Exploration World – January 2015

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JANUARY 2015

TOP 10 COUNTRIES EXPORTING OIL TO THE US

EY and EIA: Proved Reserves at Record Highs, Spending Keeps Growing

The Changing Landscape of Unconventional Reservoirs

EDITOR’S COMMENT

“ A P E S S I M I S T S E E S T H E difficulty in every opportunity; an optimist

sees the opportunity in every difficulty.” – Winston S. Churchill The oil and gas industry is in a time of flux. At the time of writing this, Brent Crude sat at $63.25—a far cry from the days of yester-June when higher costs were driving development around the world.

But then, this is an industry that has always been in perpetual change. It will heal itself. It will rebound. We will look back on 2014 as the year of plenty. And we will see the victories, not the failures.

This month, Exploration World takes a look at just a few ways the energy sector is changing.

First, we’ll look at the way the Shale Revolution is affecting countries abroad—particularly the countries that have long formed the backbone of American oil imports. Then, we examine reports from Ernst & Young and the U.S. Energy Information that show just how greatly the sector grew in 2013 and use how those trends can help us predict 2014 performance.

Finally, take a look at a piece contributed by Fuad Al Humoud, president and director of WoodGate Energy, in which he describes the evolving nature of coal-bed methane.

Thank you for reading and please enjoy.

Ian Hanner Editor ian.hanner@wdmgroup.com 3

CO CN OTNETN ETNST S FEATURES

6 Drilling

The Changing Landscape of Unconventional Reservoirs

14 Logistics

EY and EIA: Proved Reserves at Record Highs, Spending Keeps Growing

20 Top 10

NAMCOR Top 10 Countries Exporting Oil to the US

COMPANY PROFILES

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Technip Canada

CANADA 28 Technip Canada

AUSTRALIA 34 Baker Hughes Australia

42 Petroleum Exploration and Production Association of New Zealand

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Petroleum Exploration and P

4

January 2015

34 Baker Hughes Australia

Production Association of New Zealand

5

DRILLING

THE CHANGING UNCONVENTION

What could coal-bed m future’s en

W R I T T E N B Y: F U 6 January 2015

LANDSCAPE OF NAL RESERVOIRS

methane mean for the nergy mix?

UAD AL HUMOUD 7

DRILLING THE FOLLOWING ARTICLE was contributed by Fuad Al Humoud, president and director of WoodGate Energy. The views expressed herein represent his own.

Coal-bed methane (CBM) is an established, safe, clean and environmentally sound energy source. Readily available in coalrich nations such as the USA, due to being present wherever the fossil fuel is found, the unconventional gas has the potential to play a significant role in reducing dependence on imported energy sources; Moreover, innovative new drilling and completion technologies are offering up improved ways of extracting this gamechanging gas with minimal surface impact. The produced gas also contains neither hydrogen sulfide nor particulates, meaning that it is more environmentally friendly.

CBM is relatively low risk when it comes to exploration and development. The known geological location of coal deposits eliminates a significant portion of the cost and the risk associated with geologic evaluation. It also offers great opportunities to maximize the energy 8 January 2015

TH

output of the country’s coal seams.

It can even be extracted from mines where mining coal itself is no longer economically viable. Extracting CBM from coal seams enhances the safety of the relevant mine and – returning to the environmental agenda once more – contributes to the creation of ‘clean coal’.

The Drilling Dilemma Realizing the benefits of CBM is dependent on the ability to extract it economically. This has proved to be a frustrating challenge for oil and gas companies who have been aware of the benefits for some time, but have been unable to develop the technology and know-how needed for efficient CBM extraction.

One part of the challenge is that traditional vertical drilling techniques are not optimal when it comes to maximizing the potential of each seam. In conventional reservoirs, hydrocarbons are extracted from porous sandstone or limestone.

With CBM, drilling involves low permeability reservoirs.

Furthermore, in a conventional oil and/or gas well, peak production is achieved from the day production

HE CHANGING LANDSCAPE OF UNCONVENTIONAL RESERVOIRS

starts. Rates then decline over time as pressure depletes. With CBM, the formation water has to be produced to release the gas from the coal seam by lowering the bottom-hole pressure. Once the bottom-hole pressure is reduced, the gas is liberated from the coal and then gas starts to expand, eventually becoming a continuous flow.

