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12 months ago
  • Reserves Economics

How to make sense of the data

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How to make sense of the data

Written By Connor Walters
  • Reserves Economics

What a reservoir engineer needs to succeed in a modern E&P company

 

The oil and gas industry’s reservoir engineering role has been around for more than 40 years. This person’s core job is to understand their company’s reserves and production, both today and into the future, and translate these numbers into company cash flows. It’s a unique function in an energy business because it sits at the nexus between front-office production and back-office finance.

While this role has always been important, it is vital today, as unconventional drilling companies operate on razor-thin margins and try to cope with ever-increasing market volatility. Knowing how current and future production barrels translate into current and future cash flows has never been more crucial.

Connor Walters, Zeno’s Customer Success Manager—and previously a Reservoir Engineer at Devon Energy—describes the traditional problems faced by reservoir engineers and the difference a truly data-driven approach makes.

 

Speed to insight matters

When I was at Devon Energy my main focus was unconventional drilling in the Eagle Ford Shale. It was a fantastic project because it included very technical challenges in terms of temperature and pressure dynamics. Many operators were trying to develop the area at the same time, so the speed was critical. The faster we could get insights, the sooner we could move—and the better off we would be in terms of stock price. Every time, we were held back because it was so hard to get to the data and make sense of it.

 

A thousand languages

In the oil industry, people speak a thousand different languages—including finance, reservoir engineering, production, geology, and other areas of expertise. Communicating with all of these people in a common language around data is next to impossible because everyone uses the data differently, depending on their role, whether it’s using a big ERP like SAP, Peep (our reservoir economics tool), or simply Excel spreadsheets. That creates a lot of noise in the system.

For example, if I’m getting production data, it can come from public sources, flow rates on any given day, or tank levels at the end of the day. I can read the sales tickets from the trucking company and the month-end report from the downstream company. They all gave me slightly different numbers and, often, even if they shouldn’t have been, all the numbers were treated equally. As a reservoir engineer, you need to be able to understand what numbers are the most important. It’s not just about having the data, it’s also about knowing where it comes from and how it should be prioritized.

 

Comparing forecasts to actuals

Historically being able to look back and see how your forecasts compared to actual results has also been tough. If you take the tool example I wrote about earlier, we would need to go into SAP to try and understand the actual results, extract those, then go back into Peep and see what we had forecast. We then needed to crash the data together in Excel in our best attempt at putting together a comparison. It wasn’t a fun experience—or a good use of my time.

 

A ‘lost’ two years

If I look back on my days at Devon, I’d say that 40+ percent of my time was spent trying to get the right data, then manipulating it into a format that I could use in my analyses. If we could have solved this challenge, my five years at Devon would really only have been three real years of actually doing the true work of a reservoir engineer.

 

What does success look like?

Every reservoir engineer should have the science down to a T. What makes the difference is being able to build timely and accurate analyses and forecasts where you know the context in which they are going to be used in advance. This lets you work hand-in-hand with your counterparts, like the finance team.

Today, this is more important than ever because it’s not about getting the most oil or gas out of the ground, it’s about getting the right barrels out of the ground. In other words, recognizing which barrels deliver the best economic return. In the future, this isn’t just going to be about the best economic return, it will also be about producing barrels with the least environmental impact.

 

Achieving real-time forecasting

The key to achieving those goals is to ensure that your team has all the data at their fingertips. Being able to easily analyze many different data groups will give us much more confidence in the decisions we all make with that data. It will also give us the time to put ourselves in the shoes of the person we’re helping and ensure that they see the data points that are most relevant for their role.

 

Building alignment

Critically, by spending less time aggregating data, we will have more time to align with our counterparts across the company—land, production, and geology, for example. It’s vital to have this time to share and work on the same set of numbers so we can be sure that they make sense—and support our decisions.

 

Changing the reservoir engineering game

If all the data is readily available, and we have the time to align with our counterparts, we will be better able to decide which projects are optimal and which projects aren’t worth pursuing. Then there’s speed to insight. If we can assess 30 projects more accurately in a year—versus the ten years it would have historically taken—then we’re bringing three times as much value to the business. That’s a game-changer for any business in our sector.

 

Zeno

Zeno’s Energy Operating System was built from the ground up to connect the entire business through data, surfacing key insights for smarter, faster decision-making. Learn how Zeno helps businesses thrive in the new market realities of the Production Era by getting in touch.

 

Authors

Connor Walters
Connor Walters
Customer Success Manager, Zeno Technologies

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