Slovakia’s petroleum industry is celebrating 105 years since successful trials started in the former Austro-Hungarian Empire, when crude oil was industrially produced for the first time. This year’s 105th anniversary of hydrocarbon exploration and production and the 45th anniversary of underground natural gas storage in Slovakia was the occasion to interview the Chief Executive Officer of NAFTA a.s. (NAFTA), Ing. Martin Bartošovič.
1. 105 years have passed since the dawn of oil and natural gas production in Slovakia. At what moment over this long period of time did the industry most change?
An important moment was the discovery in Gbely of the first heavy crude oil reserves. The moment was the beginning of crude oil and gas
exploration in Austria, Hungary and the other countries of what was then Austria-Hungary. Another important moment was in the 1950s, when the construction of a natural gas infrastructure led to intensive use of gas, which had previously been only a by-product of oil production. Likewise, the moment when the idea of converting exhausted deposits into gas storage facilities was conceived in the late 1960s and early 1970s would create the conditions for the development of a rather interesting industrial sector. An integral part of this history includes the start of construction of underground storage facilities in the Vienna Basin.
2. How is the industry today different from the early days?
The main difference is probably that our predecessors were entering completely new, unexplored areas and its entire geological potential was still ahead. Nevertheless, evolving methods of exploration gradually led to the discovery of significant reserves. Now the situation is something else. In Slovakia, where we have operated for 105 years, the potential in classical areas has been markedly depleted. Most reserves located at easily available depths have already been found, exhausted and are being converted to gas storage facilities. Therefore, we have been moving toward a new conceptual approach to both exploration and production. Using modern methods (especially 3D seismics) in areas where hydrocarbon potential has previously been confirmed, production is finally taking place and today additional hydrocarbon reserves are being discovered. These modern methods have resulted in additionally collected data highlighting exploratory potential that had never been identified before. Of course, drilling and production technologies have also been moving forward. In the past, it would take years to excavate deep wells, but today such wells can be drilled in three to four months.
In addition, over the many years NAFTA has been in business, we have gained valuable exploration and production experience and data, which today we are exploiting quite well in our core business, the storage of natural gas in underground storage facilities.
3. Are you saying that NAFTA’s 105-year tradition of producing hydrocarbons is an advantage in operating underground storage facilities?
Yes, quite clearly. This is because underground natural gas storage is a relatively small sector compared to hydrocarbon production and the scope of investment into research and development corresponds to its size, which is obviously lower than investments into exploration and production. Gas storage is a specific department, where the most sophisticated gas technologies selected from a wide range are combined together to produce the maximum effect with a minimum environmental impact, with the emphasis on effective utilization of natural resources.
4. Besides the anniversary of hydrocarbon exploration and production, 2018 is also the 45th anniversary of natural gas storage in Slovakia. How do you think the business has changed from its beginnings?
At that time, the storage sector was a component in vertically integrated gas companies, which was how the European gas industry had evolved. Basically, one large customer was served that would purchase and subsequently sell the gas. Today, contractors and traders are much more involved in gas, something also reflected here in the higher number of customers. Before, the storage business was more stable and unpredictable. If the outside temperature was falling, production requirements would increase. Currently, we can no longer manage like that. Customers are stocking smaller amounts of gas and are using various products in different ways. Overall, the demands placed on the operation have risen in those 45 years. While reservoir injection and production were one time uniform and foreseeable, today many larger fluctuations have to be handled. In addition, higher volatility is reflected in both the diversion of gas from individual handover-takeover points and the change in flow, and so from production to injection. In summary, the main changes have been higher volatility and a tougher environment for forecasting.
5. How is NAFTA responding to similar changes in the market?
Certainly, the best response is to foresee changes and ideally to respond to them ahead of time. We are developing storage products customers find interesting. These are mainly products aimed toward greater flexibility and a higher degree of “customizing” products. At present, NAFTA is providing its customers with a broad portfolio of gas storage services ranging from storage capacity through individual injection and production services to changes in handover-turnover points. Examples include flexible storage contracts that allow year-round natural gas injection and production without seasonal restrictions.
6. Over this long tradition, NAFTA has gained know-how it is trying to exploit outside Slovakia. What type of technology and services is NAFTA exporting?
NAFTA has strong know-how, particularly in geology, reservoir engineering, drilling and repairing wells. Likewise, we have a strong presence in reservoir simulations, control systems and process engineering. Our ambition is also to use the knowledge and experience we have gained in Slovakia in countries with similar geological structures and in reservoirs where our efficient production methodology can be implemented.
One aspect of our reservoir engineering we can offer is the optimizing and developing of storage capacities. We are endeavoring to look in the same way at our customers’ facilities and, moreover relative to the competition, we are not only offering a model and assessment report with our recommendations, but also implementing the solutions we propose.
7. Are you satisfied with the direction the company is heading? How would you characterize the company now?
NAFTA is today a modern company with extensive experience in constructing and maintaining underground gas storage facilities in Slovakia, and also Slovakia’s leader in hydrocarbon exploration and production. NAFTA’s underground storage facilities are playing a critical role in guaranteeing smooth gas deliveries in Slovakia, while being an effective instrument for boosting trade in the gas market. Many years of experience coupled with a highly qualified team of professionals are the main reason I believe that NAFTA has excellent potential to be a reliable partner even for companies operating all over the world. For me, and I believe also for my colleagues, celebrating another anniversary is most of all an opportunity to showcase the professionalism, technical expertise and strong position the company enjoys at the top of our industry. And I also consider this a good opportunity for our business to be a bit more sophisticated among the general public.
8. What is NAFTA’s long-term strategy?
NAFTA’s long-term strategy is to continue its strong gas and energy tradition in Slovakia, prioritizing reliable deliveries and quality in services. NAFTA was and remains a pillar in Slovakia’s energy security and underground storage facilities are one of the safest and most economical tools to ensure secure gas supplies. Even though the natural gas market is far from simple these days, NAFTA is responding to market changes by becoming more flexible, offering a wide range of products, providing greater operational safety and finding new opportunities in exploration. At the same time, we are focusing on growth through acquisitions.