“Drill, baby, drill!” is the mantra of the triumphant Trump team’s aim to make the United States dominant in world energy production.
But where to drill? There’s the rub.
Drilling oil and gas exploration wells – many of which result in dry holes – is one of the most costly activities in producing hydrocarbons. Oil companies spent tens of billions of dollars drilling 40 dry wells in deep water until they found oil off the coast of Guyana.
Imagine if there were technology in place that would drastically reduce that dry well cost and other obstacles to abundance of oil and gas. The result would be, as RealClearMarkets editor John Tamny wrote here recently, lower costs for petroleum and its byproducts that “are so essential to so much having to do with life and soaring living standards.”
Exploration units of major oil and gas companies today face a huge challenge in discerning the location and concentration of hydrocarbon deposits thousands of feet below the ground or the ocean floor and hundreds, sometimes thousands, of square miles laterally. To decide where exactly to drill, currently they rely heavily on what’s known as the surface seismic method.
Through this method, powerful vibrators on the surface of the earth above oil and gas fields send seismic signals downward. On the surface, the echo of the seismic waves is captured by sophisticated sensors. This seismic data is fed into supercomputers for modeling and interpretation by reservoir engineers.
That’s today’s state of the art of predicting where deposits of oil and gas are located.
But drilling is only half the story. Even with the best surface seismic technology and computing power now available, 60 or 70 percent or more of hydrocarbons in large reservoirs, worth trillions of dollars, are never recovered.
A reason for this is that every surface seismic exercise is a one-off event, giving at best a snapshot of oil and gas deposits below. To paraphrase Heraclitus, you can’t look at the same oil reservoir twice. It is constantly in a state of flux.
Geophysicist David Bamford, former head of exploration at BP, elaborates on this last point, noting that when a reservoir “is put under production, fluid compositions change, for example oil may be partially replaced by water or gas, gas may be expelled from oil, and so on.” As a result, “fluid pressures drop, changing the internal stresses on the reservoir rock.”
The solution to this problem, says Bamford, is supplanting the surface seismic method with seismic transmitters installed permanently downhole for continuous scanning of the reservoir. As of now, there are no transmitters powerful and rugged enough to operate permanently in the harsh downhole environment while imaging the distances required.
An American startup company, Argus Reservoir Monitoring, is working to produce such transmitters in partnership with an expert U.S. defense systems engineering firm specializing in pulsed power applications, ASR Corporation of Albuquerque.The technology will be an enhancement of a downhole system that the industry used successfully in a “wireline” apparatus scanning much shorter distances. The objective is to replace the “snapshot” surface method with a continuously running time-lapse moving picture observing the changes within reservoirs almost in real time.
The new systems would provide vastly more, and vastly more valuable, data than repeated surface seismic surveys could produce. This bounty of dynamic seismic imaging data promises to boost recovery rates substantially. The global cost-benefit gains could potentially be in the trillions of dollars, from “tight oil” to other complex geologies in North America, to mega-reservoirs such as Saudi Arabia’s Ghawar, to the large gas reserves in Ukraine that are essential to that country’s recovery from war.
Powerful new artificial intelligence applications to process the surge of new seismic survey data from permanent reservoir scanning will provide the upstream oil and gas industry with a quantum leap in information about the volume and flow of gasses and fluids, leading eventually to the full automation of production in large fields.
Permanent reservoir scanning is needed not only to unlock energy abundance. It also will be essential for the safety of government programs mandating the storage of unprecedented quantities of carbon dioxide underground. At present no one knows whether sequestered CO2 – stored mostly in depleted oil and gas reservoirs – will remain there or escape. Large plumes of escaped CO2 are deadly.
This issue is especially important to Ukraine. With an end to the conflict, the breakthrough technology of permanent reservoir monitoring could enable Ukraine to become both energy-independent and a net exporter of natural gas, providing western Europe a reliable source for abundant clean energy. Safe and effective CO2 storage is important to Ukraine because the European Union, at least under its current leadership, conditions reconstruction assistance on its demand that Ukraine would cause no net additional emissions of CO2 while increasing its natural gas production.
In the United States and in other oil and gas producing regions around the globe, far-seeing participants in the energy industry are not caught up in notions of rationing scarcity; they are eager to achieve greater production at lower costs. “Precisely because oil is so central to progress,” as Tamny wrote, “a lower price per barrel is arguably the most bullish economic signal of all.” This is the common-sense truth that goes uncomprehended among the intellectual elite but is easily grasped by the millions of workers and farmers and small business owners who chant “drill, baby, drill.”
It’s pure common sense to want to produce more of the hundreds of billions of barrels of global oil and gas reserves that current technology is not able to recover. But before the industry can ramp up drilling to unprecedented levels, it needs better means to determine where to drill. The answer, according to experts such as David Bamford, is permanent downhole monitoring to “Scan, baby, scan.”
