The Petroleum Service Company in the Year 2000

Abstract

Summary This paper details the technical problems that the engineer will have to face and the qualifications that will be required of an entry-level service-company engineer in the year 2000. The environment in the year 2000 in which the E&P service-company engineer will have to function is addressed as background to these forecasts. Projections are provided for the likely economic, political, and business climates. By the year 2000, there will be far fewer international service companies, but they will be larger and more capable. The service-company engineers will have to understand better the needs and problems of the international oil companies because they will have to work in partnership with the international companies personnel in mostly hostile environments. The engineers will have to have broader skills and be more systems-oriented. They will have to be proficient in computer and software technology and effective team players with good communication and interpersonal skills. Introduction As a representative of the petroleum E&P service industry, I was asked to look at the role of engineering in the year 2000 by addressing five questions. What aspects of the petroleum (E&P) industry will your segment be primarily concerned with in the year 2000? What will be the significant technical problems addressed by the petroleum industry during the remainder of the century? What support will computers provide the engineer in the year 2000, and how should the engineer be prepared to use this technology effectively? How will the functions of engineers change during the remainder of this century? What qualifications will be required for an entry-level engineering position in the petroleum industry in the year 2000? Before I attempt to address these questions, I believe it is important to look at the likely economic, political, and business climates that will exist in the year 2000. (The Appendix provides a detailed look at these climates.)Worldwide demand for oil and gas will grow at a rate of 1 to 1½%/yr during the next 15 years.The current excess capacity in worldwide crude oil production will disappear by the mid-1990's.The increase in worldwide demand cannot be met by sufficient production increases outside the Middle East.U.S. crude oil needs will be increasingly met by imports. Imports will rise from approximately 25% of U.S. needs today to 43 to 52% by the year 2000.The U.S. must maintain a considerable E&P program to minimize its dependence on imports.In the year 2000, an investment of $22 will be required for 1 bbl [0.16 m3] of reserves added in North America, as opposed to $4.40 for the Middle East.The annual E&P investment in the U.S. during the 1990's will exceed the peak yearly investments of $42 billion to $43 billion in the early 1980's.In a rational market, the price of oil in the year 2000 will be in the range of $40 to $50/bbl [$252 to $314/m3] (1985 dollars).It is likely that Saudi Arabia will limit production, prolong the lives of its reservoirs, and promote a gradual increase in oil prices.The international oil companies should have the money and technology needed to find and to develop the needed reserves. Role of the International E&P Service Companies Exploration and development costs are currently very low as a result of the large overcapacity in the petroleum service industry. Drilling and development costs are very attractive today. Because of the great pressure on the going rate for their products and services, a crunching consolidation is taking place among the E&P service companies. At the end of this consolidation period, far fewer companies will exist. Those remaining will be financially stronger and should be able to meet the requirements of the domestic and international oil companies. At risk, however, is the experience level in the service industry. It is clear that the current downsizing and consolidation are removing many experienced people. It will be impossible to maintain the experience base developed in the service industry during the past 5 to 10 years. It is likely that companies will be forced to relearn a number of things. This learning process will not come cheaply to service companies or their customers.