|USSI develops and manufactures fiber optic sensor systems for microseismic and 4D seismic surveys. Photo courtesy of US Seismic Systems.|
New micro-seismic sensor technology providing sharper images of the subsurface
The current shale revolution was thrust into motion by a few key components: the ability to perform directional drilling (allowing companies to drill horizontally), and hydraulic fracturing (a process to unlock valuable hydrocarbons from tight formations).
Because of these technological breakthroughs, "Peak Oil Theory" has been shattered – at least for the near-term.
But – is the oil and gas industry on the verge of yet another step-change?
US Seismic Systems (an Acorn Energy company - NASDAQ: ACFN) is counting on it. John Moore, CEO of Acorn Energy, says: "We believe we are at a fundamental inflection point where the industry has flipped to unconventional drilling and likewise – seismic is going from an exploration tool to a production tool."
Their vision is simple: replace current seismic sensors (a 50-year old copper wire-based sensor technology) with permanent or retractable down-hole fiber optic seismic system (powered only by light) to monitor oil and gas hydraulic fracturing, as well as 4D reservoir surveys.
Moore says: "Up until 1980, the ratio of dry holes drilled to productive holes was seven to one. With the invention of 3D seismic in 1980 we saw a huge drop in the amount of wasted capital by the oil and gas industry in drilling dry holes. We are looking to make the same fundamental step change with 4D seismic to help companies increase production from properties they already have and save dollars wasted on unproductive frack stages."
Seismic as a production tool
Moore believes that people and companies only adopt technology when the pain of not adopting it becomes over bearing.
According to a study from PacWest Consulting Partners LLC, approximately $31 billion will be spent this year on frack stages that generate less-than-optimal results. Based on a recent study from Welling & Company, approximately 24% of the frack stages perform below expectations and the key reason is due to a lack of understanding of the reservoir. This has resulted in an increase use of reservoir characterization to help better understand the subsurface and better understand where to place, drill the well and where to best hydraulically fracture the well along the lateral. In a $30 billion/year market, this translates into approximately $7 billion/year of non-optimized frack jobs/inefficiency + any unnecessary drilled footage.
What does all of this mean?
More than 70% of the capital spent on a well is being wasted because of a lack of understanding of the sub surface.
So, how are national oil companies and exploration and production companies using 3D/4D seismic and downhole microseismic shoots to their benefit?
In a procedure known as 3D VSP prior to drilling and fracking a well, permanent and/or retractable seismic sensors are sent downhole to provide engineers and E&P companies a clearer picture of the subsurface in order for the company to better identify and design placements of frack stages to enhance production.
"By shooting downhole before you drill your lateral, companies could have a clear understanding of exactly where they would need to drill the lateral and where they should concentrate or avoid placing frack stages. The ultimate goal is to increase production and save on your completion cost."
Additionally, companies are beginning to monitor the actual hydraulic fracturing process using real time microseismic) in order to identify the perfect frack – companies would know when they are under fracking or over fracking a particular stage.
"At this point, the industry is fracking blind and pumping until they think it's adequate. Completing a well is now almost 60% of the total well cost. Companies are wasting dollars by drilling laterals, placing fracks and under or over fracking in the wrong areas."
Current technology has its hurdles
Currently, oil service companies and seismic companies in the US of all sizes are providing these types of seismic solutions to E&P companies. However, they are running into a few hurdles.
"National oil companies and E&P companies want to push the limits on recoverable oil factors up to 65% or 70% using permanently embedded 4D seismic. The limitations with the conventional seismic monitors are they use electronics and amplifiers in the sub surface. The sensors just don't last."
Moore says seismic service companies conducting micro seismic from the surface are not receiving the full picture. Additionally, many geophysicists agree that 90% of the subsurface data is in the low frequency shear waves (s-waves) which are not successfully monitored by the legacy downhole geophone technology. By placing its fiber optic sensors down hole, US Seismic believes it is able to capture much more information than the legacy geophone.
|"With the invention of 3D seismic in 1980 we saw a huge drop in the amount of wasted capital by the oil and gas industry in drilling dry holes. We are looking to make the same fundamental step change with 4D seismic to help companies increase production from properties they already have and save dollars wasted on unproductive frack stages." — John Moore, Acorn Energy CEO|
Proven technology making an appearance in the oil patch
US Seismic is led by CEO Jim Andersen who started and led Litton's (now Northrop Grumman) fiber optic strategic business unit that was responsible for landing the largest fiber optic sensor production contract to date with the LWWAA System, now used on all of the US Navy's newest class of Nuclear-Powered attack submarines.
Since leaving Northrop Grumman, he commercialized and upgraded the technology at USSI for improved reliability at the lowest cost. USSI recently added licensed revolutionary fiber optic sensor technology from Northrop Grumman which solidifies USSI's position as the technology leader in the industry.
Andersen says: "The fiber optics system that we built for the US Navy needed to be reliable in harsh operating environments. I have been told that to date there has not been a single failure at sea. These are the same requirements needed for operations in the oil patch."
Since the entire array that is used downhole is made of fiber optics, there are no electronics downhole meaning the company's systems can stand incredibly high temperatures and still transmit highly uniform signals for miles.
Additionally, USSI's fiber optic technology can register readings from as low as 1 Hz to over 600Hz. Multiple field trials have shown that USSI's sensors are at least 10x more sensitive than the legacy downhole sensors.
US Seismic has participated in nine trials that have led to eight commercial orders.
"As with any disruptive technology, we still have to prove to the industry that our sensors can do what we say it can do," Andersen says. "With every trial that leads to a commercial order we get one more believer."
The future for data and super sensors
Moore says, "Microseismic requires a completely different type of monitoring than your traditional seismic shoot that is looking for a pool of oil. The conventional geophones work great for finding these large deposits, but new sensors need to be able to hear the equivalent of dropping a coke can from shoulder height onto a concrete floor – miles below the surface."
Will there come a day when every field and every well in the United States is hooked into a data processing system where terabytes upon terabytes of data are coming in to be processed every day? Maybe.
In any case, Acorn's US Seismic believes smart oil and gas wells, and big data, represent the next step-change in the oil and gas industry.