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Laying down strategies for Asia’s O&G industry

July 1, 2014

New subsea technologies can replace onshore and offshore facilities. Image source: Aker Solutions

Malaysia hosted the first-ever OTC Asia this past March. Angelica Buan reports from the conference, which shone a spotlight on the region’s E&P activities and its pressing technology gap. 

Malaysia right platform for solutions 

Making its inaugural debut in Asia recently was the Offshore Technology Conference (OTC) Asia, an offshoot of the well-known OTC conference and exhibition event held annually in Houston. The very first event for Asia was held from 25-28 March in Malaysia. 

According to Dr. Arnis Judzis, OTC Board of Directors’ Representative, Malaysia was picked over three other regional capitals to host the event because of the country’s growing size and level of activity of its oil and gas industry, strongly backed by state-owned petroleum company Petronas. 

Echoing this was Datuk Wee Yiaw Hin, Petronas Executive Vice President for Exploration and Production (E&P), who said that Malaysia is currently an operating base to more than 5000 regional and global companies from more than 40 countries.He also said that Malaysia’s offshore projects are expected to incur the largest capital expenditure (Capex) increase in Asia at more than US$59 billion over the next five years, likely outpacing China and India. 

Spotlight on E&P activities in Asia

The event was attended by more than 25,100 energy professionals and trade visitors from 88 countries. Also participating were 200 national and global oil firms and service providers including Petronas, Aker Solutions, Baker Hughes, ConocoPhillips, Gazprom, Oil and Natural Gas Corp. (ONGC), Pemex, PetroVietnam, PTT Exploration and Production, and Shell. 

According to Edward Stokes, OTC Board Chairperson and Marine Project Manager at ConocoPhillips, OTC Asia spotlighted new players in offshore E&P as well as companies with on-going projects. Of particular interest were E&P activities in Malaysia, Myanmar, Indonesia, India, the Philippines, and Sri Lanka.

“We discussed challenges facing the E&P sector and explored ways to develop solutions to overcome these challenges. After our discussions and deliberations, we will return to the market place and compete fiercely with one another. However, during the conference we have been in alignment and focused on cooperation to keep powering the industry forward,” he said. 

Weatherford’s Nicholas Gee, Halliburton’s David Lesar, ConocoPhillip’s Ryan Lance, SapuraKencana’s Tan Sri Dato’ Seri Shahril Shamsuddin, Royal Dutch Shell’s Maarten Wetselaar, and Technip’s Thierry Pilenko spoke at OTC Asia’s Game Changing Technologies plenary session. Image from Offshore Technology Conference 

Narrowing the technology gap

The conference rolled out two executive plenary sessions, 10 panel sessions, five special sessions and 53 technical sessions presenting more than 300 papers. It also highlighted country briefing sessions covering Argentina, Australia, Cambodia, China, India, Indonesia, Malaysia, Mexico, Myanmar, Russia, South Korea, Sri Lanka and Vietnam. 

The message at the conference was that technology is obviously the game changer. This is where Asia lags behind its European and US counterparts, perpetuating in the region’s dependence on imported energy supplies to sustain its needs. 

According to speaker Dr. Abdul Rahim Hj Hashim, Vice Chancellor and CEO of Universiti Teknologi Petronas, developing innovative and technologically advanced energy assets is the way forward, especially to extract oil and gas from reserves, which are either drained or inaccessible. Lowering costs and increasing efficiency are major benefits of such undertakings, according to Abdul Rahim.

He also enumerated a few viable technology strategies that are utilized in Malaysia, such as enhanced oil recovery (EOR), CO2 management, operational excellence, and geo-imaging. The latter is expected to provide a sharper assessment for gas clouds, salt/pre-salt, seismic reservoir characterization, as well as 4D reservoir monitoring. However these technologies also have corresponding challenges and environmental safety factors. For example, in CO2 management, the development cost and production, as well as technology performance and standard of underground storage (for captured carbon dioxide), may make or break a project. 

Notwithstanding this, offshore E&P has definitely come a long way. Thierry Pilenko, Chairperson/CEO of Paris-headquartered Technip, said technologies for offshore E&P, including subsea, pre- and subsalt, and marginal fields exploration, essentially adopt measures for safety and environment preservation, among other benefits.

