Oil and gas account for more than half of all primary energy consumed globally. The sheer volume of oil and gas consumed means that these fuels will continue to feed a large share of the world's hunger for energy for the foreseeable future. Assuring a reliable and dependable supply depends on the technologies used in their extraction.

As ever-more challenging fields are commercialized, demands on technology are increasing to assure the economic, efficient and safe extraction of the fuel. Håvard Devold and Sandy Taylor of ABB take a look at the history of oil and its future challenges.

A significant shift occurred during the 1970s when, in the wake of the oil crisis and with oil becoming scarcer, new fields were being opened in more and more challenging locations, with technology progressing to meet the changing demands.

During this decade, ABB started to provide micro-processor-based control systems, a technology that gradually began to replace mechanical and pneumatic hardwired single-loop controls. The company also broadened its base technologically, adding further offerings for the sector. In 1973 oil and gas production was 76 Mboe/d (million barrels of oil equivalent per day), about 20% of which was from offshore fields in relatively shallow waters.

ABB soon established the rapidly growing offshore industry as its main market in the oil and gas sector, with many reference projects in the North Sea as well as huge offshore fields being developed in the Arabian Gulf. It was the age of large offshore field centers with gravity bases and fixed structure platforms. Today offshore accounts for more than 40% of all oil and gas production, and new offshore capacity is coming from fields in water depths of more than 500 meters.

Setting the Stage for the Years to Come

Combustion of fossil fuels - coal, oil and gas - are generally accepted to be the direct cause of much of the measured and forecasted global warming. Fossil fuels accounts for 81.3% of all energy consumed. Oil and gas make up 51%, with the balance coming from coal. Despite these dire consequences, there is presently no practical source or carrier of energy that can replace oil and gas on a large scale in its application in transportation or as an industrial feedstock. Battery-powered electrical cars represent a promising potential with improving technology and range, but can currently only replace a few percentage points.

Even if a revolutionary new source were to be identified, development of practical vehicles and distribution infrastructure would take well over a decade. Presently at 142 Mboe/d, combined oil and gas production is almost double what it was in 1973. Despite progress in energy efficiency and the introduction of renewable sources such as biofuel, it is likely to grow further, reaching 180 Mboe/d by 2030. In a few years, non-OECD consumption will surpass that of the OECD, and is predicted to grow by 120% by 2030. It will by then be double that of the OECD. The latter will fall slowly by about 12% over the same period due to increasing energy efficiency and limited population growth.

A typical field's production increases steeply to a maximum (plateau) and then slowly drops off (tail end). The world average production of oilfields in this phase declines at about 6% annually, if no upgrades take place. This means that in 2030, the gap between new demand and remaining tail capacity will be 70% of total consumption. This capacity must come from fields upgraded or developed between now and then, or from new unconventional sources. The gap is only slightly smaller than today's total production, placing high demands on exploration and production technology.

Different from the easy oil of yesterday, a significant fraction of this oil and gas must come from fields characterized by such adjectives as arctic, deepwater, cold, heavy, high in water content, high sulfur content, to name but a few. In addition, improved oil recovery (IOR) technologies can be used on existing reservoirs to extract additional oil that would otherwise not be extracted. In most cases, IOR features flow assist (such as pumping), heating, processing, water treatment, software models and similar technologies.

IOR works: Whereas a recovery rate of 20 to 30% was considered acceptable half a century ago, many fields are now targeting 50%, with best practice surpassing 70%. For many fields, this means that recoverable reserves have more than doubled over their lifetime, and still continue to rise as even more sophisticated enhanced oil recovery (EOR) technologies are developed as a combination of 3-D and 4-D seismic modeling, fracturing and stimulation of the reservoir, advanced modeling and other technologies.

As the oil price continues to rise and gas prices recover in the longer term, the focus is again returning to unconventional resources. There is a boom in unconventional gas (shale gas, coal bed methane) and also oil/tar sands. These sources are not only more difficult to produce from but also require more energy, which in turn implies more corresponding emissions, both directly and indirectly such as from produced water. Therefore, future production must be done with an increased focus on such topics as emissions, discharges, accidental spills and leakages as well as industrial accidents. As a result, relative capital expenditure will triple over the next decades, and suppliers will be required to supply new technology at acceptable cost.

Downstream

The refining business is constantly affected by crude-oil market fluctuations, high cost of energy, environmental regulations, and consumer needs. These factors all contribute to very tight margins. During such times, the need for innovative "value-added" applications increases greatly, as refiners seek to squeeze as much product out of a barrel of crude oil as possible, whilst optimizing energy costs, meeting environmental regulations and supplying the market with products to the required specification (Euro III and IV gasoline, and ultra-low sulfur diesel).

ABB's recent major successes have come as a result of the upgrade and enhancement of the oil movements, storage and blending solution (RBC/ABC, regulatory blend control, advanced blend control). In 2010 ABB successfully implemented and commissioned blending solutions which significantly improved refiners' margins.

And Beyond . . .

ABB meets the future challenges of oil and gas in two ways: Firstly, the company continuously develops its own core solutions in electrification, control, safety systems and instrumentation. Secondly, it has over the years been a partner for strategic customers and demonstrated the capability to develop unique enabling technologies such as subsea electrification, power from shore and integrated operations.

These solutions would not have been possible without risk sharing, financing and real proof of concept/field trials. In particular, projects on the Norwegian continental shelf and the long term commitment of companies such as Conoco Phillips, Shell, BP and Statoil to joint research and development projects with ABB and others in what has been referred to as "Laboratory North Sea."

Also partnerships and research and development agreements with such companies as Sonatrach, Dow, and Petrobras continue to enrich ABB's technology. The next step is increased focus on such partnerships in the Middle East, especially in Saudi Arabia, Qatar and UAE that would focus on sustainable and efficient solutions with particular relevance to this region. These projects will include themes such as IOR, water and water management and unmanned remote inspection and intervention.

Despite discovery and production becoming more complex, there is still enough conventional and unconventional hydrocarbon in the ground to last mankind through the next century. Reducing the environmental footprint will be the greater challenge than getting enough product. In an energy-hungry world where per capita energy consumption is almost synonymous with wealth, there still seems to be little choice despite how much we love to hate our dependence on oil and gas.