By JIM REDDEN
HOUSTON -- While ample evidence exists to effectively debunk the peak oil theories, locating and extracting reserves that are more than capable of meeting future demand remains a primary challenge going forward, a diverse panel of national and international companies said Tuesday morning at the Offshore Technology Conference.
Between 2010 and 2035, we see energy demand increasing by 51%, and 82% of that demand will be met by oil and gas, said Farouk Hussain Al Zanki, CEO of Kuwait Petroleum Corp. (KPC). The primary challenges we face in the future are availability, reliability and affordability of energy supplies. These are critical for the good of societies.
Al Zanki was one of six panelists, representing operators, service companies and consultants, in a standing-room only panel discussion that examined the changed patterns that mark the global energy outlook. Joining him were Ali Mosheri, Chevrons president of Africa and Latin America; Carlos A. Morales-Gil, Pemex director general; Shell Director of Projects and Technology Matthias Bichsel; Matt Rogers, director of McKinsey and Derek Mathieson, Baker Hughes president, Western Hemisphere.
Morales-Gil said one of the biggest challenges for international oil companies (IOC) is gaining access to the mammoth reserves held by the national oil companies (NOC). He said, however, that partnerships are critical in providing the energy required for the new generation.
The state oil companies today hold some 81% of the worlds reserves of hydrocarbons, he said. It is imperative that any partnership clearly define the roles all parties are to play in joint developments. The partnership must be clearly defined to instill confidence during execution and management.
Shells Bichsel said IOC joint ventures and production sharing arrangements with national oil companies are not necessarily confined to the latters home country. He pointed specifically to Shells joint work with Chinas CNOOC, which has extended to major projects in Qatar and Australia.
Our partnership with CNOOC goes beyond its national boundary. Today, we have several projects in Qatar and also are working together to develop coalbed methane in Australia for LNG export, he said.
Citing Shells Innovation Through Collaboration initiative, Bichsel said joint development and safe application of emerging technologies hold the key to meeting ever-increasing demand.
We are involved in a number joint industry projects, including deepwater subsea containment, and those will increase in the future.
Morales-Gil echoed that sentiment, citing the critical importance of continually developing new technologies, as the industry moves into ever-deepening waters and accelerates its push for unconventional onshore reserves. In deep water, for instance, he pointed specifically to new developments in flow assurance and new-generation robotics, which he said have contributed significantly in optimizing production in deeper waters.
To meet the increased future demand, Al Zanki said Kuwait Petroleum has embarked on a major initiative to increase production to 4 million bopd from its current output of 3 million bopd. The national company also is expanding its refining capabilities with the aim of producing up to 930,000 bpd of refined product.
In February, KPC unveiled a major enhanced oil recovery and reservoir management program in the Divided Neutral Zone that includes, among other advancements, pressure maintenance, chemical flooding and water-injection projects. At the same time, the state operator announced its intention to pursue growth in petrochemicals, both inside and outside of Kuwait, with a partner focusing on high-growth petrochemical products.
Over the next five years, Kuwait Petroleum Corp. will invest about $270 billion in both upstream and downstream projects, Al Zanki said.
Al Zanki pointed out that unlike years past, OPEC member countries no long hold total sway over global oil prices, a trend he said will only continue. We now see $100/bbl oil prices, even though OPEC has increased production significantly. Non-OPEC production may account for more than three-fourths of global supply by 2035, he said.
Much of that supply, the panelists agreed, will come from the unconventional plays. A principal target today is the unconventional oil and gas in North America and elsewhere, he said.
Morales-Gil said beleaguered U.S. gas producers can take heart, as he envisions gas taking an increasingly higher role in the years ahead. It is ironic that a few years ago, North America had the highest gas prices in the world, and now it has the lowest. Non-conventional gas will increase in importance, and that is all because of technology, he said.
This article appeared in the May 2 official newspaper of the Offshore Technology Conference. To read those newspapers in full, visit the HPInformer blog by clicking here.