A pump collects data about the oil it is hauling to the surface and re-configures its operations to handle the crude more efficiently. A roughneck tripped up by a repair job logs into a mobile device from the rig and downloads a training video. Drones fly out to remote locations to inspect oil field equipment and scour the best places for new well pads.
This is the digital oilfield, as envisioned by Houston-based oil producer Occidental Petroleum.
As oil companies hunt for new ideas to save money amid a global crude slump that’s dried up revenue and forced a retreat from once-booming shale plays, they are increasingly turning to the tech industry for nontraditional ideas that could help them operate faster and better than their competitors.
“I think there’s a tremendous amount of technology that’s currently in our pockets and in use in the consumer world … that are improving not only the way we live, but could also impact the operational inefficiencies that we have a challenge with in the oil field,” Yanni Charalambous, vice president and chief information officer at Occidental Petroleum. He shared the company’s vision about the future of the oil industry Tuesday with an audience gathered in Houston for an annual innovation expo hosted by software company Landmark, a division of oil field services giant Halliburton.
Falling oil prices may be battering exploration and production companies and forcing industry-wide cutbacks and layoffs, but the downturn hasn’t curtailed the appetite for sophisticated technologies that promise to transform the old school oil patch where reports still get jotted down on paper and workers waste huge amounts of time traveling between corporate offices and remote drill sites.
Oil companies have long struggled to capture and process the vast amounts of information collected from the oil field in part because some of the reporting continues to be done on paper, but also because the industry has been overwhelmed the by the sheer amount of data to crunch, Charalambous said.
Lower oil prices intensify the industry’s scramble to figure out how to unlock the secrets buried in reams of data gathered during exploration, production and drilling to be able to operate faster and better, Landmark’s vice president Nagaraj Srinivasan said in an interview with Fuel Fix.
“If prices stay lower for longer, the only mechanism to keep a sustainable low-cost view is to invest in technology and innovate,” Srinivasan said. “Because at the end of the day, that’s what changes your fixed cost structure.”
Underscoring his point, Srinivasan said the Landmark conference has doubled its attendance numbers from last year
While the technology can be expensive, the long-term payoffs outweigh the upfront costs, underscoring the need for oil companies to invest in innovation even while they look to cut costs elsewhere, Srinivasan said.
Although Occidental’s profits tumbled 85 percent in the second quarter on declining oil prices, the exploration and production company is still pressing forward with a project aimed at taking advantage of the growing proliferation of intelligent equipment, advanced data crunching and mobile devices that allow workers to file reports from the field.
Many exploration and production companies have relied on traditional cost-cutting methods to weather the slump – squeezing more from existing technology, pressing suppliers for ever-deeper discounts – but Occidental is hoping to find a new approach in its digital oilfield initiative, dubbed Project Re-Imagined Oil Field (RIO).
The so-called smart technologies used in devices that control temperatures in households and monitor a person’s fitness levels haven’t yet gained mainstream acceptance in the oil patch, but the possibilities are huge if exploration and production companies can figure out how to harness their power, Charalambous said.
No longer do companies have to send workers to remote regions to find the best drilling spots or conduct routine inspections of rigs. They can send drones instead to do the same risky jobs that pose potential dangers to employees, Charalambous said.