Editorial comment

	Vol. 232 No.5
PRAMOD KULKARNI, EDITOR

High noon at the energy corral

In the Western film genre, the climactic scene typically takes place at high noon when the town’s good guys in white hats shoot it out with the bad guys in black hats. In the energy debate, we seem to be nearing high noon, when proponents of competing resources battling to determine how the world will fulfill its galloping demand for energy.

Unfortunately, the energy confrontation is not taking place in black and white, but in multiple shades of grey. Recent natural calamities (nuclear fallout after the earthquake in Japan), human errors (Gulf spill, coal mining accidents) and policy errors (high food prices due to biofuel subsidies and mandates) have combined to reveal risks associated with several energy resources. Additionally, high oil prices have set the stage for a contentious global policy debate that will affect the energy mix for decades to come.

Coal. The fossil fuel that energized the Industrial Revolution is still plentiful globally. Despite high carbon emissions, the world’s consumption of coal is expected to rise to 206 quadrillion Btu in 2025.

Oil. With WTI price at $112/bbl and Brent at $120/bbl, oil remains the world’s prized commodity as a transportation fuel and feedstock for petrochemicals. While the peak oil theory remains in vogue in the pulp press, those of us in the industry know that access to unexplored areas will ensure oil supplies for a century or more. If prices remain high, there are opportunities to increase supplies by tapping heavy oil deposits and oil sands. Meanwhile, the oil industry must contend with environmental activists who are pursuing obstructionist actions to prevent the opening of unexplored frontiers such as the Arctic.

Natural gas. According to the EIA, the world’s technically recoverable gas resources, including conventional and shale, total 22,600 Tcf, ensuring adequate supplies for the next century. Low prices and the ability to reduce greenhouse emissions by 40% make gas a natural choice for electricity generation and transportation. However, environmental activists seek to thwart shale development by exploiting the perceived threat of fracing.

Biofuels. Subsidies and mandates have increased the consumption of biofuels for transportation, but the side effect has been higher food prices. During the second half of 2010, the price of corn climbed 73% in the US. Prices of sugar cane, cassava and rape seed are also climbing globally, contributing to riots and political turmoil in the Middle East and Asia.

Wind and solar. These renewable resources are attractive at a superficial level, but are hampered by the need for massive capital investments to achieve scale and the installation of power grids to transport the energy from remote regions. Wishful thinkers in Europe, such as Germany’s Federal Environment Agency, are projecting renewables to supplant oil, gas and nuclear power by 2050. The advocacy group WWF-UK wants European governments to investment as much as €3.9 trillion per year until 2025 to allow renewable projects to break even by 2040. Such massive levels of investments seem unlikely in a Europe that is still struggling against recession and debilitating deficits.

Sustainable future. What the world needs is not an energy Armageddon, but energy accommodation. With the global population nearing 7 billion, we need every resource that meets the criteria for economic sustainability, sensible risk management and environmental impact. Let’s exploit all the energy we can—oil, gas, coal, nuclear and renewables.  

IN THIS ISSUE

Deepwater advances. Offshore Editor Justin Smith discusses deepwater developments that have resulted from the need for well containment and the push to explore the Arctic. The article covers new rig designs, the two well containment systems developed for the Gulf of Mexico, and innovations in closed-loop drilling for deepwater applications.

NOC activity. News Editor Henry Terrell explains how the national oil companies, now controlling access to the bulk of the world’s resources, are extending their reach to other parts of the world and adopting the ways of the international oil companies, creating a hybrid enterprise known as international/national oil companies (INOCs).

Artificial lift. Our annual feature by production experts Jim Lea and Herald Winkler covers 18 recent technology developments in gas lift, ESPs, performance monitoring and more. Notable advancements include an interpretation technique for measuring real-time flowrate and a novel pump that combines the advantages of beam pumping and ESP systems. 

Digital rock physics. On the topic of reservoir characterization, ADCO and Ingrain petrophysicists discuss an innovative analysis method that creates a 3D digital rock sample from CT scans to perform numerical simulations for special core analysis and to compute petrophysical properties. A case study of the technology is presented for a complex carbonate formation in Abu Dhabi.