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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
IEA’s Gas & Oil Technologies
Implementing Agreement
GOT Florence Technology Conference
April 8-10, 2014
Background
GOT is a forum where innovative ideas can be fostered, shared and leveraged, to prepare the ground for wider
cooperation in areas such as joint development of new technology where challenges are steep and properly
qualified capabilities are limited. According to the most recent estimate from the IEA World Energy Outlook
Investment Study, more than US $ 850 Billion will be invested annually to secure and sustain global gas & oil
supply over the next 20 years; Even a modest 0,5 % spending in R&D implies that more than $ 85 Billion will
have to be directed and prioritized during this timeframe into equipment developers, laboratories, universities
and research establishments which are stretched on resources and capacity even today – a situation that calls
for open innovation to distribute the work load and collaboration to avoid inventing the wheel multiple times.
The GOT spring technology conference was held April 8-10, 2014 at the GE Learning Center in Florence, Italy.
The overall purpose of the conference was to identify the major challenges throughout the gas & oil value
chain as seen from the perspective of the stakeholders and so set the agenda for future research efforts. There
were approximately 60 participants from countries such as USA, China, Australia, Italy, Germany, Switzerland,
Spain, Netherlands, and Norway – representing governments, companies, universities, research institutes and
other stakeholders. A list of attendees can be found in the appendix.
GOT as a network will utilize the convening power of IEA to facilitate open discussions and idea exchange
between stakeholders across traditional dividing lines, for instance informal debate to illuminate possible
consequences of new regulations, opportunities for technology transfer between industries, and needs and
gaps to make step changes and disruptive innovation in the oil & gas industry happen. Looking back, the
industry has seen major transformations occurring in steps like for example:



Exploration successes in the 1980’s and 90’s resulting from novel methods for harvesting marine 3D
seismic and sharing data
New field development options emerging from diverless subsea production systems for large water
depths tied back to FPSO’s using flexible production risers
Advanced well architecture with horizontal and multilateral wells as well as open hole completions
offering maximum reservoir contact.
A few examples can be highlighted to illustrate some of the challenges the industry is facing. Subsea satellites
tied back to a field center (“hub”) is the preferred field development option in many cases; e.g. in deepwater and
remote areas. Now that ‘$100 is the new $20’, the commerciality of such prospects is threatened. The rising
costs strike hard in particular in two areas; wells and tie-back.
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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
The tie-back cost of a satellite development will, as a first approximation, be proportional to tie-back distance.
Until now, tie-back distances are most commonly between 5 and 20 km but can be extended up to 40 km for
oil, or up to 200 km for gas. Traditional technologies for flow assurance like chemical injection and
regeneration, heat tracing, circulation with stabilized oil, and so forth, put practical and economic limits to
reach. However, emerging technologies like the subsea factory concept, cold flow, all-electric systems, etc,
open up for tiebacks of longer distances. These solutions also offer ways to cut cost, especially if dual, hi-alloy
pipelines and complex umbilicals for hydraulic power and chemicals can be replaced by a single, carbon steel
pipeline, simple power supply, and fiber optic control.
Well cost has typically been 1/3 of the CAPEX breakdown, but is now rapidly approaching ½. Starting with a
hole the size of a small “tunnel” at the seafloor, the drilling and completion process ends up with a 2-3 inch
“straw” into the reservoir. One basic question that could be raised is why we have to dig out 50 times more rock
than we need for the actual production tubing itself.
Another aspect determining the cost of a deep-water well (close $ 100 Million) is the duration of the drilling,
essentially driven by ROP (Rate of Penetration) and the various ‘flat spots’ along the Depth vs Time progress
curve, caused by tripping, waiting on weather, and a variety of other elements of unproductivity. For example,
one operator made the observation that drilling downtime caused by regulatory testing of the Blowout
Preventer (BOP) alone accounts for annual costs of more than $ 5 Billion. The purpose of the testing is to ensure
that the BOP will work as intended when called upon, however it can be argued that testing perhaps does more
damage than good and that a ‘smart BOP’ with a complete suite of condition monitoring and diagnosis would
be a better system with reduced downtime, given that operators, regulators, equipment manufacturers and
drilling contractors align objectives and incentives. Thus moving from a “break fix” mentality to a predictive
maintenance and repair mentality, enhances safety and reduces downtime and cost.
