In the recent past, production companies faced with price pressures reduced staff. Those remaining asked service companies for help. The service companies - by and large also working with smaller staff - have had to seek ways to do more, also with less, and that appears to be largely a matter of better technology. Here are highlights of what some industry leaders say about current activities and the changes we should anticipate.

BN. Murali, Halliburton Energy Services' vice president of technology, provides a context for the changes taking place today. "A lot of what Halliburton is doing reflects the way the industry itself is going. When Halliburton started Integrated Solutions in 1993, it was right after Shell's 'Drilling in the '90s,' where Shell was trying to combine the various drilling functions into one integrated function. BP had a similar initiative. Those were the beginnings of the structural changes which are still taking place in the industry."
Murali said this integration starts with processes. "When a logging job follows a cementing job, then you can integrate some of the processes and take some of the costs out of the system. Then you move on to integrating technology and you take more costs out.
"Once we had the process and the technology integrated, the production companies said, 'OK, we'll let you construct the well. Supply your services and co-ordinate other services to give us the well.'
"So what used to be their business became our business. We began taking the risks they were taking before. What made them do that?
"The answer lies in keeping the producing properties. When an oil company reduces people, the remaining people focus on the jewels. This leaves them wondering 'How do I hang onto the next tier of production and exploit it?' And the answer is: 'Shed the risks on somebody else.' So they turn to the service companies."
Murali said Halliburton's need to integrate technology, process and business while taking costs out of the system led to the Reservoir Decision Centers it has built in Houston, Caracas and Aberdeen. "With fewer people working more assets, instead of taking the experts to the well, we now bring the well to the experts."
Data arrives at the decision centers via satellite and wide-area network connections from the job sites. Halliburton links customer centers and other places as well. In a recent job, a customer was awakened at home at 3 a.m., and connected via Internet to the decision center, which in turn was connected to the job in West Texas. The customer monitored the whole job from his home.
In another case, Halliburton ran three stimulation jobs at the same time from the decision center with several Halliburton and customer engineers in the center. "No way we could put that many experts on any well before," Murali said. Also, two of the wells were for the same customer, and by working from the decision center he could allow both stimulations to go on at the same time. "The decision center lets us take the costs out of the system, yet put the highest level of expertise on a project."
Murali expects individual technologies to continue to develop, especially in discrete services: reservoir monitoring, "smart technology" for sensors and processes, fiber optics and composite tubing.
"Our plan is to provide customers with real-time reservoir solutions through monitoring and the integration of technology in a collaborative environment. We have to continue to be damn good at our individual services such as cementing and logging. We want to develop the sensors and instrument the reservoirs and the wellbores, then move the information to the experts," he said. "Our industry is going to be highly information-technology-driven and as IT-intensive as any other industry, in fact probably more so. We are now in the knowledge management era, using IT tools to capture, archive and distribute knowledge to get expert solutions in the shortest time."
Progressing cavity pumps
E. Lee Colley, president of Weatherford Artificial Lift Systems, sees a great number of changes coming in artificial lift (AL).
Evolutionary changes include:
• continued improvement of elastomers for stators of progressing cavity (PC) pumps to widen the operating envelope;
• improvement of motor and pump durability in electric submersible pumps to reduce the frequency of expensive workovers;
• expanded application of jet pump technology into drilling and workover operations; and
• gas lift valve performance evaluation to improve the efficiency of the gas lift systems.
Innovations include a revival of an older design of a nitrogen-over-hydraulic reciprocating surface pumping unit. "Weatherford has several of these pumps installed. With a small footprint, compact design and low operating expenses, they have become increasingly attractive to clients," Colley said. "Also, development of a standardized wellsite automation and optimization system, which effectively manages any of the five artificial lifting systems, is proceeding rapidly."
In the breakthrough category, Colley cited composites in PC pumps. "We construct a composite PC stator by wrapping an elastomer over a composite core and then bonding the two. Wrapping and bonding avoid injection problems for certain elastomers and expand the type of elastomers that can be used in a PC stator.
