Oil giants innovate, push boundaries

The world’s hunger for energy is pushing global producers to invest more in new technology amid a rapidly changing energy landscape, energy ministers, executives and experts said Tuesday at the IHS CERAWeek conference in Houston.
“The story is if you don’t put anything in, you won’t get anything out,” said Juan Jose Suarez Coppel, director general of Mexico’s state-owned oil company, Petroleos Mexicanos.
Recent discoveries in deep waters and so-called tight oil rock formations have been among the inspirations for new investments.

Oil production from those sources is expected to more than double from 2010 to 2020, IHS CERA Director Leta Smith said. Production of tight oil alone will multiply nearly five times in that period, from 611,000 barrels to 3 million barrels per day.
“We anticipate that this is going to take off,” Smith said of tight oil.
From Colombia to Saudi Arabia, industry leaders say they are setting lofty goals and investing big dollars in expanding access to harder-to-reach oil and natural gas deposits.
Ecopetrol, the Colombian petroleum company, aspires to produce 50,000 barrels of oil equivalent per day from unconventional sources, like tight oil and oil sands, by 2020, said Enrique Velasquez, vice president of exploration. Colombian leaders hope to expand total national production by about 50 percent to 1.5 million barrels by 2020.
Baker Hughes CEO Martin Craighead said state-owned oil companies, in particular, are increasingly funneling capital into developing technology, rather than relying on oil field service companies.
“What seems to be changing is that the NOC has moved from learning best practices to becoming partners in innovation,” he said of national oil companies.
Taking chances
Saudi Aramco spends half its research and development dollars on high-risk groundbreaking technology, said Amin Nasser, senior vice president of upstream. The company is relying on innovative technology to “explore frontier areas in the kingdom,” including enhanced images of complex deposits below the ocean floor.
Technological advancements are critical to Saudi Arabia and other countries seeking to replicate a U.S. shale boom that has supplied the nation with a glut of cheap natural gas, Nasser said.
“A major challenge is the cost of exploration relative to the price of gas,” he said. “New technology and economies of scale will help us bring down costs as they have in North America.”
The company is also forging an aggressive campaign to uncover 100 billion new barrels of oil within the country.
Some recent major discoveries involved high risks and costs taken on by independent companies that pursued further exploration in areas that major energy companies had dismissed, said Angus McCoss, exploration director for Tullow Oil. McCoss said a large Tullow Oil discovery off Ghana was a result of a risky bet, based on seismic imaging.
“There had been others who had been in that acreage before and had moved on,” McCoss said. “We took a different view on risk … and made a breakthrough,” he added.
Such experiences have blazed a trail of more aggressive and creative exploration and production approaches, much of it sparked by the high return of oil prices in excess of $100 a barrel, said Peter Jackson, head of upstream research for IHS CERA.
“It seems that we get very creative and innovative at the two ends of the spectrum,” Jackson said, referring to extreme high and low oil prices.
Focusing on fracturing
Patrick Schorn, president of the reservoir production group for Schlumberger, noted the benefits of recent advances in drilling during a panel on Monday. Breakthroughs in hydraulic fracturing have drawn worldwide attention to the United States.
“The experience in the United States on this particular development and how to do it best is something that is looked at from all around the world,” Schorn said.
Energy companies from China to Norway have bought into U.S. shale in recent years. Paolo Scaroni, CEO of Eni, said the Italian company’s goal in its acquisition of a small Texas shale gas producer a couple of years ago wasn’t to become a major player.