Abstract

Digital Oilfield programs are underway in many oil and gas companies. The term Digital
Oilfield' covers a wide range of areas from the usage of smart downhole sensors to the
integration and transformation of data across technical and business applications for decision
making in the oilfield. Ultimately the decisions made at the operational level affect the
company's performance and hence Digital oilfield projects are connected with the decision
making at different levels in the company.

This paper analyzes different types of digital oilfield projects from the literature and draws upon
the authors experience to create a perspective based on the common requirements of such
projects. Such a perspective should help reducing silos within organization often looking at their
own data and work processes. Examples from the area of Real-time Reservoir management and
Reserves management will be analyzed by going into the details of the common elements across
these areas in terms of process and data requirements, data standards and components of the
work processes. By understanding the common requirements organizations can lower cost in
terms of reuse and deployment of the solutions across the company.

This paper will help engineers understanding of digital oilfield projects and assist in increasing
the uptake of such projects within their organization
 A history of the digital oil field

The digital oil field may seem a recent concept, but the adoption of digital technologies in the
offshore oil industry dates back to before the 1980s.

In 2006, a report by Deloitte roughly defined the digital oilfield as "the evolution and
convergence of a number of oil and gas drilling, exploration, digital control technologies
coupled with standardised communication technologies". In truth the digital oilfield is a
nebulous concept defined by progress in a multitude of fields.

But however you chose to define the digital oilfield, one thing is certain, its development
promises to continue to revolutionise the industry - upstream to downstream.

The digital oil field has seen the emergence of technologies that can increase the life of a
well, enable extraction from previously unrecoverable wells, improve safety and provide so
much real-time data, optimising it has become one of the great challenges of the modern
oil field. And it all started way over 30 years ago.

Pre-1980s: 2D seismic testing- multi-lateral well drilling

Horizontal drilling and 3D seismic testing were the first big technologies of the digital
oilfield; the technologies date back to the mid-20th century. The first horizontal well was
drilled in 1930s and a multilateral well was drilled in 1950s. During this time 2D seismic
testing was widespread, the technology behind 3D seismic testing was only developed in
the 1960s. 3D technology was considered far too expensive however and up until the 1980s
only 100 3D seismic surveys were carried out in the US, according to the US Department
of Energy (DOE).
1980s: 3D seismic testing takes off

Advances in computer technology allowed 3D seismic testing to be come standard,

opening up many previously inaccessible oil wells for drilling. By the mid 1990s around
200 - 300 3D seismic surveys were being carried out per year in the US. 3D seismic
surveys made it possible to 'see' below salt layers, which cover much of the continental
shelf in the Gulf of Mexico. The technology was also made more economically viable
during this time. Horizontal drilling technology was widely known but largely considered
too expensive in the 80s, especially for independent companies.

Remotely operated vehicles (ROV) became essential to the industry during this time, the
technology having been developed decades before by the US Navy. Two of the first ROVs
developed for offshore work were the RCV-225 and the RCV-150 developed by
HydroProducts.

1984: First completely steerable bottom-hole assembly

In 1984 the first completely steerable bottom hole assembly was developed, combining a
high performance bit, a propriety navigation sub, high performance down hole motor and
stabilisation. The technology was a precursor to the 'drilling with a mouse' technology that
would be envisaged 20 years later.

Late 1990s: Horizontal drilling becomes more affordable

It wasn't until the end of the 1990s that a typical independent oil company would routinely
drill horizontally. By the mid 1990s, 2,500 horizontal wells were being drilled each year
worldwide. In 1995, a DOE study found horizontal drilling could possibly be responsible
for 10 billion barrels of US oil reserves up until that time. The first horizontal wells drilled
in Europe were in the early 1980s by Elf Acquitaine and Institut Francis du Perole. Drilling
 of multilateral wells also became the norm during this time, with more than 700
multilateral wells planned around the world in 1997.

2003: BP's Valhall field-seismic on demand

BP's Valhall field, which started production in 1982, was one of the first to use a life of
field seismic system, using a network of permanent buried cables to record 3D seismic
data. In 2002, BP was one of the early adopters of 4D seismic data, which emerged around
the year 2000.

"Horizontal drilling and 3D seismic testing were the first big technologies of the digital
oilfield."

The 4D technology revealed significant production induced changes to the field, so BP

invested around $45m on 'seismic-on-demand' technology, which provided unprecedented
potential to acquire high quality seismic data for reservoir monitoring. As well as providing
a wealth of data it significantly reduced uncertainty. BP called the project Life of Field
Seismic. In 2006, BP later added the same technology to its Clair field project, west of
Shetlands in the North Sea.

