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President's column Wealth is not new. Neither is charity. But the idea of using private wealth imaginatively, constructively, and systematically to attack the fundamental problems of mankind is new.—John Gardner Historical philanthropy was primarily driven by religious convictions or the desire to remain in power. Around the time of John D. Rockefeller, something remarkable occurred as the great wealth created by industrialization ushered in a different sort of giving, targeted at improving people’s lives. Rockefeller started as an office clerk at age 16, creating his own firm 4 years later. His success in building Standard Oil was unprecedented—the firm would eventually be broken up into more than 30 individual companies that would grow to become Exxon, Mobil, Amoco, Sohio, and others. He gave away most of his wealth, founding the University of Chicago and Rockefeller University, but much of the giving was targeted at achieving specific goals. One example was focusing on eradicating hookworm disease across the southern US. Oil industry leaders have a long tradition of philanthropy, just one more way our industry serves the public good. SPE has set aside a modest amount of money for disaster relief in areas where our members reside. To date, we have contributed more than USD 100,000 to various efforts including USD 10,000 each to relief efforts following this year’s 7.8 magnitude earthquake in Ecuador and the Fort McMurray wildfires in Alberta and Saskatchewan, Canada. Most of us donate to charities according both to our abilities to do so and our convictions. One of the things I have been most pleased to see is not the donation of money, but the time and energy SPE members have contributed to charitable causes. I joined SPE in 1975 and one of the first activities I participated in was a section activity to raise money for scholarships, one of the most common areas for giving. SPE members have often been ready to volunteer for many efforts designed to benefit the public or deserving individuals or groups. I am thrilled to see sections and chapters around the world contributing their time and efforts to a wide variety of activities. In June, the SPE Board of Directors adopted “SPE Cares” as the name for global SPE volunteer initiatives, thereby promoting community service worldwide while bringing together students and young and experienced professionals. We can shed a positive light in the oil and gas industry and make a difference in our community outside our careers.
- North America > United States > Illinois > Cook County > Chicago (0.25)
- North America > Canada > Alberta > Census Division No. 16 > Regional Municipality of Wood Buffalo > Fort McMurray (0.25)
President's column Last December I had the pleasure of returning to the Kingdom of Saudi Arabia and touring the giant Manifa oil field. Manifa produces a heavy, sour crude oil from six, long (up to 40 km), stacked reservoirs in shallow water (Arukhe 2014). The shallow waters have abundant sea grasses and corals and are teeming with marine life. Shrimping and fishing are important parts of the local economy. The development of the Manifa field is a fascinating story showing how creative solutions can minimize impact on the environment. Manifa was discovered by Saudi Aramco in 1957. The discovery well targeted both the shallower formations productive in the large Safaniya coastal field and the deeper Arab formations so productive onshore. Neither zone was productive; however, the discovery found excellent productive layers in between, including three that were only produced in small volumes onshore and three that had never before proved productive. The heavy, sour crude was similar to Khursaniyah, one of the three major types of crude present in large quantities in the Kingdom. Demand was less for this crude than for Safaniya and Arab crudes but the market for heavy sour crudes was improving (Aramco World 1963). The first development was in 1962, and the field was brought on stream in 1964. The field produced for 20 years before being mothballed in 1985 because of low demand (Aldossary 2015). Manifa’s history can be contrasted with that of Prudhoe Bay in Alaska. While specific reserve estimates for Manifa are not public information, both fields are very large. The Prudhoe Bay field was discovered in 1968 and did not begin production until 1977. Prudhoe production peaked at about 1.5 million BOPD in 1989. Prudhoe Bay crude averages 27.6 °API and had a significant domestic market to serve. Manifa crude is 26–31 °API and has from 2.8% to 3.7% sulfur content (Croft and Patzek 2009), with less of a market at the time. It is fairly astonishing that roughly comparable fields would go down such radically different paths. Manifa would remain mothballed until 2006. Saudi Aramco redeveloped the field consistent with a very long life production time horizon for its large reservoirs (Saudi Aramco 2016). But the old way of approaching shallow offshore fields would not be acceptable. The use of jackup rigs in these shallow waters would have required excessive dredging, and the size of the reservoir eliminated the possibility of effective development from the shore. A new approach to development would be needed. A creative plan to develop man-made islands connected by a causeway would allow conventional onshore rigs to be used to develop this offshore field. A long causeway was considered, but early designs would have decreased water circulation vital to distributing nutrients and oxygen vital to marine life. With more than 4 million man-hours of work in the design phase, a solution was developed to build 27 man-made islands connected by 41 km of causeways. To ensure needed water circulation, the causeway does not go all the way across the bay and 14 bridges were built into the causeway to further improve circulation (Aldossary 2015). Production commenced in 2012 ahead of schedule and under budget in a development that earned a UNESCO Environmental Responsibility Award nomination. It is an impressive development of which Saudi Aramco is rightly proud, with eventual production capacity of 900,000 BOPD or more. As our helicopter approached the massive processing facility, I looked at the three large flare stacks. There was nothing being flared. Was the field shut in? No, the design and normal operations of the field use all of the produced gas and creative operations practices mean that almost no gas is flared. Excess electricity produced by the facilities goes into the power grid.
