The following are excerpts from a lecture by Phil Watts, managing director of the Shell Petroleum Company and group managing director of the Royal Dutch/Shell Group of Companies. The lecture was delivered at the European Association of Geoscientists and Engineers conference, which took place in Glasgow, Scotland.
Technology is central to energy companies’ performance, prospects and ability to contribute to society. Continuing advances are essential for meeting business challenges and responding to societal expectations. Technology success depends on people’s skills, understanding and creativity.
All companies today rightly focus on the bottom line. In such a competitive and demanding environment, any business which didn’t would soon regret it.
The seismic adventure
Digital recording allowed computer processing of the data using techniques originally developed in communications theory and eventually the use of 3 Dimention ( 3D) seismic images.
Shell was among the first to use 3D commercially – starting with a survey at Schoonebeek in the Netherlands in the mid 1970s. Seismic migration went from being a special process to a “must have.”
3D seismic greatly reduced the uncertainties in drilling high-cost wells. This was particularly important in the North Sea. With growing confidence in the technique .At the beginning of the 1980’s, Shell recorded just a few hundred square kilometers. In 1991, 18,000 km.
3D started off as a tool for development and appraisal. Initially, we only used it over producing fields. But – as seismic contractors vied with each other to add more and longer streamers, larger gun arrays, and bigger and bigger vessels – it became possible to shoot 3D economically over much wider areas. It became the economic way to work.
During the late 1980s, Shell used 3D seismic as an example of successful technology dissemination. Quickly disseminating new techniques and sharing learning remain fundamental.
Seismic imaging continues to be driven by technology advances in migration ( oil migration – Albawaba) . We have continued to focus on this area. Pre-stack imaging and pre-stack depth migration are now applied routinely to entire 3D data sets – providing much clearer definition.
Old surveys are being re-acquired with new techniques – such as this high resolution survey in Brunei. Or with those which provide new images – such as multi-component seismic. These developments are vital to exploit other industry developments, such as the accurate targeting of multilateral horizontal wells.
Now, a new dimension has been added to 3D – time. Time-lapse, or 4D, seismic can be used to track production in the reservoir – seeing what is left behind and where. Norske Shell used time-lapse seismic on the Draugen field – updating a 3D survey done just before production started in 1993. They found the expected water flow had been disturbed by a fault. They changed the planned location of a new well – and were rewarded by record production of over 70,000 barrels a day.
There is bound to be increasing focus on maximising production from mature reservoirs . We see 4D as a key technology for doing this.
Other seismic techniques have also developed rapidly, in particular in the field of visualization and interpretation. We are all now familiar with large scale visualization CAVES – although the technology has only available a couple of years. Such ‘reality centres’ are important for developing shared understanding among multi-disciplinary teams.
Shell is working to extend visualization – on interpretation workstations and desktops – to allow working together in world-wide ‘virtual’ teams.
Shell is experimenting with a device called a ‘haptic’ mouse to extend our sense of the subsurface to actually ‘feel’ it. It seems a long-way from the jar of colour pencils .
Geophysical Developments
Seismic data are just one source of date for integrated subsurface models – combining static geological and dynamic flow models.
Shell continued to focus on developing proprietary modelling and simulation tools – when others have been moving to third-party products. We believe we get very good value from this investment .
Shell began producing from the Leman field in 1968. It was expected to last 20 years. By using the latest technologies we now expect to keep producing until at least until 2020. For example, a visualization of the top of the reservoir from a 3D seismic volume shows the complexity of the faulting. Reservoir modelling then determines the extent of the remaining gas reserves – which can be accessed with horizontal wells.
Integration is being extended from the subsurface to surface facilities – from reservoir to point of sale.
For example, integrated subsurface and surface modelling of Sole Pit area gas fields, in the southern North Sea, enables to optimise development – very important when costs are being driven down in liberalised gas markets.
3D seismic transformed our industry in the 1980s. In the 1990s, the prize goes to the progression of major advances in drilling – long-reach, horizontal, slim, multilateral, coiled tubing.
The impact of such advances is illustrated in the Yibal field in Oman – still the country’s most important producer three decades after coming on-stream. The ability to extract more from such mature fields will be a vital thrust – and an important competitive advantage as major resource holders call on the international industry’s expertise.
Wells are getting “smart”. Combining multilateral extensions, real-time measurement of reservoir conditions, automated control and down hole processing will allow us to manage reservoir performance much more effectively – and with less environmental impact.
Shell has formed the Well Dynamics joint-venture with Halliburton – combining a range of technologies and complementary experience. One area where such wells will have particular value is in deep water – because of the high cost of well support.
Deep water is one of hottest topics in our industry – over 35 billion barrels have been discovered in water over 500 meters deep. Shell is the leading deep-water developer, with world-wide operations.
There are huge technological challenges in extending into deeper water. Relatively few fields have been developed in over one kilometre of water – Ursa platform was installed in 1,100 metres in the Gulf of Mexico last year. But the industry’s sights are already set on even deeper possibilities.
