DRILLERS TURN TO BIG DATA IN THE HUNT FOR MORE, CHEAPER OIL

Just a few miles down the road from Facebook’s headquarters, Schlumberger’s Software Technology Innovation Center in leafy Menlo Park feels like just another Silicon Valley business with dreams of changing the world.

Walls are covered with Post-it notes with ideas for product features and design principles, and the canteen has bowls of fruit and a shared pizza delivery every Friday lunchtime. Some of the engineers use standing desks and balance boards to exercise while they work. They are drawn from a diverse range of countries and industry backgrounds: one was at NASA before coming here, another worked for HBO.

Like many successful engineers in northern California, Ashok Belani, Schlumberger’s executive vice- president for technology and the force behind the center, drives a Tesla to work.

What Schlumberger is doing, however, is far from typical for Silicon Valley: it is working to increase output and cut costs for an activity at the heart of the old economy, oil and gas production.

The technology center that the oilfield services group has created is a sign of the huge changes under way in oil and gas, as the industry begins to adopt the latest innovations in information technology. Techniques such as advanced data analytics, used by Google, Facebook, Amazon and others mainly to disrupt consumer-facing businesses, are now increasingly being applied to the energy industry. Many oil executives believe the results could be similarly dramatic.

The new opportunities being opened up include analysis of rocks to target wells more precisely in oil-bearing areas, reservoir models to enable production to be maximized through the lifetime of an oilfield, and automation that can make operations safer, more efficient and cheaper.

The increased production made possible by these innovations will put downward pressure on oil prices, creating headwinds for competing technologies including electric cars, and potential difficulties for producers in other countries that are not able to cut their costs the same way. It will also mean disruption for many in the oil industry, with job losses and changes in working patterns and culture.

Matt Rogers of McKinsey, the consultancy, says forecasters have failed to grasp fully the scale of the coming changes. “I don’t think we’ve built into our supplyside models just how much more oil this will provide,” he says. “The world in 10 years will feel very different . . . It’s going to feel like we’re in Star Wars compared to where we are now.”

The oil industry has for decades been at the cutting edge of advances in information technology. John Browne, the former chief executive of BP, began his career at the end of the 1960s mapping oil reservoirs in Alaska using a computer that was the state of the art at the time. On the Top 500 list of the world’s most powerful supercomputers today, the leading private sector owners include Total and Eni, the French and Italian oil groups, and Petroleum Geo Services, a reservoir imaging company.

The difference now is the rise of cloud computing services, which make it possible to store and analyze data at a relatively low cost, opening up possibilities for new applications for a much wider range of companies. The oil industry generates large volumes of data, both structured, such as temperature and pressure readings; and unstructured, such as video footage — and the quantity is growing all the time. The cost of sensors for collecting more data are falling and their sophistication rising, making it possible to monitor more aspects of an operation such as drilling a well.

Bill Braun, chief information officer of Chevron, the US oil group, says the volume of data the company handles has been doubling every 12-18 months. The expansion of its Tengiz oilfield in Kazakhstan, scheduled to start production in 2022, will include about 1 million sensors.

Much of the industry’s data are never used, however. “A lot of data are collected, but a lot of it is very isolated,” says Binu Mathew, head of product management for digital at Baker Hughes, the oilfield services group majority owned by General Electric. “Only a small percentage of it is actually being analyzed.” The oil and gas industry is beginning to adopt new techniques made possible by modern computers that can store and process large and complex data sets. Often these techniques will employ “machine learning,” a form of artificial intelligence that uses algorithms to draw conclusions by studying large data sets. The applications include:

SEISMIC ANALYSIS

Building a picture of rock formations and the location of oil and gas miles below the surface using seismic and other surveys is a highly complex operation. Powerful computers enable companies to understand more about the geology of regions that are difficult to observe, and to predict more accurately where oil can be found.

PRODUCTION OPTIMIZATION

The flow of oil from a reservoir depends on a complex range of factors including the length and spacing of the wells and the types of fracturing used. Modern techniques allow companies to maximize the value from a field, sometimes throttling back initial production to achieve a higher ultimate return.

PREDICTIVE MAINTENANCE

Studying all the data associated with pieces of equipment such as pumps and valves can give indications as to when they are likely to fail, allowing them to be repaired or replaced before they break. The result is better safety and an ability to streamline maintenance schedules.

AUTOMATION

The spread of intelligent and connected devices means that processes that traditionally needed skilled staff at a wellhead or processing plant can increasingly be run remotely. The result will be lower labor costs, greater safety with fewer workers in hazardous environments, and increased efficiency.

SECURITY

The energy industry is already a prime target for cyber attacks, such as the Shamoon and Shamoon 2 viruses that hit Saudi Aramco in 2012 and 2016. Increased mobile connectivity, the greater use of operational data and automation create new vulnerabilities, and oil companies need to deploy the most advanced technology to protect themselves.