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THE SWEET TASTE OF (SOUR) SUCCESS In the wake of ConocoPhillips’ withdrawal, where next for Abu Dhabi’s Shah Gas field?

HALTING THE BRAIN-DRAIN How Shell implemented a cutting-edge knowledge transfer programme • Q1 2011



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opean Pipeline Pipeline Solution Transport

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Technology to the rescue? Doing more with less is a priority for the vast majority of firms involved in the oil and gas sector. As such, the role of IT is more important than ever.


hichever way you look at it, the days of easy oil are well and truly over. Global oil discoveries have declined steadily since the early 1960s, despite periods of high prices and advances in exploration and production technology. The deficit has grown such that around the world we are now consuming roughly three times the amount of oil we are discovering each year. Many, including the OECD’s International Energy Agency (IEA), forecast another supply crunch between late 2010 and 2012. In fact, the discovery deficit is now so large that the IEA estimates an equivalent of six additional Saudi Arabias need to be found and developed – requiring cumulative investments of US$26 trillion – in order to meet expected 2030 global oil demand. It’s a daunting prospect. But while we could certainly do with some big new discoveries, the fact remains that the industry as a whole is not making the most of the resources currently at its disposal. At the moment, for instance, it’s estimated that we routinely leave behind 50-70 percent of what we discover, and are still unable to differentiate effectively between traps filled with water and those that contain hydrocarbons before we actually drill. We should rightly be proud of the tremendous achievements that have been made to date, but we also need to recognise that productivity improvements can still be made, and that advances in technology represent our best chance of realising these improvements. 4D seismic, enhanced oil recovery techniques and recent innovations around the idea of the ‘digital oilfield’ are all helping to maximise E&P opportunities. Indeed, the hype surrounding the promise of smart fields continues to flow like a newly tapped gusher. The industry is projected to spend in excess of US$1 billion over the next five years on digital oilfield investments – not to mention hardware, software and

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affiliated services – yet many feel the benefits have still to be fully appreciated or attained by the industry as a whole. The Middle East, for example, is only just starting to realise the opportunities to be had in maximising returns from existing reserves, and the rollout of digital oilfield solutions is increasingly being seen as a key way to optimise production and reduce operating costs. Kuwait Oil Company is one firm that certainly believes smart fields can make a tangible difference to operations, and in this issue’s cover story we talk to the people behind the oil giant’s Kuwait Integrated Digital Field Initiative to find out how. “It’s a business imperative that we radically change how we work,” explains Khalid Al–Sumaiti, KOC’s Deputy Managing Director for Exploration, Production and Development. “We need to break down barriers in the company between teams, departments and people at all levels. Collaboration is the future – making quick, accurate decisions will enable us to build a company that is responsive, forward thinking and a true leader.” Getting more from existing resources is now the mantra, and should remain the focus going into 2011. It has to be if the oil industry is to remain a smart energy choice long into the future. Oil may no longer be ‘easy’, but the choice is simple: embrace the full power of technology, or cease to be a viable player in the 21st century energy landscape.

“We should rightly be proud of the tremendous achievements that have been made to date, but we also need to recognise that productivity improvements can still be made, and that advances in technology represent our best chance of realising these improvements”

Ben Thompson Managing Editor

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Sweet and sour


Why sour gas extraction is currently currying favour with the Middle East’s big hitters

60 Crude awakening

Hanging in the balance

O&G Senior Editor Ben Thompson takes a look at the Kuwait Oil Company, and the cutting edge technology solutions revolutionising the way oil ďŹ elds operate in the Kuwait Integrated Digital Field initiative

In this special report, O&G takes a look at the opportunites in Iraqi Kurdistan

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Delivering energy in the low-carbon era Andy Swiger, Senior Vice President for Exxon Mobil Corporation, outlines the challenges and opportunities currently facing the oil and gas community

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Mr Ron Selva Engineering Director


Ms. Anne Pritchard Managing Consultant – Technology Transfer

PP SIMTECH Solutions Ltd., Enterprise Centre Buildings, Washington Street, Bolton, BL3 5EY, United Kingdom Tel.: 0044 1204 36 56 56 Mobile.: 0044 7710 199 421 Email.:; Our Joint Venture partners: TCR Engineering Ltd. – India; Email: TCR Arabia Co. Ltd. – Kingdom of Saudi Arabia; Email:

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PROJECT FOCUS 44 Stewart Walter Fugro Gravity 86 Bob Plumridge Hitachi Data Systems

ASK THE EXPERTS 42 David Timco Fugro Geoscience 76 Issam Alameh Alameh Networks 122 Jesper Rodtjer & Yassir Ghiyati Haldor Topsoe

52 A new decade dawns for BP BP boss Bob Dudley explains why the events of the past year are an important stepping stone for a brighter future


54 Maturing nicely O&G speaks to Hamed Karim of Egypt’s PICO Petroleum to find out about mature field operations

78 Managing risk a top priority for BP O&G talks to BP’s Middle East CIO Farhan Mazhar to find out his top priorities for 2011

88 Pipeline to success HE Dr. Abdul Hussain bin Ali Mirza, Bahraini Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority, about plans for 2011


94 Letting them down gently OGP’s Technical Director John Campbell about the activity taking place in the decommissioning sector

PP SIMTECH Solutions Limited, Enterprise Centre Buildings, Washington Street, Bolton BL3 5EY, UK Registered in England No. 3310415 Tel: 0044 1204 36 56 56 Email: Web: PP SIMTECH – the global leader in best-practice RBI technology implementation and Fitness-For-Service Assessments

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133 Time to visit Libya O&G takes a look at the region’s up and coming destination

100 Deepwater Horizon uncovered

136 On the road again

O&G looks at the recent investigation into the Macoudo disaster and asks: where next for safety?

The best releases on four wheels this quarter

138 36 hours in… Cairo 112 Living with defects: replace/ repair or prove fit-for-service?

Your guide to the business capital of North Africa

Ron Selva of PP Simtech reveals how to get the best out of deteriorating plant items and optimise spend

140 On the shelf Reviewing the latest book releases

116 Chemical reaction 142 What’s on

Saudi Aramco CEO Khalid A. Al-Falih explains how the petrochemicals sector serves as both an enabling industry and an important driver of broad economic development

O&G’s guide to the upcoming events this quarter

120 Downstream round-up O&G takes a look at the latest developments in the downstream sector


124 Sharing the wealth Knowledge sharing, transfer and retention are increasingly becoming key business enablers for the oil and gas industry. O&G speaks to knowledge sharing experts at Shell to uncover the oil giant’s innovative approach EX ECUTIVE INTERVIEWS 50 Nasr Kamal United Oil Inc. 58 Mike Simpson Cansco 108 Arvid Bertelsen Riise Underwater Engineering

INDUSTRY INSIGHTS 68 Rashid Ahmad Baba Thuraya 70 Dejan Nikolin Computer Data Networks 82 Ashraf Atia NetApp 98 Jeremy Coles Dutco McConnell Dowell 106 Tom Andrews Ansell Healthcare 110 Abdullah Alshamrani Building Technology Eng. 114 Miguel de Castro SPSE Jesper Rodtjer P122

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The NG Oil & Gas MENA Summit 12 - 14 April 2011 The Meydan Jumeirah, Dubai, UAE The NGO Summit is a three-day critical information gathering of the most influential and important executives from across the region. The NGO Summit is an opportunity to debate, benchmark and learn from other industry leaders.

A Controlled, Professional and Focused Environment It is a C-level event reserved for 100 participants that includes expert workshops, facilitated roundtables, peer-to-peer networking, and coordinated technology meetings.

A Proven Format This inspired and professional format has been used by over 100 executives as a rewarding platform for discussion and learning.

Next Generation Oil & Gas MENA GDS Publishing, Queen Square House 18-21 QueenSquare, Bristol, BS1 4NH Tel: +44 117 9214000 E-mail: Legal Information The advertising and articles appearing within this publication reflect the opinions and attitudes of their respective authors and not necessarily those of the publisher or editors. We are not to be held accountable for unsolicited manuscripts, transparencies or photographs. All material within this magazine is ©2011 GDS

Chairman/Publisher Spencer Green CEO Oliver Smart Finance Director Jamie Cantillon Content Director Kelly Grant Design Director James West Managing Editor Ben Thompson Editor Lucy Douglas Contributors Ian Clover, Lorna Davies, Nicholas Pryke, Sharon Stephenson Print Director Andrew Hobson Associate Designers Dan Clayton, Élise Gilbert, Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson Online Editor Jana Grune Project Director Joe Large Sales Executives Ashley Palmer, Jess Taylor, Desmond Henry, Jack Richardson, Kieran Jones, Mike Thomas Production Director Lauren Heal Production Coordinators Renata Okrajni, Aimee Whitehead VP North America Jason Green Operations Director Ben Kelly IT Director Karen Boparoy Marketing Director John Funnell

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Find Out More – Contact NGO +44 (0)117 915 4745

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ran’s controversial nuclear policy continues to draw a cloud over the future trading of the Islamic Republic. On the one hand, international sanctions imposed by the UN, United States and European Union on its uranium enrichment programme continued to gather strength, and amid claims from EU traders that transactions with Iranian oil providers are proving increasingly tough, Iran’s bullish attitude that the sanctions would have no noticeable effect are beginning to wear thin. On the other hand however, the recent discovery of a further major oil field underline the country’s mammoth reserves, now estimated at 150.31 billion barrels of oil and more than 1000 trillion cubic feet of natural gas. In a statement in November, Ali Vakili, Managing Director of Pars Oil and Gas Company who made the discovery claimed that the new site beneath the Ferdowsi gas field has an in-place reserve capacity of 34 billion barrels and “is regarded as one of the biggest layers in the country.” And alongside the increasing fuel wealth and continued pressure from the west, Iran became the subject of one of the most controversial revelations by WikiLeaks in November. The whistle-blowing website published a series of over 250,000 leaked confidential documents from more than 250 US embassies across the world, among them a cable indicating senior officials in Middle Eastern governments, including HRH King Abdullah of Saudi Arabia, had urged the United States to attack Iran’s nuclear programme. It is as yet unclear how this revelation will impact trade relations across the MENA region. But regardless of Saudi Arabia’s stance on Iran, there is no denying the country’s mammoth reserves. Investment in field operations in Iran has already reached US$9 billion to date, in the current Iranian calendar year to end March 20th. In addition, President Mahmoud Ahmadinejad recently dropped strong hints that Iran could potentially supply natural gas to the European Union, via the Nabucco pipeline project that runs from the Caspian Sea to Vienna via Istanbul. The President told reporters that, “Europe needs Iranian gas and we are ready to sell gas to them at an acceptable price if they want.” Alongside the reports in November from Iranian officials that a major oil discovery had been made beneath the Ferdowsi gas field more recently, Iran’s oil ministry announced in January that there has been a major discovery of a new onshore gas field, with reserves valued at around US$50 billion. Oil Minister Massoud Mirkazemi told reporters that the new Khayam field, which





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lies east of the coastal village of Assaluyeh on the Arabian Gulf, has some 260 billion cubic metres (9.18 trillion cubic feet) of gas. Estimates indicate that 210 billion cubic metres can resources can be exploited from the field, at a rate of 24 million cubic metres per day. Furthermore, drilling began in December in the much disputed Arash gas field. The Iranian Offshore Oil Company has indicated plans to drill four wells in the field, which contains 20 trillion cubic feet of gas, however the field is still under scrutiny as it lies between Iran, Kuwait and Saudi Arabia. Despite the impressive figures, cracks are beginning to appear in Iran’s armour. The fourth round of sanctions imposed by the UN back in the summer of last year may have been waved off by officials as ineffective, but the European traders, who represent a key market for Iran, are beginning to feel the strain. President Ahmadinejad equated the effectiveness of the sanctions to that of a “used handkerchief”, while Mirkazemi told reporters that, “Iran’s energy sector will have no problems because of the sanctions.” However, Iranian crude customers have reported increasing levels of difficulty since the recent round of sanctions. One customer told Reuters that, “The banking side is the tough part. It has to be banks that haven’t got any kinds of interests in the United States.” “The US have tortured us for weeks, long after we abandoned everything,” a former trader dealing in Iranian oil told Reuters, with regard to America’s requests for detailed accounts of all business. “I have a feeling no one cares about the EU.” Indeed, the European Union clarified that its latest sanctions, which came into effect in October 2010, were not intended to affect Iranian oil dealings, however in reality many traders are reporting reluctance to deal in Iranian oil. “I didn’t hear from a single bank that following the clarifications from the EU they are happy to resume business,” an oil trader reported. Global giant BP recently confirmed that it has suspended production from its Rhum Gas Field in the North Sea, which it co-owns with the Iranian Oil Company.

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Regional President of BP North Sea, Trevor Garlick, said in a statement that, “Our primary interest is in ensuring we are fully compliant with the regulations. We have established that our actions in terms of the ongoing monitoring of safety and integrity of the field are compliant. However, the conditions required for continued production remain subject to further clarification. Once we obtain such clarification from the Government, we will review the situation and will take whatever action is appropriate in light of that clarification.” Still, there seems to be plenty of supply opportunities regionally and to the East; Iran is developing two major pipeline projects, one set to supply Iranian gas to Iraq and Syria, the other to Pakistan, India and Bangladesh. The first will feed gas into their major territories in both Iraq and Syria, and end in Lebanon, at cost of some US$2.5 billion. The second, still in early stage of planning, is a proposed 2775 kilometre pipeline, set to deliver gas from Iran to Pakistan, India and Bangladesh. And indeed, the state has not seemed deterred by the stand taken by the west. In November the government invested US$3 billion into projects in its South Pars gas field, bringing the total amount invested in the site this year to US$9 billion. The full effects of the west’s boycott of Iranian fuel has yet to be felt, however at the moment the country looks set to stand firm against the west, no matter what the cost.

“The banking side is the tough part. It has to be banks that haven’t got any kinds of interests in the United States”

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Will North African unrest impact the oil industry?


he images rolling across TV screens around the world were astonishing: what started as a series of largely peaceful demonstrations featuring a few hundred antigovernment protesters rapidly (thanks to a heavy-handed government crackdown involving tanks, fighter jets and military helicopters) escalated into a full-blown civil uprising that at the time of writing looks to have toppled Egyptian President Hosni Mubarak and poses serious questions about the stability of other Arab regimes across the Middle East. At the beginning of February, over one million demonstrators took to the streets of Cairo alone. The impact on global and regional markets has been immediate, with many investors spooked by the political upheaval in North Africa and concerned over its impact on the broader region. The price of Brent crude surged above US$101 a barrel for the first time since 2008 amid fears that the anti-government unrest in Egypt could ripple across the Middle East, potentially disrupting global oil supplies. Oil prices were already on the rise even before the turmoil in Egypt, increasing by US$30 a barrel since the summer as the global economic recovery pushed up demand for crude. That has put pressure on the Organisation of Petroleum Exporting Countries, which has faced mounting calls from oil-consuming countries to raise output. OPEC Secretary-General Abdalla Salem El-Badri said the organisation would open the spigots if the unrest in Egypt affected supply, though he said that was unlikely to happen. He stressed the market was well-supplied, with inventories full. Indeed, OPEC says it has about six million barrels a day of spare capacity – equal to seven percent of global demand – and can easily tap that if the world runs low on oil.

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Nonetheless, oil markets are worried the chaos could paralyse the Suez Canal, a vital shipping lane, and the Suez-Mediterranean pipeline, which both run through Egypt and bring Middle East oil to Western markets. Combined, the two transportation routes carried about 2.6 million barrels a day to world markets in December, according to the International Energy Agency. Analyst David Hunter from M&C Energy Group believes these concerns are legitimate. “Although unlikely, should this vital supply route be cut there would be major implications for the European supply of oil, and potentially liquefied natural gas,” he says. “While OPEC and Saudi Arabia are moving to reassure Western consumers that supply is plentiful, the effects of the US$30 gain in oil prices since the summer are now being felt in the wallets of already stretched consumers.” Of even greater concern is the Strait of Hormuz, through which some 40 percent of all seaborne traded oil flows, and which political-watchers fear could be vulnerable to further political contagion from North Africa. Risk analysts and intelligence agencies fear that Egypt’s uprising may set off escalating protests in the tense Shia region of Saudi Arabia, home to the world’s richest oilfields. “Yemen, Sudan, Jordan and Syria all look vulnerable. However, the greatest risk in terms of both probability and severity is in Saudi Arabia,” said a report by risk consultants Exclusive Analysis. The study looks at the risk of instability spreading to Saudi Arabia’s Eastern Province, headquarters of the Saudi oil giant Aramco and home to the vast Safaniya, Shaybah and Ghawar oilfields. “This is potentially far more dangerous,” says Faysal Itani, Mid-East strategist at Exclusive. “The Shia represent 10 percent of the Saudi population; they are deeply aggrieved and marginalised, and sit on top of the kingdom’s oil reserves.” Nima Khorrami Assl, a Gulf expert at the Transnational Crisis Project, agrees and believes that Shi’ites have been stigmatised as a result of excessive paranoia since Iran’s Islamic Revolution and face systemic barriers in education and jobs. “Should the Gulf states do nothing or attempt to preserve the status quo, social unrest becomes inevitable. The current situation is inherently unstable,” he told Foreign Policy Journal.

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Seabed seismic: clearly better



hrough the 1990s, the technical gurus highlighted the case for seabed seismic acquisition but, for various reasons including the oil price fall in 1998, the movement from towed streamer to seabed seismic has only recently become commonplace. The situation is changing, however – more quickly than some commentators have noted. “We see that some IOCs are now using seabed seismic as the predominant mode of acquisition for appraisal and development purposes,” says RXT CEO Stein Hedemark. “Ocean bottom cable acquisition has been the norm in obstructed areas where towing streamers has been considered too difficult. In regions such as the North Sea, however, platform density does not pose a major problem and this is where seabed acquisition is seeing the most dramatic increase. Clear indications are that seabed seismic will replace towed streamer mode of acquisition for appraisal and development and in 2011 there will be at least 11 3D seabed surveys in the North Sea. Like 4D seismic, this trend will likely progress to other major oil regions in the world.”

In 2003, the founders of RXT anticipated that the future of seismic acquisition was on the seabed and therefore focused company efforts into becoming the world’s leading provider of seabed seismic acquisition. This market projection has been vindicated. While the seismic industry as a whole is just now seeing signs of recovery from the global economic downturn, the seabed market has grown steadily. RXT’s investment in the VectorSeis Ocean (VSO) OBC system has resulted in a flexible operation able to operate in single vessel mode and thereby decrease HSSE exposure. Additionally, the full azimuth data obtained, the low noise environment on the seafloor and the unique broadband response of the VSO seismic receiver have resulted in RXT delivering the highest resolution imaging in the marine environment. The end result, and importantly for the operator’s bottom line, is that enhanced data quality is allowing geoscientists to make informed drilling decisions. For more information, please visit RXT’s M/V Sanco Star, working offshore Brazil in an obstructed area



PS was established in 2008 in the Scottish Highlands to provide manpower services to the oil and gas industries. Our aims were simple, to provide a high quality service that met the exact requirements of our clients. With our attention to detail, versatility and clear understanding of the sectors we operate in we are confident that we have achieved these aims. OPS currently have a database of over 20,000 highly skilled and semi-skilled personnel of all engineering disciplines, with the skill sets and expertise to accomplish even the most specialist roles. We also use a broad range of tools to search for candidates such as media advertising, social media and job boards. At OPS we believe in working with the clients directly on the project. In this way we fully understand their requirements and can not only offer individuals, but complete teams who can fit seamlessly into your project plan. This method ensures continuity and can offer overall cost savings in logistics and other areas, which are passed on to the client. Our approach is to offer quality, trust and confidence to the client by “owning” our responsibilities, to ensure that all the projects we are involved in are a success. Having worked in the oil and gas industry for over 30 years the management at OPS have a wealth of experience in both offshore and onshore operations. This experience combined with our commitment to work hand in hand with our clients makes OPS your ideal partner for all your manpower requirements.

For more information, please visit Andrew Campbell - Director, Steve Cairns - Business Development Manager

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atisfied customers provide the best advertisement for any product, and the Synergi® risk management system has plenty of them. Flexibility, configurability and user-friendliness are among the qualities they highlight. These features are acclaimed not least by oil and offshore service companies, whose global reach means that they need a solution that can be adapted to many different operating conditions. Synergi was the first incident management system for health, safety and the environment (HSE) to be implemented worldwide by US-based Hess Corporation, for instance. “It provides us with real-time reporting of HSE issues and the opportunity to learn from each other,” observes former HSE vice president Kurt Kriter. “Additionally, Synergi serves as a consistent action tracking and reporting tool which supports continuous improvement. These factors are important aspects of a growing business.”



ther users who make the same point include Statoil, the Norwegian oil company that has been expanding fast into exploration and production operations beyond its home waters. It has acquired operatorships in various countries in recent years, making overall HSE strategy its responsibility and allowing it to explore some new challenges with the aid of Synergi. “Continuous improvement of this user-friendly tool is vital for a successful roll-out into new areas,” notes Arne M Martinsen, who heads the analysis, monitoring and support department in the group’s Development and Production International business area. “We have no exceptions in Statoil: everyone uses Synergi® in every country,” he explains. “If they don’t have PCs, we must accept that they need to use paper forms. And if they can’t read and write, we’ll have to solve that as well.” Such comments reflect the need companies now have to address risk quickly and to demonstrate risk performance, thanks to globalisation and stakeholder demands for corporate accountability and transparency. Governance, risk and compliance (GRC) requirements are therefore increasingly important for companies looking to succeed in a united world.


the ideal well I

ntegra Group is Russia’s leading provider of integrated oilfield services. A total of 45 drilling rigs, supported by an in-house technology services division, provide a uniquely comprehensive package of well construction services, and a platform to deliver the ‘ideal well’. Rather than conventional day-work, Integra prefers to contract rigs as part of an integrated solution to customer needs. The combination of engineering know-how, project management and operational experience offers real value to Integra customers in Russia and beyond. Savings at the well planning stage are typically four percent, with greater gains possible once drilling begins. Engineering the ideal well includes optimal well design (whether directional, horizontal or extended reach) but also experience-based operational considerations at every stage of the well construction process. Managing both well design and construction brings opportunities for optimisation. Proprietary procedures help Integra deliver quality wells that save on drilling time and total cost. “The ideal well concept is about optimising the cost of the well construction process,” explains Integra Executive Vice President for Drilling, Workover and IPM, Jorge Lopez. “There are no easy solutions here. Only a team of highly skilled professionals can minimise well cost while meeting geological, engineering and safety requirements.” He continues: “We are in close contact with customer representatives about their needs and our capabilities. The effectiveness of our ideal well solution has been demonstrated in the field to major oil and gas producers, with very positive feedback. But we keep moving forward, and have identified further innovations to propose to our clients, including rig types new to Russia. All of this originates from our innovative vision of the well construction process.” Integra CEO Antonio Campo adds: “We aim to be the best at what we do. Integra is a Russian company, with a team blending international experience with a very strong local workforce. Working together, Integra’s three business divisions (Seismic; Drilling, Workover & IPM; and Technology Services) provide a full spectrum of integrated services to our clients, at every stage in the life of a well. For me, it’s a great combination, a formula for success.”

Read more stories from Synergi clients on For more information, please visit:

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A proven performer for oil and gas




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BB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 117,000 people. ABB is a proven performer in the oil, gas and petrochemical industry. With over 50 years of experience in this field it has over 5500 employees in 35 countries dedicated to serving the industry and has successfully completed thousands of projects worldwide, delivering a full range of products, automation and electrical solutions, complete EPC projects, and services to national and international companies. “We focus on efficient, safe and profitable operations for our customers,” explains Havard De Valde, VP for Oil and Gas at ABB. ABB continues to expand its industrial solutions for the hydrocarbon supply chain, encompassing production, processing, transportation, storage and distribution. “Our offerings include automation products and systems, electrical systems, instrument, products and analytical systems, integrated telecommunication systems, a fully integrated package of advanced petroleum refining and petrochemical process technologies, engineering, procurement and construction services, and lifecycle services,” continues De Valde. “Our suite of services range from pre-project consultation, through project execution, including support for ABB and third-party products up to full plant maintenance management. ABB´s global presence in the major oil and gas centres ensures access to our expertise and support for your needs on a local basis,” he adds.

GCC STATES AMONG WORST FOR CO2 EMISSIONS mid warnings that the MENA region is likely to be most susceptible to climate change, a recent report outlining the global rankings of CO2 emissions from energy use has indicated that Gulf nations are among the worst in the world. Research carried out by British risk analysts firm Maplecroft has produced the ranking, which cites the UAE as the highest emitter of greenhouse gases in the world and Saudi Arabia as the sixth highest. The index is intended to raise awareness of such issues and to help companies identify their risk exposures, as well as identify nations that may be subject to regulation of CO2 emissions in the future. The rankings are based on each country’s cumulative greenhouse gas emissions since 1900, on total national emissions and – most heavily – on current per capita emissions. According to Maplecroft, the poor performance of the and Saudi Arabia are ranked as UAE and Saudi Arabia was being at ‘extreme’ risk by the based predominantly on the report. Kuwait, Qatar, Iran and countries’ mammoth reliance Bahrain all ranked as ‘high’ risk on fossil fuels and also for the nations, lying 12th, 17th, 26th energy intensive water deand 31st respectively in the index salination plants. The report of 183 countries. Oman had the indicated that desalination lowest rates of CO2 emissions of accounts for 50 percent of all all the GCC member states, while CO2 emissions in Saudi Arabia. Afghanistan rated as the lowest A statement from the firm said of all MENA countries. that: “Maplecroft recognises “As the world moves tothat desalination is a positive wards a low carbon economy, way to address water security more rigorous environmental but high emissions underline policies may leave companies the need to find more energy exposed to costly operating efficient innovations.” expenses and new investment The UAE dropped 15 places requirements,” said Fiona Place, from last year’s ranking, due Head of Maps and Indices at to a huge 25 percent rise in Maplecroft. “Energy intensive total carbon output in the two sectors, such as the extractive years ending 2008 – the most sector and logistics, will be parrecently available data – and ticularly vulnerable, but all areas a 20 percent increase in per of business need to monitor the capita emissions. Both UAE associated risks.”


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Towards a smarter energy future H


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is Excellency Ali Al-Naimi, Minister for Oil and Gas in the Kingdom of Saudi Arabia, outlines the role of petroleum in the new smart energy economy.

here is a lot to like about smart energy. Beyond the inherent wisdom of balancing consumption and stewardship, smart energy boasts the intuitive marriage of hardware and software for an optimal power grid; the genius of innovative metres and appliances for more efficient use; and the potential contributions of renewable energies. A word of caution is in order, however, to temper our exuberance with realism about the readiness of newer energies to carry the day. Premature enthusiasm for the benefits of renewables puts us at risk of equating smart energy with ‘new’ energy. In this view, the smart energy concept specifically marginalises fossil fuels as ‘old’ energy. Indeed, some governments, as a matter of policy, are emphasising green energy as a means of seeking energy independence and weaning away from fossil fuels. Such a narrow focus un-levels the playing field, where policies, resources and public sentiment favouring alternative energies inhibit fossil fuels’ ability to compete and contribute. It also creates undue risk that these newer energies may not have sufficiently developed to the point of payback on considerable investments of time and money. Fossil fuels must bridge the gap, until green energy consistently lives up to its name, and overcomes affordability and infrastructure hurdles. Simply put, an either-or approach ultimately will catch us short-handed. So if smart energy is about deriving the greatest resource value, we would have to agree that any kind of energy that lets us weigh those qualifying criteria and tick the reliability and sustainability boxes off our checklist will apply. Saudi Arabia does agree that every kind of energy has a role to play. We acknowledge that fossil fuels, primarily oil, will shoulder the biggest burden in meeting global demand, and that renewables will

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complement them. Thus, our aim is to deliver the petroleum that powers the world’s economic and social engines; leverage technology and innovation to make its use cleaner; and develop renewables so that they can contribute meaningfully to the energy mix. With that in mind, let’s look at petroleum through the smart energy lens. From the smart-energy fundamentals of adequacy and reliability, the world will depend on fossil fuels for the next 50 years. Of the dramatic 40 percent increase in world energy demand that we will be seeing over the next 20 years, 85 percent will be met primarily by fossil fuels. From the perspective of Saudi Arabia alone, the smart energy supply fundamentals are well served. As the world’s leading supplier of oil with 264 billion barrels of proven oil reserves, at current production levels the Kingdom could continue to supply crude oil for another 80 years, even if we never found another barrel. However, we’re finding those new barrels. In fact, even though we produced 62 billion barrels of oil between 1990 and 2009, our reserves have not decreased. Through new discoveries and improved recoveries, we are adding as much oil as we are producing every year. And we have been doing this for the past 20 years. Given the urgency of growing global demand, it is projected that some US$26 trillion in energy investments must be made – and resource stewards like Saudi Aramco, the Kingdom’s oil enterprise, are expending funds to make additional supplies available. Last year, Saudi Aramco completed the largest capital programme in company history at a cost exceeding US$100 billion and spanning megaprojects in oil, gas, natural gas liquids, refining and petrochemicals. The oil and gas components of this project slate have enabled the Kingdom to raise its maximum sustainable crude oil production capacity to 12.5 million barrels per day. That’s a capability unmatched in the industry. More importantly, that’s good news for energy security.

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Turning from the adequacy criterion to the sustainability factor, petroleum continues to pass the smart energy test. Aided by science and technology advances, producers are stewarding these supplies so that strides are being made in such areas as better recovery, less invasive practices, emissions reduction, and improved fuel efficiency. The cornerstone of smart energy is R&D; the same is true for oil. Making the footprint of petroleum operations and products lighter is a major industry thrust. Just as we are investing in supplies, we are also allocating massive investments toward improving petroleum’s sustainability – a broad umbrella that encompasses efficiency, affordability, safety and environmental protection. Some of the most significant environmental innovation is aligned with petroleum’s leading use in transportation. In Saudi Arabia’s case, we are focusing on cleaner-burning fuel formulations and clean-engine technologies. On a domestic level, we are implementing a plan to reduce the sulphur content of various grades of fuel used in the Kingdom. Complementing innovation, knowledge leadership is an emerging energy sustainability focus. Thinktanks like King Abdullah Petroleum Studies and Research Centre, whose mission is global energy and environmental research and policy studies, are contributing useful perspectives and insights to global energy tracking. While being forward-looking and innovative are smart, being pragmatic, even cautious, may be even smarter. While renewables must be brought along to contribute meaningfully to a diverse energy mix, let us be realistic. Today, renewables’ portion of the energy pie is just two percent, and their share is expected to reach just four percent by 2030. Even if their current portion developed faster, doubling in those two decades, that would be a good advance; however, we would still be looking at just eight percent. And while solar and wind must be tied to the energy mix, their intermittent nature means they must augment the tried and true as they, and other alternative energies, are brought along to full maturity and viability.

