Realizing the value of scientific knowledge – geosciences in energy industries – part two:

Published November 13th, 2000 - 02:00 GMT

Changing technical requirements:  

In the 1960s and 70s petroleum geoscientists looked for large structures and needed the conceptual understanding to recognize the correct model for the conditions.  

 

For example, recognizing the trapping potential of Middle Jurassic reservoir sands against an unconformity closure in the northern North Sea unlocked a succession of major discoveries.  

 

In the 1980s and 1990s, the emphasis was on learning how to use the potential of new tools to understand reservoir architecture and properties in much greater detail, reducing uncertainties. This has been immensely productive. But geological understanding and imagination are far from redundant.  

 

Finding more elusive resources - within mature fields and in frontier exploration - will not just be a matter of using better tools to recognize smaller and more subtle traps, but of building on diverse clues to unlock the unseen and understand the unexpected.  

 

Let me give two examples of the sort challenges we face. The Auk field was one of the earliest discoveries in the central North Sea. I remember the larger than life Australian chief petroleum engineer in the 1970s - unimpressed by the claims of geologists - saying he would drink every barrel of oil the field produced.  

 

He had a point because, although Auk has now been in production for 25 years, only 16 percent of the oil has been recovered. The problem has been locating the productive Rotliegend Aeolian sands among tight rocks.  

 

Shell Expro undertook a new study based on improved seismic processing and advances in Aeolian sedimentology. To get beyond the accepted paradigms, geoscientists went back to the original geological and geophysical data, and analyzed analogue outcrops. New stratigraphic understanding of the dune system enabled the sands to be properly mapped. Auk gained at least two more year's of life.  

 

Turning from subsurface dunes to those of the present day. Even after decades of work the geology of the Sultanate of Oman still has great capacity to surprise - such as challenging our understanding of how hydrocarbons are generated and trapped.  

 

In the late 1980s substantial hydrocarbon reserves were discovered in Late Precambrian carbonate and silica rocks entrapped in salt-related structures at depths of four to five kilometers. These are unique and puzzling in that both reservoir and oil were formed in Precambrian to Cambrian times.  

 

Learning how to produce this old oil has also been a considerable challenge. Very poor permeability requires fracturing to allow production. We have been helped by a team of world-class academic experts from universities in Bern, Boston, Dublin and Oxford. Oil is now flowing.  

 

These Precambrian rocks are also of considerable scientific interest because of their bio-geochemical events and episodes of faunal extinction and diversification at the Precambrian-Cambrian boundary.There will be many more such problems.  

 

Engaging with others:  

I have spoken about advances in tools and techniques. But success has equally sprung from new ways of working - integrating disciplines, sharing understanding, engaging with others. This has been profoundly important. 

 

Subsurface disciplines have been brought together to contribute their particular perspectives to a common understanding.  

 

But it requires more. Delivering value in an increasingly competitive industry depends on developing discovered resources quickly, cost-effectively and flexibly. Geoscientists must work together with engineers to achieve this. There is no longer time for a leisurely sequential process of exploration, appraisal, development.  

 

Technical activities only have value if they are commercial. Business capabilities are as important as technical skills. Particularly when geoscientists are evaluating, negotiating and securing new business opportunities.  

 

And it is not just a matter of working together with your neighbors - but in global teams utilizing global networks. We pursue learning and sharing systematically. Let me touch on two successful Shell programmers.  

 

Realizing the Limit has four thrusts - maximizing the value of subsurface knowledge, speeding drilling, making the best use of capital and increasing production.  

 

We envisage the perfect performance possible for each element of a task with today's technology - and then focus our global experience on achieving this. The results have been striking - for example halving drilling costs in the North Sea.  

 

We must also extend those technological limits with a constant flow of innovation. An internal venture capitalist scheme called Gamechanger seeks to harness the creativity of all our people -encouraging and evaluating ideas, and quickly turning them into new business value.  

 

We join with others to commercialize our advances - using commercial markets to achieve industry-wide scale and delivery.  

 

Gamechanger came up with ideas for intelligent wells - combining multilateral drilling, real-time measurement of reservoir conditions, automated control and downhole processing.  

