Importance of Data Analytics in Oil and Gas Industry

Data Analytics in Oil and Gas Industry – Understanding the latent power of a modern-day business tool

In the modern digital world, data seems to enjoy the prime position of being the most focused, detail-oriented tool to target and foster business growth in any industry. Data analytics plays an important role in determining the feasibility of the company’s decision, say to float a new product or to market a previous one with a new approach.

It [Data analysis] was listed as one of the most important skills needed in the professional world and for professional growth in the annual list of Top Skills by LinkedIn. SAS, American Multinational of Analytics software, predicted last year that big data analytics and IoT (Internet of Things)  will provide 182,000 new jobs by 2020 in the UK alone!

Important and Un-important data

Ours is the world of information overloading. There’s too much data available and we are very quick in our judgments and brand it as something which is complete gibberish. The data which we often brand as ‘gibberish’ is called the ‘dark data’. It comprises of untapped and unstructured information floated on social media, blogs, newsfeeds, journals, images, audios, videos etc. It comprises 80% of the data! And the remaining 20% is the traditional data which can be utilized. Hence, it is wrong to label data as ‘important’ and ‘un-important’. What distinguishes between the two is the proper filtering and analysis of the data.

The growing importance and industrial demand for data are increasing exponentially so much so that Utrecht University has started a new area of concentration, “Applied Data Science”. The program coordinator at the University said, “The data mountain continues to grow and the end is nowhere in sight. This growth is accompanied by an increasing demand to be able to analyse data.”

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Data Apprehension: How data can make or break business?

But a poor analysis of data can also be disastrous. Alex Szalay, an astrophysicist at Johns Hopkins University, notes that “How to make sense of all these data? People should be worried about how we train the next generation, not just of scientists, but people in government and industry.” Hence, it is extremely important to understand how to make sense of the data which we are receiving and business players have to be vigilant enough while analysing the data because that can make or break their business.

Companies which consume, run and survive on data

The significance of the product/business/service, potential customer and how will the product/business/service impact the market forms the primary criteria of a business model. Management writer Joan Magretta defined a business model as “the story that explains how an enterprise works”. For cooking that ‘story’ up, one needs what is called, ‘Data’.

Data is not only the primary tool to build the business, it is more like an essential fluid for a machine which is fed to it time and again to keep it functional and useful. It is important in the conception stage, it is of paramount importance during the running stage and it cannot be ignored for future growth.

The utility of data is that it keeps you posted about your customer-base, identification of the customers, customer’s reaction to your products or services and prediction of future trends. It, the data analysis, also helps to communicate better with customers and consumers.

Companies like Amazon, Uber, Airbnb etc. which run on data can be the guiding light to understand how certain businesses use data. Amazon, the giant of e-commerce, had started as an online bookstore. The only thing which bests explains this leap forward is data. It relies on their data warehouses which help them to strengthen the relationship with their customers without physically interacting with them.

Wal-Mart handles 1 million customer transactions every hour and consequently feeding estimated databases 2.5 petabytes, a monstrous amount of data which is equivalent to 167 times the books in America’s Library of Congress.

Another important aspect of these businesses’ growing presence is their business model and their model is ‘Asset builder’ model. There were apprehensions when Facebook acquired WhatsApp. But it was a value creation as 20% of revenue generation was predicted and that was possible because of analysis of the ‘dark data’.

Oil and Gas perspective: How to gain a leg up on your competitors?

It is for Oil and Gas Industry to realize that in order to spearhead the processes of advancements in business deals and chalking out possible collaboration which is not limited to their country base i.e. in order to actually think global, the industry cannot choose to ignore the growing importance of data and its analysis.

In Oil and Gas perspective, big data makes a lot of sense. The data received from the offshore drilling sites and otherwise can be assimilated and integrated to take some tangible decisions. Also, the process is in itself a very rewarding one as it reduces the cost by allowing the decision-makers to choose or avoid working on a particular site just by analysing the data at their disposal and consequently reduces operational risks.

The latest trend in data analytics is to adopt the norm which several businesses are adopting, that is to move their data to the cloud. Data gravity will now motivate businesses to install their analytics wherever their data lives. Data gravity does it by moving the data which needs to be correlated for analysis to the location of the largest data chunk/set.

In a nutshell, the world is generating, receiving and processing an unimaginable and unforeseen amount of data which is creating a lot of new possibilities, in terms of spotting business trends, movement and prediction of business profitability etc. which couldn’t have been predicted earlier. Hence, it will be beneficial for the Oil and Gas industry to hop in into the cohort of businesses which are using Data analytics to its advantage.