Also in 2003, Exxon Mobil released its Fast-Drill Process, which increases the drilling
process by 80% by using a continuous real time display of mechanical specific energy as a
tool to enable changes in drilling parameters, to minimise the amount of excess energy
being used which enables increased efficiency.

2005: Advancements in wireless technology

Wireless capabilities now provide the backbone of many digital oil field technologies. By
implementing a wireless network, multiple automated platforms can be controlled from a
central location, resulting in a reduction of personnel needed to monitor the individual
platforms. It also allows small, unmanned single pile platforms to be operated and
controlled from a manned platform, as well as data to be transmitted from sub-sea level to
the platform.

Wireless Maritime Services, a joint venture between MTN and Cingular Wireless,
developed a new generation of wireless that replaced the conventional satellite very-small-
aperture terminal (VSAT) technology traditionally used. The technology enabled subsea
wireless transmission via bidirectional microwave radios. This also improved the
effectiveness and freedom of ROVs, which by this time were used as standard.

2006: Shell's Smart Fields Technology

Shell's Smart Field Technology, first used at the company's Champion West field, offshore
Brunei in the South China Sea in 2006, used sensors with fibre-optic cables to relay digital
information on temperature, pressure and other field conditions to control centres. It
enables engineers to continuously monitor production and make quick decisions on how to
best extract oil and spot any problems, such as blockages. Workers can, for example,
activate underground valves electronically to resolve a problem or increase production by
better managing the oil flow. For 30 years the Champion West Field was considered too
expensive to develop because it consists of oil reserves 2,000-4,000m (around 6,500-
13,000ft) beneath the seabed in scattered reservoirs. The Smart Field Technology has made
development possible.

2011: Managing data overload

One of the main challenges facing the digital oil field is to effectively use and integrate all
the data that is collected. In 2011 GE Oil & Gas launched The Drilling iBox System to do
just this. The Drilling iBox is a hardware/software solution that allows operators to turn
existing data into useful information, such as reports and status updates for event sequence,
cycle counts and both condition-based and predictive maintenance. In terms of making
relevant data streams more digestible, a range of visualisation software from companies
 like Cyviz and VSG have also been released allowing complex information to be converted
into clear graphics that make the decision-making process easier.

2013: Kongsberg and BP collaborate

In September 2013, Kongsberg, as a result of its collaboration with BP, announced delivery
of a new real-time well-monitoring and early warning system to support well construction
operations as part of its SiteCom Well Advisor software suite. The system is the first of
several similar systems BP is evaluating for potential development and deployment to
monitor a range of well activities and equipment, from drilling and cementing to blowout
preventers. The project's aim is to turn raw data feeds into information that can be used in
real time. The technology, which consists of a series of dashboard-style consoles, is,
according to BP, already deployed in more than 20 offshore operations worldwide.

2014: Present and future digital oilfields

Today there are hundreds of technologies developed to improve efficiency, assist

deepwater drilling and provide better information for improved safety and disaster
response, as well as improve information sharing and remote operations. However, for
many companies, challenges still remain in rolling out the digital oil field concept to all its
operations, as well as effectively managing the increased amount of data being recorded.

Shell see the digital oil field of the future as encompassing increased fibre
optic wells and Advanced Reservoir monitoring, as well as ensuring all
assets have the "appropriate level of smartness" applied to them. BP has
similar goals to roll out its Field of the Future Technologies across its assets.
If the oil price remains low, optimising all this technology and wealth of
data it provides for enhanced oil recovery, increased safety and

Digital oilfields
The purpose of the digital oilfield is to maximize oilfield recovery, eliminate non-productive
time, and increase profitability through the design and deployment of integrated workflows.
Digital oilfield workflows combine business process management with advanced information
technology and engineering expertise to streamline and, in many cases, automate the execution
of tasks performed by cross-functional teams.

