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E P M A G . C O
Unconventional shale
development takes root
internationally
THE
M A R C H 2 0 1 1
Shale Gale
Operating Efficiency
Subsea Systems
Coiled Tubing
4-D Seismic
StimulationTechnology
Drill BitRecords
Operating Efficiency
Subsea Systems
Coiled Tubing
4-D Seismic
StimulationTechnology
Drill BitRecords
goes global
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0000?
N N L
McJunkin
MRC
Red Man
Corporation
m
I
C
I
MIDFIELD
mnc
I Transmark
q
p
L+e. rating
c
A
nniversar
1921-2011
PIP[YARD
,
:
r-m
Global Supplier of Choice
oStrength oLongevity oDependability
Proud of Our
Past.
Prepared for Our Future.
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OPERATING EFFICIENCY
Single-sweep methods offer efficiency gains
Small-diameter sonic logging tool opensaccess to challenging wells
Improve frontline practice through riskmanagement
4-D SEISMIC
Its all acquisitions fault
Refraction monitoring shows promise in heavy
oil field
COILED TUBING
Hybrid CT rigs enter the unconventional market
DRILL BIT RECORDS
Bit performance is indicative of success
STIMULATION TECHNOLOGY
Less is more
Adjusting fluid properties maximizesshale recovery
SUBSEA SYSTEMS
IO, IM position subsea system providers asvaluable partners
Subsea sampling delivers value
IndustryPULSE:Technology transfer stepsup the pace of R&D
Partnership is key to rapidly accelerating safe andreliable technologies to meet demand growth.
EXPLORATION & PRODUCTIONW O R L D W I D E C O V E R A G E
MARCH 2011VOLUME 84 ISSUE 3
A HART ENERGY PUBLICATION www.EPmag.com
COVER STORY
32
InternationalUnconventionalShale gas could soon be a
global resource.
6
WorldVIEW:Survival of the fittest
After years of hearing, Who are these guys? tinyERHC is poised for growth in the Gulf of Guinea.
10
Unconventional: Barnett
Barnett providesfuture returns
Why the Barnett might be a good investment.
40
42
46
49
52
57
61
6668
77
80
89 REGIONAL REPORT: WEST AFRICA
71
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AS I SEE IT
Collaboration, innovation go hand in hand 5
MANAGEMENT REPORT
Five steps to turning the talent management tide 12
DIGITAL OIL FIELD
Cloud computing can be applied for reservoir modeling 17
Digital oil field creates real-time data fire hose 23
EXPLORATION TECHNOLOGY
Silicon Valley meets the oil patch 27
WELL CONSTRUCTION
New solution for an old problem 29
PRODUCTION OPTIMIZATIONA perfect storm? 31
TECH WATCH
Low-frequency seismic illuminates shale plays 84
TECH TRENDS
Innovations and new releases 86
INTERNATIONAL HIGHLIGHTS
Operators display global reach 94
ON THE MOVE/INDEX TO ADVERTISERS 99
LAST WORD
Knowledge is power 100
E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057.Periodicals postage paid at Houston, TX, and additional mailing offices. Subscription rates: 1 year (12 issues), US $149; 2 years (24 issues), US $279. Singlecopies are US $18 (prepayment required). Advertising rates furnished upon request. POSTMASTER: Send address changes to E&P, PO Box5800, Harlan, IA 51593. Address all non-subscriber correspondence to E&P, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057; Telephone:713-260-6442. All subscriber inquiries should be addressed to E&P, PO Box 5800, Harlan, IA 51593; Telephone: 713-260-6442 Fax: 713-840-1449custserv@hartenergy.com Copyright Hart Energy Publishing, LP, 2011. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine.No article may be reproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission tophotocopy is granted t o users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, Technology Index and Engineering I ndexInc. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to $25,000 for violations.
DEPARTMENTS AND COMMENTARY
COMING NEXT MONTH Exploration is the buzzword for the April issue of E&P. Senior Exploration Editor
Rhonda Duey provides a round-up of recent exploration activity, presenting advances in both land and marine
seismic and identifying some of the technologies being used to improve exploration success. Other features in the
issue include riser and subsea technologies and developments in directional drilling. The Bakken shale takes cen-
ter stage in the Unconventional Report for April, and Australia/New Zealand is the focus of the Regional Report.
Between issues of the magazine, remember to visit www.epmag.com to read exclusive articles on industry eventsand catch up on the latest oil and gas news.
ABOUT THE COVER Nabors Rig 520, now working in Irkutsk, Russia, is one of an
estimated 972 rigs active in the region in 2010, according to Douglas-Westwood. Although
Russia has considerable unconventional gas reserves, its vast conventional natural gas
resources (1,680 Tcf, according to the Energy Information Administration) will be the focus
of development in the near term. (Image courtesy of Nabors Drilling)
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ONLINE CONTENT MARCH 2011
KazMunaiGas hits onshore oilKazakhstan state-owned KazMunaiGas
has made an oil discovery on theLiman Block in the country.
PREMIUM CONTENT Subscribe @ EPmag.com/explorationhighlights
EOG ups Bakken production with Elm Coulee fieldAn EOG Resources Inc. horizontal well on the northeastern flank ofElm Coulee field had flow-to-sales at a maximum gross rate of morethan 2,000 b/d of oil.
AVAILABLE ONLY ONLINE
Ernst & Young: Oil demandspikes exiting 2010
By Rebecca Torrellas, Online Editor
According to Ernst & Youngs quarterlyreport, strong global economic growth
at the close of 2010 created the sec-
ond biggest demand spike in the past
30 years.
Growing Hawkville
By Lauren Sjurseth, Online Editor
The team that discovered the Eagle
Ford shales Hawkville field tells how
they got ahead of the competition
and sowed the seeds of success.
Water managementis global issue
By Rhonda Duey, Senior Editor
Increased unconventional gas
production and coal degasification
are raising serious issues about
water use and disposal.
