The network effect

On October 29^th, 1969; the Advanced Research Projects Agency Network (ARPANET) delivered its first message: a simple communication - “LOGIN” - from one node computer located at a lab in UCLA to another node computer at the Stanford Research Institute. While the Stanford computer received only the first two letters of the message, the Internet, as we know it today, was born.

It; of course, took many more decades to build the Internet into its current form - an ostensibly vital and ubiquitous part of everyday life for billions of people - yet the incentivising principle remains the same: the ability to allow multiple computers to communicate on a single network.

The development of the Internet in the following years meant that universities in the U.S., each acting as its own hub, could suddenly communicate via a network. They were now connected. Many of the researchers at these universities had been working on similar projects but lacked the ability to effectively share their work with each other. Once they were interconnected, all the crumbs of information began to flow freely between them, creating efficiencies never experienced before.

An analogous development is happening right now in well completions.

The digitisation of hydraulic fracturing, achieved through the addition of sensors at the wellhead which track operations, creates a common time series dataset - a new, unbiased, and consolidated database. This consolidated database, which includes all the data from the entire operation, is then accessible to the operator and all service companies. It is a network, or, by way of analogy, the Internet of frac operations.

Let us break it down: at any given time on a completions site, you have several different parties - the operator and various service companies - working alongside and with one another, each tracking and recording their data in their own ways. Each has its own database, in the same way that the universities were conducting their own research. But much like Stanford, MIT and others in the early 1960s, they could not effectively share information. Working in informational isolation from one another, the parties did their best to work together.

With a digitised master control system, suddenly all parties are contributing and have access to a single, consolidated, time series database. Similar to a blockchain, once the data is in, it is the source of truth, telling all parties what has happened in the operation, down to the second. Nothing is hidden, nothing is up for debate. And the network, like the Internet, allows for the free flow of this information among parties. It is a game-changer for well completions.

For one thing, it facilitates the removal of humans from the operation. Currently, humans are the main barriers (as well as the main operators) on site. They run the equipment, communicate between equipment and services, make decisions. They work hard; 24 hours per day, seven days a week, 365 days per year in remote environments. It is tough on those humans, who are not perfect and sometimes make mistakes.

With a completions network, human decision-making is replaced with computer decision-making, which is infinitely faster (from minutes to milliseconds), more efficient and precise. Human safety is also improved by removing workers from the danger zone.

Onsite equipment, which previously relied on humans to speak for it, is given its own voice, and can now speak to the other assets on site, whenever needed.

The value to be gained from the network depends on the user and what they want to accomplish, much like the Internet: Do you want to do some banking? Send an email? Order some groceries? Do you want to watch a movie and then browse Instagram? Or are you a medical doctor using it for research? Whatever your desire, the Internet has your answer.

With a well completions network, each party can likewise derive value where they want to. For some companies it will be in operational (environmental, social, and corporate) governance (ESG). Often undervalued in organizations, ESG is absolutely critical. And when you are completing wells at a cost of US $8 million each and relying on a human in a remote location to make decisions to protect that asset, you lack control over the operation. Operators can use the network to automate the process and maintain governance, all while completing wells faster and cheaper.

The wellhead company, for its part, can use network data about sand and water usage to improve maintenance efforts. Other service companies can rely on the network to prove, with 100 percent accuracy, their work. With the blockchain-style time series database there is no human manipulation, it is just fact. No negotiation. Performance-based, automated contracts are now a bona fide option.

As it grows and is adopted by more and more parties, the network’s value will increase. It will be used for new and different things, some of which have yet to be imagined.

Just as the Internet morphed from a two computer communication into the behemoth it is today, the well completions network has the ability to change the industry as a whole, for the benefit of all parties. The network is here, it is time to jump on.