For Francisco Ortigosa, Director of Geophysics for Madrid-based Repsol, being transferred to Houston—arguably the “capital” of the oil industry—was an important milestone, akin, he jokes, to an actor going to Hollywood. It was 2001, and Ortigosa, whose previous stints included time in Egypt, Colombia, Venezuela and Russia, had embarked on an important mission. His company had resolved to expand its operations into the Gulf of Mexico and Brazil. One important aspect of his job was to observe what the crowded fi eld of competitors in the gulf was doing right and to take away lessons that Repsol could apply in its own operations.

In the ensuing years, one clear lesson came across was that imitation—being a follower—was a path to be avoided. Such was the consensus of the multidisciplinary task force that Ortigosa led comprised of experts from Repsol’s research, production and other key business areas. The discussion came to a head in a particularly decisive meeting, held in Houston in 2005, where Ortigosa laid out a simple, but compelling calculus. “We realized that every incremental step we took would be matched by our competitors. As late entrants into the Gulf of Mexico, that means we stay behind our competitors,” Ortigosa explains. “Our breakthrough was the realization that we needed to take two steps for their every one and ‘leapfrog’ the competition.”

Looking For Tomorrow’s GrowthRepsol’s decision to expand from its primary, land-based properties (in North Africa and South America) into the Gulf of Mexico and offshore Brazil refl ected its need to replenish declining reserves. To fi nd substantial new reserves—in an era when all the “easy oil” has been discovered—Repsol recognized that its best options lay far offshore, in fi elds that were not only deeper but also more

Repsol:Discovering the Benefits of Smarter Oil and Gas Exploration

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Smarter Planet Leadership Series

Leadership Spotlight Spearheaded by Francisco Ortigosa, Director of Geophys-ics, Repsol has embarked on a groundbreaking strategy that employs highperformancecomputing (HPC) like no other energy company had before it. Repsol is achieving deeper insights on drilling risks andopportunities, while gain-ing the agility to act on them faster than competitors.

How Repsol Got SmarterOptimizing the most advancedseismic algorithms for its new HPC solution enabled Repsol to run them in one-sixth the time. The resulting edge in both increased seismic mapping accuracy and shorter time-to-action has made it not only more agile competitor but also better at measuring the risks of deep water drilling. Its 50% success rate is well above the industry average of 20%. This case study examines Repsol’s calculated gambit—and how it’s paying off.

Cajun ExpressSub Salt Well

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geologically complex. What all of its drilling options had in common was the prevalence of salt domes, mushroom-shaped layers below the ocean fl oor left behind by the evaporating of ancient seas.

While salt domes provided the perfect structure for trapping large oil deposits, they also exemplify the trade-off between opportunity and risk that characterizes major oil fi nds in the post-easy-oil era. In addition to the inherent challenges of deep water exploration, finding deposits below the salt layer is made more diffi cult by its crystalline structure, which adds a great deal of “noise” to seismic imaging data. Getting the kind of detailed picture of sub-salt conditions that lessens the risk (and $150 million cost) of drilling a dry hole requires oil companies to run powerful imaging algorithms—requiring lots of high-performance computing resources—to fi lter out this noise. The fact that few oil companies had successfully tapped sub-salt deposits attests to the diffi culty of meeting this challenge.

Jumping Ahead In ExplorationThat’s where the need to leapfrog comes in. Repsol’s leadership realized that as a relatively small player in a fi eld of global energy giants, the company needed a competitive edge, to develop capabilities that other oil and gas companies didn’t have. In the Gulf of Mexico, that required edge was speed—the ability to process complex seismic imaging data faster than competitors, thus giving Repsol the accurate and detailed information it needed to secure reserves earlier than its competitors. Off Brazil, Repsol was ahead of other oil majors in

Sub Salt Well

attempting sub-salt drilling, the main challenge was to fi nd and map deep sea drilling opportunities with a level of detail that had not been possible before. This would require new models and a quantum increase in the power of Repsol’s seismic algorithms.

