Attending one of the soirées that have come to define OTC-week in Houston, I was contemplating a bowl of gelatinous gunk, which I took to be dip, only because of the large basket of chips sitting alongside. Trying to figure out whether to partake of this delight, while balancing my drink, a tiny plate containing four shrimp, two cocktail franks and miscellaneous cubes of cheese, my thoughts were interrupted by another party-goer who abruptly asked, "What do you do?"

Avoiding the incredible temptation so say, "I'm with the Health Department checking dip toxicity," I explained that I was a journalist (which, for anyone who knows me, was obviously a white lie).
"We do production optimization," volunteered my new friend.

This demanded a response, since just below my name on the little badge pinned on me were the tell-tale words, "Production Editor." I figured that no matter what my reply, he was going to tell me his life story anyway, so I gave a noncommittal, if not enigmatic, "Oh?"

For the next 30 minutes I was bombarded with an excruciatingly detailed description of my tormentor's product, which turned out to be a flow line sensor of some sort. Without prejudging the product or its intrinsic value, I thought to myself that crediting this product with solving the myriad challenges of "production optimization" was a bit of a stretch, to put it mildly. Sort of like putting lipstick on a pig.
Lately, as the industry increasingly seeks solutions from its suppliers, it's been hard to bestow the title of optimization on anything short of a total package. Even then, optimization means different things to different companies. To some it means high volume, to others, long life. Still others envision high flow rates. And there is always the group that is conditioned to think of optimization as synonymous with "cheap."

Actually it is an amalgam of several parameters. But by definition, if production is to be truly optimized, every aspect from the reservoir to the export pipe must be considered and tuned to deliver the desired result.

I "Googled" the term and found 29,800 references in a quarter of a second. Surely, every one of those references doesn't hold the key to the holy grail? A much shorter list (2,961) is obtained when you search "Drilling Optimization." Does this mean that drillers are only 10% as interested in the pursuit of excellence? Probably not. What it does mean is that drilling represents a very specific activity with fairly narrow parameters defining the perfectly drilled hole. Production, on the other hand, encompasses a broad range of downhole and surface activities or conditions, any one of which can affect one's ability to monetize the contents of the reservoir.

Perhaps the best way to define optimization is to take a financial approach. By reducing production decisions or activities to a common denominator, operators can see how each decision affects the total cost of operations. If one accepts that one of the unique aspects of our industry is the inability to set the price of the product, this leaves cost control as the sole determinant of margin.

I was speaking with a fellow engineer recently about a new technology, and mentioned the word, "value." He surprised me with his response. "Don't talk to me about value! Everyone claims to deliver value." I thought, how else can we sum the ultimate result of all the decisions we have made? Recently, I'm seeing more and more companies taking a measured approach to decision making. First, they attempt to determine the net present value of the incremental added benefit promised by the proposed service or product. They start by making a simple comparison of this figure with the product's cost. In many cases this is all that is done.

However, other companies are factoring in risk and cost of capital to help them get closer to the real value represented by the decision. Some are even categorizing RISKEX right along with OPEX and CAPEX. But because production evolves from a vast interrelated nodal system, each decision made to optimize a certain node affects all the other nodes. Thus, I find it difficult to apply the term optimization to anything less than a total system cost/value tradeoff.

Did I impose my opinion on my new acquaintance? Certainly not. I politely nodded occasionally, and when probed for a response did so only after popping an hors d'oeuvre into my mouth, so it came out as a noncommittal, "Mmfgh." This, for me, is conversation optimization.

Comments