127 upstream cio april 2005

April 2005

IT Standards Needed For Multi-Tier Identity and Access Management................................................3Enterprise Data Storage That Does It All ....................................6Protecting Your Company From CFTC Fines ..........................14

Outsourcing to India Pays Off HandsomelyBy Pradeep Anand, President, Seeta Resources ........................18

Software on Rigs: What's the State of the Art?By Mike Christie, Oil & Gas Practice Lead, Athens Group ..........21

New Visualization Tool for Hydraulics Analyses......................24New Scope While-Drilling Services Debut ................................24

Software for Managing Oil Sands Production Volume ............25SAP, Intel Standardize RFID Hardware ......................................26ChevronTexaco Launches LubricantsUniversity.com ............28Self-Paced Project Management Training ................................28

Digital Energy 2005 Conference 'Rocks' ..................................29BP GOM Unit Chooses Enterprise Upstream ..........................30New Rock Volume Uncertainty Assessment Tool ....................31

Obsidian, Trebuchet AddressShrinking Technical Workforce ..................................................31Combining Field Data and Real-Time Info ................................32E-commerce is Not Dead ............................................................32Plant Engineering Life Cycle Conference 2005 ......................33

Roxar in Major Software Deal with TNK-BP ..............................34iStore Inks Five-Year Mexican Deal............................................34Clough Ltd. Implements SmartPlant Foundation ....................35Forest Oil Plans Wellogix Pilot Project......................................36OpenSpirit Launches New Subsidiary, Opens UK Office ........36Wellogix Expands Partnership with SAP ..................................37New Financing Option for EnergyNet Buyers ..........................37

Antech Expands Engineering Staff ............................................38ENGlobal Forms Automation Services Division ......................38BearingPoint Names Global Energy Lead ................................394th Wave Imaging Opens Houston Office ................................39

SAP Delivers Next-generation ERP............................................39Sneak Preview of Microsoft 'Indigo' ..........................................40Maplesoft Global Optimization Toolbox ....................................41CADWorx Now Supports AutoCAD 2006 ..................................41SmartDBA Optimizes Mainframe Staff ......................................42TGS Imaging Releases PRIMA 7.0..............................................42 BizTalk Server 2004 Accelerator for RosettaNet ......................42 Energy Solutions Unveils PipelineStudio 2.7 ..........................4364-bit Intel Xeon XtremeBlade ....................................................43ABAQUS for CATIA V5 ................................................................43

What does CIO stand for? ............................................................2

This Issue

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2Reproduction by any means is illegal and punishable by fines of up to $50,000 per violation. Copyright ©2005 by Zeus Development Corporation.

Upstream CIO April 2005

UPSTREAM CIOis published monthly by

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Editor’s LetterUPSTREAM CIOUPSTREAM CIOWhat does CIO stand for?I've been to a bunch of excellent conferences lately, and it seems to be a trendfor CIOs to come up with witty job titles for themselves, like:"Chief Information Optimist."

André Erlich, who is the longest-lasting CIO ever at Schlumberger at 22months, said CIO at his company stands for "Career Is Over." Later on in hisspiel he said CIO could also mean "Cheap Information Officer," because mostcompanies consider IT as a cost to be minimized by any means possible.

Gary Masada, CIO and president of ChevronTexaco InformationTechnology Co., agreed with Erlich's first definition because he said his CIOcareer is over. "When you're a CIO, you age in dog years," he said.

Do you have a witty CIO job title you would like to share with the rest ofour upstream IT community? Send it in ([email protected]), andI'll include it in my next Editor's column.

What are CIOs spending $ on this year?A recent survey developed by Robert Half Technology (www.rht.com) reported that35% of CIOs polled said improvements to network security are their highest priori-ty. Operating-system upgrades were the second-most frequent response, cited by16% of IT executives. The poll included responses from more than 1,400 CIOsfrom a stratified random sample of U.S. companies with 100 or more employees.

CIOs were asked, "Which of the following initiatives are the highest priori-ties for your IT department in the next 12 months?" Their answers were:

· Network security improvements 35% · Operating-system upgrade/installation 16% · Database upgrade/installation 15% · Customer relationship management 15% · Data storage and backup 13% · Hardware purchases 11% · Wireless communications 10% · ERP upgrade/installation 8% · Development of e-business applications 6% · Other/don't know 8% "Security is moving from being regarded as largely a defensive measure to

one that has become an integral part of systems design," said Katherine SpencerLee, executive director of Robert Half Technology. "Ensuring network securitynow demands a proactive, enterprise-wide strategy. As this issue moves to theforefront, firms that had included security as part of the network administrator'srole, in many cases, are creating new positions focused entirely on this function."This issue of Upstream CIO has a feature article on IT security.

The difference between a customer and a clientA customer is defined as "someone who buys a commodity or a service." Aclient is defined as "someone who is under the care and the protection of anoth-er." I consider you, dear reader, as my client, someone I have a relationship withand care about, whose well-being is important to me. I want you to succeed. Ifthere's any way I can help you, please let me know.Love, Jeanne

3Upstream CIOApril 2005Reproduction by any means is illegal and punishable by fines of up to $50,000 per violation. Copyright ©2005 by Zeus Development Corporation.

IT Security Systems

IT Standards Needed For Multi-TierIdentity and Access Management In today's highly sophisticated IT environments, the execution of a typical business transac-tion involves multiple layers of applications and multiple underlying technologies includingWeb services, middleware and other systems - ultimately leveraging back-end data thatoften reside on the mainframe. Each of these technologies may utilize different securitymechanisms for authentication, authorization and auditing, and this creates integrationchallenges and potential regulatory compliance issues.

At the SPE Oil and Gas Security Conference in Houston, keynoter Olivier Le Peuch,president of Schlumberger Information Systems, said the oil and gas industry is "a uniquechallenge from an IT perspective, and a unique challenge from a security perspective." Thecastle-and-moat approach of using firewalls is no longer feasible with joint venture partnersand co-located service providers participating on project teams, each with unique dataaccess needs and requirements. And while technology companies can provide off-the-shelfsecurity solutions that span many industries, these solutions just don't cut it in the oilpatch. "I believe there is room for much more improvement," he said.

The IT industry has transformed business security from single-point solutions to sys-tems-based solutions to business process security. However, with the myriad of locations,devices, technical applications, business applications and compliance issues inherent in theupstream ener-gy sector, LePeuch suggest-ed the industryform its owngroup toaddress ITsecurity stan-dards and certi-fication. Hesuggested theSociety ofPetroleumEngineersshould be theorganizationthat takes onthis task. "Weneed to estab-lish a securitystandardization Figure Courtesy of PlantData Technologies, Inc.

MACRO TRENDS



and certification body for the industry by the industry," he told attendees at the confer-ence. "If we take it seriously, we can make a real step change."

Steve Comstock, vice president of technical computing at ExxonMobil, shared some dataabout how much IT security costs his company alone. "We have 130 terabytes of Unix dataonline. It costs us $600,000 per terabyte to keep this Unix data online. You do the math." Hesaid 90% of this IT security expense is for access management, data management and licenses.

Comstock suggested a Russian nesting dolls model of IT security, where gold nuggetsof data are stored in the innermost doll, and paper clips are stored in the outermost doll forpublic access. The difficult part is defining which data are paper clips and which are goldnuggets. "I spend a lot of money guarding paper clips like they were gold nuggets," he said."We need standards for access, standards for authentication, standards for data classificationand standards for encryption."

Philippe Chalon, CIO at Total, said his company's IT budget was Euro 60 million,and that 6% of that was spent on IT security. Because Total is spread all over the world, ittook nine weeks to spread a patch for a certain new virus. "We had to clean the systemdaily, which took about 1,800 man-days of work. We lost about Euro 1.5 million," he said.

Schlumberger's IT security spend was 2% of its total IT budget five years ago, buttoday it has risen to 7-10%, according to Mehrzad Mahdavi, global vice president atSchlumberger. In Latin America, the ratio is even higher, around 10%, while national oilcompanies spend about 15% of their IT budget on security, he said.

Eric Byers, a computer security guru at the British Columbia Institute of Technology inVancouver, noted that the very character of cybersecurity incident perpetrators has changedover time. From 1982 to 2000, only 31% of industrial IT security breaches were fromexternal sources, but in the last few years that figure has risen to 70% because of dial-up,wireless and VPN access. "We no longer have security through obscurity on the plantfloor," he said. "But we can't afford to be crunchy on the outside and soft on the inside."

Technical and business Web applications are increasingly used in upstream enterprises, andaccess by vendors and partners to these applications increases the need for central authori-zation management and audit functionality. When employees need to sign on to multipleWeb applications with a different user ID and password for each, some of them resort tocreating an Excel spreadsheet titled “Passwords” to keep track of them all! Single Sign-On(SSO) is the preferred approach to this security issue.

On March 23, BMC Software announced it had acquired OpenNetwork, a leadingprovider of Web access management and Web SSO solutions, for $18 million in cash. Thisacquisition expands BMC Software's identity management product suite to include brows-er-based authentication and authorization solutions for securely managing access to Web-based applications across multiple business environments.

With the addition of OpenNetwork, BMC adds Web access management, Web SSO, andidentity federation services for Web-enabled applications to its existing identity managementsolutions for enterprise SSO. OpenNetwork leverages the data synchronization capabilities ofMicrosoft Identity Integration Server (MIIS) to enable role-based provisioning across a broadrange of enterprise resources, including systems not currently supported by MIIS such asRACF, AS/400, SAP R/3, Solaris and AIX. It can be deployed quickly and easily, and has beentranslated into French, German, Spanish, Italian and Chinese.

Another solution for integrating authentication, authorization, and auditing mechanismsacross multiple platforms and multi-tier applications is the new eTrust Security

Times Are Changing

Web Services and Single Sign-On

Multi-tier applicationauthorization

Huge Money Spent onIT Security

. . . Continued on page 6



Management Architecture, recently introduced by Computer Associates International. Thisnew architecture provides essential security, transparency and reliability for business trans-actions as they move across heterogeneous IT environments by providing a common securi-ty "backbone" across all underlying technologies. It leverages open standards to enableinteroperability between diverse platforms and security mechanisms. It also tracks useridentities in a consistent manner across the transaction processing environment, providinga complete audit trail and enabling enforcement of intelligent, platform-independent secu-rity policies.

"Loss of end-to-end accountability for business transactions implemented in a multi-tier and multi-platform application architecture is a serious problem for enterprises copingwith stringent audit and regulatory compliance demands," said Phil Schacter, vice presidentand service director of the Burton Group. "An architected and standards-based approach isneeded to address this key audit and security issue for large enterprise customers."

Although such generic IT security solutions are available, Schlumberger's Le Peuchfeels that an industry-specific solution is still in order. "There are thousands of petrotechni-cal applications, legacy systems and new solutions, data transmission and storage solutions.Oil and gas application providers currently have disparate initiatives for security standards.We need to share best practices because we are managing a whole lot of secure informationthat is critical to our business, especially in the area of reserves."

http://ca.comwww.bmc.com

Network Storage Systems

Enterprise Data Storage That Does It AllGlobal demand for enterprise storage solutions is expected to more than double each yearas companies turn to Web services for business processes and as real-time drilling and pro-duction data capture increases.

Enterprise storage has changed significantly since the early days when it was considereda back-end component with little traffic. Today, numerous disk, tape, and other storagedevices are linked to multiple servers to deliver the highest level of availability for criticalinformation. By architecting a variety of hardware and software components, a storage areanetwork (SAN) or Network Attached Storage (NAS) system can be created for remotebackup and restore; data migration, storage and sharing; and data monitoring, archivingand retrieval. The result is a dynamic, enterprise-wide data management and storage solu-tion that enables organizations to convert data into valuable business information for moreeffective decision-making.

Few industries are as data-intensive as the upstream energy sector - the amount of datarequired for hydrocarbon exploration, modeling, production and reservoir simulation isstaggering. What is needed is a highly available, robust synergy of storage power, flexibility,scalability, and ease of management that helps energy companies maximize the value oftheir energy assets without spending massive amounts of money on IT.

Currently, there are three basic paradigms of enterprise storage solutions:· Fibre Channel SAN, which apportions storage space by blocks and is rather expensive;· IP SAN, which uses iSCSI that apportions space by blocks and is a more afford

able approach; and. . . Continued on page 8



· NAS, which uses conventional TCP/IP, Ethernet or gigabit Ethernet file protocols.Fibre Channel SANs consolidate storage and servers and also streamline storage man-

agement. Andy Pratt, president of Unique Digital Technology in Houston, says that manyof the tasks that were previously managed by IT personnel can be managed by the storagemanagement software within the SAN. "In a SAN environment, a program that used torun for two hours can run in as little as 30 minutes, quadrupling performance over the oldsystem," he said. "With a SAN, the question isn't so much how much it costs but howmuch it will save the customer. This leads to the need for fewer IT staff members."

