SPE Annual Conference Highlights Global Challenge of Energy Sustainability

Panelists discuss affordable energy at the opening general session of this year’s ATCE.

More than 7,500 oil and gas professionals and 350 exhibitors gathered for the 2014 SPE Annual Technical Conference and Exhibition (ATCE) on 27–29 October in Amsterdam, the second time the conference has been held outside the United States.

“This year’s ATCE offered nearly 400 peer-selected technical papers representing all six SPE disciplines,” said Jeff Spath, 2014 SPE President. “Gathering here in Amsterdam provided a global perspective reflecting SPE’s success with its growing membership, increased technical content, and strong financial performance.”

Opening Session

At ATCE’s opening general session, panelists from ExxonMobil, the International Energy Agency (IEA), Pemex Exploration and Production, and Technip discussed the multidimensional challenge of providing and sustaining affordable energy for the world.

Asked about the single biggest challenge faced by the industry in the provision of affordable energy, panelist Neil Duffin, president of ExxonMobil Development Company, said the increasing capital intensity of projects is challenging the ability to bring in projects on time and on budget while using capital efficiently.

Chris Beeson, a senior energy analyst at IEA, discussed that challenge at different levels: for individuals, countries, the world economy, and the planet. “We should always remember that there are currently more than 1.3 billion people in the world without access to modern energy sources,” he said. It will take a continued international commitment to address this, he said.

Some countries are paying more than others for energy, which affects their competitiveness and need to become more efficient. For the world economy, the key question is “what level of potential costs or prices can (it) support without going into … a bigger downturn than currently?” Beeson said. “And finally, we should not forget the issue of climate change, which is a big question of whether the planet can afford (its)energy.”

Affordable energy was the main topic of discussion at the opening general session.


Gustavo Hernandez, general director and chief executive officer (CEO) of Pemex Exploration and Production, said that the biggest challenge for providing affordable energy is “meeting demand growth in a sustainable way.” The Mexican government’s framework for stable, secure, and environmentally sustainable energy is “what people have called the triple dilemma,” he noted.

On the effect of current declining oil prices, Beeson said that the IEA had recently lowered its projection for the increase in global energy demand next year, but “we are not talking a dramatic drop.” In the longer term, demand “is going to continue to grow. It is not going to grow as fast as in the past, but we have absolutely no doubt it is going to grow,” he said. The demand growth means that supplies “will probably come to a saturation point in 10 years, so, sooner or later, supply issues are going to become tense again,” Beeson said.

New Approaches to Challenges Win USD 60,000 in R&D Contest

Stephen Rassenfoss, JPT Emerging Technology Senior Editor

Novel ways to prevent the buildup of pipe-clogging asphaltenes, enhance production with a molecule that grows and shrinks as needed as it moves through a reservoir, and a formula drawn from quantum physics that could reduce seismic data processing overload were winners of the first SPE Research and Development Competition.

The winners were chosen after six finalists pitched their ideas of how to disrupt the industry’s status quo with new ways of attacking exploration and production’s grand challenges, often with methods from outside the industry.

A team from The University of Texas at Austin (UT) won the top prize for a method that uses an electrical current to create a thin layer of water on the inner walls of a pipe to prevent hydrocarbon buildup without the cost and environmental risk of using chemicals. “I am not relying on chemistry. I am using electricity to attract a water-wet surface and repel” hydrocarbons, said Vaibhav Bahadur, an assistant professor of mechanical engineering at UT. The water needed comes from the production stream. The pipe used must be coated to block corrosion, which is a problem when water and electric power are present together.

Vaibhav Bahadur presents his winning research proposal at the first Research and Development Competition at ATCE.


In second place was a proposal presented by Blake Teipel, a graduate research assistant at Texas A&M University. The team created molecules that can assemble in the ground into larger “networks” to increase the push by a waterflood. What makes them different is their ability to break apart to get through tight spaces and then come back together in a large molecule again. Early tests showed the material can be formulated to perform at peak levels based on the temperature and pH content of the reservoir and can do so at prices comparable to those of current methods.

