More than 8,300 professionals from 60 countries attended the 2017 SPE Annual Technical Conference and Exhibition, which was held in October in San Antonio, Texas. Conference panels and technical sessions examined best practices and emerging technologies throughout the oil and gas industry, including discussions on the role of data analytics, contemporary research and development initiatives, sustainability, automation, and recent innovations.
Here are highlights from this year’s conference.
Disruptive Drilling Technology
A panel on starting companies selling disruptive drilling technology began with the advice, “If you remember anything today, remember it is not about technology—it is about money.”
The advice from Tom Bates, an energy investor from Fort Worth, Texas, began a discussion put on by the Drilling Systems Automation Technical Section (DSATS) about starting successful companies that sell digitally controlled drilling tools. When discussing money, the panelists kept coming back to the critical, sometimes maddening role people play in deciding who gets money and profits in the end.
“Most profitable companies do not want things that disrupt” the status quo, said David Blacklaw, Shell global drilling automation lead. For change to happen, it may well require upper management to promote changes that have benefits that are not obvious to those in operations.
Even decision makers who see the potential are wary about changes at a time when mass layoffs are a fresh memory. “Automation has a lot of people nervous about their job security,” said Todd Benson, president and CEO of Motive Drilling Technologies. The worries range from decision makers who do not want to stake their job on an unknown startup to workers who see their jobs threatened.
Motive Drilling sells a directional drilling advisor, which offers turn-by-turn directions now delivered by directional drillers. While companies using it have continued to employ directional drillers, it changes what they do. If a worker sees something new as a job, “you are the enemy,” Benson said.
But there are signs that despite all the barriers, digital controls are taking over individual drilling functions. “Things have changed in the past year,” said Moray Laing, chairman of DSATS. The group that has long worked to identify and address the issues blocking the use of drilling automation has added commercialization to its task list. Laing, who recently joined Halliburton as head of Digital Solutions and Drilling Automation, said DSATS is changing what it does because drilling automation “is not blue skies anymore.”
Some of DSATS’s members are now trying to start the companies to commercialize digital controls, including one of the panelists, Andrew Bruce, CEO of Data Gumbo. The company was started to create secure databases allowing the use of multiple streams of otherwise incompatible data to analyze how to improve performance. He has come up with other applications as he has struggled to find an oil company to test it and allow the results to be reported. He finally has gotten his test, but it required a creative use for the system.
It was a critical step because “without that, companies die.” And he would like to make it easier in the future by creating a program to match drilling startups with companies that have problems they could help solve.
Espen Strom, investment director for Energy Ventures, said a company backed by the firm saved an oil company $25 million on a well over 6 months. He added, “We are still struggling to convince them to use it in other wells 4 years later,” even for wells in the same field.
Those on the other side of the deals counter that the companies selling innovation fail to see all the costs of change. “The value as seen by operators may be less because the big value seen by the inventor is diminished by other factors,” Blacklaw said.
The risks and costs associated with being a venture capital firm backing startups in the “pre-revenue” stage has convinced Energy Ventures to shift its focus to established moneymakers hungry for capital to grow.
While it is commonly imagined that entrepreneurs get rich by creating their own company, the reality is the process requires a mix of cooperation and friction with investors seeking control of the equity and operations with a goal of maximizing returns. “We are in it to build your company and sell it,” Strom said.
Electrical Waveform Technology Wins Startup Competition
A technology that captures high-resolution electrical waveforms and uses industrial machine learning software to increase uptime, improve efficiency, and optimize maintenance won the Best in Show and People’s Choice awards at a competition showcasing innovative and emerging energy technology companies.
The competition was hosted by SPE and the Rice University Alliance for Technology and Entrepreneurship during the SPE 2017 Annual Technical Conference and Exhibition.
Veros Systems won the top honors in the Startup Village competition as well as $38,500 in prize money for the awards. More than 120 companies applied to showcase their technologies in the competition and 12 were selected to present at the SPE conference. The Best in Show award was judged by a panel of industry professionals with technology backgrounds as well as energy technology investors. The People’s Choice award was selected by conference attendees. The companies were evaluated on eight criteria, including the industry’s need for the technology innovation, the market for the technology, quality of the technology, prototype or field test results, experience of the management team, market strategy, and financial projections.
Three other companies were singled out for excellence with Rising Star awards and received $15,000 each in prize money. They were:
- Rheidiant, which applies the industrial internet of things and machine learning technologies in its integrity management system
- 16S Technologies, which is developing solutions to microbial challenges
- Factor Technology, which introduced continuous, autonomous geosteering to address horizontal well issues
Other companies selected for participation at the conference were Vertice Oil Tools, QuantumPro, DataNova Analytics, Voxaya, Mims Well AS, Sinsal, 8Sigma Energy Services, and Kinetic Pressure Control. Presentations for the competition were no longer than 8 minutes apiece, with a 6-minute question-and-answer session from the judging panel.