- North America > United States > Alaska > North Slope Borough > Prudhoe Bay (0.96)
- Asia > Middle East > Saudi Arabia > Arabian Gulf (0.91)
- Government > Regional Government > Asia Government > Middle East Government > Saudi Arabia Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- North America > United States > Texas > Permian Basin > Yeso Formation (0.99)
- North America > United States > Texas > Permian Basin > Yates Formation (0.99)
- North America > United States > Texas > Permian Basin > Wolfcamp Formation (0.99)
- (22 more...)
President's column Quality is a measurement of excellence that is often difficult to quantify. Providers of quality products and services command premium prices. Brand names we associate with quality inspire positive thoughts. They are names we trust to deliver what we expect of them—safely, reliably, and with flawless performance. Quality is a perceptual, conditional, and somewhat subjective attribute that is understood differently by different people. In business, engineering, and manufacturing, quality is fitness for purpose. It has a pragmatic interpretation as the superiority of something. That something may be a product or service. It may also be a process, personnel, management, or an entire enterprise—a brand. While our industry strives to strengthen quality and reliability standards worldwide, the general public has a very negative perception of the industry’s performance. They do not think “quality” when they consider our performance or contributions to society. Why do so many people feel so negatively about the industry responsible for powering the modern world? It provides jobs and improves living standards. For more than 7 billion people on our planet, every measure of quality of life, from gross domestic product per capita and infant mortality, to education levels and access to clean water, is correlated to the consumption of modern fuels, in particular oil and gas. There is no doubt that it is a vital resource that has improved people’s lives more than any other energy source. A growing proportion of society now wants the lifestyle that oil and gas provide without our industry. Why? The short answer: trust. People do not trust oil companies. Perhaps they are cynical about gasoline prices. They do not trust what they perceive as an environmental polluter and source of greenhouse gases. They do not trust us to operate safely. The rise of vocal activist groups has exacerbated the situation, but we are not without blame. There have been industry incidents that caused loss of lives and damage to the environment. We did not always respond satisfactorily. Modern telecommunications, especially the Internet and social media, spread bad news universally, instantaneously, and continuously. In my March column, I wrote about social license to operate, deemed to exist when a project—or an industry—has ongoing support and trust from the community. Gaining that support and trust requires that we not only meet, but exceed, society’s perceived basic requirements for safety, environmental stewardship, and social responsibility. We must deliver the affordable energy that society expects of us, and we must deliver it reliably, safely, and with flawless performance. Quality is not a luxury; it is essential. The Role of Standards The value of standards to quality has been apparent at least since the Industrial Revolution. Sir Joseph Whitworth, a Victorian mechanical engineer, campaigned for conformity and consistency in nuts and bolts in 1841. This made manufacturing safer, more efficient, and more economical in his native Britain and eventually, internationally. We in the oil and gas industry have applied similar logic to develop standards that have imparted benefits in areas ranging from the manufacture of tubular goods, fittings and flanges, to cost, performance, and reliability; global trade and international operations; health, safety, and environment (HSE); sustainability; intellectual property; global trade; competition and antitrust; knowledge sharing and transfer; the needs of specific groups in society; and the development of indigenous capacity and technology transfer to developing countries. “If you control an industry’s standards, you control that industry lock, stock, and ledger,” wrote W. Edwards Deming in his book, Out of the Crisis. The crisis in this case was the economic struggle of the developed countries of North America and Western Europe in the late 1970s and early 1980s to keep pace in the face of stiff competition from Japan’s ability to produce high-quality goods at competitive cost. Ironically, Japan’s economic rise following World War II was founded on the ideas taught by Deming, an American engineer, statistician, professor, author, and management consultant. Japan became the second-largest economy in the world by managing processes. Deming saw that the concepts of statistical control of processes could be applied not only to manufacturing processes, but also to the processes by which enterprises are led and managed.