A formula based on quantum mechanics won third place. Omar Laghrouche, a professor at Heriot-Watt University, created a method for drastically streamlining the data gathered during seismic testing to allow faster processing that allows more simulations. “It is 90%, or more, simpler” than the typical method of using many more data points, he said. This method can be used to reduce the cost of basic processing or expand what is done with many more forward simulations run in the same time or analysis incorporating a wider range of bandwidths.

The awards from the corporate sponsors were USD 30,000 for first place, USD 20,000 for second, and USD 10,000 for third. Even more valuable was exposure to the judges from some of the biggest oil and service companies and technology development leaders from the industry.

All the proposals were expected to take on grand challenges set out by SPE. Better management of produced water was a grand challenge undertaken by Mark McHugh, a professor of the chemical engineering department at Virginia Commonwealth University. The goal of the project is to remove salts from high-volume streams of water that used microwave heating and pressure reductions to deliver the sharp reductions in energy use seen in other industries, such as ceramics. Placing a microwave element near the fluid increases the efficiency, but the largest gain was from pressure reduction, which can significantly lower the temperature at which water separates from salts.

Another project drew on management science to address the challenge of carbon capture and storage. Robert Perrons, a professor at  Queensland University of Technology in Australia, used collaboration models developed by computer companies, such as Intel and Microsoft, to create the broad coalitions necessary to create the personal computer business. Those methods, which have been exported to other businesses, could offer a road map for creating coalitions of companies to remove greenhouse gas from the atmosphere by injecting carbon dioxide into the ground for permanent storage. Perrons turned to that system because it has been used to create coalitions that “span several different businesses that do not normally work together.”

A method using nanotechnology to clean up groundwater polluted by hydrocarbons could be applied to freeing the remaining oil in older reservoirs with coating technology designed to supplant oil on surfaces that attract oil by reducing the interfacial tension, said Christos Tsakiroglou, research director of the Foundation for Research and Technology Hellas.


Also on the first day of the conference, the SPE Sustainability Task Force held its panel session on “People, Profit, Planet: Advancing Practices That Balance Economic Growth, Social Development, and Environmental Protection Today and in the Future.” Moderator and task force chairperson Johanna Dunlop, global citizenship manager at Schlumberger, said the goal of the session was to give operations people an enriched view of how these topics can be managed and how they affect business performance.

2014 SPE President Jeff Spath speaks at a
Sustainability Task Force special session.

In his presentation titled “Sustainability—Why SPE Has Begun Work in This Area,” Spath said the oil and gas industry has been thinking about and “doing” sustainability for nearly 20 years, since the Shell Brent Spar decommissioning event in 1995, when both social and environmental incidents gave the industry a sustainability wakeup call, much like the Piper Alpha disaster that raised a safety call in 1988.

Unlike the Piper Alpha explosion, the decommissioning of the Brent Spar did not lead to a commission being formed and regulations being drafted and enacted. Instead, activists outside the industry led campaigns to which the industry at first responded through public relations campaigns and then, increasingly, with efforts to understand the concerns and improve performance. “In other words, our industry did not initially take control of its own performance,” Spath said.

Twenty years after the Brent Spar incident, the industry is still struggling with how to define sustainability performance, who would define it, and how it could be measured in the absence of regulation. “Over time, practices emerged, industry groups formed, sustainability disciplines matured, best practices emerged, and sustainability professionals joined the industry,” Spath said.

In 2010, SPE decided that this activity was not a passing fad and that it was time to start contributing more proactively. “We formed a strategic task force and began to analyze how we could best accelerate the integration of sustainability practices to the operations of our industry,” Spath said.

The SPE Task Force of more than 20 sustainability professionals homed in on a gap for which the mission is a perfect fit: competency development.

Alyson Warhurst, founder and CEO of Maplecroft, analyzed risk, opportunity, and sustainability in the global growth landscape and how to get them to flourish long term. Warhurst blamed government for a country’s political instability because of an unequal distribution of wealth, which leads to social unrest. “In countries where disparity between relatively high social gains with oppressive governance creates potential for societally forced regime change and resource nationalism and depicts areas of business risk,” she said.

