Issue 182 July

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Incorporating

A mammoth

operation

HEAVY LIFTING AND TRANSPORTATION SPECIALIST MAMMOET MEA IS KNOWN FOR ITS CAPACITY TO HANDLE EVEN THE MOST EXTREME REQUIREMENTS

Under attack

As an important part of critical infrastructure, the energy sector is now very appealing to ransomware operators

Space miners

A single asteroid could contain rare and precious metals worth hundreds of millions of dollars

$5bn deal: bp has agreed to sell its global petrochemicals business to INEOS US solar: Two solar EPC contracts worth over $200m secured by Wood

EDITOR Editors Chairman Andrew Schofield Managing Director Joe Woolsgrove Editor Libbie Hammond - libbie@schofieldpublishing.com Assistant Editor Will Daynes Staff Writer Alex McDonald

...pretty amazing stuff and so fascinating to think that in the future, space rocks will be providing essential rare metals

Art Editor Fleur Daniels Advertising Designer Rebecca Side Operations Director Philip Monument Operations Manager Natalie Griffiths Sales Director Alasdair Gamble Sales Mark Cawston Alex Hartley Dave King Theresa McDonald Sam Surrell Web Sales web@schofieldpublishing.com Exclusive Features Darren Jolliffe - djolliffe@schofieldpublishing.com Research Managers Ben Richell Kieran Shukri Editorial Researchers Mark Cowles Wendy Russell Richard Saunders ffice Manager/Advertisement Administrator O Tracy Chynoweth Digital Subscriptions Iain Kidd - digital @schofieldpublishing.com Social Media Abigail Blake

Global coverage Now that EOG also includes Energy & Mining International, I am getting to grips with the Mining sector, and learning lots about its equipment, technology and requirements. For the first foray into Mining I was very happy to be able to include the story on asteroids – pretty amazing stuff and so fascinating to think that in the future, space rocks will be providing essential rare metals. Do you think that it’s too far-fetched to work, or will be a genuine source of materials in the years to come? If you are in the mining sector do keep in touch with news and views as I’d love to hear them. It is also great to be able to shine spotlight on the Pacific Region in our energy focus. It was a real pleasure to work with our contributors from Guam, Papua New Guinea and East Timor and learn about their operations, and make some new contacts around the world. I look forward to sharing more stories of success in the second half of 2020.

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@EOG_magazine PLEASE NOTE: The opinions expressed by contributors and advertisers within this publication do not necessarily coincide with those of the editor and publisher. Every reasonable effort is made to ensure that the information published is accurate, and correct at time of writing, but no legal responsibility for loss occasioned by the use of such information can be accepted by the publisher. All rights reserved. The contents of the magazine are strictly copyright, the property of Schofield Publishing, and may not be copied, stored in a retrieval system, or reproduced without the prior written permission of the publisher.

EDITOR LIBBIE HAMMOND ENERGY,OIL&GAS

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REGULARS

The oil and gas market The oil supermajors, the Icarus Paradox and how the strengths of successful companies can lead to

excesses that cause their downfall

Digitization Owners and operators of refineries, chemical plants and manufacturing facilities need to change the way employees work and digital transformation can help

10 Mining A single asteroid could contain trillions of dollarsâ€™ worth of precious metals, and sourcing materials from

The oil & gas market

asteroids could enable large-scale construction in space

14 Cyberthreats The energy industry vertical is an extremely important part of any nationâ€™s critical infrastructure, and this is

making it very appealing to ransomware operators

16 News Some of the recent developments within the oil and gas industry

16 EnerMech

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PA CI

L NA

Guam Power Authority

C REGIO FI

PROFILES

Mining

Mammoet MEA

SPOC Automation

MIST Inc.

PA CI

S U C

C REGIO FI

L NA

Timor Resources

C REGIO FI

NiuPower

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Time to

break free THE SUPERMAJORS AND THE ICARUS PARADOX. BY ANDREW INKPEN, MICHAEL MOFFETT, AND KANNAN RAMASWAMY

ong before the predatory Saudi Arabian oil production attack and Covid-19 there were signs of trouble in the global oil industry. The five supermajors (BP, Chevron ExxonMobil, Shell, and Total) have been delivering disappointing financial and operating results for years. Collectively, these five shed hundreds of billions of dollars in market value from 2018 to 2020. Share prices for the five firms were lagging far behind the S&P 500 well before Covid-19 emerged. The pandemic has served as an accelerant - exposing some of the fundamental weaknesses of an industry that has gambled on status quo and poor strategy in the face of significant shifts in the environment. The Icarus Paradox1 explains how successful

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organizations are often prone to failure. The paradox, stated simply, is that the strengths of successful companies can lead to excesses that cause their downfall. With success can come confidence, complacency, exaggeration, dogma, and ritual. Collectively, these attributes may sow the seeds of failure. One of the characteristics of organizations that fall into the Icarus trap is staying with the same core strategy when there is growing evidence that it is no longer working. The fundamentals of the global oil industry have changed. The rapid development and maturation of unconventional oil development like that of the Permian has fundamentally altered the upside of future activities and profitability forever. Strategy and the capital allocation associated with the execution of corporate strategy are now critical. The

THE OIL & GAS MARKET

margin for error and the days of overspending on megaprojects like Kashagan and Gorgon are long gone. We contend that three areas, vertical integration, global reach, and an insular culture, that underpinned much of the industryâ€™s historic success are sowing the seeds of decline, dragging down the firms and dimming the lights on their corporate futures.

Vertical Integration Vertical integration continues to be a core strategy for the majors and national oil companies (NOCs) like Saudi Aramco, Kuwait Petroleum, and Sinopec. The oil majors have long argued that vertical integration results in two distinct benefits, business-line synergies and as a hedge

against sector business cycles. The synergy argument relies on the efficiency gains of a combined overhead for upstream and downstream, and cost synergies arising from combined procurement and shared best practices. When asked about the value of integration on a recent quarterly earnings call, ExxonMobil CEO Darren Woods said there were two main benefits: synergies across the units such as a common project management organization and new upstream developments that could be linked with the refining and chemicals company. Our research2 shows that arguments used to support vertical integration are not defensible. There are few real synergies across the upstream, downstream, and chemicals. The knowledge and skills necessary to succeed in each

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of these sectors differ dramatically. As the industry has migrated from market inefficiency and the lack of specialists to efficient markets and specialized players, there has been a reduction in the advantages to be gained from vertical integration. The majors have been left with huge integration cost structures without the attendant benefits. The hedge argument, that a down sector will be offset by an up sector, is a myth. The five majors all have earnings which are predominantly driven by the upstream. When upstream earnings fluctuate, there is little evidence that downstream earnings offset them either in direction (upstream losses versus downstream profits) or magnitude because downstream earnings are always smaller in good times and bad. The best argument that can be made is that the two business sectors are unrelated and independent. When an ex-CEO was asked recently by the authors if vertical integration really made business sense, â€˜We are still to figure that outâ€™ he replied. It is long past time to reconsider whether the benefits of vertical integration are really that huge to warrant the enormous costs it imposes.

Global organizational reach Over time the supermajors have attempted to expand their

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organizations from a patchwork of regional developments to a global matrix of immense reach. In many ways, the industry became the poster child for globalization. This expansion came at great expense: the costs of co-ordinating global operations, the loss of regional business acumen; and the substitution of inflexible corporate standards and dogma that sapped strategic agility and resilience. The oil and gas industry is not going to become less global, especially for the supermajors. At the same time, it requires a highly specialized set of inputs in the form of labor, technology, capital, and experience. Retreating behind country walls is clearly not realistic; rethinking the approach to geographic operations is. The challenges of tomorrow will center on a firmâ€™s ability to leverage the benefits of global reach without the costs of global operations, while navigating the constant threat of nationalism. This calls for a rethinking of organizational structure and design. Regional/ local structures and decision-making are more in tune with emerging reality. Simultaneously, the relative emphasis that firms have historically placed on STEM disciplines versus other fields in hiring decisions need to be revisited. Engineers for example, can hardly be expected to help steer the firm through the

THE OIL & GAS MARKET

attitudes toward risk-taking are endemic. The expectations of ‘making the numbers work’ permeates decision-making, often fostering questionable analyses in order to pass through more and more bureaucratic hurdles. The confluence of Covid-19, climate change and the rising emphasis on renewable energy calls for new thinking about strategy and its consequences for the oil and gas industry. In an era of depressed oil and gas prices, every oil and gas company in the world is making efforts to cut operating costs. While managing costs is important for all organizations, firms cannot cut their way to success. Growth requires innovative and disruptive thinking outside the ‘we know it all’ mindset. Bold leaders are needed to break free from the pillars of past success that are so clearly constraining the future. Icarus failed because he expected too much of the same wings that had been the instrument of his salvation. The global oil industry is in danger of the same. 1 Miller, D. 1992. The Icarus paradox, How exceptional companies bring about their own downfall. New York: Harper Collins. 2 Inkpen, AC & Ramaswamy, K. 2017. The oil and gas industry: Value chains and vertical integration. Advances in International Management 30: 55-80. Kannan Ramaswamy

choppy political waters of nationalism, economic inequality, and rising anti-global sentiments. New competencies and mindsets are needed for the changing global industry.

Insular cultures of process and discipline If there is one over-riding lesson learned and perpetuated from years of success in the global oil and gas industry it is the importance of process and discipline. Oil and gas companies, particularly the five supermajors, pride themselves on their process, discipline, and technical engineering strength to solve complicated problems through science and hard work. They have brought many technical innovations such as deep-water drilling, FPSOs, enhanced recovery techniques, horizontal drilling and hydrofracking, floating LNG plants and ships, to name a few. Accompanying this success, as with the wings of Icarus, was a growing confidence in ‘the’ solution. This superconfidence leads firms to reject ideas from outside the industry and outside the firm. Corporate cultures have solidified to the point that recruiting new talent is nearly impossible; they cannot find new people who fit in the existing corporate culture. The result is a wall keeping out new ideas and alternative methods. The staid cultural

Andrew Inkpen

Michael H. Moffett

THUNDERBIRD SCHOOL OF GLOBAL MANAGEMENT Kannan Ramaswamy is the William D. Hacker Chair Professor of Management in global business at Thunderbird School of Global Management. Andrew Inkpen is a professor of management and the J. Kenneth and Jeanette Seward Chair in Global Strategy at Thunderbird School of Global Management. Michael H. Moffett is an associate professor of finance and holds the Continental Grain Professorship in Finance at Thunderbird School of Global Management. Thunderbird School of Global Management is a unit of the Arizona State University Enterprise. For more than 70 years, Thunderbird has been the vanguard of global management and leadership education, creating inclusive and sustainable prosperity worldwide by educating future-ready global leaders capable of tackling the world’s greatest challenges. For further information please visit: www.thunderbird.asu.edu

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Remote operations

come of age

JASON URSO TAKES A LOOK AT HOW MANUFACTURERS CAN KEEP FACILITIES RUNNING EFFICIENTLY, RELIABLY AND SAFELY – FROM A DISTANCE

oday’s challenging business climate underscores just how vital digital transformation is to business continuity in the industrial sector. Owners and operators of refineries, chemical plants and manufacturing facilities need to change the way employees work as quickly as possible. It’s clear that the traditional operating model where everyone works on site has evolved – not just due to current circumstances, but because the retirement of experienced plant workers is creating a shortfall of key skills. One solution to these challenges is remote technologies that can help customers safely and flexibly harness expertise from around the world to maintain operations, increase productivity and cybersecurity and help to protect workers – all while taking a step toward digital transformation.

