Current Downturn Research Articles

A synthesis of the arctic terrestrial and marine carbon cycles under pressure from a dwindling cryosphere

The current downturn of the arctic cryosphere, such as the strong loss of sea ice, melting of ice sheets and glaciers, and permafrost thaw, affects the marine and terrestrial carbon cycles in numerous interconnected ways. Nonetheless, processes in the ocean and on land have been too often considered in isolation while it has become increasingly clear that the two environments are strongly connected: Sea ice decline is one of the main causes of the rapid warming of the Arctic, and the flow of carbon from rivers into the Arctic Ocean affects marine processes and the air–sea exchange of CO2. This review, therefore, provides an overview of the current state of knowledge of the arctic terrestrial and marine carbon cycle, connections in between, and how this complex system is affected by climate change and a declining cryosphere. Ultimately, better knowledge of biogeochemical processes combined with improved model representations of ocean–land interactions are essential to accurately predict the development of arctic ecosystems and associated climate feedbacks.

Analyzing the Effects of Leverage and Hedging on the Equity Valuation of Oil and Gas Producers in the Current Commodity-Price Cycle

Summary Although a severe drop in commodity prices was expected to adversely affect a financially leveraged producer, the variability of this effect across the universe of exploration and production (E&P) companies during the current downturn, which began in Autumn 2014, surprised industry participants. What factors caused the effect to be magnified for certain companies and muted for others? In examining 71 public E&P companies, we found a moderate correlation between a company's financial leverage and the loss of its equity value. Our study confirms that leveraged producers are exposed to the risk of debt-induced value loss in a downturn. Two other factors were studied for their influence on equity performance: the economics of a company's resource portfolio and the extent of its commodity-price hedging. To examine the effect of resource economics, we analyzed the finding-and-development (F&D) cost of producers and noticed statistically significant differences by hydrocarbon-producing regions. When controlled for the regional effect, the correlation between a company's financial leverage and the loss of its equity value substantially improved. The offsetting effect of a superior resource economics on the debt-induced value loss was evident. For example, the producers operating in the Permian Basin outperformed their similarly leveraged peers operating in the Williston Basin, a less-profitable region. A subset of financially leveraged companies significantly outperformed their similarly leveraged peers. These outperformers, termed here as “Leaders,” showcase a strong alignment between their financing and hedging activities. We observed evidence of the use of a continuous-hedging program through the price cycle by the Leaders. They responded soon to changes in their hedge positions, such as hedge roll-offs, rather than hedging when it is advantageous to do so. A key benefit of such a continuous-hedging program is the dollar-cost averaging of hedged prices, which appears to be an implicit goal of the Leaders. We contend that a leveraged producer must coordinate its hedging and financing policies to maintain an alignment between the hedged volume and the debt load. Endogeneity arises in the relationship between debt and hedges, with each influencing the other. An alignment can be achieved through the implementation of a continuous-hedging program factoring in annual production, operating cashflows, financial leverage, and hedged volumes. This paper takes the hedging debate for a leveraged producer beyond the realm of “to hedge or not to hedge” and addresses the question of “how much to hedge.”

Technology Focus: Water Management (December 2016)

