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www.ngpowerenergyafrica.com • Q2 2010

Why the sands of the Sahara could challenge the dominance of oil and gas in Africa’s energy industry

WELL GROUNDED Shell’s Babs Omotowa keeps the interests of local communities at heart

WINDS OF CHANGE Why wind power makes sense, even in equatorial regions

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HEALTH AND SAFETY

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FROM THE EDITOR 5

Under the desert sun Could the solution to our energy woes lie in the shifting sands of the Sahara?

A

s our demand for power continues to soar, it becomes increasingly hard to ignore the fact that we need more renewable sources of energy. Wind, sun, hydro, biofuels – all are being eagerly exploited for their energy potential. Solar in particular, has been the focus of much hopeful speculation as to its ability to meet our future power needs.

One group of international companies thinks it has found the ideal solar solution in the Sahara desert. The Desertec Industrial Initiative GmbH was launched in July 2009 by the Desertec Foundation and reinsurance company Munich Re, with consortium members including Deutsche Bank and Siemens.

The initiative aims to create the conditions for an accelerated implementation of the Desertec concept in Europe, the Middle East and North Africa.

“Within six hours, deserts receive more energy from the sun than humankind consumes in a year” Gerhard Knies, CoFounder, Desertec Foundation (Page 30)

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According to the Foundation, the earth’s deserts are capable of supplying enough solar energy to meet humanity’s power needs for many years to come. It envisions a series of concentrating solar thermal power plants spread across the Sahara, using high voltage direct current transmission to bring power to MENA, and beyond, into Europe. In this way, the deserts would enable a secure, sufficient affordable, clean and inexhaustible energy delivery for a future world that needs to support 10 billion people.

There are drawbacks, including the relatively high cost of raw materials, the need to raise $US 555 billion to fund the initial stages of the project, and a lingering fear among local communities that this might be just another example of economic plundering by the former colonial powers.

Despite these hurdles, any project that promises to reduce our dependence on fossil fuels is worth keeping an eye on. For now, though, Africa is also helping to provide

the traditional sources of fuel that still play an important role in the energy mix. In this issue of Power & Energy, we talk to Shell’s Babs Omotowa about balancing the needs of a large multinational with those of the African communities in which it operates; Bob Lambert examines the need to diversify GB Petroleum’s portfolio in Tunisia and Morocco; and PETROCI’s Allangba Faustin looks at exploration and discovery in Cote d’lvoire.

With Desertec solar plants set to spring up across the continent, and both local and international companies continuing to pursue other sources of power, it seems that Africa is quite literally a hotspot that may hold the key to meeting our escalating demand for energy.

“Getting the infrastructure developed to be able to bring domestic gas and power to the people is the key thing for us in Africa” Babs Omotowa, Regional Vice President, Shell (Page 36)

“We’d like to drill in Kenya in early 2011, and then we have about eight wells to drill in other areas by the middle of 2012” Jeff Hume, CEO, Black Marlin Energy (Page 62)

Marie Shields, Editor

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CONTENTS 7

42

Time to shine The renewable energy initiative that could change the face of North Africa

Small ďŹ sh, big pond How small exploration companies are thriving in the shadows of their larger counterparts

30 36

Staying true to your roots Babs Omotowa balances Shell’s interests with those of local communities

86 Let there be light How two ambitious projects are bringing new hope to African households

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78

Cosmo Moyo

54

Up to go downstream

INDUSTRY INSIGHTS

DIAMOND SPONSOR

40 Tim Wells, SPX Dielectric 56 Adriaan Combrink, CK Aerial Surveys

50 Taking risks Hamed Ibrahim looks at how medium-sized companies are coping with the exploration race

62 Small is beautiful Jeff Hume outlines the positives of being a smaller operator in the exploration business

54 Up to go downstream Alastair Baumann unveils NAMCOR’s plans to secure downstream recognition

69 Help from home Jacob Saa Sandikie opens up on the intentions of the National Oil Company of Liberia

58 Combining forces How major companies are combining to take on bigger projects, according to Oladipo Faseemo

62

Small is beautiful

72 Exploration in peace William Ngeleja lifts the lid on Tanzania’s plans for the future of exploration

ASK THE EXPERTS 74 Philip Schalekamp, Trial Surveys Ltd 82 Richard Norsworthy, Polyguard Products 98 Markus Pam, Pamtronics Nigeria Ltd 120 David Omaghomi, HSE Management Ltd

EXECUTIVE INTERVIEWS 46 Jim Tait, FMC Technologies 78 Cosmo Moyo, Dynamic Security Technology Ltd 90 Idika David, Skylit Tech Ltd 100 Derek Nwafor, Solidlight Ltd

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76 Duct tales

IN THE BACK

Adam Wynne Hughes details the achievements and priorities of The International Pipeline and Offshore Contractors Association

80 The whole hog Lloyd Pirtle celebrates 20 years of the Pigging Products & Services Association

92 Saving up the sun The challenges facing the development of solar energy

102 Fair weather ahead

122 Summits 124 Global focus 126 On the shelf 128 Photo ďŹ nish Global focus

Why the forecast for wind energy is extremely good

110 Tapping into logistics Allangba Faustin deconstructs the logistical world of power generation

114 Pure and simple

118 In safe hands

Denmark’s Ambassador to South Africa promotes the deployment of low-emission technologies in Africa

Yassin Darwish looks at health and safety in the oil and gas industry

102

Fair weather ahead

40

Tim Wells

Combining forces

58

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UPFRONT 14

OIL, TOIL AND TROUBLE

Piracy is back.

And with oil supertankers seen as a prize catch for new-age pirates, can the industry ward off potential attacks or is it merely a sitting duck?

By Julian Rogers

In early January 2009, a bright red parcel attached to a small parachute glided gently toward the deck of a Saudi supertanker 500 miles off the Kenyan coast. Onboard the 330-metre long Sirius Star was a 23-man crew, a gang of armed Somali pirates and two million barrels of oil – a quarter of Saudi Arabia’s daily output. Inside the package was believed to be $3 million in high denomination bills – paid by oil giant Saudi Aramco to release the supertanker, owned by its shipping arm, and bring an end to a terrifying twomonth ordeal for the hostages.

The hijacking of the Sirius Star was the bandits’ biggest booty to date, and has fueled fears that other tankers could be snared by pirates in the future.

Indeed, most attacks are directed at

merchant ships connected in some way to the oil industry. The lion’s share have occurred in the Gulf of Aden off the Somali coast – one of the world’s most important shipping lanes with 20,000 vessels passing through annually. Kenya’s foreign minister claimed that up until November 2008 the pirates had received over US$150 million, which is being ploughed back into purchasing faster boats and increased hardware.

“The big ransom payments have fuelled attacks – there isn’t any real doubt about that,” suggests Roger Middleton, Consultant for the Africa Programme at Chatham House, formerly the Royal Institute of International Affairs. “As ransoms go up it becomes a more at-

tractive business for people, but it is a very difficult position for ship owners to be in because no-one wants to be the first not to pay a ransom and jeopardise the safety of their crew.”

Nick Davis, a former British army pilot and Chairman of the Merchant Maritime Warfare Centre (MMWC) – a not-for-profit organisation addressing ship security – is also of the opinion that payoffs are spiralling out of control.

“The pirates keep pushing for as much as they can get,” he says. “The industry, the insurance companies and the negotiation teams are letting the ransoms get out of hand, which is making the situation worse because the bigger the ransoms, the more people want to get involved. There is no shortage of manpower for the pirates to send out and

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UPFRONT 15 there will never be enough warships tims in less policed waters, namely to effectively prevent them.” the western Indian Ocean.

According to the International Davis says the crews who wind Chamber of Commerce’s up getting hijacked invariably have International Maritime Bureau little or no understanding of the (IMB), the number of attacks so far threats and have been given no this year off Somalia has far surtraining in how to defend their vespassed 2008’s total. Last year witsel. He is also concerned that ship nessed 111 incidents, with 42 owners are deploying a mishmash vessels hijacked. But by mid-May of of anti-piracy measures instead of this year 29 successful hijackings adopting a standardised approach. were recorded from 114 attempted “We have such a divide across the attacks. And while a total of 815 world,” he notes. “For instance, the crew members were taken hostage Americans are putting armed in 2008, this figure stood at 478 by guards on everything, which is not the middle of May. “These guys very helpful and will lead to all sorts have found a business model that of problems because the ultimate makes a lot more money than their authority on that ship should be the traditional fishing industry,” says master. He is still liable, irrespective Jeroen Meijer, a security consultant of who pulled the trigger and I for threat and safety advisors know a lot of masters who are very Control Risks. “Keeping uncomfortable with the that business model in arms issue and civilian tact is crucial, so guards.” they constantly So can piracy adapt their modus be stopped on land?

Crew members operandi. We saw Experts are in taken hostage them operating in agreement that the in 2008 the Gulf of Aden, off failed state of Somalia the coast of Mogadishu is a perfect breeding [Somalia’s capital] and we ground for piracy, while a lack have seen them going into the Red of law means the pirates can hijack Sea and Omani waters. So they are vessels with impunity. Piracy first constantly adapting where they opbecame a problem in the region at erate to minimise the threat to their the outbreak of Somalia’s civil war operations.” in the early 1990s when the governA knock-on effect of the pirament was overthrown, and a concy has been a sharp rise in shipping tinuing lawless atmosphere in the costs, with many firms choosing to country has magnified the probavoid the Suez Canal and navigate lem. “Somalia is a completely failed their vessels thousands of miles furstate with no political structure to ther via South Africa’s Cape of speak of and no law enforcement Good Hope. On top of this, insurcapability so these gangs operate ance costs have soared by as much with total impunity,” says Meijer. as 100 percent. And while there are “Those who live on the coast see the more than a dozen naval forces, as wealth of the world sailing by everypart of a multinational coalition ofday; in an extremely benign marfensive, flexing their military musitime environment where you can cle and patrolling the Gulf of Aden operate a small boat for very little in a bid to thwart the pirates, this cost, it’s too tempting to find a asymmetrical warfare has just Kalashnikov and an RPG and hiforced the pirates to scour for vicjack the riches on your doorstep.”

NEWS IN PICTURES

Libyan Oil Minister Shukri Ghanem speaks during an interview with Agence France-Presse in Tripoli on April 9, 2010. Ghanem said his country has allocated “US15 billion dollars for upgrading its oil sector” to increase Libya’s production capacity which is currently close to two million barrels per day.

815

Nigerian youths protest on March 16, 2010 in Abuja against the state of the nation, lack of security and electricity as well as for electoral reform. The electoral agency said on March 16 that the date of Nigeria's presidential and legislative elections next year would depend on the outcome of internationally demanded reforms of the voting system.

An aerial view of Imboulou hydropower plant under construction in Congo. Built for a total cost of US$300 million, the plant will provide 600GWh of energy every year once completed.

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UPFRONT 16

Diversifying for the

future BP Group CEO Tony Hayward examines the importance of a diversified energy mix to ensuring the world’s energy security.

E

nergy security remains at the top of the global political and economic agenda. It was a key concern during the big swings in energy markets of the past two years and a little over a month ago it was at the heart of the debate in Copenhagen.

The need to balance energy security, jobs and economic development while addressing the problem of climate change all contributed to the challenge politicians faced in Copenhagen. And that challenge means that energy security will dominate politics and policy for the next 12 months and considerably beyond.

So what delivers energy security? I believe the key factors are diversity, competition and efficiency: accessing the widest range of energy sources – through diversity; bringing out the best ways of finding, producing and distributing energy through competition; and making the most of each unit of energy – through efficiency.

There is actually nothing new about these factors. But we must not underestimate their significance. Reliable and affordable supplies of hydrocarbon energy were taken for granted through much of the 20th century and laid the foundation for the world’s extraordinary economic progress. When concerns arose, it tended to be at times of war or turbulence, notably in the Middle East, or, closer to home, with industrial action.

What’s different now is that energy security has become a defining issue for the 21st century, as one element in a complex energy challenge with strategic, eco-

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UPFRONT 17 nomic and environmental dimensions. To meet this challenge, I believe we need to apply some basic business principles. We must be clear about where we are and where we want to go – the starting point and the destination. We need a clear regulatory framework to enable business to invest with confidence to build such a future. And we need to set out practical pathways towards the destination.

A diverse energy mix Let me look first at the journey that lies ahead. BP’s projections suggest we’ll need around 45 percent more energy in 2030 than we consume today – and double what we consume today by 2050. That’s going to require investment of more than US$1 trillion a year – every year.

How do we meet that demand sustainably? Certainly there will need to be changes in the energy mix. We need more low-carbon energy. And we need to use energy more efficiently. But the main point is that there is no magic solution, and we will need a wide mix of energy types in 20 years time.

The share of renewable energy will certainly increase, but we have to be realistic about its contribution. As of today, all of the world's wind, solar, wave, tide and geothermal energy accounts for around one percent of total consumption. Given the practical challenges of scaling up such technologies, the International Energy Agency can’t see them accounting for much more than five percent of consumption in 2030, even with aggressive policy support.

Undoubtedly nuclear energy and biofuels will play a part, and by 2030 carbon capture technology could be deployed at scale. But there will still be a major role for hydrocarbons. Indeed the IEA analysis indicates that even in a low carbon scenario predicated on keeping the atmospheric concentration of CO2 to less than 450ppm, hydrocarbons will remain dominant.

The good news is that we have enough reserves of oil and natural gas to last for decades, and reserve estimates are rising as we develop ways of unlocking both conventional and unconventional resources. Our analysis indicates that the world has sufficient proved reserves for over 40 years of oil and 60 years of gas at today’s consumption rates.

The energy of the future will be more than oil. But oil will still be a major part of it. The critical point is that it will be a diverse mix. In BP our own portfolio reflects this diversity. For example to date, in our low carbon energy business we have invested over $4 billion and are continuing to invest more than $1bn a year. In another we are planning to invest in Canadian heavy oil – a relatively carbon intensive activity, but one that has a major role in providing access to secure energy for North America. We believe both will be part of a broad and sustainable mix that embraces oil, gas, coal and renewables, producing and using them all with innovation and efficiency.

First, with continuing pressure on supply, it’s important to develop energy resources as efficiently as possible – I believe that means opening them up to competition. Restrictions on market forces are key when it comes to unlocking the resources we need.

So competition has a big role to play. Opening access to a range of potential operators encourages the most efficient solutions, and often involves partnerships that provide new combinations of skills. Iraq is a very good example. BP is teaming up there with CNPC of China and Iraq’s South Oil Company to drive a major investment programme that will nearly triple production from the super-giant Rumaila field..

The second area where policy is critical is the question of climate change. It is, of course, central to sustainable energy security that we find a clear way forward on this issue. BP has been calling for action for at least 12 years – preferably via creating a price for carbon through market mechanisms. Again this is because we believe competition will encourage the most efficient ways of cutting emissions.

