Exploration World August 2015

WWW.BUSINESSREVIEWNORTHAMERICA.COM WWW.EXPLORATIONWORLD.COM

NOVEMBER 2012

AUGUST 2015

DRILLING FOR SAUDI OIL

THE ARABIAN DRILLING COMPANY

RESTRUCTURING PLAN SPOT TRADING IS KING IN FUTURE OF LNG

TOP 10

OIL & GAS COMPANIES TO WORK FOR

DIRECTOR’S COMMENT

The foundation of the exploration industry is discovery, a broad term that can be summarized with one simple concept: a focus on finding the next best thing.

WDM Group, the parent company of Exploration World, is pleased to announce our “next best thing:” a merger between Exploration World and its sister brand, Energy Digital.

Beginning in September 2015, Exploration World will no longer be published as an independent digital magazine yet readers have no need to worry: All of our insights, updates, evaluations and revelations for exploration will continue to be available through our comprehensive, globally-recognized brand, Energy Digital.

Why are we doing this? It’s simple: The oil & gas industry is a significant component of the energy world; by merging the two brands, we can now offer readers more comprehensive coverage of globally-significant issues.

Click here to check out Energy Digital’s website and previous editions of the magazine.

I hope you will continue to join us on our journey through explorative discovery, and please don’t hesitate to reach out to me personally should you have any questions, comments or concerns.

Jennifer White

Director of Content jennifer.white@wdmgroup.com

3

CO CN OTNETN ETNST S FEATURES

6 Production & Transport

A Market Develops: How LNG Trading Will Change in the Near Term

12 Business & Operations

The Future of Fossil Fuels in Latin America

18 Top 10

Top 10 employers in US oil & gas in 2015

MIDDLE EAST 28 Arabian Drilling Company

AUSTRALIA 54 Danakali Limited

BRAZIL 62 Karoon Oil & Gas

62

Karoon Oil & Gas

4 August 2015

Top 10 employers in US oil & gas in 2015

18 54 Danakali Limited

28

Arabian Drilling Company

5

PRODUCTION & TRANSPORT

A MARKET DEVELOPS: HOW LNG TRADING WI IN THE NEAR TERM

With all eyes on this expensive, yet e natural gas, views are varying on whe W R I T T E N B Y: I A N H A N N E R 6 August 2015

ILL CHANGE

fficient means of transporting ere the market is heading.

7

PRODUCTION & TRANSPORT LIQUEFIED NATURAL GAS (LNG) will likely replace iron as the second most valuable commodity after crude oil by 2020.

Spot trading of LNG, rather than long-term supply contracts, will also likely make up roughly 50 percent of LNG trading by then, according to Bloomberg Business. Today, that number is closer to 29 percent. That would be a rather dramatic turnaround in the way LNG trading has been conducted since its advent in 1964.

As with many major events in petroleum in recent years, the United States is at the center of it all.

“We see the U.S. as a major contributor to the development of the LNG spot market as the volumes start to ramp up,” Jamie Buckland of GasLog Ltd. wrote in an e-mail to Bloomberg Business. “There should be a lot more flexibility and you could see some buyers of U.S. volumes selling product on to others.”

Since June 2014 the global trading price of oil has fallen substantially, touching below $50 per barrel before leveling out around $60 for the last few months. According to most analysts, the reasoning behind this plunge is a weaker than expected global demand 8 August 2015

for crude, coupled with a dramatic upswing in American oil production from shale. But since the United States has had an export ban on crude oil since the 1970s, this analysis ultimately says more about slowing American demand than global trends.

What the United States does export, though, is natural gas— and it just so happens that the country is producing a lot of it.

From 1970 up until 2006, American production of natural gas hovered at roughly the same levels, averaging almost 22.383 trillion cubic feet of the stuff per year. That all changed in 2007 and beyond when shale gas opened a new chapter in American energy production. Since that time, natural gas production has increased by about 35.52 percent to settle at 31.895 trillion cubic feet in 2014.

With a total natural gas demand of 26.818 trillion cubic feet in 2014, the United States has something of an excess. That, combined with supply uncertainties in Europe and rapidly growing demand in Asia, has made the LNG market an extremely tantalizing one for investors.

For those who are unfamiliar with LNG, the substance is the byproduct

HOW LNG TRADING WILL CHANGE IN THE NEAR TERM

A natural gas storage facility at dusk of a process by which natural gas is chilled to negative 162 degrees Celcius and stripped of adulterants like water, mercury and more, many of which would freeze at those temperatures. The end result is natural gas in its liquid rather than gaseous form, taking up 1/600 of the volume of the latter. This allows for energy companies to transport much larger volumes of natural gas via tankers, therefore opening access to entire new global markets.

While massive costs to construct the liquefaction facilities needed for the process have largely discouraged

investment over the last few decades, the technology isn’t new. What is new is the massive amount of capital that companies are suddenly investing in LNG projects in Australia, Africa, the United States and, hypothetically, Canada.

The most noteworthy facility in the United States is Cheniere Energy’s Sabine Pass LNG terminal, which is scheduled to export its first tanker full of LNG in December.

(Cheniere also received final regulatory approval from the U.S. Department of Energy on May 12 for liquefaction and export activities at the

9

PRODUCTION & TRANSPORT

company’s proposed Corpus Christi facility up to the liquid equivalent of 2.1 billion cubic feet per day for a 20 year period.)

The company said they expect “the [United States] to produce 74 million metric tons of LNG by 2020,” 10 August 2015

according to Bloomberg Business. If accurate, that would account for about 22 percent of the projected global output by 2019, lagging behind only Qatar— the only substantial supplier of LNG until now— and Australia.

As more and more LNG is

Cheniere Energy’s Sabine Pass LNG facility in Cameron Parish, Louisiana. (Cheniere Energy)

introduced to the global market, purchasing power will likely increase for buyers that no longer need to lock into 20 year long contracts as a means of securing supply. With deals of four years or less— or even some one-off deal making— natural gas will likely

take a much more front and center role in the global commodity market, rather than regional ones.

In fact, it’s already happening, with Goldman Sachs saying in March that LNG trading would likely exceed $120 billion this year alone.

11

BUSINESS & O P E R AT I O N S

THE FUTURE OF FOSSIL FUELS IN LATIN AMERICA 12 August 2015

The Future of Fossil Fuels in Latin America W R I T T E N B Y: R E B E C C A C A S T R E J O N 13

BUSINESS & O P E R AT I O N S Latin America is home to the largest oil reserves in the world.

In recent years, the region has increased its subsidies in fossil fuel production, with more than $40 billion dollars of investments aimed at making Latin America the next leader in the oil industry. This is largely because countries such as Bolivia, Peru, Argentina, Venezuela and Ecuador are largely dependent on revenues from the fossil fuel sector.

And although the region has increased its efforts to use renewable energy— most notably with Costa Rica generating all of its electricity from renewable sources— many Latin American countries remain dependent on fossil fuels, such as Mexico, whose reforms have opened the doors to foreign investment to capitalize on the future of the industry with oil products and natural gas.

So just how much in the way of fossil fuels does Latin America consume?

According to the World Bank, the energy consumed in the region by means of fossil fuels has increased by double digits since 1990, spurred on by increasing subsidies.

14 August 2015

Renewable initiatives versus the dependability of fossil fuels The environmental group World Wildlife Fund (WWF) stated that Latin America will double its electricity demand by 2030 and will be the region that leads the renewable industry, with Brazil, Chile, Mexico and Uruguay as the main drivers of that change.

