<a href="http://youngpetro.org/2013/03/06/how-is-it-possible-to-produce-oil-from-sand/"><b>How is it possible to produce oil from sand?</b></a> <a href="http://youngpetro.org/2011/10/09/people-engineers-and-spe-members/"><b>People, Engineers and SPE Members</b></a> <a href="http://youngpetro.org/2012/12/19/if-i-were-a-prime-minister/"><b>If I Were a Prime Minister…</b></a> <a href="http://youngpetro.org/2012/12/26/polish-shales-delayed/"><b>Polish shales delayed?</b></a> <a href="http://youngpetro.org/2013/01/11/russia-continues-the-policy-of-states-companies-monopoly/"><b>Russia continues the policy of state companies’ monopoly</b></a>
 

New risky investment possibilities after OPEC deal.

18 December, 2016 News No comments
New risky investment possibilities after OPEC deal.

Two years of constant falls in oil industry were the main factor why OPEC members decided to cut production rate. After big spending cuts in 2015 and 2016 price per barrel is now above $50 and in economic forecast it should rise. Time has come for unaffiliated countries to think about making new investments until oil is still climbing up the ladder.

Although oil price is still low, Patric Pouyanne – chief executive officer of Total SA has warned that constant investments cuts can end up with oil-supply shortfall in next few years. Referring to this, they will consider whether to start developing expensive new projects.

Many influential people say, there’s no looming supply gap, and this is why companies remain conservative, cutting spending in order to boost cash flow. In the last two years many companies have focused on expanding existing facilities, not creating new ones. Now because industry is so hard to sound out, it’s just like skating on thin ice – no one knows how long will OPEC deal be respected. All investors know it and after two difficult years they don’t want to risk any more. Although who will risk now can be really successful in the end.

Just before crisis in oil industry Total made major investments in new projects which had caused huge headache for this company in 2015 and 2016. Now Total is preparing to plan their capital spending in 2017, including development of the Libra deep-water field off Brazil, an onshore project in Uganda and second phase of the Zinia offshore field in Angola. Pouyanne said, that Libra and Zinia phase two could be extremely profitable with oil at $50.

Analytics claim that actual oil price increase would be short term rise, rather than long term one. This however does not change companies investment directions. Total is reducing capital expenditure to a range of $15 billion to $17 billion a year from 2017 to 2020, compared with $18 billion this year and a peak of $28 billion in 2013. Investing at this time in oil industry seems to be really hard thing to do wisely. As Guillaume Chaloin said: “Exploration at $40 per barrel is more complicated than at $100”.

Read more:
https://www.bloomberg.com/news/articles/2016-12-16/opec-deal-tests-oil-majors-appetite-for-risk-and-reward-iwr14hrb

LNG Croatia – to be or not to be?

15 December, 2016 News No comments
LNG Croatia – to be or not to be?

According to the latest Annual report (World Energy Outlook 2016) published by International Energy Agency few days ago, rise in global energy demand for 30% is expected to happen up to 2040. However, it seems that gradual changes are about to happen in the share of a modern fuels in global energy mix. Although fossil fuels demand is expected to decline in a coming decades, slope of its’ increase in global energy mix is somewhat smaller than that from renewable and nuclear energy sources. Among all fossil fuels, natural gas is by far the best option when it comes to meeting the goals from Paris Agreement. In comparison to oil and coal, natural gas emits significantly lower amounts of CO2 when burning, therefore being more ecologically acceptable. Therefore, only natural gas sees an increase in consumption relative to today’s needs.

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Figure 1: Position of planned LNG regasification unit on Island of Krk (www.google.hr)

Implications stated in a previous paragraph show free space for development of new projects related to natural gas. One of them is a broader development of worldwide LNG (Liquefied Natural Gas) projects. LNG terminals, either liquefaction or regasification, unlock the access to more remote sources of natural gas, being independent on existing pipeline grid and geopolitical issues associated

to it. Although European energy demand is expected to decline due to energy efficiency measures, the level of gas demand is likely to remain coupled to the economic activity. To ensure future security of gas supply, the European Union should definitely improve infrastructure, include new supply routes and LNG terminals to diversify dependence on a few suppliers.

Construction of LNG terminal, specifically regasification unit, in Croatia is not a new story. What is more, it has been a subject of many debates for a few decades. Position of the planned on-shore LNG terminal was Cape Zaglav on the Island of Krk in the Adriatic Sea with 6 bcm/y capacity. Geographical position of the planned terminal is promising because of specific position of Croatia on the European map, allowing supply for both south-eastern and central Europe. Sea depths at the location of the terminal allow docking of all LNG transportation vessels. One specific feature of the Adriatic Sea is that it penetrates in the hearth of Europe, therefore positioning itself among the fast and secure supply hub of goods for European countries (Figure 1).

