Do you think low oil prices will affect the ongoing technology developments that are aimed at tackling the challenges the industry faces, particularly those related to unconventional, deep, and ultradeep offshore exploration?
I think, on the contrary. I do not view what is happening now as a downturn; I see snow coming after a nice bubble. In the last 10 years, we enjoyed very high prices, which made us a bit lazy intellectually, as everybody was doing well.
The industry as a whole has a cost issue, and it needs to be solved, but this cannot be accomplished just by cutting costs through laying off people, etc. For example, in unconventional plays, we need to go back to the basics to understand the science of it, because despite the fact that we drill fast, much of what we do is still not very efficient. Nothing is as inefficient as drilling, fracking, and completing a well, and then not producing it, or having half of your zone not producing.
This is not about technology, but it is about going back to basic science to understand why, when you drill a well and completely frack it, it does not flow. We have always called it reservoirs. I think that is a misnomer, because reservoir is about permeability. We measure conventional reservoirs in darcies. Unconventional formations are so low in permeability that the standard darcy measurement cannot explain the ability of fluids to flow through them. The only way to get these rocks to flow is through hydraulic fracturing. Yet, each time we frack, we create a little artificial reservoir that is unstable.
We do not know which part of that artificial reservoir is flowing naturally, or how much the slipping fracture is contributing to the flow. We do not know how the artificial reservoir we have created functions. If we do not understand that, it will be extremely difficult to become very efficient.
Getting back to the basics should be followed by developing the right technology to solve the issue. We can apply this to deep water. In drilling, for example, if we want to be more efficient, we must move to automation. The largest share of drilling cost is rig time. Every time we perform an intervention, it costs a fortune. We need to view completions and subsea systems holistically. Just making them bigger and heavier is not the solution. We need to develop systems that can survive for the long term. We need systems that do not need frequent intervention; we need to completely review everything.
Our new Hammerhead system, which we introduced during OTC (Offshore Technology Conference), is considered the industry’s first ultradeepwater wellhead-to-reservoir completion and production solution. This is just the start of the future of smart ultradeepwater solutions. If you look at this new system, it has a completion that can survive up to 20 years, and it is intelligent. “Intelligent” does not just mean going from hydraulic to electrical; it means that you have the right sensors. You can adapt, because, over 20 years, all reservoirs will change, and the intelligent completion will adapt itself. This is the start of a long journey.
What are the key technology solutions that Baker Hughes is developing? When do you expect to commercialize these solutions?
We are an integrated oil service company, and we work on all solutions. In deep water, we work on what drilling will look like in a few years in terms of efficiency. How can we slash the cost of intervention? We are working on these and many other technology solutions to the issues our industry faces.
The exploration and production (E&P) sector can be conservative in using new technology. How do you persuade companies to adopt new solutions in their fields?
The industry has a huge issue with cost, so if we develop new solutions that can reduce cost, companies are more likely to adopt them. With low oil prices, I think things will change, and if the technology providers come up with better solutions, the industry players will adopt them.
Is there any particular breakthrough that you have made in your technical center in Dhahran, Saudi Arabia?
We decided to make our Dhahran Global Technology Center a geoscience center, where we focus on two main subjects: unconventional geoscience and long-term flow assurance. We need to enhance our understanding of unconventional geoscience, because during the boom, we always opted for the fastest solution, but now we must focus on the best solution.
The second area of focus at the Dhahran center is the impact of corrosion and scale on flow assurance over the long term. We started addressing this issue a few years ago, and it will take time to achieve the desired results, but we are making excellent progress. The center is unique in the world, and we are positive about it.
In geoscience, we are putting together a simulator that allows us to simulate what is really going on in 3D. This is a huge advancement, as it does not go through all the short cuts.
We are also seeking better geoscience answers from a small, mobile lab that provides answers while drilling directly in the field, so you get all the data processed—and all the answers—by the time you finish drilling.
How would you describe your collaboration with national oil companies (NOCs) in terms of technology development?
For many years, collaboration between service providers and NOCs in the Middle East was based on, “You [NOC] fund the research, and we [service provider] conduct it for you.” Now, we are trying to move away from that model, as NOCs have launched their own R&D capabilities. That means that we can develop stronger knowledge locally at the perfect time. NOCs are gearing up their own research, and we can collaborate with them. We can go away from “fund me” to “collaborate together.”
Are you involved in any R&D project with NOCs from the Middle East?
The 3D fracturing simulator I mentioned earlier is a large project where we are collaborating with a major NOC.
What makes R&D a reality for NOCs in the Middle East (or elsewhere)? What are the key factors involved?
If they want to be successful in their R&D drive, companies in the Middle East should focus on the human factor. They need to persuade people to stay in the region to do research. Ten years ago, I attended a gathering of Middle Eastern MIT graduates. Out of 150 graduates, only a few were still based in the Middle East. R&D will not be sustainable in the region until Middle Eastern countries start recognizing that.
I researched academia in the Middle East, mainly in the 12th and 13th centuries, and was impressed to find out that it once flourished, similar to the current situation in the United States. This is not the case today, but if countries recognize it now, a renaissance is possible. What we can do is build tech centers, develop technology in place, and participate in developing academic centers, such as the Petroleum Institute in Abu Dhabi, the Texas A&M University in Qatar, King Fahd University (of Petroleum and Minerals), etc.
Generally, what I tell people from the Middle East about unconventional resource development is, please learn, but do not copy from the US, because the infrastructure in the US is more extensive than in the Middle East and North Africa region, and that will significantly impact development.
How do you accelerate innovation in the E&P sector?
In bubble time, even mediocre organizations do well. This time will be different, because if we do not innovate, we will vanish. The world is changing, and our industry must change with it. In the short term, we need to rescale in such a way so as not to let good people go. If we can do this, I see many opportunities for the long term.
What are the major technology trends that you expect to appear in the next 5 years?
As I have mentioned, we need to go back to basic science and focus on why things happen rather than how they happen. The next big trend I see is integration/automation/intelligent systems. We cannot continue drilling wells the same way we did 20 to 30 years ago; we need to go to the next level. Drilling now requires intelligent automated drilling. How do you do that? How do you get the data? How do you get an algorithm to respond faster? How do you get new drill bits that are adaptive?
Also, I believe the industry is going to data reach. Up to now, the consensus has been that data reach means “big data.” Actually, this is just a small part of data reach. All data must come from something. Metrology, which is at the center of measurement, will be very important in the next 5 years in helping determine how we process and use data.
Mario Ruscev is former vice president and chief technology officer of Baker Hughes. He left his position with Baker Hughes on 24 September. He has more than 30 years of experience in technology and operations in the oilfield service industry. Before joining Baker Hughes, he was the chief executive officer (CEO) of Geotech Seismic Services, a Russian seismic company. He previously was CEO of FormFactor, a maker of semiconductor testing equipment, and spent more than 20 years at Schlumberger in a number of senior roles in France, the United Kingdom, and Norway. Ruscev is a director of the Global Carbon Capture and Storage Institute. He holds a doctorate and a PhD in nuclear physics from the Pierre and Marie Curie University in Paris and Yale University, respectively.