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Due Date 03.08.2012 MATRIC No. 1106873 SURNAME FIRST NAME(S) COURSE & STAGE
Eg MSc Oil & Gas Engineering MSc Drilling & Well Engineering

Date Submitted 20.07.2012

For official use only LATE DATE

KARAKAPADATH PUTHENVEETTIL MOHAMMED MOHAMMED FAISAL MSc Oil and Gas Engineering Full Time ENM203 Business Essentials Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry JOHN BISSET

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INDEX

Serial

Contents

Page

Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry 1
Executive Summary

Introduction

Issues of Knowledge Management System (KMS)

Recommendations

Conclusion

Reference & Bibliography

ENM203 BUSINESS ESSENTIALS Executive Summary Knowledge is considered as the key tool to explore all oil and gas reserves in this century by service companies like Schlumberger, Halliburton etc., but the members of such companies remain doubtful about the knowledge management strategies. This report is focussed on the problems and issues of existing strategies of knowledge management system of Robert Gordon Drilling Company (RGD). The current knowledge management is operated by both software and personal expertise in RGD which integrates collected knowledge and provide them during normal service operations. The software has a back up of all reserves till date that company has worked on which includes all practical issues faced during the project. Researches done are also fed in to the software which enables them to provide an automated response during a new project. This helps to enhance the project outcome for the company. Based on the information collected from company logs, the knowledge management system of the company has been reviewed and major issues have been detailed in the report. The main issue have been found out to be that company relay on machines and fail to give adequate training for personals to come up with their innovative ideas. These issues seem to be rose from the outcome of lack of motivation. Most of the team formed in company believe in following the regular standard than thinking out of the box, which isnt a good practice for an industry like oil and gas. The process improvements required has been recommended after considering whole process outputs.

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Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS Introduction All companies have their own approach towards knowledge management. In some the entire process rely on machines while in some other the process is carefully handled by human expertise and then fed in to machine database for further process. Both way the whole process turns around between people and IT assisted networks. RGD follows a strategy in which both of these resources are implemented, i.e. RGD knowledge management codification strategy consist of both people to people and IT software. Company believes that both are necessary for a successful foundation but in reality it rely much more on machines than personals. Companies commonly have a huge pile of data about well summaries, field reports, well performance and failure reports. The documentation of this much data is a headache for most companies and these are handled by machines as they store in to some electronic memory devices. Even though the e-copies may not remain intact for all the time, the ease of access makes them more reliable than handling it manually. All this is done to make sure that these data can be used in future as a reference to future tasks. The expertise knowledge from people will fed in to the system software to fill in the voids. The software is programmed by complex algorithms which are not easy to decode and this automated software process all inputted data to prepare an overall report. Even though it handles data from all areas such as all planning and operational actions, it treats some data which related to well quality and productivity issues separately. The old well data will be taken into consideration by the software itself during the new well planning process as the old data has been stored in the old databases. For example; the system will revoke Log-plots of depth against lithography to compare with new data as according to the interest. The review of existing knowledge management system had been done after considering several projects have been taken in to consideration. During comparison process a lot of issues have been raised as there were a lot of missing components which couldve improved the overall process. Page | 2

Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS Issues of Knowledge Management System (KMS) Most of the companies agree that, Knowledge Management Issues arises mainly due to technology malfunctions, processing issues, peoples faults, and lack of content awareness. As a reputed organization our company must have a recent and advanced technology to make progress in the knowledge management arena, especially in todays competitive business environment. However, to achieve maximum success, even more awareness must be given to the other issues. After reviewing the current system the possible issue found were, 1. The Difference In Perception Between Human & Machine The strategy of encoding the data received from experts different for human and machine. Machine works by a certain code or set of instruction that already fed in to that, while human works according their own will. Some firms rely on human brain, while some other companies use both machine and human for encoding the knowledge they earn from previous fields. In RGH the companies use both but the whole system rely more on machine. The codified software which is used for this purpose is supposed to be used for future projects on the basis that, once data is entered into the system it can be reused for many future jobs. This will lower the costs but the software cant go beyond it is limits. Some jobs require going way beyond the usual process methods; it sometime needs to bring up innovative ideas which cant be done by this set of instructions. The company has to offer a lot more than its standard procedures to complete these kinds of jobs. Review of the system found that personals who get used to the software didnt take much effort to create innovative thoughts; they rather like to stick to the basic standards. This is not really acceptable in such an industry like oil and gas. Personals with expertise knowledge are important, if the company is looking for a long run in such a competitive environment. Both human and machine strategies should be implemented with equal importance to make the system more efficient.