Of course there are physical and practical reasons why we do what we do, the point being that we should be
ready to question these traditions and practices in order to think out of the box, set stretched goals and help
nurture and incubate new technology ideas.
Work sessions within the Technology Target Areas
The Work in GOT is structured according to five Technology Target Areas (TTAs):
•
•
•
•
•
Subsurface, Exploration, Enhanced Recovery
Drilling and Wells
Production and Processing
Safer and Cleaner Hydrocarbons
Gas Value Chain
Group work sessions were held within each task area. The participants were encouraged to bring an open
mindset into the group work and keep focused on a few key challenges within their Technology Task Area,
while also considering collaboration across areas (ref illustration). Some common concepts and terminologies
were established – roadmap definition, tech gaps driven by business needs, technology readiness levels, etc.
The groups were reminded to look for challenges and solutions related to reducing cost as well as enabling
new field development and enhancing production.
The outcome of the work sessions is highlighted in the below table.
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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
The discussions and outcome from the work sessions are reflected in more detail in the following.
Table: An overview of the key challenges identified within each task area.
Subsurface & EOR
EOR – why is it not
happening?
Incentives, barriers
Technology transfer
from unconventional
to conventional
Technology to
harness heavy
offshore oil needed
Drilling & Wells
Production &
Processing
Safer & Cleaner
Hydrocarbons
Regulations can be
improved based on
fact-based dialog
with stakeholders
Contracts optimized
throughout the value
chain with correct
incentives
BOP testing is time
consuming and costly
High cost – $100=$20
Keep the
hydrocarbons
contained in its
envelope
Continuous
improvement needed
for better HSE
performance
Maximize synergies
between energy
sources
Open innovation and
acceleration needed
Common testing and
qualification of novel
concepts
Gas Value Chain
Pipeline
infrastructure
technically
challenging
Economics for
investments, gas
competitiveness,
etc.
Multinational
regulations to be
coordinated and
synchronized
Multidisciplinary
challenges – CCUS,
boosting, …
TTA 1 – Subsurface & EOR
New technology can add value in all aspects of the subsurface domain – discover, image, model, extract;
building a robust reserve base and be positioned to capture reservoir upside. The group put up the question:
Why is EOR not happening more today?
All agree that EOR is the right thing to do. The days of ‘reap and run’ are over. Your next field development is at
your doorstep, by “squeezing the lemon” of existing fields. The question is – how. A number of actions/remedies
have to come about in order to stimulate EOR. Full scale experimentation with the reservoir is costly and risky.
Oil companies should look for ways to share cost, risk, results and data. Joint field tests involving oil companies,
service companies as well as governmental bodies should be encouraged. Operators should have a plan for
early implementation of IOR and EOR at FID and sanction. Certain EOR methods should be combined to achieve
greater effect, e.g. de-salinated water and polymer injection. A common qualification scheme among operators
would help taking technology transfer and learning points from one field to the next. An international EOR-prize
offering prestige and recognition would be a strong motivator for teams in oil companies. Even so, it is a
fundamental problem that the business environment does not incentivize EOR – in fact on the contrary:
increased unit cost per barrel is not well received in the stock market.
The regulatory bodies could take a more active role, by establishing world-wide common requirements and
regulations and by encouraging common equipment ‘plug & play’ standards. Governments should use national
research programs to increase funding for technology development & implementation and target specific
areas for international collaboration. Tax & regulations should be used actively to stimulate EOR.
The lack of a common qualification scheme and standardized methods of reservoir surveillance and
verification is a barrier to EOR implementation. The efficiency of pilots & full field experience must be judged
against a baseline which in most cases does not exist. Furthermore, the industry should collaborate to develop
more cost effective and efficient methods with minimum environmental footprint.
