The oil and natural gas industry probably isn't as far along as it should be regarding advances in using digital and information technology (IT) to assist in the exploration for and production of oil and gas. Nevertheless, industry has made great strides in using IT and digital technology to monitor, control, and optimize its E&P operations.
Regarding digital E&P, one of industry's outstanding challenges is "how to craft a coherent vision," noted William Severns, senior director with Cambridge Energy Research Associates. Severns moderated a panel of chief information officers from three oil and gas firms—two majors and one independent—at CERA's annual CERAWeek analyst conference Feb. 11 in Houston.
Coherence, Severns noted, has been so elusive probably because of the complex nature of using IT and digital technology in the E&P sector.
Panel participants took turns ticking off their respective companies' business strategies, successes, and disappointments experienced within the digital E&P area.
Majors' view
Digital E&P got a relatively easy start by "riding on the back of the internet revolution," according to Joseph R. Straccia, CIO and strategy and planning manager, for Shell International E&P. And now, "IT is increasingly integrated into the production life cycle. IT has moved right into the heart of the reservoir," he said.
With 23 years of experience in the oil and gas industry, Straccia said he has seen certain time and cost-saving benefits realized through the use of digital E&P technology, including faster data interpretation as well as the reduction of human intervention in monitoring wells, which in turn reduces a company's health, safety, and environmental risks and costs. For example, a lot of safety issues arise when employees are driving around in the desert in the Middle East or are being transported to offshore platforms, he said.
Straccia cited Shell International's use of fiberoptic "packers" used to shut out water production in a multilateral well. By using the technology, at the touch of a button, the operator can close off certain laterals that would otherwise produce water, hindering oil production. Controlling the well in such a way, Straccia said, oil production in one well increased from zero to more than 1,100 b/d in 24 hr.
What's more, he added, the well site can be controlled remotely. "Where you are is irrelevant anymore," he said. And the development curve for digital E&P is not going to "flatten out," Straccia noted, but rather it will rise exponentially. The key technologies are already here, Straccia said, adding that the secret is to commoditize them as early as possible.
One of the more detrimental trends regarding the advancement of digital E&P has been that, in the last 20-30 years, many E&P firms haven't invested heavily enough on the operations side of the business, noted Lynn Chou, ChevronTexaco Corp. CIO, North American upstream. One reason that the full-fledged "digital oil field" might be having trouble picking up momentum, she suggested, is because of the diverse practices used by various companies worldwide.
Chou said that as the "paper trail" starts to become a thing of the past for many E&P firms, they should stay focused on execution and accountability and should standardize operations where it matters most, such as in booking reserves, for example.
Independent view
Voicing an opinion from the perspective of a large independent E&P firm, Mario Coll, CIO, information systems, with Devon Energy Corp., said one issue—"improved decision-making"—comes up every time digital E&P is mentioned.
There is no single integrated solution when it comes to using digital E&P to optimize operations, Coll observed. When confronted with the abundance of geologic and geophysical data, the most successful companies will know best how to leverage these data, both internally (in areas of drilling, geology, land, and accounting) and externally (partners, service providers, data vendors, and regulatory agencies).
Technology is not the challenge, Coll contends. Industry has so much more to gain by "using technology well," he said.
Digital applications and IT provide opportunities, Coll said, for data standardization, open environments, application integration, collaboration, and faster and more-improved access to data. Partnerships among companies, Coll added, will have a major influence on overcoming barriers to exploiting these opportunities. Also, the outsourcing of nonstrategic functions within a company will become more commonplace, Coll noted, so that E&P firms can concentrate on their core business: finding and producing oil and gas.