OIL AND GAS SUPPLEMENT 2015
THE NEW NORMAL
Low prices are driving long-term shifts in the oil and gas industry PLUS TOP 10 OIL & GAS GCC UPSTREAM PROJECTS 00 - Cover FINAL.indd 1
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21.10.15 09:48
INTRODUCTION
04 GROUP GROUP CHAIRMAN AND FOUNDER
GROUP COO GINA O’HARA
06 CHINA IMPACT
EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 6830
ADVERTISING & MARKETING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 971 4 375 6842
DESIGN HEAD OF DESIGN GLENN ROXAS SENIOR DESIGNER ODILAINE SALALAC-MEJORADA
CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH NAIR rajeesh.nair@cpimediagroup.com +971 4 375 5682 PRODUCTION MANAGER JAMES THARIAN james.tharian@cpimediagroup.com +971 4 375 5673
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DOMINIC DE SOUSA GROUP CEO NADEEM HOOD
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Early days of change ow oil prices are gradually making their impact felt in the GCC region. The GCC downstream sector is likely to feel the pinch, notes a recent S&P report, as the emerging fiscal deficits could result in higher feedstock costs over the coming years for private, and government sponsored downstream corporates in the region. S&P also expects the pace of substantial capacity increases planned for the region to be reviewed in light of the pressure on government budgets. On the upstream front, though, the governments seem to be determined to stick to their long-term plans, a good example being Petroleum Development Oman’s investment in Solar enhanced oil recovery (EOR) through a 1GW solar thermal facility. The UAE is also pushing ahead with its plans for Bab Sour Gas Development. The responses to low oil prices may be varied, but the oil and gas industry globally is going through a paradigm shift, where the OPEC has conceded its role of swing producer to the US, and one of the biggest buyers of Middle East crude, namely China, is itching to become a price setter. Interesting times, indeed.
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© Copyright 2015 CPI. All rights reserved
While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.
Anoop K Menon Editor Infrastructure Middle East anoop.menon@cpimediagroup.com Oil & Gas Supplement 2015
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20 Top 10 OIL & GAS GCC UPSTREAM PROJECTS INFRASTRUCTURE MIDDLE EAST
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QUOTE BOARD
OIL & GAS INDUSTRY COMMENTARY September 1, 2015 – October 29, 2015 HE Abdalla Salem El-Badri “All of usGeneral should work together, OPEC and non-OPEC, Secretary of OPEC work together to get rid of this overhang. There is one problem we are facing: the overhang of 200m barrels” Abdullah al-Badri, Secretary General, Organisation of Petroleum Exporting Countries (OPEC)
First name:
Abdalla
Family name:
El-Badri
“Despite the North American oil rig count falling over the last year, technological Date of birth: improvements 25 May 1940 have exceeded expectations to keep shale oil production steady if not in a state of Place of birth: Ghamminis, Libya constant increase. As oil prices started declining Marital status: married, five children in the face of incremental supplies from the US, it Education: BS degree in Accounting Business Administration, Florida Southern, US was only rational for and OPEC not to cut production” Advanced courses in Finance and Management, US and Libya
Christof Rühl, Global Head of Research, Abu Dhabi Investment Authority Posts held: 1965–77
1977–80
1980–83
Worked with Esso Standard (now ExxonMobil) – Assistant Accountant – Coordinator Management Information Systems (MIS) – Assistant Controller
“We expect this year, in 2015, global oil investments to be 20% less than 2014. This is the biggest decline in oil history. As a result of this, we Member of the Board of Directors, expect that next year, US oil production will fall Umm Al-Jawabi Oil Company (ex American Amoseas) by 400,000 barrels per day because of projects not making economic ... We may well see soon Chairman, Waha Oil Company, a joint venture company betweensense National Oil Corporation, Conoco (now ConocoPhilips), Amerada Hess and Marathon Oil upwards pressure in price” Fatih Birol, Executive Director IEA
“Our policy is that all foreign companies can bring their investment, technology and advanced management skills to develop our oil industry”
“We aim to reduce our reliance on natural gas as it is mostly imported from other countries. We are trying on all fronts [to do so]; we are developing some new fields in ADNOC that will supply more gas, we are also expanding our options in terms of importing gas, expanding LNG, and Dolphin has upgraded their facility to be able to receive more gas if it’s available”
A c c e
HE Suhail Mohammed bin Faraj Al Mazrouei, UAE’s Minister of Energy
Rokneddin Javadi, Iran’s Deputy Oil Minister
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China’s oil pricing gambit The Asian giant is set to launch a rival oil benchmark to Dubai crude he role of Platts Dubai as the preferred East of Suez benchmark for Middle East oil sold into Asia could soon to be challenged by a new Chinese contract that is expected to be offered to the market in the coming months. Speaking at a media round table in Dubai last month, Dave Ernsberger, Global Oil Director, Platts said the world’s second biggest oil consumer plans to start a crude futures contract this year on the Shanghai International Energy Exchange. Dubai crude oil, determined by Platts, has been the main Asian benchmark since the mid-1980s. Platts currently assesses Dubai, Oman and Abu Dhabi’s Upper Zakum crudes, which account for a combined 1.2m barrels a day (b/d). Middle Eastern oil producers and derivatives markets use the Dubai benchmark to set prices for almost 30m barrels per day (bpd) of crude oil currently exported to Asia. The draft of the Shanghai futures contract was circulated to market participants in August. The contract will be one of the first commodity contracts available to foreign investors as China seeks more influence over pricing and promotes greater international use of its currency, the yuan. China is destined to become the largest oil consumer in the future so some may argue that it makes sense for the country to be the host for an oil futures contract in Asia. China’s consumption will exceed that of the US by 2034, according to the US EIA. The country produced about 4.6m bpd of oil in 2014, while its average net imports reached 6.1m bpd. China has already begun to loosen its grip on the physical oil sector this year by granting quotas for imported crude to privately owned refiners for the first time. With their country on its way to becoming the world’s largest importer of crude and fuels on a net basis means, Chinese traders can now exert considerable influence, and are no longer
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Evolution of China’s crude suppliers China’s Top 10 Crude Suppliers 2013
2014 Market share (%)
YTD 2015 Market share (%)
Market share (%)
Saudi Arabia
19.6
Saudi Arabia
16.1
Saudi Arabia
15.6
Angola
14.6
Angola
13.2
Angola
11.9
Oman
8.8
Russia
10.7
Russia
11.9
Russia
8.8
Oman
9.6
Iraq
9.7
Iraq
8.2
Iraq
9.3
Oman
9.2
Iran
7.4
Iran
8.9
Iran
8.7
Venezuela
5.5
Venezuela
4.5
Venezuela
4.8
Kazakhstan
4.2
UAE
3.8
Kuwait
4.1
UAE
3.7
Kuwait
3.4
Brazil
4.0
Kuwait
3.3
Colombia
3.2
UAE
3.2
Total (‘000 b/d)
5,666
Total (‘000 b/d)
6,193
Total (‘000 b/d)
6,656
Source: Platts China Oil Analytics
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SPECIAL REPORT
wary of doing so. In recent months, oil markets east of Suez have been roiled by the increasing influence of the trading arms of China’s state controlled oil giants, PetroChina and Sinopec. In August, PetroChina’s Chinaoil bid aggressively for cargoes in the price discovery mechanism run by Platts known as the Market-on-Close. This helped support the price of Dubai crude relative to other benchmarks such as the Brent but raised the ire of other market participants – traders and refiners - outside China. Ernsberger said monthly volumes have twice hit records in the past year, raising concerns on whether cargoes that can be delivered over Platt’s pricing mechanism may have hit an upper limit. To stay competitive and boost liquidity in the daily assessment of the Dubai benchmark, Platts is planning to add more Middle East crude grades. Platts has opened a formal consultation regarding the possible inclusion of Qatar’s Al-Shaheen and Abu Dhabi’s Murban in the basket of crude oils reflected in its Dubai and Oman crude oil benchmarks. Al-Shaheen production stands around 300,000 bpd. The crude is produced offshore Qatar by Maersk as part of an Exploration and
