Technology
from Europe: the Netherlands
Dutch companies will enjoy high activity,
says IRO’s vice chairmanS. A. W. (Wim)
Janse is managing director of Gusto B.V. and vice chairman of IRO, the
Association of Dutch Suppliers in the Oil and Gas Industry. As the
formal second-in-command of IRO, Mr. Janse works to ensure that the
association’s activities and lobbying are geared properly to
its goals and members’ needs. He also represents IRO’s
views and interests in meetings with the Dutch government on energy
issues and policies.
Question: How would you describe
IRO's role within the Netherlands upstream oil & gas industry?
Answer: Within the Netherlands, we have two associations. One is NOGEPA,
the Netherlands Oil and Gas Exploration and Production Association,
which represents the interests of operators and associated oil companies.
Then, of course, there is IRO, the association of suppliers and service
companies here in Holland. We have a very good relationship between
the two organizations, and we work very closely together. There is
active lobbying going on for the interests of our members toward the
Dutch government. So, the role of IRO in that respect is to look after
the interests of our members. Indeed, our managing director, Hans de
Boer, has done an outstanding job, as we have hit a new membership
record. We now have more than 300 members within IRO, so we represent
quite a substantial number of the Dutch service and supply industry
in the Netherlands. At the end of 2005, I think we had just over 270
members, so we grew about 10%.
Q: How good was last year's E&P
market for Dutch operators, and equipment/service companies? Was
IRO satisfied with the amount of activity?
A: The Dutch oil companies, of course, have a booming business at
this moment, as is the case for the service and supply portion of the
industry. Most companies that we speak with are extremely busy, but
especially those firms working internationally. In the Netherlands,
there is nothing significant going on, no new major developments, save
for one development project (that is mentioned later in this interview).
In Holland, it's mainly a business of maintaining existing wells and
offshore platforms, but most of our IRO members work internationally,
and this is a booming business. I think that more than 90% of our members
work internationally, for the export market, and are not directly focused
on Holland. So, in summary, while there's not much happening in the
Netherlands, if we look internationally at the amount of orders that
our members got last year, and the activity that they have at the moment,
then yes, we are more than satisfied.
Q: Based on your assessment of 2006, and assuming that high commodity
prices continue, what level of activity and business do you expect
for 2007?
A: Outside the Netherlands, especially,
it will be the same as last year, if not better. We see that activity
is still growing. Most of the companies that we represent rely on
the E&P budgets of the
oil companies, which are still high. So, there is a lot of new, growing
activity going on, and there is a huge demand for our products and
services. And even in the Netherlands, there will be some increase,
too.
Q: Are high oil and gas prices generating extra business for Dutch
companies, beyond normal expectations?
A: If we look back, we see that in the
period from 2000 to 2004, the market, in general, was slow, with
some exceptions. The huge increase in oil and gas prices after 2004
caused us to see that business was really picking up. And as I said
before, business is now really booming. So, yes, the high oil prices
have helped, but a particularly strong factor has been the high E&P
budgets of the oil companies. In their search for new prospects and
ongoing development of new fields, they have created quite a bit
of additional new business for us in the last few years. Naturally,
most of that business is export-related, probably 80-85%.
Q: Last year, gas completions outnumbered oil completions by 23 to
5 in the Netherlands. Offshore, the ratio was 14 to 5. Is there any
hope for improved oil activity, or is the Netherlands on an almost
exclusively gas development course?
A: What we see in the Netherlands is that there is one significant
development project, where one company, NAM (Nederlands Aardolie Matschappij,
owned jointly by Shell, 50%, and ExxonMobil, 50%) is seriously considering
re-opening the first field that ever produced oil in the Netherlands,
the Schoonebeek field. It was discovered in 1943 during the Second
World War and developed soon after. It was closed by NAM in 1996 as
not being profitable anymore, but we now expect a reopening of Schoonebeek,
and it will be onstream during 2009. So, there is, indeed, some oil
activity in the Netherlands, after all. At the moment in Holland, we
produce roughly 25,000 bopd, but Schoonebeek, itself, has an estimated
reserve of about 100 million additional bbl of oil that can be recovered
with new methods. This oil will be produced over a 20-year period,
so roughly we have an additional oil production figure, if I take an
average value, of about 15,000 bpd. That's quite a substantial increase
from just one field. By some countries' standards, it might not be
much, but it's impressive on our scale. On a percentage basis, it's
about a 60% increase. But for that, NAM will have to drill on about
19 different locations, which means drilling 73 new wells; that includes
producers and steam injectors. It's a very complicated reservoir to
redevelop.
Q: Last year, there were 39 wells
drilled in the Netherlands, and 40 are expected this year. However,
oil production fell to just 25,849 bpd last year, while gas output
was 6.97 Bcfd. Given these results, is the Dutch government doing
enough to encourage E&P activity?
Would you like to see any special initiatives created?
A: There is no real special
support from the government. There is a long-term E&P policy
in the Netherlands, and the thing that changed a few years ago was
the government's discontinuing of �Depreciation
at Will� in early 2003. I think that the abolition of that fiscal instrument
may be hampering quite a few new developments�operators are a little
bit more reluctant to step in. But saying that, we have a new coalition
government that took office on Feb.