Those aren’t just words. At BP we factor a carbon cost into both our investment choices and the engineering design of new projects. This is our way of ensuring that our investments are competitive not only in

“The energy of the future will be more than oil. But oil will still be a major part of it. The critical point is that it will be a diverse mix”

Security architecture Building such a future demands action both from businesses and policymakers. Business can provide the building blocks and tools – but we need to work within the architecture provided by governments. There are two ways in which the current energy security architecture can be strengthened.

today’s world but in a future where carbon has a more robust price.

My third reason for not joining the postCopenhagen detractors is this: I have a feeling it may mark the emergence of greater realism in the climate debate. There is a dawning realisation that we can’t afford to be paralysed by the absence of agreed targets for

2030 or 2050. Individual governments need to act regardless of whether there is a global treaty.

The crux of the matter is this. If policymakers encourage investment – whether in low-carbon energy or fossil fuels – then investment will flow – but if it doesn’t then the risk is that spare capacity will dwindle and we will return to the price volatility we saw in 2008.

The complexity and scale of the task make it especially important that those involved try wherever possible to respect three principles: First, efficiency - the best way to more secure energy is saving energy. Governments should seek the most efficient approaches that impose the lowest overall costs on society.

Second, diversity – there is no one, silver-bullet solution or technology that will deliver a secure energy future. A diverse mix of resources and technologies will be needed. Third, competition – efficient markets and market mechanisms will provide the most effective way to produce and distribute energy and to induce change.

The consequences of failure would be serious. Without a credible and enduring framework, it will be impossible for industry to invest at the scale necessary to maintain and enhance our energy supply. As well as ensuring that we don't leave future generations with the prospect of rising sea levels, we need to ensure that we keep the lights on in the next decade. If we can meet both these challenges, as I believe we can, then we will truly have delivered energy security. n

Excerpted from a speech given to the London Business School in February 2010. © BP Group.

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UPFRONT 18

MANAGE YOUR ENERGY Google, Hewlett-Packard, General Electric and 44 other companies and organisations are putting pressure on President Obama to grant people the power to “monitor and manage their energy consumption”, underlining how important smart grid technology is considered to be. In September last year, IDC Energy Insights conducted an assessment of the utilities that were leading the pack towards smart grid and smart meter deployment. Sempra Energy, Austin Energy, Edison International, Oncor, PG&E Corporation and CenterPoint Energy, all of whom are based in either California or Texas, topped the list of utilities out in front. On top of this, National Grid, the nation’s secondlargest utility, has applied to the US Department of Energy for US$200 million in stimulus funding to develop an ‘end-to-end’ smart grid deployment that will include approximately 200,000 customers in New York, Massachusetts and Rhode Island.

GROWING GHANA Thanks to investments in the nation’s oil industry, Ghana’s economy is expected to grow between four and five percent, that’s according to an announcement by the International Monetary Fund (IMF). Peter Allum, the IMF's mission chief to the West African country, said: “The IMF estimates that the economy expanded by three to five percent in 2009, notwithstanding the global financial crisis, as cocoa and gold exports remained strong. This is down from 7.3 percent in 2008, a year of highly expansionary fiscal policies that destabilised the economy.” Business Week reports that Ghana will become an oil exporter in the fourth quarter when the offshore Jubilee field is expected to start production. Jubilee has potential resources of 1.8 billion barrels, according to London-based Tullow Oil Plc, its operator. Initial production is estimated at 120,000 barrels a day.

COMPLETELY RENEWABLE According to a new study by international consulting firm Pricewaterhouse Coopers, Europe and North Africa could consume 100 percent of their energy from renewable sources by the year 2050, but this all hinges on the formation of a single European energy market that can combine with a similar universal, standards-based energy market in North Africa. Updating the regional power system to a shared system based on 100 percent renewable energy will serve to achieve two major goals for both Europe and North Africa – energy security and the decarbonisation of power generation technology. Getting all our power from clean technology would also put to rest concerns over current energy supplies and contribute to reducing ‘energy poverty’ in parts of eastern Europe and North Africa.

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UPFRONT 19

SOLAR WATER Saudi Arabia has partnered with IT giant IBM to build a solar powered desalination power plant in a bid to cut energy costs. The plant will be built in the north eastern city of Al Khafji by IBM in partnership with the King Abdulaziz City for Science and Technology. It will be powered by ultra-high concentrator photovoltaic (UHCPV) technology and the plan is for it to provide 30,000 cubic metres of water per day for over 100,000 people. Currently, thermal technology and reverse osmosis are the most commonly used desalination methods used in Saudi Arabia. Dr Turki Al Saud, Vice President for research institutes at KACST, told Arabian Business.com: “Saudi Arabia is the largest producer of desalinated water in the world and we continue to invest in new ways of making access to fresh water more affordable.”

GREENER JOBS Ontario, Canada is investing C$9 billion in the country’s renewable energy sector. Around 20,000 jobs will be created when the government signs 184 contracts for renewable energy projects. The initiative is the largest of its kind in Canadian history to date and will increase energy capacity in Ontario by 2.5 GW. It was launched as part of the government’s Open Ontario Plan, which aims to provide a stable price for clean, renewable energy so developers will invest and create 50,000 jobs. Premier Dalton McGuinty, said: “We have practical, aggressive policies to secure green energy generation, research and manufacturing, which will create good jobs in a growing industry.”

A GROWING CAPACITY A report by the American Wind Energy Association (AWEA) has revealed that the US wind energy sector employs 85,000 people. The report claims that the wind energy industry in the US is continuing to expand, having installed 10 GW of additional wind generating capacity last year – the largest growth in capacity to date.

Denise Bode of AWEA, said: “Jobs, business opportunities, clean air, energy security – wind power is delivering today on all those fronts for Americans. Our annual report documents an industry hard at work and on the verge of explosive growth if the right policies are put in place.”

The AWEA advocates the creation of a national Renewable Energy Standard to provide long-term security for companies planning to invest in the sector.

UPFRONT P&E AFRICA_25 June 13/04/2010 08:50 Page 20

UPFRONT 20 EPOXY GROUT HELPS SUGAR MILL GET BACK IN ACTION

A STEP TOO FAR The Michigan Economic Development Corporation (MEDC) was left rather red-faced last month as it was revealed that they had granted a US$9.1 million state tax break to the creator of a renewable energy company, RASCO, after claims that he would send renewable energy equipment to Africa – only to find out that he was sentenced to serve time in prison for embezzlement and bank fraud charges.

Richard Short claimed his company would hire 765 people within five years to convert a former Flint chassis plant to build and ship renewable energy and sanitation equipment to African villages – a welcome development for Michigan as it was one of the hardest hit states in the US after the economic storm. Greg Main, MEDC President and CEO, said: “Needless to say we are embarrassed. We work hard to grow, expand and attract business in Michigan and are proud of our achievements. We are taking the necessary steps to ensure situations such as this do not happen in the future.”

Wood energy constitutes

90% of household energy use in Nigeria Source: allAfrica.com

Epoxy grouts are well known in the many cheap cement grouts originally used to inindustrial plants in the USA, Japan, South East stall the equipment. Three more visits in Asia and several countries in Europe. The July, September and October resulted in power industry is a steady customer, as are the repairs being effected to 10 further items oil and gas industries, petrochemical plants, of machinery. The cane shredder was resteel rolling mills, and so on. However, there grouted, and a new electric motor drive are still industries that have not heard the installed, aligned and grouted. Six word. Machines are machines are sugar mill gearbox beams were The first machines, and their problems aligned and grouted as recontract can be easily seen, regardless quired. concerned an of the industry.

A six MW steam tur8.0 MW steam turbine generator A recently completbine generator was rethat had ed series of contracts for aligned, and the experienced a large sugar mill in West reconditioned gearbox bad vibration problems Africa highlighted the situgrouted in place. An ID fan ation. The first contract conin the boiler plant, which had cerned an 8.0 MW steam turbine been vibrating badly, was repaired by generator that had experienced bad vibraextensive rebuilding and re-grouting of tion problems, particularly in the gearthe foundation. The plant was then ready box. While this problem was being to start the new cane-crushing season on addressed in January 2009, a number of schedule in mid-November. Alphatec other potential and actual problems Engineering supplies materials and instalaround the factory were identified. lation services to all types of industry The customer had no knowledge of throughout Europe, North and West epoxy grouts as a specific material, and Africa, and the Middle East. was surprised to hear that many of his misalignment and vibration problems See website www.alphatec-engineering.com for more details. stemmed directly from the failure of

UPFRONT P&E AFRICA_25 June 13/04/2010 08:50 Page 21

UPFRONT 21

NORTH WEST CHILDREN JOIN FIGHT AGAINST CLIMATE CHANGE BY AMINATEH NKEMNGU Primary school pupils in the North West Region have been actively engaged in actions that will eventually lead to the reversal of the changing climate that is adversely affecting the Region. The action is a joint initiative of the Centre For Appropriate Technology (CAT-Cameroon), a Bamenda-based NGO in partnership with Senior Expert Service (SeS), Bonn, Germany and the Society for the advancement of Culture (DGFK), Berlin Germany.

Launching the campaign dubbed “mind building and technology” in Bamenda on Friday 12th 2010, the representatives of SES and DGFK, Nobert Pintsch, Renate Perner and Lutz Fluugge as well as the Coordinator of CAT-Cameroon, Victor Njini, explained that the initiative is aimed at building the minds of children towards climate by educating them soon on some of the minor activities that affect the climate. By doing this it is hoped that they will in turn

influence their parents to take up environmentally friendly options while carrying out their activities. This is particularly important because the children need to take part in actually securing a safe planet and guaranteeing the future that belongs to them.

As part of the activities to mark the day, the children were schooled on the functioning of climate friendly apparatus like the solar cooker and the small biogas unit amongst others. Plays explaining the interaction of animals with their environment, games and learning material were also used to illustrate the important role children can play in combating climate change.

Speaking to Eden on the sidelines of the workshop, the SES and DGFK officials stated that the aim of the two institutions is to build capacities of people including children

Children are the future of climate change

Egypt aims to generate

12% of its power from wind turbines by 2020 Source: Egyptian Wind Energy Association

in learning how the use of some technology can be better than the others. For the past nine years, they continued, SES and DGFK have been working with CAT to make appropriate technology available to people in the North West as a means of discouraging the use of fuel wood and the practice of other

activities that exacerbate climate change.

During these nine years, technology such as indirect solar agricultural driers, small biogas units, cooler water heaters, solar cookers and solar oven windmills amongst others have been successfully produced by CAT and are already in use. One of the strategies is to bring children in to begin learning these activities that are aimed at combating climate change.

The children were drawn from primary schools within the Bamenda municipality.

RUNNING FOR WATER Multi-GRAMMY winning performers Melissa Etheridge and Rob Thomas are getting ready to run the biggest races of their lives in a bid to help raise money for the largest global water initiative in history – the Dow Live Earth Run. A series of six kilometre runs, based on the average distance many women and children walk every day to get water, will culminate with water education lessons and live music performances from the pair. Funds raised from the 100 events across the world will benefit Global Water Challenge, a coalition of non-profit organisations working to bring clean, safe drinking water to millions of people.

UPFRONT P&E AFRICA_25 June 13/04/2010 08:50 Page 22

UPFRONT 22 WIND POWER: ADVANTAGES AND DISADVANTAGES

Advantages

Disadvantages

Clean energy

Unreliability The main issue concerned with power from the wind, is that of its unrealiability. Wind strength cannot be controlled and in some areas it is just not a viable source of power.

Obtaining energy from the wind emits zero emissons into the atmosphere, providing a clean alternative to fossil fuels, which contribute significantly to dangerously high levels of atmospheric CO2.

Lower electricity putput

Less space is needed

Wind power generates significantly less electricity than its fossil fuel equivalent, meaning more turbines are required to generate the same amount of power. Wind turbines are also highly inefficient in terms of output capacity.

Wind turbines take up much less space than what is required for a single power station, and the surrounding land can continue to be used for other purposes including agriculture.

Renewable energy

Expensive construction process

Unlike fossil fuels, the wind will not run out, and can provide the planet with a limitless supply of “free” power.

Wind turbines are costly to build with one turbine costing up to $1million per MW of nameplate capacity installed.

Generate energy in remote locations In remote mountainous or countryside regions, utilising wind power can provide a much cheaper and convenient source of energy.

Costly to surrounding wildlife With demand for renewable and cleaner energy sources growing it is likely that the need for land for windfarms will increase, which will potentially damage a high percentage of local wildlife in the process. It is also estimated that each wind turbine kills over 4 birds a year.

Do the advantages outweigh the disadvantages?

Noise pollution The noise produced from a singular wind turbine is similar to that of a small jet engine and can be a cause of major concern for those living near a windfarm.

World Total Installed Capacity (MW)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Current Worldwide capacity

121,188MW The US accounts for

Wind Power provides

of new installed wind capacity in 2008

of total electricity consumed

32%

1.5%

In-shore farms could produce up to

40x

the world’s total electricity 200,000

150,000

100,000

50,000

0

Sources: Clean Energy Ideas and AWEA

UPFRONT P&E AFRICA_25 June 13/04/2010 08:50 Page 23

UPFRONT 23 THE BIGGEST OIL SPILLS Since the 1940s there has been over 60 major oil spills, spilling over 1.7 billion gallons of oil both in the sea and on land. the top 10 oil disasters alone have contributed over 1.1 billion gallons.

THESE 10 DISASTERS ALONE, TOTAL MORE THAN

3.8 MILLION TONNES OF OIL

AMOCO CADIZ

227,000

ODYSSEY

132,000

TONNES

TONNES

MT HAVEN

144,000 TONNES

FERGANA VALLEY

285,000 TONNES

IXTOC

NOWRUZ FIELD

480,000

260,000

TONNES

TONNES

GULF WAR OIL SPILL

287,000

1,500,000

TONNES

TONNES

ABT SUMMER

260,000 TONNES

CASTILLO DE BELIVER

252,000 TONNES

TRACES OF EXXON VALDEZ SPILL CAN STILL BE FOUND BY DAN JONES Over 21,000 of the 11 million gallons of crude oil that gushed from the stranded tanker Exxon Valdez on the night of 23 March 1989 remain off the coast of Alaska, a new study has discovered.

Traces of the oil have been detected as far as 724km away from the spill-site in Prince William Sound, and the toxic film that coats Alaska’s shores remains a danger to wildlife, entire eco-systems and the lives of local people.

Writing in Nature Geoscience, a team of scientists found that oil just a few inches down was dissipating up to 1000 times slower than oil on the surface.

Despite Valdez not being up there with the largest oil spills of all time, it is one of the most high-profile and considered one of the worst environmental disasters of its kind, covering more than 2000km of coastline and killing thousands of seabirds, fish and other water-dwelling creatures. The economic impact was significant, heavily impacting the region’s fishing industry and costing millions of dollars in clean-up efforts.

Most clean-up operations in the area ended in 1992 with the remaining oil expected to disperse within just a few years. However, a recent study has discovered that oil is disappearing at a rate of just four percent each year, far less than people expected, and compounds environmental concerns. “The damage that [the spill] created is something beyond anyone's imagination,” says Michel Boufadel, Temple University’s Civil and Environmental Engineering chair, who has just completed research on why the oil persists.

