Although some companies are reining in spending amid low oil prices and costly developments, technology is an area in which some are opting not to skimp with a project’s success or failure hinging on meeting geological, drilling and other challenges.

In the last 11 years, new technologies aimed at enhancing oil and gas E&P have garnered about $7 billion in funding, driven mainly in recent years by action in North America targeting shale gas, tight oil, heavy oil and oil sands, Lux Research said in its latest report.

Each resource presents a unique set of challenges, making new technologies that much more important, said Daniel Choi, Lux Research analyst and lead author of the report titled “Investing in Next-generation Oil and Gas Technologies.”

“One area that has gained significant interest is optimizing tight oil production. Tight oil is characterized by dismal recovery factors, typically in the single digits,” Choi told E&P. “This challenge has led to the integration of technologies that help operators better understand completions and production such as microseismic, fiber optics and chemical tracers. Companies can then strategize on how to directly improve recovery, which can come during completions such as more effective perforations or once production begins to decline.”

The report found that investment in oil and gas technology peaked in 2011 at $1.6 billion, with deals hitting a high of 77 unique transactions in 2013.

With 76% of the 377 transactions and 87% of the investment dollars since 2003, oil and gas technology investment has been the highest in North America. Europe was next in line, according to the report’s findings, with $770 million raised from 107 transactions fueled by deepwater activity, mainly in the North Sea, which has seen production fall.

“We expect an uptick in M&A activity as companies improve their financials and start to eye technologies—from companies such as Acoustic Zoom, Robotic Drilling, Liquid Robotics and Field Upgrading—that can enhance existing industry processes,” Choi said in a prepared statement about the report.

Canada-based Acoustic Zoom focuses on seismic data acquisition and processing technology. Its novel technique, also called Acoustic Zoom, aims to improve resolution and focusing ability for 3-D and 4-D seismic imaging for both land and marine applications through the use of beam forming and steering for vector seismic fields. “The method uses a purpose designed stationary array of vector wavefield receivers spaced to receive unambiguously higher frequency signals than normally would be seen in seismic surveys along with a dedicated array of high-frequency, high-powered programmable transmitters also stationary on the seabed or on land,” according to the company’s website.

Liquid Robotics Oil & Gas, a joint venture with Schlumberger, targets offshore operations. The Houston-based company’s technological innovations include the Wave Glider autonomous marine vehicle. Capable of being configured into models targeting specific oil and gas needs, the remotely piloted marine vehicle has sensors that enable it to collect and transmit data in real time.

Robotic Drilling Systems technology transforms operations on the drill floor. The company’s autonomous robotic drilling system, designed for fully unmanned drill floor operations, is capable of handling pipe and tools, and its Deckrobot 1500 has a lifting capacity of 1,500 kg (3,307 pounds, or 1.5 metric tons) at 3-m (10-ft) extension, according to the company’s website. The systems can be configured for use on newbuilds and retrofits for land and offshore facilities.

Choi singled out Robotic Drilling Systems’ technologies as being among the emerging technologies that could lead to major changes for the industry in the future.

“Robotic Drilling Systems is developing an automated drilling floor with advanced all-electric robots. The system will automate several aspects of drilling that can lead to millions of dollars in savings,” Choi said. “More importantly, it’s a major step toward a totally automated drilling system, which will be especially important as companies push the envelope on extreme production.”

The oil and gas sector also has collaborated with other industries to transform their technologies into solutions for E&P challenges.

“For example, Solazyme, a biofuels and biochemical company, launched Encapso in 2014. Encapso is a lubricant to enhance the rate of penetration in drilling,” Choi said. “Another example is the company Field Upgrading. It developed a way to electrochemically upgrade bitumen to reduce the diluent volume needed for pipeline transportation. One of the key aspects of the process was originally developed for sodium sulfur batteries.”

The report also found that:

  • Schlumberger was the “most prolific buyer” of E&P technology developers, which are more often than not acquired by oilfield service companies instead of going public. Lux Research said Schumberger made 56 acquisitions of E&P developers, representing more than 40% of the total acquisitions in this space between 2003 and 2013; and
  • Of the investors, Energy Ventures was the “most prolific investor” in E&P technology. The Norwegian private equity firm has made 47 transactions since 2003, Lux Research said, noting Chevron Technology Ventures was second with 33 deals.

When it comes to technology, Lux Research believes investment will continue despite spending cuts by companies worldwide.

“The pressure on companies to curb capital spending forces them to continue to invest in technologies that streamline operations and improve production to survive,” Choi said. “We expect the strong oil and gas investment landscape to continue throughout 2015.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.