LAGCOE keynote speaker issues rallying call, to earn social license to operate

Kimberly McHugh, vice president of drilling & completions at Chevron, kicked off LAGCOE 2019 Wednesday morning with a reminder that, while the rumors of the demise of the oil industry are greatly exaggerated, companies must adapt to continue to meet the world’s evolving energy needs. “You’re no longer looking 20 years out, you’re looking a year out,” she said, highlighting the speed and impact of technical and societal changes on the industry.

McHugh illustrated this by pointing out that, as energy sources evolve and transition over the years, experts will inevitably prognosticate about an abrupt end to a given era. Peak oil was predicted first in the 1950s, then the 1970s, and even today thought leaders are seemingly in a hurry to call the next decline. “Our industry is an infinite game. Unfortunately, people better understand finite things. But companies that focus on the finite tend to lose,” McHugh said.

Calling oil and gas “a noble and proud industry,” McHugh addressed some of the misconceptions that persist around how the industry works, and how integral it is to modern life. “Oil is not going anywhere—the world needs what we offer, and we need to figure out how to offer it to them” in a way that is compatible with current and future needs and expectations, she said.

Growing complexity. McHugh observed how land drilling projects are overtaking offshore operations in terms of complexity. “It used to be that onshore wells were simple. Now, we are drilling longer laterals, using more water, and using more sand” to achieve production targets. “These wells are more technically complex, and they’re more socially complex. We are using too much water, and putting too many trucks on the road. We have to make these operations safer and less impactful,” McHugh said.

While technologies for land drilling are racing ahead, offshore technology has begun to lag behind current needs. “The technology we need, offshore, doesn’t exist yet,” she said, noting the inventory of HPHT deepwater opportunities that must wait to be developed as blowout preventer and emergency response systems are built to keep pace.

What’s next. A second-generation drilling engineer, McHugh sees the faster, more widely-distributed use of data as the key to meeting future energy needs while maintaining a social license to operate. This begins with making better use of the data generated across the lifespan of a drilling program.

“Data was once considered exhaust” during drilling, because the technologies, and particularly the processes, didn’t exist to leverage it. “Cross-functional teams must be able to use data wherever it comes from—we have to be data-agnostic,” McHugh said. “Data is not the IP – what you do with it is the IP.” Taking advantage of this will require a step-change in the way processes and teams currently work. “My vision is that a wellsite rep will never touch a keypad. There will be no more morning reports. We’ll design wells to perform in a range of outcomes, to better leverage the real-time data we receive, as we work.”

“It’s a logarithmic change,” McHugh said, “and if we don’t figure this out as an industry, we will all struggle.”