Interview with Giles Edward, CEO, M-Flow

The following is an interview with M-Flow CEO Giles Edward. M-Flow is a UK-based metering company providing repeatable metering products to the oil and gas industry. Responses were submitted in writing and have been left unchanged.

Tim McNally: How many founders came together to develop the technology produced by M-Flow, and why was 2012 the year that they set out to improve on it?

Giles Edward: As with many step change technologies, M-Flow’s innovations arose because a group of people connected through networks found their curiosity, different skills and access to technology connected a solution to a problem. The foundation of M-Flow included perhaps half a dozen individuals and two or three companies, all of whom made key contributions.

For us, the key factors came from a number of industry spaces: an understanding of the operational value and complexity of multiphase measurement; access to emerging composite technologies; experience of cutting edge industrial sensing from outside the oil industry; and experience of building and funding technology driven start-up businesses.

2012 was the time when the development of our core technologies and the industry’s heightened interest in new multiphase technologies crossed paths. It’s interesting to reflect that in 2012 the industry was in the midst of a high oil price boom, which made getting the company up and running possible.

A couple of years later and the oil price crash may have made M-Flow commercially difficult to fund, but in fact the oil price crash has reduced operator margins and improved the drivers for our products to improve production efficiency at a low cost.

TM: There are always things that can be improved upon in any industry, and this is of course true of the oil and gas industry as well. As such, why did the founders choose to focus on innovating and improving upon the multiphase metering system in particular?

GE: I have talked above about the role that fate plays in bringing the solution and the need together, but to focus on the need in the modern industrial world, process control is driven by data, as is ensuring successful production optimisation. The more reliable, accurate, and available the data is, the better you can improve your wells. That comes with an important caveat: if you can’t trust or access the data that’s being created, you can’t expect it to deliver valuable insights. The oil industry has been behind the curve on this. There are cultural conservative drivers for this, but also the first generation of multiphase meters did not deliver the reliability, usability and low costs required to allow their widespread adoption.

Manufacturers delivered expensive technology for niche high-end applications focusing on inherently uncertain flow rate measurement, rather than promoting accuracy and repeatability in parameters that can be more directly measured, such as water cut and gas fraction. This inherently leads to complexity, human intervention, and validation-hungry systems.

We saw the need to change the focus if wellhead multiphase measurement was to become the norm across the industry, particularly onshore. The solution we identified was to create a unique carbon fibre structure with proven sensing systems embedded inside them. This created a transparent window on the pipe flow, and eliminated the need to have intrusive sensing probes exposed to the fluids. This lowered build costs, almost completely removed maintenance costs and manpower intensive interventions, and delivered highly repeatable accuracy.

TM: Why is multiphase metering so important to an oil and gas company’s operations while drilling?

GE: When operators want to improve margins, they need to reduce costs and improve production. Multiphase measurement can have a big impact on costs through reduced man power required to gather data through well testing and sampling, but it also gives much richer data to make decisions and populate models for reservoir, well and production optimisation. Ultimately, multiphase metering data contributes to longer-term understanding, which improves well design, while also delivering immediate data on the effectiveness of workovers and other operations. It takes accurate measurement to understand the effects of your actions. Unless you can understand and quantify these changes, it’s difficult to get a clear picture of what has worked, and what hasn’t.

As we’ve seen first-hand in the field, and something that is now becoming widely accepted, the biggest improvement on this front will come from continuous well-by-well data. The sticking point for getting to that point has been cost. Today, with M-Flow, it’s commercially viable. Operators can manage an oilfield without having to amend the operational pattern every time something changes at a lower cost than traditional multiphase meters, and with almost zero subsequent opex.

TM: I saw you all use a carbon fibre structure. How did you all conclude that this was the best option? Was it through extensive testing, trial and error, or previous experience with other materials and technologies that failed to efficiently accomplish the job?

GE: Accessing the benefits of using a non-metallic composite pipe for sensing was the key insight and driver for the formation of M-Flow. The unique opportunities offered by this approach drove the other steps in innovation, which have been incorporated into our products. However, that first key step into the use of composites was the spark that created the business.

The fact that the non-metallic pipe is almost transparent to most sensing systems, particularly electromagnetic ones, meant the complex sensitive parts could be removed from the flow. Immediately, maintenance and calibration issues are avoided, costs come down, and performance takes a big step forward.

I often cite the big step forward that medical science saw when we stopped sticking probes in people’s bodies to work out what was ailing them and started to use MRI and similar technologies to see the bigger picture with much less risk. Sensing with composites pipe is an analogous change.

• M-Flow’s non-metallic spool piece allows measurement of the full volume of fluid flow equally. This unique whole pipe measurement is made with microwave sensors and, when required, gamma density gauges.
• This avoids reliance on either spot or narrow chordal measurements which make the meter performance flow regime dependent. This complete, direct measurement removes the uncertainty of flow regime modelling.
• The absence of probes or narrow measurement windows in the pipe creates a highly reliable measurement even with heavy oil or solids.

TM: A lot of companies we talk to have found certain niches or products in the O&G industry which have not been significantly improved upon. For example, one firm we spoke with was ST9 Gas and Oil, a company which focused on producing oil and gas-drilling parts at a fraction of the current cost and with a higher level of durability than products currently in the market. Why do you think that certain components of the O&G operating process go unimproved for a number of years, or even decades?