Economic growth is sustainable when it meets the needs of the present without compromising the ability of future generations to meet their own needs. For business, sustainability refers to an organization’s activities that demonstrate the inclusion of social, environmental, and corporate responsibility concerns in business operations and interactions with stakeholders, she said.

More Innovation Needed To Meet Industry’s Challenges

Trent Jacobs, JPT Senior Technology Writer

The costs of developing oil and gas fields are rising each year, while new discoveries are smaller and fewer in between. The problem, as outlined at ATCE’s Research and Development Technical Section dinner, is the slow rate at which the industry adopts new technology. Innovation was the word of the evening. Speakers from Shell and GE Global Research stressed the need for the industry to move faster on developing the advanced tools that it needs to overcome the increasingly complex challenges it faces.

“Clearly, innovation is not about pursuing every idea,” said Gerald Schotman, keynote speaker and chief technology officer of Shell. “It is about finding and nurturing the right ones.” He said that Shell has started a new program called TechWorks to identify and integrate emerging technologies from outside the oil and gas industry.

Nathan Meehan, senior executive adviser at Baker Hughes, presents his view on innovation at the Research and Development Technical Section dinner.


Schotman said Shell’s plan involves putting together small teams of 20 to 30 people in “global innovation hubs,” where they will network with technology companies, universities, venture capitalists, and entrepreneurs from outside the oil and gas business. The first of these new offices opened about a year ago in Cambridge, Massachusetts, where Harvard University and the Massachusetts Institute of Technology are both located. The next office will be in Shanghai.

The current projects that TechWorks is developing include autonomous underwater vehicles, drilling automation, and improving the fault tolerance of critical emergency equipment. The overarching goal of the program is to “develop and deploy” these technologies within 2 years.

Greg Herrera of Energy Ventures, a Norwegian-based capital venture firm focused on upstream technology companies, said that during the past 10 years, the industry’s top companies have doubled their spending on research and development. However, these firms’ return on investment has shrunk, he said. “So, what are we doing wrong? Are we taking too long to get the technology out? Are we, as an industry, failing to adopt the technology, or are we investing in simply the wrong things?” he asked.

Herrera said the industry does take a long time to embrace technology, maintaining a pace of about 30 years for wholesale adoption. “The oil and gas industry is the hardest place to take new technology to due to the difficultly of the environment, culture, and also the contracting regimes,” he explained. One of the other major problems that Herrera said many technology firms face is that they are “woefully and inadequately” funded from the beginning. Instead of investments in increments of hundreds of thousands of dollars, operators need to commit millions of dollars at a time to help companies quickly develop the technology they need, he said.

What Energy Ventures has found that can help mitigate risk for investors and speed up adoption rates is methodical collaboration and partnerships with the operators to help smaller firms protect their intellectual property, establish business strategies, and navigate the qualification process. “If you do that right, then you can crush those cycle times,” he said.

Drilling Automation

On the eve of the conference’s opening, the SPE Drilling Systems Automation Technical Section (DSATS) presented a panel session on the future of automation in the industry. The panelists agreed that the future of drilling automation will depend on bringing together better data faster to drive decision making. Quantity is not a problem, but quality is.

Speakers discuss the state of drilling automation at the Drilling Systems Automation Technical Section panel session.


“Data you gather on the rig site is really, really poor,” said Paul Pastusek, drilling mechanics adviser at ExxonMobil. “We cannot do automation without data. This is a problem we need to address shortly.”

Widespread concerns about getting the data needed to run systems have led DSATS to create a new subcommittee on data that will begin work in 2015. “That is the next big one to address,” said John Macpherson, chairperson of DSATS and a senior technical adviser at Baker Hughes.

Data is a keyword for a lot of issues, from debates about where best to place sensors and how to calibrate them to who owns all those bytes and how they should be best displayed without losing information.

For Pastusek, there is a clear starting point: knowing more about how and where the data is collected, how frequently it is delivered, and what is done to filter it when it is displayed. “We need to get transparency” to put each source of information in perspective, he said. But he is against trying to standardize the process at a time when many more measures are being tried, because it would limit innovation, he said.