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Let’s take a closer look at the impact of digitization and how it is driving the adoption of remote solutions across the sector.

Future-proofing operations Digital transformation holds significant promise for manufacturers, unlocking high levels of efficiency, productivity and safety within factories for competitive, long-term advantage. Yet many manufacturers are making limited use of enterprise data to drive operational performance. The norm is still to extract insights from siloed software applications – which tend to be process or asset-specific – and then use analytics to determine what action should be taken. This is a cumbersome, disjointed process that fails to deliver a holistic view of operations.

DIGITIZATION

However, by harnessing sensors, connectivity, data capture, visualization and advanced analytics, manufacturers can create robust remote monitoring and operations and condition-based and predictive maintenance capabilities to drive business performance and continuity. The industry’s move toward remote operations and project engineering is being facilitated by a new generation of software that can be deployed and used securely.

Remote technologies offer transformative impact Leading automation suppliers such as Honeywell are offering customers a path to digital transformation with remote solutions that deliver the skills, expertise and technology capabilities they need to navigate challenging business conditions. Using data gathered from processes and assets, remote solutions enable operations personnel – regardless of where they are in the world – to manage daily production and maintenance functions and drive continuous improvement across multiple sites. They also enable personnel to track production targets, operate plant processes, monitor asset health and even create scenarios to determine the effect of operational changes prior to implementation. Remote capabilities help manage installed automation systems, networks and devices; and facilitate development, deployment and testing, training and technology migrations.

Tools for different user requirements At present, manufacturers are reducing the number of facility workers to comply with social distancing guidelines and to help keep those remaining onsite protected. At the same time, they’re investing in safety equipment like digital video and access control systems to provide a clear view of who is on site at all times. The latest digital workforce management solutions leverage real-time data to improve the compliance, productivity and safety of employees, contractors and visitors. These solutions provide real-time monitoring and enforcement capabilities and integrate with access control and enterprise resource planning systems to streamline workforce management activities. Plant operators, meanwhile, can now view critical

processes running on physical equipment through a secure app on their mobile devices; and through remote technologies, they gain top to bottom, enterprise-wide data visibility that helps them make better decisions. Finally, advanced video collaboration, troubleshooting and maintenance tools are ushering in a new era of remote service and support. These capabilities can be enhanced further by onsite workers donning intelligent wearables to help remote service personnel pinpoint and troubleshoot issues in real time, or conduct Factory Acceptance Testing. Onsite workers, meanwhile, benefit from anywhere, anytime access to knowledge and insights that help them perform their jobs better and maintain operational uptime.

Looking toward the future By implementing remote solutions, industrial manufacturers can minimize risk, time and effort in the field and streamline their migration process. Remote technologies can reduce cycle time by up to 80 per cent, lower operational costs by as much as 20 per cent and improve migration productivity by at least 60 per cent – all while providing operations personnel with the latest cybersecurity and process control improvements. As operating teams adjust to the new norm of remote working, they can use augmented reality training to strengthen their skillsets and get up to speed faster. They can even hold virtual training sessions whenever or wherever required via an ‘on-call’ operator.

Conclusion Driven by recent business situation and the continued retirement of seasoned plant workers, industrial manufacturers are increasingly embracing digital transformation in the form of remote monitoring, operations, management and support capabilities – and driving further risk out of capital projects with experts on call while making significant savings. Through this operational model, they can connect and analyze asset data from across the enterprise and flexibly harness expertise from across the world to maintain operations, increase productivity and cybersecurity and help to protect workers.

HONEYWELL PROCESS SOLUTIONS Jason Urso is chief technology officer of Honeywell Process Solutions. Honeywell Process Solutions is a pioneering provider of automation control, safety systems, field instrumentation, fuel delivery and burners, connected plant offerings, cybersecurity, tissue and packaging materials control systems, connected utility and metering solutions, and services for a wide range of industries. For further information please visit: www.honeywellprocess.com

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Space

miners

CAN ASTEROID MINING SOLVE THE RARE METAL SHORTAGE? WADE LANNING, PHD IN MATERIALS SCIENCE AND ENGINEERING, EXPLAINS THAT, WHILE SPACE TRAVEL IS STILL EXTREMELY RISKY AND EXPENSIVE, CERTAIN ADVANTAGES MAKE ASTEROID MINING AN APPEALING POSSIBILITY

n the midst of a new privatized space race, companies are revisiting the possibility of sourcing materials from outer space â€” not least because earth faces a global rare metal shortage. A single asteroid could contain trillions of dollarsâ€™ worth of precious metals, and sourcing materials from asteroids could enable largescale construction in space. The world demand for rare and precious metals is growing, and a mix of political turmoil and natural scarcity are contributing to fears that the global supply will be unable to keep up. As supplies dwindle, demand grows, and prices rise, the new private company-based space race might offer a solution to the shortage. The asteroid mining would require major investments in new technologies, but there has been enough interest that companies have been formed to prospect for asteroids to harvest. Asteroids can be grouped broadly into those that are primarily carbonaceous, silicates, or metallic. Metallic asteroids are primarily iron and nickel but can contain rare metals like platinum, gold, iridium, palladium, osmium, ruthenium and rhodium at concentration several times

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higher than what is found on Earth. A single asteroid could be worth hundreds of millions of dollars, billions, or more if humans could overcome the formidable challenge of harvesting it. This may sound like science fiction but, since at least the 1970s, organizations like NASA have been considering the possible advantages of asteroid mining for resources.

Mine in space to build in space Bringing rare metals to Earth is not the only possible use for asteroid-derived materials. Building equipment on Earth then lifting it into space is, in fact, expensive. Every kilogram of material costs money to lift into orbit, and individual space launches cost upwards of $100 million. So, even the more common materials in asteroids, like iron and nickel, take on new value because they are already in outer space. Other materials without an obvious structural purpose, such as water, could be used as raw materials for fuel synthesis and/or life-sustaining supplies. If the materials found in asteroids could be processed into a useable form in space, it would remove a major barrier to large-scale construction and exploration in outer space.

MINING NASA has been considering the possible advantages of asteroid mining since at least the 1970s

value and relative difficulty to harvest. A few companies have even been founded to explore the possibility of extracting heavy metals from near-earth asteroids (NEAs).

A challenging mission A 2012 feasibility study at the California Institute of Technology (CalTech) in Pasadena, US, argues that the most attainable first mining project would consist of bringing an NEA into high-lunar orbit, and making it accessible for surveying and material extraction. They estimated that it would be feasible to redirect an asteroid approximately 7m across to orbit the moon by 2025. However, the same study estimates the cost of the mission to be at least $2.6 billion. Bringing an asteroid close enough to Earth to extract valuable materials depends on more than just the distance and size of the asteroid. One of the most important factors is the change in the asteroid’s velocity, or ‘delta V’, which would be required to alter the asteroid’s trajectory to one that would put it in orbit around Earth or the moon. The amount of fuel required to push the asteroid would depend on both the asteroid’s mass and delta V. Other factors, like the asteroid’s spin and whether or not it is travelling in an asteroid pair, also factor into the difficulty of re-directing the asteroid to a location for harvesting. Thus, any given asteroid’s trajectory, mass, spin and more must be taken into account when planning a retrieval operation. Additionally, any missions must also be timed to take advantage of periods when the asteroid is already moving closer to the Earth.

Surveying for valuable ores

How close are we?

Harvesting an asteroid for trillions of dollars’ worth of platinum sounds exciting. Yet the reality is that, so far, humans have barely harvested a few dust particles from actual asteroids. Much of the in-depth information we have on the composition of asteroids is from the characterization of meteorites that have, of course, fallen to Earth from space. So how could we possibly know which asteroids are worth mining? The vast majority of measurements of the composition of asteroids in outer space have been accomplished using infrared spectroscopy via telescopes. Asteroids with different compositions absorb different frequencies in the infrared spectrum, allowing scientists to determine what they are made of based on the light they reflect. More recently, radar-based techniques have also been deployed to distinguish different types of an asteroid. Such estimates of asteroid composition are often calibrated against samples of meteorites found on Earth. The relatively high abundance of rare metals in asteroids allows them to be ranked according to their approximate

In order to understand how much additional research and effort may be required to make harvesting asteroids a reality, we should take a look at the history of human efforts to retrieve materials from space for scientific study. By far the largest amounts of samples ever recovered from outer space were achieved during the race to the moon between the USA and USSR during the 60s and 70s. NASA retrieved a total of 382 kg of material from the Apollo missions between 1969 and 1972. Automated ‘Luna’ spacecraft sent by the USSR also brought back about 300 g worth of samples. It took another 30 years before any other serious efforts to retrieve material from space were attempted. NASA’s Stardust spacecraft passed near comet Wild-2 in 2004 and used an aerogel-based sample collector to capture dust from the comet. Due to its extremely high porosity, the aerogel made ideal material for slowing down and trapping the very high-velocity dust particles without destroying them. The dust was successfully returned to Earth. The material collected resulted in some valuable scientific discoveries; but grabbing a few tiny micron-sized particles

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Metallic asteroids are primarily iron and nickel but can contain rare metals like platinum, gold, iridium, palladium, osmium, ruthenium and rhodium at concentration several times higher than what is found on Earth

is a long way from industrial-scale mining. The Japan Aerospace Exploration Agency (JAXA) has executed the most successful missions to retrieve material from asteroids so far. While the Hayabusa 1 mission to 25143 Itokawa asteroid encountered difficulties and was only able to return with some dust particles, the Hayabusa 2 mission is currently underway to explore and sample the NEA, 162173 Ryugu. The probe was launched carrying three small rovers, a landing module, and equipment for taking surface samples. It has already completed two sampling runs, where it blasted the asteroid with a tantalum projectile then collected the flying debris. Hayabusa 2 is expected to return home in December of 2020 and the samples it carries will be the largest payload of samples retrieved from a near-Earth body since the Apollo missions. NASA also has ongoing missions to take samples from NEAs. The OSIRIS-REx probe is currently orbiting an NEA, Bennu, where it will map the surface and retrieve samples. The sample retrieval operation will be a precise maneuver whereby the probe approaches Bennu on a trajectory that matches the asteroidâ€™s spin, touches the surface with a sample collector for about five seconds,

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and uses a jet of nitrogen to flush loose dust and pebbles into traps in the collector. Both the Hayabusa and OSIRIS-REx missions represent major advancements in our knowledge of how to maneuver a vehicle in proximity to an asteroid. By some calculations, Ryugu and Bennu are in the top five most economically viable asteroids for mining efforts. Ryugu has an estimated value of more than $80 billion while Bennu is worth about $670 million. However, they would cost about $50 billion and $485 million to harvest, and those estimates are from Planetary Resources, a company whose existence is predicated on the idea that asteroid mining will be feasible soon. After the Hayabusa and Ryugu missions are concluded, we will have more detailed information about their compositions than ever before, and we will see whether they are as rich in precious metals as speculators hope. The biggest step towards converting asteroids into a harvestable resource may be the upcoming â€˜Double Asteroid Redirection Testâ€™ or DART. Scheduled to launch in 2021, the DART mission will involve the asteroid pair 65803 Didymos. The DART vehicle will launch a tiny observer satellite, then it will accelerate towards one of the 65803 Didymos asteroids while taking pictures, then

MINING Donald Brownlee, Stardust principal investigator with the University of Washington, flashes a victory sign for the successful arrival of Stardust material. Also pictured are JSC's Mike Zolensky (left), curator and co-investigator for the project; Friedrich Horz, JSC, and Peter Tsou, Jet Propulsion Laboratory. Credit: NASA

collide with the asteroid. Observations from Earth-based telescopes and the microsatellite will monitor the change in the asteroid’s trajectory relative to its twin. This could be the first step towards redirecting asteroids that pose a threat to Earth or towards moving an asteroid into a convenient position for mining.

trajectory of the asteroids themselves. Global demand for technologically-critical metals is still growing. In the meantime, new NEAs are constantly being discovered, and so is our ability to detect valuable metals in those asteroids. If these trends continue, it may only be a matter of time until an asteroid with enough precious metals passes near the Earth and someone decides it’s worth the risk to try to catch it.