READTHELATESTEPmag.com
INDUSTRYNEWS
Anadarko hits oil, gas offshore Indonesia
Anadarko Petroleum Corp. encounteredapproximately 133 net ft (41 net m) of oil andnatural gas pay in Upper Miocene high-qualitydeltaic sandstones at its #1-Badik prospect inthe Tarakan Basin of Indonesia.
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DIGITAL
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Technology advances cannot happen without innovation. And innovation happensmore rapidly when more resources can be brought to bear.
At the GE Oil & Gas annual meeting in Florence, Italy, a few weeks ago, Claudi Santi-ago, company president and CEO, talked about the value of innovation and collabora-
tion, particularily in a world that is struggling to recover from a global recession.The fact that we need to innovate is paramount, Santiago said, and to truly create
value, there has to be collaboration. It is absolutely critical. Partnering will be particu-larly essential in the coming years as the industry works to develop equipment that ismore ecologically sound and to extend equipment life. We will continue to innovateand deploy more and more technology that is eco-friendly, he said.
Those new technologies will include more monitoring equipment. And in the wakeof the Macondo incident, they also will include sensors for BOPs. We are extendingthese capabilities to the subsea segment of the industry, Santiago said. We want to putmore software and more control in place.
The company invested US $200 million in plants and equipment in 2010 andincreased R&D spending by 10%. GE also deployed more than 700 more resources in
key regions. The objective in moving more resources into more places around theworld is to get closer to the customer, according to Sam Aquillano, vice president drilling and production for GE Oil & Gas. Co-location allows technology transfereven quicker, he said.
GE also has established new partnerships in China, India, Saudi Arabia, Kazakhstan,and Russia.
As national oil companies (NOCs) pursue efficiencies in operation, partneringbecomes more and more significant, and this fact is not lost on the NOCs.
Ahmad A. Al-Saadi, vice president of gas operations for Saudi Aramco, explained atthe annual meeting that collaboration has become standard operating procedure forSaudi Aramco.
Saudi Aramco is known to be the oil giant of the world, Al-Saadi said, but he noted
that oil is not the companys only focus. According to Al-Saadi, the countrys gas pro-duction is expected to grow by 30% in the next 10 years. Producing gas reserves effi-ciently will require new technologies, and Saudi Aramco intends to develop thosetechnologies in cooperation with companies like GE.
Some of the more practical goals of this collaboration, he said, are to work towardmeeting the demand for spare parts with local manufacturing, to allow access to alarge local young workforce, and to support new ventures with logistical and techni-cal assistance as well as workforce development.
The world needs more energy as much as 20MMboe/d in the next 10 years, Santiago said. Finding anddeveloping reserves on that scale is a daunting proposition.For that ambitious goal to be achieved, he said, companies
will have to begin incubating the future together.
As ISEE IT
EPmag.com | March 2011
1616 S. VOSS ROAD, STE 1000HOUSTON, TEXAS 77057
TEL: +1 713.260.6400FAX: +1 713.840.0923
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Collaboration, innovationgo hand in hand
5
Read more commentary at
EPmag.com
JUDY MURRAY
Editor
jmurray@hartenergy.com
Editor JUDY MURRAYjmurray@hartenergy.com
Senior Editor RHONDA DUEYrduey@hartenergy.com
Senior Editor TAYVIS DUNNAHOEtdunnahoe@hartenergy.com
Senior Editor JO ANN DAVYjdavy@hartenergy.com
Senior Editor RICHARD G. GHISELINdghiselin@hartenergy.com
Contributing Editor DON LYLE
dlyle@hartenergy.com
Associate Editor ASHLEY E. ORGANaorgan@hartenergy.com
Corporate
Art DirectorALEXA SANDERSasanders@hartenergy.com
Senior Graphic
Designer LAURA J. WILLIAMSlwilliams@hartenergy.com
Production Director
& Reprint Sales JO LYNNE POOLjpool@hartenergy.com
Manager,
Special Projects JO ANN DAVYjdavy@hartenergy.com
Online Editor REBECCA TORRELLASrtorrellas@hartenergy.com
Director of
Business Development ERIC ROTHeroth@hartenergy.com
Group Publisher RUSSELL LAASrlaas@hartenergy.com
Vice President, Digital Media
RONS DIXON
Senior Vice President, Consulting Group
E. KRISTINE KLAVERS
Executive Vice President and CFO
KEVIN F. HIGGINS
Executive Vice President
FREDERICK L. POTTER
President and Chief Executive Officer
RICHARD A. EICHLER
H A R T E N E R G Y
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The sheer scale and immediacy of the demand forhydrocarbons to help spur global economic recovery
and growth cannot be underestimated.Simply to offset the depletion of reserves and meet
forecast increases expected to 2020, additional resourcesequivalent to approximately five times the oil capacitycurrently produced by Saudi Arabia and four times thegas capacity currently produced by Russia will berequired.
Opening up new E&P frontiers means that complextechnical issues must be tackled head-on.
Expediting progressVisionary engineering expertise is needed to conceptu-alize and swiftly introduce new technology systemsacross the industrys complex value chain, and clearly,
there can be no compromise: new technologies must besafe, reliable, and proven, enabling operators to miti-gate the potential HSE, financial, and reputational risksof being the early adopter.
Reliable innovation is integral to the GE Oil & Gasbusiness model. The company underpins deep domainknowledge and commitment to R&D with a new productintroduction system of linear tollgate validation and pro-totype testing to destruction so that to the greatestextent possible there is an understanding of the limits oftechnology prior to commercialization, installation, anddeployment.
Technology transfer or borrowing from GE sisterindustries is a key competitive differentiator for thecompany that has helped chart its progress over the lastdecade.
Technology transfer within the company means itapplies experience within other industrial businesses including aviation, healthcare, nuclear and the expert-
ise within GEs Global Research Centers very directly, forexample, exploiting aero-derivative gas turbines andmaterial science technologies, remote monitoring anddiagnostics capabilities, and also through people byexchanging senior engineers with GE Aviation.