Oil naturally ‘disappears’ through two processes. As the tide rises over an oil patch, the water sloughs off bits of oil, which then disperse into the ocean as tiny, less harmful droplets that can biodegrade easily. Secondly, bio-degradation occurs when bacteria or other microorganisms break down the oil as part of their lifecycle. However, both these processes are slowed when oil is trapped among sand grains beneath the surface.

In their paper, the team who conducted the

new study observed that the upper layer temporarily stored the oil, while it slowly and continuously filled the lower layer, “You have a high amount of oxygen in the seawater, so you would think that the oxygen would diffuse in the beach and get down 2-4 inches (5-10cm) into the lower layer and get to the oil,” says Professor Boufadel.

“But the outward movement of [fresh groundwater] in the lower level is blocking the oxygen from spreading down into that lower level.”

The Exxon Valdez oil spill • 10.8 million gallons were spilt • The oil eventually covered 1,300 sq miles of ocean • Up to 250,000 sea birds, 2,800 otters, 300 seals, 247 bald eagles and 22 orcas were killed • A study in 2007 found that more than 26,000 gallons of oil still remained in the soil around the contaminated area

Source: offshore-environment.com, wikipedia

ATLANTIC EMPRESS

UPFRONT P&E AFRICA_25 June 13/04/2010 08:50 Page 24

UPFRONT 24

TSMA: TECHNOLOGY, SURVEY AND MINING ACADEMY TSMA is a company providing ed- development ethics to encourage ucation and training in the career uniformity of practices and procedevelopment of employees in the dures and to foster public faith in the construction, mining and building professionalism of services provided.

The company has the experindustries. It is currently only providing these services within the tise and capacity to provide or facilitate a wide range of boundaries of South on the job educaAfrica but has the tion, training and capacity to extend development inits services to the terventions and rest of Africa. module per is able to pro“TSMA’s month retains job vide these within focus is on improductivity the context of reproving the lated disciplines. scarce skills shortTSMA’s Department ages in these industries to enhance the career advancement of of Engineering Surveying is a employees,” says TSMA’s Chief government accredited provider Operational Officer, Kobus of the National Certificate in Bezuidenhout. “Also, of crucial im- Surveying. The unit standards portance to the company is the en- covering the qualification are hancement of the social clustered together into twelve intelligence of the communities in one-week modules at a rate of which mining, engineering and one module (five days) per month, which allows candidates building projects take place.”

TSMA endeavours to to return to the employer for maintain the highest three weeks of every month thus possible standards of maintaining productivity.

1

professional education, training and

For further information, please contact: Kobus Bezuidenhout email: kobus@tsma.co.za or cell +27 79 515 7540

In this quarter of Oil & Gas MENA, NGP&E Africa’s sister publication focused the future of Bahrain’s energy sector. DR. ABDUL-HUSSAIN ALI MIRZA, Minister for Oil and Gas, explains what Bahrain is doing to progress the future of its exploration and drilling arenas and how it is leading change in the Middle East.

To read this article and more, go to www.ngoilgasmena.com and click on the current issue.

THUMBS UP FOR MOROCCO Morocco has announced an environmental commitment that will propel the North African country into playing a major role in the renewable energy industry worldwide. Princess Lalla Hansa of Morocco was joined by high-ranking US and Moroccan officials in

Washington DC recently to unveil the plans. Shortly after the announcement, Morocco was highly praised by members of the US Environmental Protection Agency (EPA) and the Earth Day Network for the positive model it was setting. Morocco will debut its National Charter for the Environment and Sustainable Development – the first of its kind seen in Africa – to mark Earth Day.

TSMA Ad REP.indd 1

1/4/10 11:47:08

UPFRONT P&E AFRICA_25 June 13/04/2010 08:50 Page 26

UPFRONT 26

TRAIL SURVEYS Trail Surveys (Pty) Ltd, Engineering Surveying Specialists, is the holding company within the Trail Surveys Group. The company provides multidisciplinary surveying services in the fields of civil engineering and construction, hydrographics, mining, cadastral and architectural.

Capacity differentiates Trail Surveys from most of its counterparts. Multiple teams, led by professionally qualified and experienced surveyors, provide an excellent back-up service, as well as the assurance that project deadlines are never compromised.

The company specialises in large infrastructure development projects and its capacity and expertise is enhanced by its goal, which is to employ the largest number of qualified and PLATO registered surveyors in South Africa. PLATO, is the statutory body for the profession of surveying in South Africa, thus clients are assured of quality service and advanced expertise. The company is also committed to skills development and is a fully registered and accredited BEE organisation.

TOP 10...

The phenomenal growth of Trail Surveys is an indication of the quality of its work and its exceptional service to an ever-expanding client base.

The company has the capacity to undertake large projects with proven continuity. Trail Surveys has an extensive and diverse portfolio of clients that range from various government departments, municipalities and consultants in South Africa to contractors and civil consultants in other African countries.

A wide range of expertise includes providing consulting and/or construction surveyors on site, bulk water-pipelines, power lines, roads/streets, detailed contour surveys and mapping (architectural and topographical), dam volumes/sedimentation, high-flow and low-flow calibration surveys, detailed high-accuracy surveys of hydro-weirs and structures, high-accuracy monitoring of structures (roads and dams) and cadastral verification. High accuracy volume calculation and field surveying for the corporate opencast mining industry will be launched early in 2010.

COMPANY INDEX Q2 2010 Companies in this issue are indexed to the ďŹ rst page of the article in which each is mentioned.

AfriWEA 102

Desertec Industrial Initiative, 30 International Finance

SE-Solar Co 89

AGR Petroleum 66, 67

Dielectric-Spx, 40, 41, IBC, OBC Corporation 86

Sensus 28, 29

Alphetec Engineering 20, 53

Dynamic Security Technologies IPLOCA 76

Shell 36

Artescan Lda 8

13, 78, 79

Lawrence Berkeley National

Siemens 112, 113

AT&T IFC, 1

EAX 62

Laboratory 86

Skylit Tech Ltd 11, 90, 91

Beksolar Ventures 4

EDF Energy Renewables, 102

Lighting Africa 86

Solar Electric Power

Black Marlin Energy 62

Efteg 117

The Lumina Project 86

Association 92

Blum Centre for Developing

Embassy of Denmark,

Masaood John Brown 27

Solidlight Ltd 100, 101

Economies 86

Pretoria 114

NAMCOR 54

Subsea 7 48

BP Group 16

European Wind Energy

National Oil Company of

Tanzanian Ministry for Energy

Centre for Appropriate

Association 102

Liberia 69

and Minerals, 72

Technology 21, 97

FMC Technologies 6, 46, 47

Pamtronics Ltd 98, 99

Total 58

Chart Energy 68

GB Petroleum 42

CLM Positioning Solutions, 61

PICO International Petroleum, 50 Trail Surveys 26, 74, 75 TSMA, 24, 25 HSE Management Ltd 120, 121 PETROCI 110, 111 UNESCO 86 Humboldt State University 86 Polyguard Products 82, 83

ConocoPhillips 124

Integrity Control Systems

PPSA 80

Wind Solutions Ltd 109

Cyveillance 2, 3

PTY 81

RPS 71

World Bank 86

Danagas 118

International Energy Agency 86 Sami 84, 85

CK Aerial Surveys 56, 57

OIL PRODUCING COUNTRIES IN AFRICA Done by country, then amount of oil produced per day in barrels:

1 2 3 4 5

6 7 8

NIGERIA 2,352,000 ALGERIA 2,173,000 ANGOLA 1,910,000 LIBYA 1,845,000 EGYPT 664,000 SUDAN 466,100 EQUATORIAL GUINEA 368,500 DEMOCRATIC REPUBLIC OF CONGO 261,000

9

10

GABON 243,900 SOUTH AFRICA 199,100

Source: www.cia.gov

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COVER STORY v2_mar10 13/04/2010 09:31 Page 30

COVER STORY

TIME TO

SHINE

As the hunt for renewable energy sources heats up, an initiative that could change the face of North Africa and the Middle East introduces itself to the world. By Nick Pryke

A

frica has suffered from poverty and a critically poor infrastructure for longer than many of us would care to admit. Its constant portrayal in the media as a struggling continent battling against the current is unfortunately largely one of truth. As other less economically developed regions slowly begin to take the strain and pull themselves upward, Africa, as a generalisation, seems to merely survive.

There are many philanthropic organisations currently working to help people in various parts of Africa build a more positive future. But for all the hard work and dedication that these large hearts pump into the cause, it just hasn’t been enough. Africans need something to offer the world that its former exports couldn’t – and they may have just found it.

With the earth’s desert regions receiving more solar energy in six hours than humankind consumes in a year, Africa has the potential to offer its pop-

ulation – and the rest of the world – a big bite of the renewable energy apple that is solar power. More specifically, certain African countries have the privilege of owning some of the world’s finest sun-harvesting land, affording them the opportunity to invite organisations and investors onto the continent to do precisely that: harvest the sun’s power to produce a renewable energy source that can then be delivered around the world. The jaw-dropper? It would take up less than one percent of the Saharan desert to do so.

The Desertec Industrial Initiative Gerhard Knies, co-founder of the Trans-Mediterranean Renewable Energy Cooperation (TREC), helped set up the Desertec Industrial Initiative (Dii) in 2008 to realise the ‘Desertec concept’ of obtaining a sustainable supply of electricity for Europe, the Middle East and North Africa up to the year 2050. It consists of a consortium of 12 companies, headed up by Munich Re and incorporated under German law. The concept showed that a transition

COVER STORY v2_mar10 13/04/2010 09:32 Page 31

COVER STORY v2_mar10 13/04/2010 09:32 Page 32

to a competitive, secure and compatible supply is possible using renewable energy sources and efficiency gains, with fossil fuels being used as a backup for balancing power.

Paul van Son, CEO of Dii, describes their objectives: “Our aim is to pave the way for large scale production of electricity from sun and wind in the deserts. Of course, this shall be both for the benefit of the MENA countries and Europe on the one hand and for our shareholders and partners on the other. Energy from the deserts is inspired by the Desertec concept. Our initiative has emerged from the private sector that is determined to bring this concept into reality and to create new business chances.

“What we ultimately aim for are substantial, feasible investments in this field in order to contribute to security of energy supply, climate protection and socio-economic development. We won’t do this alone, but instead will work in close cooperation and partnership with the authorities, local communities, international industries and many other initiatives.”

According to GreenPeace, “If the solar industry continues to develop at its current rate, concentrated solar power (CSP) could meet up to seven percent of the world’s power needs by 2030 and one quarter by 2050.” The organisation also claims that the solar power sector could step out of the shadow of other renewable technologies and establish itself in the sustainable power generation industry as one of the big players.

Talking to CNN, Knies couldn’t have agreed more: “We need a new, socalled ‘operating system’; a survival strategy for growing humanity on a finite planet. In a word: sustainability. Of course the earth can support 10 billion

“Of course the earth can support 10 billion people with food and shelter, but not with energy from fossil fuel sources. That is why we need the security of a complete transition to near-infinite and clean energy systems” Gerhard Knies

people with food and shelter, but not with energy from fossil fuel sources.

That is why we need the security of a complete transition to near-infinite and clean energy systems. The most powerful and fastest possibility lies in using the biggest, but least used, source of clean and unlimited energy on the earth.

That is solar radiation and the deserts.

“I think it’s insane to organise collective suicide. The fossil fuel system and our economy are doing that right now. We cannot survive in this way.

My guess is that solar energy will be 40 to 70 percent of the total energy consumption, 30 to 60 years from now.” Knies also has an unequivocal belief in his mission to help poorer countries, such as those in North Africa, by offering them the chance to develop a new source of income by selling clean electricity. “For Europe, this would be one of the cheapest sources of clean electricity. It’s a win-win situation between the two,” he said.

While this isn’t the first attempt at creating a large scale, commercial CSP plant – the first being opened in Seville, Spain, in 2007, followed by a more recent plant in Rwanda – the Dii proposes to serve a significantly larger popu-

32 www.ngpowerenergyafrica.com

lation base. It aims to do so by also bringing into play all relevant social, political, industrial and regulatory aspects pertaining to both the concept and the continent alike. Not only will this bring Africa into the spotlight in terms of what it can do for renewable energy worldwide, but perhaps more importantly, it will form bonds with multinational organisations who can hopefully advise and aid Africa in setting itself up for the future.

Of the dozen multinational founding companies of the initiative – with their comprehensive technological prowess and dream portfolio – Siemens seems to have taken on a significant role in the context of planning, due mainly to its expertise in long-distance power transportation.

Rene Umlauft, CEO of the Renewable Energy Division of Siemens AG Energy Sector, highlighted just how much experience they have in this discipline: “What was only a vision 30 years ago is at most only a technological challenge today; a challenge we can master. We can generate energy in the desert. Today, we can transport power over the power-highways over long distances with relatively low losses. We would not be Siemens if we couldn’t face such jobs and challenges – both economic and technological.

“We want to – and we will – make power from wind and the sun affordable in the future. We are currently designing such a project in China, transporting power over 1400 km from a hydro-electric power plant to a large city, with only a few percent in power loss.”

Indeed, Siemens will have an important role to play, not only in exporting power from North Africa to Europe, but also in linking up the relative individual sites; while the ‘plant’ is referred to in the singular, it is in fact a network of smaller sites scattered across a plethora of North African countries. It is here that the importance for integration and understanding at a national government level will need to prevail.

Jamila Matar, a representative for the League of Arab States, spoke at a convention in Munich in July of last year: “The League of Arab States is very confident that the Desertec initiative will certainly add to the previous contributions in the field of promoting renewable energy, reducing carbon dioxide emissions and reducing the gap between conventional resources of energy and renewable ones.” Laila Georgy, representing the Ministry of Energy for Egypt, further backed the initiative, stating: “Egypt enjoys the very high potential of renewable energy sources, especially with wind and solar. We very much appreciate this initiative and wish all the best of success and fruitful outcomes to all involved.”

Scepticism Despite such positive feedback, the involvement of a consortium of powerful global companies leads to questions about whether they are using the initiative for their own benefit rather than that of the Middle East and North Africa region. But the Dii has remained as transparent as possible on the subject, and admits that while the MENA region is currently being exploited for its oil and gas, solar energy is practically boundless and harnessing it will contribute to the technological development of the region.

The Dii makes it explicitly clear that it is left to the sovereignty of the producing countries as to whether they decide to use the clean energy to meet their own demands first and finance this energy supply through the profits that they earn from selling or dispensing with the fuels that are thus saved, or sell the energy to Europe and wait until the relevant technology becomes cheaper. In the light of the enormous potential that solar energy entails, it would be relatively easy for the countries in question to take advantage of both possibilities at the same time.

COVER STORY v2_mar10 13/04/2010 09:32 Page 33

Conversely, others question the dangers of depending on economically unstable countries in MENA for such a large project, to which the Dii replies: “It is more likely that parties which are not mutually dependant would become involved in conflicts with one another than parties which are interdependent on one another. By 2050, the South Mediterranean region will have roughly the same economic power and population as Europe and hence similar energy requirements.

