Offshore conference focuses on rising oil demand

Sept. 3, 2002
The world's increasing thirst for oil and gas received more attention at the Offshore Northern Seas Conference in Stavanger last week than the Kyoto Protocol on Climate Change.

Leo Aalund
Senior Editor-Conferences

STAVANGER, Sept. 3 -- The world's increasing thirst for oil and gas received more attention at the Offshore Northern Seas Conference in Stavanger last week than the Kyoto Protocol on Climate Change and other themes of the nearly concurrent United Nations meeting on sustainable development in Johannesburg, South Africa.

While fuel cells, hydrogen as a fuel, and renewable energy such as wind power and biomass drew official support in Johannesburg, they were seen by speakers in Stavanger as minor contributors for the foreseeable future to sustainable energy supply.

No energy shortage seen
Gerald Doucet, secretary-general of the World Energy Council (WEC), said there is no shortage of world energy and predicted a revival in nuclear power and coal.

There are, however, isolated supply crises. India has lost 51% of its 90,000 Mw electric-power grid for technical and nontechnical reasons. It needs 25,000 Mw of affordable capacity by 2005.

In Africa the share of the total population with access to minimum amounts of electricity has dropped from 12% to 8% in 10 years. This was a period of debate about opening up markets to attract investment in energy infrastructure.

"The WEC," Doucet said, "is moving toward the view that, whether we like it or not, oil has been and will be the price setter for all energies. And when you talk oil prices you need to quickly focus on oil availability in the Middle East, particularly Saudi Arabia."

OPEC view
A shortage in any other energy source will increase the call on oil, he said.

Javad Yarjani, head of the Organization of Petroleum Exporting Countries petroleum market analysis department, agreed.

He filled in as a speaker at Stavanger for Rilwanu Lukman, OPEC president, who attended the South African sustainable development conference.

OPEC sees world oil demand growing from 76 million b/d in 2000 to 89 million b/d by 2010 and more than 106 million b/d by 2020. OPEC will need to fill half the 2020 demand, Yarjani said. Two thirds of the demand in 2020 will come from developing countries and China.

OPEC bases its demand projection on the assumption that the global economy increases at about 3%/year during the next 2 decades.

Yarjani pointed out that out of a global population of 6 billion, about 2 billion people have no access to commercial energy. Many burn wood. On the Indian subcontinent alone, thousands of deaths, mainly of young women, are caused by smoke inhalation during cooking, he said.

"Just giving these people access to oil derivatives such as kerosine would mark a complete contrast in their lives," he said.

Yarjani said he expects North Sea oil production to peak in a few years then gradually decline, making Europe more dependent than it is now on OPEC. But he noted that oil trade is reciprocal. European companies are involved in exploration and production in OPEC countries, which consume European goods and products.

He acknowledged that Russia and other countries in the Former Soviet Union have large reserves but said those supplies will be much costlier to develop and transport than oil in the Middle East.

Non-OPEC oil development
Kathleen Arthur, vice-president of ChevronTexaco Corp.'s deepwater business unit in New Orleans, indirectly acknowledged the high cost of developing non-OPEC oil. She said 50 billion bbl of reserves have been discovered to date in deep water. Projections for ultimate discovery in deep water range from 80 billion bbl to 150 billion bbl.

"However," Arthur said, "discovery and commercialization of this remaining resource will require much more than simply drilling deeper wells. Infrastructure, fiscal terms, reservoir management, and technology evolution each can make or break the commercial feasibility of the remaining deepwater opportunities."

She said that the world class Discoverer Deep Seas drilling unit under contract to her company in the Gulf of Mexico has an operating cost of almost $500,000/day.

As part of ChevronTexaco's Tahiti discovery, the company set a Gulf of Mexico record when it drilled a 31,000 ft MD (30,217 ft TVD) well and took the deepest core ever recovered, a 120 ft core from 26,375 ft MD. She said the company plans to produce fields under 10,000 ft of water.

Arthur noted another cost element in deepwater operations: unscheduled contractor and vendor down time, which cost ChevronTexaco's deepwater unit $16 million last year.