CERAWeek Panel: How Will Technology Disrupt the Upstream Oil Business?

 

In this session, David Hicks, Senior Vice President at IHS Markit moderated a panel of industry and technology experts to answer the question, “How will technology disrupt the oil business?” Hear from Greg Leveille, Chief Technology Officer of ConocoPhillips, Babur Ozden, the Founder and CEO of Maana; Antonio Pietri, President and Chief Operating Officer of Aspen Technology; and Peter Terwiesch, President of Industrial Automation at ABB as they discuss the changes in the overall oil and gas industry resulting from the adoption of new technologies.

Each panelist brings a unique perspective and focus to this topic, making for a great discussion!

  • Find out how AI is disrupting the business of oil & gas operators
  • Learn about industry best practices in using AI
  • Hear what successful digitization in upstream looks like for operators.

Panelists also discuss three key things organizations should do to succeed in digitization and who should own them to ensure success.

 

Transcript:

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

We’ll kick this off. Welcome! Thanks everybody for joining us for yet another technology session here at CERA Week. I think it’s pretty clear that the key theme here is technology and how it’s impacting everyone’s businesses, the industry and maybe the world in general. We are looking today particularly at disruptors within the oil and gas industry and because that was such a broad topic we’re going to lean this a little bit more towards the upstream industry. I’m really thrilled to have the panel I’ve got here today. A lot of expertise, we’ll kick it off, but let me introduce Peter Terwiesch from ABB, Antonio Pietri from Aspen Technology, Babur Ozden founder and CEO of Maana software and then Greg Lebel the chief technology officer of ConocoPhillips a large independent oil and gas producer. Welcome everybody. Thanks for joining us. Thank you. We’re going to kick this off now with Peter. Who’s going to take us through his view from the ABB side of things on the state of the industry technologies and disruptors. Have at it?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

Thank you David! I picked some slides just to add some color to our topic. We’ll flip through them pretty fast to give you a view on how we at ABB see technology shaping the future of oil and gas as an industry. (One of the things I’ve tried in preparation was to crystallize out of the many customer discussions I’ve had in recent months to find out what is there?) I think two themes (that come back all the time and have also come back in many of the discussions here at CERA Week) are basically about the Energy Revolution on one side and the forced Industrial Revolution on the other side. Both of which are, of course, highly relevant to the future of the industry. (Then I basically looked at rather than making that subjective by looking into available surveys.) I did find some surveys (I was personally quite surprised in this.) DNV and Goldman Sachs surveys show the percentages for these trends (that you see on the chart) in terms of digitalization as a key aspect for the fourth Industrial Revolution and energy as a part of the Energy Revolution (the percentages) were higher, but that’s the data I could find (in available surveys.) Certainly sustaining the cost reduction and efforts to increase in productivity. Increase trends beyond the time when there was just pressure from the oil price is also something that came up. One reason why the survey percentages came out relatively low on these topics (which were the most frequent and certainly in my conversations have come up very strongly) is maybe that as an industry the oil and gas industry is still sitting relatively low on the digitalization s-curve. If you look, compared to some of the other industries that were the first wave digitalization, may offer an explanation. If that’s true, we would see two or three years down the road much higher percentages. On the slide I was showing earlier and in terms of being concrete, I think there’s digitalization with two very different value propositions, (in terms of) what you can get out of it during the plan and the build stage. It’s basically all about cost schedule and risk performance, whereas, during the operations stage it’s really about safety, productivity, energy, the efficiency contributions. (in terms of just as a sketch) What we’re doing in this space is we’ve evolved. I think that’s quite typical of the industry. We all started out with condition monitoring remote connections. Then have basically built an increasing portfolio of digitization solutions around this. From predictive maintenance through to data analytics, plant optimization and then obviously underpin with an offering in cyber. If you want to lean more strongly on digitalization, cybersecurity is of course a key aspect of that. Just to add some color, as I said, here’s a couple of examples that is not just technology waiting for deployment, but it’s technology that is currently being deployed at different paces in different industries. For us at ABB we serve the marine industry where you have a crew on a pretty remote asset, the vessel, leaned into this very early and very strongly we already have 700 marine vessels under contract. Certainly a much smaller number of oil and gas installations also growing, but not from the same level you see. Some examples here and from my perspective conceptually, this is about the journey. If you look at the left hand side from what was originally isolated operations through connected, (I think you got connected pretty much everywhere today) but to collaborative working across organization and geographical boundaries to ultimately more autonomous operations. Basically by means of building a cyber-physical stack you still have the physical building blocks, but you add layers over layers of increasing sophistication from a digitalization point of view. That also then in terms of outcomes which you see on the right hand side get you to increasing levels of optimization maybe (to show some pictures) I think what this does for you is in the onshore context basically help save significant maintenance time and make operations safer, but also add flexibility. This drawn PC is actually real. This is a drone flying around with a gas analyzer looking for leakage and it’s a sophisticated analyzer that can actually pick up the differences between biogas from a local farm versus emissions that come out of a leak in a pipeline. Obviously a lot of topics still to be sorted out. In terms of the range of the drones, the FAA topics here (I don’t go into the details of it), but that’s one of the things that sort of data overlaid with digital maps opens up. Sort of one type of autonomy. When I was talking about collaborative up to autonomy. (then maybe just as a last picture here also) If you look at the offshore world the continued demanding of platforms and then the question of if we’re demanding the offshore more how much can we actually go put on the seabed? We do some intensive efforts here and in combining this. Basically now we’re getting very close to putting a hundred megawatts, 600 kilometers away, 3,000 meters deep into the water. I see these are some of the trends towards autonomous operations digitalization together with further development of the primary equipment. That would be leading to writing the future together. I don’t think any of us here has all the answers, but together it’s really rich in opportunity at the crossroads of the Energy Revolution and the Fourth Industrial Revolution.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

