Innovation can’t exist in deep water outside commercial reality
If we in the oil and gas industry want deep water to be a vibrant market in the future, we should give serious thought not only to where we put our innovation dollars today, but also to how we address the growing barriers to commercialization so we can provide this frontier sector with the technology options it needs to flourish.
History tells us why. Twenty-five years ago, when the market was new and “deep” meant 1,000 feet, operators and service companies had to make significant investments in technology to find and develop these untapped reserves. The pioneering culture in the early phases of development spurred a new wave of services and capabilities that created the market we know today.
Since then, as the sector has matured, we’ve developed new ways to drill deeper and operate more routinely in deep water. But because the environments are so harsh, the barriers for technical assurance so high and the cost of failure so visible, development progress in recent years has become incremental.
Deep-water activity has been one of the hardest-hit segments in this industry downturn — an outcome largely blamed on project costs and economic risk.
Even prior to 2014, there was much talk about the spiraling costs and complexity that were challenging even in the hundred- dollar oil world.
Recovery rates have stubbornly hovered in the low double digits — some even in the single-digit range. And while production philosophies are evolving, there are still no real solutions for cost-effective well intervention and technologies that provide options for life-of-well production improvement.
As the market begins its recovery, it’s time for the industry to reset innovation strategies in deep water to align with commercial realities.
We need to progress our thinking on well construction — where we’ve spent much of our effort and resources to date but where today only incremental progress is being made — and create a new focus on unleashing a well’s production potential and improving recovery rates.
So what might these innovation strategies need to address?
First, can we design better wells? Well designs in deep water have changed little in recent years, as the industry has settled on one or two deployment methodologies that have worked, but still remain overly complex and intensive from a service perspective.
With only a small number of customers working in deep water and a relatively small number of wells being drilled on an annual basis, there are few opportunities to make step changes.
Second, once the well is in place, how do we maintain it, interact with it and get more out of it in a costeffective way throughout its producing life? There are a growing number of solutions for real-time monitoring and control, and specific products have been designed for flow assurance in the unique range of conditions they need to operate within — but very few of these specifically tie subsurface through seabed to surface in an effective way.
Finally, and possibly most intriguing: How do we as an industry create the cultural duality of rapid, effective innovation and improving safety, standards and regulations?
What changes need to take place in how the whole supply chain functions to create an energy around innovation that ushers in the next age for this sector?
The conundrum in today’s world is that it’s clear that innovation cannot live outside of commercial reality — but if we are striving to change commercial reality, it’s going to need a step change in how we manage and drive innovation. To be continued…