The region’s top upstream event took Abu Dhabi by storm in November. Oil & Gas Middle East brings you the highlights from the conference sessions and exhibition floor
There is a general consensus throughout the oil and gas industry that some very fundamental shifts are taking place that are bringing about massive change to demand, supply and production.
At a Sustainable Growth plenary session hosted by ADIPEC in November, some of the industry’s heavyweights met to discuss the challenges and opportunities that oil and gas companies will face in the coming decades.
Global demand for energy is continuing to grow: “back in 1908, the world consumed 2 million tonnes of oil equivalent per day, now it consumes 32 million tonnes,” said Robert Dudley, group chief executive of BP. “By 2030, it should rise, according to current trends, to 45 million tonnes per day,” he continued.
Antonio Silva, chairman of the management commission of Partex Oil and Gas, echoed the sentiments by pointing out that only a few years ago, the one billion people living in OECD countries producing three-quarters of the world’s GDP, consumed more energy than the 5.5 billion people in the remaining countries in the world.
But this trend was reversed in 2008 and developing countries are creating the largest demand for oil.
Silva also pointed out that in 2009, China consumed 2250 million tonnes equivalent of petroleum, 12% above the USA. But just nine years before that, the USA consumed twice the amount of private energy than China. The changes have been rapid and profound.
With the global population expected to grow from 7 billion today to 8.5 billion in 2025 and a car fleet that is expected to quadruple as people around the world demand higher living standards, meeting the increasing demand for energy will be a colossal challenge.
Fortunately, Christophe De Margerie, chief executive officer of Total, believes that “the notion of peak oil is not the subject anymore.” And many within the industry agree.
A handful of discoveries throughout the world this year, including within the Middle East, have settled concerns that most of the world’s oil had been discovered. But now, the problem is not the availability of resources, but access to them.
For Dudley, meeting demand will require four main steps: extending the life of today’s brown fields, finding new green fields by entering more remote geographies, unlocking more unconventional gas while increasing conventional gas investments and using energy as efficiently as possible while creating an increasingly diverse
energy base.
There are both political and technological barriers to accessing more reserves. The entire plenary agreed that future production levels hung on the commitment which national oil companies, international oil companies and governments made to ensure the oil keeps flowing.
For Dudley, the global oil and gas industry is now entering a new chapter. In the early to mid-20th century, IOCs had very strong control over the production processes throughout the world, but particularly in the Middle East.
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This was followed by the emergence of NOCs and a return of resources to natural control. But now, countries and companies are finding more ways to co-operate and complement each other.
“Industry will need to forge new and innovative partnerships,” agreed Morten Mauritzen, president of ExxonMobil companies in Abu Dhabi. “And government will need to develop sound policies that enable the development of all economically competitive sources of energy,” he said.
Technology has also allowed companies to extend the lives of existing oil reserves, enhancing recovery with strategies that can take into account decades of previous production.
According to De Margerie, “technology will be the driving force of our companies.” Recent advances in seismic surveillance and deep-sea drilling have opened oil companies to new opportunities, as they can now drill deeper and smarter.
“Innovation has allowed us to move into ultra deep water, taking technology from the drawing board to execution, to creating engineering models. Innovation has led to technology such as extended reach drilling, and 4-D seismic that increase safety, and reduce our environmental footprint,” said Mauritzen.
Environmental stewardship was a key point for all the speakers, both De Margerie and Silva highlighted the challenge of addressing climate change. “We cannot negotiate with nature,” said Silva, who also mentioned the opportunities with the North Pole opening up.
The speakers also touched on the need to develop future generations of oil and gas leaders. “We are all facing skill shortages,” said Sami F. Al-Rushaid, chairman and managing director of Kuwait Oil Company.
“We are also working hard to attract recruits with increasing focus on developing home grown capabilities,” he continued. The company is planning to increase recruitment by 4% per-annum, and its workforce is expected to double by 2030.
To close the talks, Silva concluded that the “winners in the coming decades will be the organisations that are able to adapt and change to the new landscape, build a network of knowledgeable staff, create new markets, build new partnerships and pay attention to local, in-country values; in alignment with the interests of the country’s social responsibility projects.”
And Mauritzen added that “industry must continue to operate with integrity, invest with discipline, forge strong and innovative relationships.”
In an interview with the ADIPEC News, the daily event newsletter, Ali Al Jarwan, ADMA OPCO’s chief executive revealed: “New grassroot field development requires investment, and this will be between $10 billion to $15 billion in total by 2019 — if we implement all projects we are considering.”
The CEO also revealed that the oil price throughout 2012 was suffcicient to support all of Abu Dhabi’s enormous upstream expansion plans.
“It seems that demand for oil will remain high and both supply and demand will continue to be tight for companies looking forward to developing traditional production. Oil prices continue to trade in the $80-$120 per barrel band, which provides assurance over the immediate outlook for investment,” said Al Jarwan.
He said Adma-Opco is pursuing 1 million barrels per day (bpd) production target and the majority of this will be completed by 2017, raising it from the current 600,000 bpd.
“Around 100,000 bpd of this will come from Lower Zakum, while the new volumes will come from three main fields – Umm Lulu, Satah Al Razboot (sarb) and the Nasr field, which will contribute 270,000 bpd. The remaining 30,000 bpd will come from existing fields, mainly Umm Shaif,” said Al Jarwan.
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Mohammad Sahoo Al Suwaidi, Gas Director of ADNOC and the recently appointed Chairman of ADIPEC 2013 said the conference and exhibition had been a clear success.
“ADIPEC has grown strongly in recent years, reflecting the position Abu Dhabi and the Middle East now hold in the global supply of oil and gas,” said Mr Mohammad Sahoo Al Suwaidi, Gas Director of ADNOC and the recently appointed Chairman of ADIPEC 2013.
“Interest in the event has filled the venue and the conference programme has never been stronger,” he added.
“Increasing the frequency of ADIPEC will accommodate the growing significance of natural gas in the global energy mix,” said Mr Al Suwaidi. “Gas is replacing coal as the world’s main source of energy after oil, partly because its cleaner burning properties are making it a preferred fuel for electricity generation,” he added.
“The global energy mix is diversifying to include both hydrocarbons and alternative sources such as renewables to meet growing energy demand and reduce carbon emissions,” Al Suwaidi said.
“Natural gas is therefore assuming greater prominence as an energy source and the conference programme next year will bring these developments into clearer focus,” he added.
“The ADIPEC conference programme has always adjusted to take into account new industry trends and this will continue as we annualise the event from 2013,” Al Suwaidi added. “ADIPEC will remain an oil and gas event but next year’s conference will spotlight the gas sector,” he concluded.
Away from the Plenary session, Oil & Gas met with Matthais Bichsel, Shell’s projects and technology director, who said he continues to be excited about the progress Oman is making with enhanced oil recovery. He says the journey for EOR is far from over and Oman will see some very exciting progress in the years to come.
“I think the challenge in PDO has been multiple. I have worked with PDO in different phases and I am very pleased with the progress,” Mathias said.
“The development I am hoping to see in the coming years is the use of modern seismic technology. The azhimuth seismic technology we used in the Gulf of Mexico is being brought to Oman,” said Bichsel.
“We have got the algorithm to Oman and we are able to image the sub-surface better and also get sharper images of the reservoir. We will continue to support PDO in their efforts,” he added.
Bichsel also said the next step in EOR was making it more cost effective. One of the technologies for that is using concentrated solar power instead of gas.
This has been made possible because of Shell’s tie-up with Glasspoint. GlassPoint manufactures solar steam generators for the oil and gas industry worldwide.
