SPE/IADC '19: Shell V.P. tells attendees that companies must share data, cooperate more
THE HAGUE -- It’s hard to say whether Mike Dewitt, Shell V.P. for Wells, Upstream Operated, intended to shake up his audience in The Hague, the Netherlands on Tuesday morning, but that was the result of his speech, nonetheless. Addressing attendees of the annual SPE-IADC International Drilling Conference, Dewitt said that industry companies are going to have to give up their traditional habit of sharing little or no information and data with competitors.
What definitely spurred some looks of consternation among the audience was when Dewitt questioned whether data are “really proprietary.” He then called for “data transparency” among industry companies, citing the need for more collaboration between companies, to facilitate quicker learning, so that the industry remains competitive in an era of rapid change, where hydrocarbons are challenged by alternative energies. But, of course, this begs the question as to which companies are brave enough to be among the first to take the risk of breaking ranks and follow Dewitt’s call, in an industry where firms typically wait for someone else to go out on a limb. Obviously, the E&P sector has a long way to go, to fulfill his vision.
In an attempt to lessen attendees’ natural resistance to the idea of significant data- and information-sharing, Dewitt reminded the audience of the story of Bluewater I, the world’s first semisubmersible floating drilling rig. For those who don’t know the history, the rig was owned by Bluewater Drilling Corporation and had operated as a four-column submersible in the shallowest part of the Gulf of Mexico for three years. And Shell, in an effort to gain a competitive advantage, had convinced the federal Bureau of Land Management in 1960 to redraw the maps for an upcoming lease sale, to include deeper acreage, out to and beyond 300-ft average water depths.
Shell did this without having a rig in hand that could drill such depths, because no such vessel existed. This prompted a significant, secret effort at Shell during 1960-1961, to design a rig for the task. At some point in that process, Shell’s engineers realized that they could, with a few modifications, transform the Bluewater I into what became the semisubmersible design. And they could do it more cheaply and quickly than with a new design from scratch. In addition, Shell wanted to drill and evaluate some of its leases in the GOM before the next federal lease sale in March 1962. Also, in December 1960, engineers successfully tested what was called the Remote Underwater Drilling and Completion System (RUDAC). After this test, they adapted the system to operate on the Bluewater I.
The vessel’s debut came in January 1962, when it spudded a record-setting exploratory well in 297 ft of water, offshore Louisiana. The Bluewater I went on to drill six more exploratory wells during that spring and summer, proving the viability of the semisubmersible concept. But Shell was too clever for its own good. When the March 1962 lease sale was held, Shell was often the only bidder on what were then considered “deepwater” tracts. The lack of competitors prompted federal officials to not honor Shell’s bids. At this point, the firm’s upper management realized that they would need competition, so that Shell could lease the deepwater acreage, as well as commercialize the new technology. Accordingly, the firm for three weeks, in January and February 1963, held a three-week "school" on offshore technology and charged “tuition” of $100,000 per company, a fairly large amount back then.
While Dewitt did not go into all these details, the story certainly supports his central point: conversion of the Bluewater I was a big technological success, but it created a regulatory headache. And it also spurred a trend-setting sharing of information and data that has benefitted everyone in the offshore sector for the last 50-plus years. “To sustain and compete, we must come together,” said Dewitt, who admonished some companies for continuing to operate with a tight lid on data. He advocated sharing data and concepts in mature places like the deepwater GOM, where it could yield measurable gains in production and efficiencies. And, insisting that operators don’t use the vast majority of data they acquire, Dewitt suggested that sharing some of this information could be done with universities and colleges.
He also offered the admonition that if companies continue to hide behind contracts and legal wording, the industry cannot sustain itself.
