{"id":32945,"date":"2018-11-13T17:42:39","date_gmt":"2018-11-13T22:42:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/"},"modified":"2018-11-13T17:42:39","modified_gmt":"2018-11-13T22:42:39","slug":"anadarko-big-oil-meets-big-data","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/","title":{"rendered":"Anadarko: Big Oil Meets Big Data"},"content":{"rendered":"

While often perceived as less innovative than its media-darling green-energy competition, Big Oil is not sitting idly by as producers eagerly enter the new digital age.\u00a0 There is a set of exploration and production (E&P) companies in the U.S. known as \u201cindependents\u201d, who are responsible for much of the sector\u2019s innovation and are beginning to invest in their artificial intelligence (AI) capabilities to essentially use data to extract more resource out of rocks at less cost[1]<\/a>.\u00a0 Houston-based Anadarko Petroleum Corporation (NYSE:APC, ~$47 billion enterprise value) is one of the most forward-looking of these independents and at the forefront of the AI\/hydrocarbon marriage in their quest for lower breakeven prices, reduced exploration risk, and advanced seismic interpretation[2]<\/a>.<\/p>\n

If the economic extraction of oil and gas from shale (made possible through advances in hydraulic fracturing and horizontal drilling) was the first major step-change in the industry, the adoption of new technologies to improve production efficiency is the second[3]<\/a>.\u00a0 These new technologies will often employ \u201cmachine learning\u201d, a form of AI that uses algorithms to draw conclusions from large and complex data sets.\u00a0 Applications include seismic analysis (determining which underground regions have the most oil and gas resource), production optimization (determining which well length and spacing will lead to maximum recovery), and predictive maintenance (determining where pieces of equipment such as pumps and valves are likely to fail)[4]<\/a>.<\/p>\n

A recent survey of oil executives by Accenture found that 70% of them expected to invest more in digital technologies, reflecting the growing acceptance of the impact of data analytics among E&P\u2019s[5]<\/a>.\u00a0 Notably, the power of AI is still just scratching the surface, as Baker Hughes estimates that the oil & gas industry only uses about 1 percent of the data it generates[6]<\/a>.\u00a0 The economic impact of this trend will be tremendous, with a recent Wood Mackenzie study estimating that digitalization could save the global upstream oil and gas sector $75 billion annually[7]<\/a>.<\/p>\n

As an E&P, Anadarko\u2019s core business is the extraction of crude oil or natural gas.\u00a0 They have had a terrific amount of success over a long period of time by continually implementing the latest technologies.\u00a0 It is critical that Anadarko continues to invest in digital so that they do not fall behind competing producers such as EOG Resources, \u201cdubbed by one of its analysts as the Apple Inc. of the oilfield\u201d[8]<\/a>.\u00a0 EOG’s premium valuation (~8.5x EBITDA) compared to Anadarko (~7.2x EBITDA) reflects their differentiated perception as the industry leader in machine learning.<\/p>\n

Anadarko has embarked on an organizational culture change to embrace these digital technologies and remain competitive in this new era of big data.\u00a0 In October 2016, Anadarko formed an Advanced Analytics and Emerging Technologies (AAET) group to help the company harness and grow its technical skills[9]<\/a>.\u00a0 And to execute on the group\u2019s vision, Anadarko has grown their staff of data scientists from just 1 in 2014 to almost 20 today[10]<\/a>. \u00a0As part of their vision, Anadarko is focused on integrating these new data scientists with their experienced petroleum engineers to share ideas and devise complex solutions[11]<\/a>.\u00a0 While the efficacy of this group will be instrumental for long-lasting impact, Anadarko is also focused on its digital prowess in the short term and has approached this by partnering with a mix of tech firms, startups, and tech-focused oilfield services companies[12]<\/a>.\u00a0 For instance, Anadarko has hired Biota Technology to use data from the DNA in well bacteria to map the most optimal drilling targets[13]<\/a>.\u00a0 Perhaps their most innovative solution, Anadarko has even launched a crowdsourcing program that assigns projects to a digital community of coders[14]<\/a>.<\/p>\n

Given the increasing importance of this oilfield data, the data has become a resource itself.\u00a0 Anadarko must work carefully with their legal team to ensure that they own and control their own data, not the oilfield services companies such as Halliburton and Schlumberger[15]<\/a>.\u00a0 And to truly be an AI leader in the oil and gas industry over the long-term, they need to continue to attract top engineering talent.\u00a0 They can do this by ensuring that technology is known as a core tenet of Anadarko and that they are committed to using AI as a key driver of performance improvement.[16]<\/a><\/p>\n

