On Friday, IBM announced a research collaboration with Shell that will support improved and more cost effective reservoir modeling. The collaboration will focus on developing and implementing advanced techniques for reconciling geophysical and reservoir engineering field data. IBM indicated that the strategic partnership was not about two companies joining forces to discover the unknown, but to apply the capabilities of IBM and Shell to improve reservoir modeling, which Shell would then fold into their proprietary reservoir modeling tool kits for application in new oil and natural gas developments as well as existing assets.

IDC Energy Insights perspective is that improved reservoir management can pay off in lower overall costs for finding and extracting hydrocarbons, and aid higher recovery levels making companies less vulnerable to the many unknowns at new E&P developments. But, the real the strength of this strategic partnership seems to be in two areas:  first, the focus on "reformulating and automate the task of reconciling the different data". In our view, the acceleration of the digital oil field is partially dependent on improvements in collaboration, but also the reassessment and automation of workflows. If the reconciling of data can be improved, completed faster, and free up the time of experts, it should hit the bottom line. Secondly, this also moves the vision of multi-discipline team collaboration further along the spectrum to real gains from shared information that supports more knowledge, and better decisions.

Of course, given the costs and challenges associated with exploring and producing in new fields, supermajors appear to be investing and giving more attention to enhanced oil recovery.

And for Shell, it has been an interesting couple of weeks, as two strategic partnerships were announced with HP and IBM. Both are leveraging the research and technology labs from these companies. Of course, the profile of both research labs is very reputable, and both vendors already had many plays in the oil and gas industry. These partnerships seem to be indicative of less reliance by oil and gas companies to meet all of their research and development needs. Not just a partnership in name, but an outward view to tap talent where it can support business operations. The recent announcements seem to indicate that some supermajors are relying on partners for non-commodity services. Is Shell ahead of the curve and more progressive? Is this a threat to oil field service companies?