Business Plan of an
Independent Oil and Gas companies Marketplace
-
IOG-place.com
by
Kenneth Fung
This business plan is submitted in partial
fulfillment of the requirements
for the course DISS790 Electronic Commerce on the
Internet only.
Although
the companies mentioned in the business plan are real.
They
are for illustration on the technologies used only.
The
company IPC-place.com is purely frictional.
School of Computer and Information Sciences
Nova Southeastern University
November 19, 2000
of a report Submitted to Nova Southeastern
University in partial fulfillment of the Requirements for DISS790 Electronic
Commerce
Business Plan of an
Independent Oil and Gas companies Marketplace
-
IOG-place.com
by
Kenneth Fung
November 19, 2000
Major oil and gas companies have their own Enterprise Resource Planning (ERP) applications, own procurement systems, oil and gas financial systems to run their business. With the Internet and its applications, independent oil and gas companies can compete with the majors in the same playing field. They may even have a slight competitive advantage.
By adopting Internet technologies, utilizing them to cut costs, and to improve communication, IOG-place is one of the top companies that can provide best-of-breed oil and gas applications to you at a reasonable price via the Internet. IOG-place is a Web-enabled series of applications specifically for small to mid-size oil and gas companies. It seamlessly integrates the exploration, procurement, and administrative functions of the oil and company. In oil and gas industry, companies need to work together to survive and prosper. IOG-place is also a vortal and a community for independent oil and gas companies. It facilitates companies to form alliances, partnerships and buying group. Companies can form alliances to explore an oil and gas field that they have interests in.
1 Introduction:................................................................................................................. 4
2 Product description...................................................................................................... 5
2.1 Applications Service Provider:.................................................................................. 5
2.1.1 Exploration:................................................................................................... 5
2.1.2 Operation and Finance:.................................................................................. 5
2.1.3 Operational Maintenance:.............................................................................. 5
2.2 Communication Center............................................................................................. 6
2.2.1 Voice and Data conferencing over IP............................................................. 6
2.2.2 Videoconferencing......................................................................................... 6
2.2.3 Wireless........................................................................................................ 6
2.3 Marketplace............................................................................................................ 7
3 Customer Profile.......................................................................................................... 7
4 Technology Strategies................................................................................................. 7
5 Marketing strategies................................................................................................... 9
6 Pricing information....................................................................................................... 9
6.1 Initial setup fee:........................................................................................................ 9
6.2 Module fee:............................................................................................................ 10
6.3 Monthly fee:........................................................................................................... 10
7 Electronic business value propositions..................................................................... 10
8 Appendix A - Detail of the alliance........................................................................... 12
9 Appendix B - Figure................................................................................................... 12
10 References:............................................................................................................ 12
1 Introduction:
Major oil and gas companies like Shell, Exxon, BP/Amoco have their own ERP applications, own procurement systems, oil and gas financial systems to run their business. What can small-medium size independent oil and gas companies do to compete with the industry giants? Up to recently, these companies are competing with the industry giants at a disadvantage. With the Internet and its applications, independent oil and gas companies can compete with the majors in the same playing field. They may even have a slight competitive advantage.
How can independent companies compete with the major and win? By adopting Internet technologies, utilizing them to cut costs and to improve communication, IOG-place is one of the top companies that can provide best-of-breed oil and gas applications to you at a reasonable price via the Internet. It is an alliance between NRI-online.com, Qbyte.com, and MRO.com (NRI-online.com, 2000), (Qbyte.com, 2000), (MRO.com, 2000). For detailed information on the alliance, please refer to Appendix A.
Most of the independent oil and gas companies operate in up-stream to mid-stream operations. They are focused on oil and gas exploration and production. IOG-place is a Web-enabled series of applications specifically for small to mid-size oil and gas companies. It is an alliance of three industry leading oil and gas software vendors. It seamlessly integrates the exploration, procurement, and administrative functions of the oil and company.