Most companies that provide FC SAN, IP SAN and NAS solutions have a separatesolution for each of these paradigms, and that poses a problem when it comes to total costof maintaining them. "It's hard to find people that understand the many different boxes allin one head," commented Keith Brown, director of technology and strategy at NetworkAppliance. The NetApp strategy, he said, is to put all three styles into the same box, thatway you only need one person to manage it. In addition, when companies have geophysicalapplications like Landmark's SeisWorks, which requires file access, and these applicationsneed to be integrated with block-access applications, then storing both kinds of datasets onthe same system makes it easier to share data between applications.

In November 2004, Network Appliance shipped its latest version of its Data ONTAP™7G enterprise storage software, which provides the world's first dynamic virtualizationengine. It is capable of aggregating physical storage components into intelligent, self-opti-mizing capacity pools, while enabling data management functions to be tailored to individ-ual application datasets. Users can double their storage utilization, dramatically increaseI/O performance for large applications, and significantly reduce storage management costsfor multi-application environments.

Data ONTAP 7G has built-in FlexVol™ logic that enables administrators to shrink orexpand volumes to accommodate storage demand changes on the fly with no human inter-vention. Like being able to re-slice a pie to accommodate people who want different sizepieces, the storage is intelligently configured and reconfigured non-disruptively, even dur-ing production hours. Many other storage systems cannot reallocate space at all, much lessdynamically and easily. This thin provisioning of storage capacity is similar to the airlinesoverbooking a flight in that no capacity is used until data is actually written.

Data ONTAP 7G also has FlexClone™, which makes virtual copies of data for testingand simulation without making a whole new copy of the data in storage - only changes inthe clone consume additional storage space. This "storage frugal" feature is ideal for appli-cations that require lots of intensive data modeling and manipulation.

When Mark Spicer first joined Newfield Exploration as IT manager, the company's computeenvironment included a complex mix of systems configured with direct-attached storage. "Itwas not unusual for us to have to reboot servers twice a day," he said. "Improving availability,particularly for our Microsoft Windows users, was essential. Plus, due to recent acquisitionswe had multiple offices depending on different platforms and applications. At any given time,some 3TB of storage were scattered across Windows NT, UNIX, and Novell servers. Addingcapacity to each server individually was time-consuming, and invariably some servers wouldbe completely maxed out while others would be underutilized. Our goal was to ultimatelyreach a point where a single person could manage our entire global architecture, and a help-desk person could bring Newfield back up in the event of a failure at any location."

In 2001, the IT team moved business data shares onto a NetApp system at Newfieldheadquarters in Houston. The following year, all of the company's Oracle databasesrunning commercial applications as well as those associated with Landmark Graphics(Unix) and Seismic Micro-Technology (Windows) seismic interpretation software were

Software Aids Self-Optimization

Newfield Standardizes onNetApp


moved over. Today, NetApp storage provides integrated NAS and SAN functionality to support

hundreds of Houston users and more than 600 Microsoft Exchange mailboxes worldwide.Most recently, the company implemented a NetApp IP SAN solution to store keyWindows application data - Exchange stores, Web stores, and SQL Server databases - usingthe iSCSI protocol. A NetApp NearStore® system adds capacity for economical archivalstorage and non-performance-critical seismic attribute processing.

NetApp SnapMirror® software enables remote mirroring across the WAN betweenNewfield's Houston and Tulsa offices, enabling an off-site sync of critical Oracle databases. Asmaller-footprint NetApp fabric-attached storage (FAS) system has also been deployed at anewly opened Newfield Malaysia office in Kuala Lumpur. Dubbed "Newfield in a Box" forits exact replication of the Houston storage architecture and functionality, the NetApp systemwas crated in the U.S. and shipped to Kuala Lumpur for rapid deployment (see Figure 1).

"NetApp delivers the reliability we need - we'vehad no storage failures since the original deploymentfour years ago," points out Spicer. "Since all of our datais on networked storage, recovery from a productionserver crash takes just minutes - eight minutes, to beexact. When we had generic RAID arrays configured, itwould have taken days to move data over to a standbysystem and get back up and running."

Newfield users also boast a new level of self-suffi-ciency. With NetApp Snapshot, they simply access aSnapshot directory and drag and drop an earlier copy ofthe files they were working on. This approach is muchfaster than trying to restore from tape, and IT staff isremoved from the process. "NetApp has given our admin-istrators back the time they need to focus on higher-level,business-critical issues. And, because management is Web-based, we can support the entire global storage structure

from Houston. As we continue to bring on new offices or acquisitions, having a single, cen-trally managed architecture saves substantial time and resources," Spicer said.

"We have a structure that can expand at a moment's notice," said Spicer. "On oneoccasion we needed to expand a 500GB volume by 40% to support a geophysical applica-tion process. It took about 90 seconds to add 200GB to the volume and the same amountof time to recover the capacity a week later when the processing was completed."

Chesapeake Energy Corp. is the fourth largest independent natural gas producer in theU.S. Two different departments within Chesapeake, the geophysical group and the ITdepartment, each decided to reevaluate its data storage solution to centralize and simplifytheir storage architecture.

Before deploying its NetApp filer, Chesapeake stored data from the geophysical appli-cations on locally attached non-RAID-protected disks. "That direct-attached storagearrangement made data management more complicated and data security very question-able," said Michael Horn, associate geophysicist at Chesapeake. "In addition, over the pastseveral years we've acquired several companies, increasing our seismic database, so we wereoutgrowing our local storage capacity. We wanted a solution that would enable us toexpand our storage needs quickly and easily."

The six-person geophysical group was the first to deploy a NetApp filer, and it onlytook about an hour. "The only reason it took that long," Horn said, "I questioned theengineer about everything so that when he left I'd understand the fundamentals of main-

Chesapeake Energy

Figure 1 Newfield Exploration’s Storage Systems.



taining the machine." Now with a centralized geophysical data filer, Chesapeake's geophysi-cal group has simplified management, enhanced data protection, and a total cost of owner-ship that is lower than other systems evaluated, Horn said.

Before deploying its own NetApp filer, the IT department had as many as 15 serversinvolved in simple file storage. "We were running out of space on the servers, so we had tocompress files," said Terry Kite, director of technical services at Chesapeake."Decompressing them degraded performance for users. Managing those servers was time-consuming, and scaling them to accommodate more data was a painful process. We werelooking for a simpler arrangement."

Then the IT department deployed a NetApp storage system. They are currently storingMicrosoft Office documents, various application-specific files, and an Oracle database onit, and they plan to move several Microsoft SQL Server databases and an Exchange e-mailrepository onto the filer. Preliminary testing has shown performance on serving databasefiles is equal to or better than local disk performance. "Scalability is also a key advantage,"Kite said. "The company has been in acquisition mode, and scaling the filer to meet grow-ing storage needs is much quicker and easier than scaling local storage."

Currently, IT and the geophysical group are discussing configuring their filers in aClustered Failover pair to enhance data availability. NetApp Clustered Failover ensuresdata availability by transferring the data service of an unavailable filer to another filer inthe event of a failure. Often, the transfer of data service is transparent to end users andapplications, and the data service is quickly resumed with no visible interruption tobusiness operation. To further ensure reliability, both departments use the filer'sSnapshot functionality to expedite online backups, performance tuning, space realloca-tion, and volume copying.

Rick Stuart, Anadarko's manager of system administration and network operations, saidthat back in 1994, Anadarko's seismic data sets represented about 50GB of storage. "Weneeded more storage as we expanded the use of seismic data. In fact, within a six-monthperiod, we doubled our data to 100GB. But, unfortunately, that data was distributedamong various workstations and could not be shared among the geophysicists. The direct-attached storage structure was cumbersome to manage, slow, and unreliable."

Today, Anadarko's NAS structure has expanded to include 15 NetApp filers, ranging fromcompact filers to enterprise-class storage systems. Anadarko uses the Landmark OpenWorks®data platform, for which project files typically range from 10 to 120GB - and some projectsrequire hundreds of files. Current raw capacity of the system is 110TB in support of morethan 300 users, with an average of 100 active users on the network at any point in time.

"Our storage structure lets us quickly adjust space allocations or rapidly respond tounplanned requirements for additional multi-terabyte capacity - a request not uncom-mon in the setting of a very active exploration and production organization," Stuartsaid. "And if someone deletes a file, we can immediately drop them back into aSnapshot. Going back to a Snapshot is almost instantaneous and much less intrusive forusers compared to going back to tape."

With approximately 90% of Anadarko's data now resident on NetApp filers, adminis-tration costs per terabyte have dropped significantly. Two systems administrators - one forUnix and one for Windows applications - manage the systems. "Only about 50% of theirtime is actually spent on storage-related activities," said Stuart. "So effectively, a single per-son handles the administration of all 15 filers and more than 65 terabytes of data. We areaggressively working to identify the remaining data locally attached to servers and movingit to the NAS where possible and practical."

Hydro IS Partner, an individual business fully owned by Norsk Hydro, provides informa-

Anadarko Petroleum

Norsk Hydro


tion services and IT management to support over 50,000 employees in 60 countries world-wide. The company's primary responsibility is to maintain global IT operations and createefficient and cost-effective business technology solutions.

Norsk Hydro's installed base of storage grew organically from within, resulting in a dif-ficult-to-manage mesh of storage networks and direct-attached storage islands with variouslocal backup procedures. Approaches differed not only across business units, but alsoamong its Windows, Novell and Unix environments.

Hydro's IT unit needed to develop a business model in which it could define differentservice levels and identify its various services as products with a workable pricing structure.Operational units would be able to purchase standard IT services at an attractive price froma reliable internal partner. "A networked storage approach was clearly the best choice, as itprovided lower costs with increased flexibility and it could be smoothly integrated into ourexisting infrastructure," said Harald Sevaldsen, service line manager for infrastructure serv-ices at Hydro IS Partner.

Norsk Hydro replaced a multitude of access methods and backup routines by standardiz-ing on multiprotocol NetApp storage systems to build a centralized storage infrastructure. Sofar, the architecture supports five sites in Norway and five sites in Germany, and the companyis expanding its deployment to consolidate information from more than 400 sites across theworld into a single networked storage environment. Ultimately, NetApp storage will supportmore than 55,000 users on 17,000 Windows workstations and some 450 Unix workstations.NetApp primary storage systems and NearStore systems currently store 175TB of businessdata. At the core of the data infrastructure is a mirrored storage platform operating betweenNorsk Hydro's head office and a separate, secure business continuance center. Some sites havealso implemented the NetApp MetroCluster solution, which synchronously mirrors data stor-age at local sites to clustered storage systems at central sites, ensuring the highest levels ofavailability and disaster protection for business data.

Previously, 79 direct-attached storage servers sup-ported the company's Norwegian operations atcentral and remote sites. Storage is now consoli-dated on four NetApp primary storage systems,making business data seamlessly available acrossthe corporate network and dramatically reducingthe need for local IT support. "Norsk Hydro'snew storage infrastructure is crucial to the group'soverall IT migration, which is freeing up resourcesacross our entire IT organization," said Sevaldsen.

Rather than having to do manual tape backup,Norsk Hydro uses SnapVault, which enablesremote IT administrators to back up heteroge-neous storage directly to the NearStore system andconserve space by performing infinite incrementalbackups after the initial full backup. "The

NearStore system can cost-effectively store weeks of online Snapshot copies, minimizing thetime and expense of tape backups while ensuring rapid and reliable restores. NetAppSnapVault is making tape obsolete across large parts of our organization. Tape is just noteconomical any more," Sevaldsen said.

When Brazilian energy company Petrobras realigned its business units, its Espirito Santooperation became responsible for managing data for the company's offshore explorationactivities in the state of Espirito Santo, most of which was previously managed at the com-pany headquarters. As a result, the amount of data storage it needed jumped from about

Petrobras ImplementsMultiprotocol Solution

Figure 2. Norsk Hydro storage infrastructure.



40GB to 2TB. To scale quickly to meet that demand, the Petrobras Espirito Santo E&Pbusiness unit deployed a Clustered Failover pair of NetApp F840 filers. The system's 200concurrent users are connected to the filers via Fast Ethernet to enable them to transfer anddisplay seismic files in the 200 to 300MB range quickly.

