What is a ‘silo,’ how do you know you are inside one?

Oil IT Journal Editor Neil McNaughton reflects on industry ‘silos’ such as geophysics, petroleum engineering and process. The ‘digital oilfield’ started with a 2001 marketing push from Sun Microsystems. Today, Microsoft carries the digital oilfield torch. While digital oilfield proponents advocate ‘collaboration,’ the initiative can be seen as tending toward yet another silo! Do we need a ‘Society of Petroleum IT’ (SPIT!) to broadcast the ‘business benefits’ of digital?

What is a silo? We all know they are ‘bad,’ that their walls have to be broken down to encourage ‘collaboration’ and inter disciplinary understanding. But what exactly are they? How do you know when you are inside one, how do you know if you are breaking down the barriers, and most importantly, how do you know when you are building a new one?

Let’s start with some obvious ‘silos’ in the upstream. By and large they can be mapped to the main tradeshows and conferences. In the upstream, we have a geology silo, a geophysics silo and a petroleum engineering silo. Moving downstream we have a process silo, a pipeline silo, an engineering silo and so on. All could equally be described in terms of job function, or education and training with much the same divisions.

As an attendee of many of the tradeshow ‘silos,’ I can say for sure, that the silo walls are already in very poor shape. While not exactly broken down, you do get to see the same people at different shows—perhaps wearing slightly different hats and with a slightly shifted discourse. But the ‘seismic story’ that is told at the SPE* these days overlaps and dovetails nicely with the simulation stories told at the SEG** or AAPG***. There really is a lot of interaction across the disciplines—and this is indeed a good thing. Should there be more? Undoubtedly. Should we break down the barriers further? Maybe and maybe not. The mapping between education, job function and Society has stood the test of time. The discipline-specific silo is probably a necessity and the boundaries are fuzzy enough to allow for significant information exchange.

But there is another way of carving up the world which turns the silos into less attractive propositions and that is capital allocation. The silos do not only tell us which tradeshows to attend but they are often used to divvy up available funds. While surfing the web the other day, I came across one of those instant ‘surveys’ that webmeisters like to put on their home pages. On the Nickles New Technology Magazine home page I was invited to vote for where R&D money should go. The choices were—Exploration, Drilling, Production, Environment and IT.

I found this rather curious. Is IT really a separate cost center? Nickels is not the only one to see the world like this. As we reported in our April 2009 issue, ExxonMobil’s Russ Spahr noted that technologies like the digital oilfield are ‘chasing the same barrels as other asset management processes.’

The idea of IT as a separate cost center and silo is salutary when you consider the lip service that is paid to breaking down the silo boundaries through ‘collaboration.’ You might think that an IT ‘silo’ was unnecessary because it is naturally a horizontal activity. Its toolset is shared across the industry and while it does have its local idiosyncrasies, a geophysicist and a refiner would probably be able to understand each others’ IT before they understood each others’ processes.

To go back to the ‘what is a silo’ question, we now have a few pointers. The existence of a dedicated conference is a good start. Some job descriptions referring to the specific discipline. Cost centers of same. And the ultimate accolade—a professional society. But before you get the idea that this editorial is a pitch for the latter—a Society of Petroleum IT (SPIT!), perhaps—I invite you to reflect on one of the drivers behind an embryonic silo. The first record we have of the ‘digital oilfield,’ was in the December 2001 issue of Oil IT Journal where we reported on the first CERA study on ‘New Technology as Key to Petroleum Future.’ This was sponsored by Sun Microsystems. The date is interesting. Oil IT Journal had already been publishing for 5 years before then. And we were by no means the first. The AAPG produced Geobyte in the 1980s and Hart’s Petro Systems World was likewise in print some twenty years or so before the ‘invention’ of the digital oilfield. Both publications are long gone by the way.

What exactly happened in 2001? It was not so much that IT suddenly arrived at the oilfield, more that the horizontal vendors’ marketing departments were getting their acts together and going after juicy vertical targets like oil and gas.

Sun Microsystems’ position in oil and gas may be somewhat diminished these days, but Microsoft has picked up the digital oilfield baton and directs a significant amount of marketing effort at its ‘collaboration’ and ‘productivity’ solutions for oil and gas along with cash contributions (Microsoft was the main sponsor of the SPE Gulf Coast Section’s 2009 Digital Energy Conference for example). Silo building chez your client is a good move. If you are an IT vendor, your job gets a lot easier if you have someone on the other side of the table with all their checks already written out to ‘software vendor.’

To judge the necessity or otherwise of an IT ‘silo’ I invite you to compare and contrast the SPE’s various ‘digital energy’ initiatives and the SEG’s high performance computing (HPC) session—a report on this will appear in next month’s Oil IT Journal. On the face of it these are just two more ‘silos’ to contend with. But they are quite different. The SEG HPC ‘silo’ is very much bottom up—catering to a community with a pressing need (seismic imaging in the complex terrain of the Gulf of Mexico sub salt play) and fulfilling a real technical role of information dissemination. On the other hand much of the SPE IT Section’s discourse involves variations on the theme of the business benefits of collaboration—or worse, the tired old dogma of the ‘big crew change’ and the imminent personnel penury. C’mon! Hardly a day goes by without an announcement of more layoffs. If we get any more ‘productive’ there’ll soon be nobody left to ‘collaborate’ with!

* Society of Petroleum Engineers.

** Society of Exploration Geophysicists.

*** American Association of Petroleum Geologists.

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