The term "digital oilfield" has been used to describe a wide variety of activities, and its
definitions have encompassed an equally wide variety of tools, tasks, and disciplines. All of them
attempt to describe various uses of advanced software and data analysis techniques to improve
the profitability of oil & gas production operations. Frequently recurring digital oilfield themes
includebut are not limited to:

Operational efficiency

Production optimization

Collaboration

Decision support

Data integration

Workflow automation

One way to understand the rise of digital oilfield technology is by considering some of the
unprecedented challenges currently being faced by the oil and gas industry:

Bimodal age distribution of workforce ("crew change")

Proliferation of software applications and data formats

Global distribution of work teams

Instant availability of massive amounts of real-time data

 Steadily decreasing number and size of new discoveries

Growing expense of advanced recovery technologies

If one maps the challenges onto the themes, it becomes clear that digital oilfields are attempting
to compensate for a higher complexity and cost of operations which must be performed by fewer,
less experienced employees. To achieve this, digital oilfields must either subsume or accelerate
many of the tasks and processes traditionally performed by engineers, geoscientists, field
technicians, financial analysts, and even managers. The industry has come to refer to ordered,
related collections of such tasks as workflows, and industry professionals increasingly think in
terms of workflow design.

The design of workflows and processes is a discipline that historically has most often been
practiced by industrial engineers or operations management specialists. The language of oil &
gas production has changed to reflect the adoption of their techniques. Traditional segmentations
of responsibilities among functional lines (e.g. reservoir, completion, and production engineers)
are being integrated into engineering workflows and business processes that more broadly reflect
the corporate objectives to be achieved (e.g. reservoir surveillance, well test validation,
production optimization). Digital oilfields, in one sense, comprise sets of workflows that allow
fast, collaborative execution of interrelated tasks among distributed (virtual) teams, with an end
result that is optimal, efficient, and more profitable.

History

The software, information technology and engineering advancements that have spurred digital
oilfield adoption by the industry have largely grown out of initiatives which started in earnest
around the turn of the century. However, one of the earliest targets for workflow orchestration
was the integrated modeling of flow through a pressure-connected network of reservoirs, wells,
and surface production facilities. This type of integrated modeling was first introduced in 1976

Alternately termed "tightly coupled reservoir-wellbore-surface network simulations" "integrated

production models" or "integrated asset models" , the publication of case studies using these
techniques began to increase awareness of the benefits of collaboration and of workflows that
crossed functional lines. Engineers working in different disciplines began to be able to foresee
potential effects of their decisions on other parts of the production network (e.g. a production
engineer could see just by running a workflow that the facilities engineer did not have enough
separation capacity to handle an increased well flow rate).

Another early benefit realized through integrated asset modeling was the ability to account for
the uncertainty of model inputs by generating probability distributions for uncertain inputs and
using Monte Carlo analysis to generate an equivalent distribution of outputs, along with their
expected values . In general, whether deterministic or stochastic, the ability to automate the
execution of multiple scenarios was immediately seen as a key advantage of integrated asset
modeling, one that continues to influence the design of new workflows.

As the maturity of workflow designs, the experience of digital oilfield users, and the availability
of computing power all increased, digital oilfield implementations began to actively optimize
desired results within a given set of constraints, rather than simply provide distributions of
scenario results. In this way, digital oilfields began to be used more and more for decision
support, and there was a coincident drive to obtain workflow results faster in order to maximize
the potential cost savings.

In many cases, it was not the time required to execute engineering models that was delaying
decision support from workflows: engineers were spending excessive amounts of time finding,
organizing, processing, entering, and validating dataall before any analysis at all could be
performed. Therefore, digital oilfields also had to address data management problems Digital
oilfield providers began to speak of "technology integration" alongside workflow integration and
model integration. Data sources had to be developed to load, store, clean, process, and validate
data coming from a diverse array of sources, from legacy software file formats, to relational
databases, to email, to PDF, and more. All of this data had to be quickly accessible for use in any
workflow without regard to its point of origin.

Furthermore, organizations had to begin learning to use these systems effectively, and change
management necessitated the development of business process management (BPM) tools. BPM
gave corporations the ability to enforce best practices, first through the design of workflows by
subject matter experts, and then through the subsequent execution of those workflows by all
personnel in conjunction with a system of flowchart-based process diagrams, automated email
notifications, and mandatory review-and-approve steps. As such, BPM continues to be an
important part of any successful digital oilfield deployment.