Production Sharing Agreement (EPSA) with Qatar Petroleum (QP). The grade typically trades in 600,000 barrel parcels while parcel size for Dubai benchmark is 500,000 barrel parcel. Murban production stands around 1.6m bpd. Murban is produced at onshore oil fields in Abu Dhabi by Abu Dhabi Company for Onshore Oil Operations (ADCO). The grade loads from two locations – buyer can nominate either location subject to terminal/operator acceptance. Ernsberger elaborated: “Everybody is happy to have more deliverable crude oil. Every crude you have has a balance between payoff in bringing the crude in and the pain that is involved in doing it. The payoff is enough additional volumes to really help with the tradeable supply. The pain is always how good the crude is in terms of specifications and logistics, and how easy is it to re-trade that crude. “Al-Shaheen is well accepted across Asian markets, mainly Japan, South Korea but interestingly enough, not much of it goes to China. On the other hand, Murban will be high-quality crude deliverable against Oman. Ninety per cent of Oman’s crude is already exported to China, and taking into account the buying interest in
Oman, we want to be sure there is enough alternative crude that can be delivered.” Based on the feedback from stakeholders, Platts hopes to move quickly with the changes to the basket with a final decision possibly before the end of the year. The Platts executive pointed out that China will also have to address headwinds against its contract with regard to currency and logistics if it wants to have say in setting oil prices. “The talk is that they want to denominate the trade in Yuan, which is not an easy currency to get in and out of,” said Ernsberger. “This might pose a major foreign currency risk for companies that might want to trade that futures contract.” “There is also the issue of small lot sizes. It will be tricky to trade a retail lot size when you want to buy and sell barrels of crude oil.” “There is also the question of alternative delivery crudes for the Chinese contracts. They have got fixed price differentials for these crudes, including some from the Middle East, for delivery. How this will work involving storage in China is a pure logistics challenge.” “Regional tensions mean that Japan and South East Asian nations will not be particularly enthused by a Chinese oil pricing benchmark.”
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DOWNSTREAM
GROWTH PANGS
China impact GCC petrochemicals industry contributed 31% to regional manufacturing GDP in 2014 etrochemical production in the GCC rose by 8.3% in 2014, making the GCC the second-highest growth region in the world. However, the slumping oil prices and the economic slowdown in China have had a direct negative impact on petrochemicals prices, with revenues declining from $89.4bn in 2013 to $88bn in 2014. According to the GCC Petrochemicals and Chemicals Facts and Figures 2014, which will be released at the 10th Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum in November 2015. The petrochemicals industry contributed to 31% of the GCC’s total manufacturing GDP, said the report released by the GPCA. “The health of the global economy since the decline in oil prices and the slowdown of the Chinese economy combined with
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the possibility of a nuclear deal with Iran, contributed to weak petrochemicals prices and created a difficult near-term outlook for the global petrochemicals and chemicals sector,” said Dr Abdulwahab Al-Sadoun, Secretary General, GPCA. “Given that the GCC petrochemicals producers are not price-setters, it means that Arabian Gulf producers need to be more agile, collaborative and innovative to succeed.” China is a crucial factor where the region’s hydrocarbons industry is concerned as the Asian giant is a major consumer of its crude oil as well as petrochemical exports. In fact, nearly 80% of the region’s petrochemical exports go to China. Recently, 32% of respondents in a Gulf Intelligence Survey conducted with 200 industry professionals said the outlook for China’s economic growth, which is experiencing its worst performance in decades, is the trigger of greatest uncertainty in the global energy markets.
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DOWNSTREAM
Even as the Chinese government’s targeted growth rate of 7% for this year, China’s economy is heading for its slowest annual expansion in a quarter of a century. Though many analysts believe the Chinese government is exaggerating current growth rates, with independent analysis claiming they are closer to 6%. After years of stability above $100 a barrel, Brent crude oil lost half its value in the second half of 2014, followed by a 50% rally, which ran out of steam over the summer and shed most of its gains. The uncertain outlook has triggered the cancellation of many projects, jeopardising much-needed investment in long-term oil production capacity. “We know that there will be an end point to the uncertainty as oil markets will balance again when increase in global demand is large enough to offset growth in supply,” said Christof Rühl, Global Head of Research, Abu Dhabi Investment Authority in reaction to the survey results. “It is important to understand the transition of the Chinese economy is what China terms as the rebalancing of the economy away from industrial sector towards more service sector towards and more light economic activity.” The Organisation of Petroleum Exporting Countries (OPEC) decided last November to abandon their traditional role of curtailing supply to maximise price, and instead chose to maximise production to protect market share. The uncertain commitment by the oil exporters group to maintain this strategy is the main cause of volatility in the oil markets, according to 31% of the Survey respondents. According to IHS, a prolonged oil price recovery would dramatically impact future investment plans as chemical producers adjust to the shifting feedstock dynamics. In a long-term recovery case, methanol projects with advantaged feedstocks, such as in North America and the Middle East, would fare better than higher-cost, coal-based units in China. According to Al Sadoun, the long-term scenario for the GCC petrochemicals industry is more positive. The industry is forecasted to grow at 6% per annum over the next five years, with the region producing over 190 m tonnes of petrochemicals annually by 2020. “The drive into higher value products, such as speciality and performance chemicals, is gaining momentum and is expected to act as a catalyst for an even stronger growth of the GCC petrochemical industry in the years to come,” said the GPCA Secretary General. As the region’s largest petrochemical producer, Saudi Arabia’s manufacturing portfolio comprised 63% of the region’s chemical portfolio and earned $68.3bn, followed by Qatar’s revenues of almost $8bn. The GCC’s total chemical capacity for 2014 exceeded 136.2m tonnes.
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SPECIAL REPORT
EXTENSIVE RANGE
In the business of temperature Okazaki continues to push the envelope in temperature and heating products for the global oil and gas industry kazaki Manufacturing Company (OMC), which was founded in 1954 in Kobe, Japan, designs and manufactures an extensive range of products for the oil and gas industry including temperature sensors, electric heaters and mineral insulated (MI) cable. These products are manufactured at its facilities spread across Japan, Taiwan and the United States that provide a flexible, comprehensive yet personal supply chain solution. OMC operates from a series of specialist sales support offices around the globe, backed up by a team of local representatives who provide specialist local instrumentation advice, guidance and technical support.