As the power and influence of AI continues to grow within Anadarko, thereby diminishing the more traditional geophysicist role, how will the company culture remain intact?\u00a0 Said differently, will this infusion of young Silicon Valley engineers mesh with Anadarko\u2019s entrenched oil-industry veterans?<\/p>\n

(733 words)<\/p>\n

[1]<\/a> “How AI Can Help The Oil Industry”. 2018.\u00a0Synced<\/i>.<\/p>\n

[2]<\/a> “Big Oil Taps Silicon Valley Expertise On Journey To Advanced Technologies”. 2018.\u00a0Exploration & Production<\/i>.<\/p>\n

[3]<\/a> “Drillers Turn To Big Data In The Hunt For More, Cheaper Oil | Financial Times”. 2018.\u00a0Ft.Com<\/i>.<\/p>\n

[4]<\/a> Ibid<\/p>\n

[5]<\/a> Ibid<\/p>\n

[6]<\/a> “\u2018Netflix For Oil\u2019 Setting Stage For $1 Trillion Battle Over Data”. 2018.\u00a0Bloomberg.Com<\/i>.<\/p>\n

[7]<\/a>\u00a0“Digitalization Can Save Upstream Sector $75B Each Year”. 2018.\u00a0Rigzone.Com<\/i>.<\/p>\n

[8]<\/a> “\u2018Netflix For Oil\u2019 Setting Stage For $1 Trillion Battle Over Data”. 2018.\u00a0Bloomberg.Com<\/i>.<\/p>\n

[9]<\/a> “Big Oil Taps Silicon Valley Expertise On Journey To Advanced Technologies”. 2018.\u00a0Exploration & Production<\/i>.<\/p>\n

[10]<\/a> Jacobs, Trent. 2018. “An Inside Look At Anadarko Petroleum’s Digital Transformation”.\u00a0Journal Of Petroleum Technology.<\/i><\/p>\n

[11]<\/a> Ibid<\/p>\n

[12]<\/a> Ibid<\/p>\n

[13]<\/a>\u00a0“Operators finally embrace digital technologies to improve production efficiency”. 2018.\u00a0WorldOil.Com.<\/em><\/p>\n

[14]<\/a><\/p>\n

Jacobs, Trent. 2018. “An Inside Look At Anadarko Petroleum’s Digital Transformation”.\u00a0Journal Of Petroleum Technology.<\/i><\/p>\n

[15]<\/a> “\u2018Netflix For Oil\u2019 Setting Stage For $1 Trillion Battle Over Data”. 2018.\u00a0Bloomberg.Com.<\/i><\/p>\n

[16]<\/a> Parshall, Joel. 2017. “Artificial Intelligence and Human Expertise Form Powerful Combination for Performance Improvement”.\u00a0Journal Of Petroleum Technology.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

The oil and gas industry is undergoing a digital transformation.<\/p>\n","protected":false},"author":11935,"featured_media":32946,"comment_status":"open","ping_status":"closed","template":"","categories":[346],"class_list":["post-32945","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-machine-learning","hck-taxonomy-organization-anadarko-petroleum","hck-taxonomy-industry-energy","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nAnadarko: Big Oil Meets Big Data - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Anadarko: Big Oil Meets Big Data - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"The oil and gas industry is undergoing a digital transformation.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/big-data-oil.png\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"530\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/\",\"name\":\"Anadarko: Big Oil Meets Big Data - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2018\\\/11\\\/big-data-oil.png\",\"datePublished\":\"2018-11-13T22:42:39+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2018\\\/11\\\/big-data-oil.png\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2018\\\/11\\\/big-data-oil.png\",\"width\":800,\"height\":530},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/anadarko-big-oil-meets-big-data\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Anadarko: Big Oil Meets Big Data\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Anadarko: Big Oil Meets Big Data - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/","og_locale":"en_US","og_type":"article","og_title":"Anadarko: Big Oil Meets Big Data - Technology and Operations Management","og_description":"The oil and gas industry is undergoing a digital transformation.","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/","og_site_name":"Technology and Operations Management","og_image":[{"width":800,"height":530,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/big-data-oil.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/","name":"Anadarko: Big Oil Meets Big Data - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/big-data-oil.png","datePublished":"2018-11-13T22:42:39+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/big-data-oil.png","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/big-data-oil.png","width":800,"height":530},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anadarko-big-oil-meets-big-data\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"Anadarko: Big Oil Meets Big Data"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/32945","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/11935"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=32945"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/32945\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/32946"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=32945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=32945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}