Asked by IHS Vice Chairman Daniel Yergin, what lessons he could offer the energy industry from the cyber attack on Saudi Aramco last August, that company’s president and CEO, Khalid al-Falih warned participants against underestimating their dependence on their information technology and systems.
“They become like oxygen,” Falih said in his keynote remarks Tuesday. “You think you can live without it, but you can’t. If you lose it, you immediately get paralyzed.”
Falih emphasized that the key components of its information technology and its information systems, the ones that manage its sub-surface and plant operations, were not touched in the August 15 attack, as they were segregated from the office systems that were hacked and penetrated.
“We really came out with flying colors,” he said. “And we had rehearsed [similar] scenarios. So, I would say ‘invest and invest heavily, and be aware of all the scenarios that could happen and don’t ever under estimate the capabilities of the bad guys who may be trying to penetrate your systems.’
“It’s not petty crime anymore,” Falih added. “We saw organized groups, with a lot of knowledge and technology at their fingertips. And build resilience into your system. Have the company plans in place and the redundancies built in. We had all of this and as a result, not a single drop of oil was stopped from production or delivery to our customers.”
The Saudi state energy giant and the Saudi interior ministry said in December that the cyber attack targeted not only 30,000 of the company’s computers, but the kingdom’s economy as a whole, and that it was carried out by organized hackers from several different foreign countries.–Richard Rubin
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Is the shale revolution going to sweep the globe?
The globe bit, yes. Revolution, not so much.
Statoil’s senior vice president of exploration, Pal Haremo, said Tuesday at CERAWeek in Houston said that after five years of tapping shale reserves outside of North America, the Norwegian producer was “a bit disappointed that we haven’t managed to identify that many basins that are equal to US basins.”
Statoil entered the North American shale sphere as a joint venture partner in the Marcellus Shale a little under two years ago, followed that up with another JV in the Eagle Ford Shale and then went whole hog with a buyout of Brigham Exploration that got them Bakken Shale acreage.
While there are prospective reserves aplenty in Argentina, China, North Africa and Colombia, Haremo said what was really holding these plays back from becoming world-class, commercially viable resource plays was “above-surface risks on accessibility and challenging commercial teams.”
In English: no pipelines, no friendly landowners.–Samantha Santa Maria
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At the jam-packed IHS CERAWeek in Houston, we’re hearing how old-guard producers are entering new areas or using new technologies to draw more hydrocarbon supplies, and how the demand-side picture may be changing. Here we provide you a running blog from a variety of speeches, panels and press conferences.
While contrasts between the US and China are often bandied about, they have something in common: LNG emerging as a heavy duty transport fuel. The US and China “are paving the way” in this regard, Tiffany Groode, director of the IHS’ automotive long-term planning and scenarios service, said in opening a panel on the subject. The price differential holds major appeal as the cost of LNG for transport in the US is about $2 cheaper than diesel on a per gallon equivalent basis, she said.
China has a lot of natural gas resources to develop, noted Xiansheng Sun, president of CNPC Economics & Technology Research Institute. “We have the confidence of the supply and money in China,” he said on the momentum behind the initiative. The opportunity is not just for road transport as CNPC is also looking at supplying boats on the rivers. “We try to be early birds,” he said.
China is currently ahead of the US. There are 1,000 CNG and LNG refueling stations in the US, but three times that amount in China, said Mike Gallagher, senior adviser and former president and chief operating officer of Westport Innovations. “It’s remarkable to see what’s going on in China,” Gallagher said of LNG buses and trucks, characterizing it as “phenomenal.” Westport has a joint venture with Cummins and is rolling out a 12L engine that will approach the strength of a traditional diesel engine as this will have 400 horsepower. “The technology has improved a lot.”
The continual improvement in LNG transport technology leaves an intermodal transportation and trucking company weighing when to get in, said Craig Harper, COO and executive vice president, operations, for J.B. Hunt Transport. He likened LNG-powered trucks to flat-screen televisions in that a consumer may invest ahead of even better evolutions in the technology and these trucks can cost $70,000-$80,000.
“It’s a large investment,” Harper said. “You want to make sure you are making the right move and [at] the right time.” Freight customers want the LNG because the fuel costs are less than that of diesel, but the transport company has to pay for the new trucks, he noted. “It’s the old buy one, get one free; everyone wants one free, but doesn’t want to buy one.”
Harper is examining what infrastructure will come along, how LNG trucks will be maintained, the weight of LNG and range considerations. “What’s going to happen if new tank technology comes out that’s cheaper, that’s lighter?” he said. The introduction into US trucking fleets may depend on the route, as some trucking needs may be better suited to LNG, CNG or diesel. “We’re excited, but it is very early in the game. We want to be sure when we make the move… we have all the math behind it so we can feel good about about our decision.”
On the supply side, Shell announced earlier Tuesday it is moving ahead with two small-scale gas liquefaction projects in Geismar, Louisiana, and Sarnia, Ontario, that would produce about 250,000 mt/year of LNG for the transportation market, heavy duty vehicles and marine. Shell customers “truly value” this and Shell, in its upstream business, is itself deploying LNG for drilling rigs and retaining LNG-powered supply vessels, said James Edward Burns, general manager of LNG for transport – Americas at Shell. “We do see natural gas as having the potential to be a game-changer in transportation,” Burns said.
Asked if the US gas supply would remain relatively low priced if LNG exports and LNG transportation fuel usage arose into more of the mainstream, the Shell exec gave a short answer. “There’s plenty to go around,” Burns said of US gas supplies.–Katharine Fraser
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