Well Connected

31 August 2007 (Last Updated August 31st, 2007 18:30)

The digital oilfield is being described as a revolutionary step in the effort to improve efficiency in the oil industry. But does this apparent panacea for a hard-pressed industry really measure up? Jim Banks reports.

Any company offered the chance to improve efficiency, get more from its existing assets and access new ones, leverage its in-house skills better, improve collaboration and optimise its performance through investment in one go would surely jump at the chance. This appears to be the tantalising prospect on offer for oil exploration and production (E&P) companies at the moment in the shape of the digital oilfield (DOF).

Cost pressures on E&P companies are mounting, while the industry faces other challenges, including a lack of new talent, an increasingly complex supply chain, a growing regulatory burden and, above all, the need to maximise output when there is more pressure on known reserves than ever. These factors are driving more companies to invest in DOF projects.

But what exactly is a digital oilfield? Companies that have invested in digitally enabled equipment and data networks have often taken different approaches to the development of the digital oilfield, but they share some common goals. Essentially the digital enabling of data streams in all aspects of E&P allows companies to bring together information from separate parts of the E&P process to manage them centrally and make better use of in-house expertise.

In the world of the digital oilfield, companies can co-ordinate data on drilling, fracturing and production so that it is centrally monitored. The digital communications network allows globally disparate and diverse teams to interact and consult, and resolve problems faster.

The ability to pool the expertise of drilling engineers and geoscientists enables companies to address the shortfall in skills in the industry by bringing their experts' knowledge to bear across a wider portfolio of operations. Also, on-site resources can easily be linked to supporting expertise elsewhere. This enables companies to move to an environment of real-time drilling, facilitated by virtual environments in which drilling operations can be remotely monitored. Ultimately, this could improve the productivity and efficiency of any given resource.

Once data streams have been centralised, it is much easier for experienced staff to monitor and control a greater number of wellsite operations simultaneously. It may also enable E&P companies to reduce on-site staff and improve collaboration. In such an integrated environment, the rapid updating of models using real-time data planning can be optimised and downtime reduced. All this could have a major impact on oilfield economics.

INVESTING IN TECHNOLOGY

Creating a digital oilfield means bringing together people, processes, systems and information in a virtual environment. The advantages accrue from data integration, but this involves the development of digitally enabled technology right through the production chain. Companies must invest in real-time sensors, conditions monitoring, geosteering techniques and many other areas.

"On-site resources can easily be linked to supporting expertise elsewhere."

As well as increasing overall reservoir recovery from existing assets, by continuously maintaining the optimum performance of drilling operations, DOF could allow complex projects, which once would have been unfeasible, to be implemented.

Shell is among the leading companies exploring the potential of the DOF concept, working with partners such as Schlumberger Information Solutions, Invensys, IBM, Intelligent Agent Corporation, Science Applications International Corporation and Microsoft to develop Smart Fields technology.

One of its key goals is to facilitate the extraction of oil from difficult geologies without damaging or disrupting local environments and ecosystems. By applying several technologies in real time to remotely manage and monitor its oilfields, Smart Fields has already enabled Shell to unlock complex resources in Brunei, which were not previously deemed economically viable. This capability could be important in the future, given that many of the new prospective areas for E&P involve high levels of technical or logistical risk that would usually require high spending on infrastructure and take a long time to plan.

POTENTIAL GROWTH

Some voices are predicting that digital oilfields could significantly increase access to reserves. Cambridge Energy Research Associates (CERA), predicted that they could increase reserve recovery by 6%, improve production rates by 10% and reduce operating costs by 25%. Much depends on the quality of the technology that develops to derive value from the digitised environment, but companies such as Shell and Schlumberger, the world’s largest oilfield services company, have helped drive
this forward in many areas.

Speaking at the annual Howard Weil Energy Conference earlier this year, Schlumberger chairman and CEO Andrew Gould reiterated the need for further investment in technology across E&P. "Our strategy of improving performance, while mitigating risk through technology, is successful and will continue to be," said Gould. "All operators – international, national and independent – increased E&P spending in 2006, and Schlumberger continues to see universally strong growth across all technologies." So far, investment is achieving promising results. The development of 4D seismic surveys through repeated 3D surveys during production now benefits from improved workflow that allow results to be input directly into field planning.

New geosteering techniques and measurement-while-drilling (MWD) capability is unlocking complex reserves. In hydraulic fracture mapping, which monitors microseismic events caused by the cracking of rock, data is being transmitted to a remote site for simulation to manage pumping in real time. Schlumbeger's vision of the DOF includes a global managed network covering the entire oilfield operation, connecting the furthest ends of the supply chain.

It is working with BT to provide a collaborative environment that can support interactive drilling and production. The company announced at the end of 2006 that, with its partners Cisco Systems and Intel, it has developed a wireless service to provide improved connectivity between drilling sites, producing fields and the wider data network. It sees this 'first mile' connectivity as the lynchpin of the collaborative environment that lies at the heart of the DOF.

DEVELOPING STORY

Those companies committed to development the DOF have invested heavily to derive value and lay a foundation for further innovation. Schlumberger, for example, has a network of 27 operation support centres providing 24/7 monitoring, modeling and control of up to 28 concurrent drilling operations in the North Sea.

"Some voices are predicting that digital oilfields could significantly increase access to reserves."

A data management capability is the key to the success of such centralised hubs. It is certainly the backbone of the DOF. The amount of data generated by E&P operations could
easily be overwhelming. Workflow is, therefore, a key area for development. Faster processing is also vital to improving the real-time performance of monitoring and modelling tools, as is improvement in 'first mile' data connectivity.

The potential benefits of the DOF are relatively clear, and some companies have started to realise them, adding considerably to their reserve base by implementing digitally enabled technologies. There are, of course, challenges ahead, and investment in new technology will have to continue in the long term.

Collaborative environments and processes will need to be improved, as will workflow management, data processing, monitoring, communications and security. However, the industry appears to have an appetite for state-of-the-art high performance computing.

What may have a great bearing on progress towards the era of the DOF is successfully bringing down barriers and getting previously unconnected parts of a business to work in the new collaborative environment.

Technology is certainly the foundation of the DOF, but it is also important for companies to understand how to manage the transition to such an environment and to know specifically what they want that transition to do for their business.