Collaborating to Solve Shared Oil and Gas Industry Challenges — Drivers , Enablers , and Best Practices.

1. Collaborating to Solve Shared Oil and Gas
Industry Challenges — Drivers, Enablers,
and Best Practices
WHITE PAPER
Sponsored by: Logica
R o ber t a B ig l ian i
Se p tember 2 011
www.idc-ei.com
IDC ENERGY INSIGHTS OPINION
When a major event strikes the oil and gas industry — a change of
F.508.988.7881
regulation, a health and safety incident, or similar — it never affects
just one company. It impacts the entire industry. This is why oil and
gas companies — traditionally not inclined to share information with
competitors — are gradually exploring new ways of collaborating to
solve shared challenges.
P.508.935.4400
This is not always easy. The data involved may be commercially
sensitive; it may be subject to local data protection rules; the volume
of data is often so substantial that it is not practical to share it; there is
then the issue of safely sharing information with a huge number of
Global Headquarters: 5 Speen Street Framingham, MA 01701 USA
contractors and with joint venture partners that may need to use it.
IDC Energy Insights believes that the initiative launched by
Exploration & Production (E&P) Information Management
Association on the Norwegian Continental Shelf is an inspiring and
innovative best practice collaboration — with License2Share,
Norwegian Continental Shelf operators came together and solved
shared challenges around licensing information management.
THE IMPERATIVE FOR COLLABORATION
Oil and gas companies operate in a difficult and uncertain political and
environmental landscape. Global demand for oil and gas is back on the
rise, while E&P costs are rising. Company executives have never been
more challenged by pressure to control costs and speed up reserves
development activities and operations. IDC Energy Insights believes
some of the major industry challenges are best tackled through a
collaborative approach:
● With the so-called ending of "easy oil" — and gas — the pressure
to meet future energy demand while securing the industry's own
future has increased. As investments for deep oil or
unconventional resources are significantly more substantial, oil
and gas companies have sought solutions to mitigate and spread
risks through global alliances, M&A activities, internationalization,
and innovation, including technological innovation.
September 2011, IDC Energy Insights #IDCWP37T

2. ● In order to mitigate the risks of drilling, and more generally of
large E&P investments, oil and gas companies have formed joint
ventures (JVs). Decisions on budgets, procurement, drilling, and at
the later stage on production, transport, and compliancy reporting
need to be taken collaboratively and effectively. The global and
dynamic nature of these relationships makes the role of the JV
administrator very complex: collaboration tools need to show a
clear, positive impact on operational effectiveness and improve
processes such as ease of communication and reporting.
● Recent environmental disasters have led to additional
environmental, health, and safety concerns, and regulators are
evaluating more stringent controls. Proactive, collaborative, and
industry-led initiatives to produce comprehensive regulatory
reporting are preferable over obligations to fill in bureaucratic
forms.
● As sustainability issues (affecting people, the planet, or profits)
become more global in their impact, more standardized processes
and collaborative technologies and tools are being developed to
tackle the inherent complexities of the industry.
● The time it takes to complete major infrastructure work (such as
exploration or production rigs and refining capacity) do not need to
be impacted by ineffective JV operations.
● Oil and gas companies are struggling to find the balance between
embracing sustainability and green/environmentally friendly
practices, while facing the need to gain permission to expand their
operations into more challenging territories or to develop
unconventional resources.
The Value of Collaboration
Rethinking and indentifying new opportunities for collaboration
enables oil and gas companies to anticipate risk effectively, improve
performance, operate more efficiently, and respond to emerging trends
and challenges. Following are a few examples of areas that are
benefitting from increased collaboration.
Collaboration to Safeguard Health, Safety, and the
Environment
Developing and operating oil and gas fields involves the collaboration
of many players: operators, JV partners, specialized contractors, and
local governments and authorities. All these are often simultaneously
involved with the same assets, so in order to streamline processes,
mitigate risks, and best handle any problems that might arise, an
information sharing platform is highly desirable. This allows all
involved parties to have the appropriate level of understanding to
organize themselves to manage risks, and act promptly if problems
arise. The ability to rapidly act in the event of an emergency is crucial.
Insufficient or inconsistent information can cause delays in reaction
Page 2 #IDCWP37T ©2011 IDC Energy Insights