High costs, high risks but high rewards So, will the world economy soon be flooded by a vast new supply of previously-scarce precious metals? Probably not. At present, no company is quite ready to risk billions of dollars on a venture that requires technologies which have not been fully developed and techniques that are not proven. The nearest thing humans have accomplished so far is scraping a few tiny samples off of an asteroid’s surface, and even those missions were very risky and challenging. However, asteroid mining might still have a future. In the next few years, missions like Hayabusa 2 and OSIRIS-REx will be returning to earth with their asteroid material samples. The data from those missions, DART and others will grant us a new understanding of how to maneuver vehicles around asteroids and change the

MATMATCH Wade Lanning is a PhD in materials science and engineering, and he prepared this article for Matmatch, a materials search platform that connects worldwide engineers and material suppliers. Matmatch is based in Germany and aims to inspire people to build better products, by changing the way the world discovers and uses materials. With over 26,000 materials, it’s never been so easy to find materials and suppliers anywhere, anytime. For further information please visit: https://matmatch.com/

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Under

attack

THE EVOLVING RANSOMWARE THREAT IN THE ENERGY SECTOR. BY IPPOLITO FORNI

n the past few months, we have seen a major increase in ransomware operations targeting the Energy Industry Vertical, taking advantage of this sector’s role in critical national infrastructure. In April specifically, Energias de Portugal, a major player in the energy industry that operates in 19 countries across four continents reported suffering a ransomware attack from the Ragnar Locker ransomware family. In addition to encrypting data, the ransomware operators exfiltrated 10 TB of data and threatened to ‘publish this Leak in Huge and famous journals and blogs, also we will notify all your clients, partners and competitors’. The ransom demand in this attack was 1580 Bitcoins which, at the time of writing, converts to approximately $15 million. All indicators considered, this was not an attack against service availability. The attack did not affect energy supply to customers. The ransomware operators targeted, exfiltrated and encrypted sensitive data, but fell short of impacting vital operations systems. It is difficult to evaluate whether this was done on purpose, but this Modus Operandi might be explained by the fact that ransomware

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operators mainly consists of cyber-criminal gangs, whose primary goal is monetization. They will therefore execute actions leading to that goal: ransom payment. A severe blow to the targeted victim, such as a total and disastrous impact with unavailability of all systems, might work against the ransom being paid. The reason behind it is that in the critical infrastructure realm service availability is a priority function. An attack that completely knocks out, for example, an electric supplier is likely going to trigger government contingency plans on the electric grid to minimize the risk of blackouts and outages. This would remove the immediate urgency factor which could lead the victim to focus on slowly re-building the network infrastructure rather than paying the ransom for immediate decryption. Other ransomware victims in the Energy Industry Vertical have not been so ‘lucky’. In February, the US Cybersecurity and Infrastructure Security Agency (CISA) responded to a ransomware attack targeting an undisclosed natural gas compression facility. In this attack, the ransomware operators first breached the

CYBERTHREATS

information technology (IT) network and then pivoted to the operational technology (OT) network where the Industrial Control Systems (ICS) reside. This attack caused the facility operators to lose visibility on the OT devices. It is worth noting that the ransomware operators never managed to impact programmable logic controllers (PLCs), as the ransomware was designed to target Windows systems, which the PLCs were not. Upon a closer look, OT systems are unlikely to avoid compromise: In February, researchers from Dragos identified a variant of the Ekans ransomware designed to target Industrial Control Systems. This ransomware variant has the capability of deploying on Windows machines in the IT network and can also run and manipulate data on OT systems, with the capability of terminating 60 industrial processes from multiple ICS vendors such as GE and Honeywell. This latest Ekans ransomware variant has not yet been leveraged in a cyber-attack in the wild, but it is currently available for sale on underground markets. The impact of a ransomware attack targeting OT systems can be extremely severe as, depending on the victim, it could

bring about massive blackouts, outages and kinetic damage by targeting ICS systems. As the ransomware landscape swiftly evolves, 2020 saw new Modus Operandi being put into place by ransomware operators to maximize the monetization effort. As we saw in the case of the ransomware attack against EDP, in addition to encrypting the data, ransomware operators are exfiltrating data and using it for further monetization purposes. These are new techniques that are becoming common in ransomware attacks. One technique consists in using the threat of leaking the data as an additional leverage to subdue the victim into paying the ransom. Another technique simply consists of selling the exfiltrated data online in case the ransom is not paid. A good example of these new trends is the March ransomware attack against Ohio-based LTI Power Systems. In this case, the operators exfiltrated the data in addition to encrypting it locally. The data consisted of schematics and drawings related to two Missouri power plants: Ameren Sioux Power Plant and Labadie Power Plant. This is particularly interesting as it might shed some light on the ransomware operatorâ€™s intentions. The ransomware operators might have been interested in simply selling the data for monetization purposes. A more sinister alternative analysis hypothesis suggests that the ransomware operators, or the threat actors purchasing the schematics and drawings, want to familiarize themselves with these two power plants before executing a new cyber-attack or have been conducting operational preparation of the environment. While this hypothesis is speculative and has no corroborating evidence for the time being, it would not be the first time a threat actors purchase data stolen by other threat actors to profile a target. The energy industry vertical is an extremely important part of any nationâ€™s critical infrastructure. This makes it very appealing to ransomware operators as the vital nature of its services provides further leverage to the ransomware operators in the extortion/monetization process.

ECLECTICIQ Ippolito Forni is a Cyber Threat Analyst at EclecticIQ, provider of intelligence-powered cybersecurity for government organisations and commercial enterprises. EclecticIQâ€™s solutions are built specifically for analysts across all intelligence-led security practices such as threat investigation, and threat hunting, as well as incident response efforts. For further information please visit: www.eclecticiq.com

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NEWS

Entering the next phase $5 billion deal bp has agreed to sell its global petrochemicals business to INEOS for a total consideration of $5 billion, subject to customary adjustments. The agreed sale will further strengthen bp’s balance sheet and delivers its target for agreed divestments a year earlier than

Upwing MDS

originally scheduled. Bernard Looney, bp chief executive officer said: “This is another significant step as we steadily work to reinvent bp. Today’s agreement is another deliberate step in building a bp that can compete and succeed through the energy transition.”

Key solutions Fugro has used the survey vessel Edda Sun to deliver an inspection, repair and maintenance (IRM) project for Corrib, Ireland’s biggest natural gas field, on behalf of Vermilion Exploration and Production Ireland Limited (Vermilion). The project included deepwater pipeline surveys, inspection of subsea structures, and maintenance tasks using Fugro’s FCV3000 remotely operated vehicle (ROV), and the Edda Sun is now returning to the North Sea to continue its 2020 IRM programme.

Commitment to hub Dräger Marine and Offshore, a division of The Dräger Group, has confirmed a new phase of investment in its Aberdeen office, which will focus on significantly expanding the company’s rental fleet of offshore safety equipment, including its fire and rescue apparatus. The company has also announced the appointment of David Donaldson to head up its Marine and Offshore UK office, based in Aberdeen. David commented: “The ongoing investment in Aberdeen reaffirms our commitment to the local business community, as well as our staff, who have been working hard to maintain our customers’ critical safety operations throughout lockdown.”

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Upwing Energy, an artificial lift technology company, and Mitsubishi Heavy Industries (MHI), one of the world’s leading industrial firms, have been awarded the next phase of the Magnetic Drive System™ (MDS) project by DeepStar. The new phase, based on the successful completion of a design study last year, will include the design, build and test of enabling technologies that are the backbone of Upwing’s MDS concept for a reliable and retrievable Electric Submersible Pump (ESP). Upwing Energy will design, fabricate and test a full-scale passive radial bearing assembly as well as a magnetic vibration and temperature sensor system to be utilized between the pump stages and motor in the MDS. MHI will design, fabricate and test a few stages of the high-speed, efficient hydraulic pump. The detailed design of the prototype and validation of major components of the MDS will determine the technical and economic viability of the MDS pump system. Upwing and MHI engineers will begin work on Phase II of the project in June and are scheduled to complete the experimental prototype, including component testing, by May 2021. The proof-of-concept phase, targeting deepwater offshore and subsea oil well applications, is sponsored and funded by the Nippon Foundation - DeepStar Joint Ocean Innovation program and supported by project champions Chevron, Shell, Petrobras and Equinor. DeepStar is a joint industry technology development program focused on advancing technologies to meet its members’ deepwater business needs to deliver increased production and reserves. DeepStar members include Shell, Total, CNOOC, Anadarko, Equinor, ExxonMobil, JX Nippon, Chevron, Petrobras and Woodside.

Major milestone Neptune Energy recently announced a major milestone for the Touat gas facility in Algeria, with operatorship having been formally passed to Groupement Touat Gaz (GTG). The day-to-day operation of the facility has been carried out by contracting company, Técnicas Reunidas (TR), since gas export began in September 2019. Operational handover was dependent upon the signing of the Performance Acceptance Certificate (PAC) between GTG and TR, which took place on 24 June. GTG is staffed by Neptune Energy and Sonatrach secondees who bring together decades of operational experience in Europe and Algeria. Neptune Energy’s Vice President for North Africa Asia Pacific, Philip Lafeber, said: “The Touat plant continues to operate well, emphasising the growing importance of the North Africa business in Neptune’s geographically-diverse and gas-weighted portfolio.” Director General at GTG, Ian Conacher, added: “We have built the right team to deliver operations at Touat. TR played a key role in enabling first gas export and ramping up the plant to plateau and I would like to thank them for their efforts at site. I look forward to continuing to work with the excellent GTG team to maintain solid production levels from Touat as we take over the operator role.”

