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ARC has been opining for a few years now about how upstream oil & gas companies can be strong beneficiaries of IioT-enabled solutions if they only choose to break from the traditional “no one likes to be first” attitude and make sound investments in technologies and automation solutions that can improve operational performance. Therefore, it was encouraging to read a recent article in the Wall Street Journal highlighting an independent E&P player that is embracing 21st century tools and reaping the benefits.
The “lower for longer” oil downturn over the last two plus year has made U.S. energy firms get creative: shale producers have turned drilling into more of a science using web-based applications in a bid to find cheap and cost-efficient ways of extracting crude. EOG Resources has become a pioneer in deploying technology among its drillers. Dubbed the “Apple of oil” by one analyst, the company developed proprietary app called iSteer that has lowered the cost for finding pockets of crude in shale-rock formations. A rig worker can receive iPhone alerts and tweak the trajectory of a drill bit thousands of feet underground, to land more squarely in a sweet spot of rock filled with West Texas crude. EOG drills horizontal wells in West Texas more than a mile long in 20 days, down from 38 days in 2014. It has done it in as few as 10½ days. It estimates it can get at least a 30% rate of return on wells at $40 a barrel, and that at $50 it can boost oil production at least 15% a year through 2020. The company says it can make money even with oil prices at $40 to $50 a barrel.
Many companies hope to recreate EOG success with the iSteer app and dozens of other homegrown innovations. Competitors such as Chesapeake Energy and Pioneer Natural Resources also are finding new ways to profit amid low energy prices. The promise of this new phase is potentially as significant as the original shale revolution. If more producers can follow EOG’s lead and profitably ramp up output from shale drilling even at lower prices, the sector could become a lasting force that challenges OPEC’s ability to control market prices. Many producers are experimenting with longer, supersize wells and fracking them with millions of pounds of sand to get more oil for each dollar spent. Other producers, however, have said the industry needs oil prices of at least $55 to $60 to truly rebound.
Regardless of where oil prices go in the future, ARC believes that the companies that invest in IIoT-enabled solutions, analytics, AR/VR, and even mobile/wearable solutions will be best positioned to control their own destiny by lowering costs, increasing production and recovery rates, improving collaboration and increasing employee productivity (a key factor in light of >400,000 layoffs), and most importantly improving profitability.
The “lower for longer” oil downturn over the last two plus year has made U.S. energy firms get creative: shale producers have turned drilling into more of a science using web-based applications in a bid to find cheap and cost-efficient ways of extracting crude. EOG Resources has become a pioneer in deploying technology among its drillers. Dubbed the “Apple of oil” by one analyst, the company developed proprietary app called iSteer that has lowered the cost for finding pockets of crude in shale-rock formations. A rig worker can receive iPhone alerts and tweak the trajectory of a drill bit thousands of feet underground, to land more squarely in a sweet spot of rock filled with West Texas crude. EOG drills horizontal wells in West Texas more than a mile long in 20 days, down from 38 days in 2014. It has done it in as few as 10½ days. It estimates it can get at least a 30% rate of return on wells at $40 a barrel, and that at $50 it can boost oil production at least 15% a year through 2020. The company says it can make money even with oil prices at $40 to $50 a barrel.
Many companies hope to recreate EOG success with the iSteer app and dozens of other homegrown innovations. Competitors such as Chesapeake Energy and Pioneer Natural Resources also are finding new ways to profit amid low energy prices. The promise of this new phase is potentially as significant as the original shale revolution. If more producers can follow EOG’s lead and profitably ramp up output from shale drilling even at lower prices, the sector could become a lasting force that challenges OPEC’s ability to control market prices. Many producers are experimenting with longer, supersize wells and fracking them with millions of pounds of sand to get more oil for each dollar spent. Other producers, however, have said the industry needs oil prices of at least $55 to $60 to truly rebound.
Regardless of where oil prices go in the future, ARC believes that the companies that invest in IIoT-enabled solutions, analytics, AR/VR, and even mobile/wearable solutions will be best positioned to control their own destiny by lowering costs, increasing production and recovery rates, improving collaboration and increasing employee productivity (a key factor in light of >400,000 layoffs), and most importantly improving profitability.