(Tech Connections Column, October 2007, American Oil and Gas Reporter)

The opportunities of the future depend on advanced technology from basic and applied research coupled with effective technology transfer that expedites application. The goal is to speed the adoption of exploration and production technology. A few observations gleaned from other sources substantiate these points.

The Society of Petroleum Engineers held its first “R&D Conference” in San Antonio (Journal of Petroleum Technology, August 2007). More than 130 individuals focused on the challenges, a major one being that the E&P industry spends less on research and development, and takes longer to implement new technology, than other industries. Tony Meggs, group vice president for technology with BP, encouraged more collaborative research.

In one of the sessions, attendees did some blue-sky brainstorming about research projects. Ideas included automating and digitizing much of the oil field, injecting smart fluids down hole that selectively block water movement and allow oil to flow, and bionic wells where laterals form and move into promising reservoirs on their own using remote sensing. In the environmental realm, the focus was on carbon capture and sequestration (CCS). Ian Potter of the Alberta Research Council noted that cost scenarios put CCS at between $50 and $100 per ton of carbon dioxide, but costs are likely to drop with concerted research. Coupling CCS with enhanced oil or gas recovery makes both more attractive.

When it comes to people, SPE President Abdul Al-Khalifa stressed how a “people first” philosophy that aligned personnel interests with corporate interests would increase industry potential. Others noted that people needed to be equipped with the right tools or they went stale, and companies needed active interaction with universities to ensure that new professionals had the right training.

Regarding technology challenges, Texas A&M’s Stephen Holditch offered cogent observations at a Drilling Engineering Association conference in Galveston (Drilling Contractor, July/August 2007). In the area of resource assessment, he noted that better methods were needed to quantify the U.S. unconventional gas resource base, especially shale gas. This includes understanding naturally fractured reservoirs better as well as how to find the “sweet spots.” His vision includes using literature and available data to determine the optimal completion and stimulation methods by basin and formation. Building on this knowledge of U.S. reservoirs, extrapolations could be made to the worldwide unconventional resource base. Regarding very specific research areas, he noted needs for better low-temperature (less than 250 degrees F) breakers in fracture fluids, improved knowledge of how to optimize completion/stimulation of thick, multizone intervals, and myriad technologies for high pressure/high temperature operations.

It is well known there is a learning curve for different shale gas plays–applied R&D, so to speak. Take the Fayetteville Shale, for example. Arthur Berman, contributing editor for World Oil, analyzed data from 187 Fayetteville completions (World Oil, August 2007). His analysis found little economic justification for the play. He couldn’t substantiate reserves claimed by operators– none of the vertical wells looked like they would recover drilling and completion costs and only three of 136 horizontal wells looked economic in the most-likely case.

One could argue with Berman’s analysis, but a primary observation appears valid: It is evaluation (moving up the learning curve) and not continued drilling that will be most fruitful now. With more production history, better understanding of best exploration practices, and more cost-efficient drilling and completion practices, the economic outcomes will most likely be significantly better.

Conferences such as the Oklahoma Independent Petroleum Association’s Mid-Continent Coalbed Methane & Shale Gas Symposium (Sept. 30-Oct. 1 in Tulsa) or the Strategic Research Institute’s 2007 Unconventional Gas Resources Conference (Nov. 29-30 in Denver) are good tools for cross-fertilizing ideas. A past, similar example is the PTTC Appalachian Region’s workshop that focused on similarities/differences in shale gas plays.

It’s not only shale gas that has a continuous learning curve. For those engaged in or contemplating CO2 flooding, there is the annual CO2 Flooding Conference in early December in Midland, Tx. There are always good case studies, plus a relevant field trip. This year the associated “carbon management” workshop is being held in Dallas. If more of that collaborative R&D referenced in the initial paragraph of this article gets going, CO2-enhanced oil recovery with anthropogenic CO2 will become more widespread.

Technology advancements have benefits only as users become aware of them and develop confidence in where to apply them. A primary goal of PTTC remains conveying technology-related information in a manner that will stimulate application. By the time this column is read, PTTC will be managed by the American Association of Petroleum Geologists. Many things will be different, but the bottom line focus on technologies that can be applied today will remain. Keep your ears tuned and plug into the next phase of PTTC’s life–your bottom line will benefit.