The Business Year

Raoul Restucci

OMAN - Energy & Mining

Augmented for Success

Managing Director, Petroleum Development Oman (PDO)


Raoul Restucci was appointed Managing Director of PDO in October 2010. Prior to this, he was appointed as Executive Vice-President for Shell in the MENA region, a member of Shell’s Upstream Leadership Team, EVP for North & South America, President & CEO Shell E&P USA, and Regional Business Director for Shell in South East Asia, including China and Australasia. He joined Shell International in 1980, following graduation from Nottingham University with a degree in Mining Engineering.

"We operate in an increasingly complex environment that needs to rely on more efficient energy management."

How would you rate the performance of Petroleum Development Oman (PDO) in 2014 compared to last year?

We’re very proud of our performance in a number of key areas. Firstly, safety, where we recorded the lowest lost time incident frequency (LTIF) and total recordable case frequency (TRCF) on record. In process safety management and asset integrity, several assets reached calculative status, which is a high international standard of integrity assurance. On the production side, we also set new (combined oil and gas) records. We’ve continued to build oil production and to meet the increasing demand for gas. On the exploration front, notwithstanding more than four decades of drilling, we continue to have high success rates. The portfolio is of course getting more difficult; for example, we’re getting into tighter, deeper gas developments, but we are highly encouraged by extended test results. On the well reservoir facilities management (WRFM) front, we continue to set the benchmark and have received much global recognition. Ultimately, it’s all about the performance of the fields. You have to get the basics right and also successfully implement enhanced oil recovery (EOR) technologies. We have fields that are producing more today than they were 30 years ago, and there are very few examples of that around the world. Thanks to considerable well intervention and restoration work, we now have very low decline rates in fields that previously were subject to high decline rates. Project delivery is also getting stronger, while the exponential growth and challenge in our business, including water production, number of wells, and power requirements, means that driving lean and continuous improvement is a must do for longer-term success and to manage the transition from primary to secondary to tertiary production. So all in all, it was a good year, but there is no complacency and our focus remains on improving all parts of our business, including how we interact and support our contractor community. We are also continuing on our journey to gain UN Global Compact membership in 2014. We set that roadmap in 2010. It’s not easy, but we’ve had global experts coming to see what we’re doing, and they were truly impressed. We still have issues and challenges, sure, but we’re fixing them with the aspiration to become a role model in sustainable development.

Can you elaborate on the importance of technology and innovation as a key driver for your business?

We operate in an increasingly complex environment that needs to rely on more efficient energy management and more advanced and efficient subsurface displacement mechanisms. We’re reviewing, testing, piloting, and prototyping some 70 different technologies at any one time. Some of them work, some of them don’t, while some of them go into full-scale implementation—it’s a never-ending process. We work with a lot of different companies to help us manage some of the challenges we face. One such challenge is water management. PDO produces considerable volumes of water of different salinities. The Nimr reed beds project is a fantastic success, enabling us to handle more than 700,000 barrels of produced water, with a 98% reduction in energy use. We can’t use that solution 100 kilometers south or north of Nimr because water salinities, and other contaminants, are very different.

How much PDO production is from EOR, and how much of it will it account for in the future according to your estimates?

At the moment, EOR projects account for about 12%-14% and, by 2023, will represent one-third of our total production, using thermal, chemical, or miscible gas injection recovery methods. We are currently reviewing 22 EOR project opportunities, four of which are under full-scale implementation, 12 that are in the pilot, design, engineering, or execution phase, and six under examination. Some will be canceled, but the vast majority will progress at a significant pace.

“We operate in an increasingly complex environment that needs to rely on more efficient energy management.”

In 2013 you initiated a new project to produce steam from solar energy as a potential substitute for gas. How successful has this technology been and will you use it in the future?

That pilot was extremely successful. It exceeded our expectations not just in terms of the effective and efficient delivery of quality solar steam, but also in terms of reliability and operability. One of the challenges of using solar applications in the Middle East is the high temperatures combined with the dust, wind, and humidity, which essentially coats the solar panels, reducing their overall effectiveness. PDO joined forces with Glasspoint to deliver a very different scheme with an effective (glasshouse) cleaning mechanism, one that was both simple and highly efficient. Now we have a very viable alternative, and we’ll be having discussions with the Board about expanding this project. It was one of the largest pilots in the world, and it’s going to get much bigger.

How is PDO managing the increasing demand for gas, and why is the resource a priority for the country?

Gas remains a key and strategic fuel for today and the foreseeable future. It’s cleaner, more reliable, and more efficient than oil-fueled energy. Power and desalination plants, energy exports, and domestic industrial expansion are all largely driven by fuel-gas. On the supply side we’re trying to explore, connect, deliver, and compress as much gas as possible in a cost-effective way. On the demand side, we’re not just a large energy supplier, we’re also a significant energy user, for instance for thermal EOR processes that are fuel-gas intensive. As a result, we place huge emphasis on energy optimization, indeed as much as we do on energy exploration. In 2012-2013, our process engineers reduced gas consumption by as much as was found by our exploration teams. Conserving gas creates considerable value along with the opportunity for redeployment for other industrial and development purposes and is achieved through the installation of combined-cycle power plants, waste-heat recovery systems, reduced distribution losses, more efficient turbines, and gas break-through controllers, not least the water and solar management projects previously referred to.

To what extent does PDO place importance on in-country value (ICV) in Oman?

On ICV, PDO is a strong and active player in Oman, and what we set as a standard tends to be followed by others. We’re very proud that, in October 2011, under the auspices of the Ministry of Oil and Gas, we received full support for our ICV strategy and roadmap, which has since become the industry’s roadmap, and the ICV acronym is now used as a common term across every publication and every engagement, every day. We’re just going to do more and more of what we’ve been doing, creating jobs and development opportunities. On December 18, 2013, we got together with the Ministry of Oil and Gas, the Oman Society for Petroleum Services (OPAL), and other operators and reviewed 53 categories amounting to more than $100 billion worth of investments by 2020. A number of ICV project categories that we addressed a year ago were recently awarded. For instance, we used to service equipment, pumps, and electrical devices in Jebel Ali, and beyond, and now those services are available locally. Turnaround has improved dramatically and we have established a capable Omani workforce in the process. Whether they stay with PDO or move to other businesses, they’ve been up-skilled, trained, and can setup their own SMEs in servicing and support. We set ourselves a target in 2011 to create 1,000 jobs per year covering the manufacture and servicing of goods, and have exceeded this target by a factor of four. Maybe forging parts doesn’t make sense, but perhaps installation does, and if that doesn’t hold true, then we move on to the next stage in the value chain to see if we can service it. It’s not just about Oman, but also about how we can help channel supplies in the region. Oman may not necessarily provide a sufficiently large local market for a new strategic investor in a particular specialty area, but it’ll need a skilled local workforce. We are therefore also working very hard to align Oman’s vocational training programs with the needs of industry. We work closely with the Minister of Manpower and we review how to up-skill, train, and target new sectors. Each month we’re targeting a new sector and a new skill.

What is your outlook for the oil and gas sector in Oman in the coming decade?

It is very positive. We get strong support from the Ministry of Oil and Gas. We have more and more operators, including small and medium scale, and this shows that the sector continues to be an attractive area of investment. On the exploration front, we continue to be successful and our portfolio of projects is very significant. However, there are opportunities also for smaller players, they are able to develop and enhance production from smaller opportunities and turn them into profitable ones. So I think the will is there, the potential is there, and there are great companies like PDO to make it all happen.

© The Business Year – July 2014



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