Moreover, the Inter-American Development Bank (IDB) said that Latin America could cover more than 20 percent of electricity demand with solar power by 2050.

From 2002 to 2012, the electricity generated by wind farms increased 51 percent in South America and 42 percent in Central America. Part of this transformation is due to government incentives granted to companies in about 20 countries in the region.

The future of fossil fuels is still battling with renewable energy initiatives. Both investments in fossil fuels and green energy have boosted economic growth. However, the region remains one of the most socioeconomically unequal in the global sphere.

While oil producers are resistant to change and government tensions

T H E F U T U R E O F F O S S I L F U E L S I N L AT I N A M E R I C A

Caracas was the site of significant civil unrest in 2014 as low oil prices weakened the Venezuelan economy. rise on the issue of fossil fuels in Latin countries, Latino leaders have sought a solution— an energy treaty provided from Union of South American Nations (UNASUR).

However, progress on the investment framework is sluggish, with leaders unable to rectify key differences between Latin nations’ respective needs.

The next competitors in the market for fossil fuels Venezuela is an economy that, despite social unrest, continues to

fund its government largely with revenues from oil production. With the single largest reserves in the world, Venezuelans have government subsidies on the production of fossil fuels to thank for $1 tanks of gasoline.

Uruguay is a country at odds with itself— heavily pushing for the increased use of renewable forms of energy while increasing oil and gas exploration spending. Although their efforts are mostly in the renewable sector, having generated more than 90 percent of electricity through wind energy, the nation is looking for new oil 15

BUSINESS & O P E R AT I O N S

Michael Schwartz

reservoirs to increase production.

Uruguay announced in January that it had found potential crude deposits off its coast.

Uruguay’s former national energy director, Ramon Mendez, who stepped down from the post in February, said, “Yes, of course we’re 16 August 2015

looking for oil. Even if the country manages to go fully renewable for its electric grid, it will still need fuel for transportation. It’s a question of survival.”

The nation’s oil production is expected to double in the next 15 years.

T H E F U T U R E O F F O S S I L F U E L S I N L AT I N A M E R I C A

Mexico is in a difficult position as well. It’s one of the countries most dependent on fossil fuels tax revenue and economic growth. The recent energy reform will only increase its aggressive production and exploration in coming years, coupled with investment in the Gulf of Mexico.

On the other hand, the high price of imported natural gas, limited hydroelectric opportunities and a lack of national infrastructure leave Mexico with few other options at this time.

17

TOP 10

TOP 10 EMPLOYERS

THE US OIL & GAS IN 2015 In the oil industry, these companies have something many businesses don’t: the love of their employees.

Written by: Ian Hanner

19

TOP 10

Everyone has a job.

Some are mothers and fathers.

Others, sons and daughters. And for billions of individuals worldwide, their job is more literal, working long days for the chance to climb the career ladder and find financial (or other) success in one form or another.

But one thing is the same, regardless of a person’s job: they all want to feel appreciated.

This isn’t a new sentiment.

While this principle can be applied equally well in just about every kind of relationship, it’s especially important to the employeremployee relationship. With countless examples to point to, it’s evident that some of the strongest, most lasting business empires in the world have been built on the backs of their employees— not because they overworked them, but because they made the person feel like part of something bigger.

Today, many American employers are in the midst of a renaissance of thought when it comes to how they improve employee buy-in. The oil and gas industry is no different.

20 August 2015

Exploration World looked at a range of reports on the best employers within oil and gas from the Houston Chronicle, Glassdoor, Fortune and others. Assigning weighted point values to each ranking, we were able to isolate our own list of the 10 best employers within American oil for 2015.

10

Cheniere Energy

Cheniere Energy is no stranger to our rankings, having taken first place in both our lists of the largest liquefied natural gas (LNG) projects and the highest-paid CEOs in oil and gas. The project that earned them their spot in the former is the Sabine Pass LNG facility. Located in Cameron Parish, La., the facility is built to produce 18 million tonnes per annum of LNG, with expansions already planned to increase that to 27 million tonnes.

From an employment standpoint, Cheniere benefits from its size: large enough to afford good employee perks, but small enough

TOP 10 EMPLOYERS IN US OIL & GAS IN 2015

Employees looking to travel often have ample opportunties within oil and gas. (Anadarko Petroleum) Robert Lawler, CEO of Chesapeake Energy. for those individuals not to get lost (Chesapeake inEnergy the crowd.

From an insurance Corp.)

standpoint, Cheniere offers employees a range of medical, dental, vision, life and disability plans, in addition to paid medical leave. The company also offers dependent care accounts.

Cheniere also prides itself as a very open company where employees are free to voice both ideas and concerns, regardless of rank.

“If I had a great idea for a new business opportunity, I feel that if my boss liked it enough... I could go to Charif [Souki] and present it to him,” Oliver Tuckerman, director of strategy and analysis, told the Houston Chronicle, referencing the company’s CEO.

9

Noble Energy

Noble Energy has been in business now for more than 82 years. The company ranked among the Houston Chronicle’s best employers list in 2010, 2011, 2012 and 2015, while also earning that honor from the Denver Post in 2014 and The Oklahoman in 2013.

With a bevy of awards in-hand for its treatment of employees, the company has done a lot in recent years to keep improving.

The company’s site says of benefits, “Noble Energy is committed to offering a total rewards package including 21

TOP 10 compensation and benefits designed to meet employees’ needs and increase our ability to attract and retain a talented workforce.”

They seem to have been successful, with a range of employee testimonials online on both their website and third-party sites attesting to an excellent company culture and a superior range of employment perks. The company’s commitment to investing in employee training and education is also evident.

8

EP Energy

EP Energy has no shortage of glowing reviews online from employees past and present.

Operating primarily in the Eagle Ford, Altamont, Wolfcamp and Haynesville formations, the Robert Lawler, CEO of Chesapeake company is firmly entrenched in Energy.

(Chesapeake Energy Corp.) the ongoing “Shale Revolution.” EP Energy’s own stated company values align very well with the people-first model.

The company offers employees 22 August 2015

Employees largely appreciate employer-sponsored volunteering opportunities.

a reportedly robust range of medical, dental and vision options.

Employees are allowed 401(k) retirement savings plans that EP Energy matches dollar for dollar.

Among some of the less common benefits the company brings to the table are transportation subsidies, adoption assistance and education assistance plans.

7

Plains All American Pipeline

Plains All American Pipeline (Plains) is a company that prides itself on open, flowing communication at all levels within the organization.

TOP 10 EMPLOYERS IN US OIL & GAS IN 2015

“We go out of our way to make sure our employees know what our goals are and how we measure performance,” CEO Greg Armstrong told the Houston Chronicle. “When we bring them into the company, we share with them what it is we need them to do and how it relates to the rest of the company.”

While that sort of frank dialogue is surprisingly absent in most workplaces today, it forms the backbone of Plains’ business. High praise for that open communication pushed Plains to the second place spot in the Houston Chronicle’s top large companies to work for.

Plains also rotates employees through a number of roles over time within the company to allow them to expand their skills. Plains boasts more than 5,000 employees throughout the United States and Canada.

6

The company was ranked no. 1 in the Houston Chronicle’s best large companies to work for in Houston.

“If you ask most employees why they like working at Anadarko, they will most likely tell you it’s our values – that we don’t just talk about them, we live them,” EVP Chuck Meloy said on the company’s website. “Our values are a key reason why Anadarko and our employees are successful.”

