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That's As Far As We'll Go

Future Promises To Be -- Different

Rocket-powered automobiles! Robot dancing instructors!

Yes, it was all going to be yours -- just like:

Personal satellites! Pocket-size cordless telephones!

Seafloor vacation resorts!

Go back a couple of decades and look at predictions for the year 2001. Like most predictions, they would sound pretty silly -- except for a few that turned out to be right on target.

"It's easier to look 10 years into the future than two years," said Dennis O'Brien. "In the short term, you have a lot of small things, small fixes that alone have no significant meaning."

O'Brien serves as director for the Institute of Energy Economics and Policy at the University of Oklahoma, where he also holds the John A. and Donnie Brock Chair of Energy Economics and Business. That gives him a great view of merging technology for the oil and gas industry.

"It's really neat being around a lot of fermenting ideas that have a chance of going out there and becoming commercial," he said -- "and not only doing well, but also making some money."

What technologies and trends will have the greatest effect on the oil industry in the next 10 years?

Here are a dozen possibilities, based on responses from all over.

Which ones are most likely to be on target?

Please check back, in the year 2010.

Teeny Tiny Tools for Drilling.

Bob Hulse, a partner in Map Production Co. in Tyler, Texas, sees big savings from coiled-tubing deployed microdrilling. A new generation of tools will be able to work through one-inch tubing, he said.

Hulse looks forward to the day when he can invest in a $15,000 microdrilled hole instead of a large-hole test at the same depth for more than $100,000.

The catch: You might not be able to produce through a superslim hole. But you will have a very economic way to take a first look around.

Seismic for Sight and Sound.

G. Warfield "Skip" Hobbs is founder and managing partner of Ammonite Resources in New Canaan, Conn. His company of 25 consultants works with venture capitalists who want to invest in new petroleum technologies.

Hobbs likes a new technology -- offered by Continuum Resources International in Houston -- that displays seismic data and geological attributes using sound as well as visuals.

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Rocket-powered automobiles! Robot dancing instructors!

Yes, it was all going to be yours -- just like:

Personal satellites! Pocket-size cordless telephones!

Seafloor vacation resorts!

Go back a couple of decades and look at predictions for the year 2001. Like most predictions, they would sound pretty silly -- except for a few that turned out to be right on target.

"It's easier to look 10 years into the future than two years," said Dennis O'Brien. "In the short term, you have a lot of small things, small fixes that alone have no significant meaning."

O'Brien serves as director for the Institute of Energy Economics and Policy at the University of Oklahoma, where he also holds the John A. and Donnie Brock Chair of Energy Economics and Business. That gives him a great view of merging technology for the oil and gas industry.

"It's really neat being around a lot of fermenting ideas that have a chance of going out there and becoming commercial," he said -- "and not only doing well, but also making some money."

What technologies and trends will have the greatest effect on the oil industry in the next 10 years?

Here are a dozen possibilities, based on responses from all over.

Which ones are most likely to be on target?

Please check back, in the year 2010.

Teeny Tiny Tools for Drilling.

Bob Hulse, a partner in Map Production Co. in Tyler, Texas, sees big savings from coiled-tubing deployed microdrilling. A new generation of tools will be able to work through one-inch tubing, he said.

Hulse looks forward to the day when he can invest in a $15,000 microdrilled hole instead of a large-hole test at the same depth for more than $100,000.

The catch: You might not be able to produce through a superslim hole. But you will have a very economic way to take a first look around.

Seismic for Sight and Sound.

G. Warfield "Skip" Hobbs is founder and managing partner of Ammonite Resources in New Canaan, Conn. His company of 25 consultants works with venture capitalists who want to invest in new petroleum technologies.

Hobbs likes a new technology -- offered by Continuum Resources International in Houston -- that displays seismic data and geological attributes using sound as well as visuals.

He calls it "a multidimensional visualization process involving the senses."

"It's a correlation," Hobbs explained. "If you've assigned a tone to a specific attribute, your ear can pick that up more quickly than your eye can."

Because their hearing is so sensitive, the blind will be part of the next generation of seismic interpreters, he said.

So, Where's the Plug?

"My sense is, within the next decade we will begin to see the application of fuel cells," O'Brien said.

Fuel cell technology could provide self-contained, portable energy units: Prolonged power sources that can be used anywhere.

"That raises some interesting questions," O'Brien observed.

"How do you market those things? Does the guy who uses one own it, or is he going to lease it?"

Steve Millett is manager of forecasts for Battelle, the science-management conglomerate in Columbus, Ohio. His actual title is "Thought Manager" for a company that employs more than 7,500 scientists and support staff.

According to Millett, in 20 years even our home appliances will be powered by fuel cells.

You Are So Darn Sensitive.

Lance Cole, project manager in Tulsa for the Petroleum Technology Transfer Council, likes advanced measurement technology as a new application -- especially in sensors that can "see through" metal.

"One area where they're seeing a lot of usage is when you punch a hole and put in a fluid sensor," he said. New-wave sensors give a much better reading of oil-gas-water in the production flow, Cole noted.

"My assessment is that the technology is going to work," he said. "My only question is timing. Will it be two years from now or five years from now?"

Baby, You Can Drive My Car.

Hybrid gas-electric vehicles might be the most obvious sign of change in the auto industry, but they are only part of the story, Millett said. In the next 10 years, auto makers could compete with major energy companies as fuel suppliers.

"My advice to (AAPG members) is, 'Watch out for the automobile companies.' They are deadly serious about fuel cells and about not having to rely on other people to provide fuel for their cars," he said.

And the nature of gasoline retailing could change forever as nontraditional outlets begin selling fuel. Good-bye corner station. Hello filling up in the parking lot. A burger and a tank of unleaded, please.

