Lux Research recently helped co-chair the Artificial Intelligence (AI) World Executive Summit in San Francisco, CA. During the first day alone, we had the opportunity to hear from a diverse set of speakers, each esteemed in their own right, on their thoughts on artificial intelligence and how some of them were applying such technologies in their respective fields. Two sessions, in particular, did a fantastic job at providing two distinct perspectives on artificial intelligence that serve as sound guidelines for how enterprises should approach the hype surrounding the field. They are each summarized below: Continue reading
Major drilling company Hercules Offshore recently announced its plans to file for bankruptcy, a big drop from its market capitalization of over a billion dollars just two years ago. When prices were high, companies raced to produce as much oil as they could with little focus on optimization. Because drillers like Hercules, Patterson-UTI and Nabors Industries charge daily rental rates, technologies that streamline drilling operations can cannibalize rig demand. The bankruptcy is a clear reminder that companies need to continually invest in innovation to survive inevitable downcycles in the oil and gas industry.
The easiest way to cut costs is to reduce non-productive time, which accounts for between 10% to 30% of a well budget. Recently, major players have introduced new products and inked partnerships focused on driving down costs. For instance, Patterson-UTI and Schramm have developed a rig with hydraulically powered “legs” that allow it to walk to the next job on a multi-well pad. Though it moves at just a foot per minute, it is faster and more cost effective than disassembling and moving it in some situations. Schlumberger and IBM announced plans to provide an integrated service to find efficiencies and reduce costs across production operations. Emerson has signed a 10-year deal to provide BP with automation technology and aftercare services.
With oil and gas companies hungry for cost-cutting technologies, clients should engage with technology developers focused specifically on optimizing for cost like (client registration required for each) XACT Downhole and 5D Oilfield Magnetics. Those interested in learning more about companies in this space should see the report (client registration required) “Identifying Ways to Reduce Drilling Budgets in the Low Oil Price Environment.”
Every new field goes through an early hype period, followed by disillusionment, then slower, more measured growth. With small-scale investors and large companies like Schlumberger weighing in to report a much more fractured market than most expected (see the report “Risk and Reward in the Frack Water Market” — client registration required), the early hype is, or should be, finished. Don’t tell companies like Flowback Solutionz (client registration required), currently seeking $9 million to build its first prototype, but investors are headed for the door, some with less cash than they started with and some hard-won lessons in the water industry. The highly variable nature of the water from play to play has kept most non-chemical players out of the challenging Marcellus, which grabbed early headlines. The newest target, North Dakota’s Bakken, remains as enigmatic as previous plays, with operators banking on a wide range of fracking and disposal strategies.
Expect savvy chemical companies like Kroff (client registration required) to continue to make a killing, adjusting high-margin formulations to meet the industy’s evolving needs. Other solutions, like WaterTectonic’s (client registration required) and Halliburton’s joint treatment system, are casting around for opportunities in industries like mining. Expect thinning ranks of startups in the space. Clients interested in advanced water treatment methods should look through the wreckage in search of IP applicable to other industries. France’s Orège (client registration required) has shown that advanced oxidation is a good solution for difficult but predictable factory wastewater. In the U.S., advanced oxidation and electrocoagulation companies have been tilting at windmills in the frack fields. Clients looking for technology to take in new directions will likely find willing partners with names like Aquamost (client registration required), Ecosphere (client registration required), Neohydro (client registration required), and Produced Water Solutions (client registration required).
Deep Casing Tools has developed a range of one-time-use powered reaming tools – Turborunner, Shalerunner and Turbocaser Express – that attach to the end of a casing string. When the string runs into an obstruction in the borehole, the tool rotates and drives through the obstruction. Once the tool reaches the target depth, operators can cement that section using conventional methods. Operators can then drill right through the tool to begin completing the next section.
Founded in 2003 by a team of oil industry engineers, Deep Casing Tools developed its technology to tackle the issue of landing first time at target depth in increasingly demanding wellbore conditions that the industry faces today. The company recruited Lance Davis as CEO from the Acteon Group in 2007 to raise funding to launch and market the technology globally. It launched its first product 2010, and the technology has quickly gained traction, doubling unit sales every years since product launch, with customers including Chevron, Saudi Aramco, BP, and Shell.
With increasingly complex well designs and monitoring systems for unconventional production, the North American market represents a massive opportunity for this company. While Deep Casing Tools has its own distribution channels throughout the rest of the world, the company is seeking a strategic alliance with a US partner. Major distributors such as Baker Hughes or Schlumberger are potential routes for the company’s drive into North America. When we spoke with Lance, he mentioned that the ideal partnership would be with a company where Deep Casing Tools product range will complement the existing technology portfolio, creating a mutually beneficial route to growing both businesses’ interests in the US market.