March 2001

3D for the masses

Schlumberger has been working with SGI and Barco to bring interactive three dimensional visualization to very large audiences.

PDM was present at a world premier of GeoQuest’s new immersive visualization “iCenter” in London last month. Described as a breakthrough in large screen 3D display, the iCenter eliminates the requirement for expensive electronic-shuttered stereo glasses.


The technology provides interactive stereo imagery to large audiences (500-1000) through ‘passive stereo’. The results are impressive, vivid colors, high resolution and good response time.


GeoQuest’s Rod Laver is a convincing evangelist for high-end visualization. Indeed 3D visualization does appear to be coming of age. This is the first time such high quality 3D is accessible to such a large audience. The 8 x 3.5 meter screen offers crisp, vivid 3D thanks to the new Barco/SGI technology. But the point that Laver makes (convincingly) is that 3D immersive visualization lets you perceive object relationships in a whole new way.


Tortuous sedimentary bodies are viewable with the 3D specs in a manner that make traditional map-based representations look rather sad. The demonstration showed a well trajectory which was wrongly directed into a shale member. The need for corrective action is immediately obvious to the massive audience. You could have the asset team, board room and shareholder representation all involved in the decision!


Schlumberger has also announced the formation of a new unit - destined to replace GeoQuest - Schlumberger Information Solutions. Within the new unit, a sub-unit “i-Reservoir” will group decision support, data management, IT and expert services. One senses that a major reorganization is being undertaken by Schlumberger.


But as yet, the re-branding is a bit lacking in clarity. PDM will be reporting on these issues and on the GeoQuest “Connect” Forum in next month’s issue, meanwhile, read our exclusive interview on page 3 with Satish Pai, president of both GeoQuest and the new SIS unit.

Peer to Peer for BP

BP is to use Consilient’s ‘process personalization’ software to optimizing global business processes for mobile workers.

BP has signed a worldwide software license agreement with Consilient Inc. for a ‘process automation platform.’ Consilient’s peer-to-peer infrastructure dynamically creates personalized business processes that span multiple people, organizations, and systems. BP has piloted Consilient’s Sitelet technology on a number of projects and the first production deployment will occur later this year.


BP’s CTO Phiroz Darukhanavala said “BP is building a highly flexible and competitive digital organization. We continually challenge all of our business units to leverage leading technologies to optimize and streamline business processes both internally and externally with employees, partners, customers, and suppliers. With an increasing number of mobile users, BP demands a solution that enables mobile working. Consilient offers a good approach to address this challenge."


Consilient VP Bob Chamberlain added “Our peer-to-peer Sitelet technology offers a truly unique solution that supports diversity of existing systems, while embracing the reality of how people naturally work.” More from

500,000 hits to

Half a million hits to the Petroleum Data Manager website -; a record number of sponsors for 2001! Things are looking up for PDM. But we want your feedback so we can make our publications even more useful. Talk to us!

The Petroleum Data Manager website,, received its 500,000th hit last month. I thought that this would be a good time to tell you about how business is going here at Petroleum Data Manager.


First we have signed up our sponsors for 2001. The following companies have lent their support to the Petroleum Data Manager website, CD-ROM and intranet editions:-


Exprodat Ltd.

Georex AT

Kelman Technologies

Landmark Graphics Corp.

Petris Technology


Silicon Graphics


Our thanks to them for their sponsorship, especially to the four founder sponsors, who have supported the PDM electronic editions for the last three years.


When we started, out way back in 1996, PDM was talking about high-tech but was low-tech in format. We rectified this situation in 1999 with the first edition of the CD, and the website went online about the same time. In 2000, in response to demand from some larger corporate readers, we began providing an Intranet edition. This is now emailed monthly to a dozen or so major clients throughout the world. Why an intranet edition? It’s all about Knowledge Management! If you are reading this, you are probably already convinced by the usefulness of a monthly update on E&P software technology, news and views. We hope that, as a knowledge worker (that’s what we all are these days!) this helps you keep up to speed with technology, and gives you a feeling for what the leaders of our industry are thinking (see especially the interview with Schlumberger Information Systems president Satish Pai on the opposite page.)

Content provider

But why have PDM on your intranet? Well it really is all about Knowledge Management. Sitting in on all those conferences about leveraging the Intranet to provide instant access, through full text search, linguistic analysis and all the wonderful tools that are emerging for supplying ‘just-in-time’ knowledge. With the move to digital text, we realized that Petroleum Data Manager has two functions. It is an information source first time around. But once you have the 1,000 plus articles on line, they become a valuable resource for software users and developers. We have, in short, become content providers.

Technology watch

So what’s next for PDM? We have one new product in the pipeline, and a vision. The new product, our technology watch reports, are published about ten times a year. They are a more detailed report on events attended by PDM staff. Whereas PDM offers a succinct overview of highlights, the Technology Watch reports provide a 10 page report on conferences and trade shows, often with illustrations of the latest software in action. We intend to dovetail the Technology Watch digital content with the PDM electronic editions to offer a high-end information source to corporate clients.


But in the longer term, what we really want to develop is a community of folks who are involved in upstream software. We sense a real need out there for something but we are not sure what. Somehow we want to group software users, knowledge workers and the development community in a way that transgresses the traditional boundaries. Thing is we are not sure how. So let’s hear your voice. What do you expect of PDM in the next few years? What directions should we take the Discussion groups? List server? Let your voice be heard! Write us at - and at the same time, if you haven’t done so already, sign up for our free monthly emailed headlines service.

