Unmatched scope and scale in Oil and Gas!
If 2014 is heralded as the year of “People Power”, then 2015 should be remembered as the year for “Policy Power”. Energy and the Economy are intertwined and interdependent. World energy demand is projected to increase by 40 percent by 2030, adding another United States and another China to demand. Meeting energy demand on this scale will require all forms of energy: coal, oil, gas and alternatives. Radical changes are being seen in energy supply and consumption. In this context, geographies and geologies are changing! China, India and Middle East have emerged as key demand centres, contributing more than 80% of incremental consumption. Similarly, oil and gas supply patterns have shifted – share of North America and Asia Pacific is increasing while supply from Europe and Latin America is declining. Globally new oil and gas production is focused in more remote, challenging and expensive to operate locations. Deep-water, ultra deep-water, tight oil and shale gas are great examples of this. In refining, crude oil processed is changing such that it increases the technological complexity and cost.
In the upstream exploration and production, sector focus should be on 4 key areas:
- Enhanced oil recovery– Even a 1% enhancement can add almost 8% to the existing proved reserves of India – about 450 million barrels of additional reserves.
- Deepwater– In addition to exploring new areas, there is immediate opportunity to develop already discovered reserves with investments of $50 billion to almost double India’s gas production by 2019, replacing imported gas worth $150 billion.
- Unconventional resources– shale gas and tight oil are two frontier areas. We need a different mind-set in terms of sharing of mineral rights with land owners, non-discriminatory access to pipeline networks, attracting technology partners and regulatory and decision making clarity.
- Strategic partnerships- The growth of several successful hydrocarbon provinces in countries like Angola, Azerbaijan and Iraq has resulted from strategic partnerships. In India also, there is a large opportunity to create such ‘win-win’ partnerships in Enhanced Oil Recovery, and difficult High Pressure High Temperature and deep water projects.
Our endeavour should be to develop more world scale plants that can compete in all seasons – providing advantaged fuel and feedstock in terms of cost, quality and formulation so that our industries can be the most competitive globally. This will need over $250 billion in investment.
Advantaged feedstock to this industry to support development of smart cities and related industrial, residential, and infrastructure investments.
In Natural Gas Pipelines
Invest in over 32000 km of network by 2030 with design capacity of more than 800 million metric standard cubic meters per day, and a liquid natural gas (LNG) terminal capacity of 80 to 90 million tons per year – all requiring $20-30 billion in investment.
Encourage competition in fuels marketing with terminal and pipeline infrastructure sharing to build capital and operating efficiencies to provide efficiency and choice to the end consumer.
In City Gas Distribution
more than 250 cities across the country could have city gas distribution with 5000 plus compressed natural gas stations to service these cities and the cross country transportation sector. $15-20 billion investment is needed by 2030 to set up an adequate CGD footprint. Research and development, oil services and ancillary businesses and skills will automatically develop at scale, as the industry develops. There exists a concrete example of the deep water industry where multiple global scale service providers and training facilities have been set up on the east coast in support of this activity.