After the presentations, table discussions took place in which participants had an opportunity to learn about several elements of being a successful new company, and expert presentations discussed roadblocks to successful entrepreneurism.
A Challenging Future
The script for the future offered by the SPE technical directors tells the story of engineers puzzling over how to adapt in the increasingly complicated enterprise of producing oil and gas from rocks saturated with unanswered questions.
The technical directors’ panel session presented interesting challenges on the frontiers of exploration and production mixed with the queasy feeling of an industry grinding through a period of deep cost reductions.
This mix was expressed by SPE Reservoir Description and Dynamics Technical Director Tom Blasingame when he said, “In reservoir engineering, the best years are ahead of us.”
Evidence of that was given in slide after slide crammed with dense lists of the challenges faced by petroleum engineers, most in unconventional formations. The opportunity to rewrite the reservoir engineering texts is an exciting opportunity for those who have remained in the industry, and Blasingame mourned the loss of many experienced people.
“There has been a loss of legacy knowledge,” he said, citing the mass departure of older engineers since prices crashed, which he described as the “great crew massacre.”
Those still working in the industry are busy managing increasingly complex processes that must be completed in shorter timeframes.
Technical reports coming from SPE’s Health, Safety, Security, Environment, and Social Responsibility (HSSE-SR) technical discipline offer advice on how to survive in a world that is both harried and more complex. One of those reports is expected to sum up what has been learned from years of workshops and webinars on process safety, and another is planned to cover the management of simultaneous operations.
“When timelines are compressed,” said SPE HSSE-SR Technical Director Trey Shaffer, what had been a linear process now is organized with work “stacked on top of each other.”
There is a lot to learn, and companies are spending less to teach it to engineers.
This has long been a concern for SPE Management and Information Technical Director J.C. Cuhna, who pointed out that “companies are really making a huge mistake when they are neglecting the training of employees just because of the downturn.”
Cunha, who advises the US Bureau of Safety and Environmental Enforcement on new technology, said he would like to see a federally funded effort to develop guidelines for effectively managing offshore operations to ensure that human factors will not affect performance negatively.
Nowadays, engineers need to know a bit of everything. Those working on completions are seeing that “cookie-cutter completions are not adequate in a conventional reservoir or an unconventional reservoir,” said SPE Completions Technical Director Jennifer Miskimins.
“More of an integration between disciplines is needed,” she said. “We have to make sure we talk to drillers.” As a result, the associate professor at the Colorado School of Mines said she is doing “more reservoir engineering than I ever did as a completions engineer.”
More Specialization
While there are rewards for multidisciplinary thinking, the evolution of the business is driving increased specialization. That led SPE to split drilling and completions into two disciplines, each with its own director. Now, those going into drilling have to make a career choice at graduation.
“One could argue that drilling has come to a fork in the road and taken it,” said SPE Drilling Technical Director Jeff Moss. While he has worked both offshore and onshore throughout his career, in today’s world drilling has become so specialized that little opportunity exists to move between the two.
Everyone in drilling feels pressure to reduce costs and work safely, but the pace and the nature of the work offshore and onshore are far different.
Yet, innovation continues to create new opportunities for engineers in the field. The growing use of unmanned vehicles on land, at sea, and in the air led to the birth recently of the Unmanned Systems Technical Section, said SPE Production and Facilities Technical Director Hisham Saadawi, adding that membership is growing fast.
What is not growing are opportunities for newcomers. Enrollment in petroleum engineering has plunged as those in record-size graduating classes have struggled to find work in the industry.
“Here we go again,” SPE Director for Academia Dan Hill, Texas A&M University, said as he described trends that mirrored what happened after the plummet in prices in the 1980s that lingered for the rest of that century.
In the coming years, the supply of new graduates will be “one-third or less” of what the supply has been in recent years, he said, adding that the decline “will lead to low numbers of petroleum engineers at a time when demand will increase.”
Faster Rollouts, Better Data
Technology development and investments were top of mind for a panel of speakers at the SPE Research and Development (R&D) Technical Section’s luncheon. Noting that R&D may be the key to survival of companies, Jon Olson, moderator of the panel and professor at the University of Texas at Austin, Petroleum and Geosystems Engineering, cited four drivers of further development: oil price, big data, automation, and environmental footprint.
A panel comprising representatives from a university, two operators, a service company, and a technology-focused investment firm offered views on the status of technology and its role in the future.
Introductory remarks were made by Olga Koper, energy business development and sales leader at Battelle and a director of the R&D Technical Section. She noted the growth of interest in all things technology-related, with the technical section’s membership now standing at nearly 4,000. When the section was launched 11 years ago, the number was 46.