Among a range of excellent

Anadarko Petroleum

Anadarko is no small name in the oil and gas industry. With strong Upstream and Midstream business segments, the company employs more than 6,000 people in four continents.

Anadarko employees help clean a creek bed.

(Anadarko Petroleum)

23

TOP 10 benefits, Anadarko offers up to $7,500 per year as tuition reimbursement to qualified employees looking to further their education.

5

EOG Resources

“Energy, opportunity and growth.”

Those are the words that form the name EOG Resources. But to this huge oil and gas company, the words represent more than just their name— they’re the values the company runs on.

Top 10 employers in US oil & gas in 2015

24 August 2015

“The basic philosophy is the value of the company is generated from the bottom up,” CEO Bill Thomas said to the Houston Chronicle. “It starts with that decentralized structure. It breaks the company down into smaller segments.”

The company employs 2,800 people worldwide, with each of them able to present ideas directly to Thomas himself.

With a strong focus on shale regions in the United States, EOG Resources produced over 186 million barrels of oil equivalent last year.

4

NuStar Energy A thriving Midstream business, NuStar Energy operates pipelines and terminal facilities that transport a range of both crude and refined oil products. Ranked the 18th best place to work in the world

by Fortune, employees rated the company 95 percent or better in the categories of challenging work, company atmosphere, The ConocoPhillips headquarters. rewards, personal pride, (ConocoPhillips) workplace communication and

TOP 10 EMPLOYERS IN US OIL & GAS IN 2015

manager quality.

With a range of ways day to day operations could go wrong without adequate safety measures in place, NuStar lives out their company principles— safety, philanthropy and loyalty.

As for the philanthropy part, NuStar allows employees to volunteer for a wide range of charities on company time.

3

Chevron

The sixth highest rated company on Glassdoor’s prestigious list of the top 50 companies to work for, Chevron manages to pull extremely high employee satisfaction numbers while being the largest company on this list.

To be exact, Glassdoor reports that from more than 850 reviews, Chevron has an employee rating of almost four and a half stars.

The company told Exploration World that they regularly participate in industry salary surveys to ensure their offerings are competitive. With a range of

job perks that include everything from medical and dental insurance to 401 (k) and retirement programs, the company also offer more unusual benefits, such as on-site gym memberships, college scholarships and up to $5,000 in adoption assistance.

2

Devon Energy

Devon Energy came in 38th in Fortune’s 100 best companies to work for in 2015 and eighth on their list of top 10 highest paying companies.

Founded in 1971, the company has more than 1,300 employees abroad and over 3,800 in the United States. According to Fortune, the company generated roughly $7.741 billion in revenue last year in the United States alone.

Devon offers employees access to on-site medical facilities and wellness centers. They have rooms with amenities for new mothers as well as on-site car wash and

25

TOP 10

dry-cleaning services. Like many of the companies on this list, they incentivize employees to volunteer.

However, unlike other companies where employees are allowed to volunteer on the clock, Devon rewards outside activities with free tickets to sports, arts and cultural events.

26

August 2015

1

Hilcorp Energy

This extremely well-reviewed exploration and production company placed 20th in Fortune’s best companies to work for in 2015, fifth in their list of highest paying companies and fifth in the Houston Chronicle’s top 10 midsize companies to work for in Houston.

TOP 10 EMPLOYERS IN US OIL & GAS IN 2015

The company offers a range of benefits, including scholarships of up to $20,000 for the children of employees who would otherwise not be able to attend college.

They offer an exchange program between the Houston and Alaskan offices intended to build camaraderie.

Much less typical for companies on this list, Hilcorp provides interest in the fields it buys to

employees, with opportunities for further buy-ins, ensuring that the company’s success means the employee’s success.

“Here, you have the chance to make a great amount of money if you do what you are told and if you invest in the company correctly,” one anonymous employee said, according to Fortune. “Your opinion is valued and you feel like you are part of something bigger.”

27

DRILLING FOR SAUDI OIL:

The Arabian Drilling Company Restructuring Plan Written by: John O’Hanlon Produced by: Heykel Ouni

29

A R A B I A N D R I L L I N G C O M PA N Y

The Arabian Drilling Company (ADC) is the workhorse of Saudi Arabia’s oil and gas industry: it is poised for a new era of modernisation, expansion, diversification and transformation driven by Technology and IT

30

August 2015

T

he Kingdom of Saudi Arabia is a forward looking country, which is rapidly expanding its economy, for example, by investing in ‘economic cities’ around the country, notably King Abdullah Economic City (KAEC) on its western, or Red Sea coast. Saudi Arabia is still heavily dependent on oil whereby 90 percent of its gross national product comes from the country’s oil reserves. The factories and service industries being developed at KAEC and elsewhere will, the Saudis hope, give the country a diversified economy fit for the long term. Extensions to the harbour will place KAEC among the top ten of the world’s largest container ports. Hence the $100 billion the state plans to spend over the next 25 years in creating this brand new megacity will come from one source - oil.

The “hit” that the Saudi economy is taking from low hydrocarbon prices over the last year has been enormous. By the middle of 2014 the country had foreign exchange reserves of $800 billion. It is estimated that if the price of crude stays low these the reserves could fall to $500 billion by 2016. Fortunately oil prices are already trending upwards and Saudi Arabia currently remains third in the world after China and Japan in terms of forex but it clearly needs to look after its one asset.

Oil exploration and extraction in Saudi Arabia is developed and managed by one single company, Saudi Aramco, which operates no fewer than 215 oil and gas rigs. Of these 32 are

E X P L O R AT I O N W O R L D

Above photo, left to right: Eng. Ali Ibrahim Al Naimi, Saudi minister of petroleum and mineral resourses. Mr. Saad Abdulla Saad, ADC Managing Director – Administration.

Mr. Mohammad Yousif Rafie, Chairman of the board of directors of ADC

owned and managed by the Arabian Drilling Company (ADC). Established in 1964 ADC is a joint venture between the Industrialization & Energy Services Company (TAQA) of Saudi Arabia which owns 51 percent and Services Petroliers Schlumberger, the global leader in oilfield services, which owns the remaining 49 percent. The post of Managing Director (MD) is shared by the partners. Saad Abdullah Al Saab, the MD for Administration, has been at ADC for 43 years, while Ihab Hussein Gueneid, a Schlumberger veteran with more than 30 years of experience in the oil industry who came into ADC in March 2014, is Operations Managing Director.

While operations are clearly the province of the latter and governance that of the former, “we

Under the auspices of His Excellency Eng. Ali Ibrahim Al Naimi, Saudi minister of petroleum and mineral recourses, the Arabian Drilling Company celebrated its 50th anniversary on Wednesday 2nd April 2014 at Al-Khobar.

w w w. a r a b d r i l l . c o m

31

WHERE YOU NEED US, WHEN YOU NEED US. When drillers invest in capital equipment, they require a dedicated service provider to support them for the life of their equipment. Cameron solves the unique service challenges of our drilling customers through an integrated, comprehensive, global approach. It’s what we call Full Life Cycle Support.

Integrated Approach to Engineering We provide thoughtful solutions to your challenges. Our technical experts collaborate with customers to design drilling equipment and packages tailored to specific customer applications.

Comprehensive Approach to Project Execution We deliver solutions in a timely manner. Our project managers coordinate the entire project from engineering through installation and commissioning.

Global, Holistic Approach to Optimizing the Life of Equipment We support your drilling operation through the life of the field. Our competent, trained technicians throughout the world provide 24/7 support of your operation for greater efficiencies and cost savings.