“Isolating this region would be much more dangerous for Europe than a joint effort towards a sustainable energy supply system. On a global scale, there will be a change of paradigm in terms of political security, which will replace the conflicts increasing worldwide over limited resources with a joint international effort to harness renewable resources.”

Under the proposal, CSP systems, photovoltaics systems and wind parks would be located on 6500 square miles of the Sahara Desert, surrounding the outer perimeter of the Saharan, with fewer sites located in the central Saharan linking up to form the solar grid. However, taking into consideration the cheaper costs of wind power over those of solar, why isn’t wind energy being given the spotlight?

Balancing out wind’s cost advantage is the disadvantage of control.

Wind energy is not controllable according to demand, making it less valuable than solar energy. In addition, wind energy potential is not nearly as

large as solar energy potential: its most common use is as a cheap source of energy for local energy requirements in MENA, and it can’t fulfil enough of the potential for a site as large as Desertec is planning. Considering the supposed ‘cheaper price’ of wind energy, the project would ironically become more expensive if it was to utilise wind plants as the high-voltage direct-current (HDVC) transmission lines being used would only run at around 50 percent capacity.

The same can be said of photovoltaic energy as an exportable power source: only 25 percent of the HDVC transmission capacity would be utilised.

It then becomes clear that together with European domestic sources, solarthermal power plants can deliver the controlled energy required as well as the basic supply, thereby dramatically increasing the utilisation of the HDVC transmission lines. The bottom line for Desertec: wind plants should be integrated as part of a larger solar-thermal plan if the renewable energy resources of the Saharan are to be fully tapped into.

And so it is. While wind energy sites would be inefficient on their own in a project of this magnitude, Dii also understands their importance in the grand scheme of the concept, and areas along the Atlantic coast and the Red Sea are perfect regions for wind plants to thrive. There is no bias based on solar over wind however, rather the environment dictates the methods – something Dii is all too aware of.

The Desertec industrial initiative supergrid proposal

Concentrating solar power

Hydro

Photovoltaics

Biomass

Wind

Geothermal

CSP collector areas for electricity World 2005 EU-25 2005 MENA 2005

Image: TREC

Trans-CSP mix EU MENA 2050

www.ngpowerenergyafrica.com 33

COVER STORY v2_mar10 13/04/2010 09:32 Page 34

Helping the people If the logistical elements of the initiative are half the battle, then the socioeconomic elements certainly remain the other half. “Just think about the numerous investments and economic activities that will be triggered by Desertec,” asserts van Son. “The construction and maintenance of many power plants, grids and related infrastructure will create jobs in the MENA region and they will add to prosperity.

“This will bring new perspectives for many people. Our approach with Desertec will of course in the first place to offer access to clean energy. Along with the implementation, it will bring technology transfer.”

For some countries, this will lead to the reversal of capital flows in the energy sector, which will afford them the opportunity to sell power and generate income rather than having the need to buy coal, oil or gas. Other countries will no longer need to exploit their fossil resources, and thus create the option of leaving these resources to future generations without loss of income. While Africa is still long off the mark in this context, it is a hope of the Dii that at some point in the future Africa will also be able to achieve a similar situation.

“By 2050, the demand for electricity and drinking water in the MENA region is estimated to become as high as in Europe,” continues van Son. “Large amounts of energy will be needed to meet this demand. Desertec will, thus, ensure a substantial part of this energy need and it will contribute to improved living conditions for many people.”

But the question still remains: does it make sense for Europe to be promoting the development and expansion of renewable energy sources in MENA? Ultimately it remains largely irrelevant whether the carbon dioxide emissions arise or are avoided in Europe or the MENA region. In the end, the speed of the

34 www.ngpowerenergyafrica.com

carbon dioxide reduction is the decisive factor; this is after all one of the main reasons for finding and forging a future for renewable energy. In addition, the MENA region would also gain from the avoidance of further human and financial losses through environmental catastrophes that are triggered when fossil and atomic fuels continue to be combusted to harness energy.

These are merely two good reasons in a sea of advantages: Europe can offer plenty to the MENA region in return for imported clean power. Perhaps one of the most important socio-economic factors is the development of an economy based on know-how and technology, thus allowing these countries to overcome underdevelopment and poverty in the mid- to long-term.

So what about the rest of the world? What about Central and Southern Africa? How would the introduction of Desertec to the North affect the South? These are all questions being asked by locals and CEOs alike. And the answer is simple: Desertec hopes to provide for all in the long term.

Renewable sources of energy in general and solar-power plants in particular are just as suitable for the rest of Africa, which can also profit from the cost reductions in the North. The Desertec concept is also being promoted in China, Australia, America and India for the realisation of “clean power from deserts”.

But means are limited for the Dii, so in order to provide wherever possible, it is building regional Desertec networks worldwide that can profit from its know-how and research. Indeed, while the focus is currently on MENA, the Dii hopes that the future of renewable energy will be inspired by the Desertec concept on a global scale – a hope that will be one step closer when contracts for the Desertec supergrid are signed in 2012. Sceptics and critics of the programme are sure to remain and battle the biggest initiative of its kind, but for North Africa it could very well be time to shine. n

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Omotowa ed_mar10 13/04/2010 08:48 Page 36

THE BIG INTERVIEW

STAYING

TRUE TO YOUR

ROOTS

Omotowa ed_mar10 13/04/2010 08:48 Page 37

Power & Energy talks to Shell’s Babs Omotowa about the challenges of working for a huge international company while keeping the interests of local communities at heart.

T

he Niger Delta is not any easy place for an international oil company to operate. A continued campaign of bomb attacks, kidnappings and illegal oil bunkering were most likely a factor in the recent decision by Shell Petroleum Development Company of Nigeria Limited, Total Exploration and Production Limited and Nigeria Agip Oil Company to jointly transfer a 45 percent stake in three production licences and related equipment in the Delta to a consortium led by two Nigerian companies.

Shell, in particular, has had a rough time in Nigeria. A court case arising from the execution of nine anti-oil campaigners in 1995 was settled out of court by the company only last summer. Shell agreed a US$15.5 million settlement, but denied any wrongdoing and called the payment part of a “process of reconciliation”. The case, brought by relatives of the executed campaigners, alleged that the company was complicit in murder, torture and other human rights abuses by Nigeria's former military government.

Some sources had reported an improving security situation in the wake of Movement for the Emancipation of the Niger Delta’s (MEND’s) 2009 ceasefire agreement with the federal government, but MEND recently suspended the ceasefire.

Given this troubled history and the current dangerous working environment, working in health and safety for an oil company in Nigeria must be quite challenging, to say the least. To gain some firsthand perspective on the issues involved, Power & Energy travelled to January’s Next Generation Oil & Gas Africa summit in Nairobi, where we caught up with Shell’s Regional Vice President of Health and Safety Infrastructure and Logistics, Babs Omotowa.

“We think climate change will define the future; the easy oils are gone, and there will be a lot more in the difficult terrains” Omotowa, who is responsible for much of the company’s logistics activities, including moving people and equipment to locations on land and offshore, takes his responsibilities seriously. He points out that Shell has operated in Nigeria for more than 50 years and during that time has built up a strong community relations strategy, building schools and clinics, providing education as well as information on HIV programs and agriculture initiatives.

“Initially we were more about just building capacity into the community, but now we are looking at developing the communities to grow capacity so that they can provide support to the oil and gas industry, developing their skill sets, making sure that they can form companies and provide services that can be useful for the oil industry,” explains Omotowa.

Babs Omotowa is Shell’s Regional Vic e President of He and Safety Infras alth tructure and Logis tics.

“We’re making good progress on that as well. We have a number of excellent examples where we’ve been able to get communities to come together to replace traditional services that were provided by foreign companies and we’ve been able to get local communities doing that. The big challenge in the Delta is that a combination of solutions is required. Community support programs on their own alone are not enough; the big challenge is infrastructure development, and that’s a key area that we’ve been looking at, along with the government. We contribute a significant amount of money, and spent US$200 million dollars in the Delta in programs for the communities.”

Striking the right balance between international oil companies (IOCs) and government is key to ensuring long-term success in the region.

Omotowa defines Shell’s current relationship with the Nigerian government as excellent, although he does compare it to that of husband and wife – not always easy, but one of longevity nonetheless. He gives the example of the visit of Peter Voser, Shell CEO, to Nigeria, and his meeting with the President, and how following successful interactions Shell remained a preferred partner there.

“In the last few years we’ve been going through the reform the government is working on,” Omotowa says. “This is to put a new industry build for the petroleum sector that is supposed to do a lot of things to create a national company that would be quite competitive, which is a good thing. Part of it includes looking at the involvement of the national oil companies in joint ventures, which has been a challenge for many years.

“These ventures are being looked at as opportunities, fiscally too, to bring transparency, to bring in indigenous companies also, and to be able to grow capacity. We support those strongly; the challenge remains how to make sure that the bill is well balanced in a way that the investments can still continue to flow into Nigeria.

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Above: a Shell-owned pumping site in the Niger Delta region of Nigeria. Left: a Shell-owned oil processing plant. Nigeria produces nearly two million barrels of oil a day, nearly 10 percent of the United States’ annual supply.

“We’re working together on the environment especially,” he continues.

“We want to see how to improve on a lot of the challenges we face. The environment side faces the challenges of flaring and oil spills.”

Clean up and recovery of spills is done quickly, as well as continuing to work on the challenges of flaring. Shell has recently put in facilities for more than 60 percent of its flaring, and what is left is being worked on. Omotowa states that funding has been one of the biggest challenges: “The sort of money we’re looking at for the projects left in the region is about US$3 billion to US$4 billion.

We’re working with the government to make sure we can get ourselves to those funds, and then to be able to get the access into the areas to be able to carry out the projects, because access is another problem which we’re working on with the government. There will be a new target date for flares, which we will also work on with the government on to make sure we can progress on that as well.”

Political instability In order to overcome the challenges created by political instability in the country, Shell is working closely alongside the government to create a tighter structure of law and order. The government is installing a lot of policing and security forces to guide and protect the lines. But, as Omotowa explains, “With 6000 kilometres of pipeline there’s a limit of how much policing you can do.” This is the reasoning behind the company’s approach to integrating communities and local government. Community workers in teams of sur-

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veillance is one way the company is doing this, as well as looking at more creative ways in which to involve the communities.

“We are confident that this two-pronged approach of working with the communities and the local government to secure those lines and giving them some incentives to make sure they feel an ownership and a sense of belonging will help solve that. As well, we are working with the government to make sure that for criminal element aspects those are dealt with by the police,” he says.

Regardless of location, there are issues that are facing almost every company, including the global skills shortage, and Omotowa sees this in Nigeria as both a challenge and an opportunity. The country is home to 350 million people, allowing a lot of scope for developing local people into skilled workers. “We see the challenge in being able to attract good technical skills; we are very focused on this area and we have a lot of things we are also doing in terms of intervention,” he explains.

“We have a learning village source in Nigeria where we take very good graduates out of the universities and put them through technical training before we bring them into the organisation. That has helped to improve on the ability of technical skills, which also made available for other companies; we don’t just train them for ourselves, we train them for much more and improve that across the country. “In terms of the impact of the political situation the big issues regard the equality of the universities and how the technical courses in the universities continue to teach from the right equipment, the right lecturers to be able to come out with higher quality graduates. That’s an area that the government continues to look at as well.”

The conversation turns to the topic on every industry executive’s lips: the expected increase in world energy demand. According to the US Energy

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Information Administration, world marketed energy consumption is projected to rise by 44 percent by 2030. Ensuring that demand is satisfied is the crux of company strategies being formulated the world over. As the people of China, India and even Africa increase their quality of life, supply will struggle to keep up, especially when the easy onshore oil is gone. Many observers predict an increased use of natural gas to pacify this demand.

“Climate change is the key that plays into the gas issue,” says Omotowa.

“I believe this will become defining to us in the future and will really define what we use. Obviously, natural gas is the cleanest of the fossil fuels and the beauty of it for us in Africa is that we haven’t even discovered all of the gas.

Increasingly we’re starting to see more gas discoveries, huge ones.

“The challenge will obviously remain to balance the domestic gas requirements and the export opportunities. For many countries in Africa, the export opportunities and liquified natural gas opportunities are key for the revenue of the nation. When you look at some of the oil producing countries in Africa, oil represents more than 80 percent of their revenue. So you need to continue to grow that. But the key as well is to be able to have gas for domestic use, power generation, industrialisation and transportation.

“The key is knowing how to develop the right commercial framework, in terms of pricing, in terms of agreements and in terms of securitisation that will enable investors to come and develop these huge reserves and be able to put in the infrastructures that are required. You do need quite a lot of infrastructure if you are doing LNG, and the key is getting this infrastructure developed to be able to bring domestic gas and power to the people. That is the key thing for us in Africa because power becomes a key lever for developing any economy. And the more we can get that working in African countries, the more we’ll start to see the industrialisation that we require.”

Alternative energy The issue of climate change is top of mind in almost every industry, oil and gas included, and the international community is carefully watching the developing world to see how it is responding. Gas is the cleaner approach, and is incorporated into Shell’s sustainable strategy. Omotowa explains how the company has been focusing on alternative energies. “We’re probably the most active of the oil companies in terms of looking for renewable solutions,” he says. “We have invested billions in R&D in terms of renewables and we have made huge progress in quite a lot of them.”

He explains how the company has made huge progress in its gas operations, specifically its gas-to-liquid projects, and regards itself to be leading from the front. “It’s not unlikely that by 2025 we may be more of a gas company than an oil company. We’ve continued to do quite a lot in areas such as hydrogen and we continue to look at interests in that area, as well as how to make renewable energies such as solar and wind and how to make them commercially attractive.

“In today’s technology, it’s still a lot more expensive to get electricity from these sources. We’ve seen the growth of renewables and we’re confident that they will continue to grow over time. A lot of this still depends on the governments, because it comes down legislation, and you need quite a lot of support to research in these sorts of areas, and you need to know what fiscal regimes government put on some of these alternative sources.”

Omotowa depicts Shell’s strategy as comprising three hard truths: the first being supply and demand, with the other two looking into possible scenarios in the future, one being called scramble, the other blueprint. “In the

scramble scenario, which is where countries are looking for energy sources because they require them to develop, we believe you might see countries even go as far as going for coal, which is the dirtiest energy. But in the blueprint scenario, you have much more government involvement looking at how to create the environment for CO2 friendly sources, and you see more renewables possibly more carbon capture, carbon storage and all those other things.

“At the recent Copenhagen climate change conference, quite a lot was expected. I’m not sure we saw as much as we thought should have come from there, and I think the government and the culture define how to move forward. That is where the difference will be made on alternative energies,” explains Omotowa.

The Nigerian government has shown its support for renewable energies.

The Minister of Environment attended the Copenhagen summit, along with other senior officials, and the country’s national oil company has a whole department dedicated to green energy. Looking at its agricultural potential, Nigeria presents itself very much as a green country. However, Omotowa remains dubious not on the government’s commitment, but on how fast they will move on this strategy.

