Question: What is TNO’s role within the Netherlands E&P industry?

Answer: TNO is active in both exploration and production as a research partner to the industry and as a consultant. In addition, TNO serves as the official adviser to the Ministry of Economic Affairs with respect to E&P in the Netherlands.

Q: What is the ISAPP (Integrated System Approach Petroleum Production) program?

A: Since November 2004, Shell International Exploration and Production BV, Delft University of Technology (TU Delft) and the Netherlands Organization for Applied Scientific Research (TNO) have been jointly responsible for executing the ISAPP (Integrated System Approach Petroleum Production) program. These three partners envisaged that future hydrocarbon production operations would require faster and higher oil and gas field recovery combined with cost reductions. These cost reductions could be achieved through automating operations and a more flexible approach to managing the risks that jeopardize production.

Furthermore, it was observed that future hydrocarbon production could benefit from favorable thermodynamic downhole conditions for processing and that emissions might be reduced by downhole processing and storage.

It was clear that these innovations would require a high level of integration involving a range of technologies as well as a rather fundamental “model-based control” approach, which might best be addressed by a consortium of research partners rather than by a single company. The scope of ISAPP’s research includes innovative concepts for hydrocarbon production, including the development of a real-time dynamic simulation, inversion and validation environment of the reservoir, well and surface processing as an integrated system, as well as the acceleration of the innovation process itself.

Q: What projects is ISAPP working on, and how are those projects progressing?

A: The research projects performed in ISAPP address subsurface characterization and flow, production systems and downhole processing. Additional research by staff and PhD candidates at the Radboud University of Nijmegen focuses on accelerating the innovation process. Currently, 20 new PhD projects have been initiated by the ISAPP program, and 10 additional existing PhD projects are now being executed within the ISAPP context at TU Delft.

These PhD projects range from reservoir surveillance of heavy oil production to coupled thermal, reservoir-flow and geomechanical modeling, and from the measurement of biological activity during Microbial Enhanced Oil Recovery (MEOR) to downhole oil contaminant separation and disposal. One PhD project at Radboud University addresses effective knowledge sharing in networks, and another addresses collaboration and learning in future “smart field” control.

TNO is working on 16 individual projects through its Information and Technology department (mainly in the area of downhole processing and production systems) and the geo-energy group of TNO’s Built Environment and Geosciences department, the latter focusing on subsurface characterization and flow as well as projects related to data assimilation and (coupled) forward modeling.

About 100 scientists and non-scientists are collaborating within the ISAPP network on a regular basis from their offices in Delft, Nijmegen, Utrecht, Rijswijk and Apeldoorn. To ensure effective cooperation between individual staff members, technical meetings are arranged on a monthly basis and dedicated ISAPP symposia are organized.

Q: How do you see the Netherlands’ oil and gas production trending in the next one to three years?

A: As published in annual reviews on oil and gas in the Netherlands (see www.nlog.nl), gas production is in decline. The profile shows the production forecasts from developed and undeveloped fields as well as the expected production from reserves still to be discovered-statistically forecast by TNO’s proprietary exploration simulation software ExploSim.

Oil production in the Netherlands is relatively small. This means that any new discovery has significant impact on the annual production. Last year, PetroCanada’s De Ruyter Field came onstream, increasing the Netherlands’ offshore production by 80%. The Shell/Exxon joint venture Nederlandse Aardolie Maatschappij (NAM) will soon restart production from Schoonebeek. This again will boost the annual production. Nevertheless, annual production is only around 2 million cubic meters (12.6 million barrels).

Recently, many new companies have entered the exploration and production scene in the Netherlands. We see a shift from large multinationals toward smaller independent operators. The latter seem to be a better fit for tail-end production, marginal fields, etc.

Q: What important projects does the Dutch industry have upcoming?

A: Schoonebeek is the only major oil-producing project. No spectacular oil fields remain, only a number of small undeveloped fields, which-due to the recent increase of oil price-have become economically sound.

Future use will be gas storage, possibly combined with LNG facilities. The Netherlands is ideally situated to become the “gas roundabout” for Europe: we have many depleted gas fields of good quality, as well as extensive infrastructure. Related to climate change and the Tokyo and Bali climate change meetings, the Netherlands is seriously considering sequestration of CO2 in depleted gas fields. This will mean a significant investment in facilities and infrastructure. First CO2 can be expected between 2015 and 2020. The Dutch E&P industry can play a major role, being the experts on these gas fields.

Q: What are the main technical challenges to increasing domestic production in the Netherlands?

A: In gas-producing fields, recovery is generally high. Economics enable even higher recovery. Still, a number of tight fields are waiting on development or on increasing recovery.

At Schoonebeek, the largest oil-producing fields, there are plans to restart production with steam injection. Other remaining producing fields are clean barrier sands in which recoveries of around 60% are realized, which is already exceptionally high.

Q: How has Dutch government policy affected domestic E&P?

A: In general, the Dutch government does not invest in E&P. Its policy is to invest in transitional and sustainable energy.

The government is working to make the Dutch E&P sector more accessible to companies. It is working to eliminate hurdles in legislation and regulations and to minimize the number of governmental institutions involved in E&P licensing and regulation, with a goal of “one-stop shopping” for E&P companies. Procedures are being developed to make the application process simpler and more efficient. Meanwhile, the Ministry of Economic Affairs is preparing legislation to tackle the problem of “sleeping licenses.”