<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>
 

Saudi economy against ongoing “oil war”

Saudi economy against ongoing “oil war”

Current geopolitics has drastically changed the situation in Saudi economy. This middle-east country is more and more burning their foreign reserves to ensure economic stability and monetary flexibility.

Last two years indicated that hydrocarbon’s price is not depending on actual supply and demand but essentially on political relations. Tense situation in the Eastern Europe (international sanctions during the Ukrainian crisis) and Syrian Civil War have enforced cuttings in oil branches especially in OPEC countries.

Saudi Arabia, as an oil-addicted state, was forcefully touched by declining prices. After many years of high spendings, their budget deficit has reached $98 billion (15 % of Gross Domestic Product) and if oil value determines near $30 a barrel, deficit will probably rise to $180 billion.

Saudi internal market and monetary policy were modified due to a new, tougher situation. “If anything happens to the riyal exchange peg, the consequences will be dramatic. There will be a serious loss of confidence,” said Khalid Alsweilem, the former head of asset management at the Saudi central bank.

In spite of ministerial claims, fuel’s prices have raised by up to 80% (December 30, 2015) including a 50% revision of the most generally sold petrol to 0.90 riyals per litre.

Near future is going to be nasty for the Kingdom of Saudi Arabia and entire OPEC unless they agree to cut crude production and eliminate the global oil surplus. The U.S plans to sell millions of barrels of crude oil from Strategic Reserve can make crisis deeper and establish a new playmaker in the international fuel’s arena.

Sources:

http://www.telegraph.co.uk/finance/economics/12071761/Saudi-riyal-in-danger-as-oil-war-escalates.html

http://www.bangkokpost.com/news/world/810468/in-global-oil-price-war-saudis-blink-first

U.S. has lost 70,000 oil jobs in the past year

U.S. has lost 70,000 oil jobs in the past year

Sadly, it has been a poor year for oil industry. Oil prices not only stayed at very low level but also were systematically dropping down to 35$ a barrel. Cheap crude affects global economy and makes current oil market environment unsunstainable. Global crude supplies are highly outweighed and crude storages may not start to deciline until 2017.

The Dallas Fed estimates in a new report that U.S. has lost about 70,000 oil and gas jobs since October 2014 what equals 14.5 percent drop in the 14 months after the domestic shale drilling boom that drew thousands to Houston’s oil hub began a steep decline.

Iran wants to pump an additional 500,000 barrels a day when western sanctions on its oil exports happen to be eased next year. Goldman Sachs believes that OPEC, which includes Iran, will boost its daily production in 2016 by 640,000 barrels. Additional barrels on market certainly will not enhance chances for crude to be more expensive.

These factors make high extraction unprofitable for oil companies and consequently less people are needed to control this process. Workers from huge companies such as; Schlumberger, Halliburton, Baker Hughes and British Petroleum were made redundant.

Apart from consumers with high transportation and manufacturing costs cheap crude worries entire world. Current market situation makes future uncertain especially for students and recent graduates who are seeking for opportunities in oil companies. However, we do know that such low prices are not beneficial for many and will eventually start to increase.

http://fuelfix.com/blog/2015/12/24/dallas-fed-says-u-s-oil-bankruptcies-at-great-recession-era-levels/

oil jobs lost 3

U. S. lifted a four-decade oil export ban

U. S. lifted a four-decade oil export ban

The United States decided to make a historic move and lifted a forty-year long ban on oil export. Mentioned restriction was a response to the Arab oil embargo in 70s which caused heavy shock to US economy. This was a solution to keep oil price on a relatively constant level in the future and also to secure the energetic sector of the country. Latest increase in oil production was the main reason why congress decided to lift the oil export restriction.
The United States currently generate about 9.2 million barrels of oil a day, about half of which is shale production, but the US also imported about 7 million barrels a day this year. With the world flooded in crude, nobody expects much demand for US exports. While new oil exports are not likely to amount to much immediately, they would provide another challenge to already sick OPEC. The Organization of the Petroleum Exporting Countries has been allowing the market forces to set prices for the past year, abandoning its previous policy of manipulating prices through the use of output quotas. That policy has cut into some US production,but the world is still overproducing by more than 1 million barrels a day.
This move is definitely an improvement, but is unlikely to have an influential impact on the global oil market. Andy Lipow of Lipow Oil Associates argued that the benchmark of the US crude is too close in price to the Brent’s. “The narrow price gap doesn’t encourage exports from the US to other parts of the world when transportation costs are factored in”, Lipow said.