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TEMPERATURE AND HEATER ASSEMBLIES
Over the last 50 years, OMC has developed a breadth of temperature measurement and heater assemblies for the oil and gas sector that have been specifically designed to provide temperature measurement and heat generation for some of today’s most challenging applications, including the following: REFINERY PROCESS
• Tube Skin Thermocouples for Fired Heater TMT Measurement • High Temperature Thermocouples for Sulphur Recovery (Claus Process) • Multipoint Temperature Assemblies for 3D catalyst reactor profiling
• VortexWell Thermowell design for high flow rate applications • Flare tip thermocouples • Hard wearing and High temperature assemblies for FCC Units • Crude Oil Heaters PETROCHEMICAL PROCESS
• Multipoint Temperature Assemblies for catalyst process such as Ethylene Oxide • High Pressure Thermocouples for production of LDPE LNG STORAGE
• Cool Down Sensors • Skin Temperature measurement • Leak Detection Sensors
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SPECIAL REPORT
OMC manufactures and supplies temperature measurement assemblies to cover the full range of process applications with a portfolio that covers temperatures from –200 degrees C to +2,200 degrees C. The products include Thermocouples, Resistance Thermometers, Temperature Transmitters, Temperature Gauges and Thermowells. OMC temperature assemblies are certified by FM for NEC (USA) standards, BASEEFA for IECEx Product Approval and also for type approval in compliance with EU ATEX directives. OMC temperature assemblies have GOST K and GOST R approval, as well as NEPSI (China) and KOSHA (Korea) country-specific approval. OMC sensors are manufactured using the company’s own manufactured AerOpak mineral insulated cables and Ceracoil RTD elements, which means that quality, accuracy and reliability are assured from start to finish. Similarly, OMC’s extensive range of electric heating systems is constructed using the company’s own manufactured MI cables. This manufacturing process offers ease of installation, since the sheath can be supplied to a bend radius of 2.5 times the heater OD. This means the heater can be formed into any desired shape and is high pressure sealed for welding when required into process flanges. As with temperature assemblies, full product certification for use in hazardous area applications can be provided. IN-HOUSE TEST AND INSPECTION
The company offers full Factory Acceptance Tests (FAT) and Documentation facilities at its factories, with all testing carried out to set, pre-approved functional test procedures. This provides an added guarantee that the equipment arrives at the job site ready for installation and to the correct technical specification. OMC also ensures that all documentation that is requested within the project VDR (Vendor Documents Review) is supplied in the correct format and project language, digitally and hard copy when required. These documents contain as standard: GA Drawings, Weld procedures and qualifications (ASME IX), IOM Manuals, Stress and Wake frequency calculation, Hazardous Area Certificates, Inspection Certificates, Calibration Certificates and Pressure Test Certificates. VORTEXWELL: CONTINUING THE TRADITION OF INNOVATION
OMC has always invested in product design and in the latest, cutting edge technologies to
build its high quality product portfolio. For example, in 1963, the company developed RESIOPAK, a metal sheathed MgO insulated resistance thermometer, which is used in temperature measurement applications within petrochemicals processes around the world. That tradition of innovation has continued with the VortexWell, a unique design of thermowell for process temperature monitoring and control. VortexWell resolved a long vexing issue for the process industry vortex induced resonance failures. Fluid flowing around a standard thermowell in its path forms vortices downstream, commonly known as vortex shedding. As the vortex shedding frequency or Strouhal Frequency approaches the thermowell natural frequency, tip displacement and stresses are greatly magnified, leading to thermowell failure. In fact, even when the thermowell had passed calculation to the ASME Performance Test Code (PTC 19.3, TW2010), failures couldn’t be ruled out in entirety. Up to now, if a thermowell failed the ASME PTC 19.3 TW2010, the manufacturer was left with several options: either to shorten the thermowell immersion, or to increase the diameter of the thermowell, neither of which are often very practical or cost effective for the user. The only other option used by the majority of thermowell suppliers is to incorporate a velocity collar on the thermowell in order to move the point of vibration or resonance. While effective to an extent, a velocity collar was also an expensive solution since the thermowell has to be made to a very high tolerance. In the course of research and development (R&D) to tackle the issues caused by vortex induced vibration, OMC looked at several different ideas: increasing damping, avoiding resonance, using a streamline cross section, and adding a vortex suppression device.
The outcome of the R&D efforts was VortexWell, which doesn’t require a velocity collar and is cost effective for the end user in terms of purchase, installation and maintenance costs (whole lifecycle costs). VortexWell incorporates a helical strake, very similar to the helical strakes seen on car aerials and cooling towers, which greatly reduces vortex-induced vibration. Tests using CFD software showed that the helical strake design disturbs the flow sufficiently to interrupt the regular formation of vortices. These tests also showed a constant and stable pressure field presenting no dynamic variations while in the case of standard tapered thermowells, oscillating pressure field was observed around the structure. Further tests using FEA software showed that ASME calculations (PTC 19.3, TW2010) used by thermowell manufacturers could be placing significant limitations upon the safety of petrochemical plants. Using the ASME calculations gave the lowest natural frequency of vibration for the standard tapered thermowell to be 68.5Hz. However, OMC’s own FEA results showed a corresponding value of 90.3Hz, a difference of more than 30%. This highlights that the ASME calculations design rules include assumptions that can lead to considerable inaccuracies when designing thermowells for petrochemical (and other) applications. OMC manufactures an extensive range of thermowells to suit all process applications and also fully compliant with ASME PTC19.3 design criteria. VortexWell design is offered where failure would occur caused by vortex shedding properties of a standard thermowell. For the process industry, VortexWell can be a practical solution to avoiding the risk of a thermowell failing due to underengineering, or incurring extra costs because of over-engineering.
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SPECIAL REPORT
HYDRAULICS
Hi-Force acquires Astro The hydraulic jack brand’s acquisition will help Hi-Force achieve its core objective of increased in-house manufacturing i-Force, the UK’s leading manufacturer of high pressure hydraulic tools and equipment, recently announced that it has taken over the manufacturing rights to produce a wide range of lightweight aluminium jacks, previously manufactured and sold under the Astro brand. The deal, concluded in August 2015 was announced by Hi-Force Group Managing Director, Kevin Brown. He says: “For many years Hi-Force has been marketing our own range of JAH Series lightweight aluminium jacks, under an own brand agreement with Astro, however following the retirement of the owner of Astro, Hi-Force decided to start negotiations, to purchase the manufacturing rights to this longstanding and well established range of products.” The Hi-Force range of JAH Series lightweight aluminium jacks are used in a wide variety of industries, including aerospace, railways, defence, steel and aluminium plants and heavy industries worldwide. Infrastructure Middle East met with the Hi-Force Group MD to discuss the acquisition. Excerpts from the interview.
H
Hydraulics jacks have formed part of Hi-Force’s product offering for many years, so what prompted the move to manufacturing in house? Hi-Force and Astro Jacks have enjoyed a successful partnership for many years, supplying high quality aluminium jacks to a wide variety of industries. In the early 2000’s, Hi-Force made a strategic decision
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“As a reliable and efficient sub-contractor, Hi-Force felt no urgency in acquiring the manufacturing rights from Astro; however the direction of both companies in recent times, became sufficiently aligned to come to an agreement, which was finalised by both parties in August 2015” to manufacture in house and significantly reduce the company’s dependency on subcontract machine shops. The acquisition of the Astro jack manufacturing rights, along with assets including four HAAS CNC machines and associated tooling, capable of machining all the component parts of the jacks, has been another step in helping Hi-Force achieve one of its key strategic objectives of increased in-house manufacturing. As a reliable and efficient sub-contractor, Hi-Force felt no urgency in acquiring the manufacturing rights from Astro; however the direction of both companies in recent times, became sufficiently aligned to come to an agreement, which was finalised by both parties in August 2015. Can you tell us more about the product range? The existing Hi-Force range of JAH aluminium jacks comprises of 18 models, available in 20, 30 and 60 tonnes lifting capacities, with a
choice of 152mm or 305mm lifting heights. Additional options such as claw attachments for ‘toe lifting’ and mechanical lock rings, for sustained load holding are also available. Predominately made of lightweight aluminium, the design of these jacks makes them useful in a wide variety of industries including; aerospace, railways, defence, steel and aluminium plants and heavy industries worldwide. Should the market expect any changes to the range in the near future? The relocation of the four HAAS CNC machines and associated tooling from the Astro facility to the Hi-Force facility, with full alignment to Hi-Force strict in-house quality control procedures, will ensure that the quality and delivery time for the current range, of aluminium jacks will continue to improve, with the added benefit that we can now offer, our global customer base, product from stock, which has always been a top priority for our business. Our engineering and design department are also in the advanced stages, of developing additional models, to add to the range, particularly focused towards the aerospace industry, where we have identified a tremendous potential. How does this acquisition affect customers who have previously purchased an Astro Jack? Hopefully the effect will be very small as any customers who previously purchased jacks from Astro, either under the Astro brand name, or as an own-branded product, are welcome to contact Hi-Force, to discuss any future requirements, they may have, for lightweight aluminium jacks, or spare parts.
