You may have heard the phase that big data is the new oil. Well (pun intended), if that is the case, then analytics should be thought of as the fracking technique used on data to improve the value you get from this new oil. Fracking is actually just one of many enhanced oil recovery (EOR) techniques; there are other forms like CO2 injection. But fracking is probably the most widely known EOR outside of the oil and gas industry.
EOR is any process, or combination of processes, that may be applied to economically increase the cumulative volume of oil that is recovered from the reservoir at an accelerated rate. EOR is also sometimes referred to as improved oil recovery (IOR). IOR processes target mobile oil or gas and EOR processes are concerned with trapped or immobile oil or gas within a well. Basically, IOR and EOR are about getting more oil or gas out of a well, economically (at a profit). If it costs you $100 to get a barrel of oil out of the ground, but you can only sell it for $75, no one would do it.
Analytics is to data like EOR/IOR is to oil and gas, because just as there different EOR/IOR processes there are more than one form of analytics: data mining, forecasting, and optimization which have different techniques under each of these three main umbrellas. Similarly, EOR/IOR is about increasing the value or volume you recover from a well, analytics is about increasing the value you receive from your data. Implemented correctly, analytics provides a strategic advantage to any company that chooses to invest in it.
If we step away from the metaphor, the interesting point is that energy companies are using analytics to improve both their EOR and IOR processes, so you could say analytics is literally part of the EOR/IOR process. For more specific information about using analytics as an EOR/IOR process, see my colleague, Keith Holdaway's, recently published book: Harness Oil and Gas Big Data with Analytics.
The sooner you start, the bigger the advantage you will have over your competitors or the larger you can grow your profit margin. When is the last time you increased your profit margin without increasing the volume of your output? Analytics can do just that by reducing your costs, improving how systems are run, and by improving safety by allowing actions to take place prior to an event actually happening.
If you can improve your processes so that it costs $65 to get that barrel of oil out of the ground, then all of a sudden it becomes economically viable to extract that oil. If you can predict when a piece of equipment may start running out of specifications prior to it actually performing poorly or failing, you can reduce your non-productive time (NPT) as well as improve safety.
These are just a few examples of what analytics can help you do today with the data your organization has collected as well as with the data your organization is planning to gather in the future. To learn more, see our Oil and Gas offerings page, which includes whitepapers, videos, and more. Or, download this whitepaper about analytic innovations in the oil and gas industry now.