The goal of this presentation is to discuss the critical issues involved in developing an effective technology strategy for optimizing reservoirs. I’d like to focus more on unconventionals (shale gas, shale oil, tight gas, etc) because they really rely on new technologies in order to obtain commercial levels of oil and gas production. The reservoirs tend to have low permeability / low porosity and thus have been unproducible historically speaking. However, with the advent of new techniques of horizontal drilling and multi-staged hydraulic fracturing, with tight cluster patterns, along with infill drilling, stacked pays, pad drilling, it is possible to produce often almost astonishing volumes considering these are onshore, and previously unproducible zones. However, there are always challenges. The first is the fact that the new technologies are new – which means that someone gets to be a guinea pig. The early-adopters are going to benefit from the possibility of dominating the market or the technology-space. However, the price is high, and they may not be able to maintain their position as soon as high costs start to kick in. As the technology turns into a truly disruptive phenomenon, the innovators can win. However, they need to have a strategy in order to do so – otherwise, others will benefit from the expensive “lessons learned” and often painful victories. Similarly, those who purchase their entry into new technologies (and new plays), may find there are pitfalls if they do not have a good technology strategy in place. They may pay too much, acquire the wrong type of technology, or worse – they may obtain technology and a leasehold position that are not ideal, and ultimately cannot achieve goals.
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Technology Strategy Considerations in Reservoir Optimization
Susan Smith Nash, Ph.D. AAPG
Real-Life Scenarios Stage 1 Operations: Acquiring Acreage /
Selecting Locations / Managing Operations Stage II Operations
Beyond HBP: Strategic Development Capital Issues: Investors,
Partners, Mergers, Acquisitions
Who are you talking to? Technical team (including specialists /
managers) Executive level (since your strategy will shape the
overall trajectory of the company) Land and legal team
Match Technology to Overall Goal Common understanding of
organizational mission / vision Predictable financial behavior (if
youre a public company, Wall Street hates uncertainty; if youre
looking to sell, so do potential buyers) Leadership: 10 years in
the future 20 years in the future Susan Smith Nash, Ph.D. 6
Field/Reservoir Development Capacity-building infrastructure,
built for future financial flexibility Assume continued ownership
Assume eventual merger or divestiture Assume proof of concept
flipping Assume NOC partnering (and selling your ability to train
and perform effective technology transfer to build technological
know-how and capacity within their human capital) Susan Smith Nash,
Ph.D. 7
Leadership Simultaneous Scenarios Long-term Near-term Susan
Smith Nash, Ph.D. 8
Leadership: Current Volatility Political climate: does this
affect the types of approaches you can take to identify sweet spots
and exploit them? Environmental climate: aquifers? Water quality?
Droughts? Induced seismicity? Unpopular reconnaissance tactics
Unpopular drilling approaches Unpopular completions Unpopular
Enhanced Oil Recovery The Shock of the New The Freshness Factor The
Allure of the Fantastic Susan Smith Nash, Ph.D. 9
Technology Strategy What do you think is the single technology
that will make the most significant difference in optimizing oil
and gas shale production in North America? (World Oil / Shale
Technology Review, July 2013) Hydraulic fracturing Optimizing frac
stages: reduce water and proppant per well Horizontal lift to
dewater horizontal gas wells Water management Drilling optimization
Susan Smith Nash, Ph.D. 10
Strategy & Definitions (Sweet Spots) Recognizing the
definitions are functions of current technological limitations (or
perceptions of such) Unconventionals / Shale Plays Brittleness (and
ways of determining it) Fracture networks Faults and other
structural determiners Porosity (granular / secondary /
dolomitization, etc.) Permeability TOC and maturation factors Susan
Smith Nash, Ph.D. 11
Strategy & Definitions (Sweet Spots) Recognizing the
definitions are functions of current technological limitations (or
perceptions of such) Deepwater Turbidite architectures
Compartmentalization due to permeability barriers Salt deformation,
etc. Susan Smith Nash, Ph.D. 12
Business Drivers: Technology Strategy Can impede sweet
spot-driven approach (need to hold the acreage or continuous
drilling clause, as in some unconventionals and also in offshore
blocks) Can restrict the type and amount of technology used (need
partner buy-in for expensive seismic acquisition and/or processing
/ re-processing) Cost-benefit analysis / ROI for each important set
of data and/or test List and include in AFE and/or Joint Operating
Agreement Can cause one to miss the window for the tests / data
gathering (example: seismic, cores, logs, etc.) Susan Smith Nash,
Ph.D. 13
Partners, Teams, & Technology Strategy Partner issues
(disagreements, non-payment, election not to participate) can lead
to the wrong focus in belt- tightening need to re-think the
difficult choices Engineers and geologists must be able to see
through some tactics used in well-timed production manipulations
(just before earnings reports, etc.) Lack of midstream facilities
can skew numbers, and weaken case for new locations and/or tests:
Service companies recommending a path of action need to be well
aware of any and all midstream issues, and also the big picture
Susan Smith Nash, Ph.D. 14
Monitoring Progress As You Go Measurements and Analytics What
metrics do you gather as you go? How do you know theyre
appropriate? Meshing metrics / cluster analyses Decisions that must
be made as you go Cluttered, undifferentiated, potentially
obfuscating data The danger of oversimplification Susan Smith Nash,
Ph.D. 15
Multi-Disciplinary Strategies Examining multi-disciplinary
Blending Overlaps New lenses How is multi-disciplinary strategic?
Requires an approach to do it well Leadership is a must Visionary
leadership Emulatory leadership Susan Smith Nash, Ph.D. 16
Benefiting from MultiDisciplinary Strategic Decisions
Technological breakthroughs New adoptions: of technique and also in
new applications / places Where something must be done, due to time
/ cost / depth / complications Examples: new types of core analyses
/ innovative frac techniques / processes / imaging / logs /
integration Susan Smith Nash, Ph.D. 17
How Do You Gain an Edge? Consortium? University of Oklahoma
(shales / geomechanics) Colorado School of Mines (play-based:
Niobrara / Bakken / Vaca Muerta) BEG (deepwater / Marcellus) DIY
research? ExxonMobils upstream research lab Service companies?
Breadth of knowledge, experience, hands-on Sometimes under pressure
Consultants? Experience, vision, may be booked up Contractors?
Ephemeral resource? Susan Smith Nash, Ph.D. 18
Achieving Strategic Objectives with Technology Geology /
Geophysics As many studies as you can Cores / reservoirs /
analytical tools / logs / petrophysics Nano-scale Smart sensors
(drilling, fracing, production) Drilling / Completions Proof of
Concept Integrate geology / structure / fractures with drilling
data / production data (fractures / joint sets / pressures
Integrate & bring together data sets, seek patterns Seismic /
microseis / cores / petrophysics / imaging Tie to production Susan
Smith Nash, Ph.D. 19
Analytics / Big Data: The Road Ahead Cluster analysis Patterns
Integration of different knowledge sets Whats relevant? Whats not?
Susan Smith Nash, Ph.D. 20
Reality Must think ahead to potential business- driver
impediments and be sure to anticipate Develop a preemptive strategy
to be able to obtain the data needed to make good decisions based
on best practices and utilization of best technologies Susan Smith
Nash, Ph.D. 21
