idaho national engineering and environmental laboratory petroleum r&d today and models for the...
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Idaho National Engineering and Environmental Laboratory
Petroleum R&D Today and Models for the Future
Dave Weinberg
Fellow
November 21, 2002
Idaho National Engineering and Environmental Laboratory
Outline• Components
• Where We Are
– people
– funding
• Models
– Conventional Partnerships
– Virtual Partnerships
– “Norwegian” Model
– “Hollywood” Model
• Some Challenges
Idaho National Engineering and Environmental Laboratory
Components
• Challenges (Problems)
• Funding
• People
Idaho National Engineering and Environmental Laboratory
Resource Triangle - Challenges
Conventional ReservoirsSmall volumes that areeasy to develop
UnconventionalLarge volumes that are difficult to develop
Imp
roved
tech
nolo
gy
Incr
ease
d p
rici
ng
Modified from Holditch, 2002
Idaho National Engineering and Environmental Laboratory
Major Energy R&D Investment
• Nine countries do 95% of the R&D
– United States - Canada - UK
– Japan - France
– Germany - Italy
– Netherlands - Switzerland
• US and Japan spend about $2 billion per year
• The other countries less than $1 billion per year
• Public and private sector energy R&D declining
Battelle 1998
Idaho National Engineering and Environmental Laboratory
R&D Funding by Private Industry
From Larner, 2001 and Holditch, 2002
R&D as % of Net Sales
0 2 4 6 8 10 12
Drugs/ Medicine
Comm. Equip.
Transp. Equip.
Aerospace
Energy*
* includes electric & gas industries
Office Equip.
Automotive
Electronics
Chemicals
(~ $3B)
Idaho National Engineering and Environmental Laboratory
Other Non-FE $34.3
DOE Fossil Energy FY01 Budget($726.6 Million)
EM $56.3
EE $50.4
Coal $221.7
CCT $69.4Gas $116.6
Fuels $32.5
Oil $68.0
Other FE $77.2
Roy Long, 2002
Idaho National Engineering and Environmental Laboratory
Recent Remarks by ExxonMobil• To meet the energy needs of the world, the oil
and gas industry needs to invest $ 1 trillion in next 10 years
• This amounts to $100 billion per year
• We are only spending $50 billion per year now
• My* Commentary
– We will need more R&D expenditures as well
– We will need more PhDs to provide the technology
*Steve Holditch, 2002
Idaho National Engineering and Environmental Laboratory
0
5000
10000
15000
20000
25000
30000
35000
40000
•c
U.S. Oil & Gas Production andU.S. Oil & Gas Production andAAPG + SEG Members in Petroleum IndustryAAPG + SEG Members in Petroleum Industry
U.S. O&G Production, MMB/Yr
2001
AAPG + SEG Members in Petroleum Industry
78 1980 82 84 86 88 1990 92 94 96 98 2000 2 4 6 8 2010 12 14 16 18 2020
Courtesy Don Lewis/AAPG
Idaho National Engineering and Environmental Laboratory
PEOPLE PIPELINE• Most S&Es develop their professional interests in junior
high school
• Seven years later (BS), few are yet employable
• Two to three years later practitioners (MS) graduate
• Three to five years later researchers (Ph.D.) graduate
• Geoscience enrollments at or near all-time low
• In last decade, only about one in four enter petroleum industry
The researcher pipeline is 10 to 15 years long!
Idaho National Engineering and Environmental Laboratory
The Idea Pipeline
Modified from DOE-NPTO
Lab-Scale Testing
Feasibility/Concept Development
EMBRYONIC STAGE 5- 30 yrs
Field-Scale Prototype
Field Scale Testing
DEVELOPMENT STAGE 5-10 yrs COMMERCIALIZATION 2-10 yrs
Field Demonstration
Meso-Scale Testing
Idaho National Engineering and Environmental Laboratory
Just In Time Research is a MYTH!
• Researchers take 10 to 15 years to “grow”
• Ideas take 5 to 20 years to become commercial technology
If We are to Solve Today’s Problems,We Need Use Some “New” Models
Idaho National Engineering and Environmental Laboratory
What does the domestic future hold?
Decreased US government funding for research
Abundance of senior talent leaving industry
Higher demand from middle sized companies
More alliances with industry & service companies
Modified from Ray Levey, 2002
Idaho National Engineering and Environmental Laboratory
Models
• Conventional Partnering (between “fixed” entities)
Consortia and JIPs
Contracts to Academia
Contracts to Public & Private Laboratories
Strategic Alliances
•Virtual Partnering (between entities, individuals, and others)
Partnering over the Internet
Hollywood model
Data/Information Mining
Idaho National Engineering and Environmental Laboratory
A World Wide View• Cumulative Oil Production – 900 Billion STB
• Current Oil Reserves – 1000 Billion STB
• Current Oil Production Rate – 27 Billion STB/yr
• Oil Production Rate in 2015 – 43 Billion STB/yr
• Ultimate Oil Recovery – 2-3 Trillion STB
• Current Gas Reserves – 5000+ TCF
• Current Gas Production Rate – 80 TCF/yr
• Gas Production Rate in 2015 – 160 TCF/yr
Idaho National Engineering and Environmental Laboratory
Norwegian Model• Investment into local infrastructure (physical and
intellectual) required by hosting government
• Local technical personnel (often but not always university-based) execute projects of interest to funding entity
• Funding entity reviews projects for relavenceand performance
• Successful projects end in commercialization in the host country of the developed technology of a public/private entity
Closest US equivalent is tax credits for research
Idaho National Engineering and Environmental Laboratory
Hollywood Model• Roles filled by individual “entrepreneurial entity”
• Projects of interest identified by X, Y, Z
• Necessary specialties identified and contracted
• Funding arranged
• Team assembled, project executed
• Compensation related to contribution and/or outcome
• Team disbanded, members go on to other projects
Requires organizing entity to have sufficient knowledge to assemble the “right” team
Idaho National Engineering and Environmental Laboratory
SOME CHALLENGES
• The communication “gulf” between the information and technology providers and the independent operators
– The operator notes that the well makes too much water
– The researcher has a grand solution that has nothing to do with water production
• The financial “gulf” between information and technology providers and the independent operators
– Operators are reluctant to spend money on information and technology developed by providers
– Many providers do an ineffective job of cost-benefit analyses
Idaho National Engineering and Environmental Laboratory
To Survive, Technology Development (R&D) Must Add Value!
Do Whatever It Takes or we will be in the slide rule business.
We must become creative in theBusiness of Technology, not just the Science of Technology.