Oil & Gas Boom Requires Automation

  • June 01, 2014
  • Siemens
  • Feature

Perspectives from the Siemens Oil & Gas Innovations Conference 2014

By Bill Lydon, Editor

For the second year, Siemens hosted an Oil & Gas Conference in Houston, TX on April 22-23, 2014. Attendance was significantly greater than last year’s inaugural event. The event offered thought leadership, training, and networking opportunities for oil and gas industry executives and industry experts. Siemens, their partners, and their users led breakout sessions that provided learning opportunities for attendees. In addition, the event hosted a focused trade show. Siemens mobile demonstration semitrailers were parked outside so attendees could learn more about automation products and applications. Major focus areas of the event included minimizing downtime, training and management of inexperienced workforce, lowering maintenance costs, and upgrading legacy oil and gas wells to new technology.

Conference workshops provided hands-on sessions.

Industry Booming

Scott Macdonald, Vice President of Sales for Siemens Industry, kicked off the meeting. Macdonald noted that the industry is strong.  U.S. crude oil production increased to 1 million barrels per day in 2014.

Macdonald said that for the first time in almost 20 years, U.S. production exceeded imports during several weeks of 2014. China has replaced the U.S. as world’s largest crude oil importer, accounting for about  one-third of global demand. Siemens is participating in the growth and now has 2,300 employees in Houston. In 2014, Siemens is also expanding process analytic solutions capacity by 50%. Macdonald said, “As industry demand is increasing, there are greater requirements for improved efficiency and reducing environmental impacts.”

John Royall, President and CEO of Gulf Publishing Company, presented data from the 2014 world oil forecast. The forecast is based on information acquired from government agencies and operators worldwide. The forecast predicts a downward trend of oil prices in 2014 (average process Brent - $104.29/ barrel and WTI - $91.50 /barrel). He believes the downward price pressure is due to shale production reducing U.S. imports significantly. The natural gas forecast is similar due to the increase in production. The forecasted average price is $3.95/MCF. Because of improved efficiencies, the U.S. oil rig count on average has decreased while footage drilled has increased. Horizontal wells and shale methods are contributing to this trend. In the Backken, there are laterals out to 20,000 feet. They forecast that about 80% of the rigs will be drilling for liquids. Based on a Barclays Capital survey, the forecast for U.S. E&P (exploration & production) spending will be up about 8.5% in 2014. Globally, excluding North America, E&P spending is up 5.7% in 2014. Overall it’s a healthy market. North America has twice as many gas processing projects as Asia Pacific or the Middle East. Overall upstream business will stay robust. Downstream is gearing up to go online over the next two years, especially LNG export and petrochemical plants.

Christopher Robart, Partner with PacWest Consulting Partners, presented similar information indicating a robust industry. PacWest is a strategy consultant and market intelligence firm that specializes in the energy, industrial, and resources sectors. They forecast that horizontal well counts will increase by more 6% in 2014. Fracking stage counts are at all-time highs; 400,000+ stages are estimated for 2014. To increase efficiencies, modern well pads are now configured like temporary manufacturing facilities. They forecast the number of horizontal wells fracked will increase through 2016, from 16.5 thousand in 2013 to 18.6 thousand in 2016. Well costs have fallen dramatically since 2010. Sophisticated technologies, including automation, remote monitoring, and robotics, are being applied across the oilfield. Optimization of production is becoming a key focus area for operators. Important operational trends are leading to improved costs and increased production. Efficiencies across the entire drilling and completion value chain continue to improve (e.g. drilling days/well, fracking days/well). Well costs continue to fall as E&Ps optimize and build scale in their operations. Even though rig count in 2014 is expected to be stable, the number of wells drilled/fracked will increase. Batch operations on multi-wellpads are one of the biggest enablers of fracking efficiency gains.

All of the presenters noted that the unrest in Europe is likely to increase exports of petroleum products.

Need for Automation

There has been significant automation in petrochemical processing plants.  However, it is surprising how little automation has been adopted in other parts of the oil & gas industry. This has changed over the last four years because the cost of operations is growing faster than profit margins. This increased cost is forcing the industry to search for ways to be more efficient. As with other industries, automation is the answer. Speakers referred to the industrialization of oil fields. The oil and gas industries have some unique environmental requirements that new automation products achieve. The advances in automation and communications technology make this possible today. The automation requirements can easily be met with industrial automation hardware, software, and sensors. Remote communications is required beacause the rigs and units are all remote.

Mobile demonstration trucks provide focused learning.

Industry Challenges

Outside of refineries, there has been little automation, but operators are starting change and become more efficient. Coupled with this, there is a huge shortage of automation technicians and engineers to deploy automation systems. Siemens is investing in the Houston and the Gulf Coast region education institutions to help develop talent. The company has donated equipment and software to the University of Houston Downtown, which offers an instrument & control engineer degree program.

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