According to Alfred Bacon, "We have a mixed Unix and NT desktop environment,and the simultaneous access to both NFS and CIFS data stored on the filer is a time-saverfor our geologists, geophysicists, and engineers, who work on both platforms. Often theyneed to insert a graphic that was created by a Unix application into a Microsoft Office doc-ument. Before we had a multiprotocol device like the NetApp filer, they had to create mul-tiple copies of the same file for multiple environments. Now, with the filer, they can save aUnix file in their user space and retrieve it in the NT environment. That gives us a degreeof flexibility we didn't have before and saves us from having to store and track multiplecopies of the same file."

The failover capability is essential for Petrobras. "E&P projects are multimillion dollaroperations, and it's critical that our data be available when we need to make key decisions,"Bacon said. "For example, in the process of drilling a well, there's a critical moment whenthe engineers and geologists need to decide whether or not to stop drilling, and thatmoment can happen any time of the day or night. To make that decision, the staff needsaccess to the data on our network and our filer. Given that the cost of drilling is upwards of$180,000 per day, the financial implications of making the right decision and making itquickly are clear."

To replace direct-attached storage, Western Gas deployed NetApp storage devices as thefoundation of its disaster recovery solution. Two servers were deployed in different locationswith NetApp SnapMirror software to clone the contents of the production system to theremote server. The amount of data currently being mirrored, including Oracle databasesand application data, exceeds 3TB. The company's 300-plus employees and 20 servers-including Unix, Linux, and Windows NT servers-access the common repository of data onthe NetApp unified storage platform. Western Gas replaced a legacy accounting systemdeveloped for the utilities industry with Oracle Financials, a flexible application thatenabled the company to automate data consolidation and speed its monthly close.

The disaster recovery capabilities of the NetApp storage infrastructure have alreadypassed a real-world test: soon after deploying the storage system, the Western Gas serverrunning financial and other production data went down. Administrators simply switchedoperations to the development server, pointed the production data stored on the system tothat server, and advised users to use that server's URL. Repairing the failed productionserver took hours, but downtime for users was minimal because they continued to accessthe applications data and Oracle databases stored on the NetApp storage system.

"Running our mission-critical Oracle Database and Oracle E-Business Suite onNetwork Appliance storage and Linux enabled us to quadruple our infrastructure capacityat one-fifth the cost," said Rick Brough, manager of database administration at WesternGas. Adding capacity to the system and allocating space according to the needs of differentservers, applications, and workgroups is quick and easy, and the ability to add incrementalstorage regardless of the operating system or protocol provides protection for Western Gas'storage investment.

www.uniquedigital.comwww.netapp.comwww.newfld.com

www.chkenergy.comwww.anadarko.com

www.hydro.comwww2.petrobras.com.br/ingles/index.asp

www.westerngas.com

Oracle, Linux ReduceCosts for Western Gas



Trading & Hedging Software

Protecting Your Company From CFTC Fines In March, American Electric Power (AEP) agreed to pay $81 million to settle federalcharges that it manipulated natural gas prices for financial gain.

AEP will pay a $30 million criminal penalty to the Department of Justice to avoidprosecution and end the department's investigation, $30 million to settle a lawsuit filed inSeptember 2003 by the Commodity Futures Trading Commission (CFTC), and a $21 mil-lion fine by the Federal Energy Regulatory Commission (FERC), which alleged that AEPgave two former subsidiaries preferential treatment in its gas storage and transportationbusiness. It is the largest fine ever levied by the commission.

AEP was one of the largest natural gas and electricity traders in the country before itsbusiness unraveled after it discovered that the five traders had given inflated gas prices to apublisher who compiled a price index. The CFTC alleged that AEP profited $63.5 millionby inflating the prices. The five traders were fired and AEP scaled back its energy tradingactivities, which had become a drag on its stock price.

"AEP is a very different company than it was in 2002 when we discovered and report-ed these improper activities by five employees," said AEP Chairman and Chief ExecutiveMichael Morris. "We have significantly reduced our participation in energy commoditytrading and changed our policies and controls on the reporting of natural gas trade infor-mation to industry publications."

The CFTC's investigation of gas price manipulation is widespread. It has reached settlementsworth nearly $300 million with 29 companies and individuals. The fine against AEP was sec-ond only to a $35 million fine against Enron. In addition, FERC has levied its own fines, andbetween the two agencies, there has been a real windfall (see table) at the significant expenseof energy companies, many of which have chosen to settle up as quietly as possible.

"I was doing some research to learn as much as I could about energy trading and thosethat regulate it," said Stewart Nelson, business development manager at KnightsbridgeSolutions LLC. "In less than three years they have levied $4.1 billion in fines that goalmost completely unpublished. Yes, that is a 'B' and not an 'M.' Now, there is a reason tobe concerned about how you are addressing the information that supports the exchange ofcommodities for your business."

With the CFTC and FERC aggressively looking for such problems, it is incumbentupon energy traders to document the circumstances around every unusual situation thatcould appear suspicious to the regulatory authorities. "It is hard to explain the meaning ofsuspicious data from months ago," said John Ruddy, senior principal at KnightsbridgeSolutions. "It's much better to have software that looks for patterns as the data are cap-tured, and any time there is a red flag, the company can document the thought processes

Lots of Companies Fined

MACRO TRENDS


and actions going on behind it for self-policing and compliance."

Ruddy said that most oil companies are super-conservative when it comes to commoditiestrading, requiring flat exposure at the end of the day. For example, if a trader buys 100,000bbl at $45/bbl, but it won't be delivered for 6 months and there are no customers lined upyet to buy it, the trader will see that oil futures are selling for $48/bbl in for that same peri-od, so he buys 100,000 bbl worth to lock in the $3 profit. Ruddy calls this hedging activity"anti-gambling."

However, companies can do much better if they optimize this system over the entireenterprise, rather than requiring each traderor each refinery to be flat at the end of theday. There are a variety of software prod-ucts that help companies manage theirtrading portfolios, but few are implementedenterprise-wide. Data warehousing andbusiness intelligence techniques are gainingmomentum to provide the enterprise /portfolio view to enable better decision-making. Managers can react immediately toany alerts when parameters cross certainthresholds. Sophisticated analytics ontrades can even point out opportunitiestraders would have missed, such as coveringa long position in one system with a similarshort position in another. Such natural off-sets enable companies to do more economi-cal trades. "Companies definitely get top-line results from implementation," Ruddysaid. And because many of them take"snapshots" at any given time, a full audittrail is available for when the CFTC andFERC come knocking.

Openlink - OpenLink's Endur™ trading, risk management, and transaction-processingsystem runs on Windows NT, Windows 2000, Sun Solaris and Unix platforms. Endurlinks front, middle, and back offices, combining advanced analytics with intricate pric-ing curves that help users do scenario evaluations, stress testing, sensitivity analysis, andparametric and Monte Carlo Value-at-Risk methodologies. Endur is used by Shell andDynegy.

SunGard - In March, SunGard's Kiodex Risk Workbench received an award from Energy Riskmagazine for best energy trading and risk software package due to its comprehensive tradecapture and modeling tools designed specifically to handle the nuances of commodities, andits fast and easy deployment and resilience as an ASP-based solution. SunGard EnergySystems was also selected as best vendor due to its responsiveness, breadth of knowledge andsuccessful delivery of complete solutions. Kiodex Risk Workbench provides Web-based com-modities risk management, independent market data and valuation to more than 70 cus-tomers worldwide. SunGard recently purchased a bunch of small trading software companiesand is in the process of integrating the best pieces of them into a coherent offering.

Allegro - With built-in reports specifically for producers including: net forward, net

Flat at the End of theDay

Trading SoftwareProgram



back and weighted average salesprice reports, Allegro also pro-vides solutions for the produc-er's marketing business, facili-tating the purchase and sale ofcrude oil, NGLs and naturalgas, valuation, hedging, con-tract management, scheduling,transportation and billing.

Triple Point - A big hitter in thefinancial services trading sector, Triple Point is only recently crossing over into energy com-modities, with its most recent successes in India. Triple Point has signed agreements for itsTempest XL and PhysOps XL software products with Bharat Petroleum Corp. Ltd.;Petronas; PTC India Ltd., India's first and largest power trading company; and the IndiaElectron Exchange, the first online electricity trading exchange for the nation's newlyderegulated power market. More than 25% of both Global 500 commodity trading compa-nies and Global 500 energy companies now use Triple Point software systems to streamlinetrade processing, reduce transaction costs, maximize supply chain efficiencies, preciselymeasure and monitor market risk, and ensure compliance.

TradeCapture - In February, Koch Supply & Trading announced it will deploy theTradeCapture's ICTS Symphony system to track and manage its global trading of crudeoil and refined petroleum products. ICTS Symphony is an integrated, multi-commoditytrading and risk management system that operates across the entire transaction chainand supports all physical and financial transactions including exchange-based futuresand OTC derivatives. The company's B2B Exchange Tools function as an "off the shelf"electronic exchange to trade physical commodities, futures and related derivative prod-ucts. Linked together, these two products provide a comprehensive end-to-end electron-ic solution for commodities trading at ChevronTexaco and AGIP Petroli, as well asPlatts and NYMEX.

INSSINC - Pogo Producing Company and Spinnaker Exploration Co. have recently signedto use its FUTRAK® program for forward curves, managing FAS133 hedge accountingrequirements, as well as providing Sarbanes-Oxley 404 compliance. FUTRAK runs on aWindows 2000 platform and captures the exposures and derivatives, documents and trackshedges, performs the mark-to-market and effectiveness testing, generates complete account-ing journal entries and provides well-organized and detailed reports online or as AdobePDF formatted output.

FEA - The company's @ENERGY® software has advanced tools to price intricate oil-related transactions; to engineer protective hedging strategies; and to manage the risksinherent in oil trading portfolios. Working closely with some of the largest participantsin the international oil derivatives markets, FEA has successfully applied its wealth offinancial engineering expertise to developing best of class pricing models and analytictools to value a wide range of oil contracts. @ENERGY/Advanced covers more complextrades such spread options.

SolArc - In late March, SolArc won a contract from Marquard & Bahls' oil trading sub-sidiary Mabanaft of Hamburg, Germany, to implement its RightAngle supply and trademanagement solution for a UK pilot project, followed by other locations. RightAngle offers

Allegro Suite


enterprise integration between traders, schedulers and accountants, providing each with thebest up-to-date information needed to manage complex trading activities, with a seamlessinterface to leading ERP, advanced risk management and financial management systems. Itis particularly suited for European energy companies because of its ability to handle multi-ple currencies, its highly flexible tax engine and capability to integrate several modes oftransport.

On February 16, Eldon Klaassen, founder and chief executive officer at AllegroDevelopment Corp., delivered a major address to delegates attending InternationalPetroleum Week in London, heralding a new generation of integrated software solutionsdesigned to give energy companies unprecedented competitive advantages in energy trad-ing, transactions and risk management.

Klaassen asserted that these next-generation solutions will make it easy for companiesto bring live data feeds directly into applications, injecting real-time market informationinto advanced analytics and new dashboard-type displays. Intuitive graphics and extensivedrill-down capabilities will give traders and risk managers a quantum leap in decision sup-port. To enable these capabilities, next-generation solutions are addressing value, risk,processes, strategy and compliance across traditional boundaries.

"As a result," Klaassen said, "companies will gain more accurate forward views andunderstandings of market dynamics and risk. Decision makers will move with greater con-fidence, improving strategic agility. And by fully integrating physical and financial transac-tions, companies will more effectively determine optimal patterns of exercise on increasing-ly complex financial derivatives such as options and futures. Advantages will be very strongin single-commodity trading and hedging, and among companies that transact in multiplecommodities."

These and other advanced capabilities are made possible by technology innovationssuch as Microsoft's .NET Web Services implementation of the XML global standard,which will add far-reaching communication and collaboration capabilities to Allegro's solu-tions, as well as several other software programs that will be migrating to Web servicesarchitecture.

Such an innovation was selected by the New York Independent System Operator(NYISO) for its Open Access Same-Time Information System (OASIS) Web site. OASIS isa real-time tool used by energy and commodity traders to monitor real-time activity onNew York's wholesale energy markets and view critical operational and market data. In fourmonths, SL Corporation's Enterprise RTView enabled NYISO to build dashboards quicklyand efficiently that made handling NYISO's complex data set highly intuitive. Traders andmarket participants now interact graphically through user-configurable real-time data dis-plays packed with helpful features like thresholds, alarm notifications, custom data ele-ments, and drill-down capabilities. At the same time, end users can effectively monitor crit-ical load consumption levels with any Web browser.

www.knightsbridge.comwww2.olf.com

www.sungard.comwww.allegrodevelopment.com

www.tpt.comwww.tradecapture.com

www.inssinc.comwww.fea.com

www.solarc.comwww.nyiso.com

www.sl.com

Poised For QuantumLeap



Outsourcing to India Pays Off HandsomelyBy Pradeep Anand, President, Seeta Resources

A U.S.-based, publicly traded software firm was under intense competitive pricing andmargin pressures and sought to alleviate them by offshoring software maintenance and cus-tomer support duties to India to reduce costs. The company hired Seeta Resources to helpdevelop and execute its strategy to maximize the opportunity and minimize the risks of thisoutsourcing initiative, which had an eight-figure budget.

