Wilson, Aubrey L., IBM Special Representative, Petroleum Industry

Publication Rights Reserved

This paper is to be presented at the Mechanical Engineering Aspects of Drilling Production Symposium in Fort Worth, Tex., on March 23–24, 1964, and is considered the property of Society of Petroleum Engineers. Permission to publish is hereby restricted to an abstract of not more than 300 words, with no illustrations, unless the paper is specifically released to the press by the Editor of the Journal of Petroleum Engineers or the Executive Secretary. Such abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in JOURNAL OF PETROLEUM TECHNOLOGY or SOCIETY OF PETROLEUM ENGINEERS JOURNAL is granted on request, providing proper credit is given that publication and the original presentation of the paper.

Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines.

The Petroleum Industry in the United States spends approximately 75 million per year for digital computing and data processing equipment. In addition, the Industry spends at least that amount on data processing and computing personnel. This sounds like a great amount of money. It is. And we in IBM are deeply appreciative for our share of these expenditures. Yet, in relation to the rest of the U.S. economy - as a per cent of sales or a per cent of total assets - the petroleum industry is not the most intensive user of computers. There are some obvious reasons for this. For example, most of the earlier work applied to computers was of the paper shuffling type involving invoices, vouchers, run tickets, etc. Petroleum - though I'm sure you often have occasion to feel differently - is not a paper generating business comparable to banking or insurance or retail merchandising.

For the petroleum industry as a while, there are no precise breakdowns of computer usage by functional grouping - that is, by retail, by wholesale, by manufacturing, etc. But there are some educated approximations. Roughly 15 per cent of the data processing dollar in petroleum goes to the processing of one type of document - the retail credit invoice. Of course, it is extremely fortunate that efficient electronic tools are available for this tedious job. Approximately 25 per cent of the DP dollar is spent in manufacturing. The refinery side of the business was one of the first to exploit the computer. As a result, a large percentage of the industry's excellent DP and computing staffs have been developed in the Manufacturing Divisions. Wholesale marketing accounts for 10 per cent of the usage. With the development of the automated bulk terminal, this will grow substantially. Research operations employ 10 to 20 per cent of the usage; home offices in the area of retirement funds, equity funds, corporate studies, etc., probably employ 10 per cent of the total computing capabilities of the industry. This possibly leaves 25 per cent of the computing and data processing for the exploration and production functions. Yet, of the $6 to $8 billion per year which the petroleum industry spends on capital investment, a large $4 to $5 billion goes into exploration and production. Based on where the bulk of the industry's investment goes, it is logical to conclude that E and P represents the critical or most profitable area of a petroleum company's business- though, of course, all functions of the business are critical and important. Likewise, it can be inferred that data processing and computing is not being utilized in E and P proportionally to E and P's significance or importance. This is in the process of change. An extremely dynamic role for data processing in E and P can be predicted with confidence for the future.

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