This is why oil and gas companies are using fiber optics in their wells

For the past year, oil and gas companies have been faced with an increasingly difficult situation. Oil prices have plunged from over $100 per barrel in July 2014 to under half that at times this year.  Some analysts predict prices will remain low, or could dive even lower.

To help weather the storm, some companies are turning to big data and analytics.

Part of the drop in prices has come from the spike in oil production. The US has gone from pumping 5.4 million barrels a day in 2009 to 8.7 million last year, according to the US Energy Information Administration.

A big reason for the transformation has been the rise of fracking, the process of shooting water into rock and impenetrable sands to extract hard to reach oil.

Today's low oil prices make it increasingly important for customers to embrace Industrial Internet technologies to increase uptime and maximize production. A more digitally connected environment means better asset management and more productivity across every asset. A 1% improvement in capital utilization for upstream oil and gas exploration and development could total $90 billion in avoided or deferred capital expenditures.

See how GE can give you an edge »

These fracking operations have been the hardest hit from the drop in oil prices. The price has dropped below break-even prices for many of the operations in the US shale basins, and some experts are saying that half of the industry could disappear by the end of the year. And a report from Wood McKenzie estimated that if oil stays below $50 a barrel this year, $1.5 trillion of all US oil projects will lose money.

Enter big data

Fiber optics were originally a military technology, dating back to the 1960s. The technology has been used since the 1990s in oil and gas drilling, but recent developments have brought the technology back to the forefront.

In the past, most fiber optic cables for energy companies were unreliable. Putting the cables deep in the ground exposed them to extreme heat, pressure and moisture, causing deterioration. Their short lifespans made them less valuable and usable.

Additionally, the length of the cables prevented robust readings from the deepest points of well. This becomes a problem as fracking wells can extend hundreds of thousands of feet below the surface and draw oil laterally from as far away as 6000 feet.

Nowadays, the strength of the cables has improved, and the applications have expanded, said Trent Jacobs at the Journal of Petroleum Technology.

"It has been an impressive comeback for a technology that once stood on the brink of failure," wrote Jacobs. "The upstream oil and gas industry has largely resolved crippling technical challenges that shortened the life of fiber-optic cables in downhole applications and is now working on a big encore."

Now firms such as OptaSense can use cables to sense a vast amount of information. According to the company, they can run up to 30 miles of cables with 4000 sensors to help companies get a better sense of what is happening.

In fact, these developments have allowed the fiber-optic market to grow quickly in the last few years.

According to Information Gatekeepers and Light Wave Ventures, the fiber-optic sensor market has gone from under $200 million in 2006 to around $600 million today. The market is expected to nearly triple again in the next 3 years, to $1.5 billion in 2018, with 70% of that spending coming from oil and gas.

New capabilities

Previously, fiber optics were used to detect temperature changes that indicated the existence of oil or gas in an area. Now new capabilities have expanded their uses.

"With distributed fiber optic sensing, by analyzing the laser-light reflections from different spots in the fiber, the temperature and strain of the glass can be determined at any point in the well, and the fiber can be turned into a series of distributed microphones or hydrophones," wrote Glenn R. McColpin of Halliburton's Pinnacle in the American Oil and Gas Reporter.

There's a lot of complicated science going into fiber's new uses, but according to Pinnacle, which offers their own selection of fiber-optic sensors, the basic idea is that the cables shoot lasers into the rock and feedback helps them detect cracks where oil may be hiding.

By analyzing this feedback data, those working the wells can focus their efforts and find oil they may have otherwise missed. "Operators can actually 'see' and 'hear' where fluid and proppant are moving along each individual meter of the well," said McColpin.

From there, operators can adjust how they go after the oil and maximize the potential of these wells. Companies can even extend the life of an older well that would otherwise be abandoned, which is huge considering that Halliburton estimates drilling a new well costs around $8 million.

In one instance, Schlumberger, an oilfield services giant, was able to use this technology to help BP extract millions of gallons of oil.

"BP was developing a portion of the Azeri-Chirag-Gunashli (ACG) oil field in the Caspian Sea offshore Azerbaijan. The main producing formations consisted of layers of sandstone interbedded with shale," said Schlumberger in a case study. "More than 100 million barrels of secondary production were at risk of being bypassed because of the reservoir's characteristics."

Instead of leaving the oil untapped, the company was able to install fiber-optic sensors to monitor both temperature and pressure helping to reach the oil that would have otherwise gone unused.