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A Wood EPC

Planning and preparation Rever Offshore has completed a twophase contract with energy major Total E&P UK. Beginning in late March, Rever Offshore undertook an onshore project management and engineering campaign, accompanied by an initial 41-day offshore operation and subsequent ten-day campaign, to conduct essential inspection, repair and maintenance (IRM) work on Total’s North Sea production assets. The workscope also included the completion of two

US solar contracts

complex and bespoke construction projects comprising the installation,

Wood has secured two solar engineering, procurement and construction (EPC) contracts from an American power and energy company worth over $200m. Wood was selected following a competitive tender process and will be responsible for delivering two major solar projects in the US state of Virginia with a combined output of 190 megawatts. The first project is a 120-megawatt solar facility in Pittsylvania County, expected to be operational in 2022. The second project covers a 70-megawatt solar facility in Chesapeake and is expected to be operational in late 2021. Both solar facilities also further Virginia’s Clean Economy Act, passed on April 13, 2020, which mandates that the state’s electricity be 100 per cent carbon-free by 2050. Stephanie Cox, CEO of Wood’s Asset Solutions Americas business, said: “These contracts build on a ten-year relationship with our client, for whom we’ve executed more than 40 projects. The awards are testament to our ability to maintain consistent project execution, deliver to accelerated construction schedules and bring forth a strong EPC proposition and skilled workforce to meet our client’s project goals. “We are seeing an unstoppable momentum towards a lower-carbon energy environment and Wood is proud to partner with clients that are committed to investing in a sustainable energy future.”

hook-up and protection of a 2.6km

Waste into wealth

CEO, commented: “As we continue

electrical cable. Rever Offshore deployed its multipurpose dive support and offshore construction vessel (DSV), the Rever Polaris. The Q2 activity represents the beginning of a number of IRM campaigns Rever expects to undertake for TEPUK during 2020,

REAL COPY

all of which will utilise the vessel. During the campaign planning and execution phases, the development and adoption of stringent Covid-19 related protocols became essential, which saw all Rever and Total personnel collaborating to achieve this. Barry Macleod, Rever Offshore to build on our long-standing relationship with Total, the safety

Using a proprietary technique and Clariant’s HYDEX E next-generation hydro-dewaxing catalyst, Duslo’s research institute VUCHT has successfully converted plastic waste into premium winter fuel distillate. The efficacy of this ground-breaking process has now been proven in a pilot plant in Slovakia. As plastics and fuels are both mainly composed of natural gas or crude oil, turning one into the other has major implications for sustainable and lucrative fuel production. “Upgrading gas oil fractions to more valuable products has become essential for improving refinery economics. Clariant is committed to supporting this customer need through innovations such as HYDEX E. We are honored to partner with VUCHT in their pioneering plastic waste-to-winter diesel technology, and very pleased about the outstanding performance of our next-generation catalyst in the process,” Stefan Heuser, Senior Vice President & General Manager at Clariant Catalysts said. The winter diesel produced is compliant with Euro 6 fuel emission standards, including cold flow properties specified for temperatures as low as -30°F (-34°C), typically required in arctic areas. To achieve this extreme improvement in cold flow, Clariant’s HYDEX E hydro-dewaxing catalyst was applied. After intensive pilot testing proved the technical viability and economic appeal of the process, VUCHT is planning to expand the method’s success in a custom-built demonstration plant with a fuel distillate capacity of 40 metric tons per annum (MTA).

of all involved has remained as important as ever. This two-phase project saw a concerted effort from Rever, Total and third-party contractors to prepare for this essential IRM project, whilst ensuring the highest level of planning to protect our people and assets.”

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PROFILE

MAMMOET MEA

A mammoth operation

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When it comes to any heavy lifting or transportation challenge, the name Mammoet has been suggested as a solutions provider for well over a century. With a core purpose to lift, transport, install and decommission big objects, Mammoet can draw on the expertise of a unique global network and an unparalleled fleet of equipment in the execution of extraordinary feats of heavy lifting – some of them breaking world records in the process. It is also worth noting here, that while known for its legendary lifting and transport capabilities, Mammoet also offers a variety of other services, including plant turnaround/shutdown management, site-wide construction services, modular construction, factory-to-foundation/logistics, rapid response, relocation and decommissioning and it also trades in new and used equipment worldwide. Michel Bunnik, Commercial Director Mammoet Middle East and Africa (MEA), gives some more details about Mammoet, with an overview of the company’s operations: “Thanks to its staff members and their deep and longstanding engineering expertise and the highest quality and safety standards, Mammoet can bring an intelligent and flexible approach to projects across a

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wide breadth of industry sectors, including petrochemical industry, the energy sector, offshore and civil construction,” he began. “Globally, approximately 7000 people work for the company, in about 140 offices and branches. The head office of the holding company is located in The Netherlands, and there are offices in North America, South America, the Middle East, Africa and Asia Pacific. Mammoet is part of the SHV group, one of the largest privately-owned companies in the world. It is a family business with an impressive portfolio of companies: Eriks, Makro, NPM Capital, Nutreco, One Dyas, and SHV Energy.” Already possessing a sterling reputation and amazing range of capabilities, in January 2020 Mammoet embarked on a new chapter of evolution, when the company revealed the acquisition of ALE – the third largest heavy lift company in the world. The transaction created the world’s largest team of dedicated professionals and an astonishing fleet of heavy equipment. The deal significantly enhanced Mammoet’s scalability, innovation capabilities and efficient mobilization, and created an entity that is not like any other in the industry. Six months after the transaction was announced Michel noted the process of integrating the

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MAMMOET MEA

two businesses has gone extremely well: “From the very start of the integration in early January Mammoet felt that both previous companies share the same culture and values,” he agreed. “Because of that the amalgamation process has been very smooth and the business has finalized the layout of the new organization. It is combining the best of both worlds now; structured and organized with quick decision making, and creating the ‘new’ Mammoet, with colleagues across the business working hard to bring people together and build one strong team.”

Prestigious projects Michel had referred to Mammoet’s various locations around the globe, and as Commercial Director of Mammoet MEA, he has hands-on experience of the challenging and fascinating work that the business undertakes in this diverse and dynamic region. “Mammoet has been present in the MEA for over 45 years, with its first projects carried out in the early 1970s,” he pointed out. “Since then, it has handled a wide range

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of prestigious projects in the region, providing transport and lifting services for clients in the power, petrochemical, civil and infrastructure sectors.” In fact, Mammoet MEA has ten operational branches spread over the entire geographical area and owns and operates all of the Mammoet MEA major equipment. For transport, this varies from lowbed trailers and conventional platform trailers to a large fleet of self-propelled modular transporter (SPMT) trailers. For lifting, it goes from hydraulic gantry systems to hydraulic cranes and crawler cranes up to 1600t capacity. “Like all other Mammoet regions we are selfsupporting in our engineering and project management services,” Michel added. The MEA region is no stranger to some very significant development projects and Mammoet MEA has participated in many of the largest and most complicated schemes that have been undertaken, including the

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Dangote Refinery - a 650,000 barrels per day (bpd) integrated refinery and petrochemical project under construction near Lagos, Nigeria. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility. “The refinery complex is being developed on a 2635ha site on the Lekki Free Zone, along the coast of the Atlantic Ocean. A jetty was specifically built for this project to receive heavy equipment for the refinery construction,” Michel explained, giving an insight into the many intricacies of such a massive undertaking. “Mammoet’s scope consists of transport and installation of 133 refinery components and 50,000t of other project cargo from jetty to the site. They were then transported, over a ten-kilometer route. Once on site the components are placed into storage on freshly paved EnviroMat, Mammoet’s innovative and sustainable solution for ground reinforcement, which

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MAMMOET MEA

were once considered impossible, and as Michel went on to explain, the business has often broken records in doing so. “Mammoet was involved in the construction of the AinDubai Ferris wheel in Dubai, which, with a diameter of 215 meters, is the largest in the world. “Initially Mammoet mobilized a 3200 metric ton ring crane and 3000 metric ton crawler cranes to install the four legs (120m length/890 tons) and the spindle. With a lifting weight of 1840 metric tons to a height of 140 meters, the spindle lift set a new world record for the highest and heaviest tandem lift ever. Afterwards the crawler crane remained on Bluewaters Island to install the eight rim segments.” Further iconic projects upon which Mammoet has worked include the Burj Al Arab and its expansion, the Dubai Metro, the Shaybah Petrochemical plant, involving a 1000-kilometer journey through desert, and another record breaker – transporting the world’s heaviest evaporator, weighing 5134t, in Saudi Arabia.

was deployed to provide the main crane hard stands. “To optimize the construction process and schedule, Mammoet has drawn on its diverse fleet of equipment. This includes SPMTs and mobile and crawler cranes ranging in capacity from 250t to 1600t. Mammoet also brought its largest super heavy lift ring cranes with lifting capacities up to 5000t – the PTC 200 DS and PT 50 – to bring maximum efficiencies to the execution of the project.”

Record breakers The components transported by Mammoet included a 3000 metric ton regenerator, which is the heaviest item ever transported over a public road in Africa and a 2000t crude column – the largest crude column in the world. Both modules were installed using Mammoet’s PTC200 DS ring crane. It is clear that clients place enormous trust in Mammoet to help them achieve feats that ENERGY,OIL&GAS

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What unites these projects is the high degree of innovation that Mammoet MEA is able to offer each and every customer and as Michel agreed, innovation has always been the driving force behind its work, and will become even more important going forward. Crucially, Mammoet is the only global heavy lifting and transport business with a large R&D facility run independently from its operational activities, allowing it to innovate for the long-term in close collaboration with customers. Michel continued with an example of a new crane project underway from Mammoet, which is quite revolutionary. He began with some background to explain the origins of the new system. “As populations grow, demand for energy and infrastructure increases. Large industrial facilities become more complex and crowded. Cities expand and become congested. At the same time, development work must continue. So, Mammoet has developed the Focus 30, to address these needs.

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“The Focus 30 offers a variety of advantages, including vertical assembly, which ensures erection does not overhang buildings, plant and people, and a small footprint, allowing more work to take place alongside heavy lifting. Its lifting capacity of 1000t allows more lifts to be performed with a single crane, and it has a large and variable operational window, with fast setup to accommodate time-critical projects. Finally, it offers low ground bearing pressure, to protect surrounding infrastructure and softer terrain.

Game-changing solutions “The fabrication of the erection frame started in November 2019, and that is now complete. Work on the crane is continuing to schedule in advance of its first deployment, which is expected later this year.” The Focus 30 was designed in direct response to client demand, and this sort of innovation is a feature of the company’s history – in the 1980s, along with Scheuerle, the company developed and introduced the

PROFILE

SPMT, and the large ring cranes made their debut in the late 1990s. “Furthermore, high capacity jacking systems have been designed, allowing offshore structures to be raised to heights of over 40 meters,” added Michel, highlighting another game-changer from Mammoet. Other innovations to date include the PTC and SK crane ranges and the Mega

MAMMOET MEA

Jack, which have all lead the industry – shortening countless project schedules in the process and redefining industry practices. As we move forward into the second half of 2020, Mammoet MEA has an exciting few months ahead. Michel noted that while Covid-19 has caused some delays in projects shifting out, Mammoet implemented safety precautions from the start and it has been able to continue with most of its work without too many problems. Additionally, prior to the ALE integration, the MEA business had started a program to have a more adaptable equipment fleet in the region allowing it to differentiate into new markets, and it invested in a fleet of hydraulicand crawler cranes. “By becoming more versatile and moving into alternative market segments Mammoet is able to serve not only the project market, but also the day market for standard crane hire or smaller transportation jobs,” explained Michel, correcting the misconception that Mammoet is only interested in big projects. “Although Mammoet is a large company with a big fleet of cranes, and it is known for the unique size and capacity of its state-of-the-art equipment, it believes that every client is important, whether it is a large project or a two-hour crane rental job. Mammoet always wants to understand its clients’ business and challenges better than anyone else, regardless of their size, industry or location. It is the trust of our clients that enables around 7000 Mammoet professionals to give their best every day and truly make a difference in projects all over the world.” To ensure that it maintains the strong legacy that has been built over the past two centuries, Mammoet will keep improving its services and support its customers, so it can continue to build smarter, safer and stronger across the world.

Mammoet MEA www.mammoet.com .............................................. Services: Heavy lifting and transportation specialist

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PROFILE

ENERMECH

Christian Brown - CEO

The power of ten Founded in 2008, EnerMech is one of the world’s leading specialist mechanical, electrical, and instrumentation services companies for large scale energy and infrastructure projects. Though the work the company performs is complex, the structure of EnerMech’s core offering is simple - the business offers its clients ten key services that can be tailored specifically to the customer or project needs. As the company’s CEO Chris Brown points out, EnerMech does not generalize, it specializes. “We’ve grown over the last 12 years through a mixture of acquisitions and organic strategies,” Chris explains. “From a small business started in Aberdeen, we have gone on to achieve a presence in 23 countries and a workforce of over 4000 people. “Even though we’re only really 12 years old, the businesses we’ve acquired along the way have given us a resume of more than 40 years’ experience in both onshore and offshore oil, as well as vast expertise in technology, project delivery, and service delivery. The part that makes EnerMech unique though is that we are very specialist. We have a number of core services we are able to offer our customers and we bring further value by bundling those services together to give our clients an efficient, cost-effective, time-effective, all-inclusive solution to their needs.”