crude-oil-pipe-NNPC.jpg1_-640x431

 

Sources:

http://www.wsj.com/articles/congressional-leaders-agree-to-lift-40-year-ban-on-oil-exports-1450242995

http://www.bbc.com/news/business-35136831

 

Lower oil prices bode well for their growth

17 December, 2015 News No comments
Lower oil prices bode well for their growth

Constantly falling oil prices cause deeper cuts to spending and drilling. With WTI dipping to mid-$30s per barrel may even more significantly contribute to deterioration of the situation in the industry and consequently accelerate pace of adjustment.
This might be a sign of faster rebound than we have expected.

Read more

First ship with liquefied natural gas from Qatar came into the Swinoujscie terminal

12 December, 2015 News No comments
First ship with liquefied natural gas from Qatar came into the Swinoujscie terminal

   Yesterday, on 11th of December 2015, an Quatar’s LNG carrier (tank ship designed for transporting LNG) “Al Nauman” came into the Swinoujscie LNG terminal (also referred as Terminal LNG in Swinoujscie, Polish LNG or Baltic LNG). This terminal is operated by Polskie LNG S.A., a subsidiary of Gaz-System. The terminal was inaugurated by prime minister Ewa Kopacz on 12 October 2015, so it’s a relatively fresh investment. It is equipped with an unloading jetty for large LNG tankers, two storage tanks and regasification train. The terminal’s initial regasification capacity is 5 billion cubic meters per annum (180 billion cubic feet per annum), and with the construction of the third tank its capacity is due to expand to reach 7.5 billion cubic meters per annum (260 billion cubic feet per annum) satisfying approximately 50% of Poland’s annual gas demand. The total cost of the terminal is €950 million (PLN 3.5billion).

That was the first LNG delivery, and it landed exactly the day it was expected. Delivered fuel is going to help with technical startup of system. After regasification it will reach Polish recipients. Regasification is a process of converting liquefied natural gas (LNG) at −162 °C (−260 °F) temperature back to natural gas at atmospheric temperature. LNG gasification plants can be located on land as well as on floating barges. In a conventional regasification plant, LNG is heated by sea water to convert it to natural gas / methane gas. In Swinoujscie air-heating system is applied because Baltic sea is too cold. It works by diving the LNG pipelines in heated water.

 swino

View of the terminal

Marek Gróbarczyk, minister of Polish Maritime Economy, said that it is significant moment for Polish Energy independence: it will allow to research when the flotation of the gas port will be possible. First implementation of the fuel and cooldown the tanks will show if there are any defects and will determine the date of the end of the investment. He emphasized that there are plans for another investment such as building one more tank in Swinoujscie or the new LNG terminal in Poland, even floating one like in Lithuanian Klajpeda.

   Poland is now available to import LNG from all over the world. Difficult time of testing and startup works is against us. Qatar’s partnership will be supplying LNG into Poland for next 20 years, so it elevates Polish-Quatar’s relations to a strategic level. Commercial exploitation LNG terminal in Swinoujscie is going to reach its destination in half of 2016. What’s more, it is a great tourist attraction and very perspective  undertaking for Polish economy.

https://en.wikipedia.org/wiki/Świnoujście_LNG_terminal

https://en.wikipedia.org/wiki/Regasification

www.google.pl/maps

www.polskieradio.pl

Keystone XL project rejected

Keystone XL project rejected

The Keystone Pipeline System is an oil pipeline system in Canada and the United States, commissioned in 2010, owned by TransCanada. It runs from the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas, oil tank farms and an oil pipeline distribution center in Cushing, Oklahoma. 

