The main plenary session of the 2019 EU Association of Geoscientists and Engineers (EAGE) was provokingly titled ‘Delivering the worlds low carbon energy needs’. The chair, BP’s Sebastian Chrispin, set the scene reminding us that to combat climate change, CO2 emissions need to halve by 2030, this in the face of ‘rapidly rising energy demands’. Today, oil and gas make up half of the energy mix. In 2030, oil and gas will still be needed ‘even in a Paris world’. WoodMac’s Neil Anderson added that the energy transition is a critical issue to us all and that it is happening now and moving quickly. The divisions between ‘them’ and ‘us’ and ‘good’ and ‘bad’ are unhelpful. Oil and gas has a critical role in driving the energy transition but needs to be more involved in the debate. Hydrocarbons have a role ‘out to 2040’. The question is how to make this role sustainable. Oils need to capture carbon and be a part of the transition. Luca Bertelli (ENI) added that natural gas has a role as a bridge fuel, displacing coal which current powers 33% of the world’s electricity. OMV’s Gary Ingram listed three key elements of the transition, carbon emissions, affordability and reliability of supply. OMV is engaged in the transition, ‘the future of the company is at stake’. Carbon capture and storage is necessary for the future of the oil and gas business. Luke Warren from the Carbon Capture and Storage Association was not going to disagree. CCS is expected to play big role in the 21st century. Although it is 'frustrating in that there has been little progress so far’. Having said that, there are 23 large industrial projects either operating or under construction. CCS now has to follow the economic path of renewables, driving down costs. While this is a harder problem, companies, countries and regions are addressing the issue. The US provides tax credits and the UK an investment framework. But where are the big champions? Industry needs to get behind this. Emily Shuckburgh from the British Antarctic Survey started with a disclaimer, ‘no I’m not part of the green movement I’m a climate scientist’. Already the world has seen 1°C warming above pre-industrial level, deadly heatwaves, floods and drought. Current rates of emissions will exceed 1.5°C between 2030 and 2050 and up to 3° by the end of the century. In its largest ever field expedition, BAS studied a remote part of the West Antarctic ice sheet which is showing signs of retreat. A total collapse of the ice sheet would produce a 3m sea level rise. We have only 10 years at current rates of consumption before we exhaust our carbon budget from fossil fuels. From 2040 on, net negative emissions will be needed.
Chrispin asked how the debate is playing out internationally? Anderson stated that in the EU ‘everyone wants to talk about this’ and there are concerns in regard to oils’ license to operate. The US is behind on the debate, especially with the Trump administration questioning global warming. Elsewhere, access to energy is the priority for the developing world.
In the Q&A the panel was asked, ‘if we have already discovered enough oil, should we stop exploring? Anderson observed that the energy transition means moving to low cost and low carbon resources. This means that Canadian oil sands are unlikely to be developed, as are Arctic fossil resources. But ‘yes, we still need to invest in exploration to plug a looming production gap, otherwise there will be a supply crunch’. Chrispin agreed that we should continue to explore, but maybe not develop everything. It will be the cheaper stuff that gets developed. Bertelli said ‘I’m not nervous’. If we stop exploring there will be a supply crunch. The is a lot of coal to be replaced. Oil and gas is to remain an important part of the energy mix. Exploration is currently only replacing 30% of production and demand is going up! Warren stated that there was huge uncertainty, but the transition will happen. Coal missed out on the CCS journey, lacking a proactive role, and has lost its future in a many of markets. Oil and gas needs to play an active role in CCS. Bertelli agreed, CCS is not broadly accepted, we need to convince people of its importance. Warren added that the IEA puts the CCUS market at a possible $100 bn/year.
A questioner raised the issue of the CCS energy balance asking, ‘Is it really useful and economic?’ Warren agreed that there will be an energy/cost penalty. But that CCS and bioenergy are a good complement to nuclear. The IEA foresees a need for 5 Gtonnes/year of CCS by 2050. But if you break down the costs these are comparable with the development of other industries.
Chairman Chrispin asked the panel what the impact of digital would be in the energy transition. Ingram ventured that digital would enable operations with less people, less aviation. Shuckburgh opined that artificial intelligence is being applied to environment/low carbon issues in Cambridge. AI is used in energy balancing and to improve predictions with data-driven forecasting.
