Downturn Drives 'Outside the Industry' Tech Innovation

In a remote area of Alaska, almost 600 miles north of Anchorage, a field inspector checks an array of oil and gas production equipment.

The inspector is examining an assigned grid of territory extending from Prudhoe Bay across the North Slope inlets, traveling over a rugged expanse of ponds, boulders and barren landscape.

Without regard to the bitterly cold weather, the inspector hovers over the equipment installation, capturing data and recording images.

Yes, literally hovers, because this inspector is a drone.

“In terms of making things more efficient, you’re starting to see these digital technologies like drones and AUVs (autonomous underwater vehicles) being used,” said Carolyn Seto, director of upstream technology and innovation for IHS Markit in Cambridge, Mass.

Drones can be used for everything from mapping to equipment surveillance, AUVs for everything from environmental surveys to checking underwater currents. They’re a boon to deepwater exploration, Seto noted.

“You can make the most of the time you have out there,” she said.

Exploration innovation in an industry downturn turns out to be much more targeted. More cost-conscious. Edgier.

“The downturn has really focused companies in allocating for what they want to innovate on. There’s more of a focus on, ‘What are the technologies we need now?’” she said. “Another thing we’ve seen from the downturn is a lot more interest in collaboration.”

Partnerships and venture groups are helping companies maximize their technology development dollars, Seto said. Also, exploration today is more willing to draw on innovations from other industries.

“It’s more taking some of these proven technologies from other areas, like the consumer segment, and bringing them into the exploration arena. In the case of drones and virtual reality and data analytics, those techniques were really perfected from the consumer industry,” Seto noted.

“Maybe 10 years ago, the industry was very closed, thinking that the best innovations came from inside the industry. Now there’s the belief that good ideas can come from anywhere,” she said.

Rise of the Machines

Seto sees big changes coming to oil and gas in three areas:

  • Greater automation in the field
  • Use of robotics in operations
  • Advanced data analytics used in proactive ways

“In mature fields, in these operations that have decades of operation or hundreds or thousands of wells, you’re starting to see a shift toward using statistical models to operate the fields,” she said.

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In a remote area of Alaska, almost 600 miles north of Anchorage, a field inspector checks an array of oil and gas production equipment.

The inspector is examining an assigned grid of territory extending from Prudhoe Bay across the North Slope inlets, traveling over a rugged expanse of ponds, boulders and barren landscape.

Without regard to the bitterly cold weather, the inspector hovers over the equipment installation, capturing data and recording images.

Yes, literally hovers, because this inspector is a drone.

“In terms of making things more efficient, you’re starting to see these digital technologies like drones and AUVs (autonomous underwater vehicles) being used,” said Carolyn Seto, director of upstream technology and innovation for IHS Markit in Cambridge, Mass.

Drones can be used for everything from mapping to equipment surveillance, AUVs for everything from environmental surveys to checking underwater currents. They’re a boon to deepwater exploration, Seto noted.

“You can make the most of the time you have out there,” she said.

Exploration innovation in an industry downturn turns out to be much more targeted. More cost-conscious. Edgier.

“The downturn has really focused companies in allocating for what they want to innovate on. There’s more of a focus on, ‘What are the technologies we need now?’” she said. “Another thing we’ve seen from the downturn is a lot more interest in collaboration.”

Partnerships and venture groups are helping companies maximize their technology development dollars, Seto said. Also, exploration today is more willing to draw on innovations from other industries.

“It’s more taking some of these proven technologies from other areas, like the consumer segment, and bringing them into the exploration arena. In the case of drones and virtual reality and data analytics, those techniques were really perfected from the consumer industry,” Seto noted.

“Maybe 10 years ago, the industry was very closed, thinking that the best innovations came from inside the industry. Now there’s the belief that good ideas can come from anywhere,” she said.

Rise of the Machines

Seto sees big changes coming to oil and gas in three areas:

  • Greater automation in the field
  • Use of robotics in operations
  • Advanced data analytics used in proactive ways

“In mature fields, in these operations that have decades of operation or hundreds or thousands of wells, you’re starting to see a shift toward using statistical models to operate the fields,” she said.

“Now we’re getting so much more data from our operations, not just technical data but data about the process. Because we have that transparency into operations, decisions are becoming more data-driven. This is leading to more cooperation among the disciplines,” she observed.

Data captured from operations can be processed for advanced analytics, a decision-support tool, as well as predictive analytics, Seto said.

According to the technology firm Gartner Inc., advanced analytic techniques include “data/text mining, machine learning, pattern matching, forecasting, visualization, semantic analysis, sentiment analysis, network and cluster analysis, multivariate statistics, graph analysis, simulation, complex event processing, neural networks.”

“Advanced analytics is being used quite successfully in drilling and completion, while predictive analytics is being used in things like equipment maintenance,” Seto said.