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Thus, Saudi Arabia’s stance is not to curb fossil fuel use, thereby drastically limiting economic and social growth. Instead, our aim is to supply the market with oil to enable economic growth and prosperity; improve petroleum’s environmental performance through sustainability-driven R&D; and contribute to energy diversity by developing renewable energies. We, and other energy resource holders, welcome smart energy and renewables as part of a vital mix, but the ultimate bottom line for smart energy solutions is that they must be sufficiently robust and resilient to shoulder a fast-growing energy burden. The smart bet would be to put the money on petroleum as a vital, and rightful, part of the smart energy mix.

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ncreasingly oil and gas asset owners and operators are realising the benefits of having one specialist training company, engaged to manage and provide all training services. Many sector participants are moving towards this model citing improved quality of service provision, improved HSEQ statistics and training metrics and a reduction in internal resources required to effectively manage training. To meet this demand, Qatar International Safety Centre (QISC), a Madina Group company based in Qatar, has developed a Total Training Solution tailored to meet the exact requirements of each customer. QISC ensures the delivery of a professional, quality, cost-effective, outsourced training management service. Commenting on a recent application of the QISC Total Training Solution, John Collings, Madina Group General Manager, said: “At one site we are responsible for $13M60 difthe training requirements for over 52,000 employees and contractors from ferent countries. We developed a customised training solution that kept employees safe and met our customer’s key requirements. This was a critical focus for us”. He added that: “a considerable investment has been made by QISC to ensure that our total training solution is the premier training service”. The total training solution includes four key services: management, training, HSE consultancy and manpower, and equipment maintenance and certification. Management Services, covering all training-related facilities, administrative, planning and records management activities through major emergency management, has cemented QISC’s status as the Middle East’s leading training provider. With the greatest number of OPITO, ECITB, CITB, NEBOSH, City and Guilds, IMO, IWCF and IVV accreditations, they offer HSE, major emergency management, fire and rescue, defensive driving, fire prevention, survival, vocational and management courses. HSE Consultancy and Manpower Services ensure the effectiveness of QISC customers’ management systems in managing fire, health, safety and environmental risk. Highly-qualified safety and security officers, fire wardens and rescue/ emergency response personnel are also available. To complete the Total Training Solution, QISC offer DNV-approved, HSE Equipment Maintenance and Certification Services for fire extinguishers, off and onshore fire-fighting equipment, and breathing apparatus, using FETAcertified technicians.

UPFRONT.indd 32

Kuwait to push big investments into oil production


uwait’s state owned oil firm Kuwait Petroleum Corporation (KPC) announced plans in Q4 last year to invest US$90 billion in the next five years in its efforts to push oil production capacity to four million barrels per day by 2020. This would be an increase of around 700,000 bpd from its current levels. The firm’s Managing Director for Planning, Hashim Al Rifai, revealed in a news conference that the US$90 billion would be spent to “implement KPC’s growth strategy”. Al Rifai also clarified that the sum was to include money investment in KPC’s overseas operations, including refineries in Vietnam and China and upgrading the oil tanker fleet, as well as in projects to help drive the 700,00 bpd increase target. The plan from KPC was revealed alongside an announcement that the fuel rich nation no longer has the natural gas resources to meet domestic demands. According to a report by Reuters, Kuwait burns an average of 200,000 to 300,000 barrels per day or oil products, and is suffering from a short fall of about 1 billion cubic feet of gas per day. Kuwait currently pumps around one billion cubic feet of gas per day, and plans to increase that considerably, to four billion cfd by 2030. As part of this scheme plans are in motion to increase the output of nonassociated gas fields to one billion cfd by 2016. This is because the majority of Kuwait’s gas production comes as a by-product of oil production, and the oil output restrictions enforced by OPEC since late in 2008 have had a knock on effect to the nation’s gas production. KPC is not alone in its plans to invest massive sums to increase output in the coming years. Fellow OPEC member Abu Dhabi National Oil Company (ADNOC) recently announced plans to invest US$60 billion over the same five year period to increase it oil production.

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Refinery compressor restored to health


lphatec Engineering, the machinery grouting specialist based in Valencia, Spain, recently completed a foundation repair, compressor regrout, motor baseplate regrout and re-alignment of an important link in the refining process at Petroplus’ Cressier refinery in Switzerland. The Thomassen compressor had been suffering from elevated vibration levels for some years, and eventually experienced a couple of mechanical failures over the last 12 months. Thomassen suggested asking Alphatec to look at the installation, and an inspection was carried out in March 2010. A report and repair proposal was submitted by Alphatec Engineering, and work started in late May. Despite delays in securing replacement parts, and mecahnical work, the compressor was aligned and grouted by the middle of June, and back on-line in July. Stéphane Viali, the Plant Maintenance Manager, said: “The compressor is now working working very well, thanks to the fine work performed by Alphatec Engineering.”

Don’t Miss… How to over come the challenges facing the oil and gas community in the low carbon era, on page 72.

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Companies in this issue are indexed to the first page of the article in which each is mentioned. ABB ADNOC Alameh Networks Alphatec Engineering Ansell Arabsat Bahrain National Oil & Gas Authority BakerHughes Bapco BIOS Middle East BP British Gas BLDGTEC Cansco Cansolv Technologies Inc. Carbovac Computer Data Networks ConocoPhilips CUDD Energy Design Assistance Corp Dialog Technivac Dow Chemical Dutco McConnell Dowell EMC Eutelsat Exxon Mobil Corporation Falck Fluor Fugro Gravity Furgo Geoscience Fugro RUE Gasco General Petroleum Company Grace GS Engineering Gulf of Suez Petroleum Co. Gulf Petrochemical Industries Company Haldor Topsoe Halliburton Oil Services Heritage Oil Hitachi Data Storage Hunt Oil IG Holdings IHS Energy Integra Group ISOH Kuwait Oil Company Madina Group Marathon Oil Mentura Group Mitsubishi Heavy Industries Company Mubadala Murphy Oil Neste Oil NetApp Numeral Services Co. Occidental Petroleum Offshore Professional Services OGP Oil and Gas Holding Company of Bahrain OPS Pajak Engineering Petro Rabigh PICO International Petroleum Polarcus PP Simtech Punj Lloyd Rockwool RXT SABIC Saipem Samsung Engineering Saudi Aramco Saudi Cranes Schlumberger Shell Showa Sigma SPSE Sumitomo Chemical Supernet Synergi Synthetic Genomics, Inc. Tatweer Petroleum Technoment Tecnicas Reunidas Thuraya Total United Oil Inc Weatherford

28, 86, 87 32 76, 77 33, 111 106, 107 19 88 64 88 81 50, 52, 78, 100 52 110 56, 58, OBC 32 141 70, 71 32 29 132 17 116 97, 98 IFC, 84, 85 67 32, 72 12 32 6, 44 42, 43, IBC 108, 109 32 52 121 88 52 88 10, 122, 123 52, 64 44 86 44 26, 27 32, 44 24 100 64 32, 127 44 79 88 32, 88 44 88 82, 83 52 32, 88 24, 129 94 88 22 101 116 52 45 43 32 103 24, 25 116 32 32 116 91, 93 64 32, 52, 124 105 137 8, 114, 115 116 41 2, 24 72 88 88 32 68 32, 52 2, 50, 51 64


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As O&G went to print, news broke that Occidental Petroleum had signed a deal to acquire a 40 percent stake in a 30-year contract to develop Abu Dhabi’s lucrative Shah gas field. The move came as a major surprise to industry watchers, many of whom believed the US$10 billion project to have stalled following the withdrawal of ConocoPhillips last year. But as this article – penned days before the ADNOC-Occidental deal was announced – points out, a number of significant challenges remain to be overcome before the project can be called a success. By Ian Clover


hen toil comes to the desert, there’s usually a good reason for it. As temperatures soar past 50˚c before 11am each morning, and shade and water are as scarce as an impoverished investment banker, the UAE’s Arabian Desert is no place for the faint-hearted. The unforgiving, remote swathe of sand that cuts across the Middle East is a barren landscape where only a few hardy souls survive, let alone thrive. Yet some 180km southwest of Abu Dhabi, in a hitherto nondescript spot of this Middle Eastern backwater, lies the Shah Gas Field. Containing in excess of 200 trillion cubic feet of gas, this is one of the largest gas basins found anywhere on earth. And while such vast reserves, particularly in this energy-rich, energy-hungry corner of the world, are usually highly developed outposts funnelling fossil fuels to markets all over the globe, the Shah Gas Field is something completely different. Despite being viewed by the Emirate as an important fi nd that is key to its continuing economic growth, work is yet to begin on gas extraction thanks to one vitally critical factor – much of the Shah Gas Field is sour. In fact, the field is universally considered to be one of the most sulphur-rich natural gas fields ever found. Irrespective of this, the fi nancial potential of such gigantic, untapped reserves far outweighs the logistical and technical difficulties that have thus far constrained the field’s development. In July 2008, the Abu Dhabi National Oil Company (ADNOC) and ConocoPhillips thought they had reached a conclusive deal when the former agreed to a 60 percent stake

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“Th is sour gas poses a very challenging scenario for in the project, with the American oil giant undercutting its the companies involved,” admits Ciszuk. “It is extremely rivals to secure the balance; but in the fi rst quarter of 2010, corrosive. It is very toxic and you need to basically treat it ConocoPhillips pulled out of the project for reasons as yet and strip out all of the toxic impurities too, which are less unconfi rmed (although it has been suggested that the estoxic but still extremely corrosive. The key challenge with calating cost of the project, combined with the potentially sour gas is the fact that there are a lot of impurities that are dangerous and technically challenging work that will be tough to deal with, and they need to be sequestered so they required, were the reasons behind the multinational’s redo not remain in the gas. And in the case of the gas in the treat). Since then, the sour gas has remained unexploited. Shah field, the degree of sourness of the gas means that out ADNOC has alternatively been touting around for new of roughly one BCF of wellhead gas production – which the partners and stating that they were keen to progress, alone Shah Project is aiming for after treatment – just over half of if needed. In the wake of ConocoPhillips’ pullout, four that will end up as sales gas.” frontrunners emerged as potential key partners – Shell, Such a combination of technical difficulty, high-risk Exxon Mobil, Occidental and Total – all four of which potential and reduced profit margins obviously proved too have the required expertise and know-how to partner much for ConocoPhilips, leaving only a select handful of with ADNOC. But all four have also displayed a hesitance, contractors and companies able and willing to consider fuelled primarily by cost factors, to quote anything close proceeding in lockstep with ADNOC. to the figures that initially secured the contract for Cono“Almost half of the extracted product will consist of coPhillips. Indeed, some sources believe that ConocoPhildifferent impurities, and some are very hard to deal with lips undercut rival bids by billions of dollars back in 2008. because of their toxic and corrosive makeup,” continues ADNOC are understandably keen to secure a partnership Ciszuk. “And they need to do something with on similar terms, but industry watchers believe them. You can’t just have a huge mountain that such favourable figures are unlikely to be of something so toxic or corrosive laying forthcoming from current frontrunners. The Shah gas about. The chief problem here will be “The partnership with ADNOC was field holds handling the large amounts of sulphur something that ConocoPhillips secured that will be brought to the surface. I back in 2008, but they wavered for a believe this is one thing that Conovery long time and didn’t ever really coPhilips appears to have miscalcucommit and, ultimately as we have lated – they thought they were going to seen, withdrew in 2010 because of their make money out of the sulphur, because own economic difficulties,” says Samuel cubic feet of gas sulphur itself can be used in fi rst lines of Ciszuk, Senior Middle East Energy Anaproduction and so on.” lyst for IHS Energy. Even though ADNOC has The reality, however, is less clear-cut. Profit said that they might move ahead independently, margins in both sulphur and gas inhabit a bracket far few from within the industry believe they have the ability below that of oil, and while it makes some fiscal sense to to project manage technically advanced projects such as invest in the complicated technology required to elicit this because they have no experience of dealing with sour fi nancial gain from what is, in effect, one of Abu Dhabi’s gas in this way. They need someone to learn from.” richest resources, recent industry developments have comSulphur, so good plicated the issue, reveals Ciszuk. Despite the dangers and difficulties of extracting sour “Sulphur production has been growing quite siggas with such high sulphur content, Abu Dhabi sees its nificantly, both globally and in the Middle East, especially Shah Gas Field as key to its continued economic expanover the past two years,” he explains. “For instance, the sion. While its well-documented oil reserves have seen huge North Field offshore from Qatar (and the South Pars the Emirate boom on the global stage, the gas it is able to Field, which is the same field but reached from the Iranian extract will be used almost exclusively for the domestic side) is slightly sour. It’s nowhere near as sour as Shah, but market, and is the reason for ADNOC’s continued involveit’s still a massive field producing very high quantities of ment. It had been anticipated that Abu Dhabi Gas Indusgas and associated sulphur. It means that Qatar and Iran tries Ltd (Gasco) would proceed with the project aided have raised their sulphur production significantly and as a primarily by Fluor as its lead technology partner, but the result, the market is suffering a glut; after all, there’s only inherent dangers of sour gas recovery present a multitude so much sulphur the world needs. So this has now become of health and safety challenges that are largely unheralded. a rather unattractive market to be involved in. Other Any natural gas that contains sulphur content in the companies are saying ‘we won’t make any money off the 30 percent range is extremely dangerous to extract. The sulphur; sulphur prices won’t be interesting; we need to merest sulphur escape is likely to prove fatal for field have margins’.” workers, and while hydrogen sulphide-rich (H2S) gas has For Ciszuk, it all comes down to technology. “The previously been produced before, very few have contained degree of toxicity and the corrosive impact the sulphur the intense concentration of sulphur found at the Shah creates a need for very specialised equipment,” he says. Gas Field. “You need to have an almost fully sealed production chain

200 trillion

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because there cannot be even the slightest form of leakage anywhere. People would die. It’s very expensive; you need to use a lot of alloys everywhere rather than normal metal and steel, so it is a complex procedure in so many ways – complex in attempting to control costs; complex technology-wise; and complex in how to monetise the procedure and sequester all those impurities.” Such complexities no doubt caused ConocoPhillips to withdraw, but a welter of subcontractors and subsidiaries have been awarded contracts worth billions of dollars since then, which serves as an indication of just how appealing the project is to those that possess the relevant expertise. Saipem, of Italy, have been awarded the contract for the sulphur recovery unit and liquid sulphur transport pipeline, while Samsung Engineering has secured the rights to administer the utilities and offsite facilities of the project. The gas-gathering contract has been awarded to a joint Spanish and Indian consortium between Tecnicas Reunidas and Punj Lloyd. “These subcontractors and service providers will come in everywhere,” says Ciszuk. “There will be construction companies building the roads and railways that will connect the field and transport the sulphur to treatment plants far away. Service companies will come in and do everything, including drilling the field to some of the actual work that is undertaken by subcontractors for oil companies.” Undoubtedly, the main skill that the leading companies looking to partner with ADNOC provide is unrivalled technical know-how. “These guys basically know how to do the absolute toughest things in gas extraction; the rest they subcontract to different players, different service companies,” says Ciszuk. “These guys will come in on a project management basis, even though the larger players have exceptional experience in managing lots of complex projects simultaneously.”

What the frontrunners offer Each of Shell, Total, Occidental and Exxon Mobil possess the technical expertise and fi nancial muscle to prove viable partners for ADNOC – and all have, at one point or another, been seen as ‘the most likely’ to proceed. But picking a winner at this stage is difficult. Exxon has recently sought to promote its Controlled Freeze Zone (CFZ) technology, claiming this flagship H2S solution to be less expensive than current, existing technologies. Exxon believes the CFZ solution would be ideal for the Shah project because it “increases its attractiveness, especially for offshore and remote applications”. The company has also claimed that the solution currently meets natural gas pipeline quality and safety requirements, requires no solvent regeneration or downstream dehydration facilities and has no upper restrictions on H2S or CO2 content. Total have perhaps the strongest history in dealing with sour gas projects, having been the first ever oil company to develop sour gas when it installed the world’s fi rst sweetening unit at the Lacq Field in southwestern France in 1957. Now, 60 years later, the global giant is understandably bullish about the great technical strides it has made,

SHAGAS.indd 38

Higher production costs could push UAE gas prices up as high as

$5 per million BTU

particularly when it came to developing its MDEA – an amine that can eliminate H2S and extract CO2. Total has also developed a hybrid solvent formulation that consists of a physical solvent and an amine, and is reported to be more effective at stripping mercaptans from sour gas, a process that has been dubbed ‘Sprex’. Occidental have plenty of vested interest in the Middle East, with more than a quarter of the company’s oil and gas production originating from the MENA region. In 2009, the company was producing 254,000 barrels of oil equivalent per day from its operations in Oman, Yemen, Libya, Qatar and Bahrain, and is currently a partner in the Dolphin Project – a leading transborder natural gas project with Abu Dhabi’s Mubadala – a partnership that has been strengthened by the company’s collusion on redeveloping the Bahrain field. Such a grounded history in MENA energy projects makes Occidental naturally interested in the possibilities that lie at the Shah Gas Field, but the company is the only one of the four frontrunners to explicitly state they would not be interested in picking up the deal on the terms agreed with ConocoPhilips. “We have consistently said over the last two years that the terms of the contract that was negotiated between ConocoPhilips and Abu Dhabi are not attractive to us,” Dr. Ray Irani, Chair-

07/02/2011 13:05


Where does all the sulphur go? Safely dealing with the errant and excess sulphur that comes with the Shah Field is one of the sternest challenges facing ADNOC and its partner. Sulphur is extremely dangerous and volatile, and cannot be overlooked or underestimated. Indeed, the sulphur problem is what many industry experts believe led to ConocoPhilips’ withdrawal. Original feasibility studies of the project concluded that the ideal sulphur solution would be to pipe it in molten liquid form to a processing plant in Ruwais, some 200km from the Shah Field. Such an option would prove almost foolishly hazardous – sulphur needs to be kept between 115˚C and 152˚C to remain stable in molten liquid form – so ADNOC began investigating the feasibility of transporting the sulphur via rail, an option it will now pursue in the form of the Shah Habshan Railway, a 264-kilometre line that runs from Ruwais port to the field.

lio, we have enhanced our capability for the treatment of various compositions for syngas – from coal gasification, contaminated natural gas and refi nery streams – and further differentiated our technology.” Abu Dhabi is evidently in no rush. Finding the correct partner is more important than merely finding the funding and expertise to help kickstart the project. However, while Abu Dhabi and the UAE are not exactly short on fi nancial muscle, further procrastination on the issue cannot be countenanced for too much longer. “When the Shah Field is developed, it will be the most sour field in the Middle East to be in production, and ADNOC is keen to press ahead sooner rather than later because it needs gas,” says Ciszuk. “The UAE has a domestic gas shortage and despite the sour nature of the Shah Field, it represents one of the few areas where the Emirate can grow domestically. “Th is is why there is such an opportunity for a company to get in here. The successful partner will be seen as a global leader in extremely sour gas production if they can pull this off, and it would very likely open up further projects in the UAE and elsewhere.”

An end in sight?

man and CEO of Occidental, told Oil & Gas Middle East last year. “However, if the government wishes to approach us with different terms, we’ll look at them.” Finally, Royal Dutch Shell, whose involvement in the Middle East dates back many decades, is likely to be involved in any high-level discussions regarding the project. Shell already partners ADNOC in a number of oil and gas processing projects throughout Abu Dhabi, and is a 15 percent shareholder in Gasco. In terms of presence, economical might and connections in the region, Shell is understandably the favourite for the project. Technically speaking, the company has also ramped up its expertise in dealing with sour gas via the acquisition of Cansolv Technologies Inc., one of the leading names in the sour gas industry. Cansolv’s SO2 Scrubbing System, which Shell now owns, is a proven regenerable amine technology that is ultra-effective at removing sulphur dioxide from combustion gases, and has proved its efficacy in numerous other refi ning and smelting tasks, too. “We want to further develop technology that has the potential to clean up contaminated gases and flue gases – predominantly SO2 solutions in the fi rst instance,” says Shell Global Solutions International President Greg Lewin. “With the addition of Cansolv’s technology to our portfo-

SHAGAS.indd 39

Had ConocoPhilips not gotten cold feet, the chances are that the next 12 months would have seen some tangible movement on the project. As it stands, few experts, including Ciszuk, can really say when the project will fi nally get off the ground. “Right now there still appears to be a bit of a deadlock,” he says. “There is certainly regular talk with the frontrunner companies, and there might even be occasional feelers being sent out from other IOCs with relevant experience to ADNOC. But there is only a very small, select group of companies that can take this project on, and only a few people within these companies able to sit and talk numbers with ADNOC.” The current impasse is a result of unique economic conditions in Abu Dhabi. They do need, at some point, to exploit their gas reserves, but for now there is little urgency while oil flows so freely and profitably. “If ADNOC and Abu Dhabi had been truly desperate, they would have already accepted other offers and moved forward,” believes Ciszuk. “They do have long-term thinking here, and have been forward-looking when securing imports from Qatar through the Dolphin Pipeline in the middle of the decade. They are not cornered. They are looking at a number of different opportunities and have already swallowed their pride and become a gas importer, which is quite important because it is hard to see Saudi Arabia doing the same thing.” After many decades of cheap oil and gas, the population of the UAE is slowly coming to the realisation that higher prices are headed their way, because the subsidies that Abu Dhabi and the other Emirates have levied for the domestic markets are going to be unsustainable – particularly after the heavy costs associated with the Shah Field are taken into account. “Emiratis are used to cheap gas being produced in the country. Hence, it makes it extra painful when the gas

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Sulphur and CO2 removal

price effectively goes up. Production costs have traditionally been around US$1.00 or lower per million BTU in Abu Dhabi and elsewhere in the Middle East,” says Ciszuk. “Since they have been purchasing gas from Qatar, prices have been around US$1.55, which was already a massive increase for the population. However, it is still within the one/two dollar range, so is palatable. With Shah, we are most likely going to see production costs push that figure up to around US$5.00 per million BTU. It’s a massive, massive change, and they are going to have to get used to it. One coping mechanism for ADNOC could be to point to ConocoPhilips’ withdrawal on cost reasons as a justification for the coming commodity price hike.” Th is could still all be two or three years away, though. ADNOC have yet to formally reconvene talks with the four potential frontrunners, even though all four will no doubt be keen to get the ball rolling as soon as possible. Large upstream IOC opportunities of this scale are few and far between in the Middle East right now. „

SHAGAS.indd 40

“After many decades of cheap oil and gas, the population of the UAE is slowly coming to the realisation that higher prices are headed their way”

Sulphur exists in natural gas as hydrogen sulphide (H2S), and the gas is usually considered sour if the hydrogen sulphide content exceeds 5.7 milligrams of H2S per cubic meter of natural gas. The process for removing this from sour gas is commonly referred to as 'sweetening'. The primary process for sweetening sour natural gas is quite similar to the processes of glycol dehydration and NGL absorption. In this case, however, amine solutions are used to remove the hydrogen sulphide. The sour gas is run through a tower, which contains the amine solution. This solution has an affinity for sulphur, and absorbs it much like glycol absorbing water. There are two principle amine solutions used, monoethanolamine (MEA) and diethanolamine (DEA). Either of these compounds, in liquid form, will absorb sulphur compounds from natural gas as it passes through. The effluent gas is virtually free of sulphur compounds, and thus loses its sour gas status. Like the process for NGL extraction and glycol dehydration, the amine solution used can be regenerated (that is, the absorbed sulphur is removed), allowing it to be reused to treat more sour gas. Although most sour gas sweetening involves the amine absorption process, it is also possible to use solid desiccants like iron sponges to remove the sulphide and carbon dioxide. In order to recover elemental sulphur from the gas processing plant, the sulphur-containing discharge from a gas sweetening process must be further treated. The process used to recover sulphur is known as the Claus process, and involves using thermal and catalytic reactions to extract the elemental sulphur from the hydrogen sulphide solution. In all, the Claus process is usually able to recover 97 percent of the sulphur that has been removed from the natural gas stream. Since it is such a polluting and harmful substance, further filtering, incineration and 'tail gas' clean-up efforts ensure that well over 98 percent of the sulphur is recovered. Gas processing is an instrumental piece of the natural gas value chain. It is instrumental in ensuring that the natural gas intended for use is as clean and pure as possible, making it the clean burning and environmentally sound energy choice. Once the natural gas has been fully processed, and is ready to be consumed, it must be transported from those areas that produce natural gas, to those areas that require it. Source:

07/02/2011 13:05


02/02/2011 11:23



Unlock the value of seismic data Seismic data and reservoir properties derived from it are frequently under-used by oil and gas asset teams because they lack the tools to properly interpret and incorporate the results. Fugro-Jason’s David Timko discusses how technology can enable asset teams to fully realise the value of their seismic data.


eoscientists have struggled for years to extract information from their seismic data that can be provided by a simple structural interpretation. One goal has been identification of lithology and estimates of associated reservoir properties. Typically these have been estimated from seismic attributes and seismic character recognition. There are a number of factors influencing the validity and usefulness of traditional attribute and character recognition analysis. Without knowledge of the underlying wavelet in the seismic data it is difficult to predict the seismic response from well-based synthetics. The relationships established between reservoir properties and seismic attributes are empirical and are difficult to extend laterally. Attributes are usually based on reflectivity data, relating to boundary properties rather than layer properties. A set of tools is required which, when combined with rock property information resulting from seismic inversion, provides reliable 3D estimates of reservoir properties based on rigorous integration with well data and established geophysical elastic rock property relationships.

Well tie and wavelet estimation The first step in this workflow is generating an appropriate time-to-depth relationship for each well and using this to reliably estimate the embedded seismic wavelet. Th is is essential even for traditional character and attribute analysis to ensure the correct seismic information is correlated to the well data. With the correct wavelet, wells can be used more effectively to predict the seismic response.

Lithology definition and estimation of elastic properties A set of discrete lithologies should be defi ned, which differentiate good reservoir from bad based on both the physical rock characteristics (porosity, shale/clay content, etc) as well as fluid saturations. One must then understand the elastic properties associated with each lithology to determine whether seismic data can be used to identify them. Th is is done by cross-plotting the elastic log data associated with each lithology, fi rstly at well log scale to determine the most optimistic separation and then repeated at seismic resolution to determine the separation that can be expected when using seismic data as the source of information. The crossplots can be used to create probability density functions (PDFs) for each lithology, determining the likeli-

FUGRO GEO.indd 42

David Timko is Product Champion for Interpretation and Analysis with Fugro-Jason, a leading provider of seismic inversion and reservoir characterisation products and services. He joined the company in 2004 as Regional Technical Manager in Dubai after 24 years experience in the exploration, production, seismic and reservoir characterization sectors of the industry primarily with Amoco and BP.

“There are a number of factors influencing the validity and usefulness of traditional attribute and character recognition analysis”

hood that a particular combination of elastic parameters represents a sample from that lithology.

Fluid and facies prediction The PDFs defi ned by the well data can be applied to volumes of elastic parameters estimated from seismic inversion to determine the probability that a sample from the seismic dataset is associated with a particular lithology. The outputs from this process are lithology probability volumes, which can be used to build a “most-likely” lithology volume. A-priori information regarding the expected proportion of each lithology is used to ensure the PDFs are weighted appropriately.

Body capture and geology modelling The “most-likely” lithology volumes can be used as input to a body capture routine to identify connected bodies of a particular lithology. Lithology probability volumes can be used to identify bodies that exceed a probability threshold. Viewed in 3D, these bodies highlight the distribution and connectivity of the reservoir. The fi nal step is to incorporate this lithology information into geological models. Using rigorous zonal sampling algorithms, the lithology and reservoir property volumes can be accurately upscaled and mapped into the models. The lithology probability volumes can be used either indirectly as trends to guide sequential indicator simulation, or directly to defi ne lithologies within the model. Lithology based relationships between elastic and reservoir properties can be used to further defi ne the reservoir properties within the bodies. With all this technology available on the geoscientist’s desktop, the true value of seismic data can now be explored and used to build the most accurate models of the subsurface possible. „

07/02/2011 11:42

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Airborne geophysics for hydrocarbon exploration Airborne geophysics provides a rapid, cost-effective method for oil companies to assess exploration targets, argues Stewart Walter.


ith more than 13,000 employees located in 250 offices around the world, Fugro has the ability to provide exploration solutions on land, offshore and from the air. It was therefore no surprise when a major oil company came to Fugro to help with its exploration in Libya. Having secured an exploration permit in a relatively isolated area with difficult access and limited data coverage, the company awarded Fugro Airborne Surveys (FAS) the contract to acquire airborne magnetic and gravity data. Airborne surveying is an environmentally friendly technique that rapidly provides regular data coverage at relatively low cost. Measuring small changes in the earth’s gravitational and magnetic fields caused by changes in rock type, these techniques allow geoscientists to interpret the subsurface geology, extrapolating from surface outcrop and interpolating between any sparse seismic lines or well data. Working with staff in Fugro’s Tripoli office and building on previous in-country operating experience, FAS was able to complete the permitting processes and mobilise a specially equipped survey aircraft within four weeks of contract award. With interpretation of the gravity and magnetic data also provided by Fugro, the client observed that, “the resulting integrated interpretation clearly contributed to resolving our exploration questions, in particular providing useful guides for seismic interpretation”. The company further commented that the project was “performed with the utmost professionalism and with respect to contractual specifications and our required exploration timing”. Following the success of this survey, the same company selected Fugro for an airborne gravity gradiometer survey in East Africa. In this case, higher resolution data was required so the Falcon gravity gradiometer system operated by Fugro was chosen. This is the only gravity gradiometer system specifically developed for airborne operation and offers a resolution 20 times better than airborne gravity.

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Th is additional resolution enabled the company to meet its geological objectives of detailing the structural framework and delineating fault patterns within the area. To get the full benefit from the Falcon technology requires much closer line spacing and the increased amount of data results in increased project cost. It is therefore important that an oil company fully understands its objectives in order to choose the most appropriate technology. Th is is achieved by pre-survey modelling of the responses of the anticipated geological structures for assessment against the available technologies, something routinely undertaken by Fugro. For example, Fugro are currently preparing for an extensive airborne survey and interpretation project for a major Libyan oil company over the Sirte Basin. There is a lot of exploration data available, but this is focused mainly on individual oil fields. The prime objective of this project is to gain a better regional perspective and predict where to concentrate future exploration efforts. The data will also be used to identify the presence and distribution of pyroclastics within the reservoir section, because these important tuffaceous and volcanic ash beds cannot be identified on seismic data. Fugro undertook feasibility modelling to confirm that these pyroclastics could be detected by aeromagnetic data, and also advised the client that rather than acquiring new airborne gravity data, the objectives could be achieved using existing land gravity data. Th is saved the company more than US$3 million and will reduce the time required for data acquisition – so allowing the exploration team to have the interpretation results more rapidly. Fugro is very pleased that these projects have demonstrated that its thorough technical evaluation, detailed planning and careful execution are the keys to success in the ongoing search for hydrocarbons. „

Stewart Walter is a geophysicist and a member of Fugro’s Business Development Team covering the Europe, Africa and Middle East Region.