On the roles of IOCs and NOCs in the energy transition, Anderson observed that some NOCs have plentiful low cost reserves and are ‘sitting this one out’. EU IOCs are in the vanguard of the energy transition. The Middle East NOCs need to be on board. BP is addressing its role in the energy transition, in part to recruit talent. Ingram asked ‘is the industry in terminal decline?’ Regarding new hires with geo-skills, you need to be honest and authentic. How will you handle these things that will come up 10-20 years’ time? Otherwise people will doubt you and go into other industries. Again, CCS is seen as saving the day in a recruitment context. It will be a major topic where geoscience will make a difference.
Another question from the floor asked about shareholder value in a shrinking industry. Anderson suggested looking forward to what the energy transition means to us as individuals. Probably solar panels, a Tesla, a battery in the basement. What kinds of companies will prosper here? Chinese PV, utilities, battery providers, EV manufacturers. In other words, a stark picture for the oil and gas industry. On the other hand we need low cost resources to avoid a supply crunch. Unfortunately, much of the industry (read shale?) is predicated on high oil and gas prices ... ‘I doubt these will be the case’.
Finally, the possibility of a world carbon tax was raised. Anderson thinks yes, of course the world needs one! We need incentives for CCS etc. This raises challenges of say, a manufacturer in India sans a C-Tax, and from the Trump administration. Shuckburgh thinks it would have been a good idea if it had been done before, ‘today we need more regulation than tax’.
Comment: The subject of a carbon tax was raised briefly at the opening ceremony by the IEA’s Tim Gould who stated that the EU carbon trading scheme was part responsible for the demise of British Steel. While this narrative is convenient for anti-taxers, it is not quite what happened. British Steel had a carbon tax liability of €100 million, but this was because the EU withheld a carbon credit pending Brexit negotiations. The UK Government agreed to sub the EU fine so this is unlikely to have played a direct role in British Steel’s demise.
The opening plenary set the scene for this special session on geoscience hiring. Iain Manson (Korn Ferry) spoke of disruption from the changing landscape of the energy transition and a ‘deep trough’ in oil and gas that ‘will not peak as before’. This is down to environmental pressures and the fact that baby boomers are on the way out and millennials are now in the majority. 35% of important skills today will not be so, real soon now. Enter the Korn Ferry ‘self-disruptive leader’. CGG’s Sophie Zurquiyah offered a more conventional view of a ‘cyclical’ industry, CGG lost 50% of its people in the last downturn. In digital, there is competition from Google and Microsoft. Is it hard to recruit? No. CGG get lots of CVs although in some circles oil and gas is seen as an industry of the past. Ann Muggeridge Imperial College London thinks it is a great time to be an earth scientist as the world needs ‘more energy and minerals, more sustainably’. But there are fewer 18 year olds from demographics and a larger fall in earth science entrants. Why? Because of a lack of awareness of geology as a subject and because parents tell their kids ‘you won’t get a job in this dodgy/dying industry’. There are concerns about the environment and climate change, and latterly plastics. Muggeridge sees openings in CCS, geothermal and in making industry carbon neutral.
Halliburton’s Naphtali Latter warns of the threat of further reduction in green energy cost and the reduction of demand due to the shared economy. Regarding climate change, what’s the real sentiment in society? Do we really care? Are we overreacting to millennials/greens? The oil price drop is reducing margins and industry is looking to cut costs. ML/AI are not new, they have been used for ‘over a decade, there is no disruption, just an evolution driven by low margins’. In 10 years time there will be new oil and gas businesses with chief sustainability officers. Latter thinks that we are being a bit dramatic regarding the threat to geoscientist. Oil and gas will be 40% of the energy mix in 2040.
A questioner asked if geoscience jobs will be completely digitalized. BP’s James Hamilton-Wright believes that no matter how automated your workflows are, you will need people to make sense of data and noise. Automation gives you freedom to think about your work.