Technology Focus Considering the current downturn in crude prices, there is a renewed interest in recycling produced water for reuse in hydraulic fracturing in the development of unconventional resource plays. As the hydrocarbons are produced, large quantities of water containing high amounts of total dissolved solids (TDS) are also produced in the process. Most of the produced water usually is reinjected into disposal wells. This practice has become a topic of public concern after reports of earthquakes began approximately 5 years ago in the central United States, where disposal wells are heavily used. Reusing produced water as the base fluid for hydraulic fracturing not only alleviates the operators’ dependence on fresh water but also lowers the overall cost of fracturing treatments. Produced water usually is composed of natural formation water and flowback water. Flowback water is water that was a large component of fracturing fluids injected into a well at high pressure as a part of the hydraulic-fracturing treatment. Within a few hours to a few weeks after the fracturing job is completed, a portion of the injected water returns to the surface. It typically contains much higher levels of chemical constituents, including TDS, than the original fracturing fluid did. The amount of produced water, and the chemical constituents (i.e., anions and cations) and their concentrations present in the produced water, usually varies significantly over the lifetime of a field. Early in the process, the water-generation rate can be a small fraction of the oil-production rate, but it can increase with time to tens of times the rate of oil produced. Compositionally, the changes are complex and field-specific because they are a function of formation mineralogy, oil and water (both in-situ and injected) chemistry, rock/fluid interactions, type of production, and the required additives for oil-production-related activities. To reuse the high-TDS produced water as a base fluid for formulating crosslinked-gel-based fracturing fluids, the water must first be treated to remove ions that hinder the development of crosslinked fluid or that cause scale buildup in the wellbore. An ideal solution would be to reuse the high-TDS produced water in subsequent fracturing treatment with no treatment or fit-for-purpose treatment. The papers featured this month deal with a fit-for-purpose treatment of produced water, a new guar-based system that allows the use of 100% produced water without treatment as a base fluid, and produced-water reinjection. I hope you enjoy reading the selected papers and search for additional papers in the OnePetro online library. Recommended additional reading at OnePetro: www.onepetro.org. SPE 175206 Produced-Water Injection—The Challenges Faced by N. Bhola, Jorin, et al. SPE 177067 The Integrated Approach to Formation-Water Management Part 2: Field Applications and Best Practices by R. Correa, AGIP Oil Ecuador, et al. SPE 181588 Reuse of Produced Water by Membranes for Enhanced Oil Recovery by Remya Ravindran Nair, University of Stavanger, et al.

Exploring how urban design has sought to inspire confidence and longevity in Western Australia’s Pilbara region

In the late nineteenth and early twentieth centuries, architecture in mining settlements often acted as a measure of wealth, as if to arouse confidence and longevity in places with an infamously brief lifespan. Arguably, recent planning for upgraded town centres in the Pilbara region of Western Australia has similarly employed urban form to provide reassurance to current and potential future residents of these settlements. Using Karratha, the largest urban centre in the Pilbara, as a case study, this paper explores the ways in which urban form has been used to further a narrative of longevity through references to traditional cities characterized by urban density, spatial delineation and economic diversification. While only six years has elapsed since the launch of a plan to guide Karratha’s transformation from a town into a city, the current mining downturn highlights the limits of urban design interventions in relation to broader issues facing the mining industry. The paper concludes by pointing to the implications of such urban design efforts for the development of cities in Northern Australia.

Comments: Facing the Future

Editor's column Many of the top-level executives attending the SPE Annual Technical Conference and Exhibition (ATCE) in Dubai see the oil and gas industry rising from a market that has bottomed out and is on the rebound. Saudi Aramco Chief Executive Officer (CEO) Amin H. Nasser said the industry is in “recovery mode” and gradually reaching a supply/demand balance. Likewise, Schlumberger CEO Paal Kibsgaard said the market had reached bottom and was rising and requires more spending to insure against a global supply shortage in a couple of years. Although the previous decade had seemed like a golden age for oil with rising demand in Asia and new sources of supply from North America, the industry proved again that it is a cyclical business, with busts often following booms. Some believe that cyclicality, despite the pain, is a good thing. Jim Krane, the Wallace S. Wilson Fellow in Energy Studies at Rice University’s Baker Institute for Public Policy, says price cycles are inevitable in the oil and gas business and that has helped the industry remain competitive. “Price swings make companies disciplined and resilient,” Krane wrote last month in a Forbes online blog. “At the same time, they help fossil fuels retain their edge against competing technology. At one time or another, oil and gas have dispatched competitors such as whale oil, candles, steam engines, electric vehicles (in the 1900s), and solar panels. King coal is the latest victim. Nuclear power may be next.” When oil prices are too high, it encourages the development and use of alternative forms of energy, whether traditional ones such as coal, or new forms such as wind and renewable power. The current downturn has caused hydraulic fracturing techniques to become more efficient and service companies to lower their costs, says Krane, at the same time that oil and gas have become cheaper and more attractive to consumers. Although use of alternative forms of energy is growing, supported by governments concerned with climate change, most executives in the industry seem confident that fossil fuels will be the dominant energy source for years to come. But with government backing, which often comes with subsidies, the oil and gas industry has entered an era of competition with other energy sources whether prices are high or not. Topics at ATCE have always been a good barometer of the state of the industry, whether it was the arrival of new environmental regulations in the 1970s to the wave of mergers and acquisitions in the late 1990s. And executives at ATCE this year acknowledged the many challenges currently facing the industry. With panel session topics such as “E&P 2.0: Shaping the Future,” “Transforming the Industry to be Fit at 50,” “Boosting Efficiency in E&P,” and “Collaboration 2.0: Reinventing the E&P Industry,” executives discussed what the industry will need to do going forward to be successful. Both international and national oil companies said they were bent on improving operations, efficiency, and innovation while controlling costs. They are betting that the industry will remain resilient in spite of the inevitable sharp price swings and competition from other energy sources. JPT

