Cloud Computing For Oil & Gas - Not All Pie In The Sky

In this exclusive interview with Oil & Gas IQ, we speak with Robert Hart, CEO of the Canadian Cloud Council about the benefits adoption of cloud computing systems could have for the upstream oil and gas industry.

The Canadian Cloud Council is a national association of policy makers and industry advocates pushing for the federal government to improve Canada’s cloud computing infrastructure.

TH Tim Haðdar, Editor in Chief, Oil & Gas IQ

RH Robert Hart, CEO, Canadian Cloud Council

TH Hello and welcome. This is Tim Haðdar of Oil & Gas IQ and today I'm going to be speaking with Robert Hart, who is the CEO of the Canadian Cloud Council. Robert, thank you very much for joining us today.

RH Thank you, Tim. I appreciate your time.

TH Now, why do you think that people have so much trouble getting their head around what cloud technology is?

RH You know this is an interesting question. I think one of the primary challenges with cloud computing is that it's typically viewed as an information technology initiative, and in the past, IT infrastructure has been provided by a dedicated IT department. A department that has spent a lot of money building its own data centres and creating and operating its own IT infrastructure systems. That’s the way things have been run for a really, really long time.

If you look at the market in general right now, on-premises cloud systems, that is to say companies that are running their own virtual infrastructure and their own data centres, is literally a multi-trillion dollar industry. It’s huge, and companies like EMC and Cisco and VMware really own a lot of the market share there.

I think what's happening now with "cloud computing", if you look at what that means purely at a technical level, it is a platform that is supposed to be leveraged using multi-tenant infrastructure, it's supposed to be available on demand, elastic, using a self-provisioning interface. It's something that would be related more to what AWS or Google provide down in the States. And, of course, Amazon and Google now have built these massive cloud marketplaces and have really established a huge amount of economic stimulus in the United States.

If you look at something like Instagram or Snapchat or WhatsApp, all of these companies have built their businesses using AWS, not using traditional IT infrastructure like EMC, Cisco and VMware.

So, one of the biggest challenges within IT right now is to understand the difference between what legacy infrastructures or virtualisation is versus what cloud computing is. And some of the behavioural changes, I guess, required within an IT department to manage cloud computing differently than they would manage on-premise or dedicated IT environments. A lot of the changes going on right now, are more behavioural or cultural, going into organisations and really trying to convince them that moving forward, if they're going to be competitive, they have to approach information technology differently and approach it more related to how they can drive value differentiation, innovation creation and more strategic outcomes versus just kind of keeping the lights on in their company and that's been a big challenge.

TH What do you think the cloud industry could give to upstream oil and gas?

RH Well, I think it could benefit from using cloud computing in a lot of different ways. One of things that we've been promoting at the Cloud Council is trying to create some sort of a regionalised ecosystem for the oil and gas sector, based out of Calgary. Using this, oil and gas companies can leverage Canadian-hosted cloud infrastructure to build, share and create different oil and gas-centric applications that might be used to help drive forward, production, accelerate supply chain management and provide better access to big data platforms that can really drive analytics.

A lot of this stuff is very complex and expensive to build, so if some of the major oil and gas companies in Calgary could come together and have access to some sort of Canadian-hosted cloud ecosystem, I think it could be a really interesting way for Canada to be able to create innovation around oil and gas applications more effectively.

The challenge is that typically these things are viewed within an IT department and they need to really rise up the value chain a little bit. When you look at creating applications that can really create innovation and value differentiation and give better access to intelligence and analytics do you really want to task an IT department that maybe doesn't have competencies in these types of strategic initiatives with creating the platforms that are going to deliver these net incomes?

I would suggest the conversation just has to be more widespread across more stakeholders in the oil and gas sector. Let's be honest, oil and gas companies make a lot of money and they haven’t necessarily in the past cared enough about information technology as it can relate to delivering some interesting net incomes. It's typically just been viewed as a cost centre. So, I think if we can get the word out and start getting more strategic stakeholders, including CEOs, in these conversations, some really interesting will begin to happen.

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TH Do you have any tangible examples of the uses of cloud technology in the oil and gas industry which have had clear benefits?

