Oil Majors Using Technology to Weather Worsening Crisis

Oil majors including Statoil, Shell and Chevron are experimenting with various technologies, from drones and drill design to data management, to drive down costs and weather a deep downturn.

Crude prices have more than halved since mid-2014, forcing companies to cut billions of dollars in costs. Determined to shield dividends and preserve the infrastructure that will allow them to compete and grow if the market recovers, they are increasingly looking to smarter tech and design to make savings, Reuters reported. French oil and gas major Total said it was now using drones to carry out detailed inspections on some of its oilfields following a trial at one of its Elgin/Franklin platforms in the North Sea.

Cyberhawk, the drone company that led the trial, said this kind of work was previously carried out by engineers who suspended themselves from ropes at dizzying heights. It said the manned inspection used to take seven separate two-week trips with a 12-man team that had to be flown in and accommodated on site.  

The drones do the work in two days and at about a tenth of the cost, according to the Britain-based firm's founder Malcolm Connolly, who said it had also worked with ExxonMobil, Shell, ConocoPhillips and BP.

Total declined to comment on how long the manned or drone inspections took, or specify how much money was saved.

Statoil's giant Johan Sverdrup field, the largest North Sea oil find in three decades which is due to start production in 2019, is a leading industry case study for cutting costs in the era of cheap oil.

The Norwegian company has cut its development costs for the first stage of the project by a fifth compared with estimates given in early 2015, to $12.2 billion.

The savings have largely been made by focusing on the most efficient technology and designs from the beginning, Statoil's head of technology Margareth Oevrum told Reuters in an interview.

Executives say the growing attention on technologies that have been around for some time shows how wasteful the global industry had been in the years before the downturn when— with crude at above $100 a barrel delivering bumper profits—oil companies' had little incentive to develop fields efficiently.

Global upstream - exploration and production - oil and gas spending has fallen by more than $300 billion across the industry in 2015-16, according to the International Energy Agency, roughly equivalent to the annual GDP of South Africa. Around two-thirds come from cost cuts, rather than cancelling or shelving projects, it said.