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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
Considering how the introduction of hydraulic well stimulation (fracking) of tight shale has completely
transformed the onshore gas and oil industry in North America, the group discussed what can be done to
transfer this technology to the conventional domain (and vice versa). Obviously, there is a case for looking at
well & completion solutions with respect to regulations & requirements as well as standardization and ‘mass
production’ as opposed to the conventional one-off well designs. On the same note, one should consider
secondary recovery mechanisms in tight oil with respect to reservoir characterization and modelling, reservoir
surveillance, process understanding etc.
EOR of Offshore Heavy Oil fields (e.g. Captain, Mariner/Bressay, etc.) offer specific challenges to the industry.
More cost effective chemicals (conventional and bio-degradable) and process technology need to be
developed. Handling of separated water from heavy oil production is a specific HSE concern.
Further topics “on the horizon” include multidisciplinary challenges to achieve sustainable production. CCS so
far has not been a complete success in offshore applications. Going forward, geoscientists and process
engineers should join forces to improve concepts to integrate CCS and EOR into CCUS: Carbon Capture, Use
and Storage. The group passes over a challenge to the Drilling and Wells (TTA2) group to set the direction for
development of Maximum Reservoir Contact Wells, and to the Production and Processing (TTA3) group to
develop Seafloor Processing: separate out water as early as possible in the flowpath to free up capacity and
reduce backpressure, add energy with pumping and compression to draw down pressure and extend reach.
Finally, Integrated Reservoir Monitoring should be developed to the stage where all relevant information
needed to make the right decisions on reservoir and production performance is brought back to decisionmakers in Real Time.
As a final message to the Executive Committee, the group recommended to clarify the vision of GOT, to bring in
more operators and service companies, and to work on “Incentives for operators” in terms of e.g. common
environmental regulations, governmental funding for technology development programs, tax incentives, and
common qualification schemes.
TTA 2 – Drilling & Wells
The group stated that decisions related to the drilling process are based on perception of required compliance
to regulations and legacy standards, instead of fact based and unbiased cost/risk analysis. GOT could help
facilitate an overall dialog between regulators, industry, and stakeholders where the industry can support
regulators to properly understand risk management. On the company side, work processes are too stringent,
bureaucratic and counterproductive, although motivated by “safety first”. Some case studies should help to
illuminate the problem.
The industry suffers from lack of overall alignment of objectives. Asset management, Engineering, Operations,
Contracting departments etc in oil companies should work jointly to understand the problem, then implement
in revised compensation formats (incentives) that ensure maximum performance.
Specifically, BOP testing is too time consuming and costly as discussed above. Standards for BOP testing needs
to be revisited, and the mindset should move from preventive to predictive maintenance. BOP manufacturers
can implement instrumentation and real-time monitoring of whole system incl. fluids, valves, plumbing etc, with
a long term view of designing a BOP without fluids…
TTA 3 – Production & Processing
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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
The group set out as success criteria to draft “World Technology Outlook” for Gas & Oil yet to find + resources
to reserves, addressing overall CAPEX needed for developing new capacity and replace old and set stretched
targets for technology development and qualification. GOT should propose a “strategic R&D agenda” to set
direction for national industrial research programs, and fund its first launch project within the next 12 months.
One specific project suggestion was to invite an international bid for RDTQ&D (Research, development, tech
qualification and demonstration) infrastructure – “The Game Change Accelerator” for full scale testing. In the
same time frame, GOT should have as an ambition to recruit 10 new countries, 10 operators, etc and engage
with API, SPE, DeepStar and other established committees and organizations. The technology focus should be
how to bring challenging field development targets “into the money” – HPHT, Ultra-deep, pre-salt, Arctic, etc.
Subsea processing, robotics, migrating deepwater back to shallow water applications were mentioned
specifically. The group underlined the importance of engaging with standardization committees in order to set
the agenda. Open innovation must be put into operation – complex systems like the Subsea Factory need open
interfaces so innovators can engage and interact. The ultimate goal should be zero surface facilities, putting
fewer persons at risk and avoiding visual contamination.
TTA 4 - Safer & Cleaner Hydrocarbons
How is it possible to add value beyond what already is taking place? A key ingredient in such value creation is
to raise the level of awareness within the area, followed by sharing of ideas and information amongst
stakeholders on best practice, lessons learned and case studies within the constraints of anti-trust and
intellectual property rights issues. With less access to hydrocarbon fields the question is if we can and should
explore and develop in more remote, possibly more environmentally fragile, areas, such as the Arctic.
