Oil ITJ Interview—Sandy Esselmont

Following Roxar’s successful renewal of a major contract with Statoil for downhole monitoring equipment, Oil IT Journal spoke to Roxar President and CEO Sandy Esslemont about the company’s activity and plans. Today’s ‘piecemeal’ offering supports high-end completion technology with a new digital downhole instrument network. The future may see more synergy between the measurement division and Roxar’s data acquisition, simulation and modeling software business.

OITJ—Tell us about Roxar and the new deal with Statoil.

Esslemont—Roxar is structured into two divisions—software solutions (headed up by Mark Bashforth) and flow measurement (Gunnar Hviding). The Frame agreement with Statoil concerns the flow measurement division—for provision of downhole monitoring. 80% of our downhole business is in Norway. We are also working with BP, Hydro and Statoil and are expanding into eastern hemisphere markets.

Oil ITJ—What about North America?

Esslemont—The US is a different kind of marketplace—there is still some skepticism of high tech downhole solutions and Roxar’s products have something of a ‘Rolls Royce’ perception. A typical specification for a downhole temperature gauge for Statoil might involve 1/10th psi accuracy—with a measurement every second. US focus is more ‘fit for purpose’.

OITJ—How is data acquired from such devices? Is it all fiber?

Esslemont—No, Statoil have proved very supportive of our next generation technology with the Frame agreement as an example. This calls for the development of an integrated downhole network using proprietary Silicon on Insulator (SOI) technology from Honeywell. This lets electronics work upwards of 225°C. A lot of money was spent to develop the system for a limited number of high temperature fields. Today’s downhole electrics are reliable, actually more so than fiber—previously considered a prerequisite for high temperature operations. Our integrated data network (IDN) is a step change over current solutions—and will evolve into a true downhole instrument network. Today’s intelligent wells are monitored and controlled using a bunch of wires and hydraulic lines. IDN will perform the same monitoring and control function on a single wire.

OITJ—At last year’s SPE ACTE there was a lot of talk about smart wells and the ‘e-field’. Is Roxar supplying smart well technology to Statoil?

Esslemont—No. Although Statoil is a big sensor client, Roxar is not a completion company.

OITJ—What is your take on the smart well movement? At the SPE we heard some reticence as to over-equipping wells. There was a comment from one operator about not wanting ‘jewelry’ downhole.

Esslemont—Technology is actually getting more and more robust—even in everyday life. Consider the automobile. These used to be simple—today they are full of control systems—airbags, ABS and cruise controls that adjust your speed to the car in front.

OITJ—Downhole jewelry is here to stay?

Esslemont—More and more instrumentation is moving downhole but much of today’s engineering quick wins are on equipping sub sea completions at the sea bed. Today’s wells cost millions to drill and complete—but without proper instrumentation, you don’t know what’s going on in your well. In a multi-well cluster, the traditional way of investigating a rising water cut is to shut in wells one by one for observation. In some cases, this has taken so long that gas wells died before the investigation was complete. Multiphase meters give advanced warning of encroachment, allowing for remedial action—such as choking back production—in time to save the well. Multi-phase metering at the well head is insurance—and can save the cost of a well.

OITJ—What about the software side of the business? Are you moving into the real time ‘sim-opt’ business, linking flow data with the reservoir model?

Esslemont—We are a product company, not a service company like Schlumberger. Our IDN network will provide a cable to the surface allowing for a variety of measurements and control of downhole devices. Our field data acquisition and management system (DACQUS) lets you remotely view and interrogate devices—even perform a simple well test or PVT analysis. Current technology offers what-if type analysis—allowing for multiple realizations of what would happen if a well was choked back etc. Ultimately we will be able to close the loop and use the reservoir model to drive downhole actuators in real time control. Currently it is more of a piece meal offering. Ultimately this will form part of the downhole ‘factory’—with across the board integration from flow metering to 4D seismic monitoring.

OITJ—Is the IDN network standards based?

Esslemont—Yes. IDN leverages the intelligent well interface standard (IWIS)—an open protocol for subsea and downhole control supported by major operators and service companies. Our DACQUS data harvester and analyzer will roll-in geology and production data and services—moving towards the ‘e-field’. But we don’t want to lose focus on selling our discrete products for integration with third party environments.

OITJ—Where does your RMS modeling product fit into the picture?

Esslemont—RMS has evolved from 3D modeling to reservoir management—particularly now that a simulator module is embedded into the RMS workflow. Operators want an integrated workflow not five separate products. Our modeling and simulation solution is the best integrated package in town. We have our work cut out marketing this—especially to the US independent sector. We want to move away from the ‘expert user’ reputation—and we want all to benefit from the new user friendliness of the product. We had a great success with Statoil—they did a year of analysis of all available packages—and RMS came out ahead. It also models very large reservoirs.

OITJ —How big is this business?

Esslemont—Roxar generated $85 million revenues in 2003. Roughly a third from software and two thirds from metering/monitoring. We spend around $10 million per year on R&D and this has made us a market leader in multiphase, wet gas metering. This is typically deployed at the sea bed—but companies’ interest in the ‘e-field’ is making folks look at putting the technology downhole. This is now possible thanks to our IDN. Over the next few years, reservoir monitoring will move from offshore to universal deployment. By then multiphase meter costs will have dropped to around $50k per device—and it will be economical to deploy them all wells. Another significant development will come about when multiphase meters are approved for fiscal transfer and allocation.

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