3. time, sometimes turning problems into disasters and disasters into
calamities.
Collaboration for Effective Operation and Risk Mitigation
Sharing operational information has a lot of benefits compared with
exchanging data and reporting to partners in a joint operation.
Inefficiencies are unaffordable, as they can lead to missed deadlines,
lower production output, rescheduling of very expensive infrastructure,
and longer time to "first oil." To limit the financial damages caused by
delays or downtime, a proper orchestration of information flows is
critical and must be backed by adequate supporting collaboration tools.
All the involved parties need access to the required information — no
more, no less — that can affect their work. This would enable, for
instance, the timely exchange of data with contractors or the
management of a multiparty workforce. Excellent collaboration
capabilities enable people in diverse locations to really work globally
as a team, allowing companies to optimize scarce or highly skilled
resources.
Collaboration to Reinforce Compliance
The value of high-quality information-sharing goes beyond
collaboration for improved efficiencies, into the realm of compliancy.
Compliance infringement is a type of risk oil and gas companies
cannot afford to take. They need to operate according to a multitude of
local, national, and international regulations and controls, and be able
to report the appropriate data to the relevant organizations, be it a
national authority or a partner in the joint venture. Once an exploration
permit or a production license is obtained it needs to be managed
during its entire life cycle.
Collaboration to Safeguard Knowledge
Another risk related to the complexity of joint ventures is that often
valuable information can be lost among partners. Many of the assets
employed by the oil and gas industry are built by one firm, operated by
another, and maintained by yet another. Valuable knowledge gained
during the build phase may be lost as the asset passes from
construction to operation. By sharing information and lessons learned
among the involved organizations, operating and maintenance costs
can be significantly reduced.
ENABLING COLLABORATION
Elevating Collaboration With Cloud-Based
Solutions
For oil and gas projects, considering the number of parties involved,
the geographic spread of these parties, and the amount of data being
dealt with, collaboration via an information-sharing platform such as
the cloud is a promising option.
©2011 IDC Energy Insights #IDCWP37T Page 3

4. A private cloud-based solution is a good choice as it guarantees
standard procedures for all parties. Also, a shared industry cloud
platform, such as RigNet/SOIL, is even more able to address security
concerns. According to IDC Energy Insights' International Survey on
Security Governance, Risk, and Compliance, cloud adopters' key
security issues when introducing cloud computing services into their
organizations are dominated by data protection and compliance issues
(25%), including data control over the cloud, privacy, and data
localization issues. IDC Energy Insights, however, believes these fears
may be misguided:
● Organizations that are wary of cloud because they believe their
data will necessarily be more secure when kept within the confines
of their organizations need to consider that as many as half of all
security breaches are caused internally, by accident or by design.
● Serious cloud providers are likely to be as good as or even better
than companies' internal IT organization because they can leverage
their scale to keep up with the latest technologies and hire the best
staff, and due to the scrutiny to which their procedures and policies
are subjected by customers and regulatory authorities.
● A significant shortage of skilled IT security specialists puts a price
and availability premium on their heads, and attracting and
retaining such skilled staff is difficult.
Customers need to ensure that service providers have undertaken
external auditing and that they have security certifications. This does
not transfer ownership or responsibility for data security and integrity
to the service provider, as the customer is ultimately responsible, but it
does lay the foundation for serious information security governance.
Information Security is Not Threatened by
Collaboration
Oil and gas companies deal with extremely sensitive data.
Collaboration inherently requires increased data sharing, but this does
not necessarily mean increased threats to data security and protection.
In effect, data security and data protection can be guaranteed, even in
collaborations where data sharing is a must, through appropriate data
protection measures and processes and adequate data management. As
oil and gas projects become more complex, involving ever more
entities, more stringent data protection processes must be put in place,
and data access and data handling must be scrutinized to ensure that
rules are respected. In the best practice case study in the next section,
security is stringent and each access is handled according to strict
identity management rules. The myth of increased collaboration and a
greater number of participants not respecting data protection must be
dispelled, as data security can be guaranteed if the correct measures
and policies are in place.
Page 4 #IDCWP37T ©2011 IDC Energy Insights

