Today we are delighted to announce that GLJ Petroleum Consultants is acquiring an equity stake in Visage Information Solutions. This means valuable product input for us and improved software and services from VISAGE for our clients.

GLJ will help enhance our products and services by sharing their more than 40 years of petroleum industry experience with us.  Serving their own clients with VISAGE, GLJ will further distinguish their petroleum consulting services with software-driven insights while participating in VISAGE’s success. The aim of our two companies is to take a leadership role in Big Data analytics for the oil & gas industry (check out our blog post on the subject).

This is big news for us, but it’s business as usual for the most part. The collaboration with GLJ involves no change to our leadership, our operations or customer focus. We will continue to do what we do best and serve and support our clients and partners.

We are very proud to be chosen by GLJ, and look forward to being a bigger part of their business while we grow ours. We also thank our clients for all their contributions to our success. It’s been a cumulative effort that’s brought us this far. Read the full press release here and please reach out if you have any questions.

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Today’s VISAGE and GLJ announcement demonstrates that both of us consider this an important time for Big Data analytics in the energy industry. In putting together this deal,we had a hard look at where the industry is at and affirmed our own sense that O&G producers, investors and financiers need to be equipped to accelerate their adoption of Big Data analytics.

First let’s be clear that VISAGE remains anti-hype. Big Data has been around a long time and sometimes we agree with critics who see the phrase as misused, as a marketing hook for the business intelligence industry.  Gartner, who originally coined the term in 2001, provided a 2012 update to the definition as follows: “Big data are high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery and process optimization.” (Douglas, Laney. “The Importance of ‘Big Data’: A Definition”. Gartner. Retrieved 21 June 2012.)  The growing limitation of an organization to manage, process and analyze the volume and variety of data is what GLJ and VISAGE see as Big Data in our industry.

Big Data in O&G – why now?

The oil and gas industry has seen a growing shift towards unconventional resources. This shift involves more expensive drilling and completion technology in an increasingly competitive landscape coupled with profound fluctuations in the price of oil and gas commodities. The oil and gas companies that will distinguish themselves are those that will “compete using analytics.” I was first introduced to this concept in the 2006 book Competing On Analytics: The New Science of Winning. The book highlights several examples of companies (non-oil and gas) who have developed competitive and strategic advantage because of their “analytic maturity.”  The gains made by these non-energy companies are in operational efficiency, cost control, strategic foresight, technology adoption and product innovation… all fueled by analytics. So how do we see this advantage being applied in our industry?

The Big Data opportunity – Why are O&G players making the shift?

• Visual analytics display trends quickly. You can see a trend or data relationship far quicker in a visual display than you can in thousands of rows in a spreadsheet. An Aberdeen Group research report determined that 66% of business decision makers face a shrinking decision window (i.e. I need your decision yesterday). How do we better accommodate the need for faster decisions?  Answer: with more, and better, visual analyses.
• WCSB data volume demands visual analysis & interpretation. The Western Canadian Sedimentary Basin (WCSB) is rich in data. With over 700, 000 wells, and a broad range of datasets, the use of visual tools (both geospatial and graphical) provide the best means to identify and understand trends and opportunities quickly.
• Your own data is rich with insights.  An Oil and Gas producer has many datasets that can collectively communicate how well that company is performing. Visual analysis of operational indicators, both production and financial, can allow you to identify and mitigate issues, or learn from your greatest successes in a fraction of the time.

We’re in a moment of the industry where Big Data is at the heart of business profitability. Several executives have said to me in recent weeks, “We’re in the business of making money, not making oil and gas.” Visual analysis of Big Data, especially financial data is proving to be a key advantage sought by industry leaders today.

The Big Data adoption essentials: Challenges Oil and Gas producers must face

1)     Data collection and quality
I often encounter engineers who would like to have data for specific analyses, but that data is not collected consistently or reliably. If you don’t collect the necessary data and ensure that it is accurate, you’ve compromised your ability to analyze and optimize.

