The 21st Century Challenges For The Petroleum Industry.

The following are extracts from a presentation to the 15th Annual APS Conference read by C. Gadelle, Deputy Director at Institut Francais du Petrole (IFP. The paper was prepared by Daniel Champlon, Director of the Information Division at IFP with Mrs. Danielle Huby, an engineer at the same division.

As a direct consequence of a predicted population explosion - 8 billion inhabitants by the year 2020 - and of a sought-after economic growth, the worldwide energy demand will continue to increase greatly throughout the first half of the 21st century. This massive upsurge, amplified by a fast urbanization, will mainly take place in the developing countries which will join the club of "Newly Industrialized Countries" in successive waves. To give a rough estimate, world energy demand could increase by one third between 1995 and 2010 (i.e. +3 Gtoe) and by 65% by 2020.

Within the context of these evolutions, hydrocarbons... will continue to provide for the major part of the worldwide energy requirements; in fact, there is no energy more acceptable for the preservation of the environment capable of massively taking over from hydrocarbons, even in the next 30 or 40 years. This conclusion directly emerges from the World Energy Council's work; hydrocarbons will have to supply more than half of the energy consumed in the world, at least until 2020, before falling to about 45% in 2050.

Natural gas, favoured by the extent of its reserves and by its intrinsic qualities as regards the environment, will play a slightly more important part to the detriment of oil, whose use will be increasingly concentrated on transport. So, what are the major strategic stakes for the petroleum technology at the beginning of the 21st century...to meet this demand? What are the major poles of technological innovation that take shape today and that allow to envisage a sustained reduction in technical costs? How does this thirst for energy consumption take account of environmental protection and, in particular, greenhouse effect control? Finally, how can a lasting development be prepared with such prospects? These are the questions that we shall try to answer in our talk.

The Major Strategic Stakes Of The 21st Century: From the mid-80s onwards, as a result of the fall in the price of crude oil, the primary objective of the petroleum industry was to adapt the productions of the most expensive oils (the total production cost of certain North Sea fields then exceeded $20/b, developed thanks to high prices) to the new market conditions. The objective was to take advantage of the technical advances and of the productivity gains so as to bring the cost of the most expensive oils back into the zone of conventional oils, i.e. at most $10 to $12/b, in order to make them compatible with the new crude prices. The results were remarkable: within only ten years, the technological breakthroughs achieved have allowed to reverse the critical situation of these "new" oils, and even to take on new zones such as deep offshore zones; it is in fact the entire petroleum geopolitics that has been modified on a long-term basis.

Along with the thirst for energy that will arise in the 21st century, new threats are emerging for the long term. It is therefore essential today to carry on with the technological effort in order to reduce even further the production costs, to increase the hydrocarbon supply and thus to extend still further the sphere of activity of the petroleum industry. This technological action must first and foremost be exerted on some main lines that are well-identified today and which are the major strategic stakes of the petroleum and gas technology for the 21st century.

Exploration Risk & Cost Reduction: Twenty years ago, only one exploratory drilling operation out of ten led to a commercial producing well. This rate has reached 1 out of 5, and it might fall to 1 out of 3 within ten years from now, hence a substantial reduction in exploration expenses, where drilling represents still more than half of the costs.

This higher exploratory drilling efficiency is due to a better knowledge of the subsoil: better knowledge of the origin of petroleum, integration of geosciences (geology, geophysics, reservoir engineering), etc.; but it is basically due to the development of 3D seismic methods and of seismic interpretation, which are among the key technologies for the future.