Our global approach means a responsibility of excellent service not only to our customers, but also to the communities we operate in. We employ and invest in people from local regions throughout the world so that host countries build the skills needed to continue their oil and gas development.

One example of this commitment is our Cameron Al-Rushaid joint venture facility in Saudi Arabia. With 15 years of experience supporting drilling operations in the Middle East, this facility offers repair, field service, and recertification capabilities for Cameron’s pressure control equipment. Focused on local employment and development, we are proud that more than half of this facility’s workforce comes from the local area.

Where you need us, when you need us. Trust Cameron’s Full Life Cycle Support for drilling operations. For more information, email drillinginfo@c-a-m.com.

AD00646DRL

SUPPLIER PROFILE

CAMERON

Cameron International Corporation (Cameron) provides flow equipment products, systems and services to global oil, gas, and process industries through three business segments: Drilling and Production Systems (DPS), Valves & Measurement (V&M), and Process Systems (PS). The DPS segment includes businesses that provide systems and equipment used to drill, control pressures, and direct flows of oil and gas wells. The V&M segment includes businesses that provide valves and measurement systems primarily used to control, direct, and measure the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines, and transmission systems to refineries, petrochemical plants, and industrial centers for processing. The PS segment includes standard and custom-engineered process packages for the separation and treatment of impurities in produced oil and gas, so they can meet product marketing and pipeline transmission requirements. The company works with drilling contractors, oil & gas producers, pipeline operators, and refiners.

A R A B I A N D R I L L I N G C O M PA N Y are two sides of the same coin” says Gueneid.

Building over 50 years of experience, ADC provides its clients with safe and cost-effective drilling services through the combination of a well-motivated workforce led by a dedicated management team with the latest modern equipment and pioneering technology. ADC has adopted a very strict and serious policy in regard to quality, health, safety and the environment (QHSE), to the extent that this policy is considered the soul of the company’s operations; onshore, offshore and in its facilities, he emphasises.

Back in 2014 ADC owned 20 rigs and employed 2,000 people. In little over a year that has increased to 32 rigs and 3,500 people.

“Our plan is to reach 60 offshore and landbased rigs by 2017,” he says. These are all

“Our plan is to reach 60 offshore and land-based rigs by 2017” – Mr. Ihab Hussein Gueneid - Managing Director - Operations

Mr. Ihab Hussein Gueneid Managing Director - Operations.

w w w. a r a b d r i l l . c o m

35

Proud Partners with Arabian Drilling Company At National Oilwell Varco we have the people, capabilities and vision to serve the needs of a challenging and evolving industry. With facilities strategically located in the Middle East, including Saudi Arabia, and all over the globe, we are here to help you succeed by providing local equipment and service requirements. We work side-by-side with Arabian Drilling Company as part of their strategic growth plan and look forward to continuing our partnership with them now and in the future.

Visit us at nov.com/land and contact us at rig@nov.com to maximize your success in this challenging industry.

Š 2015 National Oilwell Varco | All Rights Reserved

A R A B I A N D R I L L I N G C O M PA N Y new-build rigs and custom designed by top rig builders such as NOV, Drillmec, and Keppel.

This way they are guaranteed to meet the needs of ADC’s sole clients, Aramco and Al Khafji Joint Operations (KJO), Aramco’s joint venture with Kuwait Oil Company (KOC) in the shared territory between the two countries.

ADC has two offshore rigs and two multipurpose vessels, supported by a highly qualified and experienced staff with KJO in what is called the ‘divided’ region, the resources from which are shared equally between Kuwait and Saudi Arabia. As drilling activity picks up the company hopes to expand its footprint in Kuwait, and is starting to tender for direct contracts with KOC. It might not provide a huge level of diversification, but Ihab Gueneid is very keen indeed to give his personnel the opportunity to work in different international environments. Working with different clients and under varying conditions, he says, gives them a more rounded approach to the customer and extends their training opportunities and skills.

An element of diversification would enhance, not dilute, the level of service ADC offers to Aramco. One of ADC’s greatest strengths is the diversity of its workforce, where they recruit and train a multi-national workforce from more than 30 countries worldwide working together and sharing common objectives. Continuing commitment to hire, train and retain a skilled base of local talent was reflected in a Saudisation rate of 70 percent

ADC opperates 32 rigs and manages 3,500 people

w w w. a r a b d r i l l . c o m

37

A R A B I A N D R I L L I N G C O M PA N Y

Solids Control SHAKERS AND SCREENS

MONGOOSE PRO

The perfect fit Whatever your solids control needs, the M-I SWACO portfolio of shakers and screens offers the perfect combination to meet them.

Choose the dual-motion MONGOOSE PRO† shaker which is engineered for operational flexibility, or the MD-2† dual-deck shaker for high-capacity, high-efficiency operations. In advanced applications such as wellbore strengthening material recovery, or for offshore operations, the compact high-capacity MD-3† triple-deck shaker is the ideal choice.

Together with our patented DURAFLO† composite screen, our portfolio improves your solids control performance while reducing costs.

miswaco.com/solidscontrol 38 August 2015 † Mark of M-I L.L.C.

MD-2

MD-3

A R A B I A N D R I L L I N G C O M PA N Y considering a total workforce of 3,500 employees.

So Saudi Aramco shall always be the principal focus of ADC. Saudi Aramco has grown its fleet at an accelerated rate. In 2012 Aramco had 142 oil and gas rigs, today it has 215, and if hydrocarbon prices continue to recover this could go up to 250 by next year. Regionally the same thing is happening, Gueneid points out.

Kuwait already has more than 90, but plans to grow to 180. All this naturally depends on global oil prices, but it illustrates an exciting and dynamic market for an oilfield services company like Schlumberger, and a drilling contractor like ADC. Schlumberger’s involvement with ADC makes sense – after all, the oil or gas rig is the platform for all the services that bring value to the operation. But growth at ADC is not merely

215

The current number of operational oil and gas rigs that Arabian Drilling Company manages

ADC has set a financial target for 2017 to grow by more than $1.0 billion

w w w. a r a b d r i l l . c o m

39

WireCo WorldGroup速 is the world leader in manufacturing, engineering and distributing wire rope, assemblies, high tensile synthetic rope products and high-quality engineered products for oil and gas drilling, exploration, and subsea applications. Our products meet the most exacting standards and our technical support is the best in the industry. We have manufacturing and distribution locations strategically located throughout the world.

Union, a WireCo WorldGroup brand, is the premier wire rope for drilling applications. We understand the oilfield market. Utilizing the latest metallurgical practices and unique design capabilities enables us to continue to innovate and provide the most cost effective line of oilfield ropes in the world.

The World is Our Worksite. www.WireCoWorldGroup.com info@WireCoWorldGroup.com

A R A B I A N D R I L L I N G C O M PA N Y

a matter of increasing the rig count. In financial terms, the target for 2017 is to be more than $1.0 billion. A strategy of this order calls for a radical transformation internally. There is nothing wrong with the systems and structures ADC has been operating with to date, he hastens to assert, on the contrary this is a strong business with excellent governance standards, which will only serve to make the modernisation programme he is leading more robust. “Right now we are creating what we are calling the ‘New ADC’. This involves overhauling the company’s structure, modernising our business systems, and getting our various functions from HR, training, supply chain, HSE, Technical and finance right through to the project and operations departments to work seamlessly together.”

A naming ceremony was organised on 8th June 2013 in Singapore at the time of delivery of ArabDrill-50 (AD50) from Keppel FELS shipyard Singapore.