Three phases of the project are in operation:

  • the Keystone Pipeline (Phase I),
  • the Keystone-Cushing extension (Phase II)
  • the Gulf Coast Extension (Phase III)

The proposed Keystone XL Pipeline (Phase IV) would have same starting and final points as the Phase I pipeline between Hardisty, Alberta, and Steele City, Nebraska, but with a shorter route and a larger-diameter pipe. It would’ve transported 830,000 barrels per day of heavy oil sands – about 700,000 barrels from Canada – while picking up an additional 100,000 or so barrels from heavy U.S. plays.

On 6th of November 2015 US President Barack Obama announced his administration’s decision to reject TransCanada Corp.’s application for a permit to construct the controversial Keystone XL crude oil pipeline.

Obama said that this pipeline would not have made a serious impact on jobs or American prospect but may in fact cause pollution and lead to more climate problems.

TransCanada-Keystone-Pipeline-System-Map-2015-06-08

The decision revealed opposite attitudes. “It’s ironic that the administration would strike a deal to allow Iranian crude onto the global market while refusing to give our closest ally, Canada, access to U.S. refineries […] The White House has placed political calculations above sound science. Seven years of review have determined the project is safe and environmentally sound, yet the administration has turned its back on Canada with this decision, and on U.S. energy security as well.” said API president and CEO Jack Gerard.

On Keystone XL project’s webside, TransCanada says: “In light of this decision we will review our options, which will include filing a new application to receive a Presidential Permit for a cross border crude oil pipeline from Canada to the United States. “

On the other hand, May Boeve, executive director at 350.org, said in a statement “This is a big win. President Obama’s decision to reject Keystone CL because if its impact on the climate is nothing short of historic and sets and important precedent that should send shockwaves through the fossil fuel industry.”

We will see how the situation develop. Keystone XL was always just a lone pipeline. On its own, this rejection won’t lead to tectonic shifts in either oil markets or climate-change policy. Although, as a potent symbol, the death of Keystone does prefigure a few important trends that are now unfolding: the rise of supply-side environmentalism and Canada’s oil sands industry getting squeezed. As for the oil sands industry in Alberta, it’s still grinding along, putting out more than 2 million barrels of crude per day. But the prospects for further growth look much weaker than they did just a few years back.


 Sources: rigzone.comvox.com

Image source: keystone-xl.com, vox.com

Spanish shale venture

Spanish shale venture

Spain has silently joined the UK, Poland and Lithuania in its hopes of exploring its shale gas reserves. And those hopes seem not only well-founded but are also based on a real need for national energy sources. Spain is near the top of the list of largest energy consumers and yet its production of hydrocarbons is so low, it’s almost irrelevant to the needs.

According to the U.S. Energy Information Administration website up until the 2008 recession, Spain was phasing out its coal production subsidies. In 2011 coal production and consumption increased after the Spanish government introduced domestic coal production subsidies trying to reduce the country’s dependence on imported coal.

Roberto Martínez, Deputy Director of Research on Geological Resources at the Geological and Mining Institute of Spain’s view of the extremely low production of liquid fuels and natural gas is that: Conventional hydrocarbon exploration carried out during the second half of the 20th Century had a very low degree of success, discovering only small oil and gas fields on shore and a few medium size fields in the near offshore which have already been almost depleted. Hydrocarbon reserves are now almost negligible.

The possibilities

According to EIA the domestic coal production subsidies caused electricity producers to substitute away from renewables to coal. In 2012, fossil fuels accounted for 49% of Spain’s electricity generation. It’s no surprise that the government has voiced its support for shale gas development, while, in the past few years, the number of permits has gone up by 80%. According to Roberto Martínez there are currently 70 exploration permits active, 75 are expecting administrative acceptance and 23 exploitation permits are active.