Only then do wells achieve peak production. As a well transitions from primarily-water to primarily-gas, the well starts to surge. Surging of gas

tends to plug the down-hole pump with coal fines and sand. Plugging requires a clean-up job that has until recently made CBM extraction costly.

The second challenge is that there is no ‘one-size-fits-all’ option when it comes to drilling for CBM. Each coal seam will have gone through a different process of deposition, compaction and maturation. Even within an individual well, the different layers of coal, deposited within the same geologic time, will create different parameters that have to be factored in.

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DRILLING

Although assembly-line well designs can be used to reduce development costs, each project, each well and each coal seam requires some level of customization in drilling, completion and production designs.

The Right Direction Fortunately, new directional drilling and completion techniques overcome many of these challenges and projects developed with recent horizontal drilling technology have outperformed those developed with 10 January 2015

the older vertical well technology.

Directional drilling enables exploration companies to access a greater number of coal resources from fewer cost-effective drilling locations. In other words, a single horizontal well could exploit a single coal seam that might otherwise require five to 10 traditional vertical wells.

Secondly, horizontal drilling techniques make it possible to access bypassed layers of the coal from existing drilling locations, even after the primary targets have been

depleted. Once the deepest or thickest layer in the coal seam has been depleted, that zone can be plugged and operations moved up a layer to perforate the next zone to start the process again.

Therefore, each well can be used to access a far greater proportion of the seam, much more efficiently than would be the case using traditional vertical drilling. Once the transition has been made from between the de-watering period and peak production, the wells tend to have

a long production life and only mild decline rates. Directional wells that are already in production are expected to remain active for 10 to 20 years.

Cementing Not all directional techniques are created equal. Production techniques are equally important as drilling techniques and the exact technology used makes a difference between the success of one company and the failure of another.

The technology deployed needs to 11

DRILLING be able to handle the consequences of the production of water and the continuous use of pumps. Without modified gravel-pack completions, the debris from the surging wells can do serious damage to the down-hole pump. This can result in plugged pumps and even permanently damaged equipment. The expense of the clean-up required can have a severe impact on the bottom line.

Cementing techniques also have a direct impact on profitability. If the casing is not cemented properly, then it will produce water from aquifers above the coal and will require constant pumping. Instead, the objective is to isolate the coal being targeted from adjacent aquifers, which is achieved by ensuring that the right mixture of cement is used. For example, right-angle-set thixotropic cement improves zone isolation and cement bonds while reducing the amount of water in adjacent aquifers and gas-cut cement. Some areas require a light-weight cement to avoid losses to weak over-lying zones with low break-down pressures.

Toward Mainstream There is a growing knowledge base 12 January 2015

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that supports horizontal drilling techniques. The past few years have seen a great deal of experimentation, which has enabled firms to adapt the basic techniques to CBM and demonstrate that they are effective and economically viable. Experience has now shown that horizontal drilling techniques do not require prohibitively expensive and hard-tosource specialist parts or rare skill sets, eliminating one of the more common risks associated with new or

HE CHANGING LANDSCAPE OF UNCONVENTIONAL RESERVOIRS

alternative drilling techniques.

CBM fields are already in production, with more on the way as firms apply the fundamental techniques to new areas and adjust the finer details as necessary. Those production facilities have also highlighted one critical and often overlooked aspect in our need for energy sources: the impact on local landscapes. With its less obtrusive above ground presence, horizontal drilling within unconventional

reservoirs is more popular with local populations than unconventional reservoirs drilled with standard vertical drilling and completion technologies.

With no sign that the environmental or political agenda is going to shift any time soon, it appears that CBM is an energy source for our times.

Now that production, fracturing and directional drilling techniques have been mastered, it is hard not to be impressed by the potential of CBM.

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LOGISTICS

EY AN

PROVED RESERVES SPENDING KEE

How high can proved W R I T T E N B Y: I 14

January 2015

ND EIA:

S AT RECORD HIGHS, EPS GROWING

d reserves climb?

