Irina Slav: Oil and gas majors in a new era
Offshore Energy Today
Italian oil and gas company Eni has produced first gas from
supergiant Zohr field, less than two and a half years since the discovery.
Two and a half years ago, analysts asked when Italy's Eni would be able to start producing gas from the giant Zohr field offshore Egypt. The overwhelming majority said this would happen no earlier than 2019, and most likely after 2021. But first gas from Zohr flowed earlier this month, in the latest sign that the future of the oil and gas industry will be very different from its past.
Big Oil has traditionally taken its time with new projects, especially offshore ones. They require a lot of exploration, a lot of planning, and a lot of equipment once the final investment decision has been made. But no longer: the 2014 crisis really changed the setting, forcing the mammoths of the industry to at least try to become more nimble and flexible.
The Italian major is not the only one speeding things up, but it is to date the most glowing example of what Bloomberg's Chiara Albanese and Javier Blas called a seismic shift. To grasp the full significance of the Zohr feat, here's a little history .
Zohr was first auctioned back in 2012, but the discovery of the huge deposit of gas was only made in 2015: the Mediterranean is not the most productive place when it comes to oil and gas discoveries, so Zohr really shook things up with reserves that Eni has estimated at 850 billion cubic meters of natural gas, or about 30 trillion cubic feet .
From the discovery onwards, Eni took advantage of cutting-edge tech to actually work in parallel on the further exploration of the field and its initial development. It did 3D modeling of the deposit at the same time as the design of the engineering tech needed to develop these reserves and procurement. The goal was to save time and money, of course, and many believed this was mission impossible.
The feat will go down in history as yet one more mission considered impossible and made possible by a number of factors, including technology, a new emphasis on cost savings, and the awareness that in a world turning increasingly to natural gas from oil every day is precious and should not be wasted if you want to position your company ahead of the competition.
Eni's Claudio Descalzi had every right to be a little bit smug when he said, “Nobody believed what we were going to do, analysts said we were crazy; now we can say they were wrong and we were right.” The secret : “Our philosophy is time to market. We changed all the industry strategy by breaking the contractual schemes and starting to move from investment authorization to production with parallel steps."
The philosophy of accelerating the time to market is neither new nor reserved for just the energy industry. In fact, it is becoming increasingly popular across industries, but that doesn't diminish its potentially transformative impact on oil and gas given the history of that particular industry.
And yet, it's not just about a business philosophy. Eni admits that it made the best use of lower oil prices, which significantly reduced its building costs. It is also true that drilling in the Mediterranean is much easier than, say, the Arctic or the deep waters of the Gulf of Mexico or Brazil. And yet, were it not for the new approach to exploration and development, these favorable circumstances would hardly have been enough for Eni to prove that mission impossible was possible. It will only be a matter of time until we start seeing this approach replicated by the Italian company's peers. After all, there is little chance that competition in the oil and gas market will cool in the future.
By Irina Slav for Oilprice.com
Irina Slav is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry. Petroleumworld does not necessarily share these views.
Petroleumworld reprint this article in the interest of our readers and does not necessarily reflect the opinion of Bloomberg LP and its owners. All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.
Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by theoriginator.Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated.
Copyright© 1999-2017 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors.Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
Petroleumworld News 12/312017
We invite all our readers to share with us
their views and comments about this article.
Send this story to a friend
Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8 +/ 800x600 pixels