En­dow­ing Well­heads With Brains

Tech­nol­ogy ▶ Oil pro­duc­ers have a new­found in­ter­est in gear that cuts costs ▶ “It would’ve been a lot worse if not for this tech­nol­ogy” hard­ware that trans­mits

Bloomberg Businessweek (North America) - - Focus On/ Energy -

Three years ago, Ray­mond Welder was still mon­i­tor­ing his com­pany’s 150 oil and gas wells the old-fash­ioned way: Each day seven guys in trucks would drive hun­dreds of miles around South Texas check­ing each well. They’d jot down read­ings of pro­duc­tion vol­umes and pres­sure lev­els and, once back at the of­fice, type up the data and send it around to the rest of the staff. “We thought we were high-tech be­cause we had e-mail,” says Welder, chief ex­ec­u­tive of­fi­cer of San An­to­nio-based Welder Ex­plo­ration & Pro­duc­tion.

Back then, a day or more could go by be­fore the com­pany re­al­ized a well wasn’t work­ing. Then a me­chanic would have to be dis­patched to the site to di­ag­nose the prob­lem and fix it. Says Welder: “Pretty soon, some­thing small ends up cost­ing you a week of pro­duc­tion,” which can be a big prob­lem for a small pro­ducer with about 700 bar­rels a day of out­put.

To­day, it takes just sec­onds for Welder to learn that one of his com­pany’s wells has gone down. That’s be­cause in 2013, Welder Ex­plo­ration be­came one of the first oil pro­duc­ers to sign on with Wellaware, a tech startup that kits out clients’ oil and gas wells with re­al­time data over its own ra­dio net­work. Clients can ac­cess the in­for­ma­tion on a smart­phone or tablet us­ing Wellaware’s mo­bile app or through a Web browser. Cus­tomers pay $15 to $100 a month per well, de­pend­ing on the level of ser­vice and equip­ment.

Ex­cept for ad­vances in drilling tech­nol­ogy, which un­der­pinned the U.S. shale boom, much of the oil in­dus­try re­mains strik­ingly an­ti­quated when it comes to above- ground op­er­a­tions. Now, as com­pa­nies tran­si­tion from search­ing for de­posits to slash­ing costs and im­prov­ing the pro­duc­tiv­ity of ex­ist­ing wells, dig­i­tiz­ing their op­er­a­tions has be­come much more ap­peal­ing.

“Peo­ple used to tell me, ‘If you can’t help us find more oil and drill faster, I don’t have time to talk to you,’ ” says Dave Milam, head of prod­uct man­age­ment at Wellaware, which was founded in 2012. The com­pany has raised $61 mil­lion in ven­ture cap­i­tal and counts bil­lion­aire Car­los Slim as an in­vestor. The pri­vately held com­pany doesn’t re­port fi­nan­cial re­sults, but Milam says its ros­ter of cus­tomers has grown ten­fold in the past year.

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