The oil and gas industry sits at a unique point in its history as the world transitions toward more sustainable sources of energy, even as both demand for hydrocarbons and society’s focus on climate change increase. It is now that the industry has the opportunity to re-create itself, said Mike DeWitt, VP of Operated Wells with Shell, at the 2019 SPE/IADC International Drilling Conference in The Hague on 5 March.
How to thrive at a time when the traditional energy system is transitioning to more renewable forms of energy is both a great challenge and an opportunity, Mr DeWitt said. He also emphasized that although hydrocarbons will remain a part of the energy mix for the foreseeable future, the industry also must recognize the pace at which the energy transition is happening, Mr DeWitt said. “That pace is happening faster than what we’ve seen even a couple years ago,” he noted, adding that the industry needs more radical thinking to make the changes that need to be made.
In fact, change may be the new norm in our business, Mr DeWitt said, and there is a calling to continuously improve and think toward things that may be regarded as impossible, just as Bruce Collipp did in 1962 with his pioneering work at Shell of the first semisubmersible, Blue Water 1. “We’ve been given a unique opportunity to transform our industry, to thrive and be part of the solution and be able to meet our energy needs and sustain our business and industry as a whole.”
Fiber optic diagnostics, as well as automation and remote drilling control centers, have changed how the industry learns about and deploys new technologies. For example, technologies developed in North American shales can now be quickly deployed into the Vaca Muerta in Argentina, improving operations there and creating more E&P opportunities. “There’s no question technology has progressed our industry, but that same technology and the capabilities it provides compels us to never stop learning.”
“To truly sustain our industry and compete across other industries, we must come together,” Mr DeWitt said, adding that companies must take on the mentality of creating more value for all stakeholders, particularly as the industry undergoes a digital revolution. “The combined impact of data, technology and digitization has moved us from where we may have seen a pace of linear change to one where we’re seeing exponential change.”
He pointed out that the industry has generated more data in the past two years than it has in its entire history, yet it only uses about 1% of what is collected for decision-making purposes. “I would argue we’re still lagging behind other industries, and for us to be competitive, we need to change.”
At Shell, for example, an artificial intelligence-based drilling system has been developed that uses offset and synthetic data to build a model that can help to determine optimal well placement. This application of machine learning has help the operator to increase lateral lengths, provide consistent and scalable geosteering and improve rates of penetration, all leading to increased production and lower well costs. “We are just scratching the surface of what data and sharing can do in our industry,” Mr DeWitt said.
Changes also need to be made in the industry’s business model, moving from goods and services to outcome-based contracts with value for all parties. The focus should be better sharing of risk and financial reward, as well more focus on outcomes rather than components. “Our combined success and sustainability depend on how we shape these things going forward.”