good I like the slides I like the color.  Peter question though (the what just the color content so we’re gonna have to wine this into a much more serious panel all right) just one question on that so a lot of Technology a lot of great stuff coming along but is this just the evolution you would expect in terms of the technology evolution or do you see any kind of things moving faster for you?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

I mean ABB has been in this space for a long time I think the the speed varies by industry and geography we generally see faster uptake in Asia compared to Europe or Americas in all honesty sort of more willingness to actually experiment and rapidly deployed digital technologies and and then also by industry understandably some industries are more conservative than others so we also see differences there

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah. Antonio.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

I’ll make a statement. To us it’s interesting that there’s all this buzz about technology in the oil and gas industries and really in the process industry such as refining and chemicals. The fact is that digitalization, it’s been happening, in these industries for the last 30-40 years. In the 70’s, 80”s, into the 90’s most of you upgraded your asset to digital systems. These are assets there are complex to operate they’re dangerous to operate, so digitalization add a tremendous value. That started to create a significant amount of data that’s been stored in the system’s real time data historians, but for little value the fact is that a lot of that data has been used for some trraining in some visualization and a little bit of KPIs. What it really did, it enabled a new generation of advanced solutions. A multivariable control, optimization ,scheduling and a host host online model in a simulation. What you’ve really seen in the process industry and the whole oil and gas industry is a wave of technology initiatives that have crashed into these industries. Starting with the modernization of assets. Then advanced solutions into the internet and leveraging the internet into mobility. Now we’re talking about digitalization which a lot of people frame it as machine learning, analytics, a drones, and autonomous vehicles, but what you really see though is it’s a constant effort by the oil and gas industry the processing industries to maximize profitability to drive operational excellence. What I would argue is that all these technology initiatives happen under the umbrella of operational excellence. Operational excellence is not only supported by technology because what we see and (I think it’s been corroborated by a recent survey by the Boston Consulting Group in 2017 of chemical companies) in every region where they mapped the performance of chemical producers there was a classic s-curve. The bottom performers and the top performers. The difference between the top performance and the bottom performance across each region was really technology absorption which was supported by organizational excellence. We can talk all we want about technology, but unless you have the domain expertise and the organizational excellence. It all for not. We would argue that digitalization is about operational excellence. The next wave of technologies that will drive operational excellence in the process industries. It’s about data and that data is all in your systems. It’s now about the analytics that are enabled by a convergence of technologies. The cloud high-performance computing is about domain expertise, process expertise and really the organization because not only do you have to have the organization to support the implementation of these technologies, but also to sustain the value capture because at the end of the day it’s all about value and profitability. That’s been the focus of I believe the industries over the last 35-37 years and that’s what we continue to see.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah. Interesting. I want to jump down to Craig and come back to you Babur.