Like GE Oil & Gas, every original equipment manu-facturer will lay claim to having world-class systems toincubate new technologies, backed by Six Sigma, Lean,and a range of proprietary approaches that underpinoperational business processes.
But, even for an industrial conglomerate with genuinetechnology and scale differentiators, world-class systems
simply are not enough to be able to adequately serveoperator customers. More than any other factor, part-nership is the key success in tomorrows global energyindustry.
The power of partneringThe oil and gas industry has shifted beyond pure-playtransactional order-supply relationships, to more mean-ingful partnerships where longer term goals, and oftenthe associated risks, are shared.
Partnership which to be successful must be deep,intimate, and consultative customer relationships have
been the critical factor determining GEs ability to con-sistently transform engineering vision to solution reality.
The concrete proof of this is the number of innovativeproducts the company has been able to develop in a rel-atively short time frame for the industry.
The new VetcoGray S-Series SVXT subsea tree is oneexample. With a pressure rating up to 6,500 psi and a
March 2011 | EPmag.com6
industryPULSE
Technology transfersteps up the pace of R&DPartnership is key to rapidly accelerating safe and reliable technologies to meet demand growth.
The new S-Series SVXT subsea tree is the result of intense customer partnership
and consultation at the design engineering stage with many operators, includ-
ing Shell UK, which confirmed the first order for installation in 1Q 2011 in the
maturing Southern North Sea. (Images courtesy of GE Oil & Gas)
Sam Aquillano, GE Oil & Gas
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I have someone retiring after 33 years on the job.
I
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March 2011 | EPmag.com8
temperature range of between 0F and 250F (-18C to121C), this tree is 20% lighter than conventionaldesigns and has many new safety features that also havefundamental, repeat operational expenditure benefits,including eliminating the need for both a separate treecap and the deployment of an ROV or diver for installa-
tion. The SVXT is the result of intense customer part-nership and consultation at the design engineeringstage with many operators, including Shell UK, whichconfirmed the first order for installation in 1Q 2011 inthe maturing Southern North Sea.
The company soon will supply Chevron with its newSubsea MudLift Drilling pump system for deployment inearly 2012 in the first-ever commercial application ofdual gradient drilling (DGD) technology. DGD canreduce the number of casing strings required for deep-water drilling, enabling wells to be designed with largerdiameter completions and/or to reach deeper reservoir
depths previously inaccessible using conventional singlegradient drilling. The new pump can deliver up to 1,800gal/minute at discharge pressures up to 6,600 psi andcan handle solids up to 1.5 in. in diameter. This productis the result of long-term partnership and commitmentand follows rigorous prototype testing and a successfulfield trial carried out in 2001.
A third example is the VetcoGray MR-6H SE marinedrilling riser system, which fully automates marinedrilling riser makeup, increasing safety by removing peo-ple from a dangerous environment, while also helpingdecrease nonproductive time by speeding up operations.
The riser design is simple, with very few parts, anduses field-proven concepts and profiles that haveprovided many years of exemplary service. With
todays ultra-deepwater wells, this 3.5 million poundrated coupling automated riser system can help sig-nificantly reduce the time needed to deploy andretract the riser string while maintaining a highlypreloaded coupling. The VetcoGray MR-6H SE sys-tem represents a safety and efficiency advancementfor deepwater drilling.
All of these solutions build on the companysdeep domain knowledge and expertise, which helpsin clearly defining and addressing technical, envi-ronmental, schedule, and fiscal challenges.
Time and again, partnership is the single
critical factor in introducing the new and depend-able technology that the oil and gas industry needs.Partnership is the main ingredient that keeps thisindustry vibrant and full of engineering possibilities.
The nature of partnershipsPartnership also takes the form of technology transferand licensing agreements in areas that are critical to thefuture of global energy supply. In 2010, GE extended itsreach with strategic partnerships and technology trans-fer agreements in China, Asia, India, the Middle East,and Kazakhstan.
Partnering is critically important for companies thatwant to push the boundaries of their limitations. It is thefoundation of GEs business-wide company to countryapproach, which means localizing business to marketswhere the company operates, building on local capabili-ties, and developing local resources through skills devel-opment and training.
Partnership also means expanding operational foot-print to be closer to customers with field service engi-neers and facilities. Next year, GE will open a newGlobal Research Center in Rio de Janeiro, a US $100million investment that reflects a long-term commit-
ment to Brazil.Partnership requires companies to have the courage
to admit that no one player no single company hasall of the answers. Seeking out and developing meaning-ful partnerships is the surest means of accelerating thepace at which theindustry is able tounlock tomorrowshydrocarbons andto reach the oil andgas industrys fullestpotential.
The VetcoGray MR-6H SE marine drilling riser system fully
automates marine drilling riser makeup.
industryPULSE
EPmag.comREAD MORE ONLINE
There is moreto the story
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Survival of the fittest
After years of hearing, Who are these guys? tiny ERHC is poised for growth in theGulf of Guinea.
March 2011 | EPmag.com10
worldVIEW
There is an old saying that implies that the best sur-
prises often come in small packages.
Take, for instance, ERHC Energy Inc., a very small com-
pany that once had a very large concession in So Tom
and Prncipe. The company originally approached the
tiny nation to discuss environmental remediation. But thelocation of So Tom and Prncipe nestled in waters
adjacent to huge oil fields offshore Nigeria and Gabon
quickly caused the company to reassess its interest.
There seemed to be an opportunity offshore, said
Peter Ntephe, president and CEO of ERHC. On the
western side, the waters abut Nigeria, and on the eastern
side, the waters abut Equatorial Guinea and Gabon.
Here is this country bang in the middle of these oil-pro-
ducing territories.
ERHC established an exclusivity agreement with thegovernment stating that the company would help the
country set up an oil industry in exchange for a largepercentage of the revenues accruing from any eventual
production. Then things started to go very badly.
Piquing interestAs a public US company, ERHC was bound to report this
agreement. Bigger players who formerly had shown no
interest in the region suddenly sat up
and took notice.