The growing influence of the Internet also affected the design of digital oilfield systems. As
corporations grew more confident in their use of digital oilfields, they began to desire greater
standardization of their systems across assets and regions. Web-based visualization environments
became important ways to lower IT costs and to provide widely dispersed teams with a shared
vision of models and data. Software as a Service (SaaS) became a valuable way for digital
oilfield providers to enable precisely the functionality needed by a customer, in a way that was
simple for IT administrators to deploy globally, and at any scale

Future Trends

Great strides have been made over the past ten years in the design, deployment, and use of digital
oilfields. Many of the lessons learned were hard ones, and today some of the greatest difficulties
are on the people side of the business: management of change, personnel skill development,
design of business processes, and communication of the value proposition to be gained

Although the basic technology integration elements required to deploy a modern digital oilfield
are generally available, the rapid and constantly-increasing pace of technology change now
presents unique challengesand opportunities. For instance, whereas at the turn of the century a
challenge was instrumenting wells and facilities in order to obtain usable production data, today's
challenge is developing simulations and optimization workflows that can consume the massive
rate of incoming data, filter it, process it, execute models, perform analysis, and recommend
actions to decision-makersall in real-time . The "data revolution" also now makes it possible to
construct many new types of models, data-driven or "proxy" models that enable engineers to
predict system behavior for which trusted physics-based models are either too time-intensive or
perhaps even non-existent.

Additional scope for digital oilfields is expected to eventually encompass closed-loop,

autonomous control of operating facilities, a practice that is widespread in most manufacturing
environments, and even in the downstream sector of the industry. Rig automation and drilling
automation will be used for oil field manufacturing. Clearly, attention to health, safety, and the
environment will be top of mind issues for operators who lead this transformation of the industry.
As such, digital oilfields will become increasingly concerned with operational efficiency and the
optimization of processes that are not directly related to the core petroleum engineering activities
for which they are currently used.

As digital oilfields expand horizontally to encompass every aspect of operations and engineering,
they will also expand vertically within the organization to touch every functional discipline, from
accounting and finance, to executive management. Digital oilfields will become automated
oilfields, and within will be automated companies, with all information pertaining to the
acquisition, development, production, and disposition of oil & gas assets being managed in a
centrally-administered system with BPM processes, orchestrated workflows, and notifications.
Changes to a production plan in one asset will, through the design of increasingly more
sophisticated workflows that include economic analysis, roll up to a revised portfolio
optimization plan maintained by the Finance Department, with changes in expected Net Present
Value being made immediately available to executive decision-makers.

The arrival of automated companies will create an environment in which the financial impact of
individual technical decisions becomes transparent to all stakeholders. Financial metrics will, at
that point, influence the objective functions used to optimize technical operations. At that
point, automated oilfields will be indistinguishable from the most advanced factory operations;
lean, streamlined, efficient.

According to the World Energy Outlook's findings, by 2035, the global energy demands will
increase by one-thirds, with India & China accounting for 50 percent of the growth. Oil
companies need to be profitable, achieve productivity gains, ensure plant and operations safety
and promote environmental sustainability, all while grappling with challenges such as volatile oil
prices, difficulty in accessing oil reserves, industry consolidation and manpower challenges.
Therefore, oil and gas majors are looking for new ways to streamline business. This is especially
true in the emerging countries, where this industry is just coming of age.
Technology can provide the answer to most of the challenges mentioned above. The concept of
'Digital Oil fields' is appealing as it offers the benefits of an environment where
subsurface/surface professionals and field workers have total asset awareness and can monitor
and manage all operational activities in real-time or near real-time, regardless of location.

Establishing a single IP infrastructure that connects people and operations helps provide
ubiquitous access to information, collaboration tools and business applications. When the IP
infrastructure spans across the operations including drilling, production and maintenance in oil
fields, it is possible to provide a platform that integrates communications and applications so that
oil and gas companies deliver significant improvements in field collaboration; production
awareness and achieve operational excellence.

Production awareness

In the oil and gas industry, return on investment depends heavily on asset availability. If the
overall facility or sub-systems fail, production will cease but costs will continue. Assets may
include offshore drilling rigs and production platforms, land-based fields, pipelines and storage
facilities. Technologies for remote monitoring & measurement, operational video and mobile
work management help provide operator visibility or sensing to respond to downtime and
increase oil flow.

Remote monitoring helps to provide a platform for contextual awareness solutions and enhance
field efficiency by operating from offsite locations. This reduces the dependency on 24x7 field
monitoring and minimizes human errors. The applications available for remote monitoring and
measurement also help to support the acquisition of previously unavailable or isolated data and
transmit that data (to a central location or multiple sites) for analysis and decision-making. It can
also communicate a response back to the assets.

Monitoring over video helps in disaster response and helps develop analytics that can be used to
gauge the level of failure. IP video monitoring solutions running over a converged network are
being used increasingly for field operations and to monitor platforms, refineries, pipelines,
marine vessels, machinery and other assets.
With the wide availability of mobile devices such as Smartphones, PDAs and Tablet PCs, oil
companies can leverage mobile work management solutions designed to improve workflow
management, productivity and process compliance. Applications for work management permit
management, mobile maintenance and testing help to support rapid staff and contractor intake
programmes such as shutdowns and turnarounds, where instant access to information and
enforcement of process compliance is essential.

