Emerging Technology and Its Impact on the Industry

Adam Farris, Vice President of Technology Adoption and Services, Object Reservoir

It is no secret that oil fields today are more difficult to locate, evaluate, drill, and produce. In deepwater offshore projects, finding and drilling a prospect can take several years. Rig rates are up to U.S. $600,000/day and rising. A completed deepwater well can cost as much as $100 million.

Deep water is the extreme case, but consider onshore tight gas plays, where the permeabilities are in the microdarcies and extended-reach horizontals and complex completions are increasingly common. This pushes drilling and completion costs much higher. Other factors complicate the issue as well. There is a big gap in experience levels, and the engineering labor pool is dwindling. Management is preparing for the exit of many talented engineers, and as they leave, these innovators take with them lifetimes of hands-on experience. The industry challenge is this: How do we increase production with tougher problems to solve and the exit of experienced engineers and thought leaders? Technology has been touted as the saving grace for a long time, but is it the answer?

Our current industry leaders were in our shoes once. They were the emerging leaders, the up-and-comers with high aspirations and fresh ideas. Now they lead some of the most powerful companies in our industry—Anadarko, Chevron, ExxonMobil, Occidental, to name a few. We are all leaders because the success or failure of the oil and gas business depends on us. We have a responsibility to a lot of people.

Responsibility and accountability are inseparable from leadership, but think about another defining characteristic of a great leader. It is curiosity and the ideas and insight that accompany it. Then comes the hard part—follow-through and continual improvement. Technology by itself will not solve the industry’s problems. The power comes from combining the valuable industry knowledge of our current leaders and making use of that information with tech-savvy successors. Leaders who continue to innovate and use advancements in technology to create additional business value—that is the future of our industry.

There is also a difference between using technology and being an early adopter. If you would not think twice about buying an iPod that came out last week, you are an early adopter. There is not a lot of fear associated with technology among young professionals because it has always been a part of their daily life. When applied to their careers, that technology-based viewpoint offers true business value.

Several examples from the past illustrate just how important technology and its advancements are. One interesting example is computer-aided design (CAD) systems and their applications. When CAD first appeared in the 1980s, very few engineers would apply it to projects. They tried to use it, but in the end, it was faster to draw their designs on paper.

But with hand-drawn designs, there was no way to track changes and measure development. As information about the system being designed changed, the hand-drawn model became less and less “true.” These engineers just accepted the margin of error and chose to continue with the drawing even though they knew it was wrong. Decisions were being made on an incorrect design, and yet they chose not to use the new tool that would correct this issue. Over time, many ideas were lost because of resistance to change. It was not until the head of General Motors said, “You must use this tool,” that engineers began to use CAD regularly.

Another example was one that began in 1947, when Raytheon introduced a new technology called the Radarange. It was housed in a refrigerator-sized cabinet and was supposed to take the place of a traditional range. In the early 1950s, another company came out with the first home version. It cooked faster and easier, but pot roasts, baked goods, and other foods just did not turn out as expected. When consumers tried to use this in place of the traditional oven, they were unsatisfied.

Forcing Technology

The main reason the technology was unsuccessful at first was that it was being forced into an already existing niche. Trying to use the “new” range in the same way did not work. It did not fit that need. It was not until 10 years later that manufacturers began packaging the devices in their own “boxes.” Today, homes throughout the world use microwave ovens every day to pop popcorn and heat up leftovers.

Examples closer to home that have shaped our industry include rotary rigs that replaced the original cable-tool rigs, which allowed the drilling of deeper wells. Other examples are horizontal drilling, reservoir-fluids sampling, new completion techniques, subsea completions, and artificial lift. They all had a significant impact on improving production and development abilities. They all had something else in common as well—they took decades to catch on.

There are also plenty of statistics about 3D seismic, but the one that jumps out is the fact that the exploration success rate before 3D seismic was approximately 1 in 10 wells. Once 3D seismic was used, the success rate jumped to between 4 and 6 in 10 wells. Eventually, the technology caught on and became commonplace. Lending institutions forced independents to have it before they would release funding.

Still, this technology had its share of naysayers. People were used to doing things the old way and did not understand or believe that the new technology could provide significant benefit for the additional investment. In reality, the returns far exceeded the investment.

Bright Ideas

Today, there are several cutting-edge ideas that are developing into very important technologies, specifically in our industry. Perf-drill, which started in Shreveport, Louisiana, was designed as an alternative to perforating beyond wellbore damage. The mechanism drills microholes through the casing and can drill as many holes as needed on a single trip up to 10 ft in length. The really interesting part is that tool capabilities have been extended, drilling capability is being tested on up to 300‑ft perforation holes.

The February issue of JPT included information on Easywell’s “SwellPacker,” a packer that uses the swelling properties of rubber and that can be used in open or cased holes to provide an annular seal to isolate producing zones. When used in openhole situations, it actually replaces cement.

Another area of rapidly developing technology in our industry is in the seismic arena. Seismic-data processing and gathering continues to improve, and the resolution is increasingly better. Companies such as Transform are developing modern software that allows interpreters to take full advantage of better data, including 4D seismic. This progress pushes the world of geophysical interpretation closer and closer to reservoir engineering.

I only recently joined Object Reservoir. I was perfectly content in my previous role, but was intrigued about the idea the company was pursuing. It had developed an approach to modeling and simulation that could truly change the way that these functions are applied. The approach allows operating engineers to take advantage of the power of modeling by doing away with all that is difficult and unpredictable in traditional approaches. So, if you find something that is interesting and potentially valuable—pursue it and work with it.

Right now, the industry has the benefit of access to very experienced people. Some have knowledge gained over more than 25 years. We must make the most of this opportunity to combine the power of new technologies with the hands-on experience of our current leaders. The bottom line is this: It is the combination of experienced and hands-on knowledge with technology-driven engineers that will bridge the way to long-term success.

Breaking Barriers

Successful technology development depends on participation from everyone. A friend and executive of a major independent listened as I was talking to him recently about technology uptake and the barriers that exist, and he sort of laughed and said, “Our industry needs more Mikeys.”

It is funny, but true. Most people know little “Mikey” as that chubby-faced skeptic on the Life cereal television commercials that ran in the 1970s and resurfaced in the 1990s. If you are not familiar with the commercial, there are a couple of kids sitting at the breakfast table trying to decide who will taste the new cereal first. “It is supposed to be good for you,” says the first kid. “I’m not gonna try it. You try it,” responds the other one. Then, they pick Mikey to try it but decide he won’t eat it because he hates everything. Finally, Mikey takes a bite, and the others exclaim, “He likes it! He likes it!”

As engineers and leaders, it is our job to be the gatekeepers. I am not saying go out and try every new technology. But we must have discernment, and we cannot be complacent with the status quo. In the next 6 months, challenge yourselves to take a look at how you can approach projects from a different perspective. Instead of seeing all of the hurdles, stay curious about technology, and make the most of available tools and the advancements that are sure to come.

Adam Farris, SPE, is Vice President of Technology Adoption and Services for Object Reservoir. In his current position, he leads a consulting and training team and a cross-functional product focus group that supports customer/end-user needs. Before joining Object Reservoir, Farris held various leadership positions at Landmark Graphics Corp., including Global Account Leader, Business Development Manager, Principal Drilling and Completions Consultant, and Market Development Manager. He began his career at Baker Atlas GEOscience/Baker Hughes as a log analyst/field engineer. Farris earned a BS degree in chemistry from St. Edward’s U. in Austin, Texas, and has done post-graduate work in chemical engineering and business.