Shantanu Agarwal of Energy Ventures, an investment firm, said, “It’s a pretty unique time in oil and gas investment.” Among the types of investments he observes are sensor technology, which is now found in places that were previously unfeasible, such as extremely harsh environments. Drones and sensors are increasingly paired in the offshore rig inspection market, and satellite data are being used for activity competitive intelligence. Monitoring a competitor’s frac truck locations and the movement of equipment and rigs is not uncommon. He also cited investments in user-interaction devices, such as Google Glasses, and nanotechnology. Not to be overlooked are investments to improve existing technologies such as pumps and measurement while drilling—innovation in these is often inspired by advancements in other areas, Agarwal said.
Offering an operator’s perspective, Lucian Wray, vice president of engineering technical services at Apache, described the company’s three-pronged approach to developing technology. Internal or homegrown development involves “collaboration to work on the right things and deliver to the right people,” he said. Partnerships with universities and national laboratories in joint industry projects or directed research are another means the company uses. The third is investment in private equity funds. Wray said that Apache’s involvement as technical advisors provides insight into startup companies and can sometimes lead to its participation in trials for the technologies.
“ConocoPhillips made a dramatic shift” in its focus about 4–5 years ago, Greg Leveille, chief technology officer of the company, said about moving from “more classical R&D” to today’s “low-cost experimentation.” Initial testing of technology is completed within 6 months, with rollout to the field within 18 months. He added that the combining of data analytics with other sources of information reveals richer information for decision making. “If you think you’re optimizing fracs, you really aren’t. Combine [your existing information] with data analytics to see real results.”
Reassessing Automation
Mathias Schlecht, vice president of enterprise technology at Baker Hughes, a GE company, said, “We have the data and need to get the right data quality and density.” Using the existing data to determine what isn’t working or what has a limited effect is critical. He said, “There is no ‘silver bullet’ at this time. We often just don’t have enough information available.”
As automation technologies are advancing, their roles in the oil and gas industry are being reassessed. Although automation applied to drilling systems is gaining ground, its role in taking over routine tasks being done manually should not be overlooked. Schlecht said efficiency gains and reduced safety risks can go hand in hand with proper automation. In some cases, automation retrofitting—adding automation to existing assets—may be more economical than requiring replacement with a new asset. As an example, Leveille said that ConocoPhillips is finding ways to put sensors on topdrives to calibrate what is going on downhole.
Adapting Known Ideas Intelligently
Even as the oil and gas industry looks for the next great idea to propel it forward, it should constantly consider past innovations for inspiration. “The point is, you don’t have to look far for new ideas,” said Vicki Hollub, president and CEO of Occidental Petroleum Corporation, who delivered the chairperson’s luncheon speech on the first day of the conference, the key address underlining the 3-day conference theme.
Hollub cited three technologies that, although not new, have played a significant role in upstream development not only when they were introduced but in the present day. Seismic imaging, horizontal drilling, and hydraulic fracturing all have succeeded in revolutionizing upstream practices over the years and even to this day, she said. Hollub’s speech built on the conference theme of “looking back to move forward.”
“The use of these technologies together has had a powerful impact on our industry. In fact, the shale revolution, which has allowed the US to become more energy independent, would not have been possible without advancements in these three technologies,” she said. “We are seeing the benefits of all three of these technologies at Occidental, most recently in our Permian Basin position.”
Seismic imaging is about a century old, but improvements have made great advancement possible, Hollub said. Advances in seismic helped Occidental develop key properties in the Permian Basin, the Cano Limon field in Colombia—a “game changer for both Occidental and Colombia”—and the Middle East.
For example, a 3D seismic survey taken on a Middle East field in 1996 showed 15 faults; in 2005, the map showed the same anticline with improved imaging indicating 400 faults. “That helped us understand the complexity of the reservoir,” she said.
“Think of it this way: In the 1970s and 1980s, we could only identify the building. Now we are getting closer to seeing the floors. In the future, we hope to be able to see the furniture.”
Hollub presented several slides showing how technologies have developed over time to identify “sweet spots.” One example involved using seismic inversion, transforming seismic reflection data into a quantitative description of a reservoir.
Economic and Environmental Sustainability
Five panelists discussed “Sustainable Oil and Gas: Improving People’s Lives” at the opening session of the conference. The panel comprised Franklin Orr from Stanford University; David Hager, president and CEO of Devon Energy; Lorenzo Simonelli, chairman and CEO of Baker Hughes, a GE company; Khaled Al-Buraik, vice president for Saudi Aramco; and Deborah Wince-Smith, president and CEO of the Council on Competitiveness.
Differentiating between economic and environmental sustainability, Hager praised the industry’s environmental efforts. “From an environmental standpoint,” he said, “I think the industry does a good job. We’re members of this community here in this country and the world community that wants to do the right thing.”