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Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS 2. Data Handling In KMS the efficiency of the system depends upon the efficiency of data handling and its integrity. The companies which cant preserve their data properly will find it so hard to survive. Every data in the data base has to be classified according to their size and diversity. As the size of the data increases it creates a contrary impact on individuals and diversity of the data is important as the situation and issues wont be the same for every project in oil and gas industry. The company doesnt need to all data in the databases similar data can be omitted to avoid the interference of data and to make the database work faster. For these every data entered into the system must be well structured and on basis of its size and diversity. In practice for all these the system requires a massive storage facility and a faster retrieval facility. In RGD at times, the operators do a herculean job to pull out the correct decision. This is the outcome of a non-proper data handling system. Confidentiality issues come handy with data handling performance issues. 3. Lack of Motivation Electronic whenever discussion requires the representatives leads to to answer effective necessary. Effective search algorithm

description of the document which is further posted in the corporate intranet. Among the recognized experts, they can find the execution of work for the advice seeking users less motivational and chances for the experts to leave behind the future projects are also possible. Straight forward monetary incentives are a strategy to increase the incentives and motivational factors, which proved to be ineffective in the long run. Later certain additional strategies such as alternative methods along with the firstly proposed monetary incentives proved to show much better results than before. Schlumberger is an example for such strategies. They included a group which was equipped with qualitative and effective contents, which added more effective motivational skills to the whole enterprise. This can also boost up the whole enterprise and thus results in the continuous flow of knowledge in KMS. Halliburton is another example where improved technical system proved to be more advantageous in the Page | 4

Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS organizational memory system. Such strategies along with a technical approach helps in providing a better view point for the expert panel and thus they can produce a much better research area in KMS. 4. Lack of organized Learning When KMS strategies are used intensively, it creates certain impacts in the long run which are discussed in detail as an important issue to be solved in this area. This can prevent the workers or the employees to stick on to one solution that has already been implemented, without searching for other effective strategies. This can lead the systems to a competing area which in turn affects the platform of organisational learning as well as innovation. Experience is another term or symbolised here as a vital one in the process of learning through KMS strategy. Experience makes things easier. Though it seem to show effective results in the initial stages, in the long run it can also turn out to be ineffective. Thus it can be concluded that KMS strategy brings about both positive and negative effects to the scenario. Experts or users need to concentrate on the long term issues to prevent the system from destruction. Reuses of knowledge can practically bring perfection or a clear cut solution but it can in a way cause inhibition to new outlooks and a more effective solution too. Lack of difference in the process of learning and innovation causes bias in organisational learning. 5. Technical Failures Nowadays softwares are getting upgraded so fast and on a periodical basis, these new upgrades have to be done on a periodical basis to avoid technical failures. Every system becomes successful when it is able to extract knowledge that required but sometimes this extracted knowledge wont be relevant for the situation, These issues have been termed has technical failures. For example; In RGD Softwares are used to extract knowledge about hydrate formation (Fig-1), well control issues or blow out prevention to use that for a new developing well which is facing same issues similar to a previous developed well. This software will search for metaphysical data and concepts relevant to that by comparing the word patterns but sometimes it fails to deliver the correct one or it may take long duration to search the whole database. Page | 5

Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS

Fig-1 Automated extraction of information, EDW data shows events that occurred before on similar situations (Rosemary et al 2002) Recommendations The following recommendations can be used to improve drilling knowledge management issues that have been found out during reviewing the current KMS. A third party server with proper access granting permission format should be used to provide access to stored information. A master template of each field should create after reviewing its individual well operational difficulties and summary reports. All team should use same format for the master template. Proper training should be given to crews. Summary of tasks completion and its duration should be provided in each template. Suggestion from employees should be awarded properly. Data processing and accessing should be improved.

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Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS Risk assessment should be done periodically at the beginning stage of each process. A conceptual work flow should be delivered to each team member. Proper communication between crews should be facilitated. Skill development workshops should be conducted on an annual basis. A friendly medium to share information between companies should develop within the code of confidentiality policy of RGD. Maintenance reports should be inputted into the system and updated it without any delay. Conclusion The review of existing KMS has been done to find out the issues associated with it. The main issue have been found out to be that company relay on machines and fail to give adequate training for personals to come up with their innovative ideas. These issues seem to be rose from the outcome of lack of motivation. Based on these it is essential that company have to upgrade its KMS with recommended changes that given above. A fool proof Knowledge Management System is substantial for a drilling company like RGD. Word Count: 1990

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Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry

ENM203 BUSINESS ESSENTIALS Reference & Bibliography 1. Rosemary I., Simon K., Edson N., 2002. Drilling Knowledge management, What is missing and can we fix it, [e- journal] Available through: One petro [01.07.2012] 2. Jungpil H., Subramani M. R., [PDF] [Accessed 01.07.2012] 3. Hansen, M.T., Nohria, N. and Tierney, T., 1999. What's Your Strategy for Managing Knowledge, Harvard Business Review [PDF] Available at < http://sid.decon.unipd.it/materiale9/bel_eat_letture_undicesima_settiman a/hansen&nohria&tierney.pdf> [Accessed 01.07.2012] 4. Apoorva A., Singh M. D., 1998. Understanding Knowledge Management: a literature review, International Journal of Engineering Science and Technology [PDF] <http://www.ijest.info/docs/IJEST11-03-02-090.pdf> [Accessed 01.07.2012] 2002. A Framework of Knowledge at Management Systems: Issues and Challenges for Theory and Practice*, Available <http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.114.7693>

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Knowledge Management issues for operating and/or contracting companies in the oil and gas Industry