American Oil and Gas Reporter - January 2016 - 68

JANUARY 2016
Infrastructure Innovation
Looking at the past decade, the genesis of the most important innovations has
been the need to either reduce operating
expenses or enable certain types of production operations that were not technically
or economically feasible. This is especially true of the collection of technologies
(horizontal drilling, multistage hydraulic
fracturing and enhanced lifting techniques, for example) that have made shale
oil and gas production viable. Said another way, the past decade has been one of operational innovation.
As we look to the future, technology
has an important role to play in resolving
the ever-increasing challenges imposed on
exploration and production infrastructure. This next decade may be the decade
of infrastructure innovation.
Citibank analyst Ed Morse has pointed out that despite low oil prices, we are
in a market that has relatively little spare
capacity. In his words, "Even with this imbalance . . . there is virtually no spare capacity in the world."
This means we are operating in an industry that needs to continue to identify
new sources of production and to produce
them. The challenge is that the remaining
global resources tend to be in those tight,
highly corrosive, high-pressure and/or
high-temperature reservoirs that have
been left for last.
These difficult-to-produce resources are
becoming more challenging to operate in,
and have a direct impact both on the cost
of the infrastructure required to produce
them and the cost to maintain them over
time. This dynamic is playing out at a time
when the industry needs investment to produce, but when funding is more difficult
to secure.
In short, the same revolutionary techniques and technologies that have transformed the industry by opening new frontiers in unconventional resources, ultradeepwater plays and enhanced oil recovery, also
are creating much more demanding operating conditions and assets that cost more
to develop and operate over their life cycles.
Innovations that can reduce the upfront
and operational capital associated with
constructing and maintaining infrastructure in these more aggressive and complex
operating environments could be the an68 THE AMERICAN OIL & GAS REPORTER

swer to further enhancing operational capabilities and safety factors, while maintaining the cost competitiveness, of the energy industry.
Aggressive Environments
Whether it's Mother Nature defining
the high pressures and temperatures of ultradeepwater reservoirs and corrosive
heavy oil deposits, or abrasive and corrosive, technology-enabled complex operations such as multistage hydraulic fracturing or carbon dioxide enhanced oil recov-

devices. Broadly speaking, nanotechnology involves manipulating matter on a
nanometer scale. But it is hard to define
with specificity because it is such a diverse,
emerging field. The science can mean very
different things to different people, ranging from digital technology to miniaturized
mechanical devices, to chemical compositions. Consequently, there are almost limitless potential application areas for nanotechnology in oil and gas fields.
Despite all the cutting-edge technologies at the industry's disposal, there has

"As we look to the future, technology has an important role
to play in resolving the ever-increasing challenges imposed
on exploration and production infrastructure. This may be
the decade of infrastructure innovation. The next big step is using
advanced nanotechnology to redeﬁne the performance envelope of
operational assets, without increasing cost."
ery, the dynamic is the same: more aggressive operating environments with tighter
economic margins.
Despite the huge enabling breakthroughs
in production operations, the infrastructure
impact of long-lateral horizontals in a
shale play, of HP/HT reservoirs in deep water, or of steam-assisted gravity drainage in
oil sands can materially impact the absolute
return on asset investments.
For this reason, the next big step is optimizing the infrastructure itself, using advanced nanotechnology materials and
technologies to redefine the performance
envelope of operational assets, without increasing cost.
Infrastructure is one of the few remaining areas that can improve returns by attacking both the numerator (enhancing
productivity) and the denominator (reducing cost) in the equation. If the industry
does not address the implications of these
new operating conditions on infrastructurerelated capital expenditures, the reality will
be increasing capital and asset maintenance
expenses without anything to offset them.
It will become simply a question of
whether the higher and higher investment
hurdles can be overcome.
Nanotechnology holds tremendous
promise for achieving breakthroughs in infrastructure components using new metallurgies, chemistries and electromechanical

been little advancement in cost-effective
infrastructure materials. Steel is still steel
and rubber is still rubber, and despite some
advancements to higher-priced alloys,
very little has changed in industrial metals since this industry's beginnings. The
basic metallurgical and chemical compositions of steel have remained largely
unchanged. But major advancements are
under way.
One example is an advanced, low-cost
manufacturing process to produce
nanolaminated metals and materials that
are stronger, lighter and more durable than
conventional steels and alloys, all while
keeping prices competitive with conventional alloys.
When conditions require purpose-engineered solutions such as corrosion-resistant steel alloys, composite pipe or specialty elastomers, the solutions have tended to
come at much higher cost. There is a
tremendous opportunity for nanotechnologies to change that dynamic by maintaining cost parity with conventional,
low-cost options while also meaningfully extending the life of assets in more aggressive environments.
Profound Implications
Imagine the improved profitability associated with reducing the frequency of artificial lift system repairs because of cor-

American Oil and Gas Reporter - January 2016

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