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led training capability to strengthen the technical knowhow and HSSE awareness of the Basra workforce supporting the development of Iraqis southern oil fields. Additionally RSK and the University of Basrah are also cooperating to identify and develop provision of technical services in the HSE consultancy, waste management, remediation and oil spill response related services. Alan Ryder, founder and CEO of RSK, said: ‘I see working with the university as a great opportunity for us to train engineers and scientists to have the skills we need. I am looking to reduce the number of RSK expatriates in Iraq and to build our business with Iraqi nationals who are local to our offices there. This is not something we can deliver over night, but it is something we are committed to.’ David Taylor, international business development director at RSK, said: ‘Iraqis can sometimes find it difficult to access the job opportunities and financial rewards offered by the country’s oil industry. This partnership aims to make it easier for Iraqi students to train for and access jobs with international energy companies working in the south of the country. ‘It’s also RSK’s policy, when working outside the UK, to involve and employ local people wherever it can. The environmental work that we carry out often demands local social and cultural knowledge. This is a great opportunity for us to bring Iraqi talent into RSK at all levels, and this economic partnership with a fantastic academic institution is of tremendous value to both parties.’ Professor Ali Doubaul of the University of Basrah said: “The University of Basrah is delighted to be partnering with an internationally respected company such
as RSK. Our vision of education extends beyond the classroom and, with the support of RSK, the gap between theory and practical applications can be bridged. The value added to all sides is enormous. University students can be assured they are getting the best available training that will prepare them for employment in Iraq and internationally, elevating them above other candidates. The industry can be assured a credible, solid basis of knowledge from the program we are delivering. Our partnership with RSK breaks down the barriers intrinsic in local capacity building and focuses on the foundations required for success.’ The University of Basrah was established in 1964 and currently has over 45,000 students studying on various courses.
RSK will be speaking at the Basra Oil, Gas & Infrastructure Conference 2015. The presentation will explore the technical issues and opportunities associated with treatment of oily sludge present in the oil fields. It will also demonstrate how RSK’s continued investment in Iraq has developed service capabilities tasking it from a provider of consultancy services to a turnkey solution partner in environmental remediation and waste management / treatment.
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MEASURING TECHNOLOGY
FLOW MEASURE
Heartbeat technology
Enhanced self-diagnostic capability in the ‘smart flowmeter’ takes safety, efficiency and plant availability to unprecedented levels By Hans-Joachim Froehlich, Endress+Hauser Flowtec n oil and gas operations, and petrochemical companies alike, safety is of the highest importance. Consistent quality and accurate billing of products are top priority as well. There is also an increasing need to prove that the operation meets environmental regulations. Consequently, all measuring technology must ensure maximum reliability. State-ofthe-art flow sensors are free of wear and tear, which is critical to ensuring these values. They have been recognised not only for highly stable measurement outcomes over long periods of time, and robustness under demanding operating conditions, but also for convenient and traceable techniques in terms of proving and periodic testing. More recently, the use of their greatly enhanced self-diagnostic capability has made flowmeters “smart” about their own condition, and paved the way to minimise effort and exposure for the personnel involved in routine activities such as proof-testing. Compliant verification reports enable longer calibration intervals and better plant availability overall. Remote access to comprehensive diagnostic information prevents unplanned shut-down, or unnecessary and risky on-site intervention. The Backbone of the development for Endress+Hauser’s Proline flowmeters is a rigorous ‘Safety-by-design’ concept based on IEC 61508 standards for functional safety, with the goal to minimise the risk of dangerousundetected failure, and to attain best-in-class safety and reliability marks.
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HEARTBEAT VERIFICATION
A technical concept named Heartbeat Technology constitutes a test method integrated in the flowmeter, which encompasses Heartbeat Diagnostics and Heartbeat Verification, both
relying on internal factory-traceable references which are redundantly reproduced in the device. Heartbeat Diagnostics ensures broadest diagnostic coverage with no gaps left from the sensor frontend to the outputs. Diagnostic status information according to NAMUR NE 107 may be transferred to higher-level systems by digital field protocols. Clear-text indication and remedy are associated with each error code and stored in the event logbook for the device. Targeted service intervention can therefore be carried out on such a device with minimal time and cost involved. Heartbeat Verification verifies the function of the flowmeter on demand by using the same embedded technology, to satisfy requirements for periodic testing as specified in operating procedures, or whenever needed by the operator. The total test coverage (The total test coverage is defined by a Failure-modeevaluation-and-diagnostics-analysis (FMEDA) according to IEC 61508 as the ratio of potential failure detected and likewise mitigated versus the total probability of random failure in the device electronics) typically ranges from 95% to over 98%, depending on the device type. Most of the common digital field network protocols support at least a verification to be initiated remotely and a Pass / Fail statement to be transferred back to the control system, or an asset management system, respectively. Technical auditors and regulators affirm compliance of Heartbeat Technology with the requirements for traceable verification according to DIN EN ISO 9001:2008 (Section 7.6 a) ‘Control of monitoring and measuring equipment.’ Key to this conclusion is a continuous cross-check among the device-internal references, which allows detecting any drift immediately, and likewise ensures the references remain stable for both measuring and testing procedures. The ‘as-manufactured’ condition of the device-internal references is captured during factory calibration in an accredited facility according to ISO 17025, and is securely saved
in the meter’s non-volatile memory. This reference information forms the basis for consecutive internal verifications over the lifetime of the flowmeter. During verification, the current flowmeter condition expressed in a large variety of secondary parameters is compared with the reference values, thereby determining the actual device status. The individual test results are securely stored in the meter memory. They are used to compile a verification report, which allows the device to document its health condition in an incorruptible manner. The report can be used for quality documentation as an evidence of conformity with legal standards. SAFETY-INSTRUMENTED SYSTEMS
An increasingly important application for Heartbeat Technology is in safety-instrumented systems designed, implemented and operated according to functional safety standard ISO 61511. By the unparalleled low failure ratings provided by Heartbeat Diagnostics, Proline flowmeters may be used for many years before they have to undergo a full proof-test. In the meantime, Heartbeat Verification can be used to document the functionality in a quick and virtually effortless manner in case a partial proof-test is performed on the SIL-rated loop. The traditional method of verification with traceable, external proving tools is no longer necessary. As a result, regulators usually agree the intervals between labour-intensive recalibrations can be extended. The advantages of this process include significant time and cost savings, while virtually eliminating risks associated with incorrect handling. Thanks to the standardised implementation across a wide variety of measurement technologies, users of Proline flowmeters from Endress+Hauser need to learn only once how to work with this method, resulting in cost savings through increased productivity in operation and maintenance.
