Here’s Why Oil is Turning to Data & Research Centers During the Slump

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In the wake of the prolonged worldwide slump in oil prices energy companies around the world have cut spending and jobs. The same cannot be said for research institutions and companies across North America that have continued trying to make production more efficient. The opposite is actually happening, faced with an ever-growing demand for money-saving solutions, research institutions have been hiring more staff and building new laboratories.

The University of North Dakota’s Energy and Environmental Research Center (EERC) for example has hired 20 more researchers and lab assistants over the past year which is a 10% increase. Beth Kurz is a hydrogeologist that works for EERC and part of a team that is looking into using carbon dioxide (CO2) to push more oil out of wells that have already been fracked. The center has a $30 million budget funded by the federal government and industry partners work on several projects like alternative fuel and coal technologies, but the CO2 project is the largest one because of the potential economic benefits. According to Tom Erickson the Center’s head, “At $100 per barrel oil, you just produce as much as you can, with cost as a secondary concern. But at $30 oil, you need to innovate, or else you’re just losing money.”

CO2 from coal-fired plants has been used for years to extract oil from older wells but has yet to be used commercially in shale drilling. Shale differs vastly from the spongy oil reserves underneath conventional wells because it is a rock. Finding the best way for CO2 to flow through it is a puzzle that still needs to be cracked.

While carbon dioxide from coal-fired power plants has been used for years to extract oil from older, conventional wells, it has yet to be applied commercially in shale drilling. Unlike spongy conventional oil reserves, shale is a rock, and scientists are now trying to find the best way for CO2 to flow through it and help bring oil to the surface. The use of CO2 in fracking could cut production costs by about 10 percent which would bring costs down to about $24.30 per barrel which is below current market prices. Whether this technique and others can be successfully developed and brought to market as a commercial application in time for many shale operations that are currently losing money remains to be seen.

Oscar Abbink, an oilfield technology expert at IHS Energy Insight, which is not involved in the North Dakota research, calls the study promising and points out how interest in innovation has increased during the downturn. “A few years ago, it was all about pulling more oil out of the ground. Now, the cost is much more important,” states Abbink.

Researchers for WellDog Inc and Blackbird Energy Inc are also looking into using CO2. WellDog markets spectroscopy to shale operations and has launched a service that helps measure CO2 levels in older wells which could also be used to control volumes pumped into new wells. Its president, John Pope, calls it a growth area.

ConocoPhillips is the only large oil producer that has cut research spending. This could spread to others but for now, research continues unfettered. Schlumberger started licensing a process that reduces the number of pumps needed to frack a well, Hess Corp is trying to lengthen horizontal wells and use cheaper materials. Meanwhile, Halliburton is marketing its expertise in helping customers become more efficient by using machines with less moving parts.

Another area with a lot of room for innovation is the use of data. Zuleima Karpyn, a petroleum and natural gas engineering professor at Penn State, uses medical CT scanners to see how fluid flows through shale so that producers can better control the process. Petroleum Geo-Services ASA has seen demand for its Houston supercomputer rise in the past 18 months as oil companies have seismic data crunched to locate underground reserves. Also, General Electric (GE) is opening a $125 million oil and gas research center in Oklahoma City aimed at aggregating data on temperature, pressure, and other features from thousands of oil wells to help producers pick better locations.

Mike Ming, general manager of GE’s new Oklahoma City center recently said, “There is a technology lever in the oil and gas industry that hasn’t been pulled as strongly as it could have been in the past.”

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