He commented: Several international and national companies have expressed interest in developing exploration in Spain. In some cases, exploration objectives are related to very deep potential resources, deep offshore resources or unknown geological settings. In other cases, permit requests are linked to potential unconventional resources. There is still a high level of uncertainty regarding how these projects will carry on and if new exploration could be really successful. At this point, it can only be assured that there are a few companies willing to invest in oil and gas exploration in Spain and that is already a change regarding the last decades.

The hopeful attitude of the government and the operators seems supported by the Gessal study. This was a 2013 preliminary evaluation of prospective conventional and unconventional hydrocarbons, which found the potential of natural gas to be 2.5bn cubic metres, almost all of it (80%) from shale rock. There have been no new evaluations since then, but according to Mr Martínez the Gessal study is well funded and can be acceptable assuming a high level of uncertainty. However, he also commented on the ACIEP report (Asociación Española de Compañías de Investigación, Exploración, Producción de Hidrocarburos y Almacenamiento Subterráneo) based on the estimates outlined by Gessal, which claimed that the exploitation of natural gas could allow Spain to become completely independent of gas imports by 2030 and an exporter of natural gas until 2050. Mr Martínez said that the ACIEP report assumes Gessal numbers as reserves, not as prospective resources, being, in my point of view quite optimistic.  

The new addition to the energy mix

Apart from coal usage and gas imports, there are also eight operating nuclear reactors in Spain and, until recently, the government was investing in renewables. In 2014 27.4% of Spain’s electricity was generated from wind and solar power. However, the government has made some cuts in subsidies. According to Mr Martínez there are several complex reasons for that fact. (…) but probably the main issue was that tax incentives were so attractive that the learning curve for these technologies had so many actors and was very costly. When asked if the government simply chose shale over renewables he said: Now it is not possible to sustain the same incentives for mature technologies and available resources for new technological developments are lower than expected. In my opinion, it is not a matter of shale gas vs renewables.

Protests

There have been protest in Ibiza with regards to exploration. The island is considered too beautiful to allow operators access to it. At the moment, according to Mr Martínez, everyone is awaiting an administrative decision regarding seismic exploration in the area but there is strong local opposition.

In addition, Paulino Rivero, former president of the Canary Islands regional government, planned to hold a referendum on the issue. The referendum question was going to be: “Do you think the Canary Islands should modify their touristic and environmental model in exchange of oil and gas exploration?” However, The Central Government asked the Constitutional Court to evaluate if this referendum would be out of the regional government competences and Mr. Rivero decided to retire his proposal. Moreover, as Repsol decided to abandon the exploration, this referendum will likely never take place.

The future

According to Mr Martínez With the available knowledge, the Basque – Cantabrian Chain is the area with higher prospective resources, although there are other areas that may have unknown resources. However, more research is needed especially drilling, to solve main uncertainties and have a much more defined opinion on the existence of resources and in the viability of their exploitation. But we cannot expect actual production of shale gas in Spain before 2019.

It is also worth mentioning that the Hydrocarbon Law has been amended in the Parliament in order to establish economic revenues for owners and local authorities in order to promote activity but all aspects of the energy situation in Spain will be discussed by Mr Martínez during the European-focus conference at the THIRD EUROPEAN SHALE GAS AND OIL SUMMIT in Manchester in October.

Gas Condensate Banking Effects

Gas Condensate Banking Effects

Gas condensate reservoirs have been classified between volatile oil and wet gas reservoirs. It means that the reservoir temperature is between the critical temperature and the cricondentherm (maximum temperature at which gas-liquid phases can coexist). Gas condensate reservoirs exhibit a complex behavior due to the existence of a two-fluid system (it is a single-phase fluid at original reservoir conditions) composed of reservoir gas and liquid condensate. When the pressure of the reservoir falls below dew point due to production, the original single-phase (gas phase) literally disappears because of the formation of condensates (liquid phase). The behaviours of such systems are complex and still not fully understood, especially in the near-wellbore region, where the largest pressure drops occur. It is important to mention that two kinds of gas condensate reservoirs exist: rich gas condensate reservoirs (e.g. Alen field – Equatorial Guinea) and lean gas condensate reservoirs (e.g. Arun field – Indonesia, Camisea field – Peru).