A lot of the ten service lines we’ve offered in oil and gas are conducive to the renewable market too and we are currently bidding, winning, and executing more work on the road and rail infrastructure side of our business. We’ve already got a lot of experience in oil and gas, and now we will look to transfer our services to infrastructure and renewables. I think we’ll be pushing very hard across all service lines in those areas

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PROFILE

ENERMECH

The ten services that make up EnerMech’s core offering include maintenance; commissioning; mechanical, electrical, and instrumentation installation; specialist cranes and lifting services; hydraulics; process, industrial and valve services; integrity management; equipment rental; training; and subsea pipeline work. “Integrity management is a large part of what we do,” Chris adds. “This usually consists of going into a client’s asset base and using unique specialist inspections and monitoring techniques to help form and propose solutions that help clients to reduce cost and extend the life of their facility. We also have turnkey solutions when it comes to hydraulics and we have skilled people with the ability to make all types of hydraulics systems. All this is underpinned by our large equipment rental business, which gives companies the ability to perform their own construction, maintenance, or hydraulic work with the latest equipment and fleet.”

Invaluable experience EnerMech’s reputation for delivering tailormade service packages means that the company continues to draw interest from clients across the globe. Through 2017 until early 2019, the firm supported a highly

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technical subsea pipelines contract with TechnipFMC, secured due to its credentials in working in complex deepwater subsea structures. Working on Angola’s Kaombo offshore development, EnerMech provided critical pre-commissioning services during the floating production storage and offloading (FPSO) hook-up operations phase of the project. This complex project comprised the tie-in of six fields of the Kaombo North and South FPSOs in ultra-deep water (up to 1950 meters in depth). EnerMech’s experience working with complex subsea systems was invaluable during the project supporting the connection of over 300 kilometers of subsea pipelines. More recently, EnerMech has been working on the WestConnex project, a predominantly underground, 33-kilometre motorway scheme in Sydney, Australia. Currently Australia’s largest integrated transport and urban revitalization project, WestConnex is also a landmark development for EnerMech in terms of its monumental size and scale. The firm has been involved in the testing and commissioning of mechanical and electrical systems in one of the tunnels, as well as overseeing procedures for lighting, fire safety, water, and ventilation in another. EnerMech recently secured a contract for further work

on the next phase of the WestConnex M4-M5 link and hopes to soon be able to provide similar services in the UK. As WestConnex and the Kaombo offshore project illustrate, EnerMech boasts a degree of technical agility and business flexibility unmatched by the vast majority of its competitors. Chris suggests that these traits continue to distinguish EnerMech from the rest of the industry and, earlier in 2020, helped to win the company a place in the top 20 of the Sunday Times Profit Track. “The type of services we offer, and the people we hire to develop and train within those services, are true differentiators for us,” Chris says. “We’ve got industry-leading expertise in a number of areas, including subsea pipeline commission and testing, and when it comes to hydraulics technologies and integrity management, we’ve got some really unique offerings and some really good people to support them.” For a business the size of EnerMech, with offices in 40 locations across the world and a truly global footprint, maintaining the company’s renowned flexibility can be difficult, but it is a challenge that Chris relishes. “There’s only really one way you can do it,” he claims. “People have always assumed that the bigger you get, the more centralized you need to get for economies of scale, but I disagree with that. I believe the bigger you get, in terms of numbers of people spread across the globe, you’ve actually got to further decentralize. “The way we stay agile is by having four very strong regional leaders, with their own

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teams, that are close to the customers, which allows us to be responsive, reactive, and adapt to changes in the market. Now, we need a degree of governance to make sure that the four businesses don’t just operate as independent entities, and that’s what my role is at the center. We have a small number of people at the top that manage the portfolios to make sure that we’ve got good quality control across the regions and we operate an approval matrix to assess cost, risk, and value, before we deploy capital allocation. “That’s how we run the business from an agility standpoint, which is needed when you develop as many services and locations as we have but still want to be close to your customers. It’s all about balance. We’ve got to make sure we don’t blow the business up by making different decisions across four corners of the world that may not be aligned to where we are as a larger company.”

Infrastructure projects EnerMech has always valued the importance of investment as a way to grow the business and in 2017, the firm acquired EPS Australia and Americas, adding electrical and instrumentational technical services to its portfolio and paving the way for the company’s entrée into the Australian infrastructure market. Supported by The Carlyle Group, EnerMech also invests over £10 million per year on new equipment and Chris is grateful for the support offered by EnerMech’s parent company, both from a technical standpoint, as well as on capital issues.

PROFILE

“We are backed by a great group like Carlyle and I just couldn’t think of anything better,” Chris declares. “Having a good, close connection with our capital providers means we’ve got the resources to employ more people, train more people, build more offices, and ultimately, win more work. During 2019, the objective was to build a stronger platform for the future and increase our bandwidth in preparation for an attempt to double or treble growth in the coming years. Now it is my job to work with Carlyle and take us to the next level. “Diversification is going to be a key part of our future expansion. People have always seen us as an energy service provider, but we’re not. We’re more than that. We’ve recently diversified the business into more infrastructure-related projects, and we are now more OPEX-focused on the oil and gas side of our work. We’ve always managed cost well, developed our offering through differentiating technologies, and trained people successfully in those areas, but the key to our future is going to be in moving further away from the traditional oil and gas market and more into infrastructure and related markets such as renewables.” When it comes to planning for EnerMech’s future, exploring opportunities in the renewable sector certainly features high on the list of Chris’ priorities, along with preserving the company’s agility, maintaining its customer focus, and keeping its workforce safe. “In everything we do, whether we are making investments in new service lines or bringing in new people, we have to make sure we preserve our safety culture, maintain our customer focus, and retain our agility. If we lose any of that, we start to go down a path towards forgetting who we are,” Chris asserts. “In terms of where our future opportunities lie, I see huge potential for our integrity management offering on aging oil and gas facilities that have been priced out of rebuilding because of oil prices and, instead, look to squeeze more out of their existing assets. We could also see new build projects for LNG facilities both in Africa and the Middle East, as well as infrastructure and sustainability work across all regions. “Most of all, I think we will start working on more and more infrastructure projects and in renewable markets. A lot of the ten service lines we’ve offered in oil and gas are conducive to the renewable market too and we are currently bidding, winning, and executing more work on the road and rail

infrastructure side of our business. We’ve already got a lot of experience in oil and gas, and now we will look to transfer our services to infrastructure and renewables. I think we’ll be pushing very hard across all service lines in those areas.”

ENERMECH

EnerMech www.EnerMech.com .............................................. Services: Specialist mechanical, electrical, and instrumentation services company

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Lift up

and prosper

An innovation company at its core, SPOC Automation believes that world-changing ideas can come from anywhere. It is a sentiment reflected in the firmâ€™s intelligent range of automation technology for upstream and midstream markets in the oil and gas

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industry. Specializing in controlling processes and equipment that rotates, SPOC has more than 20 years of experience in manufacturing intuitive products that increase the efficiency of their customers, saving both time and money. â€œIt all started with the rod pump controller,

PROFILE

SPOC AUTOMATION

Bobby Mason

Our drive technology continues to advance, and we think that actually, over the next three to five years, there is going to be a huge transition to variable frequency drives because it saves so much energy and reduces harmful emissions. On average, we save our customers anywhere from 20 to 40 percent on their electric consumption by deploying variable frequency technology

our Ironhorse product,” SPOC’s CEO and President Bobby Mason explains. “SPOC is actually an acronym for Sensorless Pump Off Control. The name comes from the pump off controller we developed that is inside our variable frequency drive to help maximize

production and reduce energy consumption. “We can apply a variable frequency drive and automation on any rotating equipment with an electric motor. A drive acts a lot like a rheostat on a light switch. The rheostat changes the voltage supply to your light, ENERGY,OIL&GAS

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which changes the intensity of the light. We do that with an electric motor. We can change the speed of that motor electrically and maintain 100 percent torque across the speed range, so that you can speed up or slow down your process based on your requirements. Not only does it prevent wasted energy, but it also saves money and reduces mechanical wear and tear on your equipment.” As well as selling directly to user markets such as the Saltwater Disposal sector, a significant portion of SPOC products go to market through original equipment manufacturers (OEMs) and multi-national oilfield service companies who brand and

distribute the product as their own. Over the years, SPOC has developed software and automation solutions for all artificial lift and compression applications, and its products continue to dominate a number of markets none more so than the electrical submersible pump (ESP) sector, where SPOC holds more than 20 percent of the market. “We do a tremendous amount of business in the ESP market,” Mason confirms. “I think our success in that sector comes because our product is robust, its feature sets, and the fact that, as a company, we are very scalable and can handle high volumes. If a client has a project and needs 2000 drives over the next 24 months, we are able to do that and a lot of other companies are not. Since we specialize in this technology, we know the applications and our customer support is incredible. One thing is for sure, if you ask any of our customers, they’ll tell you that their support is unmatched. High quality products and unbeatable support are two things that really help to set us apart and, like everything we do, it all comes back to our core values and our belief in the Lift Up culture.”

Five core values According to Mason, Lift Up is not simply another corporate initiative but a culture; an

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PROFILE

SPOC AUTOMATION

integral philosophy ingrained in the business and shared by all who work there. Every day, SPOC challenges its employees to embody the culture by living out their five core values: committed, caring, passionate, solutions focused, and gratifying. “I am a firm believer in positive recognition and Lift Up allows that,” Mason says. “For example, we had custom coins made up each one about the size of a silver dollar - and each coin has one of our five core values on it, along with the Lift Up logo. We have established a system whereby, if your peers see you living out one of our values, they can nominate you to receive one of our coins with that particular core value on it. “At SPOC, we value recognition and so we hand out accolades and rewards. At the end of each year, we have what we call METALWORKING SOLUTIONS

Most manufacturers are frustrated trying to find a dependable sheet metal fabricator. It should not be that way. At Metalworking Solutions people matter, relationships matter, promises matter, and quality matters. Companies do not do business, people do. Men and women represent more than companies, they represent families, colleagues, and friends. There is a lot at stake when a buyer favors Metalworking Solutions with an order. The Metalworking Solutions team takes it seriously. ISO 9001:2015 certified, Metalworking Solutions combines the best equipment with a skilled team, so buyers are confident that quality parts are delivered on-time.

