Will the Oil & Gas Industry Survive?

Will the Oil & Gas Industry Survive? The Automation is the answer.

Worldwide, total oil demand keeps growing. Low prices are fueling this trend. To remain competitive, oil companies need to reduce their production costs. Oil Industry needs electrification, compressors and rotating equipment, automation, and digitization along the entire production chain — from oil drilling to processing in refineries.

Oil prices have plummeted in the space of just a few months. In the summer of 2014 a barrel (159 liters) of “black gold” cost over $100. In January 2016 a barrel cost less than $40. So What exactly happened? On the one hand, more oil had reached the market; on the other, demand had decreased. It was not the first time oil prices took a hit.

The low price of oil is both a challenge and an opportunity for the industry. Well-run oil and gas (O&G) companies that are strong today are likely to emerge even stronger after prices rebound. While the availability of oil fields and the associated equipment is always paramount for them, during a slump they have every reason to also focus on cost-effective production. Often this means bringing in new technologies and further improving processes.

Lowering production costs is not just an imminent need of the industry. It is also a long-term trend. Most of the “easy oil” has already been extracted – oil that can be produced cheaply because it is onshore, close to the surface, and conveniently spilling out of the ground under high pressure when first tapped. In the future, oil will increasingly have to be extracted from deposits that are deep underground or offshore. Gas will have to be transported from remote locations via pipelines or as liquefied natural gas (LNG) by LNG tankers. That will be a much more tricky task for production engineers.

On the whole, it is becoming harder to produce oil and gas. But there is also good news: this needn’t make oil and gas more expensive, as long as production methods are being continuously improved. In the past, technological innovations and more efficient processes have made production cost-effective under increasingly challenging conditions.

A number of trends are already taking shape like, 

• In the future, existing fields will operate longer and their yield will be increased by injecting water or gas, such as CO2, which boost the pressure of the reserve.
• Unconventional extraction methods such as the hydraulic fracturing of stone formations containing oil or gas (fracking) are likely to spread beyond the U.S.
• The production of heavy oil from oil sands will become more environmentally friendly and less energy-intensive.
• The global market for liquefied natural gas (LNG) will continue to grow strongly. As a result, the gas that is being flared, and thus wasted, today can be used and marketed in the future.
• One day the vision of automated oil fields at the bottom of the sea, working maintenance-free over decades at depths of several thousand meters, may be realized.

At the same time, alternatives to oil and gas are becoming increasingly viable. Electric cars may become more commonplace in the future. And renewable energy sources such as wind power are becoming more economical and could partially crowd out fossil fuels. According to British Petroleum (BP), four-fifths of the current growth of worldwide energy consumption is taking place in emerging economies. But even these countries’ growing appetite for energy may subside at some point.

With less “easy oil” available and interesting alternatives to oil and gas becoming more viable, the way forward is clear: O&G companies need to reduce their production costs. Some are leading the way by bringing more automation to oil fields and using data analysis in smarter ways. Simply put, in the future more valves will be opened and closed by machines than by people. And it will more often be machined, not humans, that decide when to open or close the valves. Flying workers to offshore oil platforms in helicopters may one day be the exception rather than the rule.

The automated equipment produces a constant stream of data — measurement data that can be mined, aggregated into big data and transformed into smart data through intelligent analysis. And smart data helps us to understand production processes better.

For example, visualization Softwares are already making it possible for users to immerse themselves in a virtual 3D model of a drilling platform. For instance, the crew of an offshore oil processing platform in Africa was able to begin its training on a virtual model while its future workplace was still under construction. Virtual training sessions reduced the time needed for training sessions on board, and as a result, the oil platform entered service two months earlier than planned.

Another opportunity to reduce costs opens up when mechanical and electrical drives become smaller and lighter in response to the scarcity of space on oil platforms and pipeline stations.

Two Minutes with Oil & Gas Professional - Alvin Chia

I met this amazing guy Alvin Chia, when I was at Bangkok, Thailan. Who is Strategic Planning & Marketing Manager at Weatherford. There are things we, as young engineers, can learn from professionals already working in Oil Industry.

With an impressive background and countless achievements under his belt, what can this guy teach us? What lessons can we get from him that we can apply in our engineering careers?
I talked with him about a lot of things like, Current Scenario of Oil and Gas Industry, Job Market, and Online Marketing but here are some advises. Quite possibly the best advises. I’ve ever heard about selecting the career, that literally changed the way I used to think about the Recruiting Process.

Sir... I was about to say other words, but he stopped me by saying, don't call me sir, My name is Alvin, you can call me that (with a smile).