Project at-a-glance Service: Fugro Gravity and Magnetic Services Industry: Oil and Gas Exploration Challenge: Lack of data for new hydrocarbon exploration Solution: Pre-survey modelling to identify the best technology; detailed survey planning, efficient acquisition and then integrated interpretation of the data by Fugro specialists Benefits: Development of geological models for reduction of exploration risk over known areas and generation of new targets for future exploration

07/02/2011 11:14


02/02/2011 11:20




IN THE BALANCE Following on from last issue’s Special Report into the challenges facing Iraq if it is to reach its ambitious oil output targets, Next Generation Oil & Gas takes a look at the opportunities available in Iraqi Kurdistan and concludes that the potential is huge – but only if the politics are right. By Lucy Douglas

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ollowing the removal of US and British troops from Iraq six months ago, speculation quickly turned to the country’s vast hydrocarbon wealth and how state firms could best leverage these assets in order to bring a much-needed economic boost to a country plagued by war for much of the last two decades. Lucrative though it could be – Iraq has proven reserves totalling 115 billion barrels of crude and 112 trillion cubic feet of natural gas, which will push the country alongside oil-producing giants such as Saudi Arabia – the country is still plagued by its war torn backdrop and all the challenges that come with that: a wealth of security issues, an under-developed infrastructure of limited capacity, a poor regulatory framework, limited availability of trained personnel and ongoing political instability. This has not deterred companies such as BP and National China Petroleum Company, major players that have been keen to assert their presence in any of the 16 mammoth fields that Iraq opened up to international oil companies in 2009. Nonetheless, the future of IOCs in Iraq has remained shrouded in uncertainty since the general elections in March failed to indicate a clear winner, and talks between Iraq’s various political factions remain ongoing in an attempt to establish a government. A new government and a change in the regulation of IOCs will have significant, potentially crippling, repercussions on international firms’ operations in Iraq and not least on the activity taking place in the semi-autonomous Kurdistan region of northern Iraq. Long a region politically at odds with the government of Iraq and once subject to the al-Anfal attack at the bidding of Saddam Hussein, Kurdistan today sees itself as a state integral to a politically and economically united Iraq – albeit one largely able to conduct its own affairs. According to the Iraqi constitution revisions in 2005, Iraqi Kurdistan is a recognised federal entity and though active in the 2003 invasion of Iraq, has since enjoyed relative stability. In addition, Kurdistan boasts a significant proportion of the country’s oil reserves, making it a highly attractive prospect for international investment. Indeed, the region has already attracted the likes of Hunt Oil, Murphy Oil, Heritage Oil and Marathon Oil Corporation for development projects. And with good reason. In addition to its resources – proven reserves in Iraqi Kurdistan are somewhere between 20-25 billion barrels – Kurdistan operates with a developed rule of law and compared to Iraq proper is a fairly peaceful region where companies are able to operate easily. “They’ve been quite successful and even put in their own oil law and attractive upstream investments for explo-

Kurdistan.indd 47

ration,” explains Samuel Ciszuk, a Senior Energy Analyst at HIS. “In a few cases we’ve seen developments. However, what has remained a problem is there is still debate and disagreement with Iraq proper about how much should be divulged to the autonomous region. And of course, one of the main issues is how much control over the oil resources the Kurdistan Regional Government (KRG) should be allowed to have.” The failure in March 2010 to elect a government that suited all parties vying for political rule had a knock on effect for the rest of the year. While the Iraqqiya, National Alliance and Kurdistan Regional Government parties sought to find a resolution to the political deadlock, oil companies have taken the opportunity to develop their operations in the lucrative Iraq market – both in the Shi’a dominated south and in Kurdistan. American firm Marathon announced in October that it had acquired a position in four exploration blocks in Kurdistan, at an initial cost of US$156 million and leaving the company with access to a total 295,000 net acres. The blocks lie northeast and north-northwest of Erbil, two in each location. The northeastern blocks are co-owned with the KRG, at an 80/20 percentage share respectively. “The opportunity offers both near and long-term potential to Marathon. With two wells currently drilling in our licence areas, the potential for production as early as 2016 is achievable and we believe a minimum success could yield 50,000 BOEPD by the end of the decade, with total exposure for Marathon of over 400 million barrels of net resources,” explains Dave Roberts, Marathon’s Executive Vice President of Upstream. Therein lies the challenge. Despite Roberts’ confidence that discoveries made in the Kurdistan wells will provide some lucrative long-term benefits for the company, that is also where the real effects of Iraq’s fragile rule will come into play. While Marathon and other such companies have invested so much into exploration projects in the region, the potential for development will remain cloudy until the political situation is resolved. “The few companies that have developed export capacity in Kurdistan have not been allowed access to export links,” explains Ciszuk. “They are still controlled by the central government. So you have quite a few companies exploring but increasingly coming up, I suppose, to a situation where even those who have made discoveries might think twice before they start to invest in developing those discoveries because it looks like they might have their production capacity shut in.” According to Ciszuk, Kurdistan’s legal framework for IOCs operating in the region is based on regional oil law whereby acreage is offered and a production sharing agreement implemented between the KRG and the oil company

07/02/2011 11:15



in question. This, he explains, is a different model to the one used in Iraq proper, where the government have looked to offering service contracts that they claim will keep oil wealth in Iraqi hands. “It’s just a different perspective because of course, the regions are quite different to some extent,” he says. “In Iraq proper, it is not actually about exploring for oil. It’s generally taking over existing producing fees, and in some cases existing discoveries.” Indeed, this seems to be the crux of the dilemma facing the world’s major oil producers looking to move into this lucrative market. The economic risks involved in a move into Iraq are significantly lower in the south, thanks to its geological space, and with significantly higher proven fuel reserves, this is an attractive option for fi rms looking for a relatively swift return on investment. However, underdeveloped infrastructure and security still remains a big problem in the country, and entry into the market is still relatively difficult for foreign investors. For Kurdistan on the other hand, its comparatively open nature is its primary attraction for IOCs, and the ongoing political confusion surrounding the country’s oil has left fi rms tentatively relying on a suitable outcome in order to make their investments worthwhile. “One solution is, of course, an agreement whereby Iraq proper will say, ‘We have this autonomous region, and they will continue to be autonomous like this and they will have their separate oil law and continue on these lines and be able to export crude,’” highlights Ciszuk. Certainly, the situation remaining as it is will be a logical resolution to suit the firms operating in the region. However, a host of issues, not least multiple-entry visa requirements for personnel and the customs procedures for equipment imports, need to be resolved in order for operations to develop smoothly. On top of this, personnel security remains a major issue

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in Iraq, and is proving costly for large firms with a strong workforce on the ground. “Another solution, “ Ciszuk explains, “which is advocated by the current Iraqi government, is that Kurdistan contracts are brought in line with the contracts Iraq has signed. Th is would mean that a lot of the companies that actually entered Iraqi Kurdistan might not be as happy to have their PSAs converted into technical service agreements with so small profit margins as those given in Iraq proper. And because there is a difference in geology and depending whether these are exploration tracks or mature discoveries, the altered contracts might not necessarily make sense from the company’s point of view. So that would risk scaring away investment from Iraqi Kurdistan, and that is what the Kurds have been saying.” Indeed, the relative assurance of the southern Iraq’s oil reserves is counterbalanced by the costs involved of setting up projects in the region. “We are talking about some of the world’s largest fields,” says Ciszuk. “That is of course very interesting, but only for the largest companies who can mobilise huge projects and can afford to invest billions. That makes the threshold very high for entry into Iraq proper.” Iraq has little in the way of exploration projects in the pipeline, and with no small to mid sized fields, junior companies are unable to tap into this huge market. In Iraqi Kurdistan on the other hand, exploration projects are not only popular, but seem to be paying off. Heritage Oil, which has had exploration operations in Kurdistan since 2007, announced in January a giant discovery of a significant gas field holiding a reported 12.3 trillion cubic feet. “The discovery of a major gas field… in-place with exceptional flow rates makes this one of the largest gas fields to be discovered in Iraq,” said Heritage CEO Tony Buckingham in a statement.

Heritage Oil recently announced a gas find of 12.3 trillion cubic feet

07/02/2011 11:15


“This well has substantially de-risked the field so we have the confidence to accelerate the work programme. We are considering various development options including a tie-in to planned infrastructure that will achieve first production for both oil and gas in 2015. This discovery has the potential to generate substantial further value for our shareholders and benefit the people of Kurdistan and Iraq.” And since speaking to Ciszuk, the Iraqi central government has reached an agreement with the KRG to resolve the impasse on exports from Kurdistan, with activity expected to resume from February. According to Kurdish Natural Resources Minister Ashti Hawrami, the potential oil export flow could be a round 100,000 bpd, with the capacity to reach 250,000 bpd by the end of the year. However, the issue about who will pay IOCs that produce the region’s oil has yet to reach a final resolution. Baghdad had seen the power sharing agreements in place in Kurdistan as illegal, and had therefore not allowed government funding to reach firms operating in Kurdistan. It was announced this month, however, that Iraq’s oil ministry has agreed to pay the exploration costs and expenses to the IOCs operating in the Kurdistan region, although it was not immediately clear how companies will be paid for their profits after the recent deal. Nonetheless, the interest in the region is not waning, and Ciszuk suggests that there it is only a matter of time until a resolution is established, bringing many more companies into the region. “I think it’s all about finding a solution to the disputes of the contracts. How will they look in the future, and will there be any ability to produce and export the crude and gas being found? If that is solved, that will open up a very interesting playing field for a lot of interesting players. Many midsize companies would like to go in.” And the political uncertainty facing operations in the region is not the only challenge for fi rms. The geology of the

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region is presenting its own fair share of problems. “It isn’t as straightforward as other places in Iraq,” says Ciszuk. Indeed, UK firm Sterling Energy has encountered some problems drilling at its Sangaw North well in Kurdistan. Though it has managed to recover the drill pipe to almost 2000 metres, the fi rm is now looking to side-track the well, and re-drill to around the depth at which the initial gas influx was recorded. “Companies are having to go through rather high pressure and unstable geological reserves where there’s been problems with well collapses and a risk of sour gas leaks which can be very corrosive. That has been a challenge, especially when you talk about projects being run right now by rather small companies that are having to look after their costs. Some have tried to use the minimum equipment necessary, and might be a bit unprepared to deal with some of the tougher well conditions, just because they don’t have that much money. They have raised a certain amount of money and put all of it on the line to build a more or less straightforward well. And when complications arise they fi nd it problematic.” But as Ciszuk has pointed out, the future of the Kurdish oil industry hangs in the balance. And until the political issue reaches a resolution, the energy sector will remain uncertain. “The worst thing that could happen would be a status quo,” says Ciszuk, “because the companies that entered will continue to drill; they will fulfi l their minimum acreage, but apart from that they will be very hesitant to start pouring more money into the region if it doesn’t look like they will be able to monetise their oil and gas. So it’s coming up to showtime, I suppose for Iraqi Kurdistan. Either they can actually deliver politically and move forward and control the oil and gas industry, or it might start to see investments really tally off.” „

“Iraq has little in the way of exploration projects in the pipeline, and with no small to mid sized fields, junior companies are unable to tap into this huge market”

07/02/2011 11:15



“We strive to be recognised as the best” Nasr Kamal, CEO of United Oil Inc., reveals how the company is focusing on client relationships based on trust, and its passion for delivering projects on-time and exceeding expectations. What is your experience in the field of oil and gas exploration, drilling, extraction and development? Nasr Kamal. United Oil Inc. has huge experience in upstream oilfield development, predominantly in oil and gas well drilling, completion and workover operations on a turnkey basis. We own and operate our own fleet of drilling and workover rigs, in addition to cementing trucks, mud logging units and well logging units. A member of IADC with ISO 9001-2008 certification, we have implemented the INFOR preventative maintenance system for all our rig and equipment maintenance implementations. United Oil is staffed with highly experienced, multinational staff in the fields of drilling, workover, cementing, mud logging, well logging, mud engineering and well completion and stimulation. We have drilled and completed more than 300 wells in Middle Eastern countries, particularly Egypt, Syria, Libya and Iraq. What projects are you involved in, and what were the major challenges on these projects? NK. In 2001, we contracted with the Iraqi Government to drill and complete 73 wells for the South Oil Company on a turnkey basis in the Bazargan, Abu Gharab, Halfaya, Fakkah, Siba and West Qurna fields. Currently, we have drilled and completed 46 wells on a turnkey basis in the West Qurna and Tuba fields for the South Oil Company, with excellent performance. We started the drilling project in Iraq in February 2003, but then the war began the following month. As such, we were forced to suspend operations and abandon the rigs. It wasn’t until April 2003 that we were able to return to Iraq, collect up our stolen equipment and rebuild the rigs and related equipment. We restarted operations in April 2004, and both of the two rigs are still drilling today.

United Oil’s strategy overview • Maintaining a leading position if the Oil and Gas Industry • Maintaining our position as Drilling contractor and Exploration company • Continue in expanding our activities in a very steady steps • Continue in expanding our activities worldwide • Investing in developing the team and attracting skilled staff and management

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Nasr Kamal is Chief Executive Officer of United Oil Inc. On graduating from Suez Canal University in 1981 as a Petroleum Engineer, he started out at Petrobel (Egypt) as a Drilling Engineer before joining IEOC (ENI) as Lead Drilling Engineer and Drilling Superintendent in 1990. In 1995 he left to join Admasco as Project Manager, with spells in both Syria and Kuwait. From 2000 until 2010, he occupied various positions in Petrotec Egypt, Seenopex and Anwar Akkad Sons Company, before becoming CEO of United Oil last year.

The major challenges that we faced were the logistics and security problems, which were overcome through alliances with the local troops. In addition, at that time (and actually up until 2008) there were very few service companies available to support our drilling operations. In spite of that, we have successfully completed drilling and completion of 46 wells to date. What are your plans for further expansion in this sector? NK. Currently, United Oil Inc. has two drilling rigs and three cementing trucks in the south of Iraq. And to comply with our strategy, we are mobilising three additional drilling rigs (one 1500Hp and two 2000Hp rigs) and four work over rigs, each with a capacity of 750Hp. In addition, to three logging systems and two more cementing systems. Moreover, it is important to mention that United Oil Inc. staff has already set up a firm footing in the industry with more than 25 years of experience, which we believe will stand us in good stead. What is your major area of focus right now? NK. United Oil Inc. was, is and will remain famed for the quality of its job work. We strive to be recognised among our customers as ‘The Best’, and we aim to understand and anticipate their needs and respond to them with innovative, value-added services. We plan to implement continuous improvements in terms of quality and make this an integral part of our business process. „

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UNITED OIL INC. is one of the largest and most successful Turnkey drilling contractor providers in the Middle East and Africa. We are the first company whom drilled oil and gas wells in Iraq for south Oil company since 2004 till today. We drilled Total of 46 wells in both West Qurna and Tuba fields with two drilling rigs and their associated services on turnkey basis with unrivaled performance. We provide a cost-effective quality drilling and well services, with high reliability and quality. We have extensive experience in drilling HPHT wells. QHSE and PMS are the key factors assured our success and development.

Fiorella Building - Al-Sabbura Damascus country side, Syria P. O. Box 1708 Tel. +963 11 3921725 +963 11 3921726 Fax. +963 11 3921735 UNITED OIL AD.indd 1

04/02/2011 14:01



A new decade dawns for BP Executives at the embattled oil major will probably want to forget 2010. However, new BP boss Bob Dudley sees the events of the past year as an important steppingstone to a brighter future.


n it’s most recent earnings announcement, BP confirmed that its immediate priority is to complete the process of embedding world-class safety and operational risk management at the heart of the group’s approach to all its activities and throughout all its operations. It will also reconfi rm its commitment to meet its obligations arising from the Gulf of Mexico oil spill and in relation to the Texas City refi nery, ensuring that the lessons it has learnt from the oil spill are applied across BP and shared effectively with industry and governments worldwide. “2010 will rightly be remembered for the tragic accident and oil spill in the Gulf of Mexico and it is clear that as a result BP is a company in transition. I am determined that we will emerge from this episode as a company that is safer, stronger, more sustainable, more trusted and also more valuable,” said BP group chief executive Bob Dudley. As such, BP’s top priority will remain safety and operational risk management. Th is will be driven through the new Safety and Operational Risk organisation and the continued implementation of the common Operating Management System (OMS) across the group. BP has introduced a new performance management process for 2011, explicitly requiring all employees to focus on safety, compliance and risk management priorities. The company is also carrying out an extensive review of how it manages thirdparty contractors. “2011 will be a year of recovery and consolidation as we implement the changes we have identified to reduce operational risk and meet our commitments arising from the spill,” said Dudley. “But it will also be a year in which we have the opportunity to reset the company, adjust the shape of our business, and focus on growing value for shareholders.” In its upstream business, for instance, BP’s framework for growth will be focused on delivering value rather than volume. Th is will be achieved by actively managing its portfolio, investing in new access and in increased ex-


ploration, and building an enduring presence in key oil and gas basins by making the right investment choices. Th is will be supported by deep sustainable relationships with partners, including national oil companies, said Dudley. BP intends to significantly increase its investment in exploration and will seek new partnership opportunities where its capabilities and experience can add distinctive value. And it will continue to refocus its portfolio for growth and divest assets worth more to others than itself, thereby unlocking value for shareholders. The group’s upstream portfolio today includes an unmatched position in Russia, an industry-leading resource position in the North

“2011 will be a year of recovery and consolidation as we implement the changes we have identified”

Sea, Angola and the US (including the Gulf of Mexico deepwater) and strong positions in North Africa, the Caspian, the Far East and Trinidad. BP will also continue to gain access to new opportunities. Over the next six years, BP plans to start a total of 32 projects, which are expected to contribute around one million barrels a day of new production by the end of 2016, generating significant cashflow and value. In the downstream sector, BP plans to reshape its business to better reflect the changing patterns of worldwide energy demand, concentrating on growth opportunities in developing and emerging markets while rationalising and focusing its business in mature areas. As such,

the company announced its intention to divest two of its US refi neries – Texas City and Carson, along with its associated marketing interests – while continuing to improve its other more competitive refi neries in the US. It intends to divest the assets as going concerns and, subject to regulatory and other approvals, expects to complete their sale by the end of 2012. BP has also reiterated its commitment to implement the recommendations of the BP US Refi neries Independent Safety Review Panel, which followed the 2005 Texas City refi nery explosion. BP intends to focus its downstream business worldwide around integrated positions and higher performing assets and businesses that can deliver growth and attractive returns. The sale of the two US refineries will make BP the smallest refiner among its international competitors, with a portfolio focussed on fewer but larger and higher quality refineries and related marketing networks. Outside the US, BP will continue to

07/02/2011 11:35


upgrade its fuels value chain businesses and explore potential new investment opportunities in high growth markets such as Asia. It also plans to continue to grow its high-performing lubricants and petrochemicals businesses. BP remains on track to meet its target of up to US$30 billion of divestments by the end of 2011, having concluded agreements for divestments totalling around US$22 billion by the end of 2010. The divestments agreed so far are expected to deliver disposal proceeds more than double their current book value, once completed. The divestment programme has not included any of BP’s inventory of future major upstream projects, resulting in a more focused portfolio with the potential for higher growth from a smaller base. BP’s oil and gas production in 2011 is expected to be around 3.4 million barrels of oil and gas equivalent (boe) a day. In the fourth quarter of 2010, BP’s production averaged 3.67 million


boe a day, nine percent lower than 2009, reflecting higher turnaround activity, particularly in the North Sea and Angola, and the continued impact of the Gulf of Mexico drilling moratorium. Meanwhile, BP’s reserves replacement ratio, excluding acquisitions and divestments, for 2010 was 106 percent – the 18th consecutive year that BP has reported a ratio of over 100 percent – and its resource replacement ratio was 470 percent. These additions extended BP’s inventory life from 43 to 48 years. The ground-breaking alliance between Rosneft and BP, announced in January 2011, is a key step forward in BP’s strategy to seek material positions in the world’s leading hydrocarbon basins, based on relationships of mutual advantage. The alliance offers BP a world-class opportunity to work in the Russian Arctic, and the two companies have agreed to seek additional opportunities for international collaboration. TNK-BP continues to perform strongly, growing

onshore production as output from greenfield projects ramps up, and developing business internationally. The venture will continue to seek long-term growth such as preparing for developments in the Yamal peninsula. Organic capital expenditure for 2011 is expected to be around US$20 billion, an increase from US$18.2 billion in 2009. BP intends to retain financial flexibility by maintaining a significant liquidity buffer and reducing debt levels to a gearing ratio of between 10 and 20 percent. Total cash held at the end of 2010 was over US$18 billion. “After ensuring we meet all our commitments, we are refocusing BP so that we can increase our investment in its future; investing in reducing risk, in exploration, in new projects, in emerging economies, and in new strategic partnerships,” said Dudley. “In this way I believe we will create a BP that is both safer and stronger, one that rebuilds value and trust for the long term by doing the right things and doing them well.” „

07/02/2011 11:35



Maturing P nicely With mature field operation an increasingly lucrative part of oil firms’ production portfolios, O&G speaks to Hamed Karim of Egypt’s PICO Petroleum to find out the key issues.

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ICO International Petroleum is a successful independent operator in the Egyptian oil and gas sector. Since its inception 1989, PIP has grown to become the largest private Egyptian E&P player and the third largest producer in Egypt’s Gulf of Suez Region. Over the past decade, activities have focused on the development of mature oil and gas fields and near-field exploration in Egypt, where it has successfully assumed operation of six concessions – four offshore in the Gulf of Suez, and two onshore in Egypt’s Western Desert. Furthermore, PIP also holds non-operating equity shares in one more offshore concession in the Gulf of Suez that is currently being operated by the General Petroleum Company (GPC), and equity shares in one other field in the Western Desert. All were acquired from major oil producers such as Shell, Total and British Gas, allowing PIP the chance to adopt and then customise the high levels of operational and managerial standards inherited from these major players. The company has demonstrated strong operating and fi nancial performance during the past few years. In the five-year period 2003-2008, net production has increased by more than 100 percent. Furthermore, PIP has maintained an average reserve replacement ratio of 152 percent over that period. Capitalising on its previous experience and technical know-how, PIP intends to focus on operating mature oil fields in Egypt and other parts North Africa, Middle East and SE Asia – and as such the firm’s General Manager for Exploration and Deputy Business Development Manager Hamed Ibrahim Karim has a critical role to play. Here, he speaks to O&G’s Ben Thompson about the key issues in mature field development.

07/02/2011 13:27


Hamed Ibrahim Karim worked at Gulf of Suez Petroleum Co. from 1980-1997 as Well Site Geologist, then Production Geologist. After a spell in the exploration department as Exploration Geologist and Field Study Team Leader for the first field study team in the company, he then moved back to the geological operation division as Division Manager. In 1997, Hamed joined Numeral Services Co. as Middle East Representative and Technical Advisor before joining Halliburton Oil Services as Technical Advisor for Logging and Perforation; and from 1998-2006, he was with BP as Account Manager and Business Segment Manager for Egypt and Libya. In 2006, Hamed joined PICO International Petroleum as Exploration General Manager and Deputy Business Development Manager.

PICO focuses on the development of mature oil and gas fields with upstream potential. In your experience, what are the main challenges related to operating in mature fields? Hamed Ibrahim Karim. The challenges of operating in mature fields are many, but the main one is how to keep the reservoir in an active condition and keep the decline rate as low as we can, while looking at the best ways and techniques to help maintain these conditions. Maintaining the reservoir pressure and reducing the manifold pressure – allowing wells to flow in a steady way – is essential. Using the proper technologies to support the reservoir is one of the main challenges, and managing the reservoir behaviour is also key. Controlling the water production and handling wastewater and oily water is another important aspect. What technologies/solutions are you currently utilising to overcome some of these challenges and breathe new life into mature fields? HIK. The most important one is water flooding, and we are using this technique in our Gemsa field in the Gulf of Suez. The second is artificial lift ing and this technique is widely used in several fields, including jet pumping and electric submersible pumps (ESP). Auto gas lift has been used in fields where we have gas zones above the oil zone. We use this gas to lift the oil and it works very efficiently. Chemical treatment is also playing a key role in production enhancement, both down-hole and in surface facilities, while extended reach and highly deviated wells have been used to maximise the productivity of the reservoirs. A cable-deployed system is also used to maintain and replace down-hole pumps without using a work over rig, especially in offshore fields. It saves a lot of time and money, plus reduces the cycle time of failures. Now more than ever, identification of field-specific problems is crucial. How do you ensure that the techniques you are employing for each oilfield address the specific issues of that field? HIK. As a company we are ensuring that each technique reflects the optimum way of improving that field, and that we are applying fit-for-purpose technology. When identifying field problems, we use the proper tools to identify and diagnose the cause of the problem; only once we know what that problem is can we select the correct way to solve it. For example, we had heavy scaling in one of our offshore producing pipelines and we tried to pig it several times with no success. So we started to look at other solutions, and decided to inject a certain chemical to dissolve the hard scale. We did this in doses until we were confident that if we fi lled the whole line we would be able to remove most of the scale. And we were very successful: we recovered almost 60 tons of hard scale out of the line, and were able to then pass an eight-inch hard pig through the pipe and retrieve it successfully. The pressure inside the line went back to normal, reducing the pressure from 450psi to 150psi, which was our ultimate goal.

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What role must operating companies and services providers play in terms of finding a better way to recover more oil? HIK. Operating companies and service providers should work closely together to identify the cause of the problems and fi nd the proper solution for each one. Working as a team is the most successful way in our industry, and sharing information and experiences will expedite fi nding the right solution and will minimise the losses for each party. Maximising the profit share and minimising the costs become the ultimate goals for everyone when you employ teamwork. In your opinion, is greater investment in enhanced oil recovery needed over the next few years? HIK. Th is is defi nitely true. We are still underinvesting in enhanced oil recoveries, while the amount of oil still underground remains significant. If we can increase the current recovery factor by 5-10 percent we’ll produce almost 30-40 percent more oil in addition to the current production levels. Now with oil at US$70-85 per barrel we can spend more money on enhanced oil recovery research, and the overall returns will be tremendous for both the industry and investors. Countless techniques have emerged in recent years to enhance the oil recovery process. How successful have these techniques been? Do we need to think about taking new approaches, or can we build upon the techniques we already have? HIK. In reality, we need to do both. We need to continue building upon the techniques we are already applying and we need to think about taking new approaches to accelerate the process and to fi nd more productive techniques to encourage the companies and the managerial system to accept taking this approach. One of your stated objectives as a company is to maintain a minimum reserve replacement ratio of 150 percent for the next three years. How close are you to achieving this objective, and what techniques are enabling you to meet your target? HIK. We are achieving ever better objectives in our attempts to increase reserve replacement, and this 150 percent and above target ratio has been achieved several times. Fortunately we have made a good progress in the last five years, and our achieved reserve replacement ratio reached 152 percent in some of those years, exceeding preset targets. Our strategy of drilling in new areas near to our producing wells, targeting different reservoirs, applying fit-for-purpose techniques in our work-over campaign and using enhanced oil recovery techniques have all played a key part in this. Artificial lifting and water f looding were the most effective techniques in enabling us to maintain the reserve ratio replacement, plus directional drilling and near-field exploration as well. „

07/02/2011 13:27

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COMPLETE W CONTROL Cansco CEO Mike Simpson provides an insight into the importance of well control.

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ith last year’s Macondo incident in the Gulf of Mexico still fresh in the mind, the idea of well control and safety – and the related concept of blowout prevention – has never been more topical. Servicing the international oil and gas industry for over two decades, Cansco has shaped and grown its product and service offerings to meet customers’ need for safe, reliable and trusted well performance. And nowhere does the priority of well performance matter more than in the safety critical area of well control. At Cansco, well control integrity is paramount. With one of the largest fleets of top brand blowout preventer equipment in the industry, the Dubai-headquartered company is committed to delivering a range of qualityassured rental and service solutions to its clients across the Middle East. Th is, combined with a commitment to maintaining the highest standards of BOPE service maintenance and certification, means that Cansco Well Control is rapidly evolving into the region’s leading well performance specialist. “Our mission is more than just a statement; everything Cansco sets out to achieve begins with the core values of integrity, trust, customer service, diversity, partnership, quality performance, responsibility and

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growth,” says CEO Mike Simpson. “With a continuous focus on health, safety and the environment around us, we take care to tailor our solutions to the individual needs of our clients – whether a fully integrated service package, the handling of a local service call or the ad hoc delivery of a single spare part.”

Mike Simpson is Chief Executive of Cansco, a leading provider of rental well control equipment solutions. Simpson has over 25 years of operations management experience in the international offshore and onshore drilling industry. Since joining Cansco in 2009, Simpson has steered the company’s specialisation and growth in quality assured well control solutions.

In your opinion, what are the key challenges operators currently face in terms of well control? And what solutions exist to tackle such challenges? Mike Simpson. In my opinion there is one dominant challenge facing the industry when it comes to well control, and that is to overcome the prevailing complacent attitude towards the well activity hazard with the greatest potential severity – an uncontrolled release (or blowout). The infrequency of well control events with severe outcomes – combined with misplaced confidence in policy, procedure and practices that form part of well-site ‘safe’ systems of work – are just some of the reasons why the safety-critical priority of well control can get lost in the medley of day-today well site priorities. In this case, it’s not about a lack of solutions, rather it’s about the way solutions have been applied; practice is not always what is preached, and performance standards suffer accordingly. As an industry we should not accept any degradation of well control priorities, for whatever reason, and allow risks to personnel to escalate beyond acceptable levels. Assurance of well control equipment and system integrity must always be established and maintained by strict verification and testing schedules and oversight. Contracts should specifically recognise well control priorities and ensure adequate time and fi nancial resources are committed to provide the required levels of technical and operational well control assurance. Can you provide a real-world example of how your equipment has been used in the field? What were the challenges, and how did your solution help address these requirements? MS. Blow out preventers and their control systems are critically important control measures for managing well activity risks. Customers seek assurance that the well control equipment in use has been manufactured to recognised industry standards, has been installed and commissioned in line with those recognised industry standards, has been operated and maintained in line with industry safety standards and can be supported effectively with reliable availability of replacement equipment and parts, competent technicians and licensed repair facilities so that risks to well-site personnel are controlled to acceptable levels. To achieve acceptable levels of assurance, our customers have replaced part and sometimes their entire existing well control package with Cansco equipment. Testing and verification of any solution – preferably under controlled conditions, prior to installation – is essential. How does your company address this critical need?

