[Editor's note: A version of this story appears in the December 2018 edition of Oil and Gas Investor. Subscribe to the magazine here.]
Big data, particularly its ability to transform the way the oil and gas industry operates, was the leading topic of discussion at the Society of Petroleum Engineers’ Annual Technology Conference and Exhibition recently held in Dallas. Technology has been the driver of the industry for decades. Now the industry finds itself emerging from a market downturn that required innovation in order to survive. The digitalization effort that has remade industries facing similar challenges is now quietly delivering big successes in small packages across the global E&P space.
“There’s a tremendous opportunity for the industry to accelerate the journey, as I think about digital,” Darryl Willis, vice president of oil, gas and energy for Google Cloud, told the standing-room-only gathering of industry professionals there to hear the opening keynote panel discussion. “I would say that one of the things that led me to Google after 25 years with BP was the opportunity to see if I could help accelerate that journey from a different angle.”
In his role as a digital ambassador, Willis brings a wealth of experiences collected during his time as a geophysicist, head of Deepwater Horizon oil spill claims and public relations spokesperson for BP Plc (NYSE: BP) and as president and CEO for BP Angola. He joined Google (NASDAQ: GOOG) in March, where he is focused on developing products and solutions, providing deep line-of-business expertise to the sales teams in their go-to-market efforts and building trusted relationships with key leaders and companies across the energy sector.
The challenge now facing the oil and gas industry is to scale up, to dive deep into its data lakes or soar high into the “cloud” to harness historical data to elevate its operations to a whole new level.
“More data has been created over the last two years than has been created over the last 5,000 years. We have data in archives from oil and gas fields from 50 years ago, 75 years ago, even a 100 years ago,” he said. “And the reality is today, data’s being created as we speak from hundreds of thousands of sensors providing plenty of opportunities to evolve and improve on that data, to enable us to make better decisions.”
In an exclusive interview with Oil and Gas Investor, Willis shared his insights and outlook on the oil and gas industry’s digital journey.
Investor: What would you say are the big three digital or data challenges facing the upstream oil and gas industry, and how do you see the industry converting those challenges into opportunities?
Willis: The first one is the pace of change in the industry has to accelerate. We’ve got to pick up the pace of transformation. Everyone is using the right buzzwords—AI (artificial intelligence), machine learning, digitization—but truly leveraging it is taking too long.
My observation has been that medium and smaller companies are leaning in a lot harder and making a bit more progress than some of the larger companies, but everyone sees the opportunity.
The second thing is that the industry has to begin to leverage all of the data that it has at its disposal. Our industry is known for loving data. I’m a former geophysicist, and I’m one of those people, as well, who’ve always loved making sure we had as much data as possible. But I’ve read that the industry, typically, uses somewhere between 1% to 5% of the data that it actually has access to. Five percent is, actually, really generous.
So there’s a huge opportunity to use data that sits in archives and inside of reports from the past that can provide insight, but there’s also data being created as we speak, and making sure that we’re using as much data as we can in the decision-making of the industry is something that’s a huge opportunity or challenge, as well, facing the industry.
Then the third thing is insights. I think that there are a lot more insights that can be derived from data. And, so, we’ve got to do a better job of extracting insights from all of the data and doing it faster from all of the data that we have at our disposal.
Investor: What do you feel are the best strategies managing that data, then extracting and acting on the value of that collected data?
Willis: Step one is a healthy recognition and acceptance of the fact that we are not using the data that we have access to. I think most companies see that reality and are trying to do something about it.
The second thing I would say is the condition of the data. Data conditioning is very important and making sure the data has fidelity, in that the quality of the data and the formatting of the data is good. You can’t just apply things like artificial intelligence and machine learning to data in any shape; it needs to be conditioned.
The third thing is that there’s a huge opportunity in the area of artificial intelligence; in particular, machine learning as it relates to the oil and gas industry. There are lots of things that we do in the oil and gas industry that can be automated. For example, the interpretation of seismic data or the interpretation of well logs or petrophysical cores.
There are also opportunities for us to better leverage the data that’s being created by the second, by the minute, and in some cases by the millisecond and use it to help us with things at the surface involved with predictive and preventative maintenance on all of the rotating equipment that helps to deliver energy to the world.
Investor: Are some data sets more valuable than others, and how is the value of the data determined?
Willis: It depends on the company in terms of how they see the value of the data. But I would suggest that until we understand the composition of that 95% of the data that’s not being used, most of that data, I would assert, is quite valuable and can be insightful and should be considered in driving decision-making inside of companies.
I can’t say that some data is more valuable than others, but I do believe that we have an obligation as an industry to make sure that we’re ingesting and digesting as much of the data as possible.
Investor: The industry is known for being highly secretive, so how can the industry become more open with its data while also maintaining its competitiveness?
