PLANET OIL [WELLS; MINES] Crude Oil Resource Ecology and effects on - PowerPoint PPT Presentation

‘PLANET OIL’ [WELLS; MINES] Crude Oil Resource Ecology and effects on its demand, such as Climate Change abatement I (Predictions) YOU (Decide) Health Warning: …this is a TRUE SUBJECT ( Subjective View ) and should not be considered an OBJECT (Objective View) , yet. I hold no Accountability for what I’m going to say now – only for what I will say in 3 years time. This Subject needs full & further investigation. Adrian Gregory Principal Resource Consultant adrian.gregory@pathfinder-more.co.uk

“Crude Oil Resource Ecology” Concept - Nature ECONOMY ~ ‘ECOLOGY’ Flow and Stock of ‘oil’ in an ‘economy’ [Ecosystem] ECONOMY Thrifty management of resources (money, materials, labour). Range of economic activities based on quantity [supply] & price [demand] -- aimed at optimal ‘use of resources’ (allocation efficiency). ECOLOGY [Industrial] Dynamic interactions between people, (natural) resources & enterprise. Analysis of flows, values, wealth and stock; and ‘consequences-of-use’. Enterprise aimed at maximisation of ‘use of resources’.

“Crude Oil Resource Ecology” Concept - Nature GOLD Finite Resource. Reserves Value by being held in vaults. BLACK GOLD [Crude Oil] Abundant Resource. Reserves valued because of energy & chemical use (feed-stock). Value based on its consumption – cost of production key to replenishing reserves.

“Planet Oil” Perspectives & Predictions @Resource Ecology # Stewardship >> Exploitation [Price & Technical] EXPLOITATION # picking wild strawberries => short supply, until next year => Seasonal Market Trader {…built on local knowledge, performance} => Price = f (natural abundance) STEWARDSHIP # grow wild strawberries => improve selection of plants => increase crop yield # produce cream => domesticate cows # find land in Wimbledon => lawn tennis # stewards show you to seats… …sell TV rights. => specialisms => Valuable Product [Brand] {…built on knowledge, understanding; know-how} => Price = f (bundled Value; work done) EXPLOITATION [UKCS] # Marginal Field Development 3-9 years profile TECHNICAL & TECHNOLOGICAL STEWARDSHIP [Phillips Petroleum] # repeat process 10 - 20 times @stock of knowledge; competencies & skills

‘PLANET OIL’ [WELLS; MINES] Crude Oil Resource Ecology Petroleum Resources Management System [PRMS] Problems:  Contingent Resource: “ Resources about to become Reserves ” [Select, Define, Design]  Peak Crude Oil Demand: “People don’t invest if they don’t see a future demand” [Investment; Novelty]

‘PLANET OIL’ Crude Oil Resource Ecology and effects on its demand, such as Climate Change abatement Part 1 SUPPLY  Industrial Ecology – Natural Resource Ecology  Resource Stewardship – Value Creation & Exploitation  Technical Resources – Category Dilemma  Resource Wealth (Stock) Managementship Part 2 DEMAND  Peak Oil Demand & Climate Change  Renew@ble Clean Energy  Sustainable Consumption: Benefit - Cost Parity  Conclusion Adrian Gregory MORE Consultancy Plc 25 th April 2017 Principal Resource Consultant adrian.gregory@pathfinder-more.co.uk

Industrial Ecology The study of the flows of materials and energy in industrial and consumer activities, of the effects of these flows on the environment, and of the influences of economic, political, regulatory and social factors on the flow, use and transformation of resources (White 1994) International Society for Industrial Ecology Performance Economy [2016] A concept which focuses is on the maintenance and exploitation of stock encompassing the linear or ‘circular economy’ flows of materials or energy within an ecosystem. (Stahel, Clift [Surrey University] 2016)

Sustainability Performance Economy [Resources = Wealth = Stock = Capital] Natural Capital • Pool or Mega-Pool Commons Natural Resources. If Production (Flow) Maximisation occurs (Fishing, Forestry) ‘Tragedy of the Commons’ is inevitable in Local Pools [Habitat, Biodiversity, Species Loss] ‘Second Treatise of Government’, [Nature, Ownership – Property Rights] John Locke 1689a David Gregory 1659 -1708

Sustainability Performance Economy [Firms - Corporations] Manufactured Capital [Technological Capital] Financial Natural Capital Capital Cultural Human Capital Capital TransNational (Mega) Sustainability Adaptability, Change http://www.pwc.com/gx/en/audit-services/capital-market/publications/assets/document/pwc-global-top-100-march-update.pdf

