Working smarter

New exploration and production technologies and techniques, sharing best practices, and exchanging ideas and information with your upstream peers is critical work, and it is essential to the continued success of our companies and of our industry. In fact, considering the fundamental nature of energy in our daily lives, the pre-eminent role that petroleum plays in ensuring continued global economic prosperity and social development, and our need for energy production and consumption to coexist with environmental protection, I believe geosciences is about nothing less than tackling one of the most compelling issues of our generation. I am convinced that when future generations look back at the early part of the 21st century, they will focus first and foremost on issues related to energy and the environment, and the ways in which we collectively address those issues.

Today, the world of tomorrow is being shaped most profoundly not in the political centers of the post-war era, but in the new centers of energy, and particularly within the leading companies, institutions and organizations that make up the petroleum industry. Every day, the future is taking shape on the frontiers of petroleum exploration and production; at work stations and learning centers; and in visualization suites, research labs, collaboration rooms, and wherever else men and women are working hard to find, manage and produce the energy which powers our societies – all while serving as wise stewards of our precious natural environment. I say this because if we take note of the world around us – from land, air and sea transportation to the fertilizers that help grow our food, the medicines that heal the sick, and the fabrics and materials that clothe and house humanity – we see that nothing works without oil and gas.

But how can we meet these extraordinary expectations, and the enormous challenges that accompany them? First, there is the matter of the hydrocarbon resource base, which is the indispensable starting point for all our upstream endeavors. When it comes to resources, clearly this region is the place to be. The BP Statistical Review of World Energy estimates the Middle East region’s total proven reserves of conventional oil at roughly 60% of the world total. Also, despite the impressively vast proven reserves of oil and gas in the region, the future of discovery remains promising.

Furthermore, many of our region’s reservoirs have been produced at more gradual depletion rates than comparable fields elsewhere around the world - while some have never been produced at all. The combination of the prolific nature of our reservoirs and lower production costs serves to make the region’s resource base an even more attractive play. As other fields around the globe begin to mature and decline, and production decreases as a result in many parts of the OECD, the world will increasingly look to us and our companies to translate our massive conventional reserves into reliable supplies, even as the industry enhances its ability to tap the vast resources of non-conventional oil found elsewhere around the globe.

Another major driver of future upstream success is, of course, advanced technology, whether in the form of improvements and enhancements of existing technical tools, or a whole new suite of applications, techniques and equipment designed to unlock the precious treasures of the earth. Today, high-end technologies such as satellite imaging, 3D visualization rooms, I-Field development, remote control centers, real-time drilling data transmission, and megascale parallel computer systems are increasingly commonplace. And looking ahead, even more sophisticated technology will be indispensable to the success of our companies, whether they are national oil enterprises, multinational majors, or specialized service companies and technology development firms.

High-tech solutions
But new technology doesn’t just happen, nor does it emerge fully formed overnight. Instead, the next generation of upstream technical tools and applications will stem from sustained R&D programs based on specific strategic objectives and technology targets. These R&D programs will require us to commit a high level of human and financial resources over the next few decades. In my view, successful programs will also need to be flexible enough to adapt to changing needs and new research paradigms, and to harness emerging technologies from beyond our own industry.

At Saudi Aramco, we’re pursuing such blue-water technologies with an eye toward finding, managing and producing our hydrocarbon resources more effectively and more efficiently. Our strategic goals in this regard are simple but clear: maximizing the pace and scale of discovery and the rate of recovery of oil and gas. For example, the future of discovery in the region is promising, especially that there are many under-explored areas and substantial resources associated with novel play concepts that are still untapped. The future will see us tackling such resources as gas in tight sands and basin-centered gas. Moreover, technology development to facilitate more effective discovery is also underway. These include low-frequency seismology for direct detection of hydrocarbons, seismic inter-ferometry, and passive seismic monitoring, as well as numerous non-seismic methods for assessing hydrocarbon potential.