 

This has huge potential for managing reservoirs more effectively and reducing environmental impact. Our WellDynamics joint-venture with the Halliburton - a major service company - will push them forward and commercialize them across the industry.  

 

Engaging with people goes beyond business. We recognize that many people have a stake in what a company like ours does. We need to understand and respond to their aspirations and concerns. This must involve everybody in the company.  

 

An academic foundation:  

The relationship between commercial and academic geosciences is vital.  

For us, the most important academic role is to educate the future geoscientists on whom we will depend - equipping them with the necessary scientific understanding, curiosity, imagination and independence.  

 

Attracting, developing, motivating and realizing the potential of such people will remain central to our success.  

 

We also rely on academic knowledge to solve particular technical problems. I mentioned the Pre-Cambrian oil in Oman. We are developing wider research alliances with key technology institutes in several countries.  

 

These links are valuable, not least in offering academic geoscientists access to high-quality data. But we don't want university departments to become commercial research consultancies.  

 

Above all we rely on the academic community to develop and pass on the wider geological knowledge which is the basis for progress.  

 

Realizing sustainable value:  

I believe that for energy industries realizing value means delivering the energy people need, while supporting sustainable development.  

 

By this I mean integrating economic, social and environmental considerations, balancing short- and long-term priorities, engaging with society. In Shell, we are committed to contributing to sustainable development. 

 

We bring to this the qualities of competitive enterprise:  

· responsiveness to the concerns and aspirations of customers, and to changing business conditions,  

· a compulsion to learn and improve,  

· a commitment to innovation and to offering new choices and solutions, and  

· a willingness to invest for the future. 

These qualities are inherent in competitive markets. Businesses without them succumb to their competitors. They are also vital for meeting the world's energy challenges.  

 

The first is to supply expanding energy needs as populations grow and wealth spreads. By 2050 there could be 50 percent more people, mostly in developing countries. Per capita income in developing countries has been rising by 2 percent a year - and per capita energy consumption by a nearly 3 percent. This may accelerate as major countries industrialize.  

 

By contrast, energy demand in developed countries has been growing slowly. It may soon peak as a result of socio-economic changes, market saturation, increasing efficiency and environmental measures. Shell scenarios suggest world energy demand could increase by more than half in 20 years.  

 

We expect oil resources - including heavy oils - to meet normal demand growth until at least after 2020, although this will require continuing technological advance. The timescale would be extended by rapid improvements in energy efficiency.  

 

Ultimate resources of gas are less well known, although there should be much more to find. Coal resources are very large but have expensive logistics and significant environmental drawbacks.  

 

There are abundant resources of renewable energy. The challenge is to make these economic. We are pursuing these possibilities - but don't underestimate the technical, commercial or environmental problems.  

 

We shouldn't look at this question of resources purely on a global scale. Countries gain from having their own energy sources, to meet their own needs or to export. As a geoscientist it is satisfying to contribute to a developing country's progress by identifying needed resources.  

 

Energy industries must respond to three major environmental concerns, about:  

· the impact of our operations to find and deliver energy,  

· the effects of energy use on air quality, and  

· the threat to climate systems. 

Operating standards have improved, although there is always further to go.  

 

Air quality is improving in developed countries - but is still a major challenge elsewhere. As well as industrialization and expanding transportation, we should not forget the harm from using traditional fuels.  

 

Climate change is a fundamental threat. The rise in global temperatures appears to be accelerating. The causal link with man-made greenhouse emissions is uncertain and the impact unclear.  

 

But we must take precautionary action. But this should not - and need not - unnecessarily jeopardize the economic development on which better living standards depend. There are no obvious and immediate solutions, but many possibilities and much learning to pursue. The complex energy systems on which people depend have to evolve.  

 

Such evolution is driven by the competition between energy sources to meet human needs - functional, economic, environmental, and, dare I say, emotional.  

Thus the unsustainable use of wood was extinguished by coal in 19th century Europe, but alas lingers on in Africa and India.  

 

Fuel oil overtook coal in Europe, but not in the US - and certainly not yet in India and China. In turn gas is backing out fuel oil, which is transformed into light transportation fuels.  

