More than 2,000 oil and gas professionals from all over the world converged at the Bahrain International Exhibition in March to attend the 18th Middle East Oil and Gas Show and Conference (MEOS 2013).
Organized by SPE, the conference’s opening session presented a panel of high-ranking industry figures, who delivered their perspectives on this year’s theme, “Transforming the Energy Future.” The theme focused on current issues the oil and gas industry faces as it strives to meet future global energy demand with emphasis on the processes, technologies, business models, and human skills that will be required to meet those needs effectively and efficiently.
Delivering the keynote speech, H.E. Shaikh Ahmed bin Mohammed Al Khalifa, Bahrain Minister of Finance and Minister in Charge of Oil and Gas Affairs, said the theme of the conference was appropriate. “Transforming the energy future is well chosen as we live in an era where change is the norm and agility and proactivity mean the difference between success and failure,” he said.
Shaikh Al Khalifa said that the biggest challenge facing the industry is adapting to the accelerated rate of change that will propel the oil and gas industry into the future. “To adapt, we need to introduce new methods of thinking and new work processes to be able to meet the challenges faced by society in general and the energy sector in particular,” he said.
The game changers that will potentially have the most impact on the industry are unconventional resources, renewable energy, and energy efficiency, Shaikh Al Khalifa said. “One of the challenges facing the industry is the availability of skilled human resources. It is important that the industry ensure the continuous investment in human resources to supply the industry with adequate number of skilled engineers.”
Remarks during the executive panel session followed from Amin Nasser, senior vice president for upstream at Saudi Aramco; Martin Craighead, president and chief executive officer (CEO) at Baker Hughes; Paal Kibsgaard, CEO of Schlumberger; Sami Al-Rushaid, chairman and managing director of Kuwait Oil Company (KOC); and Sara Ortwein, president of ExxonMobil Upstream Research.
In his speech, Nasser of Saudi Aramco said that the industry needs to look not only at the supply side, but also the demand side in considering better and more efficient use of energy. “This is a solution that must look at both sides of the coin, and must be fundamentally sustained by new investments, talents, and technology,” he said.
Much of the kingdom’s oil and gas domains are either not explored or underexplored, Nasser said, adding that Saudi Aramco has recently expanded its exploration activities in the Red Sea.
The company also has completed a series of seismic surface surveys and is currently drilling its first deepwater well. “The Red Sea environment is very similar to the highly successful Brazilian offshore sea; it offers new challenges and opportunities for the subsalt exploration team,” he said.
While a recent push to increase natural gas exploration has been successful and allowed Saudi gas production to more than triple, Saudi Aramco is also aggressively targeting development of unconventional gas, he said. “Saudi Arabia has a significant geological basin with potential for shale gas and tight gas. We are focusing on three regions starting with the northwest of the kingdom,” he added.
Nasser said companies need to think differently to better locate, identify, and characterize their unconventional resources to ensure they are economic to produce.
Developing Saudi Arabia’s resources requires more investment in technology, managing its fields better, and expanding its resource base, as well as increasing recovery and exploring unconventional resources. “To find more hydrocarbons and to increase our ability to recover more from this resource base, we need substantial advancements from geosciences engineering, including modeling and simulation,” said Nasser. “At Saudi Aramco, we are committed to investing and even doubling or tripling our manpower in science and technology.”
Ortwein of ExxonMobil said meeting growing energy demand will require innovation and cutting-edge technology to be able to unlock new resources while gaining energy efficiency and allowing new supply to benefit more lives with less impact on the environment.
Oil will remain the main source of energy in the near future, growing 25% by 2040, but the most significant shift will occur with natural gas, as it will become the second-largest-used fuel by 2025. “Gas will grow faster than any other fuel source. Renewables are also growing rapidly, but by 2040, hydrocarbons will still remain the main source for energy needs,” she said.
Ortwein said that technology and innovation are keys to overcoming the challenges facing the oil and gas industry. “Twenty-five years ago, deepwater production was limited to 700 m, and now we are producing at just under 3000 m and exploring in greater depths. Technology and innovation are key tools for accessing new resources.”