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MS. We advocate overall system performance testing and verification for rig-specific well control packages and recently we have seen an increase in the number of our customers seeking enhanced levels of pre-installation testing and verification work on equipment. Recent verification and testing work has included complete BOP stack assembly and outfitting, with full function and pressure testing; shear and seal performance tests for various industry standard and non-standard test samples; pressurised shear and seal performance tests (conducted with well bore pressure); BOP system performance tests; and dual bore ram testing. Cansco’s unique facilities allow for safe and efficient verification testing – however, a number of field verification tests have successfully been conducted on Cansco and customer equipment packages. This year’s Deepwater Horizon disaster highlighted why effective blowout prevention solutions are essential for the safe operation of a well. What lessons can be learnt from the disaster with regards to blowout prevention to ensure the risk of such incidents occurring again can be reduced? MS. It is clear that the overall system of work employed at Macondo had a number of significant failings, in particular in the way it was being applied, creating inaccurate perceptions of ongoing risk leading to f lawed decision-making. One lesson is very clear: systems of work are fallible unless they are treated as a continuous safety critical process, constantly verified for effectiveness for the activity in which they are being employed. For well control it means no compromise in either equipment and procedural integrity, or the level of continuous proactive effort to minimise the risk of well control events. Any factor that can affect well control priorities must be carefully managed – for example, the commercial pressures of ensuring equipment is being maintained at a safety critical level, and that adequate training and drills are being conducted, must be addressed to ensure compromises are not being made that may increase well site risk to unacceptable levels. To what extent is well control a purely a technical/ equipment challenge? Can further operator training and improved production processes help with better well control? MS. For all the good reasons mentioned above, better well control is more about improving people than the technical and/or equipment challenge. It is the human side of well control that requires the most effort and more well control training and development in the industry is essential. More specifically, it is training on the proactive side of well control that is required. Awareness and understanding of the risks, establishing effective risk control measures, and developing competence to proactively interpret and intervene to minimise the severity of all well control events before they happen should be the focus. „

07/02/2011 11:50



Technology is revolutionising the way oilfields operate – and the Kuwait Oil Company is leading the way in the implementation of state-ofthe-art solutions through its Kuwait Integrated Digital Field initiative. By Ben Thompson

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mart fields. Intelligent fields. E-fields. Whatever you call them, the hype surrounding the promise of the digital oilfield continues to flow like a newly tapped gusher. And in the Middle East, where oil and gas fi rms are only just starting to realise the opportunities to be had in maximising returns from existing reserves, the roll-out of digital oilfield solutions is increasingly being seen as a key way to optimise production and reduce operating costs. Of course, the concept of the digital oilfield is nothing new. Major international oil companies – such as Shell with its Smart Fields programme, BP with its Fields of the Future and Saudi Aramco with its own intelligent fields initiative – have been pursuing the Holy

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Grail of the fully digitised field for much of the past 10 years, while the concept of using soft ware, hardware, instrumentation, communications and engineering process improvements to assist with exploration and production activities has been around for decades. Yet despite the fact that the industry is projected to spend in excess of US$1 billion over the next five years on digital oilfield investments – not to mention hardware, soft ware and affi liated services – many feel the benefits have yet to be fully appreciated or attained by the industry as a whole. One company hoping to change that state of aff airs is Kuwait Oil Company (KOC), which recently launched a company-wide transformation project centring around the application of digital oilfield technology and concepts aimed at giving it the capability to work collaboratively and make real-time decisions with a high degree of accuracy. The vision for the so-called Kuwait Integrated Digital Field programme is to make a step-change in how KOC operates in order to achieve radical business improvement, enhanced production and to create an environment where KOC staff can excel – one that gives them greater opportunities to develop and use their knowledge and skills. “Th is project is not just about technology, but also about people,” insists Dr. Adel Al-Abbassi, Head of Research and Technology at KOC and the mastermind behind the project. “We can have the best technology in the world in KOC, but if people do not feel engaged and empowered to use it, it will make no difference. KwIDF will enable our workforce to focus on delivering solutions in shorter reaction times to optimise production flows.” The pilot phase at the Sabriyah field in North Kuwait – one of KOC’s most significant oil-producing assets – involves a range of world-class oilfield services companies, including Halliburton, Schlumberger, Weatherfield and BakerHughes, involved in developing and testing innovative solutions. With strong production potential, KOC aims to significantly increase output in the Sabriyah field by 2020 and has engaged Halliburton to manage the three-year pilot to establish the most innovative and effective integrated digital field solution for Sabriyah. The vision is to use digital oilfield technology to provide a collaborative decision-making environment that utilises accurate and real-time decision support information for production optimisation, water injection management and reservoir management; the aim is to put an end to information overload, incomplete and often delayed data, and outmoded means of gathering and managing information from the fields. Real-time information will be made available using the most advanced digital technology for downhole and surface data acquisition, automated analysis and visualisation. The result, explains Al-Abbassi, will be a futuristic system that allows for integration of the various assets’ information, quick and accurate decision-making possibilities, and a more effective workforce that spends less time processing data and more time on solutions. “We want to maximise people’s talent and we want to make

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IDC’s Catherine Madden reveals three vital factors in developing the next generation oilfield.

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hile the digital oilfield has essentially been around for 50 years, it is only now that the fundamental objectives of the concept – enhancing reservoir recoverability and optimising production – have evolved to a point that people are looking at the digital oilfield as a way to run all operations from exploration to the refinery, incorporating standardisation and process integration. “Digital oilfield efforts have essentially resulted in a positive impact on reservoir recoverability, production rates and total cost of ownership and those numbers probably vary from company to company depending on their strategy and the level of investment they have made,” explains Catherine Madden, Research Analyst for IDC’s Energy Insights. “Reductions of cost and improvements in productivity are possible, and many large oil companies such as Shell and Chevron have reported the same in relation to implementing a digital oilfield strategy.” But while many of the largest oil companies have a programme in place to support the digital oilfield, many are still looking at how to accelerate it. Madden believes that the top priority remains the same – namely, hydrocarbon extraction. However, she says that a critical link in the digital oilfield remains the human element. “Initially there was much attention placed on technology as the means for companies to solve their problems, optimise the exploration and production processes and improve the ROI; there wasn’t much attention paid to the role of people and processes in achieving those objectives. But now I think the top objective is to sustainably support the development of a holistic digital oilfield strategy – and that includes not only technology as a tool to aid that process, but also the teams of people that do the work, as well as the different business processes that are associated with exploration and production.” In essence, companies that wish to accelerate their digital oilfield will be required to understand the equation that permits the right balance between technology, people and processes. Madden insists these three objectives need to be lined up together as opposed to implementing technology alone, and goes on to explain that while the importance of this equation is slowly being recognised, she sees room for improvement in many areas, including the degree of human involvement in the process of exploration and production. “Some of the changes we’re seeing include looking at workflows and what can be automated. We’re talking about the integration of technology across distinct areas – so integrating more processes between exploration and production, for example. I think we’re currently talking about things like project management portfolios when essentially we should be looking at the entire value chain and allowing for as much integration and as much collaboration across that value chain as possible. And when I talk about the value chain, I’m really talking about everything from the moment exploration begins, through the process of drilling until the point you finally recover it and deliver it to its refinery source.” Madden goes on to explain that each of the three main factors – people, processes and technology – will play a major role in the next generation digital oilfield. Indeed, as each facet of these factors improves, so too will the digital oilfield itself. On the technology side for example, Madden expects to see an increased use of sensors, as well as a continued improvement in high performance computing. “I also think remote visualisation and service orientated architecture are going to continue to grow within virtualisation; communications that allow collaboration and even communications around security will be important too,” she says. “Technology that aids collaboration is going to continue, and while it’s already playing an important role, it’s going to become critical that you can share information – not just using email, but maybe working in a virtual room together or using virtual technology to look at the same document together and make changes to it, or using a virtual whiteboard to point out certain things you want changed.”

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them feel fulfi lled,” he says. “I believe that KwIDF will enable us to do that.”

Infrastructure overhaul

The power and communications infrastructure will be overhauled and the instrumentation in the pilot wells themselves will be enhanced

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To support the new system, the field infrastructure has been significantly upgraded. In addition to testing new technologies for surface and downhole data acquisition and a new SCADA system for the pilot wells, two ‘smart well’ completions are also being trialled for downhole monitoring and control. Designed by WellDynamics, the technology allows the operator to remotely choke back zones with high water cut without having to shut in the well, as well as to increase the oil rate and reduce water production. As such, the smart wells have the potential to provide additional oil production and reduce the load on facilities by reducing water production. To support the new systems in both the pilot and the smart wells, the power and communications infrastructure will also be overhauled and the instrumentation in the pilot wells themselves will be enhanced, allowing for remote operation from the surface. Injection wells will also be modified in order to ensure real-time data gathering from the pressure transmitter upstream of the fi lter, the differential pressure transmitter across the fi lter, and the flow of water to the injector. “Implementing digital field technologies in a brownfield is always a challenge,” says Al-Abbassi. “We had to do a lot of brainstorming and out-of-the-box thinking to get around these challenges with innovative and unique solutions.” As such, workflow processes will also be overhauled. Currently, KOC’s reservoir engineers develop reservoir models based on data received from the various wells. The models are then used by the production and petroleum engineers to plan the most optimal means of production and, if needed, injection. Surface processing facilities are then designed by process engineers using the information from production. Th is all takes time. In the future, however, with automated work processes, a decision support system will shorten the observation-to-action cycle time and the workflow can be quickly altered as new information becomes available. The project will then come together in four state-ofthe-art ‘collaboration centres’, fed from the field, where teams will work together to solve problems and maximise returns. Al-Abbassi believes the installation of sophisticated technology to help process information from the downhole straight to the desktop will have a positive impact on the flow of information within the company – and also on the way people work. “It will free our talented teams in KOC to do what they are good at – make decisions that make a difference,” he says. The centres will replace the current hierarchical system with a more communicative team environment where people with different skills and experience work together to produce optimal solutions. In addition, team members can learn from each other on a daily basis, thereby increasing the skill set of each individual employee as information and knowledge is quickly shared.

Ultimate reservoir recovery increase:


Time to first oil reduction:

up to 50%

Reduced energy usage:


Technology in the new centres includes state-of-theart workstations featuring a ‘Pilot-in-Command’ seating system with built in voice and HD video capabilities, 360degree rotation for rapid clustering, fully mobile ‘plug and play’ connectivity, dual high-defi nition monitors and a high-defi nition touchscreen information wall featuring high-defi nition technology, curvature within the wall for enhanced visibility, a high-defi nition integrated audio/ visual communication system, and touch pad smart boards embedded into the wall.

Transformational project Khalid Al–Sumaiti, KOC’s Deputy Managing Director for Exploration, Production and Development, believes the project will make KOC one of the leaders in implementing a fully integrated, real-time decisionmaking loop, and sees it as integral to building a new, transformed KOC. “It’s a business imperative that we

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Decrease in lost production:

Major facilities cost reduction:


up to 50%

Well production rate increase:

Lift efficiency improvements:



Maintenance/ workover cost reduction:

Field personnel staffing decreased:


15-20% Courtesy: Strategic Decision Sciences

radically change how we work,” he explains. “We need to break down barriers in the company between teams, departments and people at all levels. Collaboration is the future – making quick, accurate decisions will enable us to build a company that is responsive, forward thinking and a true leader. Although KwIDF is a pilot project, in reality it’s a certainty that we have committed to and will not turn back from.” Indeed, Al–Sumaiti feels that the four cutting-edge collaboration centres KOC is building are just the beginning of what is possible with the new technology advances currently being made. “They will set the scene for what will become the new way of working in KOC,” he says. “Such high-tech environments will require people to fundamentally change their behaviours and will also mean that we will have to re-evaluate and re-engineer our organisational structure. Moving from silos to collaboration is not easy, which is why we have put as much

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Smart field technology should be able to help us to get at least five percent more production, and if it can do that, that’s serious added value

emphasis on supporting the change process as we have on installing the new technology.” As with any new technology there will inevitably be some resistance to change. Consequently, KOC is putting a strong focus on communicating the advantages to stakeholders in order to ensure their full acceptance and engagement, as well as ensure any implementation is sustainable. A large part of acceptance is in understanding the technology itself; by having the proper organisational systems in place to keep everyone informed, involved and educated, Al-Sumaiti hopes to effectively communicate the benefits of the project and drive greater user engagement with the new technology. “There are many physical and mental barriers that stand in the way of future developments,” he explains. “It’s about how we all see our power base, our credibility, where we ‘fit’ in KOC and how we are rewarded for what we do. Fear and assumptions about the negative impact

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of any change is a powerful limiting factor. As we move forward, we will paint the future vividly and in a compelling way to ensure that everyone understands it, is excited by it and can see value for themselves as well as for KOC. We have also designed a process that will enable people to voice their opinions and concerns to make sure that everyone feels included and respected.” Al-Abbassi also understands that with change comes uncertainty and fear, which is why he has insisted that a major investment be made in helping people understand what’s coming, contribute their ideas to make it better, and develop new skills to make it work. “We see change management and communications as central pillars to making KwIDF successful,” he adds. “Consequently, people are and will be involved in a wide range of formal and informal meetings, training, and other events designed to support them in this process. We want them to enjoy the exciting journey and to own the solution.”

Positive response The project is certainly proving to be an inspiring model for KOC employees. Fuad Al-Shaikh, Team Leader for Production and Operations, is keen to see how such revolutionary smart field technology can help his team uncover hidden reserves and make life easier for his staff in terms of maximising production of existing wells. “We have an aggressive strategy to get every barrel of oil out of the ground,” he says. “To my mind, smart field technology should be able to help us to get at least five percent more production, and if it can do that, that’s serious added value.”

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$1bn Projected investment in digital oilfields over the next five years

With the KwIDF Sabriyah project covering 31 wells (about 10 percent of the field), he feels that the scope of the pilot should prove to be an interesting test-bed for further production gains. “I anticipate that it will help us uncover some of the mysteries of our field,” he says. “We have a complicated field with three methods of lift ing and some strange anomalies. For instance, we still don’t know why production overnight can increase or decrease rapidly. We are not able to relate this to water injection, instrumentation or whatever. So I hope this technology can help us to figure out some of these issues so that we can fi nd solutions that will add even more value.” Similarly Abdullah Al-Azmi, Team Leader for Water Handling, believes that the KwIDF pilot and follow-on implementation could make a huge difference to him in managing the critical issue of water handling. “If KwIDF brings us user-friendly data about well behaviour that is intelligently analysed and clearly presented, I will be delighted,” he grins. “We don’t have time to wade through complex data – we are busy operators and need critical data points extracted and presented in a way that we can get to quickly. There is a huge amount of information currently available in various systems, but it’s not easily accessible and is not integrated. To be able to use it we need to sift through what’s relevant and make all the connections ourselves – this is hugely time-consuming and takes us away from solving the issues that are causing a lot of pain.” The KwIDF project hopes to alleviate such pain points for KOC project teams by focusing on greater information sharing and collaboration between the various stakeholders. Improving the safety of operators and other field staff will be just one area to benefit. “We value the health and wellbeing of our staff above everything and see this new technology and approach as greatly enhancing HSE, amongst other things,” explains Al-Sumaiti. “Wellcheckers, for example, will not have to visit the wells as often as they currently do, braving the fierce heat of the summer or losing time because it is dangerous to drive into the desert in the dark. Instead, they will be able to operate from state-of-the-art collaboration centres and do their jobs more effectively and safely as a result. KwIDF will enable us to do more, expanding our business and deploying people in more effective ways”. Al-Sumaiti hopes that breaking down the digital and organisational silos – achieving federation between many types of databases, applications and workgroups – will empower the workforce to see the big picture for each asset and to make fully informed decisions. “There is a huge amount of knowledge and experience in KOC and we need to fi nd champions of this mindset change from within our ranks,” he concludes. “These young people will become the leaders of tomorrow – innovating and ensuring that KOC gets rid of outmoded practices, leverages all this investment and establishes a powerful collaborative culture. Isolation must become a thing of the past. The future belongs to the next generation and we all have a responsibility to build it.”

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Satellite services go mobile Over the past ďŹ ve years, the oil and gas sector has demonstrated an increased appetite for rapidly deployable, mobile satellite services, says Rashid Ahmad Baba.


obile voice and data solutions to support both offshore and inland operations have become an integral element of the oil and gas communications mix. In the past, it was challenging enough just to send field teams to the remotest, harshest environments on earth; but then for them to not be able to acquire accurate information when they faced problems in the field often resulted in additional operational burden and spiralling project costs. However, a new generation of satellite solutions has changed the way in which the head office interacts with its operatives in the field. In fact, implementing effective mobile satellite service technologies is the only immediately deployable method of communication open to energy companies that wish to become more agile in dealing with remote exploration issues in real time. There is no longer any need to rely on courier services to relay information back to head office. The days where field operatives waited patiently for weeks in order to receive the results of analysis are slowly becoming a thing of the past. Effective communication so-

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lutions are literally saving major oil and gas conglomerates millions of dollars in downtime by improving workflow efficiencies so they can meet important deadlines. Data solutions are now easily and rapidly deployable, with access to mobile satellite services being as simple as connecting a small portable modem unit by wireless to a laptop. These plug-and-play solutions give teams in the field access to the worldwide web, allowing field operation efficiencies. Data streaming over satellite from remote locations now enables the transmission of geomagnetic or seismic surveys, drilling, mud logging, production testing and other data from field operations to head office for instant analysis. Crucial daily operational progress reports between survey crews and head office can easily be downloaded, enabling immediate and accurate response at the time that issues occur. The ability to stream asymmetrically back to the field, directing crews on next steps at lower data rates, also allows head office to effectively control costs. MSS also plays an important role in maintaining employee welfare, keeping mid-term to long-term deployed oil and gas employees in touch with their families at home. While data solutions over mobile satellite services have been available for a number of years, they have generally been cost-inefficient and have offered slower data rates of up to 256kbps. MSS operators have now developed data products that offer increased speeds at which the oil and gas industry can operate. Now they have the ability to upload and download information over the web at speeds of up to 384kps on dedicated streaming uplinks, from modems the size of a netbook, making the transfer of data from remote location to head office seamless and swift. Uploading and downloading at different data rates, utilising leasing services and unlimited airtime packages, means that energy companies also have the flexibility to identify exactly how they want to sculpt their communication infrastructure into the most cost-effective way possible. Mobile satellite services provide the head office of an energy company with a real-time window into the field. It has repositioned its technical team as a virtual field operative, bringing field issues and challenges back to home base. Data over satellite has changed the way that the energy industry communicates. Increasing data speeds, along with solutions such as managed services and multiple-platform interconnectivity that operate in conjunction with data solutions, will further allow oil and gas organisations to maximise their operational efficiencies and minimise their costs. „

Rashid Ahmad Baba is Senior Manager for Product Management at Thuraya. Thuraya provides cost-effective mobile satellite services in more than 140 countries in Asia, Africa, Europe, Australia and the Middle East for sectors such as oil and gas, mining, agriculture, NGOs and maritime services.

07/02/2011 13:34

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Telecoms in Iraq: improving fast Iraq’s oil boom has coincided with great improvements in Iraq’s telecom services, says Dejan Nikolin.


s reported by the Iraq Directory, Iraq is concentrating its drive to quadruple its oil output on six ‘super fields’, which analysts say have the potential to produce at least 10.5 million barrels a day by 2017. A huge undertaking to increase oil production, coupled with the lack of infrastructure and basic services, will require great mobilisation to bring Iraq into the 21st century. GSM subscribers increased from zero in 2003 to 23 million in 2010 – however, this growth has been coupled with low quality service and lacked basic technologies such as proper transmission, reliable connectivity, systems integration, modernised information and communications laws, and fi nancial investment. The Iraqi Ministry of Oil has already awarded international oil companies 20-year production contracts at the Super Six oil fields: Rumaila, West Qurna 1, West Qurna 2, Majnoon, Zubair and Halfaya. In 2009, oil companies began deployment in the area and have found it somewhat difficult to obtain reliable telecom services in Iraq. Additionally, available telecom services in Iraq are one of the most expensive and inefficient in the world. Some oil companies have gone the traditional route, utilising expensive VSAT services without understanding that direct access to protected fibre is available and that Iraq is already linked to the rest of the world via multiple fibre routes that are operated and managed by several private sector operators such as our company, Computer Data Networks (CDN). Most recently in 2009 and 2010, Iraq has made great strides in its telecom sector. Iraq Telecom and Postal Company (ITPC), a wholly owned subsidiary of the Ministry of Communications, implemented a DWDM fibre optics network that spans the entire country and connects all major cities and strategic areas. ITPC signed contracts with private sector companies to repair, operate, maintain and promote and sell capacities of the network. Initial fibre links were connected to Kuwait and Turkey, and more recently ITPC has signed contracts to extend links to all of Iraq’s neighbours. Long-term investment contracts have also been signed to bring Falcon to the country in Q1 of 2011. Gulf Bridge International (GBI) is expected to be deployed in the future. Iraq’s telecom sector has been liberalised and a number of telecom operators in the market have recently emerged with particular strategies and offerings. The process of telecom sector liberalisation included the establishment

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Dejan Nikolin is Senior VP of Sales & Marketing for Computer Data Networks, a leading integrated telecom, ICT systems integrator and physical security licensed provider in Iraq, headquartered in Kuwait with offices in Iraq, Bahrain, Qatar and UAE.

of CMC and opening business opportunities for international and local telecom operators to provide services in Iraq. CDN is providing a set of vertically and horizontally integrated services and is able to handle a wide spectrum of services such as provision of voice, data and video telecom services extending LANs, microwave systems, CCTV, access control and other physical security technologies. CDN also builds and operates advanced data centres, disaster recovery services, data security and a complete set of managed services. CDN developed a unique capability in Iraq to accommodate the communications and technology requirements for the international oil companies (IOCs) developing Iraq’s massive oil fields. The O&G industry is a heavy user of telecom services, from SCADA to processing massive amounts of reservoir and seismic data to process control systems, general office automation, quantification of oil and gas production and other advanced applications. Th roughout its 25 years of doing business in the region, CDN has successfully executed a number of major regional projects such as FDDI networks, Dubai Police CCTV and the Palm Island security network. „

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e are at a strategic point in the evolution of energy – a time when the demand for greater energy supplies and the demand for fewer carbon dioxide emissions are converging. As world leaders in the production of energy and the search for environmental solutions, the United Arab Emirates and other nations in the Middle East are lynchpins in this convergence. As the global economy recovers from recession, growing populations worldwide will continue to seek higher standards of living, requiring greater amounts of energy. The correlation between these trends – between economic growth and energy demand – is clear. We certainly witness them at work in the United Arab Emirates and other nations in the region, which are quickly becoming not only major producers of energy, but major consumers of energy as well. On a global scale, energy demand is expected to increase approximately 25 percent between now and the year 2030, even taking into account significant gains in energy efficiency. This enormous increase is more pronounced in developing countries, which will account for approximately 95 percent of this growth. At the same time, concerns about the risks of climate change are growing, warranting action by governments, industry and consumers to reduce carbon emissions. While energy-related carbon-dioxide emission levels are expected to decline in many developed countries, trends point to sizable increases in developing countries, reflecting a fast pace of economic growth and improved standards of living for growing populations.

Therefore, we are not simply entering a low-carbon era, but also a high-energy demand era. As we endeavour to reduce our environmental footprint, we must also continue to take forward strides in meeting the increasing energy needs of growing populations around the world. In so doing, we must also consider our resource reality. Given the scale of global energy demand, all economic sources of supply are needed. Th is includes a wide variety of emerging alternative energy sources, which will play a more prominent and growing role in the energy mix. Of course, it also includes hydrocarbons such as oil and natural gas. Because of their widespread availability, affordability, reliability and versatility, oil and natural gas will continue to meet the majority of global energy demand for the foreseeable future. Given this reality, meeting the dual challenge of fuelling growth while reducing emissions requires that we develop the world’s oil and gas resources in the most effective and efficient way possible, while managing environmental impacts. We cannot ignore the enormous need for energy to enable economic prosperity worldwide. We cannot deny the need to manage climate change risks and reduce carbon emissions. And we cannot escape the reality that oil and natural gas will factor large in our energy future. We must confront each of these developments – and reconcile them all. Some assume these realities are at diametric odds, and that reconciling them is an impossible task. Increasing hydrocarbon energy supplies to fuel growing economies while reducing carbon emissions is indeed an enormous



During November’s ADIPEC Executive Plenary session held in Abu Dhabi, Andy Swiger, Senior Vice President for Exxon Mobil Corporation, outlined the challenges and opportunities currently facing the oil and gas community.

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“We need to keep improving the ways in which we produce and use oil and natural gas through the application of new technologies and new techniques”

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challenge. But, thanks to technology and innovation, it is not an insurmountable challenge. As history has shown, the way in which we produce, deliver and use the world’s oil and natural gas endowment constantly changes. The situation is not static but dynamic – and the dynamo driving our energy future is innovation. Th roughout history, as the world’s demand for and supply of energy has grown, so has our ability to improve upon the means of developing and delivering energy. Over time, the global energy industry has become more effective and more efficient. We have done so through innovation, in the form of new technologies and new techniques that reflect the workings of our best minds and our best practices. Th is energy learning curve extends to the present, and must continue into the future. Meeting the challenge before us – of ushering in a high-energy, low-carbon era – requires us to keep moving forward. To reconcile demands and realities, we need to keep improving the ways in which we produce and use oil and natural gas through the application of new technologies and new techniques. And for the world’s energy producers – like Abu Dhabi – who commit to innovation and partner with international oil companies to integrate the latest technologies and techniques, the challenge of growing supplies while reducing emissions and other environmental impacts becomes an enormous opportunity – albeit an enormous opportunity that requires vision, leadership and partnerships. To illustrate this point, I would like to discuss three areas of energy innovation that hold potential – innovations that could enable us to turn the energy and environmental challenge into a historic opportunity.

The first is carbon capture and storage, or CCS. CCS technology involves safely and effectively capturing, transporting and storing carbon dioxide in underground formations such as depleted oil and gas reservoirs. We see some of this technology at work in select upstream operations around the world, where carbon dioxide is already being separated from natural gas and can either be used for enhanced oil recovery operations or stored in a safe and costeffective manner. To scale up these select applications to a global level, and therefore achieve meaningful reductions in emissions, further technological progress is required. The search continues for a cost-effective means of separating carbon dioxide from the emissions of power plants and industrial facilities. ExxonMobil is advancing such progress through the ongoing development and testing of a new technology called Controlled Freeze Zone, or CFZ. CFZ has shown the potential to more efficiently separate carbon dioxide and other impurities from natural gas, and then discharge the carbon dioxide as a high-pressure liquid ready for injection into underground storage. We have committed more than US$100 million to develop and test our CFZ technology, which could not only expand the pool of cleaner-burning natural gas resources available for development and delivery to consumers, but also make carbon capture and storage more affordable and efficient in reducing emissions. Another area of innovation is in the field of renewable energy. As indicated earlier, meeting economic and environmental demands will require developing all commercially viable energy supplies, including alternative and renewable sources where and when they are competitive. One such potential renewable energy resource is algae, which could one day supplement conventional oil to help meet energy demands. Certain strains of algae produce oils with molecular structures similar to today’s petroleum products, capable of being refi ned into gasoline and diesel fuel using existing infrastructure in refining. They do so through natural photosynthesis, consuming carbon dioxide in the process. Unlike corn- or sugar-based biofuels, algae-based biofuels do not require fertile land or fresh water, and therefore do not have the same impacts on the food supply or environment. In 2009, ExxonMobil announced a partnership with Synthetic Genomics, Inc. for research and development of next-generation biofuels from photosynthetic algae, and last July we opened a new greenhouse facility in California to enable the next level of research and testing. If milestones are successfully met, ExxonMobil expects to spend more than US$600 million on this biofuels programme, US$300 million of which will be allocated to Synthetic Genomics. We are in the early days in this area of research, and the obstacles we face are formidable, but the potential is great. Finally, perhaps the most underestimated avenue for achieving a high-energy, low-carbon future lies in the area of energy efficiency. By producing, delivering and consuming oil and gas more efficiently, we not only displace demand and extend the life of the world’s hydrocarbon endowment, but we also reduce carbon emissions. Gains in

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energy efficiency across the world’s economies from 2005 through 2030 are expected to reduce the growth of global energy-demand growth by approximately 65 percent, and with it, stem any associated carbon emissions. Achieving these gains requires the application of energy-saving technologies such as cogeneration – the simultaneous production of electricity to power operations while capturing useful heat or steam for industrial processes. ExxonMobil is a leader in cogeneration, with an interest in 4900 megawatts of capacity at more than 30 sites around the world – enough capacity to supply the electricity needs of more than two million homes in the United States. Equally important to achieving greater efficiency is the application of new energy-saving techniques and practices. The expected 65 percent reduction in global energy demand growth and associated emissions due to energy efficiency through 2030 represents an aggregate of actions taken at all levels and by all actors within the energy marketplace. Industry represents one of these actors, and is making significant gains in energy efficiency. At ExxonMobil, we have over the past 10 years adopted and implemented our Global Energy Management System, or GEMS. Th is system spans our entire global refi ning and petrochemicals organisation, and is used to methodically and rigorously identify and capture opportunities to improve energy efficiency. At our refi neries and chemical plants worldwide, we have identified ways to improve energy efficiency by 15 to 20 percent – and we have captured more than 60 percent of these opportunities to date. These gains have put us on track to reaching our goal of improving energy efficiency across our operations by at least 10 percent between 2002 and 2012.

