6 years ago

Big Data in the Oil Industry: What are the benefits and the battles?

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Do the oil and gas exploration companies that do the finding and drilling of oil own the data? Or is it the oil service businesses?

Big data and the analysis of these data have been deemed important for businesses because it helps you understand everything about your company, your industry, your suppliers, and your customers. Big data and big data analysis allow you to know what your customers want and need, as well as discover who your best customers are and if there are groups of people that you are not targeting enough.

Big data also helps ensure that you have accurate data upon which you can base your decisions. In sampling, the closer you are to your population, the more accurate your data is. It used to be that it was impossible to have information on all of your customers, but that has changed with big data. Using business intelligence tools, a business can easily get information from customers from different sources. Once you have collected, gathered, standardized, and analyzed all that data, you can be very confident that you have the right information and you can base your decisions on this.

Data also has a lot of other uses for an organization aside from gaining insights on their operations, marketing, and stakeholders. There are now data libraries that they can sell their data to, allowing them to earn more.

Big data is currently being used in different industries, and now service companies that search for underground sources of oil are using it. With the advent of the Internet of Things (IoT) and the Internet of Everything, oil services companies can now get data from pretty much everything they do and every equipment they use.

But who owns the data? This is a hotly contested topic right now.

The benefits of big data

Companies in the oil industry have been getting a lot of data that they did not realize was very valuable. So valuable that some organizations are saying that they are producing not just one but two resources: gas and oil, and data.

In fact, if the oil and gas industry would undergo a digital transformation, the world’s GDP is expected to gain $816 billion, or 0.8% by 2025. For the oil and gas company, that could mean more uptime, better rates of recovery, and having more efficient refineries. It would also boost supply and production by around 4%, and the increased supply would naturally bring down the prices. This is according to a 2015 research study jointly conducted by Cisco Consulting Services and Oxford Economics.

But even with these benefits, big data has remained to be a largely untapped resource – until recently. It is thought that a typical oil services company only uses around 1% of all the data it generates, according to an estimate by Baker Hughes.

However, if they can harness all the data they get, it could mean really big money for them. For instance, using all the data, an oil company can figure out where to get oil and gas at a much faster and easier rate, while also spending a lot less. That means that they get to be more efficient while also saving themselves a lot of money. Rather than buying drilling logs or seismic files, oil companies can now use their own data generated from their own equipment used in their oil fields.

More than these, service companies can earn more if they store and sell the data to data libraries.

The battle of “who owns what” has begun

With more and more companies discovering the benefits of big data, it is not surprising that enterprises would want to own it. In the world of oil and gas, data is almost as valuable as their main product.   This is the reason why the question of who owns this data is particularly important and, to be honest, rather complex.

Do the oil and gas exploration companies that do the finding and drilling of oil own the data? Or is it the oil service businesses, which are the customers of these exploration companies? And these firms are fighting over who gets to own the data. In fact, it is one of the things that are stipulated in their contracts.

If you think about it, it can get particularly tricky. Exploration and production companies claim that they own all the data that their equipment and activities produce. In the words of Sandeep Bhakhri, data is one of their most important resources, adding that organizations like them should own that data: they should be the ones who collect, analyze, and deliver on that data and not somebody else. Bhakhri is the chief technology and information officer at EOG Resources. EOG Resources is a natural gas and petroleum exploration firm.

It is interesting to note that EOG Resources is currently using the data that they gather to power different apps that their employees use to monitor and keep track of well data. The company is also known for gathering and then analyzing the data that they get from horizontal wells across America using their own proprietary devices (which they deployed on rigs).

This is the reason why it is not easy for them to give up their data and have their customers own it. More than anything else, they are the ones who gather, store, and analyze all that data. If they hand over the ownership of all these information, their customers could sell it and their competitors would be able to see all that data that they’ve worked so hard for.

On the other hand, their customers are well aware of how valuable the same data is. They can – as mentioned earlier – sell that data to data libraries and earn some money off it. What’s more, if they do own the data, it means that they do not have to pay the exploration companies extra just so they could access this data.

And that battle is reflected by the amount of language included in the contracts. Before, ownership of data and everything else was pretty short and clear. However, right now, contracts have data ownership clauses that can extend to a page long. The clauses specifically points out who owns what data and where the overlaps are (those data sets that BOTH companies own).

Photo courtesy of Rennett Stowe (Flickr).

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