The ceremony was attended by Mr Mohamed Yousuf Rafie, Chairman, ADC’s Board of Directors and ADC Board Members.

w w w. a r a b d r i l l . c o m

41

OFSAT ARABIA (L.L.C.), is a company exclusively geared to serve the oil industry and has specialised over the past three decades, in providing onshore rig moving services and general off-road transportation services.

Email : Telephone : Facsimilie : P.O.Box 6878, P.O.Box 20074,

ofsatsa1@ofsatarabia.sa + 966 13 881 2111 + 966 13 881 1991 Dammam 31452, Kingdom of Saudi Arabia.

Al-Khobar 31952, Kingdom of Saudi Arabia.

A R A B I A N D R I L L I N G C O M PA N Y At the heart of this transformation is the creating of a new IT department, tasked with the implementation of a new Enterprise Resource Planning (ERP) system. Till now ADC has worked with a JD Edwards legacy ERP platform that acted as a repository for all the data the company needed to make strategic and day-today management systems. The problem was that obtaining the right information took time and involved a lot of manual input. Migrating to a new SAP system and replacing a number of different systems, some that were paper based, some that were automatically processed, with a single desktop system that will allow the company to streamline and speed up its operations.

For example, in the past, buying supplies and equipment was often a slow, complicated process

“Right now we are creating what wee call the new ADC ... overhauling the company’s structure” – Mr. Ihab Hussein Gueneid - Managing Director - Operations

ADC has set a financial target for 2017 to grow by more than $1.0 billion.

w w w. a r a b d r i l l . c o m

43

Risk. Reinsurance.

Human Resources.

Empower Results速 Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 69,000 colleagues worldwide, with 300 employees in 12 offices across the Middle East, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions.

For further information on our capabilities and to learn how we empower results for clients, please visit: aon.mediaroom.com.

T +966 11 44 22 700 Follow Aon on Twitter: https://twitter.com/Aon_plc Sign up for News Alerts: http://aon.mediaroom.com/index.php?s=58

A R A B I A N D R I L L I N G C O M PA N Y

that required a lot of people, a lot of paperwork, and many approvals. Under the new system employees can act as their own purchasing agents, placing orders directly through their PCs and receiving the goods they need much more quickly. At the same time, the use of a single system throughout the organisation enables it to consolidate purchases and gain greater volume discounts from its vendors.

The benefits of implementation of SAP will facilitate taking glitches out of the process and will be tangible, says Gueneid. “SAP will place as much integrated data, information and reporting at the fingertips of managers as they need to take decisions at the right time. In addition, SAP is becoming the industry standard throughout the oil and gas sector, which means that our business-

The benefits of implementation of SAP will facilitate taking glitches out of the process and will be tangible.

w w w. a r a b d r i l l . c o m

45

Bin Quraya has been servicing major clients such as Saudi Aramco since 1975, and subsequently extended its crane and heavy equipment rental activities to include SABIC, SCECO, international ďŹ rms such as Shell and Weatherford, as well as major private sector industries and utility companies throughout Saudi Arabia and the Middle East.

Heavy Equipment Rental | Pipeline Construction | Rig Move | Real Estate | & More

tel: +966 13 868 2044/55/66

A R A B I A N D R I L L I N G C O M PA N Y to-business communications will be a lot easier.”

The IT transformation has just been launched, having been approved by the board; over the next two years ADC will implement most of the SAP ERP modules and platforms, as it integrates and standardises all its legacy systems taking the company to the next level of technology leadership in the industry, he says. “What with training, and making sure the data is migrated without disrupting our day-to-day service and operations, we will be very busy – but it needs to be done if we are to grow as fast as we plan to.” It will, he concludes, change the entire application landscape of ADC. “SAP will enable us to make a lot of savings. The change will give us the ability to make decisions based on full data and sound information. It

‘SAP will enable us to make a lot of savings. The change will give us the ability to make decisions based on full data and sound information’ – Mr. Ihab Hussein Gueneid - Managing Director - Operations

w w w. a r a b d r i l l . c o m

47

A R A B I A N D R I L L I N G C O M PA N Y

Key Personnel Ihab Hussein Gueneid Managing Director – Operations Born on December 5, 1956, in Cairo, Egypt, Managing Director Operation Ihab Hussein Gueneid with a dual nationality, Ihab joined Schlumberger on April 1985 as Wire Line field engineer in China, Egypt, Turkey and Qatar.

In 1991, TLC/CTL activity started in the Gulf Area and he was given the opportunity to be the TLC/CTL specialist for the Gulf region based in Qatar. Two years later, Ihab Gueneid continued to work for Wireline as Field Service Manager, Location Manager and then Account Manager based in Abu-Dhabi.

Since 1998, he held variety of positions for the Gulf region, he was Wire Line & Testing Technical Manager, became Drilling and Measurement Operation Manager in 2000.

At 2001 he is assigned as the Oil Field services Marketing Manager for East Africa& East Mediterranean region based in his home town, Cairo. In 2003 he moved back to the Gulf as region OFS Marketing Manager for the next four years.

In mid-2007, Ihab Gueneid moved to Gatwick where he worked as Global Business Development Manager for Integrated Project Management HQ(IPM).

In early 2010, Schlumberger made a huge acquisition of SMITH International and Ihab Gueneid was assigned a challenged position as Area Vice President-Integration for the Middle East. After completing the SMITH International integration mission, he became Yemen OFS General Manager for a period of 2 years until May 2014 and since then he became Area Vice president and Managing Director-Operation for the Arabian Drilling Company, ADC, based in Saudi Arabia where he brought a wealth of experience in new technology, integrated solution and project management.

Ihab Gueneid graduated from Ain Shams University / Egypt in 1980 as Computer& Automatic control engineer, got his Master in Strategic management from France in 2003, and he is nearly finished a Petroleum Engineering Master from Heriot Watt [only theses missing], he has a degree in Project management, PMP, from Heriot watt-London in 2007 and He earn Project Management Expert title form the American Society of Project Management in 2014.

Married with 2 girls, he likes walking, drawing, reading Islamic history and spending time cooking with his family in Egypt.

48

August 2015

E X P L O R AT I O N W O R L D

will facilitate a programme of automation.�

The big difference he notices between running drilling company and oil services provider is that the drilling business is more capital intensive.

A land rig can cost $50 million, an offshore rig $300 million, and each rig needs between 80 and 110 people to run it. Down time is an anathema, and stacking, when rigs are idle for longer periods, waiting for a new contract is unthinkable. The good news is that firm contracts with Saudi Aramco and the expansion in the market keep ADC’s utilisation levels high.

ADC is headquartered at Khobar in conjunction, with the adjacent cities of Dammam and Dhahran form Saudi Arabia’s oil industry hub.

The client finds it advantageous to spread the rig contracts across a dozen drilling contractors.

A land rig can cost $50 million, an offshore rig $300 million, and each rig needs between 80 and 110 people to run it

w w w. a r a b d r i l l . c o m

49

A R A B I A N D R I L L I N G C O M PA N Y

Key Personnel Tawfeeq Al-Halal General Manager – Administration Born on June 12, 1976, in Al-Khobar, Saudi Arabia, General Manager Administration Tawfeeq Al-Halal joined Arabian Drilling Company (ADC) on March 1999 as Accountant.

