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Game-Changing Tech For The Offshore Sector

Introduction

Despite all of the hype around the shale revolution in the United States, over the long-term, US shale is expected to deteriorate. Owing to high initial decline rates, shale may not be around for the long haul.

That will put the focus back on some conventional spots in the next decade or so. Perhaps most important among them is the offshore sector, which still has vast reserves that are underexplored.

Some of the best offshore wells can provide steady production for decades. But the easiest stuff has been drilled out. That has the majors going deeper and farther offshore. Ultra-deepwater, pre-salt off the coast of Brazil, the lower tertiary – these are some of the new frontiers for oil and gas drilling.

Technology has come a long way, which allows E&P companies to reach new depths, and in more extreme conditions. But to continue to push the limits, constant innovation is needed in the sector.

In this special report, we will take a look at a whole range of new offshore drilling technologies. Some are not quite ready for prime time, but we will explore what lies in the not-so-distant future for the offshore oil industry.

New Offshore Tech

3D Printing

The ability to “print” off 3-dimensional objects using layers of plastic or metal have already been implemented in other industries, such as medicine or aviation. It hasn’t yet hit the oil patch. But that is set to change. GE Oil & Gas, a division of GE (NYSE: GE), is experimenting with 3D printing with its NovaLT16 natural gas turbines. The unit will print nozzles for the turbines. Eric Gebhardt, the Chief Technology Officer for GE Oil & Gas, spoke at the annual Offshore Technology Conference in Houston in early May. He said that 3D printing will make GE’s parts more reliable.

Whereas conventional manufacturing required the construction of multiple parts that are then subsequently assembled, with 3D printing “it’s all printed as one continuous piece,” Geghardt said. “It's a big step forward. It will make them more reliable because you won't have a bunch of welds and brazes inside. It will make them more precise because you actually have everything printed in place.” Prototypes for new equipment can be assembled much quicker, allowing tweaks on a faster time scale. In other words, companies can innovate at a faster pace with 3D printing.

By cutting the number of steps it takes to build parts, 3D printing can accelerate – and thereby reduce the cost of – equipment manufacturing. But it doesn’t stop there. 3D printing may actually allow engineers to build more sophisticated equipment, opening up the ability to create structures that were, from an engineering standpoint, too difficult to put together with conventional manufacturing.

For now, it is still early days. 3D printing will probably only be used for parts and stationary equipment. But eventually it could be deployed to build movable pieces and complex subsea production systems.

The upshot is that 3D printing could bring down the cost of drilling, allowing companies to pursue oil that has up until now been off limits due to economics.

Subsea Pigs

A “pig” is a machine that drives through a pipeline to clean and/or detect problems in it, such as corrosion. But pipelines at the bottom of the ocean are much more difficult to outfit with a pig. Oceaneering International (NYSE: OII) has come up with an elegant way to deal with pipelines deep in the ocean.

Oceaneering’s Magna Subsea Inspection System (Magna Scan) is a device that can scan the outside of a pipeline rather than having to enter from the inside. This allows producers to continue to produce without the interruption of oil flows. The Magna Scan is sort of like a vehicle that drives along the outside of the pipeline, provides a 360 degree scan of the pipeline, and provides real-time data. The inspection can detect corrosion or cracking in the pipeline. The Magna Scan won a Spotlight on New Technology Award at the 2015 OTC Conference.

New Generation of Blow Out Preventers

Another recipient of the tech award at the OTC Conference was Cameron International (NYSE: CAM) for its new blow out preventer (BOP) design, called the Mark IV system. The Mark IV has a simplified design compared to traditional BOPs, with fewer parts and a lighter weight. But most importantly, the Mark IV comes with additional redundancy in its safety system. The Mark IV has three PODs, or points-of-distribution. The PODs essentially control the movements of the BOP, and are critically important for smooth operations. Prior BOPs only had two PODs – one primary and one backup. Cameron has come up with a simple system that adds an additional backup POD.

If the primary POD fails in a traditional BOP system, the whole drilling operation has to go offline for a few weeks, costing operators millions of dollars. But Cameron’s Mark IV brings system availability up to 98 percent, and also reduces the likelihood that the entire stack will have to be removed from the water for repairs by 73 percent.

In other words, offshore drilling will become a whole lot safer if Cameron International has its way. That will reduce the probability of another well blowout, and keep regulators off the backs of drillers. Speaking of which, more companies will have to beef up their blowout preventers to comply with U.S. federal regulations stemming from the Deepwater Horizon disaster, which presents a big opportunity for Cameron.

Mapping While Drilling

When drilling a well, operators want as much information as they can get. Schlumberger (NYSE: SLB) has come up with a system that provides information on what is being drilled at least one hundred feet beneath the well bore. Using electromagnetic sensors, Schlumberger’s GeoSphere system, as it is called, provides an unprecedented look deep into a well while it is being drilled. It provides data on the geology, the structure, the oil located there, and more. In a case study in Australia, Apache Corp. (NYSE: APA) used GeoSphere and was able to increase its expected oil recovery by 11 percent, because Schlumberger’s system “revealed additional oil reserves.” While electromagnetic sensors have been used in the past, Schlumberger’s system is reported to be the most advanced yet.

Conclusion

Technological innovation has always been at the heart of the oil and gas industry. Advances in technology have allowed companies to drill farther and deeper. Innovation has opened up new sources of oil and gas previously thought to be off limits (see: shale).

There is no reason to think that drilling innovation won’t continue. Indeed, the collapse in oil prices is forcing corporate executives to think harder, become leaner, and find new ways of accessing oil, all at lower cost.

There are huge technologies that are just over the horizon – and many are already here. Offshore drilling, which will play a larger and larger role in global supplies over the next few decades, is set to undergo another wave of technological innovation.




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