A series of very remarkable factoids about the U.S. oil and gas industry have come to light in the past few months. Among those are:
• U.S. reserves for both oil and natural gas reached all-time record highs in November;
• The U.S. actually became a net exporter of petroleum liquids for one week that same month;
• America is the largest global producer for both oil and natural gas;
• The new USGS estimate of the resource contained in the Wolfcamp Shale in the Permian basin makes it the largest continuous resource ever measured in North America.
There’s much more, but that sampling gives you a good flavor for the magnitude of the economic opportunity the industry represents for our country these days. The volumes of available resource ultimately grow so large that they become almost impossible to adequately comprehend.
Perhaps the most impressive number of all, though, is the fact that, in the 12 months from November 2017 through October 2018, America’s oil and gas producers were able to increase the nation’s production of crude oil by over 2 million barrels per day, a rise of about 22 percent. It is a number that almost defies belief.
In October 2017, analysts optimistic about the potential of the domestic industry were projecting an overall increase in crude volumes of 500,000 to 800,000 bpd. But the upstream segment of the industry managed to more than double those optimistic predictions.
How did they do it?
Simply put, it’s a combination of a bunch of really smart people in the industry deploying an array of constantly advancing technologies. More powerful and fuel-efficient drilling rigs and other oilfield equipment; more accurate downhole sensors that allow drillers to better target the sweet spots of the formation rock as they move through it horizontally; more effective frac fluids and better completion technologies that maximize initial flow rates and expected resource recoveries. All these examples and many others have played key roles in the massive supply surge by American producers. It’s a true revolution with a pace that accelerates on a daily basis.
Equally important during this time of rising commodity price uncertainty is the fact that, at the same time they were ramping up production so rapidly, most producing companies were also trimming down their costs significantly. In this issue’s cover story, you will read about the ability of Apache Corporation to pare its lease operating expense down at its Alpine High operations in West Texas by over 50 percent in just 18 months.
One key to the company’s ability to achieve that cost saving has been through the deployment of advancing technologies. A few examples of this include: The use of remote-controlled drones to conduct site inspections; the deployment of infra-red cameras to identify and capture fugitive emissions at production and pipeline facilities; the use of digital communications that allow technicians in San Antonio to monitor oil and gas production flows, control production equipment and conduct other operations that in the past required on-site human intervention.
Indeed, the development and deployment of new technologies in the oil patch these days is happening at such a rapid pace that it is becoming impossible for those of us who chronicle the industry to keep up with it all. As an example, during the span of just a couple of weeks recently, I interviewed senior representatives at three different companies who have developed technologies that can help companies control costs and improve efficiencies in wildly varying ways.
PRT, a recent acquisition of DrillingInfo – PRT has developed an advanced machine-learning tool that has proven able to accurately predict weather and wind patterns up to two weeks in advance. Why is that important? Because electricity has long been the single biggest piece of lease operating expense at most upstream and midstream facilities. Many companies purchase power supply in advance at spot prices, and a better ability to accurately forecast the weather for a longer advance time will enable these companies to save more in their power costs. Cool, right?
AspenTech – AspenTech is also in the machine-learning business, in addition to a range of other endeavors. One of its new technologies uses machine-learning to not only monitor machine degradation, but also actually predict when pieces of equipment are about to break down. The ability to know when a piece of major equipment must be repaired or replaced enables companies to avoid major breakdowns that at times can result in major delays and cost thousands or even millions of dollars. This tool also has a flow assurance application that enables companies to anticipate and avoid interruptions in their ability to get their production to market.
MuscleWall – MuscleWall is different from the first two in that it is not a computer-based digital tool, but a physical technology that enhances the ability of companies to control surface water. MuscleWall manufactures a variety of modular barriers that can be easily set in place in a matter of hours by two-man crews for use in flood control, stormwater management, water containment, and for companies operating along coastlines, coastal erosion control. These barriers can be used in place of earthen berms at well sites, drilling sites, surface water storage tanks and even major facilities like gas processing plants and refineries.
Now, I’m an old guy who has a hard time setting up a standard cable box, and I learned about all of these technological marvels over the span of a couple of weeks. Think about what the staff in the production, drilling, operations, engineering and geological departments within the average upstream or midstream company are faced with evaluating and deploying each and every day in terms of technological tools that can help control and reduce and avoid costs.
Though it has seldom received the credit it deserves for it, the oil and gas industry has always been a “high-tech” business; a business in which technology constantly advances. So, that has not changed at all.
What has changed, though, and will continue to change is the pace at which the advances are coming. This is not your father’s oil and gas industry.
About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at firstname.lastname@example.org.