OTC: Panelists deliberate future of digital oil field

May 17, 2004
Industry members of an energy roundtable debated the direction of the future path of the "digital oil field" and what role information technology (IT) would play in oil and natural gas exploration and production companies' journeys down that path.

Industry members of an energy roundtable debated the direction of the future path of the "digital oil field" and what role information technology (IT) would play in oil and natural gas exploration and production companies' journeys down that path.

The May 3 panel discussion, which was moderated by Bill Severns, head of research for digital E&P strategies with Cambridge Energy Research Associates, took place on the first of the 4-day Offshore Technology Conference in Houston.

Over the past decade, the oil and gas industry—in developing the various, separate electronic infrastructure for use in its upstream and downstream operations—was "unknowingly weaving a digital fabric" that can be further sewn together for future optimization of operations, Severns said.

The facts that today oil and gas companies have near-real time total asset awareness, real time continuous optimization of field configuration, and the ability to implement the desired configuration are no longer "futuristic ideas," Severns contended.

The ever-morphing development of digital technology, Severns noted, has eroded the geographic boundaries of operations as well as those within the oil and gas industry's organizational makeup.

On the operations side of the business, he said, the work environment has become more centralized due to the advancements of digital technology. Also, industry overall is becoming more virtual, both internally and externally. Real-time drilling is a great example, Severns explained, adding that, "It serves as a microcosm for the direction that the industry is heading in now."

Considering that the digital oil field model began in the 1990s as a "pilot operation," Severns said that it's now the "dominant way" that industry is handling the management and analysis of its oil and gas fields.

Digital technology's evolution

Digital technology has everything to do with evolving, said Donald Paul, vice-president and chief technology officer with ChevronTexaco Corp. Along the value chain, IT creates the perfect opportunity for a company's integration.

Industry has entered into a "new era" of value chain integration, Paul said, and this integration has many more pieces. First, industry is borrowing from its advancements in using IT in the downstream operations and adapting it for successful use in the upstream sector.

Second, the monitization of stranded gas through the development of LNG technologies using IT is driving further gas exploration and development, particularly in the US. Gas-to-liquids, heavy oil, and subsea processing also are driving this change, Paul said.

Industry is moving toward managing "the oil field as a factory," Paul said. The use of IT in other sectors of the industry has provided high return on capital, enhanced reliability and predictability, operations efficiency, and reduction in costs, Paul explained.

Paul noted that with a company as large as ChevronTexaco, especially with the downstream sector becoming increasingly embedded into its upstream operations, it "becomes essential" for the company to serve as operator and not to concentrate so much on the farming out of projects.

Shift in management

In order for oil and gas companies to optimize value from the use of digital technology, there needs to be a shift in the way that firms manage their E&P assets, said John Darley, director, global E&P technology, Shell International.

In its "smart fields," Shell has experienced a 10% sustained improvement in production, a 5-10% increase in recovery, as much as a 20% reduction in operating costs, and as high as a 75% reduction in workflow cycle times in its core processes, Darley said. Shell has built its digital field model around the successes seen with three major projects: Na Kika in the Gulf of Mexico, Iron Duke 19 northwest of Borneo, and South Furious 30 off Malaysia.

At Na Kika, Shell is using digital technology to control commingled production and to improve its reservoir surveillance. At Iron Duke, it is enhancing recovery through smart well control through a very complex subsurface, Darley explained, adding that in doing so, the company has delayed gas breakthrough the past 2 years. Finally, at South Furious, Shell is using real-time production technology to monitor four wells.

Smart fields are evolving the ability to bring together skills, tools, and workloads, Darley said. "Technology is not the biggest challenge," he said.

Strong IT matrix

An integrated company's effective use of digital technology should start with a strong IT base, noted Philippe Chalon, chief information officer with Total SA.

Focusing on the "hardware" of the digital technology phenomenon, Chalon said that bandwidth capabilities will continue to increase, which in turn will decrease unit costs.

"Hardware performance is, and will remain, the limiting factor" in the future development of digital technology, Chalon contended.

Internet security also should be addressed by industry, Chalon said, citing that computer viruses alone last summer cost his company $1.5 million in repairs and upgrades.

Industry scorecard

Satish Pai, vice-president, Schlumberger Oilfield Technologies, provided the roundtable's audience with an "industry scorecard," which showed where he believes that industry needs to improve with regard to its development of digital technology.

Pai said the areas where industry had made the biggest advances as of late included real-time production and reservoir surveillance. Also, industry has advanced in better planning of wells and real-time placement and control.

Areas where industry isn't making much progress include the generation of more-efficient, better-quality prospects and the real-time characterization of reservoirs, Pai said.

Areas that the industry is dropping the ball completely, Pai noted, include the seamless access to global data and knowledge and the streamlined interactions among various stakeholders.

Echoing a fellow panelist, Pai said that the biggest challenges facing industry in developing further digital technology is not technology itself, but rather people and processes.