These technologies are also tapping the potentials of offshore reserves in Malaysia, such as the 2013 EOR project in Sarawak and Sabah with Shell Malaysia. Petronas will provide the final investment decision for the Angsi, Guntong, Dulang and Bokor EOR projects this year.

Recovery factor is crucial to sustain Malaysia’s oil production, said Petronas’s Datuk Wee, adding that there are about 10 EOR projects sanctioned and US$14 billion worth of investments, drawing around 800 million barrels (MMbbl) of oil, to date.

Datuk Wee stressed in his presentation that the days of “easy oil,” where national oil companies (NOCs) search for oil easily produced locally, are over. 

But the headwinds of change, such as the fact that returns in energy-related ventures are lower now, are nudging NOCs to look further beyond their borders for larger-yielding reserves. In some cases, this pits them against international oil companies, and Wee added that business model and strategy operations must be “reshaped.” NOCs must help meet what the industry needs, namely,  an integrated value chain, technology solutions, and a sizeable asset base,  he said.

Going deeper, colder

Asia, a forerunner in upstream oil and gas activities, is teeming with potential for developing deepwater and marginal field resources. 

In Malaysia, though the country remains focused on mature fields, Petronas is already exploring more remote, deepwater locations.

India is also looking at deepwater locations, amid the country’s declining production in existing fields where IOR and EOR technologies are needed, said Sudhir Vasudeva, former Chairperson of India’s ONGC. By 2030, India is targeting 60 million metric tons of oil equivalent per year from overseas sources while tapping more than 450 million metric tons of oil equivalent from domestic yet-to-find reserves. The country is also securing alliances for new resources.

Neil Gilmore, Shell’s Vice President Development, Upstream International Integrated Gas, said that by 2050, the global population could balloon to nine billion. The increase in urbanization, which could result in two billion cars on the world’s roads, may translate to a 200% increase in energy demand.

All this will require more energy resources. But the challenges in exploring the offshore fields of the Arctic were further expounded by Anatoly Zolotukhin of the Gubkin Russian State University of Oil and Gas, National Research University. He said it is costly and hindered by severe and icy climatic conditions. 

There are a few innovative solutions that were proposed, such as developing oil and gas fields from a shoreline base and building artificial islands.

Amir Aryana, Business Development Manager of Csiro in Australia, added that a more viable, yet cheaper, option to “monetize” stranded offshore gas assets, specifically in Australia, is FLNG (floating liquefied natural gas) technology. 

“FLNG is extracting natural gas from offshore reserves. To bring down cost of shipping the gas due to maritime distances, the gas is chilled to a certain temperature to liquefy it before shipping to different markets. The process significantly reduces the volume by several hundred times,” he explained, adding that environmental and technical hurdles need to be overcome first.

On another note, some experts opined that energy source depletion may either be thwarted or may not happen after all. 

Gregory Navarre, President of Texas-based Horton Wison Deepwater, was one of those who said energy resources will not run out. “Unless we choose the wrong policies or fail to implement the right policies,” a statement from which the Asian oil and gas industry should take a cue

Exhibition showcase for technology

The conference was complemented by a 6000sq m exhibition area themed “Meeting the challenges for Asia’s growth.” It hosted 10 country pavilions representing Australia, Canada, China, Holland, Korea, Malaysia, Mexico, Norway, Singapore and the US. 

An outdoor 4000sq m venue was taken up by exhibiting companies such as Halliburton, SapuraKencana, Weatherford, and WestStar Aviation Services. 

Dutch firm Fugro exhibited the Voyager, a new purpose built DP2 geotechnical drilling vessel, to meet the varied demands of Asia’s deepwater markets.

Neil Kavanagh, OTC Asia Program Committee member and Chief Science & Technology Manager at Woodside Energy, said that the Asian event was an important platform to flesh out new developments in the upstream oil and gas sectors, particularly in the areas of offshore technology solutions, engineering, and project management.

The corporate supporting organization for OTC Asia was Petronas, supported by a Malaysian committee comprising the Malaysia External Trade Development Corp. (Matrade), the Malaysian Investment Development Authority (MIDA), the Malaysian Oil & Gas Services Council (MOGSC), and the Malaysia Petroleum Resources Corp. (MPRC).

With positive feedback received from speakers, delegates and visitors on the conference sessions, as well as the interactive exhibition floor, the organizing committee said at the closing of the show that OTC Asia will return to Malaysia in 2016, with a targeted number of 30,000 visitors. 

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