Future of energy debate – Groningen
Feature Articles, Sep  01  2009 (Digital Energy Journal)

- A debate about the future of energy, including climate change and security, was held at a conference to celebrate the 50th anniversary of Groningen gas field – with speakers from ExxonMobil, Solar Century, Shell, Schlumberger and Texas A+M University, together with electronic audience voting, chaired by Rien Herber, vice president exploration for Shell in Europe

As part of the celebrations for the 50th anniversary of Netherlands’ Groningen gas field, a debate was held about climate change, security of supply, in Groningen on June 17 2009.

coffee break at the June 17 2009 Groningen Gas conference

Participants included Jeremy B. Bentham, vice president Global Business Environment, Royal Dutch Shell; Hans Doornenbal, project manager GASH – European Black Shale Database; Brad Corson, chairman and production director of ExxonMobil International Limited; Rien Herber, vice president exploration for Shell in Europe; Stephen A. Holditch, head, Petroleum Engineering Department, Texas A&M University;

Philippe Lacour-Gayet, senior scientific advisor to the Chairman of Schlumberger; David Lawrence, executive vice president exploration for Shell; Jeremy Leggett, founder and executive chairman of Solarcentury, founder and Chairman of SolarAid, director of New Energies Invest AG; David J. Scott, director of economic development programs in the Earth Sciences Sector of Natural Resources Canada.

The audience participated through electronic voting.

Groningen gas field is 30 per cent owned by Shell, 30 per cent by ExxonMobil and 40 per cent by EBN (Energie Beheer Nederland). The field is operated through NAM, the 50/50 joint venture of Shell and ExxonMobil. It is one of the top 20 fields in the world.

The field will provide an estimated 2800 billion m3 (100 trillion cubic feet - TCF) over its lifetime, and has produced around 1800 billion m3 (65 TCF) so far. This compares to an annual gas production for the whole of the US of 20 TCF.

“Its one of the largest gas discoveries of all time,” said David Lawrence, VP exploration of Shell, speaking at a conference to celebrate the 50 years anniversary of the field.

David Lawrence, executive vice president exploration for Shell

When efforts to produce the field started in the 1950s, “we didn’t expect what we saw,” said Mr Lawrence. The technology used to discover Groningen was “quite basic compared to what we have today,” he said.

“There's a debate about if it was drillers or geologists who wanted to drill deeper,” he said. “One of the lessons of Groningen – is patience, persistence and confidence in your plays.”

“Groningen is one of the great discoveries of the 20th century,” said Brad Corson, VP of Europe and Caspian with ExxonMobil,

Brad Corson, VP of Europe and Caspian with ExxonMobil,

Climate change

Shell estimates that if we carry on tackling the problem of reducing carbon dioxide emissions in a disorganised fashion, with everyone following their own interests (a scenario it calls ‘scramble’), we will end up with around 1000 parts per million carbon dioxide equivalent in the atmosphere by 2100.

Meanwhile if the world is organised and makes a co-ordinated effort (a scenario it calls ‘blueprints’), we will end up with 660 parts per million carbon dioxide equivalent in the atmosphere.

Meanwhile many scientists have predicted that the maximum safe amount of carbon dioxide in the atmosphere is around 450 parts per million, in order to keep the maximum temperature rise to due global warming to under 2 °C.

In a vote, 68 per cent of the audience agreed or fully agreed that we are currently following the ‘scramble scenario’ rather than the ‘blueprints’ scenario, and 32 per cent disagreed.

Jeremy Leggett, founder and executive chairman of solar energy company Solarcentury, says that what we really need is an approach he calls “deep blueprints” – going further than suggested in the Shell scenario. “Neither of these scenarios come anywhere close to where we have to be. It has to be more advanced than any of these scenarios,” he said.

Mr Leggett said that if we are going to avoid going over the 450ppm, we can only extract about a third of the remaining known reserves of coal, gas and oil (if we don’t have carbon capture) – suggesting that looking for new types of gas is maybe not such a good idea.

Jeremy Bentham of Shell, who wrote the scenarios, agreed that if we’re going to get closer to the advanced levels of environmental impact, you need to go further than the blueprints outlined. However he stressed that the scenarios have been designed around expected human behaviour. So in order to go beyond them, “you need unprecedented behaviour to meet where we should be.”

“We we’re either deluded or self-deluding in some of these things we are talking about.”

Rien Herber, vice president exploration for Shell in Europe, chairing the session, said he felt very optimistic, using the example of the recent increased increase in electric cars. “A year ago electric cars in the Netherlands was cloud cuckoo land. Now it’s in people’s minds.”

Public opinion is crucial, Mr NAM said, because this is what politicians will follow.

Mr Leggett acknowledged that progress to date more fits the “scramble” scenario, although there are exceptions – for example, the European Union commitment to a 20% cut in emissions of greenhouse gases by 2020, compared with 1990 levels; a 20% increase in the share of renewables in the energy mix; and a 20% cut in energy consumption. “Governments are taking this seriously and that’s encouraging,” he said.

