New technologies being researched will change the way the oil industry does business. But will it be ready, or able, to take full advantage of them?

Oilfield technology has come a long way from the days when explorers used divining rods to determine the presence of a reservoir or relied on "creekology" (the nearby presence of a stream or river) to anticipate where hydrocarbons might be hiding. That it continues to evolve at a dizzying pace probably comes as no surprise to those of us who can remember using 186 KB computers a mere 15 years ago.
But to assume a straightforward continuation of technology development and adoption is to assume the variables that affect that development and adoption will remain constant, an unlikely scenario given some dramatic shifts in industry demographics, research funding and market dynamics. There's no doubt wonderful new gadgets will continue to be dreamed up as long as there are bright minds to do the dreaming. How soon the rest of the industry will have access to them is a thornier question.
Cool stuff
When asked what new technologies held the most promise, Ed Reynolds, manager of emerging technologies in Conoco's upstream organization, said, "It's like asking a kid in a candy store which is his favorite candy."
Advances in computers, materials science and miniaturization capabilities promise to make the future oil industry very different. Increased compute power, for instance, is leading to amazing breakthroughs in seismic processing and reservoir characterization, both in the speed with which decisions can be reached and in the ability to integrate many diverse sources of data for a more complete picture of the reservoir and its properties.
In less than 30 years this compute power has completely changed the way reservoir modeling is done. Harold Vinegar, a senior research consultant at Shell International Exploration and Production Inc. specializing in advanced recovery methods and unconventional resources, remembers experiments in the 1970s in which physical scale models of the reservoir were built in the lab to simulate steam flooding. "They were 30 ft (9 m) long and tilted at the dip of the reservoir," he said. "A lot was learned from those physical scale models. But now the thermal simulators are three-phase, multicomponent compositional simulators where even reaction kinetics can be modeled."
Materials science is creating lighter, stronger materials for hostile environments, and the use of "smart" materials holds promise as well. "Some of the more fascinating materials technologies are electrosensitive materials," Reynolds said. "They respond to electrical charges much like our muscles contract in response to electrical impulses. These synthetic muscles could be useful in remote operations offshore, trying to reach 10,000 ft (3,050 m) down without using a person or a robot. This isn't a robot, but it could have the dexterity to turn small valves, perhaps, or possibly be scaled up to provide more power, like a hydraulic wrench."
Miniaturization is resulting in microelectromechanical systems (MEMS), which have multiple applications in an industry that is increasingly relying on remote sensors to monitor fields in the absence of human bodies. Already MEMS devices are being tested on seismic geophones, and Reynolds sees great promise for production operations as well. "The capability of pumping materials, opening and closing valves that are the size of a small computer chip - it's amazing," he said.
Industry needs are driving technology development as well. Vinegar said the need to exploit more unconventional reservoirs has led to imaging techniques such as time-lapse seismic that will enable the operator to monitor and control the recovery processes on the fly.
The pace of change
But technology is not the only thing that's changed about the oil industry in the past few years. Oil companies are feeling increasing pressure from their shareholders to make consistent quarterly returns, and this can run counter to the need to do some more far-sighted thinking about the future. Making a huge up-front investment in a technology that might not be commercial for 10 years may be a necessity, but it's not a pretty addition to the balance sheet.
So many major oil companies have curtailed their research and development (R&D) investments in recent years, scaling back and in some cases completely closing well-known research labs. This is a source of concern for many.
"I think the pendulum has swung too far in the direction of low-cost, immediate financial impact," Reynolds said. "I think we'll pay the price as an industry in the long run. We have been cutting too close to the bone, and that's why I'm a strong supporter of collaborative efforts. That's one of the best ways to maintain some momentum of technology advancements in an industry which regularly cycles from feast to famine."
Added Curtis Weddle, a consulting engineer, "As traditional R&D resources have been closed, joint ventures have increasingly become the way we develop new technology. However, there are forces within our industry that make it difficult to move joint industry projects along, such as the shrinking number of participants and funding as two or more companies become one or because of a need to work only on technology that has immediate application and benefit."
Cost cutting has had another negative impact on the industry as well: the demographics of the work force. Many good people have left the industry, and graduates who might have gone into the energy industry have instead been lured into high-tech jobs.
"Even people coming into petroleum engineering departments are being lured away to information technology," said Vinegar. "To me this is sad because there really could be nothing nobler than working in something as important to the world as energy."
So at a time when new technology promises to blow the doors off of our old assumptions about how to find and produce oil and gas, there may be a shortage of people who understand how to use it. This in turn may affect how quickly the technology is adopted. Technology acceptance is generally sporadic in the oil industry. First it must be accepted at the intellectual, professional society-type level, which can take years because any new gadget or application that might cause a well to be lost is not likely to find operators lining up as guinea pigs. "For many operators, the days of having a low-cost operation that the company can afford to use as a test bed are just a memory," Weddle said.
Once it becomes generally accepted as something that works, the cost issue raises its ugly head. Many new technologies have limited applications and will not work well in all instances. Even the widely applicable ones can be extremely expensive. Even 3-D seismic, recognized as one of the most revolutionary technologies in the oil patch, was not commonly used for exploration until the unit cost dropped.
It is the service companies that drive that cost reduction. They shoulder an increasing share of the cost (and risk) associated with technology development, and they have a huge incentive to commercialize it quickly to make a return on their investment. This raises the specter of applied science replacing pure science in the oil patch, but it also offers the hope that service companies, many of which have absorbed some of the displaced R&D folks who used to work for oil companies, will move technology through the pipeline a little more quickly. This does, of course, create its own set of problems.
"Inherently the industry's changed," said Diz Mackewn, president of PGS Geophysical. "A lot of the research that used to be done by oil companies is now being outsourced. That means that you've got technologists in the oil companies who have the frustration of not being able to drive their own research programs. So their procurement processes are conservative."
Service companies, he said, then attempt to accelerate the process of technology advancement, which changes the risk-reward model. "I do believe that we've got the technology that the oil companies have been asking us for, so the question that the oil companies are really asking is if we'll give them the technology they need at a price they can afford. That's the conundrum."
Ultimately, new technology has its own impact on cost. "The technology development has been driving down the cost of production," Vinegar said. "You can see it going down continuously. I think industry has done a very good job of not only keeping the amount of proven reserves going up but also lowering the production costs."
A decade and beyond
Despite some hurdles, most technologists are optimistic about the future. Vinegar said he expects a shift in the energy mix toward cleaner fuels and technologies that will enhance the sustainable development aspect of the energy industry. He also expects to see a greater emphasis on natural gas and technologies such as gas-to-liquids and liquefied natural gas from floating platforms that allow the industry to exploit stranded gas.
In the longer term, he expects a move toward renewable energy sources and more hydrogen-based technology such as fuel cells. "There are many uses for hydrogen," he said. "It's clearly the cleanest fuel and the one that is completely sustainable. The ability to produce hydrogen cheaply from hydrocarbon resources is something we'll see increasing emphasis on."
It will certainly be a different industry than the one that exists today, just as today's energy industry bears little resemblance to what has come before. But it is hoped the technologists of tomorrow will share the pride and optimism of today's technologists.
"The things we can think of and do with the tools and techniques we have available now leave me excited about the prospect for continuing to improve our business," Weddle said. "The abilities of our workforce to absorb change have been demonstrated many times over the years, and the talent shown by so many of our people convinces me that we can make almost anything work given the need and the opportunity."
Added Vinegar, "I would encourage young minds that are coming out of universities to consider careers in this industry. The future is actually very bright."

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