In an exclusive interview with a technology innovator, Matthew Staff discovers why oil & gas needs to flow towards a Silicon Valley state of mind
In a stereotypically slow-moving industry it can often take a monumental event to force a change in tack and philosophy. For the oil & gas sector, the recent oil price crisis had the potential to be that gamechanger – a fundamental wake-up call for those who believed that digital innovation wasn’t a worthwhile investment.
Yet although tweaks have taken place sporadically, and some companies have addressed their efficiencies, there remains a hesitance to invest in enabling technologies in some quarters – a vulnerable position to adopt while all parallel industries embrace digital development. Oil companies are now being urged to ditch their traditional operating procedures, and instead adopt a ‘Silicon Valley state of mind’.
Prior to the oil price crash in the early 2010s, a handsome US$120 per barrel pricing brought an air of invincibility to the sector, and with so much wealth accruing it almost didn’t matter what was flowing through its pipelines. As those prices halved during the crisis years, companies were forced into cutting costs. But, years on, many are still resisting technology as a way to safeguard, and indeed improve the industry.
Giles Edward, chief executive officer (CEO) of the UK-based wellhead metering innovator M-Flow, sees a substantial opportunity that has been presented by the “major inefficiencies” that exist in the industry. The company’s meters have the ability to merge with adjacent technological revolutions such as big data and artificial intelligence (AI) to bring oil & gas out of its comfort zone, and into the digital era.
“Oil & gas needs to be a catalyst for change, not a casualty of it,” he says. “This dynamic can only be realised if operators begin to focus on areas that have traditionally been overlooked.”
24/7 wellhead flow measurement
Previously outsourced from a monitoring point of view – and even then only addressed in the form of a written report once a day, or even a week – measurement of oil flow wasn’t a vital parameter until tighter margins made it so.
Edward says: “If you have a dial that says ‘pressure’ on it, that needle may move all the time, but companies traditionally only ever see the needle when they turn up with a clipboard, and that can happen as infrequently as once a day, or week. There is so much data being produced at other times that could be gathered to give companies a clearer picture of their operations.”
This key area addressed by M-Flow revolves around 24/7 wellhead flow measurement: knowing exactly what has flown through a pipe and is coming out of the ground at all times. Such an approach is not so much an overhaul of outdated technology, however, as it is a completely new introduction.
“The ‘tech’ from a measurement perspective has remained the same for decades – it’s collecting everything, separating it out, and then measuring what you have left,” Edward explains. “There has been good progress in Norway where multiphase flow meters – that measure the combined flow of what’s travelling through the pipes – have been used, but most still continue to aggregate everything and then separate it, which has huge operational implications.”
This represents a sizeable gap for technology to enter and make an impact, especially in the Middle East and North America, where M-Flow is primarily targeting at present.
Edward adds: “Up until a couple of years ago, it was rare to apply the same high-end systems seen in Norway to North America’s onshore space, but with 200,000 wells drilled there every year and only evidence of 200 systems being implemented to improve flow measurement so far, there are huge opportunities for those who recognise how much better their well management can be with improved measurement.”
A shift towards digital
M-Flow’s proposition, as a technology-driven business, comprises embedding sensing systems into the walls of carbon fibre pipes, rather than in the pipes themselves. The result is a continuous generation of readings and data that are unhindered and entirely accurate, while the sensors themselves remain safely concealed away from the corrosive substances flowing through.
A complex mechanical operation at first as companies are urged to integrate such solutions with existing pipelines, Edward hopes that by forming alliances with wellhead manufacturers, the future of the industry will be addressed at source, prior to implementation.
“Nobody would dream of drilling a wellhead without pressure measurement, temperature measurement or safety equipment today, but that was the reality once. The oil & gas industry will be a substantially safer and more profitable sector once it becomes commonplace to have an efficient and accurate way of measuring what will come out the pipe,” he says. “From a commercial perspective, companies can embrace the complete solution, which comprises the meter, data communication systems, logging systems, data warehousing and manipulation through our own server, and then detailed analysis of the daily numbers and flow trends. Or alternately, individual hardware components instead.
“The important thing is that companies do begin to shift towards this digital oilfield methodology.”
Bridging the old and new
According to an Oxford Economics and KPMG report, digital oilfields could generate as much as US$1 trillion to the global economy by 2025 if capitalised upon and merged with adjacent revolutions effectively.
Big data and AI are already on-hand to help filter and analyse the data that systems such as M-Flow’s can generate, and from there a rapid snowball effect of adoption is a very real possibility.
“In North America, there are four big wellhead suppliers, catering for 90% of the onshore market. If one gains a 2% market share increase because it’s able to tell its customers that measurement systems are already built in and the data they’ve generated has improved overall business efficiencies and profitability, then within a year all of them will have a meter,” Edward concludes. “At that point, every wellhead that’s built in North America will come with a measurement system embedded and it will be an ‘opt-out’ decision rather than ‘opt-in’ that will also have the added benefits of fewer HSE incidents, and an improved environmental footprint.”
The ramifications of this evolution will be more significant than simply seeing the oil sector embrace a new state of mind. Rather, it will signify a belated collaboration and bridge between old and new, to finally bring a sense of transparency, value and accuracy to the wellheads from which all oil production flows.