possibilities. Whereas we see almost endless possibilities, some people struggle to see anything but difficulty and complexity. We feel like Sisyphus at times, getting almost there, and then the rock of misunderstanding rolls back down on top of us.
What can be done? This is not a technology problem, it is a psychology problem.
It involves change and progress at a time when people are facing involuntary change every day, just trying to stay afloat on a turbulent ocean that the oil and gas industry is today. People are simply trying to get through as best as they can, and survive. Change drives people to behave in ways that frequently include resistance and downright rejection of ideas that might actually help them survive better. Where normally, people may get out to conferences and training to learn about new technology or new uses of existing technologies, the budgets may not be there for a while.
What will be happening this year at the conferences and meetings where we normally gather to see what everyone else is doing with GIS? Are people able to come out to these events, or will there need to be more sharing done online? What are the mechanisms for sharing how GIS can be leveraged to manage through these present times and beyond?