A further challenges to the oil and gas industry in Africa, for both IOCs and NOCs, is the emergence of China as a player on the African stage. For both, this means greater competition, but is it a serious threat? Omotowa maintains that it is not.

“We are very clear in Shell that we provide a superior value added for governments in Africa. We’ve been here for quite some time, we’ve provided significant revenue for countries where we have been. We have brought technologies into areas that I think are superior to what the Chinese can bring.

We pride ourselves on being a leader in technology, particularly when you go to the difficult, unconventional, deep offshore. We also bring a lot in what we do on local content development. We’ve brought a lot of industries into the region and we’ll do more of that. And when you think of local people development as well, we’ve been quite superior in that.

“There is a short/long term situation here. The Chinese obviously haven’t invested anything significant in Africa for a long time. So it’s easy to come and make promises and try to entice nations, but we do not believe this is sustainable competition, irrespective of the amount of money they are promising. Until you see that on the ground, they’re still just promises. I also worry about companies coming in and promising to build infrastructure and power stations, to build so many things that are government areas, then I worry that their intention is to try to replace government in some shape or form.”

The entrance of China, the need to begin producing energy from renewable sources and the rising global energy demand are applying pressure to an industry already laden with the burden of security issues and offshore challenges. As Omotowa says, it would be unsurprising if in 20 years time Shell no longer explored oil but converted its strategy to 100 percent gas production.

“The future in oil is gone. We need to move more and more to deeper offshore, which requires a lot of technology and the investment costs are quite significant. Unconventionals would also be an area that we’ll start to look at more and more, so the future will be about getting the more difficult oil out using technology to increase the recovery from existing fields that we have. We think those will be key to the future.

“We believe the CO2 issue will also be very key and topical into the future and we are confident that that’s an area we are already making huge progress with our technology. We think climate change will define the future; the easy oils are gone, and there will be a lot more in the difficult terrains,” he concludes. n

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INDUSTRY INSIGHT

A technological approach to innovation Tim Wells offers an insight into the integrated technological approach to innovation.

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elecom industry leaders estimate that 2.4 billion inhabitants of planet earth do not have access to wireless communications.

Energy industry experts estimate that 1.5 billion people do not have access to electricity. An overwhelming majority of these people inhabit the rural areas of developing economies. They are clearly at a disadvantage as the twenty-fi rst century unfolds – both personally, in terms of their own lives and aspirations and nationally, as it hinders the economic development of their countries.

SPX Wireless has developed a new, ground-breaking antenna technology that increases reach and coverage by up to ten times compared to current antennas, thereby significantly reducing OPEX. Th is disruptive innovation enables telecom network operators to deploy services to ‘greenfield’ areas rapidly and profitably. Recently completed field-testing in India brings the new antenna system closer to worldwide launch in other parts of Asia, Africa and the rest of the world.

However, more than half the areas that could benefit from wireless communication will be prevented from taking advantage of this new low-cost form of communication because they are off the electric grid.

To that end, SPX Wireless is currently exploring alternative energy sources to power the antennas reliably and inexpensively.

Th is is a very good example of SPX’s approach to innovation. Although, or perhaps because, the company is made up of a multitude of individual businesses organised into customer-facing affi nity clusters, it has both the necessary awareness of the need for integrating technologies and the ability to explore integration opportunities across its own business units. In general, only the fi rst condition is necessary; the second may be acquired outside the core organisation if it doesn’t already exist within the organisation.

The need for integrated technological solutions should not prevent companies from seeking to innovate in their field, regardless of how narrow that field may be. We must remember that integration benefits all the eventual partners – those who seek to complement their own solution by turning it into a viable marketing opportunity as well as those who can contribute the ‘missing part’. After all, the latter stand to benefit

greatly from the additional revenue that will be coming their way.

Partnering can be as beneficial in the product development stage as in the marketing (nowadays referred to as ‘go-to-market’) stage. The only difference is that the latter is more common than the former. SPX is taking the approach that the quest for good solutions drives the entire system of innovation. Therefore, one should start from the end-point and ask: ‘What is the best solution going to look like?’ If the company does not have all the technical capabilities required for fashioning the best

“The need for integrated technological solutions should not prevent companies from seeking to innovate in their field, regardless of how narrow that field may be”

possible solution, it should seriously entertain joining forces with those who have those capabilities.

In our case, a good solution was not simply an antenna that covers a wide area but, rather a high-coverage antenna that can serve all the members of the intended market regardless of whether they live on- or off-grid.

Compound requirement inevitably focused attention on alternative energy as a prerequisite for a successful product for off-grid customers and for the network operators who would bring wireless service to them. The African market is one of the primary areas of the world where the integrated solution of wireless service powered by alternative energy is going to make its mark.

Tim Wells has extensive global leadership experience. He has led organisations at GE and is leading SPX’s efforts in the wireless telecom industry. He has focused on uncovering innovative ideas, shaping them into viable products and launching them successfully in the global market. Wells holds degrees in Finance and Marketing from Boston University.

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EXPLORATION

SMALL FISH,

BIG POND

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With major exploration ti players l outsourcing to small companies, Robert Lambert discusses what the future holds for GB Petroleum.

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he discipline of oil and gas exploration is innately driven by money; entry costs into countries need to be paid; resources, equipment and employees need to be taken care of; and of course there are profit margins that need to be hit. But perhaps the most surprising context money currently takes in the realm of exploration is in the relationships held between small and larger companies. As Managing Director of GB Petroleum, Robert Lambert not only appreciates this dynamic, he understands it.

Formed in the second half of 2005, GB Petroleum functions as a relatively small exploration-oriented company with the help of Lambert and a number of his former Conoco colleagues. Having raised the necessary funds, the group started acquiring expiration licenses with a view at one time of seeking a market listing or merger with a larger company once they had established themselves. However, things turned out to be much more difficult than they had originally planned.

“The credit crunch hit our long-term planning quite hard because our business model depends on regular injections of investment in equity capital, which effectively disappeared for two years. Fortunately, we managed to do a deal with a small private fund who acquired us in October of last year and we’ve been recapitalising and restructuring the company since that time with a view to getting back on track and growing as much as we can and making some acquisitions again. We’re emerging from the fi nancial crisis that’s affl icted every small company and we have more confidence now in the future.”

Lambert’s main task is to balance GB Petroleum’s portfolio, which is extremely orientated towards exploration. Currently, they hold nothing close to production, although Lambert is quick to highlight an interesting gas prospect with hopes for drilling later this year that could be on stream within 18 months. “That’s not on a short enough time horizon for us,” asserts Lambert. “We would like to have something a bit more immediate. We’re evaluating a number of production opportunities in our focus area, which happen to be Africa and Europe. Our current assets are in North Africa – where we operate both in Tunisia and Morocco – and non-operated interests in Poland and the UK.

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“We have a little bit of a geographic spread. Th at was done deliberately for portfolio diversification – to spread our technical, commercial and political risk – but only from an exploration point of view. Having established what we would call a ‘footprint’ in each of these countries, the resources you have. That’s quite a challenge, but managing the foreign it would be beneficial if we could build within each country and add operations in remote areas is very similar to running a small company. some more interests. That’s where we’re primarily focusing our acquisi“A major multinational is composed of perhaps 20, 30, 40 different tion targets. small businesses aggregating into a multinational. Part of that sets you “Central and Eastern Europe and North Africa would be our fi rst up quite nicely experience wise – and of course you get to travel the world choice; we’re looking elsewhere in Africa too. My own personal experiand experience different cultures and business environments – so you ence has been effective all over the world, perhaps with the exception of learn a lot about the business that way.”

South America. There’s nothing stopping us looking anywhere, but the Yet from Lambert’s statements, and given the continuing economic commercial or technical reality is that if we’re London based, there is a crisis, the question still remains: Why North Africa? Surely, with the varcertain amount of work that a small team can do, so we tend to look ious levels of instability that come with the territory – not to mention close to home if we can.” the heightened levels of risk for smaller companies – taking Having previously worked for major multinational the safe option would be a priority? Well, as it turns out, it’s upstream, downstream companies, Lambert’s expericompletely the opposite. ences have certainly moved him to opposing ends of the “We’re based in London; we’re a very small team so spectrum now that he’s with GB Petroleum. However, to avoid what we would call resource stretch we focused will drive despite the change of scenery, Lambert maintains that on opportunities within a short flying time of London. there are still interesting similarities between the two We also wanted to focus on areas that we had prior exconfl icting environments. perience in – that was very important. In addition to that, “Most of my career was spent internationally with areas where you can access exploration acreage at low cost, Conoco in various parts of the world: Indonesia, Egypt, Baku because being a small company you can’t pay large bonuses to Lagos; each branch operates almost like a stand-alone business. You governments and you can’t pay high entry costs. You have to negotiget used to levels of responsibility and managing your assets in remote ate your way into some licenses. environments, almost independent of the head office. The major differ“Low entry costs and barriers are important considerations, but ence, of course, is that when you’re with a major multinational, once your proven geological producing areas were also a key. Hence, looking at the budgets are set the money is guaranteed, whereas with a small company UK, Poland and Tunisia, we built a portfolio that had a balance of oil and that’s just not the case. You have to fund all your activities fully each year gas, onshore and offshore. We realised we probably needed a little bit and you can’t afford cost or resource overruns; you have to manage with more romance in our portfolio with a higher potential – although that

Economics

technology

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comes with a higher risk – hence we went to Morocco.”

Indeed, while Morocco doesn’t have a lot of oil and gas proven to date, the potential is defi nitely there. Its technical parallels with the rest of West Africa, the other side of the Atlantic and off shore Canada have all proved geologically similar, forcing the conclusion that Morocco could provide some very good petroleum potential. The risk is, of course, far higher – but so too are the rewards. For all the countries mentioned by Lambert, the fiscal terms certainly shine; low costs, solid potential and a good proximity to London work wonders for GB Petroleum when combined with the relationships that have already been established throughout years of working in the industry. Yet, given all these factors, the continuing international focus on climate change has undoubtedly had an effect on strategy.

“Being a small team,” continues Lambert, “we tend to operate from the head office as much as we can. Not necessarily as a result of environmental concern, but cost concern if nothing else, we limit travel and make use of teleconferencing wherever we can. But, it has had a spin-off benefit for minimising our own impact. I’ve had very good training through my career with Conoco in being very environmentally aware and looking at sustainability too, so that is factored into everything we do anyway.

But being a very early exploration company, we’re fairly prudent in what we do.

“In operational terms, we do insist that our contractors pay proper regard to those issues. I don’t think anyone could ignore it these days as climate change is demonstrably happening. One could argue what the causes are, but there’s no doubt that things are changing and it’s only prudent to take appropriate action.

“Traditionally, supply has always met its demand; it’s just a question of economics. However, oil and gas is a fossil fuel and there is a physical limit. Every time we think we’ve reached it something happens to make us change that view. We’re accessing oil and gas reserves in areas that we never dreamt of even 10 years ago. New plays are emerging everywhere.

Deep gas is clearly a fuel for the future. It’s a question of economics.”

Gas could play a larger part in the world than it does even today, but with producer prices for gas being quite low in comparison to oil, the focus should still remain on the oil front. Lambert goes one further to say that we should be more careful about how we produce oil because it has certain uses that cannot be replaced by other means. Conversely, gas is abundant and can be easily substituted into oil burning economies if the fi nancial incentive is there.

“Sadly, that has not proven to be the case in many parts of the world,” admits Lambert. “I think the developed part of the world is catching on very quickly with the emergence of LNG and the energy hungry countries. I’m more concerned about the countries that produce oil and gas and seem not to develop their own internal energy markets to the fullest extent. Again, it all boils down to economics at the end of the day. No oil company or contractor is going to work at a loss. Some of these resources are enormously expensive to develop.

“When government takes are very high and oil prices are lingering in the US$50 to US$80 range, you can see very quickly that it’s not the oil companies that are making a lot of money; there is an enormous leakage of value in the energy chain. But sooner or later that will catch up. Whenever supply gets out of balance with demand, then economics steps in to restore it – although it does lead to short-term imbalances. Long term, of course, it has to be a better solution, but technology will defi nitely come to the rescue of the energy crisis as and when it happens.”

On the topic of long-term planning, Lambert has bright hopes for building a successful and independent oil and gas producing company, although it remains unclear whether or not it will eventually be listed on a major stock market or traded into a larger venture. However, in order for this to become a reality, Lambert is all too aware of the need to acquire some producing assets and generate an early cash flow for the company so they can break the dependence on external financing; he also hopes to use a fistful of luck through their exploration programme in order to grow organically as well as by acquisition.

“It’s not a unique story by any means. A lot of small companies go that route and some are successful, some are not. You only have to look at the general examples of Tullow and Kern to see the successful ones. What’s less known are the unsuccessful ones. For every successful story there are hundreds of failures. Then there’s the middle ground where you’re partially successful and you’re absorbed into a bigger entity; I see that as probably a more likely future for the oil industry.

Consolidation always happens when the majors run out of reserves and they buy their reserves elsewhere – the independents usually provide that target. Th is then spins off more new startups that start the whole process again.

“It’s a continuous cycle of business renewal, but it’s always been that way. When you look back over history it’s always happened; not just in the oil industry but in any industrial sector. I don’t see the current environment being any different. We like to think it’s because we’re creating our own future, but I think if you step back and just look at what’s happened, there’s a clear path that does emerge, and it’s all driven by economics. Economics will drive the technology.”

In recent times, the joke seems to be that the outsourcing of services in any industry is becoming the norm. Well, this isn’t too far off the truth when it comes to looking at the way major companies seem to be ‘outsourcing’ their exploration to the smaller man – such as GB Petroleum – as they take risks in areas that the majors just won’t. It’s only when those resources are found that the majors will step back in. The bottom line: without the smaller companies, the sort of reserves that we continue to fi nd would most probably still be hidden away.

“When you’re with a major multinational, once your budgets are set the money is guaranteed, whereas with a small company that’s just not the case”

Robert Lambert is Managing Director of GB Petroleum, as well as one of the company’s founders. He holds a BSc and a MBA, both from Aberdeen University. Lambert has worked for nearly 40 years in the international petroleum E&P industry, primarily with ConocoPhillips, from which he retired in 2003.GB Petroleum was established in 2005 by a group of former ConocoPhillips executives. Since then, the company has grown steadily and it was recently acquired and recapitalised by Nimbus Oil and Gas Group Ltd.

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EXECUTIVE INTERVIEW

THE UNDERWATER ARENA OF SUBSEA Jim Tait of FMC Technologies delves into the underwater arena of subsea technology.

When did FMC enter the subsea arena?

Jim Tait. FMC Technologies’ history began in 1967, when they sold and delivered their fi rst subsea tree, which operated at a depth of 20 metres in the waters of the Gulf of Mexico. Since that fi rst well, FMC has constructed and installed around 1300 trees on some 260 projects worldwide through six major manufacturing facilities in Houston, Brazil, Scotland, Norway, Singapore and Malaysia. FMC Technologies now offers a wide range of vertical and horizontal subsea tree solutions able to operate in pressures up to 15,000 psi and water depths of 10,000 ft.