With more than 15 years of experience in the Drilling industry, Tawfeeq Al-Halal was involved in various change initiatives and functions in ADC such as Finance, Auditing, Supply Chain, HR and Training. In 2001, Tawfeeq Al-Halal was given the opportunity to work with Schlumberger as Management Accountant in Saudi Arabia. Two years later, he began another challenge when he moved to ADC as Internal Auditor. In Early 2008, Tawfeeq Al-Halal was assigned a challenged position as Supply Chain Manager for a period of 3 years then Humane Resource Manager until January 2015 and since then he became General Manager Administration for ADC leading the structure changes of the company and introducing the latest business system to cope with the growth ADC plan.

Tawfeeq Al-Halal graduated from King Fahad University of Petroleum and Minerals, Saudi Arabia in December 1998 and got Certified as accountant public accountant from Saudi Organization for Certified Public Accountants (SOCPA) in 2002.

Abdullah Radhwan Deputy General Manager – Operations It all began when Abdulla Radwan joined Arabian Drilling Company in July 1992. His carrier started as a Trainee Engineer enrolled in the Technical Development Program and then promoted as an Operations Staff Engineer.

In 2000, through the special exposure program, Abdullah Radwan seconded to Schlumberger and started the challenged journey from Algeria, Dubai and finally Pakistan. Through the 4 and half years with Schlumberger, his skills in different managerial positions serving different clients such as BP, BHP, Anadarko, Shell and Sonatrach, made him look at the business from a different prospective.

A second journey started when Abdulla Radwan came back to Saudi Arabia with Khafji Joint Operations and then with Saudi Aramco. The challenges never stopped handling both Onshore and Offshore operations, HSE and Training Development.

Being exposed to Operations, HSE and Training Development he has shaped up his management skills dealing with challenging situations taking on spot decisions wisely serving company vision and mission.

Being currently the Deputy General Manager - Operations had changed his view on how drilling business should be run by working with a highly devoted strong team building Arabian Drilling Company future.

50

August 2015

E X P L O R AT I O N W O R L D

ADC’s market share is currently 14 percent, putting it at the top of the field. However most of the competition relies heavily on management and labour brought in from other countries whereas 70 percent of the employees of ADC, as the only truly Saudi drilling company, are Saudi nationals. Perhaps surprisingly Saudi representation is even stronger at management level than in operations. Apart from Gueneid’s co-MD Saad Saab, the operations, HR, supply chain and training managers are all Saudis. This gives ADC an edge when dealing with Aramco.

It is not just the language (most meetings in the sector are conducted in English) but more the understanding of the culture, and the fact that ADC staff are living locally and not always looking forward to their next ‘home’ leave!

This success is largely down to a determined recruitment and training programme over many years. The company’s training centre at Dhahran was one of the first in the sector and now is one of biggest drilling training centre in the country.

As well as drilling students learn the important disciplines of well control, the core business of

‘The company’s training centre at Dhahran was one of the first in the sector and is one of the biggest drilling training centre in the country’

Key Personnel Saad Saab Manager Director – Administration The Journey started on May 1972 when Saad Saab joined Arabian Drilling Company. He started his career from the rig floor level on Rig AD-01 as a Roustabout through the auspices of a special accelerated management development program. Hence throughout his career he worked his way up to various Managerial Positions in Operations, HSE, Supply Chain and Human Resources in conjunction with Training. During this time frame due to his exposure to various challenges and trials within the various organizational disciplines his management skills were broadened and honed. Because of his understanding and thorough knowledge of the core business from the ground up he was promoted to a Managing Director Administration for ADC in 1996. His team building and management skills contributed to ADC’s phenomenal growth from one drilling rig to operating 32 drilling and workover rigs, on land and offshore throughout the economic cycles of the oil industry

w w w. a r a b d r i l l . c o m

51

Global Best Practice

Local Management We are a leading supplier in KSA of catering and support services to the remote sector catering&services@saudiacatering.com www.saudiacatering.com

Global Solutions for the Oil & Gas Industry

ThyssenKrupp Materials Oil & Gas is a global network of specialists dedicated to securing supply for customers and sub-suppliers from the Oil and Gas industry. The range of products includes semi-finished products from corrosion resistant alloys, such as nickel alloys and stainless steel, and drilling tools.

Strong local presence in the core markets of the oil and gas production, and additional usage of the global network and infrastructure of the ThyssenKrupp Business Area Materials Services, as enabler to offer customers global supply chain solutions. Furthermore in house metallurgical resources collaborate closely with customers, to find individual technical solutions for future challenges.

Products and Services ❙ Beryllium Copper (BeCu) ❙ Drilling tools ❙ Precision processing capabilities ❙ Nickel alloys ❙ Stainless & low alloys ❙ Global supply chain solutions

Contacts: www.thyssenkrupp-materials-oil-gas.com oil-gas.materials@thyssenkrupp.com

ThyssenKrupp Materials Oil & Gas

A R A B I A N D R I L L I N G C O M PA N Y

ADC. Today, ADC‘s Dhahran Training Centre (DTC) is conducting more than 100 training courses. DTC has received accreditation for more than 30 training courses from IWCF, IADC and other international institutions such as OPITO. At the IADC and SPE-accredited facility, entry level students can learn the field skills they will need to do the job. A number of graduate students are recruited direct from King Fahd University of Petroleum and Minerals, also in Dhahran where in three years they complete an accelerated training programme which would take ten years for a candidate starting from scratch. Some of the more specialised training is delivered abroad, however basic skills, including ‘soft’ skills in administration, HR and the like, are all available in Dhahran.

A naming ceremony was organised on 8th June 2013 in Singapore at the time of delivery of ArabDrill-50 (AD50) from Keppel FELS shipyard Singapore.

The ceremony was attended by Mr Mohamed Yousuf Rafie, Chairman, ADC’s Board of Directors and ADC Board Members.

w w w. a r a b d r i l l . c o m

53

A R A B I A N D R I L L I N G C O M PA N Y

DTC has received accreditation for more than 30 training courses from IWCF, IADC and other international institutions such as OPITO

54

August 2015

Saudisation is one thing, but employing women is less of a national priority. Nevertheless Ihab Gueneid’s last job was in the conservative Yemen, where 60 percent of his office staff was females whose commitment and competence he particularly appreciated. “When I came here despite the high education level of Saudi women there were no women in the company: now we have 16 ladies working for us.” The first one is the MDs executive assistant, he says; the others all work very successfully in finance, supply chain and HR roles and the number is increasing.

Ihab will be retiring in few years from now, having laid the foundations for the next phase of one of Saudi Arabia’s most successful

E X P L O R AT I O N W O R L D

businesses. He concludes by acknowledging the debt he owes to the acuity of ADC’s chairman Mohammad Yousuf Rafie and his the wisdom and the intuition of his colleague Saad Saab, who has been the backbone of ADC since he joined it as a roustabout. Saab will also be retiring soon, leaving an organisation in good hands and ready to take on the challenges presented by its second half century, and a new era in the Middle East oil phenomenon. Ali Hamid Al-Ghamdi will replace Saad Saab as MD for administration .He is a deeply experienced man. He brings with him more than 30 years of experience in the Oil & Gas drilling industry from Schlumberger and Saudi Aramco.

Company Information INDUSTRY

Oil and Gas HEADQUARTERS

Kingdom of Saudi Arabia FOUNDED

1964 EMPLOYEES

3,500 PRODUCTS/ SERVICES

Drilling services

w w w. a r a b d r i l l . c o m

55

Danakali Ltd:

The continued advancemen the Colluli Potash Project

CEO and Managing Director Paul Donaldson discusses c progress and future plans.