PDM Interview - Satish Pai

Satish Pai, president of both GeoQuest and the embryonic Schlumberger Information Systems unit (SIS) tells PDM about IndigoPool, a new product “I-GeoFrame” due out next year, BP outsourcing and the OFS Portal initiative.

PDM - Tell us something about your own career with Schlumberger.

Pai – I started with 16 years in the field in Thailand, Brunei and India. In 1992, after four years as a petrophysicst in Abu Dhabi, I became head of personnel with the newly acquired GeoQuest. After couple of years in the CIS I moved to Aberdeen where my involvement in e-business began with the successful bid for the LIFT contract. This Acquisitions and Disposals (A&D) website for the UK was a forerunner of Schlumberger’s world-wide A&D portal, IndigoPool which I presided over until my latest move.

PDM - IndigoPool must have been quite a hard sell within the group?

Pai – Actually Thierry Pilenko (GeoQuest president at the time) was convinced from the outset of the potential. The original LIFT tender was regarded with a bit more suspicion, especially as there was only one other bidder – a small web company. The transition to IndigoPool took place at the height of the e-business boom – there was tremendous enthusiasm.

PDM – Is IndigoPool a kind of dot com within the Schlumberger group? Are you into profit yet?

Pai – We are not yet into profit, we are part of the Schlumberger hierarchy, but we have a lot of freedom. Other more traditional parts of the group generally allow a two to three year period for a new venture to become profitable. We are not trying to ramp up to an IPO! We are building our business steadily. We are especially pleased with the BP-initiated Virtual Prospect. Another significant success was the recent sale by Goldman Sachs of a $750 million company online to Pogo.

PDM – While the top level marketing message speaks of the new tools for enhanced business process and

e-commerce, many users still complain about bugs and inconsistencies in the traditional interpretation software. What are you doing about improving your existing tools?

Pai – We need to do a better job of fixing bugs and are revamping our software engineering process. We are moving from a serial model of development to “extreme” programming where specification, development and testing are all done concurrently.

PDM – We hear (mostly from the new kids on the software block!) that the major vendors’ code is hopelessly out-dated and that it is becoming increasingly hard to enhance and maintain. Do you have plans to re-write your legacy code?

Pai – We will be addressing a lot of such issues in the forthcoming version of GeoFrame – I-GeoFrame and also in new products like SeisClass III. But legacy code remains a huge part of the market.

PDM Tell us more about I-GeoFrame.

Pai – I-GeoFrame is a code name for our next generation products. These will start being released in 2002 and will be Java and C++ developments that leverage the GeoFrame data model.

PDM – You mentioned the BP Aberdeen outsourcing model in your address*. To what extent is this customized to BP’s requirements? Can such an outsourced model be successfully ‘productized’ and marketed to other companies?

Pai – BP is a large company which likes to try out new technologies. We are taking aspects of the BP outsourcing model and building a commercial service. We have a core of standard products that can be customized – unlike the consulting companies that offer different processes to each client! We focus on core competencies as a lever for productivity – the PowerHouse is a good example of this.

PDM – When will we see an integrated software and vendor data offering? When will clients be able to buy a Finder pre-populated with data?

Pai – We are not there yet. We can offer this for a company’s in-house data, but at the present, no one can offer this with any significant degree of drill-down. The relationship with the data vendors – who also market their own data models – obviously comes into this.

PDM – Do you ever regret not buying PetroConsultants when it was up for sale?

Pai – Not really, Schlumberger doesn’t need to buy every company! We prefer to build partnerships with companies like IHS Energy (the company that acquired PetroConsultants) – we are talking to a number of interested players in this field. One issue is that while everyone talked about collaboration during the downturn, now that things are getting better, everybody is too busy. But we have signed significant collaboration initiatives with Veritas and with the partners of the OFS Portal.

PDM – Where is the OFS initiative** now?

Pai – We are putting together a management team and working on standards and catalogues for the procurement of complex services over the internet.

PDM – You mentioned Open Systems in you address* – what is your position with respect to Open Spirit these days?

Pai – We were a founder of Open Spirit and are still extremely aggressive. We are releasing new Open Spirit functionality. GeoFrame can now run OpenWorks applications via the Open Spirit layer. We will be following Open Spirit developments with great attention and will be evaluating usage and performance to see if the technology could be used internally within GeoFrame. Open Spirit remains a seductive concept. Shell and Chevron are still very keen supporters.

*To the GeoQuest Forum - full report in next month’s PDM.

** See PDM Vol. 6 N° 1.

PwC gets Petro-Lab

PwC unit QByte Services is to acquire Petro-Lab from Sterne Stackhouse.

PricewaterhouseCoopers unit QByte Services is to acquire the Petro-Lab data retrieval and analysis software solution from Sterne Stackhouse (SSI). Built on SSI’s Labrador technology, Petro-Lab provides query, analysis and mapping from both public and proprietary data sources. The deal gives QByte an exclusive, royalty-bearing license to develop, market and sell Petro-Lab to the Canadian oil and gas market for five years.


QByte President Peter Huggard said, “Petro-Lab’s ease of use and flexibility demonstrates the value in self-service data retrieval software. Petro-Lab provides a single point of access to self-service business and operations data.”


PwC’s Michael Stoneham added “This acquisition illustrates our ongoing commitment to the oil and gas industry. We see great potential for Labrador in other industries to fulfill data search and retrieval needs.” SSI intends now to focus distributing Petro-Lab to the ‘untapped’ US petroleum market.

