Schotman eyes Shell's opportunity sets

April 1, 2011

As chief technology officer for Shell, Gerald Schotman oversees a research and development program with a budget that exceeds $1 billion. During a recent Houston visit, Schotman sat down with Russell McCulley to discuss how the company decides how to direct its R&D efforts, the importance of collaboration, and what the future holds for energy technology development.

If Gerald Schotman has an overarching philosophy, it's making sure that the vast R&D effort he oversees responds to, and in many cases anticipates, the needs of Shell's customers.

‘We always do technology development with the customer in mind,' says Schotman. ‘Sometimes it can be a perceived customer need, or a customer not yet identified. But I'm really keen on making sure that we don't just push technology, but that we pull technology.'

Those needs can range from the desire to reduce an environmental footprint to cutting drilling costs, squeezing more life out of aging fields to developing subsea systems for use in harsh and deepwater environments, to name a few areas the company is directing its R&D efforts.

‘I work back from these targets and, in essence, build a staircase and say, in order to get there, if you want to have any chance of getting there, these are the steps we need to take,' Schotman says.

Schotman, a graduate of Delft University of Technology who joined Shell in 1985, divides those efforts into what he describes as three groups of technologies: core technologies that address current needs in existing markets; technology firsts, or ‘revolutionary' technologies, that apply to new markets, assets and businesses; and emerging technologies, which could take years or decades to become viable business opportunities.

Schotman's challenge is determining how to divide the R&D resources at hand among the three categories. ‘In any good system, you always have more good ideas than you have the money for,' he says. ‘And of course people – I would love to have thousands and thousands of people working for me. Unfortunately, that's not the case.'

To broaden an already considerable knowledge pool, Shell has, under Schotman's watch, stepped up its R&D collaborations with other companies and organizations. Last year, the company partnered with the Massachusetts Institute of Technology on a $25 million, five-year energy program that will focus on advanced modeling, earth science, biofuels, nanotechnology and carbon management. Other areas of work will address emerging technologies: new solar energy applications, enhanced catalytic technology for advanced fuel cells, and smart grids.

Upping the game
Last December, Shell and Schlumberger announced a joint effort to improve recovery for oil & gas reservoirs and extend the life of existing fields, focusing on reservoir surveillance and the Digital Rock project, an effort to refine methods to forecast displacement and recovery at the macroscopic pore scale. And Shell has teamed with HP to develop a wireless sensing system that the companies say will sense, collect and store higher quality seismic data and which can be deployed more economically than current systems.

‘It's an arrangement to up the game in seismic acquisition,' Schotman says of the collaboration with HP, a company not known for extensive work with the oil & gas industry. HP brings to the table low-cost sensors that can be deployed in greater numbers, he says. ‘We also now have computing capability to handle a million channels at the same time. We can start to get in the area where we can store petabytes of data rather than terabytes or gigabytes. What we now need to crack is how to translate that data very quickly into meaningful results. You get a huge amount of data; the challenge is how to do visualization quickly – in the imaging arena, how to make sure you pick up the relevant data out of these stacks and stacks of data significantly quicker than was done in the past. It's about pattern recognition. This is about writing algorithms so that you know what data to throw away and what to keep.'

Recently, Shell announced that it had reached an agreement with Germany's Krohne to commercialize a new flow meter developed through R&D collaboration between Shell and Spinlock, a magnetic resonance specialist based in Argentina. Using magnetic resonance technology, the new flow meter is said to reduce maintenance and recalibration costs by operating across the entire gas volume fraction range, fitting around the pipe to mitigate internal restrictions, and not making use of radioactive sources.

Shell said the collaboration would continue with the goal of developing a subsea version of the flow meter.

The ‘challenges of the future,' he says, will require fast solutions. ‘And the pace of technology development needs to go up if you are going to be differentiating in the second or third category' – revolutionary and emerging technologies. ‘You need to explore alternative routes in which you do not know who the winner is. The only way to do that is through partnership, which drives creativity, which allows speed in terms of almost parallel processing.

‘I've seen – and expect it to continue – more and more technology breakthroughs at the interface of our business as we know it and the businesses of others.'

One important area of innovation lies in fiber optic applications for existing wells, which Shell has implemented in Brunei, first at the Champion West development in the South China Sea. ‘We've brought the (Smart Fields) technology to existing wells, where we can immediately see where gas lift wells work and where leakage is taking place,' he says. ‘The application space is enormous – you can keep fiber optics in place and have 4D rather than 3D reflections of what happens in the area.'

Opportunity sets
In the core technology of enhanced oil recovery, Schotman says, one of Shell's ‘real opportunity sets' lies in the Middle East, where operators are seeking to maintain recovery rates in mature fields. The company is working on a number of EOR projects with Petroleum Development Oman, including the Qarn Alam, Marmul and Harweel fields. At Qarn Alam, steam injection is being deployed to speed production and improve recovery. Polymer solution injection at Marmul is expected to boost oil production by about 10%. And Shell is injecting pressurized gas into the reservoir at Harweel to improve the flow of oil. ‘We're not talking about a few wells here,' Schotman says. ‘These are full-scale projects.'

The work has helped Shell scientists ‘find the right cocktails' for various reservoir conditions, techniques that could be deployed in fields throughout the world and included in initial field development plans, he says. ‘There will be fields where, if you don't get your mind on enhanced oil recovery at the start, you simply will not develop them. There are very heavy oil fields which have a three to four percent recovery rate if you don't do anything.'

In the offshore drilling arena, much of Shell's R&D is going into managing costs while maintaining safe practices.

‘There are two areas that we are quite excited about,' Schotman says. ‘One is automation, and one is sensing. Automation is really about using more a robotic type of approach to do rotational drilling – directional drilling on the basis of computer analysis, rather than having somebody on the rig floor responsible for that. With sensing, there's a lot of data you can collect when you can pick up all the vibrations and torsions and movements of the drillstring. In the past, drilling was seen more as a mechanical process.' Sensing can pick up early signs of trouble and allow the drillstring to be redirected if necessary, cutting nonproductive time, he says.

Shell is also directing considerable research into the area of subsea equipment, most notably in infrastructure that allows more subsea processing. Schotman points to the Ormen Lange phase two project offshore Norway, where the company is installing two new seabed templates, drilling additional wells and adding a compressor to extend the life of the productive gas field. Shell and partners Statoil, ExxonMobil, Dong and Petoro are testing new compressor technology that could be installed on the seabed some 1000m below the surface, rather than on a floating platform (OE January 2009).

‘As we go to deeper and deeper water,' he says, ‘I can see more of these subsea options coming,' including subsea solutions for power generation and distribution.

Energy futures
Although Shell recently opted not to extend its wind energy activities and divested its solar energy projects, Schotman insists that the company has not abandoned renewable energy. Shell maintains an active biofuels program and will support renewable research where appropriate, he says. ‘Where we can add value, we will participate. Where we don't add value, we will probably participate less. But that doesn't mean we won't be supportive.'

For now, Shell is directing many R&D efforts to support growth in conventional (GTL, LNG), unconventional and contaminated gas. In 2012, Schotman says, Shell will produce more gas than oil.

‘We see ourselves as an energy company, not an oil company,' he says. ‘I believe that, as we go into the future – and that's what I'm tasked with – energy will be relevant for society in many different shapes and many different forms. And I recognize there are a number of areas where the capabilities of Shell, and the interaction between the oil & gas business and the new world, is such where we can come up with many opportunities.' OE

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