AN HANNER 15

LOGISTICS NEW REPORTS FROM both Ernst & Young’s (EY) oil and gas division and the U.S. Energy Information Administration (EIA) found that crude oil and natural gas proved reserves hit new records in 2013, while the former company indicated that capital expenditures outpaced both.

While EY’s report applies on a global scale, the EIA’s report highlights growth within the United States EY: 2014 Global Oil and Gas Reserves Study EY’s study found that in 2013, worldwide proved reserves of crude oil and natural gas increased by 11 and 3 percent, respectively. Over the same period of time, upstream capital expenditures increased by about 25 percent. According to EY, the study factored in exploration and production results of 75 companies between 2009 and 2013. EY stated upstream spending, “more than doubled over the period.”

“Continued strong upstream capital investment, despite current price volatility, demonstrates the industry’s confidence in the longterm opportunities,” Dale Nijoka, an EY O&G analyst, said. “However, we 16

January 2015

EY AND EIA: PROV

expect to see significant pressure to reduce rising production costs and more investment in technologies and techniques that increase efficiencies and drive down costs.”

Some key statistics stand out in the report. For starters, total worldwide capital expenditures in 2013 hovered around $678.862 billion. Capital expenditures in exploration increased by roughly 5.36 percent over 2012, driven largely by increased Petrobras spending in Brazil.

Development spending increased from $379.095 billion in 2012 to $411.167 billion—an 8.46 percent increase.

“On a regional basis, AsiaPacific saw the largest increase with development spending increasing by 15 [percent] (US$15.2 billion). Combined exploration and development spending by integrated companies increased by 12 [percent], compared to a 5 [percent] increase by the large independent companies,” EY said.

The most dramatically changed capital expenditure appears to be in the acquisition of proved properties, which increased from $26.775 billion in 2012 to $115.557—an increase of

E D R E S E R V E S AT R E C O R D H I G H S , S P E N D I N G K E E P S G R O W I N G

about 331.58 percent.

EIA: U.S. Crude Oil and Natural Gas Proved Reserves, 2013 The EIA’s study, entitled U.S. Crude Oil and Natural Gas Proved Reserves, 2013, found that proved reserves of

natural gas in the United States now rest at the highest level on record, while proved reserves of crude oil are the highest since 1975.

The EIA defines proved reserves as, “those volumes of oil and natural gas that geological and engineering data 17

LOGISTICS

EY AND EIA: PROV

Michael Schwartz

demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.�

According to the study, proved reserves of natural gas within the United States climbed to 354 trillion cubic feet in 2013—an increase of about 10 percent over the previous year. At the same time, proved 18

January 2015

reserves of crude oil climbed by 9 percent to settle at 36.5 billion barrels, making 2013 the fifth consecutive year of proved reserve growth.

While natural gas reached higher than 2011, the 31.3 trillion cubic foot increase in 2013 was tempered by a substantial decline in 2012 when the EIA made revisions to the amount of technically recoverable natural gas.

E D R E S E R V E S AT R E C O R D H I G H S , S P E N D I N G K E E P S G R O W I N G

“The increases in 2013 from net revisions to natural gas proved reserves did not completely offset the large declines of 2012, suggesting that operators are cautious about committing to drill natural gas prospects, or are diverting their attention to oil or liquids-rich prospects,” the report stated.

Shale gas in general made up 45 percent of the proved natural gas reserve in 2013 while also accounting for the largest share of gas production, according to the EIA. On oil, the EIA stated that the majority of the reserve growth can be

attributed to roughly 5 billion barrels of extensions to existing fields. In that same period of time, new field discoveries only accounted for about 190 million barrels worth of oil.

“As of [Dec. 31, 2013], tight oil plays accounted for 28 [percent] of all U.S. crude oil and lease condensate proved reserves. More than 95 [percent] of U.S. tight oil proved reserves in 2013 came from six tight oil plays.

The Bakken/Three Forks play in the Williston Basin regained its rank as the largest tight oil play in the United States (it was surpassed by the Eagle Ford play in 2012),” the EIA stated.