President's column A great benefit of being the SPE president is the chance to interact with students and young professionals around the world. Many are anxious about the future, but not panicked. I have been asked if this is the worst time ever in the oil business, a question that made me smile. For some reason, it is natural to try and “scale” a current calamity with past ones. For example, financial recessions are compared with the Great Depression of the 1930s during which the worldwide gross domestic product (GDP) dropped 15% in 3 years. In comparison, the recession of 2008– 2009 saw a 1% drop in worldwide GDP but certainly felt huge. WTI crude oil prices dropped from USD 145.31/bbl on 3 July 2008 to USD 30.28/bbl in less than 5 months. The US rig count followed suit, dropping from 1,987 in August 2008 to 895 by mid-2009. It certainly was not good, but it was relatively short-lived. Fig. 1 compares US rotary rig activity during the four most recent significant downturns. Leo Tolstoy’s quote about families may be paraphrased to apply to downturns: “Each oil price downturn is unhappy in its own way,” and each downturn and recovery had different causes. In Fig. 1, I have started with the peak US rig activity immediately prior to the beginning of the downturn and normalized subsequent weekly activity to this peak. Each prior downturn recovered to about 80% of peak activity within approximately 2 years after dropping from 45% to 55% of peak activity. We are currently at less than 25% of the prior peak activity level and at an all-time low for the Baker Hughes reported US rig count dating to 1944. Compare this with the 1980s. In late 1981, rig activity peaked at 4,530 rigs and in the subsequent “ice age,” the rig count dropped to 663, less than 15% of the peak. While this was a steeper drop from the peak level, current rig activity is now approximately 70% of that ice age bottom, and future drops are certainly possible. Current rig activity is lower than what the US has seen in a very long time. Is the Current US Rig Count the Lowest Ever? I have been looking at historical rig activity measures. The Baker Hughes rig count data from 1944 include only rotary rigs. Before the 1950s, cable tool rigs accounted for a significant portion of drilling activity. Cable tool drilling dates to 1806 with horse-powered rigs. These were replaced in the 1830s by steam engines to provide rig power, and in 1860 when J.C. Rathbone used a steam-powered cable tool rig to drill a 100-B/D producer in West Virginia, cable tool activity took off. During the US Civil War, many hundreds of cable tool rigs were drilling, primarily in West Virginia, California, and Pennsylvania. If we include cable tool rigs, total US rig activity has exceeded 500 rigs since Abraham Lincoln was the US president, making the rig activity of 464 as of 24 March this year a truly historic low.