Okay Alvin! I've just graduated what would you suggest me to do? Something, maybe I don't know.

Alvin: Ahhhh! Well, Don't look for salary, or maybe company, look for a boss, you're about to make the biggest choice of your life. Do yourself a favor choose a good boss. By focusing on who your boss will be above most other criteria (e.g. total compensation, responsibility, advancement opportunities, location) changes how you pursue jobs and how happy you’ll be once you select one.

Me: but Alvin this is challenging because the process we use to find the work is designed to work the opposite way; the boss picks us and you only get to talk to your boss during the interview process, how can one predict? what he/she will actually be like?

Alvin: There is where the Internet and Social Media comes my brother. Do research, find out who is interviewing you rather than finding how much they're going to pay.

Me: Would you tell me why graduates fail to get a nice job? Even when they're deserving? Where do things go wrong?

Alvin: I'm not an expert on that but I'd tell you what I do myself and it has worked for me yet. I never apply online. What's even a point to apply online? They get Resumes daily like, 30 or more. I go by myself and hand it over to the HR or Manager myself.

Me: Why not applying online? Does it makes a difference?

Alvin: They only see your CV for like, 6-10 seconds. If you're applying online that will only put your application into a Black Hole, and that is the worst place for it to be.Use online platforms, like, LinkedIn. To find job openings but don’t apply for those jobs directly through them. If you can't visit them then call them, make sure they know you with your name. Make sure your CV is attractive

Me: Okay One last question. You said something about "making your CV attractive" How to do that?

Alvin: First of all go through the formal CV patterns, don't make it too short and don't make it too long. They don't have the time to go through all the details. Make sure the whole stuff is on one page. Just include the most important things they wanna see, it means it shouldn't be irrelevant. Try to give a slightly change to your CV everytime you for a job. Print it on a good quality paper. So, If I'm the manager, I won't throw that paper away, because it looks so good. So I'm just gonna put it somewhere in my drawer or desk. So, even if they aren't selecting me for the job but still I'd be somewhere on the desk. That's gonna give me another chance for the future opportunities. Maybe they'll consider my application at that time.

I've learned a lot from this 2 minutes conversation with Alvin Chia. I hope you got something to learn from his experience. I couldn’t be more excited about the future after meeting him.

GAS HYDRATES: THE TITAN UNCONVENTIONAL RESOURCE

An H2O crystal lattice structure consisting of tons and tons of methane gas. Capable of expanding up to 150 times its original size. Now that is some huge amount of storage if one starts to consider it seems almost unreal. Well, this enormous source of gas exists and is known by the name of gas hydrate.

Gas hydrate is a part of the unconventional resources of hydrocarbons and is one which has the most extensive amount of capacity of storing carbon content of about 2.2 million pounds that is twice the amount of any other conventional and unconventional fossil fuel in existence.

Throughout the world the ratio of gas hydrates in comparison to other fossil fuels (conventional and unconventional) is 2:1 respectively hence making it the largest source of hydrocarbons.

Mostly occurring in permafrost regions and deep within the ocean floor, however due to greenhouse gas emissions/global warming these clathrates recently have been found near land and have been captured in nets yes fishing nets.

So now we know a little about what gas hydrates are, their potential and where they occur. But what is the world doing about it.

Well, countries like China, Japan, Korea, and India with hydrate resources, research and development programs are doing the extensive job on determining and producing these titans of energy. Comparing the progress between these countries Japan has been the most successful, recently producing the offshore methane hydrates in a testing phase in 2013.A more promising future next to this achievement can be seen from India having the largest research and development field work being conducted there internationally inviting all the research facilities/institutions and O&G companies to come work on finding out and maximizing the potential to gain from the hydrate resource.

Other countries are also working on gaining an edge over one another in obtaining fruitful results from gas hydrates.

Places like the Gulf of Mexico, Alaska, and Malaysia are being been focused on. Recently Canada had to drop out of this race due to the shortage of funds. However, USA and UK haven’t ignored the hydrate potential being one of the chief research-based countries which are figuring out methods of finding and producing hydrates. UK’s Heriot-Watt University is the leading institute for gas hydrates research. USA's Rice University, Texas A&M University and Colorado School of Mines doing a tremendous job in development and research of gas hydrates.

The question is where Pakistan stands in all this. The answer to that is a bit vague. Pakistan has a lot of potential in terms of gas hydrates positioning. 

A rough estimate about the extent of gas hydrates field offshore is 200km long, 100 km wide, 600 meters thick.

Now keeping in mind that 1 cubic meter of hydrate consists of 164 cubic meters of gas the amount of reserves that we have is ginormous.

