Ladies and gentlemen, it is a pleasure to join you for the 20th meeting of what has become a preeminent forum for thought leadership in energy. An even greater pleasure to do so in this magnificent Opera House.
And I must say, it is a thrill for me to return to Florence.
You see, some 35 years ago, as a young high school graduate in Saudi Arabia, I made my very first trip abroad. And my destination was Florence!
As I’m sure you will appreciate, this beautiful city inspired in me a sense of wonder that remains to this day.
In fact, I remember vividly standing just about a mile from here, at the feet of a masterpiece I’d seen in countless photos – Michelangelo’s iconic “David” sculpture. I was awed by the statue’s size … and found myself trying to estimate just how massive a block of marble Michelangelo must have started with to carve a 5-meter-high figure.
It was obvious even then – I was destined to be an engineer!
And with that memory in mind as I was thinking about my talk today … it occurred to me that the work of a sculptor is relevant to this pivotal moment for our industry.
Because, before the artist can carve the statue from the stone, he must first have a clear vision of what he wants to create.
And so, let me begin this morning by considering a clear vision of a promising energy future, amidst an ongoing transition …
For all the disagreements among stakeholders on how we might get there, there seems to be broad unity on the long-term vision.
We know we need an energy portfolio that meets the needs of mankind. With the global population increasing by 1.5 billion by mid-century, as well as rising living standards of the existing base, we need adequate energy supplies to support rapidly expanding urban populations, and the economies that grow with them.
We need an energy portfolio that meets the needs of the environment. A low-carbon energy mix that reduces emissions, holds the line on climate change, and improves air quality. And to achieve these things, we need an energy portfolio that is at the cutting-edge of technology. One that eliminates poverty, delivers maximum value, higher productivity, reduced emissions, greater reliability and efficiency, and improved safety.
It short, what we all want is a future of reliable, ample, affordable, cleaner energy for the world. But ladies and gentlemen, this is where the consensus ends!
There are many different views on the best path to get us there, and the pace of change required. So, for simplicity, let me describe a narrative – one I feel strongly about – that has not received enough attention.
In this scenario, vehicle electrification progresses, but the transition is long and winding – even generational in duration. It reflects significant differences among various parts of the world, and the need for multiple technologies and energy sources to run in parallel.
There is ample precedent for this … man’s transition from wood to coal, for instance. Or from coal to oil and gas. So, it is realistic to expect oil and gas to continue to play a major role in delivering reliable, affordable energy for decades to come.
Ultimately, the situation on the ground – where affordability, reliability, energy security and adequate time to switch-over are paramount for the end user – will likely move us along this more realistic path … and ensure a more orderly transition in which no nation or region is left behind.
So, this poses an important question.
If we can agree on what the energy future looks like, with oil and gas continuing to shoulder a major burden of the world’s growing energy needs … then what does a successful oil and gas company of the future look like?
In a word, “smarter.”
And I don’t mean solely in terms of technology. … Beyond shattering technical barriers and developing and promoting cleaner oil products, we also have to improve our image, engagement and public acceptance in order to better fulfill our role in society.
A successful energy company of the future must be seen as a positive contributor moving mankind forward. A company focused not only on shareholders, but also on the broader group of stakeholders … from consumers and employees, to suppliers, governments, regulators, and communities.
Certainly this applies to climate change, where we must have a healthier, more productive, and broader dialogue with the public. It goes without saying that we must be actively committed to delivering technologies that reduce the GHG footprint of hydrocarbons. But we must also better communicate the actions we are taking and the progress we are making.
For example, Saudi Aramco’s work with the Oil and Gas Climate Initiative, our R&D in cleaner burning IC engines, CCUS and profitable uses of carbon … reduced methane emission and flaring significantly. Or more recently, Saudi Arabia’s being recognized for the lowest upstream carbon intensity in the world.
When we better engage the public, we can correct the misperception that our industry is simply “part of the problem” on climate change … and help them realize we are part of the solution.
A big part.
Next, a successful energy company will, in a sense, be a successful “technology” company. Florence was at the epicenter of the Renaissance in the 14th century. In the 21st Century, our industry has the opportunity to be at the epicenter of the Fourth Industrial Revolution. But only if we reclaim our passion for innovation. There was a time when we were at the leading edge. We created 3D seismic and horizontal drilling – we introduced super computers to discover, develop and manage reservoirs.
Today, compared to industries like computing, space and aviation, healthcare, and the Internet, we are nowhere near the front of the pack. But this is not for a lack of opportunity.
We have within our reach digital technologies that are turning science fiction into science fact. Tools like AI, the IoT, Robotics, Big Data Analytics, and many others.
I am proud to say Saudi Aramco was working in the Fourth Industrial Revolution years before the World Economic Forum coined the term. Our Uthmaniyah Gas Plant, for instance (one of our oldest gas plants) has become a leader in the use of Advanced Analytics and AI solutions. This has helped us cut inspection time by 90%, reduce cost, improve safety … and it has resulted in the WEF recognizing the plant as one of its “Lighthouses” leading the way in Industry 4.0, and the only one from oil and gas.
I mention this because, as an industry, we have massive amounts of data from seismic, production, mechanical and electrical functions. A single drilling rig or gas plant can generate terabytes of data every single day. But we tap into only a very small fraction of it.
By applying new technologies to data we are already generating, we can change the game.
In exploration, for instance, Machine Learning and AI can sift through vast amounts of 3D and 4D seismic data to extract features invisible to the human eye. Or in drilling, we should settle for nothing short of fully-automated drilling rigs to increase performance, safety and efficiency.
All of this – and much more – is within our grasp.
So what’s holding us back? … I would offer two thoughts:
First, market turbulence has had a chilling effect on investment. In field development, the investments that are being made are mostly for short-cycle, smaller projects. While in R&D, they are mostly in incremental improvements with quick payouts. We must reverse this trend … because I believe lagging investment is the greatest single threat to our future success.
And second, in our industry, we tend to keep our problems to ourselves. But this is not the way in the 4.0 space, where innovation comes from looking beyond our industry’s borders … in collaboration, not isolation. Breakthroughs come when we blur the lines … when fields like Digitalization, Bio and Nano Technologies, Space Science, Quantum Computing, Robotics, Big Data, and Earth Sciences collide.
Whether it’s a full-scale test deployment with a leading robotics company, or a simple collaboration with a university on a difficult algorithm, we have an opportunity to transform our industry by working together.
And finally, a successful energy company will build and exploit a competitive advantage. We know technology is a differentiator. But it is not the only one. For a service company, a renewed focus on efficiency and cost leadership, with a higher quality of service, will offer success where others fall behind.
Maximizing areas of competitive advantage and differentiation – whatever they might be – is critical. There are still bright prospects ahead of our industry, but the environment will be challenging and only the best will thrive.
Ladies and gentlemen, during such a pivotal moment in our history, it is fitting that we are gathered in the cradle of the Renaissance. Because “renaissance” means “rebirth.” And that is exactly what is called for if we are to strengthen the role oil and gas will continue to play in mankind’s future.
If we will rekindle our passion for innovation and advanced technology...
If we will commit to the investments needed to expand supply, unlock new value and find competitive advantage...
And if we will continue to develop – and be “seen” developing – lower carbon, cleaner oil and gas products and technologies...
Then I believe an uncertain and ambiguous future is the very stone from which we will carve a stronger and more capable industry. One that will grow and remain profitable for generations to come.
Where we must not be found lacking is in our ambition. And so I will leave you with the words of a man from Florence who knew something about ambition.
It was Michelangelo himself who said, “The greatest danger for most of us is not that we aim high and we miss it, but that we aim low, and we achieve it.”
It has been a great pleasure to return to Florence and speak with you today.
And I thank you very much.