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the Lift Up Award, which recognizes the person who has most represented our values throughout that year. I like to think of the Lift Up Award winner as somebody who, if they were deployed to Mars, without being able to speak Martian, would be able to communicate

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exactly who SPOC Automation is and what we stand for simply through their actions and their deeds. Not only is that person honored in front of the entire company, but there is also a monetary reward and special Lift Up coin to go with it. It just goes to show how important we believe those core values to be. As a business, we try to Lift Up the individual, we try to Lift Up our company, we try to Lift Up our customers, and we try to Lift Up the industry.” SPOC’s Lift Up culture is evident in all facets of the business, from its people to its products. Most recently, it played a role in the development of DriveShield, the industry’s most comprehensive extended warranty. Offering up to ten years of coverage, DriveShield is both a reflection of SPOC’s commitment to customer support, as well as evidence of the confidence the company has in its products. “We always want to try to help people,” Mason states. “DriveShield allows our customers to deploy drive automation equipment for six- to ten-years with a safety net; an unprecedented level of cover that even includes lightning strikes and voltage anomalies. There is nothing like that in the industry, and especially over these next rebuild years, DriveShield is a tremendous way to help protect our clients even from unnecessary expenses caused by an act of God. “It also speaks to the way we manufacture our products,” he adds. “We wouldn’t be able to offer up to ten years of warranty protection on a product going into some of the harshest environments on the planet if it was not built with extreme quality and robustness. After deploying more than 65,000 units, we’ve learned a great deal about how to protect our equipment correctly; DriveShield offers our customers even more peace of mind.” Innovation remains at the center of everything SPOC does, and this will not change in the future. Later this year, the company hopes to release a next-generation product that will incorporate more than a dozen new sensors, as well as a more modern, more intuitive interface. SPOC hopes it will be the first of many industry-defining innovations that the firm will pioneer in the years ahead. “We’re really excited about the next few years,” Mason remarks. “I think the energy

PROFILE

SPOC AUTOMATION

space is going to rebound quicker than a lot of the naysayers and pundits might think. Energy is vital for a quality, thriving life, and for developing nations to be able to move up that economic ladder. “The electrification of the world is increasing too. There is a large percentage of growth in that space and you can use variable frequency drives in conjunction with battery and super cap technology that will allow you to bridge the gap between diesel power and full electric. “Our drive technology continues to advance, and we think that actually, over the next three to five years, there is going to be a huge transition to variable frequency drives because it saves so much energy and reduces harmful emissions. On average, we save our customers anywhere from 20 to 40 percent on their electric consumption by deploying variable frequency technology. As you can imagine, that leaves us bullish about the future.”

SPOC Automation www.spocautomation.com ......................................... Products: Automation technology manufacturer

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Family matters

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PROFILE

Once just an idea bounced around its founder’s kitchen table, Miller Industrial Service Teams (MIST) was established by Jim Miller Sr in 2004. Still family owned and operated after 16 years in business, the firm specializes in the installation, revamp, and routine maintenance of tower internals and has experience working with some of the largest petrochemical companies in the world. On top of an exemplary record of safety and quality, over the years MIST has become renowned for its warm and welcoming company culture. Safety Director Rich Hoelke Jr suggests that it all stems from the way the firm treats its people. Though the company’s workforce might be populated by Jim Sr’s sons, grandsons, and in-laws, to MIST, family means more than that. Not simply a word to describe blood relatives, Jim says family is about treating people better. “When we started this business, we wanted to make sure we always treated our employees better than we had ever been treated when we worked for other companies,” Rich explains. “That approach means a lot to us. When we branched out from the family and hired our first full-time employee, we made sure he was the person we wanted him to be. We wanted him to be a family man. We wanted him to be a part of our family and he still is. Now our safety manager, he attends holidays with us, and his family joins us on Christmas Eve. We like to treat all our people in the same way. We think of ourselves as a big extended family.” Based in Ohio, MIST began life as an organization focused solely on completing maintenance and modifications for towers in oil refineries, chemical plants, and steel mills. Constantly developing its diverse portfolio of services, MIST has since grown into a turnkey maintenance contractor with the ability to work on reactors, drums, boilers, exchangers, and piping. With a client base that includes large companies like PBF Energy, for whom MIST is currently working in three facilities, multinational energy firm Phillips 66 remains the company’s largest customer. “We have done a lot of big projects for Phillips,” Rich states, “such as boilermaker work and pipe fitting at the P66 Bayway site in New Jersey. We have also done work for them in Wood River, Illinois, where we have been the general contractor. “At Wood River, we performed the plant’s first turnaround in the brand new coker unit.

It was back in 2011 and we had over 800 employees on the job. It remains the biggest job we have ever done in terms of manpower. It was all completed in a very short period of time, despite a host of unknown factors. I would say that it’s one of our most memorable projects.”

Preferred contractor Although the quality of MIST’s work attracts interest from a wide array of major corporations, the company is also proud to work with less prominent firms. “We have the big customers like Phillips 66, but we also have smaller ones like Crystal Clean in Indianapolis. We work on heat exchangers for them and we have another little company in Cincinnati that we did a flare tip for. No job is too small for us. We have always said that nothing is ever too small. We are willing to take on projects that some of these bigger companies won’t even look at.” Never short of work, in Spring 2019 MIST completed a project at Energy Transfer’s Marcus Hook Industrial Complex in Pennsylvania. This was followed by a turnaround for Toledo Refining Company in early 2020. With two turnaround projects already scheduled for 2021, MIST has plenty of new work on the horizon. “We have a couple of projects coming up at Bayway this summer and fall,” Rich reveals. “We are currently waiting on PBF to confirm some work in California, but the biggest news is that we have just signed another companywide contract with Phillips 66 to be one of their exclusive maintenance contractors. A multi-year deal, it will, once again, make us one of their preferred contractors.”

MIST INC.

When we bring somebody new in, we pair them up with someone experienced to see how they work. From their very first day, we ask questions like: Do they work safely? Do they do quality work? What is their level of knowledge? When we know the answers, we look to train them up and groom them for the next step. The aim is for people who walk through our doors to become foreman, general foreman, and superintendents

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One element of MIST’s enduring appeal as a contractor is the company’s impeccable track record for safety. Committed to achieving a level of safety excellence in all projects it undertakes, MIST views every accident as preventable. Since its founding in 2004, the firm has received safety awards from Phillips 66 across multiple locations, as well

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as Sunoco North East Refining for achieving zero recorded accidents from 2005 to 2010. “Safety is extremely important to us,” Rich declares. “As a business with a strong family culture, we don’t want to see anybody go home any different from how they came to work that day. After every incident free week, we buy lunch for our employees on Saturday. We put a lot of effort into bringing in good catered food and we also give away hats and shirts and cash prizes. It’s one of those things that everyone really looks forward to. Our people know that if they have a good safe week, we are going to have lunch on Saturday. Since the business started, we’ve been budgeting for this initiative. It’s not something we have built into our price. We happily use our own funds to make this happen because it is important to us and it is important to our guys.” In many ways, MIST is an industry outlier. The company’s ability to stay so deeply family-orientated while growing its turnover to $50 million a year is a feat rarely accomplished. MIST’s mission to embody the venerated ideals of teamwork, honesty, hard work, determination, and responsibility in its work is well publicized, but what have been the more practical factors in the firm’s unabated success? “I think one thing companies appreciate about us is the way we plan our jobs,” Rich claims. “We give every job equal care and attention, so we always make sure that somebody from the ownership group is onsite. It means that, if a decision needs to be made, nobody has to make a phone call

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MIST INC.

or double check with management; we have somebody right there to make any decision at any time. Clients respect that. They don’t want to waste time sitting around, waiting for an answer. “Something else we’ve been very good at over the years is tooling,” he adds. “We are highly focused on making sure that our workforce has everything they need to do a great job. If you have people hanging around, waiting for tools, it is costing you money. A lot of the bigger companies have to go through such a long purchasing process when they want to buy equipment, but we are always right there and we can make the call immediately and get what we need.”

Growth trajectory MIST’s streamlined chain of command, and comparatively small size compared to some of its competitors, continue to benefit the firm today. “We are able to make all our decisions without going through a board or somebody in another state. I really think that our management, the way we run our company, and how we plan our work has played a vital role in our trajectory of growth. Most of our competition is a lot bigger than we are and they have huge capabilities, but they still can’t do what we do. That’s what makes us special and, as a result, we will always be an attractive proposition as a provider of industrial services.” Though it is clear that the company has profited from a variety of best practices, for MIST, everything comes back to people. In order to ensure new employees enjoy a smooth transition into the MIST way of life, the firm uses statistics to formulate an intelligent training program that includes a 30-hour Occupational Safety and Health Administration course, as well as annual refresher sessions and top-ups. Not only is MIST’s workforce first aid and CPR trained, but staff are also taught about job-specific hazards, policies, and procedures. The time and attention the firm devotes to making its workforce some of the industry’s safest, most-knowledgeable, and most highly-skilled workers is yet more evidence that as a MIST employee, you are more than just a name or number. “When we bring somebody new in, we pair them up with someone experienced to see how they work,” Rich remarks. “From their very first day, we ask questions like: Do they work safely? Do they do quality work? What is their level of knowledge? When we know the answers,

we look to train them up and groom them for the next step. The aim is for people who walk through our doors to become foreman, general foreman, and superintendents. After finding out what they know, we teach them something new. We mentor our employees because we care. We want them to be the best versions of themselves.”

MIST Inc. www.mistinc.com ............................................ Services: Turnkey maintenance contractor

...with exciting plans for new developments, upgrades and refinery expansions on the agenda, the business can be viewed as a leading light for not just Pakistan but for the wider energy industry

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A powerful transformation

Located in the Western Pacific, Guam is an unincorporated territory of the United States, a progressive Pacific island community, and a strategically important link between the US and Asia. There is a crucial relationship between energy and Guam’s economic growth, and as the island continues to progress, there is a need for Guam’s energy mix to evolve because power is an important catalyst for commercial and domestic advancement. On the electricity side, energy is supplied by The Guam Power Authority (GPA), an electric utility that supplies monopoly electric services throughout Guam, including to all US Department of Defense military bases, various components of the Government of Guam, and a vibrant shopping and hotel industry. GPA serves an island population of approximately 170,000 (with around 52,000 of these as customers) with a 2019 peak demand of 254 megawatts and 2019 (fiscal year) energy sales of 1.57 billion in kilowatt hours.

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As John M. Benavente, PE and General Manager at GPA explained, the Authority is a public corporation and autonomous component unit of the Government of Guam. “The Consolidated Commission on Utilities (CCU) - comprised of an elected five-member board of commissioners - provides governance over GPA, while the Guam Public Utilities Commission (GPUC) sets GPA rates and holds oversight of the authority, to include review and approval of all large GPA contracts impacting rates and charges,” he said. Owning assets of $955m, including 29 substations, and 1797 miles of combined transmission and distribution lines, GPA employs a workforce of 450 and supports Guam’s economy with both conventional and renewable electrical energy. The island-wide power supply that comes from various fuel-oil based generating units has a gross capacity of over 420 megawatts. “Currently, GPA also has 25.3 megawatts of renewable capacity with an

PROFILE

additional 160 megawatts of solar photovoltaic and 150 megawatts of energy storage systems coming online in the next three years,” added John, “which is going to achieve a 25 per cent government-mandated Renewable Portfolio Standard (RPS).” Further elaborating on the thinking behind the energy transition from fuel oil to renewables, John pointed out that GPA’s energy has been generated by fossil fuels for the past five decades, which made Guam vulnerable and at the mercy of global fuel oil political changes. Fuel oil purchases also total more than half of GPA’s budget. “It is a significant economic drain on Guam’s economy because it lacks multiplication effects,” he said. “By converting fuel oil purchases to alternative energy purchases such as photovoltaics, Guam is converting oil to jobs, while at the same time reducing its carbon footprint and impact on the planet.” Having already appreciably transformed how Guam generates its electric power, GPA