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The contributions of new techniques, as well as new technologies to achieve greater energy efficiency, underscore the important role international oil companies can play in a high-energy, low-carbon future. Our commitment to research and development, as well as our proven management systems and utilisation of best practices across our global operations, has made us a leading integrator of innovation, capable of implementing the best set of technological solutions in the most effective and efficient way to achieve our shared energy and environmental goals. We cannot do so, of course, without strong national oil company partners and supportive host governments, such as those we find here in Abu Dhabi and across the region. NOCs often have strong, localised knowledge of the resource as well as valuable technical and managerial expertise. Host governments support the integration of innovation by upholding sound, stable policy and regulatory frameworks that encourage fair sharing of risk and rewards, as well as establishing a vision for their nations’ long-term resource development and economic and social progress. To conclude, the convergence of global demand for greater energy and reduced emissions – together with the resource reality we face – demands that we continually innovate in the areas of carbon capture and storage, algae biofuels development, energy efficiency, and many more. This innovation involves both new technologies as well as new techniques – and it involves the integration of innovation through partnerships between international oil companies, national oil companies and governments. In this way, we can work most effectively to achieve a high-energy, low-carbon future, ensuring that the evolution of energy continues to demonstrate the best of human ingenuity and achievement. „

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To cloud or not to cloud In the cloud, every business is big and smart, says Issam Alameh.


hese days, most businesses operate in that virtual space between the screens of powerful handheld devices and constantly connected boardrooms. However, although businesses have changed where they carry out their activities, the need for powerful applications to empower these enterprises still exists. Bulky servers, expensive technical support and inaccessible information no longer have a place amid successful ventures that strive to compete with larger operations. In cloud computing, applications, information and resources are all stored on the internet. The idea behind this is that it alleviates businesses from the rigorous hassle of establishing expensive and tiresome infrastructures locally in which to deliver their services in an effective and sustainable manner. Instead, their entire operation can be safely stored, administered and customised to their needs remotely, and at a fraction of the cost. As such, more and more successful businesses are moving to the cloud to create additional space right here on the ground for them to succeed. We are seeing a real shift in the way companies operate. Big businesses are cutting millions of dollars in IT budgets, while smaller businesses are gaining access to services, which were previously exclusive to larger operations. The cloud is a true encapsulation of the power of the internet to change the ways in which we conduct business. It gives big businesses the chance to grow at a faster rate, and the chance for smaller businesses to compete with the bigger ones. It is safer, more reliable and defi nitely more accessible. Businesses can focus on their core specialty, without having to allocate so much of their resources to building an effective IT infrastructure. In the cloud, solutions are customisable to the greatest degree of detail, and they combine as many applications as you need on a seamless platform. Businesses no longer

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need to hire overqualified staff to run their networks. With cloud computing solutions, all the expertise is included. Staff members can maintain, customise and expand the cloud with minimal training. Once your business is in the cloud, the sky is the limit. Although every company would be interested in what cloud computing can bring to their business, some are still reluctant to trust sensitive information off-site. However, a cloud computing concept can be adopted behind a company’s firewall (or managed infrastructure). Companies with well-established IT infrastructures can take their infrastructure to a higher level by introducing private – or even hybrid – cloud solutions. A private cloud would utilise virtualisation along with an added management layer. Th is would provide corporate network and data centre administrators with the ability to reallocate computing resources and make an infrastructure elastic and able to respond to peak periods easily. Finding out how cloud computing can benefit your company requires some work, and it usually starts with training, which should be delivered to all decision-makers, executives and IT managers; the training is then followed by an assessment session with an experienced consultant. Findings from such assessment should provide the needed information to select the services that can be moved to the cloud, and will enable the organisation to assess the ROI and performance gains from implementing private cloud. Needless to say, planning is the key to a successful cloud implementation. Implementing a private cloud within your organisation would provide the ability to react quickly to major business changes, along with a smarter use of resources. If you think you are new to cloud computing, think again if any of these names ring a bell: Skype, Google voice, Facebook, Twitter, Linkedin, Picassa, YouTube, Flickr, BitTorrent, Hotmail and Yahoo. The cloud is already here. „

Issam Alameh is CEO of Alameh Networks, the c-Business Company. Issam is a selfconfessed cloud computing evangelist who is working on changing the way people do business in the Gulf region, and is the founder of Qatar Business Community qa and can be contacted issam@

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O&G talks to BP’s Middle East CIO Farhan Mazhar to find out his top priorities for 2011; unsurprisingly, they largely focus on risk reduction and the role of IT in improving those processes.


here are no prizes for guessing what the biggest oil story of 2010 was. On April 20, while drilling at the Macondo Prospect in the Gulf of Mexico, an explosion on the BPlicensed Deepwater Horizon rig caused by a blowout killed 11 crewmen and ignited a fi reball visible from 35 miles away. The rig was evacuated, with numerous injured workers airlifted to medical facilities, and after burning for approximately 36 hours the platform sank, leaving the well gushing at the seafloor and causing the largest offshore oil spill in United States history. It was an industrial, fi nancial, environmental and public relations disaster, with serious repercussions for BP. Farhan Mazhar is the fi rm’s CIO for the Middle East region, with responsibility for IT operations across the Middle East and Pakistan. And while he was a long way from the Gulf of Mexico disaster zone itself in terms of geography, he admits that the Macondo incident has had a profound effect on the company as a whole – not least in refocusing muchneeded attention on the importance of risk and risk management. “The last 12 months been very challenging for BP,” he concedes. “The incident that took place in the Gulf of Mexico had a big impact on our business, and we have lessons we need to learn from that. As such, I think the biggest priority going forward – which is coming directly from the top management, by the way – is how we are going to manage risks in the


future, particularly in terms of high impact risks. Sometimes risk management is an imprecise science; there are always gaps. But I think that’s probably going to be the priority going forward – it has to be.” Such a renewed focus on how best to mitigate risk will naturally have a big effect on the IT department, not least in terms of preparing the company to withstand the impact of a major event. The major challenge, says Mazhar, is to have a foolproof disaster recovery plan in place to deal with all eventualities. “If anything goes down, then having a very strong disaster recovery plan in place is essential to make sure that the business stays up and running,” he explains. “And that means everything from managing your critical applications to maintaining your phone lines. If a rigger wants to go up a 150-foot communications tower to get some work done on an offshore rig, then proper risk management needs to be done before that person goes up there – because if anything goes wrong, they could be risking their life. So from the smallest bit of IT to the critical parts of it, risk management is key.” In light of the incident last year, BP has introduced a number of internal processes to help manage risk better. “A new department has been created especially to look at risk management, and for any big project activity you now have to involve the risk analysts and bring them in to make sure that the proper risk governance is done before any critical activity takes place. In addition, everyone will be asked to follow those processes to the extent

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that HSE performance will be key to a person’s performance contract. Now it’s everyone’s duty to make sure that work is carried out safely and with the proper consideration of any potential risks.” But it’s not just mitigating risk that Mazhar is focused on. Top of his CIO agenda is how the company – and his department in particular – is going to manage telecommunications in a part of the world not known for its network reliability. “That’s key to harnessing much of the technology advances we’re seeing right now,” he says. “We talk about cloud computing, we talk about hosting services remotely, we talk about using the power of the web; in all of those cases, success comes down to IT basics – which means telecommunications.” Second on his to-do list is resource allocation – and in particular, fi nding people with the right skills to take the company forward. “There’s a big challenge, especially in the Middle Eastern countries in which we operate, in getting the right level of IT skills,” he says. “We started up two new businesses in the last couple of years in Oman and in Jordan, and resources are a nightmare; there have been times when we’ve had to just forget about the recruiting procedure because we’re not getting anywhere, and have had to get an expat from the UK or the US to do the job instead because it’s just easier.” However, while it may be sometimes quicker to recruit international workers and contractors to plug short-term gaps in resources, Mazhar acknowledges that it’s far from ideal, and hardly represents a long-term solution to his staffi ng needs. As such, he is placing a strong emphasis on training homegrown talent from local populations to help meet demand. “We have something called ‘License to Work’, so that if we recruit a local project manager in Jordan, then they have to go through that BP process

before they can begin managing projects. It’s about standardising skill sets and instilling in everyone a sense of what is required to work here.” With those essential building blocks in place, Mazhar believes managing the IT function becomes a whole lot easier. “If you have the right skill set, and if you have the right telecoms, then getting information back and forth is not an issue,” he says. His fi nal area of focus for 2011 – which he admits is a constant challenge – is to be a better partner to the business. “We try to work off longterm plans,” he explains. “It’s a five-year roadmap, and we sit down with people in the business and ask them what they plan to achieve in the next five years and what their IT needs might be, so that we can put in the technology to support that. I think partnering with the business – agreeing to priorities going forward, having those long-term plans in place, having that level of understanding – is critical. The biggest thing for me is to understand business strategy, because if I can understand what the business is going to do, then I can create a solution for it. That is probably the biggest part of my job.” Indeed, Mazhar says he is confident that BP has taken the right steps to address the issues it faced over the last few years, and that IT has a key role to play in the future of the firm – especially in terms of improving operations. “I think BP’s taken a new turn,” he says. We have new management, there are going to be new priorities, and after the incident there will be a lot of learnings to incorporate into the way we do things, but I’m open to the fact that there will be changes. BP wants be the leader in the sector and the best in the business, so I think for the next 12 months improving the way we do things with a focus on safe, reliable operations will, quite rightly, be key.” „

“For the next 12 months improving the way we do things with a focus on safe, reliable operations will, quite rightly, be key”


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The data archival challenge How a variety of new, cost-effective technologies are helping E&P companies improve productivity, accelerate data recovery, and make better-informed decisions with the deluge of seismic information. By Ashraf Atia.


eismic information continues to grow at staggering rates in petroleum and gas exploration and production (E&P). Driven by higher-fidelity subsurface imaging and enhanced interpretation and visualisation technologies, this digital tidal wave includes new pre- and post-stack volumes, as well as derivative attribute volumes. For E&P data managers, poor access to the high-quality, complete data they need to make informed decisions can cost millions of dollars, and many E&P geoscientists spend far too much of their time identifying, locating and obtaining data they need for their missioncritical analyses. Every dollar saved on archiving this data for seismic storage, processing and interpretation – critical yet passive requirements – could be redirected to proactive computing. The latter includes improving data access for seismic processing and interpretation application for better reservoir characterisation. Th is can facilitate real-time well operations modelling or global collaboration, which ultimately helps reduce risk and decrease cycle times. Tape technology has long been the data archival mainstay for E&P companies and will continue to be a requisite part of the storage hierarchy for many organisations for years to come, simply because of the vast amount of legacy data. Yet today, some forward-thinking companies are looking at active archiving (near-line or online archiving for shorter-term use). Tape is unable to effectively fulfi l the active archiving role due to its slow pace of data location, access and recovery. Tape also cannot ensure integrity of data over time and requires periodic tape remastering at high cost, unless a robust archiving solution is in play that automates the latter. To address this, we now recommend and implement a variety of technologies that enable disk-based storage to complement or, in some instances, replace tape-based archiving in E&P applications. For example, data compression technology for disk storage has come a long way. Today, lossless compression solutions significantly reduce the storage requirements for both pre- and post-stack seismic data, without introducing data integrity issues. A second example is data deduplication, which reduces the amount of data required to be physically stored by eliminating redundant information and replacing subsequent iterations of it with a pointer to the original. A prime candidate for deduplication are ‘new project fi les’ that copy fi les from existing projects. Other technological advances that support disk-based storage include improved

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NetApp’s Middle East and Africa Energy Industry Director Ashraf Atia started the company’s oil and gas vertical in the Middle East and Africa region and manages a team of industry professionals in the region. With eight years’ experience in oil and gas data management, Ashraf has helped numerous regional clients speed their time to discovery and production.

use of metadata in archiving soft ware; improved reliability of storage (for example, a RAID 6 implementation) that enables use of low-cost Serial ATA (SATA) disks for seismic data storage; and tiered storage solutions (that is, ‘hot storage’ versus ‘cold storage’). Recent cost analyses between online storage and nearline storage technologies, such as tape-based systems, show that online storage can be more cost-effective than tapebased solutions over the lifetime of the seismic data. Advanced disk-based solutions can enable betterinformed decision-making using the latest data all in one place. They can enable E&P users to identify, locate and retrieve data quickly, accelerating mission-critical decision-making, reducing field costs and improving utilisation of field assets. At the same time, the solutions can improve geophysicist productivity due to easier access to data anywhere and anytime. The same technologies can also accelerate data recovery in the event of data loss, corruption or disaster. Advanced disk-based solutions can enable more efficient completion of asset sales, including transfer of digital assets. They can reduce the cost of transcription and remastering of tapes due to the transfer of some archiving to disk. Th is can also enable ‘platform protection’, avoiding obsolescence of data formats, systems, operating systems and applications. Th is benefit, as well as improved data integrity, can reduce information technology costs. Looking forward, the solutions can provide flexibility and scalability to meet continued data growth and analysis needs. „

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Exploration and production infrastructure Mohammed Amin looks at how to achieve faster time-to-oil and accelerated gains.


oday, oil and gas companies in the upstream segment are utilising more sophisticated, higher resolution seismic acquisition, processing, analysis and modelling techniques. The combination of the growth from 2D to 3D to 4D seismic surveys, pre-stack analysis and advanced modelling has driven a 500-fold increase in data. The industry is benefiting from more powerful computational capacity, allowing data to be concurrently analysed. Th is creates storage challenges. Joint ventures and M&A activity lead to not only broader collaboration on data sets, but to increased redundancy and data management complexities. Upstream operations are also constantly adding more and more specialised exploration applications and complex collection and analysis methods like real-time seismic-while-drilling (SWD). These technological advances are helping companies accelerate discovery, optimise production and minimise the risk of unsuccessful drilling efforts due to incomplete or inaccurate information. However, companies need an IT infrastructure aligned with their business challenges. It is important for organisations to have in place the right exploration and production infrastructure (EPI) framework that is designed to address unique, data intensive challenges with industry leading benefits. What are the most important components in an EPI solution? The fi rst is high-performance unified storage with an upstream application accelerator that can offer dramatic performance improvements over traditional NAS, to accelerate discovery efforts, decrease geoscientist query times and reduce information management by minimising the fragmentation of data sets. Organisations should look for technology solutions to decrease the cost of operations such as fully automated storage tiering (FAST), deduplication, compression and backup to disk for faster recovery. Backup with deduplication and compression is also important, and companies should look for backup solutions that have the capabilities of providing seismic interpretation and analysis applications with space-saving and energy-efficient data protection. Th is option will eliminate data inefficiencies and reduce the cost of operations. Next, look at efficient data archiving. The solution should enable organisations to free expensive primary storage of inactive fi les. It can offer additional benefits such as options for online access to fi les for pre-stack analysis or more data accessibility online. Such options

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“Technological advances are helping companies accelerate discovery, optimise production and minimise the risk of unsuccessful drilling efforts due to incomplete or inaccurate information” help organisations alleviate the cost and management burdens of explosive E&P data growth. Consider a fi le system assessment or data storage profi ling service. This service should provide intelligent analysis to define data and information strategies with confidence to reduce administration costs, improve application performance and improve backup and recovery times. In addition, include disaster recovery capabilities. Th is will enable organisations to protect their most valuable data assets, mitigate downtime risk and help improve service level agreements, recovery point objectives (RPO) and recovery time objectives (RTO). Finally, data protection and intellectual property is a critical component in today’s increasingly mobile environment and given rising cyber threats. It has become crucial for organisations to implement data security solutions that can provide: authentication for assuring identities to a system, resource, information or a transaction based on risk; data loss prevention and discovery, monitoring and protection of sensitive data from loss or misuse, whether in a data centre, on the network or out at the endpoints; compliance with security information and event management (SIEM) to transform raw log data into critical information to meet your compliance, security and IT and network goals; fraud prevention and protection against identity theft and other external threats targeting customers, regardless of the channel they choose to conduct their business; and integration of information management and storage technologies with physical security and video surveillance network devices to provide enterprise-class protection for your facilities, personnel and physical assets. While organisations should be considering all those benefits for their IT environment today, some oil and gas organisations are planning for the future already and riding the next big IT wave. Organisations are embarking on the journey to the private cloud in order to improve business agility, reduce IT complexity and manage the explosion of digital data. The private cloud creates a fully virtualised, next-generation IT infrastructure that spans internal and external resources. It presents seamless services to the business with IT fully in control, combining the best of the data centre with the best of the cloud. „

Mohammed Amin is VP and General Manager of EMC Turkey, Emerging Africa and Middle East Region. Based in EMC’s regional headquarters in Dubai, he has overseen the opening of nine EMC offices in the region. A vital element of his responsibilities is to increase regional awareness and demand for EMC’s comprehensive information infrastructure technologies with its vast portfolio.

07/02/2011 14:07

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Platform 3D storage scaling As technology continues to evolve, some data centre challenges become more complex even while new opportunities emerge. Take scalability – nothing new in and of itself, but taking it into the third dimension could help turn a data centre into an information centre. By Bob Plumridge. Currently, no vendor except Hitachi Data Systems has the capability to scale both up and out. With Hitachi Data Systems’ new data centre transformation solution and the Hitachi Command Suite, Hitachi Data Systems can now provide 3D storage scaling, enabling enterprises to transform their data centres and build the infrastructure necessary for the information centre of the future.

3D storage scaling in a nutshell Scale up to meet increasing demands; dynamically add processors, connectivity, capacity in a single unit as well as scale performance with added resources. Scale out to meet multiple demands; dynamically combine multiple units into a single logical system with shared resources as well as match increased demand in virtualised server environments. Scale deep to extend value; dynamically virtualise new and existing external storage systems as well as extend advanced functions to multi vendor storage.

T Bob Plumridge is the CTO for Hitachi Data Systems in EMEA. In this role Bob is responsible for aligning technology vision with business strategy and evangelising this vision to the press, analysts and existing and potential customers. Bob is also the Chairman of the Board of Directors of the SNIA for EMEA.

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he information centre is the data centre’s next stage of evolution: intelligent data management that automatically adapts to meet critical business needs. For enterprise IT departments, the information centre represents the ultimate goal, supporting business-critical processes with ultra low demands on man hours and OPEX. The vision of the information centre is clear but it is less obvious how the IT department can build an infrastructure capable of supporting this evolution. How can the data centre transform into a virtualised, automated, cloud-ready and sustainable environment that intelligently supports business goals? At the heart of this transformation is a common, virtualised platform for all data with the ability to manage multi-vendor environments. The key to the effectiveness of this platform is 3D storage scaling. Storage scaling is nothing new. Many storage platforms scale out to include additional units under the same controller. Some even scale up, introducing new processors, memory or capacity to the original storage system to improve performance. The third dimension of scaling is to scale deep. Scaling deep allows the central storage system to extend over an extra layer and scale across storage systems from multiple vendors via controller-based storage virtualisation. By scaling up, scaling out and scaling deep, you can achieve 3D storage scaling.

Data drives our world Information has become our most valuable asset. The challenge for businesses lies in making it available and secure. Hitachi Data Systems solutions help organisations transform raw data into valuable information by delivering on a vision that IT must be virtualised, automated, cloudready and sustainable. We don’t just sell storage. We give organisations solutions to make business better on every level. We help you manage data growth, collect and connect data to create valuable information, cut costs and reduce operational complexity, empower people to access, share and secure information and lastly help organisations innovate, collaborate and grow. Hitachi Data Systems’ solutions and services can enhance and change lives. They incorporate the industry’s best people, products, tools and methodologies to maximise return on IT investments and minimise total cost of ownership. Our customers trust Hitachi Data Systems to protect their data, the raw resource that lies at the heart of their business. Whether you are in financial services, healthcare, media, education, retail, manufacturing, government or any other industry, your business is transformed by the value and importance of your data and the information you derive from it. Hitachi Data Systems provides information infrastructure and solutions that let your company turn data into currency to propel business. „ For more information, please visit

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Despite moves to diversify away from a dependence on hydrocarbons, the oil and gas sector remains key to the strength of the Bahraini economy. MENA Infrastructure speaks to HE Dr. Abdul Hussain bin Ali Mirza, Bahraini Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority, about plans for 2011 – and their impact on the infrastructure sector.


ahrain enjoys a strong and diverse economy. Unlike many of its Gulf neighbours, Bahrain’s economy is not reliant upon the oil industry, having successfully diversified away from a dependence on oil; and although oil does play an important part in the country’s economy – oil and gas revenues make up over 80 percent of government revenues – Bahrain also has an increasingly important financial services industry, and acts as a fi nancial centre for the Middle East and North Africa region. Refining, aluminium production and tourism are also significant contributors to the country’s gross domestic product. But nonetheless, the oil and gas sector has traditionally been a big driver for the Bahraini economy – and remains an important driver for much of the infrastructure development currently taking place within the tiny island-state. And according to HE Dr. Abdul Hussain bin Ali Mirza, Bahraini Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority, investing in infrastructure project work remains a key part of the country’s long-range planning. “When the National Oil and Gas Authority was established in 2005, we set our long-term strategy,” he explains. “It is well known that chief executives of major companies who lose their jobs largely do so not because they did not plan, but because they did not implement the plan successfully. Since setting our plan we have focused on its successful implementation to achieve our long-term goals, and consequently we have not veered from our investment programme.” In the upstream sector this involves the development of the domestic on-shore oil field and Khuff gas field, a project initiated by the formation of Tatweer Petroleum, a joint venture between Occidental Petroleum from the USA, Mubadala from the UAE, and the Oil and Gas Holding Company of Bahrain. “Tatweer started operations in December 2009 and has already arrested the decline in crude oil production,” says Ali Mirza. “Investment during 2011 will involve three drilling rigs, drilling some 125 new development oil wells and numerous work-over rigs working full-time to increase the crude oil production. The aim is to increase production by exploiting zones of heavy crude that hitherto have been uneconomical to produce. The investment for this development is of the order of US$15 million over the life of the development and supply contract, which is 20 years.” The downstream sector has also been very active. The Low Sulphur Diesel Project (LSDP), commissioned in 2007, provides the capability to manufacture over 100kbpd of ultra-low sulphur diesel. “Th is enables us to meet the diesel

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specifications of any region of the world, thus diversifying our geographic markets,” says Ali Mirza. “At a cost of over US$700 million, the project has been extremely successful fi nancially.” The success of the LSDP was then followed in 2009 by the commissioning of the Refi nery Gas Desulphurisation Project (RGDP), a US$140 million environmental project that reduced the SOx emissions from the refi nery to those of a Californian refi nery. “The two projects – one profit-driven, one environment-driven – show that our values within the Bahrain oil industry are not just towards profit, since we believe that long-term sustainability depends on caring for all stakeholders – particularly the local community,” says Ali Mirza. As a continuation of this strategy, the country is currently building a catalytic de-waxer plant that will enable it to manufacture Group III ultra-high viscosity index lubricating base oils. Th is project, at a cost of US$430 million, will be commissioned in the fi rst half of 2011 and is a joint venture between Bahrain Oil and Gas Holding Company, Bapco and Neste Oil of Finland. It will also broaden the product range and meet the specifications of the most demanding markets in the world. “We are diversifying products and markets, we are manufacturing the highest quality, we are protecting the environment, and we are extending our planning horizons,” says Ali Mirza. “We are already thinking about the refi nery configuration required by 2020 and this will involve an expansion of crude capacity and construction of upgrading process units such that we reduce the yield of low-value products.” Further environmental investment includes a wastewater treatment plant, which is in the design stage. Additionally, the Ministry will be supporting the National Strategy and the Vision 2030 by making gas available to support new industry and the expansion of current industries, and this strategy will include the construction of an LNG terminal by the end of 2014. Such projects are certainly helping to drive growth in the construction/engineering sector. “Having set a vision for the future, and adhering to its implementation despite the global economic recession, we are providing a constant workflow to the engineering and construction industry,” says Ali Mirza. “Our investment was not curtailed by the recession. We are engaging both local contractors and reputable international contractors in our investments, which are creating wealth for Bahrain and sustainable work for the contracting industry.” Ali Mirza believes this is an outstanding achievement for a small country like Bahrain – but one that has only been

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possible as a result of the clear focus, vision and support of its political leadership, who he says are not only fiscally responsible but also socially responsible and economically driven. “The Vision 2030 sets out the aspirations for Bahrain’s economy, government and society in accordance with the guiding principles of sustainability, competitiveness and fairness,” he explains. “Following this development path will result in a better standard of living for all in Bahrain, and send a clear message to the engineering and construction industry that Bahrain is business-friendly.” Another key project is the 70-mile crude oil pipeline from Saudi Arabia to Bahrain that was originally due to be completed this year. The so-called A-B pipeline is part of Bahrain’s refi nery masterplan and will enable the country to increase its refi ning capacity. “Refi neries close to developed markets will close if they are not economically viable and the manufacturing capacity will be taken up by new, efficient, competitive refi nery capacity in the Middle East,” says Ali Mirza. “Bahrain plans to be part of this paradigm shift and the new A-B pipeline will have a capacity of 350kbpd, which is more than 100kbpd greater than the existing pipeline built over 50 years ago.” The pipeline is important for Bahrain; refi ning of crude oil has taken place in this country for nearly 80 years and is a strategic industry for the country, thus increasing the capacity of the refi nery will enable it to be highly competitive in a core competency. The new pipeline will play a key role in transporting the crude oil required – but nevertheless, its construction has been dogged by delays. “In terms of the status of the project, it is essential for safety and security reasons that the routing of the new pipeline has to be carefully considered,” explains Ali Mirza. “After all, this will be a strategic lifeline for Bahrain for the next 50 years. Once all parties are in agreement with the routing and design of the line, the project will be finalised.” The project is typical of how oil revenues are being used to further develop many of Bahrain’s critical infrastructure networks – from energy to transportation to water to telecommunications. “Anyone who has visited Bahrain

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regularly in recent years can see that massive infrastructure investments have been taking place,” admits Ali Mirza. For instance, in the transportation sector the Sitra causeway has been completely re-built into a multi-lane highway with flyovers and underpasses to ensure speedy traffic flow. Similarly the development of the Shaikh Salman Highway in Isa Town will improve traffic flow and remove a bottleneck for people travelling to work in Manama. Meanwhile in the power sector, the construction of the largest power station in Bahrain at Al Dur was completed last year and the plant commission just a few months ago. “NOGA is responsible for ensuring the availability of gas for industrial and infrastructure development and in 2007 we invested US$200 million to ensure gas was available for the new power plant,” says Ali Mirza. “The development of the Khuff gas field plus other current gas initiatives by NOGA will provide the energy to ensure that power and water demand through to the mid 2020s is met.” It’s part of a concerted effort to make sure Bahrain is economically, environmentally and socially sustainable. Last year NOGA signed an agreement with Masdar to develop ways to cut carbon emissions in the oil and gas industry, displaying a rare commitment to sustainability in the oil and gas sector. Indeed, Dr Ali Mirza believes the engineering community has an important role to play in promoting more environmentally friendly projects. “We signed an agreement with Masdar to cut carbon emissions during 2009, and this was immediately followed up with a major carbon dioxide project at Gulf Petrochemical Industries Company (GPIC) plant site in Sitra,” confi rms Dr Ali Mirza. “GPIC is the fi rst petrochemicals company in the Middle East to have such an environmentally friendly technology designed to reduce carbon dioxide emissions.” Constructed in co-operation with Technoment of Italy and Japanese giant Mitsubishi Heavy Industries Company, he feels this is a clear example of how the engineering community can bring new technology and ideas to Bahrain. “If they are consistent with our business values we will embrace them and turn them into reality,” he says. “The door is open for the engineering and contracting industry to

“Our investment was not curtailed by the recession. We are engaging both local contractors and reputable international contractors in our investments, which are creating wealth for Bahrain”

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work with Bahraini companies to reduce energy consumption and to create a cleaner environment.” It could yet prove to be a lucrative partnership for both Bahrain and the construction sector, particularly given that the industry has suffered more than most as a result of the economic downturn while Bahrain has weathered the storm relatively well. “The global recession has affected countries and industries worldwide to one extent or another; Bahrain is no exception, but whereas the developed western countries actually went into recession, Bahrain merely experienced a small reduction in the growth rate,” explains Ali Mirza. Indeed, growth in the economy has remained positive throughout the global downturn, and this strong economic position has been borne out by the overwhelming interest in government bonds issued by the Ministry of Finance. “The government has been very astute and careful in guiding the nation through this difficult time, and we have taken this into account with our investment in the oil and gas industry,” he continues. “It would be inaccurate to say that there has been no change in our plans; some change is inevitable. However, I am proud to say that the change has been minor and it has taken the form of small adjustments to completion dates. We are still following through on our project commitments. As I said earlier we are currently constructing a lube base oil plant, which has been ongoing for the last three years, and we have just signed an agreement with the EPC contracting company GS Engineering from Korea to build a new wastewater treatment plant at the refi nery.” Vision 2030’s objective is to shift Bahrain’s economy from an oil-driven economy to a global competitive economy predominantly based on fi nance, tourism and industry,

and as such the Economic Development Board has worked in close cooperation with partners across government to develop the National Economic Strategy 2009-2014. The strategy has three guiding principles: to strengthen the private sector and change the balance between private and public sector employment; to aim for diversification and innovation in a sustainable knowledge-based economy, independent of oil to the best extent possible; and to ensure appropriate skill-building in the Bahrain labour market to match the shift in focus. Ali Mirza believes that delivering on the aspirations of the Vision 2030 will create opportunities for new business investment, the innovative development of existing industries, and the development of a workforce that is renowned for its productivity. “Within the next decade we will see greater development in transportation infrastructure as the country meets the expectations of its citizens at the same time as reducing our impact on the environment,” he says. “Within the next decade we will see a greater diversification of industries, and the establishment of a wide variety of light industry not dependent on subsidized fuel. And also within the next decade, the young, educated and developing workforce of Bahrain will be available to meet the growing demands for skill, knowledge and dedication.” Clearly, the opportunities for investors, industries and contractors are going to be plentiful as Bahrain takes another step forward. “There is a saying ‘If you do not know where you are going, any road will take you there’,” concludes Dr Ali Mirza. “The Government of Bahrain has clearly defi ned the future; we know where we are going, and we hope the engineering industry will be available to help us get there.” „

Economic stability “Bahrain’s relative economic stability is reflected by the generally steady historical upgrade in its sovereign rating by international rating agencies. In December 2009, the international rating agencies, Standard & Poors and Fitch, reaffirmed their outlook on Bahrain’s long-term foreign currency sovereign debt as A (Stable). The same rating agencies assigned a rating of A (Stable) to Bahrain’s long-term local currency sovereign debt. “Indeed, in recent years, the financial services sector has been the single largest contributor to Bahrain’s GDP, reflecting the high growth in the sector. In 2009, the financial services sector remained the largest contributor to Bahrain’s GDP (contributing 25.1 percent to Bahrain’s real GDP). In line with the objectives of Vision 2030, contributions to the economy from manufacturing (15.3 percent. of GDP in 2009), mining and quarrying, including oil and gas (13.2 percent of GDP in 2009), government services (14.8 percent of GDP in 2009), transport and communications (8.8 percent of GDP in 2009) and real estate and business activities (8.7 percent of GDP in 2009) continue to increase. “The GDP numbers indicate a diverse economy and in 2009 the oil industry contribution to the public finance revenues was 83 percent, so in this respect the oil and gas industry is still vital to the economy of Bahrain.”

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Letting them down gently With a surge in decommissioning activity taking place around the world, O&G speaks to OGP’s Technical Director John Campbell about the necessary considerations involved in this sector.

