There was a great overview of Hydrocarbon accounting done by Jill Feblowitz of IDC Energy Insights at the SAP Oil & Gas Best Practices conference last October and I would like to share my views on a couple of points in her presentation. Her presentation was underpinned by three aspects of hydrocarbon accounting; Financial, Compliance, Operations. And one of the Industry Pain points noted was that reconciliation between production reporting and hydrocarbon accounting applications continues to be a challenge. Additionally, she mentions that hydrocarbon accounting is “turning into a daily operational tool”. So why does IDC believe that traditional tools need to morph over into other domains and why are there still challenges.
At the root of what I think Jill was saying is that the days of separate business silos is past and advances in business information technology are creating opportunities in hydrocarbon accounting. There cannot be multiple versions of the truth anymore as the adoption of ERP systems makes enterprises dependent upon cross enterprise applications where sharing of data is common place. And the requirements from regulatory agencies for granular reporting of production and accounting data, which they are performing data reconciliations and analysis upon, is putting additional pressure on software providers to ensure common process can be deployed such that information is passed through processes in a manner which delivers sustainable and transparent results from the front end to the back end.
Additionally, the historical boundaries between operational accountability for production volumes and revenue accounting volumes should begin to fade into the sunset from a software perspective. With complex allocation requirements and financial implications associated with each turn of a valve, it is imperative to drive your business using common processes that allow full transparency to the financial implications of daily decisions. Whether the pain is caused by component level allocation requirements, multiple solution positions, multiple fiscal regimes, or interoperability of the hydrocarbon accounting solution to integrate with financials and reservoir, what can we do about it?