-Originally posted Oct 23, 2013-
The advent of big oil and gas data has transformed the energy sector. It has created a more cost-effective approach to hydrocarbon exploration across the industry.
Because unconventional oil and gas production requires more expensive drilling and completion technologies, energy companies of all sizes now rely heavily on oil and gas data to minimize drilling risks and create optimal production results.
Think Moneyball meets oil and gas.
The Moneyball Big Data Story
In 2002, General Manager Billy Beane shifted the recruiting focus of the Oakland Athletics. The team went from seeking inexpensive talent to using a highly analytical, evidence-based sabermetric approach to choose players.
Despite having the third lowest team payroll in the league, this strategy reinvigorated the franchise. It helped the A’s become respected contenders in the 2002 and 2003 playoffs.
How Moneyball Applies to Oil and Gas Data
Although it is more commonly associated with unconventional production from shale, the oil and gas data revolution can also have a positive impact on companies and operators targeting conventional reservoirs.
While large scale capital expenditures associated with unconventional resource data may not be applicable to all conventional projects, smaller companies and operators can take advantage of the oil and gas data era without compromising individual project economics.
For example, spatially enabled big oil and gas data activity as represented in updated mineral leasing maps benefit both large and small operators in the conventional exploration space by identifying areas where leasing opportunities do not exist, allowing operators to quickly modify their leasing programs.
It is also hugely helpful to operators whose business models require them to look outside the current industry hotspots. Having “big data” rollups that can easily be searched with appropriate filters accelerates identification of true oil and gas opportunities that meet or exceed internal RIO hurdles.
Oil and Gas Data Integration and Creating Controllable Scalability
In an era when conventional reservoir “discoveries” have become increasingly rare, companies must be creative with how they identify prospects.
Many advanced technological tools, including reservoir simulators and 3-D seismic are available to all companies attempting to identify and evaluate conventional prospects. But the costs can be difficult to justify for smaller companies with tight pre-spud budgets.
In order to stay competitive, many smaller companies and operators are leveraging ever-expanding oil and gas databases to obtain information. These companies are using analytics to guide prospect generation. The most successful among them are those that are willing to think progressively about generating prospects.
Enhancing Existing Assets
While major oil and gas players are largely focused on increasing proven reserves, smaller independents are utilizing big data to optimize their actively producing assets.
For instance, data integration can allow companies to discover untapped horizons, identify potential infill well locations and optimize production of existing wells.
By applying analytics to existing assets, small companies can add value to their current production portfolio without exposing themselves to the costs and risks associated with identifying new prospects.
One of the unwritten stories of the unconventional reservoir boom is the future impact of production from uphole reservoirs that are currently kept under lease by horizontal production from primary target reservoirs (Eagle Ford, Bakken etc.).
A well-known large independent in the Eagle Ford trend has produced over 3 million barrels of oil and over 2.5 BCF of gas from 9 wells at about 8000ft in the Lower Wilcox formation.
Well production profiles show very little decline,
and the distribution of calculated EURs shows a median value of over 750,000 barrels of oil per well.
Total projected production from this small 1200 acre field is projected to be nearly 10 million barrels. Numbers like these hint at the untapped uphole potential for thousands of wells in these unconventional resource plays.
Given the very low rate of decline it’s likely that this conventional field will be producing long enough to leverage expected upward trends in wellhead oil and gas prices, even if that takes several years to materialize.
Monitoring Unconventional Activity
The shale oil and gas boom has also ushered in an era of elevated acreage prices. To avoid unnecessary acreage price increases when leasing for conventional development, companies must be aware of ever-broadening unconventional resource plays.
Increased data availability and advanced analytics have leveled the playing field in this regard. Even small companies are now able to anticipate the generation and expansion of new or underdeveloped unconventional resource plays.
Before committing to develop a conventional reservoir, companies should fully evaluate unconventional resource projections and the stage of unconventional resource development in the area.
This not only ensures that small companies are ahead of the curve, but it also can lead to added value for acreage that will eventually be held by production from conventional reservoirs.
The Oakland A’s of the Industry
As you can see, the oil and gas data revolution is providing an array of benefits to both conventional and unconventional producers.
Organizations of all sizes are now taking advantage of the era of big data in an effort to maximize company resources such as time, capital and talent.
By embracing the “compete with analytics” philosophy, smaller oil and gas producers are more equipped to swing for the fences, instead of relying on a small ball agenda for success.
So what do you think? Who will emerge as the Oakland A’s – or even the Boston Red Sox – of the oil and natural gas industry? Please leave a comment below.
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