The weight of the fluid column on unstable formations is a major challenge for deep-water drilling. Shell is developing a sub-sea system to pump drilling fluids from the seabed.
Another key issue is how to extend drilling reach while retaining the well bore to enable the high productivity deep-water economics require. Shell expandable tubular technology – expanding pipe diameter in situ – offers a solution.
Others challenges involve remote intervention, extending sub sea flow-lines and assuring flow, and developing ultra-deep platform concepts. But there is another important point. Deep-water is unforgiving – physically and economically. There’s no tolerance for failure. Success depends on integrating a range of advanced technologies.
Oil Sands
Shell Canada’s Athabasca oil sands project uses the latest low-temperature extraction techniques, environmentally friendly water recycling and gas-fired co-generation, and hydrogen upgrading. It will produce high quality fuel for North American motorists.
What is important is that the technology for exploiting non-conventional resources , is developing very rapidly. Present high oil prices shouldn’t blind us to the competitive pressures.
LNG
Shell LNG designers have been able to drive down the capital – and also operating – costs of LNG plants. There is no magic bullet. It depends on a comprehensive toolkit of technologies, as well as good people.
This hard- won technological competence provides the judgement to push limits – for example in installing the largest ever processing trains in the new Oman LNG plant. The plant – which exported its first cargo in April – is the cheapest ever green - field development. Shell continue to expand the LNG toolkit. Floating LNG plants offer the possibility of commercialising smaller offshore gas fields.
The gas-to-liquids technology has an important future. It is already proven at a commercial scale in Malaysia. A breakthrough in catalyst technology in Shell Amsterdam laboratory has cut costs significantly.
Gas-to-liquids now offers an alternative to LNG – or complementary building block – for commercialising distant gas reserves. It delivers ultra-clean, high-quality products – in increasing demand as fuel quality standards rise.
Power generation is another way of extending the gas value chain – from molecules to electrons. We see it as a vital extension of our gas business – helping add value from retail to reservoir.
Our main power vehicle, InterGen, is a leading independent power developer with a world-wide portfolio. It applies advanced generating technology to maximise efficiency and minimise impact.
For example, its Rocksavage combined cycle gas plant is guaranteed to achieve 58 percent thermal efficiency – the most efficient such plant in Britain.
Making the most of technology - all technology
Although Shell has an excellent labs ( class research centres in Rijswijk, Amsterdam and Houston. These laboratories work on both revolutionary research – seeking the new ideas which will change our industry – and evolutionary research – pushing forward existing technologies) it is seeking to engage with the wider technology community, and make alliances with key technology institutions around the world – from Delft Technical Institute to the Colorado School of Mines, NTNU in Trondheim to the Russian Academy of Sciences. As well as working with others, it is important to learn from different industries.
The computer games industry provided virtual reality techniques to help plan operations more cost-effectively and safely – for example depicting the seabed 1,000 meters down off Nigeria where we are installing the facilities for the Bonga field.
Our Game changer scheme encourages people to put forward ideas to a panel of their peers – to be accepted or rejected within one week. Money is available to work them up quickly – before review by technical and commercial experts. Then a structured process seeks to prove value and feasibility – or otherwise – as quickly as possible.
Game changer acts as an internal venture capitalist. The focus throughout is on developing new business propositions – to change our own game or commercialise. The results have been striking – in such areas as cheap exploration, smart wells, non-conventional energy, energy conversion and environmental improvement.
We have just formed a joint-venture with the Beacon Group to develop new energy technology businesses. Beacon is a leading New York based private equity investor specialising in the energy sector – in which it has already invested nearly $900 million. The first venture of the partnership involves our Twister supersonic gas separator – which has no moving parts, produces no emissions, is much smaller and saves lots of money.
Our ‘Drilling the Limit™’ process has proved particularly powerful. It starts by understanding what is required to perform each aspect of a job perfectly – the ‘limit’ with present technology – and then pursues this perfection. Shell companies around the world have reduced drilling costs by more than 20 percent on average when they use it. Drilling times were halved here in the UK. In the Gulf of Mexico deep water, we drilled twice as fast as our benchmarked competitors.
In conclusion
Energy industries face tough challenges, including:recovering more from mature reservoirs; accessing more difficult resources; achieving higher operating standards; profiting in highly-competitive markets; finding new opportunities to squeeze costs; and coping with volatile prices.
Technology is the prime means of meeting such challenges as well as achieving competitive advantage and seizing new openings. It is also vital for delivering those higher standards society requires, such as: safer operations, less intrusive seismic acquisition; slimmer, more productive wells; down hole oil and gas processing; smaller facilities; and reduced emissions and discharges.
More fundamentally, our energy systems need to evolve in response to developing needs and concerns. We will need ‘conventional’ energy for a long time. The role of gas will be particularly important in reducing carbon-dioxide emissions.
Evolution depends on technological innovation. It is at the heart of our businesses.
AlBawaba--MEBG.