"Using composites, we can manufacture a constant-thickness stator matching the configuration of the pump cavity. When the composite housing is shaped to conform to the profile of the pump cavity, then a liner of uniform thickness can be injected for a precise interference fit with the rotor," Colley said. "This fit improves pump efficiency, durability and expands the operating envelope."
The coupling of different AL technologies presents opportunities for future development that interest Colley. Examples include the cross-pollination of hydraulic pumping systems with gas lift or progressing cavity pumping systems with gas lift. "We may even see creation of a multiphase pump system where hydraulic lift is coupled with gas lift, plunger lift or progressing cavity pumps."
A relatively new motor called the constant volume rotating pump rounds out Colley's list of potential breakthrough technologies. "This pump holds promise for a radically new style of downhole and surface pump which is capable of handling the dynamic conditions associated with multiphase pumping." Colley sees management of technologies in the field as an area of increasing importance. "Clients want life-of-field management for artificial lift systems, which includes managing the systems, the maintenance and the assets."
A couple of old-fashioned winters
Homer Hershey, recently retired senior vice president of production for Mitchell Energy, points to the future of the North American gas industry as one in which new sources must be developed and rapidly, but price uncertainty and contract practices make prudent decision-making difficult. "Natural gas energy in the US is a bargain, but demand is increasing, and there is a need to develop more of it in the foreseeable future," Hershey said. "The easy-to-find, more or less pure natural gas has been found. Newer reservoirs being found in tight sands and difficult areas depend on frac technology. We will need improvements in frac technology to develop more gas reserves in the tight sands reservoirs. Deep gas deposits in the US and Canada generally come mixed with nitrogen, CO2 and hydrogen sulfide, and developing that gas will require improving the treatment processes to remove the impurities, mainly to get the cost down."
Hershey said producers haven't focused on deeper gas because it is expensive to develop and process, and prices haven't been there to support the development. It appears to be a double-edged sword: "If prices rise enough to produce the deeper reservoirs, it will also trigger competition from other forms of energy." Hershey said many tight gas reservoirs will have to be drilled to keep up with projected North American demand. These formations are highly productive for a short period, then decline rapidly but produce at low rates for a long time. Initial production from a tight sand well, for instance, may easily exceed 10 MMcf/d, but tail off in 2 or 3 years to less than 500 Mcf/d and remain a low-volume producer for a very long time. The average gas well in the United States produces 200 Mcf/d.
Further complicating this picture for gas operators is the practice of selling gas mainly on the spot market with highly uncertain demand. When a well takes 2, 2½ or 3 years to pay out, price forecasting becomes extremely critical in the decision to drill. Yet the determining element of price is the winter weather. "US and Canadian gas producers could benefit most from a couple of old-fashioned cold winters," Hershey said.
Time to deal
with water
C.O. "Doc" Stokley, TAM International vice president of technology, said several technologies are poised to live up to their promise.
"Coiled tubing (CT) drilling will begin to compete across all applications in cost-efficiency for re-entries and safe underbalanced drilling," Stokley said. It is competitive offshore, having gone through a learning curve to get away from adapting CT to conventional drilling tools. "Once the industry began to take CT units and build drilling tools for them, progress picked up."
The industry soon will be able to achieve good zone isolation when completing horizontal wells, Stokley said. "We are close at TAM with a couple of improvements that we think will give us really good zone isolation. Others are working on it too," Stokley said. "Until we get to the point of good zone isolation, the intelligent or smart completions just can't really be effective."
Also, Stokley said the millennium will see industry make a concerted effort to reduce water disposal costs. "Estimates of how much water is being produced run to between 70 million and 100 million b/d. We spend some $45 billion a year on disposal and related water costs. Now even the high-producing Saudi wells are making a lot of water, and the cost of treating it plus disposal is out of bounds," Stokley said. Mobil, BP, Texaco and Chevron have formed a consortium and, with several other producers and service companies, are studying mechanical and chemical solutions to reduce water production and costs.