Environmental Issues

A panel on the environment and how to determine groundwater contamination was held on the second day of the conference. At the session, titled “Assessing Environmental Impacts to Groundwater, Air, and Our Global Community,” speakers agreed that, in assessing the environmental risks of shale gas exploration, the key challenge is the lack of accurate and consistent procedure and practices for characterizing the potential effects on groundwater and determining whether the contamination is a result of a natural change or induced by drilling or completion activities.

Susan Stuver of the Institute of Renewable Natural Resources speaks at a special session on environmental issues.


To tackle the issue, the oil and gas industry has been working very hard and conducting research to clearly identify the procedures for characterizing potential effects and waste streams associated with shale oil and gas development. The panelists represented mainly research teams working on the Research Partnership to Secure Energy for America (RPSEA) project.

Ann Smith of GSI Environmental said the goal of the project is to perform scientific research and develop guidance for the best management practices to characterize hydraulic fracturing waste streams. The research project focuses on three key environmental issues: groundwater quality, produced water treatment and disposal, and air emission.

“GSI Environmental was in charge of the groundwater quality, while Global Petroleum Research Institute focuses on produced-water treatment,” Smith said. “Texas A&M is working on the air emissions part of this research project,” she added.

In her presentation, titled “Advanced Analytics for Assessing Methane Stray Gas,” Smith said that natural methane variation in the groundwater may arise from temporal variability, residential water use, or sampling method inconsistency. “Natural change from baseline can be misinterpreted as impact,” she said.

There are three key predictors of natural levels of methane in groundwater: water type, topography, and redox state. “The main point here is to characterize key factors to define expected range of methane and other chemicals,” she said. “Characterizing geochemistry can help define natural variability from impacted variability of groundwater.”

Smith said the key lines of evidence to distinguish natural methane from other types are hydrology and topography, water chemistry, historical information, well construction, and gas fingerprinting. “The technical protocol to capture variability in groundwater monitoring has improved the ability to obtain representative samples, accurately interpret source of stray gases, and develop effective prevention and response measure with input from stakeholders,” she said.

Oil Executive Stresses Importance of Data Management as Corporate Asset

Chris Carpenter, JPT Technology Editor

Companies and stakeholders industrywide understand that massive amounts of data are useless until they are managed and applied accurately, professionally, and with a full understanding of context. If this is true, an oil executive asked, why is the industry slow to cultivate a professional core of data-management workers who can provide such invaluable services.

Matthias Hartung, Shell’s vice president of technical data, was the keynote speaker at the Digital Energy Technical Section (DETS) dinner held in conjunction with the 2014 ATCE and hosted by DETS Chairperson Yanni Charalambous of Occidental and Vice-Chairperson Kemal Farid.

In his address, titled “Give Data a Chance,” Hartung stressed the need for companies to view data as a corporate asset rather than as a mere means to an end.

Hartung’s address title, a reference to the famous 1969 John Lennon and Yoko Ono “peace-in” in the same hotel as the dinner, nonetheless emphasized the serious need for all sectors of the industry to appreciate data as a business asset that can concretely deliver monetary success. Data is a unique asset that “is entered by one, but is used by many,” he said. The versatile nature of data, however, can either discourage those who have access to it or can hinder those who entered or generated it, because they can come to believe that they alone can interpret it correctly. Instead, Hartung argued, collaboration and specialization are essential to converting data itself into monetary corporate success.

Hartung pointed out that the industry has been reluctant to develop a clear career path for data-management professionals, whose involvement would bring new insight and accuracy as the effect of what is known as “big data,” or the collection of massive amounts of complex information, grows across the industry. He detailed the various efforts within Shell’s own corporate structure and culture to incorporate these professionals and their skills, emphasizing that the “three Ps” of the company’s data-management strategy comprise people, process, and portfolio (the “harmonizing of data applications with data architecture”). Data need to be handled not only in a trustworthy way, but also with considerable speed, he said. For instance, shale assets are produced in a very short window of time and data must be timely and accurate.