IOG-place knows that communication is the key to the success of any oil and gas companies. It provides communication features using Voice over IP and wireless technologies and video conferencing to help you communicate with your field office or your partners anywhere around the world. You save on long distance phone bills. You also save on travelling time and costs.
In oil and gas industry, companies needs to work together to survive and prosper. IOG-place is also a vortal and a community for independent oil and gas companies. It facilitates companies to form alliances, partnerships and buying group. Companies can form alliances to explore an oil and gas field that they have interests in. They can form partnerships to build facilities to bring their production to the gas plant, refineries, or to their customers. Companies can also form a buying group to buy oil field suppliers for better prices. They can even work out ways to share equipment and crew. IOG-place is here to facilitate these synergistic relationships.
With IOG-place, independent oil and gas companies can compete with the majors because they no longer have the technology barrier against them. They now can take advantage of their size and their speed to adapt to the changing environment and have flexibility to compete with their industry giants and win.
With IOG-place, you, your staff and your crew can work from home and work together as a virtual team in a virtual company. You save on having physical head quarters.
2 Product description
IOG-place is an Application Service Provider (ASP), a communication center, a marketplace, and a community for independent oil and gas companies.
2.1 Applications Service Provider:
IOG-place provides a turn key solutions to your oil and gas company. It integrates the three main functions of an oil and gas producer, allows you and your staff to work from anywhere (at corporate office, home, at the field office or at the oil field) and work with your crews, staff, partners, alliances, and consultants anywhere with an Internet connection.
2.1.1 Exploration:
As an independent oil and gas producer, it is important to have your geological data available for your geologist any time, anywhere, when needed. Using the technologies from NRI-online, your geologist can retrieve your company's geological data on-line to anywhere in the world. Whether he is in his home office or at the oil field in Texas, Vietnam or Alberta, he can get the latest geological information that helps him find oil and gas for your company. The data collected from the exploration module can be easily reference with the production and finance data in the Production Operation models. With both the geological, production and financial data available on-line, your geologist can make the best decision on where to explore and how to drill by taking into account the existing oil and gas production and facilitation data from the surrounding area.
2.1.2 Operation and Finance:
You and your Operations engineer need production and financial information to manage the oil and gas properties you have by using the leading industry Upstream Oil & Gas Information System, Qbyte (Qbyte.com, 2000). IPC-place integrates the exploration module with the Qbyte software that presents the application seamlessly. You do not have to re-input data. You can retrieve data from the exploration module for analysis. The key modules are Financial Management, Land Management, Production Management and Decision Support. Figure 1 lists all the modules in our Operation and Finance application. You do not have to subscribe to all the modules all at once. All of the modules can integrate with industry standard application packages with Object DataBase Connectivity (ODBC) technology.
2.1.3 Operational Maintenance:
To maximize your oil and gas production and to ensure uninterrupted flow, you need close monitoring and servicing of your equipment. Your crew at the field can keep a close eye on the production by logging-in to the production system. To help your crew perform routine maintenance and operation upgrades, they require a good Maintenance Repair Operation (MRO) procurement system like MRO.com. The oil field supplies and equipment can be scheduled to arrive at your site just in time when needed. IPC-place integrates the MRO.com in our procurement module. It allows your crew to purchase oil field supplies and equipment using customized electronic suppliers' catalogs, to look up suppliers' inventory for availability and pay for them electronically. The procurement module is fully integrated with the financial modules. MRO procurement is easy. You can also use the MRO exchange to conduct buyer auction when you oil and gas field require major upgrade (MRO.com, 2000).
2.2 Communication Center
The key to success of an independent oil and gas company is communication. In today's fast pace environment, you need your information on-line and in real time. You need to communicate with your crew, your operational engineers, and your geologist anytime, anywhere. IOG-place understands your needs in communication. It provides a few features for you to communicate with your staff beyond e-mail and chat. These applications facilitate collaborations and allow you, your staff and your crew to work together as a team, a virtual team.