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TOP 10

Expo

The

Top 10 Countries orting Oil to the US

ese countries keep American lights on Written by: Ian Hanner 21

TOP 10

Largely publicized is the dramatic uptick in American oil and natural gas production since 2008 as a result of increased hydraulic fracturing and horizontal drilling techniques. Given this trend’s significant impact on the worldwide energy market, some analysts have begun referring to this development as the Shale Revolution.

The fact of the matter is that worldwide society hinges on the availability of fossil fuels and their byproducts. While other forms of energy, including renewables, are making progress toward filling significant portions of the global energy mix, crude oil today remains the most highly utilized energy source in the world.

Since the industrial revolution, technologies that depend on petroleum have dramatically increased the quality of life worldwide (though disproportionately in more developed nations). And those same nations that benefitted from resource availability and economic boom have, until fairly recently, shown consistent 22 January 2015

increase in crude oil consumption.

The U.S., for example, saw an increase in crude oil consumption of about 36.5 percent between 1983 and 2005 when the overall rate of consumption topped at about 20.902 million barrels per day, according to the U.S. Energy Information Administration (EIA).

Interestingly, the nation then exhibited a 9 percent decline in demand between 2005 and 2013 when rates were closer to 18.961 million barrels per day. During that same period of time, U.S. crude oil production spiked dramatically from about 5.182 million barrels per day in 2005 to 7.441 million in 2013.

One of the chief reasons why this trend is so important has more to do with other nations than the U.S. Even with lower consumption rates, the U.S. remains the world’s largest consumer of oil. To keep pace with an increase in demand and a decrease in production that spanned decades, complicated import-export alliances formed between the U.S. and a variety of nations that are now being forced to look for other buyers for at least a portion of their oil.

TOP 10 COUNTRIES EXPORTING OIL TO THE US

It’s difficult to frame this issue in a way that doesn’t leave plenty of variables out, so Exploration World look at a specific portion of the countries being affected. These are the countries that supplied the most oil to the U.S. in 2013 and their approximate change in U.S.bound exports between 2010 and 2013, according to data provided by the EIA. They are ranked based on the former data point.

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Angola – 73.445 million barrels, down 49.55 percent

Oil was first discovered in Angola in 1955 in the onshore Kwanza basin. In the time since, searches for crude have moved almost entirely offshore. Following the conclusion of a roughly 27-year-long civil war in 2002, Angola has shown signs of explosive development in its oil and gas industry with an average production increase of 15 percent annually between 2002 and 2008. Since oil accounted for nearly 80 percent

of the country’s total revenue in 2011, Angola was particularly affected by the decrease in U.S. imports following the fracking boom. Angola joined OPEC in 2007.

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Ecuador– 84.717 million barrels, up 10.76 percent

One of the few countries that actually saw an increase in oil exports to the U.S. since 2010, Ecuador is the smallest oil producing member of OPEC. According to the EIA, over one-third of all oil produced by Ecuador in 2012 (about 505,000 barrels per day) went to the U.S. Due to uncertain future demand from the U.S., Ecuador has joined a list of countries diversifying exports to other countries— predominantly China. Given a lack of refining infrastructure within the country, Ecuador has been forced to import refined crude oil products which in turn limits their net revenue from oil.

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TOP 10

8

Nigeria – 86.903 million barrels, down 76.41 percent

Nigeria is by a sizable margin the most prolific oil producing nation in Africa and holds the continent’s second largest proved reserves. According to the EIA, Nigeria’s oil production peaked in 2005 at roughly 2.44 million barrels per day before falling dramatically as militant insurgencies forced the temporary closure of multiple operations. The production rate has struggled to recover since.

Given a heavy economic reliance on oil revenue, Nigeria was one of the countries hardest hit by the surge in U.S. production rates.

This is made worse by the type of

A view of Nigeria’s capital, Lagos.

24 January 2015

oil that Nigeria typically produces— light sweet crude.

While considered a high quality oil, the majority of crude being produced in the U.S. is the same type, making demand for that particular type of oil even lower.

7

Kuwait – 115.743 million barrels, up 66.47 percent

According to data from OPEC and the International Monetary Fund (IMF), Kuwait owes almost 60 percent of its GDP and 94 percent of its export revenue to crude oil.

