CERAWeek: Technology, gas key to fossil fuels future

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Mar. 10 -- Improving technologies and massive natural gas reserves—especially shale gas plays—will help assure fossil fuels remain the dominant energy source for coming decades, oil industry speakers said Mar. 9 at CERAWeek, hosted by IHS Cambridge Energy Research Associates.

Andy Inglis, chief executive of exploration and production at BP PLC, said advances in seismic technology and drilling techniques have allowed oil companies to maintain “our frontier spirit” by exploring for oil and gas in deeper water.

For instance, BP’s giant Tiber discovery in the Gulf of Mexico Lower Tertiary deepwater is one of the world's deepest wells. The well went to a total depth of 35,055 ft on Keathley Canyon Block 102 and found oil in multiple Lower Tertiary (Paleogene) reservoirs (OGJ, Sept. 7, 2009, Newsletter).

The company said Tiber, after appraisal to determine its size, should be larger than the 3 billion boe that BP expects to recover from its 2006 Kaskida discovery 45 miles to the southeast.

“We are looking for oil and gas in evermore testing conditions,” Inglis said. At the same time, BP is working to improve its recovery rates. “Alaska has been BP’s test bed for enhanced oil recovery.”

Kjell Pederson, chief executive officer for Petoro, said that fields more than 20 years old will account for much of the oil to be produced by 2020. “There is a big opportunity with big mature fields,” he said. Petoro holds Norway’s state interest in the Norwegian North Sea.

‘Hydrocarbon deniers’
Jim Mulva, ConocoPhillips chief executive officer, noted that gas historically has never matched oil in importance as a fossil fuel, but that gas is growing in importance as an abundant energy source.

“Carbon-based fuels, though in cleaner forms, must keep carrying the load. Renewables just cannot ramp up fast enough to replace them,” Mulva said. “Let’s consider what gas can mean for the future. The real future, not the pipe dreams of the hydrocarbon deniers.”

He forecast that gas has the potential by 2050 to help achieve US and world energy supply security, provide consumers with affordable energy, drive economic prosperity and continued job creation, and help reduce greenhouse gas emissions.

“Natural gas will remain a leading base load for power generation and heating source, due to its cleanliness, abundance, and reasonable cost,” Mulva said. “Through its flexible reserve capacity, when the wind dies or the skies are cloudy, gas will backstop wind and solar power.”

Coal also will remain an essential energy source in coming decades, Mulva said, forecasting coal will be used in more advanced ways, such as being converted into gas or liquid fuels. He expects oil industry technology will help achieve this.

Mulva said shale gas plays offer long-term energy security for US. ConocoPhillips also is in the early stages of researching methane hydrates. “Up to 700,000 tcf of methane hydrates lie beneath the ocean floor and the Arctic,” he said.

He emphasized that the US government needs to set coordinated policies on energy and climate, saying this would encourage development of all energy sources and establish a continuous regulatory framework, regardless of who is in office.

“Currently, the US government strongly supports renewable energy,” Mulva said.” Unfortunately, it also proposes higher taxes on the natural gas industry and is tightening resource access. Perhaps it has not yet learned that if you tax something, you get less of it—less supply security, fewer jobs, and lower reinvestment.”

Upon questioning during a news conference, Mulva said, “Gas is more than a bridge fuel.”

Earlier in the day, US Energy Secretary Steven Chu said gas can be used as a transition to other fuels, such as wind and solar, while helping lower US dependence on oil and coal.

“It will take many decades to transition from foreign oil,” Chu said.

Contact Paula Dittrick at paulad@ogjonline.com.