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The e-Commerce Oilfield  
Date: August-03-2000

The e-Commerce Oilfield

Spears & Associates, Inc.
5110 South Yale, Suite 410
Tulsa,  OK 74135
(918) 496-3434
(918) 496-0406 telefax

It’s not all hype. The oilfield is on the cusp of a major change in the way equipment and services are sold as B2B e-Commerce becomes the center of restructuring by oil companies. Spears and Associates conducted 125 interviews covering the e-Commerce plans of 74 oil companies and found the general population is moving toward full implementation of e-Commerce tools, some companies faster than others. The survey indicates that 40% of the companies are aggressively pursuing e-Commerce. More importantly, majors and large independents are leading the way, representing over 50% of US capital spending.

Defining B2B e-Commerce is difficult because it is evolving as it goes and the media is exaggerating the benefits for the oilfield. The bottom line is that B2B e-Commerce is simply a commerce tool. Think of it as a competitor in the commerce tool market. The existing providers are traditional commerce tools like the telephone, in-person meetings and faxes.  Email has already captured much of the market that was previously held by faxes and continues to gain market share on phone calls and in-person meetings. B2B will continue to gain market share at the cost of traditional commerce techniques, but it will not grow the market.

Purchasing specialists are more interested in e-Commerce than engineers and have a better understanding than engineers but both agree that its usefulness has its limits. Larger oil companies, majors and large independents, tend to rate e-Commerce higher in usefulness than smaller oil companies. Several engineers have experimented with e-Commerce, mainly using reverse auctions, with success. However, the visibility of e-Commerce currently exceeds the applicability leaving the industry in a temporary environment of disillusion.

The major benefit expected by engineers is time savings: less time to obtain the technical and pricing data they need and more time to perform their technical work. Oil company engineers do have some reservations over the other changes that might come with e-Commerce, such as the security of the transactions and a responsible party for after the sale follow-up. Few of those interviewed foresee harmful changes to the purchasing process or to their relationship with the supplier.

Spears and Associates developed a model to estimate the market share captured by e-Commerce and applied it to 35 major market segments in the upstream industry. The results show e-Commerce will be adopted by oil companies over the next several years, reaching a peak of over 50% of the transactions in some areas such as artificial lift, casing and cementation equipment. Subsea related and service intensive segments offered little market for e-Commerce. The top 10 markets for e-Commerce purchases are as follows:

Artificial Lift Equipment

Pressure Pumping Services
Casing Hardware
& Cementation Products
Well Servicing
Field Processing Equipment Inspection and Coating
Oil Country Tubular Goods Flow Control Equipment
Drill Bits Wireline Logging

The basic methods for e-Commerce are post and browse, catalogs, auctions and automated exchanges. Most oilfield transactions are best served with post and browse, catalogs, and auctions however a few commodity equipment categories could someday progress to an automated exchange.

There are barriers to B2B e-Commerce implementation that should be monitored over the next several months. First, the current environment of tight equipment and services provides little incentive for the suppliers to restructure their business around e-Commerce. Second, other industries that have implemented buyer owned e-Commerce sites have come under scrutiny by the FTC for anti-competitive behavior. Third, much of the equipment in the oilfield is not commodity like and requires engineering and service support bundled with the equipment -e- Commerce does not lend itself well to this. The first two barriers could be overcome in time and this could pressure suppliers to package their equipment with less service and more standardization which would lend itself to e-Commerce.

Only a few Internet businesses are fully operating as e-Commerce portals/hubs for equipment and services. A summary table of upstream oil and gas industry portals is presented on the following page. The population of portals is expected to rise then drop dramatically leaving on a few of the fittest portals serving the market. Spears and Associates will track the e-Commerce options and post them on the web at www.spearsresearch.com for the industry’s benefit.


A2D Technologies, www.a2d.com, Ownership Unknown, Services Other, Grade A

Applied Terravision Systems, www.atsi.com, Ownership Independent, Information, Services Existing,
Grade B

Commerce One Marketsite.net, www.marketsite.net, Ownership by Oil Company, Auction Trading Hub Planned, Services Planned, Grade A

EnergyNet.com, www.energynet.com, Ownership Unknown, Auction Services Existing, Grade B

EnergyPortal.com, www.energyportal.com, Ownership Independent, Information, Place Advertisement, Catalog Planned, Post & Browse Planned, Trading Hub Planned, Other e-Business Services Planned, Grade A

EnergyPrism.com, www.energyprism.com, Ownership Independent, Information Services, Catalog Planned, Auction Planned Other e-Business Asp Planned, Grade A

eNersection, www.enersection.com, Ownership Unknown, Advertisements, Post & Browse Planned, Trading Hub Planned, Other Services Planned, Grade A

eOilfield, www.eoilfield.com, Ownership Unknown, Information, Post & Browse, Auction Planned, Other, Grade B

eSASA, www.esasa.com, Ownership Independent, Information Planned, Post & Browse, Auction, Trading Hub, Asp e-Business, Other, Grade B

Hart's E&P, www.eandpnet.com, Ownership Independent, Information, Catalog, Post & Browse, Grade A

IHS Energy Group, www.ihsenergy.com, Ownership Independent, Information, Other, Grade B

IndigoPool, www.indigopool.com, Ownership Independent, Information, Asp e-business, Other, Grade A

