Kibsgaard Speaks at the SIS Global Forum 2017

Paal Kibsgaard

Chairman and Chief Executive Officer,
Schlumberger Limited

Read the opening speech by Paal Kibsgaard, chairman and chief executive officer, Schlumberger

Good morning ladies and gentlemen welcome to the 2017 SIS Global Forum.

It is great to see all of you here in Paris.

More than 200 E&P companies and industry bodies are present here today from 61 countries and who are jointly responsible for 70% of the world’s hydrocarbon production. We are honored to be your hosts.

Over the past three years, low commodity prices, lack of free cash flow in all parts of the E&P value chain, combined with increasing energy demand has continued to pose significant challenges to our industry. We believe that one solution to these challenges is to make better use of the data and expertise we have within our industry by getting the right information to the right people at the right time and by redefining how we use collaboration to drive our work.

We last met in Spain in 2014 and the Forum theme at that time was “Reveal the Future Now” highlighting that exploration and production success ultimately comes down to how well we can predict the future.

While this theme was clearly aimed at predicting asset performance and not the industry macro, we got more than what we asked for and I doubt that anyone attending the Forum in Barcelona could have predicted the dramatic changes we have seen in our industry over the past three years.

Since then,global E&P spend has fallen by 50% from a record-high of around $700B in 2014. The price of Brent dropped from $115 per barrel all the way down to $27 before stabilizing around the $50 level.

Estimates of upstream job losses have reached 425,000 workers yet oil production has grown from 92 million barrels per day in 2013 to 98 million barrels per day at the end of last year. These headline numbers conceal a myriad of developments some of which are connected to competing sources of supply while others are related to our industry’s never-ending ability to innovate.

Whether we call the outcome of this “medium-for-longer” or “lower-for-longer” our world has clearly changed and with that we are together facing significant challenges. So, for this year’s Forum we have, therefore, chosen “What’s Next?” as our theme which I think you will agree is somewhat less ominous.

Now before our customers, colleagues and guests share their thoughts on this theme I would like to show you how we have changed our way of working over the past three years and how this has led to the launch of the new and exciting Cognitive E&P Environment that forms the centerpiece of this Forum.

The last three years have changed the face of our industry. What began in 2014 as competition between the unconventional oil producers in North America and the national and international producers overseas has led to a major change in supply dynamics.

Some assets have been produced harder at the risk of longer-term depletion and decline while others have benefited from the tailwinds of previously sanctioned projects being brought online.

In some areas investments into assets with marginal wellhead economics have been overshadowed by the pursuit of short term equity returns while elsewhere strong wellhead economics have overcome the extended period of low oil prices.

In spite of the many moving parts we are at this stage seeing signs of the global oil market now balancing, however, as an industry we need to accept that oil prices and E&P investments are unlikely to return to the levels seen in the past anytime soon.

So, with that it is essential that we look for ways to change the way we approach our business and the way we work and in Schlumberger we are well on our way in terms of doing this.

Five years ago, we began to redesign our own company through a corporate-wide transformation program. In doing this we focused on creating complete alignment between our organizational structure, our work processes and business systems to achieve new levels of efficiency, reliability and teamwork.

We began by deconstructing our entire universe of work processes into individual tasks before putting these back together with redefined roles, responsibilities and interfaces ready-made for unprecedented levels of collaboration.

To further support this, we also added a new state-of-the-art IT framework. In a global industry that spans a wide range of technical workflows and capabilities scale is an essential driver and for us we look to leverage scale in three dimensions.

First through the breadth of our technology offering and our corresponding domain expertise which are essential components of technology and workflow integration.

Second through the extent of our global footprint which provides us with the scale to take on any size of project and the reach to quickly respond to customer needs in any corner of the world.

And third by expanding our ability to capture process and analyze the growing volume of data produced by our operations, turn this data into knowledge and ultimately improved technical and financial performance.

When we first set the goals for our transformation program no-one expected a downturn of the magnitude and length we have experienced but we have responded to this by ring-fencing our commitment and investments into the program.

As we have progressed, the program has delivered benefits and savings not only to ourselves but also to you, our customers.

For example, through the transformation of our research engineering and manufacturing organization we have adopted techniques from the aerospace and automotive industries which has brought a new generation of technology that offers greater reliability and improved operational efficiency.

When combined with standardized wellsite procedures this has significantly lowered non-productive time and boosted operational productivity. At the same time our operating assets have been more efficiently deployed putting the right equipment in the right place at the right time while new technology systems have been leveraged to ensure the integrity of the ongoing operating performance.

As an example, all our hydraulic fracturing fleets in North America are now centrally tracked to optimize performance using sensors on the pumps to predict the onset of major component failures through advanced data analytics.

This enables the pump to be removed from operations before it fails thereby lowering maintenance costs and reducing the need for back-up equipment.

The reliability impact has been significant with a 15% increase in pump availability to operations, a 50% reduction in major field failures and a 30% reduction in customer-facing NPT hours.

