What is the “pull” for new technology?
Feature Articles, Feb  18  2010 (Digital Energy Journal)

- This magazine always has plenty of articles about technology which vendors would like oil companies to use. What happens if we look at it from the other side – what technology oil companies, large and small, will actually need?

By David Bamford, consultant editor, Digital Energy Journal

Digital Energy Journal tells “stories” about technology successes, technology innovations. It is often reactive, able to pick and choose from the many “stories” that are out there.

Another, proactive, approach is to look at oil & gas trends, especially in exploration and production, to identify the key ‘pulls’ on technology; it seems important to think about the issue this way round – as opposed to identifying “wouldn’t it be neat if…….” technologies and ‘pushing’ them into the oil & gas world.

So what might be the key themes for the next 12 months, and beyond?

Well, as these are personal views, I should first of all declare my views on energy policy, climate change.

Where I am on this is that:

There's just no point in denying that burning fossil fuels is having an impact on the planet. I was very much in the 'old' BP position of "as scientists we should accept the evidence and think about how to respond". Pretty well as Shell articulate today.

As we see in most of life, we will wait a long time for politicians to do anything sensible.

I don't believe wind and solar will provide more than a fraction of the energy we need (tides may be a special thing for the UK) and I still find nuclear a bit scary [partly because of the above. Imagine if our UK Government treated the nuclear industry like they treat the armed forces!].

So I see little alternative to fossil fuels for the foreseeable future.

That said, I'm going to trust our inventiveness and technology.

For example, you will perhaps have seen that the US has discovered enough gas (which is by far the cleanest of the fossil fuels) that somebody as experienced as T Boone Pickens thinks they could aim at getting by without 'foreign oil'.

I like Carbon Capture and Sequestration if it means we can use all that coal without choking everything and everyone.

So the first question I ask myself is, where are the majors (and larger independents) going to find new oil & gas resources in the next decade? It seems to me that they have two distinct options:

One, building relationships of “mutual advantage” with resource-rich governments and their national oil companies who need help in bringing their current assets to production and in discovering new ones, for example in Iraq and Russia. IOCs bring finance, “Know How” and technology.

Two, re-engagement with Frontier Exploration in, for example, the Arctic, onshore (notably in central Africa and East Siberia), and in deepwater, the last handful of unexplored areas.

After a decade of ‘easy’ exploration, in which relatively young (mainly tertiary) sediments were explored offshore using regional 3D seismic as the principal exploration tool, we are returning to a style of exploration which is ‘hard’, requiring clever geological work and integrated geoscience, in deeper targets, in more remote environments.

Nonetheless, the performance levers that sub-surface folk have available to them are increasing their success rate at the same time as reducing the cost of what they do: this is true whether drilling exploration wells in a frontier province, development wells in a field that is being brought onto production or new wells in a currently producing field.

Ultimately, this is about spending less on drilling, completion and well work, these costs being the single biggest component (typically 50% or more) of any campaign to Find Petroleum.

So there should be enormous ‘pull’ on technologies that allow us to find the required resource with significantly less wells and/or spend significantly less on any one well.

Gas will be an increasingly important global theme, particularly unconventional gas, perhaps especially in Europe, emulating the massive successes onshore in the USA.

For some countries, gas storage will be an important sub-theme; the UK is very exposed to gas market swings, having only about two weeks’ storage capacity whereas Germany for example has more like 100 days.

Staying with a storage theme, the oil and gas industry will also increasingly involve itself in the storage of CO2, the ‘S’ part of CCS, both with the deployment of enhanced oil recovery schemes that utilise CO2 and its eventual permanent storage in fully depleted, rightly abandoned fields.

This will fit neatly into a focus on increasing the recovery factor of each and every oil or gas field, including developing fields that are currently ‘stranded’, extending the life of mature fields and resurrecting prematurely abandoned ones.

The common ‘pull’ of these last three paragraphs is on technologies that improve the quality and reliability of our insights as to what is going on in the sub-surface – digital technologies for collaboration, visualisation, building static and dynamic reservoir descriptions, geophysics – especially 3D and 4D seismic, understanding rock physics away from well penetrations.

My guess is that the technology breakthroughs, the real innovations, that I am looking for will come from the smaller, more entrepreneurial, players rather than the big battalions who are perhaps more interested in incremental improvements to established products – let’s see if I’m right!