Alpine 4.0

GMG’s seismic project reporting software now integrates I/O’s Image seismic acquisition system.

Green Mountain Geophysics (a subsidiary of Input Output) has released a new version of its Alpine land and marine seismic acquisition project reporting, management and archival software. Version 4.0 now includes a Microsoft Access database export feature along with sample reports and queries.


Alpine users can now graphically represent custom data fields for station, source and permit information. A spreadsheet interface is provided for access to permit information. Users can define custom data fields for additional permit attributes. GMG is expanding support for multi-component acquisition in both its Alpine and Mesa products.

Better Image

Shotpoint number representation has been expanded to support floating-point numbers, alphanumeric line names, and instrument definition. This should provide a greater level of SPS compliance. The new software also offers robust, automatic updating of the Alpine database from Input Output’s Image seismic acquisition system.

New storage technology from IBM

IBM has announced new storage technology leveraging an internet version of the SCSI protocol.

IBM has announced a new range of storage networking products, including a new iSCSI network storage appliance. The new offering includes the industry’s first open NAS Gateway, IBM TotalStorage NAS 300G, which allows LAN-based clients and servers to interoperate with an existing Storage Area Network (SAN).


IBM researchers, working with CISCO, have adapted the SCSI commands used by hardware devices so that they would run on top of the Internet’s Ethernet and TCP/IP protocols. The new protocol, iSCSI has been submitted to the IETF storage standards body.


The IP Storage 200i is a high-performance, low-cost iSCSI storage appliance that connects users to pooled storage on the network. Other new products converge Ethernet/IP networks and SANs. The NAS 300G is a tuned file server that resides between LAN and SAN and can be used with a variety storage devices such as the IBM Enterprise Storage Server (codenamed Shark).

GeoQuest signs with Enigma Data Systems

Enigma’s project archival offering will soon be available from GeoQuest’s data management centers.

GeoQuest has signed a global agreement with Enigma Data Systems to deploy Enigma’s project archiving solutions worldwide. GeoQuest will now be able to apply Enigma’s portfolio of technology, including the ex-PECC Project Archive and Retrieval System (PARS) product, to create project archiving solutions tailored to customers’ requirements. Under the new agreement, Enigma’s services will be available through GeoQuest’s data management service centers worldwide.


GeoQuest VP and head of Data Management, Ron Mobed said “Our clients will be able to access Enigma-based archival solution through onsite data management implementations or through a hosted service delivered via LiveQuest, GeoQuest’s ASP solution.


In a separate announcement, Enigma is to form a strategic partnership with Sony to develop Sony’s DTF-2 technology in Enigma’s product line. Enigma’s Linear Disk offering is one of the first fruits of the collaboration. Enigma Data Systems is a private company backed by 3i, Europe’s largest venture capital group. The company’s installed base spans North America, Europe, Africa, the Middle East, Far East and Australia. More from

GeoSmith to develop XoX Shapes

Ex-XoX employees have formed GeoSmith to continue with development and maintenance of the Shapes geometrical engine.

Folowing its exit from the geoscience software market (PDM Vol. 5 N° 12), XoX has laid off all its staff in India and the US. XoX energy clients, notably GeoQuest, which uses the XoX technology in its modeling software, were left somewhat exposed. The situation was clarified this month with the formation, by former XoX employees, of GeoSmith Consulting Group. The new company will provide software engineering services for the development and support of geometric modeling software.


GeoSmith CEO, Randy Guetter told PDM “As a licensee and value-added reseller of Shapes technologies, GeoSmith will maintain, support, and develop services for current and prospective users of Shapes-based technologies and products.


The foundation of GeoSmith secures the technical resources necessary for the company not only to meet its contractual obligations, but also provides its customers with the top-quality support of the past as well as the services they need for the future. We fully intend to become the supplier of reference for users of geometric modeling software.” More from

WebVista collaborative seismic processing

CGG’s web hosted project management software aids virtual teamwork on seismic processing and reservoir projects

CGG’s new WebVista software offers its processing and reservoir project clients web-based project tracking and reporting system. Authorized clients have real-time access to all relevant information concerning a project from a web-browser.

Decision support

WebVista is said to clarify and accelerate decision-making through improved communication. It highlights priorities at each stage, provides real-time project status and allows the project team to focus on key issues. It reduces the number of meetings that need to be held throughout the life of a project and helps to better focus the agendas of the meetings that do take place. Decision-making is accelerated, leading to reduced project turnaround time.


Better communications involve clients more closely with their projects. Project plan updates are instantly available for client validation and comment to achieve consensus. WebVista is hosted on the CGG website in a protected area, guaranteeing asset security. All project-relevant information, such as Gantt charts, weekly reports, emails, data and other project documentation is catalogued in the system, simplifying document access and retrieval through the use of hyperlinks.

Georex to market SMT software

Georex Assistance Technique has signed a non-exclusive, world-wide software marketing agreement with Seismic Micro-Technology.

Following its agreement with Seacon Computer Systems last year (PDM Vol. 5 N° 11), French service company Georex Assistance Technique has signed with Houston-based Seismic Micro-Technology (SMT) for a non-exclusive license to market SMT software worldwide. Founded in 1984, SMT provides PC-based seismic interpretation software for Windows NT-based systems. SMT’s Kingdom Suite offers seismic interpretation of 2D and 3D data, 3D cube interpretation, synthetic seismogram, post stack processing and unified geophysical and geological subsurface modeling. SMT will soon be releasing EarthPAK, a new geological interpretation system.