"The big change there is going to be basically a process change," O'Brien said. "That's the entry of WalMart (or) KMart into the service station business -- the entry of Albertsons (a grocery chain) into the business," said O'Brien.

Days of Miracles and Wonder.

"Some of the national labs are developing things that we've only dreamed about," Hulse said, "like being able to look at a density log through casing."

Government-funded research laboratories in the United States and other countries may produce breakthrough technology in the coming years. Commercializing their concepts is often a problem, but national labs "are doing some fundamental research, which companies don't like to do," Millett noted.

"One of the things they've got is a sort of epoxy that will bind to damn near anything," Hulse said. "They think it will replace Portland cement in wells, in cementing or in squeeze jobs.

"It's twice as expensive as Portland cement, but you can do anything to it," he continued. "It will bond to the pipe, bond to the rock, and there it is."

Laying the Offshore Groundwork.

Hobbs, who serves as president of AAPG's Division of Professional Affairs, believes this decade will be the time for establishing the necessity of exploration on the U.S. Pacific and Atlantic coastal margins, as well as coastal Alaska.

"We need to say, 'Hey, guys! We have a lot of gas. Let us go get it.' The Canadians are doing that quite well, and the public is behind them," he said.

"The Atlantic OCS has tremendous hydrocarbon potential, as we see from what they're doing off Nova Scotia," he continued. "The public has to be educated about the operational process of developing the coastal margins."

OK, Take a Really Deep Breath.

Some people in the industry wish that global warming and air quality issues would go away -- but they're likely to become even bigger concerns during this decade, with big implications for fuel use.

"We have major air quality problems in most cities," O'Brien said. "The issue we really haven't addressed is: Is there a subsidy for something like CNG? On the basis that it's going to reduce health problems for people who breathe the air."

As an independent operator, Hulse said his number one concern is regulations pertaining to fugitive gas emissions.

"A lot of what I do falls under the minimum emissions standards," he said. "If they lower those, they might put us out of business."

There Are Already Tank Farms.

Bio-engineering should allow us to begin raising crops for energy as well as for food, according to Millett. He sees energy farms as a way for the United States to "grow gasoline, so to speak, to lessen our dependence on imported oil.

"There's the possibility we can use DNA to grow crops for fuel, and not just with corn," Millett added. "I've been told there are chickweed and other plants that can be engineered to better produce ethanol or methanol."

Finally, the Fuel of Today.

Natural gas has been the fuel of the future for a long time. Millett believes that future may be now.

"I don't think natural gas is going to replace gasoline (as a vehicle fuel), but there's very serious interest in distributed power generation, and that's mainly natural gas," he said.

Distributed generation could gain popularity if national power grids can no longer meet growing demand for electricity.

Local power could be generated for neighborhoods or even individual businesses by gas-fired microturbines and engines.

"It looks to me like oil is going to fall away and we'll have an economy based on natural gas," Hulse said. "Our domestic U.S. oil industry is basically shot. It's not gone, but it's going."

Hey Little Guys! Group Hug!

The past decade brought mega-mergers among the majors, and Hobbs predicted that the current decade will see a flood of mini-mergers among small independents.

"Small companies have to merge," he said. "Companies that are net asset value of less than $5 million have to merge to form a critical mass -- they have to consolidate in order to attract investment capital."

Tax law changes could spur investment, according to Hobbs.

"Restoration of intangible drilling cost tax relief for passive investors would bring billions of dollars into the industry," he said.

"The oil and gas industry has had terrible return on investment for the past 15 years. Return on investment has been 7-8 percent and return on assets has been 4-5 percent.

Access to capital has been a real restraint for this industry."

Now, Natural Gas You Can Pour.

Improved gas-to-liquids methods may make a real splash within a few years, according to O'Brien, especially in producing liquids for direct fuel blending.

"I think it has very significant potential," he said. "When you turn that into a liquid you turn it into a blend stock. It goes right beyond the refinery to a point where it's blended into gasoline or middle distillate. And that could be a significant technology."

Millett expects major applications in two areas.

"One is at the wellhead," he said. "There's a whole bunch of companies, not to mention the Saudis, who would love to convert gas to liquids at the wellhead."

The second area is liquid conversion for storage and transportation purposes -- a way to salvage remote gas that otherwise would be wasted.


For the record, Battelle has produced its own list of Top Ten Energy Innovations for 2010. Battelle, which has nearly $1 billion in annual revenues, focuses on technology development and commercialization as well as laboratory management, including some of the U.S. national labs.

Here is the company's projection of the Top Ten "economically impactful energy innovations" for the next 10 years:

  1. A shifting energy industry structure.
  2. Hybrid vehicles.
  3. Smart energy management systems.
  4. Distributed power generation.
  5. Fuel cells.
  6. Gas-to-liquid conversion.
  7. Advanced batteries.
  8. Energy farms.
  9. Solar energy.
  10. Methane hydrate crystal mining.

Millett said those are listed in rough order of most likely to have an effect to least likely. No matter what the industry does during the decade, he has the comforting thought that, eventually, we will all look like idiots.

"We have a tendency to look back 100 years or 200 years and say, 'What were those people thinking?' In 100 years, people will look back at 2010 and say, 'How ignorant were those people?'" he observed.

And no matter what happens, Hobbs said the most important concept is, "Keep up." Things will change, maybe radically, so be prepared to change along with them.

"I know some wonderful guys, even AAPG members, who don't have a computer," Hobbs said. "They don't have e-mail! And I've gotten to the point where I won't do business with people who don't have e-mail.

"A message we need to get to our membership is, unless you adapt to these technological changes, you go the way of the dinosaurs."

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