SEG Show Daily ; October 2, 2006
By Blake McLane, CyrusOne

The oil and gas industry is legendary for the amount of data it collects for tasks such as earth modeling, reservoir simulations and real-time analysis of drilling operations. Processing that much data is a challenge, which is why energy company chief information officers (CIOs) and information technology (IT) managers are increasingly looking to blade servers to improve their companies' competitive positions. As companies become more reliant on high technology for exploration, blade servers are needed to quickly process information at an effective price point for a competitive advantage.

The Pros

Blade servers have several advantages aside from the major attraction of high performance. Also scalable, they pack more computing into less physical space. This technology also dovetails with the virtualization trend, which improves server utilization, reliability and overall capacity. And consider the expenditure (popularity) leap. Enterprises worldwide will spend more than US$7.2 billion annually on blade technology by 2008, up from $1.3 billion in 2004, according to estimates by IDC, an analyst firm.

The Cons

A misconception often abounds about the benefits of using blade servers in the oil and gas industry. Although the technology offers increased performance with a smaller footprint than a traditional server, cost savings are difficult to justify due to the infrastructure required to power and cool the devices. While blade servers reduce total cost of ownership, CIOs must keep in mind those cost savings are directly transferred to building an infrastructure supporting server operation.

As oil and gas companies increasingly seek the performance of blade servers, they're faced with operating them without investing their own time and money building out an infrastructure. One major drawback is that the migration to blade technology requires a major overhaul of data center infrastructure. What CIOs and IT managers frequently overlook is how they impact the data center's power and cooling requirements - not a trivial issue: By 2009, U.S. enterprises will spend twice as much on power and cooling for servers as for the hardware itself, according to a May IDC report.

Blade servers pack more computing power into less physical space, with power consumption of 20 kW or more per rack, requiring 10 times more electricity than conventional server technology. All that additional processing power generates more heat. A rack of 80 blades, with a total of 160 processors, can generate more heat than an electric oven.

“In the oil and gas industry, there is also a common misconception about the costs of actually building the infrastructure of a data center. The average cost for white floor space with the built-in power and cooling requirements is approximately $65 per sq ft. However, once a company installs blade servers, the cost increases to $2,500 per sq ft because of the dramatic power and cooling costs.

The Solution

To enjoy blade technology's benefits while avoiding downsides such as power and cooling costs, mid- and large-size oil and gas companies are looking to outside providers to leverage high-capacity data center infrastructure as an alternative. When companies migrate to high-density infrastructure, IT departments frequently outsource the task of assessing and implementing these options. Why? Data center providers already have the infrastructure to accommodate the increased power and cooling requirements companies encounter.

Significantly, oil and gas companies can leverage a data center services provider's shared infrastructure with other companies experiencing similar challenges with using blade technology. Many data centers are preparing for dense computing by designing high ceilings for efficient air circulation, for example. By outsourcing the data center, companies are freed from the financial burden of building or remodeling internal data centers to accommodate blade technology.

Investing $2 million in capital expenditures for a customized data center for blade servers is not practical. Instead, the industry is embracing scalability and reliability a data center offers. Adding more blades to an existing data center is more cost-effective than retrofitting or building more space. Furthermore, companies that have used this model have been able to account this outsourcing as an operational expense rather than a capital expenditure, making budget forecasting more accurate and ultimately enabling better business decisions.

The Bottom Line

Blade technology is a perfect fit for the oil and gas industry because it provides processing power necessary to effectively utilize data-intensive applications such as earth modeling, reservoir simulations and real-time analysis of drilling operations. However, blade servers do have greater power and cooling requirements -- compared to conventional, low-density servers -- which can significantly increase overhead costs.

Oil and gas companies can avoid those costs and still enjoy blade technology's benefits by outsourcing their data centers, which delivers a balance sheet benefit, more accurate budget forecasting and better decisions.

This article was originally published in Hart's E&P SEG Show Daily
Copyright © Hart's E&P Inc