Industry
Energy, Resources & Utilities
Rebalance the energy equation
Highlights
- The paper highlights eight disruptive trends that are shaping the upstream oil and gas business by 2030.
- The industry is at an inflection point—with growth of unconventional reservoirs and digitalization of the oil field fueling it.
- The paper provides a perspective of how O&G upstream companies can ride and leverage the trends.
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Unconventional reservoirs will rapidly change the industry dynamics
The upstream oil and gas industry, with operators and service companies, is in the midst of an inflection point today, similar to the 2D and 3D seismic revolution in the 1980s.
This is similar to the 2D to 3D seismic survey revolution in the 1980s, that provided more comprehensive understanding of the subsurface, improving exploration success rates and optimizing reservoir management strategies.
The growth of unconventional reservoirs and digitalization of the oil field are two major forces driving a re-alignment of the industry and forcing the upstream players to re-imagine themselves to remain relevant and competitive.
Here are eight key themes that the upstream industry must watch to reinvent its strategic, tactical, and operational model.
Unconventional reservoirs such as shale, tar sands, coalbed methane, and tight oil required artificially induced buoyancy. New technologies with digitalization have created opportunities for the exploration and production of hydrocarbons, greatly reducing the risk and cost of finding, appraising, and developing these reservoirs.
These unconventional reservoirs in deep water, continental shelf, and onshore exploration and production have unique characteristics and challenges.
Significant proven recoverable volumes of hydrocarbons have been found in water deeper than 6,000 feet. Deep Water exploration and production are expensive, but with increased digitization and the advent of de-manned operations, they are reducing the costs.
Remote drilling on the seafloor with a minimal footprint will become a reality and significantly reduce risks. Underwater maintenance of production facilities will be performed by self-navigating autonomous robots using deep machine learning to manage underwater production operations autonomously. For instance, the PB3 PowerBuoy® is a technology that acts like an uninterruptible power supply (UPS) by harvesting energy from waves and reducing operational costs.
Today, most of the world’s production and reserves of hydrocarbons are on the continental shelf. Current challenges are inefficient supply chains, aging infrastructure, and decommissioning existing surface and subsurface infrastructure of depleted fields and non-producing platforms. Continental shelf operations will be heavily automated and managed from remote operations centers such as drilling rigs and production facilities.
While traditional onshore reservoirs will still contribute a significant amount of hydrocarbons to the world, the recent discovery and subsequent technological and process evolution to economically produce hydrocarbon from tight gas reservoirs has changed the dynamics of onshore operations. Due to the large number of similar wells needed to maintain production volumes, a more transactional type of operation is evolving, where standardization of processes and technologies allows for a factory approach for onshore reservoirs. Techniques like steam-assisted gravity drainage (SAGD) – an advanced form of steam stimulation – are now available for oil sands and heavy crude oil production.
Some of our favorite co-workers won’t be human
New capabilities with increased complexity and sophisticated facilities, will continue to shorten decision times. Artificial intelligence (AI) and machine learning (ML) with neural network automation platforms will support the operators and service providers with real-time analytics. Autonomous robots and cobots will be deployed in extreme non-human conditions. The human engineer will coach these assistants to improve efficiency. A quadruped robotic dog called Spot recently debuted in the North Sea to detect gas leaks. It not only managed to detect a hazardous leak accurately with a gas sensor but also safely initiated a shutdown process, thus reducing risk and speeding detection and response times.
Talent shortfall could be the next crisis in the energy sector
There is a huge talent shortfall in the industry. The equity values of O&G companies were crushed between 2014 and 2020.
This was followed by COVID-19, which accelerated retirements in the industry. Downturns and growing anti-hydrocarbon rhetoric have significantly damped down interest in oil and gas careers. Succession planning is a real issue as oil and gas enterprises wrestle with how to replace experienced senior engineers and managers with skilled new talent. Digitization of the industry is warranting new skill sets like agile, data science, analytics, and AI/ML.
