Canadian oilsands companies, conventional producers and the oilfield service industry are counting on information and communications technologies to help resolve challenges they face, a recent study reveals.
A study undertaken by U.S.-based research and consulting firm Energy Insights on behalf of Telus Business Solutions shows that, like their counterparts in the U.S. and elsewhere, Canada's upstream energy executives are relying more on information and communications technologies to gain a competitive edge.
"What we're seeing here in Canada is, in many cases, very much reflective of the global market and in some cases a magnification of what we're seeing happening globally," because of high activity levels driven largely by oilsands development, says Rick Nicholson, vice-president of Energy Insights.
Nicholson says there has been a significant increase in IT spending in Canada, to the tune of average annual growth of around eight per cent. Merger and acquisition activity is also placing a lot of pressure on IT departments "to deliver the benefits" promised in the deals.
"What we're hearing is it used to be 30 per cent, but the bar has been raised and it's now getting up to 60 per cent of the synergy savings (promised in M&As) are expected to be enabled by IT," Nicholson told a Calgary audience recently at an event sponsored by Telus.
With regards to an aging workforce and an overall employee shortage, Nicholson said some companies in the energy sector are worried and examining options besides hiring new workers. "They're starting to wonder, 'How do I run things with half the workers than I used to run them with?' " In the Telus study conducted late last year, Energy Insights interviewed Canadian executives from nine service and supply companies, seven oilsands producers and eight conventional E&P companies, as well as representatives from government and associations, and oil and gas company safety managers.
For oilsands companies working in northeast Alberta, the labour shortage and high capital costs top the list of concerns. Executives say they want to improve worker productivity in the construction phase of new projects. Beefing up operating efficiency, improving stakeholder relations and complying with health, safety and environmental regulations were also common factors.
Nicholson said the oilsands leaders he spoke with are generally too busy trying to get workers' camps in place and start constructing the billions of dollars worth of mega-projects planned in the region to pay much attention to possible IT solutions. But this leads to inefficiency, he noted.
"They're building camps, they're trying to get a business up and running, it's very haphazard, there's lots of duplication going on, nothing's being shared, and the result is what systems do get put in place aren't well integrated, they're not well thought out."
Nicholson said he recommends that these companies not only build the physical infrastructure - which includes the housing and everything that goes along with that - but also use innovative human resources management techniques to get workers into the camps and make them productive.
"The focus on worker quality of life is important," he said. "There's people up there living in shacks; trying to retain workers in that environment does involve trying to provide them with a certain quality of life that involves personal communications back to their family and friends, entertainment, all the things that are now being expected. So clearly in this construction phase there's room for significant improvement based on the idea of IT and communications."
Conventional producers, meanwhile, are looking for more advanced processes to assess drilling opportunities, especially through integrating geological and geophysical analysis. In addition, executives from this industry segment are also dealing with more remote and complex projects - such as Arctic development - and therefore are being forced to move toward more advanced well and plant monitoring to reduce the need to transport workers on limited infrastructure.
Energy Insight suggests conventional E&Ps try to better integrate business processes, expand the use of remote sensors and real-time communications to improve operational efficiency, use GPS technology for vehicle monitoring and routing, and introduce real-time well, pipeline and plant monitoring through automated control.
Service and supply companies also face challenges. Nicholson said that while oilfield service firms are tempted by rapid growth, many firms lack the capital, labour and equipment needed to grow. In addition, cashflow constraints - especially among engineering service firms - and poor utilization of available equipment rank as major worries.
"The cashflow issue is very big because this is a very capital-intensive industry and managing cashflow is a tough thing to do," Nicholson said.
Energy Insights' recommendations to oilfield service firms include taking advantage of advanced project management and supply-chain management applications, adopting communication tools to better link data transfers between the field and the head office and utilizing computer-based distance- learning systems.
Jeff Lowe, vice-president of marketing, energy and utilities for Telus, said the study will help his company better understand what the business priorities in the oilpatch are today.
"It gives us an idea of what's going on in the oil and gas business that's causing the adoption of certain technologies over others, so it allows us to tailor our offerings to meet the needs of the market when we know based on fact where the market is headed," Lowe said.
"IT is an enabler, not a cure-all ... and at the end of the day human beings need to embrace technology for a reason; it won't be an end in and of itself."
(John Ludwick can be reached at ludwick@businessedge.ca)
