Cloud Storage for E&P Data: Drivers and Benefits

Cloud computing for subsurface data is part of a shift in our industry the likes of which may have never been seen. The scope, speed, and consistency with which oil and gas companies are pursuing digital transformation and digitalization strategies – and declaring them as strategic for them – could completely rewrite what an oil and gas company looks like within the next 2 – 5 years. It’s a wild, fascinating, scary disruption, and it’s happening now.

Oil and gas companies historically have shown a tendency to keep as much as possible of what they do proprietary, and how they treated their own IT infrastructure was no exception. Almost everything was ‘inside the firewall,’ and access to that firewall was highly restricted. While over the preceding years, many companies transitioned at least some of their physical storage to 3^rd party providers, many of the largest companies still maintain their own physical storage facilities, showing a reluctance to let their data out of their direct control.  And until recently, it was almost unheard of for any digital data – other than archive – to be outside the firewall.

Cloud computing has changed only recently, but in a very big way. We are now seeing the largest oil and gas companies undergoing large digital transformation projects, and one of the drivers is to get their data in the cloud. One thing is clear: the E&P industry is starting to go to the cloud. It’s happening in a big way, and it’s happening now.

So what’s up? What’s behind this disruption? Let’s take a look at the drivers and benefits that are bringing companies to the cloud, and also what we are learning as they make the journey.

Cloud Storage – What’s driving E&P companies?

Multiple factors are converging to create the environment that we see today, but at the highest level, almost all drivers can be grouped as being either: a) focused on cost savings, or; b) focused on increased productivity. Having said that, let’s take a look at the key factors.

Expectations

Increasingly, oil and gas companies are under pressure to declare a digitalization, or cloud, strategy. This pressure can be either external (shareholder pressure) or internal (fear of being left behind). A recent Accenture digital trends survey identified that 40% of respondents worried about being left behind their peers if they didn’t invest more in digital strategies.  It may also have to do with the fact that the major cloud providers have identified the oil and gas industry as a key area for growth and are focusing business development activities there.

Cost

Storage of vast amounts of digital data, media, and documents is expensive. At the same time, storage has become a commodity. So not surprisingly, one of the big drivers towards the cloud is the opportunity to reduce storage and operating cost, as well as capex. Oil and gas companies are under continuous pressure to reduce cost and increase netbacks, and the cloud offers an enticing promise to enable this. ‘Headline’ pricing for storage on the cloud is extremely attractive, and the promise of significant reduction in the cost of ownership is drawing companies to the cloud.

Access to data

In the world of ‘big data,’ companies are looking at ways to take advantage of the vast amounts of data that they have acquired. Associated with this is the realization that data that is sitting in a warehouse is not really available. The idea of having all of your data available for access and analysis is a driver to the cloud.

Degrading media

This may not be a key driver in every region, but in some places there is a serious problem with degrading media. Stored subsurface data sits on media that is end of life, and if it is not preserved through digital transformation, it could be lost for good. Since digital transformation projects are a key driver in movement to the cloud, this indirectly becomes a driver to the cloud.

Cloud Storage – What are the benefits?

We’ve covered the reasons why companies are considering the cloud. Let’s now discuss the benefits they get when they go there.

Analytics, artificial intelligence and machine learning

As mentioned above, companies have spent billions of dollars acquiring data, and a vast majority of that data sits dormant, and unused. The cloud offers the promise of aggregating that data in a single (virtual) space where advanced analytics, artificial intelligence and machine learning algorithms can operate on it. This in turn offers the potential to use this analysis to – for example – shorten exploration and development cycles, reduce drilling risk, and identify predictive maintenance. ‘Illuminating your dark data’ is a compelling value proposition that is enticing to data holders.

Hardware evergreen, transfer of risk

IT infrastructure is a huge expense, and is fundamentally non-core to an oil and gas company. In an environment where the pressure is to reduce capex and its trailing influence on the bottom line, having to purchase, maintain, and then replace expensive infrastructure as it becomes obsolete is a pain point for producers. Pushing data to the cloud potentially eliminates the need to do that, as ‘evergreening’ hardware is part of the service providers’ offering.

XaaS

You don’t generate your own electricity, so why generate your own compute? That’s one of the themes behind ‘X’ as a solution. The ‘X’ can be software, platform, or compute, and they are all potentially available through a cloud provider. The idea here is that you only use – and pay for – your compute/applications/storage when you need it. When you don’t need it, you don’t pay for it. In addition, the cloud offers scalability – if you need to ramp up compute or storage rapidly and/or temporarily, you can also do that.

The promise of the cloud is real, and it’s disruptive. It’s not something that one should be either ‘for’ or ‘against.’ It’s also not going away. While this is true, it is also true that headline cloud storage costs don’t represent the entire picture. What is increasingly clear is that there is planning and thinking to do on the part of companies as they embark on this journey. We will cover some of the lessons our customers are learning on their digital transformation journeys in our next blog.

For additional information on cloud services for subsurface data management, contact Katalyst.