The western Canadian petroleum exploration and production industry has evolved considerably since the oil price shock of 1986 and the gas price shock of 1990-92. Early adjustments focused on reducing G&A. The second, current phase has an operating emphasis. The primary goal is to meet shareholder objectives - whether those owners are public (stock market) or private (parent company). In evaluating how the industry is doing and how we measure success, Ziff Energy examines critical success factors (CSF) including the role of technology utilization.

We measure the performances of the companies in broadly defined E&P strategy areas in western Canada, comparing the leaders to the industry average in those trends. The leaders are those companies that more than replace production with reserves additions, at F&D costs lower than the value of the product found. All leader companies recognize effective use of technology as a CSF in achieving the low F&D costs and high reserves replacement ratios.

What technologies are critical to success in creating a real competitive advantage in the various oil and gas strategies? Through data questionnaires and personal interviews with the executives or managers of the leaders, we identify technology utilization practices in the various strategy areas, and correlate them with~F&D cost and reserves replacement benchmarking results.

Several patterns emerge. The leaders use only appropriate technologies, and know when not to use those that cost too much. They employ off the shelf technologies, rather than develop new ones themselves. Each of the leader companies provide an effective dissemination of technology in their organizations. The most successful companies require technology to help staff do the basics well, while demanding the application of some "art" in the process.

Our study identifies technologies that create a competitive advantage for the leaders in the various strategy areas. Our innovative graphical presentation clearly shows what the leaders do in each strategy area, compared with the rest of industry, and indicates which technologies help create their success.



About the Author(s)

Mr. George Eynon is Vice President, Corporate for Ziff Energy Group, and is responsible for the firm's "Corporate Xray"™ studies, as well as developing the corporate custom consulting practice in strategic and operational areas of the Exploration and Production business. Over the previous four years he consulted widely to national oil companies and to a range of Canadian and US oil & gas companies.

Mr. Eynon has 24 years of technical, management and senior executive experience in the Canadian, US and International oil & gas industry with a wide range of companies: integrated multinationals (Amoco Corp, Suncor Inc), large independents (Superior Oil, Bow Valley Industries), junior (Paramount Resources) and start-up (SMI Oil & Gas). He has held positions in exploration, planning & economics, strategic planning, operations and executive management.

He has also worked with several industry, professional and service organizations. He is the current Past President of the CSPG, the chairman of APEGGA's Practice Review Board, and is an officer candidate for the 1997-98 AAPG Executive.

He has a B.Sc. from the University of London, an M.Sc. from McMaster, and is a graduate of the Sloan School of Management at MIT. He has written and presented numerous papers, articles, short courses and speeches on a wide variety of geotechnical, business and management aspects of the oil & gas industry.



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