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Figure 2: Animated view on planned on-shore LNG regasification unit in Croatia (www.zavod.pgz.hr)

After the property and legal issues, without clear defining of financial model and strategic partners, Croatian government made a decision on construction of the on-shore terminal. In the same time, debate on much cheaper, faster and adoptable solution came up, as to be floating regasification terminal for LNG (Floating Storage Regasification Unit). The time of construction was reported to be much smaller, less time consuming, option to be cheaper and adoptable to market needs in terms of additional capacity installation. Another problem was to convince investors in profitability of the project since the gas consumption was continuously declining, both in Europe and Croatia, due to new technical advancements and energy efficiency measures. Today, new tender on preparing project documentation and special license issuing has finished, all of that for FSRU unit.

The importance of the construction of the LNG terminal in Croatia is in security of supply of Croatia and Europe, diversification of European supply corridors, connection with LNG terminal in Swinoujscie in Poland forming energy corridor north-south and strengthening Croatian energy position in the European natural gas market.

Direction of project development is known. Government brought a decision on construction of off-shore storage and regasification unit with the primary stage capacity of approximately 2 bcm/y which would satisfy Croatian gas demand and possible export capacities. Remaining questions rise up as who will be investors in the project, which markets will be supplied with this gas and from which locations and under which contracts. Croatia and Europe would definitely benefit from the construction of LNG terminal in Croatia but it is now the question of time when it will be realized since major number of regasification units in Europe are currently operating significantly under capacity. Hopefully, project will not only be actualized in situations of gas crisis in Europe as it was the case so far.

References:

1) World Energy Outlook 2016: Executive Summary; International Energy Agency, 2016

2) Adria LNG, 2008: Liquefied Natural Gas, Informative Brochure, Zagreb, Croatia

3) Gas Infrastructure Europe (www.gie.eu), April 2015

4) Long Term Outlook for Gas to 2035, Eurogas Brochure (www.eurogas.org)

5) D. Pavlovic, M. Jovicic: Projekt koji će učvrstiti geoenergetski položaj Hrvatske, EGE 1/2016, Energetika Marketing d.o.o. Zagreb, Croatia

by Ivan Bosnjak

Weather impact on natural gas and LNG industry.

11 December, 2016 News No comments
Weather impact on natural gas and LNG industry.

There are several factors which can impact the LNG industry, however, there is one which is completely independent from human actions. The nature of liquefied natural gas extraction and transport make weather conditions a serious factor which could affect the seasonality of LNG supply and largely affect the prices.

Due to the nature of LNG liquefaction process it is largely dependent on temperature variations. Output is much higher at cooler temperatures because the procedure requires the gas to be cooled down to approximately −260 °F. All the complexity of this process results in strong dependency of the LNG output on ambient temperature variations. Even as little as 1 ºC change can potentially impact the output – we read form Wood Mackenzie’s report. (Wood Mackenzie, 2016)

Most of the liquefaction plants were built in hot and stable temperature areas, hence, the LNG output has been consistent as well. However, recent projects show that there will be a significant shift towards more temperature unstable regions. “Around 200 mmtpa of capacity is currently under construction or proposed in areas with more than 10°C annual temperature variation, including the US Gulf Coast and Australia.” – says Lucy Cullen, Wood Mackenzie’s Senior Research Analyst.

The chart provided by Wood Mackenzie, perfectly shows how the LNG plants are distributed per temperature variations:

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Moreover, weather conditions may affect the LNG pricing in other ways. It is worth mentioning a case study from years 2005 and 2006 when hurricanes were responsible of a 4% plunge in US natural gas production. Such events should not be a significant problem during summer periods when the demand for natural gas is usually low. Problem may arise when increased demand during winter periods clashes with severe weather conditions. This may result in a situation when supply cannot meet demand on time, therefore a price increase is most likely. The difficulty of predicting the consequences of weather change means storage gas supplies may not always cushion the unexpected turbulences.

It is worth to point out that extremely cold conditions can affect the machinery that is used at drilling and extraction sites. Below certain temperatures additional heating equipment is required to protect hydraulics from freezing. Snowfall may slow down most of the machine movements making the production less effective and more expensive than under normal conditions. Therefore, it may lead to decreased supply and higher gas prices.

On the other hand, as natural gas has significant share in electricity production, it can be affected by abnormalities during summer season as well. If warmer than normal temperatures occur, then electricity demand for air cooling increases. This may lead to natural gas and LNG prices increase as well.

To sum up, natural gas and LNG industry must be considered as largely dependent on weather conditions, therefore, increased seasonality of gas supply is most likely imminent.

by Alex Zakrzewski

References:

https://www.woodmac.com/analysis/lng-seasonality

http://www.eia.gov/energyexplained/index.cfm?page=natural_gas_factors_affecting_prices

IPTC – Education Week

4 December, 2016 Events No comments
IPTC – Education Week

International Petroleum Technology Conference, or popularly known as “IPTC” has been successfully held from 14th to 16th November in Bangkok!! This year, throughout the successful efforts of the organizing committee, the IPTC has attracted more than three thousand audience from 51 countries and 37 companies as exhibitors. This year proud to say that IPTC has come to 10th Edition! As a student, I am proud to be there to join this one of the world’s foremost oil and gas event! Much honorable is that I got the opportunity to join the IPTC Education Week Program!

What is Education Week?