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he explosion on the Deepwater Horizon last year rocked the boat for the energy industry, reminding the world of the potential threat the sector can pose to its personnel and the environment. Following it, the latter half of 2010 saw a tightening of regulations across all aspects of the industry, from health and safety to technical practice. And the decommissioning sector has not been immune to the indirect effects of the BP spill. The environmental risks of non-producing structures have begun to take greater precedent in light of the events in the Gulf of Mexico (GOM), and while the decommissioning sector has already been gathering strength, the BP spill has provided the fi nal push for long-planned reforms. July saw the creation of the new Decommissioning Committee by the International Association of Oil and Gas Producers (OGP), under the leadership of Chair Gunther Newcombe of BP. Speaking on the subject, Newcombe said that: “Decommissioning activity is already a multi-billion dollar annual activity around the globe, with areas such as the GOM shelf experiencing more decommissioning in the past decade than new projects. There is a strong belief in the committee that the time is now right for operators and contractors to share experiences and for governments to work closely with the industry to deliver sustainable solutions.” The purpose of the committee is to benchmark activity around the world in order to develop a better understanding of project planning and execution and impacts of cost and safety; implement decommissioning experience and considerations into the design of new facilities and wells; work closely with governments and the scientific community to understand the environmental implications of decommissioning; and identify which technologies add value to the decommissioning process. OGP’s Technical Director John Campbell said: “The Decommissioning Committee is addressing the challenges of handling offshore structures in a safe, environmentally protective and cost efficient manner. In doing so, it takes into account prevailing regulatory requirements while identifying and addressing the engineering challenges involved. It provides a forum for identifying and sharing experiences and best technologies and practices associated with the removal, re-use and/or disposal of off shore infrastructure.” He adds, “The committee also advises OGP members on relevant regulatory developments and liaises with other OGP committees on aspects of decommissioning relating to safety and environmental performance.” Indeed, with over 150 platforms and 500 wells being decommissioned every year, ensuring the correct procedure for decommissioning takes place is of paramount importance for the industry looking to regain some valuable PR points. September of 2010 welcomed some new legislation that changed the regulation of the decommissioning landscape, and with only seven percent of original installations being decommissioned in the North Sea – compared to 50 percent in the GOM shelf – this looks set to be a big area of focus in 2011. “Decommissioning has been a mature business in the GOM for a number

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“As the North Sea and other oil and gas basins are becoming increasingly mature, decommissioning is taking place in these areas as well and there is increasing awareness of the issue” of years,” explains John Campbell, Technical Director at OGP. “As the North Sea and other oil and gas basins are becoming increasingly mature, decommissioning is taking place in these areas as well and there is increasing awareness of the issue.” Sparking this awareness was the Deepwater Horizon incident in April resulting in one of the most shocking environmental disasters in recent years, affecting fishing fleets, the tourism sector and wildlife as well as the industry itself. In its wake, environmental issues have become a key concern for the industry, and non-producing wells and of-shore structures have come under scrutiny. But according to Campbell, this has long been a chief consideration for operators looking to decommission in the most efficient way. “Standards operate at international and national levels,” he says. “International bodies such as the International Maritime Organisation (IMO) have adopted resolutions and other instruments primarily concerned with ship navigation. Organisations such as OSPAR focus on waste management and disposal at sea. National legislation can vary but the prime concern is always to ensure that all facilities are dismantled in a safe and environmentally sound way that is very much in line with operator priorities.”

Idle iron Despite already being the leading region for decommissioning activity, the GOM will continue to expand in

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the area. Legislation issued in September – the notice to lessees (NTL) – by the US Department of the Interior has called for some 130 structures to be removed and around 1200 non-producing wells to be plugged, at an estimated cost to operators of around US$3.5 billion. The legislation now requires that assets be decommissioned within a set period of time after they become redundant (three years for wells and five years for facilities). Still, the cost is not proving to be a huge cause for concern in the industry, with many operators stating that they already budget for decommissioning. Gary Siems, of Stone Energy Corp, told Decommissioning World that the impact of the NTL will more likely be on the order that decommissioning work is done, as opposed to the quantity of work carried out. Last year it was reported that the Asia-Pacific region was rife with off-shore structures waiting to be decommissioned, with over 600 platforms in the region over 25 years old. Indeed, decommissioning represents a US$9 billion market. According to Campbell costs of decommissioning on the UK Continental Shelf are around US$500 annually, and in the GOM around US$600 million each year. In addition, he points out: “As decommissioning activity increases on a global scale, there will be competition for skilled resources and also the availability of marine vessels and barges.” But despite the potential benefits that this sector could bring to the industry, there are a number of challenges posed by decommissioning activity. “The challenges depend on the types of installation involved,” says Campbell. “Many smaller platforms can be removed entirely, whereas other, significantly larger installations including gravity-based concrete structures, present greater challenges – not least because many have been modified substantially to prolong their productive lives.” More pressingly, weather poses significant challenges to the decommissioning sector. Campbell says in many cases there is only a narrow opportunity for decommissioning in the year because of extremes in weather conditions. But as regulations tighten around the sector, so closer consideration is paid to the safety hazards of the activity. According to an extensive report into the dangers of this activity, published in December, the most common causes of injury were a failure to use protective equipment, procedural breaches and incorrect work position. By and large however, risks to personnel are considered minimal in this sector. David Bayly, part of Total’s health and of safety department at E&P Norge AS told Decommissioning World that the overall safety record on recent decommissioning projects was good, considering the type of work that was undertaken and the millions of man hours worked offshore and onshore. Overall, Bayly said, the risks are held to be less severe than during production operations. Rather than being vulnerable to explosions and fi res, as they are when platforms are producing oil, workers on “cold” platforms are vulnerable to occupational hazards such as trips or dropped objects. „

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HOME WITHOUT HARM: EVERYONE, EVERY DAY In a market increasingly driven by pricing, it is essential that in the drive to offer the lowest cost contractors do not lose sight of their responsibility to ensure that staff and workers go home at the end of every day without harm. By Jeremy Coles


e have found over the years that the majority of accidents on our sites are generally due to human behaviours. Historically unsafe behaviours occur through either ineffective communication of safety requirements, employees just not understanding the message (procedures and policies), or the failure of supervision and employees to abide by these policies and procedures. Therefore, we are taking up the challenge on two fronts at Dutco McConnell Dowell: fi rstly, to ensure our employees understand what is expected of them; and then once

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they know what is expected of them, ensuring that they behave in a manner consistent with those expectations. Our company induction process is where the process of informing our employees of their obligations and responsibilities commences. We have developed a company induction DVD that introduces our new employees to the company and explains in detail what we stand for, what is expected of our personnel with regards to their behaviour and the company culture, our safety philosophy and our 10 golden rules of safety. The DVD is presented by a number of company employees, including senior management, safety

Jeremy Coles is the Managing Director of Dutco McConnell Dowell (ME) and manages the Dutco McConnell Dowell interests throughout the Middle East region (speciďŹ cally, UAE, Qatar and Saudi Arabia). He has spent the last 16 years working in the Asian and Middle East Regions.

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personnel and members of our staff of differing cultural backgrounds. The DVD, which is compulsory viewing for all employees, is dubbed into a number of languages to ensure all our employees are able to view and understand the messages portrayed. The DVD, however, is only the start of the induction process. It must then be followed up by project-specific inductions and a continual process of induction into the project-specific procedures and processes, as well as jobspecific training throughout the construction phase, to ensure that each employee understands the activities that will be carried out, the hazards that exist and how these hazards change with the site conditions. Th is process takes place through risk assessments for all activities and updates as conditions change; job safety and environment analysis for all activities; daily pre-start talks (or at the very least pre-start talks prior to commencing a new activity); and toolbox meetings.

“By trying to increase the reporting of near misses and hazards we are able to concentrate on rectification of the issues and training” From an analysis of incident reports, we have found that over 90 percent of the incidents (be it a near-miss, medical treatment case or LTI) are not caused by inadequate procedures but by supervisors and workers simply not following the required procedure or taking shortcuts. We found that the vast majority of us know the right way to work, but that workers and staff still at times take shortcuts that are the cause of incidents. While some end up being a near-miss incident, others end up in serious injury. As such, human behaviour is a contributing factor to most incidents. At Dutco McConnell Dowell, we are trying to deal with the reasons for this inconsistent behaviour. We implemented a safety improvement programme at the end of 2009 for 2010 that focuses primarily on management commitment to safety, as well as the safety behaviour and culture of our employees. The success of the programme can be seen in the outstanding results last year, with an increased awareness of our behaviours shown by almost 35,000 safety observations from our workforce and over 4.5 million man-hours without an LTI. Our focus has been on ensuring our employees are reporting incidents. By trying to increase the reporting of near misses and hazards we are able to concentrate on rectification of the issues and training in the specific areas of the deficiencies before someone gets hurt. We have a safety slogan: “Home without harm, everyone, everyday”. Th is slogan is everywhere: compulsory wallpaper and screen saver on all company computers; featured in the company induction DVD; on all notice boards at sites and camps; company brochures and literature; company procedures; and project procedures. Our aim is

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to ensure that all staff understand that our vision is above all else to ensure that all workers go home at the end of every day without harm. We place a very high importance on visible leadership in safety. It is no coincidence that the projects that have a good safety culture and good HSE statistics are led by a project management team that takes an active role in developing and maintaining the safety culture for the duration of the project. Our project and construction managers have specific key performance indicators (KPI) that are measureable and include: participating in every weekly toolbox meeting; attending pre-start talks with the work crews; chairing safety committee meetings; presenting safety awards; and regular interaction with the workers during walks around site about their tasks and what they discussed at their pre-start talks. Our senior managers are also expected to display leadership and support the project management team. Senior managers have personal lead performance indicators that include regular visits to projects (two per month) to review HSE performance. These visits serve to demonstrate visible commitment to improve the safety culture, ensure key safety systems and processes are applied effectively, and to identify opportunities for recognition or for improvement. The key to this initiative is to engage our employees during their visits. The manager is required to tour the site with the project manager or construction manager, stop at work crews and ‘Safetalk’ their work activity with them. We consider the recognition of good safety performance an integral part of improving the safety culture and safety awareness of our workforce. Each month members of the workforce who have displayed an exemplary commitment to safety are selected to receive a ‘Safety Man of the Month’ award. Whenever possible, safety award ceremonies are arranged to take place during the senior manager’s visit so that the senior manager can present the awards to the recipients. In order to keep our safety message fresh, our 2011 initiative is “See something, say something”, which is focused on increasing the reporting of hazards and near-misses. Safety awareness amongst our workforce is considered a critical factor in maintaining a safe work environment, and the more eyes and ears we have attuned to observing or detecting unsafe conditions, unsafe behaviours and near-misses in the workplace, the better it is. We have made a concerted effort to ensure that all our personnel are aware that they have a moral obligation to look out for their co-workers, and if they see somebody working unsafely they have an obligation to stop them and not walk by. If they see something that is unsafe, they are expected to take action immediately. Dutco McConnell Dowell’s safety performance has steadily improved over a number of years, but we can never rest in our quest to keep our employees safe from injury. We must continue to be vigilant and invigorate the safety message by focusing on the behaviours of our staff and workers and the overall safety culture of our projects. „

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A recent investigation into the Macondo oil well spill finds last year’s gulf disaster was preventable – and that similar disasters are likely to occur again in the future without concerted industry action.


ast month, the Presidentially-appointed Oil Spill Commission released its landmark report, Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling, on the causes and consequences of the BP Deepwater Horizon disaster. The study proposed comprehensive reforms of both government and industry practices to overhaul approaches to drilling safety and greatly reduce the chances of a similar, large-scale disaster in the future. “Our investigation shows that a series of specific and preventable human and engineering failures were the immediate causes of the disaster,” explained Commission Co-Chair William K. Reilly. “But, in fact, this disaster was almost the inevitable result of years of industry and government complacency and lack of attention to safety. Th is was indisputably the case with BP, Transocean and Halliburton, as well as the government agency charged with regulating offshore drilling – the former Minerals Management Service. As drilling pushes into ever deeper and riskier waters where more oil lies, only systemic reforms of both government and industry will prevent a similar, future disaster. “The oil and gas industry must realise that accidents

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None of the major aspects of offshore drilling safety – not the regulatory oversight, not the industry safety standards, not the spill response practices – kept pace with the push into deepwater

by any company will limit opportunities for production by every company,” he added. “Like it or not, oil and gas companies are in this together, and they must adopt rigorous standards through an industry-wide Safety Institute, or risk losing access to these leases and resulting profits.” Commission Co-Chair Bob Graham believes the reforms needed to prevent future disasters are clear. “The government must establish an independent agency responsible for regulating all aspects of offshore drilling safety to make the US the international leader on this issue,” he said. “Only a truly independent federal safety agency – totally separated from leasing practices and politics – can provide certainty that the regulators do not again become captive to the industry. We learned that our country does not have the safest record or the highest safety standards when compared to other countries. We believe that must change to restore confidence in future oil and gas operations. The US must become the global leader in safety, and the reforms we propose, if acted on by Congress and the Administration, will do just that. “This is not the time to be timid or incremental,” he continued. “Now is the time to be bold and take decisive

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action to dramatically reduce the likelihood of these inherently risky activities conducted on property that belongs to the people of the United States, possibly resulting in another Deepwater Horizon disaster.”


Key findings The most startling fi nding from the report is that the Commission found the Deepwater Horizon disaster to be both foreseeable and preventable, and that errors and misjudgements by the three major oil drilling companies involved – BP, Halliburton and Transocean – played key roles in the disaster. Meanwhile, government regulation was ineffective, and failed to keep pace with technology advancements in offshore drilling. Indeed, the report concludes that the Macondo well blowout was the product of human error, engineering mistakes and management failures. Worsestill, these errors, mistakes and management failures were not the product of a single, rogue company, but instead reveal both failures and inadequate safety procedures by industry players that have a large presence in offshore oil and gas drilling throughout the world. It also claims neither industry nor government were prepared to contain a deepwater well blowout or respond to a massive deepwater oil spill. For instance, at the time of the blowout, both BP – and industry more generally – had no proven options for rapid containment in deepwater other than attempting to close the blowout preventer. In addition, the underestimates of the amount of oil spilling from the Macondo well appear to have impeded planning for (and analysis of) well-containment efforts and contributed to a loss of confidence on the part of the public in the competence of the federal government. In addition, the Deepwater Horizon’s blowout preventer lacked key diagnostic tools that would have assisted in the containment effort. Indeed, since the Exxon Valdez oil spill in 1989, neither industry nor the government has made significant enough investments in spillresponse research and development, so the clean-up technology used following the Deepwater Horizon spill was largely unchanged. “Our exhaustive investigation finds that none of the major aspects of offshore drilling safety – not the regulatory oversight, not the industry safety standards, not the spill response practices – kept pace with the push into deepwater. In effect, our nation was entirely unprepared for an inevitable disaster,” says Reilly. “Perhaps the only greater tragedy would be not implementing the reforms we recommend based on this disaster, and allowing another, similar disaster to occur.” The government estimates that more than 170 million gallons of oil went into the Gulf, with some portion remaining in the ocean and possibly settling to the sea floor. The Macondo disaster placed further stress on coastal resources already degraded over

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20 APRIL An explosion aboard the Deepwater Horizon drilling rig in the Gulf of Mexico, 52 miles south-east of Venice, Louisiana, kills 11 workers. Operator Transocean, under contract for BP, says it had no warning of trouble ahead. 30 APRIL President Obama’s administration bans oil drilling in new areas off the US coast pending investigations into the cause of the BP spill. Before the spill, Mr Obama had said he would allow new offshore drilling. 30 MAY President Obama’s adviser on energy policy says the spill is the worst environmental disaster in US history, worse even than the 1989 Exxon Valdez spill in Alaska. 10 JUNE The US Geological Survey estimates the oil flow at as many as 40,000 barrels per day before a cap was put on the well on 3 June. BP announces it is collecting 15,800 barrels per day from the well. 6 JULY Oil from the spill reaches Texas, meaning it has affected all five US Gulf Coast states.

3 AUGUST The US government says the oil spill is officially the biggest leak ever, with 4.9 million barrels of oil leaked before the well was capped in July. Scientists say only a fifth of the leaking oil – around 800,000 barrels – was captured during the clean-up operation. 3 SEPTEMBER The cost of the oil spill rises to US$8bn says BP, an increase of some US$2bn in the past month alone.

22 APRIL The Deepwater Horizon sinks to the bottom of the Gulf after burning for 36 hours, raising concerns of a catastrophic oil spill. A Coast Guard official says the Macondo well could be releasing up to 8000 barrels of oil per day. 11 MAY At a series of congressional hearings, BP, Transocean and Halliburton, the three companies involved in the Deepwater Horizon drilling operation, all blame each other for the disaster. 4 JUNE BP places a cap, called the ‘lower marine riser package’, atop the leaking wellhead. The cap allows the company to pipe much of the oil and gas leaking from the well to ships on the surface. 17 JUNE BP announces it will place US$20bn in a fund to compensate victims of the oil spill and says it will not pay a shareholder dividend in 2010.

27 JULY BP confirms that chief executive Tony Hayward will leave his post by mutual agreement in October, but is likely to retain a position in the company. Hayward’s American colleague, Bob Dudley, who has taken charge of the clean-up operation, will replace him. 16 AUGUST The US announces that future applications for deepwater offshore drilling will require an environmental assessment, ending a practice that allowed the Deepwater Horizon rig to drill with little scrutiny. 19 SEPTEMBER The ruptured well is finally sealed and “effectively dead”, says Coast Guard Admiral Thad Allen.

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many decades by a variety of economic and development activities, including energy production. But as bad as the Deepwater Horizon disaster was, it could have been much worse. At one point, industry experts feared that a significant portion of the 4.6 billion gallon oil and gas reservoir beneath the sea floor could be released into the Gulf.

Key recommendations Nonetheless, offshore drilling will only become more complex and riskier as it moves towards sites that are deeper, darker and colder, and where less is known about geological, environmental and other conditions. And while the Commission believes that deepwater drilling can be done safely, it recommends major changes in government and industry practices in order to ensure such a large-scale disaster cannot happen again. Among the steps it recommends are the creation of an independent safety agency within the Department of the Interior, expansion of offshore drilling regulatory and enforcement practices to match or exceed the most stringent regulations of other oil-producing countries, the establishment of a “safety institute” within the oil and gas industry, acceleration of scientific and technical research in all areas related to offshore drilling, and a significant expansion of the Oil Pollution Act’s current US$75 million cap on liability for offshore facility accidents, so that drilling operators will be fi nancially responsible for the consequences of their activities (which, under the currently inadequate liability limits, they are not). It also suggests spill response planning by both government and industry must improve. Industry spill response plans must provide realistic assessments of response capability, including well containment, while government review of those plans must be rigorous and involve all federal agencies with responsibilities for oil spill response. The federal government must do a better job of integrating state and local officials into spill planning and training exercises. Industry needs to develop, and government needs to incentivise, the next generation of more effective response technologies, states the report.

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More than 170 million gallons of oil leaked into the Gulf

The cost of the spill was estimated at US$8bn in September

Budgets for the regulatory agencies that oversee offshore drilling should come directly from fees paid by the companies that are being granted access to a publicly owned resource, continues the report, while funding sources could include a regulatory fee on new and existing leases or an increase in the inspection fees already collected by the Department of the Interior. In addition, industry should be required to demonstrate how their processes and procedures will better manage risk to achieve safer outcomes. And after exploration has begun, companies should be required to constantly update their risk management plans to reflect actual experience. The API has already criticised the report for casting doubt on a whole industry on the basis of a single incident. However, while the commission’s report is critical, it does not make a case for stopping deepwater drilling altogether; indeed the fact that deepwater drilling can be carried out safely is one of the key messages to come out of the inquest. “Drilling in deepwater does not have to be abandoned. It can be done safely. That is one of the central messages of this report,” says Reilly. “The nation is currently highly dependent on offshore oil and gas supplies, including in deep waters. Prudence requires that we not abandon those essential domestic supplies. We must instead ensure that, along with other critical considerations, the application of the highest safety standards and environmental protection requirements are incorporated in decisions concerning whether, when and how those resources are developed for the American people.” Perhaps the most pressing need, however, is tackle prevailing attitudes towards safety and whistleblowing within the industry. Media reports have suggested that Transocean staff working on the Deepwater Horizon rig felt they could not voice any of their worries over health and safety, though in theory the culture was ‘anyone can stop the job’. “If people feel they cannot point out where there are issues, there is a problem to be addressed, and change is needed from the top down, suggests Ian Waldram, board member of the ISOH with longstanding experience of the offshore environment. “When the Deepwater Horizon explosion occurred, senior onshore managers from both Transocean and BP were present, having flown out that day to congratulate the team on seven years without a lost-time injury. Th is is a stark reminder that good performance in occupational safety and health may not align with good safety in drilling processes, as the controls and competences required to ensure that both areas of risk are low are not all the same.” The message is clear: the industry must take heed, with the Commission warning that multinational oil companies like BP and Shell and drilling contractors like Halliburton and Transocean operate in oceans worldwide, making this a global threat. As such, governments around the world should heed the recommendations made by the Commission and examine their own regulatory apparatus around offshore drilling, including any fi nancial liability caps that are in place as is the case in the US. Eliminating the cap on fi nancial liability will more accurately price risky deepwater drilling activity in the marketplace. 

07/02/2011 14:42

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Safety is in your hands Tom Andrews explains the importance of hand protection in the oil and gas industry.


il and gas companies have very high level of exposure to overall occupational risk factors. Many companies in the industry understand that protecting their workers against falls, cuts, harmful chemicals and harsh environmental conditions is essential to productivity and well-being. In the Middle East, major players have understood the need and have introduced intensive training and quality products. Hands are precious, irreplaceable tools that are used in almost everything we do. As a result, they may also be exposed to a whole range of risks that often require a specific approach in terms of safety. When it comes to protecting hands, the oil and gas industry, sharing many needs with the chemical industry as a whole, has its own specific challenges and requirements. The challenge is thus to select the most appropriate glove for the intended task or situation and to use it in the proper way. In order to meet particular needs of workers in onshore and offshore, protective gloves should meet two main criteria. First of all, they should offer exceptional protection against workplace hazards, including chemicals. Secondly, they should promote the tactility and dexterity required for workers to properly handle their tools. The gas and oil industry in the MENA region employs thousands of people every day. Evidently, the need for effective protection is high. Today, many health and safety managers in the Middle East have realised the importance of adequate hand protection and are making great efforts to introduce high-quality gloves offering better protection, more tactility and better comfort. Leading energy companies such as Chevron have, in collaboration with hand protection specialist Ansell, introduced educational programmes making their workers more aware of the importance of adequate hand protection. One of the tools the company has developed is a handy Pocket Glove Guide, allowing employees to make the right choice of glove depending on the application and the requested mechanical protection (general purpose, abrasion, cut, tear, puncture), chemical protection and extreme weather protection. A similar reflection was done by Baker Hughes, a technology leader providing the petroleum industry with best-in-class products and services for use in oil and gas wells, pipelines and refi neries. After an extensive glove audit, the company decided to switch to more comfortable Ansell gloves to guard employees against the particular hazards they are exposed to such as offshore oil-based mud or grease.

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Tom Andrews is Technical Sales Manager, Middle East, at the Occupational Division of Ansell Healthcare EMEA. For more information, please visit www.

Next to the need for comfort and keeping hands dry, grip is another key challenge for hand protection in the chemical and oil and gas industries. Safety concerns when lift ing with a poor grip are frequently cited as a serious safety hazard, as objects might be dropped, resulting in foot injuries or cuts. For workers, exerting less grip force can also positively contribute to preventing the onset of musculoskeletal disorders. Glove manufacturer Ansell Healthcare, for example, is addressing the grip issue through innovation. Its Ansell Grip Technology, a revolutionary new glove coating, enhances grip performance when grasping wet or oily objects. Based on many years’ experience in the sector and extensive interviews with industry experts, Ansell has put together a dedicated range of solutions that protect hands from hazards specific to the oil and gas industry. For instance, AlphaTec gloves offer advanced chemical protection and are recommended for handling and light and medium assembly applications in environments with potential chemical hazards. The Sol-Vex is a chemicalresistant, reusable nitrile glove. It offers high abrasion resistance and mechanical protection. Ansell’s single-use, nitrile Touch N Tuff glove is the best choice to protect against chemical splashes, as proven in several official trials were carried out. No other single-use nitrile glove resists a greater variety of industrial chemicals for a longer period than Ansell’s Touch N Tuff.„

04/02/2011 16:03

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02/02/2011 11:11



Optimising operating efficiency in an African context Arvid Bertelsen of Riise Underwater Engineering (RUE) provides some insight into how sub-sea processes can streamline production procedures and improve your bottom line. Which sub-sea related aspects should be focused on in order to minimise downtime and avoid production loss? Arvid Bertelsen. The key words are planned maintenance systems (PMS) and knowledge from present and past experience within this field of expertise. Every platform, sub-sea installations, vessel and subsystems to such assets has a requirement for PMS. Unfortunately, PMS in the context of sub-sea operations has in many instances been neglected, with substantial economical and technical consequences. RUE has learned this from the North Sea, which in many ways was the cradle of sub-sea completion systems and sub-sea installations maintenance. When the North Sea slowly but surely was fi lled up with sub-sea completion systems, focus on new installation and commissioning to a certain extent took away the fact that the already installed and aging systems needed follow up and maintenance. For many sub-sea completion systems no maintenance programme was prepared, and no specialised vessels, maintenance assets, sub-sea tooling or maintenance engineering were in place. Hence, the subsea IMR industry and the oil majors struggled to catch up with insufficient assets to perform the explosively growing maintenance and repair tasks.

Implementation and training of indigenous sub-sea engineering capability is another challenge. To reach an accepted professional level for an IMR sub-sea engineer one has to start with a basic structure engineer and educate him step by step. On the job training and coursing is a time consuming and costly endeavour, so it is important that the oil majors take their part of the local responsibility and ensure that education of personnel is a part of their overall IRM strategy.

Why is the IRM sub-sea engineer so important to ensuring that operations run according to plan? AB. Once main installations are in, and commissioning of a new field is done, the next step is the IMR sub-sea engineers. This role is what we characterise as the “stayers”, Arvid Bertelsen has a broad because the IRM phase of a field lasts until it is depleted education background from diving, maritime and management and decommissioned. schools. He has been working We have learned from the North Sea that skilled IMR the last 11 years for RUE. Prior to this he was over 20 years at Stolt engineers are a true asset to any oil company as well as the Offshore/Stolt Comex Seaway, contractor: putting together inspection plans, following where he held positions such as Saturation-diver, Bell Divingup the performance of the plans, producing the inspecsupervisor, Offshore Manager, tion reports, proposals for upgrading by first hand input, Diving-operation Manager and Operation Support Manager. producing maintenance procedures and repair procedures and follow up. This makes the IMR sub-sea engineer the main mechanism in any planned maintenance and repair process for any oil field. Th is also underlines the importance of securing this personnel long term by investing in their profession. How can the above mentioned challenges be mitigated? AB. With regard to IMR sub-sea engineering, which is our main field of Does RUE have any specific advice to West African oil companies? operations, the challenge is to maintain a consistent level of competence AB. RUE is positioned in the West Africa region and prepared to take on on our offshore and regional onshore key personnel. The main fall back is sub sea maintenance planning, execution of maintenance and any repair to the lack of long-term perspectives and long-term contracts to contain the the sub-sea completion systems or installation. specialist personnel. When RUE moved its focus and fields of operations to West Africa in Planned maintenance and IMR are long term achievements are you 2005, we experienced the same attitude among the oil majors as we saw build up experience in the field and installations in which you are working. in Norway; the naive-like belief that these installations hardly require any You constantly improve assets, methods and personnel as you get more follow up and PMS. RUE’s advise to West African oil majors not to make familiar with the field and its installations. Continuity in contracts is the the same mistake as was made in the North Sea. „ key to cost efficiency for IRM programmes.

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04/02/2011 14:23



How can nanotechnology protect surfaces in the oil industry? Nanotechnology has come to promise functional smart materials, such as anti-microbial and selfcleaning coatings. At first glance, it all sounds a bit too spectacular, but how does this new science of nanotechnology have relevance to the oil and gas industry? By Abdullah Alshamrani


anotechnology is the engineering of functional systems at a scale between 1 and 100 nano metres (nm) in size. One nanometre is 1 x 10-9m, or one billionth of a metre. What is important here is that, as particles get smaller and smaller and their properties change, their relative surface area increases and quantum effects can change or enhance reactivity, strength and electrical behaviour. Therefore, nanotechnology enables the introduction of better and more clever materials that will improve structural performance, prolong material life spans and drive costs down. In the case of coatings, they are not only safer, more environmentally friendly and easier to use, but more effective than older technologies, which is really important in the oil industry that faces harsher and highly corrosive environmental conditions. Applications the oil and gas industry can use now Current applications? Just about any surface or material in the oil industry can have a potential application for nanotechnology. For our purposes, we will look at coatings and admixes that are already available and proven. The SurfaPore line of products produced by NanoPhos contain billions of tiny particles that bond within the pores of the substrate to form a chemical barrier that becomes part of the substrate itself. For example, when a cement surface is treated, any trapped humidity can exit as the material retains its breathability, while moisture and water cannot enter preventing corrosion and degradation. Eff lorescence, the white salt deposits that appear on surfaces, can be prevented by the use of such material. Further, mould and lichen also have a difficult time attaching to SurfaPore nanoparticle treated surfaces because of the lack of residual moisture. However, nanotechnology can not only protect common cement surfaces by making the water repelling, but also by making them ‘self-cleaning’. A self-cleaning coating, such as NanoPhos’ SurfaShield, when placed on common surfaces will break down organic matter and effectively clean dirt and become antimicrobial! Here are some examples of applications you might want to evaluate: Water/oil protection for porous surfaces SurfaPore can eliminate water and even oil penetra-

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tion. Such an effect can have dramatic effects in the protection of surfaces against the corrosive nature of salt water and moisture. The small size of the particles hide in the pores without creating a fi lm, enabling these formulations toast longer under the intense UV conditions and heat often found in the industry. Self-cleaning and anti-microbial coatings SurfaShield nanoparticles can be used because of their self-cleaning, sterilising and anti-fouling properties, reducing maintenance costs and extending the life of surfaces. Their action is powered by the surrounding and abundant UV – this photocatalytic action is endless as the material is not consumed. Insulating paint Powered by nano and micro technology, SurfaPore ThermoDry enables paints to ref lect infrared radiation/ heat and significantly reduce thermal conduction. More specifically, paints with SurfaPore ThermoDry ref lect 93 percent of the infrared spectrum, resulting in significant temperature differences between the exterior and interior surfaces. Tests by the New Zealand Heavy Engineering Research Association (HERA) demonstrated that when a ThermoDry coating is placed on a piece of metal, thermal resistance has increased an astonishing 243 times! The applications in the oil industry are endless: painting of oil tanks for reducing internal temperature and fumes, and energy savings in plants and warehouses by simply painting pipes, containers and roofing for example.

Abdullah Alshamrani is the President and Chief Executive Officer of Building Technology, Eng. He also owns CME&C Consulting firm, is Vice President of Nukote Arabia, and sits on many councils, including the Saudi Swiss Business Council, Saudi Russian Business Council, Saudi Engineering Committee, Saudi Environmental Society, Gulf Society of Maintenance Professionals and Saudi Society of Protective Coating.

