Is the oil and gas industry behind in data management?
The latest buzz for how to boost your business in the oil and gas industry is data management and standardization. Poor data quality and mismanagement of that data are two huge factors affecting how effectively businesses run across the globe, and even more so in the oil and gas industry – an industry that may not have jumped aboard the IT and digital era as fast as other industries in the world.
Let me back up and explain. When you hear data management or data standardization, your eyes instantly glaze over, right, and you begin to fall into a coma of boredom. Think about it though. Data are what makes your entire business run. Without accurate data how can you run your financial reports and make adjustments for the next quarter? How will you know how productive or behind your wells are operating than projected without the data to back up your theories?
Why is the oil and gas industry behind in data management?
Data clearly are central to being able to run a business efficiently. So why hasn’t the time, effort and money been given to make sure that your business practices are flawless?
In listening to a podcast on Oil & Gas IQ on data standardization, guest speaker Dave Wallis, chair of marketing for the Petroleum Industry Data Exchange Committee, offers an interesting perception on why the oil and gas industry is behind in data standardization.
In the podcast, Wallis explained that the oil and gas industry began investing in data standardization and management techniques at the end of the dot com boom, which really became a bust by the time the practices were expected to begin, negating any return for the companies who just dumped all that revenue into a practice that would never get off the ground.
The industry just went back to what it had been doing beforehand in the late 1990s and never really got started again because of how much the cycle of oil prices fluctuates, he said.
“Either oil is above $100 a barrel, and everybody is too busy trying to produce oil to look back at business systems and improve them, or it is at $30 a barrel and everyone is saving money and doesn’t want to spend money on business systems improvements,” Wallis said.
Now PIDX is an organization that “provides a global forum for delivering the process, information and technology standards that facilitates seamless, efficient electronic business within the oil and natural gas industry and its trading community,” according to its website, which explains Wallis’ presence and push for data standardization in the buying and selling aspect of the industry (meaning buying and selling products associated with the oilfield), but I saw some interesting parallels that can be made for those of you who are involved in the production and distribution revenue part of the industry that we work with.
Why is data management so important?
As stated earlier, every business in the world runs on data. Why is it so important that the oil and gas industry also be on board? Because the risks, rewards, costs and potentials are so much higher. If you can’t make accurate business decisions regarding purchasing, financials, payroll and future ventures because your data management is a nightmare, then you may have a real problem. Two ways to begin standardizing your data now:
1. Data standardization is as simple as making all data consistent and in the same, easily understandable format across your systems.
Knowledge is power and just knowing how much and what type of data you control in your business will empower you to make better and smarter business decisions. This begins with making sure your data records are consistent and in the same format. This includes something as simple as spelling, abbreviations, and the same names across all systems for the same product, account, well, expense code, etc.
2. Make the leap from paper to electronic documents when possible.
Here at the office we have seen requests for a scanning module increase in the past year for clients to be able to scan their documents, production spreadsheets, invoices, bills, etc. directly into the system instead of having to sort, store and file paper documents.
I know for small operators and producers this isn’t the easiest task to meet. For some of you, just working with your records on a computer is a big step. For those comfortable with the cyber world and how efficient electronic documents make your business, consider how your business can begin the transition.
One issue operators and producers have to deal with along with the fact that data is now passed on between businesses both electronically and through paper, is that the formats are all different. Companies now have to merge paper documents with PDFs, spreadsheets, AutoCad, scanned images and Word documents.
How can your business overcome this? Are there any good solutions you’ve seen for those who have made the transition already?
What can we do to help?
For those of you familiar with oil and gas accounting software, what can we do as a software provider to make data management easier? Are there additional modules, fields or features that would help turn your revenue distribution and well data into a goldmine?