Jim Tait is Sales and Marketing Manager for FMC Technologies, Africa and Caspian.

How is the subsea market changing?

JT. The subsea production business is constantly evolving. We continue to move technology forward in order to unlock hydrocarbon resources that were previously inaccessible or non-commercial. Most notably, the drive in recent years has been to complete projects in deeper water, permit production from higher pressure and temperature reservoirs, increase our distance from subsea development to host facilities and provide additional data from subsea equipment to optimise reservoir output and implement planned maintenance programmes. In addition, we aim to consistently improve the reliability and availability of subsea equipment while reducing installed costs.

Significant investment has been made in the development of subsea boosting and separation systems with FMC providing six complete systems in the four major deepwater basins. Technologies vary from relatively simple seafloor boosting to gas, oil, water and sand separation. Boosting and separation technologies have now been retrofitted to brown field as well as incorporated in green field developments.

The technology permits production from reservoirs with low flowing pressures and or heavy oil. Separation of the oil or the water from the process stream reduces hydrate risk and optimises flow assurance with the overall net effect of improving reservoir recovery efficiency.

Using this technology, fluids can be processed on the seafloor and transported to the host facility before fi nal separation takes place – a two step process. The next evolution is to achieve both fi rst stage and second stage separation on the seabed. Th is would allow export quality fluid to be produced from a subsea field and facilitate delivery of hydrocarbons from subsea direct to the market.

There will be an increasing need for subsea processing in deepwater offshore Africa due to a predominance of shallow, low pressure reservoirs with long water column and high gas to oil ratios that creates lift , flow assurance and hydrate problems.

Are there other areas that FMC is working on to provide increased oil recovery?

JT. Investment costs for a subsea well are actually lower than for a platform well. However, intervention costs for subsea wells are extremely high compared to the platform equivalent. Th is is due to the high cost associated with mobilising a rig to perform the subsea intervention.

Platform wells in contrast can be readily re-entered at a comparatively low cost.

If the reservoir requires a lot of maintenance and the well needs to be re-entered many times after it has started to produce, then the platform well becomes cost effective. In addition, the low cost of entry to the platform well enables the operator to perform operations that increase the reservoir recovery factor. The fact that well interventions are more costly on a subsea well than on the platform well leads to fewer interventions that historically lead to a lower overall recovery rate from a subsea development.

FMC has developed technology that significantly reduces the intervention cost for subsea wells. Riser-less well intervention from a low cost monohull vessel is the solution developed. FMC has been operational with this type of system together with Island Offshore since 2004. By 2009, FMC were operational simultaneously with three such vessels in the North Sea where there is a high critical mass of subsea wells and an ageing well population. The application for Africa is evident with a high installed well count already in Angola followed by Nigeria and Equatorial Guinea.

The barriers to having all offshore developments comprised of only subsea wells are being removed by the use of low cost and efficient well intervention systems and subsea processing. The day we can develop offshore fields without the use of manned platforms, we can significantly lower the operational cost of a field. Th is is the next major step. Improved technology is not simply for use on new ‘green’ fields but may also be put to use to maximise potential of existing brown field developments – there is no easier hydrocarbon to find than in an existing reservoir. Cost effective extraction of that resource is key to ‘Enhanced Oil Recovery’.

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EXPLORATION

TAKING RISKS With the exploration race picking up speed, Hamed Ibrahim offers an insight into how medium-sized companies are coping with the competition.

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he competitive world of oil exploration is pitted with – and thrives on – risk. Smaller companies fi nd themselves taking on bigger projects with the hope of accruing greater profits, while larger companies often have to forgo exploration plans due to ridiculously expensive licensing costs, putting them at a deficit if the exploration is found to be unattractive. However, if the metaphorical porridge is too hot for small companies, and too cold for large ones, then perhaps it’s ‘just right’ for those in between.

Hamed Ibrahim, Exploration Manager for Egyptian based company Pico International Petroleum (PIP), is responsible for all drilling and development activities and acquiring assets for such a company. Having gained years of invaluable experience working for larger companies such as the Gulf of Suez Petroleum

Company – an affi liate company for AMOCO, which later became BP – Ibrahim then moved on to Halliburton for eight years before joining PIP in 2006.

“I was very lucky to have all these years of experience in different tasks and different responsibilities and different jobs,” asserts Ibrahim. “It gives me a wider vision as to what’s going on in the industry specifically, but also as a whole.”

Th is ‘wider vision’ has served both Ibrahim and PIP well; they currently hold non-operating equity shares in an offshore concession with Energy OS, which is currently being operated by the General Petro-

leum Company, and another equity share in an unclassified field in the Egyptian western desert. In addition, acquiring the company of Shell, Total and British Gas has undoubtedly allowed PIP to adopt and customise the high levels of operational and managerial standards inherited from these big players.

“The point is when you become a major company, or a big company, your overheads become a little extreme. And operating a small company on low production or low profit assets is not an economically correct decision. Plus, acquirement was in a period when oil was not that high in price; it was almost US$10 to US$12 maximum. That was

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under the ground because nobody knows what is under their ground 100 percent.

“Defi nitely there is a percentage of risk and a percentage of chance to be successful if somebody was not. It’s not because we are more clever than them or not – it’s because we are more patient and precise in this field. Th is is what happened in 1996 and 1997; we’re now in 2010 and we still have a lot of oil to produce.

Almost 33 million barrels of oil under the ground that still needs production.

“It was a very successful transaction and we have Anadarko at Barton with us in this acquisition. We have escaped a South Korean company and we are now the operator; even the operation in this field is very unique. It’s operated through what we call the FB. All the facilities are in the sea itself – you work the entire operation from this floating ship, with all the tanks and storage tanks in the same FB.”

Ensuring change

in the mid 1990s. With the low price of oil plus the high cost of operation, companies at that time would have liked to get rid of what we refer to as loser assets.

“And Pico, because it was a small company, the overheads aren’t so bad. Plus, we have experience in the Egyptian oil and gas industry so we can utilise this asset in a better economic way. We acquire those assets without incurring too much of an expense and try to make them successful; working out how to utilise them in a better way. And that is what happened. Mainly in the oil industry there is no need for succession, no end for discovery, no end for suprises. You have to depend on what is

Indeed, PIP’s transactions don’t seem to be stopping any time soon. Flicking through the pages of the past, PIP was involved in a similar transaction in 2007 with a governmental asset in a field called Diasu. Discovered by Conoco 30 years ago, it was handed over to the Egyptian General Petroleum Coalition (EGPC) who formed a third party company to operate the field. For a period of time post-EGPC, the field found itself in decline in terms of investment to upgrade the productivity of the facility. That was until PIP entered a bidding war with over 30 companies and fi nally won the field.

“But the best part of it was what happened afterwards because we took this field when it was producing almost 6500 barrels of oil. After two years, the daily field production average is almost 11,000 barrels of oil per day. Fortunately, we haven’t spent had to spend too much money upgrading the facilities and drilling wells; we’ve drilled almost 13 wells since we acquired the field and there’s a lot more to go.

There’s an exploration activity and a good exploration programme set up to explore some new areas, so we hope it has potential.”

And having undertaken seismic surveying for almost 120 square kilometres in an area where no seismic was acquired before, PIP obviously believes in this potential. Having already chalked out prospective areas, the prediction is that the first well in the field will be drilled

Hamed Ibrahim is General Manager for Exploration and Deputy Business Development Manager for Pico International Petroleum.

sometime this year. However, Ibrahim considers this move to be one of a more dominant medium-sized company, as opposed to a small company taking advantage of its situation.

“We cannot consider ourselves a small company; we consider ourselves a medium size company because right now we are producing around 30,000 barrels of oil. So it’s not a small company anymore. But we have an easier way of motion. Our decision-making is much faster; we have flexibility in negotiation, flexibility in moving faster and easier than the major companies. Plus, we have the ambition and motivation to go. We would like to establish a bigger company in the Egyptian market as we plan to go outside Egypt. We’ve tried several times in the last three to four years but so far have been unsuccessful. We will keep trying until we fi nd something outside the Egyptian market.”

Without hesitation it is easy to conclude that PIP’s intentions also serve to include evolving into an international company. After all, 10 to 15 years as an oil company is nothing big. “If you look back at the major companies in the world, they started like us,” asserts Ibrahim. “They started as small, independent companies before they grew, integrated and merged into far bigger ones. That is what makes the majors the majors right now. On your own, it would take far longer to become established as a major company in the oil industry.”

Part of understanding how to become a major company is understanding the processes on both a macro and micro level and using your assumption on that to push the envelope

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of your company. Currently, enhanced oil recovery seems to be the flavour of the month.

“The way of application is not yet that heavy,” claims Ibrahim. “It should be much heavier than what’s happening right now. Artificial lift ing, water injection, chemicals, immersible chemicals, steam injection; all of these techniques should be heavily applied.

“Right now, all that we produce amounts to no more than 25 percent of what we discover, so we still have 75 percent under the ground. If we can increase our recovery factor by 10 to 15 percent, it means we will add almost 30 percent to what we already produce – and that is what we need. Right now, the energy itself has become very efficient and essential for the development, especially for the development company.”

Nowhere is this truer than in the Middle East and North Africa, where countries are starving for energy. And it is for precisely this reason that oil becomes stable at about US$70 per barrel. Compare that to a maximum of US$15 in the mid 1990s and it is clear to see that demand has heavily increased at a considerable pace. In fact, reports suggest that there will be a two to three percent increase every

year in terms of energy demand. Th is forces the question: can the industry keep up with such rising demand? According to Ibrahim, there could be trouble.

Faster supply “With the way we are going, it looks like a no. What we are doing right now in terms of research and development is making things extremely slow. We should be moving faster.

Companies should spend money to increase research and development, improve their recovery and fi nd new ways to discover better, new oil.

“The major fields have already been discovered, so what we’re looking for is a medium to small sized field. If we can enhance the economy, the economic factor and the economic element within the industry, we will never continue at the same rate as we did in the 1970s and 1980s.

“We should also concentrate in areas where there’s little to no exploration. For instance, there’s a very virgin area for exploration in Africa; we should be concentrating in those types of country because I believe there is still plenty of oil under the ground. But the

rate of discovery and production will definitely increase because demand is so high. Right now the daily production is around 85 million barrels of oil per day.”

In the context of Africa, Ibrahim believes that safety and stability issues, particularly those of a political nature, will be the biggest challenges facing companies in fi nding oil.

Compounding this sentiment is the notion of incentive: “What encourages a company to go is part of the dilemma. If you don’t have a good incentive to go and work in the jungle, in an area where you cannot be 100 percent safe, it’s a little bit risky. You can see what’s happening to Shell in Nigeria and others in Angola. All these countries should be, if there is no political stability and some sort of calmness in the environment there, accelerating exploration as there is never as much as we would like there to be.”

However, the recent downturn in fi nancial markets has affected PIP’s plans to increase its exploration activities and built a far tougher funding environment – especially in the past 15 months. With the slowness of the economy being what it is, Ibrahim admits that PIP has had to depend on existing funds and products to survive. Yet ironically during this period, PIP has witnessed an increased productivity index in their field; Ibrahim now believes that they can fi nd solid funding support off the back of this within the next few months.

“We hope it will happen and that will give us the leverage to start our exploration activity easier than before. It will give us the confidence to move forward with more speed to discover more oil and gas. Right now we have the regional countries in the Middle East; Syria, Oman, Yemen, Algeria and Indonesia are in the ‘near future target’. We’ve visited Indonesia several times looking for acquisition, but it’s not yet matured. Regardless, we hope we can do something in the near future in these areas.”

What remains for PIP is still left to be discovered, but the future certainly looks positive for the evolving company. Perhaps they have managed to fi nd their niche within the realm of exploration, or maybe it has something to do with their size; but what it essentially boils down to is their ability to assess, interpret and take risks. It is here that they will create potential and ultimately fi nd success.

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EXPLORATION

UP TO GO DOWNSTREAM Alastair Baumann unveils future plans for NAMCOR and ideas to secure downstream recognition.

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he field of oil exploration has become a metaphorical battleground, not necessarily for land or sites as you might imagine, but for the future. Companies that invest in their exploration now are doing so to lay new foundations for better, more efficient projects for forthcoming years. Alastair Baumann, Asset Manager for NAMCOR, is fighting this battle on all fronts for the national petroleum corporation in India.

While they are not currently in production, NAMCOR’s plans have led them to a producing field in the Kudu Gas Field in Southern Namibia

that, in partnership with their downstream department, they hope will be the beginnings of something exciting.

“The Kudu Gas Field has been in existence for the last 20 years. It was discovered by Shell and it’s a 1.4 TCF field, most probably with some upside potential. That gas field is 54 percent owned by NAMCOR, with partners including Tullow Oil amongst others. In terms of the Kudu Gas Field, it’s of strategic importance in Namibia because it’s earmarked for a gas to power project. So, the sooner we get that out of the ground and off the ground, the better for Namibia and for the Southern African region as a whole because, as you may or may not be aware, there’s a power crisis looming in the next couple of years.”

With this power crisis obviously coming from the world’s energy demand rising, there are debates across both lines as to whether future supplies will be able to keep up with such demand. Some are pure cynics, others daydreamers. But for Baumann, and others just like him, there is real hope for the future.

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“We’re certainly hoping supply will keep up with demand, yeah. And once we start producing we’ll manage to see if we can get some upside potential out of it. Apart from that, we just made a recent discovery in the North of Namibia, so hopefully that will supplement it as well. It’s gas, but just not confi rmed. There’s some fluids or liquids with it, but it’s a couple of TCF potentially.”

“Namibia’s got quite a good relationship with the large operators, for example Shell. Our regime – our fiscal and legal regime – is quite favourable for operators. We’ve got quite a politically stable country, so relationships are pretty favourable between ourselves and the larger operators.”

Low risk Indeed, Namibia is defi nitely a lower risk for NAMCOR as opposed to countries such as Nigeria, and especially when it comes to the attraction of the open licensing system. “In a nutshell,” explains Baumann, “it’s on a fi rst come, fi rst serve basis. Interested companies or parties would come to the Ministry after having had a look at potential open acreage.

They got to the Ministry; the Ministry would refer them to NAMCOR where they have a look at certain data. They’d then buy a couple of seismic lines, look at the data and see if they’re interested in that.

“Then the Ministry of Mines and Energy, through the government of Namibia, negotiates a model petroleum agreement where it discusses things like royalties, the license terms and programmes. Namibia has a royalty regime; we don’t have any signature bonuses or anything like that.

So, once the model petroleum agreement is fi nalised through negotiating between the two parties. At the moment, NAMCOR is not entrenched in law that the national oil company must participate in any license. It is, however, advisable because we make life much easier with our technical expertise and knowledge of the country.”

Th is knowledge of the country has led others, 14 to be exact, to drill exploration wells offshore. However, Baumann predicts that the future will see the introduction of more projects, both on and offshore.