Field Collaboration

Professionals in the oil and gas sector spend a lifetime honing skills, accumulating experience,
acquiring tacit understanding of specific basins and reservoirs and developing functional skills,
such as directional drilling. Oil and gas companies need to exploit deposits in remote areas, often
far away from where this expertise resides. This requires a huge shift from organizational
demarcation lines and old siloed ways of working.

Through the integration of unified communications and presence technology, employees can use
any combination of voice, video, data, mobility applications and devices for communicating with
each other regardless of whether they are working on-shore or offshore. Unified
Communications brings the problem to the experts, rather than the other way round. It provides
them with complete situational awareness and the ability to collaborate and share information in
real time, with those who need the expertise. Thus the staff on the ground becomes the eyes and
hands of the remotely-based expert, helping to solve a problem as quickly and cost-effectively as
possible.

Operational excellence

Operational excellence cost management, efficiency and safety remains a constant business
imperative for oil and gas companies. Companies are also looking to consolidate facilities to
increase availability, reduce costs and improve data security. At the same time, health, safety and
environment concerns are top priority within the industry.

By its very nature, the production area is a hazardous space in which movement and activity of
all personnel needs to be closely tracked and controlled. Workforce safety can be significantly
improved by optimising the availability and delivery of applications so that employees receive
the right information they need to safely go about their work.

By leveraging the wireless network investment to introduce new capabilities for the real-time
tracking of people and assets it is possible to increase the safety limit. Through asset tracking,
any Wi-Fi device or Wi-Fi (RFID-enabled) tag that connects to the wireless network can have its
associated contextual information captured. In addition to improving visibility of assets, this
information can be used to rapidly account for personnel working in hazardous zones or when
there is an evacuation order.

The future

The energy sector needs a facelift to cater to the increasing demands in highly populated and fast
growing nations like India and China. Given that the average age of workers in the oil industry
has risen considerably, attraction and retention of talent is a key concern. The sector should
therefore consider automating processes to reduce operational time.

A piecemeal approach to IT must be avoided because it becomes cost prohibitive to implement

the technology. Against the backdrop of a massive industry consolidation, oil and gas companies
should look at other technology projects in the industry and internally across their organisation to
see if they are leveraging the full potential of IT. To increase the success rate, this review should
seek to identify and leverage industry best practices.

Industry collaborations must be built to roll-out effective solutions; technologies such as unified
communications, integrated access and location management systems must take front seat in
investment; business process transformation must be led by smart technology. This will enable
the energy sector go a long way in terms of growth and prosperity.

Recent Technologies

The oil and gas industry has always been highly innovative. In the face of repeated predictions
that it would run out of oil and gas to produce (peak oil), it has repeatedly proven the ability to
develop the technologies necessary to discover new resources and to economically produce ever
more difficult-to-extract hydrocarbons. Some of the new solutions that the oil industry has came
up with are:

Drilling Technology
Customized high performance drill bits
Extended length horizontal drilling
Increasingly automated drilling rigs
Completion Technology
Multistage Plug & Perf and sliding
Sleeve Fracturing completion technique
Dissolved frac balls
Advanced electrical submersible pumps
Hydrocarbon Processes
Insitu Reservoir Management
Solvent Co-injection to increase oil-sands productions
Efficient water-flooding in conventional oilfield
Exploratory Processes
Real-time micro-seismic monitoring
3D seismic imaging and reservoir monitoring

Drilling Technology

"The Future of Geothermal Energy Impact of Enhanced Geothermal Systems (EGS) on the
United States in the 21st Century" (2006) points out the essential importance of developing an
economical deep geothermal boring technology. With current boring technologies, bore price
rises exponentially with depth. Thus, finding a boring technology with which the bore price rise
would be approximately linear with increasing bore depth is an important challenge.

the price of boring rises linearly with depth

bore axis with neutral floating

the possibility to make vertical or inclined bores up to 10 km deep

the possibility to make large diameter bores even 5 times larger than on the ground
compared to today drilling technologies
 casing formed on site in the borehole

Examples of new drilling technologies

There are more than 20 research efforts solving innovative drilling technology such as:
laser, spallation, plasma, electron beam, pallets, enhanced rotary, electric spark and
discharge, electric arc, water jet erosion, ultrasonic, chemical, induction, nuclear, forced
flame explosive, turbine, high frequency, microwave, heating/cooling stress, electric
current and several other. The most promising solutions are mentioned below:

1. Hydrothermal spallation Thermal spallation drilling uses a large, down hole burner,
much like a jet engine, to apply a high heat flux to the rock face. This drilling technology
is based on thermal processes of rock spallation and fusion.