Philippe Lacour-Gayet, senior advisor to the chairman of Schlumberger, said he thought that it was unfortunate that climate ‘sceptics’ were often looked upon in a derogatory fashion. “Science needs scepticism to progress,” he said.

In particular the phrase ‘global warming’ is wrong and misleading – because the warming does not occur evenly around the globe, but much more at the poles than at the equator.

However Mr Lacour-Gayet said that if people are not convinced about global warming science, they can also see the increasing acidification of the ocean, and its effect on coral, as evidence that man made carbon dioxide emissions need to be reduced.

“Even if you have doubts about global warming – the acidity in the ocean is something people can relate to. Eg if you’re a diver and you see the state of coral around the world,” he said.

If it is possible to do carbon capture at industrial scale (capturing about 30 times as much carbon dioxide as the 1m tonnes per year pilot projects under development), then it should be done, he believes.

Energy security

Brad Corson, VP of Europe and Caspian with ExxonMobil, focussed his talk around providing energy security – providing energy which is available, affordable and reliable, and provided in a manner which takes political and environmental considerations into account. “Energy security will forever be a challenge,” he said.

Both industry, government and consumers have a big role to play in ensuring energy security, he said.

Governments can help by “opening access and providing incentives to develop – providing stable open markets where industry can invest,” he said.

Industry should “press for energy efficiency – ensuring items are affordable,” he said. “Consumers have a role too – they must support industry and government in their effort and encourage efficient use of energy.”

ExxonMobil strongly believes that world energy demand will continue to grow – with China and India accounting for over 40 per cent of the increase in demand.

A lot of this increase in demand will be satisfied with natural gas, Mr Corson believes. “We expect natural gas to be the fastest growing fuel source increasing by 50 per cent by 2030. Much of this growth in demand will come from the power generation sector, which is expected to increase gas demand by 1.8 per cent per year.”

Meanwhile Europe’s natural gas supply will increasingly come from outside Europe. “By 2030, 70 per cent of Europe's gas supply will come from imports, particularly LNG,” he said.

On the subject of peak oil and alternative energy, Mr Corson agrees that “oil and gas are limited reserves and other energy will play a growing role.”

“But for the foreseeable future, oil and gas will play a big role. There are substantial resources left to be recovered,” he said.

The big challenges for the future are working out how to develop different types of gas fields – including extended reach drilling and multizone simulation, Mr Corson said.

Then it is important to develop ways of moving the gas from field to market – one of the most important being by liquefying it (LNG). “New LNG liquefaction trains are 60 per cent larger than previous generations,” he said. “New LNG vessels are 80 per cent larger than 2 years ago, using 40 per cent less energy to power the vessels per cargo ton mile.”

Nuclear power

In an audience vote of whether nuclear power is an essential component in meeting energy demand, 61 per cent agreed or fully agreed and 39 per cent disagreed or fully disagreed.

Jeremy Bentham stressed that if no new nuclear power stations are built, there will be a big decline in energy supply due to existing nuclear power stations going out of action.

However there are big challenges in rebuilding the nuclear power industry – including construction, mining, waste management and redeveloping – and education.

“It takes 10-15 years to develop new plants, and there aren’t many that are ready to start,” said one delegate.

Solar Century’s Jeremy Leggett said that the nuclear industry is starting to position itself as in opposition to the renewables industry, if they are both fighting for government funding – if so the solar industry looks a lot more attractive.

“The next generation of reactor in Finland are 100 per cent over budget and 100 per cent behind schedule. This industry has been out of practise for a long time,” he said. “This industry has had half a century to get it right and it’s failed to do it. And no-one is going to invest in nuclear without any subsidies.”

“The issue is how much collateral damage this does to renewables. Nuclear industry is saying to politicians – renewables or nuclear. They’ve kind of declared war on us.”

David J. Scott, director of Economic Development Programs in the Earth Sciences Sector of Natural Resources Canada, said that the fact that no-one wants nuclear waste stored near their backyard is a formidable obstacle. “We need to move to a more robust solution.”

David J. Scott, director of economic development programs in the Earth Sciences Sector of Natural Resources Canada.

Recruitment

One of the biggest potential constraints on the oil industry’s ability to meet the demand for energy is staff recruitment.

In an audience vote, the audience was asked whether the industry will be short of young professionals in 5-10 years. 70 per cent agreed or fully agreed, whilst 30 per cent disagreed.

Steve Holditch from Texas A+M University said that the question was maybe framed wrong. It is always possible for universities to find students, train them and graduate large numbers of students. The challenge is more to provide a stable job market for them despite industry cycles – and particularly training someone who has been in the business for 1-5 years to do the a job which is normally done by someone with 15 years experience.

“I think oil and gas industry is a growing industry – we will produce more oil and gas going forward,” he said. “It’s a good line for young professionals to join our industry,

But we need industry to hire some of our students to make sure they show up again next year.”