Technology Focus: Reservoir Performance and Monitoring (September 2016)

Technology Focus Since the last Reservoir Performance and Monitoring feature, in September 2015, unfavorable market conditions have significantly constrained the operating cash flow of energy companies worldwide. This has prompted a response to delay or cancel capital-intensive projects, improve efficiency, and reduce operating costs. The response to innovation of the industry to survive through this downturn and thrive afterward could be perceived as slow. However, despite the current downturn, the industry has seen further advancements in innovation, including in reservoir-performance monitoring, analysis, and optimization. As an indicator of these advancements, almost 240 technical papers presented in the past 12 months at various conferences and meetings with reservoir-performance- and-monitoring programs were reviewed for this feature, as compared with approximately 100 in the preceding year. The current reservoir-performance-monitoring technologies are being improved continuously for better reservoir understanding, more-accurate short- and long-term production forecasting, and lower overall operational costs. The industry is becoming more efficient at using existing technologies to improve mature-field performance and surveillance. For instance, new approaches and models have been presented recently for operational optimization and future-production-behavior predictions, especially in unconventional reservoirs. Interwell tracers have been evaluated in the laboratory for their applicability in different mineralogies, and their full-field implementation in carbonate reservoirs has been reported. Temperature and acoustic measurements with fiber-optic technologies have been reported to add value to heavy-oil- reservoir monitoring. New theoretical and experimental models at micro-and nanoscales have been proposed to improve the industry understanding of fluid/formation interaction. Integrated multidisciplinary work flows have been developed to increase the value of reservoir-data monitoring. The current advancements in efficiency and innovation should lead to future successes as market conditions improve. The papers selected and recommended as additional reading are representative samples of the reviewed papers for this feature and are intended to show diverse examples of implementing multiple concepts and methodologies for production evaluation and achieving better reservoir performance. They are a mixture of field and academic applications, from all regions of the world, reporting case histories, field-data acquisition and interpretation, work flows, theoretical models, and laboratory results. JPT Recommended additional reading at OnePetro: www.onepetro.org. SPE 180369 Detecting Opal-CT Formation Resulting From Thermal Recovery Methods in Diatomites by C.M. Ross, Stanford University, et al. SPE 180061 Dynamic Reservoir Characterization and Production Optimization by Integrating Intelligent Inflow Tracers and Pressure-Transient Analysis in a Long Horizontal Well for the Ekofisk Field, Norwegian Continental Shelf by M. Prosvirnov, ConocoPhillips, et al. SPE 178984 Comprehensive Field-Scale Injection-Performance Analysis Associated With Injected-Water-Quality Parameters by Bangkog A. Sabut, Saudi Aramco, et al. OTC 26232 From Nanoscale Wetting Toward Enhanced Oil Recovery by R. Giro, IBM Research, et al.

President's Page

The current downturn looks a lot like the one we experienced 30 years ago. The numbers, again, are numbing. Oil prices have declined 50% to 60%. Some 100,000 layoffs have taken place in the United States, 350,000 worldwide. The geophysical market spend, which mimics oil price, has fallen more than 50% — from more than US$17 billion in 2013 to approximately US$8 billion this year. As companies slashed spending, new oil discoveries in 2015 plummeted to their lowest level since 1952. Today, enrollments in petroleum-related university programs are dropping too, creating a potential talent gap in the future, as it did in the 1980s and 1990s.

