BPI Request for Information Response

ACCENTURE REQUEST FOR INFORMATION RESPONSE

TO BLACKWATER PETROLEUM

INCORPORATED

Tuesday, November 26, 2013

Accenture:

Josh Nutter

Jordan Patterson

Colton Raemsch

Michael Ramirez

Courtney Reed

Blackwater Petroleum Incorporated | Group 7 | 1

TABLE OF CONTENTS

EXECUTIVE SUMMARY.………………………………………………………………………………………………...…….... 2

Introduction Our Understanding of the Problem Solution Conclusion

INTRODUCTION…..……………………………………………………………...……...……………………...………….………… 3 Purpose of Response Recommendation Summary Confidentiality Agreement

COMPANY OVERVIEW…………………………………………………………………………………….…………………..…… 4 History of Accenture Company Culture of Accenture

WHY WE ARE QUALIFIED…………………………………………………………..………………………..…………….…..… 5 Proven Success

CURRENT SITUATION…………………………………………………………………………..………..……….……………….. 5 Pipeline Monitoring Replacement Parts Inventory Management PROPOSED RECOMMENDATIONS…………………………………………..…………………………………………….…. 7 Pipeline Monitoring Solution Cloud Computing Facility Integrity & Reliability SAS Software Solutions Data Management Procurement Solution SAS Proven Success Field Service Management

PRICING………………………………………………….………………………………………..………...……….….…….……….. 10 Private Cloud Pricing Software Hardware

PHASES OF IMPLEMENTATION…….………………………………………………..………....……….………………....... 12 Assessment Phase Requirements Phase Implementation Phase Training Phase Review Phase

CONCLUSION………………………………………………………..…………………………………..……….………………....… 13 Terms and Conditions Contact List for Accenture Consultants Works Cited


EXECUTIVE SUMMARY INTRODUCTION

Blackwater Petroleum, Inc. (BPI) is a multinational oil and gas corporation headquartered out of Houston, Texas. BPI has grown into one of the largest energy companies in the world and is ranked in the top six global super major oil companies. The company is currently looking for a way to sustain its competitive advantage by improving its process to predict vital equipment failure and reduce downtime costs. OUR UNDERSTANDING OF THE PROBLEM

Blackwater Petroleum recently hired an external firm to evaluate its midstream operations and found three areas for overall improvement. First, BPI currently has a team of quality inspectors manually inspecting pipelines in its field sites. The company lacks a method to systematically monitor and predict pipeline failures. Secondly, since BPI is a global company, many of its sites are located in remote areas of the world. The procurement, shipment, and repair time to these locations are lengthy and lead to high shutdown costs as well as placing the company at risk for legal issues. Lastly, BPI lacks the technological ability to monitor pipeline part inventory levels and schedule inspection or repair crews. This leads to frequent delays in the procurement process due to manual communication. BPI is looking for a solution to have a holistic view of its pipelines, predict where failures will occur, dispatch crews for inspection, and procure the parts for any repairs necessary. SOLUTION

Accenture, recommends BPI implement a private cloud to allow users throughout the system the ability to log in remotely and access information. This solution helps BPI’s lack of real time information available while reducing the cost of maintaining individual IT departments throughout the company. With this, we suggest using SAS software to handle day-to-day operations. SAS is tailored to the oil and gas industry and uses data from pipeline technology to detect any leaks or cracks in the system. It uses predictive asset maintenance by using predictive analytics and historical data to foresee any possible pipeline issues. We will implement General Electric’s PII Pipeline Solution to monitor exterior defects and route information to the SAS system. SAS also offers a Service Parts Optimization solution to respond to BPI’s current inability to monitor inventory levels. Lastly, we will use a field service management solution by FieldOne to aid in the scheduling of inspection and repair crews in the field. This solution is also able to integrate with SAS to allow for one consolidated IT solution. CONCLUSION

We suggest that Blackwater Petroleum implement our solutions in three stages to allow optimal results. First, we suggest that the private cloud be purchased and optimized. Secondly, the SAS software should be purchased and implemented into the private cloud. Lastly, we suggest debugging the software and testing it at BPI location.


