Robo drilling increasing shale well efficiency

Shale oil engineer Oscar Portillo spends his days drilling as many as five wells at once - without ever setting foot on a rig.

Part of a team working to cut the cost of drilling a new shale well by a third, Portillo works from a Royal Dutch Shell Plc (RDSa.L) office in suburban Houston, his eyes darting among 13 monitors flashing data on speed, temperature and other metrics as he helps control rigs more than 500 miles (805 km) away in the Permian Basin, the largest U.S. oilfield.

For the last decade, smaller oil companies have led the way in shale technology, slashing costs by as much as half with breakthroughs such as horizontal drilling and hydraulic fracking that turned the United States into the world's fastest-growing energy exporter.

Now, oil majors that were slow to seize on shale are seeking further efficiencies by adapting technologies for highly automated offshore operations to shale and pursuing advances in digitalization that have reshaped industries from auto manufacturing to retail.

If they are successful, the U.S. oil industry’s ability to bring more wells to production at lower cost could amp up future output and company profits. The firms could also frustrate the ongoing effort by The Organization of Petroleum Exporting Countries (OPEC) effort to drain a global oil glut.

“We’re bringing science into the art of drilling wells,” Portillo said.

The technological push comes amid worries that U.S. shale gains are slowing as investors press for higher financial returns. Many investors want producers to restrain spending and focus on generating higher returns, not volume, prompting some to pull back on drilling.

Production at a majority of publicly traded shale producers rose just 1.3 percent over the first three quarters this year, according to Morgan Stanley (MS.N).

But many U.S. shale producers vowed during third quarter earnings disclosures to deliver higher returns through technology, with many forecasting aggressive output hikes into 2018.

Chevron Corp (CVX.N) is using drones equipped with thermal imaging to detect leaks in oil tanks and pipelines across its shale fields, avoiding traditional ground inspections and lengthy shutdowns.

Ryan Lance, chief executive of ConocoPhillips (COP.N) - the largest U.S. independent oil and gas producer - sees ample opportunity to boost both profits and output. Conoco also oversees remote drilling operations in a similar way to Shell.

“The people that don’t have shale in their portfolios don’t understand it, frankly,” Lance said in an interview. “They think it’s going to go away quickly because of the high [production] decline rates, or that the resource is not nearly that substantial. They’re wrong on both counts.”
There is much more.

One of the reasons the shale industry survived the OPEC predatory price war is because they increased efficiency.  They haven't stopped.  They are also importing efficiency from offshore drilling projects to better manage the flow of production.

While production efficiency is increasing, there has not been enough effort in the US to switch refinery capacity to match the oil being produced from shale wells.  That is probably the major stumbling block to making the US energy independent from foreign oil.


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