Written by: Eric Harding Produced by: Vince Kielty Interviewed by: Paul Donald

nt of

current

dson

D A N A K A L I LT D

High purity potassium sulphate sample generated from Colluli pilot tests

F

ormerly South Boulder Mines, which was established in 2003, Danakali Limited is an ASXlisted resources company engaged in developing the world-class Colluli Potash Project in the Danakil region of East Africa. Containing over one billion tons of potassium-bearing salts, the 200-square kilometre resource is one of the largest and most accessible potash deposits in the world.

The project The Colluli Potash Project is whollyowned by the Colluli Mining Share Company, which is a 50/50 joint 58

August 2015

venture between South Boulder Mines and the Eritrean National Mining Company.

Since drilling commenced in 2010, South Boulder Mines has made significant strides in progressing the Colluli Potash Project, completing an economically robust prefeasibility study for the production of sulphate of potash (SOP) in February 2015.

A definitive feasibility study is now underway and expected to be completed in September 2015. “By working through a series of studies, and fully assessing the composition of the Colluli resource, we’ve been able to identify the best

MINING

Environmental Baseline Studies for the Colluli Project are well advanced

development path” said Donaldson.

“As the studies reach their conclusion, we will work with our Joint Venture partners and focus on securing the funding and human resource to successfully transition from explorer to operator,” said Donaldson.

substitutable agricultural commodity which provides potassium crop health fits into this category.

Colluli is a large resource, in close proximity to the coast, is highly accessible, is geographically favourable relative to key growth markets, and is capable of making The advantages a premium potash type with The world’s population is growing exceptional quality. Prefeasibility at approximately 80 million people studies indicate the lowest capital per annum. To feed an additional 2.3 intensity and operating costs billion people by 2050, agricultural relative to all advanced SOP yields are required to increase by projects globally. almost 70%. Fertiliser consumption Colluli is geographically advanced; must grow to meet this objective, located on the doorstep of the key and potash, an essential, nongrowth economies of the future. w w w. d a n a k a l i . c o m

59

Drilling Operations at the Colluli resource

D A N A K A L I LT D Potassium sulphate (SOP) is a geologically scarce resource with strong demand growth drivers, and a favourable agriculture commodity of the future.

Capital Intensity and Operating Costs Low capital intensity and operating costs are achieved as a result of the extraction of the potassium salts in solid form. All primary producers of SOP commence with potassium rich brine which requires large amounts of evaporation, and a large area of evaporation ponds to generate a harvest salt for further processing.

Colluli has the unique advantage of starting with salts in solid form, which minimises both footprint size and capital investment. The favourable combination of salts also gives a high potassium yield which lowers the overall operating costs.

MINING

also has huge upside potential with appreciable volumes of rocksalt, magnesium chloride and gypsum also present in the resource.

“The potassium salt diversity of the Colluli resource cannot be matched by any other potash basin in the world ,” Donaldson added. “We have a massive resource, the ability to diversify potash type, are close to the coast and key markets, and exposure to huge upside potential with a suite of non-potassium salts that have well established markets .”

“There are only three major primary producers in the world making potassium sulphate. The market dynamics are highly favorable for us.”

Location Being close to the coast makes the Colluli resource one of the most accessible potash deposits in the world. “Logistically, Colluli is simple relative to many planned greenfield Diversity and marketability developments, and the East Africa The diversity if potassium bearing location is highly advantageous salts within the resource allows Colluli relative to key potential markets in to produce a range of potash fertiliser the Middle East, India, East Asia and types including potassium sulphate, Africa” said Donaldson. potassium magnesium sulphate and potassium chloride. In addition, it w w w. d a n a k a l i . c o m

61

D A N A K A L I LT D

Samples for shipping to the Saskatchewan Research Council

Attention to Environment and CSR Assessing and mitigating the social and environmental impact, and being responsible corporate citizens arekey to developing sustainable operations. As Donaldson explained, “The Joint Venture team is very focussed on ensuring the project has a positive impact on local communities and respect for the environment. Eritrea places a high level of focus and importance on the environment, and we are working through a comprehensive social and environmental impact assessment as part of our definitive feasibility study 62

August 2015

and this will form the foundation of our social and environmental management plans. .”

One of the biggest aspects for the Colluli Potash Project going forward will be recruiting and incorporating local residents.

“The way we interact with the community is by informing them of the project itself and what it means in terms of equipment, people and changes in the local area. We also have an exploration camp set up in the area and the local people actually run the facility for us— cooking, cleaning and assisting in miscellaneous tasks,” Donaldson explained.

MINING

“In the future, as the project develops, we see those local communities as the priority recruiting area to upskill for jobs in the operation.

“There are mining operations ongoing in the area now so the skillset is building up in the country that we can draw from. Caterpillar is also set up in the country to do mobile production technician training so there are skills and trades within the country. We’ll prioritize jobs with the local community but for the professional roles we’ll have to go further abroad like South Africa and Europe for seasoned mining professionals.”

Company Information INDUSTRY

Mining HEADQUARTERS

West Perth, Western Australia, Australia FOUNDED

2003

Safety Taking safety into account is a priority for Danakali.

“Our safety approach is based on risk assessment and accurate planning procedures [that are considered] prior to task execution,” said Donaldson. “Fundamentally, everything we do has a risk-based approach. We go through an annual risk register process, which looks at corporate, safety, project and operational risks.

We prioritize those to ensure we have mitigation plans in place as needed.”

The Colluli Potash Project is by far one of the mining industry’s most comprehensive and exciting projects in the world.

“This is one of the best undeveloped potash and agrichemical resources in the world today, favorably positioned to supply the world’s fastest growing markets,” Donaldson concluded.

EMPLOYEES

10 PRODUCTS/ SERVICES Danakali (ASX:DNK) is an ASX listed company and 50 per cent owner of the Colluli Potash Project in Eritrea, East Africa. The company is currently developing the Colluli Project in partnership with the Eritrean National Mining Company (ENAMCO).

The project is located in the Danakil Depression region of Eritrea, and is ~75km from the Red Sea coast, making it one of the most accessible potash deposits globally.

Mineralisation within the Colluli resource commences at just 16m, making it the world’s shallowest known potash deposit. The resource is amenable to open pit mining, which allows higher overall resource recovery to be achieved, as it’s generally safer than underground mining and is highly advantageous for modular growth.

w w w. d a n a k a l i . c o m

63

o

Karoon Oil & Gas:

Promoting the sustainable use of natural resources Established company in the Brazilian oil industry invests heavily in five Santos Basin wells Written by Flavia Brancato | Produced by Danilo Stefanelli

65

KAROON OIL & GAS

U

Echidna-1 well test (May 2, 2015) / Photo: Rodrigo Hill/Amago Images

tilizing the most advanced technologies and conducting its operations responsibly under the highest environmental safety and preservation standards, Karoon Oil and Gas is an independent oil and gas exploration company owned by Karoon Gas Australia Ltd.— an Australian company that plays an important role in the oil and gas exploration industry.

The group’s experience is internationally recognized. Karoon discovered the renowned Poseidon gas field in offshore Western Australia, and now has important projects in South America—more precisely in Peru and in the Brazilian coast, at the Santos Basin, where the company will explore and develop its oil resources.

Through a diverse portfolio of high-potential exploration blocks, Karoon’s activities’ backbone is the strategic partnerships with the leading companies in the oil and gas industry.

SANTOS BASIN - BRAZIL Proven to be one of the most important oil discoveries of the past 30 years, the Santos Basin is one of the regions where Petrobras and its partners made the biggest discoveries, including the Tupi and Carioca fields, followed by Jupiter, Guará e Iara, each estimated to contain several billions of barrels.