Gas Condensate Blockage

Condensate banking formation is a major problem when producing gas condensate fields. From the first day a gas condensate field is being produced, heavy components (valuable components) in the reservoir condense near the wellbore and continue growing over time. These condensate liquids are formed because the reservoir pressure falls below dew point (point where the first drop of liquid appears), and reduce the productivity over time. Productivity losses of around 50% (or even more) have been registered. Taking for example the case of the Arun field in Indonesia, where after 10 years of production a significant loss in well productivity occurred.

In technical literature, many authors proposed the existence of flow regions (from 2 to 4). Beyond the discussion of the existence of 2, 3 or even 4 flow regions in the reservoir, in this article we will focus only in the near wellbore region, where the principal phenomena occur due to condensate banking. Generally speaking there are two main factors that affect well deliverability when producing gas condensate reservoirs: Coupling and Forchheimer effects.

In the near wellbore region, where the gas flow rate is higher, an important effect called Forchheimer effect appears which produces higher pressure drawdown which results in major gas condensation that fills up the pore throats, and  consequently the gas relative permeability is reduced, decreasing the well deliverability. However, when condensation reaches a critical saturation, a “positive effect” occurs, which is called the coupling effect, that essentially explains the increment of the condensate relative permeability with increasing velocity and decreasing interfacial tension.

The evidence is overwhelming, it does not matter whether it is a rich or lean gas condensate reservoir, with production over time, the quantity of liquids in the near wellbore region will increase, affecting the well deliverability which is translated as a reduction in the production. Working to avoid a high pressure drawdown in retrograde gas condensate reservoirs has become an important topic today.

Corrosion and it’s remedy

Corrosion and it’s remedy

In simple words corrosion is defined as ruination of material because of its reaction with environment. It should be made clear here that for corrosion material does not have to be metal only and this vast term is not restricted to metals alone. On the other hand ruination of wood, rubber and paint due to exposure to sunlight is also considered to be corrosion.
Stress Corrosion Cracking (S.C.C) happens when mechanical stresses occur in the presence of corrosive environment and this phenomenon can cause serious problems. It is common observation that corrosion is always detrimental but interesting fact is that in some cases corrosion is beneficial and desirable like while anodizing of aluminum used to obtain a protective corrosion product on the surface and uniform appearance.
Chemical machining is widely used in aircraft’s industry. In this process unmasked areas are subjected to acid treatment and excess metal is dissolved. This process is adopted in situations where parts are hard and difficult to machine. Analysis of corrosion in Oil & Gas industry is of prime importance because of two main reasons:
1. To maintain continued and extended production to avoid loss of revenue.
2. To avoid catastrophic failures of facilities and avoid irreparable loss of life.
To control corrosion many industries are spending several billion dollars so one can realize the devastation caused by this phenomenon. Corrosion can be classified as either Sour or Sweet depending upon environments. Usually sour corrosion is caused due to the presence of high sulphur contents and its compounds in oil and gas industry.
Most common corrodents are:
1. Acid gases
2. Brine
3. Aggressive soils
4. Anaerobic bacteria
To control corrosion following corrosion measures may be taken:
1. Chemical Inhibition
2. Chemical Control (removal of dissolved gas)
3. PH control
4. Oxygen Scavenging
5. Cathodic Protection
6. Thickness measurement (Ultrasonic thickness meter)
7. Control of physical factors (Shocks etc)
It is important to calculate cost effectiveness of any of corrosion control measures before applying it and this can be calculated only in case of proper monitoring, the effectiveness of corrosion control program can be judged only in case of its proper monitoring.
At the end in Oil and gas industry it is difficult to total elimination of corrosion one can feel comfortably satisfied if the rate of corrosion is retarded up to safe extend.