There hasn't been much work done as the word 'roughly' mentioned above indicates, we need to do a lot of work starting from estimating the exact potential and hotspots to research work. 

The prospects are highly encouraging; the amount of gas produced from the hydrates can power our nation for decades to come. We are missing out on the verge of a revolutionizing era which is to come for the oil and gas industry in the near future and need to pace up to produce as much as possible from this beacon of auspiciousness.



GAS HYDRATES: THE TITAN UNCONVENTIONAL RESOURCE

Mohsin Yousufi, Lecturer, NED University of Engineering and Technology, Karachi

How the Oil and Gas industry is using Technology to reduce Water Consumption

As the United States has recently emerged as the world’s largest oil and gas producer. It's mainly because of the “shale" which has changed not only America’s energy landscape but also the global energy market. This may sound like a fiction story but it is true! While total world resources of oil shale are conservatively estimated at 2.6 trillion barrels, US sits on close to two trillion barrels of crude. Possibly more than all the crude than was ever produced worldwide since petroleum age began.  But In some states and regions, consumption of water has made it difficult to recover more of it. As fracking requires millions of gallons of water per well.

A 2009 report on modern shale gas by the Groundwater Protection Council, "Modern Shale Gas Development in the United States: A Primer," stated that: “The amount of water needed to drill and fracture a horizontal shale gas well generally ranges from about 2 million to 4 million gallons, depending on the basin and formation characteristics.”

A 2010 Harvard study found that, on average, water consumption for natural gas produced through fracking ranges from 0.6 to 1.8 gallons of water per MMBtu (Mielke, Anadon and Narayanamurti 2010).

U.S. nationwide water consumption for fracking is about 1% of the total, in such scenario companies are actively developing and using new technologies to reduce water use.
For example, Apache, a major operator in Texas, is using undrinkable and recycled produced water for its drilling and fracking operations with no freshwater supplies. The company has recycled more than 1.2 million barrels of produced water. Apache sources some of its water from the Santa Rosa aquifer, Texas whose water is unsuitable for humans or agriculture. Other operator companies in west Texas like, Pioneer Natural Resources, Anadarko are purchasing wastewater from the city of Odessa to use in its local oil and gas operations.

Energy development is the base of the economy in these regions, as supports many high-paying jobs. The sufficient oil and gas production provides America enough energy and it results in less import of oil from international market, and the use of nonpotable water means that local residents will be having plenty of underground drinking water.


In some cases, water recycling is not economical, So the Technological innovations are allowing operator companies to increase water recycling and improve overall operations. 

In 2013, Halliburton documented how reusing produced water and flowback helped save as much as $100,000 off the cost of each well for which it was used. and company says "The wells, which were in Eddy County, New Mexico, “have shown no loss of production,"

It costs Apache less than $0.30 to treat a barrel of water for reuse in west Texas. Traditionally, companies drag wastewater to separate injection wells. But it costs about ten times as much to use that same wastewater for disposal. New technologies are helping oil and gas companies make processes more economical, environmentally friendly and safer.

Water cost is one of the significant expense for oil and gas companies, sometimes totaling as much as about 10 percent of each well’s capital cost, according to IHS CERA. More innovation means more water savings, which translates to lower costs and, ultimately, the capacity for even greater investment.

As the Wall Street Journal recently reported, “Some of the largest independent U.S. oil and gas companies are spending now to save money on water later.”

A critic might suggest that these are only tales—perhaps high-profile exceptions to the rule. Wastewater disposal, after all, is still a common practice. But only a few years ago, many of these technologies and processes were nowhere to be seen. The challenge then was innovating and using technology to solve a complex environmental problem. Now technology is helping the oil and gas industry overcome many challenges to operate more efficiently and more safely.

Clearly, the oil and gas industry has accepted the challenge of backing new technology to improve operations. And the best news is that it's only just beginning.

Scotland Votes “No.” What does it mean for Petrol Prices?

This morning, people all over the world woke up to the news that the citizens of Scotland had voted against independence from Great Britain in an historical referendum. Prior to the voting process, many pundits had made predictions as to the likely outcome of a “yes” vote for independence. One of these predictions, as reported in The Telegraph, was a likely increase in fuel prices across the UK, in the region of 2 pence per litre. This was due to a likely fall in the value of Sterling against other currencies if the long-term currency union had been broken.
Now Scotland has voted “no,” it’s quite likely that UK motorists will in fact see a fall in the price of fuel. The Telegraph predicts a similar difference—around 1.6 pence per litre, due to an opposite effect on the value of Sterling.
Real-life events seem to mirror this prediction. In the wake of the “no” vote, Sterling soared in value, and although it has settled slightly, the Pound is (at the time of writing) worth €1.27 or $1.63.
Inevitably, it may be some time before fuel retailers pass on savings to customers, but in the absence of any other significant global events, it’s fair to predict that fuel costs may now drop a little more. This is great news for all UK motorists, who are already able to buy petrol and diesel at prices far lower than in recent years.