The firm had a very aggressive, challenging schedule, seeking to deliver benefits withinsix months of initial discussions. The disciplined and diligent offshoring methodology thatSeeta Resources brought to the table was based on its experience in the oil & gas, technolo-gy, and offshoring industries, along with organizational and business strategy skills and aspecial knowledge of India's culture.

Seeta used the same phased project management approach that is commonly used forlarge capital projects in the upstream petroleum industry. The steps used for this projectincluded:

· Defining goals, opportunities, and risks;· Seeking alternatives and selecting the best option; · Detailed design; · Execution/transition; and· Ongoing operations.Three types of request documents were prepared: a request for information (RFI), then

a request for proposals (RFP), followed by a request for a price quotation (RFQ). By usingthis disciplined procurement process, the company was able to take a wide variety of poten-tial options and methodically narrow in on the best approach.

Because of Seeta's intimate knowledge of India, Indian vendors, and the various cultur-al, communications, and management issues of the Indian workforce, many mis-communi-cations were avoided. Having such an advocate during all phases of the project - particular-ly during negotiations with vendors - can eliminate the many blindspots inherent in out-sourcing to India.

Successful outsourcing requires a certain depth of domain experience as well as expert-ise in developing and executing new business models to make companies more competitive.In addition, astute organizational skills are needed to secure buy-in from all stakeholdersfor speedy implementation.

A collaborative team comprising the executive vice president of engineering and cus-tomer care, three members of his staff, and Seeta personnel developed vendor evaluationcriteria that were driven by economic value, competitive value, customer value, and risk.

After analyzing the firm's objectives, key performance indicators, and anticipated risks,research was carried out using the RFI process to identify the universe of potential suppliers

GUEST EEDITORIAL

Process Followed


who could meet the company's needs. Next, after executing non-disclosure agreements, anRFP was developed and sent to the fifteen firms on the vendor list. Then the team evaluat-ed each response and selected six semi-finalists.

Seeta organized a trip to visit these firms in India to conduct detailed due diligence.The people, processes and technologies at each firm were evaluated for potential success intransition and execution. Seeta worked very closely with the semi-finalists to make surethey all put their best foot forward to meet expectations, enabling the software firm tomake best quality evaluations and decisions.

After a whirlwind week of tours in India, two finalists were selected for further discus-sions and detailed proposals. Although either of the finalist companies would have done anoutstanding job, the winner was selected based on best fit with the software firm's corpo-rate culture. A contract was negotiated and signed.

It took less than four months to go from inception to "go live" operations, and savingsbegan to accrue to the software firm almost immediately. Transition to steady-state opera-tions is anticipated to take an additional five months, yielding more than 50% cost savingsand giving the firm a compelling competitive edge.

CIOs Spending More of GrowingIT Budget on OutsourcingWorldwide IT spending is expected to rise between 4% and 7%, depending on whichanalyst you ask. As a part of this IT spend, corporations will increase the portion spenton outsourced information technology (IT) this year as they opt out of software andhardware maintenance.

Forrester Research in Cambridge, Mass. surveyed more than 1,300 IT decision mak-ers for its quarterly "CIO Confidence Poll," and found that enterprises plan to increase2005 IT spending by 3.9%. The study found that in the year 2000, U.S. companiesspent $47 billion on outsourced IT, whereas this year they will spend $84 billion. By2008 that figure is expected to rise to a whopping $99 billion.

Framingham, Mass.-based International Data Corp. (IDC) found in their ownstudy that worldwide IT spending reached $965 billion in 2004 and will increase at acompound annual growth rate of 6% from 2004 to 2008, reaching $1.2 trillion. IDCexpects spending on IT services worldwide to reach $423.8 billion, a yearly growth rateof 5.7 percent.

In Stamford, Conn., Meta Group released its "Annual Worldwide IT BenchmarkReport," in which it surveyed more than 1,900 companies from more than 30 countriesand 20 industry sectors. Meta predicts IT spending will rise 4% to 5% worldwide thisyear. Like the other analysts, Meta said companies will try to squeeze more value from ITby shifting from fixed-cost systems to systems with variable costs and outsourced soft-ware, hardware and labor.

CIO magazine's January 2005 monthly poll found that IT budgets will go up anaverage of 5.4% in the next 12 months. And InfoWorld editor-at-large Ephraim Schwartzsaid that cutting costs is a top focus and outsourcing will be on center stage. "Hostedand managed applications, as well as offshoring, are becoming more enticing than ever,"he wrote.

IT Offshoring

Results



Because Seeta brought a unique combination of high-level business and technical expe-rience, as well as the insights and perspective honed through years in the oil industry, therewas a swift, in-depth understanding of what the client wanted to accomplish with off-shoring. In addition, Seeta's intimate understanding of the potential pitfalls of doing busi-ness in India and the ability to implement pragmatic programs to avoid these pitfallsenabled the software firm to fully tap into the capabilities of Indian offshore vendors andshow a substantial effect on the bottom line.

www.seeta.com

RCG IT Selected 'Offshore 100'Service ProviderRCG Information Technology's wholly U.S.-owned Offshore Delivery Center in Manila,The Philippines was named to the "Offshore 100" by Managing Offshore, a monthlynewsletter for global sourcing managers. The 'Offshore 100' is the annual joint researchproject with consultants at neoIT to assess global service providers specializing in informa-tion technology outsourcing (ITO) and business process outsourcing (BPO) to honor com-panies that demonstrate leadership, innovation and outstanding performance.

RCG IT's Offshore Delivery Center is a sophisticated custom application developmentand testing facility. Typical application development projects involve 20-seat development,conversion, enhancement or testing engagements running three to six months. Applicationmaintenance projects typically are 30-50 seat, multi-year engagements. The consultant poolis experienced in Web technologies, Object Oriented (OO) tools and middleware, as wellas mature toolsets such as RPG and Synon.

neoIT and Managing Offshore collected over 250 wide ranging data points from 13countries with strong representation from offshoring leaders India, The Philippines, China,Russia, Malaysia and Mexico. The companies represented in the study collectively representover $90 billion in outsourcing revenue. The study surveyed four primary areas: service,client data, operational capabilities and human resource policies.

According to the study, revenues among the 'Offshore 100' service providers hasincreased substantially in recent years, with the compounded annual aggregated revenuegrowth rate at 20% between 2003 and 2005, and the median annual revenue at $32 mil-lion. Nearly 70% of the offshoring leaders have established delivery operations in theUnited States, an important consideration for U.S. customers who want to hold suppliersaccountable under American jurisdiction.

"Corporate decision makers are on the lookout for information that helps them structuredecision criteria to set up and manage offshore operations," stated Eugene Kublanov, VicePresident of neoIT. "By shortlisting the leading global suppliers, we are identifying perform-ance benchmarks that help both suppliers and buyers to manage their business."

"The 'Offshore 100' study recognizes the irreversible changes in buying behavior andsupplier options related to global sourcing," explained Robert D. Simplot, RCG IT CEOand president. "RCG IT has experienced a sharp rise in the use of offshore IT resources. Asa result of this trend, in June 2004, we moved to the high-tech Philamlife Tower facility toaccommodate our current and future growth."

For a complete listing of the "Offshore 100" companies visit:www.managingoffshore.com/0105_winners.html

www.rcgit.com


Twenty thousand feet beneath the seafloor in the deepwater Gulf of Mexico, a drill bit isrotating, making hole. Above it is an immense engineering marvel - the modern offshoredrilling rig required to steer and push that bit to reach its target. That engineering marvelincludes an incredible amount of software. How reliable is that software? Is it engineeredto the same rugged, high standards as the rest of the drilling rig? Is it all integrated togetherinto a coherent system for the driller and the operator?

Far too often, the answer is no. Software failures can occur throughout the softwaredevelopment lifecycle, and results of these failures have ranged from the irritating to thecostly. Downtime on a fifth-generation rig costs up to $200,000 per day, but that's not thebiggest cost. Software failures can cost lives, too, just as surely as hardware failures can.

Here are some true stories about software failures on offshore rigs.· Three gyros in a dynamic positioning system had identical firmware, so when a

bug occurred, all three went down together. The lesson learned here is that hardware redundancy is not the same thing as software redundancy.

· A few years ago, a highly integrated rig had serious problems because the network became overloaded under peak conditions. The network design had not addressed the actual needs of the system, but had used general parameters derived from earli-er projects. The lesson learned here that there is no substitute for modeling the realnetwork load instead of assuming it will be similar to the last project.

· On a recent newbuild rig, a vendor delivered a commissioning procedure for an iron roughneck. The procedure was written for the wrong control system, but the contractor accepted it. The engineering firm that witnessed the testing signed off on the test even though it referenced controls that did not exist!

· A recent subsea control system commissioning had no tests whatever conducted to verify that the driller was seeing accurate displays onscreen.

· A drawworks vendor flew a maintenance person out to the rig to fix a problem. He hooked up his laptop and made the change, and then told the driller to try it. The drawworks code change caused bird's nesting. It took them hours to sort out both the cables and the code. The coder had a hunch that there was "an if-test the wrong way around." So he changed the code and the drilling superintendent asked, "How do I know it's going to work this time?" They gritted their teeth, tried it, and - luckily for the tech - it worked.

· A control systems Failure Mode and Effect Analysis (FMEA) found one failure that

Software on Rigs: What's the State of the Art?By Mike Christie, Oil & Gas Practice Lead, Athens Group

Investing in proper software engineering and putting systems throughtheir full paces can prevent a lot of costly problems.

GUEST EEDITORIAL



left the driller unable to stop the mud pumps.· A catwalk machine was added at a late stage to a new build. The developer writing

the control code found out at a late stage that he had assumed the wrong physical layout of the equipment.

All of these incidents could have been prevented by the appropriate software engineer-ing processes at different points in the development cycle.

Many of the problems with rig software development can be traced to a hardware mentalitythat pervades this part of the upstream industry. Functionality and testing are often viewedfrom the viewpoint of the hardware capabilities, not the software. Here's an analogy thatmay make it clearer why this is a mistake.

Suppose you want to test a PC's ability to play a music CD. You might insert a CDand check that the media program comes up and plays the tracks. You would probably skipa track or two, listen again, then eject it. That would complete the test, according to thehardware mindset. You know that the drive is capable of doing what it needs to do. Butyou haven't tested the software fully.

· What if another program is using the audio?· What if there are two CD drives?· What if there's no connection to the Internet?Why should a 'Net connection matter? Media players talk to the 'Net for lots of rea-

sons, such as license management and upgrade services. They can even find track lists andcover art for you. But we didn't test any of that. To really test a piece of software you haveto understand all of the various states that the software can get into.

Sadly, it is rare to see this approach taken to factory acceptance testing, commissioningprocedures, or any other kind of drill floor equipment testing, and this is one of the reasonsfor the list of problems above.

The oil industry understands the value of engineering in other disciplines; structuralengineering or chemical engineering are well understood and seen to add value to the busi-ness. Why isn't the same true for software engineering?

The answer is complex, but boils down to three points:1. Unlike the IT world, where computers and software often constitute a huge frac-

tion of the enterprise's value, rig software is a tiny fraction of the cost of the drilling enterprise.

2. The cost of software engineering is high, and the buyers - project managers and drilling contractor operations managers - are not software experts and have little experience in this area.

The Hardware Mentality

Cost to Fix Software Problem


3. Although software vendors often do understand the value of good software engi-neering, they don't offer software engineering services for quality and risk reduc-tion because the buyers won't pay for it and the added cost would hurt them competitively.

Software engineering is a critical component of the IT world, and should be equallyimportant in the oil and gas IT segment because of the value you get from it. On the previ-ous page are two independent studies that show how the costs of fixing problems in a soft-ware system vary depending on how early they are found in the lifecycle.

If you find a problem at the requirements step, it's pretty easy to fix - just rewrite therequirement. Both studies gave that cost a notional value of one, but you can probably figureit will cost several hundred dollars for a small number of person-hours to correct and reviewthe change. If you wait until the design stage, there's quite a bit more work to do, as you haveto redo the requirements and also examine the impact on other parts of the design. And itgets worse later in the lifecycle. If you find a problem in an installed system, it is going to costyou hundreds of times as much to fix it.

