The main opportunity for the exploration and production industry to radically improve oilfield performance is in the adoption of digital-age technologies. The challenge will be to achieve effective integration of these applications with the different workflows and areas of activity that exist in the oil and gas sector.
According to John Darley, Shell International E&P's executive vice president, technical, "The key challenge appears to be the integration of digital technology across the different workflows and areas of activity in the oil and gas industry. While individual applications are often successful, the ability to integrate data flows, e.g. from the subsurface through reservoir and well production monitoring and into surface control systems, still proves a challenge in practice."
As to how the industry is performing in adapting these digital technologies to the oil field, he continued: "In some areas the industry takes a leading-edge role in the development or application of new digital capabilities. Examples would be the use of advanced telecoms to facilitate global communications and control systems (e.g. the real-time operating centers used by many companies to monitor, control and optimize drilling activity), or the use of powerful parallel processing and grid computing technologies to process seismic data.
"At the other extreme, the opportunity to fully integrate oilfield activities, using IT capabilities in such areas of real-time data management, inventory control, and production optimization is only sporadically applied and there is scope for both broader and accelerated application of digital technology."
This aspect raises the question
of whether digital technologies
have been fully accepted as field-proven within the exploration and production (E&P) sector at this point in time.
Darley said, "Many of the individual components in the area of digital technologies are already in place and field-proven. Our challenge is to integrate the constituent elements to provide a digital solution to provide real-time management of oil and gas fields. One example would be flow monitoring and downhole control of smart wells. Many smart well applications are providing real value today, but the integration of the flow controls on individual wells to create a digitally optimized field management system is still at an immature stage."
The upstream industry itself has made huge strides in areas such as subsurface imaging, drilling and completion technology over the past decade. In Darley's opinion, the biggest impact in terms of improving upstream operations has come from the industry's ability to effectively integrate each of the areas of technology mentioned above.
"For example, improved subsurface imaging - particularly the use of time-lapse seismic in mature producing fields - provides the opportunity to identify small, discrete pockets of untapped hydrocarbons. The complementary capability to access such pockets, through complex well drilling and completion technologies - often involving multilateral completions - provides the means for their economic recovery. The value of each of these individual technologies is maximized through a combined and integrated approach to their application.
"But further advances are needed in terms of new technological breakthroughs, especially in areas such as subsurface imaging and ultimate recovery."
Darley continued, "In my view, there is considerable value to be gained by further improvements in subsurface imaging technologies. While the record of exploration success has shown steady improvement over the years, the size of new discoveries and the complexity of the subsurface environment for new plays demands advances in imaging capability to allow further increases in success rates and thus confidence in exploration investments.
"I believe that we will see continued advances in subsurface imaging capability, with breakthroughs at two ends of the spectrum. In the exploration area, advances in seismic technology, together with renewed application of non-seismic techniques, will provide greater confidence to explore in hitherto poorly mapped areas (e.g. below major salt bodies). In parallel, and on the detailed scale needed for production optimization, time-lapse seismic techniques - including permanent monitoring systems - will see real breakthroughs in reservoir management and control.
"Equally, the opportunity for appreciable increases in ultimate recovery from discovered resources - particularly in challenging reservoir and fluid environments (carbonates, heavy oils, tight gases) - presents a real challenge for technology breakthroughs. A combination of technologies, ranging from sophisticated EOR techniques, but including more cost-effective drilling and completion technologies and real-time subsurface monitoring, are needed to deliver this goal.
"In the production arena, the ability to further optimize the economic development of those unconventional resources - extra heavy oils, tight gases - will see real progress as technologies which span the upstream/downstream interface (e.g. crude upgrading, effective treatment of non-hydrocarbon gases) are further developed. A continued drive for more cost-effective drilling and completion options (e.g. through expandable tubular technologies) will allow ever smaller resources to be tapped, particularly in deeper water.
"Finally, industry will need to address the growing impact of CO2 emissions on the global environment. Solutions will need to be found to contain and reduce green house gas emissions, particularly as the industry moves to further develop heavier oils and tar sands. Research into CO2 sequestration and other forms of containment are active in many locations, but real breakthroughs have yet to be reported in this area."
Solutions through further research and development (R&D) will no doubt come, and it could well be that the recent emergence of a higher oil price outlook for the longer term may influence operators to re-focus some of their R&D investments into recovery technologies which benefit from the higher prices, such as some of the more sophisticated EOR technologies and heavier oils.
Shell's current approach and emphasis in R&D, Darley said, is, "Even prior to the recent oil price increases, Shell had moved to re-balance the R&D investment to focus on longer-term opportunities such as the recovery of unconventional hydrocarbons (both heavier oils and tight gas), non-seismic imaging technologies, reservoir surveillance capabilities and smart fields.
"This reflected a shift from the focus at the end of the last decade, where technologies to maximize economic recovery and production potential in deep water and in a lower-price environment, had generated successful results. Of course, many of our programs, such as advances in proprietary reservoir simulation capability, subsurface imaging technologies and a strong focus on developments in well engineering, will remain important through any change in emphasis elsewhere."
He went on to highlight some of the company's recently developed or employed technologies that are showing great promise.
"We continue to be impressed by the value generated by the application of Shell's expandable tubular technologies, both in terms of opportunities for more effective well completions and re-completions, as well as in over-coming drilling problems, particularly in deep wells. The application of smart well technologies is generating exciting new potential in the Far East (with the recent announcement of the Bruneian Champion West field start-up only the latest in a string of applications), and we are looking to deploy this technology in a number of new greenfield projects as well as looking to retrofit in more mature properties.
"Production optimization, using Shell's Production Universe software, has generated real gains in a number of applications and will also be deployed across the wider Shell asset base. And we are really excited by recent results using electromagnetic logging techniques which have supported the successful drilling of a number of our 'Big Cat' exploration wells in 2005."
A further factor in the success of companies in the upstream business is their ability to remain flexible in terms of how they find and implement solutions.
One of the key advantages of the digitally enabled approach is to provide such flexibility in the face of uncertainty. "Complex geological settings, combined with expensive and challenging development conditions (e.g. in deep water), provide serious challenges to achieve optimum hydrocarbon recovery. The capability for real-time optimization of field performance, offered by digital solutions, provides the means to meet that challenge," he said.
Specifically addressing deep and ultradeepwater projects and how intelligent energy solutions can aid them, Darley said, "In many cases, the ability to deploy smart solutions may be the key solution in the economic development of deepwater accumulations. The Na Kika development in the Gulf of Mexico comprises a number of individual fields producing to a common host. On a stand-alone basis, economic development of the individual fields would have been difficult to justify. Smart completions in a number of the fields allows for the optimized and economic, development of the total complex of small accumulations."
He added, "The benefits for the application of digital solutions, smart wells etc... can be maximized by early integration in the development planning phase. These technologies should not be seen as 'add-ons' following the concept selection or field development planning phase. The application of such technologies will provide alternative, potentially advantageous approaches to reservoir management provided that they are included in the initial planning stage."
Darley is also acting in the role of chairman of the executive committee for a new Society of Petroleum Engineers/Spearhead Exhibitions conference and exhibition entitled Intelligent Energy 2006 - Oil & Gas Production In A Digital Age - to be held in Amsterdam from April 11 through 13. Further information is available at www.ie2006.com.

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