IMAGE CREDIT: Wikimedia Commons

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What does Israel want? The Israeli Invasion and Gaza’s Offshore Gas Fields

The issue of sovereignty over Gaza’s gas fields is crucial. From a legal standpoint, the gas reserves belong to Palestine.
The death of Yasser Arafat, the election of the Hamas government, the ruin of the Palestinian
Authority and the December 2008 military invasion of the Gaza Strip by Israeli Forces have enabled Israel to establish de facto control over Gaza’s offshore gas reserves.
Discovered in 2000, there are extensive gas reserves off the Gaza coastline. 

British Gas (BG Group) and its partner, the Athens based Consolidated Contractors International Company (CCC) owned by Lebanon’s Sabbagh and Koury families, were granted oil and gas exploration rights in a 25 year agreement signed in November 1999 with the Palestinian Authority.

The rights to the offshore gas field are respectively British Gas (60 percent); Consolidated Contractors (CCC) (30 percent); and the Investment Fund of the Palestinian Authority (10 percent). (Haaretz, October 21,  2007).

British Gas (BG Group) has been dealing with the Tel Aviv government. In turn, the Hamas government has been bypassed in regards to exploration and development rights over the gas fields.

The PA-BG-CCC agreement includes field development and the construction of a gas pipeline.(Middle East Economic Digest, Jan 5, 2001).

The BG Group drilled two wells in 2000:

• Gaza Marine-1
• Gaza Marine-2

Reserves are estimated by British Gas to be of the order of 1.4 trillion cubic feet, valued at approximately 4 billion dollars. These are the figures made public by British Gas. The size of Palestine’s gas reserves could be much larger.

Map of Gaza Offshore.

The election of Prime Minister Ariel Sharon in 2001 was a major turning point. Palestine’s sovereignty over the offshore gas fields was challenged in the Israeli Supreme Court. Sharon stated unequivocally that “Israel would never buy gas from Palestine” intimating that Gaza’s offshore gas reserves belong to Israel.

In 2003, Ariel Sharon, vetoed an initial deal, which would allow British Gas to supply Israel with natural gas from Gaza’s offshore wells. (The Independent, August 19, 2003)
The election victory of Hamas in 2006 was conducive to the demise of the Palestinian Authority, which became confined to the West Bank, under the proxy regime of Mahmoud Abbas.

In 2006, British Gas “was close to signing a deal to pump the gas to Egypt.” (Times, May, 23, 2007). According to reports, British Prime Minister Tony Blair intervened on behalf of Israel with a view to shunting the agreement with Egypt.

The following year, in May 2007, the Israeli Cabinet approved a proposal by Prime Minister Ehud Olmert  “to buy gas from the Palestinian Authority.” The proposed contract was for $4 billion, with profits of the order of $2 billion of which one billion was to go the Palestinians.

Tel Aviv, however, had no intention on sharing the revenues with Palestine. An Israeli team of negotiators was set up by the Israeli Cabinet to thrash out a deal with the BG Group, bypassing both the Hamas government and the Palestinian Authority:

“Israeli defence authorities want the Palestinians to be paid in goods and services and insist that no money go to the Hamas-controlled Government.” (Ibid, emphasis added)

The objective was essentially to nullify the contract signed in 1999 between the BG Group and the Palestinian Authority under Yasser Arafat.

Under the proposed 2007 agreement with BG, Palestinian gas from Gaza’s offshore wells was to be channeled by an undersea pipeline to the Israeli seaport of Ashkelon, thereby transferring control over the sale of the natural gas to Israel.
The deal fell through. The negotiations were suspended:

 ”Mossad Chief Meir Dagan opposed the transaction on security grounds, that the proceeds would fund terror”. (Member of Knesset Gilad Erdan, Address to the Knesset on “The Intention of Deputy Prime Minister Ehud Olmert to Purchase Gas from the Palestinians When Payment Will Serve Hamas,” March 1, 2006, quoted in Lt. Gen. (ret.) Moshe Yaalon, Does the Prospective Purchase of British Gas from Gaza’s Coastal Waters Threaten Israel’s National Security?  Jerusalem Center for Public Affairs, October 2007)

Israel’s intent was to foreclose the possibility that royalties be paid to the Palestinians. In December 2007, The BG Group withdrew from the negotiations with Israel and in January 2008 they closed their office in Israel.(BG website).