RH Yes. There's some really interesting stuff going on right now in Calgary and there are some big companies that we're talking to, that are starting to use cloud-type knowledge more effectively within their organisations. There's a company in Calgary right now called Pason which is working with OpenStack right now. OpenStack is an open-source cloud infrastructure platform that was created by the ex-Chief Technology Officer at NASA and a few other people. It’s really something that is starting to accelerate in the industry quite rapidly with big organisations like HP and Red Hat going to market with OpenStack solutions right now.

The interesting thing about building technology using open-source infrastructure or an open-source hypervisor, is that it provides all sorts of opportunities to leverage that infrastructure across multiple applications, multiple users, or even multiple companies.

So, Pason, has created a software using OpenStack which is really allowing people out in the oil sands to have access to a whole suite of applications that are related to SAP HANA, for instance, crunching analytics, increasing how you can leverage, a mobile device to do all sorts of interesting things in real time across multiple platforms. It’s pretty exciting.

I think, in the oil and gas sector people mobile devices are becoming key are focusing on a mobile device. People are beginning to ask the question "how do we get interesting applications out to a mobile device so people actually working out in the oil sands can leverage data in real-time?" That really is the goal in the oil and gas sector - you have to get these applications out to the mobile device; that's where all the magic happens.

TH The oil sands are hundreds of thousands of square kilometres of hydrocarbon resource spread out across a pretty inhospitable part of Canada. Are there any unique challenges that you would find in the oil sands with regards to mobility that you wouldn't find in any other places in the world?

RH Oh yes, for sure. I think the biggest challenge is actually around connectivity. A lot oil and gas activity takes place in tough environments where it's very difficult to deliver high availability with the connectivity solutions in place.

It’s all well and good in urban centres where people can use fibre or other internet-based connectivity solutions to get the bandwidth required to use cloud effectively, but in remote areas the challenge can be enormous.

In Alberta, there is a company called SuperNet which was initially established by the Government of Alberta to put together the base infrastructure to deliver high availability symmetrical broadband solutions to 99.9% of the footprint of Alberta. The challenge that they've had is actually finding service providers that see the economic benefit to go and establish operations in an extremely real remote area.

For instance, does it make logical business sense to go and spend a whole bunch of money establishing broadband infrastructure in an area where you might be just serving one client, whether it's Shell or Husky or whoever it is? So, there have been some challenges around that but, if you can't use your mobile device to access a cloud application that kind of defeats the purpose of cloud to begin with. That's the single biggest challenge I see in Alberta.

TH This interview is taking place in the same week that a well-known cloud system has been hacked and intimate pictures of Oscar winners and various celebrities have found themselves on the Net. Security is always going to be a big deal for people when it comes to anything IT related, this latest incident will make people even more wary. Obviously, oil and gas companies cumulatively hold trillions of dollars of IP which could be subject to larceny. How do you persuade C-level oil and gas executives that their proprietary information is going to be safe?

RH Yes, this is an interesting conversation and it's one that I thought might diminish a little bit over the last year. But it hasn't. There consistently seems to be more and more stuff coming out in the media about public cloud systems being hacked and private information getting out into the public and it does create a lot of hesitancy around putting information out into the cloud.

The best way that a lot of major IT companies are now approaching this, is looking at something called hybrid cloud.

Oil and gas companies, unlike almost every other industry you think of, have access to a lot of capital - they can afford to purchase their own data centres, their own IT infrastructure and operate their own cloud-based systems. This is not always the case in other industries, of course. So, what we're seeing in the oil and gas sector is organisations spending capital to build their own cloud systems in their data centres and contain all their intellectual property or core business behind a firewall and then leveraging public cloud – things like Amazon or Google - to run things that are not related to their core business. I think it would be crazy for any organisation to build their own email platform when they could use Microsoft 365 or Gmail.

I think at a really simplistic level, the discussion revolves around cloud's value proposition: how it could be leveraged - the same way that a start-up like Snapchat or WhatsApp has – to create a huge amount of innovation and wealth within an IT environment but be able to contain that within their own private data centre operation and a carefully constructed firewall.

Oil and gas is probably the only industry we've talked to besides government that can afford this. They're moving to the cloud to eliminate capital expenditures and more everything to an opex model.

TH Robert, thank you so much for your time today and thanks for your insight from the Canadian Cloud Council.

RH Really appreciate the opportunity, Tim,