Will oil ever return to $100 per barrel

Louise Smyth

Stuart Large explores how technology is reshaping the oil & gas industry

When the markets closed on Friday, July 11, 2008, the price of oil had reached a record high. Yet soon afterward, the price of oil suffered a catastrophic collapse. The bubble had burst.  

In the aftermath, oil and gas companies began scaling back. Projects were postponed, operations came to a halt and more than 250,000 workers were laid off. Over the past decade, global oil prices have remained in a constant state of flux. A bounce followed by a fall. Forcing those in the industry to operate on shifting sands.

For the companies that have survived these turbulent times, it’s become a case of adapt or die. When profit margins were healthy – and price per barrel exceeded US$100 – companies focused on maximising production and increasing output. And that made new approaches and technological innovation a low priority. When the price of oil plunged, priorities shifted to cutting capital expenditure.

The industry needed to regroup, to strategise. It had to figure out how to cut costs while boosting production efficiency.

The industry struggled on with minimal investment for a few more years. For engineers, lack of investment had seen innovation stall. Companies continued to rely on their existing equipment, doubling-down on the assets they already had in place. Asked to do more with less, engineering frustration intensified as new data-driven analytics tools and technologies came to market. But the industry was falling further behind.

Today, as technology continues to revive, rejuvenate and reshape legacy industries, oil and gas companies are finally beginning to make long-overdue investments in new technologies. Having been slow to digitalise, in comparison to other industries, oilfield operations are transforming. With prices somewhat stable, experts and analysts believe the industry is in the throes of a technological revolution.

The general consensus among analysts is that producers are unlikely to ever see prices return to US$100 per barrel. So, to survive in the era of cheap oil, companies will need to invest more and more in technologies such as artificial intelligence (AI), distributed acoustic sensing (DAS) and automation processes.

It’s imperative that producers capitalise on the business and production intelligence that such technologies offer. Oil and gas companies are no stranger to big data, pioneering its use in the 1980s and the 1990s. But to stay on top of production – and to gain a greater insight into the status of their assets – companies should be combining technologies such as AI, DAS and cloud computing to deliver efficiencies throughout their operations.

The Internet of Things (IoT) has changed oil and gas operations – with engineers now having access to everything from data analytics software to computing applications, communication networks to cloud services. These tools enable them to target wells more precisely, analyse reservoir models to enable production, maximise an oilfield’s lifecycle and automate procedures that can make oilfield operations safer, more efficient and cost effective.

When it comes to drilling and completing new wells, engineers are relying more and more on software and sensors to determine how best to proceed. It can help them locate sweet spots in the formation and optimise the use of sand, water and chemicals to maximise production output. One of the most sophisticated technologies offering such insight is DAS. The technology converts a single fibre optic cable – which is run either inside the production tubing of the well or outside of the casing – into a network of highly sensitive, individual vibrational sensors.

Its use is not just restricted to new wells either, engineers can deploy it in existing wells through various intervention methods, such as: wireline, slickline, carbon rod and coiled tubing, and the new Well-Sense FLI tool. This means that it can be employed across an entire oil field or shale play. For engineers, it enhances a number of downhole procedures, including hydraulic fracturing monitoring, well integrity, sand detection, production profiling and borehole seismic surveys.

The faster oil and gas producers integrate digital technologies into their operations, the further they can reduce costs, enhance efficiencies and
boost production.

Stuart Large is with Fotech Solutions

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