The search for upstream technology solutions - Statistical Data Included

The upstream oil and gas business has become more adept at leveraging technologies developed or applied in other industries and adapting them to meet critical exploration and production needs. One successful example of this ability is the Natural Gas and Oil Technology Partnership (NGOTP) that operates under the U.S. Department of Energy (DOE) Office of Fossil Energy. This unique program brings together the resources of the petroleum industry and capabilities of DOE's 10 major national labs to address research and development (R&D) needs of the upstream petroleum industry. Current and proposed NGOTP projects are prioritized each year by industry review panels and are generally long-term projects. Other federal resources work on a more short-term basis for the oil and gas industry. In both instances, the Petroleum Technology Transfer Council (PTTC) serves as the liaison with independent producers.

Concurrent Technologies Corp. (CTC), an independent non-profit organization, is one such resource. Late last year, CTC sought PTTC's assistance in identifying very specific, technology-related needs in the upstream oil and gas industry. Through a Department of Defense (DOD)-funded project, CTC is focused on commercializing "dual-use" federal-lab technologies that meet both DOD and commercial sector needs. CTC is partnered in this project with the U.S. Army Industrial Ecology Center, UNISPHERE (a technology brokering group), and the Federal Laboratory Consortium (an umbrella for the nation's 700+ federal labs, not just those involved in the NGOTP program). Independent producers comprise one industry segment that CTC wanted to work with to identify technology needs and find potential short-term (18 months or less) federal-lab technology solutions.

Surveying for technology needs. In early 1999, CTC conducted 22 telephone interviews with independent producers. Beforehand, interviewees were asked to think about "which two or three things in the technology realm, if changed, would most impact profitability." This question was separately posed in the three general areas of: exploration, drilling/completion, and field production operations, with the understanding that policy options were not part of the survey.

In those interviews, producers expressed more than 94 technology needs--three-fourths of which fall within the six categories listed below (in descending order of the number of needs).

* Formation analysis and site characterization

* Drilling improvements

* Alternative materials or techniques to prevent or minimize equipment corrosion

* Saltwater/brine treatment and disposal

* Improvements in pumping/lifting

* Advancements in secondary and tertiary recovery.

CTC evaluated the identified technology needs to determine functional and operational characteristics, as well as similarities to other technologies. Particular emphasis was placed on where military and independent producer needs overlapped. To find potential matches, CTC staff searched federal-lab Internet sites and made personal contacts. Although focusing on defense-related projects, this process naturally picked up existing DOE programs, primarily those within the NGOTP.

CTC found several promising matches in the areas of: 1) saltwater/brine treatment (in ongoing NGOTP projects); 2) more efficient motors (ongoing projects in a university Advanced Energy Lab and within DOE's Office of Industrial Technologies-Motor Challenge Program); 3) remediation of crude oil spills (EPA Remediation Technologies Screening Matrix that collects information on available commercial technologies); and 4) alternate materials to prevent or minimize equipment corrosion for the U.S. Navy, which experiences similar corrosion problems in its saltwater environment. Personally, the last observation caused a "why didn't I think of that" reaction since my first couple of years after college I worked in a Navy R&D lab--in a materials group nonetheless.

CTC kicked off its search by looking to solve the very specific needs that were expressed by a few producers. Another approach is to survey a broader audience, accepting that the responses will be less specific. PTTC did this throughout 1998 by gathering industry responses--primarily from smaller independent producers--to a survey that ranked technology topics within six categories (exploration, drilling/completion, operations/production, reservoir/development, environmental issues and information technology). Respondents indicated whether the need was of high, medium or low priority. Ultimately, responses were received from more than 200 people--about 10 times the size of CTC's interview sample.

Strong interest in boosting productivity. Most "high or medium interest" responses dealt with reservoir and development concerns (as opposed to exploration) as well as operations and production issues. This is not a surprising response, knowing that independents now operate the majority of mature domestic fields. Producers are interested in technologies that will help them wring more oil and gas from mature fields, and most recognize that reservoir characterization is critical.

The independent producers that participated in the PTTC survey expressed specific interest in technologies that would help them: 1) produce more from existing wells, by identifying behind-pipe potential (includes logging advances) or through advanced stimulation; 2) prioritize in-field development through geologic targeting; and 3) increase recovery through improved oil recovery (IOR) using realistic screening criteria and benefiting from sound operating practices/guidelines, as documented in case studies. The survey responses indicated that the independents were confident in their abilities to explore for hydrocarbons in the U.S. The sole exploration topic of high interest dealt with geological play/basin analyses, reflecting that producers always need more data--a critical requirement for developing more reserves in mature fields.

There is a practical reality check on these empirical findings. PTTC's regions currently conduct over 100 workshops a year, with topics primarily selected by considering feedback from past workshop attendees and input from regional producer advisory groups. Topics chosen for workshops in the last four years do reflect producers' needs--and, in this case, confirm PTTC's survey results. First, operators always want more play-based workshops. Second, advanced logging has been a hot topic covered in many workshops. Third, reservoir characterization and geological modeling, which are critical to geologic targeting and IOR, are a common thread. IOR interest has not been as strong, but that is attributable to current economics and perceptions by independents that "IOR is too complicated."

As America's oil and gas producers struggle to find solid ground for their businesses, they will need more and more answers to their exploration and production problems. Independent producers are a diverse group whose needs can vary significantly based on size, resources and geography, among other variables. While efforts like those described will not address the needs of every independent oil and gas producer, they can help us focus our often-limited resources. With broad input and focused effort, it is everyone's hope that we will find profitable solutions.

E. Lance Cole, PTTC National Project Manager, with contributions from Rodney Sobin, Cuppett, and Jim Dawson of Concurrent Technologies Corp.

COPYRIGHT 1999 Gulf Publishing Co.
COPYRIGHT 2000 Gale Group