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Shell’s Forecasts for North Sea Field Are Blown Off Course

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By Steve Rosenbush, Deputy Editor: February 27, 2013

Royal Dutch Shell plc’s analytic tools may have led it to overestimate the potential resources of an oil and gas field in the North Sea—a reminder that the latest in algorithms and visualization tools, as powerful as they might be, aren’t always right.

The company said late last Thursday it was reassessing its development plan for the Fram oil and gas field in the North Sea following “unexpected” initial drilling results. The original development plan forecasted that the field, located between the U.K. and Norway, would  produce an average of 35,000 barrels of oil equivalent a day.

“Early assessments have shown unexpected well results. Development drilling will continue for the next several months and the results will inform a revised strategy for Fram,” Shell said in a statement last week. The company, which already canceled an order for a floating production storage and offloading vessel for the site,  plans to produce an alternative development plan.

As CIO Journal has reported, Shell has invested heavily in what it calls “competitive IT,” the use of algorithms, visualization tools and other technology to help it recover unconventional resources such as deepwater oil, or  gas that is locked in hard-to-access rock formations. Those techniques have led to some breakthroughs—such as the ability to “see” through otherwise opaque salt deposits off the coast of Brazil or in the Gulf of Mexico, increasing access to deepwater reserves.

Shell declined to say what role, if any, those specific tools might have played in the forecasting for Fram, which is not a deep-water field. However, it did say that it will use a range of technologies as it moves forward with the project.

“Regarding Fram, we continue with development drilling and will assess the results using various techniques and technology as we evaluate the potential of the Fram reservoirs, with a view to producing an alternative development plan for the field,” Shell said in a statement to CIO Journal. It declined further comment.

While the particular facts of the Fram situation remain unclear, the larger point for CIOs is not–they need to construct business processes around the use of data that assumes a certain level of technological fallibility, offset by a corresponding degree of operational flexibility.

Follow Steve Rosenbush at @steve_rosenbush

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