Expedient synthesis of an atypical oxazolidinone compound library

In order to address the current downturn in the drug discovery pipeline, initiatives are being undertaken to synthesise screening libraries of sp3-rich, low molecular weight compounds. As part of the European Lead Factory initiative, the synthesis and derivatisation of a simple hexahydrooxazolo[5,4-c]pyridin-2(1H)-one bicyclic carbamate has been achieved. The synthetic route employed involved a telescoped hetero-Diels–Alder/[2,3]-sigmatropic rearrangement/cyclisation sequence to deliver the desired core scaffold containing two points for further diversification. When applied, this synthesis was found to be robust and scalable which allowed the production of a 155 compound library.

Guest Editorial: Isn’t It Time for Our Own Spielbergian “Idea Summit”?

Guest editorial Three years before the 2002 release of his science fiction film Minority Report, director Steven Spielberg brought together an ad hoc think tank to help him realistically imagine how the future might look in 50 years. More than a dozen visionaries and futurists came together for the 3-day event, an “idea summit,” which proved surprisingly prescient. Several intelligent technologies envisioned in the film have since been developed—including biometric iris scanners, robotic insects, crime prediction software, multitouch interfaces (you probably have one in your pocket or purse), and autonomous or self-driving cars. At almost 2 years into the oil industry downturn, I believe now is the ideal time, a pivotal moment, to come together for our own “idea summit” and begin to realistically imagine the future so that we can respond to the “upturn” in the oil and gas industry when it arrives, as it inevitably will as we have witnessed in the past cycles. The seventh SPE Intelligent Energy International Conference & Exhibition will meet for 3 days this September in Aberdeen to consider how we can take emerging digital technologies, big data analytics, and intelligent and autonomous systems to create our own future. This will enable us both to survive our current challenges and to thrive in the years to come. Consider the difference between invention and innovation. Invention develops new ideas and concepts; innovation combines existing elements and applies them in new ways. Today we need innovation to take advantage of the technological inventions that we already have, and we need inventions to sustain the future. Of course, we also need to leverage human potential, processes, and organizational ingenuity. To shape this future vision, we will bring together the industry’s brightest scientists, engineers, and visionaries, as well as executives and decision makers who can implement new corporate strategies and business models that will catalyze technological and organizational changes. This conference is organized to enable us to engage in candid conversation, ask one another hard questions, dream out loud, and open ourselves to fresh possibilities. Take, for example, the application of digital technology in my area of expertise, drilling: I believe one way out of the current downturn to a stronger future is to embrace digital innovation and new levels of automation. I’m not alone. Last fall, a survey conducted at the International Association of Drilling Contractors Advanced Rig Technology Conference indicated that many of its members believe now may be the best time to adopt new technology. Forty percent said a down market encourages automation. Another 38.5% agreed, as long as automated processes are properly deployed to meet specific operator requirements. Only 17% felt a down market discourages automation, largely because companies cannot afford new investments. This would not be the first time the drilling industry has innovated in a downturn to profit in the upturn. During a previous downturn—the oil price collapse of 1998—one major contractor developed next-generation, semi-automated land drilling rigs. Even charging a premium coming out of the downturn, these high-tech rigs lowered the drilling cost per foot by nearly “two-thirds.” They consistently drilled record wells. A second effect, revealed by a Schlumberger study several years later, found that downhole tool reliability improved almost “threefold” on these rigs. While it took tremendous courage to innovate in such an economic environment, ultimately it paid off, not just for one service provider, but for the industry as a whole.

IPTC Doha — A successful event despite challenging times

The ninth edition of the International Petroleum Technology Conference (IPTC) took place 6–9 December 2015 in the Qatar National Convention Centre in Doha. This was the fourth time that Qatar Petroleum (QP) has hosted the event since the IPTC's inception in the same city back in 2005, with Shell acting as cohost for this year's event. Despite the current downturn in the oil markets, the conference and exhibition attracted 3,800 industry professionals, representing 630 companies from 63 countries.

Should I Stay or Should I Go?

