|DNV sees Arctic activity spike|
| [07.09.2011, 12:31pm, Wed. GMT]|
|Arctic exploration and production is a high-risk inevitability as global energy demand threatens to overrun supply, classification stalwart DNV contends. The Norwegian outfit’s sentiments were echoed by Schlumberger chairman Andrew Gould who nonetheless argued this week that only the very large oil companies would initially dip their toes in such a harsh frontier environment.DNV’s ‘Technology Outlook 2020’ report, delivered at the Offshore Europe conference in Aberdeen on Wednesday, points to the increasing pressures on oil and gas companies to embrace ever-advancing technologies as resource depletion drives players to more difficult extraction methods.|
“As 25 percent of the world’s remaining reserves are potentially untapped in the Arctic, DNV predicts that activity will increase in this area,” it wrote.
“New technology will be essential to raise industry practices and deal with the harsh environment of the Arctic, but the focus will remain on environmental protection in this burgeoning region.”
Gould, who recently stepped down as Schlumberger chief executive to be replaced by Paal Kibsgaard, also pointed to the inevitability of Arctic exploration during a luncheon at the Aberdeen event on Tuesday.
“I think it will happen in Russia first because there won’t be quite the same environmental hold-ups in Russia as there are elsewhere,” Gould proffered on the subject.
“I think it implies [a zero tolerance approach] because the consequences of a large spill in the Arctic would be from an industry standpoint absolutely catastrophic.
“It is going to be expensive and, therefore, it is going to assume that what people look at are going to be large accumulations. And I think actually that, to begin with, it really is the very, very large oil companies who are going to be the players.
“I don’t think it is for tomorrow morning personally,” Gould concluded.
Although DNV pointed in its report to oil, gas and coal as the likely drivers behind energy consumption in the next 10 years, it also warned that “the age of cheap oil is coming to an end”.
“Companies will have to explore more costly, lower quality and unconventional oil sources.”
“The industry will have to prepare itself for drilling more complex and demanding wells in deep water, complex reservoirs, and the Arctic, which poses a number of technology challenges to oil and gas companies.”
Operators will have to assume technologies which can operate in pressures above 20,000 pounds per square inch and temperatures over 200 degrees Celsius with drilling speeds set to increase by 50 percent, according to the report.
“Horizontal drilling and the practice of hydraulic fracturing are to spread worldwide. Unconventional gas will radically change the entire gas market, but unconventional gas production will remain limited due to the environmental challenges and high cost.
“Demand for gas is expected to grow almost twice as much as for oil. In addition shale gas will be introduced to the mix due to more competitive pricing.”