Prince Amir Al Saud

What are challenges surrounding Europe Oil Exploration Industry

What are challenges surrounding Europe Oil Exploration Industry


There oil and gas exploration and production industry is perhaps the only one of its kind that demands a more assorted set of political, human, mechanical and technological proficiencies.

The very tough competition between multinational companies for natural resources has driven them to explore and get oil in unforgiving, distant and even unfriendly spots on earth, where even the most uncomplicated logistical chores can be very difficult to perform and quite expensive. And, even as the environment becomes more complicated and the challenges more difficult, the type of people who are willing to work under these harsh conditions are growing scarce every year.

Smart surveillance and the use of special sensors to monitor oil wells are key tasks in the oil production and exploration field. But to be efficient, the latest processes, responsibilities, and roles should first be determined, and people need to be trained accordingly.

Nowadays, a lot of field workers operate on their own in many remote oil and gas fields. A consolidated tracking and monitoring of oil wells will necessitate a comprehensive overseeing and blanket procedural applications which are obviously very difficult to bring about.

Another challenge lies in the gathering and analysing of data in effectively and quickly in a controlled research laboratory environment, especially if the oil rig is located in the North Sea or in Antarctica. Collecting data can be a colossal task for these locations and weather situations. And even though the latest technology has shown us that there is progress happening in that field, assimilating this innovative technology with the current systems, the latest tools and a worldwide network of various business entities with their own unique characteristics can be gruelling. And to top it all off, most of the potentially useful data gathered are not usually placed in safekeeping nor distributed to the right individuals who can make use of it the most. 

Specific production problems like for instance sanding, where solid particles can interfere with the operation by plugging the wells. This occurrence can negatively affect production and fixing it requires a complete understanding of the common issues and the tools to be able to comprehensively analyse data and establish historical patterns. Transforming this data into valuable, applicable information can actually help people make critical decisions surrounding the oil exploration industry.

Today’s gas and oil companies have combined many of their business processes with key partners, suppliers, and distributors. With this business strategy, these companies have been given the ability to react and respond instantly to alter a market opportunity or an assumed external threat.

With this strategy, these companies are minimizing operational intricacies and reducing operational costs.

By amplifying their flexibility, they are able to handle market unpredictability and produce optimum value from the data they generate. They have been enhancing their IT structures and eliminating everything that is difficult and costly to manage. They have modernized and improved a lot of processes to improve employee productivity and increase efficiency.

This is where on-demand oil and gas businesses come in. They are currently gaining better management control and more flexibility in personnel handling which helps them meet the challenges of their industry. Concurrent intelligent surveillance and early warning capacities have enabled these businesses to back up meaningful decisions and on the dot and accurate actions.

Remote management with the help of constant distant monitoring have helped oil firm’s act more predictively and this has assisted them in managing the complex political, economic, and environmental challenges of operating an oil field today. Implementing an on-demand business model is helping companies to manage wells and fields in Europe more productively and profitably using more central headquarters such as London and Houston.

Transforming relevant data into information that can be used to improve asset productivity.

The latest oil monitoring technologies can cause a single oil source to generate over one terabyte of information on a single day. This requires comprehensive analysis from pump performance and fluid composition to temperature and pressure change. The data gathered on a daily basis is complex and huge. Transferring this voluminous amount of information across independent and incongruent structures can impede interdepartmental communication. However, an on-demand strategy can help companies deliver better business value by enabling companies to transform this raw data into information that can be sent to the right person at the right time using remote access video. In the smart, on-demand oil field, data is not only gathered and stored. They are scrubbed, standardized and measured. While the data stays at the source, the meta-data is sent across the infrastructure.

Data is merged with several data streams that are gathered around the clock, and afterwards they are analysed. This helps companies correctly prevent expensive incidents like for instance pump failure. By analysing the data and matching it with other historical references, oil and gas companies are now able to accurately predict future performance and proactively solve issues. Irregular and abnormal patterns are easily identified and directed to the appropriate person for scrutiny and repair and then, the system is reprogrammed to help improve future accuracy.

