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

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.