SPE President's Column The English punk rock band, The Clash, posed this question musically in 1982. It is unlikely they intended it as a starting point for a discussion on careers in petroleum engineering. Yet, this was the topic of a SPE young professionals (YPs) meeting at the Asia Pacific Oil and Gas Conference and Exhibition I attended where, like everywhere else, YPs were concerned about the downturn in oil and gas prices and the resulting impact on their career choices. Interestingly, the title of the session was “Ridin the Storm Out,” another 1980s hit by REO Speedwagon. This title implies a temporary drop in the industry, perhaps like the 2008 Asian financial crisis. In that “storm,” oil prices dropped from more than USD 140/bbl to less than USD 40/bbl; North American rig count dropped from more than 2,000 to fewer than 900. Mapping rig activity over industry downturns since 1998 shows that the three prior storms were all relatively brief. In each of these downturns, rig activity in the US reached 80% of its prior peak activity within 2 years of the fall. Until late August last year, the current downturn had more or less tracked the previous decline in 2008. Will we recover in 2–3 years as in prior downturns, or will this be like the 1980s? What does that portend for young engineers in our industry? I do not have a magic ball, but I can share some statistics and thoughts. During the 1980s, rig count dropped from a peak of 4,469 active rigs in November 1981 to 686 rigs in June 1986. The US rig count stayed below 1,300 from 1 March 1986 to 1 February 2005, reaching a low point of 502 rigs in February 1999. This marked the lowest rig count since Baker Hughes began reporting rig counts in the 1940s. This was not a storm. It was an ice age. Here are a few questions you are probably pondering. Will there be jobs available? What will it be like to work in an environment of constant focus on costs and efficiency? Is this the industry in which I want to spend my career? Wherever I go, students and professionals share this concern.

Multinational enterprises from Latin America: investment strategies and limits to growth and diversification

The expansion of multinational enterprises from Latin America over the previous 10 years is part of a global trend of increasing outward foreign direct investment (FDI) from developing countries. This paper proposes to analyse outward FDI in the region categorising the behaviour of the 50 largest multinational enterprises from the region and attempting a broad classification of their motivations, objectives and means for their international expansion (FDI strategies). The author argues that the prevalent strategies identified can point towards an explanation for the current downturn in FDI outflows from the region. The paper finally provides a connection between the FDI strategies and the efforts towards structural change of the economies of the region, highlighting the role of outward FDI in this process.

Guest Editorial: Engineering Design in the “Lower for Longer” Environment

Guest editorial A recurring theme in the earning statements of oil and gas companies in recent months is the desire to survive not only “lower (prices) for longer,” but to use the current market downturn, and the resulting urgency, as an opportunity to reshape organizations to ensure that they are stronger and better able to thrive in the years ahead. Clearly, the industry needs to reduce costs and continue to innovate without compromising safety, but how? In other industry crunches, such as that experienced by automotive manufacturers in 2008–09, simulation played a key role in helping to reduce engineering design costs and lead times, while allowing manufacturers to continue to deliver new and innovative solutions. While each company’s view on how to tackle this new paradigm will differ, for many it will be to continue the day job (deliver quality and innovative products and solutions), but at reduced development time and cost, without compromising safety. First principles-based engineering simulation tools will be a key enabler, as companies will increasingly rely on simulation-based design exploration. The initial driver will be to reduce engineering costs and time, but companies will also benefit from simulation as an innovation enabler. Key to this has been the rapid improvement in computer hardware and software technology, as well as innovative licensing models that enable, rather than penalize, the use of high-performance computing and cloud solutions. Through the development of cloud computing, engineers now have ready and cost-effective access to computer resources that would have been unimaginable a decade ago. These improvements allow engineers to increase the number of design and operating conditions evaluated, and to move beyond the physical test to simulate real-world conditions at full scale, such as subsea separators with real process fluids at high temperature and pressure, or the behavior of a floating platform during a hurricane. The importance of simulation is evident in three specific examples: two from the recent CD-adapco Oil, Gas, and Chemical Computational Fluid Dynamics (CFD) Conference, and one from outside our industry.

