Bright oil and gas future will rely on innovation, efficiency

Panelists from ConocoPhillips, Chevron and Rice University chart past and present forces enabling their industry's future.

By Jim Montague

CT1703 ABBcustomerworld Day3

A bad headache with no remedy is worse than a super-bad headache with medicine close at hand.

For instance, booms and busts have buffeted the North American and worldwide oil and gas industry throughout its history. However, despite recent price-drops and other challenges, ConocoPhilips and Chevron reported in a panel discussion at ABB Customer World 2017 that recent technical innovations and accessible raw material resources have them feeling optimistic about their industry's performance going forward.

"The two big technical revolutions disrupting oil and gas, and causing players to rethink their business strategies, are unconventional reservoir development of oil and natural gas from shale, and large-scale performance improvements aided by data analytics," said Greg Leveille, CTO, ConocoPhilips. "The U.S. was the world's largest oil producer for much of the 20th century, began a 35-year decline starting in the mid-1970s, and regained the title due to unconventional oil."

Leveille reported that the U.S. has daily production of 25 million barrels of oil equivalents, compared to Russia's 20 million barrels and Saudi Arabia's 15 million barrels. However, the U.S. would only produce 12 million barrels of oil equivalents per day without unconventional production, which combines horizontal drilling with hydraulic fracturing. 

"This combination lets us access oil and gas we could never reach before," added Leveille. "As for data analytics, where it used to take us 20 days to drill a well, we can now do it in just 13 days. In addition, data analytics can be used anywhere, which makes it most powerful when combined with unconventional oil production. This is why we expect to achieve even more in the future."

Leveille, Trond Unneland, senior upstream advisor, Chevron, and Chuck McConnell, executive director, Energy Environment Initiative, Rice University, teamed up for the panel, "Designing business transformation and the future of energy production," at ABB Customer World this week in Houston.

Innovate—cautiously

Despite the positive influences of fracking and data analytics, Unneland cautioned that a steady stream of innovations is no guarantee that end users will employ them.

"Energy companies produce and consume lots of high-tech solutions and must constantly improve, but they're also slow to test and adopt them compared to mainstream consumers or the companies we've worked with in Silicon Valley," said Unneland. "Consumers and IT-based firms know the early bird gets the worm, but oil and gas players would rather be the second mouse that gets the cheese. This is because it's more costly to be the first to adopt new oil and gas innovations, so they stick with what's tested and reliable. Even when innovations are adopted, there's usually a step back period before benefits begin to arrive."

Unneland added the game-changing innovations in oil and gas in the past few decades include deepwater/subsea applications, real-time reservoir management, 4D seismic technology, horizontal drilling and fracturing, and data analytics. He added that emerging technologies in oil and gas include mobile computing, data science, cloud computing, cognitive computing and the Industrial Internet of Things.

"Our multi-department energy initiative focuses on three things: accessibility to secure energy sources, affordability of those sources, and environmental responsibility," added McConnell. "Then we look at what talents the industry needs, so they can develop dynamic workforces."

Implement—consistently

Leveille added that more powerful, capable and portable computing resources are greatly aiding ConocoPhilips projects. These tools perform high-end machine learning, visualization, site simulation and other functions.

"Five or 10 years ago, our major facility and well projects were mostly custom-designed, one-offs that a team would assemble and execute," he explained. "Now, we're developing capital expenditure projects with similar designs that are more repetitively executed, including well pads, oil sands processes and other rapid, low-cost experiments. This consistency gives us more leverage, and it's very liberating. We're going to do many more wells and other projects like this in the next 15 years."

Unneland added, "Upstream processes can now put sensors everywhere like downstream applications already do, and that's enabling a lot of improvements for us. However, where we used to hire data scientists to work with our geoligists, what we need now are hybrid, “petro-techs” that know both earth science and computers. We're doing some of this training at our Center for Interactive Field Technology at the University of Southern California."

Leveille added that ConocoPhilips is also providing more training in collaboration. "Our applications need to know more about how different measurements are interacting, and so we're coordinating our facilities and operations engineering people to do it," he added. "This is letting us look more closely at data for individual rigs, and even take a computer game approach, so operators can begin to compete with each other on improving performance. This whole thing becomes self-perpetuating, and it's enabled by this atmosphere of innovation."

Unneland added that even little data innovations can be a big help. "We recently had an issue about how to dispose of water from unconventional oil sites," he added. "So someone developed a smartphone app that shows site position, amount of water to be disposed and other details, and it's been a big help."

Download the full report from ABB Customer World 2017

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