Management: Supporting the Virtual Oil Company
Authors: Thompson Steve 
Published: February 2015

Talking about the future often conjures up fanciful ideas that may spark the imagination but never actually materialize in the real world. But what happens when technological promise and potential literally pay off right at the rig? For suppliers of wellsite instrumentation and business integration services, it means they are reporting some eye-opening statistics experienced by operators, including performance improvements in rate of penetration of up to 20% and significant, measurable decreases in rig downtime. The big picture is one of an industry moving from being very manually intensive to one populated with oil companies of the future, with automation a driving factor.

Back to the Future

Many oil companies are returning to their roots or core competencies—focusing on finding oil and gas. In taking that route, many other tangential aspects of their operations that do not add appreciable value to the organization are being wholly or partially outsourced.

At the same time, a demographic tide of change is occurring in the industry's workforce. In recent years, knowledge transfer has become a significant issue for a pragmatic reason. A large chunk of experienced people is disappearing through senior worker attrition, igniting a frantic need for development of freshmen and sophomore successors.

Although that has created an industry hurting for experienced people, service companies have stepped in with innovative solutions, most specifically new technology, to help oil companies over the human resource hump. Fortunately, hiring of petroleum engineers, geologists, and related professionals is again on the cyclical uptick, but it always takes a while before new hires are successfully integrated into the workforce from the standpoint of being genuinely productive.

In other words, service companies are helping oil companies of all sizes—from small independents to large, fully integrated organizations—to bridge the gap in the experienced personnel shortfall by developing and providing creative technology that increases operational efficiencies. This includes not only electronically gathering data about the drilling process, but also integrating all that information with mission-critical business applications as well. Another example involves development activities to optimize performance drilling applications by taking that drilling information (e.g., weight on bit, revolutions per minute, torque, and other measurements recorded on a daily basis) and feeding it through algorithms to compute mechanical specific energy (MSE) to help drillers, contractors, and operators drill more efficiently.

And the process can work various ways. Depending on a service company's size and its breadth of competencies, the service company may generate new ideas and techniques, then bring them to operators and drilling contractors. Or, new techniques and methodologies may be jointly developed between service companies and oil companies. For example, on some current projects, oil companies are collaborating on MSE applications with a service company to understand how to apply the measurements to their daily drilling activity. On a single-well basis, savings and efficiencies may seem somewhat minimal at first glance, possibly up to USD 15,000 total, but, aggregated across a field in a domestic drilling program, it delivers a significant impact on an operator's business.