Political Economy of New Oil and Gas Technology in the Cost Reduction Era

A study with the above mentioned title was carried out over a three-year period for the Thermie Programme of the European Commission, by a consortium of five European Organisations. The leaders were Smith Rea Energy Associates and AEA Technology.

Norman Smith, from Smith Rea Energy Associates gave a short presentation on the results of the study. Here are his main points :

Over the years 1990-1997, innovation had increased recoverable reserves of the North West European Continental Shelf (NWECS) by about 12,4 billion barrels of oil equivalent (boe), mainly by enabling the development of otherwise uneconomic fields. There was also a significant contribution from enhanced reserves in existing fields.

These gains were equivalent to satisfying current EU oil and gas demand for a 21-month period and had been compatible with an improved Health, Safety and Environmental protection performance.

Although gains normally resulted from the inter-action of parallel progress in different technologies, it was possible to attribute gains mainly to advances in drilling (38%), seismic (22%) and floating/subsea Technologies (14%). Only 7% could be put down to institutionalised cost-reduction.

The EU’s own RTD programmes had themselves made a material contribution, estimated at over 1.3 billion toe, to the gains. Additionally, by supporting European SME innovation, the helped such companies to survive in fiercely competitive world markets.

With an aggressive technology support policy, overall future gains could be as much as another 19 million toe.
The audience showed a profound appreciation of the need to continue to innovate as a means of protecting Europe from potentially damaging consequences of a rapid return to over-dependence on a supplies from politically unstable areas. It was also clearly recognised that for all the promotion, could not realistically come to the rescue within any short-term time frame. The regional importance of the offshore industry as an employer and the involvement of many vulnerable SMEs did not pass unnoticed.

This lunch debate was followed by a workshop. Six successful part-EU financed project were presented :
• Maritime Research Institute of the Netherlands on their FPSO Integrity project,
• Services Petroliers Schlumberger on their SIMPLER New Cost Effective Well Construction projet,
• BP Amoco on their Multilateral well project,
• Osservatorio Geofisico Sperimentale (OGS) Trieste on their GEOBIT Seismic While Drilling project,
• Norsk Hydro on their Advances Well project,
• Schlumberger Geko Parkla on their 4D Seismic project.