Spending on oil and gas exploration is set to rise to an estimated $369bn in 2008 – representing an 11% hike – according to the recent annual sector survey by the investment group Lehman Brothers. An increase of expenditure at this level will not only mark the sixth consecutive year of growth in double-digits, but also serve to further underline the ongoing importance of support technologies.
The offshore sector is certainly no stranger to embracing technological innovation and as a Cranfield University / BG Group supervised study recently concluded, when it comes to driving development, often 'industry pull' is more significant than 'technology push'.
However, merely having a large budget is no automatic guarantee of success. As Tony Meggs, head of technology for BP, has pointed out, "you do not create competitive advantage simply by spending more."
He should know; while BP is not the biggest spender in this area, the company has an enviable reputation for very effectively targeting its R&D expenditure.
Even so, it is one thing to innovate, another thing entirely to apply those innovations to business goals, which can present something of a conundrum. Despite the readiness of oil companies to invest heavily, amid the wealth of technologies available, both groundbreaking and maturing, in subsea, data acquisition, seismic, predictive and other fields, it can sometimes be difficult to know which ones offer the greatest benefits.
TRENDS AND DRIVERS
The drivers of technological innovation for the year ahead have already largely established themselves, production, security and the environment, and given the times, none of these comes as much of a surprise. By the same token, although each brings its own particular slant to the discussion, it is clear that they are not always so separate nor irreconcilable as it might at first appear.
In the subsea arena, for instance, while production goals inevitably drive technology uptake, so too do environmental ones – perhaps most notably in terms of the sector's rising star of all-electric installations. As Chief Seattle once famously remarked, 'all things are connected'.
In terms of shaping the wider development of technology however, across-the-board moves towards standardisation and greater integration could well emerge as the most influential factors during 2008.
CHANGING THE GAME
After so long spent on the brink of delivering on its early promise, subsea processing is one sector of developing technology which seems poised to make significant strides in the coming year.
The signs of this long-anticipated new dawn began to emerge during 2007, with ABB Vetco Gray, Aker Kvaener, Cameron and FMC Technologies all involved in various new seabed successes.
For 2008, the application of robust subsea approaches, especially to develop reserves offshore in deepwater fields or difficult locations, offers the potential for greater commercial viability – not only for new fields, but also for mature ones.
Green concerns also help to promote the technology; without the need for above-water elements, subsea developments can be highly environmentally friendly enabling oil or gas to be recovered safely in key fishing grounds or other ecologically sensitive zones. Moreover, given the interest aroused by Cameron's implementation of the first all-electric subsea production system in the world – in the K5 block of the Dutch sector of the North Sea – there is much talk in the industry that this could set the course of future developments.
An estimated 25% of the world's undiscovered oil and gas is thought to be lying in the Arctic; for operators hoping to open up these new frontiers, all-electric systems, avoiding the need for hydraulic fluid, may well be the only possible solution.
To borrow from the imagery of OTM / Douglas Westwood's famous report, the game itself may not yet have entirely changed, but the way it is being played is certainly starting to look very different.
The new year also seems likely to see a number of developments in some of the associated technologies – not least amongst monitoring, modelling and predictive systems. It has become clear that there is a growing need to improve remote subsea real time connectivity, driving the further development of robust submarine networks to make this possible.
DATA AND THE DIGITAL OILFIELD
The value of real-time data has been comprehensively established – particularly in terms of its ability to enable operational decisions to be made faster and on a more informed basis; as Statoil's Harald Laastad stresses, it is not the data itself, so much as what is done with it.
While downhole instrumentation has become very sophisticated over recent years, and despite a strong investment in digitally enabled equipment and networks, there remains a need for close adherence to developing standardisation.
The ongoing work to establish and extend common standards for both information output modes and formatting for the final data handling systems will prove critical in enabling the often-discussed benefits of the digital oilfield (DOF) to be realised.
The good news for 2008 is that the signs in this direction appear to be encouraging and the centralisation of data streams from operations in real time seems to be on the verge of opening up the potential for significantly increased access to
In addition, this technology offers the possibility of extraction from difficult geologies with minimal environmental impact or disturbance – providing another example of how economic and ecological imperatives can combine synergistically to drive technological change.
Shell seems to be leading the charge to advance the whole DOF premise through its push to develop 'Smart Fields' technology in collaboration with IBM, Intelligent Agent, Invensys, Microsoft, Science Applications International and Schlumberger Information Solutions. With much of the world's new prospective areas involving significant logistical risk, the ability to exploit complex resources which might otherwise be uneconomic has clear appeal.
It is small wonder then that Andrew Gould, Schlumberger's CEO, reports universally strong growth across constituent technologies. In the final analysis, the drive towards true integration will depend on breaking down the barriers between previously disparate and unconnected business elements if the new era of collaboration is to be ushered in.
However, if this goal can be achieved, then alongside the obvious benefits to operational control and data processing, many of the industry concerns of security can also be addressed – alongside the more mundane issues of workflows and data management.
With real-time location systems (RTLS) set to expand globally (growing by 80% to more than $1.6bn by 2010) this fast-evolving market offers an ideal way to track both assets and personnel. In our current troubled times, knowing who is where has taken on major implications – and worries over the security of energy supplies now extend way beyond simply who owns the assets on which you depend.
Approaches ensuring the protection of rigs, workers and fields form part of a growing trend – and one which Stephan Kroecker of SeaAway predicts will only increase over the coming decades, as oil and gas become more valuable.
Although the crossover between drivers is self-evident, environmental concerns remain a significant factor in the future development of technologies within the industry.
While it is inevitable that offshore operators should look to advances in technology to mitigate the impact of their activities, the scope of environmental influences encompasses more than simply offering a route to green up their act and polish up their eco-credentials.
With so much of the current environmental debate focused on emissions, it seems fitting that product transport is one aspect which received a boost in 2007 – in the shape of BP's new British Emerald – the first of the Gem Class vessels and currently the world's largest operating liquefied natural gas carrier.
Three sister ships are due to be launched in 2008; the use of dual-fuel diesel-electric (DFDE) propulsion at this scale – expected to yield savings of around 36,000t of CO2 and 1,700t of SOx emissions – will be getting a very public showcase.
Other broadly environmental technologies are also well positioned to assume greater importance – perhaps most prominently in climatic and geo-technical fields. From hurricane analysis systems to determine the sensitivity of deepwater floaters to distributed fibre-optic temperature sensing for ice-gouge prone Arctic installations, rising innovations reflect the push into ever greater water depths and increasingly remote locations.
It is not all about the new; developments in established technologies also have their part to play. Long an essential part of the exploration toolkit, seismic imaging and its allied technologies are advancing to a point where many operators can begin to think seriously about turning non-proven reserves into proven ones.
With so much potentially at stake, innovation in seismic data acquisition, survey methods and interpretation techniques is unlikely to slow in the coming year.
The industry's current move towards exploration and improving recovery factors drives both technological evolution and the recognition of technology as a key business enabler. Against this backdrop, companies selecting and using their options wisely should be well positioned to reap the benefits in 2008 and beyond.