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

They always do that to me.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Well he was last to the panel, so they’re sort of and you know punishment. It’s got to be dolled out here. Greg you’re a consumer of this right? You’re the EMP operation space a little bit different big organization. You’re the chief technology officer. What’s disruptive for you? What’s happening?

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

Building on the comments that came before mine. I think what is really different this time is we have two very dramatic revolutions going on in our industry at the same time. Over the last two days you’ve heard a lot about unconventional reservoirs and the surge in production in the US. Of course. you’ve heard about digitalization and data analytics. Either one of those by themselves I think would have created an enormous disruption in the oil and gas industry, but the two together really have changed the fundamental fabric of what it is we are about. In the last few years, ConocoPhillips has been able to cut our cost of supply by more than half. Basically taking the cost of manufacturing a molecule of oil or gas and dramatically dropping that down. We see technology really as the tool which is going allow us to keep going further. You’ve probably heard a lot of numbers in the two days here, but let me share a couple with you which might really startle you. If you think about the unconventional reservoir side of the industry. Today, the US is producing around 25 million barrels of oil equivalent per day. It would be producing half that amount if not for unconventional reservoirs’ 25 million barrels of oil equivalent per day. It’s about 5 million barrels Orlick alone today more than Russia. It’s almost double Saudi Arabia and all the other countries in the world are either a third or less of the US production. Huge surge in production, but perhaps more dramatically. If you look at the resource volumes in the entire history of the United States oil and gas industry we’ve produced around four hundred and fifty billion barrels of oil equivalent. That’s out about two thousand or so produced on the entire planet. If you look at credible resource estimates for unconventionals, it’s somewhere between three hundred and fifty billion barrels of oil equivalent and seven hundred billion barrels of oil equivalent. You’re talking about a resource has been found in the last 12 years which may replace all the oil and gas ever produced on the planet. An incredible change there. Then when you start talking about digital and data analytics what we’ve been able to do just in the last few years with taking those tools and applying them in almost every part of our business Drilling completions, subsurface, facilities, business. We’ve been able to take drilling curbs and our drilling times go for numbers which we thought were near the technical limit and cut them in half. We don’t see that trend stopping. Many people have asked where are we in the unconventional reservoir revolution? In the data analytics revolution? Unconventionals we in the north america were clearly not more than halfway through the learning about these reservoirs with the advancements of the technologies with digital and data analytics. I think Peter, like you showed our industry still just starting to grasp the capabilities that exist in that space. We perceive we’re gonna be able to cut our costs to supply further. It’s really gonna be enabled by a lot of these technology advancements that we’ve seen to date, but haven’t fully exploited yet.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Great. Babur you live heavily in the artificial intelligence space. Is it different from a disruption standpoint about what’s going on there is there anything unique about AI?

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

Yes. Before that I would like to give an example to set the stage for what we think digital should look like. For example in the year 2014, when a shopper walks into a Target, the physical store, and by the time they checked out. Target’s computers could run up to 200 decision models against that transaction. The same year, when a shopper went onto Amazon.com and by the time they checked out. Amazon would run 6,000 models against that transaction. We use the word digital and analytics side-by-side because they go along. Digital has cultural dimensions as well, but analytics is a function of models. The more models you can generate the more analytical you are. The more analytical you are you divide your digital gap. The word we borrowed from the digital world, the pure digital companies, we have a significant digital divide as traditional operators. The goal is that of course there is no need to be like Amazon for an oil and gas company, but if you take the highest oil and gas company’s monthly decision model generation is about four hundred a month. Amazon generates eleven thousand decision models every month. If we compare those numbers when we build digital organizations, digital structures and digital cultures. It is this ability at which to use your data in a very unique way to be able to generate analytics in mass scale. In that respect AI is a significant help to companies who would like to be able to use all those models because they not could be generated by human beings. You can’t rely on a few hundred data scientists to generate that many models. AI comes in handy in that space. I see oil and gas companies starting really last year looking at that space like Amazon does or Google does.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah, yeah. Let’s talk a little bit about…I think Antonio you touched on it. We’ve had sort of business transformation and then we’re talking a lot about digital transformation. That has a lot of impacts in terms of what companies do it well, what don’t or what should you look for? I mean do you have some thoughts on the digital transformation and what that really takes?

