Digitalization of Exploration and Resource Development Questions driving the future direction of the digitalization of E&RD Data ML algorithms Where does the data Who owns the IP—algorithm “...The oil and (and its associated IP) developers or data owners; gas companies What data is shared? reside when it’s in the cloud? whose data improves the decided last week What data is kept proprietary? algorithms? not to fund the drilling of the stratigraphic wells ... Instead, the group has decided Can the industry generate all to collaborate on What will an organization’s core insights needed for greater success What are the new data management subsurface competencies be? from the data it already has? business models strategies and use Developing the algorithms or (e.g., XaaS) that advances in big adapting them? will be enabled by data operations digitalization of E&RD? to find new ways of identifying exploration targets.” Upstreamonline, 2018 Industry progression toward digitalization of E&RD “Aim is to integrate everything together. It’s such a big job, start by doing something small first” Subsurface Digital Team, Major E&P firm, 2018 Improve efficiency • Automate repetitive tasks • Accelerate the pace required to arrive 15-25% Transformed workflows Traditional workflows at a decision efficiency • High level of domain gain? • Streamlined activities expertise • Automated toward • Time consuming, autonomous tedious, repetitive tasks • Integrated across functions Characterize and reduce uncertainty and lifecycle • Incomplete information • Incorporate new information for • Subjective • Unbiased more robust interpretation • Uncertainty-based • Deterministic • Carry uncertainty across entire workflow (from deterministic → scenario-based/probabilistic approach) 40-60%? Possible gains in exploration success rates comparable to gains moving from 2D to 3D seismic? Organizational elements supporting digitalization of E&RD Business problem Is there a digital solution that can solve my problem? Business unit digitalization champion Startup • Knowledge of the problem • Access to emerging technology • Technology development relationships • Nimble organization • Data (e.g., seismic, core, logs) Technology company Corporate partners (Silicon Valley-type firm) • Access to emerging technology Central technology IT/Technical IT Analytics Center • Infrastructure (traditional E&P) • Computing infrastructure of Excellence • Technical expertise (e.g., access to HPC) • Data scientists • Relationship with • Application maintenance • Data governance Service company BUs and Functions • Technical expertise • Software developers • Understand E&P industry challenges • Infrastructure R&D question • Data (e.g., external analogues) Apply cutting edge digital technology to E&RD Internal External Upstream digitalization models Comparative Digitalization model characteristic “Big bet” “Functions take the lead” “Business takes the lead” “Existential crisis” Key aspects • $100 million+, • Discrete functions drive • Operating units drive • Extreme cost pressure corporate-wide advances (e.g., Drilling, advances (e.g., Gulf drives focus on investments Reservoir Management) of Mexico, Deepwater, immediate benefits • Holistic vision, while • Light integration Australia LNG) in discrete areas (e.g., targeting “quick wins” underway (e.g., • Focus on 1) specific artificial lift, drilling) • More apt to partner formation of corporate “pain points” and • Forgo partnerships (e.g., Equinor-Accenture) Digital Transformation opportunities, and in competitive- and Industrial Revolution 2) integration across differentiating areas 4.0 groups) standalone assets • Integrate into broader innovation programs (“the new R&D organization”) Example E&P BP, Eni, Equinor, Chevron, ExxonMobil, ConocoPhillips, Shell Independents (Anadarko, firms* Petrobras, Petronas, Saudi Aramco Devon, EOG, Oxy, Pioneer, Woodside Santos) Organizational CEO (Corporation, or Functional lead (e.g., Business unit leadership Regional president, COO, positioning upstream division) EVP Wells, President CTO, CIO production company) Organizational Low-to-moderate Moderate Low-to-moderate Moderate-to-high value realized, to date *E&P firms may be hybrids and not fall exclusively into a single digitalization model. Source: IHS Markit Digitalization of Exploration and Resource Development © 2019 IHS Markit ihsmarkit.com 402021429-0919-CU.