Int'l Oilfield Equip. Brokers, www.oilfieldequipment.com, Ownership Unknown, Post & Browse, Auction, Other, Grade Not Rated

Network Oil, Inc.,  www.networkoil.com, Ownership Independent, Information, Catalog Planned, Post & Browse, Auction, Trading Hub, Other e-Business Services Planned, Grade A

Novistar, www.noviastar.com, Ownership Unknown, Other Asp e-Business Services Existing, Grade B

Oil-field Equipment.com, www.oilfield.com, Ownership Independent, Post & Browse, Grade Not Rated

Oil-N-Gas.com, www.oil-n-gas.com, Owner Independent, Information, Advertisements, Catalog Planned, Post & Browse, Grade C

Oil & Gas Journal Online, ogj.pennnet.com, Owner Independent, Information, Place Advertisements, Catalog, Post & Browse, Grade B

Oil & Gas Journal Exchange, www.ogjexchange.com, Owner Independent, Information, Place Advertisement, Catalog, Post & Browse, Auction, Grade B

OIl and Gas Online, www.oilandgasonline.com, Owner Independent, Information, Existing Catalog, Post & Browse, Trading Hub, Services Existing, Grade B

The Oil Auction, www.theoilauction.com, Ownership Unknown, Planned Catalog, Planned Post & Browse, Planned Auction, Services Planned, Grade C

Oildex Connect, www.oildex.com, Owner Independent, Place Advertisement, Information, Existing Asp e-Business, Services Existing, Grade A

OilDirectory.com, www.oildirectory.com, Owner Independent, Information, Post & Browse, Trading Hub, Other, Grade B

OilExchange.com, www.oilexchange.com, Owner Independent, Information, Post & Browse, Trading Hub, Grade B

Oilfield Direct, www.oilfielddirect.com, Ownership Unknown, Existing Catalog, Planned Post & Browse, Planned Trading Hub, Grade C

Oilfield-Source.com, www.oilfield-source.com, Ownership Unknown, Post & Browse Planned, Trading Hub Planned, Grade C

Oil.net, www.oil.net, Owner Independent, Information, Post & Browse, Grade Not Rated

OilOnline, www.oilonline.com, Owner Independent, Visit for Information, Place Advertisement, Post & Browse, Grade B

OilProperties.com, www.oilproperties.com, Ownership Unknown, Grade A

Oiltrash.com, www.oiltrash.com, Owner Independent, Visit for Information, Existing Catalog, Post & Browse, Services Existing, Grade A

Petris Technology, Inc., www.petris.com, Owner Independent, Post & Browse, ASP Services, Other Services Planned, Grade B

PetroCosm, www.petrcosm.com, Ownership Oil Company, Existing Catalog, Auction, Trading Hub, Existing Asp e-Business, Other Services Planned, Grade A

Petrodeal, www.petrodeal.com, Ownership Unknown, Visit for Information, Auction, Other Services Planned, Grade C

PetroWeb, www.petroweb.com, Ownership Unknown, Visit for Information, Existing Catalog, Services Existing, Grade B

Petroleum Listing Service, www.plsx.com, Ownership Unknown, Visit for Information, Place Advertisement, Post & Browse, Grade A

Petroleum Place, www.petroleumplace.com

 prospectONE.com, www.prospectone.com, Ownership Unknown, Existing Catalog, Grade C

RigMatch Information, www.rigmatch.com, Ownership Unknown, Visit for Information, Grade B

Upstreaminfo.com, www.upstreaminfo.com, Owner Independent, Existing Asp e-Business, Services Existing, Grade A

Wellbid, Inc, www.wellbid.com, Owner Independent, Advertisements, Existing Catalog, Trading Hub,  Existing Asp e-Business, Services Planned, Grade A

WorldOil.com, www.worldoil.com, Owner Independent, Visit for Information, Advertisement, Post & Browse Planned, Auction Planned, Other Services Planned, Grade A


 About SAI

 

Spears & Associates, Inc. Founded in 1965, Spears & Associates provides research-based consulting to the petroleum industry worldwide, specializing in equipment and services. The firm is the most experienced market research firm specializing in the petroleum industry.

Clients are engaged in all facets of the industry, from finance and exploration to production, transportation, and refining.  Included are petroleum equipment manufacturers, oilfield service firms, producers, trade associations, and government entities.

Products:

Drilling & Production Outlook
- statistics
and a forecast of drilling activity worldwide. Published quarterly.

Oilfield Market Report
- Estimate of company sales by product line for 35 market segments. Published annually.

International Land Rig Database
- A worldwide list of rigs and rig specifications of marketed land based drilling rigs. Published annually.

Services:

Oilfield Market Research & Management Consulting Asset Acquisition & Internal Investment Support Litigation Support

Clients:

Spears & Associates has about 145 clients, primarily oilfield service and equipment companies. The firm has conducted over 1,200 oilfield market research studies.

Location:

Spears & Associates, Inc.
5110 South Yale, Suite 410
Tulsa, OK  74135
ph: (918) 496-3434
fax: (918) 496-0406
www.spearsresearch.com

Reprinted with permission by Spear and Associaties, Inc.

 

Author: Spears and Associates, Inc.

 

Source: 

 

 

Reprinted with Permission by the Author or Publisher :