CERA: New-Generation Technologies to Transform Oil, Gas Industry within 10 Years

The digital gadgets that make the workday more efficient are transforming the oil and gas industry as well, and could hold the key to increasing the world's energy reserves in the next five to 10 years, according to a study unveiled Tuesday by Cambridge Energy Research Associates (CERA).

The use of new-generation digital technologies, including remote sensing, visualization, intelligent drilling and completion, automation and data integration, could up estimated oil reserves worldwide as much as 125 billion bbl, according to CERA data. It did not detail the amount of natural gas reserve estimates.

The study, "The Digital Oil Field of the Future: Enabling Next Generation Reservoir Performance," focuses on new-generation digital technologies, including remote sensing, visualization, intelligent drilling and completion, automation and data integration. It was unveiled during the company's annual CERAWeek conference in Houston, and done in collaboration with more than 30 energy and technology companies, including lead sponsors Deloitte Consulting, Landmark Graphics Corp. and Intel Corp.

William Severns, CERA's research director of the multi-client study said the five "key" technologies "will be the core of a new, vastly improved set of tools that will enable energy companies to see reserves more clearly, plan optimal drilling and production strategies, and manage operations more efficiently. Tools based on these technologies are either already in use in the oil and gas industry, or will be commercially available within the next three to five years. With these capabilities, companies may be able to increase the amount of oil and gas recovered from a given field by 2-7%, reduce lifting costs by 10-25% and increase production rates by 2-4%," he said.

"The revolution in digital technologies could well transform the dynamics of world oil supply at a time when the industry faces major choices on investment," said Daniel Yergin, CERA's chairman. "Once again, concerted technological advance holds out the promise of dramatically expanding horizons and opportunities -- and changing the big picture for oil and gas."

However, it will take more than just the new technologies, said Dick Cooper, who leads Deloitte's worldwide oil and gas practice. He said it would require the alignment of "strategy structure, culture, systems, business processes and, perhaps most important, the behaviors of people." Cooper said that visionary companies wanting to capture "digital value" will need to create a climate for change, and then maintain strong leadership through the change.

Which companies or industry sectors will benefit most from digital technologies, and how quickly and broadly the improvements will be implemented across the energy industry depend on which of three scenarios is played out in the coming years, according to the study. In the first scenario, it will be "business as usual," where the digital technology is used incrementally to reduce costs, increase recovery and improve production, but with no fundamental changes in business models, competitive strategies or structural relationships.

In the second scenario, which CERA termed "leaders of the pack," companies that can best apply digital technologies and concepts will use them to gain "significant competitive advantage." Finally, "a new relationship" is the third scenario. In this group, a new set of large exploration and production companies, "potentially including former state oil companies and national oil companies, use the availability of turnkey solutions to optimize production and leverage into larger industry positions."

"At the heart of the digital revolution in the upstream energy industry is a shift from historic, calendar-based, serial processes to real-time, parallel processes for finding and developing oil and gas assets," said John Sherman, Landmark Graphic's executive vice president of systems. "Real-time data streams, combined with breakthrough software applications and ever-faster computers, are allowing the creation of dynamic, fast-feedback hydrocarbon reservoir models."

Sherman said the dynamic models, which would run in conjunction with remote sensors, intelligent wells and automated controls, would allow operators to "visualize like never before what is happening in the subsurface and accurately predict what needs to happen next to maximize production and efficiently manage field development." He said that scalable 3-D visualization technology used with data management and high-speed networks are already reducing cycle times by up to as much as 75% for prospect generation, field development planning and well design and drilling.

"The similarity of these technologies to those currently used and under development in other industries and the ease of their transferability to the oil and gas industry means traditional oil field service companies will need to develop new software and hardware capabilities, establish new technology partnerships, and perhaps face new competition," said Severns.

Cooper added, "as with all transformation change, the soft stuff will be the hard stuff when it comes to moving toward the digital oil field of the future. The bits and bytes will work, but the biggest challenge relates to adoption and assimilation -- people changing how they work."

To learn more about the CERA study, visit the web site at www.cera.com,or contact Anne Rhodes or Theresa Spire at (713) 222-1600.

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