Innovation – a word we throw around
September 4, 2018
by Brad Baker, CEO, Tendeka
(Published in JPT, September 2018)
“We are the innovation leaders”. “We are increasing spend on innovation”. “Hey, you’re innovative”.
In our industry, positive advancements turn to unquestioned trends which are then embraced with a buzzword. Has ‘innovation’ become the latest sales jargon where its true meaning and application has become convoluted?
As a reader of JPT, you will no doubt be dazzled by the latest technology developments and self-proposed innovations, for example, in completions, drilling, and petroleum engineering. But how many are true enablers to a new way of doing something or solving a real problem? Are we really innovating as an industry or merely applying a catchphrase to already tried and tested processes because that’s what’s in?
What does real innovation mean?
In its classical sense, innovation is basically any new idea, process or solution to a problem. So, in that respect, I guess our industry is very pioneering as there seems to be a relentless stream of new products, methods and techniques hitting the market. However, the term has more recently been tagged to almost every new idea whether purposeful or just a ‘nice-to-have’ variant of an existing product.
For example, how long have we been talking about intelligent wells coupled with improved digital data to enhance reservoir recovery factors? How big have those innovative leaps really been or are they simply small steps in a long journey to the solution. The ideas that bring significant changes are what we should be heralding and measuring as true innovation in our industry. I like to call this efficacious innovation – developing real answers to real problems that create a positive step forward.
Who decides what innovation is? In a sense, it’s the end user and how important the new idea is to them. For example, when the clever engineers at Zenith invented the remote control for the television, was that really an innovative product or just a cool twist on an already simple process? For me, it’s extremely innovative but for my octogenarian dad, it’s an unnecessary device for his lazy son.
Sometimes a ‘nice-to-have’ novelty becomes an essential innovation as it drives different, unintended behavior and efficiencies. Some would say the remote drove the quickfire viewing patterns of today and the television industry built its programming around its ability to access a range of content at the press of a button.
For reservoir recovery today, it seems we are so focused on gathering data that we are missing the big innovation of making that information work to significantly improve very low recovery factors. While we have figured out how to capture data we don’t seem to know how to handle it.
As a young petroleum engineer at university, I had a job where each month I would shoot fluid levels in a couple of fields with sucker rod pumps and then reset the pumps that were off, pounding fluid until the following month. Even then, I always thought there must be a better way to maximize recovery. Decades on, and despite some slick add-ons in monitoring optimization, this is still the way it’s done in too many fields today.
I was shocked that we were leaving so much energy in place and wasting so much of the earth’s resources. So, for my final thesis, I did an optimization study of those fields and proudly stated to my professor that these same fields should produce 80% of the Oil Initially in Place (OIIP). He clearly thought differently. My paper received a grade B and on it he stated: “Nice work. Reality check – you can never reach 80% recovery factors”. I still believe the industry should be doing more to increase recovery factors.
Where will real innovation come from?
All major industries need to go through a reset or awakening every now and then. And it’s a good thing.
This industry is not in a cycle as we know it but rather a re-alignment. There is no ‘peak oil’ theory to worry about. There is no foreseeable lack of energy. In fact, the world’s energy needs are diversifying and changing quicker than anticipated. The industry will evolve with it to offer less supply velocity and lower price points.
I believe we are at the inflection point in the creation of a nimbler, more innovative industry with plenty of upside. It is innovation that will allow the sector to produce energy more economically and efficiently.
I challenge service companies that have survived the oil price crash and want to be relevant to produce innovation based on causation. The lessons learned since 2014 will show that there’s no need or want for cool stuff that’s looks great or is a fast follower twist on something already in the market.
Now is the time for truly, efficacious innovation. Innovation with a purpose that solves the problem at hand; more recovery for fewer dollars spent. Where will this come from? Not necessarily the usual suspects. There is an opportunity for the upstream services sector – with help, support and investment from the operator community – to quickly reshape an industry that can easily operate under $60/bbl.
For those companies that are agile and can innovate efficiently, 2019 should be an opportunity to grow and prosper in the upstream sector as investment shifts to efficient execution.
How important is it that we innovate to survive?
We’ve seen tremendous innovation in drilling but advances in completions have been relatively stagnant. Reservoir optimization continues to be viewed as a static installation which constrains wellbore interface and restricts the ability to optimize reservoir recovery.
As the industry finally recognizes there is tremendous upside in maximizing the reservoir, there has been a strong shift in focus to completions over the past ten years. Nanomaterials, designer metals, fluids and specialty techniques, are producing much more cost-effective completions hardware. But we still struggle with gathering reservoir information in real-time to produce a longer lasting, more efficient completion that maximizes reservoir recovery.
It is imperative that we begin to truly use digital information. Developing dynamic completions that can self-heal or adapt to changing environments and economies over time, will allow us to increase recovery factors. Gathering real-time information at source is paramount to this, coupled with making the most of the data.
I am encouraged that innovation in this area is now rapidly strengthening the marriage between data and dynamic well equipment. This will finally allow us to maximize every well we drill and prove my professor wrong.
As we continue to push towards these exciting breakthroughs, I challenge us all to reserve the word ‘innovation’ for something inspiring, game-changing or at the very least, has a meaningful impact to the industry.
We are on the verge of what I liken to the internet’s conversion from hard-wired to wireless. The ability to allow downhole completions to autonomously gather data, communicate across wells and entire fields, and improve production without dictating restrictive hardware, will truly revolutionize reservoir recovery.
Now, that for me, would be true innovation over a fad or buzzword.