INTRODUCTION

PURPOSE OF RESPONSE

We, Accenture, are issuing this Request for Information (RFI) response to make recommendations that would best meet the needs of Blackwater Petroleum Incorporated (BPI). It is our understanding that BPI wants to be a leader in risk identification and risk monitoring. Included in this RFI response are our findings and recommendations for implementation to support these business objectives. Throughout this response we will reveal BPI’s current problems, the solutions we recommend, and information of the recommended companies. We feel these proposed solutions will meet the needs of BPI, allowing them to become a leader in risk identification and monitoring should they accept our recommendations and implement them in a timely manner. RECOMMENDATION SUMMARY

We will highly recommend Procurement, Asset Integrity, and Maintenance operations to a secure private cloud using PaaS. A private ensures complete data security. SAS industry leading solutions allow for software to predict where and when asset failures may occur. It allows for complete analysis of big data and allows users to drill down to reports, graphs and KPI dashboards from the web. CONFIDENTIALITY AGREEMENT

“Confidential Information” includes all non-public information of any nature that Accenture considers to be confidential or private. As an employee of Blackwater Petroleum Incorporated, you will have access to confidential information belonging to Accenture, Accenture’s customers, suppliers, and other third parties. You agree not to disclose Confidential Information to anyone outside Blackwater Petroleum Incorporated under any circumstances.


COMPANY OVERVIEW

HISTORY OF ACCENTURE

For the last 60 years Accenture has been able to evolve and adapt with its changing environment to establish itself as a Fortune Global 500 industry leader. Accenture collaborates with its clients to help improve their businesses by aligning the company’s people, technology, and business processes to help the company perform better as a whole. With a presence in 120 countries and 275,000 employees Accenture is able to utilize their knowledge of all industries to give their clients the skills and capabilities to help them become high-performance businesses and governments. The company went public in 2001; and in the fiscal year end of August 31, 2013 they generated net revenues of US $28.6 billion. Overall, Accenture is a global management technology and consulting firm that offers its clients a wide variety of consulting, outsourcing, and technology services and solutions. COMPANY CULTURE OF ACCENTURE

Since the beginning, Accenture has been operated by its core values. Our core values help define how we operate our business. These values include: community service, integrity, attracting the best people, and creating a global network. We aim to touch the lives of the community, act ethically by taking responsibility for our actions, recruit and develop the best talent for our company, and to deliver the best services to our clients wherever they are globally. Our corporate structure is advanced in finding technological solutions by providing all employees the opportunity to develop their skill set to become the best in the industry. We are a world-class organization and strive to provide our customers with the best available solutions.


WHY WE ARE QUALIFIED

Proven Success Accenture is equipped with many qualified consultants that can help Blackwater Petroleum transform themselves into the company they are striving to become. Over the years of working with oil and gas companies, we have helped many companies find solutions to fit their needs. We have partnered up with SAS to form an alliance that has allowed our clients to seize growth opportunities, solve complex problems with speed and innovation. Senior Geologist at a major oil company recently said, “SAS has proven to be dependable in 100 percent of the cases. There is nothing in the market that matches that performance.”12 Through collaboration with clients, Accenture is able gain insight into their current situation and help them achieve their end goals. Accenture has and will continue to invest a lot of time and research to find ways better improve how companies function. Through Accenture’s strategic alliances we have developed revolutionary technology. For example, the creation of the Life Safety Solution, was named “2012 New Product of the Year”. This technology is a location-based device equipped with Wi-Fi that detects multiple gasses that could cause a hazardous environment. As you can see, Accenture is not afraid to break barriers and find new innovative ways to help companies revolutionize their business along with transforming how the entire industry works.

