Innovation is essential for affordable sustainable energy
A Petronas executive has said the current model of competition is unsustainable
Without wider risk-taking innovation and deeper collaboration, the oil and gas sector will struggle to supply affordable and sustainable energy supplies over the coming decades.
Wee Yiaw Hin, Petronas executive vice president upstream, told reporters that the model of competition is not sustainable, particularly given the gyrations of the oil markets, which can cast doubts over economic viability of future projects. "The oil and gas industry needs to look at both technology and business models for change. Collaboration is required across all levels, both vertically and horizontally, from national oil companies (NOCs) to international oil companies to the service industry".
Wee noted that the speed of bringing new innovations online within the oil and gas business, at roughly five to 10 years, is too slow, especially when compared with other industries, such as telecommunications and information technology, which can push out new developments in as little as one to two years.
Petronas has been at the forefront in developing enhanced oil recovery (EOR) techniques in collaboration with ExxonMobil and Shell. Wee said the NOC aims to increase the recovery factor for its EOR programme to an average 45-50%, from 35-36% now, translating into an extra 500 million to 800m barrels of oil reserves from an investment of $10 billion to $15bn.
Maarten Wetselaar, executive vice president of integrated gas at Shell, which is helping Petronas pursue its EOR, noted that generally the industry must cut costs and climb a steeper learning curve. He added that if 30 to 40 other companies joined Petronas, Shell and ExxonMobil's programme to pursue integrated solutions, the result would be a much faster process of development. "We need more widespread risk-taking on innovation," Wetselaar told a press conference ahead of the upcoming 8th International Petroleum Technology Conference (IPTC), which will focus on innovation and collaboration to provide affordable energy.
Since 2007, Shell has spent around $1bn per year on research and development, Wetselaar said. He added that the energy industry needs to work together to find ways to unlock more energy resources in a faster and cheaper manner. Still "the challenge for our industry is to translate these investments into meaningful projects" he said.
Shell and Petronas are both pursuing their own individual floating liquefied natural gas (FLNG) projects, which are primed to revolutionise the way gas is produced and liquefied.
Meanwhile, working together in Malaysia, the pair have proved that through collaboration and innovation they have been able to rejuvenate what was believed to be a mature province, Wetselaar said. This year alone, Shell and Petronas have made eight discoveries.