Off the top of my head I can think
of three or four countries where the
same thing has happened, Ntephe
said. Already ERHC had helped thecountry set up a national petroleum
agency, but with other players inter-
ested, So Tom and Prncipe
decided to renegotiate the deal, even
going into arbitration at one point.
The company was in trouble.
Funds had been raised to do this
in the expectation that returns would
start at a particular time, he said.
Once the problems started, those
returns didnt come when expected,
and the progress needed to continue to have financing
lines open wasnt happening. Company officials also had
decided to abandon their other businesses to make So
Tom and Prncipe the companys sole focus, meaning
the company had no way to diversify its portfolio. Accord-
ing to Ntephe, the owner of the business began looking
for buyers with sufficient faith in the prospect and suffi-
cient financial power to turn the company around.
A West African businessman who runs the ChromeGroup took an interest, and that firm became a signifi-
cant shareholder in 2001. It immediately began working
with the So Tom and Prncipe government to renego-
tiate the terms of the original deal.
That necessarily involved giving up some of the rights
that the company already had, Ntephe said.
The JDZERHC went from having exclusive rights to the entire
region to getting preferential rights in certain blocks.But by then Nigeria had decided that some of the waters
in question actually belonged to it. Again, this is a storyyoull find in many countries, he said. Where the two
waters meet, theres always a dispute, especially when
theres oil believed to be involved.
Eventually the two countries agreed to establish a
joint development zone (JDZ). Companies that already
had secured rights in the JDZ retained those rights
under the new agreement, including
ERHC. Additionally, So Tom and
Prncipe declared its remaining waters
an exclusive economic zone (EEZ), and
ERHC had preferential rights in some of
these blocks as well.
Licensing roundsThe Joint Development Authority for the
JDZ held two licensing rounds in 2003
and 2004, and ERHC exercised its rights
in the second round. However, its per-
centage in each block was no more than
25% of the total. Company officials deter-
mined that they could not grow the com-
pany quickly enough to make bids ontheir own, so they sought partners with
Peter Ntephe
(Image courtesy: ERHC Energy Inc.)
Rhonda Duey, Senior Editor
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13/102
whom they could bid for extra percentages, hoping for
operatorship.
The chairman of the company at the time led a team
that virtually crisscrossed the globe looking for partners,
Ntephe said. It was difficult because we were selling some-
thing that wasnt certain, and we were selling it on behalf
of a very small company that little was known about.
Eventually the company found partners for three of theblocks in the JDZ, resulting in the partnerships bidding
for and receiving additional rights and therefore operator-ship on those blocks. And again the questions began the
JDZ has had a licensing round, and this little company is
the operator how did that happen?
We were saying, Where were all of you when we were
receiving rejections, when doors were closing in our faces
on several continents? he said. Where were all of you
when we brought in world-class partners and together with
them put in bids for the additional rights that made us
operator?
Despite the success of the strategy, the first three part-
ners subsequently pulled out. Eventually ERHC brought
in two new partners, Sinopec and Addax. There weredark days when we were in trouble, Ntephe said. Our
business was cooked if we didnt get replacement opera-
tors. So it was more phone calls, cold calling, and working
all of our networks.
Under investigationMore bad news was to come. Barely a month after signing
production-sharing contracts with the two partners, ERHC
came under investigation due to its acreage holdings. No
charges were filed, but Ntephe said that fraud was investi-
gated. Having always been a public company, ERHC had a
significant number of documents that it
had to turn over to the investigators, even-
tually filling 106 boxes.
The investigators turned up nothing,but the pressure affected the company
severely. This was at the point where we
had secured the rights, secured significant
positions in West Africa, and were ready to
build on it, he said. That was what was
expected. And then the investigations hit.
The company took a strategy of arresting
any retrogression that might have hap-
pened and maintaining its position. A lack
of rigs made drilling difficult in 2008, but
by 2009, ERHC and its partners began
drilling, spudding five wells between August2009 and January 2010. Despite the signifi-
cant initial setbacks, it still was the first part-
nership to drill in any of the blocks of the JDZ awarded in
the 2004 licensing round. Natural gas shows were found in
three of the wells, and they continue to be evaluated.
The exploration phase of the contract has been
extended to March 2011 to take into account the fact that
rigs were obtained later than initially expected. Ntephe
said he hopes by then the partners will have enough infor-
mation from the first five wells to determine how to pro-
ceed. There is still a lot of acreage, a lot of interpretation,
and a lot of possibility, he said.Meanwhile, in the EEZ, ERHC has 100% rights with no
signature bonus in two blocks and 15% rights with signa-
ture bonus in two more. It has exercised its 100% rights in
blocks 4 and 11. Once the bids are reviewed, the company
again will seek partners to help develop that acreage. It is
not likely to be as hard a sell this time.
We now have a track record because weve done this
successfully in the JDZ, he said.
The company also now has a more diversified portfolio
with acreage in two separate areas, and it will continue to
explore West African waters. With several West Africans in
positions of power at the company, Ntephe believes ERHChas a bit of home-field advantage over other companies
that might not be as familiar with local customs.
When people ask how weve done it, its because we
know the terrain; we know the lay of the land, he said.
Even though we are an American company, when we
walk into the room, the people were visiting think, Those
guys sure look familiar.
But he also sees a uniquely American aspect to ERHC.
Where other people see constraints, we see opportunity,
he said. These are the fundamental facets of the Ameri-
can dream.
EPmag.com | March 2011 11
ERHC has acreage positions in So Tom and Prncipes EEZ as well as the JDZ thatthe country shares with Nigeria. (Map courtesy of ERHC; source ANP-STP)
worldVIEW
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Workforce management issues have been a serious
concern among oil and gas companies for some
time. If not addressed, these issues potentially could have a
negative impact on a companys performance and growth.
First, there is the big crew change. Thousands of babyboomers are becoming newly eligible for retirement on a
daily basis. With a significant age gap between these older,
skilled workers and the younger set which on average
fall between 24 and 35 years old there is concern as to
how best to capture and share boomers valuable knowl-
edge before they leave the company.