GUAM POWER AUTHORITY

is now working on a project that will result in a significant paradigm shift in how it supplies energy to the island. It has signed contracts with KEPCO for the construction and operation of the new Dededo Ukudu Combined Cycle Power Plant, which will replace its ageing and limited baseload power supply. This 198-megawatt combined cycle plant, with a 51 per cent thermal efficiency, is designed to be the cornerstone that helps to sustain Guam’s energy needs. “We are investing in dual fired (Ultra-Low Sulfur Diesel and Natural Gas) high efficiency combined cycle technology, coupled with low and stable cost renewables (20-year, one per cent escalator contracts),” said John. “The plant will allow us to hedge against fluctuating fuel oil prices because over time we will continue to reduce the volume of fuel oil we use by substituting with photovoltaic energy sources. It will work well with renewables, and, in fact, will be the backup to renewable energy to ensure continuous power to the island, in the event of non-solar days and natural disasters.” As part of its commitment to transforming into a modern, sustainable power generation company, over the next few years GPA will be contracting for an additional 180 megawatts of renewables to be commissioned beginning in 2024 and beyond. “All renewables must have adequate storage systems for full capacity load shifting capability. All contracts will comprise a power purchase agreement for 25 years or more. The majority of this capacity will be utility-scale renewables, but the program would also include rooftop solar and small energy farms, perhaps in the one to five megawatt range,” John detailed. “This plant, coupled with renewables, will allow GPA to achieve 50 per cent renewables, most likely before the end of this decade,” he added. Alongside the investments that are being made on the solar energy side, GPA has also been incorporating other associated technologies to work with renewables, including Advanced Metering Infrastructure (AMI) systems, which were installed in 2012. “We have also been upgrading our billing systems in order to accommodate net metering customers, which now total about 2100, having a total photovoltaic capacity of 24 megawatts,” added John. “Additionally, GPA has an ongoing Demand Side Management (DSM) program to rightsize customer consumption and assist them in lowering their total energy cost. Over the last four years, GPA has paid over $4m in customer cash rebates to over 10,000 customers. GPA’s current budget is to provide $3m annually,

John M. Benavente PE and General Manager

Over the past 50 years, GPA, through its founding employees and today’s team of professionals and staff, has striven for sustainability and an ever-improving quality of life for our extremely remote island. Today, we see light at the end of the tunnel and this truly is exciting and commendable

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PROFILE

GUAM POWER AUTHORITY

funded through its fuel adjustment rate component, in support of energy efficient projects. GPA estimates that for every $3m in rebates paid, this decreases fuel costs by about $21m over the typical seven-year estimated life of the equipment.” While it is apparent that GPA is very determined to move away from conventional fossil fuel based power and embrace modern, sustainable solutions, its overall mission always remains to deliver safe, reliable and quality electricity services to all customers. In fact, safety is a core value of the company’s culture, not just for end-users, but for staff too. “I have been general manager of GPA for over 25 years, and in nearly all those years, GPA has consistently placed highly, in the top three safety categories for its utility workforce safety performance,” remarked John. “The annual American Public Power Association’s safety awards recognize utilities with the lowest safety incidence rate within their groups. Groups are determined by worker-hours of exposure. For 2019, GPA earned a third-place award in the ‘Group F’ category for utilities with 250,000

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to 999,999 worker-hours of annual worker exposure. “Safety is of primary importance to myself and my entire team and GPA provides significant resources and training to ensure safety first, across all areas of the power utility. The business will continue to strive to perform and be ranked among the safest electrical power utilities and do everything it can to send all workers safely home to their families each and every night.” Having mentioned his staff, John then went on to discuss the challenge of finding the qualified personnel and how GPA addresses this issue: “GPA makes certain it maintains a highly professional and technical group of employees having adopted a pay-for-performance employee pay structure, which rewards its employees and assures a competitive pay structure and benefits today, and into the future. GPA, through this pay structure, has become a premier employer of choice on Guam; always drawing a significant interest and numerous applicants for positions listed for hiring. “The organization also runs apprenticeship and other training programs, especially in the transmission and distribution and power generation fields.” The responsibility that GPA feels for its employees also extends out further to the wider community across the territory, because as John succinctly puts it, ‘everyone who lives and works on Guam depends on the Guam Power Authority to operate one of Guam’s most critical resources, namely the island-wide power system.’ “It is important to GPA to work with the local communities it serves,” he confirmed. “From as far away as the US Virgin Islands to the nearer Commonwealth of the Northern Mariana Islands (CNMI)-Saipan, GPA is committed to, and has provided, mutual aid assistance for recovery and restoration following devastation caused by natural disasters. In 2019, GPA received a ‘Mutual Aid Commendation’ from the American Public Power Association for having answered the call for assistance and aided the devastated CNMI-Saipan community with restoring power to its customers and helping rebuild an entire island economy.” Furthermore, in 2019, GPA received a Smart Energy Provider (SEP) designation for best practices as an electric power utility that shows commitment to, and proficiency in, energy efficiency, distributed generation, renewable energy, and environmental initiatives. Additionally, achieving SEP designation allows GPA to benchmark and evaluate its work

PROFILE

GUAM POWER AUTHORITY

against a set of industry best practices in defined areas. Also in 2019, GPA was recognized as the first electric distribution utility to operate business critical functions on the Environmental Systems Research Institute (ESRI)’s Utility Network Data through tapping drones to digitally map GPA’s power lines, poles and other hardware and help GPA with maintenance forecasting, deployment of manpower and equipment. This translates to GPA being able to deliver its ambitions of building a stable foundation of economic growth and quality of life for all its customers and the community on Guam. Thanks to the steps it has already taken and the plans it has for the future, GPA is well on its way to becoming a modern, efficient energy provider, and John believes that within the next three to five years, the organization will achieve its goal in attaining an improved position of strength. “GPA will have significantly achieved the paradigm shift in energy supply to providing its ratepayers with reliable energy at

Guam Power Authority www.guampowerauthority.com .............................................. Services: Electric utility that provides monopoly electric services throughout Guam

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an affordable and stable cost,” he predicted. “It will also have begun its journey towards a fully underground system for the entire island, which could then be achieved in an affordable manner over the next 30 years. GPA’s island-wide power system consists of 90 per cent concrete poles today, making it resilient and providing for quick recoveries following devastation caused by storms. I envision GPA will begin the journey forward to fully underground the electrical power system within the next few decades, so that Guam becomes an even more sustainable island, less vulnerable to economic and natural disasters.” John is understandably very proud of the transformation that GPA has gone through. “Over the past 50 years, GPA, through its founding employees and today’s team of professionals and staff, has striven for sustainability and an ever-improving quality of life for our extremely remote island. Today, we see light at the end of the tunnel and this truly is exciting and commendable,” he concluded.

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Open for business

Located in the Timor Sea north of Australia, just 465 miles from Darwin, is the first new sovereign state of the 21st century – East Timor (also known as Timor-Leste). Comprising the eastern half of the island of Timor, plus the nearby islands of Atauro and Jaco, and Oecusse, an exclave on the northwestern side of the island surrounded by Indonesian West Timor, Timor-Leste is keen to advance its economy and has ambitious plans for its future. Since TimorLeste gained independence from Indonesia, all its elected governments have been working on a

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2011-2030 Strategic Plan as the foundation to the country’s development framework. Private investment plays a central role to these longterm goals, with the energy industry as the core. Ready to invest in the oil and gas market, the country is keen to promote that it is ‘open for business’. Indeed, the onshore oil and gas potential of Timor-Leste has long been recognised but has remained largely untapped and underexplored due to historic geopolitical issues. With a politically stable government (since

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TIMOR RESOURCES

Poverty levels in Timor-Leste are very high, with more than 60 per cent unemployment in the country. The activity of Timor Resources is recognised as an important project for the nation, which will create significant ongoing employment for the country, potential revenues streams through royalties and states take of profit petroleum that may have a big impact on changing the level of poverty in the country

2001), the country has shifted its focus to onshore oil and gas activities to complement the significant exploration and development success achieved offshore in the Timor Sea. One company set to play a pivotal role in the growth of the onshore oil and gas sector in Timor-Leste is Timor Resources, a privatelyowned Australian oil and gas company backed by NEPEAN™, Australia’s leading privately owned engineering, mining services and industrial manufacturing organisation. Timor Resources, in a joint venture with the State-

owned TIMOR GAP, is the first company in over 40 years to have obtained the rights to explore and develop onshore oil and gas resources within Timor-Leste. In 2017, it acquired a 50 per cent participating interest in two Blocks - PSC TL-OT-17-08 (Block A) and PSC TL-OT-17-09 (Block C) - via the execution of Production Sharing Contracts (PSC) with Autoridade Nacional do Petróleo e Minerais (ANPM), a government authority of the Democratic Republic of Timor-Leste. ENERGY,OIL&GAS

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TIMOR RESOURCES

Timor Resources is the Operator of both Blocks and will carry TIMOR GAP on the terms of the joint operating agreement (JOA) through exploration and appraisal. Exploration targets and leads have been identified in both Blocks, in areas known for oil and gas seeps. The exploration programme is underway, with the objective of upgrading the identified leads to prospects and taking this from a frontier exploration play to the development and production phase. As Suellen Osborne, CEO and Director of Timor Resources explained, Block A and C combined represent 2012 km2 of highly prospective acreage. “They have multiple targets and play types, and are supported by the prospectivity of the known 30 onshore oil seeps,” she said.

Significant investments Since the project began, Timor Resources has acquired 720 line kilometres of 2D seismic in the permits during 2018 and 2019, and identified nine drillable targets. “We were on track to drill the first well on 1 June 2020, but due to the impact of the Covid-19 pandemic, concern for the health and safety of the drilling teams, combined with travel restrictions and quarantine requirements, drilling has been delayed by three months,” added Suellen. “Assuming the company is able to continue post Covid-19, the intention is to drill five exploration wells, back to back. These wells are drilled in pursuit of oil reservoirs containing more than 142 million barrels of P50 unrisked, recoverable oil in.” Furthermore, to accelerate the exploration programme planned for Block A and C, Timor Resources is undertaking a capital raise, seeking a direct equity investment into Timor Resources TIN (a permanent in-country establishment and a wholly owned subsidiary of the company.) The next milestone for Suellen and the team at Timor Resources is the drilling of the first well onshore. Named Karau-1, it will be the first exploration well drilled in a planned five well programme to evaluate acreage within Timor-Leste in Block A. There is evidence of a working petroleum system in the area, thanks to surface oil seepages and oil contamination in shallow water wells, stratigraphic bores and offset wells. “This well will be located 33m above mean sea level and approximately 5.5 km north of Suai Port and Urban Area. Eastern Drilling Rig No. 1, a 1000 Hp refurbished land rig moved

into the area from the USA, will be used to drill the well,” Suellen explained. Depending on the results gained from the five well drilling programme, Timor Resources will be looking to undertake significant further investments in the project to continue its momentum. “We have already invested more than US$30m into exploration on the South Coast of Timor-Leste. Success from the drilling campaign will lead to the need for new infrastructure and tank storage, and that will require a further investment of US$50m$100m, to facilitate the export of oil, subject to the declaration of the discovery size post our drilling campaign,” Suellen noted. Referring to the need for infrastructure, the Timor-Leste Government has completed 60 per cent of the new freeway connecting the Timor -Leste petroleum corridor on the South Coast with the capital Dili. The proposed petroleum corridor will form the backbone of the Timor-Leste petroleum industry. Named the Tasi Mane projects, they are a multi-year development of three economic clusters that the government has committed to and is currently building. Over US$1 billion in State funds have been pledged by 2021 towards the Tasi Mane projects, with US$378 million having already been spent on the freeway in 2016-2019. The project is a key pillar of the country’s Strategic Development Plan and it is on track to meet its 2020 targets. Tasi Mane includes the construction and operation of a refinery, a petrochemical plant, an LNG plant, and a highway linking the economic clusters and a network of gasoline stations to ensure high quality fuel distribution across Timor-Leste. The projects will support ENERGY,OIL&GAS

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PROFILE

TIMOR RESOURCES

commercial onshore discoveries and the development of the offshore Woodsideoperated Greater Sunrise fields. “This project includes the Suai and Betano Clusters that overlap Block A and C,” added Suellen. “TIMOR GAP, our JV partner in the onshore development of Blocks A and C, represents the country’s participation in petroleum activities and this includes a mandate to implement the Tasi Mane projects.”