The education week was held from 12th to 16th November with 67 students participated from 47 universities and 29 countries! It is a one week based program where the selected student will have the opportunity to learn and get some exposure to know more about the oil and gas industry through some panel session, experience sharing talk and field trip. It is proud to have Exxon Mobil, Hess and Mubadala Petroleum to be the sponsor of education week this year!

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Group Photo of 10th IPTC Education Week

Overall Program Experience

On the 1st day of program, we have the welcoming party in which we get to know every student and also the young professional leader. It is a great networking activity where we get to know all the students from different countries and also different cultural backgrounds.  During the 2nd day of the program, we are proud to have the industry executive representatives sharing their expertise with us with the theme of “Innovation and Efficiency Excellence for our energy future”. We have the speaker from PTTEP, Schlumberger, Halliburton, Shell, Baker Hughes, Exxon Mobil, Hess and Mubadala Petroleum. The expertise advised us for not to give up to the oil and gas industry during this downturn. According to them, the energy demand is still on the track of increasing. Therefore, it is still a hope because during that time is our young generation to monopolize the oil and gas industry. The most important point is we have to find the dynamic balance point between the supply and demand. Moreover, the advancement of technology such as the advancement of data processing, renewable energy and (Autonomous underwater vehicle) AUV or unmanned aerial vehicles (UAVs) have proved to bring a bright future to us! Quoted from the words of Senior Vice President PTTEP, in order to overcome our business’s challenge, we have to be innovative and efficient in our task. That is why IPTC comes with the theme ”Innovation and Efficiency Excellence for our energy future”.

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From left to right: Session Moderator, Senior Vice President PTTEP, Vice President and General Manager – South East Asia, Schlumberger, Region Vice President – Asia Pacific, Halliburton

During the 3rd day, 14th of November, after listening to the Executive plenary session, we have a field trip to the PTTEP core research centre (PCRC). From there, we have a chance to learn and gain some knowledge about the coring and geology knowledge. Students get to know about the drilling process, mud logging, coring and have the opportunity to observe the sample core and rock.

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Group Photo during the PCRC Visit

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Knowledge Sharing session from PTTEP representative.

Apart from that, we have the chance on the 4th day to visit IPTC education booth, technical session and panel session.

On the last day of IPTC Education Week, we have our group presentation in which we present our group works since July 2016. Each group consists of 6 to 7 people from different universities and different background of study, which consists of Petroleum Engineering, Geology, Civil Engineering, Chemical Engineering and etc. Every group has different topics such as Deep water development, renewable energy, Field development, social license to operate, High Pressure High Temperature and etc. My group got the topic of Social License to Operate. It was a great exposure and learning experience listening to another group presentation. During the preparation of the works, you have the opportunity to know other students from different universities. It is so wonderful to see everyone coming from different universities and cooperate together to get the work done successfully. That’s truly a great experience and great social networking event for students!

Hope to see you again in China 2019!

Last but not least, IPTC Education Week is truly a great experience for students! Opportunity doesn’t wait! Grab the opportunity next IPTC in China 2019. As a student, grab this opportunity and apply through your society, such as SPE, SEG and AAPG, and EAGE. IPTC is a platform to promote knowledge sharing and scientific and technology dissemination on a global scale. (IPTC Home Website). Can’t wait again for the next IPTC! Thank you for the sponsoring bodies, especially PTTEP as the host organization for making the IPTC a success!

BP Mad Dog Phase 2 approval

BP Mad Dog Phase 2 approval

Recently BP has sanctioned the Mad Dog Phase 2. The project is intended to extend the capacity of production from Mad Dog Oil Field in Gulf of Mexico by adding a second floating production platform.

The new platform will have the capacity to produce up to 140,000 gross barrels of crude oil per day from up to 14 production wells. The existing, spar type, Mad Dog platform has capacity to produce 80,000 gross barrels of crude oil operated at a water depth of 4,500 ft, located about 190 miles south of New Orleans. It started production from that field in 2005.

The Mad Dog Oil Field was discovered by BP in 1998. In 2011 the appraisal drilling proved that the reservoir contains more than 4 billion barrels of oil equivalent. Another platform was needed on the field.

In 2013 the design of new platform was too expensive and complex to be realized, the cost of the project amounted to $21 billion. Since then, the BP with co-owners (BHP Billiton and Chevron) has worked on simplification and standardization of the previous platform design. Due to this action the final cost of project is reduced by 60% to $9 billion.
“This announcement shows that big deepwater projects can still be economic in a low price environment in the U.S. if they are designed in a smart and cost-effective way,” said Bob Dudley, BP Group Chief Executive.

Production of the new floating production platform is scheduled to begin in 2021. The new platform will be similar to BP’s Atlantis Platform, said BP spokesperson Jason Ryan.

Read more:
http://www.bp.com/en/global/corporate/press/press-releases/bp-approves-mad-dog-phase-2-project-in-the-deepwater-gulf-of-mexico.html

OPEC Agrees to Cut Production

OPEC Agrees to Cut Production

After eight years of unregulated production amount and two years of oil prices crisis OPEC shows it is not dead and finally will reduce output by about 1.2 million barrels a day by January. Consensus reached on Wednesday in Vienna may reverse the situation of the industry.

Read more