2000 - the virtual year

PDM editor Neil McNaughton reflects on the past year’s achievements. A year of significant moves on the corporate front, with more industry consolidation. But despite innovations like application service provision, e-commerce and high tech visualization, industry fundamentals remain uncertain.

The good thing about being an editorialist is that no matter what the state of the nation (sorry the industry, getting carried away there) you always have something to talk about. In fact during the bad times, there is more to talk about than in the good times. However, an editorialist should always avoid schadenfreude, should not revel in others’ misfortune. I’m kidding of course. Schadenfreude is core business to the editorialist and 2000 was a good year.


The industry at large has been in a parlous state for the last couple of years in the aftermath of oil co mega mergers. Apart from the short term misery of job losses and internal politicking there is the realization that while size is a good thing financially, organizationally it is a handicap. It is much easier for a small focused organization to implement an efficient IT system, than for a large one - especially if the large company has two or more large legacy systems to fuse.


2000 saw a big turn around in the oil price, but unfortunately, oils did not seem to register. E&P budgets are fixed firmly in the cost savings siege mentality of previous years. This is having a catastrophic impact on the service sector, which in turn, has seen its own mega merger - with Geco and Western pooling resources to chase the dwindling seismic market. Rationalization in the E&P software industry is happening with CGG’s sale to Paradigm and PGS’ to Landmark.

Interop - the end!

2000 saw the end of any real attempt to make E&P software interoperate. This was due to the advent of a new computer ‘virus’ - XML! XML is a data description language which has set the IT world on fire, but while it is a step in the direction of simplicity, its ‘eXtensibility’ means that it can never be a standard! XML is not a lingua franca, just a common alphabet. We are in effect back to writing shell scripts for file transfer-based data exchange. The difference with XML is that the files carry their own data format descriptors - far from a bad thing, but no revolution.

One-stop shop

With the demise of interoperability à la common data model, major and not so major oil companies opted in droves for one-stop E&P shopping. Fortunately, although this has inevitably increased polarization of the Landmark-GeoQuest spectrum, most one-stop shoppers can’t resist some best of breed buying in the sales.


Application Service Provision is another innovation which is technologically cool, but economically challenged. If you believe that outsourcing applications and data management will lead to significant cost savings to buyers - then macro-economics would imply that there is less money available to the developers. OK this argument does not take into account the economies of scale and potential synergies that the ASP may benefit from. But this is déjà vu all over again! Remember the outsourcing debate? What makes good outsourcing? Low tech, well understood, codified and horizontal tasks like document scanning or forms processing. What is E&P? - high tech, hard to figure, variable geometry and vertical. Need I say more.


Was 2000 the year of e-commerce? Well it should have been, given the hype. But I think we’ll have to wait a while to see if our way of working is really going to be revolutionized by e-commerce. One problem is the sheer number of sites out there. Buyers need to spend nearly as much time surfing the Portals as they used to do calling the suppliers. There is an intriguing dynamic between the Portal’s desire to grab market share and the buyers’ need for a standardized interface. We’ve seen this before and we know that the outcome of such competition is not always pretty. As in previous technical competitive areas, standards are needed, and XML is a necessary but not sufficient condition.


PDM has been praised for its independence from advertising. One notable exception to this is our shameless plugging of our own products. 2000 was a great year for the www.oilit.com website which has received some 400,000 hits to date. The Oil IT Buyers’s Guide is proving a popular service, and the whole website is regularly indexed by major search engines. Take-up of the PDM Intranet site license is good, and a new service of in-depth Technology Watch reporting will be announced shortly.

Virtual exploration

The cover of the January 2001 issue of Harts E&P caught my eye and I thought summed up 2000 rather well. The article refers to the promised new dawn of high-tech internet driven interpretation technology, but the title “Virtual Exploration” is positively Freudian. There you have the year 2000 - high tech and no budget, virtual exploration indeed!

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