Georex Assistance Technique (GAT) provides consulting and services to the petroleum exploration and development industry in Europe, Africa and the Americas. The company specializes in the provision of geological, geophysical, drilling, and data management services. Georex AT is a wholly owned subsidiary of Georex SA. The company has 45 consultants around the world and reported turnover for year 2000 of € 3,308 K. More from

ESRI Petroleum User Group

What is remarkable about the ESRI PUG crowd is their enthusiasm for the latest developments in ESRI’s GIS software product development. It is unusual to hear enthusiastic applause for new features in computer software, but the addition of geo-referenced transparent bitmaps of surface imagery in ArcGIS really seems to have hit a sweet spot in user expectations. While not announced publicly, ESRI’s new petroleum specialist Andrew Zolnai told PDM of ESRI’s plans to put a spatially-enabled version of the PPDM data model into the public domain.

The Earth Sciences Research Institute (ESRI) Petroleum User Group (PUG) 2001 conference convened in Houston last month and mustered the highest-ever attendance in its 11-year history. The majority of the 550 attendees was from the E&P sector and seemed impressed with the latest functionality of ArcGIS and ArcIMS. It’s not every day that applause breaks out during a software demo!


Clint Brown, director of software development, outlined the main issues for ESRI’s clients today. Most of these center on the migration path to the new Arc8 tools, with high expectations for the ArcIMS Internet map server. Despite the plethoric (and intimidating!) product nomenclature, ESRI’s intent, according to Brown, is to “merge systems into single scalable architecture, responding to trends and user requirements in GIS.” New technology drivers for the oil business include the incorporation of exotic data types such as raster, imagery, voice and time series data. This is happening against the backdrop of significant changes in computing platforms which are now distributed, networked, interoperable, loosely coupled, server-based and need to support a range of clients. Brown sees two camps emerging. On one hand there is the SunOne/Java/UNIX environment and on the other, Microsoft’s new MS.NET architecture. ESRI intends to remain platform neutral and will support both platforms. There will also be ‘lots of different clients.’ These will range from wireless, Windows CE, Palms, through browser-based, Java to desktop ArcGIS. XML is the backbone for client access to GIS-enabled Internet servers providing ArcIMS and ArcGIS services. XML will be used as the protocol and Arc for commands.


Brown sees key developments emerging in the management of GIS metadata as enabling data sharing. The integration of CAD vector imagery geo-referenced bitmaps is also germane to the upstream – for example for the display of land/lease records. ESRI is also planning to take over some of the database high ground and is pushing the concept of a ‘geodatabase,’ a scalable container for GIS data. The rationale is to ‘do the geography in the GIS’ and to reduce development overhead through ‘intelligent data.’


ESRI’s Ron Hughes presented the Arc Internet Map Server (IMS) product. IMS was first developed as an extension to ArcView, which evolved into MapObjects. Now, streamed GIS data is instantly available to web-based clients. Hughes demonstrated a server generating a map, zoomed into an area and rendered a map from streamed data. A Java viewer lets you add a local data layer, demonstrated by adding a layer showing rivers across the U.S. ArcIMS is said to be the future of ‘casual-use’ GIS. ArcView 8.1 is more powerful than ArcView 3.2, at the expense of a more complex interface.


Unocal’s John Baines is a GIS evangelist! The Explorationist’s Canvas is Unocal’s attempt to get away from the light table, Mylar, reports and books and to pull its data together into a ‘cohesive story.’ The Canvas was used to prepare Unocal’s bid for acreage in Brazil’s Campos Basin. The resource assessment team needed a composite stratigraphic column, understanding of the sedimentological environment and petroleum system. ArcView and Landmark’s OpenExplorer bring disparate data onto the Canvas to provide the multi-disciplinary asset team with a large amount accessible data. Unocal is trying to ‘beat mother nature’ in terms of pattern recognition and analog models.


Robert Hopkins (Burlington Resources) s howed how GIS was used to leverage information in its new land database. Well information, satellite and topographic images and third party lease data were integrated into the Petroleum Land Analysis Tool (PLAT) system, developed by Burlington. The system addressed business needs such as lease expiry, payments and locating Burlington’s interests by formation and other attributes. PLAT, a custom ArcView extension coupled to a land data mart, lets users define their own queries. Surface imagery can be combined with well and lease information and query results can be output to spreadsheet. The spatial environment promotes use, and enhances landman productivity, because they can now create their own maps.

Field development

The advent of 3D and 4D GIS (GIS with a time component) is helping Earth Sciences Associates solve field development problems in the gulf of Mexico, ESA’s John Grace explained. Using data from the US Minerals Management Service (MMS), a comprehensive 3D GIS covering all fields in the Gulf of Mexico has been developed. 7500 producing reservoirs were included as a 2D polygon of the productive area along with top and bottom for each completion. These surfaces were gridded in Spatial Analyst to map reservoir extent. Spatial Analyst was then used to grid production, GOR and other fluids. Radial flow gridding was also used to map fluid movement and to track GOR and other variables over time.

ArcGIS 8

By the time you read this, ArcGIS 8 will have been rolled out. The new software, demonstrated by ESRI’s Nathan Shepherd, was received with great enthusiasm. Shepherd demonstrated on-the-fly map projections to much applause. But the real showstopper involved access to external data from within ArcGIS. Shepherd went onto, grabbed some wildlife habitat imagery, and showed how control of layer transparency could be used to view both surface imagery and the underlying map data. Other enhancements include control over symbology, scalability across mobile platforms - especially ArcPad.