2)     Appropriate technology planning and deployment
Companies have to operate within budgetary constraints and have IT rules, regulations and procedures to follow when adopting new technology. These can facilitate business advantage or constrain a company’s ability to advance. When compared to the cost of drilling and completing wells and overall operational costs, companies have opportunities to make small investments in technologies that can optimize their capital ROI and operational performance. Software technology can be expensive … making the right decisions is not easy. The size of the company is often a limiting factor to how quickly and easily technology improvements can be deployed.

3)     People with analytics skills
Now that you have the right technology to enable faster and better decisions, do you have the people you need? The ability to analyze, understand and inform decisions needs to be a skill set that is part of a successful company’s culture. Resistance to this has been pervasive in the industry for decades and is difficult to overcome.

4)     Technology that can be adopted quickly and easily
The best way to make technology and analytics a pervasive part of your culture is to choose tools that are easy to use and learn. The more time and effort it takes to understand and use new technologies, the less people will use them. This can increase your total cost of ownership (i.e. you will have to hire a specialist to run the tools and provide results to other people). Self serve visual analysis that is easy to use will help companies achieve their analysis, and performance goals more quickly.

We’re excited by the opportunity we see today for Big Data analytics adoption in the industry, and for the impact we can have with GLJ taking an equity stake in VISAGE. Our technology will benefit from GLJ’s broad perspective and market reach, and VISAGE self-serve visual analytics will enable better decisions for clients at the heart of both businesses.

What do you see as major opportunities, or challenges, with Big Data in our industry?

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• gas production changes by province
• changes in average production per well over the last 50 years
• how the shift towards horizontal drilling & completion technology has impacted production

Gas production in the WCSB started declining in 2006, with the two most dramatic drops occurring in 2009 (6.6%) and 2012 (6.3%). These drops seem small compared to the 98.5% drop in drilling activity since 2006.  In 2011, production drops in Alberta and Saskatchewan were offset by an increase in British Columbia production of more than 16.6%. BC’s production in 2012 was almost exactly the same as 2011, coming in at 3,872 mmcf/day. BC now accounts for 28% of all WCSB gas production. The bulk of the production decline in the WCSB is attributable to AB, who’s production has dropped 34% since its peak in 2000, more than a third of that decrease occurring in the last three years.

More from less and less from more

The statement “More from less and less from more” characterizes how well performance has evolved since the early seventies. In 1972 the average well produced more than 16 times what today’s wells produce (this excludes production from gas storage wells and CBM).

Horizontal Shift

With a shift towards horizontal drilling comes a shift in production. November 2012 was the first time in history when horizontal well production rates collectively exceeded those of vertical wells. In December 2012, horizontal wells accounted for 44% of all gas production.

Technology Shift

If you were to examine any active play today and compare the production profiles of a horizontal well to a vertical well (check out this example from my previous blog post) you can see why drilling and completion technologies have become a clear focus in the industry. I was curious to see how this has impacted the average gas production per well over the last few years and what a type curve analysis might look like on the entire WCSB. The average initial rate in month two of 2012 wells (vertical, deviated and horizontal) is almost four times those of 2009.

The shift to horizontal wells is having an impact, which means we have the ability to increase gas production more quickly, with fewer wells. However, with these steeper declines our reliance on drilling and completion technology becomes more pronounced. Watch for a guest blog post in the coming weeks to address this topic in more detail.

Play Shift

To illustrate the impact horizontal drilling and completion technology have had on production, you need look no further than my next chart … production rates by producing zone (stratigraphic unit). In this chart I have identified the peak production rates of the nine top zones (since 1964). The clear message from this (as evidenced by Montney and Cardium Sand, the only zones with consistent growth since 2009) is that we can continue to expect technology to accelerate production in key plays … but questions arise:

1. How sustainable is this accelerated production growth in these plays?
2. What other plays could appear in future years? Montney and Cardium growth of this kind wasn’t on the radar a decade ago.
3. How has the shift in horizontal drilling and completion technology impacted oil production? This will be the focus of my next blog series.

This concludes the gas portion of the Drill Bits and Bytes series. The next two blogs will focus on Oil drilling activity and production in Western Canada. As always, please let me know if you have any suggestions for future blogs. We’d love to hear from you.