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

Well let me look in in our experience you can tell the difference between those organizations that are not only very good at absorbing technology, but at aligning their organization to capture the value from that technology. That the skills capabilities to absorb the technology, but also to sustain it over time. In that context, I think this digital transformation takes on for us two variances. One artificial intelligence machine learning that you can now apply to Big Data and all the data that been generated over so many years. To derive much deeper insight about what’s going on in your asset, the ability to predict when a piece of equipment is going to break down, the ability to predict process equipment degradation as a result of how you are running your operations. These are inside were not able to be derived in the past. There’s huge value and even greater value to be generated from the last 30 years. Now what we’re also seeing though talking about Amazon is that there are some companies out there that are pushing the boundaries. Instead of running an optimization scenario and looking at three scenarios because of the capabilities of human to two in real time to make decisions. They want to run a thousand scenarios up in the cloud of course the issue with that is well if you are a thousand scenarios if you’re a hard time deciding between three what’s going to be the challenge when you’re looking at a thousand. Well that has to be augmented by machine learn lyrics artificial intelligence because if you’re really gonna then take advantage of this capability to run much much bigger numbers and areas. Do them better and commend the capabilities of that worker, that engineer, that expert to understand what the data is saying. It’s a combination of many variables here that have to be taken into account.That will separate the winners from the losers going forward because the absorption of technology is only accelerating. That’s something that we’ve noticed over the last 35 years. The road to getting companies to implement multi-verbal control was a long process. I’ve been surprised at how quickly companies are getting ready to test and pilot machine learning applications to predict when their equipment is going to break down. That only says that the acceleration of implementation of technology is just getting much faster now.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

yeah yeah they are how about from the ABB standpoint on this transformation?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

I mean we’re obviously experiencing it in a number of industries. I think what the history of innovation teaches us generically is that innovation very much happens most profoundly at interfaces between disciplines. I think that’s what happening here as well you’ve got the domain competence which is absolutely needed of someone who understands how to actually get the most out of a reservoir, how production is kept reliable. You combine that with an algorithmic side that previously was a discipline that was relatively far away from it. If you forget about seismic in the exploration phase. Suddenly you’ve got two disciplines starting to learn about each other.  Starting to understand each other’s potential and of course you’ve got quote unquote Moore’s law as a catalyst to the whole thing and you get a reaction. I think that’s exactly what we’re experiencing right now. That’s what makes me optimistic about how much further this s-curve is going to get us.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah yeah well you mentioned seismic. Greg I got to ask you there’s a lot of traditional technologies that you don’t seem to talk about quite as any more like seismic and things? How do you look at the bounce? You’re looking over all of this in your world.

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

We’re progressing both traditional technology program and our digital and data analytics programs, but a little bit like what Peter was saying it’s the confluence of those two. We’ve got some technologies for example where we are trying to optimize drilling and really trying to get to an automated drilling type approach. What you’re doing there is you’re gathering data from the the drill rig and using that data to predict how you could optimize the drilling operations real time. You’re bringing together the drilling engineering expertise with you know expertise in data science. You know frankly we’re going to see automated drilling on mass in the oil and gas industries long before you see automated driving on the roads. I mean that is going to be a reality here in just a few years time. We were seeing it almost impacting every part of our industry David. If you look at what we’re trying to do, we’re trying to get our reservoir engineers, completion engineers, drilling engineers, geoscientists, business people up to a fairly high level as far as being able to use data analytics themselves. I think of this a little bit like the computer revolution in the 80’s. Basically when I started work there was no computer in my office. Today if there was no computer in your office, no one could get any work done. Right? I think data analytics is really going to be that type of tool. Some of you may have seen the movie “Hidden Figures” recently. It’s about a group of women at NASA who were computers. They were good at math and that’s what they did. That’s the type of thing that’s happening. I mean basically almost everyone in our industry is going to have to learn how to work with data. Some will be using very advanced tools like Babur’s talking about. Just like today, some people are using supercomputers, but everyone will be using some type of analytics.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

