When drilling a hole in the ground, most oil companies like to measure the rock being drilled through before locking the rock behind steel casing and cement for the rest of the well's life. The same three methods that were developed decades ago are still in common use today for measuring rock during the drilling process:
- Openhole/wireline Logging
- Surface Data Logging (commonly called Mud Logging)
In 2006 the industry spent over $5B on formation evaluation. This number soared to $9B by 2012, before settling at under $6B today in 2017. With such massive changes in industry spend over the past decade, we might ask, has the mix of formation evaluation types used changed over time?
Consider the following graph of formation evaluation techniques:
This not-very-exciting graph actually reveals two very compelling trends: The struggle of LWD to gain share of customers' wallets AND the stability of Mud Logging in an extremely dynamic environment.
LWD was 22% of the formation evaluation market in 2006, growing to 28% just 6 years later, and back to 23% today. LWD is highly correlated with offshore drilling, and right now offshore drilling is flat on its back. Making matters worse, we believe LWD discounting is huge at present, cutting substantial dollars out of this business segment. LWD grew when offshore drilling was strong (2012) and fell when offshore drilling faded (2017).
Openhole Wireline, the granddaddy of all formation evaluation, is also associated with international and offshore (hardly any is used on land in North America). Dominated by Schlumberger, this method lost customer wallet share through 2012, but with the decline in offshore drilling, customers appear to be preferring Openhole Wireline over LWD.
Or, perhaps Schlumberger isn't discounting Wireline as much as they are discounting LWD...
And that leaves Surface Data Logging. On the sexy technology spectrum, Surface Data Logging loses to LWD and Openhole Wireline, but we believe that this method is used on far more rigs around the world than LWD or Openhole wireline.
Still, Mud Logging takes the smallest market share on our chart. This is because Mud Logging is far cheaper per day or per foot of hole investigated than the other techniques, and we're measuring market share in dollars.
However, the table would turn if we measured use, as Mud Logging is found on all offshore rigs, all international land rigs, and almost all US horizontal drilling rigs. It is an investigative tool to help the reservoir engineers and drilling engineers know where they are and what they've got.
Plus it is an insurance policy in the event LWD and Openhole Wireline fail or stutter step. Both LWD and Wireline are conducted downhole and can fail while in the hole, making it impossible to re-run these tools in the pipe later.
As for players, Schlumberger leads all three market segments, but the usurper in the Mud Logging arena is GEOLOG. If you haven't taken notice yet, we'd say it's time to write down that name.