In his 20 years with Repsol, Ortigosa’s role has always been centered on finding and evaluating opportunity below the ground. He believes, however, that along the way, the subtleties of how he executes this role have evolved—with the sub-salt project a powerful case in point. “My job is to be a spark that provides a trigger for inspiration among a diverse group of perspectives so that we can synthesize their best ideas into an effective strategy,” says Ortigosa. This role as an

The Benefi ts of Repsol’sSmarter Drilling• Increase in drilling success rate to 50%, compared to industry average of 20%,through improved ability to quantify drilling risks

• The savings from only one avoided “dry” well ($150 million) are equivalent to eight times the money spent todevelop Project Kaleidoscope.

• 85% reduction in time required advanced reverse time migration seismic algorithms

• Faster time to market for new oil and gas properties by shortening the seismic data analysis phase

• Reduced risk in bidding for offshore oil and gas leases

In under 30 years, global energy consumption will increase by 50%

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orchestrator of solutions was essential as his team sought to pull together the elements of a winning strategy. Most evident was the need for a new level of computing power to enable the speed and imaging insights that would give Repsol competitive edge it needed to succeed.

Epiphany From BarcelonaThe project’s turning point came when Repsol was approached by parallel processing experts from the Spanish-government-owned Barcelona Supercomputing Center (BSC), who outlined the benefits of optimizing Repsol’s reverse time migration (RTM) algorithms to run on IBM’s Cell Processor, an architecture first developed to run graphics-intensive video games. The BSC team specifically pointed out how the PowerXCell 8i’s multicore processing architecture was especially well-suited to RTM’s specialized processing demands, and how IBM Research—through its expertise in optimizing algorithms to run on the Cell platform—could help maximize their performance. This meeting of the minds was the genesis of an initiative that came to be known within Repsol as Project Kaleidoscope.

Leadership is:Orchestrating a Diverse Set of InputsIn his 20 years in geophysicswith Repsol, Francisco Ortigosa’s role has always been centered on finding andevaluating opportunity belowthe ground. The sub-saltproject highlighted how his jobhas evolved along the way, with Ortigosa acting as a “sparkplug” to spur problem solving among a diverse group of problem solvers.

Lessons Learned:The importance of Seeking a Diversity of Opinion“We realized that for a projectlike Kaleidoscope, which wasaiming for a clear shift in ourexploration model, we neededout-of-the-box thinking in everydimension. Looking back, wesee the diversity of our team—with people on both sides of the Atlantic—as a major reason for project’s success.”

The vision embodied by Project Kaleidoscope constituted a fundamental change in Repsol’s exploration strategy, one that elevated the role of high-performance computing to top-tier strategic importance. Adopting it required the team to sell the business case to the company’s senior

management as well as the Board of Directors. With the business case laid out before them—driven by lower risk, improved drilling success rates and a strong prospect of finding the long-term reserves Repsol needed—management was excited. Nonetheless, there was a clear recognition among senior management of the underlying risks of going head-to-head with established competitors, especially in the Gulf of Mexico. But in the end, the company saw the prospect of success as significantly outweighing these risks.

Success Through DiversityOne important reason for Repsol’s confidence was the depth and breadth of support the company would rely on through key strategic partners. In addition to BSC and IBM, Repsol would also leverage the resources of Stanford University’s Stanford Exploration Project (SEP), an academic consortium focused on creating more advanced 3-D and 4-D seismic models. In lining up institutional resources for Project Kaleidoscope, Ortigosa was following a clearly defined strategy—that is, to maximize the diversity of perspectives in order to provide the richest and most groundbreaking set of ideas. “Advancing seismic imaging to the next level of precision poses a multi-disciplinary challenge, demanding the best minds from industry, government and academia,” explains Ortigosa. “We realized

that for a project like Kaleidoscope, which was aiming for a clear shift in our exploration model, we needed out-of-the-box thinking in every dimension. Looking back, we see the diversity of our team—with people on both sides of the Atlantic—as a major reason for project’s success.”

Today, Repsol’s strategic vision is realized in the Project Kaleidoscope’s high performance computing infrastructure, located in Houston and running on a cluster of 288 IBM BladeCenter QS22 blade servers and supported by a large network of IBM TotalStorage storage hardware. After experts from BSC and IBM worked to optimize Repsol’s complex seismic algorithms for the IBM PowerXCell 8i processors at core of the solution, the Project Kaleidoscope infrastructure can run these algorithms six times faster than Repsol’s previous computing platform, reducing a cycle that once took four months to roughly two weeks.

