President's Column

The New Conventional

Ganesh Thakur, 2012 SPE President

The word “unconventional” has become quite common in today’s E&P (exploration and production) lexis. A quick search of SPE’s library returns more than 1,750 documents using the word in the title. This is not surprising, since most energy analysts believe that world sources of unconventional hydrocarbons—such as gas hydrates, tight gas sandstones, and oil and gas shales—hold more fuel than undiscovered conventional hydrocarbon sources.

According to the International Energy Agency’s World Energy Outlook 2011, the long-term global natural gas resource base is very roughly estimated at more than 800 Tcm, of which about 50% is unconventional gas. Total natural gas resources could sustain today’s production for more than 250 years, and all regions have resources approximately equal to at least 75 years of current consumption.

The IEA also projects oil demand will hit 99 million B/D in 2035. A growing share of oil equivalent output will come from natural gas liquids and unconventional crude resources, such as extra heavy oil, oil sands in Canada, and tight oil in the US. Unconventional oil production will play an increasingly important role in the global energy economy.

These unconventionals are the new conventional.

So what does this mean for the industry? It means working with increasingly geologically challenging reservoirs at a higher cost of extraction and development amid a host of possible roadblocks, including public concern about water issues, environmental impact assessments perhaps limiting access to resources, growth in regulation, and longer permitting processes. Not the ideal norm.

To achieve the production demands of the future, there will need to be a significant increase in global energy-related investment over the next 20 years, a large fraction of which needs to be in technology development. We have seen how advances in horizontal drilling and hydraulic fracturing technology have transformed the natural gas supply in North America. More advanced technology will be required to access resources that are deeper, hotter, tighter, more remote, in deeper water, and in smaller, harder-to-find prospects.

Another large piece of global oil and gas investment needs to be in people. Although the recession has delayed many retirements, many engineers and geoscientists working in our industry will retire in the next 5 to 10 years.

With the influx of young professionals (YPs) into the industry around the world and the maturity of the current workforce, YPs are being asked to take on more responsibility sooner in their careers. Rapid changes in the industry require YPs to have broader technical and soft skill sets to perform the complex tasks required of them every day. This requisite, coupled with the complexity of today’s E&P environment, compounds the challenges facing the industry. We no longer have the luxury of time to develop both new technology and new personnel. Both have to be developed simultaneously with deployment.

How do we accelerate technology and talent development?  The answer is fundamental to SPE’s purpose: through the power of information dissemination and collaborative focus. For technology development, we need to develop stronger collaborative ties between industry, governments, and academia for more R&D (research and development). The industry also needs to collaborate with countries across the globe to learn best practices, such as the Alberta, Canada, model of how to stimulate private investment, streamline permitting processes, and accelerate sustainable development of resources. Industry and governments must work together to address public concerns and encourage prudent development of needed energy resources. We can also learn from collaboration with industries outside the E&P sector—including nanotechnology, biochemistry, medical technology, materials science, computer modeling, and aeronautics and space technology. SPE is an ideal forum for such collaboration.

To help develop the talent pool, sharing knowledge and best practices is essential to help accelerate the time it takes for YPs to reach autonomy. SPE has many resources that promote YPs’ ability to learn from each other, develop consensus, and build on each other’s strengths, resulting in a stronger industry as a whole. If done effectively, with the synergy such efforts create, SPE helps expedite progress and avoid duplication of effort, thereby reducing cost and time.

There are many ways to nurture collaborative efforts. Sharing best practices, participating in R&D consortiums, creating industry internships for students and sabbatical opportunities for college professors, allowing qualified industry engineers and scientists to teach at colleges, and increasing research funding for colleges are good examples of collaborative efforts.

SPE facilitates best practice sharing through conferences, applied technology workshops, technical information groups, and forums, as well as through publication of technical papers and journals. In the spirit of enhancing collaboration, we are also taking a further step and exerting special effort to hold such events jointly with other industry professional societies.

All these initiatives help take the next generation of YPs into the world of the new conventional.

International Energy Agency (IEA) World Energy Outlook 2011: “Are We Entering a Golden Age of Gas?” Special Report; and IEA World Energy Outlook 2011: Executive Summary