top of page

Digitalization Can Save Upstream Sector $75B Each Year

rugged rig.jpg

The global upstream oil and gas sector could save $75 billion per year through digitalization … and the U.S. Lower 48 is leading the way, according to a study released Nov. 12 by Wood Mackenzie.

The U.S. Lower 48 has been swift in adopting new and innovative technologies that has helped them stay ahead of the curve to realize the benefits of digital transformation.


Does the shale boom ring a bell?

“Historically, U.S. shale oil and gas production has been characterized by innovation and technology,” Anuj Goyal, U.S. Lower 48 upstream analyst at WoodMac, said in a statement emailed to Rigzone. “After all, it was U.S. independents who led the innovation boom in shale 10 years ago, developing and adapting new technologies at a faster clip than the majors or other conventional players at the time.”

The deployment of remote monitoring of rigs has acted as a force multiplier. In the past four years, drilling speeds across the Lower 48 increased by 10 percent on average – more than 20 percent for the best operators, WoodMac finds.

By using production, completions and subsurface data, machine learning algorithms are starting to help Lower 48 operators develop better completion designs.

Regarding worker efficiencies, there’s been a plethora of technologies and software deployed to help workers be more connected.

The study said the next step is to remove workers from the field entirely, citing robots as one way to do this.

Typically, Lower 48 horizontal wells start generating positive cash flow within three years.  After that, remaining returns depend largely on Lease Operating Expenses (LOE) – making these wells prime targets for optimization.

The study also estimates that by placing the Lower 48’s mature wells on smart production management systems that lower Lease Operating Expenses (LOE) by 10 percent, it could add $25 billion of value to its fields. A bit more aggressive, by placing all wells on secondary recovery earlier, that value could shoot to $45 billion.

Value gains of this scale are larger than the entire portfolios of some of the top Lower 48 operators.

While upstream oil and gas companies have been a bit slow to take full advantage of digitalization, Lower 48 operators have been quicker to adopt digital solutions than their conventional counterparts.

“The cost curve for tight oil has materially shifted down and to the right, and digitalization has been a critical role,” Goyal said. “Those companies that utilize their data as an asset and scale the application of digital technologies will be the ones to benefit the most.”

Source: Rig Zone

bottom of page