In closing, Hartung posed a series of probing questions with notes of encouraging signs. For instance, the ever-growing emphasis on industry safety has motivated many stakeholders to process data more closely and professionally than before, sparking a realization that data has both intrinsic and inherent values. “Many people get that this is an important issue,” he acknowledged, “but we need to show them that it should actually be near and dear to their heart.”

North Sea

A special session held on the second morning of the conference examined aging assets in the North Sea. When Apache took over the Forties field from BP in 2004, one of the first things it did was to get the drilling rigs on the 20-year-old platforms operational again. At the time, the biggest field in the North Sea had 125 million bbl of reserves and was expected to last another decade or so, said Bob Davenport, North Sea operations manager at Apache.

Since then, Apache has produced 240 million bbl of oil and the reserve total stands at approximately 90 million bbl. The field’s life is expected to stretch to 2030. Production has held steady since the independent oil company took over, largely because of the 140 wells drilled to tap the pockets of oil remaining in the field, which covers an area comparable to metropolitan Amsterdam.

Davenport was asked if the formula that he described as the Forties miracle was reproducible. Based on his long reply, the answer was a qualified yes. Although its business plan has reproducible elements, such as a focus on goals and the right incentives, Apache also required a USD 5 billion investment, much of it used for drilling the wells responsible for approximately 70% of its 50,000 B/D production, Davenport said.

At this point in the North Sea, with oil prices down, costs up, and taxes high, anyone investing big to go after what is left needs to have a long-term view. Based on presentations by Apache and ConocoPhillips, the formula requires a good asset, good execution, and persistence.

Size is a consideration. The presentations covered the Forties field, the largest in the United Kingdom’s sector of the North Sea, and Ekofisk, the largest in Norway’s half of the sea. Both required enormous investments. While much of the USD 5 billion invested in the Forties was for drilling, at Ekofisk, ConocoPhillips also had to pay the huge expense of jacking up rigs that were sinking into the water because of subsidence, said John Hand, a technology program manager at ConocoPhillips.

John Hand, technology program manager at ConocoPhillips, speaks during the “Aging Assets in the North Sea” special session.


A lot of assets are being removed, and a lot of assets are coming in” to extend the life of Ekofisk, Hand said. “We replace about six wellbores a year. That results in complicated well paths” to avoid intersecting old wellbores, with each new well costing approximately USD 50 million or more.

The Forties field is on solid ground, allowing the drilling of new wells out of older wellbores. Horizontal wells are significantly increasing production, Davenport said. Reusing old wellbores has allowed operators to avoid having to permanently plug old wells.

Both fields are competing with projects globally when needed investments are sought to extend their production, at a time when the North Sea is generally seen as a basin in decline. Production has sunk to less than half of its peak of 3.5 million B/D in 2004, said Adam Davey, economics and market intelligence manager at Oil and Gas UK.

Apache has made operating efficiency a focus, pushing it to 90%, Davenport said, because the productivity is required to ensure an acceptable return on the large investments in a region where the oil that is left is hard to produce and because of tax rates.

A focus for Oil and Gas UK, which represents the industry, is working with the authorities to create a tax system that encourages investment. One problem is the 62% tax rate on business income and another is the complicated set of incentives created that Davey said is so specific that a company may not know if they apply until a well has been drilled, he said.

The situation has become so bad that the industry is backing the creation of a new regulator in the North Sea with greater power over operating functions, such as movements of oil that often must travel from platform to platform before reaching the pipeline, Davey said. It means that if one platform shuts, others nearby will need to stop producing for lack of an outlet for their oil.

“We have seen operations with lowest efficiency in North Sea are tied back into other operations. More needs to be done to foster cooperation so assets in the North Sea can operate more efficiently,” Davenport said.

Industry Leader: Standardizing Technology Will Help Overcome Economic Hurdles

Trent Jacobs, JPT Senior Technology Writer

Today’s oil and gas industry stands at an economic crossroad, where the conventional wisdom of supply and demand is being stretched to reflect a new paradigm. This is the result of a changing world in which developing countries demand more energy than what the oil and gas industry can offer at an affordable price, an industry leader said.

