For General Electric, the timing of its new $125 million oil and natural gas technology center in Oklahoma City couldn’t be better.
The oil and gas industry is suffering one of its worst slumps ever, with recovery slow to take hold and unlikely to deliver any time soon the much higher prices producers enjoyed a few years ago.
That puts a premium on new technologies that can discover and produce oil and gas faster, more efficiently and less expensively.
“When we broke ground in 2014, we had no idea that the market was about to enter into the worst downturn in more than 30 years, forcing companies to evaluate long-standing industry methods and norms,” C. Michael Ming, general manager of the GE Global Research Oil & Gas Technology Center, said in a letter to The Journal Record, an Oklahoma City business newspaper.
“Many of the systems in place for years aren’t sustainable in a downturn, and if this downturn is the new normal, we must find ways to work smarter and more efficiently.”
Ming will join Oklahoma officials, GE executives and customers of the conglomerate in a ceremony Wednesday celebrating the facility, the first GE research center to be focused solely on innovation in a single sector.
The five-story center includes 10,000-square-feet of laboratories and two indoor test wells — one 360-feet deep and the other 43-feet deep — where 120 or so GE engineers, scientists and technicians can simulate conditions in wells and collaborate with customers on new means of probing and producing from oil and gas formations.
The Oklahoma City operation also draws on expertise from other GE technology centers and businesses around the world, what the corporation refers to as the “GE Store.”
“Different businesses inside GE go through cycles. What we’ve learned through these different cycles is that you need to lean into a downturn and not shy away from it,” Brian Cothran, president and CEO of GE Oil & Gas’s North American Operations, said in an interview.
“What our customers are looking for today is how do I make money and drive profit at $40, $50, $60 a barrel. They are looking to get more efficiency, more productivity, longer durations between shutdowns and more optimization around their operations.”
Those considerations are especially important for shale formations in North Dakota, Pennsylvania, Texas and other states. While those regions are responsible for a resurgence in U.S. oil production and record U.S. gas output in recent years, a lot is still left in the ground.
That said, U.S. producers aren’t blind to new technology. In fact, innovations such as drilling techniques that reach multiple locations from one well site have helped keep oil output at higher levels than expected, considering low prices.
But advances in software, sensors and other digital applications, which are the hallmark now for industrial giants such as GE, are considered key to long-term recovery in the oil and gas patch.
Ming, a petroleum engineer who previously worked for Chevron and served as Oklahoma’s energy secretary, said oil and gas know-how needs to catch up with technologies in other sectors that have been incorporating such advances for years, such as gas turbines for jets and electric power generators.
“The oil and gas industry is pretty good at gathering data,” Ming said in an interview. “But they haven’t gotten to the point that they want to be or need to be on how to actually take that data and derive useful information and make even better or automated decisions with the data.”
Put another way, Ming sees GE helping to write a new chapter for the U.S. oil and gas industry.
The first chapter saw operators drill vertical wells in traditional oil fields, followed by another episode in which companies such as Oklahoma City-based Chesapeake Energy, Continental Resources and Devon Energy are targeting unconventional oil and gas wells with horizontal drilling and hydraulic fracturing, he said.
Now, in the latest chapter, the objective is to raise the art of exploration and production to higher levels with data-driven systems, Ming said.
“The timing and the objectives of the center actually fit very well with the pivot in the industry from new production at any cost to increased yield at lower cost.”
Bill Loveless — @bill_loveless on Twitter — is a veteran energy journalist and podcast host in Washington. He is the former anchor of the TV program Platts Energy Week.