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SPECIAL REPORT
HEADWINDS
A goal too far Iraq has decided to lower its crude production targets for 2020 in the wake of sustained decline in international oil prices raq has the world’s fifth-largest proven crude oil reserves and is the secondlargest oil exporter in the Organisation of Petroleum Exporting Countries (OPEC). Oil dominates the Iraqi economy, contributing over 90% of government revenues and more than 95% of exports. Iraq’s proven gas reserves are around 3,435bn standard cubic metres, equivalent to around 15bn barrels of oil. Potentially, another 7.9bn standard cubic metres have been identified and are recoverable. While some portion of the natural gas is used as fuel for power generation and for reinjection to increase oil recovery, the majority of Iraqi natural gas production is flared. The majority of the oil produced in Iraq comes from Kirkuk, the North Rumaila field in southern Iraq, and the South Rumaila field. Southern fields of the country produce around
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75% of the crude oil. The Ministry of Oil oversees the production and development activities through its operating entities – the North Oil Company (NOC) and the Midland Oil Company (MDOC) in the north and central regions, and the South Oil Company (SOC) and the Missan Oil Company (MOC) in southern regions. Production of oil and gas in the northern region is controlled by the Kurdistan Regional Government (KRG). In December 2014, Iraq’s central government and KRG entered into an agreement to end their dispute over oil exports and budget payments. The deal is expected to allow the Iraqi government to increase its oil exports (Kurds committed to hand over 550,000 bpd of regional oil), and will provide the Kurdish government 17% of Iraq’s national budget. Later in January 2015, the deal was incorporated into the National Budget Law of Iraq for 2015. Iraq’s government initially targeted to increase crude oil production to nine million
barrels per day (bpd) by 2020, as per the Energy Intelligence Group estimates. The government estimated capital expenditures of $30bn per year in the country’s energy infrastructure to meet production targets. But the sustained decline in oil prices is having a negative impact on Iraq’s oil production strategy. The OPEC giant has reduced its ambitious oil output growth targets, saying it would raise production to 5.5-6m bpd by 2020 Morgan Stanley analysts said in a research note last month that they had cut sharply their forecasts for Iraqi oil production over the next five years and now expect Iraq to produce less oil, not more, to 2020. “Our commodity team have lowered their Iraq oil supply forecasts and now expect Iraq oil production to average about 4.2m bpd in 2016, broadly flat compared to Iraq’s production levels in June and July. They also now forecast a slight decline in Iraqi production between 2016-2020 compared to previous forecast growth of over 500,000 bpd,” the analysts wrote. A Standard & Poor’s (S&P) rating report was more optimistic, forecasting Iraq’s oil production to reach about 5m bpd by 2018 (with exports of about 4.5m bpd), compared with around 3.1 m bpd in 2014. Last month, Platts reported that Iraq passed its 2016 budget having forecasted oil exports of 3.6m bpd and an oil price of $45 per barrel. The $94bn budget assumes that 550,000 bpd will be exported from northern Iraq, 250,000 bpd from Kurdistan, and 300,000 bpd from Iraq’s North Oil Company. Iraq has told foreign companies developing the country’s southern oilfields that they may need to slash development spending next year because it has less money to pay them. “Because of the drop in oil-sales revenues, the Iraq government has sharply reduced the funds available to the Ministry of Oil,” said the Reuters report quoting a letter sent by the oil ministry to the companies. Earlier, in May, BP had cut its development budget for the giant Rumaila oilfield to $2.5bn, from the initially planned $3.5bn as the Iraqi government raised the red flag on lower oil revenues and stretched budgets. Iraq’s current account has typically run a surplus owing to large oil exports. S&P expects the current account balance to fall into deficit in 2015 because of the sharp drop in oil prices. The widening deficit is planned to be partially financed by up to $6bn in external
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SPECIAL REPORT
borrowing, and by domestic issuance taken up by state-owned banks. On the flip side, Iraq’s inability to increase output as fast as it has previously announced could help ease the global oil glut more quickly than anticipated and thus support prices. However, the existing projects continue to perform. The newest investor in Iraq is Egypt through an agreement with Kuwait Energy, which puts 10% of an area in Basra in the hands of Egyptian General Petroleum Corporation. Over 85% of Iraq’s oil fields and production are located in the south of the country close to Basra, the main port for crude exports. Last month, a consortium comprising of Kuwait Energy Company (60%) as the operator, Dragon Oil (30%) and the Egyptian General Petroleum Corporation (10%) commenced oil production from Faihaa-1 well in Block 9, located in Basra. Production has begun from the Faihaa-1 well in the order of 5,000 bpd on 32/64 inch choke. UK-based Intertek, a leading quality solutions provider to industries worldwide, won a multi-year third party inspection procurement contract for the South Oil
“Earlier, in May, BP had cut its development budget for the giant Rumaila oilfield to $2.5bn, from the initially planned $3.5bn as the Iraqi government raised the red flag about lower oil revenues and stretched budgets” Company in Iraq. It is the first time SOC has appointed a third party inspection company to help ensure the quality and safety of all their projects, which are contracted to various oil and gas companies. The Karbala Refinery project is also on track as recent news about the selection of Veolia Water Technologies to supply Zero Liquid Discharge (ZLD) technology attests. Iraq´s State Company for Oil Projects (SCOP) and their EPC contractor HDGSK, a joint
venture composed of Hyundai Engineering & Construction, GS Engineering & Construction, SK Engineering & Construction, and Hyundai Engineering, selected Veolia´s HPD evaporator technology to eliminate all liquid waste discharge and instead, produce a waste solid product discharge from a centrifugal separation process. This will make Karbala refinery the most technically advanced refinery in Iraq. Oilfield services company Petrofac was awarded a multi-million dollar technical training contract with Shell Iraq, achieving their fourth win with a major operator in the country. Petrofac Training Services (PTS) has joined Shell in the management and operation of Shell’s Majnoon training centre in the Majnoon oil field development in Southern Iraq for two years, with an optional one year extension. In January this year, Shell had signed a deal worth $11bn with the Iraqi government to build a petrochemicals complex near Basra. Planned to be named Nibras, the complex is expected to produce 1.8 MT of petrochemical products a year, including plastics, fertilisers and other derivatives.