2.2.1 Voice and Data conferencing over IP
As an independent oil and gas company, you want to maximize effectiveness in communication. You want cost effective communication between you and your staff anywhere, anytime. IOG-place works with Latutude Communications Inc. It integrates the Meetingplace IP (Latitude.com, 2000) in its applications. It delivers real time data and voice conferencing to facilitate interaction, collaboration and decision making for every employee in your company. Your and your staff can talk as well as work in the same application at the same time. Because it is operating in the Internet, there is no long distance phone charge. Your geologist can present to you his exploration recommendation and you can provide real time feedback on "what-if" scenarios. Your crew can show you production reports and you can provide real-time advice on how to maximize production. You can work with your accountant with real-time interaction and adjustment on the budget.
2.2.2 Videoconferencing
A picture is worth a thousand words, you crew may want to show you the production problem from the equipment at the field. IOG-place incorporates video-conferencing capability in the communication center. You can have videoconference meeting with your crew at the field office. IOG-place integrates PictureTel technology in its communication center (PictureTel.com, 2000).
2.2.3 Wireless
Many of IOG-place applications are wireless and web enabled. Your crew can access IOG-place from a laptop or wireless Personal Digital Assistant (PDA) and use the applications via a digital phone. With wireless capabilities, IOG-place extends the system to your oil and gas site. This provides extensive information to your crew when and where it is needed. Applications like well site inspections, production data gathering, oil field supplies ordering, as well as data, voice or videoconferencing can be done wirelessly.
2.3 Marketplace
IOG-place is more than an Application Service Provider (ASP). It is a marketplace where you can make deals with other companies. It lists oil and gas properties for sale and exchange. Companies can consolidate their oil and gas holding to take advantage of economy of scale.
You can form a buying group to take advantage of volume buying of oil field supplies. When you have a major upgrade of your oil and gas facilities, you can setup a buyer auction to get the best deal for your upgrade.
You may not need a full time crew, geologist, or operational engineer. Our exchange provides a matching and searching service of your crew, geologist and operations engineers.
IOG-place provides a marketplace for companies like yours to form alliances and partnerships with other independent oil and gas companies. With these alliances and partnerships, you can share resources, equipment, pipeline capacity and gas plant capacities.
3 Customer Profile
You, the target customers, are small to size oil and gas companies of 10 - 200 people, with assets of 1 million $ to 500 million $ and revenue of 1 million to 500 million $. Your companies are often run by engineers or geologists. As an independent oil and gas company, you want to minimize your capital investments in technology infra- structure. You have the technical, field and operational expertise in the area you are working on. You appreciate technology and are eager to adopt technology and use them to your advantage.
IOG-place's target customers are independent oil and gas companies in Canada and USA. Entrepreneurial Companies such as Prima Energy, are small, efficient and know how to enable technology to their advantage. The CEO of Prima Energy Corporation received the Ernst & Young Entrepreneur of the Year Award for the Rocky Mountain region. Prima Energy is also listed five times in Forbes Best 200 Small Companies in America (PrimaEnergy.com, 2000).
4 Technology Strategies
Internet provides the connectivity. IOG-place customers connect to its application servers from anywhere around the world. IOG-place uses the latest broadband technology available. Our application servers are tuned to the Asymmetric Digital Subscriber Line (ADSL) speed. Users can still use the regular 56k dial-up and wireless to connect to the servers. The following is a high level diagram of the IOG-place.
IOC-place focuses on integrating best of breed applications and technologies into one marketplace. At the same time, we provide flexible modules for the clients to grow. As your company grows, you can turn on more modules. Reporting is centralized. Figure 2 illustrates the technical architecture of IOG-place.
Figure 2: Technical
Architecture of IOG-place
5 Marketing strategies
The key success factor of IOG-place is to serve the independent oil and gas companies well and establish good relationship with the customers. It is going to focus on good customer service, value pricing and ease of use.