You may be interested in the rest of the series:

Drill Bits & Bytes Part 1: Curious about Drilling Activity in Western Canada

Drill Bits & Bytes Part 2: The Decline of Gas Drilling in Western Canada

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Since 2006 vertical gas well drilling has dropped by 98.5%. In 2006 there were 27 times more vertical wells drilled than horizontal. In 2012 there were 3.4 times more horizontal wells drilled than vertical. This profound shift towards horizontal wells has meant that the average measured depth of wells has increased 3 times.

How long and how deep are horizontal wells?

The average true vertical depth of horizontal wells has steadily increased from 1831m to 2486m over the last six years (an increase of 655m).

The average length of horizontal wells has also steadily increased from 1214m to 1708m over the last six years (an increase of 494m).

An interesting way to look at the evolution of horizontal well lengths is in a cumulative probability distribution, or percentile chart. This chart shows a distribution of the horizontal lengths drilled in each year since 2006. It effectively communicates the variability of horizontal lengths in each year (by the shape of the distribution) and how the data trends over time (by the relative position of each distribution). I’ve highlighted the P50 values for each year so you can see how the biggest step changes occurred in 2008 and 2009.

Who’s drilling gas wells?

When I started examining this, I quickly changed the question to “Who’s not drilling gas wells?” So I decided to take the top 13 gas drilling companies from 2010, and see how their gas drilling activities have evolved in the last 3 years. They are sorted from left to right in terms of total number of wells drilled in the last 3 years. Only one company has had a consistent increase in drilling over that time: Peyto Exploration & Development.

What gas plays are being drilled?

I took the same approach when looking at what plays are being drilled. I took the top 13 stratigraphic units from 2010 (in terms of gas wells drilled) and plotted how they have evolved over the last three years. It’s no surprise that the Montney was the dominant play in 2012, even though drilling activity in the Montney has dropped by 60% since 2010.

So how have changes in gas drilling activity affected production?

Stay tuned. I’ll summarize this in my next blog … coming soon.

You may also be interested in the rest of the series:

Drill Bits & Bytes Part 1: Curious about drilling activity in Western Canada

Drill Bits & Bytes Part 3: A Shift in Western Canada’s Gas Production

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• Meters Drilled in 2012:  26,645,125 m

That’s almost 27, 000 km of well bore in 2012. The diameter of the earth is 12, 742 km. That means, if we were to line up all of those well bores we could have drilled through the earth (to the other side) twice.

Now that had me curious… what was the most meters drilled in one year?

• The answer is 45,767,817 meters in 2005. That’s enough to go through the earth 3.6 times.

Now that had me even more curious… how many meters have been drilled in the entire WCSB since the beginning of time…. and when was the first well drilled?

• The first well (with a recorded rig release date) was in 1883.
• Since then there have been 733,127 wells drilled with a cumulative 868,394,326 meters drilled (up to Dec 31^st, 2012). Now let’s put that in a fun context … how many times around the earth is that? The circumference of the earth is 40,075 km. That makes enough meters drilled to wrap around the earth’s equator almost 22 times.

My curiosity didn’t stop there … how much drilling is attributable to horizontal wells in recent years? The easiest answer is to show you…

Horizontal well drilling surpassed vertical (+ deviated) in 2010, and in 2012 accounts for 80% of meters drilled in the WCSB. With a shift towards horizontal drilling, how has that affected the number of wells drilled? We’ll investigate this more in future installments of this series.  And when you ask me why I bothered to find out all these facts, I’ll answer you with the same answer I give my daughter when I’m at a loss for an explanation … “Why not?”.

So that completes the first installment of the Drill Bits and Bytes series. The next two installments will focus on:

• Part 2: Gas Wells – Who’s drilling and where are they drilling? What plays are attracting all of the attention?
• Part 3: Gas Wells – How have changes in gas drilling activity affected production?

As always, I welcome suggestions for interesting material to present in this blog series. Don’t be shy. We’d love to hear from you.

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On September 26, 2012, VISAGE client (artist and adventurer) Mike Elliott embarked on a five week trek with the objective of reaching the Mt. Everest Base Camp (a humble 18,000 feet). Along with 9 other individuals from Canada, this “Young and Breathless” team had more than simply reaching the Mt. Everest Base Camp on their minds. The team was working towards raising the necessary funds for the Sir Edmund Hillary Foundation to establish a new computer lab at the Zeke O’Connor School (150 students) in Phaplu, Nepal, a very remote and underprivileged region. Total estimated project cost was $20,000 CDN.