yeah

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

I just want to enhance that point because I think it’s a it’s a very good one. If you graduated with an engineering degree in the 80’s computers were starting to happen in universities. Over time it almost became a requirement for engineers to know how to program and do software programming. I believe that over the next 5, 10, 15 years there will be a requirement for engineers to come out knowing about analytics and data science. It will permeate the industry and will be a basic skill that will be required.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Do we need data scientist specifically now, or is it an education a little bit like you’re talking about Greg. Can we grow people that aren’t data scientists today? The workforce issue is kind of an interesting one with this technology coming on as fast as it is.

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

If I could just jump in on that, I mean we have 4,000 people out of 11,000 people in our workforce now who are competent in Spotfire and Statistica are very basic tools in the analytics space. We have a number of data scientists. Now we’re trying to build basically what we’re calling citizen data scientists in between. These people who have degrees in the traditional petro-technical functions, but we’re now immersing them in some of the more advanced data analytics. We offered a training course recently and we had 25 slots. I think we had four or five times the number of people raise their hand saying I want to do that. The younger people, the new generations coming into our industry realize this is going to be a big part of the future. I think we will have a lot of people trained up.

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

I think the need for data science and data scientist will dissipate and disappear. The reason that I believe they exist today. The data that’s generated by the transactional systems have never had in the first intent to be used in this fashion. This is a transitional period. This is an unorthodox thinking, but you once you shape the data, clean the data that’s it. That data source is done for good. It’s a transitional job description maybe a couple of decades and then will be gone.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

I just want to support by Baburs point because I do agree that data scientists will be required, but it will be up to technology companies to hide the data science in the the technology, in the products. May put it in the background so that your everyday engineer can use a product like any other product and any other technology today. We’re already doing that with some of our machine learning applications. To me two weeks ago in Europe, the best reaction I had from a customer was when he said “we don’t need a data scientist to run this application”. Over time systems will get so good that analytics and machinery will be hidden in the background. You just have an interface to get to drive.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Peter ?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

Yeah. My take on that is I think was machine learning and artificial intelligence. We’re getting some great new tools in the toolbox. At the same time the physics won’t go away. There’s some laws of physics that we studied hard to understand. I think combining the best of those two was for the individual problem you’re trying to solve it’s gonna remain absolutely essential. That’s where I think a data scientist who doesn’t also know what’s there in terms of the physics, the geophysics of the reservoir, the thermodynamics of the processes we’re running. You need to combine the best of both worlds otherwise you stop optimizing. I think they were back to this innovation happening and interfaces. We need the kind of t-shaped profiles where people have depth in something, but they also have the capability to reach across to their neighboring disciplines to get the best overall solution in the team.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah Yeah. Is there because we’re going through this progression, is there something that we’re not seeing? Is there something that’s gonna surprise us? Is there something that your worried about Babur? That you see out there at all in terms of how the technology is progressing?

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

My single biggest worry as a CEO of a startup company is the adoption curve. The pace of it because my livelihood and my company’s livelihood depends on that. Assuming that this is not the excitement among early adopters and there’s not a huge gap from there to mainstream adapters. Where we’re focused as we grow our business to understand have really big this digitization wave. Have commonplace it could be made by tools like Antonio was mentioning because if as long as analytics are embedded in the applications. If we have not stopped talking about data quality issues we’re not there yet. The day we stop talking about the quality of data is the day we’re actually starting the first full year of digitization in an industry. That’s my worry abou what’s that gap?