Pricing is set up to promote usage. Prices are variable and charged only by usage. The initial setup fee is deliberately setup to be low to provide value to the customers. The monthly fee structure is based on usage. IOG-place believes satisfied customers are the best advertising. It provides rebate of fee based on the number of referrals it gets from existing customers. If an existing customer bring in a new company to IOG-place, it gives one month free service to both the existing company as well as the new company. For the existing company, it is the reward for referral. For the new company, it is to promote usage. In the first month, the users are usually learning the system. The first free month is to encourage the new company to explore all the features of the system, learn the system and promote future usage.
IOG-place believes in customer service and has real-life customer service representatives and technical representatives standing by 24x7. Customers can use the communication center to work with the customer representative and technical representatives to resolve their problems.
The initial product launch is through trade journals, banner advertising and direct marketing to target customers through industry trade associations and journals. IOG-place also provides banner advertising to promote companies, suppliers and services with the vortal. This is to create awareness and encourage usage of product and services with the community.
6 Pricing information
6.1 Initial setup fee:
The initial setup is $10,000 for each company. This is a one-time setup fee for a company. This includes the setting up of the communication module, the basic modules in Exploration, Operation and Financial as well as access to the marketplace. It is the comprehensive fee to enable all basic modules to be used by a company. For each user, the initial setup fee is $100. This setup fee is to connect the user to the servers. This is a one-time fee for the user and it allows him to access IOG-place services from anywhere with an Internet connection.
Basic Modules are:
· Exploration
· General Ledger, Accounts Payable, Accounts Receivable
· Procurement
6.2 Module fee:
As your company grows, you may want to use additional modules. The setup fee is $1000 per module. This is also a one-time fee to enable one additional module for the company. This allows companies to pay for modules and services that they actually use.
6.3 Monthly fee:
The monthly usage fee is $1000 per month each user or $ 0.50 per transaction. This fee is deliberately set low to encourage usage.
7 Electronic business value propositions
IOG-place:
· Provides facilities for people to form a virtual team: geologist, engineer, and operator in close communication with Head Office as well as partners and alliances from all over the world. You save on the long distance bill.
· Allows you to form a virtual company with your head office at home. You and your staff can work from home.
· Gives the power of the best-of-breed applications to you without big capital investment. You subscribe IOG-place in one monthly fee.
· Allows you to improve your procurement by using e-procurement.
· Integrates your exploration data, your operational data and financial data to better manage your properties and investments.
· Provides 24X7 customer and technical support.
You are welcome at
our web site:
http://www.cadvision.com/fungk/IOG-place/index.htm
8 Appendix A - Detail of the alliance
This business plan is submitted in partial fulfillment of the requirements for the course DISS790 Electronic Commerce on the Internet only. Although the companies mentioned in the business plan are real. They are used for illustration on the technologies only.
The company IPC-place.com is purely fictional. There is no alliance between
NRI-online.com, Qbyte.com and MRO.com.
9 Appendix B - Figure
Figure 1: - Qbyte E&P Product Capabilities
10 References:
Latitude.com. (2000). Products and Services. Latitude.com. Internet: http://www.latitude.com/products/ Accessed [2000, October 31].
MRO.com. (2000). MRO.com. MRO.com. Internet: MRO.com Accessed [2000, October 16].
NRI-online.com. (2000). NRI online archival solutions. NRI-online.com. Internet: http://www.nri-online.com/ Accessed [2000, October 31].
PictureTel.com. (2000). Products and Services. PictureTel.com. Internet: http://www.picturetel.com/flash/index.html Accessed [2000, October 31].
PrimaEnergy.com. (2000). PRIMA ENERGY CEO NAMED ROCKY MOUNTAIN REGION ENTREPRENEUR OF THE YEAR. PrimaEnergy.com. Internet: http://www.primaenergy.com/EYA.htm Accessed [2000, October 31].
Qbyte.com. (2000). Welcome to the dynamic world of QByte's Upstream Oil & Gas Information Systems. QByte.com. Internet: http://qbyte.com/QBHome.html Accessed [2000, October 31].