- North America > United States > Virginia (0.46)
- North America > United States > West Virginia (0.44)
President's column There are many definitions of sustainability, but the 1987 United Nations Brundtland Commission’s remains a standard. “Meeting the needs of today without compromising the ability of future generations to meet their own needs.” (WCED 1987) Some think oil and gas have little role in a sustainable future; global realities suggest otherwise. How is it that a finite energy resource and a source of greenhouse gas emissions can be part of a sustainable future? Oil and gas are essential to meeting the “needs of today;” their prudent use is the safest way to ensure we do not compromise the “ability of future generations to meet their own needs.” The Society of Petroleum Engineers Board of Directors adopted the following definition of sustainability in 2014: “Exploration, development and production of oil and gas resources provide affordable energy that contributes significantly to well-being and prosperity. SPE encourages the responsible management of these oil and gas resources and operations including the appropriate management of social and environmental impacts and their related risks. SPE demonstrates this commitment by offering its members opportunities to train, share knowledge and advance practices for doing business in ways that balance economic growth, social development, and environmental protection to meet societal needs today and in the future.” (SPE 2014) Petrowiki also has an excellent discussion of sustainability at http://petrowiki.org/Sustainability, including references to noteworthy papers from www.OnePetro.org. Safe, affordable energy is central to quality of life. It is essential for farmers to be able to produce sufficient food; for the transportation of this food to consumers; and for housing, heating and cooling, clothing, and all other necessities of life. Quality of life is strongly correlated to energy use. Supplying energy for the world is a monumental task. There continue to be improvements in renewable energy sources; however, reasonable forecasts of growth in renewables suggest fossil fuels will remain the primary source of the world’s energy for decades to come. Only radical growth in nuclear power could seriously diminish this result. The realities reflecting public concerns over nuclear safety and proliferation of radioactive materials make such growth unlikely. While coal resources are abundant, concerns over greenhouse gas emissions and the possibilities of pricing carbon through taxes, caps, exchanges or other mechanisms, and the relatively low cost of natural gas, continue to make natural gas a more attractive fuel. This is true whether you expect it to be a relatively near-term “bridge fuel” to a renewable future or (as I do) part of our longer-term energy solutions. If oil and gas are to be part of a sustainable solution to our energy needs, there are some things we can and should do better as petroleum engineers.
President's column “You don’t get your social license by going to a government ministry and making an application for one, or simply paying a fee. … It requires far more than money to truly become part of the communities in which you operate.” Pierre Lassonde, President of Newmont Mining Corp., 2003 There is widespread acceptance that extraction industries— including oil and gas—improve people’s lives and enable the economic growth of countries. However, at the project level, this acceptance is neither automatic nor unconditional. The concept of a social license to operate (SLO) has been applied to extraction industries and has been defined as “a community’s perceptions of the acceptability of a company and its local operations” by Thomson and Boutilier (2011). Community can be very broadly defined to include stakeholders and interested parties well outside the immediate areas of operations, or “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Mitchell et al. 1997). SLO is deemed to exist when a project has ongoing approval of the community. For any project to have SLO, it is necessary to earn and maintain the support—and ultimately trust—of the community. We have seen ample evidence, including in our own industry, that failure to do this can lead to conflict, delays, added costs, or even prohibition of projects. Because it is rooted in beliefs and perceptions, SLO is intangible. Beliefs and perceptions are subject to change with new information; SLO is nonpermanent. This presents challenges for companies who want to know the status of their SLO and what they need to do to maintain or improve it. Thomson and Boutilier developed a framework to measure beliefs, perceptions, and opinions that impact social license in the mining industry and published quantitative assessments of their framework. Fig. 1 represents their model and serves as a useful starting point for a discussion of SLO in the upstream oil and gas industry. Measuring Social License According to the Thomson and Boutilier framework, SLO exists in a four-level hierarchy, with withholding or withdrawal at the lowest level, followed by acceptance, approval, and coownership, or psychological identification. To advance in the hierarchy, the project must meet criteria of legitimacy, credibility, and trust. At the lowest level, SLO does not exist, and projects cannot proceed; the community perceives them as illegitimate. To be considered legitimate, an extraction operation must contribute to the well-being of the community, respect existing traditions and lifestyles, and be conducted in a manner the community considers fair. If the extraction project is not considered legitimate, the community either withholds or withdraws access— including legal license—to essential resources. Drilling permits fall under this category, as do restrictions prohibiting hydraulic fracturing imposed by a government. The social license to operate also can be withheld or withdrawn by removing essential financing, workforce availability, markets, etc. Examples of social licenses that have been withheld in our industry are the development of the Marcellus Shale in New York and development of unconventional resources in France. The driver for these licenses failing to rise to the level of acceptance is not primarily the complaints of local residents who could be directly affected by activity, but a larger concern at state or national levels arising from fears about hydraulic fracturing. The next-higher level of social license is acceptance. This is the most common level in the SLO hierarchy. It may be granted grudgingly or reluctantly by parts of the community. Importantly, this level is just one level above the social license being withdrawn. While acceptance implies tolerance, there may be lingering or recurring issues, the presence of outside nongovernmental organizations, and watchful monitoring.