Speaking at the ATCE Chairman’s Luncheon, Matthias Bichsel, general chairperson of the conference and former projects and technology director at Shell, said, “The only possible solution is for the oil and gas industry to shift the entire energy supply curve to the right to keep the market in equilibrium.” It means the industry must supply more energy at a cheaper price, he said. “But can we do that?” he asked.

Underscoring the daunting situation is the increasing development costs in many parts of the world, driving long-term forecasts of energy prices higher, despite the recent fall in oil prices. Deepwater fields are among the most expensive and complex industrial developments that mankind has ever undertaken, Bichsel said. And the recent advent of the North American shale revolution is by far a costlier exercise than conventional reservoir development, which requires thousands of wells per field with each field costing several million dollars.

“Outside of deepwater and shale formations, not many hydrocarbon plays are left over, at least for international oil companies,” Bichsel said. “Whatever is available tends to be found where the industry has not really looked before.” For example, off Tanzania, oil and gas infrastructure is nonexistent and must be “built up from scratch,” further driving up energy prices, he said.

And while effective, enhanced oil recovery has proven to be very expensive and most operators have been reluctant to commit capital to the process if they think commodity prices may remain low for any significant period of time, Bichsel said. “Suffice it to say that simple economics do not offer an obvious way to meet the growing energy needs where exploration and production costs are rising,” he said.

As he painted an admittedly grim economic picture, Bichsel offered his thoughts on how the industry can help balance supply and demand under these challenging conditions. The solution will require the industry to evolve current technology and apply it better than it ever has, he said. “Regardless of how you determine an energy source’s ultimate price, technological innovation can make it more affordable,” he said. “History is filled with examples of how innovation has made more from less.”

Looking forward, Bichsel said the industry needs practical innovations that can be replicated and standardized. “That is the only way that a particular energy technology will make a real difference in the world,” he said. “A new innovation with an unprecedented performance-to-cost ratio will do little good for the world if it just sits on the lab workbench. It has to be scalable; it has to be used many, many times over to really make an impact.”

Wellbore Positioning

Also on the conference’s second day, a topical luncheon addressed the issue of wellbore positioning. Sponsored by the SPE Wellbore Positioning Technical Section, the event was titled, “Why Did Your Reservoir Just Move?”

Petrophysicist A.M. Loermans, right, speaks at the wellbore positioning luncheon while Angus Jamieson of the University of the Highlands and Islands listens.


Moderator Robert Wylie, product line director at National Oilwell Varco, presented examples of the potential cost of foregoing well surveys. One was a study of certain North Sea and west African reservoirs that showed a 1-ft error in total vertical depth (TVD) measurement leading to a shortfall of 60,000 to 100,000 bbl in oil reserves. Another case involved steam-assisted gravity drainage in which placing a wellbore 1 m lower would have added USD 1.8 million in recoverable reserves.

In discussing along-hole depth measurement by wireline logging or logging while drilling (LWD), a key input for measuring TVD, petrophysicist A.M. Loermans said that wireline measurements are usually corrected for stretch in the drillstring, while LWD measurements almost never are. Even in the wireline case, the corrections used were developed decades ago for relatively simple vertical wells and are inadequate for today’s horizontal wells.

Panelist Angus Jamieson, a professor in the department of offshore engineering at the University of the Highlands and the Islands in the UK, said that instead of treating drilling as though there were a “starting gun” and telling contractors to finish the well as fast as possible and promising a bonus, “how about putting it in the right place so that we get the production that we’re looking for. That’s where the rewards should lie.”

Mexico Prepares for Historic Bidding Rounds

John Donnelly, JPT Editor

María de Lourdes Melgar Palacios

Mexico plans to have contract models ready next month for its opening upstream bidding round covering shallow-water areas, another step in the historic energy reforms taking place in the country, two high-ranking government officials said during ATCE.

María de Lourdes Melgar Palacios, undersecretary of hydrocarbons at the Secretariat of Energy of Mexico, and Edgar Rangel German, a commissioner on the National Hydrocarbons Commission, spoke at a special breakfast presentation. They outlined the steps that Mexico has taken so far in its energy transformation and explained next year’s bidding process.

