“Lower longer” is the prevailing term for oil and gas prices in what has become the “new normal” in the oil and gas market. A single dollar drop in global trade could cost exporters billions. Over the last decade, uncertainty has intensified around commodity prices and regulatory challenges. The outcome for global producers has rarely been good.
Capital outflows and sanctions from the World Bank have hit Russia, whose economy heavily depends upon its crude oil exports. The country has fallen in the ranks since 2008. Meanwhile, oil and gas exploration and production (E&P) companies from the United States, Saudi Arabia and Canada have struggled to stay afloat, despite outperforming Russia.
As a way to cope with these events, many E&P companies (at least those that have not opted for bankruptcy or distressed asset acquisition) are drilling down through operational inefficiencies.
Recently, the world’s leading oil and gas producers are setting aside big money to get to the root of these downturns. So far, it seems as though these businesses have reached a consensus that to offset production declines, embracing innovation and retaining key employees (i.e., avoiding layoffs) are essential.
The focus has now shifted to enhancing oilfield equipment and optimizing production field management to achieve greater efficiencies and manage costs. From advancements in workover rig technology to enhanced oil recovery (EOR) techniques, it seems like the new upstream sector is trying to prove to the world that it can thrive even in a low-price environment.
Tapping into Bypassed Reserves
In Canada, tax royalty relief and incentives have sparked interest in reentry drilling. Amoco Canada Petroleum Ltd. has been at the forefront of these efforts as it breathes new life to the country’s aging oilfields.
Engineers have designed re-entry technologies to enhance access to reservoirs and small isolated pockets of oil and gas, therefore reducing horizontal well costs. In geologically complex mature fields, reentry drilling, onsite technicians use inflow control devices to tap into bypassed reserves as a way to increase recovery.
Many companies have been taking advantage of the growing opportunities for re-entry wells, which has prompted the development of new reservoir management models aimed at maximizing an existing mature field’s productivity. As a result, businesses spare their organizations from shelling out billions on exploring new potential fields or engaging in costly remedial options.
Infill drilling is another cost-effective method used to access bypassed reserves in mature reservoirs where greater hydrocarbon saturations exist. In terms of remedial operations, hydrocarbon companies are using snubbing and workover rigs as a safe and simple alternative to costly well kill operations. These techniques help accelerate the expected ultimate recovery in heterogeneous reservoirs.
Oilfield Optimization: It’s All About Efficiency
On top of these developments downhole, companies are also looking at ways to improve efficiencies in central sites and facilities. Production engineers are developing approaches to solve problems in the field efficiently. Adopting a sequential quadratic programming (SQP) algorithm in real-time simulations and sensitivity analysis is one such technique used to determine the optimal production rates and well connections of reserves.
When operating complex field sites, project managers often deal with multiple conflicting goals. They can address this issue through multi-objective optimization methods and help decision-makers identify potential optimization solutions and trade-offs.
Data analytics and visualization technologies are in place to accelerate and support these decisions, eliminating what E&P companies have long been accustomed to – the “wait-and-see” approach.
Today, project engineers install advanced sensors and communication tools into oilfield and downhole equipment to monitor and manage reservoir performance. These tools have also been instrumental in increasing safety and reducing operational costs and risks in the field.
Monster Rigs and Next-Generation Well Servicing
The big move toward creating new efficiencies in field operations is, of course, an exercise in futility if well servicing equipment remains outdated. Fortunately, manufacturers and drilling operators are also pushing the limits of conventional drilling equipment to assist E&P companies in their efforts to ramp up production.
High-spec, or “super” workover rigs with robust top drives, hosting systems and pumps are now in high demand. James West, an analyst for investment bank Evercore ISI, said in an interview with the Houston Chronicle that despite the oil downturn in the United States, top companies are shelling out more cash and signing more extended contracts with super-spec rig suppliers.
These monster rigs boast a capacity to load 750,000 pounds of pipe and drilling systems with 1,500 horsepower. These rigs can drill a well in less than 10 days, which is a week faster than the average drilling time of conventional equipment. Where money is no issue, drilling technologies can achieve depths in excess of 1,200 meters.
In addition to efficiency and capacity to sink a borehole into great depths, precision and control are top priorities. These super rigs are designed to achieve high levels of stability so that the drill holes do not deviate from their planned trajectory when the turning bit and steel rods move into different layers of rocks with varying resistance.
With great horsepower comes great responsibility, and the high-spec super rig is a case in point. While a majority of oil and gas companies shave costs by laying workers off, those that have signed contracts with next-gen rig suppliers are, in fact, hiring more people. Patterson-UTI alone has hired 4,000 new workers to operate its new fleet of super-spec rigs.
Simplicity in Complexity: The Future of Upstream
Production and depletion of a reservoir depend on the successful completion and workover operations applied to a well.
Today, it’s all about squeezing out as much oil from the well as efficiently as possible, all while protecting the integrity of the reservoir, reducing site incidents and leaving minimum impact on the environment.
Because there are varying parameters by which a completion unit must operate, upstream companies must never cease to innovate. Breakthrough digital technologies, supported by hardware advancements, are being deployed in core upstream operations at a faster rate than ever. This industry development is creating new field management models and benchmarks for efficient and safe hydrocarbon well completion standards.
If you’re looking for the best way to increase efficiencies while keeping costs down for your next upstream oil and gas project, reach out and let us know what you’re working on and where you need help.