As the price of crude oil continues to drop, the uncertainty about when it will recover only seems to increase. Experts continue to look for signs of what the future holds; however, at the moment, they only seem to remain stuck guessing at where prices will eventually bottom out. While this uncertainty continues, one thing remains clear: lower oil prices mean that operational efficiency in the oil and gas industry is more important than ever. In our previous article, we explored the evolution of drilling and its influence on efficient oil and natural gas extraction. We will continue in this vein by examining other methods of operational efficiency, especially during production. Maintaining efficient production methods ultimately helps improve profitability, which is especially important while oil prices remain low.
Certain studies cited by the Bain Group have indicated that over 10% of production capacity can be improved by making operations more efficient. Additional challenges need to be addressed as well. Regulations in the field are becoming increasingly complex; at the same time, regulators continue to become more and more proactive. The boom in oil production is spurring the expectations of shareholders to rise as well. Production must meet the highest levels of compliance while operating at maximum levels of profitability. The key to satisfying these multiple demands lies in a combination of using the best available technology with the most efficient production practices.
The shale oil reserves that are the core of America’s current resurgence of oil and gas are considered unconventional resources, and as such pose unique operational challenges. While new methods of extracting oil and gas have re-invigorated the industry, capture costs for these methods are much higher than for traditional oil wells. Oil companies need to employ the most reliable components and technologies, all the while ensuring that their operations are being held to the most stringent industrial and government standards.
One method of maintaining the highest standards of efficiency lies in getting the most out of each drilled well. The conventional wisdom of extracting oil has often relied on drilling new wells as soon as assets degrade, but are still not totally depleted. This method is not only a waste of existing resources, but often results in areas becoming over drilled. There are many difficulties that arise from over drilling oil shales, including well interference. Well locations that are too close together end up essentially stealing oil from each other. This practice not only decreases production, but in some cases makes wells entirely non-viable commercially.
Maximizing efficiency for each well helps operators get the most for their money while minimizing environmental impacts. There are a number of factors which can assist in this endeavor. Oil companies can commit to using the best components, including fittings, valves, gauges, and temperature control products. Using best-in-class products will elevate performance levels while helping companies fulfill the highest industrial and governmental standards.
Oil and gas extraction has also been the focus of all types of efficiency-enhancing technology. A number of advanced innovations have been achieved as of late. For example, new energy efficient technologies include combined heat and power (CHP) and waste heat to power (WHP). CHP and WHP help reduce energy costs, improve reliability, and increase efficiency by harnessing spent heat for power production. Petroleum refining, pipeline compressing, natural gas distillation, and oil recovery operations use a great deal of energy. Innovative technologies such as CHP and WHP can harness energy which is otherwise wasted to produce power with no additional combustion or CO₂ emissions. Solutions such as these help oil and gas producers save money and decrease their carbon footprint all at the same time.
Other technologies that are being developed to promote sustainable business practices while making operations as efficient as possible include crack detection. Unexpected spills can be prevented before leaks occur by employing predictive maintenance devices. Real-time data can be collected from wells without the need of direct visual inspection. These devices keep extraction occurring at optimal levels while ensuring costly and environmentally damaging cracks are detected before leaking occurs.
Efficiency in oil and gas production is achieved at all different levels, from the careful selection of drilling sites to the most advanced equipment and latest technologies. It is essential for operators to be functioning at the highest levels of efficiency possible, especially given the unpredictable nature of oil prices at present. By partnering with the best quality suppliers and employing the most efficient production methods, oil and gas operators can maximize their profits even while petroleum prices remain low.