E&Ps face data challenges

Data quality and data management practices can help leverage shale opportunities

Greg Fletcher and Shannan Scarselletta, North Highland, Houston

With the advent of new horizontal drilling technology along with rising capital costs incurred from drilling deeper and more complex wells, shale exploration and production companies are demanding more and better data analysis and management than ever before to stay economically viable. While a few of the supermajors have divested or separated these lines of business, mergers and acquisitions are frequent among mid-sized companies and large operators to acquire the assets, tools, technology, and skills needed to reap the full benefits of an upstream enterprise.

While there are clear benefits to this M&A model, traditional E&P companies face a number of unique challenges in unconventional shale operations. One of the biggest challenges faced in this sector is the adoption of scalable and cost-effective data management practices that best utilize growing volumes of shale asset data. In order to be successful, these practices must be designed to meet operational, regulatory, and strategic needs, while sustaining data quality and minimizing manual data manipulation. When an operator can make decisions based on trustworthy, accessible data, they will be well positioned for success in this competitive environment.

Quality data is critical to reporting and compliance requirements and can help identify efficiencies to be gained during well lifecycle processes. Because shale assets require a much larger volume of data and change more rapidly than conventional oil plays, access to current and accurate data is critical to making informed decisions. For example, production volumes captured in real time can help determine whether or not a well is producing at a rate worth investing in.

Manual data entry in this fast-paced environment may result in data errors, which could lead to serious implications such as jeopardizing employee safety and increasing operational risk in the field. For example, misplacing digits when entering latitude and longitude coordinates can lead to drilling a well in the wrong location, potentially on someone else's property. Entering the wrong well header can ultimately mean that a vendor or land owner won't get paid on time. Both of these scenarios can lead to costly penalties, tarnished credibility, and a bad reputation in the local communities where work is performed.

In light of the challenges presented by manual data entry with shale assets, the demand for cross-functional data sharing and streamlining of processes is growing within the industry. Replacing manual data management processes with effective reporting tools and streamlined system interfaces reduces the likelihood of human error, as well as employee time spent on non-productive tasks. An additional benefit of cross-functional data sharing is that all employees are making strategic and operational decisions based on the same set of information.

Commitment to data quality and more effective data management must be a strategic priority for any organization, with other initiatives aligned to these objectives. Given that much of data degradation is assigned to human error, a greater need for accountability and shared responsibility across the company is required. A shift in culture is also required for companies that have traditionally operated in more siloed, less-agile environments, where the rate of data transmission and decision-making has been much slower.

Company leaders should foster the idea that data is a valuable asset that is critically important to operational efficiency, employee safety, and overall company success. It must be recognized that data is not owned by IT or one particular function. Rather, all employees must contribute to the quality of this critical asset. Successfully changing employee mindset and behavior may require an adjustment to employee incentives and performance management, as well as vocal and visible sponsorship from both the business and IT leadership.

As the energy industry evolves and changes, an organization must adapt and support flexibility. Leaders must embrace the fact that understanding data and processing it quickly is inextricably linked to business performance. With so many players in the unconventional market, having a competitive advantage through more efficient data management can enhance or diminish an operator's success.

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