PESGB PETEX 2012, London

Tony Hayward (Genel) on future of oil and gas. Shell’s Glenn Cayley on global gas developments. Carl Trowell (Schlumberger) on ‘unsustainable’ non conventionals. Mark Hempton on Shell’s Cardamon Deep and ‘fast scan’ seismic interpretation. Chris Reddick on BP’s ‘at scale’ EOR.

There was a record turnout of 3000 delegates for the 2012 edition of Petex held last month in London. Keynote speaker Tony Hayward, now CEO of Genel, looked at the future for the oil and gas industry. Hayward noted the rising importance of high performance computing in seismic imaging, horizontal drilling and hydraulic fracking as recent industry game changers. This is largely due to the absence of a US energy policy. The USA makes up for the fact that it is the largest unregulated energy market in the world by being also the largest capital market. Rapid capital allocation is driving the necessary infrastructure and funding a buoyant service sector. Natural gas prices are low because of the absence of a regulatory framework. Already shale gas makes up 30% of US supply.

Shell VP Glenn Cayley looked into the future of global gas development. Current natural gas supplies equate to some 250 years of supply. Moreover gas produces half the greenhouse gas emissions of coal. ‘Installation costs’ for natural gas are five times less than nuclear and fifteen times less than wind power. 3D seismic has been a ‘real enabler’ as has floating LNG. Shell is building the world’s largest LNG floater, Prelude. Gas to liquids is a key new technology. The largest GTL plant in the world is under construction in Qatar. And there are also GTL possibilities in Louisiana. In the Q&A, Cayley was asked, ‘Is shale gas economic?’ He replied, ‘I hope so.’

Schlumberger’s Carl Trowell agreed that non-conventionals represent a ‘true paradigm shift’ where the source is now also both reservoir and trap. While conventional scientific understanding is in its infancy, there is the potential for global changes in supply and demand balance. Today the big issue is water management. Fracking requires a lot of water and also produces a lot of ‘polluted’ water. Today’s approach is unsustainable and won’t happen in Europe. In the US, water usage amounts to 700/800 trucks per well—billions of gallons of water and millions of tons of proppant—which equates to ‘not sustainable!’ Trowell anticipates that technology will help with more efficient fracking using less water and less proppant. Better reservoir evaluation and completion will be achievable blending petrophysics, reservoir engineering geomechanics and completion engineering. ‘Digital geology’ will help too with better reservoir simulation and earth model building, ‘geology and geophysics are coming together, you no longer need to upscale.’

In the Q&A Trowell was asked if the shale gale was coming to Europe. He thinks not, ‘The US is a special case. Realistically, European activity will never reach the same level because of service intensity and the question of consumables. China may be more like the US.’ Answering a question on recruitment Trowel said, ‘the industry is obsessed with attracting people. In fact you can recruit easily in the far east, if not in the EU or US.’ One question though is do we need geologically-minded digitally aware geoscientists? Universities need to offer more education on the use of digital technology. Geomechanics and completions specialists are also in short supply. But much will come from more automation in interpretation technology.

Mark Hempton (Shell) returned to the role of technology in enabling new discoveries. Exploration is harder than it used be and technology reduces risk and cost while increasing safety. Improved seismic imaging for sub salt targets is leveraging multi azimuth, ocean bottom surveying, broadband and ‘million channel’ systems. Hempton cited the Cardamon Deep Gulf of Mexico development where wide angle seismic, anisotropic velocity modeling and Shell proprietary technology are being applied. Elsewhere, 2D broadband is enabling imaging through gas clouds. Million channel systems with fiber optics and/or wireless sensor networks promise to lower cost and speed time to first oil. Also novel techniques such as ‘fast scan’ seismic interpretation have cut turn-around times tenfold. Forward stratigraphic modeling is also key to understanding sedimentation and fluid flow. This has proved especially useful in frontier areas where there is no well data. On the drilling front innovative rigs and extended reach wells are lowering costs,
as is more automation. ‘Technology is a differentiator.’ Hempton was also quizzed on the shale gas boom—he responded that the ‘jury is still out on non conventionals.’

Chris Reddick described ‘at-scale’ deployment of enhanced oil recovery (EOR) in BP. Today a mere 3 % of oil production comes from EOR which historically has been the bailiwick of engineers and geologists. Today, chemists, geochemists and rock scientists are getting in on the EOR act.

EOR is not just about the subsurface but also about facility engineering solutions. Here there is another challenge—holding up a development while lab experiments (for instance in flooding) are carried out. BP is developing relationships with Universities and other scientific resources in the service industry.

One challenge is how to monitor a water flood—often working with other owners across a unitized field. This may involve relationships with governments and regulators. The real issue is to get the EOR technology out there and optimize BP’s portfolio with water or gas flooding where needed. EOR is also now being considered much earlier in a project’s lifecycle, especially offshore.

So far polymer injection has seen little take-up because of environmental concerns. BP is working on these issues and trying to get new technology out of the lab and into the field. Low salinity (LoSal) is a twenty year old flooding technique that now looks promising. LoSal costs around $3 per produced barrel and requires extra topside facilities. Overall the economics are favorable.

For the onshore, managing produced water is the big challenge. Here membrane technology and ‘Bright Water’ look promising to improve sweep efficiency. Currently the industry ‘produces’ around three million barrels per day from EOR (BP alone gets 100,000 barrels). LoSal, originally developed at the University of Wyoming was championed by BP for a decade before core flood lab tests finally demonstrated its viability. More from Petex.

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