So, what's the incentive? How much does software engineering have to save to beworthwhile? Let's do the math. Day rates for fifth-generation rigs are running close to$200,000 per day right now, so a $100,000 software engineering investment would have tosave 12 hours of downtime to be worth it.

Alternatively, one can look at the cost of lost production. At $50/bbl, on a platformpumping 20,000 bbl/day, that same investment would pay off if you saved less than 2½hours of downtime. Take another look at the list of problems above, and remember theseare not isolated instances. There are literally hundreds of stories like these, and many suchproblems have caused downtime measured in days or even weeks, not hours.

Here's one more example that illustrates the potential costs of poor software engineer-ing as well as the mindset that is current in the industry. One of the major vendors ofdrilling software has a product that permits highly automated movement of the drill floorequipment. This product was being tested in the factory - in simulation, fortunately. Forfactory acceptance, the vendor showed the client a single one of the hundreds of possibleautomated equipment sequences. The vendor told the client that the base software couldrun any sequence, and that testing just one sequence would suffice.

They ran the test, and midway through it the client pressed the emergency stop but-ton, which had not been in the planned test sequence. The emergency stop worked correct-ly, so they proceeded with the remainder of the test - but when they did so, the automatedcontrol sequence software sent the equipment that had stopped to the wrong location onthe drill floor. As the client pointed out to the vendor, if a human had been standing there,which was quite likely, that person would have been killed.

Because of this incident, the client insisted that all possible sequences be tested, and thatvarious additional exception conditions should be verified, as well. It was clear to the projectteam that it was not sufficient to test only the "success paths" through the code; the entirecode had to be exercised. Software engineering on rigs will have come of age when all partiesagree on this before a safety incident occurs.

Software quality, like quality in any manufacturing discipline, is invisible. You can'tknow whether your investment in software engineering was worthwhile, because the resultis a working system and you don't know what would have happened without the softwareengineering steps. But building quality in from the beginning, rather than trying to test itin at the end, is the mark of a mature industry. Software in the world of drilling needs tomature. Right now software engineering is not a core competency in the oil and gas busi-ness, but in the future, it's going to have to be.

© 2005 Mike Christie, Athens Group



New Visualization Tool for Hydraulics AnalysesFor today's driller, there is so much data being generated in real time that monitoring it allcan be a physical challenge. However, computer visualization techniques can transformlarge quantities of seemingly unrelated data into graphical representations that are moreeasily understood, thereby improving drilling efficiency and decision-making processes.

At the 2005 SPE/IADC Drilling Conference in Amsterdam, M-I Swaco unveiled anew PC-based software program that is the first to provide interactive 3D visualization ofthe fluids inside the wellbore. The proprietary, patent-pending Virtual HydraulicsNavigator allows downhole drilling hydraulics conditions to be critically examined using astandard PC and a joystick while navigating the well from surface to total depth. The soft-ware package has applications for interpreting large data sets, mitigating drilling problems,training and encouraging collaboration among multi-disciplinary teams.

This new version of the acclaimed Virtual Hydraulics software primarily focuses onaspects of borehole geometry, deviation, lithology, tool string design, drilling fluid proper-ties and hydraulics. Stacked 2D images are used to create 3D borehole representations,offering the user multiple views of the borehole, including virtual camera movements upand down the hole internally, side-to-side rotation, zoom and external views.

With continued development, 3D-visualization software will help drillers predict prob-lems and offer solutions in real time. Engineers at M-I Swaco are working to include theprediction of annular pack-offs, borehole deformations and instabilities in future editionsof the software, as well as methods to avoid key seating and stuck pipe.

www.miswaco.com

Downhole Hydraulics Sofware

DRILLING TECHNOLOGY

New Scope While-Drilling Services DebutMeasurement While Drilling

Also at the 2005 SPE/IADC Drilling Conference, Schlumberger introduced its new-gener-ation Scope while-drilling services that dramatically improve drilling performance and wellplacement, leading to increased production. In field tests, Scope services set new standardsfor reliability and data quality, while quadrupling the data transmission rate over the indus-try standard.

Three products comprise the Scope family of while-drilling services:· EcoScope multifunction logging-while-drilling - This LWD service integrates

drilling and formation evaluation sensors in one compact collar to increase effi-ciency and safety. EcoScope provides more downhole information than any other LWD tool, including unique measurements such as elemental capture spectroscopyand sigma. Instead of the traditional radioactive AmBe source, EcoScope uses a


pulsed neutron generator that was jointly developed with Japan National Oil Corp.to minimize the risk of radioactive exposure.

· StethoScope formation pressure-while-drilling - This pressure-while-drilling (PWD) service provides accurate formation pressure measurements in less time than needed to make a connection. Direct pore pressure and mobility data can be used for fluid typing, reservoir pressure management, and mud weight control and optimization to avoid kicks and drilling delays. Statoil recently used the StethoScope service for 17 runs in its Kristin and Gullfaks fields, among others, enabling early production and saving significant rig time. "Its flexibility allowed us to run it successfully in a variety of downhole environments including vertical to high-angle deviations, high temperature/high pressure wells, as well as in forma-tions with both low and high mobility. We see great opportunities for this key technology in Statoil, especially in the production drilling environment," said Harald Laastad, Statoil's geo-operations and data acquisition advisor.

· TeleScope high-speed telemetry-while-drilling services - When used in conjunction with the Orion telemetry platform, TeleScope increases data transmission rates fourfold, compared to the industry standard. The information delivered to surface improves drilling efficiency, reduces risk, optimizes well placement and ultimately increases production and recovery by providing a comprehensive picture of the downhole environment through real-time measurements from multiple tools.

"When applied to real-world drilling challenges, our clients will benefit from the relia-bility and data quality advances made possible by this step-change in drilling measurementtechnology," said Paal Kibsgaard, president, Drilling & Measurements, Schlumberger.

www.oilfield.slb.com/scope

Production Software

Software for Managing Oil Sands Production Volume Deer Creek Energy Ltd. of Calgary, Alberta, has agreed to license Quorum VolumeManagement software from Quorum Business Solutions Inc. This newly developed applica-tion marks the first time in the oil and gas industry where a software program spans and inte-grates three critical volume management functions for upstream and midstream operations:

· Field data capture;· Production allocation; and· Data measurement, validation and calculation. Deer Creek is an oil sands development company with interests in both steam-assisted

gravity drainage (SAGD) and mining assets. Deer Creek is the operator and has an 84%working interest in the Joslyn Project located North of Fort McMurray, Alberta. The com-plexity around managing Joslyn's production activities required a comprehensive volumemanagement solution.

"In an effort to manage the oil and gas production volume from Joslyn, Deer Creekconducted a thorough evaluation of commercially available software in the market, but

UPSTREAM IT NEWS



failed to come up with an optimal solution until we reviewed Quorum," said MarkMontemurro, Deer Creek's vice president of Thermal Operations.

The Quorum Volume Management module takes a unique approach to commodityproduction, according to Roland Labuhn, vice president at Quorum. "Our software canhandle any kind of commodity than can be produced, whether that's oil, natural gas, sul-fur, bitumen, or whatever. Deer Creek can measure the steam used in its SAGD opera-

tions, and even calculate how much sand and how much bitu-men is produced."

The Volume Management module enables producers toedit and verify data from a number of sources, including theusual meters and tank levels, old-fashioned chart recordersand new-fangled SCADA systems, filling in missing data as itbecomes available. The producer can then publish "approved"volumes and conditions, storing the historical data for properaudit management. The software also allows for physical bal-ancing and managing prior period adjustments. Optionalmodules are available for Web-based volume collaboration,regulatory reporting, and operation on laptops and handhelddevices.

"Prior to implementing our solution, Deer Creek hadbeen using spreadsheets to calculate their production volumesmanually - this is not uncommon in the upstream oil and gasindustry," said Labuhn. "In fact, this area is underserved. Theindustry is looking for a comprehensive solution for this."

www.qbsol.com

RFID Technology

SAP, Intel Standardize RFID Hardware At CeBIT, the world's largest IT trade fair held at Hanover, Germany, March 10-16, SAPAG and Intel announced a joint effort that aims to make radio frequency identification(RFID) technology easier to use and help companies overcome the common hurdles theyface in creating viable business cases for RFID implementations.

The joint effort will offer customers the choice of either integrating their RFIDhardware directly into backend systems and business processes or using device manage-ment partners to manage their hardware environment. Direct integration provides astreamlined approach to the customer's RFID implementation and is best utilized inless complex business environments. The device management partner approach enablesthe customer to manage a more complex environment comprising multiple device typesfrom different vendors.

The collaboration introduces a new RFID concept, enabling companies to integrateRFID data directly into backend systems. Companies can implement the solution on anyIntel-based RFID backend hardware such as servers and front-end hardware such as desk-tops, notebooks and RFID readers, regardless of provider. This solution will likely resultin faster adoption of RFID devices, creating a plug-and-play environment. Intel will alsosupply the necessary technology to allow for a device management solution to be delivered


through the SAP NetWeaver™ platform.Companies implementing RFID tech-

nology today face hurdles such as the expenseof the solution, complex integration of pro-prietary and non-proprietary technology,emerging standards as well as complex systemsarchitecture. The new approach from SAPand Intel will help companies to meet thesechallenges by providing the capability toinstruct the RFID reader directly from thebusiness application. This capability will helpdecrease costs, increase process speed, andreduce the need for services on hardwaremaintenance and support. The collaboration

will also enable companies to combine non-intelligent with intelligent data capturedevices for a total RFID solution, regardless of hardware or vendor.

The concept is based on providing more intelligence as part of the reader hardware aswell as seamless integration into any system infrastructure, such as SAP Auto-IDInfrastructure. The additional intelligence on the reader hardware will also allow companiesto control hardware combinations, such as an arrangement of sensors and actors togetherwith RFID reader hardware.

"The implementation of RFID technology within current business processes willincrease the data volume significantly," said Abhi Talwalkar, vice president and generalmanager of Intel's Digital Enterprise Group. "To drive down costs and increase flexibilityof business processes, intelligent systems need to provide a solid foundation for smart,accurate decisions. The new platform approach from Intel, based on open standards withbroad industry alignment as played out with SAP and high performance systems, has thecapabilities of bringing these benefits to the customer."

The new approach between Intel and SAP focuses primarily on the direct data exchangebetween reader hardware and business applications. Intel will provide enough intelligence onits readers to be able to directly feed SAP with the read results. It does not eliminate theneed of administrating, monitoring and managing all the different RFID devices, which isthe main focus of existing device management collaborations and which also requires a tightintegration of these monitoring functions into SAP Auto-ID Infrastructure.

"With this approach, we are moving another step closer to our vision of adaptive businessnetworks and real world awareness by accelerating business processes through improved senseand response capabilities by leveraging RFID," said Claus Heinrich, member of the executiveboard at SAP. "At the same time, we are expanding our RFID partner ecosystem so that ourcustomers can choose the RFID solution best suited to their needs."

The proposed solution will include RFID-enabled supply chain execution with mySAPSupply Chain Management, including an improved integration of partner devices and part-ner based device management; a certification for standard Physical Markup Language mes-sages coming from RFID devices; as well as a composite platform based on SAP NetWeaverthat plugs into the partner's device management, administration and monitoring tools andprovides the user with a look and feel of an SAP solution.

Intel will provide a standard architecture to give users the capability of directly inte-grating RFID devices into business solutions from SAP. In addition, Intel will provideaccess for customers to its RFID Lab in Munich and provide support through the IntelSolution Service organization.

www.intel.comwww.sap.com

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Enterprise Systems



UPSTREAM IT NEWS

E-Learning

ChevronTexaco LaunchesLubricantsUniversity.com ChevronTexaco Products Co. has launched an online training and informational resourcecalled LubricantsUniversity.com for workers in the lubrication and maintenance markets. Thesite is designed to be a fast, easy and convenient solution for those interested in ongoing job-related training and education on lubricant technologies, trends, issues and solutions.

LubricantsUniversity.com will offer online courses designed to enhance the lubricationskill sets of its target audience and address the constant need for easily accessible technicaltraining. Upon successful completion of a course, the student will receive a certificate ofcompletion.

The premiere course, entitled "Fundamentals of Lubrication," will describe the role oflubrication with respect to preventing wear and friction in mechanical equipment. Viscosityand the lubrication identification systems are reviewed and applied to common wear andfriction problems. For a limited time, this course will be offered free of charge.

