Tackling the third trillion
For the past few decades the world has enjoyed a sense of relative comfort knowing that there is a healthy supply of oil around the globe. The once prominent images that cropped up frequently during the oil supply crises of the 1970s - showing the last drop of oil trickling from an empty pipeline - have been pushed towards the back of most memories. But could we be heading for an oil supply situation where those images might find their way back to prominence, accompanied by echoes of 'when will the oil run out?'
In short the answer most experts would give is 'not yet'; in fact, not for some time to come. According to the International Energy Agency (IEA), a leading global authority on energy supply and demand, there are around 10 trillion (10 x 1012) barrels oil equivalent (boe) of 'conventional' oil and natural gas in place in reservoirs spread around the globe. Add to these barrels a similar amount of 'unconventional' oil and gas - typically locked up either as difficult fluids such as tar or very viscous oil, or in very low permeability rocks including shale and coal seams - and the total tops 20 trillion boe. The IEA considers perhaps 5-10 trillion boe of this total may be considered to be recoverable - subject to prevailing economics, and dependent on the development of technologies to solve the challenges of recovering some of the more intransigent resources.
But energy demand is constantly rising. If current trends continue, the IEA forecasts that total global energy demand in 2030 will likely be over 50 per cent higher than it is now, reaching some 17,000 million tonnes of oil equivalent. The sources of that energy are expected to be dominated, as now, by fossil fuel hydrocarbons - oil, gas and coal - which currently provide some 88 per cent of primary energy to the world.
){kind=small}
'This an extremely large challenge, but one we must rise to,' adds Meggs. 'We have lived through long periods of surplus oil supply capacity for most of the past 30 years. The industry has become more sophisticated as a global trading market in getting oil supplies quickly to wherever they are needed, connecting supply and demand more effectively, while also ensuring the effects of political instability are minimised.
'But the mind-set of assumed surplus appears to be changing quickly. Governments are increasingly concerned with where the next barrel of oil is coming from - geographically speaking - thereby putting security of supply at the top of the energy agenda. Alongside this is the other main driving force in the energy world - the concerns surrounding climate change. In essence, the world needs more energy but wants it to be clean energy. This combination has created, in a relatively short space of time, the perception that we are moving from the comfort zone of surplus oil supply to a situation pervaded by a sense of uncertainty.'
Trillions two and three
It is in this supply context that BP and other energy companies are looking for what is now often labelled the 'third trillion'.Although there may be many trillions of barrels of original oil in place, the industry works on 'proven reserves' - that is, those which can be recovered economically with existing technology. There is general consensus that around one trillion barrels of oil have been produced to date, and that there are another one trillion proven barrels in existing producing oil fields with firm and approved development plans for their recovery - essentially the 'second trillion'. This second trillion is the current source of global oil supply and if energy demand growth rates continue as expected, this could be consumed in another 25-30 years.
'The big and perhaps obvious question,' observes Meggs, 'is where do we find the third trillion and how do we obtain it, so that we have oil for a further 20-30 years beyond the next 30?
'I believe we can address the question of how we access the third trillion from three angles, namely: getting more out of what we have already discovered; finding more conventional oil reserves; and seeking to diversify our sources of supply.'
){kind=small}
'A recent study carried out by leading management consultants McKinsey into the size and cost of measures to reduce greenhouse gas emissions, revealed that the biggest opportunity for stretching out the second and third trillion barrels is energy efficiency. By making power generation, vehicles, buildings, manufacturing, and a host of other activities more efficient in the way they use energy, there could be very significant energy savings at no net cost. As the report points out, efficiency measures do not require a change in lifestyle or reduced levels of comfort, but they do need the will of policy makers to align the incentives of companies and consumers. This will not be easy to achieve as it involves billions of companies and individuals, but it should not be overlooked.'
Enhancing recovery
Getting more oil from reserves already discovered is the first of the three actions listed by Meggs that will lead to the third trillion. The worldwide average recovery factor for conventional oil reservoirs is around 35 per cent of the original oil in place, although some individual fields achieve 50-60 per cent recovery. Clearly any improvement on this, even by small increments, could have significant benefits.For example, a one per cent increase in recovery factor from BP's reservoirs would yield an additional two billion boe, notes Meggs. On a worldwide basis, a conservative five per cent increase in recovery would yield an additional 300-600 billion boe.
'Recovery rates will undoubtedly be improved by the application of new and upcoming technologies to oil reservoirs,' he asserts. 'A case in point that proves this is BP's Prudhoe Bay oil field in Alaska. Over the 30 years since it began operations, a succession of technologies has been used there to very good effect. These include horizontal drilling, coiled tubing drilling, miscible gas injection and gas cap water injection. As a result, BP's original estimate of 40 per cent oil recovery has grown to our current estimate of 60 per cent recovery. I'm confident this will rise still more in the future.'