 

References:

http://www.npl.co.uk/upload/pdf/beginners_guide_to_corrosion.pdf

http://www.npl.co.uk/upload/pdf/basics_of_corrosion_control.pdf

http://www.ce.berkeley.edu/~paulmont/241/Corrosion.pdf

Dispelling Shale Myths

Dispelling Shale Myths

With UK offshore gas supplies declining and the UK becoming increasingly reliant upon gas imports, the establishment of a successful onshore oil and gas industry is now of growing importance.  Generating a sustainable UK shale industry could be the answer to such problems, providing not only energy security, but also boosting the UK economy through job creation and investment. In light of the impending 14th onshore licensing round ESGOS sat down with Ken Cronin, Chief Executive of UKOOG, to discuss the next steps for the UK shale industry.

Dispelling Shale Myths

The shale industry has long fallen victim to a host of misconceptions, with community concerns over safety continually serving as a stumbling block to the development of the sector. What steps do you feel need to be taken to ease community concerns about shale?

‘There have been a lot of unfounded myths put out there. The truth is that over 80% of our homes and industries are heated using gas, over 500,000 people are employed by the chemicals industry which uses gas as a raw material as the building block for products that are as varied as cosmetics, computers and medical equipment. By 2020 80% of that gas will come from outside the UK paying no tax and creating few jobs. We have a very good regulatory system and the industry has been reviewed by a number of independent bodies and all found the risks in a properly regulated are low. These are the messages we need to continue to communicate with local communities. That and the fact our industry has been operating safely for over 100 years. People are amazed when I say we have 250 operating wells in this country producing enough oil to power over a million family cars a year’.

14th Onshore Licensing Round set to Kick-start UK Shale Industry

Progress within the UK shale industry to date has to a large extent remained stagnant. However with the results of the 14th onshore licensing round imminent, forecasters are predicting a kick-start to UK operations. How many wells do you expect to be drilled during 2015-2016?

‘We have drilled 34 wells in the last two years albeit mainly conventional wells. 2014 was actually a better year than the previous 3. The number of future shale wells depends on a number of variables but I think we need to be thinking about 5 to 6 sites having activity by the end of 2016’.

Ensuring the positive impact of the 14th onshore licensing round also depends upon overcoming a number of other industry hurdles, particularly with regard to the planning process. What steps do you feel need to be taken to ensure that the 14th onshore licencing round is as productive as possible?

‘I think we need to see this as a nationally important resource as we did with the North Sea in the 70s. Planning and permitting needs to be made as efficient as possible and the overlaps between the two systems need to be eradicated. We also need to educate people why gas is so important not only to our energy security but also our economy’.

Emphasis now is also moving toward increasing private investment in the UK shale industry. Do you expect to see an increase in private investment to help fund shale operations?

‘We have already seen a lot of new investment in the last 18 months with new players such as Centrica, Total, GDF and Ineos coming in. As progress to proving the resources happens I expect to see more investment’.

Boosting the UK Economy

Kick-starting the UK shale industry also holds the potential to substantially boost the UK economy. With potential for job creation, increasing the level of skilled workers and growing UK trade and investment the shale industry could play a key role in redefining the UK economy. Do you feel the development of a successful shale gas industry will boost the UK economy?

‘Absolutely – we commissioned a study by EY last year that showed £33bn would need to be spent on the supply chain to create the first 100 sites and alongside that 64,000 jobs would be created’.

Successfully establishing a shale industry within the UK also has the potential to benefit a number of other sectors within the UK. What other industries do you feel can benefit economically from the development of a UK shale industry?

‘I think the chemical industry will benefit significantly from a secure source of feedstock without the recourse of having to buy imported gas. The UK supply chain and in particular SMEs will also benefit from supply chain activities from sand production through to waste treatment facilities’.

With the UK shale industry witnessing an increasing trend toward growth and progress, what are UKOOG’s plans over the course of the next 12 months?

‘To continue to promote the industry with a strong focus on helping the industry move to exploratory drilling to allow us to ascertain the true extent of the gas under our feet’.

Ken Cronin will be discussing the development of the UK shale industry and its role in the UK economy further at the European Shale Gas & Oil Summit taking place on the 15th-16th October 2015.

For further details visit the summit website www.esgos.eu

Image source: carbonbrief.org