Al-Rushaid of KOC said that the contribution of “easy oil” is decreasing while tougher-to-find and difficult-to-produce oil is increasing. Global oil demand is anticipated to rise from the current 88 million BOPD to 105 million BOPD by 2035.
Al-Rushaid said Kuwait has enough reserves to increase and maintain production capacity at 4 million BOPD, in line with its 2030 strategy. He said that most of the production growth is coming from primary and secondary recovery schemes in easy to medium complexity reservoirs. “However, it is our strategy to not overexploit our easy oil. We plan to create a better managed transition to the more difficult oil structure,” he said. “This means we are entering a more difficult unconventional arena, much earlier than expected, in order to create organic growth in capability and skills within the company.”
For KOC, an energy transformation will also come from development and use of heavy oil recovery, deep sour gas, and enhanced oil recovery (EOR). The company is well advanced in producing deep hot sour gas and also beginning to experience heavy oil recovery, both from the North Kuwait Reservoir. “We are fast tracking the evaluation of EOR technique, not just the facilities to inject, produce, and treat the last drop of oil, but we are also working on the required chemicals of extraction, the logistical challenge, and their application in massive quantities for our giant fields,” he said.
Al-Rushaid said his company has not even started playing in the arena of shale gas, but he said it will start soon. “You can see that our strategy in unconventional resources is to invest earlier, depending on project selection and pace of implementation,” he said.
By taking the risk earlier, KOC will create a gradual learning curve, he said, at the same time realizing benefits from earlier application of advanced techniques. “This also fits in with our strategy to always carry easy oil to mitigate surprises,” he said.
Reframing Geoscience
Craighead of Baker Hughes stressed the importance of understanding the Earth’s subsurface. Reframing geoscience, he explained, will play a major role in ensuring that the oil and gas industry delivers affordable energy safely, responsibly, and in a manner that is both economically and environmentally sustainable.
“Our industry is no longer solely about the extraction and distribution of hydrocarbons,” he said. “Rather, any discussion about energy is essentially a discussion about the much larger picture of survival, opportunity, and community.”
Focusing on global opportunities in shale development, Craighead cited the benefits of an approach based on geologic measurement and scientific models versus one that relies heavily on statistical data and a factory drilling mind-set. By applying sophisticated subsurface models and conducting detailed engineering on a well-by-well basis, the industry can be better prepared to meet the expectations of all stakeholders while dramatically lessening its footprint on the surface. Places such as China, Saudi Arabia, and South America, he said, will not drill hundreds of wells in a single play and use the law of averages to predict results.
“Instead, prediction techniques will be integrated with geoscience to identify commercial prospects earlier; de-risk fields faster and more effectively; and drill, complete, and produce in such a way that every well contributes to ultimate hydrocarbon recovery,” he said.
Additionally, innovations that allow measurement while fracturing, coupled with technologies that predict how fractures will perform, will have huge implications for the use and reuse of water.
“It’s important that we get this right,” Craighead stressed, “because society needs to know that energy will be there, that it will be affordable and accessible, and that both commerce and community will benefit.”
Kibsgaard of Schlumberger said that the oil and gas industry is no stranger to challenges and uncertainties. He said the industry is putting a lot of effort into advancing engineered fluid systems. “If you look at the consumption of water in US-based fracturing, a lot of it has to do with the fact that these are what we call ‘slickwater’ fracks. This is water and it is sand, so in order to make sure that the sand stays in suspension, we need a high rate and a high velocity and we also need a high pressure to be able to fracture,” he said.
He also said that there are different things companies can do with viscosity and adding density to the fluid in different ways other than just purely horsepower. “So we are looking at other ways that we can do this and I think over time, if we can achieve some of these milestones with having a more sophisticated engineered fluid system than just slickwater fracks, then we have a huge opportunity to reduce both the amount of horsepower as well as the amount of water that we consume in these plays.”
Unlocking Unconventionals
Panelists at another session discussed the technology that will be required to unlock unconventional resources.
Usman Ahmed, vice president of unconventionals and chief reservoir engineer at Baker Hughes, said the geochemical, geological, and geomechanical sciences are keys to identifying the sweet spot. “The sweet spots for unconventionals are not contiguous; they vary even within a particular basin. When finding the sweet spot, we need to select where to put the stage and when to avoid putting the stages,” he said.