Strangely, one innovation mostly left behind in the rush to automation and data analytics is the idea of the intelligent field – the “iField” or “Field of the Future” concept.

“There’s less interest in that now, partly because those projects have been implemented and have reached a barrier,” Seto said.

Five Technologies for the Coming Decade

In September, the international management consulting firm McKinsey & Company issued a report titled “Five Technologies for the Next Ten Years,” listing technologies expected to affect the oil and gas industry during the coming decade.

Richard Ward, senior expert, and Scott Nyquist, senior partner, both with McKinsey’s office in Houston, were two of the co-authors of the report.

Ward said exploration has been the most digital industry on the planet in many ways and observed, “The oil and gas business might be the most valuable digital industry in history.”

He put the accumulated value of technology-enabled oil industry operations at $40 trillion to $50 trillion.

According to the report, these five technologies will change the way the industry operates in the future:

1. Mobile

Mobile technology will let technicians understand a project, accept an assignment and file a work report when they have finished, “no matter what time it is or where they are.”

“The ability to provide connectivity to smaller and cheaper components, in more and more remote areas, continues to grow. We expect that by 2025 every well in the Western Hemisphere will have access to 4G cellular at a cost-competitive rate,” the report said.

2. The Internet of Things

Equipped with electronics, software sensors and Internet connections, this network of physical objects will collect and exchange data.

“We keep thinking that you won’t be able to buy a toaster that won’t be connected in some way,” Ward said.

A $30,000 or $40,000 piece of equipment will definitely want to be connected, he noted. The industry already has many networked sensors for remote monitoring and control of refineries, pipelines, pumps and platforms.

As the cost of sensing and connecting continues to drop, more and more interconnections will occur.

3. Machine Learning

Through machine learning, computers can understand how to do something without having been programmed to do it. When a computer can teach itself new strategies based on experience, its analyses will improve over time without the need for human intervention.

Ward gave the example of a computer-assisted seismic interpretation system that will both learn and suggest best practices.

“If previously you had to have an expert who would program things into a system, now you’ll have a system observe how 500 interpreters around the world are doing it,” he said.

4. Robotics

If you’ve been wondering whether robots will take over the world, the answer is: “Yes.”

Robotics has “undergone dramatic changes in the last five years,” the report stated.

“We expect that the number of robotic systems working in oil fields around the world will be nearly a million by 2025. Some will live permanently at a facility such as a refinery, while others will be a part of a technician’s toolkit,” it said.

5. Blockchain

A digital ledger approach to recording financial transactions, Blockchain is poised to simplify contracting and transacting everywhere, Ward and Nyquist believe.

Blockchain was first used as the underlying technology for bitcoin in 2009.

“In the oil and gas industry, anywhere a contract for performance is required there is a chance it will migrate to a blockchain-enabled agreement. Such contracts may include land royalty, production sharing, or service-execution contracts,” its report said.

Automation Now

Seismic acquisition will be one of the first areas to benefit from enhanced automation, Ward predicted. Offshore, semi-autonomous drones for positioning could make sure streamers are exactly parallel to ensure the fidelity of data capture. On land, each geophone could be its own quadcopter.

“That would give you much better fidelity on 3-D data capture and at much lower costs, because you don’t have to be putting roads through people’s property. One of the things farmers and ranchers are unhappiest about is people carving out roads and cutting through their land,” he said.

Another change Ward expects is growth of the “angels-on-their-shoulders” concept, in which oil and gas professionals increasingly will be assisted by expert systems. A program might ask, “Didn’t you mean to make that pick a couple of pixels over?’” he said.

“That concept is going to start percolating itself more and more into knowledge work, especially into interpretive work,” Ward said.

Better Efficiency, More Fun

Technological advances and applications promise to make the oil and gas industry not only more effective, but also more efficient and productive.

“From a senior management point of view, this will show up as a step-change in productivity,” Nyquist said.

The move to advanced technology reflects the change in an industry that’s going through what has been called the “Great Crew Change” or the “Big Replacement.”

“Many geoscientists that have learned a certain way of using technology on the job are finding out that these technologies are changing. There is a generational shift taking place,” Nyquist observed.

Ward said the good news for geoscience professionals is that these new technologies can reduce the drudgery of routine and repetitive tasks.

“What we’re seeing is that many of these tools can make a certain amount of that fade into the background. I really, fundamentally believe these technologies will bring more fun to the job,” he said.

Will the coming technology changes be revolutionary?

It’s happened before, Ward noted.

He said we’re now “holding a four-inch piece of glass in our hands and can look up anything we want to at any moment. The iPhone was released in 2007, so about 10 years ago. And this has literally changed the world.”

With so much added capability in data capture, interconnectedness and automation, are we headed toward a peak of data use in exploration?

Seto doesn’t see it that way.

“I think we’re just scratching the surface of this,” she said.