Anti-corrosive metal coatings Applied to different metals, nanoparticle coatings can prevent rust and corrosion in much the same way as with glass by creating a super-thin fi lm that protects metals for corrosive substances. Cement additives that improve adhesion NanoPhos is leading the way in commercial applications with its SurfaMix cement mix additive that doubles adhesion, reduces cracking, and controls cement hydration. The result is superior plasters that last longer and no longer exhibit poor adhesion. „

04/02/2011 16:44


02/02/2011 11:10



Living with defects: replace/repair or prove fit-for-service? RBI guru and FFS assessment expert Ron Selva reveals how to get the best out of deteriorating plant items and optimise spend.


hen oil, gas, petrochemical or fertilizer plant items are replaced or repaired simply because the corrosion allowance has been used up, cracking has been detected or material property changes and/or metallurgical degradation are suspected, the cost implication to companies is enormous. However, with the availability of established proven fitness-for-service (FFS) assessment technologies, rejection of these items is not necessarily automatic. Application of state-of-the-art FFS technologies based on active and potential damage mechanisms (DMs) and their root causes, along with best-practice risk-based inspection (RBI) technology, is changing the way in which such decisions are made to optimise spend, whilst ensuring safety and reliability of the affected equipment. For many deteriorating or aging plant items, the RBI implementation is supported by FFS assessments to derive the optimum remaining life and inspection intervals based on acceptable levels of risk and consequences of failure. A comprehensive knowledge of DMs and their root causes in static equipment deterioration based on reliable operating data is crucial to correct application of FFS and RBI technologies. By this principle, an item is considered to be fit for the intended service if it can be demonstrated (within acceptable safety margins) that the condition to cause failure is not reached within a predetermined time period, giving due regard to its integrity risk and the HSE and business consequences of failure. Th is holistic approach to asset integrity management guarantees delivery of the six strategic goals aimed for by plant sites, which are desired operational reliability between TAs; desired optimum plant run-length time between TAs; maximum cost-effective life out of aging equipment; optimum inspection interval for each item; optimum spend on CapEx; and optimum spend on RevEx. The scope of FFS application includes all types of pressure vessels (reactors, crackers, distillation columns, absorbers, strippers, reformers, fi red heaters, storage tanks and utility plant items such as boiler drums, de-aerators, headers). Codes and Standards used in an FFS assessment include BS-7910 and/or API-579. The assessor may also have to refer to design codes such as ASME-VIII and/or British standard BS-5500 and other guidance documents issued by recognised associations or regulatory bodies. Depending on the reasons for the FFS assessment, the output may include one or more of the following: tolerable corrosion/erosion damage sizes and damage rates; tolerable crack sizes and crack growth rates; remaining life;

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integrity-driven operating limits and other risk mitigating measures; design improvements; and suitable intrusive and/or non-intrusive non destructive testing (NDT) inspection methods. The output of an FFS assessment becomes an input to the RBI implementation team’s study to formally determine whether to run the item as it is and at what optimum inspection interval; to monitor the defect and at what monitoring frequency; to repair/replace the item and decide when it should be carried out; to revise operating conditions; and to modify design or upgrade material. These decisions will be influenced by the RBI study output such as the risk profi les of the applicable DMs and the respective HSE and business consequences of failure. The following three examples are given to illustrate the substantial benefits of FFS application in conjunction with RBI.

Capex savings can run to several million dollars

Project 1 Scope: This project involved the FFS assessment of several redundant distillation columns for re-use on a new duty. Under the previous duty, the columns had suffered various levels of localised corrosion damage (below design corrosion allowance) and cracking at some weld seams. The new duty involved higher working pressures and temperatures and a low temperature pressurised start-up. Approach: The FFS assessment was supported by stress analysis, fracture mechanics and material damage studies, including toughness testing and supported by specific NDT inspections to assess condition of the columns, followed by an RBI team study. Outcome: The mechanical integrity of the columns on new duty was established, proving that the previous damage, apart from two defects, did not require any repairs and that the respective DMs were confirmed inactive under new duty. An RBI plan incorporating optimum inspection intervals was implemented, with additional NDT to match

“PP SIMTECH has saved clients substantial sums of money using this holistic approach, incorporating FFS and RBI to successfully demonstrate the integrity of aging plant items ”

Project 1

07/02/2011 11:18


newly identified potential DMs under the new operating conditions. Several million dollars were realised in savings on capital expenditure.

Project 2 Scope: This involved FFS assessment of pressure swing absorbers (20 years old) that were approaching their allowable design pressure cycles. The requirement was to establish the remaining life based on actual operating cyclic pressures; future optimum inspection intervals and scope of inspection; and a replacement strategy for the vessels. Approach: The FFS assessment was supported by stress analysis, initial fatigue analysis using BS 5500 methodology to assess remaining life (cycles), and a refined remaining life assessment based on a fracture mechanics approach (BS7910) to establish crack growth rates and allowable crack sizes. The latter assessment was based on postulation of a surface crack size that can be reliably detected by established NDT inspection methods. This was followed by RBI team study. Outcome: The mechanical integrity of the absorbers was proven for a minimum of a further 12 years. An optimum inspection interval based on RBI study output was set at six years (alternative turnarounds) incorporating two reliable intrusive and non-intrusive NDT methods with extensive inspection scope covering vulnerable areas of the vessels where fatigue cracking can initiate. The project helped defer substantial capital expenditure for replacement absorbers/piping.

Project 2

Project 3 Scope: This involved FFS assessment of a 15,000T ammonia storage tank (double wall construction) operating at 50mbarg and at -33°C. Its last internal inspection was in 1994, with its next inspection due in 2006 (after 12 years). The MPI inspections required for the Inner tank to detect SCC (Stress Corrosion Cracking) at internal welds are prohibitively expensive, due to size of tanks and preparatory

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Project 3

requirements. The key DM that drives internal inspection is SCC, which is caused by the presence of O2 in the liquid ammonia. There is also interest industry-wide to minimise the number of intrusive inspections by supporting these with non-intrusive inspections for SCC because the potential for damage is more likely as oxygen can get into the tank during re-commissioning. For these reasons, the project scope was to assess the possibility of deferment of internal inspection to 2012. Approach: FFS assessment was carried out supported by our RBI technology process to assess the possibility of deferment of inspection to 2012. Extensive work was initiated following the RBI team study, which involved comparing the RBI outcome with the EFMA RBI process; fracture mechanics work to establish critical SCC defect sizes; settingup a minimum sub-critical defect size having an acceptable safety margin (against critical size), and developing a new on-line ultrasonic procedure to detect this minimum size defect on a manufactured test piece using qualifying NDT technicians; development of an on-line entry regime into tank annular space and risk assessment; carrying out the on-line ultrasonic inspection; and installing an oxygen monitoring system. Outcome: The inspection interval was safely extended to 2012, while non-intrusive ultrasonic inspection was implemented to inspect the most vulnerable welds on a sample basis. A procedure was implemented to ensure no ingress of O2, and the local regulatory body approved the work carried out. Th is outcome deferred inspection costs of around UK£1 million to 2012, whilst reducing the potential for SCC initiation.

Ron Selva has over 35 years of industry recognised experience relating to static equipment integrity, with the last 20 years specialising in the development and application of best practice RBI and fitness-for-service assessment technologies. He has published many papers on these subjects. He is also a member of several relevant British Standards Technical Committees.

PP SIMTECH has saved clients substantial sums of money using this holistic approach incorporating FFS and RBI to successfully demonstrate integrity of aging plant items subjected to deterioration caused by various DMs. „ A detailed version of this article is available online at

07/02/2011 11:18



South European pipeline proving system SPSE’s Miguel de Castro explains his firm’s influence on the global performance of the pipeline.


PSE owns and operates three pipelines starting in the south of France, two ending in Germany, and the third one in the centre of France. The pipelines are 24 inches, 34 inches and 40 inches in diameter. The longest line is 769 kilometres long. SPSE transports 25 Mm3/year for five different clients for three countries along the 40 inch main line. Each client has its own measurement system and tankfarm. SPSE owns and operates a centralised flowmetre proving facility. Here we explain why SPSE created a flow laboratory, and the results obtained with that choice. The laboratory also allows SPSE to be aware of technology progress while testing new metering systems for third parties. SPSE receives the client’s crude oil in a tankfarm in Fos sur Mer. Each tank is equipped with a radar-based gauging system. Typically, pipeline performance is based on the volume received by the pipeline company compared with the volume delivered to its clients. Th at is called losses. For SPSE the typical results are: a loss percentage of 0.0079 percent or a loss value of 2100 cubic metres, including 770m 3 for shrinkage. Th is means that for every cubic metre received in the tankfarm, SPSE will deliver 0.999921 cubic metres. The overall performance is also influenced by the water detection. For comparison, an acceptable figure for pipeline systems is 0.03 percent. To achieve such results, a high precision metering system is necessary. SPSE could have used the tank gauging of the end client as the measurement basis. But as SPSE had different clients with different standards, it was decided to control the measurement of the deliveries. Moreover, the introduction of a systematic error at one delivery point would favour one client at the expense of another. It would also introduce a wrong balance for the concerned refi nery. Therefore, an efficient measurement for custody transfers was necessary. As no existing facility fulfi lled SPSE needs, it was decided to invest in an adapted flowmetre calibration laboratory. SPSE made the choice of a centralised calibration. More than the clear cost reduction compared with classical prover loop-fitted delivery terminals, the centralised calibration guarantees a better metrology performance. All the metres are calibrated with the same tool. If a systematic error exists, it’s the same for every metering bench. Th is is true once the difference due to the metering bench geometry is eliminated. For that a flow corrector is used at each delivery terminal. SPSE led different tests with real size copies of its delivery terminals to study the influence

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of bends installed prior to the metering bench. Th is study was led mainly on turbine meters. Its aim was to check that with a proper flow corrector installed at 10 times the diameter from the meter, the same metre factor was found regardless of the elbows. Private tests with other meter technologies show that these flow correctors are sometimes necessary even with non-mechanical meters. The choice of a centralised proving required the use of reliable metres in terms of repeatability and resistance to wear. Therefore the choice of turbine meters at the time (end 1970s). Nowadays, the experience obtained from the calibrations made for metre manufacturers and the improvements made on ultrasonic or coriolis metres would probably lead to other choices in SPSE’s application.

“In order to have an efficient tool, the proving facility is considered as an independent unit of SPSE. It has its own quality system and agreement”

Miguel de Castro has a master degree in Physics, with specialisation in measurement and legal metrology applications. He has 12 years experience in corrosion prevention, pipeline maintenance and general maintenance trouble-shooting, and eight years experience in pipeline operations and in charge of sampling and metering.

The metering system isn’t reduced to a facility. In order to have an efficient tool, the proving facility is considered as an independent unit of SPSE. It has its own quality system and agreement. Th is guarantees its performance to SPSE’s pipeline clients and also to the proving facility’s direct clients and authorities. The agreements obtained from the French authorities and metrology services are the best incentive to maintain and improve the system performance. At the time of writing this facility is unique in Europe. It allows calibrations up to 4000m3/h within a range of viscosities from 0.5 to 150cSt on standard (up to 500cSt with specific products). The proving station is COFRAC accredited since 1998. Th is means that the process is mastered and the uncertainties guaranteed. It also gives the calibration results a multilateral recognition from other countries’ certification services, such as UKAS (Great Britain), DKD (Germany), NATA (Australia) etc. Reference equipment is kept and maintained in this facility. These references (temperature, pressure, viscosity) are necessary to obtain a reliable uncertainty of the calibration facility. „

07/02/2011 11:43

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03/02/2011 15:30




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The petrochemicals sector is pivotal for our national and regional economies, serving as both an enabling industry and an important driver of broad economic development, argues Saudi Aramco CEO Khalid A. Al-Falih.


his year, global chemical sales will total roughly 3.5 trillion dollars, or nearly four times the combined GDP of the Gulf Cooperation Council nations. Worldwide, the industry directly employs more than 10 million people, and enables the indirect employment of another 50 million or more. Here in the Gulf, petrochemical firms can take pride in three decades of sustained growth. 30 years ago, our region was a net importer of chemicals, while this year GCC chemicals production will be worth around US$40 billion, with the vast majority of that exported to global markets. In the last decade alone, both production and exports have multiplied more than six-fold in value terms, driven upwards by both rising global prices and growth in volume – an impressive achievement. And yet when we consider the enormous impact the industry has had in other parts of the world – particularly in terms of value addition and job creation – our enthusiasm is somewhat dampened, and we must concede that the Gulf’s chemical sector can and should do much more in the future. To date, our petrochemical enterprises have been built largely on the competitive advantage derived from gas-based feedstocks, with refi nery petrochemical integration only now starting to emerge. Th is area of the business, which offers many opportunities for product diversification and value addition, has significant room for growth in the Gulf – and Saudi Aramco intends to take an active role in realising those opportunities. Without a doubt, we enjoy significant energy advantages: the GCC is home to more than one-third of the world’s oil and nearly a quarter of its natural gas reserves, enabling us to be a big player in basic petrochemical commodities. But is the Gulf pulling its weight when it comes to the wider petrochemical and chemical industry? The answer is, unfortunately, no, because when we consider downstream conversion and fi nished products – that is, areas of the value chain that are much richer in terms of value and employment potential – the broader region has a lot of catching up to do. Consider that the Gulf’s share of global chemical production is only one-and-a-half percent, note that Europe’s 60,000 chemical companies employ more than 1.2 million people, and think about the fact that on that continent, chemicals stand second only to pharmaceuticals in terms of value-added per employee: more than 80 percent higher than the combined average of all manufacturing sectors. So how do chemical industries elsewhere in the world generate such massive revenues, contribute so much to GDP, and create so many good jobs – all economic areas where our region needs to perform better? The simple answer is wide product diversity and immense downstream

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value addition. In other words, they go far beyond petrochemicals to supply specialty and performance chemical products to industries like automotives, construction, electronics, textiles, pharmaceuticals, agriculture and others. Capturing additional value is critical as our nations travel along their inevitable journeys from a dependence on exports of natural resources to more diversified economies – not only to increase GDP, but also to create more well-paying employment opportunities than come with oil and gas production, refi ning and primary petrochemicals, all of which are more capital- and less labour-intensive. The development of industrial parks surrounding petrochemical facilities is a cornerstone of such a downstream development strategy, and Saudi Aramco is committed to driving that change with our sustained support for the fi rst industrial estate for conversion industries in Saudi Arabia, the Petro Rabigh Plus Tech Park on the Red Sea, as well as the Value Park planned in association with our Jubail petrochemical venture. Those highly advanced chemical complexes will be producing numerous specialty and performance materials, including polyurethane building blocks, metallocenebased elastomers, glycol ethers, solution polyethylene, MMA/PMMA, nylon and EP rubber – many of which have never before been produced in the Middle East. These products will in turn serve as feedstock for conversion and input for manufacturing industries, helping to grow and diversify our economies. I am excited that Saudi Aramco and its joint-venture partners, Sumitomo Chemical and Dow Chemical respectively, will shortly be announcing further progress in both of these forward-looking ventures, which we believe will generate even greater momentum for the kind of fundamental transformation I am describing. It is also important to note that these value parks will allow us to further benefit from the clustering concept, where interrelated manufacturing and production companies, their customers, suppliers, service providers and associated institutions reinforce each other, thus helping all participants while also broadening economic and social development. You see such clusters in the automotive industries of Bavaria, the American Midwest and Japan’s Aichi Prefecture; with fi nancial institutions in New York and London; and of course along the US Gulf Coast, which is home to many of that country’s petrochemical and chemical plants and facilities. Clusters can also pay big dividends in our region, particularly when it comes to allowing supply chain improvements and integration and the maximisation of local content, which is why Saudi Aramco’s integrated petrochemical ventures have been designed with this concept in mind. In addition to these localised clusters, though, we should also think of the entire region as a potential ‘megacluster’ for chemicals. That is, we should look at the Gulf as a unified whole, rather than as a collection of smaller individual markets, or even worse as a set of boxes that are walled off from one another. Even as we compete, we should concurrently collaborate at the regional level, with

04/02/2011 16:06



greater integration and cooperation providing critical mass in terms of local markets for chemicals. Such a robust home market can in turn serve as a springboard to competing on the global stage, even while the GCC chemicals ‘mega-cluster’ spurs economic diversification and new opportunities within our societies. So what needs to change during this decisive decade for our region’s chemicals industry to contribute more effectively to economic development and diversification? I see three key areas where we must focus our attention given the enormous impact and plentiful opportunities contained within this trio of interlocked and interlacing factors. First, we must do more in the area of research, technology development and innovation as a whole. R&D plays a central role in obtaining and maintaining competitive advantage in the chemicals arena, since this is a business that in essence is based on chemistry, material sciences and the clever manipulation of molecules to provide the innovative materials demanded by increasingly complex end-use applications and ever-more sophisticated customers. Successful chemical enterprises create products that evolve alongside or even in advance of consumer demands, and thus they must continually expand their capacity for innovation. Thus far, our region has relied primarily on the licensing of technology from others, which is indeed a sound strategy for entry into new businesses. But if we aspire to lead the global chemicals industry, our region must also become a leader in chemicals R&D. That won’t be easy, and there will be very few overnight successes. But in addition to the key role of chemical companies in this area, I believe part of the solution also lies with academic and research institutions throughout the Gulf, which have an important part to play in the development of knowledge in the areas of materials science, chemistry and basic research. By tying their initiatives back to the needs of the region’s chemical enterprises, these research centres can develop into significant hubs of excellence – and I believe they should impact developments on a global plane, rather than just on a regional level. In this regard I would like to recognise the bold steps undertaken by SABIC in establishing research centres at leading Saudi universities. The second key transformative area is human resource development. We must recognise that success in chemicals hinges not just on fuel and feedstock supplies, industrial infrastructure and advanced technology, but also on our people’s skills, competencies and boundless capacity for innovation and entrepreneurship. There is absolutely no reason we can’t set in motion a tidal wave of innovation and creativity here in our region, given that we have talented individuals with just as many gray cells as the scientists and researchers found elsewhere in the world. Our companies should take a leading role in addressing those challenges – in partnership with others where possible, and on our own when necessary.

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Of course, we all recognise the importance of the socalled STEM disciplines – science, technology, engineering and mathematics – to improve as well as develop new technologies. But to convert breakthroughs into commercial successes, we also need to develop talent in areas like marketing, business development, finance, customer service, and supply chain management. In fact, I believe we should start to assess the economic impact of petrochemicals and chemicals not only through revenue and value addition, but also in terms of the transformation of our human resources. That is, we should shift the discourse to the production of a greater number of increasingly sophisticated researchers, scientists, entrepreneurs and marketers, rather than just cranking out more gas-based commodities. This observation brings me to my third but equally important area of endeavour: the cultivation of a dynamic environment for commercial success. Such an ecosystem encompasses a spirit of entrepreneurship, the availability of venture capital and other forms of risk financing, integrated value parks, and a welcoming business environment that encourages investment, growth, enterprise and value addition. Indeed, this is another area where chemicals can contribute to our region’s transition to a knowledge economy: not just leveraging talent and technology in their own right, but also creating a landscape which encourages innovation and innovators, and which has a greater capacity to deal with an increasingly complex, kinetic and ambiguous global business landscape. At Saudi Aramco, we’re planting the seeds for this kind of environment through our new Entrepreneurship Centre, which provides local small businesses and start-ups not only with seed capital, but also learning opportunities to develop their business acumen and commercial capabilities. Such a business-friendly ecosystem also needs to embrace the vital role that small and medium-sized enterprises play within the chemicals sector. Collectively, as part of our transformative efforts we should provide greater support to SMEs within the industry, since they play an essential complementary role in terms of innovation and exploiting unlimited niche opportunities. We should also encourage the growth of local customers, since together with SMEs, they can spur greater job creation and employment opportunities than the region’s handful of globally successful large players. At the same time, a more entrepreneurial mindset can help us better appreciate the limitations of our traditional approach to the chemicals business, where everyone in the Gulf is basically fighting for a greater share of basic chemicals and commodities like ammonia, methanol, polyolefins and ethylene glycol. Instead, we should consider what the INSEAD business school has termed a ‘blue ocean strategy’, and strike out for relatively open waters like life sciences, biotechnology, pharmaceuticals, food and nutrition, and advanced materials. By doing so, companies can

04/02/2011 16:06


“We should increase the chemicalsrelated workforce in the Gulf by a factor of 10 in the next 10 years ”

move away from just seeking incremental improvements to achieving step changes that create fresh opportunities and even entirely new businesses within the Gulf. In other words, the strategic challenge for the region’s chemical industry is not to grow from US$40 billion to US$50 billion in per annum revenue, but to fundamentally alter its economic role within the region, to serve as a true enabling industry for other sectors, and to leapfrog other regions within the global chemicals landscape. That requires 10 years of transformation, not just tweaking around the edges of the existing business model. Therefore, I would like to close by encouraging the industry to accept four stretch targets that I believe are essential if the chemical industry is to take its place alongside oil and gas as one of the Gulf’s pillar industries. First, by 2020 the region’s petrochemical and chemical industry should increase sales by a factor of five. In a business-as-usual scenario, GCC chemicals production is forecast to rise from around US$40 billion to nearly US$80 billion dollars per year over the coming decade – but I would like to see the year 2020 value hit the US$150-200 billion per annum range, capitalising not only on the growth of existing enterprises, but more importantly creating new ones. Second, we should increase the chemicals-related workforce in the Gulf by a factor of 10 in the next 10 years – something I believe is achievable given the tremendous job-creation potential of specialty chemicals and associated downstream industries. As noted earlier, for every one person directly employed in the global chemical industry, five more people work in related businesses, and for every million dollars that is invested in the conversion industry 30 jobs are created, versus less than three jobs for the same investment in primary industry. I think that’s a pattern of job creation we should seek to replicate here on our shores.

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Th ird, while data are scarce, our region’s petrochemicals sector currently spends about a half-percent of its revenues on research and technology development, compared to two-and-a-half to three percent by leading European and American chemical companies. If we are to compete and lead globally, I believe the Gulf’s chemical sector must increase its R&D spending by a factor of 10, to roughly five percent of total sales. That’s a big jump, but it is imperative that we catch up from our relatively low level of current investments. To give you some sense of the distance we have to cover, last year only one company in any business in the entire Middle East – namely SABIC – ranked among the top global thousand corporate investors in R&D, according to a study by Booz & Company. That must change, and therefore a well-conceived, well-executed and sustained increase in R&D spending is essential for the long-term competitiveness of our regional chemicals sector. And fourth and fi nally, we must tackle the task of developing talent. It is very difficult to quantify this challenge. Traditionally, levels of R&D expenditures, the volume of high technology trade, or the number of scientists, journal articles or patents and licenses have all been used to gauge the innovative capacity of advanced economies. Since so little data is available for the Gulf, I will hazard a guess that at the most there are 500 true scientists, engineers and researchers currently employed in chemicals R&D across the GCC. I therefore propose that we establish an aggressive target of multiplying the number of R&D scientists and engineers at work in the sector by a factor of 50 over the coming two decades. Again, that is a stretch goal, but one I consider essential to the long-term health and competitiveness of the Gulf’s chemical industry. Over the last three decades, the region’s petrochemical industry has benefited greatly from a range of policies and initiatives designed to establish and grow this critical economic sector, and I congratulate the industry on its many accomplishments and landmark achievements. Today, though, the time has come for chemicals to step up and take their rightful place as a pillar industry by growing the petrochemicals downstream in a variety of ways, with the aim of more rapidly expanding and diversifying our economies. I firmly believe that this is a key strategy to pursue, if we are to create enough well-paying jobs for our youth – a task that will require us to grow our regional economies at a desirable, although admittedly challenging, rate in the range of eight percent per year compared to three or four percent per year at present. That means 10 years of sweeping change in which we extend the sector’s portfolio into more value-added products and activities, place new emphasis on research and technology, invest significantly in the development of our people and their innate skills and talents, and create an environment that bolsters business, encourages a spirit of entrepreneurship and rewards wise investment. Th is can indeed be a decisive decade for our region and our organisations – and I encourage each and every one of us to seize the many opportunities and realise the massive potential that characterises the Gulf’s petrochemical and chemical industries.„

04/02/2011 16:06



Refinery and construction costs continue to rise Downstream costs continue to march back to prerecession levels as activity picks up, with revived projects benefitting from recessiondriven cost declines


he costs for designing and constructing downstream refi ning and petrochemical projects rose three percent from Q1 2010 to Q3 2010, according to the latest edition of the IHS CERA Downstream Capital Costs Index (DCCI). It was the third straight increase for the index since prices bottomed out at nine percent below peak 2008 levels. Costs are now just four percent below their 2008 peak. The DCCI is a proprietary measure of project cost inflation similar in concept to the Consumer Price Index (CPI). It provides a benchmark for comparing costs around the world and draws upon proprietary IHS and IHS CERA databases and analytical tools. The current DCCI rose from 175 to 180 over the past six months; the values are indexed to the year 2000, meaning that a project that cost US$100 in 2000 would cost US$180 today. Higher commodity prices and a weakening US dollar continued to be the driving force behind the steady rise of costs in the downstream sector. “The momentum in the rise of costs back to prerecession levels is really a ‘slowmentum’ reflective of the broader global economic recovery,” explains IHS CERA Chairman and author of the Pulitzer Prize-winning book The Prize, Daniel Yergin. “Activity is increasing and prices are rising, albeit with a healthy dose of caution.” Commodity prices were driven by the global economy’s recovery and increased construction activity as the impact of the fiscal stimuli was felt by the wider economy. Steel prices continued to show high degrees of volatility as iron ore producers switched from adjusting prices annually to adjusting them every quarter, reflecting market-based demand-supply fundamentals. The continued weakening of the US dollar also contributed to the rise of commodity prices while also driving up costs of equipment, labour and engineering and project management costs. The dollar’s fall was driven by the US Federal Reserve’s second round of quantitative easing to reinvigorate the US economy – the Fed recently announced a US$600 billion plan to purchase treasury bonds over the next eight months. Robust downstream construction activity in China, India and the Middle East continues unabated, according to the index. Record refi ning and ethylene capacity additions came online in 2009 and more projects are in

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various stages of engineering and construction. Th is trend is expected to continue until 2015. Government policies encourage investment in the downstream sector in anticipation of increasing demand for transportation fuels, plastics and fibres. China plans to increase refining capacity by 50 percent in the next five years. Similarly, the Middle East is emerging as a major hub for petrochemicals, with advantageous feedstock and government policies that incentivise diversification into other industries supported by petrochemicals. Large complex refineries with integrated petrochemicals are emerging as the ‘new standard’ to position the downstream sector for profitability. The capacity additions in Asia will continue to put downward pressure on margins as excess capacity emerges in the face of tepid consumer demand. Refi ners and petrochemical companies in Organisation for Economic Cooperation and Development (OECD) countries – which have been rationalising refi ning capacity – will continue to face rising pressure to shutdown older and less efficient plants with poor economics. “The economic outlook ahead appears to be mixed with rising prospects that the recent momentum will give way to an impending slowdown,” says Farooq Sheikh, lead researcher for the IHS CERA Capital Costs Analysis Forum for Downstream. “China also appears to be slowing down as the government increasingly restrains the fiscal stimulus, and has recently increased interest rates by a quarter percent in fear of a real estate bubble.” Developing countries are showing increasing concerns about capital flows into their markets, creating an asset bubble. Capital controls and higher interest rates are being employed to temper unbridled growth. As a result, the DCCI concludes that another modest increase is expected in downstream capital costs in the near term as recovering construction activity and further increases in raw materials prices push costs closer to their prerecession highs. „

“Higher commodity prices and a weakening US dollar continued to be the driving force behind the steady rise of costs in the downstream sector”

04/02/2011 16:05

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02/02/2011 11:16



Revamping your hydrotreater Can an existing low-pressure hydrotreater be revamped for production of ultra low sulphur diesel (ULSD) in an economically feasible way? Yes, according to Topsoe’s Jesper Rodtjer and Yassir Ghiyati. They tell Oil & Gas why.


evolutionary steps in catalyst research have made it possible to go down to ultra low sulphur diesel by minimum process changes in an existing unit, and Topsøe’s experience is that can be economically advantageous to revamp an existing hydrotreater rather than building a grassroots plant. The decision of whether to revamp an existing hydrotreater or build new hydrotreating capacity may be influenced by several factors, e.g. existing unit pressure and capacity, feedstock properties (straight or cracked stock, feed endpoint, sulphur content), present and future crude slate, expectations on future regulation of sulphur and aromatics, plant location (Middle East, North Africa, Europe, USA etc.), and corporate clean fuels goal.

“Topsøe has revamped 57 diesel hydrotreaters for production of ULSD” It is not necessary to consider only the same licensor for the revamp as an original licensor. Rather it is important to select a licensor that through understanding of the interplay between catalyst and process solutions will arrive at the optimal solution. Topsøe has revamped 57 diesel hydrotreaters for production of ULSD, and all 57 hydrotreaters were not originally licensed by Topsøe.

Things to consider before revamping a lowpressure unit For a revamp to be successful it is necessary to make a thorough study as it can be difficult to predict bottlenecks. Examples of bottlenecks are compressor limitations, pump limitations, amine flow limitations, H2S handling limitations, wash water limitation, metallurgy limitations etc. There are many things to consider and it is not easy for the refi ner to gather experts within all these fields, whereas licensors can. Topsøe approach is to prepare a revamp study including a test run to collect data about the performance of the existing hydrotreater. In this study, Topsøe summarises the pros and cons of different revamp cases including a detailed economic study. The client can then make an informed decision about the revamp configuration to implement. Catalyst selection is a vital part of the revamp. A broad

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range of high activity catalysts is necessary for optimum product yield, conversion, extent of desulphurisation etc. Change in the catalyst may require change in the process, e.g.: changing MW in recycle gas has an influence on compressor performance. It is important that the licensor is also a catalyst supplier and can help to predict these issues and help solve them. Reactor internals are important for optimum utilisation of modern catalyst systems and are critical for ULSD production. A change to high efficiency reactor internals will be a natural part of an ULSD revamp.

Jesper Rodtjer

Revamping a low-pressure unit – industrial example The Catalytic Hydrodesulphurisation (CHD) unit at the BP Coryton, UK refi nery (Now owned by Petroplus), was built in 1968 and has been revamped extensively since then to a capacity, which is more than three times the original capacity. The feed was a blend of kerosene, AGO, LVGO and Heavy Cat. Cracker Naphtha (HCCS). Operating conditions were: Yassir Ghiyati

Unit pressure, bara


Treat gas rate, Nm3/m3


Diesel feed sulphur, wt%

0.3 – 0.5

Feed cut-point, °C


Jesper Rodtjer and Yassir Ghiyati are both Technology Sales Managers working in Haldor Topsoe A/S, the leading supplier of ultra low sulphur diesel (ULSD) solutions for refiners

BP’s original understanding was that a new high-pressure unit for 10 wppm diesel production was required, and five licensors were invited to bid for this unit. Topsøe was selected out of two licensors, both confident of revamping the low-pressure unit for ULSD production. Revamp modifications included a new reactor in series with the existing reactor, a new compressor rotor, addition of a wash water system and a new stripper pre-flash drum and re-tray to off-load product stripper flood limit. Both reactors were fi lled with a new charge of Topsøe’s CoMo catalyst. A successful test run was completed to demonstrate the revamped unit’s capabilities for production of 10wppm sulphur diesel. The catalyst activity obtained was excellent during the entire fi rst catalyst cycle, and the client decided to purchase Topsøe CoMo catalysts for the two subsequent catalyst cycle. „

07/02/2011 11:43

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02/02/2011 11:17



SHARING THE WEALTH Knowledge sharing, transfer and retention are increasingly becoming key business enablers for the oil and gas industry. O&G speaks to knowledge sharing experts at Shell to uncover the oil giant’s innovative approach. Lorna Davies reports.

