May 1, 2001
"You can breing me a hammer, but can I build a house with it?" This simple question from an oil industry veteran sums up the what the "new economy" is offering the upstream petroleum industry.

Where's the value?

"You can bring me a hammer, but can I build a house with it?" This simple question from an oil industry veteran sums up the what the "new economy" is offering the upstream petroleum industry. New economy ventures are populated with countless gimmicks to extract investment, often with less-than-adequate delivery performance or awfully weak focus on actual buiness conditions.

We ask: Will it define geological structures better? Will it find more oil? Will it help drill faster? Will it produce more? Will it...well, you know the concern! When you get past the pormotion, proposals, and innuendo, the answer often amount to: "not really, but it is a good hammer."

Yes there are software programs , better tools and evaluation systems, and more efficient methods. But how do you separate these from the plethora of ideas and developments being promoted?

Why have all of these programs and devices emerged in such volume? It begins with many "new economy" businesses. Most are low entry-cost: hire a sofrware writer, find a market niche, promote quickly and widely, and tout the opportunity to attain competitive advantage. Soon, bells and whistles begin to appear as substance.

Many successful programs developed within producer firms, service companies, and contractin firms have been heavily tested against skeptical "what does it do better, cheaper, faster, etc." engineers. Some vendor-contributed programs, principally in E & Pmanage, accoutntin, decision-making, procurement, and transaction, are making major contributions to efficiecny, but truely effective programs are rate.

One of the major tasks that "old economy" upstream petroleum professionals will have over the coming months is sorting trhought the remainsof rhe "new economy," integrating what is truely functional, and discarding the remainder.

Greener pastures

One of the most difficult strategies for any company to embark upon is to create or join businesses that compete or take market share from existing products or business. Such is the case of oil and gas producers who find themselves of necessity investing in technologies and companies that are developing competing renewable energy forms.

An extension of that same investment thrust-fuel cells, hydrogen power, etc.- is closely related, if only because no one really knows whether oil and gas or their derivatives will be the most efficient power source for fuel cells. The presumption is that hydrocarbons will play a role-either directly or indirectly. In any case, the cost to set up a global consumer refueling infrastructure is substantial, and oil compaines have an in-place network.

Global spills

We have a dichotomy in capability: news of oil spills anywhere in the world circles the world in minutes, but it takes days and often weeks to mobilize spill recovery equipment and crews for environmental accidents in remote areas of the world. While advanced maritime nations have some type of reaction capability to oil spills in place, the remining 90% of the workd is woefully short of anything to respond with.

Because oil fields are spread around the globe, and large and small tankers must move crude oil products to every port in the world, this 90% vacuum has to concern producers and transporters everywhere.

The petroleum industry must become more active in on-call global response operation, or better, a regional response effort. The presence and efforts of spill collection and wildlife rehabilitation teams, however poor the early response results may be, are important in terms of appearance to worldwide audiences. In the end, it is not the involved transporter or producer who gets most of the blame, but the entire petroleum industry.

Leonard Le Blanc

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