That Was Then, This Is Now
In 2004, US oil production was in decline, Facebook did not exist, and attitudes toward climate change were in flux. In years since, what has happened—and what’s important for the oil and gas industry of tomorrow?
This is not my first JPT editorial. In fact, it is more than 16 years since that was published—sufficiently long ago that I initially put my invitation to write this piece down to an error. When it became clear that was not the case, I wondered what I should use this opportunity to say.
I had entirely forgotten what I had written about in February 2004. Reading that editorial again was slightly uncomfortable, and I found myself wincing at parts. Setting that discomfort aside, when I thought about when the piece was written, as much as what I had said, I was struck by the parallels and contrasts with the world that we live in today. That insight led me to test what I believe to be important for the oil and gas industry of tomorrow.
Compared to 2004 I am, broadly speaking, much the same; perhaps a little wiser. I still have a keen interest in (my words), or pointless obsession with (other people’s words), fonts, text editors, pre-1980s programming languages, and units of weights and measures. I could add more to this list, but I don’t want to come across as too nerdy. While I have remained constant, at least in spirit, some things were profoundly different at the start of 2004.
US Oil Production Had Been in a Long Period of Decline. During 2003 the US produced around 5.6 million B/D of crude oil, including lease condensates. Production had been declining steadily from its peak in the mid-1980s. In my editorial I wrung my hands at the slow pace of uptake of methods to improve well productivity and drive down well costs. As far as the US was concerned, I needn’t have worried: a productivity revolution was underway that would profoundly affect not only the shape of the US oil industry, but the supply/demand balance of the entire world. The factory drilling of highly stimulated horizontal wells took US crude production from 5 million B/D in 2008 to more than 12 million B/D by the end of last year.
Facebook Did Not Exist. Facebook was launched in February 2004. Gmail was announced in April the same year. Twitter was not “a thing” until 2006. In a world where something has become so pervasive, it is hard to imagine that the term “social media” had no meaning for most people in 2004. Today, social media is deeply entrenched in our working practices: it is central to the way that companies communicate with their employees and with the public; it provides the means by which we advertise and apply for jobs; people use WhatsApp groups to collaborate on projects because it is better than the tools provided by their employers. The impact upon our personal lives is perhaps even more dramatic. Although the positive influences of being hyperconnected should not be underestimated—a point I’ll come back to later—cyber-bullying was no real cause for concern in 2004, nor was the impact of social media on major political events.
SARS-CoV Did Not Have a Number. By the end of 2003, the SARS epidemic had been reduced to a few sporadic outbreaks. The coronavirus genome that caused the disease had earlier been classified as SARS-CoV. Today it is known as SARS-CoV-1 and its baby brother, CoV‑2, is currently wreaking havoc across the world. At a time when the oil and gas industry was already wrestling with oversupply, COVID-19 has managed to destroy demand by an unprecedented level, and the oil and gas industry has been plunged into another downturn. I hear people using phrases like “the coronavirus fog is lifting,” but I’m not so sure—I think we have just adapted rather quickly to working in the fog.
Attitudes Toward Climate Change Were in a State of Flux. To be fair, attitudes today are hardly a consensus, but things were still very different in 2004. The Kyoto Protocol of 1997, which agreed on legally binding emissions cuts for industrialized nations, had still not been ratified. The oil and gas industry could largely carry on regardless, with the voices of climate change activists being too quiet or too far away to have any material impact. Today the global politics concerning climate change has, if anything, become more intense, but public opinion has shifted markedly. Irrespective of our individual views, the oil and gas industry is being forced to adapt by attitudes to climate change. I’m not trying to make a political point—I’m just stating the obvious.
I am writing this article in my house, looking out of the window into a sunny garden, under lockdown in the UK. I feel like I’m in the eye of a storm, which has already battered the industry on its way through and will, no doubt, still do further damage. However, I’m nothing if not persistent, and after more than 30 years of working in oilfield technology, I’m not going to give up now.
I don’t feel at all self-serving when I say that the application of technology will continue to transform the oil and gas industry. Nor am I embarrassed about using the tired cliché that necessity is the mother of invention. Indeed, I’ve watched as the past few months of lockdowns and travel bans have changed the way that people work.
The world’s information networks initially groaned under the strain of supporting so much video-calling, but that strain was shrugged off quickly. Microsoft reported that more than four billion minutes of Teams meetings happened in a single day in April, up from a previous record of 900 million minutes in mid-March. Although the effect on wellbeing of enforced isolation is a cause for concern, for some people the improvement in the quality of their working life has been a revelation.
On reflection, recent events have reinforced my opinion on what needs to be done—at least in the areas that my colleagues and I have any ability to influence—and optimism about that making a difference.
Reduce Footprint. Whether due to lack of bed space, travel restrictions, or the current need to remain socially distant, we need to use fewer people to do jobs at the wellsite. Indeed, we need to use less resources in general. The oil and gas industry is being forced to reduce its footprint, in all senses of the word, and that is a necessity that we should turn into a way of working. As the past few months have shown, technology has a clear role to play: better connectivity, better remote operations support, better data gathering leading to better answers—it’s all doable.
Upgrade Existing Equipment Through Retrofitting. Our industry is characterized by huge amounts of capital equipment, much of it obsolete. In many cases, as a matter of policy, that equipment is serviced only by the original manufacturers who simply keep it functioning. We can do better than that.
We can improve our stewardship of brownfield assets, leaving much of the original equipment in place, by retrofitting new components that enhance performance, reduce inefficiency, and provide better diagnostics. Additive manufacturing will become increasingly important. Lumps of dumb iron can be replaced by printed structures—where internal complexity reduces waste and cost—made as required, rather than kept in overstocked warehouses.
The pace of change in this area is probably going to be limited not by technology, but by policy. It needs us to rethink the supply chain, bursting the misapprehension bubble that a policy of using original equipment manufacturers to service old equipment is the best way to ensure quality and reliability. It isn’t—it increases cost and stifles innovation.
Prepare To Abandon. Nothing stands still; there is always some transition under way. However, the oil and gas industry is not going to suddenly die, no matter how much some people might think that it should. Indeed, it would be an environmental catastrophe if it did. As the world becomes increasingly electrified, the oil and (particularly) gas industry is going to play a key part in this transition.
Nevertheless, there is an enormous amount of infrastructure that will need to be decommissioned. The anticipated costs of that are currently eye-watering and need to be reduced without compromising the quality of the end result. There is great scope for innovation, such as new well-abandonment methods, and better pre-abandonment surveys that inform planning for final decommissioning. All of this should reduce the risk of unforeseen problems, which tend to cause abandonment costs to be heavily skewed toward significant budget overruns.
In closing, despite the current uncertainty and recognizing that this is a difficult time for many people, I believe there is much to be excited about. I’m not worried about getting old—I plan to do it with great vigor. I think the oil and gas industry will do the same.