The Innovation Imperative: For the Oil Sands Industry, Creative Is the New Normal
March 17, 2017
GE Reports Canada
Why unprecedented innovation and collaboration are necessary for the oil sands industry to thrive.
Energy companies have long been an innovative group, using processes like steam-assisted gravity draining (SAGD) to separate oil from Alberta’s oil sands. But two key factors are forcing the industry to pursue technological innovation now more than ever: a continued slump in oil prices, which has knocked down the price of crude by 60% since 2014, and the ever-important need to reduce GHG emissions.
It’s a volatile environment for oil companies, and operators are working on the narrowest of margins. Greater productivity is the key to surviving, says GE Chief Economist Marco Annunziata: “Innovation is the only road to greater prosperity.”
A Smaller Carbon Footprint for the Oil Sands
A 2015 report by the Council of Canadian Academies found that the oil sands industry’s environmental impact outstrips the ability of known technologies to contain it. That footprint needs to shrink, even as production grows.
“To achieve absolute reductions, transformative approaches and technologies will be required to supplement the many important but incremental technologies that can achieve reductions on an intensity basis,” the report says.
Technology development will play a central role in reducing the environmental footprint. Sustainability and profitability are not mutually exclusive, and technology is one of the key elements to achieving both.
An important piece of the puzzle can be found in the recently-launched Adaptix software suite. “Adaptix improves upstream operations by applying machine learning and adaptive intelligence,” says Warren Gieck, AI and production optimization leader with GE, based at the Customer Innovation Centre in Calgary.
The initial focus of GE Adaptix will be thermal production optimization, targeting the in situ oil-sands sector. Thanks to advanced real-time digital models of wells in service, GE Adaptix and its SteamIQ and WellIQ components will be able to help producers not only reduce their use of steam, but also the natural gas used to heat it.
Improved precision will reduce both costs and greenhouse gas emissions per barrel — a win-win scenario for industry and the planet. To date, Gieck says, his team has found that improvements of one to six percent can be achieved immediately by applying SteamIQ in the field.
Unlocking Revenue During the Price Slump
The current low-price environment and the oversupply of oil and gas in the market have also inspired a new urgency to innovate. The good news is that ten field-proven digital oilfield technologies have already been paying dividends to early adopters.
Although in 2015 an MIT Sloan Management global study found that the oil and gas industry’s digital maturity was among the lowest of businesses it examined, that’s all changing, fast.
50% of oil and gas companies are looking to spend more on digital technologies over the next 3-5 years, according to a Digital Oilfield Outlook Report released by the Edmonton-based information provider JWN in November.
“We’re starting to see digital technologies enter the oil and gas space, as well as other industries,” says Bemal Mehta, senior vice-president of energy intelligence at JWN. “What makes it very exciting is that it will drive up productivity, drive down costs, improve safety, and improve environmental performance.”