Author: Yogi Schulz

The upstream oil & gas industry, the economic powerhouse that continues to deliver prosperity to many Albertans, is using the Web to tame the blizzard of paper that is a fact of life in the industry. The Web is accelerating communication and reducing costs for the oil & gas industry much like it does for every other industry. Perhaps this example can spark a similar data exchange idea for your business or industry.

One early business to business Web success story is the JIBLink service offered by Red Dog Systems Inc. JIBLink,, receives and distributes large volumes of Joint Interest Billing (JIB) transactions electronically among Canadian oil & gas producers. These transactions, previously communicated by paper and fax, originate from active joint ventures in which oil & gas producers participate.

Mr. Van Dafoe, the Controller at ARC Resources Ltd. says his firm benefits from the use of JIBLink through acceleration of receivable collection, reduction of keying effort and elimination of keying errors. These benefits have attracted a list of JIBLink clients that reads like the yellow pages listing of Canadian oil & gas producers.

{Other industries are likely to gather learnings from the JIBLink success to breathe life into their faltering e-marketplace and data exchange initiatives. With its need to move large volumes of data, the oil & gas industry has led various data exchange initiatives. For business data these are PIDX, the EDI Committee of the American Petroleum Institute and the PPDM data exchange standard. For geotechnical data, the industry has sponsored the DAEX Data Exchange technology, the OpenSpirit platform and the Geoshare User’s Group.}

The oil & gas industry has long employed joint ventures as a risk management technique. In a joint venture, individual oil & gas companies accept responsibility for a particular percentage interest in the agreed project. The joint venture group of oil & gas companies initially agrees to share the costs of exploration. If the well proves to be economically viable, the joint venture participants continue by sharing the cost of completion, the operating costs and most importantly, the revenue from the sale of oil & gas products. All this activity in the field generates a continuing stream of reports, invoices, statements and cheques between the operator of the joint venture and the various participants. The related financial activity is called Joint Interest Billing. The size and complexity of joint venture arrangements makes keeping the paper flowing on an accurate and timely basis a major challenge in many companies.

Consider that the Western Canadian Sedimentary basin is home to hundreds of oil & gas companies, thousands of new wells each year and tens of thousands of producing wells. Monthly, each of these wells generates dozens of invoices that are shared among the partners. When you multiply that out, you quickly discover that the industry generates hundreds of millions of transactions among all the participants each year. Every one of these transactions costs time and money to process. Mr. Dafoe reminds us that before JIBLink, the joint venture accountants spent most of their time either inputting vouchers into the financial accounting system or reconciling the amounts owed to the various operators.

Using the Web for simple, cheap communication and the JIBLink service to exchange the JIB transactions electronically, oil & gas companies have improved timeliness and reduced costs. Mr. Chris Baker of Canadian Natural Resources Ltd. reports that JIBLink has decreased employee effort from several days per month to a half day to extract and upload billings. CNRL has also eliminated their JIB printing and postage costs of $1,300 per month.

With the JIBLink success largely achieved, Mr. Dave Howden, the Manager of Business Development at Red Dog is enthusiastic about expanding the data exchange services to other aspects of oil & gas operations such as contracts, land billings, divisions of interest and processing fees. He points to the banks and brokerage houses as other examples of industries where central data exchanges work to everyone’s benefit. Red Dog expects to build on its Canadian success by expanding into the U. S. A. market this year.

The JIBLink success story suggests that other industries can benefit from implementing similar technology and processes.

The negative reactions that have accompanied some initial failures to build e-marketplaces, achieve collaboration and increase the volume of data exchange may be an over-reaction. The attractiveness of using the Web for business to business commerce will overcome these initial stumbles.