Karoon has 65 percent of equity in five blocks of exploration in the basin. They are located 160 miles off the coast of Santa Catarina state,

66

August 2015

BRAZIL

“Finding oil in the Santos Basin and drilling six wells is one of our biggest success stories” – Tom Hosking, Karoon’s General Manager for South America Photo: Nilton Nascimento/Studio A3 Fotografias

in shallow water, very similar to the Piracucá, Tiro, Sidon and Caravela oil fields, as well as the Merluza gas field. According to Tom Hosking, Karoon’s General Manager for South America, “We have finished the second phase of our campaign in the Santos Basin, which began on November 2014 and during which we drilled three wells. The first, Kangaroo-2, confirmed a 250 meter gross, 135 meter net, oil column, with testing showing a 39 degree API,” he explains.

The positive production test results of a second exploration well, Echidna-1, confirmed an excellent quality in this Paleocene reservoir, bringing more confidence. “The Echidna discovery and production test represents a

Kangaroo-2 well test (January 1, 2015)

w w w. k a r o o n . c o m . b r

67

BRAZIL

significant milestone, moving Karoon a step closer to realizing the company’s ambitions of developing an integrated production hub in the Santos Basin,” asserts Hosking.

The president emphasizes the fact that well productivity is a key driver of commerciality for any oil project, especially when it is considered much better than expected in that region.

“Particularly in the current oil price environment, the result from the Echidna flow test is very encouraging. We are preparing to drill the first offshore well over 200 meters in water depth in 2016,” he says.

OTHER PROJECTS Within the permits there is potential for a variety of actions either in the pre-salt and post-salt section.

Echidna-1 well test (May 2, 2015) / Photo: Rodrigo Hill/Amago Images

SUPPLIER PROFILE QGOG CONSTELLATION QGOG Constellation is a market leading provider of offshore and onshore oil and gas contract drilling and FPSO services in Brazil through its subsidiary Queiroz Galvão Óleo e Gás (QGOG). With continuous operations since 1981, QGOG has built an unmatched reputation for excellence in offshore and onshore drilling services, obtaining ISO 9001, ISO 14001 and OHSAS 18001 certification for its quality management, environmental and safety records and systems.

Website: www.qgogconstellation.com

w w w. k a r o o n . c o m . b r

69

We’re making history by looking ahead.

For more than 75 years, Frank’s International has been making history in tubular oil and gas services by anticipating change and staying ahead of industry needs. Today, more than ever, our innovative technologies and proprietary tools, available in 60 countries on six continents, are helping customers meet new challenges and get the most from their energy assets.

Applying the latest generation techniques, Karoon was the first company to run 3D wide azimuth seismic acquisition in Brazil. Besides the five blocks on the Brazilian coast, the company acquired and took over the operations of the offshore Tumbes and onshore Marañon basins, in Peru. “We believe our operations in South America may come to up to 50% of our business,” estimates Hosking.

Block Z-38 located in the Tumbes Basin is approximately five times the size of the combined five blocks operated in Santos Basin. The block lies in water depths ranging from 300 meters along its eastern boundary to over 2500 meters in the west and it is located on the Peruvian coast, bordering Ecuador in its northern side.

Karoon’s Block 144, of approximately 6,838 km2, is located on the eastern side of the Andes mountain range within the onshore Marañon Basin. The Marañón Basin is the largest Peruvian sedimentary basin. It

Franks_HBJ ad_final_1219.indd 1

70

August 2015

12/19/14 12:57 PM

Photo: Rodrigo Hill/Amago Images

BRAZIL

Olinda Star – detail of the rescue boat and helicopter landing area

forms part of a much greater sub-Andean basin system that extends into the prolific Oriente Basin in Ecuador and the Putumayo Basin in Colombia.

ENVIROMENTAL COMMITMENT Karoon is committed to preserving the environment and the ecosystem of the regions where it operates. In order to fulfill its commitment to being an environmentally responsible company, Karoon meets the highest environmental standards and best practices in all of its operations.

The company understands that each country has its own requirements and procedures so as to

Karoon’s shorebase – tubes for the drilling campaign (May 2015) Photo: Rodrigo Hill/ Amago Images

w w w. k a r o o n . c o m . b r

71

Enabling global trade Clarksons Platou is the lead provider of Chartering, Sale and Purchase, Newbuilding and Demolition across all sectors of shipping and offshore.

The Group's financial division is engaged in providing debt and equity capital solutions as well as risk management strategies to clients, whilst also offering debt restructuring, corporate finance and equity research across global maritime, oil services and natural resources sectors.

All of this is underpinned by Clarksons Research, providing leading data and analysis to the shipping and offshore industries.

Clarksons Platou (Brasil) LTDA.

Av. Rio Branco 89, Sala 1601 | CEP 20.040-004 | Rio de Janeiro | Brazil + (55) 21 3923 8800 Africa | Asia | Australia | Europe | Middle East | North America | South America

www.clarksons.com

Globe_advert 297x210mm.indd 1

FluidControl.

Global presence, local expertise.

Our team in Rio de Janeiro would be pleased to tell you more about our activities in Brazil. To know more about NOV WellSite Services’ Solids Control and Waste Management solutions and to discuss your own project, contact us by phone +55 21 3575-0381 or +55 22 2141-9000.

nov.com/wellsite Š 2015 National Oilwell Varco | All Rights Reserved

17/06/2015 12:10

Photo: Rodrigo Hill/Amago Images

BRAZIL

Olinda Star control room

acquire its permits according to all the countries’ legislation. In a responsible way, it employs the latest technology as well as the highest standards to achieve safety and environmental conservation.

Additionally, Karoon is greatly involvement with community work. In some regions, Karoon’s staff develops relationships with the local population to learn about their most immediate needs, helping to improve the quality of life of these residents.

With that in mind, a series of programs have been put into effect. Even though performing charity was not the main objective, the projects had an important and positive impact in the northern coast fishing and Peruvian Amazon mestizo

“We believe our operations in South America may come to up to 50% of our business.”

– Tom Hosking, Karoon’s General Manager for South America

w w w. k a r o o n . c o m . b r

73

Echidna-1 well test (May 2, 2015). Photo: Rodrigo Hill/Amago Images

“The Echidna discovery and production test represent a significant milestone, moving Karoon a step closer to realizing the company’s ambitions of developing an integrated production hub in the Santos Basin” – Tom Hosking, Karoon’s General Manager for South America 74

August 2015

BRAZIL

Company Information NAME

Karoon Oil and Gas INDUSTRY

Oil and Gas HEADQUARTERS

Rio de Janeiro / RJ Brazil

Olinda Star drilling rig (May 2015).

Photo: Rodrigo Hill/Amago Images

E S TA B L I S H E D

communities.

Karoon has positive expectations for the future and has been working with governments to achieve sustainable development through the creation of strategic alliances which can be applied to different sectors including the economy, environment and community projects.

The upcoming years’ wishes are very simple.

“Get early production in our five operated blocks and increase our footprint in Brazil as a reputable operator,” concludes Hosking.

Still in the general manager’s words, “Finding oil in the Santos Basin and drilling six wells is one of our biggest success stories. The oil industry in Brazil is advanced, with interesting ongoing projects, future opportunities through government bids and proven basins,” he finishes.

2008 in Brazil PRODUCTS/ SERVICES

Production and exploration of Oil and Gas

w w w. k a r o o n . c o m . b r

75