Regulatory work needs to be accelerated and the policy makers need to have better understanding of the
industry.
A major challenge within the task area is to “keep the hydrocarbons contained in its envelope,” i.e. ensure
safety and prevent/stop spills and leaks, also including flaring, venting, fugitive methane. Technical integrity
management including overall assessment of the infrastructure, monitoring of performance, technical
conditions, flow, cost etc of aging infrastructure is necessary.
HSE performance and management should be improved with a “continuous improvement” mindset, i.e. Kaizen.
This includes transfer of safety culture from offshore to onshore as well as continuous focus on safety and
environmental critical elements and activities. Greater transparency is needed when it comes to actual HSE
performance of the industry and a much higher degree of global sharing of methods and training programs.
Prescriptive approaches should be replaced with risk based approaches.
The future energy use will not derive from few but rather many different sources into an energy mix. In this
context, a holistic process perspective is needed when it comes to emissions/pollutions. A complete Life Cycle
Analysis (LCAs) is warranted along with understanding the environmental footprints of the energy sources.
TTA 5 - Gas Value Chain
The work group consisted of members from the Dutch government, JOGMEC, Repsol, GTI, TNO as well as Hobre.
The main areas of concern expressed by the group was that there is a need for an integrated energy grid, for
alternative gas supply, and increasing future demand for gas.
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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
An integrated energy grid will enable different energy sources to co-exist, including renewables. Gas needs to
be positioned as an element of a reliable and low cost energy system to be distributed in the right quantity for
economy of scale. The technical challenges discussed were partial loading, multi-directional distribution of
energy, integrity issues, the varying compositions of gas as well as creating viable systems and equipment to
monitor and control the flow. From an economic standpoint, feasible concepts to store energy are needed.
Competitiveness of gas (e.g. to coal) is currently an issue. Base load cost needs to be lower. Centralized vs
decentralized infrastructure does not have guidelines as of yet. Furthermore, regulations need to be aligned to
the market structure and balanced between multiple regimes.
Another issue revolved around how to effectively integrate and support other gas resources into the gas value
chain. Exchange of best practice and knowledge transfer from unconventional E&P should be encouraged.
Technical challenges in regards to pollution, environment, waterless fracking, emissions and energy efficiency
need to be looked at. General aspects around resources, e.g. stranded resources and unconventionals (shale
gas, tight gas, hydrates, sour gas, CBM) are of importance, the economics of alternative gas supply needs to be
sound, development of unconventional sources worldwide to meet the demand for future gas supply needs to
be planned, setting up regulations for global operations in regards to safety and environment have to be in
place and finally the issue of renewable types of gas need to be considered, e.g. bio-gas and hydrogen.
To name a few of the technical gaps, there is a limited understanding of geology, deep-sea mining technology,
a lack of access to robust transmission infrastructure and limited experience, knowledge, and risk assessment
ability in general. In terms of HSE gaps, water management becomes an increased focus point with the growth
of fracking activities. There is a call for a decrease of environmental footprint and risks in general. Finally,
looking at the economic gaps, there is a misalignment of business drivers between regions/countries, an
unknown cost for setting up the required upstream to downstream infrastructure, the economies of scale are
not really known when it comes to new unconventional projects, and there is an increased cost of drilling and
production in general.
The last major area looked at within the task area is on how to support the role of natural gas in the future
energy mix, i.e. building future demand. New applications are needed, e.g. natural gas as a fuel for
transportation – e.g. barges, trucks, trains. One also needs to consider regulations on e.g. maritime transport
emissions and general environmental issues. Gas needs to be economical and available. From a technical point
of view, composition standards and compatibility are of importance, along with the need for new types of
infrastructure, e.g. S2S, fueling infrastructure. s HSE gaps include the need to set up safety management
culture for new LNG diversification, evaluate environmental benefits, and changing perceptions on emissions,
and global warming. From a regulatory standpoint, standardization and international regulation
implementation should be compulsory. Finally, there is an economic gap, when it comes to cost effective
infrastructure (thus effecting gas price), taxation issues, and incentives along with a need to set up more deeply
developed spot markets/changes on oil-indexation.
