Posted by Holger Kisker on September 1, 2010
Last week, I attended the ONS (Offshore North Sea) 2010 conference, one of the world’s largest energy conferences, with more than 49,000 participants, in Stavanger, Norway. The conference theme was “energy for more people,” an important goal, not only to keep pace with the growth of the world’s population (expected to hit 9-plus billion people by 2050) but to fight poverty and increase living standards around the globe. However, soon after the opening ceremony by King Harald V, it became very clear from the first panel discussion that the path forward to achieve this goal has many facets and that the leaders of the world, including politicians, academics, business people, and other authorities, are far from reaching consensus on the right path today.
Conventional Energy Resources
Global energy demand will increase by ~45% within the next 20 years (according to the International Energy Agency), but what will the distribution of energy resources look like by 2030? Most scenarios predict that fossil fuels will continue to be the primary energy source, with oil and gas making up 65% of the total demand. To no one’s surprise, most of the presentations and exhibitions at ONS 2010 were therefore dedicated to the future of fossil fuels that can be combined into the following themes to satisfy the energy demand of tomorrow:
- Unlocking new oil and gas reserves in the world. The concept seems to be straightforward: Overcome technical and political hurdles and drill deeper, faster, and more efficiently to carry exploration into new territories such as the Arctic or ultra-deep sea.
- Increasing the recovery rate.With currently >60% (world average, 54% in the Norwegian shelf) of oil remaining untapped in producing reservoirs, an increase in the recovery rate with new technology can have more impact on the global oil reserves than any new discovery.
- Shifting to natural gas. No question, natural gas is becoming more and more important. With more than 250 years of secured supply at current consumption rates, much lower carbon impact compared with oil and coal, and an increasing transportation and distribution network due to maturing liquefaction technologies, natural gas is one of the big hopes to satisfy the future energy demand.
On the other hand, there was a strong focus at ONS on renewable energy such as wind, tidal, waves, and solar. Statoil, for example, outlined its current engagement and future plans for offshore wind parks in the North Sea, a project that could deliver as much as 10% of the total energy demand in the UK. But let’s be realistic. Whenever one of the established leading oil and gas companies addressed the topic of renewable energy at ONS, it always happened in the context of “profitable business.” It became very clear at ONS that the oil and gas industry regards renewable energy as a business opportunity, not an idealistic investment to solve the world’s challenges. And as long as the political framework for new energy investments, which companies continued to request like a mantra at ONS, is missing, it is not likely that we will see major innovations in renewable energy coming from the established oil and gas companies.
The Role Of Technology
It was interesting to see that almost all of the discussion at ONS under the leading theme of “energy for more people” focused on energy supply and not on energy distribution. Of course, sufficient supply is a prerequisite to deliver energy to more people, but it won’t solve the problem alone. However, ONS is a technology and business event, and the technology challenges are mainly in exploration and production, and, not to forget – the margins as well. The oil and gas industry is a high-tech industry by nature but it has changed from a net technology exporter to other industries, to a technology consumer and follower. Today R&D investments in the oil and gas industry are much lower as compared with many other industries (e.g., pharma, automotive, or high tech), probably because the industry was simply doing too well during the decades of cheap oil. Another important observation regarding technology at ONS was the significant lack of coverage of information technology. There were only a handful of exhibition booths featuring information technology, mainly on seismic data or asset simulation, and I did not see a single key presentation that addressed the critical importance of information technology for the energy industry at ONS 2010 (including a speech by Mark Foster from Accenture, a company that lives on information technology adoption).
If we take into account that probably no other industry produces, processes, and distributes larger amounts of information than the oil and gas industry, along the whole hydrocarbon value chain from the well head to the gas pump (e.g., a single, daily seismic survey file can include several terabytes of data), and that the right piece of information at the right time can make a difference of billions of dollars in a licensing process or prevent a environmental catastrophe, the importance of information technology in the energy industry from data collection to process efficiency and decision support cannot be overestimated. Yet the industry uses information and communication technology mainly as an enabler, not as a strategic, competitive differentiator, as became apparent again at ONS 2010. There is tremendous value in a stronger adoption of information and communication technology in the energy industry and a huge opportunity for both – the industry and dedicated ICT vendors and service companies that can help in the adoption process. (More information is available in the August 13, 2010, “The Digital Drop: IT Opportunities In The Oil and Gas Industry”) Forrester report.)
“Energy for more people” is a long-term goal to address the world’s growing population – “more information technology for the energy industry” is an important step toward this goal to make the energy industry more efficient and successful for tomorrow’s energy challenges.
Please leave a comment or contact me directly.
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