“Well, there’s certainly been a paradigm shift on thinking on Namibia’s explorability. Now we see a lot more happening because of our cooperation with the Brazilians. In Brazil there’s been a couple of massive discoveries. There’s a lot of geological similarity between Namibia and Brazil because we basically share the same margins. So, there’s a lot more interest in Namibia and we really see more happening in the next couple of years in terms of exploration and drilling of more wells.

“However, the biggest challenge will be cost. Namibia thus far has not been an exploration destination, so logistics to and from Namibia are costly. The last well we drilled in the offshore in about 700 metres of water depth was over about US$100 million. That’s a bit of a risk for us, but I’m sure we’ll manage it in the future.”

Managing the future is certainly core to NAMCOR’s success; their downstream operations will need to become a defi ning force in expanding the company. Currently, NAMCOR imports 50 percent of the country’s few demands. It’s strategy, according to Baumann, is to now become a major player in the downstream industry.

“There are other big players like Shell and Total; we don’t want to take them out. Instead, our strategy is to try and get as many storage facilities as possible in the inland of Namibia. We’ve just opened a stor-

age facility which we built ourselves in the northern part of Namibia and that’s pretty much our strategy – to tackle the downstream demand by these strategic storage facilities in strategic places. I think next will be the coastal harbour town of Walvis Bay. That’s where we’ll put up our next storage facility.”

The idea of strategic planning for the downstream sector is indeed a relatively risky move considering all the unpredictable factors that are included in economically developing countries. But for NAMCOR and Alastair Baumann, it is a risk well worth taking in order to secure their future and hopefully grow within the business that we know as exploration.

Alastair Baumann is Asset Manager for NAMCOR. He received a BSc (Hons) in Geology from the University of the Western Cape.

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INDUSTRY INSIGHT

Modern LiDAR-based aerial surveys Adriaan Combrink explains the techniques and processes of modern LiDAR-based aerial surveys.

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modern LiDAR-based Aerial Survey (LBAS) offers a surveying and planning solution to the mining, energy and civil engineering markets, which older surveying techniques could not.

Light Detection and Ranging (LiDAR) is an airborne surveying technique that combines the trajectory of the aircraft (from differential GPS), orientation of the aircraft (from an inertial measurement unit) and laser ranging to survey the earth’s surface accurately in high resolution.

Aerial surveys have always been able to cover larger areas in a shorter period, compared to conventional ground surveying, while also offering imagery to visualise the survey sites. Furthermore, very little ground access was required, which is a positive from a security point-of-view.

However, conventional aerial surveys – for example stereo photogrammetry – had some major shortcomings.

Firstly, digital terrain models (DTMs) provided could not be accurate in vegetated areas, since the stereo-derived DTMs would only give the heights of the top of the vegetation.

Secondly, some ground access was required to do so-called pre-marking, whereby a white cross is built on the ground to serve as a known point. And thirdly, turnaround on the delivery of survey products was slow and expensive because of all the manual labour involved.

The advent of LBAS solved many of these problems.

Firstly, the high-power short-pulse laser used will penetrate vegetation and also ensure returns off dark surfaces such as tarred roads or coal stockpiles. Furthermore, multiple returns are recorded for each pulse, so that the coordinates of the ground and vegetation are recorded, thus providing a very accurate DTM. Secondly, the ortho-rectified aerial photos from LBAS are produced through direct geo-referencing whereby pixels are projected onto the DTM, while the indirect methods of photogrammetry required pre-marked survey beacons. Using LBAS, site access is only required for quality assurance purposes, but can strictly be conducted without any site access. Thirdly, with the automated systems used turnaround time has greatly been reduced and this allows for rapid calculation of volumes, contours, vectorisation of buildings, et cetera.

Modern LBAS systems improved significantly on older LiDAR systems. The modern surveying systems, such as those used by CK Aerial Surveys, has laser pulses in the air 51 percent of the time, while the other 49 percent is spent turning the mirror to direct the laser pulses. The three engineering limitations that prevent these systems from surveying any

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quicker are the speed of light, the speed at which the mirror can be turned side-to-side without introducing any significant deformation, and the recording rate of data. Currently, systems can transmit up to 200,000 pulses and record up to 800,000 returns per second.

One of the major benefits of the improved ranging rate is lower cost to the client. Various steps can now be taken to reduce the cost of conducting the surveys, for example flying lower and using a wider field-of-view, thus covering a larger area to better resolution and accuracy than possible before and doing so in a shorter period. CK Aerial Surveys exploits this property by operating mostly from a helicopter platform and thereby further negating the need to operate from airfields and reducing aircraft turn-around time at the end of flight lines by 75 percent.

“Typical modern LBAS data sets contain five to 10 points surveyed per square metre, to accuracies of five to eight cm” Earth’s atmosphere causes dispersion of laser pulses as they travel to the ground, hence another advantage of modern helicopter-mounted systems is the smaller laser footprint on the ground, typically eight to 12 cm diameter, which offers better resolution and accuracy of the ground points than the 20 cm diameter from systems based in fixed-wing aircraft. With the smaller footprint, one is able to also survey features such as earth wires on power transmission lines.

Typical modern LBAS data sets contain five to 10 points surveyed per square metre, to accuracies of five to eight cm.

The high-resolution photography combined herewith, yields ortho-rectified aerial photos with seven to 10 cm pixel sizes.

These data sets have a myriad of uses in mining, energy and civil engineering, including volume calculations of stockpiles and pits, DTMs, contouring, audits, hydrology, flood predictions, detection of sinkholes, three-dimensional mapping of power lines relative to the ground and other features, and environmental impact assessments. n Adriaan Combrink holds a PhD in Geomatics from the University of Cape Town and an MSc in Physics from Potchefstroom University. He spent six years as a full-time researcher at the HartRAO Space Geodesy Programme and has been heading up the Geospatial Operations at CK Aerial Surveys since 2008.

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EXPLORATION

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With bigger risks and greater profits going hand in hand in the exploration industry, Oladipo Faseemo of Total E&P Nigeria explains how major companies are combining to take on bigger projects and reap the benefits.

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he arena of oil and gas exploration remains one of the few sectors in which competitors double up as allies; in order to make the big profits, big risks need to be spread across partnerships and alliances that not only combat the logistical and economic risks of drilling, but also the socio-political risks of the relevant countries being explored. While this may be a blessing for smaller companies – in terms of obtaining more lucrative, outsourced work – for the bigger companies it can mean a complete shift in direction.

For Oladipo Faseemo, Fields GSR Manager at Total E&P Nigeria, this fl ickering dynamic between competitor and ally is a balance of finesse. Not only does he need to factor in Total’s interests into an exploration project or field, but he also needs to assess whether or not the risk is substantial enough to encourage competitors into partnership.

“Our major task is to make reservoir studies towards the development of oil and gas fields,” explains Faseemo. “How do we best develop these fields, how many wells do you need and then be able to forecast that the well can last the rate you produce it are all questions that need to be answered. First, we need to quantify how much of the resources we have in the subsurface; this is done throughout the life of the field.

“Right now I’m in charge of four developed fields in offshore Nigeria.

These are fields that have been in production for 16 years. I have a team of six engineers, geologists and geophysicists whose main task is to ensure the continuity of production from these fields and to optimise the oil and gas recovery from the developed fields. Even though we’re producing declining oil production rates, we still hope to have the fields in production for at least the next 20 years.”

Production decline The task ahead for Faseemo and his team is to ascertain how to arrest this decline in oil production. At the initial stages of production, Total was seeing high rates of oil being produced – but this soon slowed to a plateau. More specifically, this meant a slow decline from about 70,000 barrels of oil per day to where they stand today, at about 20,000 barrels per day. Without the introduction of new ideas, new wells, or even completing existing wells to sustain productivity for a longer period of time, Faseemo and his team will continue to witness this decline. Fortunately for Total, Faseemo has a track record of successfully deterring production decline.

“Currently, we’re midway between the onshore and the deep offshore, which is a relatively new frontier; it’s more complex and more expensive. In the conventional offshore you have production platforms that were built during the construction phase that allow you access to oil well slots. In turn, these let you carry out measurements in your wells to

see the zones that have been bypassed by the existing wells, which we call infield wells within the reservoir, to be drilled from your platform so that you can increase production within a short period of time. “Sometimes you also have nearby exploration with the knowledge that you have the region to say, ‘Okay, now I have a better understanding of this environment, maybe I should just go a few kilometres away from my existing installation and I will fi nd something interesting’. We’ve recently had some successes for new fields, but I’m in the process of doing a study for development that will also be tied back to existing installations.

“To the south of the four fields that are developed and have been producing since 1993, there’s a new field that was discovered some time ago but had previously not been economically viable. We then did some reprocessing of seismic data that showed some other interesting zones that were not previously available. The well was drilled about seven years ago and that changed the picture of the field. At the end of last year we got the approval to go ahead with the field development plan, so that will take us to the stage of fi nal decision where you discover the partners because usually these fields are very capital intensive.”

Forming bonds And it is for this exact reason that companies enter partnerships with their competitors; either partners are imposed on them by the government of the country where the work is taking place, or by discussions with other major oil companies. Regardless, once this investment is made, it allows for a little more breathing space in which basic engineering plans can start to emerge “We look to start producing these other fields in the next five years,” asserts Faseemo. “Of course, you have to construct a new platform through which the wells will be drilled and then we’re going to produce true flotation production units. It actually involves floating a ship that stores and processes your oil before it’s transported to the hub of production offshore.”

As if that wasn’t a feat in itself, Faseemo’s work with hydrocarbon has also provided the opening for a new field in 2009, boosting Total’s international hydrocarbon profi le dramatically. “I don’t work directly on the field, so we have a different subsurface team of reservoir engineers, geologists and geophysicists that will take care of things. Of course, the idea is to exploit oil in an economic manner and to make money for the company and for the country where we operate. It’s the same principle.

“With Nigeria being the most important subsidiary of the Total Group worldwide, and containing our floating production storage ship – which is the lightest that has ever been built – projects are bound to come along that will challenge that record. But still, it has been a great success and we have our other deep-water projects coming up for Total in Nigeria as well.”

Despite their good fortune, both Faseemo and Total have had their work cut out dealing with the sensitive political situation in Nigeria. Fortunately, Total has been very successful in dealing with, and navigating through, all of the turbulent security situations encountered so far. “One of the reasons why we are so successful is that we respect the political situation of the country; we work well with our host community by carrying out sustainable development projects.

“We have a few sites onshore where Total has literally taken up re-

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sponsibility to ensure that the economy of the new data environment is improved tremendously. In return we are seen in a positive light by the locals. That’s one approach that’s really worked for us. Another is that we have ‘proven technologies’ that are not only respected by the local community but also by the government, the National Oil Companies and the Director of Petroleum Resources, who oversees the petroleum industry in Nigeria as a whole.”

Indeed, it would seem that Total is in the good books of all and sundry, which has paid off in a very positive way – with a bit of luck thrown in for good measure, of course. However, this is not always the case for Total; its pipelines can provide a few challenges at times, especially when you consider the fact that it ties into some of the surface pipelines used by bigger companies.

“Total has been in the country for a long time,” reminds Faseemo. “And then we have also have ten percent of Shell in Nigeria. So whatever affects Shell, affects Total in a way. We also have deep offshore and conventional offshore interests, so by and large things have been going quite positively. There’s a strong focus in the country at the moment to improve on the political situation and things have really calmed down quite a lot these past months. There’s a willingness on the part of the government to positively engage the host communities and whoever had previous agitations. All of these things are being brought on board and addressed in a very positive way, which is good for the economic environment as a whole.”

produce more than 40 percent of the oil you’ve discovered. With improving technology and what we call enhanced oil recovery, you need to be able to develop new technology to improve on the recovery of the already developed fields. It’s a huge potential, even if you only manage to implement it for one of your developments, as then you can start to put in place polymer and surfactant injections. We have already begun incorporating them into development designs. Th is is the future and I think that there’s a lot of room for improvement.

The other issue Faseemo highlights as a bone of contention is what to do with the existing fields already in play? It’s fine to find new fields and talk about bid developments, but you can’t merely discard the old and move on to the new. “Big projects, big profits, but big problems,” as Faseemo says. “If one well has a problem it’s probably equivalent to all the production from my four fields, for example, from one field. If there’s a problem with a well in the big projects then it has a big impact on the company. But for the conventional offshore fields that I manage, we look for piecemeal increasing oil production.

“It has to be a balance, just like anything in life. While it’s good for big projects, don’t forget your small fields as well. We have that spread in Nigeria for Total that that has really paid off, and continues to do so.”

“Before now, people were not venturing to deep waters because I would say horizontal wells were not commonly drilled before. But now you don’t only talk about horizontal wells in deep waters, you talk of multilaterals where for a single you can drill different branches of the single well, thereby improving the production and productivity by tapping into different reservoir zones. Th is kind of advancement in drilling technology has helped to improve the stakes because you wouldn’t want to put a subsea well just to tap a single zone like we were doing before.

“Onshore, you can put several wells, but with offshore you are restricted. You only have your platform if it’s unconventional or you need to drill extended wells, which was not possible some years back. Apart from that, there’s also advancement in enhanced oil recovery techniques.

For more and more companies this means trying out new things in order to have a real case study to refer to – giving them more confidence to go after what they want. If you’re successful with those techniques it’s always beneficial in the long run to improve your recovery efforts.”

Indeed, part of the reason for the success of many international oil companies lies in their ability to not just take risks, but to take the right risks. Faseemo cites a relatively new company whose strategy was to go after and buy existing fields where production was assured. For a new company still in its setup period, the courage and economic power doesn’t exist to take on bigger risks, so it usually falls on the multinationals who are well grounded and diversified geographically in the grand scheme of things. Ultimately, they have the fi nancial backing to take risks; the higher the risk, generally the higher the rewards. As Faseemo simply put it: “It’s just the way it is.”

“With improving technology and what we call enhanced oil recovery, you need to be able to develop new technology to improve on the recovery of the already developed fields”

Future demand Yet even with this positive movement for Nigeria and its host communities, the inevitable negative comes from one of worldwide prominence: the increasing energy demand. “I don’t have the exact figures,” admits Faseemo, “but I know the energy demand of the world keeps growing and the supply is not growing as much as the demand, as it already is today. Of course, new frontiers are being opened. Before now, nobody even thought of going into deep waters; it’s always been very expensive and nobody expected the kind of huge successes that we’ve had in past years in deep waters.

“As long as the demand is there and the price is right, I think that will push the big multinationals to take more risks. If you’re successful then you’ll have your payout in no time, so the increasing demand and environment we work in will continue to push the majors – especially with the fact that you don’t go it alone, you always go into partnership or spread your risk. The frontiers will continue to go deeper into unconventional hydrocarbon resources, which are quite expensive to develop now.”

In light of this, Faseemo has ensured that he has a plan for the future of Total in Nigeria; they already have big projects lined up with the intention of tripling production in the next nine to 10 years, and hope to see various larger projects coming on stream from now until 2015. While it’s clearly a continuous process, Faseemo makes no qualms about their future being assured through a daily improvement on Total’s recovery.

