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Interview

Lewis Affleck, Managing Director, Maersk Oil Qatar

17.07.2014 / Energyboardroom

In 1992, Maersk Oil entered into an Exploration and Production Sharing Agreement (EPSA) with Qatar Petroleum (QP) at the Al Shaheen field, which had been deemed uneconomic by others. First oil was produced just two years later, and Maersk Oil is now producing over a third of Qatar’s daily oil production. Here, the Managing Director of Maersk Oil Qatar discusses how the company managed it, and what the future holds for them in Qatar.

What are your activities at the Al Shaheen field today, and what are your development plans for the field going forward?

Working in close partnership with Qatar Petroleum, we have operated the complex Al Shaheen field for over 20 years. Originally considered a marginal and unattractive oilfield by other companies, we have now produced over 1.4 billion barrels from the field and it is the biggest oil producer in Qatar, currently producing around 300,000 b/d. In doing so, we have overcome many technical challenges; for example, drilling some of the world’s longest horizontal wells, implementing one of the world’s largest offshore waterfloods which currently injects over 800,000 barrels of water per day into the Al Shaheen reservoirs, and applying enhanced oil recovery (EOR) techniques.  We have already drilled over 300 wells and installed 33 offshore platforms, and we have ambitious plans to continue to unlock value from the field in the future.

Today we are in the next stage of development, a project we call FDP2012, which is a USD 1.5 billion investment. FDP2012 calls for the drilling of another 51 wells to help maximize recovery and maintain a longer-term stable production plateau from the Al Shaheen field. By the end of 2013 we had three dedicated drilling rigs working on the FDP2012 development plan, and another work-over rig operating in the field. What’s pleasing is that two out of the four drilling rigs working for Maersk Oil Qatar are from a local drilling contractor, Gulf Drilling International (GDI). This is testament to our continued focus on using local companies and employing Qatari citizens. In fact, we spent some USD 650 million with local businesses in 2013 alone. And we now employ around 200 Qatari nationals. We launched a new Qatarization strategy at the end of 2013 and we remain very much focused on developing Qatari talent in our organization.

What technologies have you been implementing at Al Shaheen in order to turn it into such a productive field?

We are very proud that we’ve been able to transfer our technology, knowledge and experience from the Danish sector of the North Sea to help unlock the potential of Al Shaheen. We now have over 20 years’ hands-on experience of unlocking this very complex field. Initially, horizontal wells were the key to successful production – we drilled what was, at the time, the longest horizontal well in the world. After this, water flooding and gas injection has helped to improve recovery in the field.

We are also piloting an enhanced oil recovery technique known as WAG (water alternating gas) injection offshore. No single technology will bring us the key to unlocking the field’s full potential; rather, we must understand the field meter-by-meter, and apply the right approaches and technology to each individual challenge.

Al Shaheen is a unique, challenging, and maturing oil field, but by applying our technology and experience, and by developing and deploying Qatari talent, we believe that there remain many opportunities for us to significantly extend the field’s production plateau and deliver a continued contribution to the state’s growth and development. The same expertise that transformed Al Shaheen into a world-class field in the past will be just as important in ensuring its success in the future: unparalleled reservoir insight, the application of both new and proven technology, all delivered with world-class operating performance that has created a leading track record in safe, value-driven delivery.

Maersk has installed advanced equipment at Maersk Oil Research and Technology Centre (MO-RTC) at Qatar Science & Technology Park (QSTP). What enhanced oil recovery techniques (EOR) has Maersk been developing?

We are investing USD 100 million over 10 years in our Doha research center and we’re already seeing some great results. Our focus is on applied research, for example research into EOR techniques that can improve ultimate recovery from fields like Al Shaheen. We’ve got activities in such areas as long well performance, new well technology, well completion technology, and EOR strategies – as well as environmental research into the marine environment here in Qatar. Our activities are progressing well, in fact we opened a new digital core laboratory in January of 2014 that allows us to analyze core samples down to a micro-level.

By advancing understanding of the mineralogy of Al Shaheen reservoir rocks and of the subsurface chemistry and fluid flow relationship, the Digital Core Laboratory aims to improve enhanced oil recovery success rates. Researchers use more than 13,000 X-ray images in a computed tomography (CT) scan to make a mathematical reconstruction of carbonate rock samples. The pores of oil-bearing rocks are studied at a minute level, down to a diameter of 40 times less than that of a human hair. When these data results are combined, a 3D image is produced that shows valuable petrophysical and flow-related information.

We also signed a technology cooperation framework agreement between the Maersk Oil Research and Technology Center and the Qatar Petroleum Research & Technology Centre, allowing QP to use the Maersk Oil Digital Core Laboratory for individual or joint research activities.

What are your expectations for your collaboration with Gulf Drilling International?

In 2013, Maersk Oil Qatar (MOQ) and Gulf Drilling International (GDI) signed a four-year agreement for 770 million Qatari Riyal (USD 211 million), under which Maersk Oil Qatar will contract the Al Jassra, GDI’s new-build jack-up drilling rig. The contract covers drilling and well workover activity in the Al Shaheen field. In addition, MOQ and GDI signed another two new contracts; one two-year contract for the GDI jack-up drilling rig (rig ‘B-341’), and another three-year contract for a new GDI offshore accommodation jack-up. The total value of these contracts is more than QAR 750 million (USD 206 million). These signings represented the second and third major agreements between GDI and MOQ in 2013. I believe this is the start of a very good relationship between our two companies. 

Did you have any worries or concerns before entering into a contract with GDI?

We fully audited them and we know the company well; reports from the rest of the industry were very positive and the drilling rig we received from them was brand new – we were even able to go out and see it in Singapore before it was delivered. We are very pleased that a Qatari-based drilling company is able to provide the world-class drilling support that we currently require – and we very much look forward to working with GDI in the years ahead.

What is your relationship with Qatar Petroleum and what are the synergies between your companies?

Over the last 20 years, the success we have had in Qatar has been hand in hand with Qatar Petroleum (QP). Our two companies recently partnered to publish a series of new technical papers and presentations for the seventh International Petroleum Technology Conference (IPTC) held in Doha in January 2014. The 14 co-authored submissions highlighted a range of technical learning and experience gained through more than 20 years of successfully developing Qatar’s Al Shaheen field. The technical papers provided insights into the experience and application of innovative technologies that have enabled the transformation of Al Shaheen, from what was considered a marginal and unattractive field, into Qatar’s largest offshore oil producer. We have an excellent working relationship.

Jakob Thomasen, Maersk Oil’s CEO recently said: “Qatar Petroleum’s expertise has been crucial in the successful development of the Al Shaheen.” At the same time, we have seen that you have done a lot of R&D work at Al Shaheen in cooperation with QP, developing technologies and strategies to maximize exploitation of the field.  Are you planning to work outside Qatar with QP in the future, as Shell and Total have done?

It is certainly something we are looking at. H. E. Minister Al Sada is keen on it, as is Jakob Thomasen; what we have to do now is find the right project for both parties.

Qatarization is clearly important to Maersk Oil in Qatar, and already, Qataris make up around 25 percent of your employees. Looking at the policy objectively, does it make financial sense for Maersk to invest so much in training and employing Qataris when it could continue to bring in qualified staff from other parts of the world?

We are lucky because our deputy managing director, Sheikh Faisal Al Thani, is a fantastic role model for all Qataris. He plays a great role in attracting and retaining talent and being a role model for them. Last year we launched a new Qatarization strategy, which aims to support our continued efforts to employ, develop and retain the Qataris – particularly into senior leadership positions over time.

We are very pleased at the quality of the people we are getting in, but a simple challenge is availability – given the size of the Qatari population. A number of years ago it was very much quantity – the number of people employed, but I think everyone recognized that there just simply aren’t enough people to go around. Recently, the focus has been much more on recruiting, developing and retaining high-quality performers and getting them in to leadership positions.

Among other initiatives, together with Qatar Petroleum, Maersk Oil has been able to reduce gas flaring by 90 percent between 2007 and 2011 in the Al Shaheen field. This gas gathering project has been recognized as the world’s largest clean development mechanism project by the UN Framework Convention on Climate Change. Beyond this, what strategic role is Maersk willing to play in the green growth trend that is currently taking place in Qatar?

Maersk oil remains heavily focused on environmental sustainability. For example, in Q1 2014 we reduced flaring in our operations to around 5 Mmscf/day, the lowest that it has ever been. Since 1997 the company has reduced flaring at its operations by well over 90 percent, and reduced Greenhouse Gas emissions by 50 percent.

Qatar has embarked on the National Vision 2030, of which one of the key ambitions is the diversification of the country’s economy and elimination of dependence on oil and gas revenues. How can companies like Maersk Oil contribute to this process, but also gain from it? What are the real chances of Qatar succeeding?

Oil will continue to play a central role in a balanced energy portfolio for Qatar and a successful oil industry remains as important as ever as Qatar strives to deliver its 2030 vision. First and foremost, we aim to continue responsibly extracting oil from the complex Al Shaheen field in a manner that delivers the greatest possible value to the State of Qatar.

Above and beyond this, Maersk Oil is also making a broader contribution to the nation’s 2030 Vision. In addition to supporting the growth of local companies – MOQ spent $650m with local businesses in 2013 alone – we are playing a role in social and environmental progress. In the last five years we have doubled the number of Qataris that work in MOQ and by 2030 our aim is for one in two of our organization to be Qatari nationals.

What do you want to achieve in Qatar that the firm has not yet achieved?

We are very pleased with the safety culture we have here. We would like to continue building on that safety culture and to further improve our performance culture. We intend to remain the best performing operator in the basin.

Maersk Oil introduced Incident-free globally in 2011. It sought to transform the company’s safety culture and performance in two ways: Leading Safety focuses on the personal aspects of safety, to create an Incident-free safety culture throughout the organization; and process safety deals with the technical processes and competencies that are needed to be Incident-free.

Safety, and being incident-free, is a huge focus for Maersk Oil in Qatar. We were very proud that we recorded our best ever safety statistics in 2012, results that are considered top quartile in our industry. Of course there is more we can do. In 2013, we did experience some lost time injuries (LTIs) in our operation, which – although not serious in nature – we want to eliminate.

To read more articles and interviews from Qatar, and to download EnergyBoardroom’s latest free report on the country, click here.

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