Alberta Companies Discover Big Returns in the Digital Oilfield

The first major crude oil discovery in Alberta was made near Leduc in 1947. The resulting well, Leduc No. 1, produced 317,000 barrels of oil and 323 million cubic feet of natural gas before it finally gave out in 1974. In the process, Alberta and Canada became one of the world’s biggest oil producers.

Things haven’t always been so good. A recent slump in oil prices has knocked down the price of crude by 60% since 2014. Lately, it’s been tougher to make money in the oil patch.

Technology has helped ease some of the pain, and energy companies have long been an innovative group, using processes like steam-assisted gravity draining (SAGD) to separate oil from Alberta’s oilsands. Now, the oil patch has found a new way to improve the bottom line: digital technologies.

“We’re starting to see digital technologies enter the oil and gas space, as well as other industries, and what makes it very exciting is that it will drive up productivity, drive down costs, improve safety, and improve environmental performance,” says Bemal Mehta, senior vice-president of energy intelligence at Edmonton-based information provider JWN, which released its Digital Oilfield Outlook Report in November.

Predictive Maintenance and Production Asset Optimization: two use cases with the greatest potential ROI

According to the JWN survey, Predictive Maintenance and Production Asset Optimization are perceived to be the two best technologies to deliver return on investment. Mehta likens Predictive Maintenance to how contemporary car computers show when service is needed: not by relying on a preset maintenance schedule, but by using inputs from actual usage.

Unplanned outages for an asset in the oil patch can be extremely damaging, costing from up to $1 million each day in the drilling-to-completion phase, and $300,000 per day once the project is running. McKinsey has estimated that improving production efficiency by 10 percentage points can raise the bottom line of a single asset by up to $260 million.

Predictive Maintenance: Hifi Engineering unlocks hidden barrels

Calgary-based Hifi Engineering Inc demonstrates how Predictive Maintenance holds surprising benefits for oilfield services companies. The Zone Startups Calgary company has applied its fibre-optic monitoring technology to wells and pipelines, to help prevent problems such as corrosion that could lead to leaks and spills.

Hifi’s solution monitors three key data points from pipelines in real time — acoustic energy, strain, and temperature — enabling operators to know where issues are occurring on a line. The challenge is making sense of all that data, since a 100-kilometre cable can generate more than 10 terabytes of data per sort it all out, Hifi coupled its own algorithm with GE’s Predix operating system, which allows operators to visualize and generate reports. The company says the payback on 100 kilometres of pipeline takes less than one year.

By increasing the number of barrels produced and spreading fixed costs over more barrels, Predictive Maintenance can unlock what JWN calls hidden barrels. “These hidden barrels can often add 3% to 9% on a production facility or a well,” says Mehta.

Production Asset Optimization: With GE Adaptix, small improvements yield big results

Of course, another way to unlock production is to get the best possible outcome from existing assets, which can be tricky when it comes to the oilsands.

For example, using SAGD means juggling a lot of variables, such as how much steam to inject or when to drill in-fill wells, among others. To address those issues, GE developed thermal production optimization software called GE Adaptix at its Customer Innovation Centre in Calgary. The software allows operators to run what-if scenarios and establish ideal operating parameters. They can also build a “digital twin” that allows them to adjust variables and run an optimizer in a matter of seconds.

In an early application, Adaptix produced a 1-1.5% improvement in steady state operations and a 3-5% improvement in non-steady state production. According to JWN, even a 1% improvement in production using existing infrastructure can yield millions in dollars in additional annual revenue.

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