WellPoint Systems' Blog

According to UPI, crude oil prices topped $81 a barrel Friday on the New York Mercantile Exchange, closing at $81.50 a barrel, up $1.29 for the trading session.

Analysts said the higher price was boosted by U.S. jobs data and positive comments from Chinese officials about economic growth, MarketWatch reported.

“In addition to the jobs data, which was supportive, we also have the specter of geopolitical concerns in the market,” said Bill O’Neill, managing partner at Logic Investment Services.

The Labor Department said the nation’s unemployment rate held steady at 9.7 percent.

Also on Friday, Chinese Prime Minister Wen Jiabao told the Chinese Legislature he would maintain an 8 percent growth rate for the economy this year, MarketWatch said.

Gasoline and heating oil futures also closed higher after starting the day at $2.2624 per gallon for gasoline and $2.0874 per gallon for heating oil.

Natural gas for April delivery added 1.8 cents, to close Friday at $4.593 per million British thermal units.

At the pump, the national average price of unleaded gasoline was $2.72 per gallon, up from Thursday’s $2.706, AAA said.

Data quality has proven to be critical for good and accurate decision making in the oil and gas industry. Where most companies use technology to build their businesses, a common problem is that the information from each of their systems isn’t readily shared with other systems. Improving the quality of data is challenging, yet highly beneficial, in today’s business environment.

In E&P Magazine’s “Data Quality, What is it Worth,” Michael Weiss, of WellPoint Systems, emphasizes the bottom line of a good company: the integration of sources of data. To read the article, see http://www.epmag.com/Magazine/2009/11/item47356.php.

Oil and Gas Pros Rapidly Embracing Social Media and Collaboration Tools, Yet Corporate Policy Lags, According to New Microsoft and Accenture Survey

Respondents cite productivity boost and flexibility, but security concerns remain.

Nearly 75 percent of oil and gas professionals see value in using social media and collaboration tools at work — an 83 percent jump from responses in last year’s similar poll — but corporatewide endorsement of these tools continues to lag behind, according to a Microsoft Corp. and Accenture (NYSE: ACN) survey released recently at Microsoft’s Global Energy Forum in Houston.

The Microsoft and Accenture Oil & Gas Collaboration Survey 2010, which surveyed 275 professionals within international, national and independent oil and gas and related companies, found that social media and collaboration technology adoption is primarily a grassroots phenomenon within firms. At the same time, half of those surveyed said their companies prohibit or restrict the use of many of these publicly available tools, such as photo-sharing and social networking sites.

Oil and gas employees stated that productivity gains (37 percent), work flexibility (95 percent) and the ability to complete projects on time and on budget (36 percent and 38 percent) are the primary reasons for use of social media and collaboration tools. However, companywide endorsement has not mirrored employee demand. The survey found that only 11 percent of social media adoption is driven by the executive suite, and higher-ups’ greatest concerns center around a “limited ability to control or provide a secure environment” (39 percent).

“With fewer resources overall and colleagues scattered across continents, it is no surprise that oil and gas professionals are increasingly turning to technology to connect and share information,” said Craig Hodges, general manager of U.S. Manufacturing and Resources at Microsoft. “However, we recognize that securing company data and intellectual property are obviously key company priorities, and there are many corporate collaboration technologies today that achieve both goals.”

“The survey shows that companies are not realizing the strategic benefits from their collaboration tools investments such as increased work-force performance, improved sharing of knowledge or skills across the work force,” said Craig Heiser, Accenture senior executive in the Energy industry group’s management practice. “To realize the full potential of collaboration investments, companies need to change work processes and individual roles while training their employees on how to achieve improved business performance through collaboration.”

Johan Krebbers, Group IT architect at Shell, confirmed the industry’s need for heightened work force collaboration.

“The challenge we have with exploration is that we have people positioned globally to explore for oil and gas,” Krebbers said. “Eighty percent of our teams are global teams, with members in multiple locations around the world. We must offer world-class collaboration capabilities so that our people can work at a global level.”

As the world’s largest E&P expo, NAPE (North American Prospect Expo) has generated a marketplace for the latest upstream prospects, properties, and technologies, and this year’s show was no exception. Held on February 11-12 at the George R. Brown Convention Center in Downtown Houston, it was a significant networking and marketing opportunity for WellPoint Systems, who has already made a positive impact on its user community through customer focus and innovation.

At this 18^th year of NAPE, WellPoint’s aspiration to continue to serve the energy industry was seen through the Oil & Gas Investor publication’s interview with Neil Carpenter, Senior Vice President of Worldwide Sales for WellPoint. Here he discussed his forecast for how WellPoint plans to better adjust to its customers’ needs in the present economy. By growing the company’s presence globally while maintaining solutions to the challenges faced by those in the oil and gas industries, WellPoint Systems will be able to keep a strong existence in the minds of its customers. The NAPE expo has been a staple of the energy and exploration market and continues to house many alliances, trades, and purchases twice a year in Houston.  As the industry’s window to the world, NAPE holds hundreds of exhibitors and expects up to 14,000 attendees eager to learn more about the current state of the industry. NAPE participation was strong this year, and WellPoint Systems will continue to take the opportunity to network and explore new ideas at NAPE expos in years to come.

