The last decade has seen tremendous advances in technology related to finding, estimating, and producing oil and gas. A decade ago, many of these technologies would have seemed like scenes from a Sci-Fi novel. But today, they are realities. They range from supercomputers to nanotechnology.
The Digital Oilfield
Imagine an oilfield where all the components integrate and communicate constantly on a platform from which companies can manage, measure, and track all of the data coming from all over the oilfield.
Instruments
constantly read data from wellheads, pipelines, and mechanical
systems.Information is evaluated by computers, which send analytics to real-time operations centers that fine-tune oil flows to optimize production and reduce downtimes, cutting operating costs by up to 25 percent while improving productivity by five percent.
The investment to make this happen is occurring now. According to Oil and Gas Investor, total upstream energy IT support spending is about $0.25 per barrel of oil. Experts at Booz Allen Hamilton believe digital oilfield technologies could increase the net present value of oil and gas assets by 25 percent.
The last decade has seen tremendous advances in technology related to finding, estimating, and producing oil and gas. A decade ago, many of these technologies would have seemed like scenes from a Sci-Fi novel. But today, they are realities. They range from supercomputers to nanotechnology.
The New Normal
Development of the Subsea Oilfields — Subsea oil and gas technology is advancing to meet the requirements of increasingly demanding production environments: deeper water, greater distances from shore, and higher reservoir temperatures and pressures. Oil companies are cognizant of the risks and rewards. Over 100,000 people attended the Offshore Technology Conference in 2013, a multi-day conference focused on drilling rigs, remote underwater vehicles, and crew safety. At the conference this year, Dr. Phaneedra Kondapi, an adjunct professor of subsea engineering at the University of Houston, presented findings that moving fluid processing to the floor of the sea was the most sought-after technology being developed and improved today. Moving processing to the ocean floor reduces infrastructure costs and production costs, greatly improving return on investment.
The Shale Play — Exploitation of shale basins using hydraulic fracturing (“fracking”) and horizontal drilling techniques has pushed U.S. crude output to its highest level since 1989. The resurgence in production helped the U.S. meet 87 percent of its energy needs in the first five months of 2013, on pace to be the highest annual rate since 1986, according to the Energy Information Administration. These techniques have changed the risk profile of drilling for oil and gas. For example, in the Bakken there is a 99 percent success rate of finding producible oil. With this success rate, rigs are used like a sewing machine putting together a patchwork quilt, just moving from section to section drilling a well and then moving to the next patch. Large shale basins in other countries have yet to be developed. As they begin to be developed, we can expect the supply and demand curve for oil and gas to be impacted.
4D Seismic Technology
The expense of exploration in deeper waters and the value of residual oil in existing fields are among the drivers of seismic technology development.The size and scale of seismic surveys has increased alongside the increases in computing power during the last 25 years. 3D technology looks at oil and gas reserves as if it is a cube with height, width, and depth. 4D technology adds time as a component, which shows how a reservoir will change over time.
Workforce Challenges
The oil and gas industry is facing a shrinking talent pool for those with specialized expertise. A large percentage of the individuals who have the institutional and technological “know-how” of their organization’s specific risks and operations are looking toward retirement. Nearly 90 percent of senior human resources executives at 22 top international oil and gas companies believe this problem is one of the top business issues facing their companies1. The chart on the following page illustrates the average years of industry experience by discipline area.
As such, many oil and gas companies are undertaking strategic initiatives to attract a new generation of workers, including increasing salaries, offering attractive perks, and aggressively recruiting and training. The companies are eager to identify key university programs, offer scholarships and sponsorships for top students and their respective universities, and actively participate in conferences and training workshops.
Salary and Wage Increases
As the global energy demand has steadily increased, the competition for talent among top energy companies has also increased. As a result, employees’ salary packages for skilled labor have seen an upward trend over the last several years, a trend that is expected to continue in the foreseeable future. According to a recent survey of oil and gas personnel performed by Hays, Plc., approximately 65 percent of the respondents experienced annual salary increases with over 50 percent of the increases being in excess of five percent. Going forward, the number of employees receiving salary increases per year between five percent and 10 percent is expected to increase approximately 30 percent, while the number of employees receiving salary increases of more than 10 percent is expected to increase approximately 28 percent.
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