The invasion plan of the Gaza Strip under “Operation Cast Lead” was set in motion in June 2008, according to Israeli military sources:

“Sources in the defense establishment said Defense Minister Ehud Barak instructed the Israel Defense Forces to prepare for the operation over six months ago [June or before June] , even as Israel was beginning to negotiate a ceasefire agreement with Hamas.”(Barak Ravid, Operation “Cast Lead”: Israeli Air Force strike followed months of planning, Haaretz, December 27, 2008)

The military occupation of Gaza is intent upon transferring the sovereignty of the gas fields to Israel in violation of international law.
What can we expect in the wake of the invasion?
What is the intent of Israel with regard to Palestine’s Natural Gas reserves?
A new territorial arrangement, with the stationing of Israeli and/or “peacekeeping” troops?

The militarization of the entire Gaza coastline, which is strategic for Israel?
The outright confiscation of Palestinian gas fields and the unilateral declaration of Israeli sovereignty over Gaza’s maritime areas?

If this were to occur, the Gaza gas fields would be integrated into Israel’s offshore installations, which are contiguous to those of the Gaza Strip.

These various offshore installations are also linked up to Israel’s energy transport corridor, extending from the port of Eilat, which is an oil pipeline terminal, on the Red Sea to the seaport – pipeline terminal at Ashkelon, and northwards to Haifa, and eventually linking up through a proposed Israeli-Turkish pipeline with the Turkish port of Ceyhan.

Ceyhan is the terminal of the Baku, Tblisi Ceyhan Trans Caspian pipeline. “What is envisaged is to link the BTC pipeline to the Trans-Israel Eilat-Ashkelon pipeline, also known as Israel’s Tipline.” (See Michel Chossudovsky, The War on Lebanon and the Battle for Oil, Global Research, July 23, 2006)

British Petroleum (BP)

British Petroleum is the third largest publicly traded energy company in the world and the fourth largest company overall in terms of revenue. In 2010, BP had revenues of $308 billion and claimed total assets of $272 billion. BP employs over 79,000 people worldwide and is headquartered in London, England but has additional headquarters in Houston, Texas.

• Founded : 1909 (as Anglo-Persian Oil Company)
• 1935 (as Anglo-Iranian Oil Company)
• 1954 (as British Petroleum)
• 1998 (as BP Amoco plc)
• 2001 (as BP plc)
• Headquarter : London, UK
• Key people : Carl-Henric Svanberg (Chairman)

History: 

BP can date its history back to 1901 when the Shah of Iran granted William Knox D’Arcy a concession to search for oil. In 1909 the Anglo Persian Oil Company was incorporated as a subsidiary of Burma Oil Company and went on to exploit oil rights in the Middle East. In 1935 the company became known as the Anglo Iranian Oil Company, a name that it retained until 1953.

In 1951, the prime minister of Iran was assassinated and replaced by a nationalist named Mohammed Mossadeq who nationalized oil production under the National Iranian Oil Company. In 1953, the United States CIA organized a coup to remove Mossadeq. As a result of the coup, the National Iranian Oil Company became an international consortium. Profits were split on a 50/50 basis with Iran, but oil reserves were split among the consortium. 40% went to five American companies, 20% to Royal Dutch Shell and Total S.A., and 40% to the AIOC. In 1954, the AIOC became the British Petroleum Company.

In 1998 British Petroleum merged with Amoco to become BP Amoco. The company was formally renamed BP in 2001 and adopted the tagline “Beyond Petroleum.”

Holdings and Industry Segment:

 BP operates upstream and downstream affiliates and also owns the Castrol brand of automotive lubricants. BP has roughly 18 billion barrels of oil in proven reserves. It produces around 3.8 billion barrels of oil per day.

BP has major holdings in renewable energy including solar, hydrogen biofuel, and wind. The company currently invests of $1 billion per year in renewable energy research.

Revenue:

BP posted revenue of 308 billion USD in 2010 along with operating losses of 3.7 billion U.S. dollars and net income loss of 3.3 billion USD. These losses are a result of the Deep water Horizon well explosion that occurred in the summer of 2010. The year prior to the accident, BP posted a profit of $17 billion.

As a result of the 2010 Deepwater Horizon well explosion, BP agreed to set up a $20 billion fund in order to compensate citizens of Gulf States for the damage caused. The monetary size on the fund is neither a ceiling or a floor, leaving BP own to litigation in the future, but also requiring the company to release the entire amount of the fund.