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah yeah. Data still remains a big piece of this thing.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

Yeah. I just think that each of our organizations has to understand what is the opportunity? You have to start with the opportunity. Then from there decide what is required to catch that opportunity. I’ll give you an example. You can implement a multi-variable controller on a fluid catalytic cracker in a refinery. That’s maybe three to four million dollars per year, but if a compressor in the flue catalytic cracker fails and shuts down that cracker. A major disruption in a refinery that’s probably tens of millions of dollars and wipes out the value from that APC application in a moment’s time. The value creation from greater insights to understand that compressor is going to fail in 30 or 50 days is by far greater than some of the technologies that we’ll be implementing. We’re of the opinion that in a way the last 30 years of technology adoption has been about setting the foundation. It is the next 30 years we’ll truly deliver the great value for all of our companies because now we have the data, we have the processes, and the cloud high-performance computing. It’s going to enable some incredible things. Not to talk about quantum computing which would flip it all on its head and just it created this world.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah yeah. Let’s come back a little bit to that workforce because in some of the conversations we had with this change. There is a certain amount of concern maybe opportunity, but Peter are people going to lose their jobs because of machine learning, artificial intelligence and the new technologies that are coming along?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

I think it’s a question we’ve seen in other industries. When we look back at for instance, when we started introducing robots in the automotive industry. A lot of people had the initial perception that will actually wipe out a lot of jobs and people who will get unemployed. If you look at the data for industrialized countries today. Countries that have a high robot density like Korea, Germany, Japan. These are countries that actually have some of the lowest unemployment rates. If you even talk with unionized workforce in these countries, they will actually tell you we’re so happy about the robots because they do the dull and dirty kind of work. I think yes the automation of knowledge work which machine learning and artificial intelligence is all about. It’s different in nature, but I think there will always be a next level. Where actually humans will have a role to play. I think yes there will be disruption. There will be jobs lost. They won’t reappear in the exact same space, but there will also be a need for us and our children our workforces to learn in totally different ways which by itself as an industry. If you think of learning as an industry, after the speed of technology, innovation and deployment, as Antonio was referring to, as changing to more and more rapid. You also need completely different learning models. You’re not done when you spend four or five years in a university. That prepares you for the rest of your career. Basically you work and every wave of technology deployment needs to find its way into our skill base. A people’s skill base basically is an example, generates new opportunities as well. I’m an optimist there. I think the history has shown that previous industrial revolutions have destroyed jobs on a massive scale, but also if you look to the West. They’ve created for humankind and for nation-states and corporate enterprises. I think we have good reason to be optimistic

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

Yeah education will be a key to all of these though because it’s a highly educated workforce that will be able to keep up with the advancement of technology. That you don’t fall behind in the skills that are required for the new economy.

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

If you for example take IBM 1960’s and now they employ same amount of people three times the revenues today than it was in 60’s. The jobs not gone, but the types of John jobs are probably a very different that what you did for IBM in 1960’s and what you do today. It’s inevitable, but I guess the impact of oil price to a job creation is far more important than AI.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Perfect segue. Mr. Leveille, How is all this affected by the price of oil dropping down to fifteen heaven forbid or leaping up to 120?

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

Well I think the oil and gas prices falling side, it has been interesting that over the last few years you probably have seen accelerated innovation as result for the drop in oil and gas prices. As a Chief Technology Officer actually really high gas prices are not a good time to try an change technology.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Gregg I think we lost your luster. Gregg great you know. I think I could hear what you’re saying was fascinating. I’m just worried that the audience maybe can’t. Oh well I’ll just you project some of the collaboration we’ve been discussing.

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

We’re gonna improvise with technology. What I was saying is when gas prices are high it’s actually a harder time to innovate a harder time to push technology advancements through the system. Frankly low prices is a period in which industry tends to respond. The response has been extraordinary. I do think you know within our company and many companies there’s a belief that when you’re looking at the revolutions that play in the industry. That we need to keep improving prices of $60 a barrel are very helpful, but you know we don’t know where prices are gonna go. They may go up, they may go down. One thing we do know If we improve our businesses we’re gonna be able to be profitable regardless of price. That’s really what we’re concentrating on. Frankly we’ll see how it plays out, but continuing to improve is a big big part of our focus.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

I mean everyone’s lived through the last three years with deep concern about oil. I think that is a celebrating uptick of technology which not only in oil production or exploration, but across the process industries. The competitive pressures that drive to greater profitability. It’s acellerating technology uptake.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah yeah. What about challenges from each your perspectives? Let’s just run down the line and start with you Peter. With all that’s going on, what are the challenges either for ABB or for a customer of ABB in terms of making this transition?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

