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Avoiding CIO Failure in Oil and Gas – Yogi Schulz

By Yogi Schulz

It’s no secret that the Canadian oil and gas industry is struggling. The major issues afflicting the sector include:

  1. Insufficient export pipeline capacity due to application approval gridlock.
  2. Complex and uncertain regulatory approval processes for development projects.
  3. Significant competition for markets from oil and gas producers in other countries, including the United States of America.
  4. Global oversupply depressing prices.
  5. Global demand collapse due to the COVID-19 pandemic, depressing prices.

These issues conspire to reduce the profitability of oil and gas producers. Even in this profitability-constrained environment, the IT function can significantly contribute to lowering overall operating costs without ignoring expansion initiatives.

However, IT and the CIO are often measured in the oil and gas industry by achieving the lowest possible cost for operating the existing application portfolio and the related computing infrastructure. That low IT cost goal creates a constrained CIO focused on optimizing the status quo while failing to contribute to future growth and transformation. That narrow focus leads quickly to CIO failure.

To avoid failure, CIOs need to position the IT function as an essential contributor to advancing the business plan, especially in difficult times. What initiatives should oil and gas CIOs be raising with the executive team to definitively demonstrate that IT is not just a tedious, expensive back-room activity?

Promote data analytics

CIOs should reduce their preoccupation with licensed software packages that serve functional needs.

Instead, thoughtful CIOs focus on digital opportunities that are primarily data-driven. IT departments can achieve high tangible cost and elapsed time reduction benefits along the oil and gas value chain with advanced analytics. Successful data analytics applications require significant data inputs from multiple data sources.

Useful data analytics applications along the oil and gas value chain include:

  1. Reducing exploration risk.
  2. Creating development scenarios.
  3. Controlling drilling & completion costs.
  4. Improving production operations.
  5. Evaluating acquisition & divestiture opportunities.

CIOs are ideally positioned to provide technical leadership through their IT staff to ensure the success of data analytics applications.

To position data analytics projects for success, please read this article: Is data analytics adding business value for you?

Strengthen work from home

CIOs should look beyond the initial scramble to provision working from home in response to the social distancing required to contain the COVID-19 pandemic. The CIO and the IT department should have received lots of compliments on how well they supported the rapid shift. It’s now time to reflect on how to improve effectiveness and reduce or eliminate irritants.

CIOs should lead work to improve work from home in the following broad areas:

  1. Increase access to application software.
  2. Upgrade employee computing infrastructure.
  3. Update HR policies.

For a more detailed discussion of how to strengthen work from home, please read this article: Ten technology tips to improve work from home

Facilitate cross-functional collaboration

CIOs should not merely react to a predefined IT strategy developed by others.

Instead, proactive CIOs reach out to business leaders, identify pain points collaboratively and focus on delivering business value by reducing the pain points. In many cases, reducing pain points requires cross-functional collaboration.

Frequently named pain reduction applications in oil and gas include:

  1. Implementing industry-specific Software-as-a-Service (SaaS) solutions.
  2. Improving data integration among installed software packages.
  3. Initiating data quality improvement initiatives.
  4. Encouraging business process improvement supported by robotic process automation (RPA).

CIOs are ideally positioned to provide the cross-functional business leadership that can lead to a successful collaboration to reduce pain points.

Integrate IT and OT

CIOs should not merely accept the wide chasm that frequently separates the world of information technology (IT) from the world of operational technology (OT) in many oil and gas companies. In many companies, the OT world sits outside the CIO’s domain and falls in the realm of field operations.

Instead, proactive CIOs describe the value of greater use of the data from the OT world in the IT world to business leaders on both sides of the chasm.

Useful example applications that use oil and gas OT data in the IT world include:

  1. Close-to-real-time production data for improved product marketing and trading.
  2. Equipment performance monitoring for improved predictive maintenance.
  3. Field development planning that uses geospatial reserves data, production data, pipeline data and facilities data.
  4. Digital twins for optimizing operation, planning upgrades and major maintenance tasks.

CIOs are uniquely positioned to provide the cross-chasm leadership to ensure the company uses the massive volumes of OT data it collects for more business value.

Accelerate digital transformation

CIOs should not merely accept the slow progress of digital transformation initiatives as these are blocked mostly by people change management hurdles.

Instead, proactive CIOs reach out to business leaders to explain and patiently re-explain the benefits case for digital transformation and urge them to break through the barriers in their areas of responsibilities. The benefits case for digital transformation is most often its foundation for the data-driven organization.

Paper files benefit the most from digital transformation. In the oil and gas industry, paper data includes:

  1. Mineral land leases.
  2. Contracts
  3. Regulatory approvals of wells, facilities and pipelines.
  4. Regional assessments of exploration potential.
  5. Subscriptions to industry newsletters and reports.
  6. Weather reports.
  7. Performance reports for management.

CIOs are well positioned to provide leadership to ensure digital transformation initiatives succeed.

To position digital transformation initiatives for success, please read this article: Success at digital transformation? Make mistakes and think small

Pursuing these ideas can position CIOs for success as essential contributors to advancing the business plan.

About Yogi Schulz

Yogi Schulz

Yogi Schulz has over 40 years of Information Technology experience in various industries. Yogi works extensively in the petroleum industry to select and implement financial, production revenue accounting, land & contracts, and geotechnical systems. He manages projects that arise from changes in business requirements, from the need to leverage technology opportunities and from mergers. His specialties include IT strategy, web strategy, and systems project management.

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