In parallel with our transformation we have continued to build out our technology portfolio.

In drilling services for example, we entered the business in the early 1960s and over the following four decades we built an industry-leading position in directional drilling measurement-while-drilling and logging-while-drilling services through a combination of M&A and internal R&E.

In 2010, the acquisitions of Smith and Geoservices added drill bits, drilling fluids, drilling tools and surface data measurements, allowing us to complete the integration of the downhole drilling system.

At this stage, it was already clear to us that the interactions between the downhole and surface parts of the drilling system were critical to the total system performance.

We therefore added industry-leading rig design and control system capabilities through Omron and T&T Engineering before the acquisition of Cameron brought further surface expertise and technology to accelerate drilling system integration all the way from the top drive to the drill bit.

And finally, to convert this extensive drilling hardware portfolio into a technology system that completely redefines drilling performance we also needed to leverage the capabilities of our SIS product line.

SIS provides industry-leading geoscience expertise together with E&P software and information management capabilities. The SIS product line was created in 1992 through the acquisition of GeoQuest when we combined our existing data services and software solutions in petrophysics and seismic with the strong software culture of GeoQuest.

Reservoir capabilities were expanded through Eclipse in 1995 followed by Merak planning software in 1999 and Petrel in 2002. Internal developments further enabled functionalities to be expanded quickly, resulting in a full suite of software solutions and workflows spanning all the geoscience disciplines.

But one thing was still missing.

The various disciplines and domains still worked independently in separate software solutions that were not joined together and this siloed structure prevented the geoscience teams taking a holistic view of the system.

So, what’s next?

Our answer is to connect domains, people and processes through a new software and digital foundation.

This new solution offers far more than just an incremental change to what is available today as it represents a completely new way of working that provides new opportunities, unmatched performance and a step-change in efficiency.

In doing this we are delivering an E&P environment that removes barriers between disciplines to create a seamless pore to process workflow combining a new collaborative environment with extensive domain expertise and industry-leading software technology not only in the geoscience disciplines but in all E&P domains.

The new Cognitive E&P Environment we are introducing today as DELFI is a multi-dimensional ecosystem that unites E&P workflows from exploration to field abandonment by bringing together advances in a broad range of technical disciplines.

It makes applications and workflows accessible to all users and allows team members to build common workspaces for data models and interpretations while respecting information confidentiality.

The environment provides the best possible representation of the surface and subsurface including existing wells and facilities in addition to those that are planned.

The outcome is shared insight between all users and among all stakeholders thereby eliminating the silos of today.

The benefits are numerous as processes no longer need to be linear but can become multi-dimensional.

Performance is boosted as cycle times are compressed and uncertainty is reduced and above all business value is created, amplified and always preserved.

As an example, let’s look at how we have used DELFI together with deep domain knowledge and a complete software and hardware portfolio to set new performance standards in well construction.

Our new well construction workflow is divided into three stages. First the planning team integrates geological, geophysical, petrophysical and reservoir data from existing logs, surveys and wells to design the new well profile and deliver the complete drilling plan. Full access to all the offset data automated engineering tools that identifies risks and uncertainties and a concurrent collaborative work environment delivers unparalleled efficiency.

Furthermore, direct integration of standard operating procedures ensures adherence to all HSE standards. In the second stage the planners select the optimal bottom-hole assembly and further integrates this with the right drilling fluid to maximize both the rate of penetration and hole cleaning. And third this entire plan is loaded into the rig control system which orchestrates operations and keeps track of all well construction information in real time. During the drilling operations large volumes of data are collected from multiple sources including sensors on the rig tools, downhole instrumentation at the surface and the rigs bulk inventory systems.

Gathering all this data into a single environment enables the collaborative domain workflows where all participants and team members work in a parallel and seamless collaboration mode, avoiding inefficiencies in the handoffs between different players and services leading to dramatic improvements in both planning and subsequent drilling efficiency.

Ladies and gentlemen, the way we have applied DELFI to the well construction process as I just outlined can be replicated to any other E&P workflow from exploration through production operations all the way to field abandonment.   At this Forum, you will be able to explore the possibilities and opportunities that DELFI offers by talking with our experts and by visiting the exhibition area.   And in a moment, Ashok Belani our EVP of Technology will introduce this new and exciting technology platform in far greater detail.

So, in conclusion, our industry today faces significant challenges which can only be overcome by creating a step-change in the quality and efficiency of our operations. We believe that this can be achieved by taking a systems approach to technology development where we maximize the value creation from the hardware software data and domain expertise in a dramatically improved collaborative environment. We have established the hardware and software technology portfolio to facilitate this systems approach but we cannot realize the full potential of the system without your help and your expertise who, after all, are the end users of the technologies.

So we thank you for the opportunity you give us to engage and to push our collaboration further. We are now ready to jointly capitalize on all the efforts that have been made over the past decade to create the next generation of solutions that will help the industry face the current and the future challenges.

We are in this together. What’s Next starts today. I wish you all an enjoyable and successful Forum.

Thank you.