5. THE BEST PRACTICE
E&P Information Management Association
and its License2Share: An Example From
the Norwegian Continental Shelf
Members of the Exploration & Production Information Management
Association (EPIM) operate exploration permits, production, transport
licenses, and joint ventures involved in activities on the Norwegian
Continental Shelf (NCS). Members include leading global oil and gas
companies such as Chevron, ConocoPhillips, ExxonMobil, BP, Statoil,
ENI, Total, and GDF Suez. In addition, observer members include the
Climate and Pollution Agency, the Ministry of Petroleum and Energy,
the Norwegian Petroleum Directorate, and the Petroleum Safety
Authority Norway.
EPIM's mission is to make available IT solutions that facilitate the best
possible flow of information between its members. By working closely
with oil and gas companies operating on the NCS, EPIM aims to
identify areas where, by introducing collaboration platforms, it is
possible to improve information quality and flow, minimizing the risk
of inconsistent versions, reducing handling times (retrieval and version
control), and lowering costs for each individual operator. All this
needs to be done without impacting competition between companies or
joint ventures.
EPIM provides a number of services, and one of the most successful is
License2Share (L2S), implemented and operated on behalf of EPIM
by Logica.
What is License2Share?
License2Share (L2S) is the official communication and archiving tool
for administrative interaction between operators, partners, and
authorities for all licenses on the Norwegian Continental Shelf. The
application, which runs in a private cloud environment, is designed to
meet the requirements for information handling as stated in the license
agreements and encompass functionalities for publishing and
reporting, managing workflow and approval documentation, archiving,
and providing assistance for user training.
L2S is currently used by 76 companies (operators and partners) and by
the Norwegian authorities. It has more than 6,000 users, and every day
has an average 800 to 1,000 unique log-ins. Role-based views are
created for joint venture administrators. Security is stringent and each
access is handled according to strict identity management rules. L2S is
the de facto enterprise content management system for license data
throughout the lifespan of oil and gas fields. The standardized
processes and practices embedded in the solution are built on more
than a decade of operator experience in the NCS, and are a best
practice reference. For this reason, adoption of the service by each user
requires very limited customization (which is easily done during
configuration), and some functions are mandatory and not subject to
©2011 IDC Energy Insights #IDCWP37T Page 5

6. change. Lean interfaces are also provided to integrate information into
companies' own systems.
EPIM chose Logica to provide system integration services to
implement L2S and to migrate data from previous platforms. Logica is
now responsible for the outsourcing services, as well as user support
services based on OpenText Content Lifecycle Management software.
L2S: The Value of Collaboration
L2S brings together JV parties with disparate processes, data from
various sources, and applications into a single collaboration platform.
The key business value of the initiative is that companies recognize
that the collaboration does not jeopardize competition, but actually
streamlines work processes, making them more effective and reducing
information risks and costs. "All players involved are confident that
they are all gaining from collaboration," said Ove Ryland, managing
director, EPIM. "They can count on L2S to fulfill regulation
requirements in a very effective and predictable way." L2S facilitates
the information sharing inside each JV operating on the NCS, and
simplifies the process for companies deciding to join or leave a joint
venture.
A key success factor of the initiative is the pragmatic approach taken
for its implementation. Experts from the key operators worked
together to define standard procedures or data formatting and
reporting, looking for a best practice solution that would satisfy the
requirements of both companies and regulators. The same approach is
followed for any additional new functionality that is implemented. By
doing so, any adopter can count on a "best practice" solution built on
the industry's concrete experiences. In addition, companies might have
different roles in various JVs, being an operator in one and a partner in
another, for instance. By adopting the platform they get consistency
across licenses.
To summarize, the key advantages of L2S are:
● Reliable administration and archiving of JV documentation
● Reliable collaboration on events, compliance, and legal document
sharing and data management
● JV life-cycle content management of different document types,
traceable and time stamped
● Easy alignment to changes in the JV life cycle
● Compliance with local legislation, including the flexibility to
incorporate future changes in legislation
● A private cloud-based solution that is easily extendable and
scalable
● A proven and accepted industry concept
Page 6 #IDCWP37T ©2011 IDC Energy Insights

