Supporting the Virtual Oil Company

Steve Thompson, Director of New Business Development, M/D Totco Division

Talking about the future often conjures up fanciful ideas that may spark the imagination but never actually materialize in the real world. But what happens when technological promise and potential literally pay off right at the rig? For suppliers of well-site instrumentation and business integration services, it means they are reporting some eye-opening statistics experienced by operators, including performance improvements in rate of penetration of up to 20% and significant, measurable decreases in rig downtime. The big picture is one of an industry moving from being very manually intensive to one populated with oil companies of the future, with automation a driving factor

Back to the Future

Many oil companies are returning to their roots or core competencies—focusing on finding oil and gas. In taking that route, many other tangential aspects of their operations that do not add appreciable value to the organization are being wholly or partially outsourced.

At the same time, a demographic tide of change is occurring in the industry’s workforce. In recent years, knowledge transfer has become a significant issue for a pragmatic reason. A large chunk of experienced people is disappearing through senior worker attrition, igniting a frantic need for development of freshmen and sophomore successors.

Although that has created an industry hurting for experienced people, service companies have stepped in with innovative solutions, most specifically new technology, to help oil companies over the human resource hump. Fortunately, hiring of petroleum engineers, geologists, and related professionals is again on the cyclical uptick, but it always takes a while before new hires are successfully integrated into the workforce from the standpoint of being genuinely productive.

In other words, service companies are helping oil companies of all sizes—from small independents to large, fully integrated organizations—to bridge the gap in the experienced personnel shortfall by developing and providing creative technology that increases operational efficiencies. This includes not only electronically gathering data about the drilling process, but also integrating all that information with mission-critical business applications as well. Another example involves development activities to optimize performance drilling applications by taking that drilling information (e.g., weight on bit, revolutions per minute, torque, and other measurements recorded on a daily basis) and feeding it through algorithms to compute mechanical specific energy (MSE) to help drillers, contractors, and operators drill more efficiently.

And the process can work various ways. Depending on a service company’s size and its breadth of competencies, the service company may generate new ideas and techniques, then bring them to operators and drilling contractors. Or, new techniques and methodologies may be jointly developed between service companies and oil companies. For example, on some current projects, oil companies are collaborating on MSE applications with a service company to understand how to apply the measurements to their daily drilling activity. On a single-well basis, savings and efficiencies may seem somewhat minimal at first glance, possibly up to USD 15,000 total, but, aggregated across a field in a domestic drilling program, it delivers a significant impact on an operator’s business.

Productivity From Many Directions

New technology’s value, of course, is not about its bells-and-whistle looks, but about what it actually brings to the table. It is extraordinary how far oil companies have stepped into the future, just from the perspective of the instrumentation side of the business. Productivity can be a value-add from several different directions: in terms of the drilling aspect with performance drilling solutions, business integration solutions, asset management solutions, or through communications solutions. Notably, some efficiencies on the drilling instrumentation side are being adapted to the workover and production side of the business.

One of the primary ways to solve the dilemma of a lack of trained people in the industry is by helping companies essentially help themselves by automating as much of the daily operations as possible. That includes new technology that assists directional drillers by sending information to their downhole tool automatically or even remotely. Similarly, there is ongoing development with MSE to enhance the value of remote monitoring capabilities.

While it might be concluded that these efforts are designed to reduce a company’s workforce, the emphasis remains one of building greater efficiencies rather than lowering head count—and “remote” is a key. More and more companies are monitoring operations, changing configurations, and troubleshooting—all remotely. Rigs monitored remotely feed information into a service center manned 24/7. Technicians’ well-monitoring duties include making sure that sensors are functioning properly, that software is current, and that the appropriate command is electronically sent if it needs updating.

All these developments are delivering the clear message that the days of adding unlimited personnel to a company’s work-force are gone. Certainly, viewed in a generalist way, E&P rigs and operations look the same as they did years ago. Yet, in many ways not visible to a typical observer, the industry is changing in quantum leaps, and companies must be prepared to change with the times. In an industry contradictorily brimming with new technology yet highly conservative and somewhat reluctant to change, stepping into the next dimension is not always the obvious next move. However, companies must adapt to today’s economic environment by becoming more efficient and productive or absorb the adverse effects.

That means looking past a healthy oil and gas economy today to be positioned for times that may not be as bright—investing now to have those efficiencies and gains in place when the inevitable downturn occurs. This applies not only to large, integrated companies, but especially to small independents that may not think such an investment is feasible since they do not have comparable resources. However, as noted earlier, when service companies can bring smaller oil companies significant performance improvements, investment for the future should not be dismissed out of hand.

Therefore, it is important to build and maintain a continued focus on a partnership and active collaboration between operators and service companies to push technology toward gaining even more efficiencies and reducing costs. That may be better or improved integration of wellsite operations with the back-office functionality, streamlining those activities on site and together allowing the driller and tool pusher to concentrate more on drilling hole than on being ad hoc administrators. That allows operators to get back to their core business of finding oil and gas, and being less concerned with administrative issues surrounding that process, by automating
that, too.

There are few bigger challenges than finding and producing oil and gas. That is precisely why, even when traditional methods work fine, better ones are always right around the corner. And they are usually born of cutting-edge technology that accomplishes the old-fashioned objectives of efficiency, productivity, and profitably better than yesterday’s methods ever will. Technology is one of better management’s best friends.

Managing the Business of Drilling

As the oil industry enters a new economic environment with increased introduction of new technology, the message to operators stays on course: making them more efficient and better at managing both risk and E&P operations. Pivotal to this approach are solutions designed to provide more accurate, timely information from the wellsite to the corporate office and critical business applications. In other words, the issue remains how senior executives can best manage or streamline business operations, manage their drilling budget as a business investment, and improve their return on investment. These points or challenges call for solutions directed not only at the head office but at drilling crews, rig managers, and operations managers, along with key management.

What to look for in a website information system:

On-demand Web access to all drilling data, including reports for remote/corporate office access
Dedicated email accounts for easy communications between sites and home office
Standardized communications across all rig operations

What to look for in a business-integration system:

Corporate office drilling process data collection and mining capability
Integrated function to automatically feed critical business applications

Steve Thompson is Director of New Business Development for National Oilwell Varco’s M/D Totco Division, where he is responsible for product line management and new business development. Thompson has more than 25 years of experience in the upstream and midstream oil and gas service sectors. He has held various technical and management positions with M/D Totco, Western Atlas, and Wood Group Energy Services. His background includes experience in open- and cased-hole logging, log interpretation, petrophysical analysis, reservoir characterization, and data management. He earned a BS degree in geology from Rutgers University and an MS degree in finance from the University of Houston–Clear Lake.