Ahmed said that nanotechnology is playing an increasing role in unlocking unconventional resources.
Richard Newhart, team lead of subsurface and new ventures at Encana USA, said in his presentation titled, “Haynesville Fracture Stimulation Evolution and its Effect on Increasing Well Performance,” that shale gas is easy to find, but achieving commercial flow is difficult.
He said that it is important to build surface area in low-permeability (nanodarcy) rocks, adding that maximizing surface area in low-permeability reservoirs is the key to flow rate. “In the Haynesville, wells are in linear flow for many years or most of their life.”
Newhart also said that nanodarcy rocks require optimum construction of surface area to connect a low-permeability matrix system to a high-permeability fracture system.
“Well performance is driven by a simple formula that combines entry point count with the volume pumped,” he said. “Completion score serves as a proxy for the total fracture surface area generated by the completion score, which includes fluid/cluster, proppant/cluster, and the number of clusters,” he added.
Unconventionals in Saudi Arabia
There are vast amounts of unconventional natural gas associated with various rock formations in different geological environments in Saudi Arabia. The most common natural gas resources include tight sand gas, shale gas, coalbed methane, and gas hydrates. Among these resources, only tight sands and shale are present in vast amounts in Saudi Arabia.
Potential exploration targets for unconventional natural gas in the kingdom are the Paleozioc succession, including the Qasim, Sarag, Qalibah, Jauf, Unayzah, and Khuff formations. “Although the outcrops of these formations are relatively limited along a curved belt surrounding the Arabian Shield, they are extensively distributed in the subsurface,” said Ali Sahin of King Fahd University of Petroleum and Minerals in Saudi Arabia.
A comparison of porosity and permeability data representing the Paleozoic succession from the Rub’ Al-Khali Basin with corresponding data from the producing tight gas formations from several US basins indicates close similarities. “Unconventional problems require unconventional solutions. Therefore, it is essential to adopt an unconventional approach to finding a solution for unconventional natural gas exploration and production problems,” Sahin said.
Developing these resources and producing them commercially also will require enabling existing technology and developing new ones as well.
Samer Al-Ashgar, manager of EXPEC Advanced Research Centre at Saudi Aramco, said that emerging and innovative technologies are needed to improve the economics of reservoirs in Saudi Arabia.
Currently, Saudi Arabia is not only looking for the extension of existing technologies such as multistage fracturing, but it is also focusing more on long-term, higher impact research programs that are typically of much higher risk. “Multistage technologies are important and the industry will continue to develop them and we will participate in their development,” said Al-Ashgar. “But to optimize cost, we need to focus on new, innovative, and cost-effective fracturing techniques.”
Al-Ashgar said that Saudi Aramco’s EXPEC Advanced Research Centre is working on developing a technique with a partner to control the initiation and the propagation of multiple fractures in openhole horizontal well, without mechanical isolation. “The concept here is based on creating several weak points for fracture initiation that bypass near-wellbore stress, to place all fracture in one operation,” Al-Ashgar said. “This, of course, should drastically reduce the completion cost. Several labs experiments have successfully been conducted for planning a field test before the end of this year.”
Water scarcity in the kingdom requires a new look at fracture treatment. “Of course, gas fracturing offers a solution to create a high-quality and extensive fracturing network without using proppant, but this technology helps us in making our sweet spots even sweeter,” he added.
Talent Branding
A key issue facing the industry is talent and retention. A talent retention workshop focused on branding, looking at it from both sides. Najwa Azaimi, vice chairperson for publicity for the SPE Saudi Arabia Section and a professional development and training adviser at Saudi Aramco, said that branding helps improve the career prospects of professionals in the oil and gas industry, because it provides the power of recognition and reputation for products and people.
Both companies and engineers must stand out in a competitive talent market. “Companies now look for an engineer who is creative, innovative, and who has communication skills and is assertive,” she said.
The Exhibition
More than 300 companies from 30 countries exhibited at MEOS 2013, which covered all areas of the upstream oil and gas industry, including production, reservoir management, drilling, completions, measurement systems, geology, geophysics, automation, transportation, health and safety, and information technology.