 

Solar photovoltaic - already successful in niches - may be waiting to spring forward. Sustainable biomass could have even more promise. Nuclear faces a crisis of extinction, but may yet come into its own. Hydrogen is waiting for a storage breakthrough to boom. And so on.  

 

We are moving from a world with a few simple energy species to a rich and exciting diversity of choice.  

 

Extending the use of gas is the most important immediate step for reducing greenhouse emissions and improving air quality. Gas consumption could double in 20. The challenge is to deliver it competitively.  

 

New ways of powering transport and generating power are emerging. High-efficiency, low-emission vehicles are entering the market. Attention is focusing on the long-term possibilities of hydrogen fuel cells - initially derived from fossil fuels and using existing infrastructure.  

 

Ways of dealing with carbon dioxide emissions - such as underground sequestration - are being investigated.  

 

Some people look for a more certain path, a more directed process - choosing future technologies and prescribing solutions. The world is too complex and too uncertain. Progress depends on establishing the conditions which encourage improvement, innovation and investment.  

 

Contributing to solutions:  

I discussed the challenges facing energy industries. Geoscientists have a key role in meeting those challenges - particularly in extending the oil and gas resources the world needs.  

 

This means identifying more resources and recovering more of them. Neither will be easy. Most basins have already been systematically explored and the industry has long focused on increasing recovery.  

 

But there is still huge potential in the continuing improvement in our understanding of subsurface - through advancing technology and knowledge - together with our ability to drill much more precise and productive wells. 

 

To underline how vital this task is, let me focus on China's expanding energy demand. This is largely met by coal which causes damaging pollution and emits much carbon dioxide. Helping China realize its aspirations to use more gas instead is vital.  

 

This means delivering economic gas from elsewhere, as LNG or in due course by pipeline. But maximizing the potential of indigenous gas resources is the essential foundation. This is a considerable technical challenge. We are contributing our experience in the Ordos and Tarim basins.  

 

Geoscientists also contribute to improving operating standards. Reducing the footprint of exploration and of production facilities, and bringing less gas and water to the surface, all depend on the quality of subsurface knowledge. 

 

I mentioned the possibilities of renewable energy. One possibility we are investigating is geothermal energy from hot fractured rocks. Unlike conventional geothermal energy this doesn't depend on limited sources of underground hot water. Rather it involves injecting and recovering water through hot rocks in a closed system.  

 

The geological possibilities for this are much wider. Our existing skills in well stimulation would be the basis for fracturing the rocks. Experience in drilling and managing water injection systems would also be important.  

 

But the foundation would be the geoscientific capabilities to identify locations with appropriate temperature, stress regime and rock strength characteristics, and to understand and manage the reservoir created by the fracturing.  

 

We are also working with others in the industry to investigate the possibilities for subsurface carbon dioxide sequestration, which may be extensive.  

 

And together with Siemens-Westinghouse we are pursuing emission-free power from gas - generated in solid-oxide fuel cells, re-injecting the carbon dioxide. We plan to install the first pilot plant in Norway.  

 

A challenging, worthwhile career:  

Would I encourage a young person today to join an energy company such as Shell?  

I can only say what I have found. Like most people I wanted a career that was challenging, stimulating, rewarding and worthwhile.  

 

An opportunity to apply my professional skills and passions in multidisciplinary teams, learning and contributing. An industry where I could develop and grow. I have found all these in abundance, throughout my career.  

 

I have tried to express the excitement of being an energy geoscientist - applying knowledge, imagination and technological capabilities to solve real problems and achieve valuable results through working with others all over the world.  

 

I think there can be few more worthwhile jobs than meeting developing energy needs in a sustainable way - a vital challenge for the 21st century.  

 

Source:Shell.com 

Mark Moody-Stuart - Mark Moody-Stuart, Chairman of the Committee of Managing Directors (CMD) of the Royal Dutch/Shell Group of Companies and Chairman of The "Shell" Transport and Trading Company, plc. at the Sir Peter Kent lecture, The Geological Society, The Geological Society, London, UK 

© 2000 Mena Report (www.menareport.com)

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