Upcoming courses will address topics involving heavy duty and industrial lubricants,each containing multiple modules. In the case of the industrial course, the modules addresshydraulics, industrial greases, gear oils, bearing lubrication, oil analysis, as well as properstorage and handling of lubricants.

The e-learning Web site also offers articles on developing a training plan, using arefractometer, coolant change-out procedures for Class 8 trucks, infrared thermography andreliability-based maintenance practices. In addition, ChevronTexaco has chosen to resurrectits Lubrication magazine, a trusted source of information of interest to broad and special-ized audiences of lubrication practitioners, with nearly 1,000 issues published since 1911.The premiere issue features a story on the "Evolution of Base Oil Technology."

www.chevrontexaco.com

Self-Paced Project Management Training PM College, the training and professional development arm of project management con-sultancy PM Solutions, has launched a new e-learning program called PM ProfessionalCoach. Designed to prepare project managers for Project Management Professional (PMP)certification, PM Professional Coach enables project managers to focus on the fundamen-tals of project management at their own pace. It is ideal for companies that want to supple-ment classroom-based project management training and that seek to improve or certifytheir project management staff. At a cost of 70% less than comparable programs, PMProfessional Coach is the most affordable project management e-learning solution available.

PM Professional Coach offers four program packages to meet the distinct needs of

E-Learning


each student: · PMP Fast Track Package - for learners who plan to take the PMP exam within 90

days of course completion. Features 40 hours of access to satisfy the 35 contact hours needed to meet the PMP education requirement. Includes one copy of the PMP Study Guide.

· Project Management Core Knowledge Package - for project team members and those new to project management. Features 25 hours of access to satisfy the 23 contact hours needed to meet the education requirement for the Project Management Institute's Certified Associate in Project Management (CAPM) desig-nation.

· PMP Re-Certification Package - for students who plan to renew their PMP certification credentials. Features 15 hours of access to satisfy the PMP re-certificaton requirement for self-directed learning activities.

· Corporate University Package - for corporations to use as a companion learning aid to reinforce their classroom-based project management curriculum. Accommodates unlimited users on an annual license, and includes aggregate usage and progress reports. Corporations also receive a licensed electronic copy of the PMP Study Guide to post on their intranet sites.

"PM Professional Coach helps participants better understand the fundamental princi-ples of project management on their own time, without detracting from professional andpersonal commitments," said Debbie Bigelow, president of PM College. "Companies bene-fit as their project managers become certified with the PMP designation, validating theirknowledge."

PM Professional Coach features self-study aids, PMP exam practice and simulation,and real-time diagnostic progress reporting. It is based on the nine knowledge areas of theProject Management Institute's PMBOK Guide, which include integration management,scope management, time management, cost management, quality management, humanresource management, communication management, risk management and procurementmanagement.

For a free preview of PM Professional Coach, visit www.pmcollege.com/elearning.

www.pmcollege.com

CONFERENCES

Digital Energy 2005 Conference 'Rocks'The Digital Oil Field is nothing less than a revolution in how the oil industry does busi-ness. That was one of the key messages at the Society of Petroleum Engineers (SPE) GulfCoast Section's Digital Energy 2005 Conference held March 23-24 at The Westin GalleriaHotel in Houston.

Keynoter Don Paul, vice president and chief technology officer at ChevronTexaco, saidthat simulation is going to be integrated with real-time systems. "I think we're moving to asystem where real-time is feasible," he told a standing-room-only audience. He saidChevronTexaco had 700 terabytes of technical data in storage and that cybersecurity "is notjust an IT issue any more." Many oil companies have their ERP systems and HR systems



under the purview of the corporate IT group, while the technical systems fall under theR&D group and some have a separate real-time data group. However, IT security needs tobe addressed in an enterprise-wide manner. "Some companies even have firewalls betweenthese three groups," Paul noted. "The issue is not the number, but the sophistication of thethreats. You've got to see them coming."

Paul said SCADA systems were never built to be secure, and that these are one of thegreatest vulnerabilities in the oil field. He painted a picture of a future oilfield that operatesmore like a factory. "With downhole processing, the only thing that will be produced is theproduct," he envisioned. "I suggest that with continued growth in digital technologies, withthe right simulators and control systems, we can make this business a hell of a lot better."

Future issues of Upstream CIO will have more in-depth coverage of some of the presen-tations given at Digital Energy 2005.

In addition to the stimulating presentations, there was a sold-out exhibit hall with 35IT vendors displaying their latest technologies, including HP's new 64-bit xw9300 work-station designed specifically for the oil industry (see the March 2005 issue of UpstreamCIO, page 12). Here are some of the major announcements made at the Digital Energy2005 Conference.

www.chevrontexaco.comwww.hp.com

BP GOM Unit Chooses Enterprise Upstream Houston-based P2 Energy Solutions announced that BP has chosen its EnterpriseUpstream Volumes Management suite for deployment in the BP Gulf of MexicoDeepwater Production unit. The implementation project will be jointly managed by P2Energy Solutions and Science Applications International Corp. (SAIC).

P2 Energy Solutions will provide software and implementation services including sys-tem configuration, setup, data conversion, training, report development, documentationand joint project management. SAIC will provide project documentation, group facilita-tion, change management, quality assurance, technical infrastructure support, interfacedevelopment, user acceptance training and overall project management.

BP chose Enterprise Upstream because of its ability to handle complex deepwater pro-duction handling agreements with commingled production. It also allows easier integrationand a better fit with other engineering systems currently in place at BP. It will handle thecomplex process simulation modeling requirements necessary to allocate oil and gas vol-umes and gas energy for BP's deepwater assets based on existing measurement and alloca-tion agreements in place with its partners. The BP Deepwater Operations team will uploadlease level volumes into SAP for accounting tasks established through its outsourcing con-tract with IBM.

The main driver for BP in its purchase of Enterprise Upstream Volumes Managementis to migrate from legacy systems to a hydrocarbon allocation solution that promotes singlepoint of data entry and Sarbanes-Oxley compliance while providing an audit trail for jointventure partners and regulatory bodies.

"For P2 Energy Solutions, this is a major indication that our volumes management solu-tion offers clients the most flexible, scaleable and configurable solution in the market. It ismuch more than a monthly production accounting and regulatory reporting system; it is a

Production Software


functionally complete, global volumetric management system that can be applied at a field oroperations level as well as in the back office for E&P accounting requirements," said MarkEikermann, senior vice president of software development for P2 Energy Solutions.

www.bp.comwww.saic.com

www.p2es.com

New Rock Volume UncertaintyAssessment Tool Earth Decision Sciences announced the launch of Alea, a second module in its three-partUncertainty Assessment Suite, Version 2.1.2. Alea is a rock volume uncertainty assessmenttool that will provide geoscientists powerful prospect analysis capabilities, enabling assetteams to define, analyze and visualize the envelope of uncertainty around structural scenar-ios, including assessing hydrocarbon-water contacts in seismic interpretation.

Alea also builds on the success of and complements Jacta, the widely respected reservoirrisk assessment module developed earlier by Earth Decision in its Uncertainty AssessmentSuite. Used worldwide to plan successful investment allocation by quantifying and reducinguncertainties in predicting the volume, position and economic value of hydrocarbon plays,Jacta has proven to be a highly effective reservoir modeling tool to assess uncertainty andrisk.

Alea and Jacta, both based on the power of GOCAD, are the first two in a series ofthree uncertainty tools to be released by Earth Decision Sciences. The third product will benamed "Est," completing Julius Caesar's famous quote, "Alea Jacta Est," or "The Die isCast," as he crossed the Rubicon to go to war.

"We have new management and a new theme of 'Go with the big guys,' and that's justwhat we plan to do," said Susan Morgan, vice president of marketing, at the first press con-ference of the day. "There have been rumors that we are going to be bought by Halliburtonor Schlumberger, but the truth is, we going to buy both of them! We have more PhDs thanwe have people, and we understand more about what you don't know than anyone else."

www.earthdecision.com

Obsidian, Trebuchet Address Shrinking Technical Workforce Obsidian, a Houston-based consulting firm specializing in change management for theenergy industry, is joining forces with Trebuchet Knowledge Solutions to engage globalcommunities in the rapid sharing of expertise.

With 60% of itstechnical workforce projected to retire within the next 5 years, theenergy industry is facing serious workforce development challenges. There is unprecedentedurgency for these companies to more fully leverage internal and external experts across theirglobal organizations. Trebuchet's experience running successful online communities ofpractice and Obsidian's experience supporting people as they adopt new technologies andwork practices make this venture a natural pairing.

"Good technology and processes aren't enough," said Charlie Gilbeau, founder of

Risk Management

Knowledge Management



Trebuchet. "The people in the community have to own and promote the community fromwithin. Obsidian's consistent focus on the people is an outstanding complement toTrebuchet's technical expertise."

"Charlie has built the most successful technical community of practice that we haveseen in the industry so far," said Shelly Immel, managing director of Obsidian. "We areexcited to be working with Trebuchet in bringing successful communities of practice to theHouston energy sector."

www.obsidian-edge.comwww.treb-km.com

Combining Field Data and Real-Time InfoOSIsoft, Inc. announced a partnership with GlobaLogix whereby the two companies willextend their combined domain expertise to help customers by integrating customer datainto OSIsoft's Real-time Performance Management (RtPM) Platform and then developingspecific applications to fit their business needs.

"This partnership provides a tremendous value proposition for our customers andemphasizes OSIsoft's commitment in developing a healthy ecosystem in which to supporttheir business initiatives," said Michael Saucier, vice president of Marketing, OSIsoft.

"With our combined experience, we are able to deliver integral operational perform-ance metrics to the upstream oil and gas market. Access to this information changes thegame and will address critical issues around worldwide energy demands and the need forknowledge management at a time when many companies are experiencing tidal shifts intheir work environments."

GlobaLogix specializes in servicing leaders in upstream oil and gas by moving real-timeoperational data and information "from the well head to the Web site." The company providesintegrated data management solutions that collect field data and converts it into informationin an ongoing service that facilitates greater control and enhances profitability for their clients.

www.osisoft.comwww.globalogix.com

E-commerce is Not Dead In the spotlight at the exhibit hall was EE-B2B™, the solution in Stone Bond's EnterpriseEnabler product family for integrating PIDX transactions with existing applications.Combining the flexibility of Enterprise Enabler with the convenience of pre-configuredsupport for PIDX transactions has created an off-the-shelf solution for implementing E-commerce in the petroleum industry. EE-B2B enables companies of all sizes and with vir-tually any computer application infrastructure to enjoy the benefits of E-commerce -with-out the high implementation costs.

"When petroleum companies began implementing PIDX standards, the only optionswere expensive, long-duration projects that consumed many man-hours of specially-skilled,outside consultants," said Dan Tostado, energy industry sales manager with Stone Bond."Stone Bond's EE-B2B offers a packaged software solution that minimizes the overheadtypically required to implement E-commerce projects."

www.stonebond.com

Real-Time Operations

E-Commerce


Bentley Systems, Inc. will debut its DigitalPlant solution in Europe at the new PlantEngineering Life Cycle Conference (PELC) 2005, being held April 11 in The Hague,Netherlands. PELC 2005 is the premier event in the European oil, gas, and process andpower industries to focus on present and future challenges of plant lifecycle data managementthroughout the process industry supply chain. It will be attended by owner-operators; engi-neering, procurement and construction contractors; solutions and service providers; and con-sortia and industry groups. Among some of the key companies already planning to participateare Shell, ChevronTexaco, BP, Statoil, LyonellChemie, AkzoNobel, Bayer, Technip,AkerKvaerner, ABB, and Foster Wheeler. To view the agenda or pre-register, visit www.pelc.nl

Bentley executives will be available in Booth 4 at PELC 2005 to detail DigitalPlant'smany features, and will participate in the conference's afternoon Q&A panel discussion.DigitalPlant is Bentley's solution for bringing together the worlds of engineering informa-tion and business information. On the business side, ERP programs from vendors such asSAP have consolidated enterprise information into a unified resource system to cut costsand increase efficiencies. To achieve this on the plant engineering and operations side,Bentley provides DigitalPlant, which connects the silos of engineering information to eachother and to enterprise systems.

