Seismic Technology: The Next Chapter in US Energy

When people think of computer and IT companies, names like Intel, Microsoft, IBM and Apple are usually the first that spring to mind. Companies, in other words, that specialize in computers, software and consumer electronics.

The reach of computer tech, however, is far greater and more transformational. It has come to touch everything we do. Rapid improvements in computer processing capacity, thanks to the ongoing fulfillment of Moore’s law, mean the things we are doing keep getting better.

High-performance computers are making possible higher rates of drug discovery that haven’t been possible in the past.

We’ve seen this sort of transformation of the U.S. economy before. Waves of new general-purpose technologies have historically grown the U.S. economy and improved the standard of living for its citizens.

Take rail transportation as an example. In 1850, before this tech was widespread, U.S. gross domestic product was smaller than that of Italy. Then came the railroads, connecting the vast continent and making it possible for the U.S. to become an industrial, urban nation. This disruptive technological change made the U.S. the world’s top manufacturer and largest economy by 1900. The adoption of electrification and automobiles would continue the trend into the new century.

These technologies gave the U.S. economy muscles. Now, with the computer and information tech revolution, it is growing brains. Furthermore, this revolution still has a long way to run. While the physical economy still dwarfs the digital one, that will change over the next 20 years.

As I often like to point out, one of the much overlooked areas where this is happening is biomedical research. This year’s Nobel Prize in chemistry was awarded to three researchers, Martin Karplus, Michael Levitt and Arieh Warshel, “for the development of multiscale models for complex chemical systems.” Instead of using balls and sticks to model molecules, chemists are now able to do so using fast computer models.

And of course, no chemical system is more complex than human biology. This sort of modeling, made possible by computer tech, means that software is replacing wetware. We can now create computer models as silicon-based stand-ins for biology. Using these algorithms for cells and tissues, we are discovering new ways to treat disease. High-performance computers are making possible higher rates of drug discovery that haven’t been possible in the past.

Health care, of course, is a huge chunk of the U.S. economy, accounting for some one-sixth of the nation’s GDP, but it isn’t the only area that is being disrupted in this way. Energy also makes up a large share, and it too is being transformed by computational tech.

We are in the midst of an energy revolution, although it has been a long time in the making.

New computer tech, along with sensors and networks, has made it possible to extract oil and gas where it wasn’t possible before. Back in 1979, exploratory drilling turned up a productive well only once in every seven tries. By the 1980s, however, new computing tech made it possible to perform seismic surveys and model what things look like underground. The number of unproductive holes drilled into the ground fell sharply.

But things really got going in the 2000s in the U.S., where for decades, oil and gas production had been in decline.

As you know, new tech called fracking began to be used to make previously unproductive deposits viable, as well as bring old tapped-out fields back into production.

Also known as hydrofracking, this method of oil extraction uses high-pressure fluid to fracture oil-bearing formations underground, releasing their valuable hydrocarbon content. But fracking depends on the latest in sensing and computing technology.

Since 2008, U.S. production has enjoyed a sharp upswing. In fact, the International Energy Agency is now projecting that the U.S. could become the world’s largest oil producer in the next two years, surpassing Russia and even Saudi Arabia.

All of this is being driven by tech. There’s plenty of money to be made in oil itself, of course, but there is also the tech making it possible. Today I’d like to tell you about a tech company specializing in the oil and gas extraction business.

The sensors aren’t only helpful for finding oil in the ground; they are also used to draw a map while a well is hydrofracked.

Computer-assisted oil and gas production relies on sound propagated underground in order to learn about the subterranean environment. Seismic sensors, also called geophones, are used to detect vibrations in the ground generated by special ground-vibrating equipment. The data are then used to build an underground 3-D map.

The seismic maps are critical for tapping previously unavailable resources. In many shale formations, for example, the oil- and gas-bearing layer might be only 200 feet thick but reside a mile underground. When the vertical well is drilled, it must be precisely located in order for horizontal shafts to branch out. Enhanced recovery techniques, which allow for greater production from aging fields, also require the use of sensing tech.

The sensors aren’t only helpful for finding oil in the ground; they are also used to draw a map while a well is hydrofracked. In hydrofracking, fluids are pumped into the well at high pressure, fracturing the rock. Particulate matter, such as sand, is injected along with the fluid to hold the fractures open. The fracturing itself is like a seismic event, and is detectable using seismic equipment, which can be used to determine the location and extent of the fractures.

There are also environmental reasons for good detection tech. Aquifers can be located near oil- and gas-bearing formations, and improper fracturing can cause leaks into the groundwater. Good sensing technology can be used to monitor and control the process, protecting this natural resource.

In short, the energy industry will have to make a major shift in seismic technology.

Conventional seismic sensing equipment uses cables run deep underground to the sensors. This is expensive, and cabling can cost millions for a single location. Deploying cabled systems is also a time-consuming and high-maintenance proposition. The rough environment of drilling sites isn’t friendly to equipment.

That’s why what the world needs now is new seismic sensing equipment. Stay tuned as we cover specific companies in this space in future issues!

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Daily Reckoning

Ed. Note: The search for new technologies that will reshape industries is a never-ending process. And Ray has made it his life’s mission to seek out and discover those companies at the forefront of these new disruptive technologies… and which stand to benefit the most. Today’s email edition of Tomorrow in Review gave readers a unique opportunity to discover a few of these companies from themselves. If you didn’t get it, you might have missed out. Don’t let that happen again. Sign up for the FREE Tomorrow in Review email edition, right here.