SPeech
Driving Operational Excellence through Digital Innovation

Dug eagle ford conference
November 2017 – San antonio, Texas

 

At Marathon Oil, we look at digital technology and innovation as key capabilities for how we compete to be the premier E&P. 

Fueled by the best talent in the industry, these capabilities will lead us to better performance.

Engineering and technological innovation have been THE driving force behind our industry for more than 150 years. Many of these innovations have consistently occurred against the backdrop of significant transformation. 

Our industry is in the midst of yet another transformation driven by the force of digital innovation, with data as its cornerstone. To successfully navigate this transformation, we must take advantage of the linkage between innovation and operational excellence. The two are intertwined.

To date, innovation in our industry has been heavily focused on the subsurface, where it should be.  The subsurface is what makes our industry so unique AND so challenging.   

And this new transformation is asking us to think about innovation in the digital space in concert with our traditional subsurface focus. 

A couple of weeks ago, at a Hart Energy Conference in Midland, our CEO Lee Tillman also spoke about innovation. He noted that it’s common and comfortable to use data for historical purposes, like asking: what were the economics for this well?

But we should also be using data for making reliable predictions, like: what will be the ultimate recovery for the well?

 

Other industries have already seen the value in this approach—aerospace, medicine, retail—they are well ahead of the oil and gas industry.

Think about the on-line tech companies, like Google … Amazon … Netflix. These companies employ digital technologies and machine learning to predict consumer behaviors, and see emerging trends in near real time. Think about how much enterprise value these companies have generated based on how they leverage data.

Lee challenged us to find more ways to better leverage our large data sets to boost efficiency, improve well performance, and reduce cost while improving safety conditions, and he urged us to utilize machine learning, like Netflix and Google, to identify trends and make predictions.

It’s true that other industries are leveraging data in very interesting and meaningful ways.

Airlines are digitizing their assets and connecting data from multiple sources to track the true cost of operations and maintenance, optimize aircraft and crew scheduling, reduce inventory and fuel costs, and minimize foreseeable delays. 

 

Imagine this scenario: one of the engines on an in-flight aircraft detects a failure condition. Don’t worry, it’s a non-catastrophic event.

While still in the air, the plane is able to stream the data back to the field operations crew at the destination airport.  

The intelligent digital system analyzes the data along with billions of other data records from the same engine and others within the same family, and even other engines on the same route, and provides diagnostic information and a repair recommendation.

The maintenance crew then orders the needed parts at the local services warehouse and downloads all of the maintenance standard work procedures necessary to complete the work.   

Everything is ready by the time the airplane is on the ground. The repair work starts immediately and is completed on time for the next flight to be on-schedule, without delays.

 

 

The railroad industry has similar stories. Some companies in that space, are taking big steps forward by optimizing their entire supply chain so they can add move value to their customers and their customers’ customers.

Think about how much enterprise value all of these companies have generated based on how they leverage data and digital technologies.

Why can’t WE in the oil and gas industry leverage our data in the same way?

We can and we should. That’s our challenge.

I know.  Sometimes, this sounds far-fetched but I tell you that it is very real. 

We can use digital technologies and learn from these industries’ best practices, to unleash productivity in our oil & gas business operations. 

And at Marathon Oil, WE ARE using digital technologies, as we embrace the linkage between digital innovation and operational excellence.   

We make a conscious effort to link our technology management decisions to outcomes that can yield the highest impact to our operations.

We’re focused on finding and producing more oil and gas safely and at a lower cost, aligned with our strategic decision to concentrate on U.S. unconventional resource plays and our low-cost, high-margin portfolio management game plan.

One area of particular interest for us is the Digital Oilfield.  Data collection and analysis combined with field automation is already maximizing oilfield recovery and increasing profitability.

The immediate value is in the ability to analyze large amounts of disparate data, to make it visual, to sort through what’s most important, and to automate certain processes and decisions.

For instance, thanks to the digital oil field enhancements in our Eagle Ford asset, we’re adding two to three barrels of production to every well per day, which could ultimately result in several thousand additional barrels per day annually with virtually zero incremental cost.   

