The world without oil.

Tuesday, 06 October 2015 Read 6692 times
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Abstract of the presentation “The world without oil”.

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Only about 15 years ago peak oil theories ("The world is running out of oil") were quite popular and accepted by the general public. Indeed it was predicted that the United States would need massive amounts of imported LNG. Another school of thought, based on the concept of resource triangle, stated that as technology develops and as prices increased, vast amounts of hydrocarbon resources would become commercial. Oil and gas prices did increase and this led to the unconventional gas revolution. Shale oil development soon followed the shale gas revolution. An analysis of resource potential based on technical data collected for North American basins showed that there is about an order of magnitude larger in place volumes for unconventional resources compared to conventional oil and gas (Holditch, Ayers, et al 2010), while the ratio of technically recoverable unconventional to conventional resources is about the factor of 4 (Holditch, Ayers, et al 2014). We may think of hydrocarbon resources as being essentially infinite for practical purposes.

However the cost of the resource development, as expressed by the production activation index introduced by M. Economides (the CapEx required to create production stream of 1 stb/day) increased over the decade by about an order of magnitude from about USD 1000-10,000 /bopd range for conventional oil, up to USD 100,000/bopd in some cases. If we drill a 10 million dollar horizontal oil well with 50 stages of fracture stimulation in a tight oil reservoir, it may have a stabilized production rate in the range from 100 to 1000 stb/day. So the high estimate of production activation index will be USD 10,000,000/100 bopd = USD 100,000/bopd. Maintaining production levels with unconventional resources requires constant drilling. The rapid rate of decline of unconventional wells translates to roughly a three-fold increase in the cost of generating a unit of energy compared to conventional wells. At this order of magnitude of energy costs, other sources of energy and combinations of technologies become competitive with conventional fossil fuel based energy and transportation.

3/4 of all the oil that we produce is used for 3 purposes: ground transportation, heating and electricity generation, and jet fuel. About 2/3 of the natural gas that we produce is used to generate electricity and for industrial use for energy. In this lecture we will discuss competitive technologies, their technical limitations, their progress in application and market penetration trends. These competitive technologies are solar power, electric automobiles, and magnetic levitation trains. The high energy density of gasoline made conventional internal combustion engine cars prevalent at the turn of the 20th century. But today, the higher energy efficiency of electric cars and improvements in battery technology are making electric vehicles competitive. A transition has probably started for the automobile and power generation industries. We review how the future may look like and how our industry may adapt and change. As the transition starts there will probably be long term demand destruction trend in OECD countries.

It is likely that the industry will experience significant downward oil price pressure as alternative technologies become more competitive. We will need to be more efficient and perhaps much of the deepwater and arctic offshore hydrocarbon resources that require high capital expenditures in the infrastructure will never be developed. We need to train young engineers in energy engineering rather than just petroleum engineering. Engineering education should add more chemistry and physics in the curriculum. Our industry needs to transform, to find a way to participate in the hydrogen distribution business and in distributed electricity generation.

About Author

Iskander Diyashev, Instructor, Petroskills

Iskander Diyashev is an instructor for Petroskills since 2008. The PetroSkills Alliance is a training organization for the 30 member companies (including supermajors, and large service companies) representing more than 40% of the world’s oil production.

Iskander Diyashev have taught numerous classes in fundamentals of petroleum, reservoir, and production engineering. The advanced level classes that Dr. Diyashev have instructed include oil and gas reserves evaluation, well test design and analysis and gas reservoir management.

Prior to his current job with Petroskills, Dr. Diyashev worked in various engineering and leadership roles for S.A. Holditch and Associates, Schlumberger, Sibneft, Geo-Alliance and NRK-Technology.

Iskander served on the SPE International board of directors in 2006-2008, and participated in various SPE technical and organizing committees for SPE conferences.

Iskander holds Ph.D degree in Petroleum Engineering from Texas A&M University (1998) and BS and MS degrees in Physics (Molecular and Chemical Physics) from Moscow Institute of Physics and Technology.

Congress Center of RF CCI. Start at 7 p.m.:

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