CURRENT SITUATION

Blackwater Petroleum, Inc. (BPI) currently faces major problems in their business processes and how they have been historically keeping records. One of BPI’s major problem areas is that they have an inefficient mid-stream operation; which includes monitoring and predicting failures in pipelines, long lead times to replace or fix pipelines, and exactly what inventory they are holding. Pipeline Monitoring

BPI’s first major issue is in pipeline monitoring. This required extensive manual labor and effort to manually check along pipeline paths for leaks and other issues, which show a lack of pipeline integrity. This causes a lot of problems for BPI because the majority of the pipelines are located in remote areas. Some of the areas that the BPI employees have to cover include Alaska and Northern Canada, the jungles of South America, vast stretches of Russian forests, and the outback in Australia. With pipelines located all around the globe, the amount of miles that are required to be visually inspected creates a major problem. Additionally, the labor and transportation costs to manually inspect pipelines is a tremendous pull at BPI’s bottom line.

Replacement Parts

Along with the extremely remote monitoring of the pipelines comes the long lead times created when a repair is required. Typically, the inspection crew must report the issues to


the dispatcher. The dispatcher then must find a repair crew to make the appropriate repairs. Next, the repair crew needs to find the appropriate materials to make the repair, which includes transportation of the materials. Due to the size of the materials, replacement parts may take up significant space. Transportation may require specialized trucks to transport the large materials. Scheduling the repair crews and transportation may sound simple, but can incur substantial costs if processed incorrectly. BPI needs a system to route and schedule repair crews efficiently. Inventory Management Finally, BPI faces the problem of not knowing accurate inventory levels for inspection or repair crews. Once the order is put in the system to repair the problem, the dispatcher has to be able to tell if the crew they have dispatched has all the required parts to do the repair. BPI needs a solution to provide accurate tracking of repair crews and correct inventory levels on trucks and in local warehouses. In the oil industry, every minute of downtime costs the company thousands of dollars. It is essential BPI has a solution to provide accurate inventory levels to repair crews and efficient repair crew scheduling and routing.


Proposed Recommendations Information Technology is a vital part of every modern day business, but can distract from the core competencies of the business. BPI’s current IT infrastructure is not providing the information it needs to mitigate risk and increase profitability. Several IT solutions exist on the marketplace today, which could push BPI in a new direction focusing on safety, predictive maintenance, and cost-saving procurement monitor strategies. Pipeline Monitoring Solution

A major problem indicated at BPI is labor-intensive pipeline monitoring. While surface level monitoring is limited, technology once again surpasses our abilities. Accenture’s recommendation is General Electric’s PII Pipeline solutions. These devices, termed as “Smart Pigs” are deployed within pipelines to defects in the form of cracks, Stress Corrosion Cracking, sulfide corrosion, and third party defects. 1 GE offers several options for both Gas and oil pipelines for data collection. They can be routed through pipelines currently used pipelines to check for defects. Data is stored onboard the device and then offloaded and analyzed. This vast amount of data will then be routed to a database within the SAS platform to be analyzed. Data analysis usually takes one to three months. This will tremendously reduce BPI’s labor costs and increase accuracy and efficiency of inspections. Cloud Computing

Cloud computing is a recent innovation that has changed enterprise IT immensely. Instead of each enterprise purchasing servers and managing an IT department, enterprises can use

a highly scalable cloud solution. BPI’s issues are all contributed to a lack of real time or delayed processes. Due to the on demand nature of Cloud, it provides the perfect solution for BPI. There are three types of cloud infrastructure including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Additionally, private cloud solutions dedicate servers to only one customer, whereas public cloud uses servers to store various customer’s data. Our recommendation is that BPI use a private Cloud while using IaaS infrastructure to avoid large initial capital investments. Our recommendation is Amazon Web Services Private cloud. They have been consistently ranked in the top providers for cloud services.

