State-of-the-Art Summary

Surviving the Oil and Gas (Professional) Shortage
by Karl Lang, Hart/IRI Fuels Information Services

Much has been written about the improvements in productivity in the E&P industry during the past decade. High profile technologies like 3-D seismic and directional drilling, as well as many less dramatic but significant changes, have received a lot of the credit for gains in the efficiency of locating and producing oil and gas. Coupled with the increase in M&A activity and the accompanying cycles of downsizing, few will not agree that a smaller number of individual engineers, geologists and geophysicists are relying on new technology to manage a larger workload. A recent survey by Hart Publications (Hart's E&P, July 2001) revealed that the number of projects a given producing company engineer is responsible for has increased by more than 50% since 1990, and by 300% since 1970.

These productivity improvements, driven by the demand for bottom line economic performance, have been accompanied by a drop off in E&P hiring. From 1992 through 2001, the worldwide demand for petroleum engineers has decreased 4 percent while demand for electrical, civil, mechanical and chemical engineers over the same time period increased between 20 and 25 percent. With companies hiring fewer technologists, the average age of those remaining is increasing. A look at the trend in member age distribution for both the Society of Petroleum Engineers (SPE) and the American Association of Petroleum Geologists (AAPG) supports this fact (see Figures 1 & 2). The data for the Society of Exploration Geophysicists (SEG) is also striking, with the median member age rising by ten years over the 1990 to 2001 time frame.

Figure 1

Figure 2

With demand for energy rising, it is clear that a shrinking number of geologists and engineers will be called on to handle the expected increase in drilling and production activity (assuming there are enough rig hands available to drill the wells … a whole other problem). What are companies doing to handle this growing oil and gas professional employment gap? It depends a lot on who you talk to. Folks at the larger service companies will tell you that the shortage of technologically adept people will always be there and companies will have to rely more on outsourcing to find capabilities and technologies. They will add that many operators are asking them to take up the slack and provide play analysis along with exploration or production services. But that just shifts the shortage to another location. Some larger E&P companies will say that they are now raiding non-oil and gas companies looking for competent technical people who can be trained to handle oil and gas operations, but the competition is tough, training takes time, and the E&P industry suffers from its image as an employment "roller-coaster."

What is most likely is that the trend towards a dwindling supply of petroleum engineers, geologists and geophysicists will not turn around soon and companies will need to rely on continued incremental improvements in efficiency for their business model to succeed. The companies that prosper will be those that are able to continue to identify and take advantage of ways to extend and build the capabilities of the people they employ. Two ways to do this: 

• Make it easier for fewer people to accomplish more through better handling of information.
• Improve the way professional knowledge is managed, expanded, and conserved.

Information Handling

For example, Pennaco Energy Inc. (now part of Marathon Oil Co.) has been one of the Rocky Mountains' most successful developers of coalbed methane (CBM) resources. In the Powder River Basin, the hottest CBM play in the region, Marathon-Pennaco is successfully utilizing technology to make it possible for fewer people to accomplish more. Developing the Powder River CBM resource requires a large number of shallow wells with subsurface pumps, each of which needs careful monitoring to optimize the dewatering of the coal seam and associated gas production. Under typical circumstances, adding two or three new wells a day over a years time would require doubling the number of pumpers. Marathon-Pennaco, by utilizing a combination of wellhead pump controls, electronic metering and communications systems, has found a way that allows the same number of pumpers to handle two or even three times the number of wells.

At each wellhead, produced gas and water volumes are measured electronically, as are surface flowline and subsurface pressures. A remote terminal unit (RTU) at each wellhead calculates water levels using the pressure data. Each RTU incorporates a radio link to the office in Gillette, Wyoming. Information from each well is transmitted hourly to the engineering staff in Denver.

One of the most important benefits of the system, however, is the manner in which it is utilized by the operations people in the field, says Dave Looper of ABB Inc.'s Totalflow Products Group. "Each pumper can monitor the wells in his area of responsibility from a phone or Internet connection, and make decisions about how best to schedule his time …which wells need onsite attention, which ones don't." Adds Looper, "The same electronic link can then be used by the operator to make remote changes to the pump rate to optimize gas production without even visiting the well."

In addition to Marathon-Pennaco, other coalbed methane producers such as Devon Energy and Evergreen Resources have turned to similar systems to permit them to economically monitor and optimize production from a large number of relatively low-rate gas wells, says Looper. "Coalbed methane production has just the right combination of production characteristics and operational demands for a system like this to make a lot of sense." One of the reasons the automation of production data collection and well monitoring worked well here was that the whole system was integrated from day one.

But too much data can also become a problem. The Hart survey, mentioned previously, found that many engineers believe their greatest challenge is dealing with too much data. One reservoir engineer at a major oil company said, "I think the most significant challenge we face is data. Systems have improved and we're getting a lot more data thrown at us…the problem is that it is coming from dissimilar sources so being able to integrate and make sense of it is the problem." Most engineers get daily production reports but those with large companies say that much data are captured in many different ways (SCADA systems to tally books) and putting it together coherently can be time intensive.

Data incompatibility is an important barrier to reaching the "Holy Grail" of many engineers in the survey: a fully Web-enabled system that permits remote, real-time monitoring of wells and reservoirs. But the cost of solving a company's data integration problems may be many times the cost of the software systems designed to use the data. One participant in the survey, Trem Smith, Director of Reservoir Management and Technology for Chevron's Thailand business unit, summarized the problem this way: "Becoming Web-enabled requires people to change the way they do business …if you underestimate the time and cost of getting that done, you'll fail."