If there were a ‘Highly Skilled Red Octopus’? The Case of Italian Highly Skilled Mobility at Times of Crisis

IntroductionIn the era of globalisation, the demand for highly skilled workers has grown faster because of an increasing reliance on technological and scientific innovation. Concurrently, the population ageing, which characterizes most industrialized countries in the twenty-first century, is causing a decrease in production capacity, which is needed to improve the competitiveness of national systems in the global market (Balduzzi and Rosina, 2011). In this scenario, many industrialized countries have become competitors in what has been defined gain, namely the acquisition of highly trained, foreign-born professionals.In times of crisis, the brain gain becomes even more evident, as innovation is a crucial factor to boost growth (Isaakyan and Triandafyllidou, 2013). Although Europe as a whole is likely to remain an attractive destination for highly trained professionals, it is undeniable that some Northern European cities, as traditional poles of attraction, are more magnetic than others. However, the case of 'alternative' highly skilled mobility in Europe - such as the cases of mobility intra-Southern European countries - is particularly interesting to discuss. On the one hand, indeed, the effects of the current downturn have been particularly severe in these countries, namely Greece, Italy, Spain and Portugal. On the other hand, recent studies conducted on the mobility of highly skilled Italian have begun to show that a number of talented Italians are moving to those countries. Yet, not much research has been focussed on these flows. This means that the dynamics have been poorly understood so far. Then, there is the need to understand who is actually moving and for how long. On this basis, the main purpose of this paper is to discuss critically contributions in the study of highly skilled people, using the Italian case as a reference example. In doing so, a complementary perspective will be presented, by drawing on two recent studies on Italian highly skilled mobility at times of crisis.Starting from this preliminary consideration, the first section of this paper is dedicated to discussion of the very definition of a highly skilled worker, highlighting strengths and weaknesses of common classifications. It follows a brief discussion on the most significant contributions offered by traditional literature, before moving to more recent studies made towards the end of the 1990s. Then, particular attention is paid to some of the current forms and directions of highly skilled mobility in Europe, trying to better understand the main features of this phenomenon in its current context.The second part is intended to provide a general overview of the socio-economic situation in Italy. In particular, the focus is placed on old structural weaknesses of the country to see how they have affected, and continue to affect, the mobility of human capital from Italy. Emphasizing the features of the Italian labour market today allows a better sense of the circumstances in which the phenomenon is developing.In the third and last part of the paper, a brief overview of the results of the two recent studies mentioned above will be tabled. This is intended to outline the utility of an approach which takes into account the different forms and directions of highly skilled mobility within Europe nowadays.1. Definitional problems: who are the highly skilled?Despite a growing interest in the phenomenon, particularly since the 1990s, the international scientific community has not provided a universally accepted definition of highly skilled workers so far, because of differences between countries in terms of education systems and recognition of qualifications. It is not surprising, then, than in recent years, institution such us the European Union have pointed to the standardization and mutual recognition of qualifications through the so-called Bologna Process (Milio, Lattanzi, Casadio, Crosta, Raviglione, Ricci, Scano, 2012). …

URTeC showcases integration

The third Unconventional Resources Technology Conference (URTeC), held in July 2015 in San Antonio, Texas, proved to be a successful meeting in spite of the current industry downturn caused by the drop in the price of oil and gas. The technical program continues to evolve toward the integrated exchange of experiences that is the targeted objective of this annual conference. Although there was a drop- off in attendance from the initial conferences, which were held during a more favorable economic climate, the presentations were well attended. The emphasis toward the integrated team approach gave valuable information for the attendees to take back and incorporate into their approach to develop unconventional reservoirs.

Technology Focus: Reservoir Performance and Monitoring (September 2015)

