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Primer: Oil Industry Technology

With growing talk about peak oil — when the globe’s petroleum reserves begin an inexorable decline — exploration companies are increasingly turning high-tech to delay this eventuality.

There's been stunning advances in the industry's ability to visualize what lies deep underground and to extract more of what's down there.

Alex Brandon

Take the recent huge oil find off the coast of Brazil, which may be the largest discovery in 30 years.

That would not have been possible just a few years ago; nobody was even looking in that part of the Earth’s mantle, which sits under thousands of feet of salt.

That’s because the industry’s standard exploration technique — shooting sound waves and measuring their echo, known as 3D seismic — could not "see" through the salt because it scrambles the waves.

Once geophysicists could see below the salt (via enhanced version of 3D) they discovered sedimentary rock formations of the kind very likely to hold petroleum reserves.

“The significance of this is that an earth volume that had previously been construed as not even explorable … may hold a lot of oil and gas, and this is potentially true in many other places on the planet that nobody could even think about before — that’s a big deal,” says Bob Tippee, editor of the Oil & Gas Journal. “The ramifications of that for future supply are very large.”

Digital Days

“Because of technological advances, I think we have zoomed way past what King Hubbert, the original peak oil guy, predicted,” says Dean Clark of the Society of Exploration Geophysicists, where Hubbert was a member.

“He was making all these predictions based on analog data, and soon after his prediction, we went into digital data, and I think a whole bunch of stuff has been found by digital technology that would not have been found by the other [earlier] technology.”

In that sense, some consider the North Sea to be “100 percent digital oil,” he added.

It’s difficult to definitively quantify how much of a difference this, and other important technological advances, are making to expand the universe of known reserves.

Some are genuine breakthroughs — suchExxon’s discovery of 3D in the 1970s— or, on the production side, the ability to do horizontal drilling.

Much more common are the incremental improvements to these major advances, the result of years of patient refinement and tweaking.

The 3D enhancement used in Brazil (known as prestack depth migration, or PDSM) has enabled other important deep-water discoveries in the Gulf of Mexico, whereAnadarko Petroleum first employed this technique in 1998 with Amoco, prior to its merger with BP.

Supply Equation

But such inventiveness is up against seemingly dwindling supplies — at least easily accessible reserves — and experts say every bit of additional fuel will be needed to keep demand and supply in rough balance.

Global oil production slipped in 2007 for the first time in six years — by 0.2 percent, to 81.53 million barrels per day, according to BP’s Statistical Review of World Energy published in mid-June.

But the major producers say the world is not facing peak oil — at least not in a geological sense.

In fact, according to BP's recent report, Statistical Review of World Energy, there are still some 1.24 trillion barrels of oil left globally, based on proven reserves, enough for 41 years of production, at present rates.

Any shortages are driven by “human, not geological” factors, BP’s CEO Tony Hayward said in a statement accompanying the release of the June report. Hayward cited high taxes and barriers to access, adding that 80 percent of world’s oil is controlled by increasingly nationalistic governments.

That view is fairly consistent among the major players, says Doug Morris of the American Petroleum Institute.

New Technology

“The industry is fairly confident it can continue to develop and find new resources with the caveat that it is going to take a lot of new technology," says Morris, API's group director of upstream and industry operations.

“This industry has really, in the last 20 years, turned into a high-technology industry. There is lot more of science and technology used to develop the resources that we are finding now.”

“We certainly can’t rule out the possibility of further big finds; however, I think the likelihood is declining,” Jerroen van der Veer, CEO of Shell, recently told the Times of London, “What remains is in harsh frontier environments, such as deep oceans or the Arctic, where it is more difficult and more expensive to extract.”

This has been a factor in Shell opting to invest more in "unconventional" sources of oil, including the tar sands of Canada, which van der Veer said would account for 15 percent of the company's production by 2015, up from the 5 percent of today.

These trends make technological advances, both in exploration and production, all the more critical for an increasingly risk-averse and shareholder sensitive industry.

Limitations And Advances

But for all the high-powered geosciences advances, the energy industry is still far from its Holy Grail of being able to positively identify petroleum underground, except under the most ideal conditions.

At present, technology can generally only identify rock formations where petroleum is likely to be trapped.

That means exploration remains interpretative science, involving the analysis of huge volumes of data, which itself is only manageable through newly expanded computing power, explains Alan Petzet, chief exploration editor of the Oil and Gas Journal.

Still, there are impressive advances. “Cable-free” land acquisition, a version of seismic data collection using radio transmissions, promises to greatly reduce the cost of seismic collection on land, which is actually more expensive than at sea.

The useful life of the declining North Sea oil fields, for instance, is being extended by seismic data collected through a technique known as "‘wide azimuth acquisition off-shore" which employs two boats rather than one.

“One guy actually told me that he thinks this will make all previously acquired off-shore data obsolete because this is so much better,” says Clark.

The same dynamic is happening on land. Production from a huge Texan oil basin has been extended after scientists determined how to collect seismic data from under the Dallas-Ft. Worth airport.

“That’s amazing because when you are doing seismic, your enemy is noise of any kind, and what’s noisier than an airport, other than a battlefield,” says Clark.

Reserve Recovery

It also illustrates another key industry trend — the focus on boosting recovery rates.

Typically this was just 30 percent, but better reservoir management has boosted the rate to 35 to 40 percent.

Some of the improvement comes from a range of enhanced oil recovery (EOR) techniques that pump water or carbon dioxide into wells to flush out more oil. Chemicals are also being used to help scrub oil from the rocks.

A critical tool in these efforts is 4D seismic — in which time is the fourth dimension. It uses 3D data taken at time intervals to track shifting pressures and oil movements as the field is drained.

Production improvements, such as horizontal drilling, are also critical and continually being refined.

That’s critical for producing oil in the Bakken Formation in Montana and North Dakota — the site of the biggest domestic production boom in recent years, which got a boost when the US Geological Survey confirmed in April that there is probably 3.65 billion barrels of oil and 1.85 trillion cubic feet of gas.

There, drill bits are sunk several thousand feet before they are turned horizontal for another few thousand feet to tap into a thin layer of oil-bearing rock in the Williston Basin.

Then there is the genuinely outside-the-box thinking about the industry’s challenge.

One new idea is based on “very strong evidence” that not all petroleum is biotic — from decayed biological material — and that the underground presence of microbes that can live on petroleum can indicate the likelihood of larger deposits nearby, explains Robert Hazen, a senior staff scientist at the Carnegie Geophysical Laboratory.

“It is one of the prospecting tools, so rather than using seismic waves or exploratory holes or looking at geological structure, you look for bugs — it’s just a great idea.”

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