Deep water

Boykin Witherspoon (MMS) described a new concept from the agency, ‘Open GIS.’ The first component is custom software that will be used to document MMS scientific investigations such as the collection, and conceptualization of multiple data types in coastal and territorial waters. MMS project goals include environmental studies (a digital standard is being drafted), and their integration with existing data. The development is being undertaken by ESRI.


Ron Brush (New Century Software) provided a status report on the Pipeline Open Data Standard (PODS). Developed in conjunction with the GTI (formerly Gas Research Institute), PODS is a database standard for the pipeline industry. The data model involved the upgrading of a previous industry standard pipeline data model ISAT 1.0. PODS will therefore become ISAT 2.0. The PODS Association oversees model development through working groups of industry and vendors. PODS, described as an ‘enterprise pipeline data model’ has over 300 tables, describing facilities, compliance and inspection activities. PODS contributors include Conoco, Chevron and TransCanada Pipelines. More from


Conoco’s Chuck Rinehart offered advice on how to move GIS data to a UNIX storage area network (SAN) ‘without getting killed’. Conoco’s Houston SAN boasts four terabytes of user data and applications. The move to this environment involved changing every file link and pathname. About 120 GB of GIS libraries and 2,800 individual ArcView projects were migrated to SAN disks with redirection of some 180,000 embedded APR file paths files to the new locations. The benefits of SAN? Disks are now decoupled from the server and disk to server bandwidth has been improved. The philosophy adopted in moving the data was ‘keep the Business Running.’ To this effect, Conoco moved 120 GB of GIS data with minimal impact on customers .

PDM Interview, Andrew Zolnai

PDM interviewed ESRI’s new Petroleum Industry boss, Andrew Zolnai, who reveals plans for an E&P industry data model.

PDM - What would you say are the main ingredients for the PUG’s success?

Zolnai - Clients like the PUG because they can find out what’s going on, meet with the vendors, network and talk to ESRI.

PDM - What do you see as the main trends of GIS for the oil industry?

Zolnai - GIS will pervade the industry. Look at Calgary where some 700 petroleum companies work with proprietary products that can’t talk to each other. Users want to share data and access it geographically, but they are tired of having to rebuild everything to achieve this. They want to find oil, not process data. So the future is interoperable data.

PDM - We were intrigued by a recent announcement from ESRI concerning an industry-specific data model for the utilities industry (PDM Vol. 5 N° 11). Will there ever be a GIS data model for the upstream?

Zolnai - ESRI is building an upstream data model for petroleum as we have done for other industries. This will be a Public Petroleum Data Model (PPDM) development on the Arc 8 Geodatabase. We will put this development into the public domain.

PDM - Is ESRI now competing with vertical E&P software vendors?

Zolnai - ESRI is a toolbox that clients and business partners, such as Landmark and GeoQuest, can use without conflict of interest. GIS has been a long time coming. It’s being pushed from the outside by Oracle and the Internet, and ESRI is defining the geographic component.

Decision Making in upstream

Fiona Macmillan’s PhD thesis on risk analysis sets out to determine whether the use of probabilistic reserve analysis contributes to corporate success. Along the way, the 250 page thesis offers a critical state of the art review and bibliography.

Fiona Macmillan kindly provided PDM with a copy of her PhD thesis “Risk, Uncertainty and Investment Decision-Making in the Upstream Oil and Gas Industry.” The research, conducted at the University of Aberdeen, was funded by CSIRO Australia. Macmillan believes that despite four decades of work on decision analysis tools, no research has been able to show conclusively what works and what does not. Indeed such analysis has been slow to appear in the literature, doubtless because of the threat it represents to the decision analysts. As one previous worker put it: “Asking whether decision analysis works is risky. What if the answer is negative? The contribution will clearly be scientifically valuable, but many individuals – consultants, academics, instructors – with a vested interest in decision analysis could lose standing, clients, or even jobs.” MacMillan’s study remedies this situation by researching the use of decision analysis in investment appraisal decision-making by upstream majors. The thesis seeks to answer three questions: what techniques are appropriate, which are actually used, and is there a relationship between their use and corporate success?


In the 250 page tome, Macmillan traces the history of risk analysis from Laplace and Bayes in the early nineteenth century, through its first use in the oil industry in the 1960s, to its limited application today. The research was conducted via in-depth interviews of some 20 companies working in the UK. All of the companies use some software to assist with decision making, usually some form of Monte Carlo simulation. The most popular packages are Crystal Ball, @risk and Merak PEEP. There was a general recognition that whilst the mechanics of the simulation is straightforward, the tools could be misused. One interviewee remarked “the clever bit is in the model that you set up where you’ve got the risk … and you’ve got the relationship. So you can have a fantastic tool that does Monte Carlo inside and out but [it’s] garbage in-garbage out.” Definitions also were a source of problems. One interviewee commented “I would say that there’s about as many different definitions of risk and uncertainty in our company, as you found in your literature search.” Another - “Every time we start to discuss risk we have arguments and rows!” Problems were encountered when reporting the results of probabilistic analysis to management: “We do all this beautiful simulation of the distributions but people still want one figure. You could say, ‘The range is this, or your expectation is this at various probability levels.’ You know, a nice little cumulative distribution. But people don’t look at it. They want one number, ‘What’s the mean? What’s the expected value?’ So sometimes I question why we do it because people just land on one number.”