The original plan for Mike and his teammates was to begin a trek over 12 days with the objective of reaching Everest Base Camp. Tragically, on the morning of the team’s arrival in Kathmandu the team learned that 19 people had died on a flight to Lukla (the starting point for the trek). This news, in addition to poor weather conditions, meant timely decisions were made regarding alternative options, with the team’s decision being to divert the trek with the new objective of reaching the Annapura Base Camp. The team accomplished this in 12 days.

Of the 10 climbers, 3 (including Mike), elected to remain in Kathmandu with the decision to fly into Lukla via helicopter where they went on to complete the original mission – a 9 day trek to Everest Base Camp.

Between the two treks a distance of over 250 km was covered.

The “Young and Breathless” team, along with the Zeke O’Connor School were delighted with the support they received and exceeded their goal with total funds raised to date of $25,000. Having surpassed their funding target, the initiatives will help fund the operating expenses of the school which in April 2013 will be adding 30 new students in Grade 8, with girl students from poor and disadvantaged groups given top priority. The school will be upgraded in April 2013 to facilitate a Grade 10 class.

The project doesn’t end here. With this new infrastructure comes overhead and a need for ongoing support. Mike plans to continue his fundraising efforts to help provide ongoing support. We (at VISAGE) are committed to supporting this long term initiative.

We hope you found Mike’s trip tales as inspiring as we did. VISAGE was pleased to donate $1,000 and a dozen VISAGE toques. If you’re inspired and interested in donating, please do: http://www.canadahelps.org/GivingPages/GivingPage.aspx?gpID=20265.

Happy holidays to you and yours.

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Thanks again for everyone’s efforts this year!

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If you are a regular at our blog site you’ll be hungry for some analysis or at least a few stats. Here goes. Calgary 2011: over 146,000 people used foodbank, 42% of whom were children. Hunger can be a short but scary crisis: 81% of clients visited three or fewer times. It’s not just the unemployed – 35% of households needing help had at least one person employed, with incomes too low to support them.

Last year YYC Tech Gives raised about $65,000 for the Calgary Food Bank. This year the aim is $100,000. If your tech team hasn’t already given to YYC Tech Gives – get in touch with jeff.large@arcurve.com to take part. Or rally your team to make a donation of food or cash. Check out the YYCTechGives Facebook page (link to http://www.facebook.com/pages/YYC-Tech-Gives/176860869072313) for ways to take care of the hungry in Calgary.

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-       Drilling costs per meter by drilling company

-       Cost per stage by frac company

-       Average production rate per stage

-       Average production rate per 100m completed length

-       Average production rate per tonne of proppant

-       Average production rate per $1,000,000 completion cost

 We’re confident that you’ll walk away in 20 minutes recognizing more analysis possibilities than you thought were possible.

This is the stuff that gets us excited – when we can demonstrate how effective data analysis supports better decision-making, giving you a leg up in a highly competitive industry.

 Join us at the IHS Customer Expo & Gala, an event showcasing the latest oil & gas developments with an opportunity to network and learn from other IHS clients. We’ll be speaking at 3:45pm on November 15^th and you can register today at ihs.com/CalgaryExpo12. Registration ends soon!

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We’re also pleased to announce the recent integration of the Well Completions & Frac Database (WCFD) by Canadian Discovery Ltd and Introspec Energy Group Inc. Now subscribers of the WCFD data and public data can use VISAGE to evaluate plays across Western Canada, including the Cardium, Viking, Montney, Doig, Bluesky, and many other established and newly emerging plays. We’ll be demonstrating how analyzing the WCFD data can support better competitive analysis and detailed examination of an entire play (including impacts of frac spacing, tonnage, horizontal length, drilling cost per meter, completion costs etc.).

As you know, we’re passionate about effective data analysis and how it can offer our clients a unique competitive advantage. We’d love to see you at this week’s SPE Conference so please stop by and introduce yourself – you’ll find us at the IHS Booth (Booth #115).

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