SAS Software Solutions

Once BPI has a platform running on the cloud, it will need software to improve particular parts of the business discussed earlier. SAS provides a comprehensive software solution to analyze all business aspects of the oil industry. There are three specific solutions BPI will

http://www.ge-energy.com/content/multimedia/_files/downloads/pll_pipeline_sol_cr_mn.pdf


need from SAS including Facility Integrity & Reliability, Data Management, and Service Parts Optimization. SAS will allow us to take data from pipeline technology to detect any leaks or cracks. SAS software is tailored specifically to fit the oil and gas industry. Facility Integrity & Reliability Balancing costs of purchasing new equipment while attempting to maximize profits and safety can be an impossible task. SAS solves this problem with one solution, Facility Integrity & Reliability. It captures comprehensive data relevant to equipment usage. Then, it provides the tools to build predictive models. Another close solution SAS offers is Predictive Asset Maintenance. It uses a combination of predictive analytics and historical data to model future possible pipeline integrity issues. This will result in less downtime and a decrease in maintenance lead time. As quoted from SAS, “SAS provides an analytics-based framework to improve uptimes, performance and availability of crucial assets while reducing the amount of unscheduled maintenance, thus minimizing maintenance-related costs and operation disruptions.” With the vast amount of data to be analyzed, SAS will also help BPI find root causes of pipeline issues. SAS includes analytics and the ability to analyze Big Data. This software provides an overhaul to BPIs reporting system which will improve the provide KPIs and Dashboards concerning pipeline maintenance. Below is an example of a SAS’ Predictive Asset Maintenance software. It visually models data to show anomalies which could predict equipment failures.


Data Management

Due to the amount of data captured by the smart pigs, efficient storage of data is essential to the success of the system. Thousands of gigabytes of storage will be required. Amazon’s cloud solution will provide the storage, but BPI needs a solution to easily access the data. SAS’ solution provides an easy way to build, edit, and manage custom databases for easy access to data worldwide and company-wide. Procurement Solution

Procurement is a major aspect of any company, but issues are present when a multi-million dollar oil company is unable to repair a pipeline due to lack of spare parts. Naturally, improvements in predictive maintenance will help show where spare parts are needed, therefore, increasing forecasting accuracy for spare parts. Additionally, SAS also offers industry leading procurement solutions to improve inventory management. Their suite of software includes a procurement solution, Service Parts Optimization (SPO). SPO uses forecasts and multi-echelon inventory optimization best practices to reduce stock outs provide accurate on hand inventory levels. This will directly improve BPI’s inventory issues it currently experiences. SAS Proven Success

Petrobras is an oil and gas company that has used SAS in their company for over 15 years and has experienced significant improvement. They currently use and SAS to help with managerial analyses and with supporting decision-making processes in their terrestrial fields. They have seen substantial improvements in their project profitability and note that SAS has been dependable in 100% of the cases. After implementing SAS, the company achieved a daily output record of 2,000,238 barrels compared to their previous record of 1,000,912 barrels. Field Service Management

Field service management is the solution to BPI’s repair crew scheduling issues. SAS does not currently have a direct solution for Field Service Management, but Accenture has found the answer. FieldOne provides an open source and comprehensive solution for managing technicians in the field. FieldOne provides the field service management solutions including scheduling, customer communication abilities, and reporting. FieldOne also includes mapping and route support for repair crews in the field. Due to its open source nature, it is easily integrated into the SAS solution. FieldOne uses a variety of methods, from simple Web Services and Excel, to XML, .Net, Soap etc. to integrate with SAS. Data can be uni or bi directional, batched, event driven, or several other triggers can be used to sync. FieldOne supports private cloud and provides customizable apps for mobile devices including iOS, Android, and Windows for technicians in the field.


Pricing There are three price aspects involved in our recommendations including Amazon’s EC2 private cloud, SAS software solutions, FieldOne software, and the General Electric’s PII smart pig. BPI must first purchase the base of the software solution, the Private Cloud. Secondly, BPI will need to purchase the smart pigs. Private Cloud Pricing Amazon’s Cloud solution, EC2, pricing is based on instances or virtual computing

environments. Reserved instances allow enterprise customers to buy instances for a

significant discount. Below are Amazon EC2 prices for hourly, one year, and 3 year

increments of reserved instances. One we receive estimated instances from BPI, we can

estimate the total cost of the private cloud. After testing the private cloud initially, BPI

should consider an extended contract with Amazon to drive quantity discounts.