Drill rigs and production facilities around the world and their operators and engineers will be connected through industrial social media platforms. Powered by Web 2.0, the technology can support industry requirements and connect with remote geographic locations. Companies will leverage newer mediums like podcasts to collectively share knowledge, solve problems, and build a robust knowledge base.
Liquified natural gas (LNG) will be the clean-energy pathway for the industry
Though the industry is called oil and gas, the oil business is distinctly different from the gas business, each with its own market drivers.
Technologies that would allow LNG production right at the wellhead are being tested. This would enable cheap gas production with efficient infrastructure, reducing investment costs of large LNG plants and easing transportation logistics. It would also give oil companies a path to pivot to clean energy.
Dynamic simulation of offshore oil and gas platforms with Digital Twins will help companies streamline asset management, reduce operational risk, optimize processes, and increase efficiency by building and maintaining these platforms faster, better, and cheaper.
Water requirements in the industry will drive reinvention
Hydraulic fracturing is a technique in which pressurized fluid is injected deep into the earth’s surface to fracture rock and create new cracks. A formation fracture procedure can use between 450,000 and 750,000 bbls of water, and the amount is increasing. The fracture zones are getting longer (for instance, a 10,000 ft horizontal well was drilled and completed in 2022). In many areas, water is scarce, and competition for it is getting fierce. Disposing of produced (used) water in other areas is becoming more difficult, as the traditional method of injecting water underground in a well is causing geological problems. Technology enhancements to treat produced water, such as carbon nanotubes and microbiology, might prove to be the solution.
Powering the future of exploration and production with digitalization
Human interpretation of seismic data will be a thing of the past. Acquired data will be fed directly to an automated interpretation platform that uses machine learning to do data correlation and verification and automatically interpret the data to create virtual models with proposed well locations and targets.
Autonomous rigs will move across the landscape. Onshore, this will be fed directly to a mobile rig fleet. At the same time, offshore drilling will be with floating structures - such as tension leg platforms (TLPs) - with required trajectory information to drill the well.
Autonomous rig fleets will move themselves to new drill locations fed to them directly by automated interpretation systems and get drilling targets from self-learning interpretation systems. With new data from other rigs in the same area, it would update wells and trajectories in real-time.
Dynamic simulation of offshore oil and gas platforms with digital twins will help companies streamline asset management, reduce operational risk, optimize processes, and increase efficiency by building and maintaining these platforms faster, better, and cheaper.
Supply chains will become more frictionless. Connected by Internet of Things (IoT) technology, the supply of materials to drill and operate oil wells and fields will be automated. Warehouses will be automated with robots managing inventory, picking, and shipping of required materials without human intervention – also called dark warehousing. Onshore, driverless trucks will reduce HSE (Health, Safety, and Environmental) risks with optimized routing. Wearables, smart devices, drones, and 3D printers will enable “just-in-time” deliveries of operating suppliers. With intelligent Master Data Management (MDM), the current overstocking and duplication of parts, which are rampant challenges in the industry, will be resolved.
There will be a renewed focus on oil recovery operations with new ways
Microbial-enhanced oil recovery (MEOR) processes will come into play. Microbes with nutrients will be injected into reservoirs with the ability to influence the physio-chemical properties of crude oil and reservoir conditions to benefit oil production.
On the surface, hydrocarbon-eating microbes will help clean up spills and decommission old facilities. Nano-bots are also becoming standard tools for secondary recovery operations like artificial lifts, which employs water and gas injection to displace the oil and drive it to the surface. All these will increase the recovery factor in all types of reservoirs, particularly in unconventional reservoirs where current recovery factors are in single digits or low teens.
Offshore production
Modular rig design and increased automation along with analytics-augmented maintenance practices will make it possible to optimize offshore production. These offshore platforms will be hyper-efficient, and hyper-dependable. Refurbishments will be a constant ongoing activity.