Competitive advantage

Notwithstanding such doubters, Macmillan contends that the use of decision analysis techniques and concepts in investment appraisal decision-making is a source of competitive advantage, claiming that there are “strong positive correlations between the use and sophistication of decision analysis techniques and concepts used, and various measures of business success in the upstream.” Macmillan proposes a complete, if theoretical, decision support workflow for the upstream as follows. First, assess the chance of success based on historical statistics and analogues of other basins and plays with similar geological characteristics. Next apply sensitivity analysis to determine critical reservoir parameters. A probabilistic analysis of reserves using Monte Carlo techniques follows to provide high, mid and low cases. Influence diagrams are used to draft a decision tree and for each reserve case, the chance of success estimated in the first step is combined with economics and decision tree analysis to generate expected monetary values. These can be further analyzed with option theory. So much for a ‘perfect’ workflow. But what do companies actually do today? Not a lot seemingly! Most companies use Monte Carlo simulation to generate estimates of prospect reserves and run the economics on only one reserve case. In fact, Macmillan found that even Monte Carlo simulation is not in general use for economic analysis in E&P decision making. Option, portfolio and preference theories “are hardly used at all by any firm.” Macmillan concludes that there is a gap between current theory and practice in the quantitative techniques used for investment appraisal in the upstream.

Does it work?

The majority of the results produced suggested that there is a positive association between the use of decision analysis in investment appraisal and good organizational performance in the upstream oil and gas industry. This thesis has highlighted that decision analysis should not be perceived to be providing ‘a dictatorial straitjacket of rationality’ (French, 1989). Rather it should be seen to be ‘a delicate, interactive, exploratory tool which seeks to introduce intuitive judgments and feelings directly into the formal analysis of a decision problem’ (Raiffa, 1968). The decision analysis approach is distinctive because for each decision, it requires inputs such as executive judgment, experience and attitudes, along with the “hard data”. It helps decision-makers tread the fine line between ill-conceived and arbitrary investment decisions made without systematic study and reflection (“extinction by instinct”) and a retreat into abstraction and conservatism that relies obsessively on numbers (“paralysis by analysis”) (Langley, 1995). The thesis has demonstrated that such an approach contributes positively to organizational performance in the upstream oil and gas industry.

Macmillan’s thesis “Risk, Uncertainty and Investment Decision-Making in the Upstream Oil and Gas Industry,” conducted at the University of Aberdeen, is available on

Mathtec for Landmark

Landmark is to acquire a controlling interest in LMK Resources, Pakistan. The company runs the Pakistan national data repository.

Landmark is to acquire a majority stake in LMK Resources (previously known as Mathtech), a consulting and IT technology company based in Islamabad, Pakistan. LMK provides integrated data management solutions and E&P technical services using Landmark technologies and is amongst the oldest specialized software developers in Pakistan. LMK established and maintains the Pakistan government’s national E&P data repository.


Landmark president and CEO, John Gibson said “By acquiring a majority interest in this new business, we can utilize [LMK’s] technical talent on Landmark projects in that area of the world, and at the same time, ensure the continued growth and focus of this important distribution and services channel.”


Landmark VP Peter Bernard added “The demand for technical know-how in the upstream business is rapidly exceeding supply. We need to provide not only excellent E&P software, but also superior performance consulting services.”


LMK president and CEO Atif Khan concluded “Our relationship with Landmark Graphics has been mutually beneficial for both companies over the past five years. We believe that by joining with Landmark more closely, we can deliver an even wider range of technology, service and support solutions in designated market areas. We are extremely pleased to become a valued part of the Landmark family.”


The new company will have approximately 200 employees, based in its head-office in Islamabad, Pakistan and a branch office in Dubai, UAE.

Faults in GeoProbe

Magic Earth has added fault and surface interpretation to its high-end visualization environment GeoProbe.

GeoProbe 2.5 now incorporates a fault and surface interpretation capability, ‘ezFault’ and ‘ezSurface.’ Other additions in the new release include geobody sculpting, surface-bounded autotracking and clipping and enhanced user control of graphics and probe interaction.


Client Dave Roberts, BP’s Global Visualization Network Leader said “ezFault and ezSurface represent an innovative leap forward in GeoProbe interpretation functionality which should make a significant improvement in fault and surface interpretation efficiency.”

ENI joins Trade Ranger

Industry e-commerce grouping Trade Ranger has signed up Italian ENI to the electronic marketplace.

Italian state oil company ENI has signed up with Trade Ranger, the Internet marketplace. ENI has joined Trade Ranger as a founding equity member. Trade Ranger CEO Claire Farley said “Adding ENI not only solidifies our European base, but provides Trade Ranger with a strategic partner that brings immediate value to a truly global and functional marketplace. Having a company of ENI’s stature commit to our marketplace demonstrates that we are bringing an unmatched value proposition to sellers and buyers in our industry.”


ENI’s senior VP for global procurement, Vittorio Giacomelli commented “As we explored ways to increase our global reach, develop new relationships and expand the ones we already had within the industry, Trade Ranger became the natural vehicle to help achieve our goals. ENI is pleased to be working with the energy industry’s leading companies in developing a marketplace that will enhance the way we do business.” Founded by Royal Dutch Shell, BP, TotalFinaElf, Conoco, Oxxy, Phillips, Repsol, Unocal and Statoil, Trade-Ranger deploys Commerce One’s MarketSite e-commerce technology.

Java 3D tools

INT has released a new version of its J/View3DPro graphics toolkit.