I think one of the interesting questions is was digitalization. As what kind of perceptions that you have from the consumer IT space actually travel over to the the business and an industry IT space. One that I encounter a lot and I have a firm view on, is basically the question of digitalization platforms. Is there the equivalent of the Android versus iOS in digitalization platforms or does that concept actually not travel so well because in industry you don’t want to be held hostage to somebody’s proprietary platform? You want to own your data. You’re going to preserve the optionality of also moving platform because the values in your data rather than in the platform proper. From that point of view and my view also looking at the industry we have here. If you look at the introduction of digital field buses in the various industries including gas and chemical industries. We as an industry. You as the end-user customers. Us as suppliers. We invested in these technologies, but basically the kind of platform fights and lack of open standards cost the industry 15 to 20 years in terms of technology development. Then very delayed uptake. I think that should be a reminder for us to actually drive towards open standards and an ability to move your data around freely. Have a clear conversation about who owns what data, as opposed to click here to accept terms and conditions. I think that whole environment is something that’s close to my heart.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Do you feel optimistic in a general sense about openness?

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

Yeah. I think the conversations are going in a good direction, but that also means we will have to find the right balance between where we innovate? Where do we actually standardize? For the sake of really evolving this to something that’s most useful to all. In that only is what creates the uptake at the end of the day.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Antonio ?

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

Yeah. I think there are two points and the second one will build upon Peters. The first point that we see is every time we get a customer to talk about our machine learning solutions. There replies, “well 20 companies have come through and they’re all saying the same thing”. I think initially there is a real challenge for those of you trying to make technology decisions to discern in the market place between all these companies that are pitching machine learning artificial intelligence because there’s nothing proprietary about these algorithms. The barriers to entry into the these spaces are very low. I think that will present a challenge for a lot of companies discerning between the array of companies pitching. In the last conference that I attended. I was sitting there with Peter as well. They stated that there’s 854 AI analytics machine learning companies in the United States today. Think about that. The array of optionality and no doubt that in five years it’ll be a much smaller set of companies. Then the second point to build on what Peter said. I think no doubt that all these technologies present disruption. Not only the opportunity of disruption in your organization’s, but also for the solution providers. It can also be very disruptive to our own models, business models, technology models, open platforms or not. Do these technologies disrupt or enhance technologies that have been deployed over the last thirty years and create more value? There’s multiple dimensions to these. To this moment that you’re gonna have to be very crafty in managing them.

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

I’ll skip to him .

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

Okay. You know someone I think about challenges one is probably the fractionated landscape in the EMP industry. If you think about exploration and production companies there’s literally hundreds of thousands of them around the planet. ConocoPhillips is a big one we’ve got a lot of data, but when you’re talking about data and data analytics. Having more data is far better place to make decisions from.  Will the industry come together and share data? What types of data will be shared? We had a conference or there was a forum on Monday amongst the CTOs and one area for example that was discussed was safety. I mean why can’t safety data be shared more easily across the industry, environmental type data. Then where are the boundaries? I think it’s a great opportunity out here for companies to start thinking about pooling data? Getting far more leverage than just looking at their own data sets, but much of the structure as to how you do that doesn’t exist today.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

That’s evolved for you in your career in terms of sharing are you seeing more of?

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

I don’t think it’s evolved that far David. I think there’s loads of room in that space. Tthat might be a next big opportunity as companies begin to get to the point where they say okay I’ve done what I can with my data and my workforce. What other things can we do? It’d be looking at the industry and in a bigger perspective?

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Yeah yeah. You’re gonna abstain from that question Babur?

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

Well if I’m sitting here among these big companies meaning that those challenges are kind of easy to surpass.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

He’s a disrupter.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Walking disrupter.