Autonomic data analysis now runs without human assistance, providing timely warnings of critical issues including sand entry, liquid composition alterations and gas or water breakthrough.

A type of data archiving that organizes data streams efficiently based on time, space, types of measurement, and relationship to detection targets or spatiotemporal archiving provides important historical information for data analysis. Integrating this data with existing internal and external systems including finance and workflow provides a wider view of data that can radically affect long-term strategic planning and performance of any oil company.

Europe Oil Industry

Last year was a busy year for European oil companies. The drilling bans in the UK and Italy were lifted, there was a huge oil discovery in offshore Ireland, several oil strikes were made in Norway, and t resolution of the TNK-BP saga was finally reached.

The latest oil discoveries in the North Sea were a bit reedy compared to the Johan Sverdrup discovery that reached up to 3.3 billion barrels of oil. Statoil also made gas source detection with its Norwegian North Sea exploration that amounts to between 70 and 200 million barrels of oil. Total, on the other hand, made a declaration that they had discovered over 75 million barrels of oil at its Garantiana explorations.

But perhaps the biggest haul of them all in European oil explorations occurred at offshore Ireland in the Celtic Sea.

Local gas digger Providence Resources noticed oil flow at its Barryroe explorations. The site is estimated to contain more than a billion barrels of oil in place especially in the Basal Wealden and Middle Wealden regions. There is a projected separate 800 million barrels in the Lower Wealden and Purbeckian regions.

In the meantime, Statoil and its associates etched an agreement to be part of the planning of the Johan Sverdrup development.

Another field exploration project is the $2.3 billion Cygnus gas field project in the southern North Sea which is part of the United Kingdom. The project was given the go signal after the UK government introduced a tax allowance of $810 million for big shallow-water gas sources.

Cygnus is considered as the biggest discovery in the North Sea's Southern Gas Basin during the last quarter of a century with roughly 635 billion cubic feet of 2P gross gas reserves.

This discovery is projected to generate 1,200 jobs initially and is expected to grow more. This will boost the number of jobs available in the UK not to mention the fact that oilfield services firm Aker Solutions proclaimed that it would be hiring more people at its London engineering centre by as much as 400% by 2015 as part of a milestone energy deal between Norway and the UK.

The gas field allowance is just one of the many measures implemented by the UK government the objective of which is to boost the offshore oil and gas sector. Certain tax allowances are designed to shield earnings from these fields from taxation. This move would advance investment and jobs in the offshore sector by trade body Oil & Gas UK, where specific projects are projected to reach up to $800 million tax shield. 

Drilling Ban on Italy lifted

 The United Kingdom was not the only nation to positively adopt itself to exploration options. Italy just recently lifted its long-time ban on offshore drilling for specific projects and this happened two years after the infamous BP Deepwater Horizon disaster. The ban in Italy was intended at offshore exploration and production activities within five miles of the Italian coast. 

While oil workers in Italy and the UK became elated with the most recent positive progress happening in their respective nations, a series of strikes and industrial disputes were happening in Norway’s offshore sector. A strike on the Baker Hughes offshore exploration in Norway was prevented when the Norwegian Oil Industry Association together with the labour union SAFE agreed on a new collective deal in the oilfield services industry. However, another larger strike that went on for half a month that have cost Norway’s oil and gas segment an estimated $500 million. The strike was only stopped after Norway's Minister of Labour invoked emergency powers.

There was another strike that threatened to shut down two North Sea oil fields were also avoided when the government agreed to a pay deal with the union Industri Energi. The deal sealed a general pay increase of 4.5% for all the drilling personnel. The challenges that the unions in UK were more concentrated on health and safety matters. A major safety and health episode occurred when Total closed down its oil and gas production at the Elgin platform in the North Sea off Scotland because of a gas leak. Over two hundred people were evacuated from the platform and in the next few months after that, Total worked to plug the leak. The Elgin field is capable of producing up to 280,000 barrels of oil each day and its operation was suspended with hopes of having the field restarted soon.

