Traditionally at the end of the exploration and production food chain, production has had to put up with the cumulative results of false economy, parochial knowledge and questionable judgment inflicted upon it during the exploration, drilling and completion phases. At last there is a glimmer of hope, as my travels have uncovered a few pioneering souls who focus on the future when choosing among the many alternatives presented to them during the early stages of development. With strong and growing demand pushing commodity prices to historic levels, operators who predicate their decisions on how they will impact production will win huge rewards in both the short and long terms.

Tampering with tradition

It's a hard habit to break. With each specialty or department focused on meeting or beating its AFEs, there are strong temptations to go for maximum process efficiency with little regard on how decisions made today affect the processes of tomorrow. When I was a young field engineer back in the days of wooden rigs and iron men, the conventional practice was for the drilling department to total depth the hole, case it and cement it. Then they turned it over to completion engineers who had to deal with bad cement jobs or formation damage caused by cheap drilling practices or suboptimal drilling fluids. Subsequently, after struggling to overcome those problems, the completions guys would turn the well over to the production engineers, who had to work with the reservoir team to try to establish compatibility with existing wells and with surface systems, each group forced to deal with the decisions made by its predecessors. Usually, most problems were solved so that ultimately the field could be placed on production, but many thousands of dollars were wasted correcting conditions that could have been avoided had a little foresight been added to the mix in the first place.

And there were some classic blunders. One involved a major oil company, now but a faint memory of the past, that actually set an offshore drilling and production platform on the wrong side of a fault because it refused to spend money on dipmeter surveys that could have easily identified the fault and quantified its strike and dip. It was rumored that an officer of the company had issued an edict banning such "new fangled' technology as dipmeter logs. To compound the disaster, the problem wasn't discovered until correlations from several dry development wells revealed the truth. Woops!

Fast forward to the 21st Century

I thought we'd learned our lessons. The growth of drilling and production technology over the past 2 decades has been nothing short of phenomenal. Yet two significant shortcomings continue to impede the industry's ability to reach its production potential: technology uptake and system integration. Intuitively for example, one would think that businesses in the pharmaceutical industry would have very slow and deliberate uptake of new drug therapies. After all, getting FDA approval is no cakewalk. But the drug folks move at warp speed compared to the petroleum industry when it comes to technology uptake. At a recent offshore conference, the keynote speaker remarked that it takes us on average 30 to 35 years to fully implement new technology. I don't know about you, but at that rate I probably won't even be around to see how some of the new fangled stuff like intelligent well systems and fiber optics turns out. It's a pity.

As for systems integration, the process seems to be racing along at geologic speed. A few far-sighted companies are testing the waters, but I still run into vestiges of rugged individualism in specialty departments, still bent over their spreadsheets and focusing on their piece of the puzzle with no regard for how it will fit into or contribute to the success of the production unit.

Will we ever learn?

Every so often, I come across evidence that a few pioneering companies are starting to see the light. Recently, I wrote about ChevronTexaco's giant Agbami project offshore West Africa. Millions of dollars and a great deal of time were saved by integrating the reservoir and production simulations to optimize field development all the way from proper sizing of production risers to choosing and scaling surface processing equipment. For the first time, reservoir and production engineers worked interactively with the same data sets, not correlations or estimates. One said, "I actually could simulate the effect on the reservoir of taking a separator offline for maintenance." Decisions stopped being 20% fact and 80% guesswork.

And an independent producer told me how his company had experienced great difficulty in drilling a certain prospect. "We got the holes down, but cementing ate our lunch," he said. "Finally, we worked with an integrated service company who had the capability to include one of their cementing specialists on the well team. He actually called most of the shots during planning and later as we drilled the well. For the first time, we got a good cement job." Considering the alternative, the well was a success largely because of technology integration.

It's a paradox. The only thing forestalling the eventuality of Hubbert's prediction is technology, yet we fear and resist it. At least, let's beat the drug dealers!

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