Upstream (E&P) asset management covers multiple regions, with varying processes and regulations, driving a lack of standardization and inefficiency.
Context & Challenges
The upstream or exploration and production (E&P) segment of the oil and gas industry is considered the most technologically intensive and complicated spaces in the industry, involving a very risky search for natural resources and their consequent extraction from reservoirs.
Exploration & Production (E&P) companies operate in multiple distinct regions, each with varying processes, operations and regulatory requirements. The upstream process demands the drilling of wells hundreds of miles offshore, often in geopolitically-unstable areas and extremely regulated jurisdictions, further complicated the effect of their number and variety,
While wells are operated by energy companies, the extraction and production of resources necessitates around 30-40 separate companies, if not more. Each of these work with distinct deliverables, performance metrics, and contract details which can create huge friction when it comes to coordinating and reconciling payment. Each of these regions use a set of standards and technology systems tailored to their specific activities, creating a unique asset management challenge that can result in large, unexpected write-downs during annual inventory checks.
As a result of its complexity, the upstream segment faces a number of challenges,
Reconciliation in general is incredibly slow, labor-intensive and highly manual for the upstream segment. Any single unit of resource is connected to a colossal amount of disconnected data, which can make it near impossible to track and reconcile data. This in turn leads to complications around financial reconciliation.
— Identity & Certification
Identity and certification is also a concern. Workers on oil rigs require very specific certifications the data on which must be taken from a huge variety of sources, meaning that it can take 45 days to verify that a well or rig has been staffed appropriately.
— Field Capture Errors
Field Capture Errors are also growingly common, with field personnel often making errors when entering data on oilfield tickets which are at the center of inter-party communication, data tracking, and maintenance records. Error rates tend to hover around 25-30%, driving increased need for reconciliation. Many of these errors result from the fact that data is often uncoordinated, incomplete, or inaccurate.
The segment involve four key stakeholders: Majors, the larger international oil and gas companies owning most activity, NOCs or National Oil Companies, Independents, which operate only within their assigned segment and in upstream often provide concentrated E&P skills, and Oilfield Services, which provide equipment, support, and skills.
Majors are often run delayed or flawed projects due to incomplete data or lengthy identification processes, which results in financial, reputational, and operational losses.
NOCs are subject to performance-based contracts with Majors, which can be challenging in the face of lagging and incomplete data and a complex supply chain, meaning proper compensation is not always reached.
— Independents and Oil Service Providers
Independents and service providers in the upstream segments often struggle to comply with changing regulatory landscapes, and to maintain wells, equipment, and identification without complete and sanitized data.
Given the risky environment of upstream activities, regulation is imperative to keeping stakeholders and communities safe, however it’s also challenging to execute effectively without a complete picture of the data.
Upstream (E&P) asset management is streamlined on STRATO Mercata.
STRATO would provide a host of benefits for upstream (E&P) asset management, beginning with a single source of truth for asset information based on a unified data structure used in each region. Other benefits include:
— Asset standardization – a separator is a separator
— Allow regions to work independently to meet standards and extend asset data beyond HQ needs as necessary + using a common language for any necessary collaboration
— Forecasting and automating maintenance and inspection activities
— Time-stamping data to reduce regulatory compliance burden of manual audits
— Maintain existing systems, creating little-to-no change in existing systems & tools
— Prevention of large inventory write-downs and accidental double-spend issues
— Clear asset provenance, including maintenance and inspection history
— Provide a data-driven picture for enhanced business analytics and forecasting capabilities
Additional features include:
— RESTful APIs for direct connection of IoT devices such as storage providers’ iPads to the blockchain network
— Identity Management, OAuth, and SSO capabilities for simplified IoT authorization and user login
— Privacy via private chains to keep sensitive data private and control who sees what data
— Enterprise Data Modeling for integration into existing data systems and to ensure interoperability