The oil and gas industry does need to work out ways to train people faster, said Mr Holditch. “We can’t do training like we’ve always done it and hope to get there. We have to come up with a new training system that doesn’t’ exist now. For example systems that can spot the gaps in [someone’s] competency. There are companies working on that right now.”

There might be less students applying to work in the oil and gas industry from California, but there are still plenty of people from other regions – for example, Texas and Egypt, Mr Holditch said.

Brad Corson from ExxonMobil acknowledged that “Texas A+M is a very strong pipeline of strong talent coming into ExxonMobil.”

“It’s not about having enough new employees – its ensuring we can capture the knowledge of the people leaving the industry,” he said. “That’s a great wealth of knowledge and we need to capture that.”

We also have a responsibility with children in grade school and high school to show them “the opportunity that the technical professions provide so they see the excitement and want to pursue these career paths.”

Mr Lacour-Gayet from Schlumberger said that the oil industry should never be in the situation it is currently in, with the average age of its employees much higher than the average age of working professionals, because it means that the company gets out of touch with society.

“If your employees are older than your society there are great difficulties in understanding new things coming,” he said. “Young people play an important role in bringing new things in.”

Companies should continue recruiting even though there is a downturn, he stressed. “I think, in a downturn, you have to make room for young people.

“New” energy is often proving much more attractive to employees than the old oil and gas industry. When working as CEO of Shell Hydrogen, Mr Bentham said he would sometimes get “several hundred” people a week applying for jobs. “There was something about the area that attracted people to work within it,” he said.

Solar Century’s Jeremy Leggett said that the average age of many people working in cleantech companies such as his is in their 20s, compared to the average age of people in the oil and gas industry of around 49. “We have defections from BP and Shell in my company,” he said.

“Young people can see the trend – with companies struggling to replace their reserves – or they replace them by merging companies, then they cut jobs. It can be brutal in the oil industry. It’s much more attractive for many of these folks on the other side of the fence.”

Rien Herber, vice president exploration for Shell in Europe, said that the company is currently recruiting people directly from India and the Far East.

One “young professional” in the audience, working at ExxonMobil/Shell joint venture NAM, said he often finds himself in difficult situations, due to the fact that the company has “a huge gap in your structure with a lot of very inexperienced people and a lot of very experienced people. How are we going to fill that middle bit?” he asked.

“The gap we have in the middle sector could be due to cycles in recruitment.

I hope that doesn’t happen again,” he said.

Where will new technology come from?

The audience was in strong agreement that the energy solution of the future “will be found by technological ingenuity led by industry and less by politicians,” with 73 per cent agreeing / strongly agreeing and 27 per cent disagreeing.

“As industry we are the legs of society and get things done,” said Shell’s Mr Bentham. “But we need the ‘brains of society’ – government – to provide direction.”

Solar Century’s Jeremy Leggett said that whilst historically it is always industry rather than government that leads, in future it is not obvious if the right new technologies will be developed without government support, because of people’s lack of incentive to change.

There have been studies showing that no company has ever launched a product which threatened its core product, he said – and so realistically but sadly, it is probably unwise to expect BP and Shell to damage their core fossil fuels business with investment in renewable energy.

“So it’s very sad but understandable that BP and Shell are now (after dabbling with these new technologies) miles behind,” he said. “That’s not to say that it can’t be done. “Clean tech is highly disruptive technologies that can invade fossil fuel markets very quickly.”

One delegate from the Technical University of Delft pointed out that whilst politicians will never lead on technological breakthroughs, they have an important role; and industry has a role in advising them. “Politicians are very confused with the possible exception of Denmark. They don’t know where to go and they need very good advice,” he said.

Another delegate said that politicians might solve the energy problems if they had 100 years to do it. “If you have less time, industry has to do it,” he said.

Mr Scott said that we might need government to make low carbon fuels viable. “Until there is a price on carbon that reflects the lifecycle cost, there must be a stimulus,” he said.

Public responsibility

Many speakers emphasised the importance of the general public taking responsibility and getting involved in energy issues – too often, the only time industry comes into contact with the public is where there are complaints or someone doesn’t want something built next to them. The politicians ultimately follow the public’s will.

Schlumberger’s Philippe Lacour-Gayet emphasised the importance of the public as the ultimate decision maker. “It’s very clear that if the public doesn’t buy the solution, it won’t work, as we see with nuclear power,” he said.

Rien Herber, vice president exploration for Shell in Europe, chairing the session, pointed out that the public will “generally” look for the cheapest, rather than the most environmentally friendly products.

However oil and gas isn’t necessarily cheap. “– I look at last summer when oil cost $147 – consumers took different choices about their automobiles. As soon as it hits someone in the bank account, behaviours will change,” said Mr Scott.

There is plenty of frustration in the industry about how much the public seems to end up obstructing development. “I heard an expression ‘caveman’ which stands for ‘citizens against virtually everything,” Mr Holditch said.

Groningen Gas Conference

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