DigitalPlant will also be featured at the upcoming BE Conference, which is being heldMay 8-12 in Baltimore, Md. The BE Conference is an annual gathering of Bentley usersand their managers who want to sharpen their skills and expand their knowledge at morethan 300 training, best practice, new technology, and keynote sessions.

www.be.orgwww.bentley.com/digitalplant

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COMPANY NNEWS

Roxar in Major SoftwareDeal with TNK-BP Roxar announced a major software agreement with Russia's third largest oil company,TNK-BP. TNK-BP will purchase more than 100 licenses of Roxar's flagship 3D reservoirmodeling software, Irap RMS, as well as its Tempest reservoir simulation software, for itsmain R&D centers including the Tyumen Research and Technology Center, the IzhevskResearch and Technology Center, TNK Nyagan, TNK Nizhnevartovsk, Samotlorneftegazand Varyoganneftegaz.

Roxar's flagship reservoir modeling product, Irap RMS, comprises 10 fully integratedsoftware modules including mapping, modeling, planning and workflow managementtools. Its Tempest program is a fast, memory-efficient reservoir simulation tool with power-ful 2D and 3D visualization capabilities.

Roxar CEO Sandy Esslemont said: "For today's Russian oil and gas multinational, suc-cess comes down to performance, production and profits. Roxar's strength lies in its solu-tions, which enable everybody involved in the discovery-to-production lifecycle to sharecritical information, work together more effectively and maximize reservoir performance."

www.roxar.comwww.tnk-bp.com

Reservoir Modeling & Simulation

iStore Inks Five-Year Mexican DealUnder a five-year technology agreement between The Information Store (iStore) andIntegrated Trade Systems, Inc. (ITS), the E&P division of Pemex stands to improve man-agement of Mexico's oil and gas activities through better access to data. The deal will givePemex E&P asset managers company-wide access to iStore's PetroTrek suite of Web-basedsoftware solutions, enabling them to access, analyze, report on and distribute mission-criti-cal exploration and production data. ITS is providing integrated international procurementservices to the five entities of Pemex in Mexico.

iStore began its relationship with Pemex E&P in 1997, when it installed the AssetManagement Solution - Seismic at the company's geophysical data processing center inVillahermosa to make more than 10 terabytes of seismic data available company-wide. iStore has since installed its exploration module and is currently installing the drilling mod-ule for Pemex E&P's Southern Region.

Two years ago, Pemex E&P embarked on a corporate initiative to enable data access

Asset & Data Management


across all regions of the company. In April 2004, Pemex E&P tapped iStore to assist withthe ADITEP (Administracion de Datos y Informacion Tecnica de Exploracion yProduccion) project, and executives were pleased with the performance of PetroTrek.

The PetroTrek suite includes Asset Management System-Production (AMS-P), a Web-based application that pulls in critical information from across the enterprise. Users canaccess data from multiple databases with the click of a mouse and present it in a highlyusable format.

"With iStore, our asset management teams now have access to a wide range of oilfielddata," said Jose Luis Figueroa Correa, manager of technical systems for exploration andexploitation for Pemex E&P. "More importantly, that data can quickly and easily be putinto various formats and used to support decision-making. We're excited about the resultswe've already seen in a few short months."

Those results led to the new framework agreement, which will simplify the procure-ment of technology required by Pemex E&P by pre-defining all commercial terms and con-ditions that would prevail for all future transactions.

www.istore.comwww.tradesolutions.com/its.html

www.pep.pemex.com

Intergraph Corp. announced that Clough Ltd., one of Australia's largest engineering firms,is implementing the SmartPlant® Foundation integration and workflow management hubin a phased program for project engineering information and document management, datahandover to clients and engineering information visualization. SmartPlant Foundation inte-grates Clough's existing software investment, which includes virtually all Intergraph designengineering tools and the MARIAN procurement and supply chain management system.First installations are at Clough offices in Australia and Indonesia. The engineering IT proj-ect will ultimately create the SmartPlant Enterprise environment to help reduce risk andincrease project delivery effectiveness for Clough's international business.

Simon High, CEO of Clough Services, said, "As our e-engineering hub, SmartPlantFoundation will help ensure that Clough further improves control of engineering informa-tion and documentation. Clough and its clients will be using the same system, configuredfor our own respective businesses, thereby greatly improving data handover. Clough's ulti-mate goal is to integrate our Intergraph engineering and procurement solutions to shortenschedules and optimize resources to better manage project delivery."

SmartPlant Foundation is the integration, information access and workflow controlhub of the SmartPlant Enterprise, Intergraph's comprehensive suite of intelligent, data-cen-tric engineering software. SmartPlant Foundation encompasses a plant's initial design, con-struction and ongoing operating modifications, defining and driving electronic workprocesses, tracking changes and managing engineering revisions.

ppm.intergraph.com/businesseswww.clough.com.au

Plant Engineering & Procurement

Clough Ltd. Implements SmartPlant Foundation



Forest Oil Corp. has selected Wellogix to provide software and services for a pilot project toimprove the company's purchase-to-pay process for its U.S. operations. Utilizing the coremodules of Wellogix's Complex Services Management (CSM) suite, the solution willincrease the efficiency of the invoice process and reduce the cycle time between invoicereceipt and payment, thereby reducing costs and expediting service company payment. Inaddition, the solution will support Forest's efforts to comply with Sarbanes-Oxley legisla-tion as it relates to the company's purchase-to-pay process.

"As a result of the company's rapid growth, our operations now generate a significantvolume of paper invoices, which places a tremendous burden on our administration andaccounting functions, as well as on our engineers and field personnel," said Scot Woodall,senior vice president of Forest Oil's western business unit. "Implementing an electronicinvoice solution could allow us to take advantage of possible savings from the early pay-ment of our field service invoices and allow operations personnel to spend more time onvalue-adding activities and less time chasing down invoices and approvals."

Depending upon the pilot results, the solution will be implemented in phases, with thefirst phase targeting the company's Permian Basin operations. Experiences and lessonslearned during this implementation will be used for the enterprise-wide rollout.

www.forestoil.comwww.wellogix.com

Interoperability Standards

OpenSpirit Launches New Subsidiary, Opens UK OfficeOpenSpirit Corp. has formed a new wholly-owned subsidiary, OpenSpirit Corporation(UK) Ltd., and opened a European office headquartered in London to serve clientsthroughout the Europe, Africa and Middle East (EAME) region.

"The opening of our London office is in response to market demands from our manyEuropean and Middle Eastern clients," said OpenSpirit President and CEO Dan Piette."We are delighted to confirm our commitment to them, while at the same time establish-ing the infrastructure from which to expand our presence in the region."

Conveniently located within walking distance of Gatwick Airport, OpenSpirit'sLondon office will provide a full range of the company's products and services, includingsales and first-line support.

"The active EAME region has become increasingly important to OpenSpirit," saidSteve Batchelor, OpenSpirit EAME managing director. "The number of companies in theglobal marketplace embracing OpenSpirit integration solutions has grown. Our technolo-gy is viewed as the de facto standard for integrating data and applications in the upstreamE&P environment."

www.openspirit.com

E-Procurement

Forest Oil Plans Wellogix Pilot Project


Online Auctions

New Financing Option for EnergyNet Buyers Texas Capital Bank has teamed up with EnergyNet, the online auction site for energyacquisitions and divestitures, to provide buyers with direct access to bankers that have spe-cial expertise in oil and gas lending.

Once a deal of $250,000 or more has been awarded to a bidder, they have the oppor-tunity to originate the lending process online by accessing the Energy Lending link fromEnergyNet's home page. Prospective borrowers may shorten the loan application processsignificantly by requesting that the due diligence information they shared with EnergyNetbe made available to Texas Capital Bank.

The bank's Energy Group originates oil and gas reserve-based loans and specializes insenior debt funding for:

· Acquisition of oil and gas properties;· Development drilling; and· Capital expenditures against proven reserves.

www.texascapitalbank.comwww.energynet.com

E-Procurement

Wellogix Expands Partnership with SAP Wellogix announced a joint marketing agreement with SAP, whereby the companies willmarket a joint industry solution that helps customers automate their procurement func-tions. The agreement includes the mySAP SRM product, as well as other procurementofferings from SAP, with the Wellogix CSM suite integrated via SAP's NetWeaver platform.

The Wellogix Complex Services Management (CSM) Suite is a complete solution forthe planning, procurement and payment of complex oil field services across a company'sengineering, procurement and financial functions. Remotely hosted and available ondemand, it can be used as a standalone solution or integrated into an existing businessapplication environment.

"For our customers, the procurement of complex services through our applicationsimproves the performance of the business," said Tom Jordan, vice president of businessdevelopment at Wellogix. "Customer adoption of the SAP NetWeaver platform is on therise. We are pleased that the evolution of our relationship with SAP allows us to help cus-tomers optimize the business value of the critical technology they rely on for success."

The Wellogix CSM suite will be PIDX compliant, integration certified by SAP and"Powered by NetWeaver." SAP certification helps assure customers that the interfacesbetween Wellogix solutions and SAP solutions are reliable and seamless.

www.wellogix.comwww.sap.com



PEOPLE NNEWS

Antech Expands Engineering StaffAnTech Ltd., an engineering design and manufacturing company based in Exeter, England,has appointed Alaina Tan as Electronics Engineer with the Special Engineering Projectsdepartment and Valentin Balaschenko as Senior Software Engineer in its Oilfield Softwaredivision.

Tan will play an instrumental role in all stages of circuit design and PCB layout, pro-duction and testing, and will provide special expertise in Texas Instruments Firmware. Anative of Singapore, Tan earned a diploma in Electronics, Computer and CommunicationEngineering (Telecommunication) from Singapore Polytechnic and a master's degree inElectronic Engineering in 2003 from Cardiff University, Wales. Previously, she worked as aservice administrator for Tesco UK Ltd. in Wales and as a VHDL developer with RokeManor Research Ltd., a division of Siemens.

Balaschenko's primary responsibilities will be to improve and expand the company'ssuite of StringView well planning, visualization, and reporting software, in particular, sup-porting and developing AnTech's graphics library and the StringView Millennium softwaredevelopers kit. In addition, he will be further developing the control system for COLT,AnTech's award-winning gas well drilling and steering system. Originally from Belarus, heis a graduate of Belarussian State University of Informatics and Radioelectronics in Minsk,where he earned a BSc in Radio Electronics 1998 and an MSc in Mathware and SoftComputing in 2003. Before joining AnTech, Balaschenko served for four years in a seniorsoftware engineering role for Insoft Group in Belarus.

www.antech.co.uk

Alaina Tan

Valentin Balaschenko

ENGlobal Corp. has formed ENGlobal Automation Group (EAG), a division of ENGlobalEngineering, Inc., to provide services relating to the implementation of process control,advanced automation and information technology projects. EAG will promote ENGlobal'sproven capabilities for plant automation services and products to respond to the currenttrend toward replacing obsolete technology with new open-system architecture for distrib-uted control systems (DCS).

Shelly D. Leedy, P.E., will lead this strategic initiative as president of the ENGlobalAutomation Group from the company's Beaumont office. Leedy has more than 20 years ofexperience in the automation services industry, including the execution of instrumentationand automation projects in North and Latin America as well as heading a division withannual revenues in excess of $400 million.

www.ENGlobal.com

ENGlobal Forms AutomationServices Division

Shelly D. Leedy


PRODUCT NNEWS

4th Wave Imaging Opens Houston Office 4th Wave Imaging has opened a Houston office with the appointment of Dr. William E.(Bill) Hottman as Director of Sales and Marketing. Hottman brings more than 25 years ofpetroleum asset management and business development experience from past assignmentswith Shell Oil and Halliburton Energy Services. Most recently, he was technology Director,asset performance at Landmark Graphics, responsible for identifying new opportunitieswith emerging technologies and management of third-party technology relationships. Hehas a Ph.D. in geological oceanography from Texas A&M University.

4th Wave Imaging's advanced seismic imaging technology is focused on practical, accu-rate methods of characterizing and monitoring oil and gas production from petroleumreservoirs, which can dramatically lower the economic risks and increase the ultimate recov-ery efficiency. 4th Wave Imaging's technology has also been utilized in oilfield thermalrecovery projects in California and Canada, and to monitor carbon dioxide injection forboth enhanced oil recovery (EOR) and environmental disposal.

www.4thwaveimaging.com

Dr. William E. (Bill)Hottman

BearingPoint Names Global Energy Lead Systems integrator BearingPoint, Inc. announced that Reid Morrison will lead the GlobalEnergy & Chemicals practice, which includes the Oil and Gas, Utilities, Chemicals, andNatural Resources sectors.

Before joining BearingPoint, Morrison worked for Andersen Business Consulting from1997 to 2002. Prior to that, he was a director of business development and project manag-er for Aon Consulting for four years. Morrison was also employed by Systems Research andApplications as a research associate. He holds a bachelor's degree from SouthwesternUniversity and Master's of Arts from Tulsa University.

www.BearingPoint.com

Reid Morrison

SAP Delivers Next-generation ERPThe latest version of mySAP™ ERP, SAP's flagship enterprise resource planning (ERP)solution, shipped to customers a full month ahead of schedule. SAP plans to meet withcustomers in nearly 100 cities to talk about the benefits of service-oriented ERP solutionsthe standards-based SAP NetWeaver™ platform.

