Technical Directors Outlook

The oil bust is forcing change, which is often difficult and sometimes for the better.

Another major round of layoffs hit exploration and production workers late last year, as companies came to the painful conclusion that a recovery is not coming any time soon. The cost pressures behind those cuts are also a force for more positive changes in the industry, such as simplified project designs, revised completion designs, and the application of unconventional innovations to conventional exploration and production.

The seven technical directors on the SPE Board of Directors are concerned about the long-term impact of this wrenching period. They addressed the issue during a panel discussion on “Managing the Future Impact of Current Cost Cutting” at the 2015 SPE Annual Technical Conference and Exhibition. And it was on their minds as they talked about the industry’s future for this article.

One danger they cite is that money saved now by reducing the number of experienced petroleum engineers could have financial consequences later in the form of more expensive wells that are less productive, or shortages of skilled professionals.

“It is very hard for any professional in the industry to lose his or her job,” said J.C. Cunha, SPE’s technical director for Management and Information, adding, “These people are capable of doing a lot of other things. They will not sit and wait 2 to 3 years when the industry begins to look for them.”

The industry is cutting expenses, but lasting productivity will depend on how it measures costs. “We have to make sure that the drive to cut costs doesn’t impact the cost-effectiveness of wells,” said David Curry, the technical director representing Drilling and Completions. Rather than focusing on the number of days it takes to drill, the industry should design and build wells to maximize profitable output.

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