2. Chemical plasma is based on crushing by high-speed combustion, but nitric acid as

oxidizing agent instead of oxygen.

3. Erosion - most patents refer to water jet rock cutting. Different modification variants
are described, e.g. utilization of cavitations, turbulent processes, combination with
mechanical processes, etc.

4. Laser - during the recent decade intense research has been made into utilization of
high energy laser beams for rock disintegration. Primarily conversion of military
equipment is concerned. Laser energy is used for the process of thermal spallation,
melting, or evaporation of rock.

5. Electric discharge - The methods utilizing electric discharge are based on long-term
experience gained in other application areas.

6. Electrical plasma - is based on crushing by irradiation of plasma with high

temperature up to 20 000C

7. Direct transfer of heat - This technology is based on electrically melting rock at

1400C; lava gravel will float to top; bore hole walls are of glass of surrounding rock.
Cost decreases with depth, with no limit on depth of bore hole. Bore diameters from 1m
to 10m. Recovery of energy used to melt rock

EXAMPLE OF DIGITAL OIL FIELD

Digital Oil Field Technology Offers Valuable New Options For Optimizing
Production
Did you make New Years resolutions for your business this year? Perhaps those resolutions
include working smarter, carving out un- necessary costs, staying clear of unrealistic schemes,
making that smart investment that will differentiate your company and accelerate growth, or
maybe renewing that passion, that drive, that exhilarating spark that used to permeate throughout
the company? If this years list does not differ significantly from last years resolutions,
operators can take heart in knowing it is true that persistence certainly counts in the oil and gas
business. However, one tongue-in-cheek definition of insanity involves the expectation of
different results while continuing to do the same things. Digital oil field technology offers an
option worth considering, or reconsidering, as a means to move toward corporate business goals
in 2010. Digital oil field programs have become mature enough to be modularized. It no longer
requires a soup-to-nuts, do-it-yourself effort to see dramatic results. Whether it is cost
containment that keeps an oil and gas executive up at night, or optimization and growth,
independent operators now have fresh weapons in their arsenal.

While there are certainly several common production operations challenges, the good news is
that various enlightened options also exist for addressing the promise to make improvements
throughout the new year. Increasing asset awareness may be one approach to delivering the
changes and improvements needed to achieve improved production goals. Remote sensing is
available for all facets of production operation, providing pressure, temperature, flow and other
data. There are a number of choices for network transmission of the data, and service companies
and suppliers equip wells and fields accordingly. Acquired assets may already be wired, and
proven engineering, production modeling and field management tools from companies such as
Petroleum Experts and others consistently help to deliver practical understanding from the
complexity. The biggest hurdles are no longer field infrastructure or analysis tools. For the
independent, they are generally a distraction because of office information technology
infrastructure and confidence in measurable benefits. The focus has moved from capability,
which has been demonstrated, to attitude and judgment.

The Last Mile The notorious last mile of connectivity may not be some remote field site; it may
be the office suite. For many independents, staying lean, mean and focused relegates IT efforts to
the category of necessary evil, overhead cost burden and nonproductive time. When IT lite
becomes the operators strategic position, infrastructure at the office is constrained. While well
equipped with staff experts to analyze and use the data, the pro-visioning of software, networks
and data can remain problematic for the independent operator. The underlying network
management, security, data storage, software portfolio and training are perceived as representing
a significant investment of effort and money.