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SPECIAL REPORT
ENERGY DEALS
Sleeping giant Investment in oil, gas and petrochemicals projects will be priority for post-sanctions Iran n October 18, the Joint Comprehensive Plan of Action (JCPOA) reached by Iran and the 5+1 group over Tehran’s nuclear programme was officially adopted, paving the way for lifting of sanctions by the end of the this year. The lifting of sanctions on Iran is one of the most significant changes to the regional business landscape ever seen in the region and it offers huge opportunities for Iranian and international businesses. Last month, Iranian First VicePresident Eshaq Jahangiri said the country is prepared to increase its oil production by 500,000 bpd once the sanctions are lifted. Tehran is lining up $100bn worth of energy deals it wants to sign in the aftermath international sanctions being lifted, according to a report by MEED. The recently released Opportunity Iran 2015 report says that largescale investment in oil, gas and petrochemicals projects will be Iran’s top priority once international economic sanctions are lifted. Iran has the fourth-biggest oil reserves and the largest gas reserves in the world, but years of isolation from the global market has left its hydrocarbons sector in dire need of modernisation. Investment in Iranian projects is expected to surge once the removal of international sanctions opens the major Middle East
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economy for business. The country’s petrochemicals sector – already the region’s second largest – is set to benefit from a wealth of cheap feedstock as Iran starts up new phases of its offshore South Pars gas development in the Gulf. “The Iranian economy has long been the region’s sleeping giant and could represent the world’s largest frontier market for investors after international sanctions are lifted,” said Mark Watts, MEED’s Oil & Gas Editor and co-author of Opportunity Iran 2015 report. “The country’s oil and gas sector has suffered from chronic underinvestment and is need of modernisation and expansion to reach its potential as a global energy powerhouse.” The main United Nations, US and EU sanctions impacting Iran could be lifted, at the earliest, at the end of 2015 after the final assessment by the International Atomic Energy Agency (IAEA). Iran will aim to expand its oil production in two phases. The first phase will see National Iranian Oil Company (NIOC) reviving its crude output to pre-2012 levels as sanctions relief opens up export markets. From 2020 onwards, Iranian crude capacity is set to increase further with the influx of investment and technology from international companies. Investment will allow NIOC to deploy enhanced oil recovery (EOR) technology at its ageing fields, revive stalled field developments, and carry out green-
field developments at untapped assets. By some estimates, Iran is expected to return to its presanctions export level of 2.3m bpd by 2017. The Iranians have also been building up their domestic capability in the oil and gas sector, moving from being a pure consumer of foreign technology and crude oil exporter to an exporter of oil, gas and petrochemical products and a manufacturer of petroleum sector equipment and machinery. According to Bijan Khajehpour, Managing Partner at Atieh International, the intensive sanctions also created an opportunity for Iran to optimize utilise its resources and create domestic capacities. “In fact, the growing potential of gas will transform Iran and one should start looking at Iran as an exporter of energy in various forms,” he said while speaking at a discussion on Iran’s oil sector hosted by SIPA’s Centre on Global Energy Policy (CGEP) and the New York Energy Forum in September, adding: “By 2020, Iran will become the 5th largest gas market in the world after the US, the EU, Russia and China.” “Qatar utilised its offshore gas assets to become a global leader in liquefied natural gas (LNG) exports – something Iran has failed to replicate due to its inability to procure liquefaction technology,” said Watts. “With sanctions lifted, Iran will have access to this technology and could rival Qatar and other LNG leaders within the next decade.”
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EVENTS EVENTS
ADIPEC 2015 9-12 NOVEMBER 2015, Abu Dhabi osted by the Abu Dhabi National Oil Company (ADNOC) and organised by dmg events, ADIPEC 2015 will take place at the Abu Dhabi National Exhibition Centre (ADNEC). The event is expected to host more than 85,000 attendees, 7,000 delegates, and 2,000 exhibitors from more than 120 countries. The event will welcome 23 international pavilions this year, including major oil producing countries US, China, and Canada. Held under the patronage of the President of the UAE, HH Sheikh Khalifa Bin Zayed Al Nahyan, ADIPEC is one of the world’s top three energy events. The largest oil and gas event in the Middle East and North Africa (MENA) has established itself as a knowledge-sharing platform that enables industry experts to exchange ideas and information that shape the future of the energy sector. Key highlights include three breakfast sessions,
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two ministerial Sessions, two CEO plenary sessions, 79 technical sessions and 6 VIP programme sessions. The opening ceremony ministerial panel discussion will address the ADIPEC 2015 theme Innovation and sustainability in a new energy world. HE Suhail Mohamed Al Mazrouei, Minister of Energy, UAE will be joined by international and regional ministers of energy, oil and gas, creating an interactive and open dialogue. The session will be moderated by Dr Daniel Yergin, Pulitzer Prize winning author and highly respected leading authority on energy, international politics and economics, who is also a key note speaker at ADIPEC 2015.
Contact: Nour Soliman Tel: +44 992 656 632 Email: NourSoliman@dmgeventsme.com www.adipec.com
BASRA OIL, GAS & INFRASTRUCTURE 2015 2-3 NOVEMBER 2015, Istanbul nder the High Patronage of Basra Governorate and Basra council, this is the only meeting of Basra’s oil, gas & infrastructure industries giving you the opportunity to get involved with the Super Giant oil Fields development and to win infrastructure contracts in the biggest oil producing province in Iraq.
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Amongst the stellar line-up of speakers you can hear • aid Elyaseri Country Manager P ra • Ahmad Atallah eneral Manager Ma noon Shell ra
They will be joining the Outlook of the Current Projects in Basra session together with: • Hayan Abdulghani Director eneral of the South Oil Company Ministry of Oil
Contact the Basra Oil, Gas & Infrastructure Team For Speaking or Programme, Contact Nawar Abdulhadi: basraenq@thecwcgroup.com or call +44 (0) 20 7978 0093 For Sponsorship or Attending, Contact Phillip Clarke: basraenq@thecwcgroup.com or call +44 (0) 20 7978 0056 | www.cwcbasraoilgas.com
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Mark your diary... GPCA ANNUAL CONFERENCE 17-19 NOVEMBER, DUBAI The Annual Forum, GPCA’s flagship event organized in association with ICIS, is the leading networking event for the petrochemicals and chemicals industry in the Arabian Gulf region. During the three day forum, delegates from some of the world’s biggest petrochemicals and chemical producers share their perspectives on current industry issues. The Forum provides extensive networking opportunities including an exhibition of leading companies and suppliers running alongside the conference sessions and gala dinners and lunches sponsored by major international and GCC companies. Since the first meeting in 2006, event attendance has grown steadily year on year along with the reputation of the event in the global chemical industry. In 2013, around 1,900 international industry executives from 40 countries representing all parts of the value chain gathered in Dubai for the 8th Annual GPCA Forum. Contact: Jill Raine, Telephone: +44 (0) 20 8652 3233 Email: GPCA.registrations@rbi.co.uk
IPTC (INTERNATIONAL PETROLEUM TECHNOLOGY CONFERENCE) 6-9 DECEMBER, DOHA The 9th edition of the IPTC will be held again in Doha. The International Petroleum Technology Conference (IPTC) is an annual event rotating between Asia Pacific and the Middle East. The Conference Programme will be focused on dissemination of new and current technology, best practices and multi-disciplinary activities designed to emphasise the importance of the “value chain” and maximising asset value. The knowledge, capabilities and strengths of the participating countries and the sponsoring societies’ global membership, over the spectrum of multi-disciplinary technologies, will be central to the success of the conference and the corresponding exhibition. Contact: The Society of Petroleum Engineers Middle East, North Africa, and India Tel: +9714 457 5800 Email: iptc@iptcnet.org
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SPECIAL REPORT
EFFECTIVE MAINTENANCE
Hose management
Joe MacGillicuddy, Divisional Business Development Manager – MENA, elaborates on solutions to protect rig owners against downtime and asset failure land rig has anywhere between 130 to 320 Flexible Hose Assemblies (FHAs), whilst an offshore jackup rig has over 1,000 FHAs. According to industry experts, failure of FHAs is the cause of 47% of all rig downtime. Just one hose-related incident can shut down an entire operation, with up to 4-hours of downtime and lost production. When hoses fail, rig operators will experience downtime and potential safety and environmental issues. Gates Engineering & Services offers a bespoke Hose Management System that meets the forthcoming API approval standards in order to decrease downtime and increase cost-savings. The system will also reduce HSE incidents as a result of hose failure. Gates has over 100 years’ experience in the production and maintenance of high-quality rubber products, including hydraulic, industrial and oilfield hose. Gates serves a number of endmarkets globally, including Oil & Gas (Upstream and Downstream), Marine, Agriculture, Automotive &Transportation, Infrastructure & Construction, and Process & Specialty. The comprehensive program offered comprises a number of stages. The first step is a full asset audit of every FHA on the rig
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carried out by Gates specialist hose technicians. Each hose will also be tagged with a Radio Frequency Identification (RFID) tag. The data collected during the audit is then applied to the Gates® Hose Management System dashboard, which identifies over 85 parameters of each individual hose, including expected life cycle, risk management, replacement scheduling, location, pressure rating, fitting angle and purpose. This system is not just a hose register but a complete hose management concept that allows constant monitoring and data updates. The custom-built dashboard is accessible by the customer at any time anywhere in the world; information on the real-time health of any tagged asset is available at the touch of a button. The system continues to add value after the initial set up by allowing the customer to order replacement product directly from Gates using the dashboard. The rig assets will also be inspected and monitored by Gates qualified personnel in accordance with the schedule defined by qualified professional personnel based on information captured by the Gates® Hose Management System. The lifecycle of each asset is captured, allowing the rig operator to monitor the performance of its FHAs, ensuring expected lifecycles are being achieved. Ongoing inspections mitigate the need for other full audits or surveys to be carried out.