Mega Company Activities MarketSpace • Appropriate for Stewardship of National Resources? [Value Preservation] Informed Policy Value Resources Changes # Tangibles, Intangibles # Assets; USD $ Mega Company Policy, Procedures & Activities Processes Transactions Output # Assets, Goods & Services, Money # quantity, quality Organisation Social, Political Signals & Environmental # Public, Stakeholders Consequences MarketPlace • What is appropriate 'Value-for-Money' where services are not marketed ? • How should efficiency be measured when outputs are produced many years later ? • What effort should be spent assessing, evaluating, reviewing work ? Saudi Aramco: ‘The Caravan Goes On’ [2013] Frank Jungers, Chairman & CEO 1973-1978 Chapter 22: Master Gas Plan

Sustainable Growth Sustainable Growth Saudi Aramco Natural Capital = 265 Billion BO Reserves 31 st December 2016 Natural {15% Planet Oil [Proven]} Oil Resources Gas Solar Wind Big Innovation: Oil $/BO IOP IOR Gas $/MSCF Renew@ble Clean Solar; Wind; Core Competencies Cost/Risk Core Growth Technical Assurance Technical Culture & Change

Sustainability Creation Natural Resources – Technical Stewardship Yin Yang Exploitation Explore – Identification, Reconnaissance, Access, Exploration [Discovery] Appraise – Delineation, Feasibility, Option Selection [Commerciality] {Mining 1:1000 commercialisation} 7 Core Activities {Wells 1: 6 commercialisation UKCS} Abandon Explore Resource Management Resource Management 6 1 & Ecology & Ecology 7 Sustain [Stewardship] Appraise 2 5 Maintain 4 3 Produce Develop Develop – Development Define, Design, Sanction, Build Produce – Commissioning, Start-Up & Plateau Production, Improved Recovery [IOR] Sustain – Improved Production [IOP], IOR, Maintenance [Maintain] Abandon – ‘Rehabilitation’ [Mining]; Abandonment, Reclamation and Remediation “…Technical Stewardship maximises economic resources” G O [Best Practice] W @ ATG.96 Market Oriented Resource Exploitation

Improved Production & Recovery Doing Right; Doing Right Things; Doing Things Right # produce as much can # National Resource longevity [Profit Maximisation] [Production Stewardship] # producing sustainably = f (Flows, Reserves, Resources [Stock]) HIIP => ‘Trapped’ Volume, Geology & Fluid Properties [Resources] Reserves => Wells, Drainage, Reservoir Management Plan Recover the 'Full' Barrel Q oil Production => Investment, Design & Infrastructure ‘Ability’ CR oil UR oil UEY oil G O W @ ATG.96 Market Oriented Resource Exploitation

Natural Resource Economics Yield & Time-2-Move-On [Dynamic Markets] Maximum Sustainable Yield [~58% RF] Business Go Local Markets Go Quantity [MM bopd] Production Improves New Substitute [IOP] Markets Grow Recovery Techniques Improves [IOR] Business Come Technology Advances Lowest Cost ($)/BO eg Exploration [IOE] survives Sustainable Oil Production Sustainable Oil Production [Supply] Time

‘PLANET OIL’ [MINED SHALE OIL] ‘Peak’ ‘Sputter, Surges and Stalls’ Estonia Shale Oil – Resource Management Plan http://www.envir.ee/sites/default/files/polevkivi_kasutamise_arengukava_2008_2015_eng.pdf

‘@Risk’ Production & Recovery Cost of Production = f (Scale, Scope, Proximity, Complexity) Difficult Oil Artic Development Deep Water Development Difficult Environments: Barents Sea, West of Shetlands Oil Sands [Extra Heavy Oil] Distal Offshore Proximal Offshore US Onshore Shale & Tight Oil Onshore Viscous Oil [<1000cp] Onshore & Shallow Water Proximal Offshore Easy Oil ~30-50 MMBO/D [2015-2035]; 10 MMBO/D @72 yrs = ~265 Billion BO Supply > Demand: Stewardship Focus: N os 1 Production [IOP] Risk = f (Cost) N os 2 Recovery [IOR] G O W @ ATG.96 Market Oriented Resource Exploitation

Stewardship – Resource Stock Natural Resource Challenge - Wealth Governance Stewardship of Natural Resources # Nurturing/Maintaining Quantity & Quality of "Stock" [Wealth Governance] # Managing "Use of (Resource) Stock" [Value-of-Use] ie Sustainable Production Proven Probable Possible Deemed Impossible Prospective Resources Yet-to-be Prospective [Deterministic]

Sustainability - Stewardship Peak Oil Supply

Sustainability - Stewardship ‘Planet Oil’ [Current; Speculative & Prospective Resources] Legend: CR Current Reserves [~2P] proved IOR Technically Recoverable [SR] PR Prospective Resources SR Speculative Resource CR = ~1.6 T BO UTR Ultimate Technical Resources USR Ultimate Speculative Resources IOR = ~1 T BO SR = >1 T BO unrecognised PR = ~0.8 T BO PR = ~0.2 T BO unrecognised UTR = ~4.6 T BO USR = ~1 + >1 + ~0.2 T BO = ~2.2 T BO IOR SR unrecognised PR unrecognised G O W @ ATG.96 Market Oriented Resource Exploitation