American Oil and Gas Reporter - February 2015 - 29

TECHCONNECTIONS
U.S. Operators
Capable Of Overcoming
Difficult Times

"For industry to continue its drive
forward, companies must make

As we move into 2015, it is becoming clear to many in the oil
and gas industry that once again we are facing challenges related to the price of crude oil and natural gas. Lower commodity prices
and emerging regulations are making it especially hard on independent operators in the United States.
For industry to continue its drive forward while adjusting to
an ever-changing environment, it will be critical for companies
to make decisions that are economically sound and technologically optimal in order to maximize return on investment. With many
operators planning their 2015 budgets based on the production from
their existing wells, adjustments and reductions are being made
as the industry overcomes this latest hurdle.
Drilling has slowed, especially in areas that are not well known
geologically or that are more expensive to produce. In Kansas
alone, areas that were booming, thanks to operators utilizing new
technology, have gone back to more traditional drilling and completion methods. While these challenges can be difficult, they are
not impossible to overcome. In fact, we have seen these issues in
the past, and in true innovative-industry fashion, operators will
rise to the occasion and continue to operate and produce in the
lower-48 states.
Critical to this mission will be continued optimization of individual wells and completions, as well as using technology and
best practices to produce oil and gas more efficiently and more
economically. For many independent operators, the thought of testing a new technology in downtimes can be a difficult concept to
comprehend. Realistically speaking, operators might ask why they
would spend more money on an emerging technology that
might or might not work, when their established methods have
worked for them through both good times and bad.
Indeed, careful evaluation must be made when deciding to try
a new technology, and sometimes sorting out the "snake oil" from
the "real deal" can be difficult for an independent operator. One
of the main issues for even the most innovative operators is getting access to and evaluating emerging technology.
In 1989, Lanny Schoeling, Don Green and Paul Whilhite published a paper in the Journal of Petroleum Engineering (SPE17401-PA) that described operators' challenges in embracing new
technology. Although the paper was published more than 25 years
ago, many of the issues operators face today are much the same.
In their paper, the authors describe independents' hesitation resulting from the unavailability of reservoir data, limited equipment, and fear that an improved oil recovery technology might
not be applied successfully. The authors contended, "For independent oil operators to use an enhanced oil recovery process, they
must hurdle these constraints and have confidence that the
process can be successful. They cannot afford major expenditures
without a reasonable payout period. If capital must be borrowed,
the lending institution also must be convinced that the process will
be economically attractive."
This study found that most small producers do not have access
to the research and development resources that would enable them
to assess the validity and cost effectiveness of different tech-

decisions that are economically
sound and technologically optimal.

nologies. This is where technology transfer organizations such
as PTTC and the University of Kansas' Tertiary Oil Recovery Project have stepped in to help disseminate critical information to independent producers.
A report published in the Dec. 22 edition of the Wall Street Journal quotes Qatari Oil Minister Mohammed Bin Saleh al-Sada saying, "Those who cannot stand the pressure of lower prices will
have to step down and give way to those who can do better in terms
of efficiency."
The U.S. oil and gas exploration, drilling and producing industry has been at the forefront of technological advances and cost
reductions, and can accept the challenge of increasing its efficiency
and further reducing costs.
Ì

JEREMY VISCOMI is director
of technology transfer for the
University of Kansas Tertiary
Oil Recovery Program and is
Mid-Continent regional director for PTTC. He has more
than a decade of experience in
developing and organizing
technical conferences and special events.
FEBRUARY 2015 29

American Oil and Gas Reporter - February 2015

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