For a company to be successful, it must achieve many things. Perhaps one of the most basic elements required is simply that of being unique. Torkell Gjerstad, president and chief executive officer of Roxar ASA of Norway, is building his company in just this way.

The fruits of his successful strategy are there for all to see. The latest evidence comes with the recent announcement of Roxar's acquisition of a key market rival - Fluenta AS.
A private company headquartered in Bergen, Norway, Fluenta has three product lines: multiphase metering, sand detection and flare gas metering. It has been one of Roxar's main competitors in the multiphase metering market, seeing strong growth within the market, and had revenues of about $6 million (NOK 55 million) in 2000.
The acquisition means Roxar's multiphase metering business will be combined with Fluenta's in a new company to be called Roxar Flow Measurement AS.
Following the acquisition, Roxar will have more than half the global market share of the multiphase metering sector, with significant potential for further synergies.
"This is an area with strong growth, and oil companies are now starting to apply this technology for fieldwide solutions," Gjerstad said in a statement about the deal. "Sand detection is often applied in combination with multiphase metering, and we will also offer these products in combination with our downhole reservoir monitoring systems.
"Ultrasound measurement of flare gas is also a growth area, both because of the increased environmental focus and because it enables improved process control. Overall, this will strengthen Roxar's international position within several growth areas, and provide more opportunities to supply integrated solutions for field production monitoring," Gjerstad said.
This latest deal is the culmination of many years of strategic growth for Roxar, formed in March 1999 from the merger of MultiFluid AS and Smedvig Technologies (Holding) AS. Its first annual report listed 275 employees and an annual turnover of $42 million (NOK 370 million).
In 1994, the drilling business was not so good, however, so Smedvig decided to try and smooth out the cycles and expand the business. The goal for 2003 was to be 50% drilling, 30% to 35% production contracting and 15% to 20% technology. "This led to the idea that if you are going to be engaged in mobile production, then you should have an understanding of the reservoir. That's where the risk is, and you are going to be invited to enter into contracts where quite a lot depends on reservoir behavior, production rates, etc. And this affects the term of the contract," Gjerstad said.
"Smedvig had made another observation, and this was that there was quite a lot of new technology around in this country (Norway). That was for two main reasons - Norwegians were quite keen to make Norway into an oil nation. In fact, the oil companies got brownie points for how many million NOK they spent on research. But it was more than just a political game, because in fact at the time there was a need for a lot of new technology.
"The main North Sea fields are characterized by quite high production rates, so it was important that each and every well performed to its optimum potential," Gjerstad said.
As background to this, Norwegian petroleum law was centered on maximizing recovery. In the early days, people thought they could get a 17% to 25% recovery factor, whereas today the average recovery for all Norwegian areas of the North Sea is approaching 45%. Some are more than 60% and even approach 65%. Another factor stimulating this technology is that increasing recovery from existing fields is always less risky than wildcat drilling.
And so the company embarked upon a plan of restructuring through mergers and acquisitions. "We turned all the drilling and production hardware over to Smedvig, and then we closed down some things we didn't consider to be worthwhile. In 1995, we acquired Geomatic and Odin, which was partially owned by a company called Petec, a reservoir engineering consultancy," Gjerstad said.
"The idea was to commercialize reservoir management technology. I thought this was very important - the task of which is usually grossly underestimated by engineers - and to create an international network through which to grow the organization," said Gjerstad.
"Gradually we started to build up our international volume of business. There are two things that can help us get out of the cycles. First of all, there is the fact that cycles do not always occur simultaneously around the world - globalization helps us here. Second, we have developed three main areas of technology: geomodeling software, downhole monitoring systems and multiphase metering. The software seems to follow the oil prices closely. The monitoring is a long-term investment very little tied to oil prices. And the metering is somewhere in between."
The company also moved into intelligent completion systems. About 3 years ago it started to develop its Promac flow control device, which went into the ground early this year for PDVSA. The innovative device has gone into the El Furrial field, which is one of the largest in Venezuela. PDVSA is going deep into the basement zone to tap a reservoir that has four horizontal legs. "Each leg is somewhat isolated, and each has different reservoir characteristics. So we are installing a pilot project where there will be one well equipped with four flow control systems - not to control production but to control injection. They use a WAG (water-after-gas) scheme, and we want to be able to monitor and control the timing and amount of gas and water injected into each well. There are observation wells 197 ft (60 m) apart that are equipped with four of our water-monitoring radar, one for each zone. This operates like a resistivity tool in that it can detect the build-up of water saturation in the producing formation, to help predict water breakthrough in time to take corrective action. It is a sort of electromagnetic device that operates like a permanent logging tool. We will take measurements over half a year and use them to predict how the injection water and gas are moving through the reservoir. And then we are doing Promac installation with Caltex in Indonesia."
Promac is a hydraulically controlled device with no electrical parts, except for the gauges. The hydraulic choke is continually adjustable throughout its range.
