“New Frontiers in the Oil & Gas Industries: The Technological Difference”

Speech delivered by HE Abdalla Salem El-Badri, OPEC Secretary General, to the 15th IIES Conference & Exhibition, Theme: "Technology and Innovation in the Oil and Gas Industry", Tehran, Iran, 1-2 November 2011.

Excellencies, ladies and gentlemen:

Let me begin by thanking His Excellency Engineer Rostam Ghasemi - Iran's Petroleum Minister and President of the OPEC Conference - for inviting me to attend the Institute for International Energy Studies conference.

It is an honour to be here in Tehran, the capital of one of OPEC's five Founding Members.

The theme of this year's conference is technology - which as we all know is at the heart of all the great achievements in the oil and gas industries.

It has profoundly changed the nature of our industries and dramatically transformed the supply geography worldwide.

For more than a century, new technologies have changed the way reserves are identified, developed and produced, leading to a massive growth in reserves and supply.

In terms of exploration, technology has improved the quantity and quality of information available about different geological structures.

This has enhanced the likelihood of finding oil and gas, and has extended the reach of surveyors, geologists and explorers into new frontier areas.

Today many new tools allow us to find deeper and harder-to-reach fields.

Part of this has been the result of improvements to sub-surface imaging of deep and complex horizons.

  • Enhanced 3D, for example, lets us see through thick salt layers. This technology has enabled important discoveries like those off the coast of Brazil.
  • Other new technologies include cable-free land seismic data acquisition, which can be especially useful since it can reduce the costs of on-land seismic data collection.

Technology has also been a game-changer in terms of drilling and production.

The successful application of new technologies has literally extended the reach of the industry's drills to "frontier fields", allowing drilling and production in harsh environments, and remote and challenging locations.

And new technologies have helped transform resources once thought unconventional into conventional ones.

Remember that only forty years ago, all offshore oil was considered unconventional. Today, this portion of total global oil supply accounts for 30%.

  • For example, flexible drills and directional, long-reach drilling have enabled the industry to access resources in the frozen regions of Russia, the deep waters of the Gulf of Mexico and difficult terrain across the Middle East.
  •  In addition, today we have the example of "tight" oil and shale gas, which can now be accessed using hydraulic fracturing.

This technology has already spread to other countries like Argentina, China and Poland, increasingly making frontier oil and gas commercially available.

Technological changes have also improved recovery rates and extended the life of existing oil fields. With new technology, old fields - or those considered to be depleted - have been brought back to life.

  • The giant Duri oil field in Indonesia, for example, originally discovered in 1941, was able to boost production from 65,000 b/d to 200,000 b/d in the 1980s by relying on the new technology of injecting pressurized steam underground.

Of course, today, such techniques - using water, carbon dioxide or other chemicals to improve recovery of oil - are widespread.

  • Other new technologies - such as time-lapse or 4D seismic monitoring - have been important tools for enhanced mapping and improved monitoring of fields during production.

These have contributed directly to improved recovery rates.

If new tools and further technological changes can increase recovery rates by several percentage points more, we can assume that we will see more oil - which, combined with new discoveries, will result in tremendous endowment growth and additional supply to consumers.

The impact of technological change on reserve growth and the world's resource base has also been most impressive. This is expected to continue into the future.

According to OPEC's 2010 World Oil Outlook, Member Countries and their reserves have benefitted greatly from technological innovation over the years.

  • Member Countries now account for the majority of world crude oil reserves - around 80%.
  • More importantly, they now have 60% of the world's original endowment and have produced 20% of this amount.

Non-OPEC countries, too, have also witnessed growth in total endowments.

  • The non-OPEC region has 40% of the world's original endowment and has produced more than 40% of this amount.

Looking globally, we see similar growth.

  • Estimates of total original endowments suggest that more than 30% of the world's resource base still remains to be turned into proven reserves - either through reserve growth or future discoveries.
  • And total original recoverable resources were recently estimated at 3.5 trillion barrels, according to OPEC's World Oil Outlook.

Thus, by helping to expand the global resource base of oil and gas, technology has contributed directly to a strengthening of security of supply worldwide.

I should note that technology has also helped reduce the drilling and production costs of oil and gas activities, reducing capital needs and minimizing the risks associated with upstream activities.

Technology has thus not only been a game-changer but also a cost-cutter.

The early development and deployment of new technologies has also helped reduce the industry's environmental footprint.

  • Cleaner oil and gas storage systems, and the use of new transportation materials, have reduced environmental risks.
  • New technologies have helped refineries around the world produce more environmentally-friendly products.
  • One proven scientific innovation is Carbon Capture and Storage.

Although this technology still poses challenges in terms of costs and efficiency, further advances can make it commercially viable - especially if it is combined with targeted R&D efforts and new technological solutions.

Thus, innovations in science and technology mean that fossil fuels can be friendly to the environment.

In closing, let me stress that science, technology and innovation are the key to the continued success of the oil and gas industries. With further innovation, technology may yet help expand oil's role as the world's most affordable and most convenient source of energy.

In-depth scientific and technical research has played a vital role in our industries. It has consistently helped address all sorts of challenges:

  • in exploration, development and production;
  • in efforts to protect the environment;
  • and to extend the reach of the industry and reduce costs.

Technology offers us a way forward in all these areas.

However, this is not just a matter of going out and buying new technology. We need skilled workers who know how to best use this technology. But the majority of our work-force is aging and growing scarce.

This remains one of the most serious challenges.

We should also remember that given the long-term nature of our industries, R&D efforts require ongoing, timely investments. While we should pay close attention to crude prices in the short-term, we should also be aware of the policies and technological changes in consuming countries that could impact demand levels in the long-term.

This is the delicate, dual nature of the challenge before us all.

But through continued dialogue among Member Countries and greater collaboration on R&D activities, we can attend to this common challenge together - and continue to reach new frontiers in our industry.

Thank you.