GE: The oil industry has some unique challenges, and those create practical and cultural obstacles to technology adoption. One of the big challenges to the oil industry right at the front end is that there are thousands, or even tens of thousands of wells, feeding and funnelling raw product into the infrastructure of pipelines and refineries that produce the consumer facing products. That diverse network of upstream producers is exposed to high economic and technical risk around their complex base operations, and there are a lot of people to educate and convince of the benefits of innovation. Add to that that the bigger, more centralised guys are often working in huge long-term projects and it should not be surprising that adoption can be slow. But that does not mean that change does not take place. The changes to well technology in the unconventional space shows that the industry embraces change rapidly once the evidence is on the table, so the focus is always on building case studies.

As a cyclical industry with frequent booms and busts, investment in R&D doesn’t always track periods when companies are willing and able integrate new technologies. Inventions that focus on increasing production are less valuable when there’s a global glut. Similarly, when prices are high and there’s less demand for efficiency, it can be difficult for products that produce incremental gains to get a fair hearing.

Some technologies persist over a long period, because people just haven’t come up with a better way of doing it. However, I think it’s clear the multiphase area we are in is in a phase of change.

Multiphase metering has simply not penetrated into the onshore space; we see companies continuing to invest in traditional multiphase meters. But the body of evidence is that these produce less accurate and reliable results at high costs than will drive a cultural change, and that’s a difficult case to sell. At present, it’s rare to find an operator claim to get better than 10% +/- accuracy from their multiphase meters.

The traditional multiphase meter companies are looking to find ways to make their last generation products more competitive and suited to the costs and operations of the US onshore environment.

To address these weaknesses, cumbersome and expensive test separators remain in operation; but they provide only piecemeal or fragmented information that rarely delivers more than limited value. What it will take to see real change is smart monitoring systems throughout the upstream production chain.

TM: What are the main advantages for operators using the M-Flow multiphase metering system when compared to the traditional metering systems found in the market?

GE: In contrast to traditional meters, M-Flow’s new carbon fibre multiphase meters require minimal manpower, lower capital expenditure, and almost zero operational expenditure, with five-year lifespan meter costs that are on average 20% of traditional MPFM capex and opex combined. All the while delivering directly measured, constant data on water cut and gas fraction with zero doubts about its accuracy or repeatability.

This last point is particularly important, because production efficiencies are ensured by ongoing analysis of operations. You have to be able to trust the primary measurements, otherwise you are going to spend as much verifying them to avoid making the wrong decisions as you hoped to save by taking them in the first place.

We summarise this in the following statement: When the measurement changes, the operator should know that the change was due to the fluids, and not the meter.  

Earlier this year I was speaking to a senior manager from an international operator. He gave an example that when the watercut on his wells goes above 40%, he’ll get emulsion formation. Once this happens he has got to shut the field in and empty everything.

TM: M-Flow was obviously founded before the current price-depression of oil, but do you think that the rather trying times given the price of oil encourages companies to be more receptive towards new options which can eliminate operating costs than they might have been before?

GE: As I mentioned earlier the oil price crash has reduced operator margins and improved the drivers for our products to improve production efficiency at a low cost.

In today’s challenging environment, it is vital that the costs of drilling and production come down and the efficiency of production increases. There is a widespread acceptance of the importance of data in achieving these objectives.  

There is no shortage of change and innovation in the industry to meet these challenges.  In recent years we’ve seen innovations such as pad drilling, high-volume completions, and tighter well spacing. All have made statistically visible differences to costs and how quickly and successfully projects are brought to commercialisation.

On the back of this, we’re seeing much more willingness to investigate and invest in new technologies that fit with standardised, manufacturing-like processes that characterises tight oil production and will govern the future cost of production.  In this sense the oil industry will follow other industries in the proliferation of quality control data.  Multiphase well monitoring is a quality and efficiency control tool for the industry.

It’s something we’re seeing first hand with our multiphase meters. The proven reliability of our technology facilitates a shift in the traditional engagement. By providing this information in a packaged, discreet, and highly valuable data set, we have enabled a shift in focus to where it needs to be: moving dialogue and engagement within the multiphase market away from the meter, and onto the impact of accurate and reliable data to redefine upstream operations.

TM: The combination of software and hardware in the oil and gas industry has become a critical component of maintaining cost-effective operations in the oilfield. Recently, the transference of real-time data to operators has become the pinnacle of cost-effectiveness. Can you speak to the important of the immediate availability of such data and its place in the future of the oil and gas industry?

GE: The importance of this area cannot be overstated. The benefits of data gathering at the wellhead will be limited if the systems and infrastructure are not in place to gather data and analyse it. The best understanding can be obtained when multiphase measurements are combined with downhole data, traditional production data, and then models of reservoir etc. What we do should always be considered by operators as part of the whole, which is why we focus on creating solutions which are not black boxes, allow the operator to collate and manipulate our data alongside other sources of information, and always interface with industry data systems.

Multiphase measurement has always been a combination of direct measurements and modelled understanding of flow changes.  The advent of ‘big data’ and the ‘internet of the oil field’ allows us to interface with more data in virtual flow meters.  Carry out history matching, model fitting etc. in back office environments where big data sets and massive processing power can achieve much more than is the case on the systems which are appropriate for distributed, low cost high reliability in multiple field applications.

A well-managed dataset reveals insights, trends, and patterns that will help increase return on investment, decrease HSE incidents, and create the foundation for future achievement. For these reasons the foundation of the modern, industrialised oilfield is reliable data. But unless the information that’s derived at the wellhead is consistently reliable and replicable, we won’t fix today’s problems – let alone solve tomorrow’s.