Since the shale revolution began in 2006, technologies have played a huge role in breakthroughs like horizontal drilling and hydraulic fracking, turning the United States into the world’s fastest-growing energy exporter.
This success has led to the further use of information technologies that aid in reducing risk, improving efficiency and maximizing productivity, all of which improve profitability and return. But this technical push comes at a time when investors worry that shale gains are slowing, while at the same time, they press for higher returns on their investments.
near Alvarado, Texas.
It comes down to investors demanding that producers restrain their spending and focus on generating higher returns, not volume, forcing some producers to cut back on drilling. This was made clear when production at a majority of publicly traded shale producers rose just 1.3 percent over the first three quarters this year, according to Morgan Stanley.
Shale producers have now vowed to deliver higher returns using technology, going so far as to forecast serious output hikes in 2018. Chevron, ConocoPhillips, Shell, and others are seriously embracing everything from drones using thermal imaging to detect leaks in oil tanks and pipelines across its shale fields, to automated drilling systems.
Ryan Lance, chief executive of ConocoPhillips (COP.N) – the largest U.S. independent oil and gas producer, says companies can boost both profits and output. “The people that don’t have shale in their portfolios don’t understand it, frankly,” Lance said in an interview.
“They think it’s going to go away quickly because of the high [production] decline rates, or that the resource is not nearly that substantial. They’re wrong on both counts.”
Shell’s iShale initiative
Like other major natural gas producers, Shell wants to make sure that fossil fuels remain a part of the global energy mix. “Shale is a future growth engine for Shell,” Greg Guidry, executive vice president of Shell’s Unconventionals business, told Rigzone on the sidelines of Energy Dialogues LLC’s North American Gas Forum in October.
“Any breakthrough technology requires a great deal of collaboration, particularly with your supply chain, but also with academic and across the industry to establish standards,” Guidry explained, adding that Shell’s “iShale” initiative provides a case in point.
Shell has brought together technologies from oilfield suppliers, including devices from subsea specialist TechnipFMC Plc that separate fracking sand from oil and well-control software from Emerson Electric Co, to bring more automation and data analysis to shale operations.
Guidry said iShale will become the “shale field of the future,” and will become a reality very soon, pointing out the initiative uses existing technologies already used elsewhere in oil and gas and in other industries. “It’s more integration of existing technologies and applying them to onshore shale,” he said.
Shell also wants to incorporate “remote” fracking of wells – putting operators in one place to oversee several projects in different places. They also plan on using solar panels and storage batteries to save on electricity and diesel fuel costs. Shell says this will greatly reduce the cost of drilling a new well, which currently costs about $5.9 million, bringing the cost down to about $4.0 million.
DNA sequencing from microbes in oil
Anadarko Petroleum, Statoil, and others are using DNA sequencing to pinpoint possible drilling areas. DNA in oil microbes are sequenced and are compared to the DNA in rock microbes
Ajay Kshatriya, the chief executive, and co-founder of Biota Technology, the company that developed the technique says the technology can cut the time needed to begin pumping, shaving production costs as much as 10 percent. Biota’s method can detect subsurface DNA to determine hydrocarbon fluid movement. This informs operators where to place and how to complete wells
Biota’s technology has been used on over 300 wells across the U.S., and is just one of a number of new technologies, like microseismic studies, which examine how liquid moves in a reservoir, and tracers, which use some DNA elements to study fluid movement being used to cut drilling costs and increase productivity and profits.
