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Exploiting Unconventional Oil Fields Need Overcoming of Tough Logistics Challenges

Jan 20 2014, 3:21pm CST | by

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Exploiting Unconventional Oil Fields Need Overcoming of Tough Logistics Challenges

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Exploiting Unconventional Oil Fields Need Overcoming of Tough Logistics Challenges

Unconventional oil and gas production is a huge factor in the US.  “Unconventionals” – which include shale gas, shale oil, and tight gas sands – accounted for over 8.5 trillion cubic feet of natural gas production in 2011, more than 26 percent of the total US gas production.

There is no shortage of unconventional oil and gas resources in the US.  However, actually getting these resources out of the ground introduces new logistics challenges and requires new approaches.

Some key challenges include:

Wells Decline Quickly – One of the highly debated topics is the decline rate for the shale wells and how long they might last.  Typical decline rate for the first year is from 60 percent to 70 percent.  The typical lifespan of the unconventional well is still not well understood, but generally thought to be about five years.  By contrast, a conventional well would take two years to reach a 50 percent decline in production and would last up to 20 years.

Due to the high first-year decline rate, more and more wells need to be drilled just to maintain production.  The Eagle Ford has over 250 operating rigs, but operators need to drill over 6,000 wells in 2013 just to maintain current production rates.  To achieve this kind of rate, drilling and completion methods need to adapt to a “factory drilling” methodology. To support this fast pace – both for the initial drilling activities but also for on-going drilling, factory style project logistics and pop up supply chain methodologies need to be developed.

Large Area of Operations – Support operations need to cover vast areas.   The Eagle Ford shale operation covers 30 counties and over 3,000 square miles. By contrast, the Prudhoe Bay operation area in Alaska is approximately 558 square miles.  Unconventional production also tends to be located in very remote areas with very limited infrastructure. Further, as drilling expands out from a central location, operations become more challenging as transportation assets and drilling equipment moves into the more remote areas of the region.

The need to support such a very large area of operations combined with the high drilling/completion rate means that there is very little lead time to build out supporting infrastructure over a very large area.  It’s critical to minimize the time to when the well starts producing (“first oil”), which cannot wait for infrastructure build out.

Driving to the Site Represents Major Safety Hazard – The leading cause of death among oil field workers is not due to accidents on the rigs them-selves, but to vehicle accidents driving to and from the product sites.  Authorities in the Eagle Ford area report a tenfold increase in vehicle accidents.

Clearly, less driving means fewer accidents. Remote monitoring of wellhead readings, separator levels, flow meter readings, etc. reduces the need for workers to drive to the wellhead.  Further, if telematics technology is used to monitor for accidents and bad driving behaviors such as speeding, safety can be enhanced.  It is also important to provide a “panic button” for drivers to signal for help, when needed.

I interviewed Tim Hodge, the President of GEOTrac Systems, and a company that was acquired by Trimble Navigation, Ltd. Also part of the call was Scott Vanselous, CMO at TMW Systems.  TMW is also owned by Trimble, and both companies are part of the Trimble Transportation and Logistics solution portfolio for the Energy, Oil, and Gas industry. This portfolio of solutions does address the issues raised above.

First of all, the GEOTrac solution includes the most up to date geocoding of oil field lease roads and well heads for all the unconventional oil fields discussed in this article.  This means not only understanding the weight limits on conventional roads leading into these fields, it means 1.2 million additional roads that don’t appear on conventional maps, plus four million well heads. The roads include road attributes because some roads are only passable certain times of the year (like a road over a frozen lake in winter). This GIS data can be fed into the Alk Technologies Copilot GPS Navigation unit for turn by turn directions.

The PeopleNet telematics solution, PeopleNet is another Trimble company, can communicate via satellite in remote areas. It addresses safety issues by allowing trucks to be monitored for speeding, as well as having geofencing and bread crumb trails. The solution can sense when a driver has been away from the truck for too long a period, and raise an alert that there is a potential safety issue.

“Unconventionals” logistics can include construction of the pad and the building of the well; bringing in the sand, chemicals, and the water needed for fracking; servicing the needs of the people living at the well site; maintenance of site equipment; and transporting the petroleum products to a pipeline or rail ramp.  Each of these operations can have unique workflows associated with them. As one example, drivers that are hauling the oil or gas crude away may be asked to take quality measures and take a measure of how much crude remains at the site storage tank. These processes can be accommodated through handheld computer tablets, or can be entered in the in-cab telematics unit.

Further, the fleets associated with building the rig, fracking, serving the site, can be fairly large. For example, it can take a fleet of 75 trucks just to build the rig. The TMWSuite is a fleet management solution that aids in routing, dispatching, maintaining, and effectively financially managing the fleet.

The generally remote and expansive nature of unconventional oil and gas production, the relative lack of infrastructure at or near these sites, and the dynamic nature of these operations all combine to make energy industry telematics an interesting technology to solve these challenges.

Note: TMW Systems, a component of this solution portfolio, is a Logistics Viewpoints sponsor.

Source: Forbes


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