It’s all about fiber optics today, with acoustic spy tech that aims to both perfect offshore fracking and detect subsea leaks—and this is where the defense industry and oil and gas are merging for some top dollar plays.
This distributed fiber-optic sensor market is forecast to reach $586 million in 2013 and $1.1 billion in 2016, 70% of it connected to the oil and gas industry. There are a multitude of applications here that the oil and gas industry is catching on to. The bottom line is that optic fibers can sense most physical properties—from light intensity, displacement, temperature, pressure, rotation, sound and strain to magnetic fields, electric fields, radiation, flow, liquid levels, chemical analysis and vibration.
So this is oil and gas getting really smart, and really sensitive.
Listen to the Perfect Frack
Drilling equipment providers are on to something new: acoustic submarine spy tech that records sounds deep under the Earth’s surface that can tell us how much oil could flow from a well. The ultimate goal is to record and catalogue all the sounds that comprise the flawless frack—explosions, cracking rock and gurgling hydrocarbons—to perfect the process and ensure that the future contains only 100% successful fracks.
For instance, you may not know that gas has a speed of sound of around 600 m/s, while water has a speed of sound around 1,500 m/s, so the distributed variations can be measured…
It’s all about fiber optics today, with acoustic spy tech that aims to both perfect offshore fracking and detect subsea leaks—and this is where the defense industry and oil and gas are merging for some top dollar plays.
This distributed fiber-optic sensor market is forecast to reach $586 million in 2013 and $1.1 billion in 2016, 70% of it connected to the oil and gas industry. There are a multitude of applications here that the oil and gas industry is catching on to. The bottom line is that optic fibers can sense most physical properties—from light intensity, displacement, temperature, pressure, rotation, sound and strain to magnetic fields, electric fields, radiation, flow, liquid levels, chemical analysis and vibration.
So this is oil and gas getting really smart, and really sensitive.
Listen to the Perfect Frack
Drilling equipment providers are on to something new: acoustic submarine spy tech that records sounds deep under the Earth’s surface that can tell us how much oil could flow from a well. The ultimate goal is to record and catalogue all the sounds that comprise the flawless frack—explosions, cracking rock and gurgling hydrocarbons—to perfect the process and ensure that the future contains only 100% successful fracks.
For instance, you may not know that gas has a speed of sound of around 600 m/s, while water has a speed of sound around 1,500 m/s, so the distributed variations can be measured along a well to determine flow composition.
It may sound trite, but we assure you, it’s not. The average well undergoes about 15 stages of fracking, with a single stage costing about $100,000. Unsuccessful fracks are extremely expensive, and this new technology could save countless billions in the end.
It is set to increase efficiency—and possibly reduce potential environmental impact—by perfecting the process. Industry experts say it could save $30+ billion on fracking by increasing yield.
It’s being touted as another revolutionary fracking technology, and the prospects are bringing oil and gas companies into partnership with the companies traditionally tied to the US defense industry—companies whose business is, well, surveillance.
We’re not sure it’s exactly revolutionary, per se, but it is promising, with one drawback: cost will limit it to offshore venues for now.
It’s too expensive to implement onshore. For each well it will cost in the neighborhood of several thousand dollars to install this acoustic sensory network. While the long-term savings will be enormous, it will be hard to recoup in onshore plays where wells are cheaper to drill. Offshore, though, is another ball game entirely. If wells cost tens of millions, then fiber optics are well worth the cost.
Subsea Leak Detection
As explorers go deeper and deeper and shallow-water plays run out, leak detection technology that is designed for offshore, deepwater venues becomes increasingly important.
Fiber optics is likely the next step towards improving subsea leak detection technologies.
Existing subsea leak detection systems are limited in the time it takes to detect small leaks before they become big leaks. There are new alternative technologies in the works, but fiber optics could fill in the gaps. Offshore, there is a real need for improved technology because traditional flow-based leak detection systems that work for onshore pipelines are not sufficient in deepwater.
Conventional subsea leak detection systems are internal, and they measure internal pressures and flow rates and look for discrepancies. The instruments for this system are traditionally located at the ends of a pipeline segment, which is usually not close to a leak. The instruments can be inaccurate, and their level of sensitivity is lower than it could be, and small leaks can go undetected. This gap is ostensibly filled by over-flights or observations from vessels to detect oil sheens.
Fiber-optics can also be applied to rig safety. NASA and Houston-based Astro Technology Inc. in early June unveiled their new fiber-optic monitoring system developed through a Space Act Agreement. The system has been installed on two oil platforms off the coast of West Africa and in designed to increase worker safety and help prevent leaks and spills.
This is the Tendon Tension Monitoring System (TTMS), and it detects subtle changes in tension due to tides, wave activity, storms and boat docking.
The technology uses a fiber-optic strain gauge system and sensor clamps to measure the tension on subsea risers and pipelines, sensing stresses along the legs of a platform and streaming the data in real time.
Who to Watch
Our top 2 picks for stocks to benefit from the forecasts in this market segment are OptaSense and Halliburton—they are both pioneers, and they are rolling out new systems both for well ‘spying’ and leak detection that are forward-thinking all-in-one bundles that should be more attractive to the offshore majors.
OptaSense
OptaSense’s parent company is Qinetiq, a British defense contractor that provides drones and cyber security, among other things. It was about five years ago that OptaSense debuted its fiber-optic well ‘eavesdropping’ tech in a demonstration for Shell, which signed on in 2012 for global monitoring services. OptaSense is leading the pack in terms of using fiber-optics for subsea leak detection. It rolled out its new leak detection system in mid-June. The system uses four methods of leak detection simultaneously and introduces fiber-optics into the mix.
Halliburton Co. (HAL)
Halliburton is the world’s largest provider of fracking services, and it’s jumped whole-heartedly on the well surveillance bandwagon. This is spearheaded by Halliburton’s Sperry Drilling division. Halliburton’s well surveillance version is call XBAT Azimuthal Sonic and Ultrasonic logging-while-drilling (LWD) service (remind me to complain to their PR people about the unmemorable name). LWD in itself has been around for a while, but XBAT takes this to new limits: it also has gas detection, borehole stability and geosteering capabilities—not just real time sensory intelligence gathering. XBAT has been tested thoroughly in the US Gulf of Mexico, the North Sea and Brunei. What E&P companies should be most interested in here is the capability to decide-right away—if the oil flow is not commercial without wasting money on multiple testing.