Technology Focus Recent months have been very challenging for the oil and gas industry. When the previous Reservoir Performance and Monitoring feature appeared in JPT in September 2014, Brent was trading at approximately USD 105/bbl. At the end of June 2015, when this statement was written, its price was 41% lower, at just above USD 62/bbl. In addition, the world rig counts reported by Baker Hughes in September 2014 and June 2015 were 3,659 and 2,152, respectively, a decrease of approximately 41% (rig count is a trailing indicator of oil price). The international and North America rigcount decreases between September 2014 and June 2015 were approximately 12 and 57%, respectively. These steep decreases, mostly the direct consequence of a global imbalance between demand and supply, are warnings that our conventional innovation schemes need to be recalibrated. Even if the rig count has been dropping, the rig efficiency continues to improve. From multiwell pads to advanced drilling technologies, innovation is helping keep current production high. If current low prices persist, further innovation may improve the alignment between short-term production and long-term recovery, while lowering overall production costs. Maximizing short-term production and optimizing longterm recovery may provide key opportunities for cost savings during the next downturn of major proportions. This could be achieved through the industry’s ability to innovatively acquire and interpret data for optimizing the reservoir performance. The industry is continuously looking at new monitoring devices and techniques, and there are huge opportunities for monitoring fieldwide data with the ultimate goal of understanding the reservoir better and predicting its short- and long-term production more accurately. The current downturn may be a great opportunity for the big-data revolution from other industries to be extended to the oil and gas industry in general and to reservoir performance in particular. As a result of the industry’s current efforts to improve reservoir performance and reduce production costs, many great papers have been presented at recent SPE conferences and meetings. From the more than 100 papers reviewed for this feature, approximately half of them present case histories, field-data interpretation, and work flows, and the other half present theoretical and laboratory results. The papers summarized in this feature and recommended as additional reading are excellent samples of this distribution. JPT Recommended additional reading at OnePetro: www.onepetro.org. SPE 170619 Wireless Inflow Monitoring in a Subsea Field Development: A Case Study From the Hyme Field, Offshore Mid-Norway by Svein Mjaaland, Statoil, et al. IPTC 18115 Three-Dimensional Visualization of Solvent Chamber Growth in Solvent-Injection Processes: An Experimental Approach by F. Fang, University of Alberta, et al. SPE 171932 Linking Diagenesis, NMR, and Dynamic Data for Accurate Flow Characterization of Heterogeneous Carbonate Reservoir by Umer Farooq, Abu Dhabi Company for Onshore Oil Operations, et al. SPE 172929 Production Forecast, Analysis, and Simulation of Eagle Ford Shale Oil Wells by Basel Alotaibi, Texas A&M University, et al.

Upping the Ante on Technology and Leadership in Challenging Market Conditions

Pillars of the Industry Part 1: John Wishart, Lloyd’s Register Science and engineering is the lifeblood of my career and a passion since sixth form. It was my teacher who first encouraged me to enroll in engineering, which later led me to qualify with a degree in chemical engineering. My first job was with John Brown E&C in London where I worked on projects in the oil and gas industry. After a few years, my job with BP took me from the engineering contracting sector to a role focused on project and facilities engineering. My next career step was joining the then newly founded Genesis Oil & Gas, moving to Aberdeen and then to Houston, by which time the company was owned by Technip and later I became Technip’s US chief executive officer. While it is true that the mistakes you make along the way help you learn and progress in life, I can say that I have truly gained a lot personally and professionally from the journey I have made and the people I have worked with. When you start out in the world of work, knowing how to take your educational knowledge to the market place and learning how to apply it in different ways in different situations is critical to your success in life. Part 2: Judith Dwarkin, ITG Investment Research As energy in all its forms is essential to both economy and life in general, the challenges associated with finding, harvesting, distributing, and using it efficiently and responsibly are enduring. And whether the current downturn in the global oil market is, or is not, a watershed moment, it is important to remember that as an industry professional you have been presented with a massive summons to action, which also comes with a massive opportunity to shine. I was raised in Fernie, British Columbia, Canada, a small coal mining and lumber town in Western Canada well acquainted with commodity cycles. After completing my undergraduate and master’s degrees, I travelled to Australia on a Commonwealth scholarship to pursue a PhD in natural resource economics. During my academic career, I became interested in public policy and commodity markets and on returning home to Western Canada after graduating, I was fortunate to find a way to pursue both these topics at the Alberta Department of Energy. At the time, the provinces and Canada’s federal government were in the process of dismantling a plethora of energy policies and regulations that imposed various types of controls on domestic oil and gas upstream development and markets, as well as internal and external trade. This period of deregulation was a dynamic and challenging time to work on energy policy and, as it turned out, a great entry point for my career in the industry.