That confidence comes from knowledge of other techniques BP could apply in Alaska and elsewhere. Some of these are already tried and tested, for example, more sophisticated low-cost drilling methods involving multilateral wells to gain greater contact with oil bearing zones in reservoirs. But others are relatively new and still in the development stage.
'The precise chemistry of how this new technique works so well is not yet fully understood, but we are studying it in detail,' says Meggs. 'Initial estimates suggest BP may be able to add one billion barrels of proved reserves around the world using the LoSal technique.'
Miscible gas injection, an established enhanced oil recovery (EOR) technique with a good track record in Alaska and in other oil producing regions, is another method which could bring benefits. Gas injected into the trapped oil helps reduce the interfacial tension between the rock and oil, enabling more oil to be flushed out - 'like adding detergent to a greasy pot', adds Meggs. Historically, natural gas associated with oil production has been the main gas used for injection, although economically, if a gas market has been available, it has often made more sense to sell the gas rather than reinject it for EOR purposes. However, carbon dioxide (CO2) has also been shown to be an effective miscible gas.
'Industry experience in the US indicates CO2 injection could boost recovery rates by 5-15 per cent,' observes Meggs. 'With CO2 sequestration likely to become widespread in helping to reduce greenhouse gas emissions, we will have a large supply of captured CO2 available to use for EOR.'
Applying smart chemistry is not the only technique on BP's EOR agenda. The company is also evaluating microbial EOR - using micro-organisms to chase out remaining oil from reservoirs. By injecting 'bugs' into reservoirs and feeding them, or adding nutrients to stimulate those naturally occurring in reservoirs, their metabolic activity gives rise to by-products such as polymers, surfactants and gas. These in turn can help trapped oil to move more freely. Micro-organisms can also degrade the oil itself, reducing the viscosity of heavier oil so that it can flow from the rock pores (see diagram below).
'BP is studying the mechanism of microbial EOR in conjunction with DuPont, and the new BP Energy Biosciences Institute will also work on this,' says Meggs (Frontiers, April 2007). 'We do not yet know if this technique will work - it's part of being at the frontier of oil recovery.'
In addition to EOR techniques, he also sees the ongoing evolution in technology for 'seeing' what is happening deep inside reservoirs to be another vital tool for getting more from existing oil reserves. 'Life of Field Seismic', a technique pioneered by BP in its Valhall field offshore Norway, essentially brings time into the seismic equation, the resulting '4D seismic' enabling the movement of oil in the reservoir to be tracked over time. While this is not yet widely applied, and the industry's ability to acquire and interpret 4D data accurately is 'still primitive', Meggs believes this and other deep penetration techniques being developed by service companies will yield significant results in the future.
){kind=small}
Finding more
The second approach to the third trillion is quite simply to find more of the same - conventional oil held in geological reservoirs. The oil industry's ability to find new sources of oil continues to be a success story - the latest BP Statistical Review of World Energy records that the world's proven reserves of oil have steadily increased from 877 billion barrels in 1986 to 1049 billion in 1996 and are currently at 1208 billion barrels.In addition to finding new pockets of oil in the vicinity of existing reservoirs, the industry will push into new areas to find more oil, extending the geographical reach of its current operations to include the Arctic, or in even deeper waters in the Gulf of Mexico, offshore Brazil or West Africa - BP has made over a dozen discoveries offshore Angola in around 2500m of water in the past few years.
Moves into deeper waters will benefit from enhanced seismic surveying techniques that permit explorers to see below salt. Many hydrocarbon resources lie in rocks which have large salt deposits above them - salt obscures seismic signals, making it difficult to assess whether hydrocarbons lie below. To counter this, over the past few years BP has developed new surveying techniques, such as wide azimuth towed streamers and multi-azimuth surveys, which give much clearer pictures of what is happening below the salt. These industry-leading methods are already delivering benefits in BP's oil fields in the Gulf of Mexico and in the Nile Delta offshore Egypt (Frontiers, April 2007).
'As we move into new areas we also need to make advances in engineering technology to handle the more demanding environmental conditions,' explains Meggs. 'For example, in the Arctic, where BP is evaluating a prospect offshore Sakhalin Island, we will have to develop the capability to build offshore structures that can withstand moving ice packs in deep water - or find an alternative approach that dispenses with offshore platforms, such as processing the oil and gas on the seabed, below the ice hazard.