WellPoint Systems hosted an executive breakfast in Houston on Friday Jan 22nd. Vikas Dwivedi, partner, BTU Capitol presented an Energy Outlook for 2010. Some takeaways from that presentation were the following:

Conclusions for the Crude market:
► Normalized price estimated at $90 per barrel
► Refined products will continue as primary global energy source
► Better economics than alternatives
► Product demand is GDP driven; does not need to return to trend for high prices
► Supply growth will be difficult without accelerating costs

Summary for the Natural Gas Market:
► The US natural gas market has a bearish outlook for at least the next 12 to 24 months.
► High productive capacity and limited demand are highly visible drivers. In contrast, the impact of bullish drivers like carbon legislation, CNG, and low rig counts are less visible and less certain.
► Demand
► R&C demand growth anemic over the short, medium, and long-term.
► Industrial demand decline started before recession and will continue for the next three to four years.
► Power sector is still the key driver. May be soft for 2 years and then pickup.
► Carbon, CNG initiatives, weaker dollar, and ethanol demand are positives.
► The U.S. can become one of the largest exporters of natural gas over time. (A point that is seemingly reiterated when you hear any industry expert speak)

Conclusions and observations on Cap and Trade
► Very little carbon savings will be achieved without significant technology development
► Carbon charges will increase energy prices and U.S. industry will be less competitive
► China is building the equivalent of the entire U.S. coal fleet between 2007 and 2012
► Approximately 38 TCF /Yr of carbon from U.S. power plants.
► Nobody, regardless of approach knows for sure – nothing but highly informed views
► Bill is dead for now

From Oil and Gas Journal

Nov 25, 2009
Curtis Williams
OGJ Correspondent

PORT OF SPAIN, Nov. 25 — BP PLC Chief Executive Officer Tony Hayward says more money needs to be spent on exploration and development if the world is to meet increasing demand for energy.

Speaking at a news conference in Trinidad, Hayward said BP was projecting that by 2030 the world will need at least 45% more energy than it consumes now.

Hayward said this increase demand will be driven mainly by the world’s emerging economies.

“Hundreds of millions of people, driven mainly by India’s and China’s development, are making the journey from a rural to an urban way of life, and that journey brings with it an explosion in demand for energy,” Hayward said.

To meet this increase in demand, BP projects it will require an investment of $25-30 trillion, or and average of “more than $1 trillion/year for the next 20 years.”

Hayward said is not happening at the moment because the world economic crisis has led to a reduction in companies’ ability to invest in exploration.

Hayward said to face the challenges of energy security and climate change there will also be a need for a more diverse energy mix.

“What has become very clear is that there are no magic bullets, nor is there going to be a ‘one-size fits all’ solution: each country will have to define its own pathway, based on its natural competitive advantage,” he said.

Focus on gas
Hayward said natural gas is becoming increasingly important in dealing with the energy and environmental challenges facing the world and as the developing economies continue to expand, demand for power is set to grow exponentially.

“We believe the best way of meeting this demand growth, while lowering carbon emissions, is through a switch from coal to gas.”

Renewable energy will eventually be important but it will take several decades to become a significant part of the power generation mix. Very long lead times apply to nuclear power as well.

“In the short term, the main choice for expanding generation capacity is between coal and gas. And until clean coal technology has been developed for use at scale—which is still some ways off—gas should be the clear choice,” he said.

Hayward added, “[Gas] generates half the carbon emissions of coal. It is abundantly available—even more so than we thought just a few years ago thanks to the unlocking of significant reserves of unconventional gas in North America. And as LNG it is traded in increasingly open markets around the world.”

A fundamental part of the world’s energy future, Hayward argued, must be gas. After all, he said, it is the fuel that offers the greatest potential to provide the largest carbon reductions—at the lowest cost—and all that by using technology that’s available today.

Hayward admitted though that clean coal technology will have to be improved and coal will return as part of the sustainable energy mix.

Last week was the WellPoint Systems Regional User Conference in Calgary. Over 45 attendees were at the event and shared their WellPoint experiences with each other as well as WellPoint staff. It was a very positive atmosphere, with customers stating their appreciation of the event. The sessions were productive, with great conversation and interaction between the participants. Some of the feedback was:

“It was good to hear about WellPoint’s strategies for the future”
“I learned some things that I can go back to the office and take advantage of immediately”
“The pricing module in Energy Broker in absolutely the most robust I’ve seen – bar none”
“WellPoint listened to (and has already implemented) the suggestions I made at the Houston conference. I’m back to make more suggestions”
“Thank you for putting on a conference for USERS”
“The small classes offered a setting conducive to good conversations”
“Your new website looks great! The things you are doing to market WellPoint look really good”

Mike Weiss, SVP Products and Technology for WellPoint, recently wrote an article regarding the value of data quality. Below is an excerpt, for the full article, click on the article.

WellPoint President and CEO recently wrote an opinion piece for Oil and Gas Financial Journal on better alternatives to proposed cap-and-trade legislation. Below is an excerpt of the article, to view the entire article, click on the article below.

Oil and Gas Financial Journal recently sat down with Debra Bryson – Product Manager for Energy Broker for a Q&A on ETRM.

Below is an excerpt, for the full article, click here. http://www.wellpointsystems.com/pdf/press/2009/OGFJENB.pdf

Q. Is it true that more energy trading is taking place than ever before? Is there a difference in the type of risk management systems required for each type of trading activity?

A. More trading is occurring today because there are a larger number of participants and despite continued liquidity issues in most energy commodity markets, the increased number of participants have resulted in more individual transactions. The ratio of physical to financial trades varies by several distinct variables: geo-political boundaries, North American geographies, seasonal production, facility capacity and storage options, storage capacity and the corporate or trading firm business models. The type of risk will vary by the type of trading activity. Firms trading product they own will have a lower risk profile while firms trading product as a commodity for hedging or swaps will have a higher risk profile.