Producers will spend $1.4 billion for telecommunications in 2000

Wider bandwidth, larger data transfers driving costs

As worldwide demand for fuel and related products increases, the way for compa nies to gain a competitive edge is to become more agile in exploring locations around the world. This pressure to think and act internationally emphasizes how important it is today to have a state-of-the-art communications system that can give employees anytime, anywhere access to information.

When working in a remote site or trying to make a fast, well-informed business decision, knowledge management becomes a company's most important asset. Data access and the ability to share data across a network is becoming increasingly important to oil and gas companies.

Currently, the demand for data is doubling every 18 months. Oil and natural gas companies invested $1 billion in telecommunications services in 1998, and estimates indicate that businesses will spend $1.4 billion by the year 2000.

The good news for businesses is that while the demand for and volume of data is increasing, the price of transporting that data is decreasing. The evolution of technologies such as asynchronous transfer mode (ATM) and Internet protocol (IP)-based infrastructures as well as the convergence of voice and data will continue to drive prices down. Estimates show that IP will transport 50% of all enterprise data and voice traffic by 2002.

Synchronous transfer

ATM technology is particularly well suited to meet the data transport demands in the oil and gas industry and offers significant benefits over satellite. The ATM service, with high bandwidth and multi-media capabilities, runs at speeds of up to 155 megabits per second. Although easier to deploy, satellite technology, with speeds of about 64 kilobits per second, is about 10 times more costly for oil and gas companies.

To take advantage of this cutting-edge technology, however, a company must know where to turn for help. Even though many major oil companies have invested in building high-volume data communications capabilities over the last several years, it will be difficult to keep up with the ever-advancing technology alone.

Companies that chose to go it alone constantly will be fighting a battle of obsolescence. Realizing this difficulty, most multinational energy companies choose to look to a partner to support their data and voice communications.

Shell's network

In 1996 Shell, which managed a network based primarily on X.25 and frame relay technology offered by various suppliers, began a search for one global networking supplier. As the company began to expand global operations, it realized that knowledge-sharing and rapid access to infor mation in an on-line world had to be a top priority. Initially the company sent out an RFP requesting pricing on a group-wide frame relay network that would connect more than 150 locations.

Equant suggested that Shell look not at its network requirements, but rather allow its busi ness requirements to dictate the technology. The result - ShellNet - is a worldwide intranet based on TCP/IP using Equant's global network. ShellNet provides rapid access to infor mation inside and outside the company to support international team working so that Shell businesses can act decisively on a global scale.

Shell required the network foundation to be built quickly. It gave the go-ahead in May 1997, and in less than one year, 80 connections were migrated to IP ShellNet. The company is realizing benefits to the network, including the building of virtual knowledge teams that can share expertise on a worldwide basis. Shell weighed several factors before deciding on a provider. Among Shell's networking requirements were:

  • Worldwide services for staff to collaborate electronically 7 days a week and 24 hours a day
  • Support for staff working at other offices while traveling or from home
  • A secure infrastructure and systems that are trusted by staff, customers, and partners
  • Secure electronic commerce
  • A flexible network based on the latest technology.

Looking ahead

Although most oil and gas companies have not deployed communications networks as extensive as ShellNet, many have used global networks as a basis to gain access to field offices, remote exploration sites, manufacturing facilities, and key business partners. As a company's needs for data transmission and the sharing of infor mation change and grow, the network backing that company should be flexible enough to keep pace and meet current and future requirements.

The deployment of global applications that can aid in seismic exploration and production include CAD file transfer for engineering drawings, seismic modeling tools for exploration and production teams, CAD file transfer for engineering drawings, and real-time decision-support systems for global market trading.

Other relevant applications include enterprise resource planning using SAP R/3 or JD Edwards, Advanced MIS systems for forecourt retailing, executive reporting for traveling and remote project teams, and inter-company document exchange for alliance partners.

Applications will become increasingly advanced, and emerging technology will put additional weapons in the arsenals of oil and gas companies. Expansion of ATM will provide companies with improved availability of required charts, maps, manuals, and other geographical documentation; executive voice, data, and videoconferencing tools for improving project planning, reporting, and discussions; and the ability to distribute and manipulate large files from centrally managed datastores, including seismic archives.

Also on the technology horizon is the increasing convergence of voice and data. Convergence will offer companies another opportunity to cut costs, potentially giving companies a 20% saving over using separate voice and data networks.

Technology to assist oil and gas sector companies is changing and expanding rapidly, but these changes should not intimidate businesses. Companies should instead become inspired to look at emerging technology as an opportunity to stay ahead of their competition.

Shell is an example of a company that took a different view of information technology, looking at it as an enabler rather than a commodity. Companies that adopt a similar view will realize that the possibilities of using information systems to make business operations more efficient are endless.

More in Company News