'We have already demonstrated that we can extend the envelope of current engineering know-how, for example in the Thunder Horse development in the Gulf of Mexico, which among its many engineering "firsts" includes deepwater steel catenary risers up to 600mm in diameter. These are the largest and strongest risers in the industry to date, capable of bringing high pressure, high temperature oil and gas from the seabed some 1900m below. It will be achievements of this kind that will enable the industry to go beyond current limits in materials and engineering design to support exploration and development in new parts of the world.'
){kind=small}
Diversity of supply
The third route to the third trillion barrels is one with something of a twist in the tale, as in Meggs' view it is not only about oil. While there are known huge reserves of unconventional oil - most notably in tar sands and oil shales - and additional gas that can be recovered in the form of coal bed methane (Frontiers, April 2007) or from tight gas accumulations (see tight gas article in this issue of Frontiers), he believes that in the future many of the useful products currently obtained from oil and gas will come from other sources of carbon, significantly contributing toward the third trillion barrels.'Carbon is very fungible, that is to say, almost any large scale source of carbon can be converted into a desired product by the application of technology,' he explains. 'This is already carried out in conversion processes, such as that for converting natural gas into clean liquid diesel fuel via syngas (Frontiers, August 2006). But there exists tremendous scope for improving carbon conversion technologies to provide us with more of the end products we need.
'As we encounter more concern about security of supply, conversion technologies will become ever more critical for two reasons. They will enable us to diversify the hydrocarbon resource base, for example using coal or biomass to produce fuels. And they will allow more localised energy production near to the centres of demand.'
){kind=small}
Even though around 90 per cent of the world's coal is either too deep or too thin to mine - and therefore not included in the proven world total above - this need not be a showstopper, says Meggs.
In May, BP announced the formation of a joint venture company with leading international mining group Rio Tinto, which as part of its operations will focus on the use of clean coal technology for power generation. Studies for several projects are under way, including a $1.5 billion coal-based power generation project at Kwinana in Western Australia that would be fully integrated with carbon capture and storage. The coal would be gasified to produce hydrogen - which would be used to fuel the 'clean' power station - and CO2, some four million tonnes of which would be permanently stored underground each year.
Fundamental shift
If diversity of supply and carbon fungibility are to feature prominently in the quest for the third trillion, additional skills will be needed to complement the more traditional oil industry disciplines of geosciences and engineering. Chemistry, and particularly chemical engineering and catalysis, will play an increasingly important role in converting known resources into useful products. Bioscience will do so too, although its role in energy production is only just now beginning to take shape, propelled by the upsurge of interest in biofuels (Frontiers, April 2007).'The future, in my opinion, will be both chemical and biological, and also digital,' states Meggs. 'Technologies will begin to converge into the digital space, blurring the current distinctions between science and engineering and information technology. In 10-15 years from now, real-time data, supplemented by sophisticated modelling, will enable us to take that virtual walk inside our reservoirs.'
But his optimism is tempered by what he sees to be a need for a fundamental shift in approach if the energy industry is to make the most of its talent and technology. That shift, says Meggs, must come in the way the industry conducts its research and development (R&D).
'To date we have been successful as an industry in developing technology to meet the needs of increasing energy demand. But the energy world is now changing more rapidly - accelerating - and we are not set up to make the required advances in an effective way. For example, the oil and gas sector surprisingly spends less than any other industrial sector on R&D, amounting to only 0.3 per cent of its sales volume compared, say, with pharmaceuticals at around 15 per cent. We are also much slower to introduce and apply new technology. These factors must change if we are successfully to tackle the complexity and scale of the energy challenge we are facing.'
'We must have high level consensus on where we are trying to get to, supported by collaboration on fundamental research and backed up by demonstration projects if we are to advance technology in a more cohesive and efficient manner. BP has good experience of this with its collaboration partners in universities, other oil companies and with suppliers, but this thinking needs to be expanded.'
One encouraging collaboration example Meggs refers to is the recent establishment of the UK government-led Energy Technology Institute (ETI), designed to help public and private sectors to share experience and knowledge in developing new energy technologies. BP is to invest £5 million per year in the ETI - Meggs is a board member - and other companies, thus far including Shell, EDF Energy, EO.N UK, Rolls-Royce and Caterpillar, have also committed to fund the project. With the government contributing £500 million to the 50:50 partnership over the next ten years, the ETI will effectively double the investment in energy R&D in the UK when it is fully operational in 2008, targeted at promoting a step change toward secure, reliable and affordable low carbon energy technologies.
'Looking ahead, the current differentiation we use when discussing conventional and unconventional sources of oil and gas, and diverse sources of fungible carbon, will tend to disappear and fuse into a unified energy supply,' he concludes. 'In 30 years or so, as we embark on using the third trillion barrels, the collaborative roadmap we set in place today will be seen as the basis for securing the fourth trillion of the future.'
Energy matters
Read the Review online
