First Quarter 2015 Energy Outlook Energy Industry Faces Many Unknown Unknowns in 2015, but Innovation Remains the One Known Known! Thegulfintelligence.com 99 CONTENT 03 Foreword By Sean Evers, Managing Partner, Gulf Intelligence INNOVATION & COMPETITION 05 The Global Oil Industry Should Shape the Post-Easy Oil Era with Technological Innovation – or Risk Being Shaped By It By John Wishart, President, Lloyd’s Register Energy 11 Volume, Velocity & Variety: Data – a Key Resource for the 21st Century Oil Industry By Abdulla Al-Qamzi, Manager Digital Oil Field, ADMA-OPCO 15 How can the Energy Industry Help STEM the Great Crew Change? By Andrew Vaughan, Vice President Abu Dhabi, Kuwait and Syria, Shell Abu Dhabi 19 Energy Hubs 2035: A New Energy Map – Who Will be the Winners and Losers? By Mirko Rubeis, Principal, The Boston Consulting Group SOCIAL LICENSE TO OPERATE 23 National Talent Shortage: Filling the Gap, Retaining the People By Richard Doidge, Managing Director, Maersk Oil Middle East 29 Good Business: The Energy Sector’s Role in Maximizing In-Country Value By Diego Perez-Claramunt, Social Performance Manager, Middle East & North Africa, Shell 32 On a Mission: Oman’s Pioneering Efforts in Developing a Sustainable Local Supply Base By Said Al-Sarhani, ICV Director, Takatuf Oman LLC 35 Securing Energy for Future Generations, Investing in Energy Efficiency By David Keat, VP Technical & Engineering Support, Al Hosn Gas SPECIAL FEATURE INTERVIEW 38 Q&A with HE Dr. Seyed Mohammed Hossein Adeli, Secretary General, Gas Exporting Countries Forum 2015 Gulf Intelligence. All Rights reserved. No part of this publication may be reproduced without the written permission of Gulf Intelligence 1 GI enregy.pdf 1 10/28/14 10:44 AM C M Y CM MY CY CMY K 2 Foreword Will 2015 Deliver yet Another ‘New Normal’ Set of Post-Lehman All will be Well Factors? JUST when you thought it was safe to go back in for the potential lifting of international sanctions, the water as the world emerged from the near death a move that would revive the Islamic Republic’s experience of the global credit crisis with the settled ailing energy industry, pave the way for its return comfortable new normal familiarity of printing as a major oil exporter and provide much-needed money, oil at $100 a barrel and Iran marginalized stimulus to the domestic economy. by crippling sanctions, the currents changed in A normalization of relations with Iran would 2014 within a few unpredictable months. surely bring a lot of benefits to the Gulf region, In the short space of two OPEC meetings the with an economy of 80 million people hungry for oil exporters group is staring down the barrel of a modernization, even if the extra energy exports $500 billion collapse in revenue in 2015 as crude that would inevitably come would add to further prices dropped like a rock alongside Japanese downward pressure on oil prices. recession and Chinese GDP growth figures hitting That said, the opposite outcome of the Iran a 5-year low. And it felt like every time one opened nuclear talks could trigger a major support to a newspaper or turned on a TV we were drowning energy markets. The 2015 energy crystal ball surely in images of John Kerry, U.S. Secretary of State, has many more difficult to predict rain clouds, and his Iranian counterpart Mohammad Javad there’s Ebola and Vladimir Putin banging on the Zarif, in permanent man-crush grins that screamed door of Europe and Islamic State terrorism, but in peace and love new beginnings. a world of zero interest rates the U.S. consumers In late November, the world’s six major powers are regaining their mo-jo and with the cash printing and Iran agreed to extend the nuclear talks yet again presses ready to go into action in Europe and Asia -- the new goal is to reach a political agreement we could be about to embark on another wave of within four months and a final deal by June 30, loose monetary freebie inspired growth! 2015 that would curb Tehran’s controversial nuclear program in exchange for sanctions relief. Sean Evers After years of isolation, Iran is positioning itself Managing Partner, Gulf Intelligence 3 4 INNOVATION & COMPETITION The Global Oil Industry Should Shape Post-Easy Oil Era with Technological Innovation – or Risk Being Shaped by It! By John Wishart, President, Lloyd’s Register Energy 5 IT IS THE fundamental truth of our time that meeting the rising energy needs of a growing technology is evolving at an accelerating pace, and increasingly urbanized population, and transforming, whether we like it or not, the coping with the environmental challenges in way companies operate and make decisions the decades ahead. every day in order to optimize business. The Only 10 years ago, the production of global oil and gas industry is no exception, shale oil and gas in North America wouldn’t and it must decide whether to proactively have been feasible. Although the existence shape the future or risk being shaped by it. of shale