Economically, the panel suggested that the future of natural gas is secure because of its use in electricity generation. Future uses of oil, however, may need to be reconsidered in light of advancements made in electric vehicles. “We’re trying to reduce the percentage of oil in the fuel sector, transportation sector,” Al-Buraik said, adding that oil will be used increasingly as manufacturing feedstock. “This will continue the sustainability of the industry.”
The panel began its discussion by pointing out that the digital revolution and management of the data collected are key drivers toward sustainability. “We can really revolutionize the way we think about this using sensors and data,” Orr said. “We are entering sensor world.”
The challenge, however, is to make the vast amounts of data useful. “We need to do a deeper investment ourselves in understanding how to sense, manage, and optimize very complex linked systems of systems.”
The light of the digital revolution, the panel noted, while feeding innovation, also casts a shadow. “The shadow, of course, is cybersecurity,” Wince-Smith said. “I think this sector, in particular, is very, very vulnerable and we should talk about that.”
Another challenge addressed by the panel is the continued recruitment of talent. “There just is a huge opportunity space here,” Orr said, “for smart young people to join us in the challenge of making a cleaner world energy system that meets the needs of all Earth’s people.”
Building on the idea of a cleaner energy future, Orr addressed climate change. “The evidence for human-induced climate change, in my view, is incontrovertible,” he said. “The only remaining questions are how much and how fast.”
Women in Energy Committee Encourages Career Success
One of the major focuses of the 2017 ATCE was the changing role of women in the oil and gas industry. With more women entering the professional and technical ranks, a new scenario is unfolding within the industry on a global scale. To underline these developments and the opportunities they present, SPE’s Women in Energy (WIN) Committee hosted a special session entitled “Own Your Future.”
Introduced by Nihal Mounir of Advantek and Amber Sturrock of Chevron, the special session featured keynote speakers as well as six roundtable discussions that allowed attendees the opportunity to discuss a variety of career strategies and soft skills with established mentors who have experienced industry success. Roundtable topics included nonverbal and spoken communication, the choice between the technical and the managerial career track, and developing emotional intelligence. Discussion leaders were drawn from a variety of entities, from major service companies to professional-development firms.
WIN was founded in 2016 by Maggie Seeliger of SNC-Lavalin in response to a challenge by incoming SPE President Janeen Judah for women to form a professional organization within SPE. The committee grew so quickly that within a year it had been granted approval as a formal SPE standing committee. “We have focused on quick wins, working with existing committees, chapters and sections, and the Board, including successfully launching our first event at this year’s ATCE,” Seeliger said. “We have a strong group of advisory members who support and sponsor our efforts, and we now have members in Australia, India, Egypt, Nigeria, Saudi Arabia, the United Kingdom, Poland, and the US, among others.”
Keynote speakers included Vance Scott of Ernst & Young, who covered the industry outlook and the implications for women within it, and Melody Meyer of Melody Meyer Energy, who discussed the takeaways that she had gathered in a 38-year career in oil and gas that began when women in middle-management positions, let alone C-suite roles, were a rarity. Stressing the importance of charting one’s career ahead of time with the goal of gaining positions that will add value to a company’s profile, Meyer recalled an important moment in her professional development toward the beginning of her career. After dining with a group of male colleagues, she opened her fortune cookie to find the unforgettable advice that “women who seek equality with men lack ambition.” Meyer still keeps the small slip of paper at hand.
WIN co-chairs Mounir and Rita Okoroafor of Stanford University discussed the important role of mentoring played by the committee during events including the special session. Mounir noted that she was “totally blown away by the incredible group of women that were brought together and how they could relate to each other despite their different backgrounds,” adding that the primary goal of WIN was to inspire women to “gather their strength and courage to keep pursuing their dreams.” Okoroafor believed the roundtable format to be a particular strength of the session: “The general networking and experience-sharing has been invaluable in developing new insights and opening up new doors, both personally and professionally.”
As attendees build on the knowledge and contacts they gained at the session, WIN seeks to further pursue its five primary objectives through further events and growing resources. These objectives include attracting women into science, technology, engineering, and mathematics; creating and marketing women’s programs within SPE; promoting women’s leadership roles in SPE; connecting women in technical and leadership positions; and promoting diversity as an industry goal.
The session closed with door prizes—and, more importantly, an atmosphere of support and strength. “Owning your future is really daunting,” Meyer said. “It requires a lot of self-development and a lot of courage, but it provides great rewards.” With its first ATCE event, WIN has further established its important role within SPE as women continue to strive for the top levels of industry achievement. “Having the first WIN event at ATCE was a dream come true,” Mounir said. “The energies released through open sharing among women, helping other women to succeed, were truly exceptional.”
JPT staff Chris Carpenter, Adam Wilson, Stephen Rassenfoss, Stephen Whitfield, John Donnelly, and Pam Boschee contributed to this report.