Insights Yield PayoffsWhat Repsol has effectively done is to radically shift—if not break—the trade-off between the accuracy of seismic imaging and the all important variable of speed. Now Repsol has both. This has provided exactly the competitive edge its planners conceived, an edge that has yielded measurable benefits. Perhaps the most telltale metric is to 50 percent success rate Repsol achieved in the most recent year (considerably higher than the industry average) which signifies the company’s ability to understand and manage drilling risks better than competitors. This enables Repsol to not only avoid the time and capital lost on dry wells, but also to more accurately gauge and more effectively capitalize on major of discoveries. This impact was seen in Repsol’s decision to purchase a major stake in the deepwater Shenzi field in the Gulf of Mexico, now one of the world’s largest offshore oil-producing areas. The fact that Repsol was able to map the Shenzi field before any other companies gave it valuable insights that it was able to take advantage of and position it favorably for future development.

As mentioned above, the powerful business case Ortigosa and his team presented to Repsol’s senior management was an important factor in the company’s decision to go ahead with Project Kaleidoscope. But it wasn’t the only factor. During the time Ortigosa and his team were assembling the business case, Repsol was also experiencing major personnel changes at the top. This included the appointment of Antonio Brufau as Executive Chairman, who was known to be open to embracing technology. Ortigosa explains: “Given the direction we wanted to take, we saw the change in mindset—the openness to new ways of doing business—as an ideal situation.”

The Parameters of Repsol’s Smarter Drilling

InstrumentedSeismic sensing data captured by Repsol is run through powerful algorithms that have optimized for maximum performance.

InterconnectedProject Kaleidoscope’s high-performance computing cluster delivers a six-fold increase in processing throughput over the previous platform.

IntelligentBy rendering complex subsurface structures such as salt domes in greater detail, Repsol can substantially curb drilling risk, resulting in fewer dry holes and lost opportunities.

Repsol’s management saw its faith in Kaleidoscope amply rewarded. The most obvious measure was the fact that the project came in on time and within budget and produced an impressive streak of exploration successes. On the broader stage, the magnitude of Repsol’s achievement was further underscored by the recognition it received from industry observers, including the Commercial Technology of the Year award at the Platts Global Energy Awards and being named one of the five most innovative projects worldwide by the Institute of Electrical and Electronics Engineers in 2008. Most recently, Petroleum Economist magazine named it the Energy Company of the Year for embracing technology in all areas, from exploration to refining to investigating new sources of energy, as well as in looking for more efficient ways of using the finite resource that is oil.

Asked what the future holds for the oil and gas exploration industry as a whole, Ortigosa sees more challenging environments—deeper and farther offshore—as a trend that will continue, with Repsol’srecent major deepwater finds off West Africa and Brazil good examples. To meet these challenges, Repsol is developing even more powerful algorithms that will take advantage of the advanced high performance computing capabilities that underpin Project Kaleidoscope. With that approach, Ortigosa sees Repsol leading a trend that others in the industry are likely to follow. “The Kaleidoscope Project has had a profound impact, not only for the results it has obtained, but because it has created a new trend in the manner in which innovation is viewed within our industry,” explains Ortigosa. “With this project we truly are inventing the future.”

The Makings of Success…Receptiveness at the TopThe powerful business case Ortigosa and his team presented to Repsol’s senior management wasn’t the only factor in the company’s decision to go ahead. The fact that it coincided with a shift in executive attitudes toward technology—and “a new way of doing business”—created a favorable environment for the breakthrough approach that the team was proposing.

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© Copyright IBM Corporation 2010 IBM Corporation 1 New Orchard Rd. Armonk, NY 10504 U.S.A. Produced in the United States of America January 2010 All Rights Reserved IBM, the IBM logo, ibm.com, BladeCenter, PowerXCell, System Storage and TotalStorage are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Other company, product or service names may be trademarks or service marks of others. This case study illustrates how one IBM customer uses IBM products. There is no guarantee of comparable results. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates.

Leadership is… Successful “Leapfrogging”

“The Kaleidoscope Project has had a profound impact, not only for the results it has obtained, but because it has created a new trend in the manner in which innovation is viewed within our industry.”

Francisco Ortigosa, on how Kaleidoscope has changed the way the industry thinks about exploration

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