There also is a nuclear war for skilled workers. Demand
for people at all levels, particularly engineers, far exceeds
the supply. As a result, companies are fighting to recruit top
employees from competing firms and struggling to retain
their best people. Combine this talent void with other
human-capital management issues, such as successionmanagement, leadership development, and globalization,
and what might seem like a few organizational challenges
can spiral into a bigger business issue.
There are five key steps oil and gas companies can take
to turn their human resources (HR) strategies into a
competitive advantage.
A holistic approach to talent managementWhen talent-management strategies for learning and
development, employee performance management, and
succession planning are integrated and supported by the
right technology solution companies can get a clearerpicture of their workforce. This kind of intelligence allows
HR to make smarter decisions about their talent and more
quickly respond to changing business needs.
For oil and gas companies, there is real value in the
ability to identify high performers and future leaders to
track and evaluate employee performance and isolate andaddress skill gaps with targeted training as well as to ensure
that the right people are in the right roles and at the right
time all within a centralized system. Even better, data col-
lected in the system now can be tracked and reported.
Other benefits, such as organizational efficiencies and
automation of key processes, mean HR leaders can spend
less time mired in paperwork and tactics and more time
developing strategies that can support current and future
business needs.
A holistic approach to people management can have a
positive impact on the bottom line. According to analystfirm Bersin & Associates, companies with intermediate to
advanced levels of talent management performed better
financially during the recession and were able to generate
higher employee performance and lower overall volun-
tary turnover.
Transition to a development-drivenperformance management cultureThe ultimate goal for any company is to raise peoples
performance levels and achieve better business results.
Five steps to turningthe talent management tidePutting the right processes and tools in place can lead to greater employee retention
and productivity.
Charles Coy, Cornerstone OnDemand
Individualized career path pages help employees track their
progress and improve their skills. (Images courtesy of Corner-
stone OnDemand)
March 2011 | EPmag.com12
managementREPORT
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But simply identifying areas where an employee needs to
improve is not enough. Employees must be able to accessthe tools they need for increased knowledge and
improved skills.Incorporating learning as part of the performance
management process provides managers with the tools
needed to develop high-quality learning plans that pre-
pare high performers for leadership positions or address
competencies required for specific roles. This coaching
and development style of performance management can
result in increased productivity, higher employee engage-
ment, and improved retention.
The ability to manage performance can be challenging
when it comes to roles where employee performance is best
monitored in real time. Some talent management solutions
offer a performance observation checklist feature thatallows companies to assess and record an employees skills
and competencies while directly observing activities in the
field. Automating what once was an inefficient, paper-based
process makes it easier to track and validate proficiencies
or regulatory compliance with critical safety procedures.
When this capability is integrated with learning tools, man-
agers automatically can assign training when additional sup-
port is needed. Capturing and tracking this information in
a centralized system also helps HR leaders ensure regula-
tory reporting is accurate and timely.
Find the perfect learning blendChanging demographics have increased the need for
learning management particularly technical training
and leadership development. The most effective way of
delivering consistent, cost-friendly training to global, geo-
graphically dispersed workforces is through blendedlearning the combination of in-classroom training with
e-learning, virtual classrooms, and mobile learningoptions. This allows learning initiatives to be aligned
more closely to the needs of busy employees, who now
have more options for accessing self-service training any-
time, anywhere.
A successful blended learning strategy requires
thoughtful planning, engaging content, and a robust
user-friendly learning management system. Some pro-
grams fail because they do not meet the actual learning
needs of employees or because they fail to take the com-
panys learning culture into account. Programs must be
developed based on what, how, why, and when employees
need to learn. This approach also requires employees tobecome more engaged and take more responsibility for
their own training and development.
Rewrite the rules of succession planningSmart companies are moving away from succession man-
agement as a top-down process that focuses on only a few
key executives. Rather, they are expanding succession
planning deeper into the ranks of the company and
directly engaging employees in career management.
Technology can facilitate this collaboration between man-agers and employees in a way that supports both the
needs of the business (bench strength and talent mobil-ity) and the needs of the individual (professional growth
and career path).
New to the succession mix, online career-management
tools empower employees to take ownership of their
careers within a company, helping to improve engage-
ment and retention. With these tools, employees can cre-
ate an online profile to market their skills, competencies,
and career preferences such as the willingness to relo-
cate, specific geographical preferences, and long-term
career goals. For HR, this also provides a searchable data-
base for internal recruiting.
When succession processes are integrated with learningmanagement, HR leaders can allocate targeted leader-
ship courses for employees in the succession pipeline and
can seamlessly assign training to employees to close readi-
ness gaps and align career paths with reviews and goals.
Get socialMost companies are not sure how to get started with
social networking and collaboration tools, and they will
not allocate resources toward implementing these tech-
nologies until the benefits are clear. There also is a mis-perception of these tools being more for entertainment
March 2011 | EPmag.com14
managementREPORT
Companies that overcome negative attitudes about social network-
ing sites are discovering that an in-house site can encourage
greater communication, cooperation, and cross-discipline learning.
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17/102
EPmag.com | March 2011 15
than for business purposes, resulting in lost productivity.
Social technologies can help to increase productivityand drive innovation by connecting employees with the
right knowledge and people across a company. The easi-est way to introduce these tools is to start small and focus
on wrapping social technologies around two areas.
Existing learning and development programs:It has been
observed that while 80% of training budgets are spent on
formal learning programs, 80% of what people actually
learn is informal, whether it is overheard at the water
cooler, passed down by a mentor, or shared in an email.
Building an online community around an existing train-
ing course helps to centralize and capture this informal
learning experience. Participants have a way to connect
with one another before, during, and after the course to
find commonalities and share knowledge. Employees arebetter able to connect with their mentors and foster a
richer relationship.Employee alumni networks:Aging workers leaving the
workforce possess large amounts of institutional knowl-
edge that is difficult or impossible to capture and share.
Alumni networks provide a social channel to engage
retirees so the business can continue to benefit from their
expertise even after they are no longer employed, easingthe brain drain.
