Tullow Oil Exec Says Satellite Players need to Sharpen Up

By | March 26, 2010 | Feature, Telecom

[Satellite News 03-26-10] Oil companies want more from satellite companies as they continue to build out communications networks onshore and offshore, according to panelists at SMi’s Oil and Gas Satellite Communications show in London.
    Andrew Marks, chief information officer, Tullow Oil, said satellite companies should not take strong business from oil companies for granted in the future. “Satellite is king for now. But, you have to ask, is the long-term VSAT service deal at risk?” he said. “For example, if you look at the speed that a wireless operator like MTN is moving (in Uganda), they have got a massive domestic market. This means, they can then go into the business market, and provides a solid backbone to fund risked investment. MTN has had the foresight to see that oil would drive local development. They have built in Uganda a nationwide cellular network. They have a full service suite including 3G, EDGE and WiMAX. They are leap frogging copper. The questions is: what are the satellite providers doing to respond?”
    Telcos and wireless operators that move quickly are the ones that Tullow wants to do business with. “Those providers who are investing early are seeing real opportunities. For example, we are working with Gateway Communications in Ghana. Gateway saw the opportunity that Tullow presented. Delivering an offshore service was a first for Gateway in Ghana. There were teething problems. But now we take the service is granted. Onshore, with Vodafone’s takeover of Ghana Telecom, we have moved to fiber for our primary link,” Marks said.
    Marks said costs and transparency have been two major issues dealing with satellite companies. “Cost is a big issue when looking at a multi-year satellite deal. We are looking for more transparency (from satellite players). We have had a much better relationship since the providers have become more transparent. I think honesty is key here, when speaking about onshore and offshore capabilities. We want the VSAT providers to educate us, talk to us about reliability, and then we will make a risk-based investment. We struggle with the ‘Trust me, we have done it before’ attitude from satellite players. Until we have signed up with VSAT, we can’t seem to test it. Fiber providers are more customer friendly. However, our strategy right now is to start with VSAT, and then go to fiber. But, the VSAT connection may not grow over time.”
    However, Marks believes it is not just satellite players who have to up their game. “The reality is that there are few global (telecoms) players. While we get a good story from our telecoms providers, I wonder how much of that is a wonderful story, and how much a reality is. They all see oil as a great revenue opportunity,” he said.
    Tullow Oil is building a strong business in Africa, and generates $4.5 million in revenues every single day. It is a $16 billion company. It is expecting its revenues to increase significantly over the next few years, as it funds a massive exploration program throughout Africa. In terms of its plans for 2010, Marks said, “We are planning 20 wells in Uganda. With investment in technology such as Cisco VoIP, we can connect remote locations. We will be busier in 2010. We are going into countries where there is no pre-existing infrastructure. We are establishing infrastructure in places like Ghana. We are the leading independent oil company in Africa.”

Saudi Aramco
Saudi Aramco is one of the world’s big oil companies. It is the only oil company in Saudi Arabia, and supplies around 10 percent of the world’s oil, and according to Fawaz Al-Khudhairy, senior IT and communications representative for King Abdullah Petroleum Studies & Research Center, Saudi Aramco, the company has the world’s largest crude reserves. The company is also looking to target the growing markets of China and India.
    Al-Khudhairy said satellite communication is a “vital component” of Saudi Aramco’s international network. “Saudi Arabia has a land area of 2.2 million square kilometers. Our coverage is 1.5 million square kilometers. To put this into context, this is the size of Spain, France and Italy put together. So, for Saudi Aramco, remote monitoring is a big application. We have 8,000 well heads that need to be monitored. We have 4,000 operated manually. 4,000 others are now being addressed by satellite or wireless. We are moving to have 8,000 well heads monitored by wireless and satellite.”
    The company is also looking to use satellite technology in other areas. “We have an annual budget of $250 million for security,” said Al-Khudhairy. “We also have a comprehensive vehicle location and fleet management system. We have 13,000 vehicles. We are implementing a fleet management system using satellite. We are using satellite communications wherever we don’t have network coverage. The main challenge we have is to have real-time information. We have a huge area of operation, and in remote locations, we need satellite capacity and capability.”
The oil company is looking more at wireless technologies going forward. “From a security point of view, we want our own networks, and have TETRA coverage. For drilling exploration, it is difficult to have a TETRA network. We still expect to use satellite in these areas. However, we have plans to use other communication technologies over the next five years,” said Al-Khudhairy.

Shell Upstream International

Augustine Igwegbe, regional IT business systems manager, Shell Upstream International, Sub Sahara Africa said the key challenge for the company is bundling different communications technologies into a single overall coherent network. “We have a hybrid network design that will meet emerging upstream requirements. There are challenges facing IP over satellite to support mission-critical applications. There is a technical challenge of ‘bundling’ satellite, radio and fiber into a logical network. In terms of latency, some mission critical applications may not run effectively. In terms of the key benefits of satellite, you have short lead times to deploy compared to fiber and radio. It is a key technology for last miles and difficult terrains compared to fiber or radio. Satellite is a key component of the hybrid communication network,” he said.

Others Respond
With oil companies demanding more from telecoms and satellite providers, one of the big questions is what communications technologies’ will work best for oil companies in the future. Kevin Blyth, global connectivity solutions at Schlumberger said “VSAT will always have a place”. He added, “VSAT will always have a place as it can deliver a limited service. What we are seeing is no-one else’s solution is exactly there. We need to embrace other technologies to deliver what we are trying to do. GSM is one of those backhaul technologies we have to embrace. Real time is now king. That is the demand from the industry. Satellite is closer to being the last resort. Fiber is growing, but it is expensive. We can use fiber, if we start working together. We are being pushed to do more for less, but at the same time satellite operating costs are going up.”

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