Innovations in oil industry boost production, efficiency

TWOODWARD — echnology has transformed the oil and natural gas sector, allowing companies to stay in business during price drops and eventually to expand while remaining cost-conscious, according to speakers at the Tri-State Oil and Natural Gas Convention in Woodward last week.

The gains in technology and processes have affected all aspects of the oil and natural gas industry and have been evolving rapidly over the past decade. The improvements in the early and mid-2000s allowed companies to use horizontal drilling and hydraulic fracturing to recover oil and natural gas from shale and other dense rock layers that previously could not be produced from economically.

More recently, companies have continued to improve their processes in moves that have allowed them to produce more oil and natural gas with fewer drilling rigs and find other ways to shave costs.

“We're seeing it across the board. This is a technology revolution,” said Scott Goodwin, vice president of operations at Denver-based FourPoint Energy, which is operating in western Oklahoma and the Texas Panhandle.

“It's not just one phase of our industry or one particular tool.”

Many of the recent innovations have been made out of necessity, Goodwin said.

“Commodity prices are a challenge, but we can't understate what we learn in those challenging times,” he said. “Times like this — truly as difficult as it can be — do make us stronger and help us get more efficient, make the decisions that we needed to make and move on and look for better days. There will be better days.”

The efficiency gains have allowed companies to stay in business as oil and natural gas prices have dropped. But they've also led in many cases to companies

needing fewer employees, both in the field and in corporate offices.

The improvements have allowed companies in Oklahoma to continue to increase production even as the number of drilling rigs active in the state has tumbled 38% over the past year, down to 86 from 139 one year ago. Each rig employs dozens of people.

In the longer run, however, the efficiency gains will lead to more employees in the state's energy sector, Goodwin said.

“The upside of it is that technology over time helps us improve economically and then start growing our companies again,” he said. “A lot of us are talking about living within cash flow and being disciplined, which is important right now. As product prices improve, companies will start investing and growing again. I feel like we are close to that stage.

“We are going to use

technology to expand and then maybe not have to add as many people as we would otherwise, but we're not using it to purposely reduce our headcount. That's not a winning game. When you have the quality folks we have in our industry, we want to use the tools to grow.”

In some parts of the industry, technology has allowed companies to expand, said Byron Cottingham, production manager at Oklahoma City-based Roan Resources.

“What it has done is add to our workforce on the IT side and on the engineering side in managing our systems and helping to build those analytics,” he said. “We've probably added employees on the technology side, on the automation measurement and in IT.”

Despite employment reductions throughout much of the oil industry

in recent years, Jason Goss, managing partner at Tres Management in Oklahoma City, said industry leaders still are looking for ways to grow and improve their workforce.

“We'll be investing in people as much as we can,” he said. “We still expect prices to come back, and we're going to need more people eventually.”