Technology bridges distance at the first SPE Asia Pacific Virtual Town Hall

Posted on: 02/02/2016

Technology bridges distance at the first SPE Asia Pacific Virtual Town Hall
By Helena Wu (Santos), SPE South Australian Section Chair

With the aid of technology, our SPE leaders are overcoming the tyranny of distance to ensure they continue to engage members and the wider industry, during this period of downturn.

The first SPE Asia Pacific Virtual Town Hall, held on Tuesday 12 January 2016, attracted an estimated 2,000+ individuals in over 20 different locations across the Asia Pacific Region.

The 90 minute event provided an unique opportunity for Dr Nathan Meehan, 2016 SPE President, and Datuk Mohd Anuar Taib, Chairman of the SPE Asia Pacific Board and Senior Vice President, Upstream Malaysia, Petronas, to share their perspectives on the current state of the industry and answer questions submitted by the audience across the region.

By utilising available technology, the session was streamed live across the region using PETRONAS’ conferencing platform. This enabled Dr Meehan and Datuk Anuar to present from Houston and Kuala Lumpur respectively. Throughout the session, remote sites had the opportunity to submit questions for the Q&A session at the end.

The South Australian Section participated in the event by hosting a remote site at the Australian School of Petroleum. Although only a small crowd was able to attend the live streaming in Adelaide, the level of audience interaction was a highlight – at least half the questions submitted from our location were answered by Dr Meehan or Datuk Anuar during the 30 minute Q&A session.

A session summary written from the author’s perspective is provided below. Special thanks to the SPE Asia Pacific team for organising the event in conjunction with PETRONAS, and the Australian School of Petroleum for hosting the remote location in Adelaide.

Session Summary

Dr Nathan Meehan began his address, setting the scene by providing a short history of the oil price and noting the price was only $3/bbl when he started in the industry himself! He highlighted a few factors contributing to the recent supply glut, leading to a steep decline in prices – a slow down in short term demand particularly from China, and an increase in production from Russia and OPEC producers. Dr Meehan noted the industry downturn forces innovation and that globally, the demand for energy is still forecasted to rise in the medium to long term.

Dr Meehan reminded the audience that “access to safe and affordable energy such as oil and gas is essential to quality of life”. He touched on the issues of climate change and global warning, calling them ‘the elephant in the room’ for our industry. While noting that natural gas has the potential to displace coal in electricity generation, Dr Meehan said climate change and global warming are threats to our industry. However, renewable energy sources are unlikely to completely displace fossil fuels by 2040 and multiple fuel sources will still be required to meet demand. Dr Meehan summarised it as a challenge for us all to increase quality of life, while reducing the impact to the environment.

On energy efficiency, Dr Meehan predicted that while reducing total energy demand is an option in the supply/demand balance, “no country would want to decrease their quality of life (through a reduction in energy use), although some technology advances may help”.

In his conclusion, Dr Meehan named a few goals for the industry to consider, to ensure that we are also playing our part in reducing the carbon footprint and improving efficiency. These include reducing or eliminating flaring, improving containment of hydrocarbons and well integrity, eliminating blowouts and well control issues, progressing carbon capture and storage, and improving the recovery of hydrocarbons (e.g. optimising fracs). Lastly, he reminded the audience that “what we do is important, it improves people’s lives”.

The session moved onto Datuk Mohd Anuar Taib’s new year address – Datuk Anuar predicted 2016 will be a tough year with lots of changes, such as consolidations and reductions, to be expected in the short to medium term. He added there will be a lot of movements that come with the change, such as people moving in between countries (e.g. expats returning home), people moving out of the industry, and lower levels of recruitment in general.

Datuk Anuar believes that human ingenuity is a key part of surviving the current industry downturn and ensuring our industry is sustainable in the longer term. He noted the oil price was around $14/bbl when he started in the industry, and that there was more EOR in the 1990s than there is now. The strength of the deepwater part of our industry was built in the 1980s and 1990s when the oil price was less than $40/bbl.

Datuk Anuar reminded the audience that being smarter and more innovative is not necessarily taking the easiest path. Sequencing out scheduled maintenance through risk assessments was provided as an example that could lead to cost reductions, although the negative impacts of this will not be realised until much later on.

In providing insights into the challenges unique to the Asia Pacific region, Datuk Anuar explained our region’s challenges are dependent on our demographics. Asia Pacific members are younger on average, when compared with other regions. Therefore, while the ‘Big Crew Change’ is a top concern for many parts of the industry, the Asia Pacific region’s key challenge is actually in developing people, particularly young members. With cost reductions, there is likely to be a reduction in budget for attending conferences and training courses. There will be a need to focus on meaningful and high quality development opportunities, which will be a priority for SPE. Datuk Anuar encouraged individuals to “show yourself, connect, use opportunities to learn and network”.

In the Q&A session, Dr Meehan and Datuk Anuar took turns answering questions submitted from different remote locations. The questions asked spanned a variety of topics from how NOCs are ‘weathering the storm’ to advice for young members. A brief summary of the comments made to address the questions asked, are as follows:

• On when the oil price will reach rock bottom – many forecasts predict the next 1-2 years although some say longer. A better question would be when will we get rid of the current inventory?

• On how NOCs weather the storm – collaboration in supply chains, finding partners with common interest, adapting the downstream mentality (high levels of reliability due to their skinny margins) upstream by identifying opportunities to make operations and processes more efficient and reliable. NOCs and IOCs are not significantly different in that both need to make profits and be sustainable.

• On the timing of CCS – need a carbon price to accelerate timing/interest as no one currently wants to pay to store carbon. CCS will open up a lot of opportunities for our industry due to the need for similar skills around reservoir characterisation, drilling and completing wells, and monitoring reservoirs.

• On ‘fire sales’ – there could be several reasons as to why there hasn’t been as many company/asset sales as people expect. For example, interest rates are at historically low levels leading to lower financial stress for companies with high debt. Expect to see more transactions when the oil price is perceived to have stabilised or bottomed out – this is when buyers will pull the trigger.

• On the impact on R&D – people and companies will become more selective in what they invest in, in an industry downturn.

• On the impact of renewables on our industry – cost is still a major issue hindering growth in renewables although government subsidies are a key distortion. Unlikely to see a dramatic impact on our industry anytime soon.

• On advice for young members – develop yourself, take challenges and opportunities, focus on on-the-job training opportunities and learn from colleagues both internally and externally. Make yourself relevant. The industry is small, don’t burn bridges!

• On another ‘Big Crew Change’ – there were record enrolments in petroleum engineering last year, leading to lots of anxiety amongst graduating students on finding jobs. There is already evidence of lower enrolment numbers and students transferring out of petroleum engineering to other disciplines – these trends are likely to continue. In order for another ‘big crew change’ to occur, enrolments will need to stay low for at least a decade, which is not expected to happen. The industry still needs to plan for this though.

• On the impact of data analytics and technology – will need less people in the industry in the future and the nature of work is likely to change due to automation and technology advances. The use of drones for inspecting a flare stack was used as an example.