The Shale Assembly Line
INDUSTRY - Oil and Gas, SOLUTION - Analytics, SOLUTION - Information Management, SOLUTIONS - Industry Solutions
Matt Tatro, Senior Principal - Noah Consulting
Matt Becker, Principal - Noah Consulting
This year marks the 100th anniversary of something that many people consider pivotal to humanity. Something that defined industrial power in the United States for the last 100 years and, since that day, has changed the way goods are manufactured around the world. Although the actual idea for this invention dates back some 200 years earlier, it was not until 100 years ago that someone realized a large scale industrial implementation of this concept: the assembly line.
When the Ford Motor Company began manufacturing the new Ford Model T on their new assembly line December 1st, 1913, at first, the world took little notice; after all, many car companies were already building legendary vehicles. Ford wanted to build vehicles anyone could own and, with that, had to make the vehicles much faster and cheaper than ever before. Ford standardized the assembly by limiting options and paint schemes, famously saying, “A Ford can be bought in any color as long as it was black.”
Today, oil and gas companies are facing somewhat similar challenges as did Ford 100 years ago. Since the early days of exploration and production of oil or gas, everything was bespoke. The entire process was custom engineered, requiring special tools, equipment, and knowledge.
As the world changed geo-politically, and the oil wealth shifted from nations such as the United States, once the largest oil and gas producer in the world and today’s largest consumer, to areas which are politically less stable, the U.S. started exploring new avenues for production – shale. As it turns out, the U.S. is not alone, there are huge shale reserves being explored worldwide, many in energy dependent areas, such as Europe and China.
So, what is the connection between the shale well lifecycle and the assembly line?
Shale wells have been around for 100 years, as well. However, it has only been in the last decade or two that the industry has figured out how to make shale wells economical and, therefore, unlocking the real potential. There is, however, a caveat; there must be a standard, repeatable processes or assembly line-type of production in order to produce wells fast enough to make shale plays economical. Consequently, the “factory” or “assembly line” analogies are even more relevant as organizations begin to think about how to become operationally efficient in a market where valuations have been based on how quickly they can ramp up their reserves at all costs over the past 5 years. However, many executives are anticipating the turn is just ahead; efficiency will become the new measure. The goal will be shifting from not just operationally excellent, but operationally excellent and efficient. Those that can apply the factory model to increase reserves will also be better positioned to benefit from a data centric approach to their operations.
Many E&P companies run 30 or more rigs simultaneously to maximize their asset utilization, but high quality data capture, monitoring, and optimization are also required every step of the way to improve all aspects of the well lifecycle. Data can be used to monitor performance to better understand, and then reduce, the times between operations, such as the time between staking a well and starting construction or between the completion of a well and the time it is put online.
Historically, much of the data required to optimize the assembly line in shale production, such as dates and the time gaps between them, has been neglected or not treated as important in larger offshore projects that simply do not have the same challenges. Lease expirations and shorter production cycles are not a priority for offshore; but, in shale, time to market is a real issue. Shale wells tend to lose 2/3 of their production in the first 2 years vs. offshore wells, which routinely produce for 30 years. For example, by understanding the time it takes between the well having been completed and being put online, then reducing this time by 2 days per well, would result in 720 days a year, assuming 30 wells are drilled per month. This is a substantial amount of potential production time wasted. Accurately collecting this information and making it available for analytical use becomes the basis for optimization scenarios, even simulations. Much of the data collected from real-time applications during the drilling process itself will, in the near future, become even more useful with the advent of big data applications for the oil & gas industry. These data points will allow companies to analyze just-in-time options for the oil field, change strategies on inventory, better control their well inventory and rig times, and have much better insight into supplier contracting possibilities, just to name a few. However, without first putting the foundation in place to collect all of the relevant data none of these new possibilities can become a reality.
Fortunately, practical applications utilizing BI dashboards and related technologies for shale are being developed, including various large data initiatives. Further, many companies already have an existing data warehouse or even large data technologies – just not used for these purposes – that could process this information. Most of these initiatives are still in the early stages and are drawing from experiences gained in other industries, such the assembly line first made practical by Henry Ford.
ABOUT THE AUTHORS
Matt Tatro: As Senior Principal at Noah Consulting, Matt is a leader of innovation, problem solving, planning, organizing and managing budgets and has 25 years of practice across a wide range of different industries including extensive experience in oil & gas. He is currently a Project Manager for a corporate data management project focusing on the E & P well life cycle and is a trusted member of the client’s PMO advisory panel. He is a team player that enjoys managing large groups of virtual teams across multiple times zones, different languages and various cultures. Matt has very strong technical skills across many technologies including mobile development, SAP, Hyperion, .Net and Java. Matt is married and has two beautiful daughters. In his free time, he is an active member of the “Brazos Valley Amateur Radio Club” and ladies’ rowing competition fan, traveling the U.S. (hopefully, soon - the globe) to cheer on his favorite athlete.
Matt Becker: Specializing in BI and Data Warehouse solutions, Matthew Becker has 14+ years of experience in the Energy industry (Pipeline, Refined Products, Upstream, & Energy Trading) with emphasis on Project Management & Business Analysis as it relates to Business Intelligence / Data Warehouse Implementations, Information & Master Data Management, Data Governance & Quality, Custom Full Life-Cycle Design & Development for various Large Scale Implementations, Implementation Quality Assurance, and Deployment. Since joining Noah in 2011 as a Principal, Matt Becker has made a significant impact on Noah by making strong contributions to both clients and Noah’s internal operations. Matt enjoys showing Noah clients how valuable accurate data is in both reducing inefficiency and gaining insight into overall operational performance. Matt also enjoys recruiting and marketing for Noah and frequently volunteers his time to participate in interviewing and candidate screening and various marketing tasks.