According to the EIA, “To diversify its oil-heavy economy, Kuwait has increased efforts to explore and develop its nonassociated natural gas fields, which currently make up a small portion of its natural gas production.” Kuwait distinguishes itself as not only one of the few countries that increased imports to the U.S. between 2010 and 2013, but by a significant margin.

TOP 10 COUNTRIES EXPORTING OIL TO THE US

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Iraq – 124.316 million barrels, down 17.26 percent

Iraq is second only to Saudi Arabia as the largest producer of crude oil in OPEC. In fact, Iraq has the fifth largest proved reserve of crude oil in the world after Saudi Arabia, Venezuela, Canada and Iran. According to the EIA, Iraq is one of the few places in the world that can boast that a majority of its known hydrocarbon resource potential remains untapped.

“Iraq has begun to develop its oil and natural gas reserves after years of sanctions and wars, but it will need to develop its infrastructure in order to reach its production potential,” the EIA said.

The tomb of Imam Hussain in Karbala, Iraq. (journalistanbulShutterstock.com)

According to that body, infrastructure restraints coupled with political infighting have seriously hampered a return to pre-war production rates. Though too early to tell, it seems a safe assumption that Iraq’s annual production rates, as well as the level of oil exported to the U.S., will show a significant decline in 2014 with the rise of the Islamic State throughout much of the country.

5

Colombia – 133.964 million barrels, up 9.17 percent

The only project on this list that is located near the arctic, the Yamal LNG project is the joint venture of Novatak (60 percent), Total (20 percent) and the China National Petroleum Corp. (20 percent). Located in the estuary of the Ob River near Russia’s Kara Sea, the project will ensure the year-round production and export of natural gas from the country’s large Arctic reserves. Utilizing over 200 wells, gas will be processed in three LNG trains with a combined capacity around 16.5 million 25

TOP 10 tonnes per annum. Since the river is frozen nine months out of the year, the partners will commission 16 icebreaker tankers dedicated to the Yamal facility.

4

Venezuela – 274.359 million barrels, down 33.50 percent

According to the EIA, Venezuela holds the second largest proved reserves of crude oil in the world after Saudi Arabia.

In 2012, the EIA put that number at approximately 211.2 billion barrels.

Venezuela has had a storied past few decades with the U.S. following a takeover by now deceased President Hugo Chavez whom upon taking office enacted a series of socialist reforms across a wide range of sectors, one of which being the oil industry, leading to some protests of gasoline retailers in the U.S. who purchased and sold Venezuelan oil.

3

Mexico – 309.402 million barrels, down 26.10 percent

Mexico has had a tough last few decades in oil and gas. This year, Mexico’s congress voted to overturn a 76-year-old constitutional amendment that granted exclusive oil and gas production rights to Pemex, Mexico’s state-owned energy company. By some estimates, Pemex alone accounts for nearly one-third of Mexico’s total tax revenue, leading in large part to the reforms as the company has shown progressively declining oil production in recent years. Despite the slump in production, Mexico still came in third in crude oil exports to the U.S. in 2013.

2

Saudi Arabia 479.193 million barrels, up 22.80 percent

Despite widely publicized stories that the U.S. has overtaken Saudi Arabia to become the largest producer of crude oil in the world, 26

January 2015

TOP 10 COUNTRIES EXPORTING OIL TO THE US

the International Energy Agency stated that discounting refinery gains, Saudi Arabia still holds that title. With 16 percent of the world’s total proved oil reserves, it’s very easy to understand why Saudi Arabia has long been a powerhouse in the oil industry.

Saudi Arabian oil imports have become something of a campaigning tool for pro-energy, American political candidates who advocate increased production efforts in the U.S. to limit dependence on foreign supply. Oil accounted for 85 percent of Saudi Arabia’s export revenue in 2013.

1

American crude oil demand brought on by the nation’s surge in production, Canada has launched several projects aimed at diversifying exports in the near future, including targeting developing markets in Asia, especially China.

The skyline of Calgary, Alberta.

This city serves as the largest Canadian hub for oil and gas.