Interactive Network Technologies, Inc. (INT), has released J/View3DPro 2.0, its graphics toolkit based on Java 3D. The toolkit lets programmers visualize, manipulate, annotate, and edit complex 3D scenes without previous Java 3D or DirectX/OpenGL programming experience.


J/View3DPro simplifies the task of creating sophisticated interactive data visualizations with a higher-level, more intuitive API. The new release promises significant performance enhancements, including new file loaders for easier manipulation of 3D object and 3D studio files, texture mapping and viewer background editors, and improved editing. A free 30-day evaluation is available from

New eBiz standard approved

The new UN-backed ebXML standard is set to replace the aging EDI protocol for e-business.

Workers in the popular fields of e-commerce and business data interchange will be interested in an XML specification for e-business that was approved by the United Nations UN/CEFACT organization and industry grouping OASIS. ebXML was ‘overwhelmingly approved’ by members such as Adobe Systems, Arbortext, Auto-trol, Bentley Systems, Boeing, Commerce One, Documentum, Informix, Microsoft, Netscape/AOL, NextPage, SAP, Sun Microsystems, Xerox and IBM.


The specification is noteworthy because of the lineage of the prior standard for electronic business data exchange, EDI. The technical architecture for the new XML based version of EDI was approved last month at a meeting in Vancouver of 350 participants. The initiative is said to be ‘nearing its goal of delivering a complete suite of specifications in May 2001.’


IBM’s Rob Sutor said “Interest in ebXML continues to build at a phenomenal rate. The ebXML Technical Architecture Specification gives implementers a clear understanding of the entire initiative and how the various ebXML specifications relate to one another.” The ebXML spec covers core components, business processes, registry & repository, messaging services, trading partner agreements and security. More from

Variance Cube on Open Spirit

GeoQuest’s Variance Cube product is one of the first industry tools to work atop the new Open Spirit middleware.

GoeQuest’s first Open Spirit compliant software is its volume attribute analysis tool Variance Cube. The new release of Variance Cube can access seismic data from GeoFrame project databases or Landmark’s OpenWorks. Variance Cube’s use of Open Spirit is said to provide “ a fast and seamless workflow for customers with a variety of software infrastructures.”

Norske Shell

Beta testers with Norske Shell were enthusiastic, team leader Bernd Lahmeyer said “We regard Open Spirit as a central part of our integration strategy for the future. In order to get experience with a commercial GeoQuest product based on OpenSpirit, we tested Variance Cube. We were really impressed by both its performance and stability.”


Variance Cube uses a patented algorithm to measure dissimilarities in seismic data. The tool is used for both structural and stratigraphic interpretation.


PDM understands that Open Spirit is GeoQuest’s preferred method of integrating software from competing environments such as OpenWorks. Its possible wider deployment within GeoQuest’s own environment is dependent on longer term performance evaluation.

GUPCO’s Pyramid

BP’s Egyptian joint venture is building the ‘Pyramid’ data repository with GeoQuest technology.

Gulf of Suez Petroleum Company (Gupco), BP’s joint venture with the Egyptian General Petroleum Company is to build a repository for upstream data using GeoQuest’s Finder data management system. Gupco project manager Hassan Hataba said “The Pyramid data management project has been identified as the core company project that will deliver growth throughout the company.


It will allow manpower resources to work more efficiently.” The Pyramid will provide Gupco’s 100 users with access to data on 1100 wells and 150,000 kilometers of seismics. Gupco deputy exploration manager, Tim Marchante added “Gupco made great progress in bringing digital technologies into its core E&P business. We are now preparing to take the next step with a secure, accurate and trusted digital database.”

Sun Fire for CGG

CGG’s Houston office is an early adopter of Sun’s latest Sun Fire servers

CGG has selected Sun Microsystems’ latest midrange Sun Fire server for use in its seismic processing division. CGG IT Architect Laurent Clerc said “The Sun Fire server is simple, flexible and powerful. We are pleased with the capacity of the new UltraSPARC III processors and the new generation of Sun servers. The Sun Fire server seems particularly well adapted to transaction-based operations and heavy I/O loads, providing improved interactive response time.”

Epoch makes it with TTI

Epoch and technical Toolboxes will co-develop drilling software.

Epoch Well Services and Technical Toolboxes, both of Houston, have signed a Memorandum of Understanding on joint software development for the drilling industry. Epoch’s PERC well data management system, will integrate TTI’s Drilling Toolbox, to provide “a complete integrated solution to meet the needs of both operating companies and drilling contractors.”


Petroleum Engineering Resource Coordinator (PERC) is described as a “field-proven, windows-based Morning Report System which has quickly become the industry standard.” The combined effort will provide a solution for the management of both drilling and completion data and the new PERC software suite will include advanced engineering applications for well survey computation, torque & drag, casing design and enhanced drilling pipe and mud databases. On the business side, an AFE project planner and daily reporting module completes the offering.

Magnetic pulse in North Sea

Logtek is to provide MPI’s XACTware full wave processing in North Sea.

MagneticPulse’s XACTware acoustic full wave phase velocity analysis software will be available in the North Sea through Stavanger-based Logtek A.S. Founded in 1997, Logtek is an independent log analysis company offering a full range of Petrophysical and Log Analysis services. Logtek specializes in reprocessing ‘difficult’ North Sea acoustic data acquired by mono and dipole acoustic logging tools.


