How One Industry is Adapting to Change

Posted by Dominic Carr
Director, Microsoft News Center.

James Burkhard
Managing Director, CERA Global Oil Group.

Craig Hodges
General Manager, Manufacturing & Resources, Microsoft.

Dominic Carr writes: Many industries are facing dramatic and accelerating change, whether because of new competition, changed stakeholder expectations or new technology. Many industries are also adapting to the expectations of the digital generation entering the workforce.  One industry facing such change is the oil and gas industry.  As Microsoft hosts the Global Energy Forum in Houston today we thought it would be interesting to share some perspectives on how the industry is using technology to adapt.  James Burkhard from the CERA Global Oil Group sets out the challenges the industry faces, and Microsoft’s Craig Hodges offers his perspective on some of the ways technology is helping.

James Burkhard writes: The oil market is no place for the faint of heart. It’s volatile and fast-moving, its twists and turns dictated by global politics, economic upheavals, government policies, technological game-changers, and the costs of labor and finance.  With all those in play, it’s not surprising that the past several years have seen wild swings in both the oil and natural gas markets. That will big topic of discussion at today’s Microsoft Global Energy Forum in Houston.

Take the oil market. Since mid-2008, we have seen oil prices soar to near $150 per barrel, plummet to around $30 and then rise to the around $80 per barrel. In the natural gas market, cracking the code to the economical production of unconventional gas sources – such as using high-pressure water to crack shale and release trapped natural gas – have lifted expectations of future North American domestic supply and lowered price forecasts.

The volatility in the global energy market makes it difficult to understand what’s around the corner. On the demand side, for instance,  the United States and other developed markets are beginning to  rein in demand for oil  —a remarkable achievement. But at the same time China, India and other emerging markets could require vastly more energy. 

Then there is the supply question. We’ve lived for years with estimates about whether we have hit “peak oil” – the point at which total production can only decline. But the oil industry has a history of pushing back technological frontiers—the success of finding and development fields in deep ocean water is but one example. Moreover, political change often has influenced global oil supply trends, both up and down.  Those two forces will continue to shape oil supply.

Other variables range from shifts in environmental policy on greenhouse gas emissions to the adoption of electric cars. With all that, it’s not surprising that the oil and gas industry constantly challenges conventional wisdom and pre-conceived notions of the future.

Craig Hodges writes: James is right – today’s energy market is a difficult one to manage. But information technology can help. I’ve just seen a Microsoft-Accenture survey of 275 industry professionals, in which more than three-quarters of all oil and gas employees say they need to collaborate effectively with peers to get their jobs done. Nearly as many believe that tools such as unified communications and social media can make it easier to collaborate, giving them more time to focus on business needs and boosting productivity.

At Microsoft, we’re working to create technologies that help oil and gas employees work more productively and make the connections they need. One great example can be found at Chesapeake Energy. They use an application built on Microsoft Office SharePoint Server 2007 that knits together the company’s intranet, extranet and Internet sites.  That has streamlined collaboration so that employees can work together more easily. And they also benefit from simpler data analysis and more consistent communications.

Shell and Conoco Phillips are two other companies that see a need for more collaboration and knowledge sharing, and are deploying social media tools such as intranet-based discussion forums and alternative messaging (IM, for instance), to be more agile and responsive. (You can read more here). In the years to come, we think our approach to “many screens and the cloud” will pay big dividends for the energy industry. Offering enterprises the ability to quickly and easily scale their computing needs – and make the power available to workers around the globe – will help companies speed oilfield deployment, reduce costs and operating expenses, and help business move as fast as the market.

In other areas, mobile applications, new graphics tools that help energy employees visualize geophysical processes, and better access to information all will help the energy industry meet society’s needs.  IT innovations such as high performance computing remove barriers and enable oil and gas companies to overcome hurdles to finding and producing new reserves.  Plus, Microsoft’s partner ecosystem with expertise in oil and gas means that energy companies can benefit from tools tailored to fit their exact needs.