Surviving the Oil and Gas
(Professional) Shortage
by Karl Lang,
Hart/IRI Fuels Information Services
Excerpts in PTTC
Network News, 3rd Quarter 2001
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."
Knowledge Management on the Internet
The overall success of E&P industry Internet enterprises is a topic that has been the subject of much scrutiny. It appears that online auction sites for properties and equipment are still standing (and in a few cases, prospering) while e-procurement sites, with a few exceptions, have not fared so well. Most information subscription sites have not fared well either. Also, company worries about putting their proprietary information outside their firewalls have kept them from taking advantage of some of the online application services that have been offered. Producers and service/supply companies have embraced the efficiency of the Internet for communication with colleagues, vendors, customers, and management, but not for buying all types of goods and services.
However, one application of the Internet that will undoubtedly grow will be in helping E&P professionals expand their professional knowledge and their employers in capturing that knowledge for wider use, both in time and space.
"Knowledge Management" has come to mean different things to different people, but it can be as simple as figuring out what solutions work and distilling them into packages that can be shared with other professionals in the business unit or elsewhere. E&P companies have been spending significant amounts of time and money on crafting ways to do this better, but one of the problems they find is the large amount of time and energy required to carefully record, evaluate and package the information needed to achieve this goal. The Internet will play an increasing role, not just in providing a way for individuals throughout a company to access information, but for helping them learn how to use that information to effectively solve problems.
For example, Gas Research Institute (GRI, now GTI, Gas Technology Institute) has developed a proven analytical process - Successful Practices™ - to identify and reduce costs associated with performance inefficiencies. The precursor of this effort, GTI's Successful Practices drilling projects, have been estimated to have saved the industry roughly $226 million in avoided costs between 1995 to 2001. In studies covering 11 different geographic areas, GTI helped to define specific regional drilling practices that resulted in improved efficiency and well cost reductions. The differences between the "business as usual" average well cost and the "most successful" well cost varied by region, but the average operator could realize a decrease in well costs of approximately 19 percent. Drilling operations plans compiled and published for each region provided operators with enough detailed technical direction to take advantage of these savings in their own operations. A post-project analysis in one of the project areas revealed that participating operators that applied the plans required 20 percent fewer days to drill a well than non-participants targeting the same objectives.
Building on experience in Successful Practices assessments, GTI is working with the Department of Energy (DOE) to develop a computer-assisted "virtual intelligence" tool that will assist Oklahoma independent produces to optimize practices on their own using artificial neural networks. The project will include two field demonstrations to verify the results of optimized practices. Results from these field projects will be compared against the common practice baseline that will be developed in cooperation with the participating industry members. The goal of the project is to increase oil production by an average of 15 percent over a period of 5 years, employing technologies that cost the same or less than current practices.
Individual companies that wish to perform the same sort of assessments within their own organization can benefit from this expertise and also from finding ways to use the Internet to allow their employees to access and apply the results interactively. In the not too distant future, engineers faced with a particular problem will be able to access a database of solutions, based on the collective knowledge of their company's (and perhaps other companies') current and past engineering talent. The results of their application of that knowledge, success or failure, will then be fed back to become part of the knowledge base.
Online Learning
The same engineers, as well as geologists and geophysicists, will be able to expand their general knowledge using the Internet. While major companies like Shell, Chevron, Texaco,
Conoco, and BP are developing online learning centers for their professionals, smaller companies can take advantage of the opportunities for online learning that are being provided by associations and universities.
The SPE now offers five online courses taught by recognized experts and plans to develop more electronic courses with interactive examples as part of its $10 million eSPE initiative. The Bureau of Economic Geology (BEG) at the University of Texas at Austin has teamed up with the American Geological Institute to provide the Multidisciplinary Continuing Education
(MCE) program's interactive, game-based courses. Unlike many Web-based programs, MCE users participate in the decision-making process and apply new knowledge to real-world problems, according to Scott Rodgers, developer at BEG.
About 90% of higher education institutions in the U.S. now offer courses online. Texas A&M University offers its entire Master of Engineering degree through distance learning. Videotapes of classes held on campus are digitized and shipped on CDs to students who view them on their PC. The university is researching how to cut down on the file sizes so the videos can be sent over the Internet. Students both on campus and out of state can post questions about research problems or homework to a bulletin board where all members of the class have access to the discussion. Last December A&M graduated the first eight PDVSA students with Master of Engineering degrees via Internet.
Colorado School of Mines created Mines Online to provide both graduate programs and certification courses over the Internet. The Certificate in Petroleum Geology contains seven "knowledge modules" for petroleum engineers that last 3-6 weeks.
The Southern Alberta Institute of Technology (SAIT) has teamed with Mecca Media Group to produce CD-ROM and Web-based training products for the oil and gas sector. The first release was Gas Process Operations (GPO) Instructional Resource, which included SAIT's entire GPO course along with a library of 2,500 graphics and 350 animations to provide gas plant operators with real-life situations. "Once the Web-based version is available, operators worldwide will have immediate access to best safe practices regarding any aspect of oil and gas operations and maintenance," said Mecca Media president Jim Armstrong.
As the ranks of professional E&P technologists contract, the storehouse of knowledge on how to succeed in finding and producing oil and gas will increasingly be found in a smaller and smaller set of individuals. Companies that can expand and capture their employees knowledge will have an advantage over those enterprises that fail to do so.
Author: Karl Lang is Director of Custom Publishing at Hart/IRI
Fuels Information Services. He edits GasTIPS, a technical journal produced by
Hart for GTI. He also writes for a number of Hart energy publications. E-mail:
klang@phillips.com
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