Canada – 940.623 million barrels, up 31.29 percent

It would not be difficult to consider Canada one of America’s closest allies. With the third largest proved reserve of crude oil and fifth largest proved reserve of natural gas in the world, Canada is a net exporter of energy to the U.S. In 2013, nearly 97 percent of Canadian crude oil went to the U.S. In the face of slowly declining 27

Technip Canada

Technip Sees Strong Future in Eastern Canadat

With an emphasis on subsea developments, Technip is setting the bar in the region Written by: Ian Hanner Produced by: Bobby Meehan

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TECHNIP CANADA

Transfer of Flowline Reel to Technip Vessel Deep Pioneer

T

echnip Canada is applying world-class expertise in eastern Canada to develop top-notch subsea installations for oil and gas production.

As a worldwide oil and gas company, Technip is no stranger to highly complex tasks. Founded over 50 years ago, the company today has more than 40,000 employees from all corners of the Earth. Despite their seasoned background, Technip is relatively new in Canada.

Since 1997, Technip has maintained its Eastern Canada base in St. John’s, Newfoundland and Labrador and in 2009 a second Canadian office 30

January 2015

was established in Calgary, Alberta focusing their efforts within the onshore market.

“Subsea is a relatively new industry and even when I started, say in 2000, it was still maturing,” Muise said. “The Terra Nova project in eastern Canada, which I started on, was one of the most complex subsea projects ever at the time.

Since then, the technology has improved—the boats have gotten larger, the projects have gotten larger, the water depths have gotten deeper and the tie-back distance has gotten longer.”

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

Deep Pioneer Arrival into St. John’s Harbour

Technology Muise recalls that the Terra Nova project (located offshore St. John’s and owned by Suncor) sat in about 100 meters of water and the work was primarily carried out by divers.

To him, this represents how greatly the industry has evolved in the last decade or so, as today, the majority of offshore projects have moved into deeper waters with remote operated vehicles (ROVs) doing the majority of installation work.

“Technip is a company that puts a lot of time and effort into research and development,” he said. “We’re world leaders in flexible

pipe technology and we put a lot of focus in developing that product line for harsher environments, for deeper water and for more adverse operating conditions, [like] highpressure and high-temperature.”

According to Muise, flexible pipe technology is far from Technip’s only area of focused research.

The company has invested a good deal into Electrically Trace Heated Pipe-In-Pipe technology (ETH-PiP) h, which in essence is the direct heating of tieback lines along the seabed. With this technology, tiebacks can be developed in excess of 50 kilometers, allowing the

w w w. t e c h n i p . c o m / e n / e n t i t i e s / c a n a d a

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TECHNIP CANADA developer to tie numerous wells into one central production facility over a longer distance.

Overseeing connection of Umibical Weaklink System

Projects Muise is nothing if not confident in the opportunities availing themselves to Technip Canada. While reluctant to speak about future projects in the works, he said, “There’s a general increase in activity… in eastern Canada. I don’t really want to go into particular clients, but there are several large opportunities now for subsea developments in eastern Canada, which are very far along in their planning stage and it bodes well for our future.”

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

He added that the company had recently completed an expansion project for Husky Energy on their White Rose development. The front contract was executed in 2013 and included the supply and installation of gas injection flowlines, umbilicals and subsea structures. The second contract took place in 2014 and covered the supply and installation of flowlines and subsea structures to support oil production and water injection.

The Future Last year the Technip Group brought in about €10 billion in revenue, according to Muise. In the company’s third quarter 2014 results, revenue from subsea contracts alone totaled about €1.348 billion—an increase of 23.9 percent over the same period in 2013.

While Muise emphasized that it’s taken time for Technip Canada to get where it is now, he remains extremely optimistic about the future. As buzzing saws from a deserved office expansion threaten to drown out his voice, Muise adds, “It’s a bit of a transitional period right now in the industry, with the [falling] price of oil… but our outlook is still positive here and I think that’s worth mentioning.”

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Baker Hughes Australia Baker Hughes Australia Drives Forwa

Values Based on Integrity, Teamwork Learning and Courage

Baker Hughes believes performance excellence will driv that differentiate them from their competitors.