Gjerstad added: "But if you're interested in intelligent wells, you have to ask yourself, 'Where is the intelligence?' And that is the uniqueness of Roxar, because we have the monitoring, the metering and the modeling software to support it. We are moving as fast as we can toward combining these three...We think that if you can combine downhole monitoring with multiphase metering and then develop a true diagnostic 'tune' for what is going on, you have a real-time reservoir surveillance that will operate even from a remote location. This allows a company to concentrate its expertise into one spot - a sort of center of excellence. And of course some of these areas are places that are difficult to travel to, and you don't want to have a lot of human resources assigned to that location. So you place your staff in any convenient city with good communications, and operate from there.
Gjerstad also described how his company has concentrated on monitoring temperature, pressure and knowing where the water is through the use of its water-detection radar. "We want to detect the water before it hits the well in a big way. We are also developing a downhole water-cut meter that will be integrated with the Promac valve to detect water production from each individual zone. This provides a sort of early warning system that detects the gradual increase of water saturation before it reaches the critical stage where breakthrough occurs. We call this system IRPM (Integrated Reservoir Production Management)."
Discussing key technologies for the future, Gjerstad was quick to point out the surveys that report oil company executives as saying what's important going forward are technologies such as advanced drilling techniques and 3-D seismic, with the next revolution to be in information management. "They talk about downhole monitoring and reservoir modeling. The seismic market is quite large, but it is also quite saturated. The same thing is true for simulation that is dominated by products such as Eclipse and VIP.
"But the reservoir characterization part in the middle is pretty new compared to the two other areas, and that is where our main effort is directed. In fact, the formation of Roxar was based on the idea that if you link monitoring and metering, then you really know something about the production that you can translate to the reservoir model. The ability to do multiphase metering is key. A great deal of research was done in Norway on multiphase metering in the 1980s. Three of the four companies that have captured that market are Norwegian companies - Roxar, Fluenta and Framo. And that market up until last year was very much a sort of trial case.
"There were a total of 250 multiphase meters installed in the world up until mid-1999. Shell predicts the market will grow to as many as 1,000 installations per year. We used to sell our meters one or two at a time, and everyone wanted their own specifications. But now we see a clear trend of orders for 10, 20 or 40 meters for full-field application.
"It's a very interesting market, particularly when you can do more than just display the results. By linking up the measurements with our software, and that of others, we can use the data in relevant reservoir-management programs."
In flow modeling, one of the companies it acquired was RSRC Inc. of Oklahoma. That company's More simulator has been further developed with the particular view of getting accurate simulation of multizone and multilateral wells. Called NextWell, it started within Statoil and simulates the next well proposed for a field. "The model becomes the map, and the measurement is the terrain, and you can match the map to the terrain. If it doesn't fit it's probably because there's something wrong with the model. It's almost a sort of neural network situation where you get a kind of history match, except much more advanced, because here you are looking at individual wells," Gjerstad said.
Roxar also set up a separate department to deal with IRPM, which is the integration of the three technologies of metering, monitoring and modeling. "The client wants total field solutions rather than one well here and one meter there, and IRPM gives it to him," Gjerstad said. "The Statoil pilot field is only six wells, but it is an ideal starting position because we're not dealing with something that is extremely complicated. The reservoir is complicated, with faults and pressure variations that present challenges, but with pressure/ temperature monitoring combined with multiphase metering, it's all manageable on a rather short time scale. I think it will be a remarkable showcase. Once we get it up and running, we can consider adding other innovations such as the water-monitoring radar and so forth. This makes your imagination the only limit."
A key factor is to provide an open software architecture because oil companies may want to add additional measurements or programs in their search for the total solution, he added.
"So we have created our RMS system that is POSC-compliant so it can interface with the big systems or stand alone, in case someone who has not adopted OpenWorks or GeoFrame wants it. Moreover, it follows API (Applications Programmers Interface) protocols so any programmer can adapt it to his system as needed. What we once viewed as a threat has really become an opportunity.
"When we released RMS 6.0 in the spring of 2000, we could see that finally all these individual programs were put into a modularized suite where you can do basic structure modeling, stochastic modeling, normal geological modeling and upscaling for simulations such as VIP, Eclipse or your own Tempest simulator. You can do integral well planning, and that is truly integrated, because it doesn't only allow you to draw a well in 3-D, but it can check your well plan against drilling constraints to help you calculate torque and drag."
"Roxar's own experience with the number of multiphase meters sold, reservoir monitoring systems installed and RMS seats sold is that the growth rate is amazing. Our emphasis has to be ease of use, plug and play, and simplicity - things that make our systems user-friendly and quick to install and get up to speed. We must concentrate on robustness and reliability, both for our hardware and our software. And we must have the global network to make it happen."
He concluded there is much to be learned from industries such as aerospace, defense and medicine. "It used to be that the petroleum industry was the leader in things like finite element analysis, gridding techniques, etc. But today we have learned that you have to have a good look at other industries for ideas. Even the little Mars rover used a lot of commercial parts from outside the space industry. We have to learn to do this as well, or we will never be able to keep up."