This year, new production licenses in offshore Europe were approved and the major participants were the UK, Norway and Iceland. The UK has been a very attractive spot for oil exploration and in 2012, they have awarded 167 production licenses. The Norwegian Petroleum Directorate announced that Norway had received applications from 36 companies with the interest focused in Barents Sea blocks. According to NPD Exploration Director Sissel Eriksen, this increase in license requests was "no great surprise" since Statoil found oil and gas on Skrugard back in 2011. In Iceland, Faroe Petroleum was awarded a number of blocks in the offshore Dreki Area. With Faroe Petroleum is Valiant Petroleum and Norway's state-owned oil company Petoro.

What is considered as the biggest merger and acquisition deal in the European oil sector was Rosneft's move to buy TNK-BP from its owners, BP and the Alfa-Access-Renova consortium. Rosneft has acquired 50% of TNK-BP for $17.1 billion cash. There was also a substantial asset-transfer deal between ExxonMobil and Total regarding their interests on the Norwegian Continental Shelf.

There was also positive progress in shale gas fracking in Europe. Gas fracking or hydraulic fracturing refers to the process of extracting natural gas from shale rock layers deep within the earth. Although there are several European Union nations including France and Bulgaria that ban fracking, Poland has been quite active with the activity and they have even declared the process as environmentally safe. ExxonMobil decided to put a stop to its shale gas projects in Poland and a lot of people think of the move as a blow to the country's budding shale gas industry. However, other major players in the oil industry such as Chevron and ConocoPhillips, along with large independents Talisman Energy and Marathon Oil, have continued with their operations in Poland's shale gas basins.

The biggest news on the shale gas fracking front would be the announcement that the UK is lifting its ban on the activity. There had been moves by the UK government to exploit other energy sources as the Department of Energy and Climate Change tries to set up an Office for Unconventional Gas and Oil. This paved the way for more fracking developments in the UK, especially at Cuadrilla Resource's Bowland Basin operation in northern England.

Major Cutbacks on Oil Exploration Spending Most global oil firms have announced huge cut on their exploration spending, going away from the frontier zones and in the process risking their future reserves. There have been some massive exploration failures in high-profile regions including Africa's west coast, starting with Angola all the way up to Sierra Leone. These setbacks have discouraged appraisals for exploration-focused firms and are now forcing oil majors to alter their strategies.

Tim Dodson, the exploration chief of Statoil says that it has become “increasingly difficult to find new oil and gas, and in particular new oil”. Statoil was the world's top conventional explorer in 2011. He further comments that the “discoveries tend to be somewhat smaller, more complex, more remote, so it is very difficult to see a reversal of that trend”. Although the final statistics have not been published yet, many experts think that last year may have been the industry's worst year for oil exploration.

Because of this, explorations are likely to be cut, most especially in the newest frontiers. A possible scaling back on some exploration will occur, such as the ones being done in the Arctic or the deepest waters with limited infrastructure. Major oil explorations that have already been established such as the one in the Gulf of Mexico and Brazil will continue to see a lot of activity, but explorations in frontier regions will probably be reduced. And the biggest losers in this setback are the oil majors because they main large resource bases. As the world runs out of huge conventional oil fields, as well as access to acreage, especially in the Middle East, large oil companies will have to make do with what they have in the meantime.

Oil Prices Fluctuate

According to Virendra Chauhan, oil analyst at consultancy Energy Aspects, oil prices need to remain at elevated levels because there is a risk that a fall in oil prices or a cutback in investments by companies will mean that production growth slows. Even though world oil reserves increased by 1%, they just amounted to just 52.9 years of global consumption, down from 54.2 in 2011. British Petroleum sees consumption to increase by as much as 19 million barrels per day by 2035. Energy firms have already been shifting capital from conventional to shale production, and this trend could continue as the exploration risk is smaller, the lag from investment to cash-flow is shorter, and project sizes are more manageable.

In the past decade, the European oil industry has had its ups and downs with the challenges evolving from lack of equipment to safety and salary. Oil exploration has not only economical but political impacts as well and this has made the industry one of the toughest to maintain.  

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