formations in the US was known Advances in and the widespread adoption for many decades, high cost and a myriad of technologies have triggered a conversion of technological challenges stood in the way process that’s resonating across the entire of development. It was a cocktail of high oil industry and along its value chain. The growth prices and advances in horizontal drilling and in computing power and widespread digital hydraulic fracturing technologies combined connectivity enable companies to harvest and with a push for greater supply security that analyze ever-larger amounts of relevant data brought shale oil and gas developments within in real time, helping make faster and smarter the realm of economic feasibility – potentially decisions, facilitating equipment maintenance, optimizing production, and enhancing safety and compliance. Technological advancements in reservoir Going forward, more than imaging, drilling and well completion, among others, have truly revolutionized the industry. ever before, innovation—new and For decades, technological innovation has helped offset the impact of depletion by improved technologies—will play introducing smarter and more efficient ways of discovery and production. Thanks a crucial role in meeting the rising to technological progress, the industry has been able to open up ever-more challenging energy needs of a growing and frontiers in the quest for new hydrocarbon resources, develop increasingly deep and increasingly urbanized population, complex reservoirs, and boost efficiencies in their recovery. And, going forward, more than and coping with the environmental ever before, innovation—new and improved challenges in the decades ahead.” technologies—will play a crucial role in 6 INNOVATION & COMPETITION opening up billions of barrels of oil and high-impact technologies such as automation, trillions cubic feet of gas for extraction and including remote and subsea operation, and production in the US and in other parts of the enhanced oil and gas recovery (EOR) in the world, and with it the potential to lower the near and medium term. price of power generation. Enhancing production and operational As traditional forms of hydrocarbons are efficiency is one, but not the only, driver of becoming harder to find and extract, ongoing technology innovation in the industry. Cost technological innovation will be integral to reductions as well as safety and environmental pushing back the much debated arrival of improvements are also widely seen as major ‘peak oil’ – the point at which the world’s oil objectives of innovation, especially related to production is reaching its peak. This holds also remote operations. The reason is clear. Safety true for the Middle East, a region long known isn’t just about loss prevention and minimizing for the existence of easily accessible oil and gas the cost arising from industry accidents and reservoirs from such giant fields as Ghawar incidents; it is the industry’s moral obligation in Saudi Arabia and Burgan in Kuwait that to protect the environment and people – both are now maturing while new ones are more those who work in the sector and those whose challenging to develop. lives may be affected by the industry’s actions. It therefore doesn’t come as a surprise that As the industry pushes into deeper waters improving recovery and extending the life of and more hostile environments, and refines existing assets are emerging as dominating existing and develops new technologies, themes in the oil industry around the globe. the rising cost of doing so could potentially As the findings from a Lloyd’s Register hamper progress on the innovation front. Energy survey “Technology Radar” (www. Finding practical ways to collaborate more lr.org/technologyradar) carried out among closely with other organizations to share senior industry executives and academics development costs for new technologies will in 17 countries shows, the majority of those therefore be of great significance for the polled plan to focus on further innovations in industry at large. International oil companies 7 PROUD TO SERVE OMAN (IOCs), national oil companies (NOCs), As a result, the flow of new talent into the oil service companies as well as academia and and gas industry hasn’t been able to match the government will all have to play a role in this outflows and keep up with rising demand. by coming closer together. Today, the single biggest challenge facing NOCs in particular are raising the stakes technology innovation in the oil and gas on the innovation front. Since 2005, five of industry is arguably the knowledge shortage the largest NOCs—PetroChina, Petrobras, resulting from the generational gap that can Sinopec, Lukoil and Statoil—have grown their be sourced back to the 1980s, and that’s set to research budgets at twice the rate of the super worsen as an entire generation of experienced majors and, in 2011, out-invested IOCs at engineers is reaching retirement age.