1. SPE 147773
Business and Technology Innovation: Essential Imperatives for Future
Energy Sustainability
Ekeh Modesty Kelechukwu, Dept. of Chemical and Petroleum Engineering, UCSI University
Copyright 2011, Society of Petroleum Engineers
This paper was prepared for presentation at the SPE Asia Pacific Oil and Gas Conference and Exhibition held in Jakarta, Indonesia, 20–22 September 2011.
This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect any position of the Society of Petroleum Engineers, its
officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission to
reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.
Abstract
Exploration of petroleum resources is considered synonymous with the lifeblood of modern society and how it
meets its energy needs. Yet, the entire globe has been unimaginably seized by the soon visible energy crisis and
consequently demanding from humanity a systematic blue print of its sustainability. The future looks very
different from our routine hydrocarbon exploration and production practices, hence to succeed in such future,
players in the petroleum industry will need innovative business strategy to make their portfolios more diverse;
develop new technologies that will help to establish the heartlands of sustainability; globalise operations and best
practices; and invest in partnerships that create value across the strata of stakeholders. However, energy
sustainability is a complex challenge, which involves, among others; petroleum industry players, private sector
and Government. While parallel development in creating business friendly-environment and innovative
technological advancement will serve as a vehicle to enable success in future energy sustainability. Technology
will significantly influence the availability, choice and cost of future energy. Investment in R&D is crucial to
provide energy efficient-technologies through private sector partnership. Business plays an important role in
energy efficiency and sustainability, within its sphere of responsibility, in partnership with stakeholders and
investment diversification. It should be taken into account that business operates well under sound predictable
long term enabling frameworks and good governance. This paper focuses on the opportunities of inventing new
conceptual dynamics to ensure sustainable energy Future.
1. Introduction
As global energy demand steadily increases and output from producing fields and new oil discoveries declines,
supplying the energy for our global future is the major challenge facing the oil and gas industry today. Over the
next 50 years, the world’s energy needs will double or triple, presenting the inevitable competitive landscape and
a new map of world energy in view, while the current high cost of exploration and development, reminds us that
the consequences of failure are becoming more pronounced. The technical challenges, increasing cost of new
technologies and environmental sensitivity creates additional risk and broadens the uncertainty of energy future.
“As International Energy Agency (IEA’s World Energy Outlook 2010) puts it, our actual global energy situation is
vulnerable and expensive” and anticipates growth of 60% in energy consumption by 2035. This visible harsh
reality can have acute impacts on energy, and in turn economic stability, which requires swift and decisive action
through a synergized strategy to meet future energy demand. This means that more new discoveries are needed in
unfriendly areas with good business incentives, better technological capabilities and sufficient investment in long-
term development that meets the need of the present and secure our energy use without compromising the ability
of future generations to meet their needs. Emphasis on the world’s energy future through sustainability framework
would usher in a future that is rooted on the efficient and secured use of energy, sourced from diversified range of

2. 2 SPE 147773
business network, technology innovation and uncompromised energy management system. In the face of global
energy threat, the pivotal role of technological innovation can enable oil and gas companies to push the limit of
the present and fully exploit their potential. A parallel business-oriented industry / government coalition will form
an incredible advance, to provide long-term investment in production; natural resolution of conflicts raised in
connection with oil and gas development and builds a consensus among stakeholders, forming framework
required for energy sustainability. This paper has suggested a concerted pathway for sustainable energy future
development.
2. Need For Sustainable Energy Development
The sustainability imperatives running through the world’s consciousness presently, allows the oil and gas
industry and the global society, to conduct a debate, and reach a resolution that is driven by recognition of what
future generations may require and define a pathway to meet their expectation. This evaluation often based on
value based judgments; (fig.1) invites all the stakeholders to weigh social, environmental and economic benefits
of any given course of action against the detriments.
In this globalization era, business strategy, technology and human values are changing every day. Most oil and
gas companies know that how they respond to the challenges of sustainability will profoundly affect the
competitiveness and perhaps even the survival of their organization. Yet most are flailing around, launching a
hodgepodge of initiatives without any over-arching vision or plan. That’s not because they don’t understand the
necessity of sustainability as a strategic fulcrum. Rather, it’s because they think they are facing an unprecedented
pathway for which there is no road map. Sustainability is an emerging framework, and thus its course is to some
extent predictable as the vehicle for the near future R&D for technology development.
3. Diversification Strategy for Energy Sustainability Development
In balancing supply and demand, energy providers and policy-makers need to re-engage their commitment and
ensure that countries can count on dependable supplies. Energy security is a major strategic challenge as most oil
and gas resources are located in a small number of countries, with ten countries controlling 80% of global oil
reserves and three possessing over half the world’s natural gas. The whole industry is moving in the direction of
diversifying portfolios, because diversity brings more flexibility, a broader base of experience and a stronger
competitive climate (The Oil & Gas Review 2003, vol.2). However, the undeniable challenge lies in finding away
to reconcile the necessity and demand for energy supply with its impact on natural energy resources in order to
ensure sustainable path for development. Apart from the integration of business and technological innovation, the
role of both non-renewable and renewable sources of energy is vital in the formulation of framework for long
term reliability and security of energy supply. Diversification is metamorphosing into inescapable strategic
imperatives for most major industry stakeholders. Diversification concept, referring to incipient business,
economic and technological shifts, which force traditional and persistent shifts in how oil and gas companies
invest and compete. Such transformations arising from technological innovation or from new ways of doing
business can magnify the process of change and question the old-wisdom of single source of energy dependency.
Over the past 10 years, environmental issues have steadily encroached on business’ capacity to create value for
customers and shareholders. Globalization workforces and supply chain have added to environmental pressures
and attendant business liabilities. The rising new world economies, notably china and India, has intensified
competition for natural resources (especially oil) and added a geopolitical dimension to sustainability. These
factors can be diminished by launching a systematic approach to investment, technology, policy and diversify
sources of energy, informed by looking at the future in terms of pathways to achieving the optimal efficiency. In
considering these pathways, the oil and gas companies should seek to identify forms of energy that can be
efficient, cost effective and material in the short, medium and long term at the same time environmental
acceptable and providing energy security.
4. Business and Technology Innovation for Sustainable Energy and Economic Development
Technology will affect the choice and cost of future energy systems. Investment in R&D in needed now to
provide energy efficient technologies in the medium and long term. While the private sector remains the main

3. SPE 147773 3
vehicle for technology diffusion through its day-to-day business of technology development, investment,
commercialization and dissemination, governments have an important role. Such important roles as; providing an
R&D friendly environment and offering high-quality intellectual property right protections to encourage
investment by the private sector in R&D; encourage technological development and deployment by supporting
research centers and universities involved in R&D on long-term energy and energy efficient policies; engaging in
a dialogue with major groups on the advancement of new technologies and anticipating the legal and regulatory
framework for new technologies. Technology innovation would open up new frontiers and provide new
techniques that enable the energy providers to maximize their competitiveness and develop their business in new
ways. Such essential benefits as finding and extracting previously trapped resources of oil and gas; often in
challenging settings such as ultra deepwater or complex rock formations and carbon capture and storage will
bring energy resources within commercial reach. Policies promoting the development of energy efficient
technologies may also include simplifying planning and permitting for big hydro and nuclear; product standards
for appliances and building codes; subsidies for fast market penetration of renewable energy and how to get these
to scale and thereby reduce costs for these technologies and risk guarantees for these new major technologies.
Government should keep all energy options open and avoid choosing “winners and losers” among technologies, at
the same time considering investment requirements for the range of options in the energy mix. Investments are
driven by expectations of future returns which will depend on future market conditions, so providing innovation-
friendly markets for companies should become one of governments’ main goals, for lack of these frameworks
constitute a major barrier to investments in research and stifles innovation.
Managing energy sustainability in this new future would require distinctive business structure that will enable
frameworks for a synergized megatrend in new business adaption, incentives and attractive partnership
capabilities to push back the limits of possible economic development. The important role of business in energy
efficiency, within its sphere of responsibility, in partnership with other stakeholders is fundamental. It should be
taken into account that business operates well under sound, and predictable long term enabling framework that
enhances the ability of business to make optimal contributions to improving energy efficiency. Enabling
frameworks, taking into account economic, environmental and social implications, are critical to the success of
both governmental policy and to motivate and support private sector contribution to energy efficiency and
innovation in technology resulting in sustainable future. Countries need to provide innovation-friendly markets
for their companies, the lack of which constitute a major barrier to investment in research and development and
stifles innovation. Governments should ensure the development and deployment of leading-edge technologies
through partnerships and incentives and an approach to mitigate long-term market risk and deliver secure benefits
for large scale, low-carbon and efficient new technology projects. These conditions when provided by
governments will attract and support business investments and innovations in the energy sector. Business supports
partnerships as a very practical means of contributing to improvement of energy efficiency and delivering
sustainable development. For instance, innovation systems and human resources for science and technology
accounting for better energy efficiency can be achieved through promotion of better public-private partnerships,
in particular of the industry-university relations. Government, industry and other stakeholders will have to work
hard together to improve energy sustainability.
5. Pathways for Energy Sustainability
The road map is very clear: create a vision that moves systematically through four stages of value based criteria.
Hence, it’s important to find out the unique competitive differentiators in this new landscape. Therefore, pathway,
and sustainability analysis of energy future are essential which are true for any new megatrend and /or system.
This is necessary to satisfy success in these value based criteria, hence, these competitive differential factors and
its pathway travelled with time (Hossain et al, 2009). According to Khan and Islam, the pathway of a sustainable
technology is its long term durability and environmentally wholesome impact while an unsustainable technology
is marked by ∆t → 0 (khan, M.I & Islam, M.R., 2007).
In this era of globalization, no industry or system can address energy sustainability challenges in isolation. While
technology innovation and new business strategy does not substitute for government commitments, they remain
powerful means for industry and stakeholders to contribute to sustainable development objectives. Thus
sustainability concept is the vehicle for the near future R&D for technology development. A sustainable system
will work towards natural process, and nature is symmetric. (Khan et al. 2005c, 2006) stated that the model “time-

4. 4 SPE 147773
tested” of sustainability hypothesizes the sustainability of a technology which can be achieved if it emulates
nature. In nature, all functions or techniques are inherently sustainable, efficient and functional for an infinite time
period, i.e. ∆t → ∞. Therefore, following the same path as the function inherent in nature, we can develop a
sustainable energy future. Figure 2 shows the pathway for sustainable energy development as a flow chart.
6. The Sustainability Imperative: Energy future Development
The oil and gas development history is marked by periods of relative stability punctuated by fundamental shifts in
the competitive landscape that create inescapable threats and game-changing opportunities. Sustainability is an
emerging business megatrend, like diversifying portfolios; rethinking technology and nurturing industry /
government partnerships that will profoundly affect companies’ competitiveness and even their survival.
Sustainable energy future should be evaluated based on four value- judgment related to: Economy,
Environmental, Social and Energy Security. Figure 3 is an extension of figure 2. It suggests that the total critical
natural resources should be conserved in the whole energy development process. Based on the assumed concepts,
the following criteria are taken into consideration.
Economic Capital : Cen
Environmental Capital : Cec
Social Capital : Ce
Energy Security : Cs
Natural Capital : Cn = Cen + Cec
To enable success in the sustainability criterion, the sum of all the capitals cost should be greater than or equal to
constant for all time horizons, i.e. (Cn + Ce + Cs)t constant for any time, t. However, these conditions have
underlying assumptions that: 0, 0, 0 Figure 3 also depicts a diagnostic test
procedure of the proposed sustainable energy future development. If a new developed system passes through
these procedures, it can be certify that the proposed new development is sustainable.
7. Conclusions
The world’s energy supply is presently dependent on fossil fuels and natural gas as source of energy. These
conventional sources of energy are finite and slowly declining with time and space, and have added pressure on
environmental issues. In order to guarantee the sustainability of energy future and in extension economic
stability; a diversification of energy sources, rethinking technology and paradigm shift in business strategy will
magnify the process of energy development and ensure energy future security. A sustainable energy future
development pathway is developed and suggested to test the sustainability.
References
1. Abdul Rahman, M. and Lee, T. (2004) Energy Policy for Sustainable Development in Malaysia: The joint
International Conference on Sustainable Energy and Environment (SEE), Thailand.
2. BP Sustainability Reporting, 2009: Energy Challenges and Climate Change (Meeting the energy demands
of today & tomorrow).
3. David A. Lubin and Daniel C. Esty, (2010) The Sustainability Imperatives: Harvard Business Review.
4. Energy Efficiency for a Sustainable Future (2007): The voice of OECD Business, Paris France.
5. Fabrizio BARBASO (2010) Energy networks, diversifying energy sources and increasing energy
efficiency (Directorate for Energy: European Commission).
6. Hitam, S. (2000) Sustainable Energy Policy & Strategies: A pre-Requisite for the Concerted Development
and Promotion of the Renewable Energy in Malaysia.
7. Hossain, M.E., (2011) Development of a Sustainable Diagnostic Test for Drilling Fluid: International
Symposium on Sustainable Systems and the Environment (ISSE), American University of Sharjah,
Sharjah UAE.
8. Khalid A. Al-Falih, (2011) “Addressing the Real Sustainability Challenge” Keynote address: The second
International Energy Forum NOC, IOC Forum, Paris France.
9. Khan, M.I. and Islam, M.R. (2007) Handbook of Sustainable Oil & Gas Engineering Operations
Management, Gulf Publishing Company, Austin Texas.

5. SPE 147773 5
10. Khan, M.I & Islam, M.R., (2005) “Sustainable Wealth Generation: Community Based Offshore Oil &
Gas Operations: VARICOSTA 2005 – International Conference on Integrated Coastal Zone Management,
University of Oriente, and Santiago du Cuba.
11. The Future of Energy: Corporate Social Responsibility Report (Total Oil Intern’al, 2006)
12. Pathways to Energy Sustainability: Measuring APEC progress in promoting Economic Growth, Energy
Security and Environmental Protection (2010 Asia Pacific Energy Research Centre;
www.ieej.org.jp/aperc