For improved recovery we aim to move in the next few years from MRC wells to next-generation Extreme Reservoir Contact wells, which will feature 10, 20, perhaps even 50 laterals snaking through the payzone. Other future technologies on our books include the use of nanorobots to enter reservoir rock pores and pore throats. But for all these high-tech tools, the upstream sector is still at heart a people-centered business, and it takes a keen eye and a sharp intellect honed by years of experience to make sense out of mountains of data, and a leap of human imagination to develop new technologies to solve problems both large and small. And no matter how fast the rate of technological change accelerates, the upstream will continue to be about big brains, strong character and lofty dreams.

At Saudi Aramco, we believe strongly that the quality of people is the main source of differentiation between those companies that will lead in the future, and those that will follow. In keeping with that belief, our value proposition to our E&P staff is this: our company is a place where your work is focused underground, but where we want you to reach for the stars. We believe in the immense power of integrated teams, and hold that bringing people together from different professional and engineering disciplines makes us a stronger organization, and is ultimately more rewarding for the individuals involved.

We are making an even more substantial investment in our E&P talent pool, with the construction of a new Upstream Professional Development Center to promote hands-on learning in an intensive, immersive and integrated setting. When it is complete in 2010, this center will have 3D visualization rooms, drilling and I-Field simulators, and other learning facilities designed to keep our professionals up to speed with the latest developments and technologies in their various fields, and to do so in an interdisciplinary manner. Our goal for the facility is to help cut the skill development time for top-notch upstream professionals from years to a matter of months, by immersing them into a richer variety of information, techniques and technologies in a hands-on manner.

But even with the combination of plentiful reserves, cutting-edge technology and highly qualified people, there must be something more. To be truly successful we also must have a clear vision for our exploration and production activities, and a solid strategy or “game plan” to achieve it. In my view, a winning upstream strategy focuses first and foremost on maximizing our resource base for the benefit of our nations and their peoples, as well as the wider global economy – or in other words, to do our part in meeting the pressing energy challenges of our era. To that end, we at Saudi Aramco have challenged our earth scientists and engineers to set their sights high and add nearly 200 billion more barrels of oil-in-place, and to recover up to 70% of the original oil-in-place from our major producing fields – clearly stretch targets considering that the world currently recovers on average around half of that.

Ready to meet demand
Of course, a long-term perspective is also a vital part of our strategy, and while short-term commercial considerations are important, so is building for a future that will continue to run on petroleum. It’s hard to escape the talk in the popular press about “peak oil” and the impending decline of petroleum as a fuel source in the near future, and yet the consensus forecast is for fossil fuels to account for 80 to 90% of the worldwide energy mix in the year 2030. Given that total energy demand will continue to increase, largely as a result of growing populations and rising living standards in the developing world, the call on our energy will certainly remain strong for many, many decades to come. And by implementing sound upstream strategies and a sustained commitment to maximizing our resource base, I know our region will be prepared to answer the call.

But living up to the responsibilities that come with such close engagement on the great issues of our time mean that no company – no matter how large, how sophisticated or how capable – can go it alone. Instead, co-operation and collaboration are essential for a meaningful long-term strategy for the upstream sector. Petroleum companies in this part of the world are already working closely among themselves, and with leading peer companies around the world in a variety of fields and disciplines. But we must also recognize that co-operation and collaboration go well beyond these corporate relationships, and include professional societies like the AAPG, EAGE, SEG, SPE and others.

These societies are also doing essential work to bring along a critically important new generation of E&P professionals through their student programs, and to show the best and brightest of the youth that ours is a sunrise industry, not a sunset business. Universities, research institutions and other entities are also exerting tremendous efforts to supply these young people with the technical skills and knowledge they need to contribute to our future success. Saudi Aramco is proud to support a range of professional societies and to collaborate with many different institutions of higher learning, and I know we are not alone among the region’s petroleum companies in doing so.

