In the energy industry, oil and gas companies as well as utilities are struggling with many changes at once. First, they're facing what the oil and gas industry has coined "the big crew change," meaning the retirement of those with the most skills and experience on how to run their current systems, processes and more. At the same time, energy companies must introduce the "relatively new" concept that remaining competitive in the future will require more than adhering to first principles (of engineering or of physics) alone.
In physics and other sciences, theoretical work is said to be from first principles if it starts directly at the level of established science and does not make assumptions such as empirical model and fitting parameters. Since analytics is all about empirical modeling and fitting parameters, there sometimes is resistance to using analytics along with first principles in the energy industry. In real world situations, however, where past performance does not necessarily guarantee a known future state, combining analytic modeling to enhance first principle modeling can provide you with possible outcomes with different degrees of confidence. The resulting information will help you make decisions pro-actively verses reacting to an event that just happened.
As I've blogged previously about using advanced analytics to help engineers think outside the box (literally). That post shows just one example of how analytics can enhance first principles. Obviously, first principles will remain a key component of success, however I've found in general there is a lack of understanding of the benefit that can be derived by introducing the use of advanced analytics in conjunction with first principles based processes.
Furthermore, those who would benefit the most from applying analytics tend to be the last one's to realize it, because they are too busy working and therefore tend to avoid anything that may introduce change and potentially impact short term results, thereby sacrificing the long-term benefits that could be achieved. For more examples and details on this topic, I would encourage you to read my colleague, Keith Holdaway's new book, Harness Oil and Gas Big Data with Analytics. Or watch this video on Better Drilling through Analytics: Visualizing Unconventional Completions with SAS.
