Due to rising energy demand and declining reserves worldwide, the oil and gas industry will be asked to produce more, but at the same time it needs to proactively gain the confidence of the public with the use of technology that addresses its concerns. Along those lines, serious work is under way in developing environmentally friendly fracturing techniques. That was the message of Tim Probert, Halliburton’s president of global business lines and chief health, safety and environment officer, in a keynote speech that presented a macro energy picture to attendees of the KPMG energy conference.

Based on International Energy Agency numbers, Probert suggested that total British Thermal Unit (BTU) needs of the world would increase substantially by 2035, and that liquids and natural gas would be asked to provide an additional 10 quadrillion BTU. Compounding the problem, Probert said that the oil and gas industry has not been spending enough due to the nature of the cycles it has weathered in the past few decades.

“The reality is that we have probably been significantly under-investing in the base requirements to grow production to the level that we need, to if you buy into the fact that we are going to see significant growth by the 2030 timeframe,” he said.

Fourth-quarter 2010 saw world oil demand grow by 3.9%, and the year’s average oil demand growth was 3.4%.

“When we are talking about 90 million barrels a day, 3% growth will get into the realm of large numbers. We are looking to find somewhere between 2- and 3 million barrels a day,” he said. That growth in production, he says, is not likely to come from OPEC. It peaked in 2009 at 6 million barrels per day and is on its way down rapidly. It is likely somewhere around half that due to events in Libya.

Probert believes unconventional shale opportunities could offset some of that demand. Shale gas is already 23% of U.S. output, and companies have been investing through the down cycle, despite the soft price. However, shale assets can be found the world over.

China may have the most shale gas in place globally, with more than 1,200 trillion cubic feet (TCF). Europe has an estimated 624 TCF of shale gas, and most countries rely heavily on Gazprom for their current natural gas needs. Recalling the incident in 2009 when Europe’s gas supply was significantly reduced during a contract dispute, Probert suggested these countries may be incentivized to develop domestic resources quickly. Others, like France, have banned fracing altogether.

Probert gave what he called a “forward-looking view” of hydraulic fracturing, which implements technologies that minimize potential environmental issues with the practice. He discussed a suite of four technologies that address key concerns around water: water recycling, food-grade frac fluids made of food industry ingredients, eliminating biocides, and BTX (benzene, toluene, xylene)-free blending. He says these technologies are being used currently in the Haynesville and should help to develop shale resources here and in Europe, where there has been some public opposition.

“We have a lot to do as an industry to gain the confidence, not of the regulators, but of the public. It’s things like this that we can do which, if we communicate well, can reduce the anxiety around a technology that provides tremendous potential for us to have a long and positive view of a relatively low cost energy source.”

Contact the author Brian Tully at btully@hartenergy.com.

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