How does constant technological innovation influence the optimization of profits in the petroleum industry?

Introduction

In this opportunity I would like to share with you a series of reflections oriented to the importance that the incorporation of new technologies in the oil industry has and can continue to have in order to make this business feasible, especially considering the low prices at present and the low prices that are sure to come.

Which branch of the oil industry requires the most investment?

There is no doubt that the part of the oil industry that requires great investment is the part of exploration and production. Currently, with the low oil prices, it is convenient to identify which part of this business is the one that requires the greatest investment and at the same time generates the greatest uncertainty.

If, as you heard, uncertainty, the exploration part of hydrocarbons includes a series of scientific and technical knowledge to be applied in favor of getting the hydrocarbon in a certain area, after the seismic and exploration studies determine that a certain area is prospective in order to find the hydrocarbon, a well must be drilled where there is the probability that no oil and/or natural gas will be found.

In times when oil was found in prices with peaks that reached their best values up to a maximum of around $100, the damage that could be caused to the economy of this business was not so evident that the prediction of finding the hydrocarbon could fail.

Today, I believe that this scenario must change, since with an oil price of between 15 and 10 dollars a barrel it is not convenient to drill an exploratory well so that it can provide data on a prospective oil field that is without oil and natural gas.

It is under this scenario that the constant technological innovation applied to carry out exploration and production activities of hydrocarbons, especially in remote areas where the greatest investment costs are incurred, plays a very important role. If technology, through the application and use of new equipment combined with the best techniques focused on science, manages to maximize and optimize processes so that the uncertainty of finding oil can be reduced, then we could be talking about the oil industry being able to continue to be profitable in the times ahead.

One of the parts where the new challenges in the application of new technologies that open a range of possibilities for the new era and oil revolution is in the extraction of oil in deep waters.

Not only would this new era in the technological and oil revolution have to overcome the challenge of being able to continue with the business of exploration and production at a cost of the barrel of oil at $15 as I mentioned earlier, but certainly diminish those high probabilities of getting us a dry field, that is to say one that does not contain hydrocarbons, especially considering that the costs of drilling and building a well are only recovered once a number of wells from the given field are put into production.

What in the past could be profitable within the oil business as it was to exploit the offshore fields due to the high volumes of oil being handled, today with the low oil prices the scenario has been reversed.

Although I am an oil engineer and worked for 3 years in the national oil industry of my country Venezuela (PDVSA) I am not one of those who fully supported all the existing ways to recover oil with minimum investment and maximize profits, such is the case of hydraulic fracturing also called fracking, since the solvents and chemicals used in the preparation of the fluid that is injected into the reservoirs can cause problems to the environment even more than conventional operations can.

However, if the new technological incorporations are focused on applying hydraulic fracturing with a new formulation of the injector fluid that will surely be sustainable in time for humanity and be profitable to minimize the production costs of hydrocarbons, and as I am one of those who believe in a rational use of natural resources, then I do not rule out the idea of continuing to focus on new technologies to generate energy from oil but in a conscious way.

I am not going to explain the fracking technique very thoroughly, as it is not the central theme of the publication, but briefly I can tell you that in essence what is done in this technique is to pump a fluid with chemical additives into the formation of the oil field with the aim of opening channels to the pores of the rock where the oil is contained in the field with the intention of improving the mobility of oil (ie its permeability) and thus be able to produce oil that is already considered unrecoverable in the oil field, this is what is known as a technique of improved recovery of crude.

The problem with this technique is that chemical additives can contaminate freshwater aquifers and generate other types of surface environmental problems.

For those who follow closely all the developments at the technological level I can tell you that when it comes to the oil industry we want to continue to apply fracking technology especially offshore and thus minimize oil production costs and enter more competitive markets where the barrel of oil at 15 dollars means one of many options, however, let's hope that the technology becomes more innovative to make the application of hydraulic fracturing feasible in environmental terms.

Let us hope that the challenges that are already on the stage within the oil industry are not maximized in the face of the great technological openness that is coming and with which it has already been worked, from my point of view the following objectives must be met:

• That can be tracked profitably in oil exploration and production operations under the new low price scenario.

• That new technologies incorporated have environmental preservation characteristics and can be sustainable over time.

• That there is a technological transfer capacity in which all markets and industries can benefit in this process of profit optimization despite the low prices of the barrel of oil.

reference consulted and recommended

New oil revolution is coming: low cost crude oil extraction in deep water