Technology gains highlighted in energy CEO presentations
Longer laterals, faster drilling and other technological and process improvements have helped oil and natural gas companies survive in difficult times and keep costs in check as the industry has recovered, two local CEOs said this week.
It’s a narrative energy company executives have been touting for much of the past five years, but they say they are continuing to see such improvements and related costs savings.
“The overall time used to be maybe one completion crew for every two rigs,” Devon Energy Corp. CEO Dave Hager said Wednesday at Barclay’s Global CEO Energy Power Conference in New York.
“We’re essentially at one completion crew for every four rigs now. That’s because of the efficiencies we’ve been able to drive into the process on the completion side.”
While efficiencies are lowering costs, the industry also is dealing with increased day rates for services companies and increased steel costs because of the 25 percent tariff enforced by the Donald Trump Administration.
“So you put all this together, what does it mean? Well, it means that in the absence of the efficiencies that we’re achieving, we would probably be experiencing mid-single-digit increases in well costs,” Hager said.
Instead, companies are seeing costs continue to fall even as oil prices increase, allowing companies to return to profitability and repay debt.
Industrywide, the trend has allowed oil and natural gas companies to nearly double earnings so far this year while revenues are up almost 20 percent, Continental Resources Inc. CEO Harold Hamm said.
Technology improvements have been reported in nearly all aspects of the business, including drilling equipment and completion techniques. But industry leaders say the gains are only at the beginning.
While the executives were giving their presentations in New York, representatives from energy firms through the state and region met in Oklahoma City to discuss how technology can continue to shape the industry.
Companies for several years have been collecting as much data as possible, but they’re only beginning to take advantage of the information they have collected, John Westerheide, director of emerging technology at Baker Hughes, said during Wednesday’s innovation forum at Baker Hughes’ Oklahoma City Energy Innovation Center.
“The velocity of information and the variety of information makes it really challenging,” he said. “We can get the data in, but if we can’t make sense of it, if we can’t understand it, we’re not going to unlock the value.”
Westerheide’s teams at Baker Hughes and other technology teams throughout the country are studying ways to best use the data companies are collecting. One of the most promising answers is machine learning — also known as artificial intelligence — where a computer is programmed to analyze a database and find trends and patterns that could indicate problems or opportunities.
“The large-scale data processing technologies are the things that will set a foundation,” said Stephen Taylor, senior manager of information technology at Devon. “I can put the data in a spread sheet, but when it has 100 billion lines, you can’t process trends just by looking at it. We have to learn to adopt the technology that allows us to process that data.”