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

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

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