North America’s unconventional, deepwater, tight and heavy oil resources have been the focus of much of the investment in exploration and production technology since 2003, according to a recent report by Boston-based Lux Research.
North American investments accounted for 87 percent of the investment dollars and 76 percent of the 377 merger and acquisition transactions made since 2003, according to Lux’s report “Investing in Next Generation Oil and Gas Technologies”. During that time, more than $7 billion has been invested in new technologies to enhance oil and gas exploration and production.
“Unlike in the past, the oil and gas industry now embraces emerging technologies from adjacent industries,” said Daniel Choi, Lux research analyst and lead author of the report.
Initial investments focused on making unconventional plays more productive, such as hydraulic fracturing technology. Now, a group of companies are focused on giving operators more information on the actual production process, such as microseismic, chemical tracers, downhole fiber optic sensors and temporary insulation to bolster production recovery from wells, Choi told Rigzone in an interview.
The next wave of investment in oil and gas technology will focus on improving recovery of tight oil production. Single-digit recovery levels are currently seen in tight oil wells, compared with recovery of between 20 to 70 percent from conventional wells, said Choi. Currently, many operators are opting to drill new wells rather than invest in currently producing wells to boost production.
“Right now, it’s all about making completions more efficient and understanding completions themselves,” said Choi. “It’s still the Wild West in terms of technologies to understand what makes a well more productive.
The recent decline in oil prices will not slow down investment in unconventional oil and gas technology, as the breakeven price for most shale plays is an average of $60/barrel. However, lower oil prices could hurt investment in the implementation of oil sands production technology, depending on the company, Choi said.
Lux also expects an uptick in merger and acquisition activity as companies improve their financials and start to eye technologies – from companies such as Acoustic Zoom Inc. an advanced geophysical company, Robotic Drilling Systems, a provider of robotic technology for fully unmanned drill floor operations, Liquid Robotics, an ocean data services provider, and Field Upgrading, which focuses on developing and commercializing bitumen and heavy oil upgrading technology – that can enhance existing industry processes.
Oil and gas investment in Europe ranked second behind North America, with $770 million from 107 transactions. Europe’s evolving deepwater sector, mainly in the North Sea, was behind this investment.
From 2003 to 2013, oilfield services company Schlumberger Ltd. was the most prolific buyer of exploration and production technology with 56 transactions, more than 40 percent of the total acquisitions made in the space, Lux noted in a Nov. 25 press release. By making these acquisitions, Schlumberger has been able to stay one step ahead of its competition, introducing technology solutions ahead of their competitors, said Choi.
Energy Ventures, a Norway-based private equity firm, is ranked as the most prolific investor in E&P technology, with 47 transactions made since 2003. Operator-owned investment funds, led by fund Chevron Technology Ventures, is the second largest investor with 33 deals.