Shale operators develop data volume advantage to compete on price

Oil price pressure is accelerating improvements in onshore production operations and supply chain processes and is thereby cutting costs per barrel faster than in a higher price environment, according to views gathered by Upstream Intelligence from across the industry.

The prolonged slump in global oil prices has been seen as a threat to the survival of the shale oil and gas industry, but the bearish crude market has prompted major advancements in areas such as data acquisition.

Based on in-depth interviews with more than 20 engineers and managers working in the US unconventional energy sector, Upstream Intelligence has gained insight into the main changes taking effect in the industry.

These changes are broadly determined by the geophysics of production in US shale plays and the methods used for onshore exploration.

Since depletion in shale beds occurs about 10 times faster than it does in conventional sedimentary reservoirs, hundreds or thousands of wells have to be sunk to maintain and expand output and this creates a different production dynamic.

An IT revolution

Currently, one main area of progress is in the acquisition and manipulation of data, rather than the heavy focus on the kind of equipment that is used.

For example, although strata may be hundreds of miles wide, some areas are more productive than others and this places a premium on well-managed data to locate and sink wells for hydraulic fracturing at “sweet spots” where oil or gas originates. 

The high number of wells associated with onshore shale drilling creates a need for systems that can handle large amounts of real-time data collected over a wide area.

This must then be converted into key indicators than can be automated and optimised by IT and distributed control systems, and presented to technicians and managers in a form that they can use to make engineering and investment decisions.

Up until now, data at a wellhead has been logged by a narrow-band SCADA (supervisory control and data acquisition) linked to a simple RTU (remote terminal unit). This data has been typically gathered by an engineer who drives to each well with a laptop computer.

Although this is still the norm, the industry is beginning to migrate to high bandwidth Ethernets that connect multi-functional programmable automation controllers (PACs).

These can be accessed and configured remotely, and can be used to perform sophisticated operations involving numerous wells, such as integrated shutdowns.

The ability to gather data in centralised facilities and to remotely control machinery in the field allows the use of automation systems to continuously adjust the way the field is being produced. For example, operators can apply just the right pressure in separators and tweak quantities of anti-corrosion agents in pipes.

4.5 million data points

Some companies that have retained their SCADA systems have succeeded in leveraging its capabilities to an impressive extent.

One oil operator has developed the ability to gather 4.5 million data points from its operations in Oklahoma and convey them to its Houston control centre using high-bandwidth connectors that operate in close to real time.

This system also allows water and carbon dioxide injection systems to be optimised, and can even supply enough quality data to allow an engineer to change from one kind of injection system to another.

Alongside the use of IT to create more detailed and dynamic models of the basin, and to keep equipment operating efficiently, some firms are developing forecasting models for important variables such as pressure within the reservoir and the viscosity of recovered oil.

There is also a consensus among engineers that the focus on production optimisation has meant that manufacturers of engineering equipment have become much more concerned with making lower cost, standardised gear, particularly for the topside of wells, and are more keen to work with operators and contractors to determine performance specifications.