With this release, SAP has evolved from automating end-to-end processes within anorganization to extending processes beyond the enterprise to the entire ecosystem of cus-tomers, suppliers and partners, providing companies with one solution for business analyt-ics, financials, human capital management, operations and corporate services.

"ERP is no longer just about squeezing more efficiency out of a business," said Jim

Enterprise Resource Planning Systems



Hagemann Snabe, senior vice president at SAP. "To survive in the 21st century, businessesmust also be able to react rapidly to change. mySAP ERP is the ERP solution that gives com-panies the flexibility to adapt business processes to new market conditions while simultane-ously maximizing productivity. We are proud that we are implementing a faster and easiertransition to the next-generation ERP solution in a way that is evolutionary, not revolution-ary, to customers' existing systems. This is unprecedented in the enterprise software industry."

Since the third quarter of 2004, more than 1,000 mySAP ERP contracts have beensigned, 70% of them with companies with less than $1 billion in annual revenues. Withnew human capital management features such as compensation management, e-learning andself-services, mySAP ERP can improve global HR systems to better align employee skills,activities and incentives with business objectives while setting the foundation for implement-ing service-oriented infrastructure across the enterprise. The product handles invoices inelectronic bill presentment and payment; recruiting and enterprise learning; shop floor inte-gration; process collaboration via cFolders; radio frequency identification (RFID) in invento-ry and warehouse management; document exchange in self-service procurement and requisi-tion; collaborative project management; and supplier collaboration in the area of procure-ment. Analytics from all business processes can be fed into and retrieved from the businessinformation warehouse. Users have access to data as well as enhanced analysis and reportingtools that support compliance with new regulations such as Sarbanes-Oxley.

www.sap.com/erp

Sneak Preview of Microsoft 'Indigo'

Web Services Technology

At a keynote address at a San Francisco conference, Eric Rudder, Microsoft's senior vicepresident of servers and tools, gave a sneak preview of how "Indigo," the code name forMicrosoft's next-generation Web services technology, will enable developers to reduce thecomplexity associated with building secure, reliable and interoperable applications on theWindows platform. Applications built using "Indigo" are able to interact and exchangedata with other applications, independent of the underlying platform, he said. Rudder alsoannounced that a March community technology preview would enable developers to test,experiment and give feedback on the features in "Indigo" prior to beta releases.

While today's Web services technologies enable applications running on different plat-forms to interoperate, few of these technologies have the advanced levels of security andcommunications reliability that customers need. "Indigo" will take Web services to the nextlevel with its built-in support for the WS-* specifications, a group of interoperable proto-cols co-developed by Microsoft and partners for service-oriented applications.

"The world we live in is more connected than ever before," Rudder said. "It is vitalthat developers have the tools to build connected systems that can enable organizations toreach out beyond their four walls to interact with customers and partners in new and valu-able ways. With 'Indigo,' customers have the tools to create software that reflects thedynamic nature of their business."

Microsoft will deliver "Indigo" as an extension of the .NET Framework 2.0, thus themore than 6 million Visual Studio developers worldwide will be able to build secure, reli-able, interoperable Web services using any of the programming languages supported by the.NET Framework, such as Visual Basic .NET and Visual C#. By enabling customers totake advantage of existing skills and investments, "Indigo" will result in less complexity for


developers, fewer components to be managed by IT professionals and, ultimately, signifi-cant cost savings for organizations.

In addition to being available on "Longhorn," code name for the upcoming version ofthe Windows client operating system, "Indigo" will be made available for Windows XP andWindows Server 2003.

msdn.microsoft.com/longhorn/default.aspx

Optimization Software

Maplesoft Global Optimization Toolbox Optimization is the science of finding solutions that satisfy complicated constraints and objec-tives. In engineering, constraints may arise from technical issues, whereas in business, con-straints are related to materials, cost, time and staff. The goal of global optimization is to findthe absolute best answer for models with multiple possible solutions, a process that can beextremely difficult without the proper tools. Frequently, engineers and researchers are forced tosettle for solutions that are "good enough" because the best solution takes too long to find.

Maplesoft provides a high-performance software tool for engineering, science andmathematics called Global Optimization Toolbox, which enables a wide range of profes-sionals to obtain the mathematically optimized solution to complex modeling problems. Itis a valuable resource for anyone who deals with nonlinear optimization problems in opera-tions research, engineering, economics or other applied sciences.

"Using the Global Optimization Toolbox, users can formulate optimization modelseasily inside the powerful Maple numeric and symbolic system, and then use world-classMaple numeric solvers to return the best answer, fast," said Dr. Laurent Bernardin,Maplesoft's chief scientist.

"Maple's optimization add-on has permitted me to lock in on optimal parameters in prob-lems involving six parameters on a system with three orders of magnitude for each dimension,"said Ron Lenk, systems applications engineering manager at Tyco Electronics and author ofPractical Design of Power Supplies. "Full global optimization is critical and Maple's optimizationadd-on is the only software I have tried that even comes close to solving these problems."

www.maplesoft.com/products/toolboxes

Plant Design Software

CADWorx Now Supports AutoCAD 2006COADE announced support for AutoCADR 2006, the next-generation design software fromAutodesk, which means that COADE customers can take advantage of the latest release ofthe world's leading customizable and extendable CAD software for 2D drafting. CADWorxoffers intelligent drawing-to-database connectivity, advanced levels of automation and easy-to-use design techniques, as well as bi-directional integration between CAD and stress analysis,such as PVElite for vessels and CAESAR II for piping systems. Taking advantage of theDynamic Blocks, Heads-Up Design and Workspaces and Tool Palettes in AutoCAD 2006,CADWorx users can get the most out of their data and realize their design ideas faster.

www.autodesk.comwww.coade.com



PRODUCT NNEWS

Supply Chain Management

BizTalk Server2004 Acceleratorfor RosettaNet Microsoft Corp. launched the BizTalkServer Accelerator for RosettaNet,which adds complete support for thetrading partner integration standarddeveloped by RosettaNet, a consortiumof IT, electronic and manufacturingcompanies. Customers using BizTalkServer Accelerator for RosettaNet willsee new levels of supply chain efficien-cy, visibility and flexibility, while signif-icantly lowering costs and increasingcustomer satisfaction.

"This third version of theAccelerator demonstrates our continuedpartnership with the industry in drivingthe adoption of XML standards," saidTed Kummert, corporate vice presidentof the Business Process and IntegrationDivision at Microsoft.

It has full compliance with theRosettaNet ImplementationFramework (RNIF) versions 1.1 and2.0, as well as support for the ChemicalIndustry Data Exchange (CIDX)Chem eStandards version 2.0.2.

www.microsoft.com/windowsserversystem

Seismic Interpretation Software

TGS ImagingReleasesPRIMA 7.0 TGS Imaging, the seismic data pro-cessing division of TGS-NOPECGeophysical, released a new version ofthe PRIMA™ pre-stack interpreta-tion and analysis software, whichincludes new interpretation tools andfeatures, functionality improvements,well log overlay capabilities andenhanced workflow integration.

The release adds a new"Interactive Surface Viewer by Offset"tool for improved gather attribute dis-plays. Gather attributes can now alsobe submitted as a batch job to opti-mize computational delays. With thisversion, PRIMA has the ability to dis-play and overlay well paths and curvesin certain modules.

PRIMA 7.0 has been upgradedto be compliant with OpenSpirit2.7, to allow for greater

Database Management Software

SmartDBAOptimizesMainframe StaffBMC Software's SmartDBA helpsdatabase administrators managedatabases across both distributed andmainframe environments via a com-mon look and feel, thereby address-ing the shortage of qualified main-frame DBAs. By eliminating thelearning curves traditionally associat-ed with managing mainframe data-bases and automating previouslytime-consuming tasks, companiescan consolidate their DBA staff andensure greater efficiencies within theIT support team.

"We rely heavily on mainframesand anticipate them to play a majorrole within our IT environment fora long time. However, findingskilled mainframe talent to supportthis platform is a challenge," saidMarsha Robinson, database adminis-trator at xwave, one of the largest ITcompanies in Canada. "SmartDBAeliminated the complexities tradi-tionally associated with managingthe mainframe and enabled us tostreamline and standardize how wemanage data for a more efficient andconsistent process."

"With skilled mainframe talent

import/export abilities, includingwell logs and seismic slice volumes.The software is also available withthe Linux operating system.

www.tgsnopec.com

declining, it is necessary for compa-nies to plan ahead to ensure futuresupport. Implementing the propertools now will ensure an easier transi-tion when existing staff retire," saidBill Miller, vice president and generalmanager, mainframe managementsolutions, BMC Software.

www.xwave.comwww.bmc.com


ABAQUS, Inc. announced therelease of ABAQUS for CATIA V5,Version 2.1, which offers users ofCATIA V5 new simulation capabili-ties including added functionalityfor advanced materials and structuralassembly techniques in ABAQUS. Itis completely integrated with theCATIA V5 Product LifecycleManagement (PLM) solution fromDassault Systemes.

Accurate structural modeling ofassemblies remains a daunting chal-lenge in product design.Sophisticated technology is requiredto model spot welds and other join-ing techniques, to ensure high-fideli-ty prediction of product perform-ance, and to realistically estimateproduct life. To address these chal-lenges, Version 2.1 of ABAQUS forCATIA V5 takes advantage of thelatest advances in ABAQUS technol-ogy. This release of ABAQUS forCATIA V5 continues to deepen theprovision for nonlinear analysis bysupporting more material models,such as enhanced metal plasticitymodels, hyperelasticity, and user-defined materials.

"With each release, ABAQUS forCATIA V5 continues to deliver sig-nificant new capabilities for advancedFEA within the CATIA V5 user envi-ronment," said Ken Short, vice presi-dent of marketing for ABAQUS."This new version offers a compellingPLM-integrated solution for sophisti-cated, real-world simulation."

www.abaqus.comwww.3ds.com

Pipeline Design Software

Energy SolutionsUnveilsPipelineStudio 2.7Houston-based Energy SolutionsInternational released the latest ver-sion of its popular PipelineStudio®software, which contains featuresthat speed pipeline design, improvedata analysis and decrease simulationtime by integrating technical andfinancial aspects of pipeline designand operation.

"This release of PipelineStudiocontinues to build upon our best-in-class capabilities for pipeline designand simulation," said Al Jacob,Energy Solutions chief executiveofficer. "The fact that we haveissued three releases of the productover a 12-month period demon-strates our commitment to continu-ous improvement of our products.We recognize the changing businessrequirements our pipeline customersface and we're working hard to beresponsive."

New features and enhancementsin PipelineStudio 2.7 include:

· Import/export of configura-tion element libraries;

· Improved trend plot and trending functionality;

· New product help support inSpanish and enhancements inChinese;

· Differentiation of input and output on data blocks for ease of data review; and

· Increased speed and robust-ness of the PipelineSimulatorengine.

PipelineStudio users can designpipelines and size equipment, analyzehydraulic responses and pipelineoperation, perform "what if" scenar-ios for operational and financial

Finite Element Analysis Software

ABAQUS forCATIA V5

investment purposes, simulatepipeline operations from existing dataand analyze operational problems.PipelineStudio supports both steady-state and transient hydraulic analysis.

www.energy-solutions.com

Appro unveiled its new Intel Xeonprocessor-based XtremeBlade solu-tion at the Intel Developer Forum inSan Francisco. It combines thepower of 64-bit Intel Xeon proces-sors, InfiniBand and PCI Expresstechnologies to provide outstandingperformance and scalability as wellas high-bandwidth and low-latencyinfrastructure required for next-gen-eration data centers. It was designedfor high availability by offering hot-swappable blades, redundant powersupplies and cooling fans as well astight integration of key componentssuch as network switches and cen-tralized management.

The Appro XtremeBlade solutionfeatures six sub-racks housing up to12 blade servers in each sub-rack pro-viding a reliable clustering buildingblock for High-Performance, Grid orCompute-On-Demand deployments.An XtremeBlade Cluster can supportup to 72 Blade servers in a singlerack cabinet. The solution offers avariety of configuration optionsincluding Appro DAS/NAS/SANbased storage solutions and a choiceof Windows and Linux OperatingSystems. The product will be avail-able in June.

www.appro.com

High Performance Computing

64-bit Intel XeonXtremeBlade



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