EAGE, London—Part II

More from the reserves session—BG on probabilistic reserve estimates. SGS Horizon on the five year rule’s ‘inconsistency.’ Shell critical of IoD’s ‘new North Sea’ report. The Carbon Crunch.

We left the EAGE last month in the middle of the reserves evaluation with an enigma. On the one hand, the SEC now accepts geophysical ‘evidence’ in support of reserve evaluation, on the other hand, we had the example of Norway’s ‘seismically transparent’ Ringhorne field. The SEC now accepts ‘probabilistic’ reserves estimation which Carolina Coll (BG Group) said was previously considered ‘mumbo-jumbo.’ A ‘scenario method’ can be used to build model and investigate sensitivity across a decision tree, or a Monte Carlo investigation of all parameters can be used. Coll suggests that ‘You don’t need to go nuclear on all cases.’ Experimental design can be used to see what needs modeling and to identify key uncertainties. More from the SPEE Monograph 3.

Enrique Morales (SGS Horizon) homed-in on the SEC’s five year time limit on likely development and its different interpretations. Using examples from 10K filings and company reports, Morales showed that different companies use different commercial requirements—even on the same field! Inconsistencies and loopholes have been created. Some projects are booked as probable when the five year limit cannot be fulfilled. All which can give ‘confusing messages to banks and investors.’

Jamie Spears (Imperial College) noted confusion between ‘reserves’ and what will ultimately be recoverable. A new URR estimate is required summing future production plus reserves growth and ‘yet to find.’ In the UK, BERR/DECC stopped reporting (conventional) reserves by field due to inconsistent reporting from operators. Reserves increase with time as technology and geological understanding improve. For unconventional there is an even wider range of (ambiguous) terminology and estimates.

In the ‘executive session’ on the global gas challenge, Shell’s Matthias Bichsel said, ‘I don’t like the hype around unconventional. There have been success stories, but there has been a fair number of disappointments like the Green River basin. Some countries may be setting themselves up for disappointment.’ Bichsel opined that the UK Institute of Directors was premature in categorizing the UK’s potential as a ‘new North Sea.’ To make non conventional work requires automation in the field. Shale gas needs hundreds of wells, not manpower. Enter Shell’s ScadaDrill autonomous control system. Remote monitoring means that one expert works on several wells. Shell has published a handbook of best practices for shale exploration.

Oxford University’s Dieter Helm gave an overview of the world energy scene based on his book, The Carbon Crunch. The new abundance of fossil fuel has turned energy policy on its head. Helm was scathing about the EU’s enthusiasm for renewables and on the decade long lag between policy and events. In 2005, a major energy policy framework was formulated in ignorance of non conventionals. Obama’s energy policies likewise got short shrift from the fervent professor. All have got it wrong! There are abundant supplies and demand is falling. Today, the world potential supply of gas is ‘practically infinite.’ On regulating climate change, emissions are accelerating—nothing has been achieved in 25 years. If all the fossil fuels get burned, ‘you had better hope that all the climate scientists are wrong—which is unlikely.’ Helm sees salvation from technology—smart grids, storage/batteries and next generation solar and renewables and gas as a transitional fuel. He also advocates ... a carbon tax.

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