Comments: A Pivotal Month

Editor's column This month should offer key clues to the direction of the oil market over the next several months. OPEC countries will meet on 5 June in Vienna in a regular meeting to discuss their current supply to the market and production quotas. And government figures released this month should begin to get a better handle on the decline in US production. OPEC’s last meeting, in November, contributed to the steep drop in oil prices when Saudi Arabia decided it would no longer play the role of “swing producer” and would instead defend market share. Although many took this as provocative, several executives speaking at the recent IHS CERA conference in Houston noted that OPEC fears prolonged high oil prices could lead to faster development of alternative energy, and the cartel is engaged in a “price discovery exercise” to determine the sustainability of US shale producers. “I think it’s going to be very useful to the industry to have a clear understanding of the resilience of these resources, how robust the resources are, and how they are able to withstand different price environments,” said ExxonMobil Chief Executive Officer Rex Tillerson. Most of the executives at the conference agreed that the current price downturn would last a while and that the current situation seemed closer to the downturn that occurred in the mid-1980s, rather than more recent price downturns. The OPEC strategy is definitely having an impact on North American production. The US Energy Information Administration last month lowered its 2015 and 2016 crude oil production growth forecasts. Its latest Short-Term Energy Outlook predicts that US crude production this year will increase 530,000 B/D (revised down from 550,000 B/D) and that 2016 growth will be 20,000 B/D (revised down from 80,000 B/D). US producers have cut spending, idled more than half of the country’s drilling rigs, and eliminated thousands of jobs. The number of active rigs working in the US had fallen for 23 weeks in a row as of mid-May.

Situating consumption in a sustainable economic recovery: Bringing the environment back in

It is argued within this article that the marginalisation of climate change as a significant economic challenge within the current downturn has led to highly problematic strategies of economic recovery. This article aims to highlight the role of carbon-intensive and debt-fuelled consumerism in instigating both the financial and environmental degradation of recent times, and discusses the appropriate role of consumption within an economic recovery more sensitive to broader economic challenges. It is argued that when a more holistic understanding of the recent economic and environmental outcomes is adopted, it is clear that recent consumption patterns – which have acted as a central driver of economic growth – has produced deleterious financial and environmental consequences and should now be considered unsustainable. Yet these consumption patterns have been entrenched by the policies undertaken to revive growth. Only alternative models of consumption and growth constitute credible responses to the current crisis.

Changing the Equation: Refracturing Shale Oil Wells

Refracturing Revolution As shale operators look for ways to survive amid the current downturn in oil prices, accelerating the refracturing of older horizontal wells is turning into one of the most attractive options. In years past, when oil prices were significantly higher, the more accepted proposition was to drill and complete new wells to increase production, book new reserves, and hold onto leases. However, since late last year, the equation has been turned on its head. In many oil-rich plays, companies are realizing that refracturing is the more budget-friendly way to achieve cash flow. Compared with the USD 8 million to USD 16 million needed for a new well, most refracture jobs are reported to cost from USD 1 million to USD 3 million. In a well where all of the sunk costs have been recovered, the extra production and incremental reserves from refracturing can net several million dollars of added profit. Tim Leshchyshyn, founder of FracKnowledge, said the current low-price market environment has become the biggest driver for companies to reinvest in their old oil wells. One operator that his company tracks is so sold on the idea that it is considering refracturing 500 to 1,000 wells this year. “Refracturing is what everybody is banking on,” he said. “It is the thing they are trying to get figured out because there are going to be a lot of wells to do.” As operators and service companies climb their way up the learning curve, they are trying to determine which wells to refracture, which ones to bypass, and which plays it will work best in. Only a few unconventional producers have published the results of their refracturing programs in oil-rich plays, and many others do not acknowledge having such programs at all. But there are years’ worth of case studies from gas-rich plays such as the Marcellus, Haynesville, and the Barnett, the birthplace of unconventional shale development, that indicate refracturing can be successfully applied in the oil-rich plays as well. Mike Vincent, an independent consultant, is seeing unprecedented demand from operating companies for his courses on how, why, and where to do refracturing. While eager to learn all they can about refracturing, many of his clients are reluctant to discuss the topic publicly. “I think there are multiple reasons why there is radio silence right now,” Vincent said. Companies still unsure of the success rate of refracturing may be trying to avoid overselling its potential to investors. Others are certain that it works quite well, Vincent said, but are staying quiet for competitive reasons, which includes the desire to buy out other operators’ offset wells and refracture them.