Interview with Marco Cercato, President of European Oil and Gas Innovation Forum

Marco Cercato is the President of Eurogif, the European Oil and Gas Innovation Forum. The group represents national industry associations and companies from various European countries that are involved in Engineering, Manufacturing, Supply and Service (EMSS) for the European oil and gas industry. Eurogif’s mission is to stimulate innovation, pan-European collaboration and technological progress to improve industry competitiveness.

Question: How is Eurogif’s role evolving within the European E&P industry?

Answer: On one side, Eurogif is finding and supporting means to improve R&D cooperation and innovation, such as participating in key European Technology Platforms whose objective is to define R&D priorities to promote collaboration projects in different areas.

On the other side, Eurogif is also promoting the image of the oil and gas EMSS industry, by working with the International Energy Agency, with the European Commission and with OGP, the International Association of Oil and Gas Producers.

Eurogif monitors the most relevant European directives and standards that could have an impact on our sector. In this way, Eurogif aims at ensuring that the needs of oil and gas EMSS industry are taken into account in formulating legislative proposals. 

Q: How does Eurogif support the development of new technologies for the European oil and gas sector? 

A: Eurogif as an association isn’t directly involved in the development of new technologies, but it supports and coordinates the activity of its members in this respect. Moreover, Eurogif carefully monitors the development of the European Technology Platforms, launched by the European Commission’s Directorate-General of Research. Through its participation in European Technology Platforms, Eurogif can contribute to shaping their Strategic Research Agenda (SRA), which defines the projects to be supported by the Framework Programme for Research and Technological Developments.

Unfortunately, there has been a lack of direct funding for oil and gas activities, both in the Framework Programme 6 and 7, the current one. Hence, Eurogif could not present its own Technology Platform. Nevertheless, the participation of Eurogif in other Technology Platforms can ensure that the technological needs of our sector are considered when drafting the Commission’s Work Programmes.

So far, Eurogif has been actively involved in two Technology Platforms: “Waterborne” (maritime transport and operations), which includes in its scope deep and ultra-deep offshore technologies and LNG carriers, and “Sustainable Mineral Resources,” which includes in its scope more efficient exploitation of mature fields, non-conventional hydrocarbons and the natural gas chain.

Eurogif has also participated in the Europe INNOVA initiative, financed by the Sixth Framework Programme. It is an initiative led by the Directorate-General of Enterprise that aims at proposing actions to favor innovation in several critical sectors, such as energy. The chairman position of [Europe INNOVA’s] energy innovation panel over the one-year duration of the program has been assigned to Eurogif’s president.

There are a number of other projects—directed toward enhanced rig automation for increased safety, reduced environmental footprint and enhanced recovery—that have already been field proven; they are expected to help to increase the exploitation of indigenous hydrocarbons in many EU countries. 

Q: How do you see the continent’s oil and gas production trending? 

A: It’s well-known that the EU is very dependent on other regions for quite a large part of its oil and gas supply. Unfortunately, given the limited number and dimensions of the active oil and gas fields in most of the EU countries, it’s not difficult to predict that the present downward trend will continue in the years to come.

Nevertheless, there are still areas inside the EU that may bear appreciable quantities of oil and gas. A common EU strategy for intensive E&P within the EU boundaries would increase the contribution of indigenous oil and gas resources. New discoveries and resumed production from known reservoirs would help to slow down the negative trend and have an important impact on the national budgets of several EU countries. 

Q: What are the main challenges to increasing European production? 

A: I believe that, like in many other parts of the world, the main problems to overcome lie with the “NIMBY” [Not In My Back Yard] syndrome. Regardless of whether it is a matter of drilling a well, building a power plant or a regasification plant, crossing the land with a pipeline or building a refinery, the most difficult obstacle to remove is the opposition of the local residents and communities. Sometimes it’s strong enough to overturn even the rights granted by law.

That said, the technical challenges to increasing domestic production are those that can help remove the public opposition to E&P activity—to put it simply, proving that reducing the risk for the workers, the communities and the environment can actually be done.

Mostly because a large part of the possible domestic E&P activity in the EU would occur in fairly populated or protected areas, it’s important that it’s done with advanced technology that allows safety for the workers and environmental protection. Therefore, small footprint, light and easy transport, reduced visual impact, very low noise and emission levels, automation and high safety are the most important challenges. 

Q: How have European governments been investing in research and development for E&P? 

A: Many EU countries have little or no domestic E&P activity and very limited prospects, with a few exceptions: UK, the Netherlands, Germany, Italy and Romania. Therefore, no government, including those of the countries where there is E&P activity, gave priority to R&D. There is a common opinion that R&D should be borrowed from the oil companies. It’s no surprise that this is basically the position of the European Commission and Parliament.

As a matter of fact, the sector was specifically left aside at the EU level. As I mentioned before, the Commission excluded oil and gas R&D activities from any direct funding both in Framework Programme 6 and 7.

Further, they make no distinction between oil companies and EMSS companies. One of our main efforts has been to explain to the national institutions and to the European Commission that oil companies and EMMS have different characteristics, problems and peculiarities.

However, we can expect a change in the coming years; particularly with the Russian gas crisis, the oil and gas sector is now back in the center of discussion.

The first sign of this change has been the second Strategic Energy Review published by the commission in November 2008, to which Eurogif contributed. It finally highlights the importance of European indigenous production along with the need for more R&D to develop such a production.

In contrast, there has always been a big focus on R&D for oil and gas technologies in Norway [which is not an EU member], and we can see the good results of that.

Q: How is Eurogif involved in alternative energy research? 

A: Eurogif aims to develop closer links with the renewable energy industries in general and with the ocean energy and offshore wind sectors in particular.

Those industries are facing big technology challenges, such as devoted systems development, grid connection, operations and maintenance, installation and decommissioning. Our industry, with its vast experience in the offshore domain, could be a main contributor to foster know-how transfer in this new energy market.