At first, only mud bubbled out of the hole. Then natural gas came shooting out, spraying the mud 150 ft into the sky, followed quickly by oil, and lots of it. For 9 days, the oil shot into the sky. Vast pools of oil surrounded the well. They called it the Lucas Geyser, and, once they got it capped, it was producing more oil than all the other wells in the world combined. You know it best, of course, as Spindletop.
The oil and gas industry has a new Spindletop, and it’s nowhere near being capped. People like to say data is the new oil, with 90% of it created in the last 2 years alone, and the volume is only increasing. But in this data boom, the oil and gas industry is up to its neck in petabytes (with fifteen zeros) of data, generating thousands of terabytes per day, with the volumes doubling every 12–18 months, and using less than 5% of it for decision making.
The vast amounts of that unused data, currently locked in silos, represents not just several hundred billion dollars of trapped value. It’s actually more important than that. That wasted data offers a way forward during what I’ve called the perfect energy storm. To navigate the interconnected, simultaneous, and dire pressures it’s facing, the oil and gas sector needs to use those virtual lakes of data and transform entire companies into intelligent enterprises able to operate at lower break-even numbers.
Using data to make decisions is not a radical idea. In fact, most industries are undergoing rapid digitalization that has only increased during the pandemic. But, while this is perhaps even more necessary for oil and gas, there is not a single energy company that has completely transformed itself into an end-to-end intelligent enterprise. In fact, the energy sector is almost a decade behind the industries that are doing this right. That’s the bad news.
The good news is that the oil and gas industry is well-positioned for quick progress because it already generates the aforementioned petabytes of sophisticated data. There are sensors up and down the energy supply chain—on wells, on pipelines, on pumps, in the refineries, everywhere. A single rig creates a terabyte of data every day. The problem is that the data from these sensors are not being used to look for the right thing. Since Spindletop, oil and gas companies have been using increasingly sophisticated means to see underneath the Earth’s surface in constant search of oil and gas.
Now, thanks to disruptions on both the supply and demand sides, the primary challenge is to find not oil but value. Future growth requires maximizing the value of every single molecule as it moves along the supply chain. Incremental improvements will only prolong an untenable status quo, whereas a complete transformation can double or even triple the return on capital.
Turning a data Spindletop into an intelligent enterprise is not unlike what they did back in East Texas: Build the platform, control the resource, and then get value out of it. In this case, the first step is to move to a cloud-based platform that can manage the velocity and volume in such a way that the capacity can be dialed up or down rapidly.