- North America > United States > West Virginia > Appalachian Basin > Marcellus Shale Formation (0.99)
- North America > United States > Virginia > Appalachian Basin > Marcellus Shale Formation (0.99)
- North America > United States > Pennsylvania > Appalachian Basin > Marcellus Shale Formation (0.99)
- (3 more...)
President's column There are two great truths tied to hydraulic fracturing. It has helped improve people’s lives by enabling the oil and gas industry to tap reserves that otherwise could not have been recovered. It has unleashed dramatic public opposition. I am disappointed to see public opposition to hydraulic fracturing, because I think, for the biggest part, it is unfounded. Hydraulic fracturing has become “fracking” in the common parlance. To too many people, “fracking” symbolizes all that is wrong with oil and gas companies and modern technology. It is certainly associated with all aspects of unconventional resource development, which depends on both horizontal drilling and hydraulic fracturing to be successful. It would be inaccurate to deny that there can be problems. But, an objective look reveals that its benefits far outweigh its potential risks. It is a safe, reliable technology that has proven highly beneficial to society and it is being improved continuously by operators and service companies. Many studies done by the US Environmental Protection Agency (2015) and others have found very small risks from the practice. Let us take a closer look. A Proven Technology Since the late 1940s, hydraulic fracturing technology has been used in more than 1 million US wells to safely produce oil and gas reserves that otherwise could not be recovered. While the principles of the process have not changed in decades, modern hydraulic fracturing relies on vastly improved technology and processes to ensure its continued contribution to a safe, environmentally responsible energy future. Why the Complaints? Detractors claim that we do not know enough about fracturing’s impacts and risks, despite decades of experience. Many who are critical of hydraulic fracturing are actually critical of unconventional well activity, oil and gas activity in general, and the use of fossil fuels. To them, hydraulic fracturing is a focal point for their broader objections. Critics of the process have claimed multiple problems with hydraulic fracturing, including: Earthquakes caused by hydraulic fracturing Pollution of groundwater with unknown chemicals Air pollution Surface spills Fugitive methane emissions Traffic and noise pollution Excess use of water resources
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- North America > United States > Oklahoma > Arkoma Basin > Fayetteville Shale Formation (0.99)
- North America > United States > Arkansas > Arkoma Basin > Fayetteville Shale Formation (0.99)
President's column The first brief flight at Kitty Hawk in 1903 did not immediately make the Wright brothers famous; however, within 5 years, enthusiasm for the new technology began to spread around the world. Louis Blériot won a prize for flying over the English Channel in a heavier-than-air craft in 1909, and Charles Lindbergh won the USD 25,000 Orteig prize for the first nonstop flight between New York and Paris in 1927. Multiple teams competed and spent hundreds of thousands of dollars pursuing the prize. Technical advances developed by the competitors led to multiple advances in aviation, revolutionizing the way the world works. Incentivizing Technological Innovation The concept of an inducement prize (as opposed to a recognition prize such as Nobel Prizes) is well established for the solution of a problem that is important to society. The British, Spanish, and Dutch governments all offered monetary prizes as early as 1567 for breakthroughs in determining the longitude of a ship at sea. Many scientists and engineers worked on this problem, resulting in substantial advances in timekeeping, telescopes, and other technologies. The French government offered a large prize during the Napoleonic wars for a way to safely and cheaply preserve large amounts of food, leading to pasteurization advances. The Ansari XPRIZE challenged teams to build a spaceship capable of carrying three people to 100 km above the Earth’s surface twice within two weeks. The USD 10-million prize was awarded in 2004 and has sparked other XPRIZES designed to encourage advances in oil spill cleanup, adult literacy, medicine, and various technologies. The concept is to specify an audacious goal that will benefit mankind if a significant breakthrough is made. SPE R&D Committee Identifies Grand Challenges The National Academy of Engineering incorporated input from leading technological minds to identify 14 “grand challenges” for engineering for the 21st century. Several of these dealt with energy, including making solar energy more commercial, providing energy from fusion, and carbon sequestration. The SPE Research and Development (R&D) Committee identified five grand challenges for the petroleum industry including: High-resolution subsurface imaging Challenges in reusing produced water In-situ molecular manipulation Increasing hydrocarbon recovery factors Carbon capture and sequestration An additional focus on the environment, including minimizing the footprint of oil and gas activities, and oil spill prevention and response were added, so these are often referred to as the “5+1” challenges.
