Inside Energy: Below ground technology
With oil prices now at a six year low, oil companies have been idling hundreds of drilling rigs. For the wells that remain active, the key is getting more out of less...which is tricky because when you drill for oil, only around 5 percent of what’s underground is actually recovered. That’s according to the US Energy Information Administration. So at any given well, more than 90% of the oil is generally left underground! Inside Energy’s Leigh Paterson reports on how these days - with prices so low - producers are using below ground technology to chase oil thousands of feet below the earth’s surface.
(SOUND UP EXEC OF VAIL GLOBAL ENERGY FORUM)
“Well welcome, its terrific to have such a great crowd here”
At the recent Vail Global Energy Forum in Colorado….
(SOUND UP JIM BROWN) How do we make, simply put, better wells?
that was the million dollar question from Halliburton’s Jim Brown and other oil executives here, on a panel about innovation in hydraulic fracturing. Here’s the moderator Mark Zoback, a geophysicist from Stanford University:
(SOUNDBITE MARK ZOBACK)
What’s been lacking is an improvement in our knowledge of how these complicated reservoirs work.
Zoback says that since the beginning of the oil and gas boom, there’s always been a push for innovation and greater efficiency. Until recently, the emphasis has been above ground -- and its worked: for example, in many oil fields, the time it takes to drill a well has been cut in half over the past few years.
(SOUNDBITE MARK ZOBACK)
“There is sort of an attitude that at a sufficient price, if you drill enough wells and do enough frack jobs, you’re gonna make money.
That was then, this is now: producers are not drilling as many new wells. So they’re starting to focus underground- using new methods to find the the areas richest in oil, known as sweet spots. Halliburton’s Jim Brown offers this example:
(SOUNDBITE JIM BROWN) We’ve developed a biodegradable diverting agent that we can pump in real time and direct that frack.
The product, called BioVert, is a chemical substance that diverts fracking fluid towards the rock formations with the most oil and gas. Brown claims that two operators in the Bakken started using this stuff 6 months ago and they have already seen production go up 36%
(SOUNDBITE JIM BROWN)
“If you look at Halliburton, we spend about three quarters of a billion dollars a year on R+D”
Brown says they’re now directing most of thse dollars to research and development on below ground efficiency.
(SOUND UP JIM Brown)
Again, simply put, how do we get more out of each well?
(ambi door opens)
In Wyoming, an energy services company called WellDog has just received a shipment of products that could be part of the answer. CEO John Pope leads me into their brand new warehouse.
(SOUND UP “hey look busy hahahaha’)
Where we come across a lanky Australian draped on a couch
(SOUND UP “This is Mike Seaford”)
Just in from WellDog’s Australian office...
(SOUND UP JOHN POPE)
“We brought Mike over to support the WatchDog business as it really gets going”
The WatchDog business is one of WellDog’s products - yes, they are really working that canine metaphor. WatchDog is made up of a sensor that collects data deep underground that is then sent up to a computer via thousands of feet of cable.
(SOUNDBITE BITE JOHN POPE)
“That information can be used by the operators to do things such as indicate whether the well is healthy…”
as well as things like where to frack, and where not to frack. These days, that sort of information is in high demand. Last year, the company almost doubled its US workforce. And sales of the Watchdog product so far this year are ALREADY more than three times what they were for all of 2014. John Pope says while this sort of so-called downhole technology isn’t entirely new, the scramble to offset low oil prices is.
(SOUNDBITE JOHN POPE)
“In boom times, optimizing can lead to increased profits. In challenging times, optimizing can make the difference between profits and no profits.”
Riding the boom and bust of the oil business itself, WellDog is no stranger to tough times. The company had plans to move into this warehouse complex- the one they’re expanding into now- in 2007… and then the recession hit.
(SOUNDBITE JOHN POPE)
“...by the time the building was available they were laying people off and preparing to go into bankrupcy.”
It is too early to really know IF all this technology and money is going to wrestle significantly more oil from the rocks. But consider this: although the US rig count IS down nearly 40% since this time last year, this month, overall crude production in the U.S. is predicted to go up.
For Inside Energy, I’m Leigh Paterson