Willis: One of our scientists in our Google Brain organization has a very interesting quote that I like to share. He talks about the fact that it’s not the company with the best algorithm that will win, but it’s the company with the most data that will ultimately win. So, I think that there is something really important around seeing data as a competitive advantage. And, if you really believe that data is a competitive advantage, then I think we have to push ourselves as an industry to get beyond the 5% utilization point for the data.
The second point I would make is that it’s not good enough just to have data if you’re not using it. The history of the industry is to be very protective of data but, I think, the opportunity of the industry is to make sure it’s absolutely being used to its fullest potential in all of its decision-making.
The companies that will ultimately win will be those companies that integrate, that share best practices internally and across the industry, that figure out how to leverage more data, figure out how to do that faster and figure out how to get new insights even faster. Those will be the companies that ultimately win in this new world. It won’t be big versus small; it’s going to be fast vs. slow.
There was a time in the industry when the biggest company was able to dominate but, going forward, it is going to be the fastest and most innovative companies that dominate. Open will be more advantageous than closed when you think about being competitive and learning from each other.
Investor: What is Google Cloud’s role in the digital transformation?
Willis: Innovation is to Google what safety is to most oil and gas companies. And I say that having spent almost three decades inside of an oil and gas company. But innovation is in the DNA of Google. It is cultural, just like safety is cultural for the industry.
There’s a huge opportunity for Google to bring all of the capability and expertise that it’s built up in data analytics and artificial intelligence and high-performance computing, to take all of that capability and innovation that’s been cultivated in this company over the last two decades and figure out how to intersect that with an industry that has been incredibly successful over the last hundred-plus years.
One of the things we say at Google is that we believe in the democratization of artificial intelligence to ensure fast, accurate and useful access and insights, and I believe that as we continue on this mission to democratize artificial intelligence, the energy industry is fertile ground. So many things in the industry are still done, to some extent, in a manual or semi-manual way.
When I sat on the other side of the fence inside the industry it was very difficult to drive change. Sometimes it felt like it was never going to happen. But I think it will happen because the industry is starting to think hard and trying to evolve.
At Google, we have a healthy disrespect for the impossible. And although it feels slow, although it seems difficult, I believe because of the courage of Google and the Google Cloud that we are willing to partner with the industry and to work through some of the toughest and hardest of problems to help deliver and to operationalize this digital transformation.
Investor: What advice do you have for companies that are at the beginning of their digital transformation journey?
Willis: First is to start—just to get into action. It’s essential not to over analyze whether or not this is a necessary step. It is a necessary step, so step one is to get into action.
The second step is to keep the agenda as simple as possible. My observation has been either companies are afraid to get into action or they’re trying to get into too many actions. Pick a small area to start and get some traction. Don’t try to boil the ocean and do too many things.
The third thing is that it’s important that you have success. When a company has success, it’s important to figure out how to scale that success throughout the company.
The last thing is that companies should realize that this digital journey is as much about culture as it is about data. Not only is it a digital transformation, it is a cultural and behavioral transformation as well. To be successful on this journey, there has to be some cultural component so that there’s traction when you have success. Ultimately, the mindset of a company has to open in terms of how we use data, how we digest it, and how we leverage it.
Investor: What role can experienced employees play in the development of digital systems in this digital transformation?
Willis: There’s a huge opportunity to get to decision points faster using things like machine learning and artificial intelligence more broadly. That said, I still believe that judgment is going to be required when it comes to things like ranking portfolios and making decisions around which opportunities to drill in the Permian Basin, or in the Gulf of Mexico and deepwater Angola. So there’s going be an incredible amount of judgment that’s required to make sure that after we build our inventory of opportunities that we’re picking the very best ones to invest in.
And that, to me, is where we will always need the expertise and experience of those industry veterans who have seen and drilled wells all across the U.S. or around the world, to make sure that [we’re] making the very best decision to deploy capital against the very best opportunity.
So I see the Google Clouds of the world helping companies get to a portfolio ranking faster using more data, but then the industry would have to bring their best scientists to the table to make the choices around what to invest in. Machine learning and artificial intelligence have a big role to play in accelerating the time it takes to go from seismic lines and logs and petrophysical cores to when we can actually start to make decisions around investments.
Investor: Just how far along do you see the industry in five years on this journey?
Willis: The last five years has been relatively slow. We’ve gone from one to 5% utilization of data. I do believe, over the next five years, it’ll be variable. My sense is that some of the medium and smaller companies will probably start to use a lot more of their data. My hope is that some of the larger companies will be fast followers as well.
But in the next five years, we have got to be pushing somewhere between 50% and 100% utilization of the data that we have at our disposal. So I’m expecting to see an exponential growth in the utilization of data over the next five years. And I do believe that companies that ultimately use their data will be those that win, and companies that don’t use their data will lose.
Jennifer Presley can be reached at firstname.lastname@example.org.