Oil and Gas Companies Get Practical about Cloud Innovation to Digitally Transform

By Eddie Murray, Global Oil & Gas Leader, Amazon Web Services

Introduction by Mark Schwartz, Enterprise Strategist, AWS

As my colleague Miriam McLemore says, large enterprises have innovation in their DNA. There was something innovative they did that got them to be big enterprises in the first place, and probably many innovations along the way. As Eddie Murray points out in this post, the Oil and Gas industry has been driven by innovation. The industry now finds itself in a market where instability might be the new normal, and digital transformation is the key to dealing with this instability through continuous innovation. Murray’s advice is applicable across other industries as well: to innovate ambitiously, but in a way that is tied to outcomes.

-Mark

Oil and Gas Companies Get Practical about Cloud Innovation to Digitally Transform

Eddie Murray, Global Oil & Gas Leader, Amazon Web Services

A rich history of innovation

More than 150 years ago, the oil industry began transforming the world, part of a wave of innovation during the Second Industrial Revolution, making possible new modes of transportation, manufacturing, heating, and even lighting.

The oil and gas industry is certainly no stranger to innovation—whether it’s successfully drilling in the Gulf of Mexico, or on the opposite spectrum, the desert, or other places previously thought impossible to reach. In more recent times, the focus has been on innovation through digital technology. A World Economic Forum report notes that “as early as the 1980s, Oil and Gas companies began to adopt digital technologies, with a focus on better understanding a reservoir’s resource and production potential, improving health and safety, and boosting marginal operational efficiencies at oil fields around the world.”

The next transformation

That focus remains, even as the industry continues to recover from the effects of a down market, with stronger but still volatile prices throughout the sector. Strategies like increasing productivity and driving higher efficiencieshave helped offset low prices, yet there is a sense, among oil and gas companies I’ve talked to, that market instabilities may justbe part of a “new normal.” Companies feel that they need to thrive in this more unpredictable market landscape.

It is against this backdrop that digital transformation continues to be a driving focus. Oil and gas companies talk about how digital technology will enable them to transform into “industry 4.0”—becoming the next generation of companies. I see a good amount of curiosity from companies that are keen to explore how different technologies can drive that transformation, to tap new levels of efficiency and productivity. They are looking at their current workflows, which in many cases have remained without major innovation for decades and are exploring ways to drive order of magnitude in efficiencies.

Getting practical about Cloud

The Cloud is a big part of oil and gas digital initiatives. What’s notable in my conversations with oil and gas customers about Cloud is that they don’t just want to know what’s possible, but also increasingly ask, what can I do first, and how can I do it quickly? Companies are being visionary in their Cloud outlook, but also practical—they are ready to produce tangible results.

Yet it is not always easy to move down from the vision and get more practical about what reality will look like in the end. This is an area we often talk to customers about, sharing our innovation mechanisms: the power of working backwards. To work backwards, we start with the end vision—what a company reallywants to accomplish—and then we map out how we get there. By starting with the end in mind, we can more easily establish what steps are required to bring that vision into reality.

If you are not familiar with this practice, it is a cornerstone for how AWS (and Amazon) work. To define our end goal, we’ll draft a press release that showcases all the desired accomplishments. We’ve shared the process with many oil and gas customers, and have in return, learned much from them as they try out the approach in their ownenvironments.

Ambitious goals are tied to specific outcomes

But what does that really look like? Let me share a hypothetical example. Let’s say that an operator wanted to reduce from months to days the time between an offshore seismic acquisition and the interpretation of that data. A first step to accomplish this can be to move seismic data from the vessel to the Cloud, eliminating the cost, logistical challenges, and trapped value of tape. A next step can be to process seismic data in the Cloud and deliver the processed images to cloud-based interpretation software. The working backwardsprocess allows this operator to define end goals by creating a press release and frequently asked questions. Once this end picture is defined, we start building. This is the same process that Amazon follows for all our innovations.

It’s also worth noting, having an ambitious end goal in mind does not mean delivering everything at once in a gigantic effort. For example, one customer, Baker Hughes (BHGE), a GE company, had an ambitious goal of moving all their applications (500 in all) to AWS, essentially eliminating the data center as part of a digital initiative. While the effort has been significant, the company portioned the migrations, so that they could begin to immediately gain benefits as they went along. They applied solutions like Elastic Beanstalk to drive cost savings by shutting down apps when not in use, even as migrations continued.

Building on an idea

The examples above are both instances of how companies can expand on value delivered,by building on an original idea. For example, once seismic data is stored in the cloud and not trapped on tapes, companies can apply machine learning models to extract more valuefrom that data while stored in low-coststorage services like Amazon Glacier. Also, companies can use ISV solutions running on cloudthat automate the interpretationof data or develop new machine learning models that help simplify interpretation. Our customer BHGE was able to capitalize on its Cloud migrations by analyzing usage and other patterns across its applications and identifying additional cost-saving strategies.

At AWS, we are big believers in the power of continuous innovation—with each idea building upon the last to create continuing growth and exploration. As oil and gas companies further advance their digital initiatives, there is a tremendous opportunity ahead to drive new innovative practices, supported by technology, that open doors to higher efficiencies, improving productivity, and keeping crews safe in the field.

Eddie Murray

Eddie is a global leader in Oil and Gas at Amazon Web Services. His organization works closely with leading Oil and Gas companies to help them innovate using AWS cloud services. Prior to AWS, Eddie served as Country Manager for the Southern Gulf and Central Asia Regions for Landmark Software & Services (a division of Halliburton). He has an MBA from the Thunderbird School of Global Management and a BS in Industrial Engineering from the Catholic University of Argentina (Universidad Católica Argentina).

Sources:

1. World Economic Forum. “Digital Transformation Initiative: Oil and Gas Industry.” January 2017. http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/white-paper-2017-dti-oil-gas.pdf
2. Case study: “Royal Dutch Shell Proactively Identifies Cybersecurity Threats Using AWS.” https://aws.amazon.com/solutions/case-studies/royal-dutch-shell/
3. Case study: “GE Oil & Gas Moves to AWS in Digital Transformation, Achieves 52% IT Savings.” https://aws.amazon.com/solutions/case-studies/ge-oil-gas/