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This was the introduction to Peter Griffiths' keynote speech at the 2001 Technology Education New Zealand (TENZ) national conference. In his address, Peter took the audience on a brief journey through BP's business and outlined how the company was applying technology to enable it to achieve its ongoing business objectives. Peter explained that technology is a core element in BP's brand values. These brand values define what BP stands for as a company.
In his address he looked to link the modern oil industry and the operation of BP as a company with the concepts of technology and technological literacy as outlined in the technology curriculum statement.
BP as a company
The global demand for oilThe global need for energy is now greater than ever. Energy is one of the fundamental requirements for development and sustenance of a modern economy - the source of heat, light, and mobility for 6 billion people. Today, the world will consume around 77 million barrels of oil. By 2010, the demand for oil, even on conservative assumptions about economic growth, could be as much as 90 million barrels a day. A 15 percent increase in just 9 years - and it could well be more. It is this human need for increased energy , which is shaping the future of the oil industry through two powerful forces - efficiency and substitution. Those two forces are the focal point of a great deal of technical change. They represent the points at which technology and business come together.
EfficiencyThere have been a series of advances over recent years that have transformed the efficiency of prospecting, recovery, and production of oil. Technology has increased the quality and speed at which seismic data can be acquired and interpreted - which in turn leads to a greater understanding of the sub-surface characteristics and structures of oil and gas reservoirs. Seismic data can now be interpreted in three months when it could previously have taken a year - this reduction in time avoids the drilling of additional wells resulting in a cost saving of around $100 million per well. New and innovative advances have occurred in the mechanical technology of drilling, enabling BP to push the limits of its wells in terms of depth, pressure, and overall distance. The wells can be curved and turned as desired and drilling crews no longer have to stand on top of the reservoir to drill into it. A combination of fibre optics and software now allows operators to interpret seismic data actually ahead of the drill bit, and to take corrective action to steer the well safely through fault zones or potential hazards.
When drilling is completed the same systems have created so called "intelligent wells" - which can control flow rates and give the ability to manage what is happening downhole on a continuous basis. These have great potential for use in deepwater, inhospitable, and sensitive environments which are now being increasingly explored. In each case these advances have been assisted by a new technology relying on visual simulation - the ability to display information on a screen. One of the most exciting innovations of the past year has been the concept of what are called HIVE's (Highly Immersive Visualization Environments). An HIVE is a workroom with a series of 3D digital projectors around which large teams of people can gather to manipulate data and pictures. HIVE's give BP something it has never had before the ability to give all the people involved in a project a common mental picture of the structure on which they are working. This helps create a rapid and common understanding of something they will never actually see. BP has 15 HIVEs in operation around the world, and another three under construction. In every case they change the boundaries of teams, and bring together people of very different disciplines - all applying their skills to a common objective. As a result of the technology, decisions are able to be reached in a matter of days rather than weeks or months. Worldwide, HIVEs can add $300m a year to BP's bottom line. This is very exciting to the company, both technically and commercially. There have also been advances in robotic and remote operating technologies for use underwater, which allows a continual extension of the oil prospecting frontier. Much of the Earth's surface is covered with water and much of it is very deep - so exploration and development in very deep water is of great value if the world's future demand for oil is to be met. Twenty years ago, 600t was considered to be the working limit. Now it is 6,000t, and that is by no means the limit. In the 1980s, the well cost of finding and developing a barrel of oil was rising - in some cases to $12 or even $16 a barrel. That was unsustainable because crude prices were coming down and if unit costs had stayed at that level, private companies simply wouldn't have been able to compete with the OPEC producers. The impact of the measures described -, the improved capacity for digesting vast amounts of seismic data quickly, capacity to create a common understanding among teams of different disciplines combined with smart drilling capabilities often in deepwater - has lead to lower costs, increased production, and more efficient recovery. The net result is that finding and development costs for a new field are now typically down to below $8 per barrel.
SubstitutionThis relates to technologies that have brought about a shift in the fuels that BP develops and sells over time and will sell in the future. The world needs to diversify its sources of energy away from traditional petroleum products and begin a shift in the energy mix that will be as important as the shift from coal to fuel oil was nearly a century ago. Some people believe that this coming shift will be and needs to be to directly to renewables and non-hydrocarbon based alternatives. Indeed, one day, according to Peter, they may well play a major role.
In the meantime and that could mean a period of 20 or 30 years the major shift in the energy mix will be to natural gas. That is the next big step and it has already begun. Over the last decade global energy consumption has risen by 10 percent. Oil use has grown by 12 percent, while natural gas demand is up by 19 percent, and continues to rise some 2.5 to 3 percent a year. Again technology is driving the change. Turbine technology has dramatically increased the productivity of gas as a fuel in the power generation sector, and now liquification and pumping technology is changing the economics of long distance gas transportation. That sort of development is fundamental because it means that gas can become an internationally traded fuel that does not depend on extensive pipeline networks. That in turn will change the scale and the pattern of supply and demand. It means, for instance, that in China, natural gas can be imported -- from Asia, from the Middle East, and from Russia -- and can offset or displace coal as a source of power generation as well as providing energy for the industries and people of China's great cities. And of course that carries a great environmental benefit as well because gas produces 24 percent less carbon than oil and 41 percent less than coal. Ten years ago gas accounted for just 15 percent of BP's daily production. Now it's 40 percent and that figure continues to rise. So as technology drives efficiency and substitution, technical change is leading the change in the pattern of energy supply and demand on a global basis.
         
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