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

Definitely it is it is a green field for everyone. Even the startups in it. Innovators in it. We’re learning this together.  I would not be wanting to be in the shoe any of you as us pitching you all. As you said there are hundreds of companies using same slogan same buzzwords. Our websites look the same. Our salespeople speak the same. For those it could be very consuming to look at that space, but again this is not much about vendors. This is about I believe what I see among my customers and investors, it’s about a determination. One way or another you want to move. You want to make it happen. You accept that there will be trials and errors whether it’s technology or organizationally, but you are determined to keep doing it.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

yeah great good we’ve got a few minutes left I think I’d open it up to the audience we have some mics coming around but if anyone’s got a question for the panel that you guys on the hot spot

AUDIENCE #1 – Question #1

Just a quick question in my own career I I didn’t study statistics in my formal education and and then later in life when applying statistics the typical problems I often got accused of knowing dangerously too much and miss applying statistics to certain problems. We probably all share that. That coupled with the fact that there’s eight hundred fifty four forms firms out there offering up data science, but often in a complete lack of the business problem or the business space or the domain knowledge that we talk about, Kind of creating solutions in an unconstrained manner you know. What’s the danger here of rampantly miss applying data science to our our business space?

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

Yeah maybe I’ll grab that one to start with. I think that does raise the issue around getting your subject matter experts involved. Data scientist by themselves. There’s a lot of good things they could do, but you really do need people with expertise involved in the problem. Iconical fellows what we’ve done is really try to pair up our business units or Petro-technical employees with our IT side of the business. We’ve been very purposeful in that. We think that’s a very powerful combination. I think Peter you were talking about the collaboration. One of the things we’ve done is just tear down all the walls as far as what data goes into the integrated data or warehouses. It used to be each function had a place to store their data and no other function could get into one of the functions data stores. That’s all been broken down, but it is then getting the subject matter experts working with the people who have the analytics knowledge. I think either one by themselves you can end up with really big problems.

PANELIST – Peter Terwiesch (President, Industrial Automation | ABB Group)

If I can just quickly build on that. In system identification signal processing science there is this concept of data richness. If you train whatever algorithm on data that doesn’t contain what your system needs to learn, then basically the best algorithm will not do the trick. I think that’s where this pairing up is very important. There’s a science base for this. It’s very important that it is some part of your workforce also understands the science base.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

Yeah I mean that it is data. Its analytics and it’s domain expertise. I’ll give you a tip I was sitting on another panel last week. Investors panel there was a CEO of a company called Udacity. They claim they can train an engineer in six months on artificial intelligence. It’s intense training, but they claim they can do that. Their business models around that including autonomous technologies and vehicles and so on so you know your neighborhood in San Francisco.

PANELIST – Babur Ozden (Founder & CEO | Maana, Inc.)

You don’t know if they end up building artificial intelligence. We see the most important component in analytics is the domain expertise. In artificial intelligence if it’s an order of magnitude more important to be able to have that. It is another source of data sits in here, so to be able to tap into that.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Good. Great another question here.

AUDIENCE #2 – Question #2

Thank you gentlemen has been great presentation. Quick question for you all we’re talking a lot about data analytics the value that that’s providing to the business then in the value creation here. Do you envisage a world where data becomes a new asset class and treat it as such?

PANELIST – Gegory P. Leveille (Chief technology Officer | ConocoPhillips)

Yeah I think we’re we’re very rapidly coming to that point if we’re not already there. Yeah there’s gonna be some interesting conversations around who owns what data. A lot of that is yet to be decided, but you see certain companies who are providing services to operators being very explicit about their expectations.Their expectation that the customer owns the data. We would encourage those types of conversations to occur.

PANELIST – Antonio Pietri (President & CEO | Aspen Technology)

Yeah and I think comes down to the willingness of organization to share data internal, but also externally. You can build knowledge bases. Autonomous driving will rely a lot on data sharing as well as other applications. In the process industries  the performance of a compressor or a pump aggregating the data from thousands of compressor and pumps into a common database to be able to do better machine learning. Yeah that would be ideal.

INTERVIEWER – David Hicks (Senior Vice President, Upstream Energy | IHS Market)

Great. Thank you gentlemen. Thanks for questions. We’ve hit our time. It sounds like we are still early on the curves with all this technology.  We’re early on the curve, but what I also heard was if your organization is not getting up to speed you will be quickly left behind. Thanks everybody for the time. Thanks to all my panelists. I Really enjoyed it. Have a great week. Thank you.

 

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