When oil-field equipment breaks down in rural Oklahoma, operators and service companies could lose many thousands of dollars in downtime if they have to hunt throughout the region for replacement parts.
Tulsa-based startup technology company Equip Advantage executives hope to save companies money — and earn a bit themselves — by connecting people who need parts or services with companies in the area that can meet those needs.
Equip Advantage and other companies like it are building on a trend sweeping throughout the country's oil patch by using technology to transform a century-old industry.
“There wasn't any innovation for decades, but new innovations have opened a door,” Kirk Willard, a managing partner at Equip Advantage, told The Oklahoman on Wednesday. “The oil field in general has latched onto that and has started to take hold of these new innovations that can make life easier for everyone.”
A new hope
Oil and natural gas operations were largely unchanged for decades until companies within the past 15 years discovered how to combine horizontal drilling with hydraulic fracturing and other technologies to produce oil and natural gas from shale and other rock too tough for previous generations of drillers.
Technology swept throughout the industry as companies increasingly used three-dimensional seismic imaging and advanced directional drilling to target rock layers just a few feet thick more than a mile underground.
Drilling rig controls now resemble science fiction spaceship cockpits with joysticks and multiple large screen displays to precisely guide drillbits through the dirt and rock.
Now technology is changing again.
But rather than the revolutionary, systemic changes that so quickly transformed the industry, today's changes tend to be smaller and more targeted.
“Increased safety, reduced environmental footprint and reduced costs are the three things being tackled with the different technologies,” said Trey Lewis, coordinator for Sustaining Oklahoma's Energy Resources, which formerly was known as the Oklahoma Marginal Well Commission.
“We had all this focus on supply and finding more and drilling more. Now we're using this technology to reduce costs.”
The changes are having a significant effect on companies' costs and profits, said Steve Agee, dean of the Meinders School of Business at Oklahoma City University.
“Everything is faster. Everything is more efficient,” he said. “As a result, their costs are lower. It allows them to continue to build on their exploration efforts because they've created this cost-efficient side of the model.”
The innovations are wide-ranging, including tracking oil-field equipment inventory, capturing and selling natural gas that previously would have been vented into the atmosphere, and digitizing and automating processes that previously were recorded by hand.
The larger companies also continue to refine their operations.
Oklahoma City-based Devon Energy Corp. recently began running fiber optics cables into horizontal wells to record digital acoustic signals and digital temperature data.
“We're able to get a much better idea of how our hydraulic fracturing and fracturing stimulations are affecting our completion, how it's impacting our overall completion and productivity,” said Todd Moehlenbrock, Devon's vice president of engineering technology.
“By combining the micro seismic with downhole fiber optics together, there is a tremendous amount of data we're interpreting. It's giving us insight into our fracks that we haven't had before.”
The digital oil field
Oklahoma City-based Greasebook has created an iPad app by the same name designed to allow oil-field pumpers to be more efficient.
“To stay competitive, you have to find innovative ways of keeping costs down,” Greasebook co-founder Greg Archibald said.
For decades, oil-field pumpers have traveled from well to well recording the level of oil each site is producing. The pumper would then record the information and mail it to the operator. Problems often would go unreported for many days.
Armed with an iPad and the Greasebook app, pumpers today can instantaneously send production volumes and other information to the operator from the well site.
Other companies have developed sensors and valves that can be controlled off-site, bypassing the pumper altogether.
Archibald said his technology is available only because of innovations by many other companies.
“The small companies get to leverage the big systems that exist. It's sort of like standing on the shoulders of giants,” he said. “As a small company, we can build on platforms from companies like Apple and Google. It's delivered by companies like AT&T and Verizon. It's only because of this technology that smaller companies are able to compete.”
Such innovation also is allowing smaller oil and natural gas companies access to key technology.
“Smaller companies can compete with the big boys more than they could in the past,” Lewis said. “They have access to this technology that in the past the small guys could only dream about and the big guys could have.”
That innovation will become even more important in the future, Lewis said.
“Other countries have shale resources. They're learning and eventually will apply it in their countries,” he said.
“If we can maintain our cost effectiveness by applying these technologies, we can maintain this energy pipeline and move toward energy independence.”
The “Silicon Valley” of the oil patch
While innovation is widespread throughout the oil and natural gas industry, much of the effort has been led by Oklahoma companies.
“I think Oklahoma City is like the Silicon Valley of the oil and gas industry,” said Kate Richard, CEO of Oklahoma City-based Warwick Energy. “Companies here have pioneered innovation in industry business cycles, financial structuring and the application of new technologies to old fields. There is an entrepreneurial culture in the energy industry here because so many of Oklahoma City's large companies were built with dramatic success by entrepreneurs who are now the global leaders in unconventional oil and gas.”
The changes have affected all aspects of the industry, she said.
“There are new technologies on the accounting, engineering and geological side that require a high level of comfort with different types of databases,” she said.
“The days of clerks coming in and inputting loads of data manually are over. The future is uploading and downloading production, drilling and cash flow data from a number of different web-based interfaces and then syncing different systems to speak to one another.”
Now that innovation and technology have become the norm throughout the oil patch, the trend is likely to continue.
Continued innovation will be essential in the industry for decades to come, Devon's Moehlenbrock said.
“It has to. Applying these technologies and ideas, we may have to spread a wider net on where these technologies and ideas can come from and be applied to the oil and gas business.” he said.
“There's technology in the medical field and in the manufacturing business, raw materials technology that could be applied to the oil and gas space. I think looking beyond the oil and gas industry in these different areas of technology, including big data as well as some of these other industries could have huge potential.”
Oklahoma already has attracted a key part of the future of the oil and gas industry with General Electric's announcement that it will soon build a global research oil and gas technology center in the area.
“Technology is critical,” said Michael Ming, general manager of the planned technology center. “What's happened over the past 10 years didn't happen overnight. It was a compounding of itself. One thing led to another that led to another until all of a sudden, the whole was greater than the sum of its parts.”
The continued innovation promises to lead to more changes and improvements.
“It's just getting started,” Greasebook's Archibald said of the innovation. “It's going to be a really fun time to be in the oil and gas industry.”
There wasn't any innovation for decades, but new innovations have opened a door. The oil field in general has latched onto that and has started to take hold of these new innovations that can make life easier for everyone.”
A managing partner at Equip Advantage