Software

SAS Software has many different configurations. According to SAS, BPI could purchase individual licenses or purchase a use license for a specified number of years. In order to provide more detailed price estimates, we will need some more information from BPI. A wide range estimate is $40 Million – $50 Million for user licenses. This would include basic installation and training modules. Additional support and training would need to be purchased from SAS directly for an additional price. The FieldOne solution is a valuable addition to SAS, and costs significantly less. According to FieldOne, purchasing the entire system outright would cost approximately $250,000. This is a great value and would contribute greatly to BPI’s goals.

Hardware

Smart pigs are an incredible technological innovation which will help BPI cut costs. They were developed in the 1970s and since then, prices have dropped. Individual units used to cost over $1 Million dollars, but have since dropped below. Once again, BPI needs to select specific options for each model General Electric offers. Once General Electric receives more detailed requirements such as circumference of pipelines, length between inspection bays, etc., they will be able to provide more detailed information. Generally, smart pigs cost from $500,000 - $1,000,000 per unit.


Phases of SAS Implementation

Assessment Phase

The first phase of the SAS system is to evaluate whether there is a need and opportunity to implement a SAS system. Within this phase it is important to determine the key business areas that could be positively affected by the implementation of a SAS system. Evaluation of the potential success factors is critical to a successful implementation. Some of the items that are included in the first half of the assessment phase are choosing the highest level of corporate sponsor for the project, gaining resources for the project, ensuring unity between team members, and finally determining the model and project implementation. The final step in this phase is to prepare a formal document explaining the reasons to either proceed with implementation or terminate the project. Requirements Phase

Upon completion of the Assessment Phase and acceptance to proceed with implementation, the Requirements Phase begins. In this phase, sources of data input are recognized, a model of the SAS system is created, holes between the needs of the SAS system and Information Technology department constraints are identified, and finally a project schedule is simulated. The outcome of the Requirements Phase is a document consisting of all models, data usage, requirements for transformation from the current system to the new SAS system, and a timeline for implementation. Implementation Phase

Once the assessment and requirements phases are completed, the implementation phase begins. In this stage a physical model is constructed to show a representation of the project. The first stage of the implementation the data will be loaded and stored into the SAS system. All the data that passes through this stage has to be scanned and validated so it can be entered in the right formats to meet the needs of the SAS system. In the second stage in the process, the data is actually loaded into the system. Finally, once all the data is entered the user is able to create charts and graphs to better understand the data that has been entered. Training Phase

The training phase begins immediately upon completion of the Implementation Phase. Within this phase it is necessary to create a training manual explaining the SAS system and how to use the new technology. It is also important to provide training classes for employees that will be directly or indirectly affected by the implementation of the SAS system.

Review PhaseTraining PhaseImplementation Phase

Requirements Phase

Assessment Phase


Review Phase

After the Training Phase is finished and system turnover has happened, an evaluation of the success and failures is crucial to accurately represent the SAS systems impact on the organization. All success and failures should be documented for future reference.

Conclusion In conclusion, Accenture recommends BPI implement a cloud based solution. Cloud gives BPI the flexibility to avoid big capital investments in IT and provides remote access to all data throughout the company. Accenture recommends BPI implement an SAS based system to handle all of the day to day functions. BPI’s issues with monitoring of pipelines, inventory management, and replacement parts should all be significantly improved. FieldOne also presents additional functionality to the system for scheduling. General Electric provides a great solution for pipeline inspections. Together, this unique combination of hardware, software, and cloud computing should propel BPI’s continued success


TERMS AND CONDITIONS

Should BPI accept our recommendations, they should contact our consulting team via phone or email listed below. Unauthorized distribution or action taken upon these recommendations is strictly prohibited. Upon acceptance of the implementation of the proposed recommendations a contract will be created with our terms of agreement. CONTACT LIST FOR ACCENTURE CONSULTANTS Josh Nutter (936) 689-8298 [email protected] Jordan Patterson (713) 689-8298 [email protected] Colton Raemsch (512) 332-1339 [email protected] Michael Ramirez (956) 292-1490 [email protected] Courtney Reed (210) 244-3973 [email protected]

mailto:[email protected]






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BPI Request for Information Response

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