1. The Digital Oil Field Hype Cycle: An Assessment of where the Oil & Gas efforts are today Baker Hughes Innovation Forum Houston, TX December 10, 2013

4. Agenda The Future of the Digital Oil Field The Digital Oil Field Hype Cycle Barriers to Adoption – The “Integration” Challenge – The “Innovation” Challenge – The “Complexity” Challenge – The “Data Foundation” Challenge How do you talk to a Digital Engineer? The “Knowledge Exchange” Challenge

5. THE FUTURE OF THE DIGITAL OIL FIELD

6. Observations Resistance if Futile The trend of field automation, real-time systems and earth & reservoir modeling suggests that the Digital Oil Field is a reality New engineers and earth scientists are entering the workforce with high digital literacy (from lifelong experiences with consumer IT) and with some training in programming More and more petroleum engineering and earth science “intellectual property” comes in the shape of software But, Houston we have a problem Most of the “innovation” comes from end users or consultants working on project, the impact of central research groups are decreasing, most of the execution & support details are left to local IT Significant gaps continue to surface (lack of reuse, fragile integration, poor data foundation, lack of end-to-end system design)

8. THE EMERGING WORLD OF THE DIGITAL ENGINEER

10. 10 T-shaped expertise A mix of technology/science, business and management will ready future innovators for the big challenges presented by a knowledge-driven economy. "IT professionals will need to possess expertise in multiple domains. Technical aptitude alone will no longer be enough. IT professionals must prove they can understand business realities – industry, core processes, customer bases, regulatory environment, culture and constraints. Versatility will be crucial.“ – Gartner Group IT Professional Outlook DEEPDEEP BROAD

12. THE DIGITAL OIL FIELD HYPE CYCLE

13. Technology Hype Cycle

14. Gartner 2010 Emerging Technologies Hype Cycle

15. The Digital Oil Field Hype Curve 2013 y6 1 2 3 4 5 6 7 8 9 10 11 12 13 1.Real-Time Drilling 2.Equipt. Health Monitoring 3.Heavy Oil 4.Artificial Lift 5.EOR 6.Production Surveillance 7.Reservoir Performance 8.IO Center 9.Big Data Analytics 10.Born Smart facilities 11.Logistics 12.Advanced Process Control 13.Remote Operations

16. Barriers to Adoption

17. THE INTEGRATION CHALLENGE

18. The “Integration” Challenge From Field to Office From Reservoir to Well to Facilities Regional, between similar fields Along the Supply Chain Fully Integrated Operations

25. THE COMPLEXITY CHALLENGE

30. THE INNOVATION CHALLENGE

31. Types of Innovation “Do New Things”: Invention “Do Things Better or Faster”: Continuous Improvement / Lean Sigma “Do Things Cheaper”: Frugal Innovation “Do Things Differently”: Transformation

32. Where does Innovation Happen? Invention in the Center (R&D department) Commercialization (productization) in the center (economies of scale) Adoption at the edge (business units) Innovation could happen anywhere – Lease Innovation (external consultants) – Buy Innovation (from market suppliers) – Problem Solvers are usually at the edge where the problems are

33. THE DATA FOUNDATION CHALLENGE

36. Information Quality Train Wrecks

39. THE KNOWLEDGE EXCHANGE CHALLENGE

41. THE FUTURE BELONGS TO THE DIGITAL ENGINEER JIM CROMPTON DIGITAL OILFIELD USA SUMMIT DECEMBER 10, 2013