Shifting to a more strategic, integrated talent-manage-
ment strategy takes time. It is wise to roll different HR ini-
tiatives out in phases and by geographical location. Since
field-based employees might not have a culture of remote
or self-service learning or performance management,
change-management initiatives are needed to persuade
those employees to access and use these tools.
Companies also should choose a technology solution
that is flexible, scalable, and configurable enough to sup-
port business needs; that can be implemented quickly and
easily; and that does not require additional IT resources orconstant version upgrades. But a technology solution isonly as good as the strategy it supports. HR leaders must
ensure talent processes are in line with business needs and
that they make sense for the company as a whole.
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What do online shopping and fluvial geostatistics have
in common? The initial answer might be not a lot,
but the longer answer could be surprising. The rise of
cloud computing means that the worlds most famous
online retailer and reservoir modeling in the oil and gasindustry might have a considerable amount in common.
While the idea of taking datasets away from physical
servers and hard drives and placing them on multiple vir-
tual servers on the Internet (the cloud) already has been
implemented in sectors such as government and financial
services, there also are clear applications for the oil and
gas industry and, in particular, reservoir management.
The importance of uncertaintyThere is an important need to reduce risk and better
quantify uncertainty in reservoir management today
something that is becoming more challenging as reser-voirs become more geologically complex and difficult
to reach.
The reservoir modeler normally is confronted with
sparse data and a need to generate countless realizations
and stochastic models to generate a range of possibilities
of what appears in the subsurface to reduce uncertainty.
Such complex and intensive processes require immense
amounts of computer power and many man hours. And
while supercomputers today are very fast, they still are
struggling to scale up to the growing amounts of work and
data at the speeds a user requires.
Enter the cloudThis is where cloud computing comes into its own. Com-
puters have been scaled up about as far as current technol-
ogy allows within a central processing unit, so the next
best option, as many operators already have discovered,
is to scale out through multiple clusters of computers,
often termed distributed computing.
Multiple clusters, which are used regularly in seismic
processing and reservoir simulation, have their downside.
The cost of ownership is high, IT infrastructures can be
complex and often not well integrated, and smaller opera-
tors and other organizations such as universities and think
tanks likely will be left behind due to accessibility issues.
Cloud computing provides all of the scalability benefits
of clusters and distributed computing with none of the
downside. Through a thin client device such as an iPad or
laptop, users can enjoy an elastic capacity of on-demand
data and computer power, zero maintenance costs, and
significantly reduced capital expenditure requirements.Cloud computing also can lead to a much more inte-
grated and seamless workflow. Gone are the days where
huge datasets need to be transferred to different sites and
time lags were common between different applications.
With cloud computing, reservoir modelers can enjoy real-
time collaboration across different projects and access
information from a single truly scalable system.
A transparent and structured reservoir modeling
workflow through cloud computing also can act as a
repository for years of expertise and modeling advances
(particularly important given the number of people leav-
ing the industry over the next few years), help publicize
and enforce best practices, and foster a uniform style and
standard of work across the operating company and
across physical locations. It also can ensure greater pro-
ductivity from reservoir asset teams, which is crucial in
todays environment.
digitalOIL FIELD
Cloud computing can beapplied for reservoir modelingModeling with Amazon? It is closer than ever.
Tyson Bridger, Emerson Process Management
Roxar RMS runs on the .rox database. (Images courtesy of
Emerson Process Management)
EPmag.com | March 2011 17
8/10/2019 Revista E&P - Marzo 2011
20/102
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EPmag.com | March 2011
digitalOIL FIELD
If the benefits are so compelling, why have all operators not yet adopted cloud
computing? Security seems to be the number one barrier. To reach a level of
trust, it is helpful to distinguish between public and private clouds. Whereas a
public cloud entails the cloud being open to a largely unrestricted universe ofpotential users, the cloud also can be restricted to a single company with the
same robust security as internal IT servers. In fact, while larger operators are
likely to be most concerned about security, they also have the resources and
expertise to put internal clouds in place.
Just as passing credit card details over the Internet was treated with great skep-
ticism a few years back, this is largely an issue of educating users.
Cloud computing in reservoir modeling todayRecent research from IT analysts at IDC Energy Insights indicates that there is
rapid growth in spending for virtual machines. A number of operators also are
starting to develop internal clouds, spurred by the appeal of an on-demand,
elastic environment, as Catherine Madden of IDC puts it.Emersons portfolio of reservoir modeling, simulation, and history-matching
products is positioned to capitalize on the cloud-computing phenomenon.
There are several reasons for this. First, its software solutions run on the Linux
operating system, making the transition to the cloud more seamless. Today, of
the 500 fastest supercomputers in the world, 455 run on Linux, according to the
biannual Top 500 supercomputer list.
Emersons software architecture is focused on being flexible and agile with an
emphasis on thin clients, where computers are distributed over a network and
models can be built up quickly and accurately. Other reservoir management soft-
ware packages are more fat-client focused, where most resources are installed
locally, leading to more data at the desktop. The fat-client approach is less well-
suited to cloud computing today.Emerson also has a number of cluster-enabled products that fit comfortably
with cloud computing. For example, the Roxar Tempest simulator deploys simu-
lations across multiple computer nodes, and the automated history-matching
tool, Roxar EnABLE, generates multiple realizations and multiple simulator
instances across computer nodes. Elastic cloud computing allows the reservoir
modeler to scale the cluster according to the size of the problem.
Cloud computing also needs a coherent management strategy. It is in this con-
text that Emerson has developed a common data management platform and
architecture that is designed for scalability, can integrate all of its software func-
tions, and help facilitate and navigate reservoir management tools as part of
cloud computing.
The new platform, known as .rox, will consist of: Distributable applications, scripts, and plugins, enabling users to
access software;
A domain model of the subsurface that covers geophysics, geology, and reser-
voir engineering objects (reservoir.rox); and
An object database that exists for geological and production data
(source.rox).
The reservoir modeling software, Roxar RMS, already runs on this database.
