Digital oilfield technologies tipped for decade-long investment boom

Tools that optimize operating costs will be at the forefront of a predicted digital-oilfield investment boom, Unconventional Capital Managing Director Chris Robart has predicted.

The offshore oil and gas industry has been slow to embrace digital technology but attitudes are changing fast, Houston-based Robart told Upstream Intelligence. His firm believes investments in the digital oilfield will outperform the general oilfield-services market over the next decade.

“It’s a hot market. Production has been done the same way for 50 years and there’s a lot of room to improve efficiency by using better data to make decisions,” he said. “Surface operations, including drilling, completions and production, will see the most significant investment. The Gulf of Mexico, Asia and, to a lesser extent, West Africa, are the main target markets.”

Robart said feedback from the industry supported his conclusions. Some 80% of companies expect to invest more in digital technology over the next three to five years. Their major priorities, he said, include the management of large data sets, real-time visualization and alarms, and remote asset monitoring. Robart estimated the size of the investment opportunity at $60 billion based on global production, with a 5% compound annual growth rate over the next five years.

Taking the lead

The offshore oil industry has lagged behind other industries such as geological and geophysical exploration, which has used digital tools for more than two decades. Most offshore wells are still not equipped with sensors, or other digital infrastructure. However, some companies have been proactive and the mindset is changing throughout the industry.

EOG Resources has hundreds of software developers in its in-house teams in the US and India and Devon Energy is at the leading edge in embracing digital analytics, according to Robart. Devon is the only oil company that has integrated all its data in one place using OSIsoft’s PI System, a suite of products used for data collection, analysis and visualization, he noted.

Filip Stroobant, Business Unit Manager – Digital Oilfields for IPCOS, a Belgian-based provider of digital solutions, singled out automation as another area the oil industry has been slow to embrace. But he said there were signs of growth in this area.

“OPEC is under such pressure that I expect to see investment for optimization in most areas with the exception of the North Sea, where we are seeing a total freeze. Costs are among the highest and there is little margin to play with. Projects are being put on hold, or cancelled altogether,” he told Upstream Intelligence.

Stroobant said it was difficult to determine where digital technologies provide most value. Benefits tend to be felt across the board, he said. “When we fix things in one specific area, the improvements can be in a very different area. For example, it we improve the accuracy of reports on production volumes it could have a big impact on investments. That’s what a lot of oil companies have struggled in the past to understand. Digital optimization is about connecting up all the dots to improve all-round performance. You have to look at it holistically.”

Majors accept the challenge

Digital technology will be needed to tackle a multitude of new challenges, according to Upstream Intelligence’s recent Offshore Digital Services Report. These challenges include deeper wells, deeper water, high pressure and high temperatures in the well bore, more complex wells, remote locations, a higher number of wells in an unconventional-resource drilling program, and greater public scrutiny on incidents, the report noted.

The report also described how digital investment has helped Chevron to optimize operations. Chevron’s I-field digital program has eight global mission-control centers. Each has a single duty, such as managing wells for higher yields or using real-time data to make collaborative decisions in drilling operations. One specific component, seafloor pumps, reduced back pressure on Chevron’s deep reservoirs and increased recovery. The Jack/St. Malo deepwater project in the Gulf of Mexico is expected to yield an improvement of 10-30%, which equates to 50 to 150 million barrels of additional oil recovery.

BP has also made large investments in digital. It opened a facility at its headquarters in Houston in 2013 to house what was then the world’s largest supercomputer for commercial research. (Total last month inaugurated what it said was the most powerful supercomputer in the industry: the Pangea, which computing power of 6.7 petaflops). The Center for High-Performance Computing serves as a worldwide hub for processing and managing huge amounts of geophysical data from across BP’s portfolio. It will be a key tool in helping scientists to see more clearly what lies beneath the earth’s surface.

The Upstream Intelligence report said that ever-more precise images of the subsurface would enhance BP’s ability to find new energy resources. Thanks to greater computing power, speed and storage capacity, BP will be able to analyze massive quantities of seismic data in less time and conduct more detailed in-house modelling of rock formations before drilling begins.

“Better imaging capability will also help the company more safely and efficiently appraise new finds and manage complex reservoirs once production starts,” it summarized. “In addition, the center opens up new possibilities for research into other important aspects of BP’s business activities, from oil refining to enhanced oil recovery.”

By David W. Smith