In the predawn hours, Gaye Hester would make her way down the South Texas gravel ranch roads, checking on oil wells like a doctor making rounds in a hospital.
It was a time-consuming routine. Hester, who works for private oil company Welder Exploration & Production, climbed each narrow staircase to the tank’s lid, dipped a long stick into the darkness, jotted down her notes by hand, then spent the afternoon logging numbers into a spreadsheet. A well could lose hours of precious production before Hester discovered the problem and called a technician to make repairs.
Oil and gas companies have been working for years on ways to swap pencil and paper in the oil patch for sophisticated sensors and iPads, but the digital oil field initiative fell by the wayside during the flush days of the recent shale boom. That effort is gaining renewed attention during the worst crude slump in decades as oil and gas firms scramble to squeeze more out of smaller fleet of wells and workers. Since the collapse forced a slowdown in the oil patch, energy companies are taking a second look at devices, tools and software systems that promise to help them produce more for less, even if that means spending a little extra on technology while cutting elsewhere.
“We’re seeing a lot more traction now,” said Kirk Coburn, CEO of a Houston-based company that funds energy tech startups. “We will come out of this downturn with a more digital footprint than we’ve ever had.”
The industry may be known for its space-age innovations to pull oil and gas from the toughest rocks and deepest seas, but basic daily functions, such as monitoring wells and keeping track of production, remained old school, creating costly inefficiencies and pricey delays. The drive to digitize the oil field began in earnest years ago as the industry looked to improve its operations, make smarter decisions and cut down on the time employees wasted traveling between remote well sites.
But it hasn’t been easy.
The cellphones and tablets consumers embraced had to be modified to withstand harsh conditions. Remote oil fields often had unreliable cellular coverage, making it difficult for sensors to transmit information wirelessly, and it was expensive to outfit far-flung oil fields with the sophisticated technology needed to digitize operations.
Recent technological advances in software, sensors, communications systems and other digital oil field tools helped spur the initiative forward, but efforts got sidelined as high crude prices boosted profits, triggering a drilling frenzy and leaving the industry with little financial incentive to get more efficient.
“At $100 per barrel, they figured, ‘Why break something that’s working? We’re making plenty of money. There’s no need to fundamentally change what we’re doing,’ ” said Brian Richards, the innovation lead at global consulting firm Accenture. “Now, nothing is sacred. Everything is on the table, and anything that can help you operate more efficiently and achieve more production is something worth looking at and pushing forward with.”
GroundMetrics, a San Diego-based energy tech startup that uses electromagnetic sensors to take subsurface images, struggled to drum up meetings with oil executives to pitch their product during the boom times because oil companies were too busy to carve out the time, CEO George Eiskamp said. Since the downturn started, some of those firms now are seeking meetings with GroundMetrics and bringing an entire team to listen to the sales presentations, he said.
The privately owned company has snapped up new customers in the past year, locking in three big sales over a three-week timeframe, and has plans to to grow its Houston staff from three to eight and establish an office space, Eiskamp said.
“It’s surreal,” he said. “It’s like I’m waiting for someone to pinch me and say, ‘Now wake up.’ ”
Cash-strapped oil companies slashing spending and curtailing drilling plans are trying to glean as much as possible from existing investments. As the industry shies away from exploration, the investment appetite has shifted from technologies that help companies peer underground to find the sweetest spots to drill to tools aimed at bolstering production.
WellAware, an oil field monitoring and data analytics company, said it’s seen a surge of interest from customers in the downturn, helping the San Antonio-based company grow its customer base and hire more employees despite the slump.
“Our customers are coming to us and asking how we can help streamline operations, cut costs, improve production, improve downtime and improve safety,” CEO Matt Harrison said. “It’s an entirely different mindset that these customers are in today than they were a year ago.”
The company worked with Welder Exploration & Production, where Hester works, to install meters and sensors at the wellhead that monitor flow rates, pressure and temperature, and transmit that data via wireless network to Welder’s employees on their iPads, cellphones or computer screens.
WellAware’s technology has improved the company’s operations by transforming workers from data gatherers to troubleshooters, allowing them to prioritize wells that need the most attention and reducing the amount spent stuck behind a wheel crisscrossing South Texas ranchlands, said Welder CEO Raymond Welder, who is also a board member of WellAware.
“It makes a person much more efficient, and that’s fairly critical, especially in this price environment,” he said.
For Hester, who now provides support to the gaugers checking on wells out in the field, the results have been tangible.
“It knocks out the whole process of having to drive back to the office and enter data into the computer, which saves a lot of time,” she said. “A lot of guys don’t even come back to the office anymore. They go straight to the field or straight home, and come to the office only as needed.”
Digital initiatives also promise to save money, a key selling point for oil companies struggling to balance their books.
An analysis by IHS found that in the past decade, the application of digital technologies boosted output by up to 8 percent and lowered operating costs by up to 25 percent. Innovations helped lower the price tags of expensive projects, including deep-water projects that came in $1 to $3 cheaper per barrel of oil equivalent over the lifetime of the developments, IHS said.
Digital technologies also tend to be cheaper solutions that reap quicker benefits, and tend to be easier to scale across a company, said Jud Jacobs, director of upstream oil and gas research at IHS who authored the analysis. That’s why companies have continued spending money on those technologies, Jacobs said.
“I know of two or three companies that had substantial layoffs, and my contacts there that are working on those initiatives largely came through unscathed,” he said. “That’s a reflection that this is still valued within the company.”
Houston-based oil field services giant Baker Hughes, which has slashed thousands of jobs, has continued investing in digital technology, such as a system to remotely monitor and control the pumps that haul oil to the surface. Data gathered from oil patches across the globe are sent to a control room in Oklahoma, where employees can tweak the pumps’ settings to keep them running.
“Digital oil field initiatives and digital technologies are probably more important than ever because they really enable more efficient operations and you can do more with less,” said Tommy Denney, Baker Hughes’ product line manager of well monitoring.
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