Philip Ringrose (NTNU & Equinor) kicked-off the first meeting of the EAGE Special Interest Community on 'Decarbonization and the energy transition’. Ringrose ran through the many climate forecasting scenarios (Bloomberg, IPCC, IEA, New Green Deal, EU Clean Planet 2050, BP, Shell, Equinor and others) In particular the IPCC’s 1.5° report is an ‘essential read’. Latterly the CO2 trend has eased-off but is still increasing. It needs to flatten and then reduce by 50% by 2050, the IPCC says by 80%. How is this to be achieved? Investors want to invest in this, but in what? The IPCC offers several mitigation pathways. Of interest to the EAGE/geoscience community is fossil fuels emissions reduction along with CCS. Across the board, decarbonizing is hard, expensive and not happening, at least not in heavy industry and transport. CCS is moving slowly but has the potential to decarbonize parts that other approaches cannot reach. There are positive signs. In Norway, Sleipner has a single well sequestering 1 million tonnes/year, equivalent to 300k cars or a 500MW gas fired power station. Overall Norway’s emissions are around 50million tonnes/annum. Sleipner works! It doesn’t leak and could easily scale. Last week Angela Merkel said ‘maybe Germany needs CCS’! Hydrogen from methane is also looking encouraging. The H21 Green project in the North of England is extracting hydrogen from methane. The remaining carbon turns to CO2 and is sequestered offshore. Hydrigen is a promising fuel for heavy industry and shipping.
Karin de Borst reported on Shell’s ‘QUEST’ to put carbon back underground. CCS is the only technology that can decarbonize heavy industry (cement, steel …) but CCS needs to accelerate. Today there are 18 large scale projects in operation and 5 in construction. Nearly 40 million tonnes was sequestered in 2017. The IEA 2°C scenario implies a 100x scale up to gigatonne levels by 2050, ‘a significant and urgent increase in current investment levels’. The technology is there. Capture solvents have been in use since the 1930s and CO2 transport and storage since the 1970s in oil and gas. Shell is involved in Northern Lights, OGO Clean Gas, Quest, TCM, Pernis, Gorgon and Boundary Dam. Quest is commercial scale CCS in Alberta sequestering a million tonnes/year for 25 years, i.e. 1/3 of the CO2 from the upgrader. But to reach 3GT/year we need a few thousand Quests and a new mind shift. As Professor Wallace Smith Broecker (Columbia University and (allegedly) coiner of the phrase ‘Global Warming’) has put it, ‘humanity has dealt with garbage, sewage and now CO2, we must learn how to capture and bury it’.
Iain Stewart (Plymouth University UK) wondered aloud how geoscience should be framed for the public and for policy makers. In regard to the world’s sustainable development goals, geology can be ‘squeezed-in’, but it is not central except to CCS. Unfortunately, there is little sense of urgency regarding CCS. ‘If you do a geoscience degree today you don’t see sustainability (or CCS). The same can be said of UK PLC’s priority research challenges. Geology is getting marginalized and there is a new cohort of student who ‘don’t want to work in oil and gas, (or in mining)’ hence the need for a rebrand on sustainability. Sign-up to the EAGE sustainability LinkedIn group or visit the EAGE decarbonization minisite.
In a Schlumberger booth presentation, Ahmed Adnan Aqrawi unveiled the Delfi developer portal (DDP). Aqrawi stresses the importance of ‘open software’ claiming openness in Schlumberger’s Ocean (2005), Ocean Store (2010) and now Delfi. ‘Open’ allows users to 'take things out and bring things in’. Today ‘1500 developers are using our openness’. Delfi is Schlumberger’s data ecosystem running under shared services in support of apps such as Petrel, DrillPlan, Olga and general-purpose analytics/ML. The DDP leverages the Google ApiGEE gateway technology in an E&P developer sandbox. SmartDocs and Drupal also ran. Delfi services provide coordinate conversion and access to Petrel objects from Jupyter notebooks and third-party map software. More from Developer.delfi.slb.com and the SIS Forum (which is not ‘open’) to be held in Monaco 17-19 September 2019. Comment: It is tempting to see the DDP as a counter to the embryonic OSDU!
In 2018, the then president elect Juan Soldo quit to return to his daytime job. This year, Peter Lloyd, president elect for 2020-2021 also resigned to enjoy his retirement. Jean-Jacques Biteau’s extended presidency will end next year as secretary treasurer Everhard Muijzert was unanimously voted in as the new president elect. Biteau (ex Total) observed that artificial intelligence has been applied to reservoir characterization for some 40 years! But now it’s firmly on the EAGE radar in the form of a AI special interest community. The EAGE is also jumping onto the digital bandwagon with an inaugural EAGE Digitalization Conference and Exhibition scheduled for 7-10 April 2020 in Vienna. EAGE finances appear somewhat challenged. The EAGE holding company loses money from its conferences and EAGE continues to spend its cash reserves. But Biteau assures members, EAGE is on the road to full recovery while maintaining service levels.
Next year’s EAGE will be in Amsterdam from 8-11 June 2020.
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