Using Technology for E&P Success – the Practices of the Leaders

The western Canadian petroleum exploration and production industry has evolved considerably since the oil price shock of 1986 and the gas price shock of 1990-92. Early adjustments focused on reducing G&A. The second, current phase has an operating emphasis. The primary goal is to meet shareholder objectives - whether those owners are public (stock market) or private (parent company). In evaluating how the industry is doing and how we measure success, Ziff Energy examines critical success factors (CSF) including the role of technology utilization.

We measure the performances of the companies in broadly defined E&P strategy areas in western Canada, comparing the leaders to the industry average in those trends. The leaders are those companies that more than replace production with reserves additions, at F&D costs lower than the value of the product found. All leader companies recognize effective use of technology as a CSF in achieving the low F&D costs and high reserves replacement ratios.

What technologies are critical to success in creating a real competitive advantage in the various oil and gas strategies? Through data questionnaires and personal interviews with the executives or managers of the leaders, we identify technology utilization practices in the various strategy areas, and correlate them with~F&D cost and reserves replacement benchmarking results.

Several patterns emerge. The leaders use only appropriate technologies, and know when not to use those that cost too much. They employ off the shelf technologies, rather than develop new ones themselves. Each of the leader companies provide an effective dissemination of technology in their organizations. The most successful companies require technology to help staff do the basics well, while demanding the application of some "art" in the process.

Our study identifies technologies that create a competitive advantage for the leaders in the various strategy areas. Our innovative graphical presentation clearly shows what the leaders do in each strategy area, compared with the rest of industry, and indicates which technologies help create their success.