The team behind Maersk Oil’s TriGen are closing in on a launch project, and have been delighted with the response to the global business development efforts undertaken throughout a busy 2013. TriGen Technical Director Pieter Kapteijn spoke to the Source after a particularly exciting trip to the US. “We’ve just returned from Texas. It was an excellent visit and we’ve come away energised because people really see the potential. In North America many oil companies can’t get CO2 for their reservoirs because the market is maxed out. When we say we can provide that as well as power to run their fields too they get very interested,” he smiles. TriGen, an integrated energy system that combines upstream low quality gas production, clean power generation and the production and injection of reservoir ready CO2 for enhanced oil recovery, sounds like a technology pitch, but is really about generating an option for Maersk Oil to play a completely unique game, says Kapteijn. “TriGen involves technology but it is not about the technology. It is about connecting up parts of the energy world together in a different way and leveraging these capabilities to gain access to resources that other people find too difficult to develop, and that is a powerful value proposition.” Today the team is carrying out feasibility studies in the US, Europe, the Middle East and in South East Asia. They explore with potential partners where TriGen can be made to work and will generate business value. “Right now it is more an exploration type activity than normal project development. We know the technology is there, and maturing the technology with Siemens and CES is not the issue. We are confident that given the right funding and time the technology will work. We have not found any technology show-stoppers.” Managing Complexity
“Because we are making a connection between the upstream and the power business these kinds of value chains are more complex and that’s what we need to learn to get better at. We are rapidly getting better at doing the technical and commercial design and optimisation of the value chain but the stakeholder management required to bring the parties together is the real challenge for the team. Kapteijn says the culture and regulatory environment in the power business are in some ways completely new to Maersk Oil, so the deeper the conversations go the more there is to learn. “The interesting thing here, is that within the organisation we are finding people who have experience in many of these fields who are coming forward and saying “actually I’ve done something like that” so we are mobilising skills within the organisation we didn’t even really know we had.” TriGen’s key goals right now are to build up a portfolio of opportunities and conducting as many feasibility studies as the team can manage so that market sweet spots are found. “What’s vital is finding a place where we can demonstrate TriGen’s full capability. The oil and gas industry is fundamentally conservative, we all want to be “fast followers”, but I’m certain that when we have that first demo, the market will absolutely take off,” enthuses Kapteijn. He adds that with a development proposition of this nature, at least 12-15 projects are needed in the portfolio to convert one or two into that keystone launch project. “Once you have the first one or two the hit rate becomes much better, but getting over the initial hurdle is the big challenge.
We have seven in our portfolio right now, with as many “leads” again. We want to expand that portfolio out to 15 studies in the next year, out of which one or two will come to fruition,” he says. Kapteijn says that compared to getting the first seven, getting the next eight should be easier, because the TriGen team has developed a way of working with other companies which is more efficient. “We can now quickly establish whether a potential project has legs or not. This is important because, as Maersk Oil, we do not want to get drawn into a project, only to find it is not going anywhere. We are quickly fine tuning projects and homing in on the potential partners and companies we could work with,” he explains. “We want to be able to dis-engage early and elegantly, if the project adds no value to us or our partners, with Maersk Oil’s professional reputation intact, if not enhanced.” Resource dimension
The leading position Maersk Oil has with this technology opens up a lot of exciting opportunities for the company, Kapteijn stresses. TriGen offers us an option to get access to- and participate in a larger number of upstream assets, as an operating or non-operating partner. Our approach is to offer the TriGen plant in exchange for a share of the reserves and production from the fields involved. This will in turn grow and improve Maersk Oil’s oil and gas reserves. “It is important that people see the technology, (cool and impressive) as it is, as an enabler. The real game is to set up energy value chains that other people can’t create. TriGen enables Maersk Oil to generate projects with a configuration that is unique.” Stakeholder Lessons
Kapteijn says the TriGen proposition involves more and different stakeholders than a typical Maersk Oil project, bringing in the power industry and its own regulatory authorities, in addition to partners, resource holders and the upstream regulators and authorities in the four continents the team has been working in. “The ability of the organisation to engage and work well with all these stakeholders and manage those relationships, is as vital to TriGen as it is to Maersk Oil everywhere it operates, so we’re learning valuable and transferable lessons too. Chief amongst those lessons is that we need to do technical and economical optimisation concurrently. Getting the numbers to add up is not enough, it is about getting everything right, down to putting the contractual and business design in place that makes the chain work,” he says. It is complex, he concedes, and it’s all about realising valuable synergies. “TriGen means we, with our partners, make money out of resources other people cannot generate value from. Stranded, poor quality or CO2 contaminated gas, enhanced oil recovery… very few companies are making good returns on these assets, where we potentially could. We have the technology that can unlock the value…. And we are doing it in a cleaner, responsible way. And that last factor really makes the team feel good about what we do. We get contacted by people who are interested in just that aspect of TriGen. It changes the way they think about the oil industry." Kapteijn highlights that the value to Maersk Oil goes beyond individual project economics. “Doing the conventional upstream part of the business, but doing it in a genuinely environmentally responsible way will have a big impact on our reputation. If our vision is navigating complexity, unlocking potential – This truly ticks all the boxes,” he concludes.