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BLOOMBERG: Explorers to Tackle Tougher Fields, Shell's Bannister Says

March 6 (Bloomberg) — Oil and gas explorers are tackling more difficult projects to meet surging global demand for energy, said Gaurdie Banister, an exploration executive at Royal Dutch Shell Plc, Europe's No. 2 oil company.
World energy demand may increase as much as 60 percent by 2030, requiring an investment of $16 trillion in power stations, oil platforms and gas pipelines, according to the Paris-based International Energy Agency. To meet demand, oil companies are contemplating more costly and challenging terrain and undersea areas, Banister said in an interview from Auckland yesterday.
“That's what the future holds: difficult, large, complex projects,'' said Banister, technical vice president for Shell's Asia Pacific exploration activities. “Unless you want to go there, it's going to be tough to be in this business in the future.''
Shell will spend $15 billion this year looking for new large oil and gas fields, or extracting more fuel from its present projects, the company said in December. Among possible exploration sites is New Zealand's Great Southern Basin, which government scientists say may hold the country's largest gas reserves, in deep water south of the country.
Great Southern has the potential to deliver gas finds of five trillion cubic feet, the New Zealand Herald reported in December, citing officials of New Zealand's Crown Minerals unit. Maui has delivered more than 3 trillion cubic feet of gas.
“All I can say about the Great South is that its under evaluation right now for us, so we're going to examine it and try and make a decision later about it,'' Banister said.
By 2009, Shell aims worldwide to have developed projects for an investment decision with the potential to deliver the equivalent of 5 billion of barrels of oil.
Shell and its partners in the $20 billion Sakhalin-2 project in Russia aim to be producing 9.6 million tons of liquefied natural gas a year by 2008. Shell began production from its $3.6 billion Bonga deepwater oil field off Nigeria in November.
Developing those so-called “big cat'' projects, which aim to deliver Shell at least the equivalent of 100 million barrels of oil, depends on new technology to be viable, Banister said.
Still, that technology can be used worldwide and can be used to extract more fuel from existing fields, he said. It is also key to meeting the company's goal of keeping its projects among the cheapest quarter of fields operating.
In the Pohokura field off New Zealand's Taranaki coast, Shell has drilled a 7 kilometer well, the nation's longest, from on shore. Not only did that save the cost of as many as three offshore gas wells, it will also lower the ongoing cost of running the field.
“It's the difference between being economic and not being economic,'' said Banister, who is in New Zealand for the nation's biennial petroleum conference.
Shell, the biggest oil and gas producer in New Zealand, is developing Pohokura to replace output from the dwindling Maui field, the country's biggest gas resource.
The run down of Maui, and a lack of new finds, has prompted New Zealand power generators Contact Energy Ltd. and Genesis Power Ltd. to consider importing LNG from 2011 when the country's rising energy demand is expected to outstrip gas deliveries from domestic fields.
Short-term measures Shell is taking to fill that gap include two new wells it is drilling in Maui to extend the life of the 25-year-old field beyond 2009.
It will also look at using techniques it developed in North America and at Changbei in China to speed up the flow of gas from New Zealand's onshore Kapuni field, Banister said.
To contact the reporter on this story:
Gavin Evans in Wellington at [email protected]

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