But as I noted earlier, we should not close our eyes to the benefits of working with companies, research centers and universities whose primary focus is not oil, or even energy. For example, there are tools and technologies developed in the medical field that may have widespread applications for our business. Computerized tomography, or the CT scan, was originally designed to improve on medical X-ray technologies and is now routinely used in our business to analyze core samples. By the same token, the aerospace, material science, bio-technology, nanotechnology, IT and telecommunications industries may also be in the process of developing innovative products, tools and techniques which could one day be indispensable in our work. In other words, just because a new technology wasn’t designed with oil and gas in mind doesn’t mean it can’t be of immense value to us in our operations.

Green awareness
Such an approach is important in part because some of those technologies may help us in tackling what is perhaps the biggest challenge facing our industry at the moment - and some have argued, the most pressing issue currently facing mankind: the protection and preservation of the natural environment. Make no mistake: environmental issues affect every aspect of our business, and worries about safeguarding the natural world are present at every step of the petroleum production, processing, transportation and consumption cycle. Like it or not, concerns among both the general public and policymakers over greenhouse gas emissions, global warming and conventional pollution are changing the overall context in which our organizations operate, and in which global energy policies are being debated and formulated.

But these concerns may also create new technical and commercial opportunities in fields such as carbon management and pollution mitigation, and enable us to raise our commitment to environmental stewardship to a whole new level. I believe energy and the environment represent two important and intertwined imperatives for humankind, and that technology can help further reduce the amount of energy needed to generate the maximum benefits to society while also minimizing the negative impact on the environment. In my mind, this is the way forward if we are to realize a sustainable and successful future.

And because I believe that talent, technical skill and a passion for innovation will be indispensable in achieving those twin goals, I also think that E&P has a leadership role to play here. For example, many of the new tools and techniques designed to optimize the discovery, recovery and production of hydrocarbons also hold significant environmental benefits, and can lighten our industry’s environmental footprint. I think we can do more to leverage these new technologies for the benefit of the environment while still fulfilling our mandates as energy providers, and as we need our best minds and most experienced hands at work on these pressing issues, that means we need people like you and your upstream peers.

I believe that the petroleum industry should not only be the most sophisticated and technologically savvy business on Earth, but also act as the primary engine and indispensable enabler of global economic growth, serve as the fundamental driver of sustained social development, and be the acknowledged leader in environmental protection and stewardship. Thanks to us and our efforts, every man, woman and child on the planet should wake up knowing they will have ready and reliable access to the energy they need as they make their way through their world, and thus have the ability to move a little faster, push on a little farther, and soar a little higher.

And those same men, women and children should be able to sleep soundly at night knowing that - again thanks to us - the incredible beauty, diversity and magnificence of our natural world is protected and preserved, and that our planet will remain healthy. Over the last century and more, petroleum professionals have proven themselves more than equal to the challenges they have confronted, and I believe that all of this is within our grasp, if we simply recommit ourselves to realizing our enormous potential both as an industry, and as individuals.

This article is based on a speech given by Khalid A. Al-Falih at the Eighth Middle East Geosciences Conference in Manama, Bahrain.

Khalid A. Al-Falih’s vision for convention oil

• Accept the challenge of increasing the global average, economic recovery rate for conventional oil to a minimum of 50% with an eye toward 70%.

• Discover most of the remaining in-place conventional oil resources over the next quarter century, taking the total discovered oil to the upper-end of the global endowment estimated at 8 trillion barrel.

• Devise a suite of readily usable, commercial technologies for the capture and sequestration of carbon.

• Lastly, work jointly toward creating an enabling environment – accounting for the economic, regulatory, environmental, technological and policy dimensions that will help turn the resources into supplies as dictated by demand growth.

Al-Falih says similar goals should also be established for unconventional liquid fuels, such as extra heavy oil, tar sand and oil shales.

Khalid A. Al-Falih was appointed as EVP of Operations last September. The business center that he manages handles E&P, engineering and project management, operations services, refining, as well as marketing and international business lines. Al-Falih joined the company in 1979 and was sponsored to study at Texas A&M University in College Station, earning a BS degree in mechanical engineering in 1982. He has worked in a variety of roles at the company since and was appointed to the board of directors of Saudi Aramco in 2004. He also serves as chairman of the board of the newly formed South Rub' al-Khali joint venture between Shell, Total and Saudi Aramco.