7. CANDIDATES FOR COLLABORATION
Joint venture partnerships span the entire oil and gas industry, both
upstream and downstream. There are a number of situations where a
solution such as L2S could be effectively adopted. The best practice
example described above proves that regulators are excellent
candidates for adoption. IDC Energy Insights would expect interest
from other entities, such as the Bureau of Ocean Energy Management,
Regulation, and Enforcement (BOEMRE) in the U.S.
In addition to the regulators themselves, there are three other prime
collaboration candidates: deepwater, shale, and LNG. Deepwater
assets require multibillion-dollar investments over extended periods of
time, and this alone leads operating companies to de-risk large
portfolio investments by sharing the costs through joint ventures. The
wave of unconventional shale investment in North America, started by
independents, has attracted numerous investors, from the "super
majors" to international independents and national oil companies.
Many of these investments have been through joint ventures and
partnerships, making them strong candidates to seek better ways to
collaborate. Finally, there is the LNG market, in which by nature
multiple parties are involved throughout the value chain, from gas
producer to liquefaction plant to wholesale gas consumer, making
them excellent candidates to share information.
CONCLUSIONS
Collaboration, when done effectively, allows oil and gas companies to
mitigate risk effectively, improve performance, operate globally more
efficiently, and solve shared challenges. IDC Energy Insights
recommends the following to oil and gas companies:
● Sharing specifications, drawings, and other documents, while
insuring appropriate approvals, has always been labor intensive
and subject to version confusion. Alternative approaches, such as
L2S, need to be evaluated and more often translated into practice.
Often it is not true that collaboration is not possible due to
competition among players.
● Challenge the myth that collaboration equals weaker information
security, and keep a close eye on evolving information
technologies such as cloud. Though oil and gas companies have
been slow to adopt some of these technologies, the technologies
are gradually becoming part of organizations' set-up, bringing
significant benefits to a number of critical business activities.
● When adopting cloud solutions, the location of data storage is a
key piece of information in that data storage must be subject to
privacy and usage regulations depending on the country or region.
Data handling, segregation, and encryption, including availability
issues, must be evaluated. Should there be a requirement for a legal
investigation involving inappropriate activity, the cloud vendor
©2011 IDC Energy Insights #IDCWP37T Page 7

8. must be able to demonstrate where the data is and that its
movements can be traced. Customers must ask for identification of
key personnel, such as administrators with privileged access, along
with hiring policies and employment cessation processes.
● Finally, detailed processes and agreements must be in place for
data recovery, replication, infrastructure replication, and service
restoration in the event of an interruption or disaster.
ABOUT LOGICA
Logica is a business and technology service company employing
41,000 people across 40 countries. Logica provides business
consulting, systems integration, and outsourcing to clients around the
world, including many of the Global 500. Logica creates value for
clients by successfully integrating people, business, and technology.
Logica is committed to long-term collaboration, applying insight to
create innovative answers to clients' business needs. It has worked in
the oil and gas industry for over 30 years, with oil majors, regional
operators, and service companies, throughout the world. Logica helps
its clients harness technology to extract more value from every single
aspect of their supply chains, whether that involves improving
decision making in rigs and refineries, making distribution networks
run more efficiently and sustainably, improving health and safety,
making trading decisions, or restructuring their businesses. Logica is
listed on both the London Stock Exchange and Euronext (Amsterdam).
For more information, please visit www.logica.com.
ABOUT IDC ENERGY INSIGHTS
IDC Energy Insights provides research-based advisory and consulting
services focused on market and technology developments in the
energy and utility industries. Staffed by senior analysts with decades
of direct industry experience, IDC Energy Insights covers the energy
value chain — upstream, wholesale, delivery, and customer service —
providing independent, timely, and relevant analysis focused on key
business and technology issues. IDC Energy Insights serves a diverse
and growing global client base, including electric, gas, and water
utilities; IT vendors; independent power producers; retail energy
providers; oil and gas companies; equipment manufacturers;
government agencies; financial institutions; and professional services
firms. IDC is a subsidiary of IDG, the world's leading technology
media, research, and events company.
Page 8 #IDCWP37T ©2011 IDC Energy Insights

9. Copyright Notice
Copyright 2011 IDC Energy Insights. Reproduction without written
permission is completely forbidden. External Publication of IDC
Energy Insights Information and Data: Any IDC Energy Insights
information that is to be used in advertising, press releases, or
promotional materials requires prior written approval from the
appropriate IDC Energy Insights Vice President. A draft of the
proposed document should accompany any such request. IDC Energy
Insights reserves the right to deny approval of external usage for any
reason.
©2011 IDC Energy Insights #IDCWP37T Page 9