There was some good feedback from our November 2013 lead ‘Object Management Group floats data distribution service (DDS) as performant alternative to OPC-UA.’ First from Michel Condemine (president of the French chapter of the OPC Foundation) who denied that ‘visibility and internet connectivity were missing from OPC-UA,’ offering a detailed explanation of how OPC UA is perfectly compliant with internet and can leverage multiple HTTP encodings. In the expectation that this might kick-off an interesting debate we went back to our OMG/DDS sources who have essentially backtracked their claim for superiority of DDS over OPC and/or Witsml—claims which, by the way, we accurately reported.
To set the record straight OMG CEO Richard Soley told us, ‘ DDS has a decade of experience on OPC, and the DDS designers have constantly updated the standard based on our own and others’ experiences with various middleware technologies. But we strongly believe that the real world will always feature many different solutions to any given problem, including middleware.
We expect to be able to bring you more on the OPC/ OMG debate and indeed their interactions with other standards bodies following the 2014 gathering of the standards leadership council in Paris next month.
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I figured that I would editorialize this month by opening up my burgeoning ‘industry at large’ file. Mood music in the industry is changing rather fast with Shell’s backtracking from the Arctic and a less than stellar performance from other majors. But first, to cheer you up (?) a report from CareerBuilder on the ‘hot’ oil and gas jobs in the UK. There are some 450,000 oil and gas jobs in the UK North Sea and employment ‘is expected to rise over the next 20 years as the oil industry is overhauled.’ CareerBuilder’s ‘hot jobs’ reflect the sectors showing the greatest wage increase between 2010 and 2013. The N° 1 slot is held by ‘physicists, geologists and meteorologists’ up 25% £20.50 per hour. Next finance managers, up 17% to £28.90. IT user support technicians saw a 17% hike to £13.40 and mechanical engineers, a 6% increase to £20.65. These are the medians, your mileage may vary.
On the other side of the pond, the API reports that oil drilling rose 5% in 2013 but this was balanced by a 20% decline in natural gas completions. A survey by Urbach Hacker Young and the Oil & Gas Financial Journal has it that two-thirds of oil and gas companies plan higher capital expenditure in 2014, reflecting in part a need to ‘focus unconventional projects on improved production.’ I find this rationale intriguing. Perhaps the increased capex is required to fuel what IHS has described as ‘surprising resiliency’ in Bakken and Eagle Ford production despite ‘exceptionally high production decline rates, and the lack of a third major tight oil play.’
Production from unconventionals is at the heart of the latest report from the International Energy Agency which sees shale production as contributing to an energy price gap between Europe and the US which, according to IEA chief economist Fatih Birol, will ‘last at least twenty years.’
The January-March edition of the excellent Reservoir Solutions newsletter from Ryder Scott puts the IEA’s bullish and un-nuanced view into context. In his lead, John Lee of the University of Houston reports ‘serious unknowns’ in production forecasts of shale plays. Today, industry relies on industry empirical production decline models developed a century ago, ‘Industry has no models that totally account for the physical processes of [frac] flow regimes.’ The Society of Petroleum Engineers is planning a summit to look into such issues.
Recalling CEO Rex Tillerson’s comment on how ExxonMobil was ‘losing its shirt’ on shale gas back in 2012, I scanned through Exxon’s ‘Outlook For Energy’ (O4E) hoping to find some nuance. There was none. This year’s O4E toes the party line and sees shale gas transforming the US economy and having potential to do the same elsewhere. O4E has it that North America is expected to shift from being a net importer of natural gas to a net exporter by 2030, as production growth from shale and other unconventional sources ‘outpaces demand.’ Which could be seen as a Freudian slip since an outpaced demand will likely cause a price collapse, but I digress. One interesting facet of the O4E numbers is that they come, not from Exxon’s own research, but from, guess who, the IEA! Now who, I ask you, is best placed to evaluate US shale gas potential, ExxonMobil or the IEA’s functionaries?
The subtext in O4E is likely one of wishful thinking along the lines of, even if, as we think, there is probably less gas than the IEA has it, we will continue to ‘lose our shirts’ unless we are allowed to export it to the EU and Japanese markets. But why the IEA toes the Exxon party line is a puzzle. There must be some great lobbying going on behind the scenes. Similar wishful thinking is evidenced in the November 2013 report to the International Association of Oil and Gas Producers (OGP) on the effects of shale gas production to the EU economy. A ‘shale boom’ scenario sees some €540 billion savings to the EU economy out to 2015 although to be fair, the OGP study acknowledges many unknowns.
But politicians in the EU, notably David Cameron in the UK and Arnaud Montebourg in France (who by the way now seems to be convinced that propane is an environmentally attractive alternative to water for fracking) seem to have drunk the Kool-Aid. Perhaps one way to view all this is as an updated version of Keynes’ digging and filling in holes in the road as a way to kick start the economy. As Woody Allen says, whatever works!
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