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Meridian CEO: Industry must break down barriers to adopting new technologies

Posted on 07 April 2009

The IADC Future Technology Subcommittee is conducting a study of best-performing drilling and completion technologies across a broad range – both on the rig and downhole. This survey, expected to be available soon, examines which of a group of technologies offer the best performance for a given topic, and which could benefit from future development.

SPE Emerging
Technology Workshop:
19-20 May 2009,
San Antonio, Texas

The industry’s technology track record has improved in recent years in such areas as horizontal and lateral drilling, steering technology and “intelligent/smart well” innovation, Mr Ching added. “Those technologies have really taken hold in the last decade-and-a-half, and have improved the hydrocarbon recovery and profitability from all kinds of reservoirs,” he said. “Even so, horizontal drilling was a proven technology for many years before the industry fully embraced and implemented it on a wide scale.”

Why the industry has been so reluctant to embrace innovation involves mindset, communication, cost and differing attitudes about risk, Mr Ching suggested. “People who develop technology don’t articulate in a manner that is conclusive for users to get a clear picture of the value proposition of the technology, how it works, what the risks are and how to implement it within the user’s assets,” he said. “The user community, who typically isn’t involved with the development of the technology, doesn’t understand how it works, the associated risks and what it can do for them, i.e., how does it add value to my bottom line?”

Within E&P companies, there is a definite difference, Mr Ching says, between explorationists and asset managers. “Explorationists are in the risk business, and, in my experience, they are very open to trying innovative ideas to improve their ability to find new reserves of hydrocarbons,” he said.

“They tend to take on new technologies. For example, a new software for interpreting seismic anomalies will be adopted much faster than technologies that are in field development or production.

“Asset managers are not in the risk business,” he continued. “Their job is to make sure the field is developed properly, that the wells are producing and generating revenue. Trying new technology is a risk to their ability to keep the field/wells on stream”

And in an industry where the risks are great and the stakes high, the “it-wasn’t-invented-here-so-I’m-not-going-to-do-it” attitude also prevails.

“Management and staff want to be assured that the technology works, understand the risks of implementing the technology, what it costs and how it synergizes with their current systems and processes,” Mr Ching said. “Overall, there is constant tension in the innovation cycle. Developers of technology want a reasonable return on their investment; users want to drive technology as soon as possible to be a commodity because the price will come down.”

He says organizations need to develop a culture of “rewarding and encouraging people to take an appropriate amount of risk in trying new technologies that could add significant value.”

But companies are beginning to find ways to break down the barriers. “Many companies have a process in place now where they work the technology through stage gates, from developing an idea, to proof of concept, to working on development, piloting it, testing and then moving into the first commercial, and then final commercial stages,” Mr Ching said. “And they’re getting the users involved up front, while they are thinking about how to make it work in the field and get it commercialized. So it’s more of a continuum, with people from both sides of the community involved in the whole process.”

While previous economic downturns have prompted organizations to cut their technology budgets, companies appear to be taking a longer-term view this time around as society demands greater energy efficiency and environmental responsibility, said Mr Ching, who is a member of the SPE Research and Development Committee.

“Despite the recession, they recognize technology is going to be vital in reducing our carbon footprint and more effectively getting those resources out of the subsurface oilfield in the future.”

For more information on the IADC Future Technology Subcommittee, e-mail Mike Killalea.

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