The first contract details were to be released in November, and the data room for shallow-water fields, the acreage offered in Round 1, will be available in January. The country expects to award its first contract in May and complete five bid rounds by the end of 2015. In addition to shallow water, bid rounds will cover extra-heavy crude fields, onshore, deep water, and unconventional resources. “We are a couple of weeks away from publishing terms and contracts, contract models, and prequalification requirements for Round 1,” Melgar Palacios said.

Edgar Rangel German

Both license and production-sharing contracts will be offered in Round 1. Contract terms for extra-heavy crude fields will be released in December, with field data available in February; contracts for unconventionals will be released in January, with data available in March; onshore terms will be released in February, with data available in April; and deepwater contract terms will be unveiled in March, with data ready by May.

When developing the contract models, Mexico is looking at numerous factors, including the type of rock and basin, as well as technical; economic; and health, safety, and environment factors, Melgar Palacios said.  “We are offering a wide variety of opportunities in deep water, extra-heavy crude, onshore, and offshore,” she said.

Mexico is counting on a smooth bidding process, but both officials acknowledged that it will be a learning process. Mexican state-owned petroleum company Pemex has had a monopoly in the oil and gas industry since 1938. A total of 109 exploration blocks and 60 “extraction” blocks containing probable and possible (2P) reserves will be offered in the entire bidding process, with Pemex farming out an additional 10 contracts, Rangel German said.  “We have great expectations for undertaking these reforms.” Melgar Palacios said.

Mexico’s main goals for the reform are to

  • Increase the country’s production and reserves
  • Create local jobs
  • Grow the country’s infrastructure
  • Attract investment and boost the country’s gross domestic product by 2%
  • Improve related industries such as petrochemicals, steel, and cement
  • Make Mexico an energy hub in the region, bridging North and South America

“We have everything we need to become a hub,” she said. “We have great potential for other types of energy besides hydrocarbons. This reform gives us hope that things are changing for the better in Mexico.”

In December 2013, Mexico’s sweeping energy reform became law, leading to a dramatic change in the country’s oil, gas, and electric industries. In August, legislators enacted 21 supporting laws, establishing a new legal and regulatory framework for the energy industry. “It was a major step for the country,” she said.

Even though private companies will be allowed to bid for the right to explore for and produce oil and gas in the country, Mexico’s hydrocarbon resources still belong to the country, Melgar Palacios said. One of the more important outgrowths of the reform is the creation of The Mexican Petroleum Fund for Stabilization and Development, designed to benefit the country for years to come, she added.

The need for change in the energy sector was obvious, she said, estimating that Mexico had lost more than 1 million B/D of production over the past decade. Output from major fields such as the Cantarell was declining rapidly, and the infrastructure and money to jump-start the oil and gas industry was absent.

Meanwhile, Mexico’s neighbor to the north, the United States, was undergoing a shale revolution while much of Mexico’s abundant resources were going untapped.

Several key principles underlie Mexico’s reform effort, she said. Even though the hydrocarbons belong to the state, the legislation allows for “free market access and free and fair competition,” she said. That means Mexico had to strengthen its regulatory structure and the regulatory bodies will have to be transparent and accountable.

President’s Luncheon

On the final day of the conference, Spath presented a State of the Society address at the President’s Luncheon and annual Meeting of Members in which he highlighted SPE’s achievements and upcoming initiatives. The luncheon also honored notable SPE volunteers, outstanding SPE sections, and SPE award winners. Also during the luncheon, Spath passed the gavel to 2015 SPE President Helge Hove Haldorsen.

2015 ATCE

The 2015 conference will be held on 28–30 September in Houston at the George R. Brown Convention Center. Gustavo Hernandez of Pemex will serve as the general chairperson.

JPT editors Abdelghani Henni, Stephen Rassenfoss, Joel Parshall, Trent Jacobs, John Donnelly, and Adam Wilson contributed to this report.

SPE Annual Conference Highlights Global Challenge of Energy Sustainability

01 December 2014

Volume: 66 | Issue: 12


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