Written by: Baker Hughes Produced by: Wayne Masciotro

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BAKER HUGHES AUSTRALIA

Baker Hughes provided bifuel services to Cabot Oil and Gas in the Marcellus resultin

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top-tier oilfield service company with a century-long track record, Baker Hughes delivers solutions that help oil and gas operators make the most of their reservoirs.

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January 2015

Collaboration is the foundation on which we build our business. We listen to our clients to understand their unique challenges and then develop solutions designed to help manage operating expenses,

E X P L O R AT I O N

ng in cost savings and reduced environmental impact.

maximize reserve recovery, and boost overall return on investment throughout the life of an oil or gas asset.

With 60,000 employees in more than 80 countries, our

local geomarket teams work side by side with customers to engineer reliable applicationspecific products and services that create more value from the reservoir whether the application w w w. b a k e r h u g h e s . c o m

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BAKER HUGHES AUSTRALIA

The Peace Bridge was built to connect southern downtown Calgary to the northern community of Sunnyside.

is deepwater, unconventional hydrocarbons or production and water management.

Our history of technology innovation is a cornerstone of our success.

Local teams are supported by global centers of excellence where scientists push the boundaries of value38

January 2015

adding technology to find solutions for progressively more complex technical challenges.

At dedicated innovation centers, scientists conduct applied and game-changing critical research.

We collaborate with customers to jointly develop technology for

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“We continue our commitment to research and development in world-class technology and education centers.” specific industry needs at regional technology centers. Engineers and scientists at our product centers work on next-generation products and services for drilling and evaluation, completions and production, and fluids and chemicals.

At Baker Hughes, we are looking forward to the next 100 years of working side by side with our customers to continue expanding the limits of oil, gas and alternative energy drilling, completion and production through innovation problem solving.

Ground-Breaking Inventions That Revolutionized The Petroleum Industry For more than a century, innovation has been part of our DNA. Baker Hughes was formed in 1987 with the merger of Baker International and Hughes Tool Company - both founded over

100 years ago when R.C. Baker and Howard Hughes conceived ground-breaking inventions that revolutionized the fledging petroleum era. Since those earliest advancements, we’ve never stopped searching for solutions to conquer the next frontier.

In 1907, Reuben C. Baker developed a casing shoe that modernized cable tool drilling.

In 1909, Howard R. Hughes, Sr. introduced the first roller cutter bit that dramatically improved the rotary drilling process. Over the ensuing eight decades, Baker International and Hughes Tool Company continued to lead the industry with innovative products in well completions, drilling tools and related services.

During its history, Baker Hughes has acquired and integrated numerous oilfield pioneers including: Brown w w w. b a k e r h u g h e s . c o m

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Members from the Baker Hughes young professionals organization.

www.ascc.net.au

ASCC is the market leading distributor of solvents, chemicals and resins with proven performance for over 13 years of supply across Australia & New Zealand.

With the broadest reach of any chemical distributor in Australia and New Zealand, we cover industries such as Mining, Water Treatment, Oil & Gas, Industrial Cleaning, Agriculture and many other manufacturing sectors.

ASCC Australia PO Box 1683 Springwood QLD 4127, Australia T: +61 7 3209 7250 F: +61 7 3209 8829 ASCC New Zealand P O Box 8340 Symonds St. Auckland, New Zealand T: 0800 754 767 F: 0800 754 732

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where local teams work to understand customer needs and coordinate delivery of reliable, practical solutions that include the right Baker Hughes technologies for every project. The Baker Hughes regions are: North America; Latin America; Europe, Africa, Russia Caspian, and Middle East and Asia Pacific.

Centers Of Excellence We continue our commitment to research and development in world-class technology and education centers. Our technology and trained workforce ensure you extract more hydrocarbons from mature fields and discover new resources in frontier areas.

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A top-tier oilfield service company with a century-long track record, Baker Hughes delivers solutions that help oil and gas operators make the most of their reservoirs.

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Petroleum

Exploration and Production Associ New Zealand (PE

iation of

EPANZ)

P E PA N Z

Mt Taranaki

N

ew Zealand was born from the adventures of great explorers whose sense of imagination, curiosity and drive to find a better world to live in brought them to the shores of a land New Zealand’s first settlers, Maori, 44

January 2015

called ‘Aotearoa’ – the land of the long white cloud.