22. So, a new Dutch regime might give some fresh hope that could stimulate
the development of marginal fields in the smaller gas pockets that
we know are out there. Yet, we have to act quickly if we want to
use the existing infrastructure that there is in the North Sea in
the coming years. We should act now; otherwise, the existing pipeline
infrastructure might be too old to hook up the new fields to it,
and then we might need substantial, additional investment to bring
those fields online.
Q: What are some major field projects worldwide that Dutch firms are
involved in?
A: A lot of Dutch companies
are working worldwide�at
my own company, Gusto, we have activities around the world. But the
same is true for many IRO members. There are a lot of Dutch companies
involved in developments ongoing at Sakhalin, as well as in Qatar
and in Kazakhstan. We are also doing work in the Gulf of Mexico and
offshore West Africa, of course. In all the larger developments going
on, you see the involvement of various Dutch companies, either as
servicing firms or as equipment suppliers.
Q: What are some good examples of upstream technical work that Dutch
oil and service companies are involved in, either in the Netherlands
or other parts of the world?
A: I have to list a number of Dutch companies.
For instance, looking at FPSOs, two of the larger suppliers of floating
production systems come from Holland�SBM Offshore, of course; with
offices in Monaco, Schiedam and Houston, but they are listed on the
Euronext Amsterdam stock exchange here in Holland, as well as Bluewater.
And, looking to specialized equipment, both in pipelay and drilling
equipment, as well as special vessels, there is Huisman-Itrec, Keppel
Verolme (completing several units); IHC Holland Merwede shipyards
(building the two pipelay vessels for Subsea 7); Allseas (deepwater
pipelines); plus my own company, Gusto, for large cranes, pipelay
equipment and special designs for all kinds of drilling units and
other offshore vessels; and Heerema and Seaway Heavy Lifting for
various types of heavy lifting. Of course, there is also Fugro for
geotechnical engineering and surveys. The list can go on and on.
Q: Is IRO concerned about places
of geopolitical instability in the world and the effect they may
have on E&P
activity?
A: I think from an IRO viewpoint, there is not a direct concern. What
you mentioned in terms of instability is happening mainly onshore (as
in Venezuela, Sudan, Russia, China, parts of the Middle East, etc.)
at the moment. Perhaps it might even drive the larger international
oil companies to start developing more and more offshore fields, where
they can have a greater direct say in regulations and operations, if
possible. But because our expertise and equipment reside in the service/supply
industry, our firms will remain necessary. So, we don't see it as a
direct threat.
Q: Does OPEC's continued strong attitude toward output levels and
prices help or hurt the upstream sector?
A: Of course, OPEC has an influence on oil prices. Judging from what
we see at this moment, the instability in some countries might influence
the prices more than what OPEC is doing. Besides that, all kinds of
more local-related phenomena could have an impact. For instance, if
you see a large hurricane coming into the Gulf of Mexico, you see that
influence on prices. If a shortage of refining capacity is mentioned,
that also drives up the price. Another example is BP having problems
at Prudhoe Bay, and the price goes up. So, more and more, it is a speculator's
market, driven by emotions. If OPEC mentions something in terms of
a higher or lower producing capability, that is one of the factors,
but perhaps not the strongest.
Q: Toward which international areas do you think that oil and gas
company interest, and investment, are moving?
A: If you want to mention specific areas,
what we see are moves toward deeper water, the Arctic, West Africa,
the Gulf of Mexico, as well as a shift toward areas where there is
a possibility for new gas exploration. We see a gradual shift from
oil toward gas, as it becomes more important in the overall fossil
fuel industry. I would re-emphasize that we see many companies gravitating
toward all kinds of areas for deeper water, and we see a lot of recent
interest in the northern/Arctic areas�Sakhalin
is an example, so is Stokhman.
Q: Do you have any additional comments?
A: Only to say that the forecast for the coming
years, as we see it in Holland, is very promising. We are very optimistic
about the future of our industry. Here in Holland, there is a lot
of activity going on for renewables. However, we still think this
country, and the world in general, will remain dependent on fossil
fuels for seven decades. There is a huge need for fossil fuels, so
this offers good opportunities for us, the Dutch industry.
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S.
A. W. (Wim) Janse is vice-chairman of IRO, the Association
of Dutch Suppliers in the Oil and Gas industry, and managing
director of Gusto B.V. (a subsidiary of SBM Offshore NV) in
Schiedam, the Netherlands. He graduated with an MSc degree
in Naval Architecture and Ship Hydrodynamics in 1982 from the
University of Technology in Delft, the Netherlands. In 1982/1983,
Mr. Janse was a design engineer for the Dutch heavy transport
contractor, ITC. He joined Gusto in 1983 as an engineer in
the Hydrodynamical Department. Following that, he acted in
positions as project manager and departmental manager within
the Gusto organization. From 2000, he has served as managing
director of Gusto BV. During the last few years, Mr. Janse
has served on a number of company and association boards, including
the board of IRO since 2001. |
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