Digital Energy Conference Tackles Range of Issues

Oilfield applications of digital technology, including best practices, cutting-edge applications, and future technologies, were the themes of “Digital Energy 2006: Bytes and Barrels,” a 2-day conference held in Houston in February. SPE and the SPE Gulf Coast Section worked together on the event, the sixth annual conference on applications of digital technology in the oil and gas industry. The event featured the perspectives of operators, service companies, and firms directly involved in information technology (IT) on such issues as data management, how demographics will influence IT, production-operations monitoring, collaboration, systems integration, and drilling and operations.

In the conference keynote address, Steven B. Hinchman, Senior Vice President of Worldwide Production for Marathon Oil Corp., addressed “New Work Processes Required for Success.” Supply and demand factors will influence how companies operate in the future, he said. “The global energy outlook really defines this changing work model,” Hinchman said. Those factors include rising energy demand, especially in places such as China; growing transportation demand; the rise of natural gas as a global commodity; and a heavier and more sour barrel of oil that is becoming more difficult to produce.

“The most critical question international oil and gas companies face today is access to resources,” Hinchman said. By 2020, the industry will need to provide 125 million BOE in additional production capacity because of the rise in global demand and the decline rate of current producing fields, he said.

Changing Relationship

Another issue affecting how companies operate is the changing relationship between private international oil companies (IOCs) and national oil companies (NOCs), Hinchman said. NOCs control most of the world’s reserves and are becoming increasingly active in the international arena. And today, NOCs have access to the industry’s conventional technology, have more financial resources than they did in the past, and are becoming more active outside their borders. “IOCs will have to be able to differentiate themselves,” he added.

Oil and gas is becoming increasingly harder to produce because of rising E&P complexity and access to resources. Much of the industry’s focus in the future will be on producing unconventional oil and gas, new gas technologies such as liquefied natural gas and gas to liquids, Arctic seas drilling, and ultradeepwater drilling. “All this means is that technology will play an even more important role in the next 20 years than it has in the past 20,” he said. The industry’s well-noted demographic challenges also will add pressure to how companies operate.

Hinchman sees the need for a “new generation work model” that would involve:

Integration of resource holders, suppliers, and vendors.
Increased productivity.
Disciplined processes and work flow.
Leveraging of technology.
Globalized work teams.
Accelerated learning and knowledge transfer.

“Transition to this new work model will not be easy,” Hinchman said, and technology can help usher in this new model. There is a sense of urgency among companies that realize that without the transition they will be at a competitive disadvantage, he added.

Handling the Data Explosion

In another session, an executive roundtable featured representatives of some of the oil and gas industry’s top companies discussing “Business Performance Challenges.” The panel included Don Paul, Vice President and Chief Technology Officer, Chevron; Ricardo Rodriguez, Director, Shell Technology Ventures; Alan Huffman, President, Fusion Petroleum Technologies Inc.; and Jerome Beaudoin, Vice President and Chief Information Officer, Devon Energy. The moderator was Murthy Divakaruni, Area Vice President, L&T Infotech, and Cochairperson of the Digital Energy conference.

The industry currently is trying to advance core E&P technologies, leveraging major technical trends (including universal digital, sensing, and connectivity; value-chain and information integration; and automation and robotics, of which upstream E&P is at the forefront), while furthering the human-digital relationship. The task is to better define the E&P engine, and the international workplace is prompting the industry to derive a supply-chain management mentality in which value is the key, not just technology.

One area plaguing the industry is the explosion of data. “I think we’ve maxed out and we have to get ready for something else, or what will we do when it becomes 1,000 times as much?” asked Paul. Expansion of computational imaging and passive acoustic monitoring coupled with the advent of prestack seismic analysis and real-time depth imaging has delivered volumes of data (5 to 10 terrabytes). There has been a rapid expansion of supercomputing power, but integration of real-time reservoir simulation is a monstrous task that includes analyzing data from complex settings across disciplines. At the same time, the finance sector is accelerating turnaround time, shortening timeframes on critical projects, and data sets are being required to conform to audit requirements. Work in hostile environments continues to drive costs up. “It is also a human challenge, not just data,” Huffman said.

This puts data management at the top of the list of industry priorities. Panelists pointed out that while new data-management systems are in place, longevity is not proved, and the industry does not know where problems might exist in these systems. Huffman presented an example from two major operators in which significant financial risk was tied directly to data management.

Rather than digital replacing the human component, business performance requires people to add dimension to analysis, to use the people dimension to somehow shorten the analysis cycle. The industry also is challenged with maintaining staff and advancing data and project management in an accelerating business climate, while it is required to keep pace with new technologies and maintain training during these busy times.

Well-Cycle Time

During his presentation, Beaudoin pointed out that technology is always talked about as an enabler, but to “enable” it must be managed in an efficient manner. In the E&P industry, the focus has been and remains on the well. But it needs to focus on both the controllable and uncontrollable well activities to learn where to reduce the operating cycle, much of which revolves around data. A balance is desired between managing data and reducing well-cycle time.

Operations challenges include how to adapt reservoir management strategies to use real-time digital data and avoid risk and/or failure; how to reduce cycle times; and how to effectively integrate people, hardware, software, and technology in a manner consistent with government and business requirements. Rodriguez reviewed business performance issues from the perspectives of senior management, middle management, and frontline management and emphasized how today’s complex joint-venture arrangements complicate the risk/return scenario. He also commented on the highly involved E&P risk/return models and how they relate to rapidity of technology uptake.
The panel also addressed such issues as how to manage systems across disciplines without incurring significant costs or increased risk or process failures; striking the right balance between real-time and right-time data delivery and evaluation; how far down into the data international standards should apply; and who should take responsibility for data management.

Deploying Intelligent-Field Concepts

Several technical sessions focused on case studies and practical applications of digital technology. In a session on “Production Operations Monitoring—Building a Real-Time Enterprise,” Victor Villagran, Project Manager of the Carthage i-Field for Chevron’s MidContinent Business Unit, gave an overview of how his company is applying intelligent-field concepts to a mature field. Carthage is a gas field in east Texas discovered in 1936 that contains more than 700 wells. Chevron realized that it needed to maximize artificial-lift production at the field, manage unplanned downtime, and manage the increasing well count. An asset assessment was conducted to identify potential opportunities for intelligent-field implementation, cross-asset learning opportunities, and potential technology-development opportunities.

That assessment concluded that field operations had

Low data acquisition rates.
Significant time spent collecting and managing data.
A slow artificial-lift optimization cycle.
Heavy reliance on operator experience.

In contrast, the company wanted to operate more proactively, with fast identification and response to well problems and time spent on data analysis, rather than just data collection, Villagran said. It also wanted the field operations to be in adequate shape to handle coming demographic changes. The solution was to redesign, streamline, and simplify the IT infrastructure at the field and to begin to automate collection of a lot of the data that was being collected manually. In addition, a next-generation supervisory control and data acquisition system was implemented, and mobile communication capacity was increased. As a result, there was more focus on analysis, optimization, and maintenance.

On a broader scale, the industry faces several challenges in trying to make such improvements at the field level, Villagran said, including resources constraints, problems in data architecture and quality, slow time cycles for new-technology development, a culture often resistant to change, and little management tolerance for failure. Part of that can be overcome by keeping project scopes tight and ensuring that the technology deployed is fit for purpose, he said. In addition, the focus should be on intelligent processes and decisions, not on the technology, which is just a tool.