Effectively, implementation of the Gates® Hose Management System allows customers the opportunity to audit their assets in real time at any time. Access to a reliable snapshot of the performance of any FHA in use on a rig provides transparency and traceability. From anywhere around the world, customers can measure the performance of assets versus the anticipated lifecycle of each individual component. The system has the capability to automatically send notifications to customers advising them when preventative maintenance is due and if hose replacement is scheduled. The replacement schedules also allow for rig owners and operators to set realistic budgets for replacement product – there are fewer surprises and unexpected failures. Furthermore, the dashboard highlights any trouble areas, such as repeat failures of a hose in the same location. The Gates team will then provide recommendations in order to achieve improved performance, which may involve a different specification of hose or training on usage. Whilst cost-saving and reduced downtime are clear benefits of the Gates® Hose Management System, the primary focus of Gates was to increase HSE compliancy for personnel. Failure of high-pressure hoses causes not only loss of production, but potentially the loss of life, and safety should be everyone’s priority. A reduced number of FHA failures also reduces the risk of negative environmental impacts due to leaks and loss of fluids. Assets are better protected against failure and productivity is ultimately maximized. Customer are better-equipped to protect their employees, the environment, their assets and their future through proactive, forward thinking drivers contributing to their Safety and Environmental Management Systems. Risk management is vastly improved with the implementation of the Gates® Hose Management System. Ongoing surveys,
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SPECIAL REPORT
registry, inspections, maintenance, testing, recertification and services, including flushing and training give rig operators peace of mind and information at their fingertips. The dashboard function enables informed decision making based on knowledge of the facts, data analysis, compliance, planning, visibility, preventative maintenance and replacement scheduling for Choke and Kill, Rotary, Vibrating, Transfer, Hydraulic and Industrial FHAs. A further benefit of adopting the Gates® Hose Management System may be more favourable premiums from insurance companies – less downtime means less financial risk for them as well as rig owners and operators. Leading rig operators have already accepted and implemented the Gates® Hose Management System. The Gates Engineering & Services team has worked with customers in Saudi Arabia, West
Africa and North America. Despite the current economic climate as a result of depressed oil prices, many operators realise that they simply cannot afford not to allocate budget spending towards a preventative maintenance program. In order to make the Gates® Hose Management System less cost-restrictive, Gates Engineering & Services offers a tailor-made financial model and pricing system to suit all economic climates and conditions. The Gates® Hose Management System isn’t just for rigs; it can also be implemented on drillships, FPSOs, support vessels and within refineries. It can be used anywhere that customers require: • A comprehensive life cycle management system that can be linked with an operational ERP program to support compliance standards for the critical FHA segment of their operations • A document control system that meets or exceeds industry traceability visibility
standards and re uirements Through the ates Hose Management System the lifecycle and performance history of a hose is registered inspected tested recertified and tracked • An operational and capital e ciency tool that provides engineered technical services solutions and data analysis to assist in identifying problem areas and opportunities to optimise safety environmental management potential as part of a Safety and Environmental Management System (SEMS) for critical rig components (FHAs) • Managing risk mitigation component failure and down time The ob ective of the ates Hose Management System is to enhance operational and capital e ciency while reducing risk enhancing compliance through visibility and traceability and reducing down time and incidents due to FHA failures
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TEN OIL & GAS UPSTREAM PROJECTS
OIL & GAS GCC UPSTREAM PROJECTS The regional oil and gas industry’s long-term plans remain largely unaffected by the downtrend in crude prices
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KHAZZAN & MAKAREM GAS FIELDS DEVELOPMENT
Owner: Ministry of Oil & Gas Budget: $16bn Progress: EPC contracts BP is developing tight gas reservoirs in Block 61 and the Khazzan and Makarem gas fields that cover an area of some 2,800 sq. km. The Khazzan Project has the potential to deliver up to 30% of Oman’s gas supply in 2020. BP plans to drill around 300 wells over 15 years to deliver plateau production of 28.3 Mcm/d of gas and 25,000 bpd of gas condensate. The company has awarded several contracts, including a $1.2bn engineering, procurement and construction (EPC) contract for building the central processing facility (CPF), two long-term drilling contracts totalling $730m and a contract worth $110m to build and install a gas gathering system.
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TEN OIL & GAS UPSTREAM PROJECTS
BUL HANINE OFFSHORE OILFIELD RE-DEVELOPMENT PROJECT
Owner: Qatar Petroleum (QP) Budget: $11bn Progress: EPC stage Bul Hanine offshore oil field project is designed to prolong the field’s life by countering its production decline and doubling its current oil production rate from 40,000 barrels per day (bpd) to 95,000 bpd. The project involves drilling new wells from the existing/modified well-head jackets, as well as from 14 new wellhead jackets. Last month, US-based McDermott International was awarded an engineering, procurement, construction and installation (EPCI) contract for four wellhead jackets on this scheme. Two of the jackets are scheduled for completion in December 2016, while the remaining are two scheduled for July 2017.
BAB SOUR GAS DEVELOPMENT PROJECT
UPPER ZAKUM CRUDE INCREMENT PROJECT
Owner: Abu Dhabi National Oil Company (ADNOC) Budget: $10bn Progress: FEED stage
Owner: Zakum Development Company (ZADCO) Budget: $10bn Progress: Contracts awarded
The project involves EPC contract for the development of Bab sour gas field, located 150km south west of Abu Dhabi city, with a capacity of about 1bn cubic feet a day (cf/d). It is being implemented in joint venture with oil major Shell. EPC contracts are expected to be awarded in 2016. Client is aiming to start production at the field by 2020. US engineering group Fluor has been awarded a contract to carry out the pre frontend engineering and design (preFEED) on this scheme. WorleyParsons has been appointed as the project management consultant (PMC) for the preFEED phase. In April this year it was announced that Fluor has been awarded the contract for the FEED consultancy for this scheme. ADNOC is managing the early tendering stages.
