By Luther Birdzell, CEO, OAG ANALYTICS
Before Big Data was a buzzword, it could be loosely defined as data requirements that exceeded commercially available technology, the boundaries of which the oil and gas industry has been pushing since the dawn of computing. The rise of companies like Google, Facebook, and eBay dramatically accelerated big data technologies, particularly as these firms released some of their core intellectual property to the public domain. In turn, wide availability of these innovations created opportunities for other industries to share in the massive value creation from big data. Taming the high volume, variety, and velocity of today’s data is a necessary, though not sufficient, condition for creating material competitive advantage for shale-focused operators and investors.
Accordingly, current oil and gas big data strategies should be aligned with transforming data from a cost into a revenue-generating and cost optimization asset and sponsored at the C-suite level.[i] Shale 1.0 was characterized by producing hydrocarbons from unconventional reservoirs using horizontal drilling and multi-stage completion technology. It has resulted in huge increases in domestic oil and gas production over the past decade, but is more complex, data intensive, and operationally difficult than conventional exploration and production (E&P).Therefore, traditional data management and analysis techniques must cede to advanced methods to maximize understanding of the complex relationships that drive unconventional production.
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From the wellhead to the boardroom, actionable, data-driven insights can create billions of dollars of value by improving the industry’s ability to right size completions as well as value and manage assets. The proper application of big data technologies can enable highly cost effective solutions with the following capabilities:
Engineering and Geoscience
Sr. Management and Financial Services
Optimize completion design
Produce data-driven forecasts & reserve reports
Value assets for acquisitions & divestitures
Calculate estimated ultimate recovery(EUR)
Reframe development strategies
Build discounted financial models (NPV & IRR)
Provide Wall St. guidance
Perform competitive analysis
The first phase of the Shale Revolution was facilitated by high oil and gas prices. The current downturn necessitates optimizing capital deployment in an environment with very different economics. Analysts believe that Shale 2.0 will be fueled by rapid advances in big data and will usher in a second American oil renaissance that will equal or surpass the first one.