MPI’s XACTware delivers accurate phase velocity of compressional, shear and Stoneley waves acquired in difficult environments such as unconsolidated formations, cased hole, or by an under performing tool. Its built-in features allow analysis in time, frequency and space domains of acoustic signal acquired by separate receivers. XACTware is claimed to offer efficient diagnostics for quality control of acoustic tool performance.

SeisVision for OpenWorks

Geographix’s SeisVision can now share project data with OpenWorks and SeisWorks.

Landmark’s Geographix unit has upgraded its Windows-based SeisVision interpretation system to interoperate with Landmark’s flagship OpenWorks database environment. SeisVision for OpenWorks provides a dynamic link between Geographix’s SeisVision and Landmark’s UNIX-based SeisWorks and OpenWorks products.


Landmark’s customers now have a seismic interpretation system that can scale across IT infrastructures from Windows 2000, NT to UNIX. This allows organizations to “better manage their application and IT expenses by providing a completely flexible and cost-effective configuration option.”

Direct link

SeisVision’s seismic data is now directly linked to OpenWorks or SeisWorks projects. SeisVision users can interpret horizons, faults, and surfaces that are then stored, in real time, into a SeisWorks project file. The system also provides for well and curve data exchange via the GeoGraphix Discovery WellXchange module.

Grant library for Seitel

Seitel has acquired a 1300 sq. mi. seismic data library from Grant Geophysical

Houston-based Seitel has acquired a library of 3-D seismic data from Grant Geophysical. The acquisition, for an undisclosed cash consideration, concerns some 1,300 square miles of Texas’ Gulf Coast data shot from 1998 to 2000.

Future acquisitions

The transaction will add to Seitel’s earnings this year and beyond. Seitel is understood to be working on similar purchases that could close over the next 12 months.

Enron - “decapitalize!”

Enron president and CEO Jeff Skilling advocates de-integration and de-capitalization as the way to enhanced profitability, and argues that today’s technology is a key enabler.

Speaking at last month’s Cambridge Energy Research Associates’ Global Energy Plenary last month, Enron President and CEO Jeff Skilling advocated the de-capitalization of assets as a route to enhanced profitability. Skilling sees three current trends in the energy industry; the decline of vertical integration, the de-capitalization of assets and a focus on specific activities where ‘benefits of scale and competitive advantage can be realized.’

Ford Motor Co.

Skilling uses the evolution of the motor industry to illustrate the move away from vertical integration. Ford Motor Co. used to own its own forests, sawmills and rubber plantations! Then there was Toyota, which turned the industry into a complex broad-based market for parts and services, where the car manufacturer no longer owns everything, but scours the world seeking out low cost, high quality components, a more flexible business model.


Historically, such de-integration was limited by the cost of interaction. Technology is changing this by collapsing such costs, creating new forms of organization. “We'll see a big shift to de-verticalization over the next ten years.” Skilling’s next hobbyhorse is de-capitalization. Most companies have far too much of their balance sheets tied up in capital assets offering a low rate of return. The calculation goes like this. If you want a 5% real growth rate, then you need an 18-20% return on assets.


So for an oil company, producing assets should be hived off to institutional investors who would be more comfortable with a 9-10% return. Thus, a typical oil company could release around half of its balance sheet assets. What do you do when you have de-verticalized and stripped your own assets? Focus on your core competencies. Enron’s role in this? Providing services to re-integrate the value chain and “focusing on a couple of activities we are very good at.” It seems to be paying off. Enron will be number 6 on the next Fortune 500, and the company’s market capitalization has grown from $ 2.2 billion to $ 74 billion in 2001.

Industry leaders see hope

CGG’s Robert Brunck and Halliburton’s David Lesar see light at the end of the tunnel. CGG intends to restore operating margins, while Halliburton is looking at new corporate acquisitions for its Landmark Graphics unit.

CGG Chairman Robert Brunck, commenting the service company’s year 2000 financials, expects the seismic market to grow by approximately 15% in 2001, following “consistent announcements of increased investment budgets by most of the E&P Companies.”

Spending prioritized

Such spending will however be prioritized toward the development of already identified prospects rather than on exploration, leading to “a slower initial recovery of the seismic sector as compared to other services.”


CGG anticipates that the bulk of growth will take place during the second half of 2001. The strength and quality of the recovery will depend on the market share and pricing strategies of the different participants in the sector. “CGG is firmly engaged in a policy of restoring its operating margins, by capitalizing on the benefits of its in depth strategic repositioning and the re-balancing of its portfolio of activities between Land and Offshore” concluded Brunck.

Poised for upswing

In an interview with Reuters, Halliburton CEO David Lesar believes the company’s troubled engineering and construction business is poised for an upswing in operating income in 2002. Lesar denied reports of a sell-off of its engineering and construction business.

No divestment

Halliburton will continue to review its business portfolio, but the case for divesting engineering and construction was likely to become less persuasive as markets improve. Lesar stated “I think that when things recover, people will start to appreciate the kind of return on capital, the cash flow and the earnings contribution that it can make and I think they'll see that it really fits nicely into the organization”.

Niche acquisitions

Lesar said Halliburton would continue to make niche acquisitions, particularly in areas that would complement the operations of its Landmark Graphics unit. Citing the recent acquisition of the PGS Data Management division, Lesar said “I think you'll see us continue to look at expanding Landmark’s portfolio of assets because it’s been so successful and the management of data has become so important to our customers.”

© 1996-2021 The Data Room SARL All rights reserved. Web user only - no LAN/WAN Intranet use allowed. Contact.