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nowledge sharing is a tool of great importance in the oil and gas industry. BP, for example, has partnered with other major corporations such as Xerox, Lucent Technologies and Kraft Foods in extensive research into the relationship between knowledge and performance. Within organisations themselves, according to the Oil and Gas Collaboration Survey 2009, more traditional processes such as electronic fi le sharing, databases or repositories, conference calls and meetings or written documents are most commonly used, despite employees expressing the need for more of a technologically innovative approach. But increasingly, oil majors are catching on. Shell, for instance, has put a great deal of effort into creating a knowledge-sharing programme that makes the most of the tools and processes the company already has in place, and acknowledges the importance of the different types of knowledge that help people perform their daily work effectively. Shell uses knowledge management teams to accelerate teaching and coaching around the options and tools available for knowledge sharing. As Houston-based Ed O’Neal, Manager of Learning Transfer for Upstream Americas at Shell, explains: “Where we have such teams, the speed of implementation of knowledge sharing is much faster.” For many years, the exploration and production industry has been a global leader in the development and effective use of collaboration processes and organisational models; virtually all of the large E&P companies have a dedicated team focused on knowledge sharing, and Shell is no exception. But advances in technology make the sharing of knowledge much more attainable. O’Neal understands the need for this kind of formalised knowledge management scheme. “The need to share knowledge is easily understandable and very desirable, and increasingly there are tools and processes that can really make this activity even more valuable to the business,” he says. Shell is concentrating its efforts on moving from ‘pockets of excellence’ to a more widespread adoption of knowledge sharing. “Pockets of Excellence represent organisational units where leaders really embrace the value of knowledge sharing and actively support and participate in the work,” explains O’Neil. “In other areas, leaders are perhaps less committed or unconvinced of the value of this work and the people below them are, in turn, less motivated to participate in knowledge sharing outside of what they may do normally on their own. Our programme is about driving greater user engagement across the business.”

Worldwide reach Shell is a global company with units spread across the world and, as with many multinational organisations, such geographic reach can prove challenging in terms of knowledge sharing. Achieving the right balance between efforts spent embedding effective behaviours and developing appropriate IT solutions, as well as justifying the effort spent on knowledge management by trying to tie down the moving target of measured value, are the tasks facing Shell and other E&P companies. Managing an increasing number of disparate, home grown knowledge management solutions springing up all over the organisation is also a big challenge. And while the advantage of a large geographic reach is that organisations are able to source talent and ideas globally, the shift does affect organisational communication, strategy and business processes. Griet Johannsen, Manager of Learning Knowledge Sharing at Shell, understands the ongoing awareness and communication needed to share key knowledge with such a dispersed and varied workforce. “We need to reach new hires, engage with key stakeholders and promote the offer in an ongoing way,” she says. As such, Shell asks its employees to use the ‘AskLearn-Share-Win’ way of working. Th is encourages staff to ask before starting new activities, learn from what they know already and share their own knowledge and experience with their peers. “It’s about a mindset change,” Johannsen explains, “about adopting a different way of working. Th is is probably the biggest challenge as it requires encouragement from all senior leaders and line managers, and buy-in from each individual.”

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formal learning, from peers and experts can help new recruits get up to speed faster, being well connected to colleagues across the globe is essential for new staff

70% of business managers believe knowledge collaboration are important for revenue

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The first generation of Shell’s KM infrastructure focused predominantly on linking existing initiatives, many of which were gathered beneath what are now known as the Shell EP Global Networks – a collection of large technical and business communities of practice that now have more than 15,000 members. The value to Shell’s global business of these networks is estimated at close to US$300 million per annum. Building on this success, Shell Wiki is the company’s internal, global encyclopaedia for Shellspecific content managed by individuals and communities. Launched in 2007, the service was initially low profi le and used only by a few enthusiasts. It rapidly took off, however, and today has 70,000 registered users – roughly two thirds of the entire Shell population – with around 3600 people publishing their content on the Wiki. “We think this is a good number after three years but we know we still have to optimise it by making the editing process easier,” Johannsen says. “However, it has a very good search engine and people here really like that. We use it quite a lot in the context of learning, for example, by making study materials available on Shell Wiki.” Accuracy and security are key issues with any knowledge management strategy, and something Shell takes very seriously. After discovering that some pages were ‘orphanised’ (i.e. left unfi nished or not linked to other Wiki articles), the team now ensures every Wiki page has a designated owner. Th is way content is kept current and if someone departs from the team, page ownership moves to his or her successor or another person. “Shell Wiki content is community controlled,” explains Johannsen. “There’s no department checking everything that people enter. But you have the same risks if you put something on an intranet or store fi les in a document management system – it needs to be accurate, current and the context needs to be clear.” Security is another concern. One worry in particular is that the information could fall into the hands of a rival company. To counter such threats, Shell Wiki, as with all Shell applications, is managed within a secure, firewallprotected IT environment. Anonymity is also impossible on Shell Wiki, as each individual’s activity is tracked. And despite such concerns, Shell now sees online tools for knowledge sharing as an essential part of its operating model. “We have online global communities of practice connected via discussion forums, the Shell international Global Networks (SIGN), with around 40,000 members. Additionally, face-to-face and virtual networks play a key role in collaboration and learning,” Johannsen says. Shell has also added Shell Tube, another service by which Shell employees can fi nd or share information. The site has masterclass videos, short training clips, messages from senior management and key speeches. It’s a trend that is increasingly being recognised as essential by many of the key players in the industry. The Oil and Gas Collaboration Survey 2009, conducted by PennEnergy in partnership with the Oil & Gas Journal and Research Centre, surveyed engineers, geoscientists and business managers worldwide and found that more than 70 percent believed that collaboration and knowledge

sharing are important for driving revenue, cutting costs and contributed to the health and safety of worker. The survey also revealed how much time could be saved with the implementation of sharing tools such as Shell Wiki and highlighted the role of more effective collaboration tools: 41.5 percent of those polled said they could save at least one hour everyday by using newer and more effective collaboration tools such as social media.

Strategy for success Ensuring that the required behaviours for effective knowledge sharing are embedded in staff teams globally is a fundamental challenge for oil and gas organisations everywhere. In response, Shell has provided significant support to coach people on how to work and even think in new ways. An enormous task has been reduced to something more manageable with the implementation of a successful knowledge sharing strategy. Knowledge sharing acts as a support for Shell in achieving its overall objective of engaging efficiently, responsibly and profitably in oil, oil products, gas chemicals and other selected businesses. Johannsen explains how knowledge sharing also supports Shell in its search for and development of other sources of energy to meet evolving customer needs and the world’s growing demand for energy. “Informal learning, outside the classroom or in the workplace, from peers and experts can help new recruits get up to speed faster,” she says. “Being well connected to colleagues across the globe is essential for new staff – and our online communities of practice offer this connectivity, as well as practical advice and help. In some technical functions, new recruits are introduced to knowledge sharing as part of their ‘on-boarding’ programmes – but we don’t do this consistently yet.” Shell Wiki was a surprise hit with Shell staff. “I remember our team celebrating when we had our fi rst thousand users,” Johannsen recalls. “In the beginning we didn’t anticipate it being that successful after such a short period of time, because there were so many people who were sceptical about it.” Critics thought the ability to go in and edit other people’s articles would hinder the Shell Wiki experience. While Shell found few problems with this, it has now implemented ownership banners to the site in order to address concerns. Indeed, staff attend mandatory training to understand the principles of managing content in line with Shell standards. “It is not permitted to share confidential or export controlled content via Shell Wiki. Users accept these terms of usage when they enter Shell Wiki for the fi rst time, and these rules are permanently available on the Shell Wiki main page,” Johannsen explains. And although individual activity is tracked, a certain amount of trust is needed, as O’Neal explains. “We emphasise the importance of understanding our standards and the way we operate, but we have to trust them to do the right thing,” he says. “If they’re not doing that then we deal with it as a separate issue. However, we don’t have controls to prevent someone from copying information on to a memory stick and giving it to somebody.”

07/02/2011 11:55


02/02/2011 11:17



The company also has various training courses available online, with Shell Wiki used as the source for study materials. For example, Shell offers a Production Chemistry course and in 2007 around 50 people signed up; however, statistics showed that over 4000 Shell people were using the material and experiencing the benefits. In this way, Shell Wiki allows for both workplace learning and more formalised training. Social media is also playing an increasingly important role in knowledge sharing. Research shows that the industry loses almost half a billion dollars annually due to inefficiencies around fi nding, using and sharing information among engineers alone, while around 40 percent of oil and gas professionals believe adoption of social media tools, including social networking sites, would boost productivity. Shell has obviously taken this on board with Shell Wiki and other interactive knowledge sharing sites, but research indicates that few fi rms have the tools in place to effectively capitalise on the social media opportunity. Most global companies need to innovate, optimise and standardise their business processes, develop their people, or are facing up to generation gaps related to demographical changes – and in that respect, the oil and gas industry is not much different from other industries. But, as O’Neal explains, there are good reasons for oil and gas companies to embrace the social media revolution. “One of our very active expert communities is the Health and Safety Environment group – you can see high activity levels in their online discussion forums, such as in the area of learning from incidents. In view of the size of projects in our industry, a strong focus on project delivery – on time, on budget – is very important. Th is is an area where well-connected

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41.5% Business managers could save 1 hour a day with collaboration tools

professionals sharing their knowledge and experience can really contribute to better business performance.”

Lessons learned Managing staff relations plays a key role in maintaining the success of the oil and gas industry. Companies are obviously striving to avoid the mass layoffs that crippled the industry in the 1980s, but the new effects of employee interaction patterns and accountability may also be difficult for employers to adapt to. Knowledge sharing such as Shell Wiki, however, enables active participation of both senior and younger workers so knowledge is captured in an easily transferable way. Many oil and gas companies are highly dependant on the knowledge and expertise of senior workers. Success in the future will hinge on the active participation and buy-in of this key group and the capture of their knowledge in a way that is easily transferable to a younger generation of workers. Shell intends to make this a key focus by strongly encouraging robust succession planning well in advance, with a clear plan of how to pass on critical knowledge from older, wiser employees to their successors and other parts of the organisation. “We have several methods to help people convey their expert knowledge to others,” says O’Neal. “If you have a person who is a single expert, you have got to have a clear succession plan for that person and you need to start offloading that knowledge – not 90 days in advance, but sometimes years in advance – and start preparing other people to have that knowledge and to be able to use it effectively.” Shell also implements knowledge transfer sessions to capture critical knowledge that is not already documented in procedures, policies or other ways. The company is focusing on an information strategy that ensures people store working documents and other information in a way that can be easily accessible to other users in the future. “You can imagine how many key documents a person could generate over a 15-year period and how they might organise this information in a way that only makes sense to them,” says O’Neal. “Overcoming that and instilling a change in working practices is challenging, but essential.” Finally, the last aspect Shell is working on to ensure the successful transfer of information is by connecting people through its system of technical or functional networks, such as Shell Wiki. The issue of experienced, knowledgeable employees retiring and taking a wealth of knowledge with them is one facing a number of industries, but is particularly relevant in a highly technical industry such as the oil and gas sector. Companies such as Shell and ConocoPhillips, for example, have three generations of employees working together sideby-side or dispersed around the world, with a significant number planning to retire soon. Th is, plus regular attrition, creates the need for effective knowledge sharing – but its an area the industry is starting to address. Shell has its Wiki, while ConocoPhillips has regular intranet-based discussion forums, online search tools and content management processes to ensure the smooth transfer of skills and information between different generations.

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ith Shell leading the way, the oil and gas industry has become increasingly savvy in its use of information portals. Sharing insight into how best to resolve difficult industry challenges such as health and safety, environmental concerns or avoiding loss of revenue will enable the industry to overcome these challenges. ConocoPhillips has already felt the benefits of successful business collaboration. The company created and implemented a new Production Optimisation Centre in their North Sea Business Unit and found that, along with reducing production losses, the POC improved production coordination, planning and communication. As many E&P companies have experienced, digital oilfield technology has allowed operators to made significant progress in addressing critical business challenges. Subsea services and construction support firm DeepOcean was among the first in its industry to implement the Windows platform for its onshore operations and offshore data processing. The firm has since migrated onto Windows 7 and Windows Server 2008 R2 due to its need to support its sales force and engineers who travel between onshore and offshore locations. Statoil also wanted to improve employee productivity by ensuring workers could fully collaborate within its increasingly global operations. The oil company also intends to implement Windows 7 and Windows Sever 2008 R2 enabling heightened communication between its employees.

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The big crew change Concerns and discussions surrounding the aging workforce and massive retirements of experienced professionals in the E&P industry have grown over the last decade, but the global economic crisis caused many experienced professionals to postpone retirement and delayed the dreaded ‘brain drain’. In addition, lower revenues have meant some companies have reduced or put on hold their recruitment drives in an effort to control tighter budgets. As a result, forward thinking fi rms can seize the moment to recruit engineering graduates from the larger pool graduating in 2011 and begin transferring knowledge from their experienced workers who have postponed retirement Indeed, the so-called ‘big crew change’ – the race to recruit the skilled engineers and others needed to continue profitable operations – has been successful in increasing the number of graduates heading into the petroleum industry. Although the greater impact on personnel is mainly in the US and Europe, companies in emerging oil and gas areas also have significant needs for engineering staff, further challenging the talent supply. To meet the projected need for petroleum engineers, universi-

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We emphasise the importance of understanding our standards and the way we operate, but we have to trust them to do the right thing

ties around the world with petroleum engineering programmes have increased enrolment. US universities, for example, have expanded their programmes and are now producing more graduates – there were 675 graduates from petroleum engineering departments in 2007-2008, 973 in 2009-2010 and an estimated total of 1202 graduates from petroleum engineering departments in the US for 2010-2011. Meanwhile, the number of graduates attending recruitment fairs for the science and technology sector were higher than ever this year, according to the UK’s Oxford University. Appealing to such a demographic – the so-called digital natives, for whom using technology comes as secondnature – will be key for the industry, and as the Oil and Gas Collaboration Survey has shown, the integration of information portals and social networks would be both an innovative step towards higher levels of knowledge transfer in the oil and gas industry, and a good selling point for attracting new, IT-savvy recruits. Shell, with its use of Shell Wiki and other interactive technology approaches, is successfully capitalising on this trend – enabling employees to interact and share knowledge that is now vital to the future prosperity of the industry. 

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Events | Gadgets | Travel | Books | Leisure Lybia opens up for business

36 hours in Cairo

The best business reads of Q4

What’s on this quarter





The World Cup comes to the Middle East


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Time to visit Libya? Time : EET (UTC+2) | Currency: dinar | Population : 6.5 million


ited by experts as “an untapped goldmine”, the economic landscape of the North African Islamic state Libya looks ripe for development. The International Monetary Fund predicted last year that the country would enjoy a 10 percent growth in its GDP by the end of 2010 and with 46 billion barrels in proven crude oil reserves and 1.5 trillion cubic metres of proven natural gas supplies, Libya has the largest proven fuel resources on the African continent. In the five years since the US lifted sanctions on trading with Libya, such powerhouses as BP and Exxon Mobil have moved in to capitalise on the country’s impressive fuel wealth, and according to Energy Minister Dr. Shokri Ghanem in an interview he gave back in 2009, some 50 international companies are currently in Libya conducting operations in the upstream sector and the government plans to invest US$42 billion into exploration and development of the energy sector in the five years up to 2015. Still, uncertainty surrounding the country’s political future is growing. Premier Muammar Qaddafi’s two sons – who each could stand to take over leadership of the country from their father – have two very different political stances. Saif al-Islam Qaddafi, the younger of the two, a media baron and liberal, is intent on opening up Libya to foreign investment while his brother Mutasim-Billah, who currently stands as Libya’s national-security adviser, takes a more right-wing approach and would prefer to keep the Libyan market closed from international input. However, one thing is for certain. Sparked by some of the largest proven oil reserves in the world Libya’s economy is growing, and while the country’s investment landscape may be unsure if it is ready to welcome the international market, the tourism sector certainly is waiting with open arms. The booming oil and gas sector, backed up by the potentially lucrative construction development market, is drawing increasing numbers of visitors to the country for business purposes, paying dividends to Libya’s growing tourism industry. “Tripoli has seen an increase in supply of late,” explains Philip Camble, Director of Cushman

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& Wakefield Hospitality for the EMEA region. “The new Radisson opened 15 months ago. You’ve got the Al-Wadan Hotel. You’ve got the Rixos Hotel, which opened earlier this year. These are all running at reasonable occupancies and reasonable rates. Everybody thought the market would collapse when they opened but it hasn’t, and that’s largely because of all the business tourism that’s going on there.” As an emerging destination, Libya is yet to embrace a legislative framework to facilitate large-scale foreign investment. While undoubtedly throwing up a host of challenges, the scope for development and investment is wide in the North African state. Just as giants BP and Exxon Mobil have entered into the region, so other international firms have managed to find a way into the market. US based Hess Corporation operates with Libyan subsidiaries in order to hold a presence in the market; Algerian giant Sonatrach made discoveries at a site owned with Libyan National Oil Company. Q3 2010 saw Switzerland’s Vitol eyeing a stake in Libyan refinery. The potential to be gained from these operations is also showing positive signs. California’s Occidental increased its oil output at its Libyan well from 8000 to 22,000 bpd between 2008 and 2009. “If [Libya] opens up then there’s tremendous potential,” says Camble. “It’s very close to Europe. It’s got some incredibly tourist sites waiting to be exploited. It is literally a sleeping giant. But I think oil and gas are going to be the mainstay of their economy for some time, and even if they choose to close the route, that will continue to develop.” Still, while the Libyan government mulls over its decision to open the country up to the European tourist market, the hotel sector is continuing to develop, feeding the lucrative market of business travellers flocking to the country in order to tap its immense economic potential. And that is reflected in the hotels’ product. With less emphasis on luxury amenities such as gyms or spas, Tripoli’s five star venues boast more of their business centres and their proximity to ports or airports. “If the country continues to diversify its economy and become more open to foreign investment then yes, those hotels will fill.”

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Open for business… Radisson Blu Al Mahary Hotel, Tripoli The majority of Libya’s business tourism traffic comes direct to its capital Tripoli. This hotel’s waterside location over looking the Mediterranean makes for some beautiful views, but more importantly the business suites are ideal for creating a comfortable and constructive working environment away from the home and office. The suites include a meeting room, connecting to private living rooms and bedrooms. In addition to private suites, the Radisson is equipped to facilitate corporate events with meeting rooms of various sizes and 600 capacity ballroom.

Rixos Al Nasr, Tripoli

Al Waddan Hotel Tripoli

Opened a year ago in Q1 2010, the Rixos describes itself as a ‘business hotel’. While its business rooms do not have inter-connecting private meeting rooms like the Radisson, they do have the luxury typical of the Rixos brand. In addition there are a dozen meeting rooms and conference centres of various sizes spread across the ground and basement floors to accommodate the hotel’s business clientele.

The Al Wadden is actually one of the oldest hotels in the city, but recently underwent renovation. While smaller than the Radisson and Rixos (it describes itself as a boutique hotel) it still offers a ballroom for larger corporate functions and a boardroom smaller scale meetings. With less than a hundred rooms in the whole hotel, the Al Waddan does not offer any business suits specifically, however all rooms are fitted with such fixtures as wireless internet and work desk to make them amenable for the business traveller.

46 billion barrels in proven crude oil reserves

1.5 trillion cubic metres of proven natural gas supplies

The government plans to invest

US$42 billion into exploration and development of the energy sector in the five years up to 2015

Under development… The Sheraton Tripoli Hotel

JW Marriott Hotel, Tripoli

The site for the forthcoming Sheraton is beach facing, making for a popular tourist hotel. Still, Sheraton is boasting that the final product will offer 15,000 square feet of conference space, including a grand ballroom and 16 individual meeting rooms. The site is an easy 10 minutes from Tripoli port and 30 minutes from the airport. The Sheraton Tripoli is due to open September 2012

The international company has yet to publish much information about its forthcoming project in Tripoli. The 370-room hotel is a comfortable size and will come complete with business facilities. Wynn Las Vegas The JW Marriott Hotel Tripoli is due to open in 2011

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On the road again Mecedes-Benz BIOME

Fresh from the German brand’s Los Angeles design studio, the BIOME has been tagged as an “ultralight vehicle at one with nature”. The car is made from a material called BioFibre – supposedly considerably lighter than metal or plastic and more robust than steel – and weighs in at tiny 394 kg. Powered on biofuel, Mercedes claims that this vehicle emits only pure oxygen and also says that at the end of the car’s serviceable life it can be composted or used as building materials. MENA Infrastructure says: Designed as part of the Los Angeles Design Challenge, this vehicle is impressive to say the least, but we’re not sure they’ll be available in the shops just yet.

This car is a slimmed down version of previous models, a full 65 kg less than the Superleggara. This has been achieved by swapping leather interior for Alcantara, fixing lightweight wheels and a frivolous use of carbonfibre in the body work. Top speeds of the Performante reach 323 kilometres an hour and makes 0-100kmp in 4 seconds.

Lamborghini Gallardo LP5704 Spyder Performante

MENA Infrastructure says: Similar to previous models apart from the weight loss, this is not something we haven’t seen before. Still, Lamborghini rarely disappoint and the speeds of this model are enough to tempt us. Prices are expected to be around US$260,000 and first deliveries are projected for end Q1 2011.

Porsche Caymen R

Cousin to 911, the Caymen R has a 325 bhp and, as is the trend this season, has cut weight from previous models by using carbonfibre for the interior, aluminium doors, smaller fuel tank and the lightest set of wheels made by Porsche. It runs up to 100 kmp in five seconds, still slower than the 911 but faster than its predecessor, and retailing at US$63,490 in the Gulf makes it a healthy US$15,000 less than the 911. MENA Infrastructure says: Stripping the air conditioning may have improved the minimalist aesthetics of the car’s interior, but it’s not ideal for driving in the Gulf.

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36 hours in... Cairo Time: UTC+2 Population: 17.3 million (Urban) Area: 453 Square km (City) Elevation: 23 m

In the know Home to almost 20 million residents – who fondly nickname their city ‘Mother of the World’ – Cairo is the beating heart of Egypt. A city wrapped in ancient history, economic growth and Islamic culture, Cairo is at once the commercial centre of Egypt and a beautiful metropolis rich in ornate architecture. Sitting astride the rambling Nile, Cairo has long been well positioned as a trade hub uniting the East with the West, and remains today a booming economic city and site of some of the most attractive tourist destinations in the world. Between the Khan Al-Khalili market place, the myriad cafes and coffeehouses and the art galleries, visitors can experience the culture of cosmopolitan Cairo, though only minutes from the sites such as the Pyramids of Giza and a multitude of museums showcasing the ancient Egyptian Empire.

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Eat Those looking for a taste of something traditional with a twist of class should head to Abou El Sid to sample a mezze, or a classic Egyptian chicken dish of molokheya. In addition to the delightful food visitors can enjoy traditional sheesha after dining. Alternatively, Abou Shakra is a popular dinner spot with the locals, having served everything from Egyptian style kebabs to western-style beef fillet for over 60 years. A strictly Muslim restaurant, Abou Shakra serves no alcohol. For a more original dining experience, try the Lebanese themed Dar El Amar, a floating restaurant situated on the river. The menu is very wide, with 53 mezzes to chose from, and prices are reasonable for a waterside eatery.

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Time off Of course, no trip to Egypt is complete without a visit to the Pyramids of Giza, the burial site of the ancient dynasties that once ruled over a sprawling empire. Proving popular with visitors looking to escape the crowds is the Dahshur field. Just as beautiful as the Giza strip, this site of forth and 12th dynasty Pyramids was an off limits military zone until 1996 and remains free of large tourist parties. For a more religious landmark, take a trip to the Mosque and Madrasa of Sultan Hassan. Completed in 1366 with stones from the Pyramids, this is reported to be one of the oldest mosques in the world. Alternatively, Cairo’s city centre offers a bustling hub of culture waiting to be soaked up. Enjoy a lazy morning at the 200 year old Fishawi’s Coffeehouse or the charismatic Simonds café.

Sleep Cairo’s Intercontinental Semiramis provides a good base for enjoying the sights and sounds of the city and its café is ideal for watching a sunset over the Nile. Alternatively, the Cairo Marriott Hotel is a wonderfully opulent retreat from the chaos of the city, and its distance from the city centre makes it the ideal spot for conferences and meetings. That’s not to say that the hotel is lacking in hospitality or charm; its lush green gardens and lagoon pool help guests to completely relax. Just outside the bustle of Cairo, on the Giza Plateau, the Mena House Oberoi is a stately home turned charming guest house, with views out over the Pyramids, grand interior décor and jasmine-scented gardens.

Facts - Cairo was established in the 10th century, but long before that land had been the site of the many ancient capitals. - Cairo currently has the only metro system on the African continent. - Cairo is the largest city in the Arab World, as well as the largest city on the African continent. - Cairo is home to al-Azhar University, the second oldest institution of higher learning in the world.

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On the shelf O&G’s roundup of this quarter’s must-read business books for the region’s oil and gas executives.

FUEL ON THE FIRE Oil and Politics in Occupied Iraq by Greg Muttitt Oil lies at the heart of Iraqi politics. Yet in the eight years since the bombs began to fall on Baghdad it has been a taboo subject. In Greg Muttitt’s gripping and far-reaching investigation we are taken behind the scenes of the occupation to answer one of the war’s most pressing questions: what is happening to Iraq’s oil? Drawing on hundreds of unreleased government documents and extensive interviews with senior American, British and Iraqi officials and oilmen, Fuel on the Fire reveals how the occupying powers have sought to return Iraq’s oil industry to multinational companies – and why attempts to impose a Western oil agenda have dragged the country into ever-deeper violence and continue to shape not just Iraq but the future of energy supplies and Anglo-American military strategy.

O&G says: Fuel on the Fire is vital to our understanding of the war in Iraq and its consequences. It documents the clash between cultures and strategic interests, and reverberates with echoes of the West’s imperial past and of its tragic failure to learn the lessons of history.

Published on 7 April, 2011 by Bodley Head

IN TOO DEEP BP and the Drilling Race That Took it Down by Stanley Reed and Alison Fitzgerald By the time it plugged the hole at the bottom of the Gulf of Mexico following the Macondo well blowout, BP had become the biggest oil polluter in US history. And while some commentators suggest this was bound to happen and BP was simply the unlucky company to which this disaster befell, Stanley Reed, who has been covering the company for over 10 years, and investigative journalist Alison Fitzgerald, think otherwise. In Too Deep suggests that there is a reason it was a BP well that blew, and not one that belonged to Exxon or Shell – and that the blame may lie in BP’s culture of risk-taking and hard focus on financial results. They reveal how former CEO John Browne built a company focused on acquisitions and cost cutting – cultural assets in some areas that ended up being cultural poison in the area of deepwater drilling.

O&G says: BP may have successfully killed the company’s damaged deepwater well, but the environmental fallout and public relations campaign to rebuild the brand are just beginning. In Too Deep details why BP suffered this disaster, why now, and what’s next for the oil giant.

Out now, published by John Wiley & Sons

OIL’S ENDLESS BID Taming the Unreliable Price of Oil to Secure Our Economy by Dan Dicker The price of oil is negatively impacting both companies and consumers. In Oil’s Endless Bid, energy analyst Dan Dicker recalls his experiences as an oil trader and reveals the changes that have taken place in the oil markets during the past 20 years – and particularly in the last five, as investment banks, energy hedge funds and managed futures funds have come to dominate energy trading and wreaked havoc on prices. The book reveals why oil prices cannot stabilise without dramatic action on the part of both government and business, details how the novel (but wrong) idea of oil as an asset class took a sleepy, club-like market into the national spotlight, and describes how the US is unnecessarily handing over wealth to foreign oil producers during a time when the potential supply of oil is greater than ever.

O&G says: Written by an industry insider, Oil’s Endless Bid analyses the biggest financial story of the last 10 years – how we lost control of the oil markets – and provides expert analysis of rising oil prices and the volatile oil markets that jeopardise both international security and the economy.

Published on 23 March, 2011 by John Wiley & Sons

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Coming up Qatar Masters Part of the iconic PGA European Tour, the Qatar leg is the perfect opportunity to welcome Europe’s finest golfers onto Persian soil, as well as providing the Gulf’s up and coming golf stars a chance to shine. Indeed, along with a comfortable prize of US$2.5 million, golfers play for the chance to earn a spot jazz festivalon the European Ryder Cup team.

02-06.02 Drawing in excess of two million visitors annually, the Muscat Festival is one of the Middle East’s finest cultural events of the year. Including everything from theatre to music to art exhibitions to sporting events to seminars on Islam, the event is both as stimulating and enriching as it is fun.



Muscat Festival

Skywards Dubai International Jazz Festival A multi-award winning event that attracts some 40,000 visitors every year, the Skywards Dubai International Jazz Festival will not disappoint. Now in it’s ninth year, this event showcases some of the finest quality music to be heard this side of the Atlantic. And to complement the festival, street entertainment runs alongside.

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RAK Half Marathon


With 2011 marking its fifth anniversary, the Ras Al Khaimah Half Marathon is the most lucrative half marathon in the world (with prizes worth more than US$250,000) and attracts some of the finest long distance runners from across the world. In addition, this situation of this run allows both visitors and runners the added attraction of being able to explore the lesser known states of the UAE. The course offers the half marathon, as well as a Team Relay Challenge and a 6 kilometre fun run.

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Dubai International Racing Carnival

The Bahrain International Exhibition Centre fills with all the trimmings that make up these impressive and meticulously detailed gardens. Showing off the latest garden technology, must-have accessories and the most stylish landscape designs, the Bahrain International Garden Show offers visitors conferences and workshops that will help you to get the most out of your garden.



Attracting some of the best racing horses from across the world, the Dubai International Racing Carnival offers more than a million dollars in prize money. Races are held at the Meydan Racecourse, where visitors can enjoy exquisite dining to complement the entertainment.

The Big Boys Toys Super Show At the Abu Dhabi National Exhibition Centre, this show is ideal for those who desire the biggest and best of everything. Showcasing the finest gadgets and gizmos, visitors can catch glimpses of everything from high-performance cars and top speed motorbikes to dune buggies and lounge boat, from private jets and remote control aircrafts to home theatre systems and fitness equipment.

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Bahrain Grand Prix The first such event to be held in the Middle East, the Bahrain leg of the Formula One Grand Prix is now in its seventh year marks the opening on the new season. Held at the Bahrain International Racing Circuit, this event attracts fanatics of the sport from across the world. Expect to smell burning rubber, hear the roar of the world’s fastest engines and maybe spot some of the sport’s international superstars.


Bahrain International Garden Show

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On December 2, 2010, President of FIFA Sepp Blatter announced that Russia and Qatar had been selected to host the 2018 and 2022 World Cups respectively. This is the first time for both countries to host the tournament; indeed the Qatar bid marks the first time the event will take place in the whole Gulf region. Two of the most resource rich nations in the world, Qatar and Russia were both able to agree to sizeable investments in infrastructure to support the events. Blatter stated that FIFA was looking to take football to “new lands”.

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Doing more with less is a priority for the vast majority of firms involved in the oil and gas sector. As such, the role of IT is more import...