Oil and Gas Technology – Efficient, Flexible & Scalable

Latest

Oil and Gas Technology - Efficient, Flexible & Scalable

Advancements in technology are best implemented under the correct context, and in oil and gas, a significant talking point with respect to context is volatility; especially with regards to the international trade standoff started by Russia and Saudi Arabia, as well as the hit to global crude oil demand brought into being via the coronavirus pandemic. With the recent volatility in energy markets, we choose to introduce three advancements in technology (one of which is our own) that are a good fit for the boom and bust cycles of oil and gas. Amazon Web Services Cloud Computing, Epic’s DH350 mobile drilling rig, and PanXchange Sand®.

Amazon Oil and Gas Cloud Computing

The confluence of energy and technology has gained traction in recent years and as stated by Amazon Web Services (AWS) CEO Andrew Jassy at last’ year’s IHS Markit conference, the cost savings are a compelling “conversation starter”.  It was predicted in 2017 by the World Economic Forum that the digitalization of the energy industry would bring a $1.5 trillion benefit.

Rather than investing in capital intensive, less flexible data centers, cloud computing offers a number of competitive advantages – one of the most notable is that it “perfectly fits [the] boom and bust cycles” of the energy industry, as stated by Bill Vass, Vice President of engineering at AWS.

“The ability to scale massively when you need to, and scale down significantly when you don’t, fits very nicely with the cycles you see in the oil and gas industry.”

“The price of oil goes up, so they want to explore faster. They want to do production faster. They want to use machine learning to increase their yields, to improve their maintenance, to reduce their cost. They want to do all those things, so they can scale dynamically to the cloud, and then if the price of oil goes down and they want to reduce their expense, they can just literally turn it off,” Vass said.

Epiroc’s Mobile Drilling Rig

Another piece of technology that is flexible is Epiroc’s new DH350 drilling rig that offers the advantages of Tier 1 unconventional shale drilling rigs while surpassing the mobility of conventional drilling rigs.

“The DH350 combines the mobility of carrier drive rigs with the power density of conventional skidded systems to produce one of the most agile and capable drilling rigs in the marketplace today,” said Cole Carpenter, product manager at Epiroc Drilling Solutions.  – “We will continue to drive the paradigm shift in conventional rig design – the DH350, a step-change in drilling efficiency.”

About the Rig: The optimized load configuration and integrated hydraulics allow crane-free rig up in under 12 hours, less than 6 rig loads between drilling locations, allowing operators to minimize cycle type and improve long term well economics.

A more mobile and economic rig fleet would allow for better adaptability to the volatility commodity prices and fewer rigs sitting idle, introducing cost savings on behalf of oilfield services providers as well.

PanXchange Sand®

PanXchange has brought an attractive advancement in technology to a seemingly unlikely niche – frac sand. To give a quick background on the US frac sand market, it was first dominated by Northern White, and then in-basin regional supply proximal to large portions of the oil and gas development in the US lower 48 came into the mix and upended market share.

As a result, there has been a large amount of price movement in the price of frac sand, based on the changing dynamics of supply and demand. The frac sand market is huge, with Rystad pinning annual demand in the US lower 48 at over 125 million tons (over 2 billion pounds) in 2019. With billions of pounds of product movement, the market is at a similar scale to the amount of corn sold in the US (approximately 8 billion pounds).

Before PanXchange, there was no centralized, transparent, medium of exchange for frac sand and not a lot of financial flexibility for trading physical deal flow. Now with PanXchange’s easy-to-use platform, you can manage one of the largest input costs to drill an unconventional well – the cost of frac sand – without any of the hassle of additional paperwork, and no costs related to clearing, regulation or counterpart management. All the hassle is borne by PanXchange, and for net purchasers, this platform functionality is completely free (the costs are paid by the net seller). To price long term contracts while avoiding price risk, many industry players are also using PanXchange’s industry-standard frac sand benchmarks to settle contracts (think like WTI, but for frac sand! Ask us how). In addition, the historical database of sand prices provides PanXchange members with the data needed to model completion designs and future input costs.