Do not forget AmazonSo what do Amazon and fluvial geostatistics have in common? Amazon today is
much more than just an online book store. It also is one of the worlds leading
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providers of cloud computing space alongside companiessuch as Google, IBM, Microsoft, and Rackspace. Accord-
ing to a recent Business Week article, Amazon predicts
that its cloud-computing efforts could one day surpass its
retailing revenues.
With Amazon, it takes just a few commands to boot up
new virtual machines in seconds. Capacity is available on
demand and payable on usage. It also is important to note
that the cost to carry out processing on its offering, Ama-zon EC2 (Amazon Elastic Compute Cloud), is up to 10
times cheaper on Linux than it would be on Windows.
Emerson already has tested a number of its reservoir mod-
eling tools on Amazon. Using Roxar RMS on the .rox plat-
form, jobs can be distributed transparently to the cloud.
Data can be distributed using source.rox on Amazon S3,
Amazons storage service. Computations can be performed
on the correctly sized virtual cluster on Amazon EC2 with
control of the job taking place through Amazon Web Serv-
ices. Reservoir modelers also can choose to run the jobs
locally or in the cloud, depending on their need.
Cloud computing has the potential to usher in a revolu-tion in how the industry handles reservoir models and the
data it generates. If a link can continue to be provided
between cloud computing and improved reservoir manage-
ment economics, the sky literally could be the limit.
digitalOIL FIELD
Emerson already has tested a number of its reservoir modeling
tools on Amazon to positive effect. A system that relies on Ama-
zons S3 and EC2 offerings has a distinct structure.
March 2011 | EPmag.com20
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The industrial revolution was about speed, scale, and
specialization. The information revolution is about
value, innovation, and collaboration. It all starts with
numbers and the art of making them speak.
Applying analyticsBusinessdictionary.com defines analytics as the field of
data analysis. According to the website, Analytics often
involve studying past historical data to research potential
trends, to analyze the effects of certain decisions or events,
or to evaluate the performance of a given tool or scenario.
The goal of analytics is to improve the business by gaining
knowledge which can be used to make improvements or
changes. Leading companies understand that mining
data faster and better than their competitors yields a com-
petitive advantage. This understanding has made data ana-
lytics mainstream.Many industries contend with the tsunami of data gener-
ated by networks, sensors, and computer processors, but
few face the additional challenge of data quality what to
do when the accuracy of the data feed is questionable or
the readings are considered unreliable. In the oil and gas
industry, this occurs regularly due to harsh environments
and difficult transmission conditions. Engineers have been
using their knowledge, common sense, and experience to
differentiate good from bad data, for instance identify-
ing meaningful spikes from insignificant blips. This was
marginally tenable when few data feeds where installed,
but the increased data volume and the decreased numberof petroleum engineers now render this exercise nearly
impossible. Today, heaps of data are gathered but cannot
be mined in real time. Instead, they are held in reserve
and used for after-the-fact forensic analysis when an inci-
dent happens. Real-time data capture (installed to enable
preventive analysis and actions) more often than not is
used for a much less attractive return on investment
a mere forensic tool to understand what went wrong.
Many attempts have been made to overcome this chal-
lenge. The two most common approaches revolve around
ruled-based and model-based technologies. Unfortunately,
while these methodologies work very well to solve other
challenges, the variability of data exceptions in upstream oiland gas sensor readings render these techniques ineffective.
A different approachClaude Shannons information theory handles these chal-
lenges and provides a novel solution to several oil and gas
data analytic problems. Classical information theory can
determine the bandwidth requirements for transmitting
messages of varying types. Information streams containing
rapid variations and complicated patterns (e.g., oil and gas
data streams) require greater bandwidth than streams con-
sisting of simple patterns with few variations. Shannon used
digitalOIL FIELD
Digital oil field createsreal-time data fire hoseThe digital oil field allows an enormous amount of real-time data to be collected. The challenge
is to move from raw data to actionable information.
Philippe Flichy and Tom Lovell, IO-hub
EPmag.com | March 2011 23
The scan finds obvious and subtle anomalies using complexity
changes. A non-obvious anomaly is detected (red circle) near the
end of the data stream. (Images courtesy of IO-hub)
The zoomed view shows details of the non-obvious anomaly detected
near the end of the data stream.
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EPmag.com | March 2011 25
digitalOIL FIELD
the term entropy to describe his measure of information
content. The higher the entropy of an information stream,
the more bandwidth it requires to transmit, or when com-
pressed, the more disk space it requires to store. Perhapssurprisingly, Shannons entropy relates directly to the
entropy of classical thermodynamics.
To help conceptualize this connection qualitatively
(and without arguing their truth or falsity), consider these
approximately equivalent statements: The universes
entropy is increasing, The universe is approaching per-
fect randomness, and The universe is approaching a
more complex ordering. The last, more nuanced state-
ment suggests entropy may be considered a direct measure
of complexity. Data streams can be compared by their
inherent complexity and their complexity relative to one
another. Some shifts in a data streams complexity signalchanges in the underlying well physics. Other shifts signal
normal responses to control actions. Still others reflect
erroneous sensor spikes and drift.
An analogy to some of Shannons less well-known work
may help. He used simple statistical data analytics for iden-
tifying the language used in a transmitted message. Simple
algorithms automatically built 2-D histograms of the occur-
rence frequency of letter pairs for typical messages sent
in several languages. For example, English language
messages very frequently contain th but not often cz
pairings. Every language analyzed has its own letter-pair
statistics. Information theory can characterize the com-plexity of each languages letter-pair probability distribu-
tion and distinguish these distributions from one another.
New messages can be classified among the known lan-
guages. A message in an unknown language is not classi-
fied but is identified as unknown or anomalous.
Likewise, data streams from an oil well (e.g., pressure,
temperature, flow, choke valve travel, etc.) contain their
own typical complexity. The various data streams might be
scanned for complexity (information entropy) singly or in
combination. Analyzed during normal well operations, a
data stream metaphorically may be speaking French. Dur-
ing methanol injection, the well might start speaking Russ-ian. Or, a new previously unseen condition may arise that
can be flagged as anomalous, perhaps requiring attention.