The project is part of Zakum Development Company’s (ZADCO) programme to increase crude production capacity to 750,000 bpd from 500,000 bpd at present. The scheme is being implemented in JV with US’ ExxonMobil, which holds a 28% stake. The major civil engineering works on this project have been completed. Amec Foster Wheeler has been awarded an extension to its existing project management consultancy (PMC) contract on this scheme. Client will oversee the contractors’ delivery of reimbursable EPC scopes of work, commissioning and start-up support. Work is scheduled for completion in December 2017.
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FADHILI GAS PROCESSING PLANT PROJECT
KIRKUK OIL FIELD DEVELOPMENT PROJECT
Owner: Saudi Aramco Budget: $6.5bn Progress: EPC awarded
Owner: Ministry of Oil Budget: $5bn Progress: Stablilisation contract awarded
The project involves a sour gas processing plant with capacity of 2.5bn cubic feet a day at Fadhili oil field in the Eastern Province. It will process gas coming from Khusaniyah and Hasbah Fields. In September, Saudi Aramco announced Spain’s Tecnicas Reunidas and UK’s Petrofac have been awarded EPC contracts to build the Fadhili gas plant. The project is split into three construction packages for the gas processing unit, utilities and offsite facilities such as nitrogen, steam, power and water systems, and sulphur recovery. Fadhili, together with Aramco’s other gas projects in Wasit and Midyan, are slated to add more than 5bn scfd of non-associated gas processing capacity, which will help the company meet soaring domestic demand for industrial use and electricity generation in the world’s largest oil exporter.
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The project involves an EPC contract for the development of Kirkuk oil field to increase production by 150,000 bpd. The scope of work also includes 3D seismic testing of the field which is located around the city of Kirkuk, 290 km north of Baghdad. In June this year, it was announced that UK’s BP has signed an agreement with the North Oil Company (NOC) to provide subsurface engineering work to help stabilise production ahead of the development contract tender. Air Energi has been awarded the contract to provide personnel for this project. The five year agreement will see Air Energi deliver talent acquisition services to support BP Iraq’s operations.
LOWER FARS HEAVY OIL DEVELOPMENT PROJECT - PHASE 1
Owner: Kuwait Oil Company Budget: $4.2bn Progress: EPC prequalification The Lower Fars field is located about 80 km northwest of Kuwait City. The EPC contract covers drilling of hundreds of wells and data collection, as well pilot schemes using various extraction methods. Worley Parsons has completed the FEED study on this scheme. The consortium of Petrofac and Consolidated Contractors Company (CCC) declared winner in January this year. When fully operational it is expected that the initial phase of the Lower Fars heavy oil project will produce around 60,000 bpd. The scope of the contract covers main central processing facility (CPF), associated infrastructure as well as the production support complex .
Oil & Gas Supplement 2015
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TEN OIL & GAS UPSTREAM PROJECTS
JURASSIC FIELD DEVELOPMENT PROJECT
YIBAL KHUFF SOUR GAS DEVELOPMENT
HAIL OFFSHORE OILFIELD DEVELOPMENT PROJECT
Budget: $1.2bn Progress: Invitation to Bid
Owner: Petroleum Development Oman Budget: $900m Progress: EPC awarded
Owner: Abu Dhabi Oil Company (ADOC) Budget: $500m Progress: Detailed design stage
Owner: Kuwait Oil Company
The project involves an EPC contract for the development of Jurassic field with production capacity of 150,000 bpd of sour crude oil and up to 510 million cf/d of gas, along with a sulphur granulation plant. The client has invited companies to bid for a contract to develop East Raudhatain, West Raudhatain, West Sabriya and Umm Niqa oil fields on this scheme. Last month, Kuwait’s Central Tenders Committee (CTC) gave its approval to include the names of following companies to the list of companies invited to participate in this tender: India’s Larsen & Toubro; UK’s Petrofac and local Spetco International Petroleum Company. The project has been divided into three packages.
Petrofac has been awarded the EPC contract by PDO for Yibal Khuff sour gas project, located approximately 350 km southwest of Muscat. The development of the field will add to PDO’s future oil production whilst the associated gas will be utilised for power generation and enhanced oil recovery developments. Under the terms of the four and a half year contract Petrofac will be providing reimbursable detailed engineering, and construction and commissioning management support services and procurement on an incentivised pass-through basis. This will extend throughout construction and during start-up of the integrated oil and sour gas facility. The commissioning of the project is expected in 2019.
This project involves development of the offshore Hail oilfield in Abu Dhabi. Scope of work covers both the early production and full field development phases for the field, which is located approximately 10km south of Mubarraz Island in the Gulf. The offshore field is situated adjacent to the client’s existing operating field and includes undeveloped reservoirs, with the maximum oil production from these reservoirs anticipated to be similar to the current production rate of the existing oil fields. UK’s Mott MacDonald has been appointed as the project management consultant (PMC). MottMac will manage and administer Phase 1, which covers both FEED and EPC tendering. Technip was awarded the FEED contract in April 2014.
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SOLUTIONS HUB
UKCS DEPLOYMENT
Emerson, Stork collaborate on sand monitoring technology
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New Roxar SandLog wireless transmitters help protect equipment through accurate, flexible and cost-effective monitoring tork, a global provider of knowledge-based asset integrity services focused on the oil & gas, chemical and power sectors, has successfully installed Emerson Process Management’s Roxar SandLog wireless sand erosion monitoring solutions on a major North Sea operator’s installation. Stork offers services and products associated with maintenance, modifications and assurance of asset integrity (MMI) of production facilities. Emerson’s collaboration with Stork marks the first installation of the Roxar SandLog wireless monitors in the UK Continental Shelf (UKCS). The new wireless devices provide flexible, cost effective and highly accurate online monitoring of sand erosion from the field, helping to extend equipment life and increase production from reserves. “With operators’ increased focus on the bottom line, effective protection from sand erosion and corrosion can be an important factor in maintaining the successful and economic flow of hydrocarbons from reservoir to refinery,” said Kjell Wold, business development manager for flow assurance at Emerson Process Management. “Our technology and application specialists designed the Roxar SandLog Wireless transmitters to meet this challenge head-on,” he continued. “The result is a highly sensitive and accurate solution that improves operator insight and can be directly integrated with
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WirelessHart networks. By working with a highly experienced Monitoring Solutions provider such as Stork, we can deliver a complete asset integrity management system for well operators.” Stork’s Monitoring Solutions capabilities provide operators with the means to monitor the rate of erosion on their assets, identifying and continuously reporting on areas of concern, and enabling the planning of effective remedial work. Monitoring erosion on essential lines is vital, as it contributes to the failure of equipment and loss of containment, as well as posing a risk to personnel and the environment. Rod Agnew, vice president for service delivery at Stork, said: “With over 30 years’ experience, Stork’s Monitoring Solutions department is uniquely positioned to deliver a range of traditional and advanced techniques for monitoring the rate of corrosion, erosion, stress, temperature, strain or intrusion on pipelines both on and offshore.”
“Working in collaboration with companies such as Emerson,” Agnew continued, “ensures Stork is at the forefront of technological advancements that are safe, cost effective and deliver operational efficiencies for our clients.” The Roxar SandLog Wireless transmitters significantly reduce installation costs compared to wired online systems and enable monitoring in previously inaccessible areas. They are one element of Emerson’s complete asset integrity system that also includes the Roxar CorrLog corrosion monitoring transmitters. Operators can also access Roxar Fieldwatch, Emerson’s windows-based field monitoring system for rigorous analysis of the data generated. The Roxar CorrLog and SandLog wireless transmitters are certified to industry standards, including ATEX.
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Oil & Gas Supplement 2015
10/26/15 6:56 PM
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