These perceptions may have been well founded at one time, but rethinking those perceptions
may be in order during 2010. To bring corporate IT decisions into a little more personal
perspective, con-sider an oil and gas executive trying to decide whether to perform the lawn care
at his home, or alternatively, rely on a company specializing in yard maintenance to perform that
task for him. Would it be cheaper from him to do it himself? On a direct expense level, the cost
of a mower might definitely be less. However, factoring in the full cost of lawn maintenance
beyond the cost of a mower by adding the value of his time to learn the tricks of the trade and
perform the work, shifts the balance. Could he do the work as reliably and fast as the lawn crew?
That is doubtful. Is lawn care optional? Not really. So, he negotiates the best price he can for the
service, judges the expense as worthwhile, and subsequently perceives delivered value.
 A similar approach is increasingly being implemented in integrating business IT capabilities.
Contracting for shared IT services or hosted services gains expertise and value, in many cases. IT
centers specifically established to serve the needs of independents enable operators to focus their
costs on the personalized IT capability they need. A broad range of available services allows for
flexible access to software tools and data handling on a temporary or periodic basis, as needed.
Benefits also are gained from the improved quality and level of service that comes from a fully-
equipped IT operation that enjoys attendant discounts and priorities that come with volume
operations. Do independents pay for this? Yes. They judge the investment worthwhile to achieve
their business objectives to carefully manage costs and deliver reli- able production levels. Do
they pay as much as they would if the same, small- er-scale service was in-house? No,
particularly when all the hidden costs are exposed.

Digital Oil Field Of The Future Just what is the digital oil field? Circa 2000, Cambridge Energy
Research As- sociates christened the digital oil field of the future (DOFF) and defined it as
entailing total asset awareness, right-time analysis and decision making, and timely execution.
Others have characterized it similarly, as technology and workflow solutions connecting
geographically distributed experts to optimize oil field activities in process-consistent time.

The opportunities that DOFF enables were summarized by CERA as:

Increased reservoir recovery;

Increased production rates;

Better well performance;

Reduced downtime; and

Lower operating costs.

Motivated by the promise of DOFF, improvements in the way the upstream works escalated into
transformation mode. Early adopters, such as BP, Chevron, Shell and Statoil, consistently
identified a similar set of innovations critical to success. New levels of systems and
organizational integration would be required to enable the business to interact in new ways. In
the cross hairs was the friction associated with information sharing across all facets of business.
This spotlighted the industrys enormous gaps in foundational IT infrastructure and integration to
deliver the digits of the digital oil field. Version one implementations of DOFF were by
necessity, then expansion, emphasizing the construction of strategic foundational data-moving
elements that could then be reused.

Today, DOFF stands on the shoulders of those leaders and others persistent and massive
investments in technology, testing and organizational transforma- tion. A community of
experienced practitioners exists both within the operating companies and among the service
providers that also invested significant- ly. The myriad benefits of DOFF in upstream decision
making (the original ob- jective) are well documented now and measurable on the bottom line.
Among the good news for the independent keen to pursue DOFF-type gains is that this
community of capable service providers is available. A do-it-your- self approach verges on being
counter-productive, since these suppliers bring with them their hard-won experience in what
works well and what does not.

Also, with expanded IT infrastructure making oil field digits more easily ac- cessible, todays
DOFF projects are often much more focused than previous ones. That is, the projects target a
specific oil field issue starving for better, timelier decision making. Questions have shifted from
How do I get the data from those field devices into my software applications? to How can my
chemical treatment program be changed to control costs while achieving even greater
improvements in flow assurance? and How could I get more value for my spending on
artificial lift in this field? These questions and others like them resonate loud and clear with
independent operators.

Flow Assurance The formations todays independent producers are working are more and more
challenging to operate. Increasing water production also increases tendencies for corrosion and
scale. Asphaltenes, hydrate development and many other geochemical anomalies conspire to
choke hard-won production. Chemical treatment has become widely practiced to counter these
difficulties and maintain flow levels. Therefore, applying chemicals is often imperative, and the
costs of chemicals definitely impact the economic viability of the field. In which situations do
DOFF practices apply to chemical injection? Traditional chemical injection devices are static and
commonly result in chemical overuse or underuse, either of which undermine the operators flow
assurance objectives. Producing conditions are dynamic, so delivery systems must be as well.
Today, tank-level monitoring and control systems have been introduced to fa- cilitate condition-
based chemical injection processes. These innovative systems enable the monitoring and
efficient control of injection systems. With this new level of insight, the treatment levels can be
kept synchronized with dynamic producing conditions, such as adjustments in production rates,
pump performance, power outages and chemical tank levels.

The following example highlights how tank-level monitoring and condition- based injection
bring value. During 2009, an operator reprioritized the need to maximize production and protect
against production system upsets in an offshore Gulf of Mexico asset. An effective chemical
treatment program was designed and deployed. To help ensure uninterrupted demulsifier
application and avoid facility shut in because of wet oil, the operator teamed with its supplier to
install a unique DOFF-style remote tank level inventory system to continuously monitor and
report on system status. Eventually the tank level system detected a low usage condition in the
demulsifier injection operation during the overnight hours and immediately initiated the alerting
process. The service provider quickly contacted the offshore operator to notify it of the issue.
The operator mobilized, and onboard staff confirmed there was a problem with the demulsifier
injection pump. The problem had eluded the platform personnel despite the fact that the
demulsifier injection pump was tied to the supervisory control and data acquisition system, and
benefited from around-the-clock site presence seven days a week.

