Efficiency, Productivity to Remain Focus of Oil, Gas Technology


Technological development focused on improving efficiency and productivity will remain a key focus of the oil and gas industry in 2015.

In 2014, Rigzone reported on the release of a number of new technologies aimed at boosting productivity and efficiency in oil and gas operations, such as drillbits designed to increase the rate of penetration.

The trend in drilling technology is the demand for more: operators now require more and better data from their service companies, said Jennifer Padgett, head of business development for Tolteq, a Cedar Park, Texas-based provider of measurement-while-drilling (MWD) software for oil and gas.

“At the same time, they expect a faster ROP (Rate of Penetration) and longer laterals. They’re just pushing harder and faster! Something has to give, and in the past it has been MWD tools,” Padgett told Rigzone.

The company has addressed these issues by refocusing over the past two years on the next generation of tools.

More clarity in designing production wells that can be brought online safely and efficiently has also created the need for 3D design software, which can give a better picture of the subsurface environment versus 2D software. Intelligent well system technology such as Baker Hughes’ all-electric system, can enhance productivity and efficiency by extending the number of compartments that can be made within the reservoir.

The oil and gas industry continues to face the challenge of knowing where to place perforations and individual hydraulic fracturing stages. A Halliburton official speaking at the ATCE conference said that, as a result of incorrect hydraulic fracturing, approximately 25 to 30 percent of unconventional well zones don’t produce. To address this issue, the company announced the launch of FracInsight, an unbiased repeatable tool that selects perforations and frac stage locations from the best available formation evaluation data along a horizontal well, at the Society of Petroleum Engineers’ Annual Technology Conference and Exhibition in Amsterdam in late October.

The need of the oil and gas industry to better identify sweet spots has prompted Shell International Exploration and Production to collaborate with Wyoming-based WellDog to commercialize a novel shale gas testing service. This technology was originally used for coalbed methane operations. Another technology also originally used in coalbed methane is now being used in hydraulic fracturing operations. This technology, which utilized coil tubing, offers a more efficient and economic solution for unconventional well completion and production, according to officials withNCS Multistage Unlimited.


A recent survey of oil and gas professionals by the Deloitte Center for Energy Solutions found that two-thirds of survey respondents reported shale extraction as benefiting from better economics through improved efficiencies and new safer, faster, less expensive rig technology. The improved economics of shale will be beneficial to the industry as it weathers the low price environment it is currently experiencing, Deloitte reported.

“The survey revealed continued positive momentum regarding the optimization of U.S. shale,” said John England, vice chairman and U.S. Oil & Gas Leader for Deloitte, in a Nov. 18 press statement. “Shale development remains the lynchpin of the North American Energy Renaissance, and improving extraction technologies and methods as well as improved midstream infrastructure are fueling the growth of production.”

Nearly half, or 44 percent of survey respondents, point to the smaller environmental footprint of shale as a significant improvement, while 39 percent believe fresh water recycling has improved.

Technological innovation in green completion technology has resulted in reduced methane emissions from U.S. shale gas operations, according to a recent study by the University of Texas at Austin.

Linda Castaneda, advisory for oil & gas with Ernst & Young, told Rigzone that the industry has made tremendous progress and improvements in efficiency thanks to technology. Given the decline in oil prices, companies will have to be even more creative technology-wise in 2015. But improvements in process also need to accompany technology advances in order for a company to succeed. Companies that can efficiently integrate and improve efficiency not only in exploration and production, but finance, logistics and other functions and disciplines, are the ones that will succeed.


Besides lower oil prices, the oil and gas industry will continue to face the same issues that they’ve had to contend with in 2014. Moving forward, PwC anticipates “very active movements” by government agencies to regulate the oil and gas industry, said Reid Morrison, PwC advisory leader for U.S. Energy and Greater Houston Market, in an interview with Rigzone..

The oil and gas industry is “very concerned” and doing everything it can to addressing water usage and recycling as well as health, safety and environmental issues.

From a public and community relations standpoint, the industry’s inability to tell its story in a meaningful way for stakeholders remains a weak spot for the industry. Except for a few companies, many oil and gas companies have only a marginal budget for public and community relations.

“By comparison, consumer product companies such as Proctor and Gamble have brand management as a core competency, and public and community relations funded on par with other business units,” said Reid Morrison, PwC advisory leader for U.S. Energy and Greater Houston Market, in an interview with Rigzone. “The industry is really struggling for the right approach for its message.”

In addition to lower oil prices, oil and gas companies also must contend with institutional investor demand for healthy dividends. When oil prices are higher, companies are able to invest in both exploration and production and healthy dividends. But lower oil prices means that companies will need to choose one or the other.

“They want to have their cake and eat it too, and they can’t have both,” Morrison commented.

“When you look at the industry from a macro standpoint or an institutional investor standpoint, investors are focused on the dividend quality and reliability of performance,” said Morrison. “While oil and gas industry stocks do have a growth element, their P/E ratios, or free cash, are lower compared with stocks for high tech and pharmaceutical companies.”

Oil and gas companies view reservoir and production growth as paramount. However, the analyst community focuses on free cash flow. What tends to happen in a bad commodity price environment is that each of the functional groups within a company try to solve the problem in their own way.

Over the past five years, oil and gas companies have been able to maintain a balance between production and reserve growth and quality dividends. Now, companies must decide whether to continue investing in production and reserve growth or paying investors. Companieslikely will seek to maintain production growth and dividends will pulling back on a few discrete items to buy time.





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