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US shale producers moving to the head of digitalization surge

U.S. shale oil and gas producers have moved to the forefront of digitalization in an effort to become more efficient, Ara Partners principal Johanna Schmidtke said Oct. 2.

Speaking at a conference at Rice University's Baker Institute, Schmidtke said producers operating in U.S. shale plays are now well ahead of their conventional drilling counterparts in the Middle East when it comes to the use of technology. The need to obtain data from high quality wells and apply it to others, she said, is a key to an independent's success.

"They have to integrate all their data from one well to the next to the next," she said. "This ability to innovate and integrate across these lower-cost assets is really where digitalization is coming in."

Schmidtke said machine learning and artificial intelligence are being used in sensors and computer systems put to use at the wellhead, allowing for faster analysis and response times when a potential problem is identified. The use of those systems, she said, will continue to increase as time goes on.

"While the capabilities are there, it's the time and weaving of these elements that are in its infancy and will only increase in the next 10 years," she said.

Computer systems are also being used to compile data that, for some companies, goes back as far as 75 years. New technology is allowing producers to go back and identify oil and gas fields identified generations ago that may have been too complex to be explored at the time.

"They're starting to connect all the data," Schmidtke said. "They're now able to pull up .pdfs of maps from the 1940s."

In a case of new technologies working in conjunction with existing ones, Schmidtke said the next generation of innovation will be needed to collaborate with current technologies to reduce methane emissions at the wellhead. The combination of the two, she said, could lead to a significant reduction in emissions.

"Sensors, drones, cameras, analytics … and then you have old technologies where they know well where methane emissions are," Schmidtke said. "There's a tremendous opportunity to reduce carbon emissions in natural gas production."

As the use of digitalization becomes more commonplace in the oil and gas industry, so are cyberattacks. Schmidtke cautioned that producers will have to take the potential of an attack on their infrastructure seriously and prepare accordingly.

"Cybersecurity is an enormous issue. Those attacks are real," she said. "We have to be ahead in our [cybersecurity] programs."