In fact, we expect to be able to operate more efficiently as a result of process improvements.  And as the Eagle Ford matures, stemming the decline of base production will be more important than ever.

The Digital Oilfield has also had an impact on how our people do their work. Once our Operations Control Center was up and running at our Karnes County office, we introduced a new way of doing things.  A safer and more efficient way:

  • There’s less driving around well sites thanks to video surveillance.
  • Real-time decision-making through data dashboards and notifications.
  • And predictive alerting for potential issues like paraffin build-up or battery failure alerts before they even happen.

In the room, the team is working together, solving problems—and they’re doing it in a much more collaborative and efficient way than they did in the past.

They’re not only working ON the systems, they’re actually taking part IN DESIGNING the systems. 

And the operators in the field are leveraging the same technology on their mobile devices and learning new ways to work more effectively.

These changes in how our people do things also mean we have to update our training programs so they can learn new skills and also participate in the design of these digital systems. 

We’re also building new technical capabilities in our technology functions like IT so they can rise to challenge. 

IT is no longer a back-office function.  They are at the table discussing the best roadmap toward better business performance. 

It’s exhilarating!

 

Our leaders at Marathon Oil recognize this paradigm and they’re continuously striving to create an environment of collaboration, accountability, leadership and entrepreneurship.

It’s important to remember that technology alone is not sufficient.  Success comes from a good mix of technology, business processes, and talent.  Great talent enables great performance.  

Our leaders at Marathon Oil recognize this paradigm and they’re continuously striving to create an environment of collaboration, accountability, leadership and entrepreneurship.  

And we do that because we know these traits, and their associated behaviors, will lead us to more innovation. And as we all know, that innovation will propel us forward. It’s the full cycle of an innovative company.

Technology, innovation and talent will continue to drive, direct and shape the future of our industry. 

One day we’ll have the creation of autonomous facilities. This vision requires digital innovation combined with artificial intelligence and field automation. We imagine a future where computers and people, together, make the best economical and safest decisions. 

Yes, people are in the mix, because we just cannot fully substitute YOUR experience. 

“Creating a learning environment, where people work together to find better solutions, is also a must. The future requires a different mindset, where silos across functions are broken down, and collaboration is highly rewarded.”

 

This vision doesn’t come without its challenges though. 

Some are technical -- like a good data management strategy so access to the right solutions are readily available.  Good, reliable data is also a key ingredient in successfully creating machine learning models.   

It’s not that our industry doesn’t have enough data.  We have plenty and we’ve been at the forefront of using high-performance computing to leverage it.  It’s about how we use it and the type of questions we want to answer with it. 

Here, there is a good lesson-learned from other industries:  Data should be treated like an asset.

The other challenges are not technical in nature.  Attracting and recruiting the best diverse talent is part of that list.  

We need to incentivize Science, Technology, Engineering, and Math programs, also known as STEM, in the current and upcoming generations of high-school students.  

We also need to get more women, more minorities, more diversity into oil and gas. 

Creating a learning environment, where people work together to find better solutions, is also a must. The future requires a different mindset, where silos across functions are broken down, and collaboration is highly rewarded. 

As an industry, we need to foster a culture of innovation.

Specifically, for Artificial Intelligence or AI to work, we also need a mindset shift.  We were all taught in school to work hard in creating a problem statement, then develop a model or hypothesis as a potential solution, and then collect data to validate such hypothesis.   

AI requires us to think differently:  instead of developing a model to validate, we need to work in putting as much data together for the AI algorithms to learn and to create the right model. 

It’s almost like if I ask you to read from right to left instead of left to right. Wouldn’t that urge you to think and learn differently?  I like to think that Leonardo da Vinci would certainly agree.

Now, back to our innovation challenge … I certainly expect that we will get closer to the day where we can ask a bot, Alexa-style: “hey Bob, What’s the right landing zone for this well? …. What’s the ultimate recovery for this well?” 

And Bob, applying AI algorithms on the massive amounts of data we have collected and curated, can provide the most accurate response to safely maximize recovery and minimize cost.

Whether the technological innovation is through continuous improvements, efficiency gains, or major breakthroughs, the future is ours to create.  

We are looking at all of YOU across the industry to innovate and help us build that future.

 

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