“Just to give you an idea, taking oil for example, which is more economic to develop. When you develop an oil field, you don’t expect to

Oladipo Faseemo is currently as Fields GSR Manager for Total E&P Nigeria. He formerly held the positions of Senior Reservior Engineer at Total E&P and Reservior Engineer at Elf Petroleum. Faseemo studied at Ecole du Petrole et des Moteurs and the University of Lagos and obtained degrees from both.

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EXPLORATION

Small is

beautiful

Black Marlin Energy’s Jeff Hume discusses the positives of being a smaller oil company in the exploration business.

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he arena of gas and oil exploration is pebbled with data, research and analytics that precede and often dictate the introduction of drilling. Combine that with political sensitivity and geographical restrictions that seem to cause more problems than they currently solve, and it’s clear the industry is being battered by decisions that will affect its future. Jeff Hume, COO and founder of Black Marlin Energy, flips the lid on what’s being done by smaller oil companies to thrive in such an environment.

Having recently stepped down as President and CEO of the company, Hume has employed a former Africa Oil employee with a knowledge in public markets to step up and guide the company through its reverse take over and listing on the Toronto Stock Exchange.

“We’ve been operating in East Africa since late 2004 gathering data, and then really started doing things in 2006,” he says. “The fi rst operation we had was here in Kenya. We explored in Tanzania and drilled two wells with partners there. The second well was a gas discovery on the southern end of Songo Songo Island – close to the gas field – which proved a little difficult to monetise because there’s so much gas there and so little capacity in the current pipeline.”

With acreage positions spanning Ehtiopia, Southern Ethiopia and Kenya, Black Marlin Energy also has a few exciting blocks near Mombasa, which are both onshore and offshore, that are about to be exposed to seismic data shoots. The hope is, given that Mombasa Island is in extremely shallow water, that something will be found and be available to take to market very quickly.

“The other two areas we’re in are Madagascar and the Seychelles. We have a 75 percent working interest in the largest acreage in the Seychelles, which we’re very excited about. We’ve shot a lot of seismic data over the last four years there and we’re homing on a few areas that we like; we hope to get some big partners in the next six or eight months.

“We’re at the pure exploration end at this stage and so we’re looking to develop drilling prospects and either drill them ourselves or bring in partners. Tanzania obviously has gas; there’s likely to be gas because there’s so much gas that has been found there. We’re chasing oil in other areas: Seychelles and Madagascar are probably oil. Coastal Kenya could be gas, could be oil.

The exploration game “With regard to the cleaner fuel issues, it’s really rather down the road. We’re unlikely to develop production. We might get into the development stage, but in terms of actually producing it, we’ll probably sell that off and then go back to more exploration because small companies explore. Big companies don’t explore any more.”

The idea of small companies taking on the exploration side of things seems to ring true throughout the industry. For starters, small companies can undertake exploration with far less expenditure, and often in places that larger companies can’t get to without putting in large amounts of money. The model really becomes the exploration of new areas; ironically the higher price of oil has opened up areas that were inaccessible before.

“For example,” continues Hume, “five years ago I was at a conference listening to Andrew Tullow. Tullow and Heritage had just drilled two wells; one was a water well and the other one was full of carbon dioxide.

They were disappointing results, and that’s only five years ago. Here we’re talking about production of more than a billion barrels of oil. That’s the kind of thing we’re looking for.

In addition to these, small companies often face a multitude of other challenges – one of which is data and data management. “The government typically over 20-30 years collected information from oil companies, but to a large extent didn’t really understand it. Now, that’s being unfair on some governments who have got excellent technical departments that have reviewed the data, and that’s certainly more true now.

But often the data was boxed up and sent to the companies and they just put it in an archive.

“Tying some of that data together, understanding it, being able to reprocess it, even being able to recover it in some of the exploration areas – particularly in East Africa – is very difficult and very time consuming.

Often you’re on quite tight timeframes to be able to explore an area.

“Let’s say you have a three year exploration period. Well, if is takes you 18 months to fi nd, recover and reprocess the data, that’s a big chunk out of that period. In the context of data management it would be ideal if the government could just give you a digital fi le and say ‘there’s all the data’. The problem with that is that digitised rubbish is still rubbish. You need to understand the providence of the data and how it got into that digital database before you can really use it. Although you’re not doing new work, there’s a lot of detective work that needs to be done before you can say, ‘Yes, okay. We can rely on that information.’”

Exacerbating the issue is the problem of political challenges. Tax issues, tax treaties and product-sharing contracts going back to 1999 with exemptions and tax reliefs have all caused problems, specifically with customs laws and the tax unification in East Africa. Suddenly in 2004 another set of decisions were made, but nobody went back to question the fact that the exemption was already in the agreement.

“One of the sensitivities is really understanding the structure of the agreement. IHS has been talking about that a lot recently. Is it robust and does it fit with current conditions? You really need to fi nd out sooner rather than later.”

Th is notion of ‘sooner rather than later’ certainly plays effectively in relation to geophysical technology and how it can improve exploration risk rates and reduce costs. Having spent a good deal of his career involved in planning and executing 3D and 4D surveys for production, Hume is more than aware of the need to keep costs down.

“Unless you’re in deep marine conditions it really isn’t economic to do 3D surveys. We’re in the situation in East Africa, which is again where our focus is, where almost no 3D surveys have been done. One or two big marine surveys have been done, but very little in the way of land treaty or transition zone treaty because they’re so expensive.

High cost “The technology we tend to use is 2D seismic technology tied to any other method that we can use to de-risk it. For example, if we had four structures on a block that were of similar size and had a similar look and feel and looked prospective – but on one of them we had a geochemical anomaly that suggested that there were hydrocarbons – that would be an interesting de-risking tool. GNT was here this week with that type of technology. We do look at integrating these exploration technologies

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and other things to de-risk the drilling, which can be very expensive.

Whereas a well in Canada might cost US$1 million, here it’s US$15 million to do the same thing.

“The key part about geophysical technology is being fit for purpose. We’re looking for big structures in regional lines that are as much as three kilometres apart. In a 3D survey your subsurface lines are 25 metres apart, so it’s a huge difference. Accuracy of positioning is not as critical for the type of work that we do. We’re working in Ethiopia at the moment where there is a security issue that the Ethiopian government are handling very well for us, but nevertheless we cut back our exposure by doing essentially real-time navigation like you would on a boat. We’ve applied it to land data, so we don’t have teams of surveyors wandering around days in advance putting little flags in the ground.”

Indeed, the application of geophysical technology has its merits and Black Marlin Energy has recently proved this in its acquirement of data

“Small companies explore. Big companies don’t explore any more” in Tanzania. “Having done quite a lot of research on this,” asserts Hume, “normally longer is better in terms of geophysical cables, but when you have to get up little creeks it’s impossible to use a six kilometre cable. The alternative is to go to a transition zone crew and lay something on the bottom, which is very expensive and slow, or see what you can manage in terms of the offset.

“We’ve recently acquired over 350 kilometres of new data for a client and a partner in Tanzania where no seismic data had ever been shot before; very shallow water, very successfully with some very good looking data. We’re about to apply the same technique – short offset, towed cable, here in Kenya. We’re in the point of acquiring data where no data

has been acquired before, and we want to try it as close to the coast as we can because in our block, close to Mombasa, even 50 BCF of gas is a commercial fi nd as long as we can access it from land. If you go in 1000 metres of water it’s got to be two TCF of gas. There’s a big difference.”

And the difference will get bigger in all relative terms as the world energy demand increases. As this is undoubtedly the case, the next worry for small companies will be the ability to supply the demand in the coming years. According to Hume, the answer to that question will come down to the usual – money.

“The price will go up with time, and as it goes up more resources will become available. Madagascar currently produces no oil at all, but there are at least 25 billion barrels of oil in Madagascar at the surface, and it’s easy to get at. But it needs to be a sustained oil price, probably above US$65-US$70 per barrel for a long period of time to make it economic.

There is shale gas in the US that was considered to be a minor resource 15-20 years ago, but now it’s a huge multi-TCF of shale gas. There are lots of places to go provided that there is a sustained price that you can get the investment back on.

“I think we can manage a higher price of oil and I think OPEC are doing a cleverer job of managing the price than they did in the 1980s.

I believe that the money and resources will be there as more unconventional resources come into play. But you need that sustained price over time.”

Future vision On the topic of exploration activities, Hume seems to have a solid grasp on his vision for the future direction of Black Marlin Energy.

“We’re going to continue in the exploration game and we’ve certainly got a good reputation here in East Africa. We’re looking at a couple of other areas around the world where we can bring our business model into play.

I still think there’s something left in the business model of having a service arm that can actually perform unconventional types of service. The kind of work that we’re doing around Mombasa right now doesn’t exist, so we created it to do our own work.

“That innovative approach to data acquisition to help us in getting to the front end of exploration deals is something we’ll probably continue.

But should we have a major success – for example, a really big fi nd in Madagascar – we may drill in Madagascar this year for example, and that would change the profi le of the company completely. It really does depend on how we develop, but we have a pretty aggressive strategy over the next two years. We hope to be drilling this year, but Madagascar is a little politically sensitive, so we’ve got to be careful there. But hopefully we’ll still be able to carry out our plans.

“We’d like to drill in Kenya, certainly in early 2011, and then we have up to about eight wells to drill between say the middle of this year and the middle of 2012. Quite a lot of activity in different countries – that’s our main focus. Whether we develop the company and grow it organically, or we get to be an interesting takeover target at some stage, the future will decide.”

Jeff Hume is Chief Operating Officer and founder of Black Marlin Energy. Hume holds a BSc (Hons) degree in Exploration Science from University of Nottingham, UK and has over 30 years of experience in the areas of geophysical and survey services and consulting to the oil and gas, hydrographic surveying, geodetic surveying and geotechnical industries.

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EXPLORATION

HELP FROM HOME Jacob Saa Sandikie explains the intentions and hopes of the National Oil Company of Liberia.

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lthough neighbouring countries have already proven substantial offshore oil reserves, the waters off the coast of Liberia are yet to provide in this oil rich region of West Africa. And yet, surely something must be found along the 359 mile Liberian Atlantic coastline as it opens up into the oil-laden Gulf of Guinea. To ensure something is, the National Oil Company of Liberia concerns itself with all things oil to make this hope a reality. Jacob Saa Sandikie, Vice President for Technical Services, is helping lead the charge in this new voyage for Liberia’s oil pockets.

“Basically,” explains Sandikie, “the National Oil Company of Liberia is a 100 percent government owned corporation responsible for exploring oil and making everything possible for oil companies to come, conduct and provide the licenses for oil exploration. It also provides all the necessary permits that the investor will need to conduct oil exploration in Liberia. On a personal level, I’m also responsible for negotiations for the oil company.

“For instance, we have had two bid rounds. We conduct bid rounds by chairing – I should say co-chair because the proper chairman of the Petroleum Technical Committee is the President of the National Oil Company or his designee. Most of the time he designates me to chair the committee, which is responsible for conducting the negotiation and bid round and evaluating the bids. Then, once all negotiations are cleared, the agreement is submitted to management who will then send it to the board for approval.

“Once the board of Directors have approved, the agreement is signed.

The Liberia agreement is signed by the ministers of Lands, Mines and Energy, the President of the National Oil Company, the National Invest-

ment Commission, the Ministry of Finance and it’s attended by the Minister of Justice. Once this has passed, the process goes on to the office of the President who then approves the agreement and sends it for ratification to the legislature. After that, the agreement becomes binding and in effect.”

Final bidding To date, the National Oil Company of Liberia has conducted 12 of these agreements that are all currently in effect, with five remaining agreement ‘blocks’ available to future interests. In addition, they have recently extended the deadline for a further round of bidding after some of the companies requested more time to bid – a promising sign.

“The National Oil Company asks for contributions from other companies to train younger Liberians in various aspects of the oil industry” “By February we’re going to have a ceremony to open all the bids that are coming and then the committee will get to work again to evaluate the bids. Then those that win the bid will be called in for negotiations with the government. This committee is responsible for reviewing the wet programme of the oil company, reviewing the budget, approving them, and then whatever problems arise that can be quickly resolved between parties can be handled through this committee for the operations to go on.”

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At the moment, the National Oil Company is witnessing solid levels of potential in the context of discovery, with interpretation work commencing after a 3D seismic reading earlier in the year. If hopes are to be believed, Sandikie thinks that by the end of the year they will be able to defi ne a drillable structure.

“Anadarko have a new platinum tip technology they want to try in Liberia. They’ve done the 3D and then brought in another vessel recently to go over the area. I can’t describe exactly what it was, but we believe this will be able to pinpoint the area more successfully. That’s why they’re taking their own time to make sure that there are no mistakes; if they decide to drill then we should think there’s something there because they use every available means to search before they go ahead.”

A helping hand However, keeping the costs down will become pivotal in both attracting new investors and exploration companies, but also in continuing to work within unconventional resources. “At the moment,” continues Sandikie, “we have been able to help the oil company with the permits. For instance, the maritime bureau was asking for rates that were equivalent to the commercial vessels. Merchant vessels coming in to do seismic were being charged ‘per year’ even though they weren’t there for the whole year.

“The service vessels coming in for two, three, even five months have to pay again for the whole year if they come back in January because they have crossed over the year. We were able to negotiate with the maritime bureau to look at it, but in the end it’s actually a cost recoverable expense.

The more wages we charge, the more we’ll have to eventually reduce the revenue that will come to Liberia. Instead, why don’t we eliminate the permit requirements for seismic vessels, or at least reduce them to the minimum.

“We were able to come down to a very, very reasonable amount and reduce the costs in that area. We’re doing a lot of things like that. Also, when we review the budget with the company in the work programme, we normally discuss these things to make sure that the budgets are passed within the reasonable amounts that are cost effective for the programme.

“Incidentally, we are at the initial stages in our oil programme doing oil exploration with seismic acquisition interpretation. At this particular stage there is not much activity underground when it comes to direct contact with the population. We don’t have any problems with that, but nevertheless we have been able to negotiate with oil companies to advance some money on an annual basis for some shale work for their contributions.”

In addition, the National Oil Company also asks for contributions from other companies in order to train younger Liberians in various aspects of the oil industry; not only will this afford a level of privileged education, but more importantly it will provide a greater workforce should oil be found in Liberia. So far, a large majority of the companies have been generous enough to afford reasonable amounts into the scheme on an annual basis.

Combined with this idea is the recent board approved budget to provide scholarships for young people to train abroad, be it for a degree or industry qualifications. They even have the components in place to undertake skills training – making the students a valuable asset to companies and the country alike once they are fully equipped with the skill set.

Th is intention is certainly pushing the attitudes and motivation of Liberia forward, but what does the future hold for the country? Well, Sandikie keeps his prospects for the future simple: “The most important thing is to discover the oil and have it pumped out of the ground. We are optimistic that it shouldn’t take more than two or three years. If that happens, and oil revenue comes in, of course that changes the entire picture for Liberia in terms of development, employment, infrastructure and so on.

“We are very hopeful and the government is giving a lot of attention to the oil programme right now by way of supporting the work and making sure that investors come in and they give them all the necessary courtesies and legal instruments that they need to do their work.”

And it seems to be a case of ‘so far so good’. