Oil Review Africa 3 2013

ORA 3 2013 Cover_cover.qxd 21/05/2013 16:01 Page 1

■ Geology - p28 ■ Gas - p30 ■ Exploration - p32 ■ Technology - p41

Volume 8 Issue Three 2013

www.oilreviewafrica.com

Africa

Covering Oil, Gas and Hydrocarbon Processing

Europe m15, Kenya Ksh300, Nigeria N400, South Africa R20, UK £10, USA $16,50

Oil Review Africa - Issue Three 2013

Nigeria downstream a work in progress Algeria comes full circle to embrace investment Tackling the people problem Gas to liquids floating solutions

Nigerian firms prosper from offshore oil boom

Accurate and reliable pipeline leak detection Round pipes - an engineer’s pipe dream Mechanical extrusion technology Oil cyber security the invisible attackers

www.oilreviewafrica.com

Aliko Dangote aims to invest up to US$8bn in a major new oil refinery.

See page 20.

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

S01 ORA 3 2013 Start_Layout 1 21/05/2013 14:49 Page 2

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S01 ORA 3 2013 Start_Layout 1 21/05/2013 16:11 Page 3

■ Geology - p28 ■ Gas - p30 ■ Exploration - p32 ■ Technology - p40

Contents

Volume 8 Issue Three 2013

www.oilreviewafrica.com

Africa

Covering Oil, Gas and Hydrocarbon Processing

Europe m15, Kenya Ksh300, Nigeria N400, South Africa R20, UK £10, USA $16,50

Nigeria downstream a work in progress Algeria comes full circle to embrace investment

Columns

Tackling the people problem

Industry news and executives’ calendar

Gas to liquids floating solutions

4

Nigerian firms prosper from offshore oil boom

Accurate and reliable pipeline leak detection Round pipes - an engineer’s pipe dream

Analysis

Mechanical extrusion technology

Oil market analysed

Oil cyber security the invisible attackers

12

Ahead of the northern hemisphere’s “driving” season, the oil market has been quiet, considerably eased by the resumption of international supplies from South Sudan.

Aliko Dangote aims to invest up to US$8bn in a major new oil refinery.

See page 20.

Country Focus

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

Nigeria

Nigerian firms prosper from the offshore oil boom...Afren drilling at Okoro East.

14

Nigerian firms prosper from offshore oil boom.

The downstream sector - a work in progress.

Algeria

22

Algeria comes full circle to embrace investment but outside dangers lurk.

Human Resources Tackling the people problem

24

Access to human resources is critical for the future success of the oil and gas industry.

Gas Liquid floating solutions deal

30

SBM Offshore has joined forces with CompactGTL to provide gas to liquids floating solutions.

Developments

31

A round-up of recent gas activity from around the region.

E&P Developments

Editor’s note The growth of Nigeria’s rich deepwater sector has had a big impact on the nation’s homegrown oil and gas companies, with the country’s entrepreneurs in the services sector as well as new and emerging locally-owned exploration and production companies starting to gain a foothold in this testing sector.

Meanwhile Algeria is showing renewed signs of progress and now there is a political will to reform upstream investment terms and so investor confidence is building.

However, there is still a ‘people problem’. As the industry moves to increasingly deeper waters and tougher environments, high-skill labour is increasingly scarce, with one generation retiring, and the new generation as yet inexperienced. The oil companies cannot buy their talent - they have to increase their own efforts to develop it.

32

The latest exploration and production news from around the region.

Interview Rosetti Marino looks south

38

Interview with Alessandro Heltai about the company’s plans to seek new markets in sub-Saharan Africa.

Technology Accurate and reliable pipeline leak detection

41

How the latest leak detection systems based on Coriolis flowmeter technology can help operators to meet regulatory requirements and detect leaks effectively with a minimum of false alarms.Information Technology

Pipelines

44

Round pipes - an engineer’s pipe dream Collaborative effort proves successful for Angolan pipe-lining project

Extrusion technology

46

One of the most innovative recent advances in downhole activation for the drilling industry has been the introduction of mechanical extrusion technology by Churchill Drilling Tools, incorporating the deployment of rigid metal darts.

ICT Cyber security - the invisible attackers

49

Michela Menting of ABI Research tells Oil Review about some of the cyber threats the industry should fear — and why they should fear them.

41 Accurate and reliable pipeline leak detection. Typical installation using Coriolis meters for pipeline material balance.

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Covering Oil, Gas and Hydrocarbon Processing

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Oil Review Africa Issue Three 2013 3

Industry News & Events

S01 ORA 3 2013 Start_Layout 1 21/05/2013 14:49 Page 4

Executives Calendar 2013 JUNE 10th Maghreb, Mediterranean, MidEast Upstream Conference

3-5 4-6 4-6 4-6 11-12 11-12 12-13 13-14 18-20 18-20 18-20 18-20 19-20 19-20

Nigeria Oil & Gas Technology Lagos Power NOG Logistics Oil Council Africa Assembly Mozambique Recruitment Summit EG Gas Platts Crude Oil Summit IFSEC South Africa 4th Eastern Africa Oil, Gas & Energy Conference 2013 ZIMEC (3rd Annual Zambia Intl Mining & Energy Conference & Exhibition African Energy Forum Offshore Africa Summit World National Oil Companies Congress

PARIS LAGOS LAGOS LAGOS PARIS MAPUTO MALABO LONDON JOHANNESBURG NAIROBI LUSAKA BARCELONA JOHANNESBURG LONDON

www.petro21.com www.cwcnogtech.com www.lagos-power.com www.nog-logistics.com www.frontier-communications.com www.eliteic.net www.cwceg.com www.platts.com www.ifsecsa.com www.petro21.com www.zimeczambia.com www.africa-energy-forum.com www.offshoreafricasummit.com www.terrapinn.com

Angola Recruitment Summit NAICE 2013

LUANDA LAGOS

www.eliteic.net www.spenigeria.spe.org

Oil & Gas Summit Africa

MAPUTO

www.africa.oilgassummit.com

Offshore Europe 3rd U & D Oil & Gas Summit

ABERDEEN ABUJA

www.offshore-europe.co.uk www.environmental-expert.com

Power Nigeria East Africa Oil & Gas Summit CIOME 2013 NOCs & Governments Summit

LAGOS LONDON N'DJAMENA LONDON

www.power-nigeria.com www.eastafrica-oil-gas.com www.ciome-chad.com www.nocs-governments.com

JULY 6-7 30-1 Aug

AUGUST 18-20

SEPTEMBER 3-6 24-26

OCTOBER 2-4 7-10 8-11 28-30

Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

OTC sees record number of attendees EXPERTS FROM THE offshore energy industry around the world came together for the 2013 OTC in Houston. Attendance at the conference reached a 30-year high of 104,800, the second highest in show history and up 17 per cent from last year.

Attendance surpassed the 2012 total of 89,400 and the sold-out exhibition was the largest in show history.

“We had a terrific conference with deep and broad technical coverage, supported by excellent panels and executive keynote presentations,” said Steve Balint chairman of OTC. “Technology is at the heart of the offshore industry and it was all here on display at OTC 2013.”

This year’s event featured nine panel sessions, 29 executive keynote presentations at luncheons and breakfasts, and 298 technical papers.

Speakers from major IOCs, NOCs, and independent operators presented their views on the current challenges and future directions of the industry.

OTC’s Spotlight on New Technology recognised 15 technologies for their innovation in allowing the industry to produce offshore resources.

Energy ministers and national oil company senior executives participated on a panel where they shared their perspectives on how the industry and its partnership models should adjust to address future supply challenges and what role companies and governments should play to shape the energy future.

The Distinguished Achievement Award for companies, organisations, or institutions was awarded to Total’s Pazflor deep offshore development at the sold-out event on the floor of Reliant Stadium.

OTC 2014 takes place 5-8 May 2014 at Reliant Park.

4 Oil Review Africa Issue Three 2013

E Africa resurgence reshapes oil landscape RECENT LARGE AND world-class gas discoveries in Mozambique and Tanzania, with potential for more to come, and commercial oil flows in Kenya, show the potential of the enormous exploration frontiers of Eastern Africa, both onshore and offshore. The impact of this resurgence is rebalancing the Africa oil-gas industry landscape into a wider continental oil and gas/LNG game, with potentially global consequences.

The 4th Eastern Africa Oil, Gas & Energy Conference 2013 gives new insight in the opportunities, acreage, key players and corporate and government strategies in this region. The Conference is hosted annually by Global Pacific and will be held from June 18th to 20th in the InterContinental Hotel in Nairobi, including the pre-conference 4th Eastern Africa Strategy Briefing by Dr Duncan Clarke. The meeting highlights presentations of CEOs, government officials, ministers and key executives from within leading corporate and state oil companies.

During the 4th Eastern Africa Conference key Speakers will reveal the exploration potential, future opportunities and growth in countries like Kenya, Somalia, Ethiopia, DRC, the Seychelles, Tanzania, Madagascar, Burundi, Rwanda, and regional oil giant Uganda.

“The new discoveries will add substantial net wealth to the Eastern Africa’s littoral states where they are located, and induce higher economic growth rates and regional development,” Dr Duncan Clarke, Chairman of Global Pacific & Partners, says.

Prior to the conference the 4th Eastern Africa Strategy Briefing together with the celebrated 51st PetroAfricanus Dinner, will be held on June 18th.

During the Strategy Briefing Dr Duncan Clarke will provide key insights on the corporate upstream oil and gas game, governments and state oil firms and licensing agency strategies. www.oilreviewafrica.com

S02 ORA 3 2013 News_Layout 1 21/05/2013 11:09 Page 5

Industry News & Events

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TWMA wins first contract offshore W Africa TWMA, A LEADER in integrated drilling waste management and environmental solutions, has announced their first offshore processing project in West Africa. The 400-day contract is to supply TWMA’s industry-leading offshore processing services to support Glencore Exploration Cameroon Ltd’s (Glencore) West Africa drilling campaign.

The scope of work includes the installation of a TWMA TCC RotoMill and cuttings collection and distribution system (CCDS). This integrated approach provides a complete containment, treatment and disposal solution for capturing drill cuttings and associated fluids on-board the Atwood Aurora jack-up drilling rig. A team of experienced TWMA operators are managing the project on location.

As offshore production in Africa escalates, new operators penetrating the sector are being forced to consider implementing reliable methods of reducing the environmental impact of improperly disposed drill

cuttings. The solution provided by TWMA treats all nonaqueous base fluid (NABF) drill cuttings by way of thermal desorption, recovering 99 per cent of base oil for reuse by the operator. The inert rock powder and recovered water are disposed overboard for sea dispersal, in a process which is proven to have a near zero impact on the environment.

"The size of the rig combined with deck loading restrictions and a very tight design cycle made this a very interesting and challenging project from the outset,” said Kyle Duncan, TWMA project engineer for the Glencore installation. “In order to meet the project deadlines, TWMA’s engineering team travelled to Houston to complete a fast-track FEED phase with the client.”

Upon completion of the preliminary design works, TWMA finalised and delivered the full engineering design package within a three-week time frame in order to obtain the client’s approval prior to mobilisation.

Lekoil plans to be pan-African player WEST AFRICA-FOCUSED junior oil firm Lekoil has raised US$48.6mn from investors as part of its listing on London's Alternative Investment Market.

The firm plans to use the funds to become a panAfrican oil and gas business. So far, it has a farm-in agreement with Afren that will see it ultimately

acquire a 27-per cent interest in the OPL310 license, offshore Nigeria, and it holds a 69.75-per cent interest in Blocks 2514 A & B, offshore Namibia.

Lekoil Namibia intends to acquire 2D seismic data over Blocks 2514 A &B in 2014 as a first step towards defining drillable exploration prospects.

Japan invests $2bn in African projects JAPAN WILL PROVIDE US$2bn worth of financial support over five years to back Japanese companies’ resources development projects in Africa.

Japanese news agencies Kyodo and Jiji reported the country’s Trade Minister Toshimitsu Motegi making the announcement at the Africa-Japan Ministerial Meeting for Resources Development in Tokyo. The financial support will be channelled through state-run Japan Oil, Gas and Metals National Corp, the news agencies said.

Several Japanese companies have been participating in resources projects in Africa, including Mitsui & Co, which is partnered with Anadarko in the Area 1 liquefied natural gas project in Mozambique.

Shell & CHC enter five-year agreement SHELL INTERNATIONAL EXPLORATION and Production has selected CHC Helicopter, the world’s leading offshore helicopter services provider, for a five-year, multi-million dollar contract to support Shell‘s deep-water exploration activities off the coast of sub-Saharan Africa.

The agreement, which comes with five, one-year options, will dedicate two Eurocopter Super Puma L2 aircraft to helicopter transportation services and emergency medical evacuation capabilities in support of Shell’s Noble Globetrotter II Deepwater drillship’s multi-country operations. Delivery of those services begins from July 2013.

CHC has provided services in 19 different African countries for a diverse mix of customers, including oil and gas operators and the United Nations. The company operates both Agusta Westland 139 and Sikorsky 76 aircraft for ongoing rig support across multiple drilling programmes.

Chris Krajewski, CHC’s regional director for Africa and Euro-Asia, said his company has unmatched

6 Oil Review Africa Issue Three 2013

knowledge and operational experience in supporting such complex multi-country projects.

“We support customers in challenging oil and gas territories around the world, including in recent projects for EHL, Petrobras and British Gas throughout East and West Africa,” said Mr Krajewski. “This contract reflects CHC’s ability and our commitment to customers, as we help them safely go further and do more in Africa and around the world.”

He said that CHC has particular expertise in understanding and working within different national flight requirements, as well as quickly and efficiently starting up operations in support of new contracts.

Wärtsilä signs service agreement in Zambia WARTSILA, A LEADING global supplier of flexible and efficient power plant solutions and services, has signed an Operations & Maintenance (O&M) agreement with Ndola Energy Company Ltd (NECL), a subsidiary of Great Lakes Energy NV. The agreement was signed in April and is for ten years. It will cover the full operations, maintenance and servicing of the NECL power plant located in Ndola, Zambia.

The plant will be powered by a total of six Wärtsilä 32 engines running on heavy fuel oil (HFO), a byproduct supplied from the Indeni refinery, which is immediately adjacent to the plant.

The plant is scheduled to commence commercial operations at the end of July 2013, and the electricity produced will be sold to Zambia Electricity Supply Company Ltd (ZESCO Ltd). When operational, the plant will have an electrical output capacity of 50 MW, which will be fed to the grid. It will be the first HFO power plant installed in Zambia to be exclusively operated

by Wärtsilä.

“Our extensive experience and know-how in O&M as well as our capability to mobilise in such a short span, together with the efficiency and reliability of the Wärtsilä equipment will be of tremendous value in ensuring the success of this important project,” said Kaj Nordman, Director Business Development Power Plant Agreements, Wärtsilä Services, Contract & Project Management.

“The power plant is designed with high operating efficiency, low generating costs, and reliability as key criteria, and these are all areas where Wärtsilä excels.”

The NECL power plant will contribute significantly towards Zambia achieving a more diversified energy mix and increased stability in its power generation. The country relies heavily on hydropower and this new power plant will complement Zambia’s installed capacity.

David Carroll, Business Development Manager, Ndola Energy Company Ltd, said: “This is a milestone achievement in developing the power generation business in Zambia. This is the first greenfield project from an independent power producer to operate in Zambia, with the funding being 100 per cent private sector capital.” www.oilreviewafrica.com

S02 ORA 3 2013 News_Layout 1 21/05/2013 11:09 Page 7

Industry News & Events

S02 ORA 3 2013 News_Layout 1 21/05/2013 11:09 Page 8

Nexans heated cables to protect Lianzi subsea pipeline NEXANS, A WORLDWIDE expert in the cable industry, has been awarded a US$32mn contract by Subsea 7, a global leader in seabed-to-surface engineering, construction and services to the offshore energy industry, to design and manufacture the direct electrical heating (DEH) system for the subsea pipelines serving the Lianzi oil field development located in a unitised offshore zone between the Republic of Congo and the Republic of Angola. The Lianzi field is operated by Chevron Overseas (Congo) Ltd. The Lianzi fields tie back to the Benguela Belize Lobito Tomboco (BBLT) platform located in Angola Block 14.

With a water depth between 390 and 1,070 m, this will be the world’s deepest DEH system.

The contract with Subsea 7 covers the

delivery of a complete DEH system, including DEH riser cable, armoured feeder cable, a 43 km long piggyback cable and all associated accessories for connection to the pipeline that will connect the Lianzi development project subsea facilities with the BBLT platform. The piggyback cable incorporates Nexans’ field proven Integrated Protection System (IPS).

DEH is a technology for flow assurance, developed to safeguard the wellstream through the pipeline to the platform.

Alternating current (AC) transmitted from the DEH cable runs through the steel in the pipe, which heats up due to its own electrical resistance. By controlling the current, the pipeline inner wall can at all times be maintained above the critical temperature for wax and hydrate formation. The DEH system eliminates the

need for chemical injection, pressure evacuation or other flow assurance methods that might have environmental or operational challenges. DEH allows the pipeline to be operated in a cost-efficient and environmentally safe manner.

“This latest project with Subsea 7 is a further confirmation of Nexans’ position as the prime supplier for the development and implementation of DEH systems,” says Eldar Ystad, Sales Manager DEH systems, Nexans. “Over the past 15-20 years, Nexans has supplied 19 out of the 20 pipelines operating with DEH systems.’

The cables for the Lianzi DEH system will be manufactured at the Nexans factory in Halden, Norway, for delivery during the summer of 2014. As a result, problem free and reliable transportation of hydrocarbons is achieved.

Smit Lamnalco welcomes new vessels in Gabon A WELCOME CEREMONY was held for two newbuild vessels SL Gabon and SL Libreville at Port Gentil, Gabon on 17 April.

Among those attending the ceremony were the Minister Delegate of Transport Mr Emmanuel Jean Didier Biye, the Governor of the Ogooué Maritime Province Mr Martin Boguikouma, the Prefect of the Bendjè Department Mr Joseph Mouele, Total Gabon Chief Executive Officer Mr Benoît Chagué and Smit Lamnalco Chief Executive Officer Mr Daan Koornneef.

SL Gabon and SL Libreville have been contracted for a five year period by Total Gabon. The vessels will support offshore oilfield activities and tanker operations at the terminal of Cap Lopez, Port Gentil.

“The partnership between our two organisations has roots reaching back 30 years,” said Mr Koornneef.

“Port Gentil’s location demands robust and reliable marine support services. We are delighted to bring these two state of the art tugs into service for Total Gabon, signifying our continuing commitment to invest in the future of Gabon.”

Smit Lamnalco now operates five vessels for Total Gabon, has a further four vessels under contract for Shell at its Gamba terminal and manages one vessel for Perenco.

The marine support company praised the performance of its 179 Port Gentil-based staff, 75 per cent of whom are Gabon nationals.

Special mention was made of Master Jean-David Mpaga who has been sailing with the company for over 30 years.

Egypt to adopt new oil, gas licensing policy EGYPT WILL ADOPT a new licensing policy for its future oil and gas exploration contracts signed with foreign companies that will allow the north African country to obtain a bigger share of the production, its oil minister Osama Kamal said.

"We have developed a new system that will be implemented in the next licensing round," Kamal said. "The new system will allow Egypt to increase its share of the output when production rises. The more production rises, the more our share will rise."

The new policy won't be implemented on the eight oil and gas exploration projects in the Mediterranean Sea that Egypt awarded earlier for an overall minimum investment of US$1.2bn, Mr.

8 Oil Review Africa Issue Three 2013

Kamal added.

The winning companies in the last bidding round, which include BP, Eni, Edison and IEOC, a subsidiary of Eni group, Canada's Sea Dragon Energy, will drill a minimum of 18 wells and will pay US$73.2mn for the licenses.

Mr. Kamal has previously said that investments in oil and gas exploration are expected to reach US$8.6bn this year.

Egypt has seen its oil and gas exploration activities slowing over the past couple of years due to the continuing political and social unrest since the ousting of former president Hosni Mubarak.

The Egyptian government has been

negotiating with the International Monetary Fund over a US$4.8bn loan, which analysts and investors say is critical for the country. IMF officials left Cairo earlier this month without agreeing on the terms of the loan.

The subsidies are delaying an agreement with the IMF, which is demanding Egypt makes progress on phasing them out.

The fund was on the verge of signing a bailout late last year, but the Egyptian government decided the measures were too controversial at the time. In a country already struggling with civil unrest, any cuts to fuel subsidies could enrage Egyptians who rely daily on cheap fuel, economists said.

www.oilreviewafrica.com

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Industry News & Events

S03 ORA 3 2013 Analysis_Layout 1 21/05/2013 11:31 Page 10

PEM Offshore selects Kongsberg offshore vessel simulators for Nigeria’s first offshore training centre PEM OFFSHORE LTD has signed a multi-million dollar contract with Kongsberg Maritime for the supply of a full suite of offshore anchor handling, dynamic positioning, power management and crane simulation systems. The new simulators will form the main infrastructure for a world-class offshore simulation training centre and the first of its kind in Nigeria and West Africa.

The new training centre will be located in Lagos and serve to support the training of local and foreign offshore personnel involved in offshore oil and gas operations, underpinning a growing market demand for highly competent and qualified personnel for this high risk environment.

With operations in Nigeria, the USA and Trinidad & Tobago, PEM Offshore has a proven track record as a reliable solutions provider offering a wide range of services aimed at improving safety, quality and reliability in the marine and oil & gas sectors. The establishment of the new offshore simulation training centre will create new highvalue employment opportunities for the region and underpin the requirements for qualified marine personnel in this primary offshore supply hub for West Africa.

As part of the contract, Kongsberg Maritime will supply PEM Offshore with world-class simulation

training technology, identical to systems found on board many vessels in the world fleet and also provide subject matter expertise to ensure that the new training centre meets or exceeds industry standards. The simulator delivery includes both DP Class B and Class C simulation trainers, allowing for advanced dynamic positioning training for certification in accordance with Nautical Institute (NI), Det Norsk Veritas (DNV) and International Marine Contractors Association (IMCA) standards.

The PEM Offshore Training Center will also be certified to DP Class A for use in sea-time reduction training, where time spent in simulator training significantly reduces time required for live training at sea, enabling safer and more costeffective DP training.

PEM Offshore has also invested in a comprehensive range of technical and instructor (trainthe-trainer) programmes that will cover all aspects of the DP, Kongsberg offshore vessel simulator (KOVS), crane, bridge and power management simulators. To remain current with evolving regulatory changes and the latest Kongsberg developments, PEM Offshore has also invested in a five- year, Long Term System Support Program (LTSSP).

PEM Offshore Senior Vice President, Philips E. Matthew, commented: “This is a new venture for

PEM that will further our commitment to excellence in our maritime operations for Nigerians and other West African nationals. As the hub of offshore activity in West Africa, Nigeria is a natural location for this facility.

Kongsberg Maritime is the undisputed leader in the offshore Industry when it comes to advanced technology and excellence in delivering training services. With Kongsberg at our side, we take great pride in announcing West Africa's first dedicated commercial offshore training facility and Kongsberg’s visible commitment to supporting its customers operating in this important petroleumproducing region."

Kongsberg Maritime Simulation Inc. President, Henry Tremblay added: “This is a strategic win for our company in what is one of the most active geographic areas for oil & gas exploration and production. This world-class training centre will be equipped with the latest available offshore simulation technology and provide PEM Offshore with the tools it needs to continue growing its expertise in maritime operations. We are very pleased to have been selected for this project.”

PEM Offshore's new training centre is accepting course registrations now for training commencing January 20, 2014.

Unique insights and opportunities at NOGTech NIGERIA OIL AND Gas Technology Conference & Exhibition (NOGTech) is Nigeria’s leading oil and gas technology event, now in its fourth year. Held at the EKO Centre (Victoria Island, Lagos), NOGTech is strategically positioned in the commercial centre to bring together government ministries, industry stakeholders and key oil and gas professionals.

The NOGTech 2013 conference and exhibition will showcase the latest technologies available to the Nigerian oil and gas industry and highlight how these can be utilised to overcome the challenges that industry stakeholders face in successful project delivery. NOGTech 2013 will have a particular focus on how the adoption of new technology and best practice can increase production, drive efficiency and improve cost reduction.

NOGTech 2013 features two days of technical presentations that will directly address the challenges the Nigerian oil and gas industry faces and provide insights into how, through the adoption of the latest technologies and best practices, these can be overcome. Combined with unrivalled networking opportunities for all conference delegates, NOGTech 2013 is a must attend event.

Key topics Include: 6 The important role of technology: Driving efficiency, cost reduction & production increase through technological advances 6 New deepwater technology case studies: Sharing best practice in project delivery:

10 Oil Review Africa Issue Three 2013

Reduced costs & increased efficiency

6 Subsea & deepwater global technology

6 6 6 6

advances: Reducing costs, increasing efficiency & productivity Panel discussion: Financing growth & technology implementation New technologies increasing productivity & reducing costs for marginal field operators Keynote address: NNPC update on the Nigerian Gas Master Plan Technology advances for gas distribution,

utilisation & commercialisation

6 Enhancing commercial returns with the latest metering & monitoring technologies

6 The impact of new technology on production levels, efficiency & OPEX in heavy oil & high water tut projects 6 Panel discussion: How can Nigeria build R&D capacity to encourage in-country technological iInnovation?

6 Panel discussion: What role can technology play in meeting Nigerian content targets?

NOGTech 2012 was a great success.

www.oilreviewafrica.com

S03 ORA 3 2013 Analysis_Layout 1 21/05/2013 11:31 Page 11

Connecting your business.

When it comes to staying connected, corporate customers worldwide rely on SkyVision, a leading provider of IP telecommunications solutions.

• Ensured business communications real-time interpretation of drilling data • Guaranteed bandwidth seamless integration • Business continuity and disaster recovery

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S03 ORA 3 2013 Analysis_Layout 1 21/05/2013 11:31 Page 12

Analysis

Ahead of the northern hemisphere’s “driving” season the oil market has been quiet, considerably eased by the resumption of international supplies from South Sudan.

Developments in China and the USA continue to influence the trend.

Oil market

analysed T

HE PRICES OF most commodities, foodstuffs and industrials, including gold, have been exceptionally weak recently.

Crude oil has certainly not been immune from this trend, with WTI marker grade trading at the end of April at less than US$90/bbl compared with US$97 at the beginning of February: Key components of OPEC’s “basket”, both North and sub-Saharan Africa’s sweeter lighter crudes earn a substantial premium on this because of their exceptional acceptability to traditional refiners.

However in a loose market even this differential has been seen to be eroded of late.

Nevertheless the US dollar has been strengthening nicely at the same time, and this is of course the currency in which most of Africa’s oil is still invoiced. OPEC’s latest averaged-out price just shy of US$100 was way ahead of its suggested and now almost-forgotten “fair” price, and the turnaround in the US gas market has hardly even begun to be felt in the much larger international liquid trades as yet. Meanwhile US imports have continued to fall.

SSA remains region of choice Pluses and minuses abound at the end of April therefore, but SSA remains the region of choice for incoming investors seeking anything better than sluggish growth; far more receptive and responsive than both China and India for example. “The fastest growing continent on earth” Africa has recently been described as. Budding energy centres like Luanda (oil, well established) and now Mtwara (gas, brand new) are starting to feature boomtown conditions right now. Confidence remains high, as a result, for example, of the quietly successful transition to a new administration in Kenya, the East’s most closely watched state.

To put all this into perspective in crude-oil market terms we have examined the latest marketcondition statements from the acknowledged international experts, interpreting what both OPEC and the International Energy Agency have recently been saying - as always - in the light of the fact that they reflect the views of key suppliers and traditional consumers, of course.

First to Paris at the beginning of the month, when both groups shared a platform at the IFP/Petrostrategies 14th International Oil Summit.

OPEC’s Secretary General Abdalla El-Badri expressed confidence that global economic conditions will improve eventually, pointing out that automobile ownership is still on track to double by 2035, with the Organization expecting

12 Oil Review Africa Issue Three 2013

Fossil fuels will continue to dominate.

It is instability that threatens the anticipated recovery in the world economy. total demand for energy in all its traded forms to increase by 54 per cent by this time, and consumption of the core product, traded oil, to grow at an acceptable but much slower rate because of a whole raft of widely discussed and generally agreed reasons.

The bottom line he indicated from Vienna’s viewpoint was that total demand for crude will increase by an average of 20mn bpd between 2010 and 2035, to just over 107mn bpd, leaving plenty of room for enhanced sub-Saharan supplies as long as they continue to demonstrate the reliability they have shown so far.

Any weakening in prices, along with the activities of market speculators, will simply have the effect of deterring incoming investment, he cautioned, a re-statement of course as this is a long-standing OPEC point of view.

And the “basic realities” he summed up his address by outlining are that the foreseeable future

will continue to be dominated by fossil fuels – although the mix will continue to change - and that current weakened price levels are nothing to be worried about. By contrast it is instability that threatens the anticipated recovery in the world economy, he said.

The future is a shared one “The future is a shared one,” he concluded. “There is no country, region or continent that can act alone. It is about inter-dependence, not independence”. Both sub-regions of Africa are naturally key components of this.

Unsurprisingly the Organization’s April monthly report reflected this don’t-panic point of view. It commented on the downturn in prices [which has continued since], adding that an unusually high level of demand-depressing seasonal maintenance work has been taking place at refineries around the world. Meanwhile global economic prospects do seem to be getting better, with China alone – now a key market for and investor in sub-Saharan oil, of course - indicating a growth rate of eight per centplus in 2013. Once again the MOMR report points to a 0.8mn bpd increase in global demand this year,

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Analysis

a hopeful sign more driven by developments in the People’s Republic than anywhere else. OECD markets especially European ones are expected to remain flat at best, however.

Ahead of their new 2013 Medium-Term OM Report (due to appear just as we go to press) the IEA presented a refreshingly sanguine monthly Oil Market Report in the middle of April. Noting the recent decline in prices overall this agreed with OPEC on the reasons, such as the continuing weakness of demand in Europe (expected to be lower this year than at any time since the 1980s), the effects of “subdued” refinery throughput (6.8mbpd offline in April alone) and the ability of suppliers generally to respond promptly to any upturn. It commented on “signs that the oil market as a whole may be getting more comfortable.”

However, “Recent easing could be relatively short-lived,” it maintained. And at the same time the monthly summary noted the effects of output disruptions in both Libya (“a major worry”) and Nigeria (disturbingly reported from both north and south).

On the Supply side the IEA says with particular reference to Africa: 6 Global output fell in March, with increased nonOPEC output up nevertheless 6 Production has re-started in South Sudan, ending more than 12 months of outage due to

There has been “subdued” refinery throughput over the past year.

Recent easing could be relatively short-lived. what it describes as a “tiff”

6 Output was reduced in three African OPEC countries in March, in Algeria as well as in the two listed just above.

Concerning demand, the Agency forecasts that global consumption will increase by a mere 0.9 per cent this year overall, with strong regional differences again expected. Interestingly it also points out that the growth in demand for gasoline

is now, unusually, outpacing that for diesel/gasoil due to the strength of the new-car markets in developing countries compared with the sluggishness of industrial demand in the OECD world, Europe especially.

And on the key issue, pricing, it agrees with OPEC’s comments on the narrowing of that WTI/Brent gap.

“Rarely has the market faced such diffuse risks,” the latest monthly report from the IEA concludes.

“In a resource-rich but rapidly changing world this makes market transparency a greater priority than ever.” A call-for-action statement with which officials based in Vienna will probably agree. ■

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Nigeria

The growth of Nigeria’s rich deepwater sector has had a big impact on the nation’s homegrown oil and gas companies.

Nigerian firms prosper from

offshore oil boom A

S NIGERIA’S OFFSHORE sector has expanded, so too has the nation’s indigenous oil and gas industry.

From exploration and production, right through to transportation services, the local energy sector is rightly enjoying some of the benefits of the nation’s huge oil and gas wealth.

After all, it was never the intention of the government to design local content policies exclusively for onshore operations.

But the daunting prospect of deepwater operations is an entirely different proposition to traditional onshore work, even in challenging environments like the Niger Delta.

Still, it is a transition process that has been underway for some time now.

It’s almost 10 years since Shell launched

The Bonga project helped create the first generation of Nigerian oil and gas engineers with deepwater experience. production from Nigeria’s first deepwater project, Bonga, back in 2005, which overnight lifted the nation’s oil capacity by 10 per cent.

First discovered in 1995, the field sits in water depths over 1,000 metres, over an area of 60 sq km, and can now produce more than 200,000 barrels of oil a day (bpd) and 150mn standard cubic feet of gas a day.

Although the field is owned by big international oil companies (IOCs), led by Shell, indigenous firms played a vital role in its development.

Three of the big Bonga modules were designed and built in Nigeria, for instance.

So too were the foundation piles for the floating production storage and offloading (FPSO) vessel, as well as the risers, and the giant single point mooring buoy, the largest in the world at the time for deepwater operations, weighing in at about 870 tonnes.

Local engineering boost In fact, the Bonga project helped create the first generation of Nigerian oil and gas engineers with deepwater experience, according to local industry experts.

When work first commenced, the country had very few contractors with the technical capacity or scale to support such an enormous offshore

14 Oil Review Africa Issue Three 2013

Three of the big Bonga modules were designed and built in Nigeria.

development.

Shell’s upstream unit, Shell Nigeria Exploration and Production Company Limited (SNEPCo), actually began training local engineers for Bonga as early as 1999.

By the end of 2011, some 90 per cent of the project’s core offshore staff were Nigerian.

Perhaps even more importantly, Bonga also stimulated the growth of other support industries, so vital to all offshore projects.

For the Bonga project itself, a modern onshore base for subsea equipment testing and maintenance was established at Onne in Rivers State in the Niger Delta.

And these shore-based facilities are now thriving commercial hubs for the growing deepwater sector.

Many of the small local companies that started out as Bonga took shape are now working for international clients on other big fields.

In fact, strong local content has been used for all of Nigeria’s other major deepwater projects such as Agbami and Usan.

More investment is on its ways too, with Shell recently confirming that it plans to go ahead with another deepwater project, Erha North Phase 2 in OML 133.

The field, which is located over 100 km off the Nigerian coast, will eventually produce some 60,000 boepd.

By air and sea Nearly a decade after the launch of Bonga, there is a growing air of confidence about Nigeria’s local services companies, and their ability to

service the deepwater needs of the IOCs. Among the better known is Caverton Helicopters, which works closely with Shell on its offshore contracts.

Headquartered in Lagos, it is the first wholly indigenous civil helicopter company to work in the oil and gas industry.

This year, it became the only certified Agusta Westland Service Centre in sub-Saharan Africa, opening up a new state-of-the-art purpose-built hanger outside Lagos, to service aircraft built by the Ango-Italian chopper group.

The centre now provides maintenance and repair services to operators across the region.

And there are ambitious plans for continued growth still.

Caverton this year placed an order for an additional three AW139 helicopters - ideal for serving deepwater oil and gas installations with their long range - to add to its existing fleet of six, in order to better serve offshore clients.

Caverton’s executive vice chairman Adeniyi Makanjuola called it “another major milestone” for his company, as it seeks to broaden its client base and increase capacity.

As well as up in the air, the same trend is being seen on the waves too.

One company looking to modernise its fleet in a similar fashion is Seabulk Offshore Operators Nigeria Limited, which counts Chevron and ExxonMobil among its client base.

The company’s roots date back more than a decade but it was only in 2008 that it was taken over by Nigerian ownership.

Since then, management has actively sought

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Deepwater E&P sector And it is not only in the services sector that Nigeria’s entrepreneurs are making an impact.

New and emerging locally-owned exploration and production companies are also starting to gain a foothold in the testing deepwater sector.

This is no easy undertaking with most local producers content to focus on opportunities onshore, in areas passed on by the IOCs, or perhaps those places deemed to hazardous for foreign companies.

That should not mask their ambition, however: Atlantic Energy, for instance, which holds assets in the western Niger Delta, hopes to achieve 150,000 barrels of oil equivalent per day (boepd) by 2015.

And, just as the deepwater sector is a dauntingly challenging prospect from a technical perspective, it is a financially costly proposition to aspiring oil companies too.

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But it can be made to work.

South Atlantic Petroleum Limited (Sapetro) has a small equity stake in Total’s deep offshore Akpo field in Block OML 130, for example.

This deepwater field has a plateau production of around 180,000 barrels per day (bpd) of condensates.

Sapetro is also exploring for hydrocarbons beyond Nigeria’s borders, again a measure of growing confidence among these niche producers.

Last year, it signed up the Juan De Nova permit offshore Mozambique, a new up and coming gas province on Africa’s eastern flank, to add to another overseas project, the redevelopment of the Seme field in Benin’s Block 1.

Another contender is Dangote Equity Energy

New and emerging locallyowned exploration and production companies are also starting to gain a foothold in the testing deepwater sector.

Resources, a part of the large and diversified Dangote Group, which also includes various oil and gas services ventures.

Upstream, Dangote holds equity in blocks in the Joint Development Zone (JDZ), a largely virgin offshore territory located between Nigeria and Sao Tome and Principe.

It holds a nine per cent interest in JDZ Block I, where it partners Chevron and ExxonMobil - and where an initial discovery has been made - and a 10 per cent stake in JDZ Block 3, where it partners operator Anadakko Petroleum.

It also holds a small stake in one deepwater exploration block off Nigeria (Block 315), where it partners Petrobras and Statoil.

Although the company is yet to taste first production from these deepwater areas, it is backed by substantial resources from the broader Dangote Group; the highly successful cement division is heading for a UK stock market listing this year, for example.

At the World Economic Forum earlier this year, Dangote Group president Aliko Dangote expressed his confidence in the country’s private sector to make Nigeria’s economy strong.

With local oil and gas industry players on the ascendancy - from upstream producers, to engineers and manufacturers - it’s a trend that is already happening. ■

Oil Review Africa Issue Three 2013 15

Nigeria

to modernise the fleet, introducing state-of-theart dynamic positioning (DP) vessels and highspeed supply boats, a measure of the company’s confidence and ambition.

The company’s first DP2 PSV, The Al-Kat, acquired in 2012, is currently working offshore for Chevron.

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Nigeria

The current administration of President Goodluck Jonathan has announced ambitious plans to considerably expand investment in Nigeria’s oil and gas production and, at the same time, increase the country’s share of the proceeds from oil and gas extraction in order to enhance economic development and employment opportunities. Nicholas Newman reports.

Nigeria - a work

in progress I

N 2012, NIGERIA held proven reserves of at least 40bn barrels of oil, reports BP’s Statistical Review of World Energy, nearly three times greater than its nearest rival producer, Angola. Owing to lack of investment, oil production has plateaued at around three million barrels of oil per day levels reached a decade ago, and less than their peak of 2011. To arrest this decline the state-owned oil company, together with its partners, plans to invest US$100bn over the next five years to explore for crude and gas onshore and in risky deep water fields in order to raise reserves and reach a target of four million barrels output a day. To succeed, further foreign investment will be required alongside positive encouragement of indigenous firms to invest in oil exploration. Asset sales by oil majors to Nigerian companies such as Oando, Elan and Seven Energy Ltd, and to small independents will increase drilling and exploration in existing onshore fields. An exemplar of success is Nigerian energy giant Oando, purchasing in May 2012, a 40 per cent share of the Qua Iboe Field in the Niger River Delta. Chief executive officer, of Oando Exploration and Production Ltd, Pade Durotoye, said that the company’s new asset is estimated to contain 11.3mn bbl of 2P reserve which immediately increases the company’s reserve base by about 50 per cent.

Nigeria has gas reserves of around 181 tcf of gas, sufficient to supply the whole of the EU for eleven years and seventh largest in the world.

Oil production has remained virtually stationary over recent years due, in part, to the uncertainty arising from the long-delayed Petroleum Industry Bill. Exploration licences have been delayed since 2007. Energy majors have stalled investment and in some cases sold onshore assets. Dissatisfaction with the Bill’s contents has led the chairman of Shell Nigeria to predict “Production will be down about 40 per cent by 2020. All deepwater, most gas and some oil projects will not take place under the Petroleum Industry Bill”. Added to which there are the very real perennial losses from disruptions by strikes, oil smuggling, pipeline vandalism and corruption. Losses of 250,000 barrels of crude,

16 Oil Review Africa Issue Three 2013

Oando has built a 100 km gas distribution network in Lagos State.

equivalent to one tenth of daily oil production from sabotage and theft from pipelines are said to have cost the government US$7bn or about a quarter of its 2011 budget. Nigeria is expected to lose US$554mn (N83bn) in the months of April and May alone, caused by crude oil thefts, according to a statement by Tumini Green, Acting Group General Manager Public Affairs Division, NNPC (18 April).

Downstream – refineries The downstream oil industry consists of four oil refineries, eight oil companies and 750 independents all active in the marketing of petroleum products. The government has, through its 100 per cent state-owned national oil company an all encompassing control over the industry through its shareholding and its setting of wholesale and retail prices. A programme of deregulation of the downstream sector of the oil industry began in 2001 but has proved insubstantial to date. Currently, Nigeria’s four state-owned refineries produce just under half a million barrels of oil a day for Africa’s second largest economy! The remaining 80 per cent of domestic demand is provided by subsidised imports, an expensive method when demand for petroleum products is expanding by 12.8 per cent a year. Energy consultant Ifeanyi Izeze said, “Over 25 licenses for the building of privately-owned refining plants were doled out to people who say they were interested in investing in the refining.”

However, it remains to be seen what transpires given the withholding of investments until the Petroleum Investment Bill is passed and the warning from Mr Malcolm Brinded, the outgoing Executive Director of Shell Petroleum Development Company (SPDC), “the company cannot build a refinery in Nigeria because there

are surplus refineries across the world.”

Nevertheless, there are ambitious plans afoot by the private sector to build a series of brand new refineries to boost output. For example, Nigerian billionaire Alhaji Aliko Dangote, reportedly one of Africa’s richest men, plans to construct a new oil refinery costing US$8bn, with a capacity to produce 450,000 bpd by 2016. In addition, the Nigerian government has signed a US$4.5bn deal to build six modular refineries with a combined capacity of 180,000 bpd in a joint venture group, comprising Vulcan Energy Corp.

Petroleum Refining and Strategic Reserve Ltd., and Nigerian National Petroleum Corp. The first two should be completed within a year.

Forecasters such as the EIU suggest that consumption of petroleum products is likely to increase from 10,756 ktoe (kilo tonnes of oil equivalent) in 2011 to around 14,565 ktoe in 2020, as various government reforms begin to kick in to remove regulatory imposed supply constraints.

Gas-Nigeria’s hidden secret Nigeria has gas reserves of around 181 tcf of gas, sufficient to supply the whole of the EU for eleven years and seventh largest in the world, according to BP’s Statistical Review of World Energy in 2012. However, geologists employed by Nigeria LNG Limited (NLNG) speculate that there is a more gas to be discovered (potentially up to 600 tcf), if companies deliberately explored for gas, as opposed to finding it while in search of oil. In 2011, gas production was put at just under 30,000 ktoe and is forecast to increase to 52,000 ktoe by 2020 according to the Economist Intelligence Unit. Nigeria burns away most of the fuel it produces along with oil because it lacks the infrastructure to produce it.

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Nigeria

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Currently, Nigeria is the leading gas producer in the Atlantic Basin accounting for eight per cent of global sales last year. Gas production is undertaken by a joint venture of the government owned Nigerian National Petroleum Corporation and foreign oil majors, Royal Dutch Shell, Total and ENI Group (NLNG). Exports from NLNG’s LNG plant at Bonny Island near Port Harcourt, reached 22 m tonnes delivered in a fleet of 23 chartered LNG tankers to markets in Europe, North America and the Far East. Liquid Natural Gas exports are likely to increase to 30m a tonne a year when additional export terminal capacity is completed in 2019.

The market for Nigerian gas exports faces some upheaval in the coming years. Today Europe is Nigeria’s biggest market for gas. However, if the EU is successful in developing its unconventional shale gas resources, long-term demand for Nigerian gas is likely to shrink significantly. Moreover, the American shale gas revolution could impact on Nigeria’s markets in India and China as the US plans of exporting gas to far distant markets come to fruition. “Nigeria must recognise that a significant resource shift has turned a key trade region into a possible direct competitor,” said Augustine Avuru, at April’s Lagos Business School Breakfast Club meeting.

While exports may face relative decline, the domestic market demand for gas will rise. It is expected that “domestic gas consumption will increase from 1bcfpd in 2012 to about 3bcfpd in 2020,” said Augustine Avuru, Managing Director, Seplat Petroleum Development Company Limited.

Much of this increase, will be driven by

NLNG’s LNG plant at Bonny Island.

New and emerging locallyowned exploration and production companies are also starting to gain a foothold in the testing deepwater sector. increasing demand from the country’s recently deregulated growing power generation sector’s resolve to diminish power shortages. Nigeria’s power output is expected to grow ten fold to 40

GW by 2020 fueled by local gas. Further encouragement for increased domestic gas consumption comes from the demonstration effect of an existing private sector project.

Nigeria’s first large private sector energy company, Oando has built a 100 km gas distribution network in Lagos State to supply over 100 industrial customers with 85mn standard cubic feet per day (mmscfd). Nearly 90 per cent of Nigeria’s industrial capability lies within easy reach of Oando’s Lagos focused pipeline network and customers have made significant savings in energy costs from switching from portable diesel generators to gas powered ones to supply power. ■

Content Act enables US$380bn to remain in Nigeria THE IMPLEMENTATION OF the Nigerian Oil and Gas Industry Content Development (NOGICD) Act has ensured that US$380bn has stayed within Nigeria instead of going overseas and prevented the loss of two million jobs, according to the Nigerian Content Development and Monitoring Board (NCDMB). General counsel of the NCDMB board, Umar Babangida, made the statement on behalf of the board’s executive secretary, Ernest Nwapa, at the recent ESQ Oil and Gas Summit in Lagos.

The statement from Nwapa said that more than 95 per cent of the jobs in the industry were still carried out abroad, with US$214bn of procurement and US$9bn research and development carried out in North America and US$78bn worth of technical services and engineering work amounting to US$39bn carried out in Europe.

However, the NCDMB leader added that the 2010 Content Act had reduced capital flight by around US$168bn and that US$107bn of procurement, fabrication worth US$20bn, US$14bn of technical services, US$20bn of engineering, and research and development worth US$7bn had been domiciled in Nigeria due to the act.

Nwapa’s statement added that a further US$191bn could still be retained and that 300,000 new direct job opportunities are expected to be created in such areas as engineering, sciences, technical services and manufacturing. There has also been a significant increase in contracts being awarded to Nigerian companies, according to Nwapa, though exact details were not given. The statement concluded by saying that 90 per cent local content had

18 Oil Review Africa Issue Three 2013

been achieved in the area of engineering and 50 per cent in fabrication and the compulsory one per cent deduction of the contract sum of any project, which is deducted at source and paid into the NCD Fund, had amounted to US$150mn by January 2013.

The statement followed Nwapa’s recent keynote speech at the Nigerian Content Seminar 2013, which formed part of the conference programme at this year’s Nigeria Oil & Gas exhibition at the Abuja International Conference Centre. The seminar was hosted

by Total and allowed the opportunities created by the NOGICD Act to be evaluated and any challenges to be discussed.

During his speech Nwapa outlined two separate strategic development models, one that focused purely on revenue and the other, enabled by the NOGICD, that focused on in-country value.

The key driver of the revenue-focussed development option is operators seeking the cheapest and fastest route to the first oil.

Taxes and royalties from that oil income is then invested in development, with little attention paid to garnering any added value from operations. Nwapa added that this model promotes the import of goods and services.

By contrast, the in-country value focused model sees operators encouraged to consider long term value, the higher the in-country value, the less revenue the government takes and greater attention is paid to the life cycle support of operations. Nwapa concluded that this promotes development and the use of local workers, skills and capacity. www.oilreviewafrica.com

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Nigeria

Dangote leads the way to private refineries in Nigeria NIGERIA’S FOREMOST INDUSTRIALIST, Alhaji Aliko Dangote, is investing US$8bn in a crude oil refinery in the country, with a capacity to produce around 400,000 bpd by 2016, marking a real commitment. The Niger Delta Petroleum Resources Ltd (NDPR) had commenced a refinery that had an initial capacity of 1,000 bpd of crude in Ahoada East, Rivers State.

Dangote's target of 400,000 bpd dwarfs the production of the four federal government-owned refineries: they have the capacity for 445,000 bpd but they have been producing below 50 per cent installation capacity. It also bolsters the lies inherent in the subsidy regime and gives hope to a nation that is one of the world's greatest producers of oil, yet imports 80 per cent of local needs. Other things being equal, Nigeria and Nigerians have much to gain if Dangote goes ahead with his plan to build the refinery.

Dangote's exploits in business and successes in cement, fast-moving consumer products and his net worth

of US$16bn, according to Forbes, are enough to show his seriousness. Private investors' efficiency and business-like approach contrast sharply with the sloppiness, red tape and corruption that characterise the civil bureaucracy. If Dangote's pioneering effort comes into fruition, it will be a big relief in all ramifications.

It is important that the government should stop paying lip service to the deregulation of the downstream sector.

With fuel subsidy running into the trillion-naira mark, importation of the commodity and subsequent subsidy payments on it have become an industry from which some people are feeding fat. They are therefore unwilling to let go of the subsidy regime that has sustained them for decades. But the government would do well to invoke the necessary provisions of the law to revoke dormant licences as it did in 2007 before issuing nine new ones. These other licencees should not be allowed to use their licences to procure oil wells and sell crude to multinational corporations and other oblique economic hegemons.

NNPC unveils $16bn gas infrastructure investment opportunity THE NIGERIAN NATIONAL Petroleum Corporation, NNPC, has outlined a comprehensive gas infrastructure development programme projected to attract an industry-wide investment outlay of over US$16bn within the next four years.

Providing details of the gas infrastructure development drive in a presentation at the recently concluded OTC in Houston, Dr. David Ige, Group Executive Director, Gas and Power of the NNPC, said the aspiration for gas development is anchored on the three point strategic focus of the Gas Master Plan.

Under the strategic themes of the GMP, it is envisaged that the plan will deliver gas to power for at least a threefold increase in generation capacity by 2015, achieve a reasonable level of gas-based industrialisation by positioning Nigeria as the undisputed regional hub for gas-based industries such as fertiliser, petrochemicals and methanol by 2014. This item is the corner stone of the President’s Gas Revolution Agenda. The GMP is also focused on achieving high value export via LNG and Dr Ige said the ongoing work to consolidate the agenda has thrown up investment opportunities in the gas sector to the tune of US$16bn. “Opportunities for investments exist in the areas of financial services, gas transmission pipelines, pipe milling and fabrication yards, upstream gas development, LNG and LPG plants and gas processing facility/gas based manufacturing industries,’’ he said.

On the proposed Ogidingbe gas-based Industrial Park, the NNPC GED said that investment opportunities are available in the areas of Free Trade Zone infrastructure, port infrastructure and real estate development. The park is designed to emerge as Africa’s largest Gas City ultimately aims to create the largest gas industrial park sub-Saharan Africa with fertiliser, methanol and power projects.

Global Oceon named a winner at the inaugural Nigeria50 Award GLOBAL OCEON ENGINEERS Nigeria Limited (OCEON) has been named the third fastest growing company within the private sector in Nigeria. OCEON, by international standards, has grown its growth rate by 2,304 per cent over three years of its operation and with a growth at an average 100 per cent a year on revenues of US$9mn. The top three companies on the Nigeria50 all have very close growth rates exceeding 2,000 per cent for the period 2009-2011.

According to the organisers at the recent award ceremony in Lagos, “the Nigeria50 broke AllWorld records, with each company growing at an average 100 per cent a year on revenues of US$9mn, and as a group they have created 6,600 jobs, and if they continue growing, will create thousands more in the next few years. The Nigeria50 offers a glimpse into the country’s vast potential for entrepreneurs, and the impact entrepreneurs are having in addressing the country’s problems from malnutrition to job creation and employee training.”

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PENGASSAN urges immediate passage of PIB THE PETROLEUM AND Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has called on members of the National Assembly to urgently pass the Petroleum Industry Bill, PIB. President of the association, Mr Babatunde Ogun, made the call recently in an interview with the News Agency of Nigeria, NAN, in Lagos, adding that its urgent passage was for the benefit of the people.

He said that the quick passage of the bill was important because of the discovery of new oil fields in other parts of Africa.

According to him, while the country was delaying the passage of the bill, other African countries were attracting investors.

“We cannot, therefore, afford the luxury of time, while unnecessary bickering continues over such an important bill on a sector that is the main stay of the economy.

“The Petroleum Industry accounts for over 90 per cent of Nigeria’s foreign exchange, about 40 per cent of the Gross Domestic Product, GDP, and 80 per cent of government revenue”.

Ogun further urged the Federal Government to create a section in the bill that would make it compulsory to invest 20 per cent of all income from oil in the oil sector. He added that some of the percentage should be invested in the solid mineral sector.

The PENGASSAN president said that if the section was created, it would save the legislators from debating the crude oil price bench mark and help them focus on the growth of the national economy.

Ogun said that the bill represented a great opportunity for Nigerians to ensure a solid foundation on which the future of oil and gas operations in the country would rest. He also said that the bill, if passed, would ensure that agencies and companies in the sector would be bound by the Nigeria Extractive Industry Transparency Initiative. www.oilreviewafrica.com

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Algeria

After increasing resource stagnation, Algeria has showed renewed signs of progress. Most importantly, for the first time in years a political will to reform upstream investment terms and improve investor confidence has been building. Sam Ciscuk reports.

Algeria comes full circle to embrace investment

but outside dangers lurk F

OR THE FIRST time in years a political will to reform upstream investment terms and improve investor confidence has been building. With that in mind, the violent Islamist siege of Algeria’s In Amenas gas facility at the start of the year was even more tragic, rising to seriously derail Algeria’s upstream investment recovery because of outside factors.

Algeria seemed to have come full circle last year, with its political leadership speaking increasingly openly about the need to reform its upstream investment environment, making terms more attractive to international oil companies (IOCs). The situation was reminiscent of the 1980s, when falling production and a gaping need for investment and technology prodded Algeria to open its upstream sector up in the first place through a far-reaching liberalisation programme.

Consequently the 1990s saw large investments in exploration and development, with IOCs like Anadarko taking the step to midsize status partly through the projects they could realise in the country. The growth of IOCs in Algeria, and their profits, spurred a political backlash, however, and by the middle of the last decade a strong resource nationalist sentiment started to crystallise within the country’s political elite. Laws were changed and investment terms tightened, just as Algeria stood on the cusp of opening up its large, relatively tight, gas reserves in the frontier South and West Sahara desert, far from existing infrastructure and with relatively high production costs. Investment sentiment weaned and many projects started losing speed and crawling slowly to a near-halt.

The lack of progress on projects was not only due to tightened fiscal terms. Excessive amounts of red tape had long been a feature of the Algerian energy industry and its civil service and the backlash against liberalisation was to a high degree carried out by re-emboldened civil servants with little understanding of the industry’s need for technology. To many frustrated IOC-executives and project managers the second half of last decade seemed like a long “revenge of the bureaucracy”.

If there ever was any bureaucratic confidenceoverreach, it, however, disappeared in the deep corruption scandal of 2010, which decimated the senior leadership of Sonatrach, led to the immediate downfall of all but one of the company’s Vice Presidents and the dismissal and indictment of its President and CEO, Mohamed Meziane. Fallout from the scandal went even further, claiming Oil Minister Chekib Khelil, who had a close working relationship with Meziane and had nominated him to his post.

22 Oil Review Africa Issue Three 2013

Excessive amounts of red tape had long been a feature of the Algerian energy industry.

For IOCs this was seen as very bad news. Khelil was seen as a guarantor of liberal policies in the oil and gas sector and a bulwark for the oil companies against resource nationalistic encroachment.

Moreover, what had been a slow bureaucratic pace of Sonatrach and the civil service, often delaying projects, became a complete paralysis.

For 2010 and most of 2011 there was a virtual decision-making stand-still in Algeria’s hydrocarbon sector. It took time to get a skilled new leadership in to fill all the vacant senior positions, but the anti-corruption drive also created a climate where functionaries at the corporate mid-level and in the project management side feared taking any decisions at all, particularly those involving money.

Given the extent of what has been said to have been quite a freewheeling corporate culture when it came to corruption, at least at mid-to-senior levels, there was probably no way around it. In order to clean Sonatrach and the Algerian hydrocarbon sector up, a tough clean-up had not only to set a new example, but also to take its time.

After project delays having built up for almost two years and licensing rounds having seen record low interest, things were starting to change. Project plans stuck with Sonatrach for far too long started to make definitive advances, mainly thanks to a conscious effort to debottleneck any decisionmaking processes relating to ongoing projects first.

Algerian regime’s general preponderance for bureaucracy meant that Sonatrach was never going to be reformed into a lean operations example, however there was a clear strategy from new Energy

Minister Youcef Yousfi, to methodically untangle decisions that were stuck, starting in the most urgent part – ongoing upstream projects.

Chief of the projects seemingly close to being de-railed at the time was Anadarko’s El Merk, with a planned production capacity of 98,000 bpd of crude, 29,000 bpd of condensates, 31,000 bpd of LPG and around 500 mmcfd of gas, most of which however will be reinjected. As being a good sign for 2013, El Merk came onstream following around four years of development during the first quarter and production will be ramped up during the coming months. Another project which looks like it is now moving forward more decidedly is the Petroceltic-led development of the 2.1 tcf Ain Tsila gas and condensate field. There too, delays were building as Sonatrach failed to act quickly with approing the project plan and given Petroceltic’s relatively junior size and stature, the delays likely played a significant role in the company’s need to farm down in more than one round, steps which also need Sonatrach’s permission.

There has also been some debottlenecking of exploration, although it remains far below where it should be considering the amount of acreage which has been offered in licensing rounds over the past years and the amount of gas discovered, but not yet developed, in Algeria’s south-central Sahara area.

Need for $80bn investment programme Algeria last year said it needs to undertake an US$80bn investment programme in its hydrocarbon sector over the coming five years and with foreign investment having slowed to a trickle in the past five years, the political will to reform tax laws and fiscal terms started to crystallise. In the political arena the tone started to sound more investmentfriendly already in late 2010, however the Arab Spring protests, which to a smaller extent also spread to Algeria from neighbouring Libya and Tunisia, caused a delays in the political sphere too.

By the second half of 2012 new terms were however in place, mainly targeting investment in the country’s shale gas (and shale oil) potential.

Apart from the expected shale potential, much of the loss of pace in the so promising southcentral Sahara gas region, around the Timimoun and Reggane basins, comes from the fact that the rather tight –and remote- reservoirs were far too expensive to develop under Algeria’s harsh conventional oil and gas investment terms. A more shale-related investment term package will most likely also help make the Timimoun, Reggane and surrounding basins profitable.

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recently on the border with Libya, it is however ironic that the inflow of investments now could stay muted because of outside security factors. The tragic and violent In Amenas gas facility siege at the start of the year severely dented Algeria’s reputation as a safe destination for oil and gas companies (as long as they stayed out of the densely populated, but essentially hydrocarbon-free north). Although the Algerian army for decades has managed to secure the country’s oil and gas installations, the complete breakdown of security in Libya, Mali and to a high degree also Tunisia, means that securing the borders of the vast country will be almost impossible. With much of the oil and gas projects straddling Libya’s western border, this is bad news for the Algerians.

Other remote areas hard to police include the prospective shale areas and the tight gas discoveries in the south-central Sahara region.

For investors interested in its potential, this might be the best time to enter and build relationships.

Algeria

The increased political will to meet investors’ demands for better terms in the upstream sector is not necessarily a golden ticket, but this time around it is more likely to prove durable. Unlike last time liberalisation was launched, there was significant opposition which remained opposed to it in a scale much stronger than now. Algeria tried a higher degree of liberalisation than, but could be said to have settled for a more muted reform this time, after having gone full circle from nationalisation to liberalisation and back.

Politics and the operational climate is also not necessarily going to be a smooth ride in Algeria. A large corruption probe in Italy into Eni and Saipem dealings with Algeria could have large reverberations and cause further bloodletting in Sonatrach and the Energy Ministry, as could a looming Canadian probe into SNC-Lavalin’s dealings with its Algerian counterparties. Yet, nothing focuses political concentration as well as strained resources and Algeria’s oil and gas income is shrinking amid a continued outpouring of welfare payments to pacify protests, introduced in the wake of the Arab Spring. According to magazine The Economist, Algeria needs an oil price in the vicinity of USD120/barrel to break even, meaning that the start of 2013 is looking less than comfortable.

Given all the good signs for foreign investors, including a potentially large discovery by Repsol

El Merk central processing facililty.

No doubt the Algerians will try to maintain their security amid this new tough challenge. They managed to secure their hydrocarbon industry from harm well during the violence in the 1990s and with more resources and some proactivity they are in the best place in North Africa, save Morocco, to do so, judging from organisation and capability. From a geographical position it will however be tougher this time, particularly if the Libyan security situation deteriorates further.

For investors interested in its potential though, this might be the best time to enter and build relationships at a time when the Algerians truly are learning to value upstream investors and their partnerships. ■

Oil Review Africa Issue Three 2013 23

S06 ORA 3 2013 Human Resources_Layout 1 21/05/2013 11:48 Page 24

Human Resources

Access to human resources is critical for the future success of the oil and gas industry, says Willy H. Olsen.*

Tackling the

people problem T

HE ROLE OF human capital, competence and people issues is ascending on the strategic agenda of both public and private enterprises. We have been through a period with heavy focus on capital efficiency, asset values and shareholder returns.

Human capital management is becoming critical for all oil and gas producing environments. The importance in the mature provinces in North America, the Middle East, Malaysia, Indonesia, UK and Norway, are equally as important as in the new oil and gas producing countries in Africa such as Ghana, Uganda, Tanzania and

Employers in future can no longer rely solely on new graduates or labour market entrants as the primary source of new skills and knowledge

Mozambique. Employment in the US oil and gas industry has increased with close to 40 per cent over the past decade as a result of the shale oil and gas revolution.

Shell’s external recruitment demand has tripled over the last 18 month, Sander Nieuwenhuizen, Shell’s vice president for recruiting told the Upstream newspaper recently. The oil companies cannot buy their talent. They have to increase their own efforts to develop the talent.

Corporate culture “We need to focus on transforming today's oil wealth into a broader framework, investing in our people - particularly our youth - with a focus on technical skills, training and creating technical professionals who are qualified and capable of working both here and abroad,” to quote HE Nasser bin Khamis al Jashmi, Undersecretary for the Ministry of Oil and Gas in Oman, a country that has launched its in-country value programme where development of people is a major element.

The King Abdullah Scholarship Programme

supports overseas studies of over 100,000 young Saudi Arabian men and women. They will return to participate in the modernising of the economy. Saudi Aramco, the world’s largest oil producer, has made training a signature element of its corporate culture. Saudi Aramco has a huge programme of training people and has also introduced young people into a key role in its strategic process.

Qatar, UAE and Kuwait have substantial training programmes to attract and keep talent in the oil and gas industry.

Access to well trained people is critical for Brazil to reach its very ambitious targets for growing its oil production, and they have a training programme to match. The country is determined to use the large oil reserves to generate local jobs, but face a skill shortage in the short term. The Brazilian president has signed agreements with several countries, including the United States, France and Britain, opening the way for foreign universities to provide slots for Brazilian students. The scholarship plan is part of the Science without Borders programme announced by President Dilma Rousseff to support students who pursue degrees abroad.

The programme is expected to assist 100,000 university students by 2014 at a cost of about US$2 billion. Petrobras will provide 5,000 scholarships over the next six years to Brazilian students, many of them will go abroad. The company has its own training and educational facilities with a highly successful corporate university and heavy investments in its own world-class R&D facilities.

Essential

The skills shortage in the oil and gas sector needs to be quickly addressed

24 Oil Review Africa Issue Three 2013

In India leading institutions are focusing on nurturing talent for the oil and gas industry. India has become an attractive location for international engineering firms using India as an engineering center. But India also has to tackle the outflow of talent, especially to the Middle East.

Young Indians are looking for opportunities that enable them to expand their capabilities through challenging jobs in an international environment.

Training and development programmes are essential in the hydrocarbon industry where the evolution and advancement of knowledge, information and technologies are constant and swift.

Projects have become larger and more costly as complexity has grown. Project management is now a core industry skill. In the past, very large project management has been within the capability of a

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Human Resources

S06 ORA 3 2013 Human Resources_Layout 1 21/05/2013 11:48 Page 26

few companies; and the major oil companies in particular. With more and more companies executing larger and larger projects, often in remote or complex environments, the need to train project managers is becoming acute.

The path-breaking development of new technologies is no longer limited to the technology, media and telecom industries. New innovations have made their way into virtually all sectors of the modern economy, not at least the oil and gas industry.

Oilfield services are built on science and technology. The industry is using some of the most advanced services and products in the world to address the most challenging engineering problems on land and in increasingly deeper waters under huge salt layers. The oil industry moves to tougher and tougher environments, especially in the Arctic, where the environment has to be protected.

As the industry moves to these environments, these challenges will not get easier. The focus on unconventional oil and gas resources has changed the technical capabilities demanded by oil and gas companies.

People and competence are crucial for the productivity of these technologies. High-skill labour is an increasingly scarce input for competitive firms and organisations. To attract and develop talent for key positions and leadership, individual incentive schemes and performance-based remuneration has become increasing popular.

The oil and gas industry is facing a big crew change. The generation that entered the sector in the late 1970s and 1980s is retiring.

Schlumberger Business Consulting global survey data show that strong efforts have been

made to recruit in the last decade, but the effect of the retiring generation still hitting hard. More than 22,000 senior petro-technical professionals are set to leave the industry by 2015. The number of inexperienced industry professionals will have increased significantly and could become a major headache in the light of the challenges that the industry faces.

Untapped resource The oil and gas industry has not been on the top of the wish list for the young generation in the UK, Europe or the USA. Few have looked to math and science as their priority. Asia stands out – with more students with relevant backgrounds emerging and with energy high on the priority list of the new Asian talent, with a higher share of women looking to the energy sector. The number of females in the industry is still far too low, but the industry has realised that women are an untapped resource.

“Empowering women to advance in the sciences, engineering and technology forms a significant advantage to solving many of the challenges faced by both the developing and the developed world," says Mr. Sola Oyinlola, Vice Chairman of the Schlumberger Foundation.

The industry and the education sector are upgrading capacity for training. Petronas, the

The oil companies cannot buy their talent. They have to increase their own efforts to develop the talent

The focus on unconventional oil and gas resources has changed the technical capabilities demanded by oil and gas companies.

26 Oil Review Africa Issue Three 2013

national oil company in Malaysia, has long been a leader in training its people and is expanding its activities to bring in more people from the countries around the world where Petronas is operating. Petrofac has opened an advanced training center in Singapore where the students will be able to work in a ‘live’ environment similar working on a platform or process plant.

Robert Gordon University in Scotland is launching a new programme to address the growing skills gap in the prospering Energy industry, particularly for oil, gas and renewables expertise. A new Masters programme will be created through direct contribution and collaboration with energy industry experts. The programme has been developed to create technical expertise coupled with management skills within the oil and gas industries.

Many energy professionals with relevant technical industry experience are looking to develop essential commercial skills including risk management and supply chain vulnerability in order to enhance their current careers or following a change in job role.

Quality control Employers in future can no longer rely solely on new graduates or labour market entrants as the primary source of new skills and knowledge. They need workers who are willing and able to update their skills throughout their lifetime. Lifelong learning is now more than just a slogan. It has become a necessity for everyone. Information and communication technologies (ICTs) are opening up entirely new avenues for pedagogy, for interinstitutional networking around research, and for on-line and virtual learning. Access to the Internet allows for self-paced knowledge and skills acquisition.

Prepared courses, even professional certification now can take place on-line, with adequate quality control and monitoring to facilitate individualised tutoring and graduated, step-by-step instruction and achievement. Schools, colleges and universities, as well as individual students (and faculty) can engage in networked academic activities across institutional, even beyond national boundaries.

All players will have to engage with academia and education authorities to ensure that the disciplines needed by the industry are available at the education facilities around the world. ■

*Senior Advisor INTSOK, Norway, Senior Associate, the CWC School for Energy, UK, Former advisor to Statoil’s CEO. Willy Olsen has held a number of senior positions, including Managing Director of Statoil UK and head of Statoil’s activities in in the former Soviet Union.

Olsen is now the Senior Advisor to INTSOK, a foundation owned by the Norwegian government and Norwegian oil industry. INTSOK is co-ordinating efforts of expanding the internationalisation of the Norwegian petroleum cluster.

Olsen is also a course leader at CWC School for Energy. For more information please visit: www.cwcschool.com www.oilreviewafrica.com

FIXEDS07 ORA 3 2013 Geology_Layout 1 22/05/2013 19:15 Page 27

Training Programs

June 2013

July 2013

August 2013

Training Programs

June 2013

July 2013

August 2013

IWCF Rotary Drilling Well Control

10th - 15th

15th - 19th

19th – 23rd

Mobile Crane Operation

Mon - Tues

Mon - Tues

Mon - Tues

IWCF Well Intervention Pressure Control

17th – 21st

22nd – 26th

26th – 30th

Offshore Crane Operation

Tues - Wed

Tues - Wed

Tues - Wed

Competent Rigger API RP 2D

Tues - Wed

Tues - Wed

Tues - Wed

IADC WellCAP Program

17th – 21st

15th – 19th

19th – 23rd

Banksman& Slinger

Mon - Tues

Mon - Tues

Mon - Tues

Introductory Well Control

24th – 28th

8th- 12th

26th – 30th

Stuck Pipe Prevention

10th- 11th

10th – 11th

15th - 16th

Lifting & Slinging [Practical]

24th – 25th

10th – 11th

8th – 9th

Management of Lifting & Slinging

17th – 18th

29th – 30th

5th – 6th

Lifting Equipment Inspection

24th - 27th

22nd - 25th 19th – 22nd

IADC HSE Rig Pass

24th – 27th

22nd - 25th 12th -15th

Wire Rope Inspection

17th – 19th

22nd- 24th

28th - 30th

Roustabout/Roughneck

10th – 16th

15th – 19th

26th – 30th

CCU Inspection

19th – 21st

15th – 17th

14th – 16th

Confined Space [Entry & Rescue] Thurs - Fri

Thurs - Fri

Thurs - Fri

Wire Rope Socketing

10th – 11th

30th – 31st

20th – 21st

Work at Height & Rescue

Mon - Tues

Mon - Tues

Lift Planning

3rd

26th

12th

Helicopter Landing Officer [HLO] Thurs - Fri

Thurs - Fri

Thurs - Fri

Forklift Operation

Mon - Tues

Mon - Tues

Mon - Tues

Competent Scaffold Erector

Thurs - Fri

Thurs - Fri

Thurs - Fri

Mobile Elevated Work Platform

Tues - Wed

Tues - Wed

Tues - Wed

Hydrogen Sulphide Safety [H2S]

13th – 14th

18th – 19th

8th – 9th

Man Riding Tugger Operation

Thurs - Fri

Thurs - Fri

Thurs - Fri

Welder’s Safety

12th – 13th

25th – 26th

12th -13th

Onshore/Offshore Focal Point

10th – 12th

16th – 17th

22nd -23rd

Manual Handling

17th

22nd

12th

IRATA Level 1

24th - 28th

22nd – 26th

5th – 9th

Safe Use of Lifting Equipment

Mon - Tues

Mon - Tues

Mon - Tues

IRATA Level 2

24th – 28th

22nd – 26th

12th - 16th

Safe Use of Cargo Carrying Unit

Thurs - Fri

Thurs - Fri

Thurs - Fri

IRATA Level 3

24th – 28th

22nd – 26th

19th - 23rd

Accident Investigation

Mon - Tues

Mon - Tues

Mon - Tues

Mon - Tues

Nigeria.

Nigeria.

Geology

FIXEDS07 ORA 3 2013 Geology_Layout 1 21/05/2013 14:34 Page 28

Dolphin applies record seismic spread offshore South Africa DOLPHIN GEOPHYSICAL HAS used a seismic survey spread described as the world’s largest floating object. The eight streamers were 8 km long and separated by 200 m, giving a total area covered under tow of 11.2 sq km.

The equipment was used offshore South Africa under contract with Shell and using the Polar Duchess seismic vessel. The big spread was used to get 8,000 sq km surveyed during a limited weather window of four months.

“Despite the remote nature of the area and the challenging metocean conditions, the survey has been executed safely, efficiently and with a low down time,” said Stuart McGeoch, Shell regional ventures exploration manager for sub-Sahara Africa. “We have been impressed with the quality of acquisition data.”

Shell’s process centre in Houston validated the initial returns and is validating the data.

CAMAC completes data acquisition in Kenya CAMAC ENERGY INC has announced that Sander Geophysics Ltd has completed shooting airborne gravity and magnetic geophysical surveys on the company's Kenya onshore Lamu Basin Blocks L1B and L16. The data acquisition covers essentially the entire 12,129 sq km in Block L1B and the entire 3,613 sq km in Block L16 and satisfies the gravity and magnetic survey requirements for each Block under the relevant Production Sharing Agreements.

The company expects to receive initial results of the shoot in the third quarter of 2013. Results will be used to optimise the placement of 2-D seismic lines by identifying faults, basement structures and intra-sedimentary volcanic layers and/or intrusions.

"I am pleased that we completed the acquisition of the airborne gravity and magnetic geophysical surveys in Kenya safely, on time, and under budget," said Senior Vice President of Exploration and Production Segun Omidele. "Our geophysical team will now work with SGL to interpret the data and delineate optimal areas for 2-D seismic acquisition."

South African offshore survey for Fugro FUGRO HAS COMPLETED a survey for Anadarko over exploration acreage in the Orange basin offshore South Africa.

Anadarko is operating the first exploration period over frontier blocks 5/6 and block 7, in partnership with PetroSA. Fugro’s survey involved acquisition of multibeam echo sounder (MBES) data from the MV Fugro Gauss, and onboard seep mapping interpretation. The program is part of a greater

seafloor geochemical exploration survey designed by Anadarko and its partner.

The nearly 56,000-sq km MBES survey provided bathymetry and backscatter MBES data for identification of natural hydrocarbon seepage at the seafloor.

Fugro geoscientists onboard the vessel performed mapping of potential seeps, interpretation of the surficial sedimentary geology, structural geology and shallow fluid

WesternGeco starts multiclient seismic survey offshore Mozambique WESTERNGECO HAS BEGUN acquisition of a major multiclient seismic survey offshore Mozambique using the ObliQ sliding-notch broadband acquisition and imaging technique.

The technique optimises the recorded bandwidth of the seismic signal enabling more detailed imaging of the subsurface and more reliable extraction of rock properties.

“This seismic survey is optimally located to help oil and gas companies evaluate play potential offshore Mozambique,” said Carel Hooykaas, president, WesternGeco. “The ObliQ technique is expected to provide valuable high-resolution broadband imaging in this geologically complex area where recent discoveries and regional appraisals indicate significant frontier exploration potential.”

The survey is being acquired in collaboration with the National Petroleum Institute of Mozambique (INP) and is fully supported by industry prefunding. It consists of more than 31,000 km long-offset 2D data and covers the majority of the offshore territory of Mozambique where future licensing rounds are expected.

28 Oil Review Africa Issue Three 2013

migration systems, and reported the acquired MBES data.

Helle Els, commercial manager of Fugro Survey Africa, said: “Seep hunting requires both MBES bathymetry and MBES backscatter data to be collected and processed in real-time during the survey. Our geologists onboard evaluate the data to determine potential seep targets and weight them for a later geochemical coring survey.”

Swala awards Tanzania shoot AUSTRALIA-BASED EXPLORER Swala Oil & Gas has awarded a contract to Canada’s Polaris International to carry out a 2D seismic acquisition programme over its Kilosa-Kilombero and Pangani licences areas in Tanzania.

Swala, which operates the licences on behalf of Australian joint venture partner Otto Energy, said the US$7.3mn contract will include 300 km of 2D seismic in Kilosa-Kilombero and 200 km in Pangani.

The shoot is expected to be conducted from June to September.

Swala chief executive davis Mestres Ridge said in a statement that the programme would enable the company to “gain a better overall understanding of the basins such that specific areas of interest can be targeted for infill seismic and drilling”.

Airborne gravity-magnetic surveys conducted last year had confirmed the likely presence of significant sedimentary basins in both licence areas.

The Kilosa, Kilombero and Kidatu basins, each covering about 2000 sq km, were identified in Kiloso-Kilombero.

Two further basins were identified in the Pangani licence. www.oilreviewafrica.com

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S08 ORA 3 2013 Gas_Layout 1 21/05/2013 11:54 Page 30

Gas

CompactGTL’s solution to the problem of associated gas at remote oilfields, both onshore and offshore, can now be applied to projects around the globe that are delayed, constrained or prevented by operational matters, logistical issues or gas flaring legislation.

Now SBM Offshore has joined forces to provide gas to liquids floating solutions.

Liquid floating

solutions deal L

EASED FLOATING PRODUCTION storage and offloading (FPSO) vessel supplier, SBM Offshore, and modular gas to liquids solutions provider, CompactGTL Ltd, have signed a commercial development agreement to work exclusively together on offshore projects.

Using GTL technology for floating production systems could significantly reduce gas flaring as associated gas can be turned into synthetic crude oil then blended in to the produced crude oil.

The agreement between the two companies, who have been working together since 2008, makes the world’s first, fully integrated, offshore modular GTL solution for the upstream industry a genuine prospect. The companies said in a joint statement that they will combine their strengths for the marketing and execution of projects involving associated gas challenges for oil fields offshore.

“SBM Offshore and CompactGTL provide complimentary expertise, and by combining this we have been able to develop an exciting new FPSO product which will be a very attractive solution for associated gas disposal in ultra deepwater fields,” said Mike Wyllie, chief technology officer, SBM Offshore.

Nicholas Gay, chief executive of CompactGTL added, “CompactGTL is delighted that we have been able to cement our longstanding relationship with SBM Offshore. It is a world class company and, combined with our expertise in delivering the world’s first commercial scale modular gas to liquids solution for associated gas, will have significant impact on the offshore oilfield appraisal and development sector.”

Small-scale GTL UK-based CompactGTL has been developing tailored GTL conversion technology, which is small enough to fit on the deck of a vessel, throughout the company’s six-year existence.

“As we see commercial projects on the horizon we thought it time to cement relations with a formal commercial development agreement,” Wyllie was quoted as saying recently.

Creating synthetic crude from gas feedstock is an expensive and complex process that involves the use of specialised catalysts and, due to the corrosive nature of the process and high temperatures involved, requires the use of advanced construction materials. Such processing has only been adopted onshore by Sasol and Shell (at Qatar’s Pearl GTL plant) to date but on the large scale required for it to make economic sense. SBM and CompactGTL’s smaller scale, offshore

30 Oil Review Africa Issue Three 2013

CompactGTL has come up with a very neat solution that avoids the use of oxygen and relies on steam in the reaction processes. processing plans could therefore be a gamechanger if they are fully realised. In fact, the companies have announced they are looking to launch a 2,000 bpd liquids plant-carrying test vessel soon.

This may seem modest but the partners’ main motivation is to overcome the problem of flaring small volumes of gas, a process that is being deemed increasingly unacceptable, to reach “stranded” oil deposits. This could provide a genuine alternative to other, often costly methods of dealing with the gas such as re-injection or pipeline laying.

CompactGTL’s experience in this area led Brazilian operator, Petrobras, to commission a US$45mn demonstration plant in Aracaju on the Brazilian coast in December 2010. Following extensive testing with associated gas at the 20 bpd plant, Petrobras has now approved CompactGTL’s technology for commercial use.

Petrobras is also carrying out onshore testing of a GTL demonstration plant from the rival

partnership formed by US company, Velocys, and Japan’s Modec and Toyo.

“CompactGTL has come up with a very neat solution that avoids the use of oxygen and relies on steam in the reaction processes,” Wyllie was quoted as saying. “They have brought it to a point where we believe it can be integrated quite easily on to an FPSO. In an EWT [extended well testing] context, this technology is perfect. You can hop from field to field without flaring gas.

“We have done extensive studies in-house for such a vessel. Now the next step is to go into a FEED study with a client for a specific application.”

With Petrobras rumoured to be keen on EWT work on its deepwater pre-salt fields, SBM and CompactGTL have put themselves in a prime position to assist as their generic vessel design is ideally suited for use in Brazilian pre-salt fields, as well as many other field conditions.

The 2,000 bpd modular GTL plant required for such a purpose would weigh 4,000 tonnes and take up a third of the deck space of a converted Suezmax size tanker.

“We are looking actively at a number of ways of increasing the complexity of converted FPSOs,” Wyllie was quoted as saying. “GTL is one way of extending our capability into more complex units.

We’re starting small, using it for associated gas disposal – we think that’s a good way to get it offshore and gain experience in operating a floating facility with GTL capabilities.” ■

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S08 ORA 3 2013 Gas_Layout 1 21/05/2013 11:54 Page 31

Deepwater Tanzania well flows gas Gas

A DRILLSTEM TEST of the Mzia-2 well in deepwater block 1 offshore Tanzania flowed as much as 57mn cfd of natural gas. This is the first test of the deeper Cretaceous reservoir and was constrained by the equipment capacities. Mzia-2 is 4 km from the Mzia-1 discovery, in around 1,620 m of water and approximately 45 km off the coast of southern Tanzania. It is approximately 22 km north of the Jodari-1 discovery well, also in block 1, where a successful drillstem test was completed in March on the shallower Tertiary reservoir.

The drillship Deepsea Metro-1 has relocated to block 4 to drill an exploration well, Ngisi-1, adjacent to the Pweza and Chewa discoveries.

BG Group will use data from the current exploration and appraisal campaign and a recently completed 3-D seismic survey to help identify new offshore targets for a third exploration programme beginning in late 2013.

BG Group as operator has a 60 per cent interest in blocks 1, 3, and 4 offshore Tanzania, with Ophir Energy holding 40 per cent.

Jumbo installed five structures for Ikhwezi JUMBO HAS SUCCESSFULLY completed the deployment of five subsea structures for PetroSA’s Ikhwezi project, offshore South Africa. The installation of the five structures, weighing between 35 and 185t and measuring up to 14 x 8 x 5 ½ m, was executed by Jumbo’s DP2 Heavy Lift Vessel Fairplayer. The project was awarded on an intervention basis and Jumbo once again proved its flexibility and ‘can do’ mentality.

The Ikhwezi project is a subsea development that ties into the FA-platform and is set to play an instrumental role in sustaining the life of PetroSA’s gas-to-liquids (GTL) refinery in Mossel Bay, Republic South Africa. It involves tapping into gas reserves in the FO field, which is located 40km south-east of PetroSA’s F-A production platform off South Africa’s south coast. Because the project was awarded on an intervention basis Jumbo had very limited time to complete the preparations. The structures had to be installed before the beginning of the winter in South Africa. The weather and sea states off the coast are known to become very hostile in the winter period. The Fairplayer was mobilised in Rotterdam, eg, taking Jumbo’s offshore accommodation unit onboard and preparing its Deepwater Deployment System (DDS).

The Ikhwezi subsea installation project confirms Jumbo added-value concept of providing a single solution for loading, transporting and installing subsea structures in water depths up to 3,000 m.

Sonatrach ‘eyes Mozambique gas stake’ SONATRACH IS IN talks to buy a stake in Mozambique offshore gas projects operated by Italy's Eni and Anadarko Petroleum of the US, according to the Algerian state energy firm's chief executive.

Sonatrach, seeking to expand its presence abroad, is also eyeing new gas blocks in the east African country, Reuters quoted the company's chief Abdelhamid Zerguine as saying.

Zerguine was speaking after signing a memorandum of understanding with the head of Mozambique's Empresa Nacional de

www.oilreviewafrica.com

Hidrocarbonets (ENH), Nelson Ocuane.

Zerguine said Sonatrach was interested in buying part of a minority stake held by ENH in the offshore gas fields.

"We want to have a place, but on the Mozambican side," he said, according to the newswire.

Zerguine did not give details of the size of stake Sonatrach was seeking to acquire, but said a five per cent holding would cost it around US$1bn.

The memorandum also opened the way for Sonatrach to acquire exploration blocks in Mozambique.

"We agreed that Sonatrach will get prospecting blocks to explore alone or in partnership with energy companies operating in Mozambique," APS quoted Zerguine as saying.

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Tanzania’s 4th round of exploration announced THE TANZANIA PETROLEUM Development Corporation (TPDC) announced the 4th Tanzania Deep Offshore and North Lake Tanganyika Licensing Round will take place during the Tanzania Oil and Gas Conference and Exhibition in Dar es Salaam in October 2013.

The fourth round will include seven deep-sea sedimentary blocks, each with an average size of 3,000 sq km, and one offshore block in Lake Tanganyika, the TPDC announced.

The licensing round was scheduled to take place in September 2012, but was delayed one year to give the government time to ratify the Natural Gas Policy, according to Tanzania's The Citizen.

The government had planned to auction nine deep offshore blocks in the Indian Ocean, but decided to reserve two for commercial use.

"The two deep offshore blocks are reserved for [the] government where TPDC will be allowed to execute a different exploration approach using a strategic partner to be competitively sourced," the TPDC said.

Kenya farm-out in ERHC sights US INDEPENDENT ERHC has inked a letter of intent to farm out part of a Kenya block to an unidentified multinational company.

The Houston-based company has been looking to farm down its 100 per cent interest in Block 11a as it seeks to move forward with exploration after finalising a production sharing contract with the authorities last year.

ERHC said it would now start to hammer out definitive terms of a farm-out deal with the potential suitor, which it described as “an international oil and gas company” with “exploration and production interests spread across several continents”.

The block operator is currently evaluating bids from service companies to carry out an airborne full tensor gravity gradiometry survey of the 11,950 sqkm tract in north-west Kenya, near the South Sudan border with Lake Turkana to the east.

ERHC is pursuing the block’s rift margin play that is believed to be similar to recent major onshore discoveries made by the likes of Tullow Oil in East Africa respectively."

Drillship primed for fresh East Africa probes BG GROUP AND Ophir Energy have extended a contract for drillship Deepsea Metro I under their rig-sharing arrangement as the partners line up back-to-back wells for a busy exploration and appraisal campaign off Tanzania and Kenya.

The pair have decided to prolong the charter of Odfjell Drilling’s ultra-deepwater unit, due to expire in June, by 18 months to November 2014 and, according to Odfjell’s fleet status report, apparently have an option to extend it further to mid-2016.

The Ophir-BG joint venture is currently using the vessel to drill the Ngisi-1 exploration well in Block 4 off Tanzania that Ophir estimates could boost in-place resources at the Chewa-Pweza-Ngisi hub to

Tullow Oil spuds Kenya well

5.8 tcf, or a mean recoverable figure of 4.1 tcf. It would also “provide critical scale for gas aggregation and development” at the block that is likely to be tied into a combined liquefied natural gas project for blocks 1 to 3 in southern Tanzania, also including Statoil’s discoveries in Block 2.

BG Group has discovered between 13.5 and 21 tcf of gas in place in blocks 1, 3 and 4 off Tanzania, but partner Ophir believes there is resource upside of about 75 tcf.

Statoil meanwhile has lifted recoverable volumes in its operated Block 2 to between 10 and 13 tcf following its latest Tangawizi find earlier this year and its exploration chief Tim Dodson was recently reported as saying a joint LNG project

The Ngamia rig site in northern Kenya.

TULLOW OIL, THE operator of Block 10BB in Kenya, has commenced drilling at the Etuko (formerly Kamba) prospect. This well will target a new play area in the Lockichar Basin where a working petroleum system has been confirmed by recent discoveries at Ngamia and Twiga. The well will focus on the 'eastern flank play' where oil was discovered in 1992 by Shell at the Loperot-1 well. The primary objectives will be the Lower Lokhone and Auwerwer sands, both of which have been shown to be high quality reservoirs containing oil in existing wells. The gross best estimate of prospective resources for the prospect are 231mn barrels of oil based on a third-party Competent Person's Report. The well is expected to take approximately 60 days to drill and evaluate.

Testing operations continue on the Ngamia #1 well, also in Block 10BB in Kenya, and drilling operations continue on the Sabisa #1 well in the South Omo Block in Ethiopia. A result for Sabisa is expected in late May and Ngamia testing completed in early June.

Africa Oil CEO Keith Hill commented, "The Etuko prospect is one of the most attractive prospects in our portfolio and has the potential to open up a new play fairway on the eastern side of the already proven Lockichar Basin. A number of additional prospects and leads will be de-risked on this 'eastern flank' play if the Etuko well is successful. With three rigs active and three more on the way, the second half of 2013 promises to be a very exciting period in the continuing growth story of the company in East Africa."

32 Oil Review Africa Issue Three 2013

would be based on at least 20 tcf of producible volumes.

Ophir said the joint venture is now likely to drill a satellite exploration well close to the Jodari discovery in Block 1, followed by an appraisal and drillstem test in Block 4.

A further outboard exploration well would be drilled in Block 1 to test basin floor prospectivity by early September, with targets currently being evaluated, it said.

Ophir will then use the drillship to drill a probe targeting the Mlinzi feature in Block 7 off Tanzania in November.

The co-venturers have also lined up wells in Kenya’s largely underexplored offshore play but are remaining tight-lipped on drilling targets.

Woodside eyes Mozambique oil and gas OIL AND GAS producer Woodside Petroleum has its eyes on a project off the coast of Africa, that could be five times bigger than the North West Shelf project.

Chief executive Peter Coleman has previously ruled out investing in emerging east African oil and gas projects due to high costs, but he has now highlighted the potential of Mozambique for liquefied natural gas exports.

At a recent business breakfast, Coleman said recent discoveries in Mozambique had shown an area of gas reserves totalling around 100tcf, or “Five North West Shelfs”.

Coleman predicted energy producers will soon have to change the way they market and transport LNG. “That’s not just due to shale gas, that’s due to a whole new number of new supply sources coming in,” he said. “Wherever and whatever it is, the industry is fundamentally changing.” www.oilreviewafrica.com

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SacOil to look for oil in Botswana

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THE MOZAMBIQUE GOVERNMENT is currently revising its legal and fiscal packages for exploration and production, but anticipates its new petroleum law to be ratified by year-end in time for the upcoming licensing round, said Arsenio Mabote, chairman of the Instituto Nacional de Petroleo. Mozambique will seek to promote exploration in offshore areas 4, 5 and 6 in its upcoming licensing round. The government is also developing a master plan for development of the nation's gas resources, including asset development options, optimal locations, pricing structures and social improvements.

Mozambique has significant offshore natural gas resources in the Rovuma Basin, where 12 gas discoveries have been made to date within a 50 km radius area.

Thanks to exploration activity, the estimate of Rovuma Basin gas resources has been raised from five tcf in 2009 to 170 tcf in 2012.

The additional gas resources are located in two main concession areas 1 and 4. However, more resources may exist as both areas are not fully explored and exploration efforts offshore neighboring Tanzania and Kenya will support the construction of several liquefied natural gas (LNG) plants in the region.

Mozambique could also hold significant oil resources as well, if estimates by Total, which holds interest in offshore areas 3 and 6, are correct.

"The government understands the stable legal framework needed, but laws need to be finalised before the project can move forward," said John Peffer, president of Anadarko Mozambique.

Despite the cost, Anadarko President and CEO Al Walker sees Mozambique and its tremendous gas resources as the right opportunity for Anadarko to meet its goal of becoming a major LNG player.

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AFRICAN OIL AND gas company SacOil has been given the right to explore for oil in Botswana.

The independent upstream oil and gas company, through its Botswana subsidiary Transfer Holdings, said it has been granted three exploration licenses by the Botswana Department of Mines.

SacOil has interests in Nigeria, the Democratic Republic of the Congo and Malawi.

Botswana's mineral industry provides about 40 per cent of all government revenue but the country's policy makers have been trying to reduce the economic dependence on the sector.

Ratification of Mozambique petroleum law seen by year end

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Lekoil farms into OPL 310 AFREN AND LEKOIL have agreed to farm-out terms for license OPL 310 that lies offshore Nigeria and holds the Ogo prospect that is currently being drilled. Under the terms of the agreement, Afren has farmed out a 17.14 per cent interest in license to Lekoil, pending Nigerian Ministerial Consent. The indigenous Nigerian company Optimum Petroleum Development Ltd is the operator of the block and will continue to hold a 60 per cent participating interest.

The GSF Monitor (350' ILC) spud the Ogo prospect which is a four-way dip-closed structure in the Turonian to Albian sandstone reservoirs. The well is targeting 78mn barrels of oil equivalent of gross P50 prospective resources, stated Afren in a press release. Drilling commenced April 23 and is currently at a depth of 914 metres.

Drilling is expected to last 90 days and includes a planned sidetrack which will test a new play of stratigraphically trapped sediments that pinch-out onto the basement high targeting 124mn boe of gross P50 prospective resources.

“We are delighted to have successfully concluded a farm-out on OPL 310, offshore Nigeria and welcome Lekoil as a partner in exploring the significant potential of this under-explored region of the West African Transform Margin,” said Osman Shahenshah, chief executive of Afren.

Addax contracts Atwood jack up for 2014 SINOPEC GROUP'S ADDAX Petroleum Cameroon Ltd unit has let a contract to Atwood Oceanics Inc for the Atwood Aurora jack up to drill offshore Cameroon. Atwood said the contract is for one year beginning February 2014 at a US$193,000 day rate inclusive of the 15 per cent Cameroon withholding tax or US$164,000 exclusive of the 15 per cent Cameroon withholding tax, depending on the well location.

Addax in October 2012 said it would appraise the Padouk-1X exploratory well in 42 m of water on the Iroko block in the Rio Del Rey basin near the marine border with Nigeria.

The discovery well went to a total depth of 2,616 m and logged 38.6 m true vertical depth of net oil and 65.1 m TVD of net gas sands in which Addax estimated a provisional contingent resource of 20mn bbl of oil and 200 bcf of gas excluding upside potential to be assessed during appraisal.

Noble proves more oil offshore Equatorial Guinea NOBLE ENERGY HAS found oil in the Carla South structure offshore Equatorial Guinea.

According to partner PA Resources (PAR), well I-7 in block I encountered oil in good-quality sandstones at the target level. It has reached a total MD of 3,660 m, and will be side tracked to an adjacent target.

Drill cuttings, wireline log data, and downhole measurements indicate about 12-m measured thickness and 10-m vertical thickness of net oil pay.

PAR CEO Bo Askvik said the result has “extended the proven Carla trend from block O into block I. Further analysis of the data will be required to assess the implications of the well and next steps on this trend.”

The partners plan an additional appraisal well and longterm test on the Diega field later this year, he added.

BP sets course for start-up from PCC project BP IS GEARING up to kick-start production from its long-delayed Platina, Chumbo and Cesio (PCC) project in Block 18 off Angola via a hefty subsea development that could produce up to 70,000 bpd of crude.

There has been a long-running debate between BP and Angola’s state-owned oil company Sonangol about how best to exploit these challenging assets.

Sonangol wants a floating production, storage and offloading vessel, while the operator is seeking an all-subsea scheme tied back to its Greater Plutonio FPSO. BP Angola regional president Martyn Morris said the PCC project “is more likely to be a tie-back arrangement, rather than requiring another vessel”.

He said Sonangol would prefer an FPSO because the Angolan strategy is to have at least two independent projects in each offshore block, so that when one installation cannot produce for whatever reason, a second remains on stream.

BP’s view is that the costs of using an FPSO “do not stack up” and that in recent talks with Sonangol, “we have an understanding that the tie-back concept is the best way forward”.

The next step, Morris said, is to work out what the development will look like, how much it will cost and the project schedule.

Assuming Sonangol agrees to a subsea soluition, the plan could call for between 14 and 16 wells, down from the original 26. This scaleddown project is understood to be based on initially developing only the Platina and Chumbo discoveries, with the challenging Cesiofind to be tied back at a later date.

Solo in West African buy SOLO OIL IS planning to acquire a stake in a Switzerland-based company with farm-in deals lined up in West Africa.

Solo has signed a binding memorandum of understanding for a 15 per cent shareholding in Pan Minerals & Oil, which has already negotiated existing production agreements for onshore

34 Oil Review Africa Issue Three 2013

oilfields in the region.

Consideration for the acquisition is US$779,000, comprising a US$306,106 cash payment and 60mn new ordinary Solo shares.

Pan Minerals has invested almost US$3mn on pursuing farm-ins onshore West Africa, focusing on proven oilfields that have the potential to be

brought onto production at more than 2000 bpd within a 12-month period. Solo’s investment is expected to help complete these agreements.

Solo chief executive Neil Ritson said for commercial reasons, the details of the proven onshore oilfields needed to remain confidential at this stage.

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QUICKFLANGE, ONE OF the industry’s leading providers of high performance pipe connection systems with thousands of topside applications worldwide, has launched its new subsea pipeline repair solution – the Quickflange Subsea.

The new solution, which has been designed to bring low impact, robust and cost effective flange-to-pipe connections to subsea operations, will be available for delivery immediately and will be applicable for pipeline sizes of up to 12” with larger sizes to follow.

The Quickflange Subsea can be utilised in a number of subsea scenarios, such as emergency and contingency pipeline spool repair, but also applications in pipe lay, decommissioning, and modification.

“For too long, the mechanical connector market has been characterised by high subsea intervention costs, long lead times and complex and expensive solutions. No longer!” said Quickflange CEO, Rune Haddeland. “With the Quickflange Subsea, operators will be able to enjoy, for the first time, low impact, flexible and cost effective subsea pipeline repairs that are also highly reliable and robust. Quickflange is delighted to be launching this revolutionary new solution today and look forward to making as big an impact subsea as we have already done topside.”

The Quickflange Subsea can easily be slid onto the pipe with a hydraulic tool then used to activate the flange. This results in a mechanically robust flange-to-pipe connection and a less onerous

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installation compared to other more cumbersome mechanical systems. Key benefits include: Simplicity & Flexibility. The Quickflange Subsea is simple to install and activate. As it is up to 60 per cent shorter than other pipe-end connectors, it is easier to handle with straightforward diver operations and no specialist diver training required. The solution can be used on multiple pipe ranges with the installation being fully retrievable and reusable, thereby being ideal for emergency repair and contingency repair systems.

Significant Cost Savings. Thanks to the simplicity of the concept, the Quickflange Subsea also delivers significant cost savings in regard to subsea repair time, subsea operations, diver and support vessel costs. This includes reduces lead and delivery times and faster implementation with a reduction in required diver time and less required pipe preparation, such as coating removal and deburial. The Quickflange Subsea also comes with flexible rental options and installation tooling to reduce CAPEX. Finally, the Quickflange Subsea comes with maximum reliability and robustness. There are no moving parts, grips or other components, ensuring that less can go wrong. Third party testing has demonstrated that the solution is equivalent to welded weld-neck flanges in terms of pressure retention and load resistance with the assembled joint being stronger than the flange itself.

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Innovations

Simple, flexible, reliable and cost-effective pipeline repairs for subsea applications

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Apache reveals trio of Western Desert finds

Egypt to adopt new oil, gas licensing policy

APACHE HAS DISCLOSED a trio of new discoveries in Egypt's Western Desert.

Apache vice president for the region, Thomas Maher, said the finds, made in three different basins, showed the explorer's "diverse potential for new oil and gas developments across its concessions".

Maher added that the Houston-based explorer held a "deep backlog of drilling opportunities" offering "stacked-pay potential " in the Western Desert, where drilling costs were relatively cheap.

The NRQ 3151-IX probe in the Alamein basin's North Ras Qattara concession flowed at a combined rate of 1,625 barrels of oil and 18.7 mcfd of natural gas from two intervals in the Jurassic Lower Safa Formation.

Logging operations confirmed 30 m of pay sands were encountered in multiple zones, including the Cretaceous Upper Bahariya, the Jurassic Zahra, the Upper Safa and the Lower Safa.

The SIWA L-IX discovery well in the Siwa Concession within the Faghur Basin, tested at a rate of 2,041 bopd from the lowermost portion of a thick Paleozoic Desourky pay sand.

The well encountered 38 m of hydrocarbon pay in the Cretaceous Alam el Buieb (AEB-3), AEB-5, Jurassic Safa and the Desouky zones, according to Apache.

"In addition to extending the productivity fairway of the Faghur basin, this discovery also sets up a number of analogous prospects for drilling in 2013," the explorer said.

The NTRK-G-IX probe in the Matruh Basin's North Tarek concession encountered 60 net feet of Upper Safa hydrocarbon pay, later testing at 14.8mcf of natural gas and 1,522 bpd of condensate.

Apache said that in addition to being a wholly-owned discovery, the Jurassic Upper Safa find was only three km from a gas gathering system it and the Egyptian General Petroleum Corporation are competing during the coming months.

EGYPTY WILL ADOPT a new licensing policy for its future oil and gas exploration contracts signed with foreign companies that will allow the North African country to obtain a bigger share of the production, its oil minister Osama Kamal said.

"We have developed a new system that will be implemented in the next licensing round," Kamal said. "The new system will allow Egypt to increase its share of the output when production rises. The more production rises, the more our share will rise," he said.

The new policy won't be implemented on the eight oil and gas exploration projects in the Mediterranean Sea that Egypt awarded earlier this month for an overall minimum investment of US$1.2bn, Kamal added.

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BP ready to get feet wet drilling off Libya SUPERMAJOR BP PLANS to start deep-water drilling off Libya in October 2014 using a newbuild vessel being built by Samsung and to be operated by Maersk Drilling. The project is part of a US$2bn offshore and onshore exploration contract won by BP before the 2011 overthrown of the Gaddafi regime - and represents a big boost to Libya's efforts to mobilise foreign investment and to revive its energy sector.

The 2007 exploration agreement was based on the expectation of finding enough gas reserves to justify construction of liquifaction facilities for export.

BP Exploration Libya has already invited expressions of interest from contractors for provision of offshore helicopter services in support of the drilling programme in the Gulf of Sirt for five wells over three years. A full tender will be issued later.

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THE UGANDAN GOVERNMENT has reached an agreement with oil companies operating in its oil-rich Lake Albertine rift basin over the construction of a 30,000 bpd refinery, ending a nearly two-year deadlock that has largely been blamed for delaying the development of the country's oil fields, according to the Ugandan presidency.

The refinery agreement brings the two parties closer to a final deal on the basin-wide oil development plan, where companies are expected to invest more than US$12bn to develop the country's nascent oil sector.

A presidential spokeswoman said that the refinery agreement was reached following a meeting between President Yoweri Museveni and representatives of companies operating in the country - Tullow Oil, Total and CNOOC. "The parties agreed to start with the refinery size of 30,000 bpd" the spokeswoman said, adding that Museveni noted that oil production in the country was long overdue because alot of time has been wasted in negotiations.

With an estimated 3.5bn barrels of untapped oil, Uganda is expected to join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers. While the companies have been pushing for a pipeline to export crude on the open market, government has been insisting on the construction of a large refinery, with the capacity to refine as much as 180,000 bpd of crude into fuel products, initially for domestic consumption and then for regional export.

Museveni has said that the two sides were close to agreeing an oil and gas extraction plan that is "optimal" for both government and oil companies. Following the meeting with oil companies, government also agreed to the construction of an export pipeline.

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Sapref awards clean fuels contract to Fluor FLUOR CORPORATION HAS been awarded a frontend engineering and design contract by South African Petroleum Refineries (Sapref) for its clean fuels project in Durban.

"This award builds on our significant clean fuels expertise as well as Fluor’s ongoing site support work with Sapref in South Africa for nearly 20 years," Peter Oosterveer, president of Fluor’s energy and chemicals group, said.

Sapref is a joint venture between Shell SA Refining and BP Southern Africa. It is the largest crude oil refinery in southern Africa, providing 35 per cent of South Africa’s refining capacity.

The contract would be the first to be carried out in Africa under Shell’s enterprise framework agreement with Fluor. This encompasses engineering and project management services throughout Europe, Africa and the Middle East. The project would allow for a substantial upgrade of the Sapref refinery, which would improve the quality of transport fuels by reducing levels of sulphur, benzene and aromatics. This would meet enhanced legislative requirements.

The agreement allowed for a potential engineering, procurement and construction management contract to be signed at a later date.

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Midstream & Downstream

Uganda reaches deal over refinery

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OMC

Rosetti Marino always plays a key role at the Offshore Mediterranean Conference (OMC) that every other year is held in Ravenna, Italy – the annual conference alternating its location with Alexandra, Egypt. This year, Oil Review Africa spoke with Alessandro Heltai about the company’s plans to seek new markets in sub-Saharan Africa. Stephen Williams reports.

Rosetti Marino

looks south I

T IS NOT just the world’s top investment companies that have turned their gaze towards sub-Saharan Africa and the continent’s fast-growing economies, but there is increasing interest from all manner of service companies – and this is also true of those working in the energy sector.

Rosetti Marino is a highly respected, integrated engineering group of companies with a focus on the offshore oil and gas industry. Having built an enviable reputation for engineering, procurement and construction (EPC) throughout the Caspian, in North African waters (and onshore), as well as territories as diverse as the North Atlantic, Brazil and the Gulf, the company is now appraising new markets in sub-Saharan Africa.

Alessandro Heltai, Rosetti Marino’s regional manager for Africa, describes the company’s objectives in this way: “Our company is very keen in pursuing all the interesting prospects there are there, for example in Mozambique and in West African countries such as Ghana and Côte d’Ivoire.”

What makes Rosetti Marino’s strategy so compelling is that it can offer more than 40-years experience in the oil and gas industry. In fact, the company traces its origins back even further – to 1925 to be exact – when the firm’s founder, Marino Rosetti established his company in Ravenna, one of the country’s most important maritime ports and industrial centre, located in north-east Italy.

He was to build his business by supplying the local market with steel components and small storage tanks. He then branched out into ship’s hull maintenance work and pressure vessel manufacturing.

Offshore platforms became core business The opportunity to further develop the business arose in 1970 when the iconic Italian National Oil and Gas company, ENI, began the exploration of the Adriatic Sea to determine its gas prospectivity. And so began the long commercial relationship between ENI and Rosetti Marino that continues to this day. Within 20-years, the construction of offshore platforms for the oil and gas industry became the Rosetti Marino’s core business.

However, it has also developed the design and construction of tugs, anchorhandling tug supply vessels, and platform supply vessels. These vessels utilise the most advanced technology, being completely outfitted with state-of-the-art equipment such as the Voith Schneider propeller (also known as a cycloidal drive) a specialised marine propulsion system that ensures high maneuverability, being able to change the direction of a vessel’s thrust almost instantaneously.

Much of the marine vessel work is undertaken at the San Vitale Yard in Ravenna harbour, a facility of over 56 sq km with a 175 m quay capable of ‘loading out’ items of up to 10,000tonnes.

“We have a proven capability to work in distant markets,” Heltai explains, pointing to the experience built up by Rosetti Marino with supplying various offshore platforms to clients operating in the extremely demanding North Sea environment. “To build, and then transport our jackups and topsides from the Ravenna yard to the North Sea clearly added some financial costs that perhaps our competitors did not need to meet, but we were successful, and it demonstrated our ability to penetrate distant markets.”

Heltai believes that sub-Saharan Africa may be a different proposition, as local content is becoming an important pre-condition for international companies wanting to establish operations in Africa.

“At the moment, the yards in sub-Saharan countries are limited in terms of capacity,” Heltai says. “That is why we are still competing for a share of the West African market. But now I see that there is increasing pressure from the governments of all those countries in the region to have foreign companies make investments within the country, to begin manufacturing that will bolster

38 Oil Review Africa Issue Three 2013

Alessandro Heltai, Rosetti Marino’s regional manager for Africa.

Local content is becoming an important pre-condition for international companies wanting to establish operations in Africa. the economy and provide employment opportunities.

“I think that procurement of materials and the equipment and so on will continue be done in Western Europe and in the United States, but increasingly goods used by companies in Africa are required to be locally sourced. Nigeria for good example of this with the country having published a local content act.

“But this does not discourage us, even if we are not there at the moment.

We know Nigeria is still a very promising country, and holds a lot of possible prospects and projects for us. We need to verify how to organise ourselves to move forward, almost certainly with local partners.”

Heltai also spoke of the prospects that Mozambique represents, especially as its long-term client ENI has such an important stake in the recently discovered offshore gas reserves of the Rovuma basin.

“Mozambique is very promising,” he confirms. “We visited Mozambique many times last year and earlier this year, and we are looking at this country’s prospects very closely. It is true that Mozambique represents mainly subsea and LNG activities. These are two areas where Rosetta Marino is not present at the moment, but we have the capability to fabricate subsea modules. We would be delighted to participate in projects for ENI, and we are looking at the possibility of building a yard in the country, but this requires a huge investment. Therefore, it is important to confirm the projects first. We have to assess those future projects where we can be competitive.”

And that would seem to be Rosetti Marino’s strategy, to carefully assess where they can be competitive, leveraging their extensive experience in the oil and gas industry, defining new markets and setting up local offices in order to better liaise with their clients.

This is the business model that Rosetti Marino has followed in its main operating sphere, the North Africa littoral. “We have a branch and a company in Libya,” Heltai explains, “as well as Egypt and Tunisia. The objective is always to work with local branches or local companies. Our presence adds a lot to future developments because you have the continuous presence of your people, your staff and then also the contact with the clients is much more frequent. This is very beneficial for the business.”

It was notable that this year’s OMC attracted record numbers of participants, exhibitors and visitors, despite the global economic downturn that has impacted southern Europe in particular.

In fact, the chairman of the OMC ’13, Innocenzo Titone reported that the 22,500 sq m exhibition area, over six pavilions, this year hosted more than 550

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Rosetti Marino’s strategy is to carefully assess where they can be competitive. technologies, such as those that are being applied in the renewable energy space.

When asked for his opinion as to the potential of renewable energy for Rosetti Marino, Heltai said: “We are an EPC contracting company, so when we talk about renewables, the first idea that comes to my mind is wind. There are different types of activities we can do including the construction for the wind farms, but perhaps the most promising would be to build the jackets and topsides for the High Voltage Direct Current Stations. These would collect the power from the wind turbines and transport that electricity via high voltage cable to the onshore. This is the equivalent of building electrical substations, and Rosetti Marino’s engineering expertise and experience would be invaluable to construct wind farms.”

And asked to sum up what he would be taking away from the OMC this year, Heltai was upbeat about prospects for the industry. “The East Mediterranean has seen a lot of new discoveries for Lebanon, Israel, Cyprus and maybe Syria, and exploration is still continuing. While water depths are significant, we feel sure we can take part in subsea development.

“I repeat, we are not at the moment present in the subsea industry, but I know we can participate with many of the technology providers and work together to expand this very demanding market. So we’ll keep an eye on the development and be one of the players there too.”

On a final note, he commented: We see that Italy is suffering from this global economic crisis and the political instability. However Rosetta Marino has a lot of work and we see a brilliant future for our continuing growth in the coming years, and I think that promise includes growing outside the Euro zone and that has to include Africa.” ■

Oil Review Africa Issue Three 2013 39

OMC

exhibitors from 30 countries from around the world, representing a 17 per cent growth of the event.

Significantly, this year there seemed to be a renewed optimism that the large gas reserves identified in the Eastern Mediterranean will begin to be exploited and monetised (although many challenges still remain), and that the Mahgreb’s hydrocarbon industry would be bouncing back following the political instability the region has experienced over the last three years.

Many of the super-major exhibitors presented mini-seminars on their stands.

The ENI stand was a case in point where Furo Ogolo who is a technical advisor for gas monetisation to the Italian major, gave a fascinating overview of recent developments.

Rosetti Marino is also at the cutting edge of new gas technologies. In cooperation with Atlantic Hydrogen, Canada, they have been developing a unique technology which removes carbon from natural gas prior to its use (as alternative to CO2 capture and sequestration after combustion).

In this process, carbon is separated prior to combustion in the form of solid carbon powder, thus avoiding all problems related to CO2 sequestration. The technology produces a ‘low-carbon natural gas’ that can substitute natural gas in motors and turbines as well as in city-gas networks (supplied as ‘green natural gas’) reducing GHG emissions. The process is also emission free and solid carbon removed upfront as carbon black is a valuable product for the chemical industry.

The technology is in an early commercialisation phase and is presently being considered as a means of reducing the carbon footprint of stationary power applications that use natural gas as a feed and for sustainable transport fuels as compressed natural gas.

Among the 25 technical sessions that ran alongside the OMC exhibition – including learned dissertations on drilling, reservoir engineering, subsea operations and health and safety issues – were a number that focussed on emerging

Innovations

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New concept to deal with pipeline expansion TRANSPORTING OIL AND gas from high-pressure and high-temperature reservoirs through pipelines is a major challenge.

A pipeline laid on or buried in the seabed responds to high pressure and high temperature by expanding, resulting in axial displacement (also known as end expansion), lateral buckling, upheaval buckling, or a combination of these. Such pipeline movements can cause failures and are critical to the integrity of a pipeline. When a pipeline is subject to high pressure and high temperature, its ends expand longitudinally and exert large forces and bending moments onto adjacent tied-in structures connected to it. The tiedin structures must be designed to withstand these expansions and forces. Dumping rocks along the pipeline or a giant spool installed at the pipeline end have traditionally been costly alternatives.

SliPIPE works to reduce the end force expansion exerted at the tie-in by absorbing the end expansion through sliding within itself and simultaneously reducing or eliminating the effective axial compressive force in the pipeline.

The concept consists of an outer pipe connected

alongside a pressure chamber and an inner pipe that can slide inside them. Seals are placed at the contacts between the pressure chamber and the inner pipe. The inner pipe slides in or out of the outer pipes in response to an axial stress that can either be more or less than a certain value. This value is pre-determined in the design and causes an axial tension in the pipe wall to develop, which opposes the effective axial compressive force component arising from the inner fluid pressure.

The axial tensile pipe wall force is produced by letting fluid pressure in. Between the outer pipe/pressure chamber and the inner pipe of the SliPIPE concept are two main seals, a partition wall seal, an environmental seal and a scraper seal. The seals are made of materials that allow them to function at high temperatures and pressures.

Several practical issues that will influence the operation of the SliPIPE have been studied and feasible ways to overcome these are looked into.

A SliPIPE concept used for absorbing end expansion may be pre-installed on a PLET which is then transported and installed offshore on the end

of the pipeline, lowered onto the seabed and connected to a manifold or riser via a short tie-in spool. A misalignment flange may be included.

Alternatively, a direct tie-in (without a PLET and short tie-in spool) is also feasible with the use of a suitable installation guide.

Key advantages with the SliPIPE concept are: 6 avoids the fabrication and complicated installation associated with giant spools 6 minimises costly post-installation subsea intervention work 6 space-efficient and ideal in areas congested with many subsea facilities.

“At this stage SliPIPE is conceptual and will require refinement, engineering and qualification before it can be realised in an actual project,” said DNV’s pipeline director Asle Venås. A global DNV team of experienced engineers has developed the concept. The team has also taken into account comments from the industry and academia.

SliPIPE is a new concept developed to deal with the end expansion of a rigid pipeline subject to high-pressure and/or high-temperature (HPHT)

Optimum sealing solutions AFTER AN EXTENDED programme of third-party testing, Trelleborg Sealing Solutions now has 20 best-in-class materials qualified to all elements of the stringent NORSOK M-710 specification. The breadth of the range of approved compounds, from elastomers to PEEK and PTFE based compounds, means Trelleborg can provide the optimum sealing or bearing solution whatever the oilfield conditions, however demanding.

Trelleborg Sealing Solutions’ extensive range of innovating seal materials and ongoing material development help it meet industryrecognised standards, such as NORSOK M-710, which requires that all subcomponents of oilfield equipment be approved to stated specifications. Individual seal materials are rigorously tested and approved based on criteria such as Explosive Decompression Resistance (EDR), sour and sweet gas ageing, compression set tests and material property tests.

“In today’s oilfield market, quality and safety are paramount. Simply saying you produce a quality product is insufficient, and claims must be reinforced with experience, compliance to industry standards and proven performance," said Eric Bucci, Oil & Gas segment manager,

Trelleborg Sealing Solutions Americas.

Trelleborg Sealing Solutions has invested heavily in research to identify the optimum compound for each application. All materials were involved in tests undertaken and supervised by MERL – Materials Engineering Research Laboratory – a respected independent laboratory in the U.K. The standard covers all critical nonmetallic (polymer) sealing, seat and backup materials for permanent use subsea, including well completion, trees, control systems, wellheads and valves. It also applies to topside valves in critical gas systems.

“Now that Trelleborg Sealing Solutions provides such an extensive range of elastomer and thermoplastic materials certified to NORSOK M-710, including low-temperature compounds, Trelleborg is uniquely positioned to solve difficult applications in the oilfield,” said European Oil & Gas Segment Manager, Bill Allan. “New reservoir discoveries in harsh and challenging environments are driving the need for innovative materials, and Trelleborg is prepared to address these challenges."

Honeywell introduces new HPS high pressure switch HONEYWELL HAS BROUGHT to market its HPS Series High Pressure Premium Switches with a two million life cycle rating, IP67 environmental sealing, and multiple port and termination options, which the company claims helps to improve equipment uptime, simplify rapid design and assembly, and reduce total production costs.

The HPS Series are durable, reliable electromechanical gauge pressure on/off switches that are available with either single pole single throw (SPST) or single pole

40 Oil Review Africa Issue Three 2013

Honeywell HPS series switch.

double throw (SPDT) circuitry.

The switches are suited for use in rugged transportation and industrial applications that require the making or breaking of an electrical connection in response to a pressure change of the system media.

The HPS Series switches feature a switching point accuracy of up to ±2 per cent, providing efficient operation of equipment.

They also operate in temperature ranges from of -40°C to 120°C which means it can be used in a variety of environments.

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Technology

In this article, Christopher Connor, Emerson Process Management, explains how the latest leak detection systems based on Coriolis flowmeter technology, can help operators to meet regulatory requirements and detect leaks effectively, with a minimum of false alarms.

Accurate and reliable pipeline

leak detection Typical installation using Coriolis meters for pipeline material balance.

P

IPELINE LEAKS ARE a major concern for any pipeline operator. Whether they are caused by pipeline aging, equipment failure or unauthorised extraction, pipeline leaks can compromise safety and have a serious environmental impact.

Installing a reliable and effective leak detection system will minimise the amount of product released, maximise public and employee safety, reduce environmental impact, minimise clean-up costs, and limit legal liability. An accurate and reliable leak detection system will also assist operators in meeting local regulatory requirements.

Over the years, various technologies and strategies have been implemented to detect leaks and these systems generally fall into three categories. Pipeline inspection gauge (pig) based systems, where a pig is passed along the length of the pipe, external monitoring where the line is inspected manually and internal fluid state monitoring. While pig based and manual systems are scheduled, event based activities; internal fluid state leak detection systems based on Computational Pipeline Monitoring are continuous.

By using the latest high accuracy Coriolis flowmeters, accuracies of less than 0.2 per cent of the maximum line flow rate have been reliably detected in less than ten minutes.

Each of these methods is summarised as follows: 1. Pipe integrity monitoring (eg, pipeline pigging) Pipeline pigs carry a range of surveillance and monitoring equipment and are used at regular intervals to check the internal condition of a pipe. If a leak is suspected, a pig with acoustic equipment on board is used to locate the leak. This occurs when the audio output reaches a maximum. Using radio transmitters, the exact location of the pig in the pipeline can be confirmed and the leak investigated.

Unlike instrumentation based systems, pigging is not a continuous method of monitoring and this introduces delays in leak detection. There can also be problems with pigs getting stuck in pipelines due to the build-up of debris. Noise generated by obstacles such as welds may also affect the acoustic output as the pig travels along the pipeline. To compensate for this, some pigging systems build up

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an acoustic map of an individual pipeline so any changes can be more easily detected.

2. External monitoring (eg, human inspection, surveillance by unmanned drones or satellites, vapour sensors, acoustic emissions monitoring, and IR sensing) The simplest method of pipeline monitoring is by regular inspection, either by walking the line or surveillance using vehicles or aircraft. However these systems are labour intensive and may expose operators to difficult or dangerous terrain. Even if the inspections are carried out regularly, pipeline leaks could remain undetected for some time.

3. Internal fluid state monitoring Internal fluid state monitoring is where the hydraulic state of the fluid in the pipeline is monitored. This is the most common method and this type of leak detection is normally software-based. It is called Computational Pipeline Monitoring.

Computational pipeline monitoring Introduced by the American Petroleum Institute (API) in 1994, Computational Pipeline Monitoring (CPM) uses pressure, flow and temperature information to estimate the hydraulic behaviour of the product being transported. Based on the estimation, the results are compared to other field references to detect the presence of an unusual situation, which may be related to a leak.

CPM uses two principal methods used for leak detection. Pressure or acoustic analysis analyses the pressure wave in the fluid that is caused by a leak.

This method detects leaks quickly, (a function of the speed of sound in the fluid), however, the leak must be fairly large for the system to pick it up.

The second method is based on the material balance of the pipeline (or segments of the pipeline). By comparing the quantity of material entering the pipeline, with the quantity of material flowing out, any differences that cannot be accounted for by changes in temperature, pressure, or linepack (changes in the volume of material in the pipe), suggest the existence of a leak. Combining these two methods to maximise detectability and sensitivity in both flowing and static pipeline operations, provides the most effective leak detection systems.

Material balance systems Material balance systems can be based on either volume or (direct) mass. For the purposes of this article, the term ‘material balance systems based on mass’ refers only to systems that utilise direct mass measurement.

1. Volume-based For material balance systems based on volume, the volume measurements at each end of the pipeline (or segment) must be comparable.

Differences in temperature and/or pressure between the input and output measurements, will introduce errors that must be compensated for.

Material balance systems based on inferred mass (mass derived from volume) are essentially volume-based, and have all the limitations associated with volume measurement.

In addition to measuring volume, temperature and pressure measurements are required at both ends of the line. The volume measurement is then converted either to ‘standard’ conditions or to mass (the preferred solution). However, if either the temperature or pressure varies significantly inside the pipeline, the end measurements are not truly representative and the applied compensation factors are not accurate. Temperature compensation, in particular can be challenging if the pipeline is exposed to different environments (e.g., if some segments are below ground, under a body of water, etc.).

2. Mass-based For material balance systems based on mass, no temperature or pressure compensation is required because mass measurements are not affected by temperature or pressure.

Accordingly, material balance systems based on mass require less instrumentation, and since only one measurement device is used, they are typically more accurate.

Even the most rigorous leak detection system, whether volume-based or mass-based, will require linepack compensation. Linepack compensation adjusts measurements for the amount of material in the pipe. Linepack compensation is implemented by the software component of CPM systems and is one of the main reasons that the software is required.

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Technology

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Effective mass balance system required Although a mass balance system is theoretically accurate, in reality its accuracy depends on the accuracy of the mass measurement devices and the linepack calculation.

Meter accuracy directly determines the system’s sensitivity or ability to detect small leaks and the overall accuracy of the system is a function of the least accurate meter. Accordingly, all meters must be of custody transfer quality, capable of providing high-accuracy measurements. All measurements must be repeatable through changing process conditions (changing flow rates, density, viscosity, etc.) and finally, all measurements must be reliable and sustainable over time. Experience has shown that flowmeters based on Coriolis technology are ideally suited to meet these requirements.

Emerson’s Micro Motion range is a good example of the high accuracy available from Coriolis flowmeters. Various models are available with an accuracy specification of 0.1 per cent. For applications where an even higher accuracy is required, an enhanced model is available with an accuracy specification of 0.05 per cent. The high accuracy of these meters makes them an ideal choice for direct mass measurement leak detection applications. An additional benefit is that meters based on Coriolis technology will measure density

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as well as mass, and this additional data can be used for secondary functions.

For example, the density measurement can be used to monitor changes in process fluid composition, eg, to track batches of product as they pass multiple metering stations, or to monitor product quality. Coriolis meters measure the density of the entire flowing stream, independent of fluid composition. This makes them more accurate for process fluids with complex or variable composition, than other technologies that infer the density (e.g., using look-up tables).

Built-in meter verification is a recent innovation that enables a calibration check to be quickly made without removing the meter from the line. Ensuring that a flowmeter is correctly calibrated means that when there is an out-of-tolerance variation between meters being used for leak detection, operators can quickly rule out false alarms or meter damage.

Real life situations The ‘ideal’ application is where a well-understood refined product is being monitored. In reality this tends to be the exception rather that the rule and there are many factors that make accurate measurement problematic. Examples include fluids of variable (transient) composition eg, produced crude with gas, water and suspended

solids, fluids with gas/liquid fractions, and fluids with variable viscosity or density.

There are also situations which make it impossible to follow installation best practice for measuring instruments, for example where there are short meter runs or installations near elbows, etc. In addition there may be difficult operating situations (eg, empty-full-empty).

Where operating conditions are less than ideal, the highly accurate, direct mass flow measurements produced by Coriolis mass flow meters makes them the meter of choice. In addition, because they do not rely on external pressure or temperature measurements or conversion to reference conditions, they are not affected by changing conditions. Because Coriolis meters are delivered from the factory preconfigured, they usually do not need any calibration in the field. When compared with other technologies, users do not require a high level of expertise to design and operate a metered run of pipe.

Coriolis flowmeters offer many other benefits.

For example, they have a high turndown ratio, which ensures accurate results over a wide range of flow rates. Their robust design isolates sensitive components from the process and insulates them from the ambient environment. In addition, they do

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Summary The most effective leak detection systems utilise a combination of a pressure or acoustic analysis system and a material balance system. The most accurate, reliable and robust material balance systems incorporate linepack compensation and are based on mass measurement, rather than volume.

Emerson’s flowmeters measure mass accurately and reliably across changing process and environmental conditions, with no requirement for external temperature, pressure, or density data.

Using leak detection systems that include Coriolis flowmeters, pipeline operators can meet regulatory requirements and detect leaks effectively with a minimum of false alarms. In addition, Coriolis meters can tolerate vapour fractions and also support a variety of secondary functions such as process fluid monitoring or custody transfer.

Coriolis technology in action The following four examples outline applications where Micro Motion Coriolis meters are being successfully used for leak detection.

To increase statistical accuracy and reliability, four Micro Motion Coriolis meters were installed on each pipeline, two at each end. Mass flow data is reported to a central station. If the four meters agree to within 0.5 per cent, the pipeline is assumed to be intact; if any one of the four meters is outside this limit, an alarm is generated. Because of the relatively short length of the pipeline, linepack compensation was not needed. Based on the success of this system, it has been implemented on a further 18 pipelines at this site.

Figure 1 shows two examples of changes in pipeline operation and the resultant effects on measurement. The data lines represent mass flow rate from Meter 1 at the tank farm (the pipeline entrance) and Meter 2 at the pipeline exit. The meter readings are in close agreement until Event 1 (a tank switch at the tank farm). The tank switch registers only on Meter 1. When the disruption is over, the meter readings again agree until Event 2 occurs (a pump shutdown at the pipeline exit). Both meters register this change, but at different times. Event 3 (pump restart) is also registered by both meters but at different times.

station. With the constantly changing environmental conditions and fluid properties, the PD meters were not sufficiently accurate to meet regulatory requirements. As a result, the refiner was unable to demonstrate to the authorities that there were no leaks currently in the pipeline, or that an effective leak detection system was in place.

A project to improve the flow reconciliation was undertaken. This required the installation of two Micro Motion Coriolis flowmeters from Emerson, one at each end of the pipeline, with the mass totals from these two meters being compared every hour: 6 If the totals matched within 0.7 per cent, the pipeline was assumed to be intact.

6 If the totals varied by more than 0.7 per cent, an alarm was generated.

The conversion to Micro Motion meters was immediately successful enabling the refiner to meet its regulatory requirements. However, when mass flow rates from the two meters were compared on a continuous basis: 6 If pipeline operation was steady, the meters agreed to within 0.1 per cent.

6 If pipeline operation changed (eg, a tank was switched or a pump was shut down), the readings would diverge until flow again reached steady state.

These results demonstrate the importance of linepack compensation in leak detection systems. If only the hourly reconciliation is used, it would be possible for a leak to go undetected for up to an hour, but a comparison of flow rate data cannot distinguish between pipeline events and leaks without the assistance of linepack compensation.

Leak detection using flow reconciliation A refiner needed a leak detection system to meet pipeline monitoring requirements. The pipeline is 120 km long and 300 mm in diameter, and carries various crude oils including sweet, sour and heavy crudes.

The refiner chose to use flow reconciliation to meet regulatory requirements. Three metering stations were installed; one at each end of the pipeline and one in the centre with Positive Displacement (PD) meters being installed at each

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Leak detection using a 4-m voting system A refiner sends products from the refinery to a tank farm located on the opposite bank of a large river.

The pipelines run below the riverbed and the local authorities required a leak detection system to monitor for leaks into the river. The original system used a volume-based, materials balance system with both PD and turbine meters. However, this system generated a large number of false alarms, so a new system based on mass measurement was designed.

Leak detection compensation

with

linepack

The state of Alaska has established some of the most stringent pipeline leak detection requirements in the United States and possibly the world. This means that all leak detection systems are inspected, tested, and monitored by the state.

At one refinery, PD meters were installed at various points along a large crude oil pipeline.

Although a statistical pipeline monitoring system was in place, the leaks were being masked by the noise of the PD meters. The site was unable to pass the state audit.

When the replacement Micro Motion meters were installed, mass flow rather than volume flow was reported to the leak detection software. The leak detection system now reached the required levels of effectiveness and received state approval.

Coriolis meters used for storage and pipeline leak detection at an oil terminal.

Leak detection on pipeline transporting multiple fluids and custody transfer An 800 km pipeline in Canada transports C2+ (ethane and higher hydrocarbons), condensate, and crude oil. Only a mass-based Coriolis system can easily measure process fluids of such varied composition. Other methods either infer density from look-up tables or require a separate density device.

The pipeline operator has installed Micro Motion Coriolis meters, and uses them for leak detection and for custody transfer – with the same meters supporting both functions. ■

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Technology

not require long pipe runs before or after the meter, so they can be installed in more accessible locations.

Finally, gas entrainment in mostly-liquid streams is a situation that can occur frequently in leak detection and is challenging for conventional meters. For example, produced crude oil has whatever gas fraction nature feels appropriate. This makes achieving complete gas-oil separation for measurement challenging. Likewise, a chemical process that is operating slightly off its set point can produce a mostly liquid flow with a vapour fraction. This can be a problem when the flow is being measured by a meter designed for liquid flow measurement.

In both instances, the presence of vapour, and the transient amount of it, can seriously degrade meter accuracy and consequently leak detection sensitivity and reliability. It is important therefore to utilise Coriolis technology that can tolerate vapour fractions and deliver acceptable accuracy (around one per cent) in the presence of vapour, to avoid compromising leak detection.

For example, using Emerson’s Coriolis flowmeters, leaks of less than 0.2 per cent of the line flow rate have been reliably detected. While it is possible to achieve this level of success with other meter types, the use of Coriolis technology makes it far easier to accomplish, particularly in difficult applications.

Pipelines

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A common assumption made by many people is that pipes are round and have a constant wall thickness. It is also assumed that to all that needs to be done to fit pipes together is to find and join together pipes of a similar size. These assumptions are incorrect, however, as Dr Tim Clarke from OMS reports.

Round pipes -

an engineer’s pipe dream T

HE MAJORITY OF pipes create fit up problems. The only way that pipes approach being round is when they are machined internally and externally, a manufacturing process that is not always possible.

"Manufacturers try to make pipes as accurately as they can but they cannot be formed precisely enough," said Dr Tim Clarke, director of Optical Metrology Services (OMS).

"There will always be a necessity to take further steps to meet the most demanding applications found in the oil and gas industry."

A size discrepancy of just half a millimetre between pipes can mean the difference between success and ecological disaster. A fatigue-sensitive steel catenary riser is subject to dynamic stresses as it descends a mile from a vessel (or a spar) to the sea floor, for example.

The topside structures are subject to extreme weather conditions (such as hurricanes) while the pipe itself can be buffeted by underwater currents that are so strong that strakes are typically fitted to pipes to stop them vibrating.

The shape of a pipe is largely dependent on the method of manufacture and, for each method there will be variability that is typical for that process. Further shape variations will occur depending on the size of the pipe and the specific equipment used to manufacture the pipe. One type of manufacture is the UOE process. These pipes are called UOE pipes as they are first formed into a U, then an O and finally expanded to their final size. Each part of the process leaves its signature on the pipe. The expander is a tool that is made up of a number of segments. The pipe is enlarged by the expander in order to attempt to create a uniformly round pipe. While it may be successful in taking out some features left behind from the Uing and Oing process, it leaves behind its own imprint in the pipe.

When the Eing process does not create a circular pipe, a variety of shapes are possible.

Sometimes the pipes are oval or are not circular in the weld region, an effect known as 'peaking', but this term arguably does not adequately cover the sheer variety of shape abnormalities in the region of the weld.

UOE pipes are used in the oil and gas industry at the point when seamless pipe become difficult to manufacture to the desire standards. Unlike UOE pipes, seamless pipes are manufactured red hot. The manufacturing process is complicated. A solid cylinder of red

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A size discrepancy of just half a millimetre between pipes can mean the difference between success and ecological disaster. hot steel is pierced through the centre with a rod, then the red hot tube goes through further stages where it is rolled into shape against an internal mandrel. The final pipe is far longer than the original ingot.

Seamless pipes have a variety of shapes which can vary between mills and during production runs. In some cases the pipes are made in double lengths and cut in half. The ends of these pipes can be more out of shape than the middle due to the closeness of the end to the piercing.

Extra attention for deep water pipes Pipes that will be used in deep water (more than a kilometre under the sea) must be given extra attention, particularly steel catenary risers (SCR’s), which bend up from the sea bed and lead up to a platform or FPSO. Weather extremes and sea currents can cause serious problems if they are not welded to an exact specification.

"If the pipes don’t match any closer than 0.5mm a bad weld can occur which could lead to a failure of a riser which would be an environmental disaster,” said Clarke.

Better fit up of pipes leads to better welds and this can prevent such problems occurring.

OMS also measures pipes more quickly, easily and accurately than has previously been possible, taking a matter of seconds for 2,000 measurements of both the internal diameter and wall thickness of the pipe.

OMS's Automatic Pipe Checker uses lasers to measure internal and external dimensions.

The device is placed inside the end of the pipe

so that an arm with lasers attached can encircle the pipe taking accurate measurements to build up a map of the pipe shape, both on the inside and the outside. The information from the tool is sent to a computer via Bluetooth technology, which displays all the points of the circle, in a line, as though the pipes circumference has been unwrapped.

The software devised by the company is then able to perform a number of tasks that solve the problems posed by out-of-shape pipes.

One scheme is to find the pipes that fit together exactly.

"Sometimes the pipes we get are difficult to use," said Clarke. "We have to find pipes with the right diameter and then find pipes that are the right shape. It can be an extraordinarily complex thing to do."

In other cases OMS will assist in creating a counterbore plan in order to create pipes that are good enough to be used without matching them together in a specific order. Counterboring is a process of removing material from the inside of the pipe to obtain a smooth circular inside, which is good for welding and easy to fit together in any order. Either way, OMS is able to deliver pipe joints to the client that are as good as they would be if the pipes were round.

Using the OMS tools saves time - being able to measure as many as 400 pipe ends in one day is at least three times faster than using regular measurement tools that only measure at a few discrete locations around the pipe.

Companies are able to keep their project schedules on track and as some projects involve measuring more than 2,500 pipes, this time saving is hugely valuable.

Project engineers also have the security of knowing that the dimensional part of their project is being managed by experts who have acquired skills and experience over many years on a wide range of projects.

Clarke said, “Offering our clients the complete solution to their problems is our aim, we know we can deliver that, in fact we do.” ■

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SWAGELINING LTD HAS detailed the successful deployment of its integrated lining system in a water-injection riser offshore Angola.

The single leg offset riser (SLOR) concept, installed by J-Lay, was utilised for the first time with a polymer lining system designed specifically for the application. The manufacturing of the base double joints was completed in the UK before they were shipped to Angola for installation.

The SLOR configuration included bespoke sections for the upper and lower riser assemblies which also required lining. With a 20 year service life, the design of the polymer lining system had to accommodate the J-Lay installation process and be able to withstand very high operating pressures. The vertical orientation of the riser, which was in water 2,000 metres deep, raised a number of engineering questions surrounding the tightness of fit, self-support and anchoring for the liner system.

410 bar without ingress of water behind the liner, proving the technology's efficacy at elevated levels.

Despite a very challenging fabrication schedule, PTL was able to complete the riser double joints with time to spare and within the budgeted costs. The challenging upper and lower assemblies were successfully Swagelined as a separate scope undertaken at HMC fabrication shops in Holland. The SLOR now has internal corrosion protection from

end to end, ensuring that it remains 100 per cent operational for its full 20-year service life.

The successful combination of WeldLink connectors and Swagelining technology has shown that taking a collaborative approach to developing an integrated lining system, made up of materials, technology and proprietary components, can be a highly effective strategy when fitting polymer lining to deep water pipes and risers.

A co-ordinated collaborative effort The project was very much a co-ordinated, collaborative effort. Heerema Marine Contracting, acting on behalf of BP, was responsible for the manufacture and installation of the SLOR by J-Lay, using their semi-submersible crane vessel, Balder.

The design of the SLOR was by 2H and Pipeline Technique Limited (PTL) was responsible for the fabrication of the riser. PTL selected Swagelining Limited for the design and delivery of the polymer lining system. All stakeholders worked openly with each other to identify every relevant technical issue to the first-time use of the technology in the SLOR. In what may have been the most extensive polymer lining system design report yet completed for a water injection system, Swagelining Limited produced a wide range of evidence that the liner system was fit for purpose.

Every individual aspect of the performance of the liner system was analysed for insertion and in-service loads. Design calculations were developed and a substantial pre-qualification test programme was also established and successfully completed.

To support the validation exercise, Swagelining Limited produced extensive historical records from previous projects including the condition assessment of a 13year-old 'Swagelined' spoolpiece with a WeldLink connector attached, recovered from the seabed. Further data from extensive fullyinstrumented hydrotests of Swagelined spools with WeldLink Connectors further enhanced confidence that the system would prove fit for purpose.

The water injection system, comprising Swagelined polymer liners and WeldLink connectors, was successfully hydrotested to

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Oil Review Africa Issue Three 2013 45

Pipelines

Collaborative effort proves successful for Angolan pipe-lining project

Technology

S13 ORA 3 2013 Technology 03_Layout 1 21/05/2013 12:41 Page 46

One of the most innovative recent advances in downhole activation for the drilling industry has been the introduction of mechanical extrusion technology, incorporating the deployment of rigid metal darts, as a means of improving cycling and control of a range of processes and devices.

Patented mechanical

extrusion technology M

ECHANICAL EXTRUSION USING dart activation is being increasingly recognised by operators as a time, cost and labour saving alternative to traditional ball activation methods.

As an example, drilling bypass valves have been conventionally cycled with balls via a polymer extrusion. However, using mechanical extrusion, Churchill Drilling Tools - an Aberdeen-based designer and manufacturer of patented downhole tools - has developed a highly effective and accurate dart-based valve which can deliver up to four times faster deployment, saving considerable wait time over polymer methods.

The company’s MX (mechanical extrusion) system allows the use of rigid darts (Smart Darts) for multi-cycle control and exploits their robustness and HPHT resilience (up to 660°F) to deliver greater speed, reliability and performance. The system’s unique feature is that it has two configurable shearing modes, solving reliability and power delivery problems. It requires as little as 0.0075” radially for power transmission, making implementation extremely compact.

Users can control and power three or more tools independently, removing the conventional ID and obstruction conflicts between different tools in a string. This has implications for mono-cycling ball and shear systems, which commonly obstruct the bore after use. These can now be turned into multicycling, non-obstructive, multi-tool systems. It can also enhance multi-cycling ball activated tools based on polymer extrusion, by improving performance and delivering greater multi-tool compatibility and inter-operability.

The system allows mechanical extrusion to be delivered in a range of settings to suit the specific cycle application. Offering the user a variety of latching, sealing and flow path geometries as well as the adjustable shear mode ratings, this element of the system provides a tangible change in string design and program implementation. For example, in bypass valve implementation, users can cover multiple flow path contingencies with a single valve in hole and then choose from the range of darts the optimal setting for the situation encountered.

The system advances the capability of simple hydro-mechanical control and its power and reliability benefits into areas which were previously the domain of more complex electronic systems. Being mechanical it is not subject to the same HPHT limits that affect electronics and electrical components.

Smart Darts unlock the potential of a simple circ sub to deliver reliable and versatile bypass on demand.

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Whatever the drilling application, whether planned or contingency, DAV MX users get rapid and reliable switching to the optimal flow path configuration.

The correct flow path mode is vital for a given application. There is no need for DAV MX configuration in advance, as one tool in hole will do it all. Each bypass application has its own dart to ‘quick set’ the valve into the right mode. Functions such as, LCM spotting, split-flow hole cleaning and dry tripping are truly “plug and play”.

The closing cycle is just as easy with a universal closing dart rapidly deployed to allow drilling to resume quickly with no loss of hydraulic performance. Multiple Smart Dart cycles can be performed in any sequence.

System benefits When curing losses, boosting hole cleaning or performing other circulation applications, conventional BHA bypass relies on balls landing on seats. Landing seats are sized to withstand a pressure up activation cycle and then succumb to a blow thru shear-out sequence to regain circulation to the bit. The emergence of the mechanically extruding dart technology as an alternative to the polymer extrusion has presented tool designers with an opportunity to push some of the performance boundaries of conventional valves.

The objective for any tool is to offer maximum performance and value whilst being as simple, reliable and flexible to use as possible. For drilling bypass valves this can be more specifically analysed under the following sections to assess the current conventional limits. * Activation speed and ball displacement algorithms: With heavy losses, fast activation is critical to stem the mud being lost to the formation, over-zealous activator displacement which fails to take into account depth, angle and mud density parameters creates a risk of blow-thru misfire. Conservative displacement can increase delays and may make activation pressure more difficult to detect from the surface. Polymer extrusion systems can therefore lead to comparatively slow activation sequences, as time must be allocated to displacement calculations and detection of the activation point before curing can begin. In contrast, darts eliminate the calculation element and activate at high pump rates, and with a positive opening stroke clearly indicated by a pressure drop, losses can be treated more quickly. * Cycling reliability: The properties of the extrusion determine the performance window of the cycle. Using polymer extrusion, the designer has to

The MX Smart Dart for multi-cycle control.

The system allows mechanical extrusion to be delivered in a range of settings to suit the specific cycle application. create an interference between the ball and the seat that can withstand the landing shock and allow the ball to overcome the inertia of the piston/mandrel in the valve before it reaches its extrusion threshold. In single cycle circ subs this interference can be over-engineered to guarantee opening, but for multi-cycling the shear-out point needs to be in pump range so that circulation can be regained by extruding the ball. In order for it to be possible to close the valve using polymer extrusion it must be possible for it to misfire by definition. By creating a dual shear point characteristic, mechanical extrusion addresses both reliability and the activation speed simultaneously.

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S13 ORA 3 2013 Technology 03_Layout 1 21/05/2013 12:41 Page 47

Technology

S13 ORA 3 2013 Technology 03_Layout 1 21/05/2013 12:41 Page 48

* Multi-modal/application flexibility: When selecting a valve it is prudent to perform a weighted risk assessment to identify the circulating contingencies that are most likely for a given well.

For example, whilst hole-cleaning might be a major issue, contingency for heavy losses might be prioritised on the basis of well control. The operator then makes a tool selection based on these priorities.

In polymer extrusion systems, tool choice is an important consideration because of the multiple configuration permutations during bypass. The introduction of an activation ball sets the polymer extrusion tool in primary bypass mode. However, this may not be the optimal setting, meaning either performance is limited or delayed whilst smaller secondary setting balls are pumped to secondary seats to create application specific flow-paths. By contrast, dart-based mechanical extrusion can optimise bypass for almost any application in a single step, thereby simplifying both tool selection and application implementation. * Genuine BHA isolation: Using polymer extrusion, contamination of the bottom hole assembly (BHA) during pill spotting can occur even when 100 per cent bypass has been configured. A ball on a seat seals in just one direction, once the pumps are switched off u-tubing and buoyancy forces will determine whether the ball stays on its seat or floats/rolls away to allow curing fluids to make their way into the BHA. Dart latching through mechanical extrusion ensures that the isolation objective is achieved. * Simplicity of operation and design: Complexity down-hole invariably adds risk and unreliability.

Whilst the permutations of polymer extrusion applications can allow the skilled user to activate and configure for almost any application, the need for skill and expertise adds risk for the operator.

Multi-sized operating balls and complicated displacement procedures for activation can increase the risk of error and non-productive time. In addition, the likelihood that full value will be returned from financial investment in the tool is reduced because users will be naturally cautious about trying unfamiliar or complex procedures.

For the mechanical extrusion system, a simple port and piston assembly housing a low profile ceramic ‘socket’ to catch the darts is all that is required. The darts themselves determine performance. Single use and individually sealed, the dart is kept isolated from the down-hole environment until the very last minute. Dart robustness means up to 4 times faster deployment and landing at speeds up to 2,000 ft/minute, saving in excess of an hour of wait time and giving positive opening indications to remove any uncertainty.

Proven success Since 2011, the system has had a 100% reliability record courtesy of the high shear landing mode and the innate stability of the mechanism in any fluid and high temperatures and pressures. As an example, a European land operator deployed a single dart cycle to set hole cleaning and tripping dry modes simultaneously, not only saving time but also delivering rig floor safety that would previously been unavailable.

48 Oil Review Africa Issue Three 2013

The PTS MX pressure test dart provides a simple yet accurate way to test a drill string.

In another instance, a North Sea operator planned for hole cleaning and jetting but when unexpected losses occurred it was simple to switch strategies and choose a dart that would deliver LCM into the formation and protect the BHA from contamination.

The system has been used successfully in bypass valves for over 200 wells to date, including in the Gulf of Mexico.

Handling the pressure

replacement of the landing seat. The darts themselves are available in a range of sizes with easily adjustable shearing points. Whereas a typical ball system will require about 13.4 per cent of the bore ID to be used for power delivery the MX requires less than one per cent and this compactness makes it both easy to implement and delivers the flexibility for multi-tool compatibility and inter-operability.

Both operators and service companies are starting to look at using the system to improve BHA design by reducing ID restrictions and increasing operational performance windows. This can be done by replacing ball seats within a series of conflicting tools with dart seats that catch only the darts intended for that tool. This simplifies the process for the user as more options can be kept open and also for the tool designer who can offer the user more flexibility and performance.

The Smart Darts provide an infinite combination of geometries, latches, seals and chokes that can be rapidly deployed to set the tool into its optimal configuration.

In December 2011, Churchill applied mechanical extrusion to a fourth dart in a new tool for string integrity testing. The PTS MX™ system provides a simple yet accurate way to test a drill string up to a specific pre-set pressure with the capability to regain circulation between each test. This allows users to perform multiple tests at various pressures in a single run. The system can be run in any length of pipe, at any angle or temperature and with any type of circulation fluid.

The subs have fully tapered internals, provide unrestricted circulation and have a full thru-bore prior to the first cycle. The dart is dropped and pumped into place with the load transmitted through pins in the dart into the sub; the pins determine the shear out pressure. Pressure can be held at the required test level for as long as necessary, and when testing is complete a small increase in pressure is used to shear out the dart into the catcher below.

The unique benefits of the system are that multiple test cycles can be performed; full circulation is regained between each test, and that the shear out point can be accurately modified by altering the dart’s pins before it is dropped.

The system was first successfully deployed in Norway by a major pipe manufacturer in 2011 with shearing accuracy results of 99.6 per cent. As a result of this success, a full programme of further drill string development applications has been scheduled using the system. The system is also being used in the UK Continental Shelf for leak detection in operational drill-strings, in pre-emptive integrity tests prior to ultra-critical high-pressure phases.

To summarise, the key system benefits for the user are: 6 Multi-tool (three or more) multi-cycling in any order 6 High speed activation 6 High reliability 6 HPHT to 660F 6 High angle performance

Choosing the right tool for the job

Conclusion

The MX™ Smart Dart™ is available under licence for use by OEMs to overcome most of the issues encountered with polymer solutions. The advantage is that it does not require a redesign of their existing ball activated systems. The system can easily be integrated into existing tool designs by simple

Mechanical extrusion via dart deployment has helped make existing processes faster, more cost effective and simpler to deploy. There is now an opportunity to evaluate whether mechanical extrusion can become the conventional system for a range of downhole deployments. ■

The key benefits for the OEMs are:

6 Easy to retrofit into existing tools (both ball shear and extrusion types)

6 Multi-tool series capability 6 Multi-modal tool options controlled by the dart deployed 6 Compact (Radially <1 per cent compared to ~13.4 per cent for balls)

6 Infinitely more configurable for power delivery and shearing points

6 Smart Dart options for variable tool settings and flow paths

6 Total flexibility for OD/ID selection

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Cyber criminals are a threat to oil and gas infrastructure. But how much of a threat? And how prepared is the oil and gas industry for these invisible attackers? In the first of two articles on cyber security Michela Menting of ABI Research tells Vaughan O’Grady about some of the cyber threats the industry should fear — and why they should fear them.

ICT

The invisible

attackers C

ONSIDER THE SHEER size of most oil projects and the multiple players involved. Then consider them from the point of view of a hacker or cyber

terrorist.

There is, theoretically, no shortage of potential attack points where IT could be present in the form of computers, monitors or wireless links.

They range from rigs, pipelines, refineries, supply and transport vessels, geological surveys and HQs or commodity trading operations to any one of a large number of oilfield service companies and subcontractors. How well are all these points being protected?

That is one of the questions ABI Research’s Cyber Security and Smart Grids Research Services* asked recently in a review of oil and gas industry cybersecurity spending. It suggested that realisation of the financial implications of persistent cyber threats will boost cybersecurity spending on critical infrastructure in the oil and gas industry; it will reach US$1.87bn by 2018. This includes spending on IT networks, industrial control systems and data security; counter measures; and policies and procedures.

Today oil and gas infrastructure is not as secure as it needs to be. ABI refers to “industrial control systems full of unpatched vulnerabilities to the internet, where cybercriminals roam with impunity”. It continues, “These systems are poorly protected against cyber threats — at best, they are secured with IT solutions which are ill-adapted to legacy control systems such as SCADA.” In fact cyber attacks have already been carried out, through high profile intrusions like Shamoon (a computer virus used against Saudi Aramco in September 2012) and Night Dragon (a multitechnique cyber attack used against a number of energy companies). There may even be others, albeit they have not been publicised because

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energy companies would not be keen to advertise the fact that their security has been compromised.

Proper investment in security measures However, speaking to Oil Review, ABI Research senior cyber security analyst Michela Menting is reassuring — though not unequivocally. Referring to the attack points mentioned earlier she says, “In theory, all these points can be monitored and protected if there is proper investment in security measures. This means a multi-layered approach to security — at the end-point, in the network and around the data, whether it is at rest or in transit. It should not matter what the type of end-point or network is — whether it is an RTU [remote terminal unit], a computer, or a sensor, or whether the communication is fixed or wireless. There are security mechanisms available for all of them.”

Today oil and gas infrastructure is not as secure as it needs to be.

Of course, as she notes, there can be problems — often focused on something as simple as basic cost. Does it make sense to protect all these endpoints in view of the risks?

More worrying perhaps is the problem of knowledge. As she says, “Operators or management may simply not be aware that there are risks to particular terminals or data.”

And it’s not just about the areas where IT is housed. An E & P operation will use multiple communications technologies — from SCADA, GSM and TETRA to satellite, microwave, fibre optic and PSTN, at the very least.

“Certainly the more vectors, the greater the risk,” Menting agrees. And of course it would be

difficult to put into place one system to monitor all of them since a number of service providers would be involved across mobile, fixed and ISPs, all of them employing different security mechanisms for their networks. “For this reason,” she says, “the focus from the E&P operator should be on protecting the data, since the network security will be largely out of their hands. This can be done through encryption.”

Of the various communications technologies mentioned, SCADA (supervisory control and data acquisition) seems to be one that ABI regards as among the most vulnerable. Menting herself has produced a white paper going into more detail about SCADA security. Called PetroSecurity in the Digital Era: Legacy Systems vs. Cyber Threats** it points out that SCADA systems use legacy technology and transmission protocols that are not easily replaced. They also have a very long life cycle (often over a decade) and security audits are less likely. Why? SCADA is a type of industrial control system (ICS). Such systems are computer controlled and usually monitor and control industrial processes.

SCADA systems are likely to be large-scale processes that can include multiple sites, and large distances. And in oil and gas they are, it seems, just about everywhere.

The white paper explains, “Such systems enable remote operators to make set point changes on distant process controllers, to open or close valves and switchers, to monitor alarms, and gather measurement information from, for example, an oil or gas field, a pipeline system, or an offshore platform.”

It’s hardly surprising that you wouldn't want to turn them off for too often long to check security but the white paper also suggests that there is low security awareness among SCADA operators. In fact, it says, “SCADA system vulnerabilities in particular

Oil Review Africa Issue Three 2013 49

ICT

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represent over half of all ICS vulnerabilities”.

So what threats do these and other systems have to be ready for, at least in theory? What methods would cyber attackers use to disrupt or hack oil and gas company communications?

“Cyber attackers can disrupt the corporate network of an oil and gas company through any number of tried and tested cyber attacks — denial of service (DoS) attacks, SQL [Structured Query Language} injections to breach the web-facing sites and gain access to the network, or social engineering techniques like phishing to steal logins and credentials,” Menting explains. “Once inside the network, the cyber attacker can either remain low profile and steal data, or infect the system with disruptive malware that will impair the proper functioning of the systems.”

Attacks against the industrial control systems are less common, but have also happened. Similar attack methods are used for the corporate network attacks, except that the forms of malware infecting the system may be written specifically for ICS. “They travel through the corporate system looking for a way into the ICS. Once there, they could potentially disrupt the flow of information between RTUs and sensors, or with SCADA systems,” says Menting.

And these assaults are far from simple. As ABI points out, Night Dragon used spearphishing, social engineering, Windows bugs and

remote administration tools (RATs). What do such terms mean?

Menting explains: “Spear-phishing is a targeted form of social engineering. It looks to exploit human weakness in order to get access to a particular system. It implies that the targeted person has been the object of study by the attacker.

For example, a management figure at an oil and gas company is sent an email from a supposedly trusted source with attachments that would be of interest to that figure — the email could come from a law firm or third party supplier that the company deals with regularly, including a pdf entitled E&P Operations in China, or SEC Filing for Oil Competitor X. Often, the attackers will try and compromise a less well protected third party to try and gain access to a better protected target. Social engineering, especially target ones like spearphishing, can be difficult to detect. Once the pdf is opened, the malware will usually infiltrate the corporate system. Many spear-phishing attacks are employed in espionage operations, so they will remain hidden in the system.”

She continues, “The perpetrator will exploit vulnerabilities in the systems, usually Windows if it is a corporate system, by using remote administration tools (RATs). These allow remote access to a PC. Usually used by IT administrators to troubleshoot systems remotely, RATs have known to

Zero-day exploits And then there are zero-day exploits. These are vulnerabilities in a system or application that have been found by malicious cyber agents but not yet by the developer of that system or by security professionals. Therefore, there is no known patch for that vulnerability. They are even a form of tradeable commodity in their own right. “Exploit packs [which demonstrate the vulnerability of a network] which include zero-day will sell much higher in the digital black-market than those without any zero-days,” says Menting.

These may be the highest profile cyber attacks but they are far from the only ones. Is the energy sector prepared? Not really. Can it be? Yes. Find out how in part two of this feature. ■

*ABI Research is a market intelligence company specializing in global technology markets. For more on ABI’s cyber security research service, go to : http://www.abiresearch.com/research/service/c yber-security/ http://www.abiresearch.com/whitepapers/petro security-in-the-digital-era/

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