Statoil’s Lund cites three global challenges for oil, gas

The global oil and gas industry will simultaneously need to become more economically competitive, environmentally benign, and socially responsible if it expects to survive, Statoil ASA Chief Execute Helge Lund suggested.

“If you look at what the industry faces today, particularly finding new supplies in a cost-effective way, the challenges are formidable,” he said in remarks at the Center for Strategic and International Studies on May 6.

“The industry must remain competitive and a reliable source of energy,” Lund said. “Society, particularly politicians, must create a level playing field both for more oil and gas and dealing with climate and social impacts.”

He said Statoil responded in four main areas: to revitalize the Norwegian Continental Shelf, where it has made major discoveries the last 10 years in even mature areas; to reenergize its exploration efforts over the last 10 years; to modernize its natural gas portfolio by moving to gas-to-gas and market-based contracts and building a solid gas base in the US as well as Europe; and to continue building its unconventional oil and gas business “because we believe that will be the basis for long-term supply.”

Lund said he thinks oil and gas companies have increasingly become risk management institutions during his 10 years at Statoil’s helm because of all the politics they have to confront.

Russia and Europe

“In terms of the current issue in Ukraine and the current gas markets, there is no problem in the supply to Europe because it had a very mild winter and storage is good,” he observed. “Medium term, storage could be drawn down. Some Russian gas could be rerouted to Europe, while Holland and Norway potentially could produce more. In the long term, Europe will be very dependent on Russian gas, but it also has been a very reliable supplier. There is no way Statoil could replace Russian gas.”

The global industry also must respond to society’s concerns, both in the standards and practices used in its operations and taking more seriously concerns expressed by people living close to its operations, Lund said.

“Safety must come first when you’re working with hydrocarbons because they can explode,” he maintained. “We use only the highest drilling and production practices and standards, employ independent inspectors, and engage with others in the industry on ways we can improve. Every incident must be a source of new learning so we can improve and improve. That’s the philosophy we have offshore, and there’s no reason we can’t apply it onshore.”

Climate change is global, and unfortunately has become much more political, Lund said. “People care about what we do because what we do matters,” he noted. “Our industry must be able to build trust with society with more transparency, dialogue with all stakeholders (including those we may not agree with), and continued improvement of our own operating environment. We know there’s more to do from both industry and government as the unconventional oil and gas revolution continues to unfold.”

He said, “We are committed with our peers, governments, and others to develop the best standards and practices here in the US. We believe a number of states have put forth the best regulations, and feel requirements must reflect local conditions. At the same time, there are areas were common best practices can be applied. The goal is to assure that these resources are developed in an environmentally responsible way.”

Managing capital costs

The growing cost of capital, meanwhile, could force the global industry to become even more efficient, Lund said. “My personal view is that the oil and gas industry has been quite effective when oil prices are low, and is less so when they’re high. Our companies needs to trim costs along their value chains, including working with our supply and service companies. I think the current cost of capital might also hamper, and perhaps delay, some of the most challenging offshore opportunities, particularly in the Arctic.”

He said Statoil recognizes technology can help its business grow, but also realizes that a step-by-step process sometimes is necessary, particularly when it comes to moving further into the Arctic. “Actually, the world has many Arctics,” Lund said. “We operate our [Snohvit] field without ice, but there are other areas where the industry has to contend with this. We’ve gradually moved activities north since the 1960s as the industry has shown the government it can use the abilities it has acquired.”

In the US, Statoil and other producers are committed with many levels of government and other stakeholders to develop and use the best standards and practices, he said. “We believe a number of states have put forth the best regulations, and feel requirements must reflect local conditions,” he said. “At the same time, there are areas were common best practices can be applied. The goal is to assure that these resources are developed in an environmentally responsible way.

“We’re proud of the progress we’ve made, but we recognize there’s still a lot of work to be done,” Lund continued. “Commercial-scale shale gas and oil are still in their infancy, and it will require the efforts of more than one company. Some progress has been made. North Dakota has a good regulatory system in place, and Statoil is working hard, for example, to help it meet flaring reduction targets. But more can be done, such as encouraging more use of gas locally, particularly in running rigs.”

He said states and the federal government can streamline regulations to enable faster build-out of gas infrastructure. “I’m glad the US Department of Energy is emphasizing infrastructure in its first quadrennial energy review, and we look forward to working with it to help the country’s demand centers get better access to these resources,” Lund said.

Contact Nick Snow at nicks@pennwell.com.

Related Articles

USGS report aims to improve quake prediction from induced seismicity

04/24/2015 The US Geological Survey issued a report with preliminary outlines of models to predict severity of ground tremors in areas where sharp seismicity ...

SandRidge names senior vice-president, production

04/24/2015 SandRidge Energy Inc., Oklahoma City, has appointed John Suter as senior vice-president, production, effective Apr. 27. Most recently, Suter worked...

Antin Infrastructure Partners buys BP’s interest in CATS

04/24/2015 Antin Infrastructure Partners SAS, Paris, has agreed to acquire BP PLC’s Central Area Transmission System (CATS) business in the UK North Sea for $...

MARKET WATCH: NYMEX, Brent crude oil prices reach 2015 highs on Yemen strife

04/24/2015 Crude oil futures found support on both New York and London markets in Apr. 23 trading on news of more airstrikes against rebels in Yemen by Saudi ...

MOL agrees to buy Ithaca Petroleum Norge

04/24/2015 MOL Group has committed to drill three exploration wells offshore Norway during 2015-16 under an agreement to buy Ithaca Petroleum Norge from Ithac...

Congressional Republicans see undue restrictions in 2017-22 OCS draft

04/23/2015 Congressional Republicans—led by Senate Energy and Natural Resources Committee Chair Lisa Murkowski (Alas.) and House Natural Resources Committee C...

CERAWeek: Evolutions of Pemex, YPF running parallel

04/23/2015 Chief executives of Mexico’s Petroleos Mexicanos (Pemex) and Argentina’s YPF SA are both seeing energy reforms within their respective countries, a...

Diligence essential to avoid future offshore mistakes, panel told

04/23/2015 The offshore oil and gas industry—as well as the federal agencies that regulate it—must remain diligent to avoid the mistakes that led up to the Ma...

Gazprom: EC’s antitrust allegations ‘unsubstantiated’

04/23/2015 OAO Gazprom says antitrust allegations by the European Commission regarding territorial restrictions and an unfair pricing policy are “unsubstantia...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected