Lecture

Darcy Spady Visits Montanuniversitaet Leoben

At first, Mr. Spady got to see our Department of Petroleum Engineering, which he was quite impressed by. Not only was he impressed by the applied research Prof. Hofstätter and his team took the time to introduce him to, but also by our new building and the facilities in general. We also had the pleasure to show him the downstream applications of our beloved petroleum in the Department of Polymer Science, and especially, their lab facilities.

Department tour: Sepp Steinlechner, Ines Smaoui, Darcy Spady, Florian Gamperl, Prof. Herbert Hofstätter, Georg Ripperger (from left to right) in the Production Engineering Master Class

In the evening, Mr. Spady gave a motivational presentation to an audience of about 50 students. He started talking about his personal career which he says is an “example of what not to do”. However – and that is the huge motivating message behind this talk – it also shows that anything is possible, if you are willing to take chance and move out of your comfort zone. For example, he was based in an area with enormous shale layers in a time when “shale was considered garbage. It was something you’d speed up your logging tool”. Yet, he developed some kind of expertise in this area, which was then helpful for his further career.

With shale gas being a very controversial topic, this was an excellent opportunity to move to another subject Mr. Spady is very enthusiastic about, community involvement. Again, he gave an example from his personal career, where he had to drill a well on a university campus, in the middle of a city. Despite public concerns, he and his crew managed to drill the well, and even reduced the public resistance to a minimum by getting them involved, allowing them on site, and explaining what is going on. Darcy Spady says that regaining the public trust is the key to continuing our work in densely populated areas. This may not be the case for many areas of the world, but it sure is an important factor in Central Europe!

As the President Elect of SPE, our organization also had to be mentioned. Showing interest in SPE is something very rewarding. Mr. Spady especially encouraged us to write papers, and go on conferences with them. He also mentioned that we should not be afraid of being made fun of with our research work: If it makes it through the selection process, the paper has to be good! And Mr. Darcy Spady also specifically said that the level of teaching and research is very high at our university, another big encouragement to start spreading our knowledge!

Thomas Gundacker of BP during his presentation

The visit of Darcy Spady coincided with the traditional visit of Thomas Gundacker, a Leoben graduate working with BP. He also gave a brief talk about the world energy outlook, the role of oil and gas in the future. He also pointed out that BP is hiring students for internships and for permanent work despite the crisis. For more, visit www.bp.com/leoben

The evening was concluded with a dinner at Mensa, to which both Mr. Gundacker and Mr. Spady were invited.

We would like to thank everyone who has been involved in organizing the program, especially Prof. Hofstätter and the team at the DPE for taking the time to show our guest around, and of course, a big “Thank You!” to Mr. Gundacker and Mr. Spady for visiting Leoben. We hope you enjoyed your stay just as much as we did.

The Struggle Over Oil

The panelists were Prof. Philippe Le Billon, geographer at the University of British Columbia, and Manana Kochladze, biologist, founder of the environmental watchdog group Green Alternative and winner of the Goldman Environmental Prize 2016. Moderator of the discussion was the Head of the Politics Department at the University of Linz Prof. Karin Fischer.

The opening statements were dedicated to the question of who are the “main actors” in the political and economic oil network, as well as what role they play, and what drives them. Looking at reserves, Prof. Le Billon stated that the two biggest players are Saudi Arabia (conventional) and Venezuela (heavy oil); however, looking the resources, the United States are the clear leader ahead of Russia. He also provided an insight in the economics of oil production: Assuming 100USD oil price, 20USD are lifting costs. This number will only vary slightly despite oil price changes. The oil producing countries’ governments take another 33USD as royalties etc., 40USD go to the consumer countries’ governments as taxes and corporate profit would only be 7USD. In the current price environment, this means that ca. 1/3 of the oil price are lifting costs (as they are quite independent of the oil price), governments take 63%, and only a mere 3-4% are left up for the international oil companies (IOCs). This implies that IOCs are striving to reduce lifting costs.

Mrs Kochladze focused her opening statement on the communities, and their role: Only in the past 20-30 years, oil companies started to involve the locals in their business and saw them as equal stakeholders in projects – a cause for many conflicts in the past, some of which lasting until now. Another aspect of her statement was the way how the mindset of oil companies, and especially the governments of oil producers, works when it comes to justifying big investments: Economically challenging projects such as transit pipelines are split into sections, which will increase the profit and throughput per dollar spent: Imagine a pipeline that costs 1bn USD and has an expected throughput of 1bcf of gas, that would mean 1bcf/USD. But splitting the pipeline into four sections, which obviously have the same throughput, the performance will increase to 4bcf/USD, making the project look a lot better! However, the overall economic feasibility remains the same and often even questionable).

The topic of the discussion slowly moved into the direction of conflicts over oil, and how they affect the geopolitical situation. The consensus that was reached was that there are five different reasons for conflicts over oil:

“Peak Oil” – the struggle over the remaining reserves
Geopolitical aspect – oil as a strategic resource, and as a diplomatic “weapon”
Climate change – migration and other social changes caused by it
Environmental conflicts – both unarmed resistance against projects as well as “environmental terrorism” (i.e. violent opposition) as means to deal with oil companies and (often autocratic) governments of the oil producing countries
“Conflict Oil” – like blood diamonds, oil is a major economic factor for any party involved in armed conflicts

It was also stated that oil was the “excrement of the devil”, as it is not only the cause for conflicts, but also for the local communities, which are often suppressed to make prestigious projects possible.

“Oil is a very practical fuel. Thus, it will be hard to replace it in transportation, but it is fairly easy to replace in other areas, such as heating and energy production, or for the production of packing material.”

Philippe Le Billon

Finally, the question of how to cope with increasing oil prices, the environmental impact of oil and finding alternatives to fossil fuels was raised. As we live in the “Oil Age”, petroleum simply is our most important natural resource. A population increase will inevitably lead to an even higher consumption, both by direct causes such as transportation and heating, and by indirect ones, such as the production of many consumer goods. Visionary takes on this problem will be needed to succeed – and electrical mobility is seen as such a thing by the panelists. Moreover, the private car will – according to the panelists – vanish from cities, and the bicycle should become the number one means of transportation there.

The second half of the session was dedicated to questions from the audience. Geopolitical questions, such as the role of Iran and China as well as of the new US government were discussed as well as more technical ones in the direction of the feasibility to get rid of fossil energy sources altogether in the near future, or the impact of a transition towards e-mobility on environment and global economy.

The geopolitical aspect was answered in the following way: While the decision of US President Trump to include Exxon Mobil CEO Rex Tillerson (Secretary of State) in his cabinet may not mean too much (and is not even unusual as Dick Cheney, Vice President under George W. Bush was CEO of Halliburton), the nomination of Scott Pruitt as the head of the Environmental Protection Agency) is clear signals towards the energy sector: He is assumed to facilitate hydraulic fracturing operations in the US, securing the US role on the global oil market on a longer time. As for China, the focus will probably be to spend the accumulated money on oil projects in the Caucasus and the Balkans, thus weakening the role of Russia for Europe’s supply security. The lifting of sanctions against Iran on the other hand will primarily have regional effect: the mid- and downstream industry in the neighboring countries will be affected, as those will be the countries that will have to ensure the transportation to the consumers in Europe.

The discussion was concluded with the final statement that oil demand has peaked, and will probably decline in the developed countries. However, especially in the US there is a significant correlation between oil price and consumption, which will not assist in moving on towards other resources.

(We would like to point out that the above opinions, especially on political topics, are the reproduction of the ones stated in the panel discussion, they do not necessarily reflect the ones of the Student Chapter.)

Leoben Goes Zagreb

The delegation was rather international, including students not only from Austria, but also from Germany, Hungary, Romania, Tunisia, and even the US. In total, the conference had around 300 participants, around 60 of which were from foreign countries.

Day 1 – March 8^th

In small groups, our students arrived in the Croatian capital, leaving the early birds some time for sightseeing while waiting for the late arrivals. In the evening, we were guided to a restaurant and greeted with a great dinner of traditional Croatian cuisine.

Day 2 – March 9^th

The conference was officially opened with speeches of the initiator of the ASEC, former SPE SC Zagreb President Filip Krunić, the current SPE Croatian Section President Dr. Vladislav Brkić and the Dean of the Faculty of Mining, Geology, and Petroleum Engineering, Prof. Zoran Nakić.

The opening ceremony was dominated by appreciating the conference sponsors and supporters, stating that “The moment we stop investing in knowledge, the next generation – in short: in the future – is the moment we stop working as a society!”. Furthermore, the hope for an intensified cooperation and joint projects with the neighboring Student Chapters was expressed. Within the frame of this, also the leader of the Leoben delegation, Oliver Kleinferchner, was honored for his efforts in supporting the logistics of the conference. The musical part of the opening ceremony was covered by five great members of the faculty’s choir, singing traditional Croatian folk songs.

After the opening ceremony, there was an interesting panel discussion about the pros and cons of drilling offshore in the Adriatic Sea. Even though the panel consisted only of petroleum engineers, the discussion was very lively, because some participants were – not entirely expectable – against oil and gas production in the Adriatic Sea; their concern about the negative impact of leakages and spills, not only on the environment, but also on tourism, one of Croatia’s main economic branches, was too big.

Panel discussion on the topic of offshore drilling in the Adriatic – moderator Igor Dekanić, and the participants Davor Štern, Željko Belošić, Pavle Uroda and Zdenko Dvorščak

Technical presentations and insights in the research work of fellow students from all across Europe, as well as the operations of major oil and gas companies followed before and after the lunch break. The official program was then concluded by a workshop on the production analysis program Prosper.

However, the day did not end with this: After some free time, we could use to explore the city, or to simply have a rest, a disco night was organized, lasting until the early morning hours. This gave us plenty of time to get to know our fellow participants and local people.

Day 3 – March 10^th

The presentations of the day were under the sign of environmental aspects of our industry, talking about waste disposal through wells, or geothermal energy. Since the weather was good, some of us decided to skip a promising-sounding afternoon session (dominated by the topics Oil Price and Energy Politics), and do some sightseeing instead.

St. Mark’s church in the heart of the Upper Town (“Gornij grad”) in one of Zagreb’s oldest part

Even though there was no program planned for the evening, a large part of our group gathered to explore a traditional brewery later that day, spending some time on enjoying some alternatives to our beloved “Gösser” beer.

Day 4 – March 11^th

This was not only the day of the technical presentations, but also of the day of our delegation: Four people from Montanuniversitaet Leoben, among them DI Akos Kiss, DDI Dr.mont. Clemens Langbauer, Prof. Holger Ott and Prof. Herbert Hofstätter, giving some interesting insights into their research.

DDI Dr. mont. Clemens Langbauer presenting his research work to the participantts of the 3rd ASEC

After listening to such great and encouraging presentations, the official part of the conference ended with a great closing ceremony, again accompanied by the SPE Student Chapter’s own choir.

The day ended with another disco night in one of Zagreb’s most prolific clubs.

Day 5 – March 12^th

Even though one of the most looked-forward-to event, the paintball game, had to be cancelled due to the unexpectedly bad weather, those of our delegation who chose to stay until Sunday, enjoyed another day in Zagreb, including a great BBQ in the afternoon, also organized by the SPE Student Chapter.

At this point, we would like to thank the organizers of the 3^rd ASEC for their great work and effort and their hospitality throughout the whole week. It was a great pleasure to spend those five days in Zagreb, and we are looking forward to meeting everyone again as soon as possible!

(photo credit to all photos: Christoph Schwarzenegger)