Today that same sense of adventure, that similar curiosity, has led to some of New Zealand’s greatest moments- Sir Edmund Hillary climbing Mt Everest, Sir

E X P L O R AT I O N

Ernest Rutherford splitting the atomwe even made jumping off buildings and bridges at a great height with only a piece of rubber attached to your feet a worldwide phenomenon.

And we are still pushing boundaries, innovating, and now our oil and gas industry is continuing our tradition of exploration by looking to discover what lies beneath our land and sea.

Our job as the Petroleum Exploration and Production Association (PEPANZ) is to represent the interests of the major companies that explore for and produce New Zealand’s oil and gas resources.

Since 1972, the Petroleum Exploration and Production Association NZ has worked with local and central governments to ensure that the country’s regulatory and commercial framework promotes investment and maximises the return to the New Zealand’s industry and community from developing the nation’s oil and gas resources.

We now currently represent companies that are responsible for 95% of petroleum production. In

Cameron Madgwick

addition, PEPANZ also represents more than 30 associate member companies that provide a wide range of goods and services to the industry.

As an association, PEPANZ aims to secure conditions that enable member companies to operate safely, sustainably and profitably.

PEPANZ believes that by developing and growing our oil and gas industry we can enrich New Zealand’s future. The future of our member companies, our communities and the economic future of our country.

As the representative of the oil and gas industry we look to w w w. p e p a n z . c o m

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P E PA N Z provide members with strong representation and advocacy, leadership for industry wide issues, while engaging openly and honestly with New Zealanders.

Over the past 3 years, New Zealand’s regulation and legislation concerning the oil and gas industry has undergone some major changes – from the way we offer permits to regulating our Exclusive Economic Zone.

Historically petroleum exploration permits in New Zealand were granted through a priority in time (PIT) system, where operators identified an area they wanted to explore and applied for a permit. Between 2003 and 2012 New Zealand ran a number of B lock Offers.

In 2012 the modern Block Offer tender process was introduced which improved New Zealand’s

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January 2015

profile among international investors and since its introduction companies like Anadarko, Statoil and Woodside have invested in New Zealand’s petroleum potential.

In New Zealand we have 15 times more area in our Exclusive Economic Zone (EEZ) below the sea compared to land.

Exploration of our offshore basins is essential, the largest discoveries we have made to date are off shore.

The Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (the EEZ Act) is a law that regulates activities taking place in New Zealand’s exclusive economic zone and continental shelf- this puts in place clear regulations and requirements for operators looking to explore our deep waters.

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As well as working to ensure both legislation and regulation governing the activities of our oil and gas industry serve to provide an industry friendly environment for operators and investors, PEPANZ prioritises building and maintaining important relationships with both the community and Government.

Engaging with communities is a priority for New Zealand’s oil and gas industry and we like to do so face to face. As an association we proactively look to engage with communities where the oil and gas sector is operating or expanding so communities feel confident in future projects that may take place. We also think it is important to engage with young Kiwis, and work hard to attend career days, support scholarships and help fund local science fairs. Engaging communities is about gaining a social licence to operate, with the goal of becoming part of the community you operate in.

We also believe in providing factual easily accessible information to both better inform people of activities and put to rest some mistruths peddled by industry opponents about

technologies we use to both explore and extract hydrocarbons.

Working constructively with the New Zealand government is another priority for our Association.

This year we announced that both PEPANZ and the Government would work together to hold a single industry event called “Advantage NZ: The Petroleum Summit”. Until now, both the Government and Industry have held separate conferences – but together we acknowledged the need for both partners to provide a well-rounded, all-encompassing event in New Zealand. As well as social, technical and international keynote presentations, the Government will also announce the 2015 Block offers.

The Summit will be held from 29-31 March in 2015: www. petroleumsummit.co.nz So I invite you all to become explorers – come to New Zealand, take a look – and not just at what is on the surface, like most things in our industry – what lies beneath is much more interesting.

Haere mai!

w w w. p e p a n z . c o m

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