Dedicated to success The objective of Tasi Mane is to enable petroleum and energy development within Timor-Leste, providing a direct economic dividend from the petroleum industry activities to the country. Without these value-adding projects, the country would be limited to the royalties and taxes generated by multinational offshore operations. “We recognise the importance of the development of the oil industry onshore for Timor-Leste,” noted Suellen. This is not only in economic terms, but also how increased investments and developments will open up job opportunities and wider social improvements for the communities on the island. “We genuinely care for the people of Timor-Leste and we are focused on the small rural communities that live in our contract areas,” she continued. “Poverty levels in Timor-Leste are very high, with more than 60 per cent unemployment in the country. The activity of Timor Resources is recognised as an important project for the nation, which will create significant ongoing employment for the country, potential revenues streams through royalties and states take of profit petroleum that may have a big impact on changing the level of poverty in the country.” Timor Resources has already provided employment for more than 550 Timorese local people during its seismic campaigns, as well as establishing an in-country presence, with a permanent office located in Dili, employing a group of highly experienced staff on a fulltime basis, across the strategy, operations and finance functions. It is also committed to open and accountable processes that encourage stakeholder engagement throughout all stages of project development. “We have created an extensive and ongoing stakeholder engagement programme that builds on the pro-active approach to consultation that commenced in early 2016 after identifying the opportunity in Timor-Leste,” added Suellen. “Stakeholders consulted include a broad range

and diverse cross-section of government, industry and community representatives.” Looking forward, Suellen is confident that under the watchful eye of its experienced board and management team, by the fourth quarter of 2020, Timor Resources will be undertaking drilling operations. This is an admirable achievement in a very short 36-month timescale since targeting assets from which to produce, and illustrates the professionalism of Timor Resources and its dedication to ensuring that new oil and gas development on Timor-Leste is a success. “We will continue to train and support the Timorese people to take on jobs in the new business,” she concluded, “as well as continue to actively promote the Timor nation. This is an exciting time in the history of Timor and we proud to be working in this beautiful country, in pursuit of a brighter future for the Timorese people.”

Timor Resources www.timorresources.com.au ......................................... Services: Privately-owned oil and gas company

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The Power of partnership

Located in the nation’s capital city, Port Moresby Power Station is Papua New Guinea’s first dedicated, gridconnected, gas-fired power plant. The 58.7-megawatt facility was commissioned in November 2019 and is currently the biggest independent power generation asset on the Port Moresby grid. In a journey that begins over 700km away, natural gas is drawn from deep into the country’s soaring highlands before arriving via pipeline at a liquefaction plant on its way to the pioneering new site. It is a process that has been helping to supply Papua New Guinea’s capital with electricity since the end of 2019 and NiuPower Limited hopes that will remain the case for the next 20 years. The driving force behind the construction of the Port Moresby Power Station, NiuPower is a Papua New Guinean power generation company that owns and operates the site. Established in 2017, the firm is an independent power producer (IPP) focused

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on providing cost-effective, natural gas-fuelled power generation for the National Capital District and Central Province of Papua New Guinea. Owned as part of a 50/50 joint venture between Kumul Petroleum Holdings and Oil Search Limited, NiuPower made the vital $100m initial investment towards the construction of the new power plant. Talking to Energy, Oil & Gas, Michael Uiari, NiuPower’s CEO, explains the early stages of the venture in more detail. “The actual design of the facility was tendered and awarded by ExxonMobil because they had previously intended to fund and deliver the power station themselves. Plans changed however when the funding model became uncertain so NiuPower stepped into the breach and offered to fund, own and operate the power station. In 2018, two companies put up half of the capital each to allow us to do that: Kumul Petroleum - who are widely viewed as the national oil company of Papua New Guinea and Oil Search Limited.”

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A truly state-of-the-art facility, Port Moresby Power Station’s six internal combustion gas engines ensure superior thermal efficiency compared to other gas-fuelled generation options, meaning less fuel, lower costs, and lower emissions. A highly flexible dispatch allows the site to deliver any level of power, from six megawatts to 58 megawatts, to precisely match PNG Power’s demand. Developed with sustainability and corporate responsibility in mind, a Level 2 Environment Permit was fully approved and issued by Papua New Guinea’s Conservation and Environment Protection Authority for the construction and operation of the plant. “The project cost around 100 million US dollars in total to construct and deliver,” Michael says. “It was already confirmed that the site would be feature gas fired reciprocating engines and Finnish company Wärtsilä had already won the tender. This meant that the template was set, so when we gained control of the project, we simply took over the relationship with the engineering, procurement and construction (ECP) contractor and put in place a project management team, consisting of members from both shareholding firms, to oversee the delivery of the power station through that twoyear period.” Development of the power plant began in 2017, led by an EPC consortium of Wärtsilä and Clough. The construction phase of the project had a widely positive impact on the local economy, but it wasn’t without its challenges. “Port Moresby Power Station is not a particularly large site, but I think the biggest difficulty, apart from the tight schedule, was the delay caused by regulatory hurdles and the extra work that was required to navigate our way through government involvement in the project,” Michael states. “Still, the work was completed within a reasonable timeframe and, during construction, an indigenous workforce made up around 90 per cent of our total workforce. “Not only did the project generate jobs, but it also promoted the transfer of skills to indigenous workers, who will hopefully be able to use their new abilities in whatever employment they have been able to secure since the project’s completion. In summary, the use of local suppliers and a local workforce would have had a multiplier effect on the local economy.”

By 2030, Papua New Guinea hopes for 70 per cent of its population to have access to electricity. With Port Moresby Power Station already producing around $4 million worth of energy per month, it is expected that the facility will act as a catalyst in the country’s transition towards cheaper, more reliable power drawn from its own domestic gas resources. Capable of a staged expansion to 175 megawatts and underpinned by a longterm power purchase agreement (PPA) with state utility company PNG Power, Michael suggests that the Port Moresby Power Station project demonstrates what can be achieved elsewhere in the country. “Both shareholders want to explore the full suite of domestic gas utilisation opportunities in Papua New Guinea,” he reveals. “Over the last three years, we have been looking very carefully at the domestic distribution of LNG around the country to displace diesel for industrial purposes and, in particular, how it can be used for power generation by PNG Power and mining customers. “Port Moresby Power Station demonstrates that you can build a scalable, or modular, power plant, using exactly the same technology and then replicate that experience right around the country using gas that is produced domestically, lowering the unit cost of electricity to the grid and increasing reliability in the process. We are hoping that our work here will help to promote the electrification agenda and plug the gap in terms of energy generation until the country can justify investing in, and delivering, largerscale, long term, more capital-intensive hydro power projects. “Ultimately, large-scale hydro will be the ideal solution for Papua New Guinea because the fuel is water, so it costs nothing. The challenge is that these assets require major capital to build and can take anywhere up to

NIUPOWER

Port Moresby Power Station demonstrates that you can build a scalable, or modular, power plant, using exactly the same technology and then replicate that experience right around the country using gas that is produced domestically, lowering the unit cost of electricity to the grid and increasing reliability in the process

ENERGY,OIL&GAS

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five years to deliver so timing is everything. Grid demand has to be large enough to absorb generation capacity. The experience we’ve gone through in Port Moresby is one that you can replicate anywhere around the country, for industrial and residential use, until the largescale hydro becomes a genuine possibility for this nation.” Though the venture is a commercial undertaking and NiuPower seeks to make a profitable return for its shareholders, the company is dedicated to promoting the use of domestic gas as part of the country’s industrialisation agenda. The firm also aims to demonstrate that private sector investment in gas-fired power generation in Papua New Guinea can be practical and cost-effective. “Diesel has been one of the primary fuels used for power generation over the years,” Michael remarks. “It’s considerably more expensive than gas is and so, in the medium-term, gas has a role to play in diesel displacement. Natural gas can provide an interim fuel solution or an intermediate fuel alternative for power generation pending the introduction of additional hydropower that will eventually provide our baseload.” At the end of January 2020, PNG Power installed a new transmission line at the facility, enabling the power plant to fully dispatch its 58-megawatt capacity and allowing Port Moresby to realise the benefits of cheaper, more reliable, clean power, potentially eradicating long-standing issues surrounding high costs and frequent blackouts. Buoyed by the success of the country’s first power station, NiuPower hopes that the Port Moresby facility will herald a new age of gas-fired power in Papua New Guinea and spark the construction of similar sites around the nation.

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“We’d like to help our customer, PNG Power, become a much more financially viable company than it has been in the past, such that it can invest in making transmission and distribution more reliable than at present – that’s where we are falling over at the moment in operating efficiently and meeting the expectations of our customers,” Michael declares. “Building on that relationship, we hope to take our partnership elsewhere in the country, where the need exists, and table a value proposition to potential industrial customers out there, such as our large mines, showing them that we can provide their power generation solutions successfully, in a way that meets their objectives.” To realise a project of the nature of Port Moresby Power Station, in a country where any such undertaking was previously unprecedented, requires a vast amount of teamwork and co-operation. When the plant was finally commissioned, NiuPower thanked a long list of people and organisations for their help in establishing a harmonious working environment, including the local community comprising five villages, PNG Power, The Department of Lands & Physical Planning, the Department of Treasury and the Treasurer, the Bank of Papua New Guinea, the National Executive Council, the Independent Consumer and Competition Commission, the Electricity Management Committee, the Department of Petroleum and Energy, the Office of the Chief

PROFILE

Secretary, the State Solicitor, ExxonMobil and owners of the PNG LNG Project. In working through the development process from beginning to end, Michael believes that he has learnt some valuable lessons that could prove useful for the future of Papua New Guinea’s energy industry, especially in encouraging potential investors. “One thing I think we must not lose sight of,” he asserts, “is that the policy setting for private sector investment in the electricity sector in this country needs to become more structured and I think it’s important that the government behaves in a way that’s consistent with their policies. Secondly, I think we need an independent regulatory authority that moderates investment in the various grids across Papua New Guinea so that we can introduce investment in the electricity sector in an orderly fashion, along predictable business channels.” Passionate about the sector and brimming with ideas for improvement, Michael is confident that Papua New Guinea is currently taking its first steps towards a brighter future and a better relationship with the way it generates energy. For now, NiuPower’s CEO is focused on ensuring that Port Moresby Power Station offers the best possible service to PNG Power customers across the region. “In the immediate term, we’d like to bed down the business and make sure we can help get the grid in Port Moresby operating in

an optimal fashion because, at the moment, it needs quite a lot of investment to restore grid stability,” he points out. “That’s where our attention will be fixed over the next few months, but beyond that, we will look at what other opportunities exist around the country, leveraging the relationship we’ve got with our customer PNG Power.”

NIUPOWER

NiuPower www.niupower.com.pg ............................................ Services: Independent power producer

...with exciting plans for new developments, upgrades and refinery expansions on the agenda, the business can be viewed as a leading light for not just Pakistan but for the wider energy industry

ENERGY,OIL&GAS

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Schofield Publishing Ltd

Published on Jul 15, 2020

Energy, Oil & Gas Issue 182 July 2020

The latest edition of Energy, Oil & Gas

Energy, Oil & Gas Issue 182 July 2020

Published on Jul 15, 2020

The latest edition of Energy, Oil & Gas

schofieldpublishingltd

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