By Kash Kashikar
VP, Completions Evaluation
Management expert Peter Drucker once defined innovation as “the act that endows resources with a new capacity to create wealth.” This will be evident in the coming months as the industry tackles the uncertainty in the oil prices. Companies that continue to innovate will come out of this much stronger and in a better position for rapid growth when the price rebounds.
There is no shortage of gloomy outlook for the unconventional shale oil industry in the media. Further declines in oil prices could certainly dampen the growth, but the most productive basins for shale oil and gas will remain profitable even if oil prices remain at today’s levels.
Let’s consider the numbers: 1) Shale gas production has grown 51 percent per year since 2007, and proved reserves have increased five-fold since then, according to the U.S. Energy Information Administration (EIA). 2)The United States has gone from averaging 5 million barrels per day of total crude oil production in 2008 to 8.7 million barrels per day in September 2014—and the EIA now projects it will top 9.5 million barrels per day in 2015. Shale production accounts for the lion’s share of the increase. 3) Technological innovation is paying off as wells become more efficient.
The silver lining in this tough market is that the industry is now switching from firefighting mode to performance mode. At lower commodity prices, the industry can no longer absorb in-efficiencies in drilling, completion and production. Companies will continue to focus on safety and will work towards becoming more efficient, rather than hoping for a recovery in commodity prices. This process will enable operators to control costs, maximize operating efficiencies, apply world-class technologies, optimize well performance, and ultimately, enhance recovery. It affords service providers a unique opportunity to work with operators in providing innovative technical solutions that help reduce costs, improve operational efficiencies, and achieve higher production and EUR.
I expect to see a three pronged approach by the operators: increased focus on production optimization to boost production from existing wells, re-completion or re-frac’ing of existing wells to tap into by-passed zones, and increase in completion optimization on new wells to achieve higher IP and EUR per well.
As the oil and gas industry continues to transition to new frontiers, I believe that Microseismic Inc. is in a good position to stay at the forefront of change. We are committed to our vision - a world in which every completion is optimized through real-time monitoring and evaluation. In 2014, we took some major steps toward achieving that vision, and we are excited about the possibility of building on that success in 2015 and beyond. As we continue to roll out our innovative Completions Evaluation Services, we provide operators enhanced tools for real-time optimization of their completions. FracRx™ precisely evaluates treatment geometry and helps optimize fluid and proppant volumes for every stage of every well. PermIndex™ is available to determine system permeability further helping operators understand stage-by-stage production variability and adjust treatment parameters to maximize productivity per stage. The need for performance is here and we are delivering it today.