The effect of technology on unconventional resource development might be the biggest story in the oil and gas industry ever. And that story is still being written.
In the United States, unconventionals will help push crude oil production to a record average of 10.8 million barrels a day in 2018, according to the U.S. Energy Information Administration.
This huge increase in U.S. crude production, driven by technology, began in 2009 and has persisted despite one of the most significant industry downturns in history.
At the upcoming Unconventional Resources Technology Conference in Houston, a panel of industry experts will discuss the most important current and emerging technologies in unconventionals.
The July 23 session, “Technologies That Will Make a Difference in Unconventional Reservoir E&P,” will examine the state of traditional unconventional reservoir technologies and explore what new technologies could become game-changers for the industry.
Chris Spies, vice president of geoscience and technology for Concho Resources in Midland, Tex., will participate on the panel.
Spies said the most important emerging technologies in unconventionals are “those that help us learn about short- and long-term production of oil, gas and water, and those that help with efficiency. I think a lot of them are small, at-the-margin things that add up to a much bigger thing.”
He noted the cumulative effect of many advances in technology as unconventional resource development has progressed in the United States over the past decade.
“I truly believe the whole adds up to so much more than the sum of the parts – the gestalt of unconventionals. And I believe that there’s a lot more ahead. The initial exploration phase is over and we’re finding out there is so much more to be learned,” Spies said.
Others scheduled to participate on the URTeC panel are:
Yanni Charalambous, vice president and chief information officer of Occidental Petroleum
Hege Kverneland, corporate vice president and chief technology officer of National Oilwell Varco
Chris Cheatwood, executive vice president and chief technology officer of Pioneer Natural Resources
Five years ago, the industry was interested in quantifying the hydrocarbons-in-place stored in shales for unconventional production, Spies said.
“This meant we had to solve for the mineral constituents of the entire rock, including the organic matter/TOC, clay, even pyrite,” he noted
Other pursuits at that time included imaging nanopores or pores that were previously unaccounted for, using core analysis of organic mudstones and finding ways of better measuring permeability – one thing the industry still isn’t very good at, Spies observed.
Today the industry is asking, he said, “How much of the hydrocarbons-in-place are movable?”
“It turns out some of the core and log analysis is fooled by solid or immobile hydrocarbons. Advancements in NMR (nuclear magnetic resonance spectroscopy) and geochemistry are helping solve this problem,” Spies noted.
Beyond ‘Pump and Pray’
In unconventionals now, the industry is putting increased emphasis on geomechanical measurements – core, log, seismic, etc. – to analyze how the rock breaks, he said.
Also, the industry is developing techniques to better understand the role of natural fracture systems and bedding boundaries/barriers, he observed.
For the geoscientist, technology innovations that contribute to a knowledge of the subsurface in unconventional resources are always meaningful, explained Spies.
“Any technology that is able to be incorporated back into your digital model of the subsurface is very important,” he said.“The biggest thing for me – and it’s not really a geoscience thing – the fiber optic sensors have been really interesting,” he added.
In addition to advances in petrophysics, the industry has gained an improved understanding of geomechanical modeling in unconventionals and has seen important, new contributions from geochemistry, Spies noted.
“In the early days geochemistry was more set on maturities, and today it’s more about oil typing to better understand spacing,” he said
Horizontal drilling and hydraulic fracturing kicked off the resource-play boom, and Spies thinks continuing technological development in both areas has been the main contributor to the continued success of unconventional development.
“I would say (innovation in) drilling and completion technology is the biggest needle-mover, because without that none of this could have happened,” Spies said. “And understanding the subsurface context makes it or breaks it.”
In hydraulic fracturing, the innovation of “having isolation between each of your fracs was a huge step,” he noted.
That helped the industry move away from what Spies called “pump-and-pray” stimulation to a much better understanding of fluids and proppants “and tighter cluster spacing, all of which resulted in higher fracture density and improved recovery factors,” he said.
Concho Resources works in a variety of unconventional resource settings in west Texas and southeastern New Mexico. The company is organized into asset groups and emphasizes innovation, Spies said.
“Primarily the way we come at it is to democratize the technology,” he explained
“First you have to find the right tool. Then you have to purchase and implement the tool – and that can be an expensive proposition. Then you have to provide access for a whole group of people,” he said.
Spies hesitated when asked to identify new technologies on the horizon that will affect resource development.
“We’ve been pretty poor predictors of that, so we believe in constantly tinkering. We say, ‘Technology begets more technology,’” he said.
Remarkably, a collapsing oil price and serious industry downturn did not impair technology advancements for unconventionals. Instead, companies tried harder to achieve production improvements and operational efficiencies.
In the downturn “a lot of innovation happened, and the mindset changed, too,” Spies said.
“Another thing that was happening at the same time was that the scale of the development projects got larger. Now we’re looking at 20 wells in the same one-mile or two-mile area,” he added.
In the unconventionals arena today, “on balance, the mode is switching to pretty intensive full-field development,” Spies observed.
He compared the pace of technology development in unconventionals to Moore’s Law in computing. Moore’s original observation applied to the growth of processing capacity; it is now often cited as a general comment on the continued doubling of technological capability.
“Unconventionals is a great place to see Moore’s Law in action,” he said.
Spies predicted that future advances in technology will have the most effect in “areas that have the largest scale – areas where you can invest a lot of money. I think they’ll be most advantaged,” he said.
As the oil and gas industry continues to identify and develop unconventional resources “the pure size of the prize is incredible. It’s big enough to displace everything else in the U.S. and to compete with conventional resources globally,” Spies observed.
That makes URTeC an especially important gathering for the industry, he noted.
“I think URTeC is a great environment to see multidisciplinary teams of people talking, in real time, about what’s happening,” he said.
Advancements in technology go on improving the outlook for resource plays. At times in recent years, the whirlwind of technological innovation for unconventionals has neared cyclone strength.
“It’s been the most exciting time in the industry, I feel,” Spies said.