Conclusion
The GOT dialogue in Florence was a significant step forward in creating a global vision. On the basis of the
contributions of the international stakeholders, progress towards a unique strategic vision is being made.
Future consolidated GOT activities as well as the independent efforts of the task area participants will help
achieve the goal of safer, more sustainable and more efficient development of the world’s resources through
collaborative technology, policy and regulatory consideration.
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Report from the GOT IA Technology Conference in Florence, April 8-10, 2014
Appendix
List of attendees.
Name
Affiliation
Country
Andrea Mescoli
BREDA ENERGIA SPA
ITALY
Arnar Kristjansson
GE Oil & Gas
Norway
Arne Graue
University of Bergen
Norway
Art Schroeder
Energy Valley, Inc.
USA
LOTOS Petrobaltic S.A.
Artur Sowinski
Poland
Bas van den Beemt
TNO
Netherlands
Ben Ratner
Environmental Defense Fund
USA
Camilla Vavik Pedersen
Statoil
Norway
Cyril Widdershoven
TNO
Netherlands
Daniela Abate
GE Oil & Gas
Italy
Dario Salvadori
SAFE SRL
Italy
Davide Micalella
GE Oil & Gas
Italy
Dr. Jon Steinar Gudmundsson
NTNU
Norway
Enrico Savoldi
TECHINT COMPAGNIA TECNICA INTERNAZIONALE SPA
ITALY
Enrique Palomino Moreno-Manzanaro
FERTIBERIA, SA
SPAIN
Fabio Filocamo
Ministry of Universitites and Industrial Research
Italy
Francesca Casucci
GE Oil & Gas
Italy
Francesco Berri
GE Oil & Gas
Italy
Frank Børre Pederesen
DNV
Norway
Frank Denys
Netherlands
Netherlands
Grazia Colacicco
GE
Italy
Günter Siddiqi
Swiss Federal Office of Energy
Switzerland
Helge Lunde
SEA-BOX
Norway
Ingrid Anne Munz
Norwegian Research Council
Norway
Jeannot M. Kok
HOBRE INSTRUMENTS BV
NETHERLANDS
Joachim Wilhelm
ROSETTI MARINO SPA
Italy
John Felmy
American Petroleum Institute
USA
Jostein Dahl Karlsen
Norway
Norway
Khalid Shamsher
ENGRO CHEMICAL PAKISTAN LIMITED
Pakistan
Kjetil Skaugset, PhD
Statoil ASA
Norway
Lars Slagsvold
GE Oil & Gas
Norway
Lars Sørum
DNV
Norway
Laslo Olah
Texas Institute of Science
USA
Luis Gorospe Rodriguez del Castillo Spain / REPSOL
Spain
Marco DeIaco
GE
Italy
Marco Fallai
GE Oil & Gas
Italy
Mario Schiatti
Breda Energia s.p.a.
Italy
Markus Becker
GE
Germany
Mike Moore
FearnOil
USA
Mike Smith
Interstate Oil and Gas Compact Commission
USA
Morten Wiencke
GE Oil & Gas
Norway
Nicola Marcucci
GE
Italy
Paolo Macculi
ENI SPA
ITALY
Paul Doucette
GE
USA
Peter Lilly
The University of Western Australia
Australia
Richard Braal
TNO
Netherlands
Richard Haut
Houston Advanced Research Center
USA
Rod Rinholm
Gas Technology Institute
Norway
Roy Ruså, Teknologidirektør, Petoro Petoro
Norway
Simone Bertolo
ENEL TRADE SPA
ITALY
Takami Kawamoto
JOGMEC
Japan
Torgeir Knutsen
Norway
Norway
Torger Skillingstad
RESMAN AS
Norway
Umberto Vitali
ROSETTI MARINO SPA
Italy
Vello Kuuskraa
Advanced Resources International, Inc.
USA
Øivind Fevang
Statoil
Norway
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