Using such methods, it is possible to detect precursor
events (predictive or not), major events, and data trends as
distinguished from erroneous sensor drift. The next step is
to accumulate data for massive real-time parallel correla-
tion of multiple events, offering and then exploiting a
holistic view of the data to better identify normal versus
abnormal operation. This allows the automated correlating
of data stream combinations neither presently done nor
considered feasible.
Applying algorithmsDuring the last year, IO-hub took a step in this direction,
receiving multiple high-frequency data streams for several
wells in the Gulf of Mexico. A typical well generated 15 to20 data streams with new data readings every few seconds,
covering months of operation. Half of the streams moni-
tored well conditions (e.g., various downhole, annulus,
and wellhead pressures and temperatures); the remain-
ing data streams recorded actions taken (e.g., methanol
injection, choke valve travel, and master and crossover
valve settings). Most of the time, pressure and tempera-
ture streams showed steady stable behavior. All streams
showed a fair number of irregular and very noticeable
short duration fluctuations. Faced with reams of data
from multiple wells, all clearly exhibiting many intermit-
tent data events, the engineer wanted to know whetherthe well was in good health. Being fire-hosed with data,
where should he spend his time?
IO-hub software scanned all data streams and
identified all anomalies (the intermittent data events
of unknown importance) in all data streams. When the
data were assembled into a time-based event table, it
quickly became clear that all anomalous events in the
pressure and temperature data were associated with at
least one causing action (e.g., methanol or chemical
injection, change in choke valve position, change in
crossover valve state, etc.). Learning this, the engineer
concluded the wells were behaving normally.This solution while done quickly, with substantial
time savings over typical largely manual methods was
not fully automatic. Work continues toward automating
the process. When done, the software detects and classi-
fies data events, alerting the petroleum engineers only to
1) as yet unclassified anomalies or 2) event classes the
engineers have indicated they want flagged.
Rather than mining numbers after the fact to under-
stand what went wrong, this approach offers the ability to
anticipate and avoid potentially catastrophic and costly
events. Furthermore, the technology lends itself to smart
recording and transmission by prioritizing the essentialdata from the mundane.
The information revolution is about a new approach
to data and determining its usefulness. This novel
approach automatically can clean and analyze data
to identify precursor
events in each data
stream, enhancing its
value by correlating this
analysis over multiple
concurrent real-time
data streams. EPmag.com
READ MORE ONLINE
There is moreto the story
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Most geoscientists would agree that the more data
they can acquire and interpret, the more accu-
rate their reservoir model will be. But this often is eas-
ier said than done. Data acquisition is expensive and
time consuming, and often it is difficult to integrate
different datasets in a meaningful way.
A new company hopes to change that. Called NEOS
GeoSolutions, its goal is to integrate all geophysical
datasets gravity, magnetic, electromagnetic, radiomet-
ric, and hyperspectral with existing seismic, geologic,
and geochemical information to create a combinedand unique 3-D interpretation of the subsurface.
The value that we bring is fairly simple, said Jim Hol-
lis, president and CEO of NEOS. We apply and integrate
multiple geoscience methodologies. No one methodol-
ogy gives you the answer; it gives you an answer. By fusing
multiple methodologies, you get the answer.
This has long been the goal in geosciences, but it took
computers a while to catch up to the dream. Now the
company has developed the needed suite of technolo-
gies to acquire, manage, and integrate
these measurements, he said.
The company offers three solutions,which vary depending on how the
data are acquired and what one is try-
ing to do. Its neoSCAN programs help
geoscientists develop an understand-
ing of the macro-geological features at
the basin scale, including the thick-
ness of the sediment column; the
depth and likely areal extent of target
areas within the geologic column; and
the impact of large-scale folding, faulting, and thrusting.
Next is the neoBASIN, in which NEOS flies an air-
plane over a large area of interest, acquiring gravity,magnetic, and hyperspectral data to add to the inter-
pretation. These surveys typically are acquired under a
multiclient commercial model and are designed to
high-grade acreage and develop exploration leads.
Finally, there is the neoPROSPECTOR, which is
designed to identify drillable prospects. These projects
integrate high-resolution data acquired with a helicop-
ter with other available measurements and, in many
cases, identify look-alike prospects based on correlating
the measurements associated with known discoveries.
Data from all of these projects are integrated and
interpreted in a proprietary data management system
called the NeoSphere.What does NEOS have that other companies do not?
In addition to a strong management team and highly
qualified geoscientists, it has connections to Silicon Val-
ley through two of its primary backers, the venture firm
Kleiner Perkins Caufield & Byers and Bill Gates. Were
able to tap into the latest Silicon Valley technologies, like
cloud computing, social networking, crowd sourcing,
and intelligent search, Hollis said. For instance, one of
the relationships we have is with Google. They have put
a lot of effort into geospatial data man-
agement at Google Earth, and we have
access to those kinds of technologies aswe evolve our NeoSphere.
For now, NEOS confines its activities
to North and South America, where
programs are under way in California,
Colorado, and Argentina. However, it
recently got a new investor from the
Middle East that has a track record of
forging oil field services ventures with
Saudi Aramco and others in the region,
suggesting this might be the next area for expansion.
For Hollis, the excitement stems not only from addi-
tional opportunities in other parts of the world, butalso the step change his companys technology can pro-
vide for natural resource exploration.
If you want to introduce something new into this
business, you have to address the value equation on all
fronts, he said. We cant just deliver a better image or
be faster or be cheaper.
Weve got to deliver on all
three fronts simultane-
ously. And thats what I
believe we offer.
Silicon Valley meets the oil patchA new company combines geoscience expertise with compute power.
Read more commentary at
EPmag.com
RHONDA DUEYSenior Editor
rduey@hartenergy.com
EPmag.com | March 2011 27
explorationTECHNOLOGY
No one
methodology gives
you the answer; it
gives you an answer.
By fusing multiple
methodologies,
you get the answer.
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