- Europe > Netherlands (0.35)
- Europe > France (0.35)
- North America > United States > New York (0.25)
- Contests & Prizes (0.92)
- Overview > Innovation (0.50)
President's column What constitutes a perfect day? It depends. To a surfer, it is a day of warm sunshine and perfect waves. To sports fans, perhaps a great win by their favorite team. We each have our own idea of what makes a perfect day. Another aspect of a perfect day may not be a conscious thought but is of utmost importance: arriving home safely at the end of the day. Last month, I wrote about how the Society of Petroleum Engineers’ (SPE) mission statement reflects the role of the Society and its members in serving the public benefit. This month, let us discuss how we are going beyond statements to actions to improve people’s lives by not only enabling affordable energy, but also by doing it in the healthiest, safest, and most environmentally responsible way possible. HSE: An Evolving Approach When I started my career, the topic of health, safety, and environment (HSE) was often seen as a regulatory obligation to meet government requirements. HSE is now recognized as the “right thing to do” for two very important reasons. It is part of our moral and ethical responsibility to our employees, customers, contractors, the communities in which we work, and to the future of our planet. HSE is good for business. There is no downside to good HSE practices. Conversely, the cost of poor practices can drive companies out of business. More organizations are striving to eliminate or significantly reduce HSE incident occurrences. This trend in performance improvements over the past decade has plateaued. We need a breakthrough. This will not occur overnight; it will require a journey. Getting to Zero SPE has a long commitment to HSE and I strongly encourage you to visit its website at spe.org/hsenow. This free website for HSE professionals is an informative public resource. HSE is a growing discipline within SPE globally. OnePetro (www. onepetro.org) now has 6,000 published HSE papers. As the number of professionals sharing knowledge on HSE increases, SPE offers the ideal place where they can gather, access resources, increase learning, and collaborate to improve industry practices.
President's column What is the mission of the Society of Petroleum Engineers (SPE)? Why do we collect, disseminate, and exchange technical knowledge? There are plenty of reasons why such activities are valuable. Our mission statement gives a reason for this activity, namely, for the public benefit. Mission statements of various professional societies often reflect the need to serve the public in some way. The American Society of Mechanical Engineers’ mission statement includes its purpose “to serve diverse, global communities” and “applying engineering knowledge for improving the quality of life.” The mission of the American Institute of Chemical Engineers is to “provide essential value to our members and partners, advance civil engineering, and serve the public good.” The mission of the National Academy of Engineering is “to advance the well-being of the nation.” The mission of SPE is: To collect, disseminate, and exchange technical knowledge concerning the exploration, development and production of oil and gas resources, and related technologies for the public benefit; and to provide opportunities for professionals to enhance their technical and professional competence. The mission was adopted more than 50 years ago. The statement about providing opportunities for professionals to enhance their technical and professional competence forms the basis of many of the Society’s training and professional development activities. The phrase I have emphasized is occasionally replaced by ellipsis in SPE Powerpoint presentation and not discussed enough. Before we discuss SPE’s role for the public benefit, let us look at engineering’s role. Engineers are uniquely responsible for the machines, buildings, energy, and technology that surround us and are fundamental to our lives. After the Unconventional Resources Technology Conference in San Antonio, Texas, this year, I revisited the Espada Aqueduct built in 1731, completed in 1745 by Franciscan missionaries to provide water for irrigation. It reminded me of the Roman aqueducts built as early as 300 BC and other feats of engineering that resulted in improved health, sanitation, and productivity in societies. The state of engineering at the time was craft work relying on working knowledge of construction, geometry, and fluid flow principles. This type of engineering dates back to the pyramids. Modern engineering developed in parallel with the industrial revolution, powered by coal.