While a SCADA system may be part of a DOFF pursuit, this example clarifies that it is not a
substitute for one. The pump failure was promptly corrected, demulsifier injection restored, and
production continued without incident or upset. The operator clearly benefited from the
cooperative and integrated service delivered by its supplier. Without the tank-level system and its
DOFF monitoring services, it is unknown when the off-line situation might have been noticed.
The operator speculated that had the situation run to failure, the cost of downtime and startup
would have run to $1.2 million. By preventing a wet oil condition, and most probably, a facility
shut in, the operator lost no production as a result of this incident. Expenses related to system
 upset and system restart also were avoided. The values of the DOFF scheme are many, but
include:

More reliable production levels because of reduced downtime;

Improved management of chemical use and costs;

Decreased threat to other costly elements of the completion, such as pumps;

More timely and accurate reporting, including regulatory obligations; and

Decreased health, safety and environmental exposure resulting from un- expected
developments such as leaks, which are swiftly identified through real-time monitoring and
surveillance.

Artificial Lift Chemical treatment programs often are applied in conjunction with artificial lift
systems that provide another vital route to production improvement. Today, remote artificial lift
monitoring and automation services give operators the in- formation and insight necessary to
optimize production and extend equipment run life. A full range of proven equipment and
services for data collection, data communication, Web-based monitoring, and data analysis are
commonly available in the market. Equipped for digital oil field pursuits, their performance,
reliability and bottom-line impact are significantly enhanced. Downhole sensors measure well
parameters and provide critical data to enhance electrical submersible pump system efficiency
and reliability. These sensors can cover a broad range of needs from basic downhole
measurement to more sophisticated data for production optimization. Data distribution, retrieval,
and analysis capabilities seamlessly link downhole data to a desktop, spanning the independent
operators last mile. Also, specialized software modules now can provide ESP operators real-
time, constant flow measurements at a fraction of the cost of traditional flow monitoring devices.
Flow readings help diagnose well or ESP problems and accurately track reservoir performance.

Again, the question at hand is not whether DOFF-style artificial lift pro- grams can be reliably
implemented. The question is whether such a program is suitable for application by independent
producers. As real-world examples from the field suggest, the answer is yes, and 2010 is the year
to do it. For instance, for two years a California independent had been experiencing
approximately three hours of ESP system downtime daily because of gas lock- ing. The deep,
highly deviated well had significant gas production, but the natural gas along with the complex
well bore formed foam on top of the fluid, masking the fluid level.

By investing in sensors on the ESP, accurate measurements were provided (fluid levels and
temperatures, as well as pressure and motor winding temperatures). Intake pressure readings
from the instrument now give accurate fluid readings and eliminate the gas locking. By
eliminating three hours of daily down-time, production increased by 15 barrels of oil a day,
improving the bottom line by approximately $164,000 annually at $30 a barrel. In another
instance on a carbon dioxide flood program, DOFF-style ESP re- mote monitoring by a service
provider exposed a severe cycling situation. The experts recommendation reduced the ESPs
cycling and increased daily oil production by 25 barrels.

Finally, on a water-alternating-gas (WAG) field program, DOFF-style ESP remote monitoring by

a service provider allowed service techs to apply management by exception practices across 130
wells to better prioritize work and respond to critical situations more quickly. In this case, the
operators techs were notified of undesirable operating conditions prior to failure or shutdown.

Among the results documented were nine immediate failures prevented over two months. With each
failure costing approximately $80,000, the operator saw a direct gain of $720,000. This gain was
compounded by the increased uptime and daily production delivered. From these examples, decisional oil
field efforts can clearly be scaled for the needs of an independent operator. Moreover, although an all-
encompassing program is not required, powerful re-sults can be obtained when a couple of DOFF projects
are blended. For example, since chemical treatment programs and artificial lift programs often operate in
tandem, operators may consider combining the monitoring and surveillance programs of both to better
optimize well and field operations. Chemical treatment can affect pump life; pumping dynamics dictate
the need for chemicals. Starting small and targeted with DOFF is absolutely realistic now. What was
previously too complex to coordinate is now easily within reach. To get started, a trial phase may be
useful to identify which elements work well and which are lower priority.