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OM in the News: Technology and the Oil Recovery

February 22, 2017
A control room operator for Pioneer Natural Resources in Midland, helping manage all of the company’s drilling sites in 21st-century style

A control room operator helping manage all of Pioneer Natural Resources’ drilling sites

We blogged a few weeks ago about changes in the oil drilling industry and how automation is creating a new demand for high-tech workers. It is in the news again. “Despite 163,000 lost oil jobs since 2014, U.S. oil production is galloping upward, to 9 million barrels a day from 8.6 million a few months ago,” reports The New York Times (Feb, 20, 2017).

Nationwide, with only 1/3 as many rigs operating as in 2014, production is down less than 10% from record levels. Wells that 3 years ago required a breakeven oil price of $60 a barrel now need $35, well below the current price of $53.

Much of the technology has been developed by the aviation and automotive industries. Now most oil firms have organized teams of technicians that collect well and tank data to develop complex algorithms enabling them to duplicate the design for the most productive wells and to repair parts before they break down. The result is improved production and safety, but also a far smaller–more brain-oriented–work force.

Texas’ Pioneer Natural Resources has slashed the number of days to drill and complete wells so drastically that it has been able to cut costs by 25% in wells completed since 2015. The typical rig that drilled 8-12 wells a year just a few years ago now drills 16. Last year, the company added 240 Texas wells without adding new employees.

With the loss of manual jobs has come a transformation in the job force, with demand growing for more data analysts, math scientists, communications specialists and robotic design engineers. In the last 2 year, Switzerland’s ABB has opened two plants in Houston for assembling robotics into oil field operations.

Classroom discussion questions:

  1. What are the implications of increased productivity in this industry?

      2. How is OM changing the drilling industry?

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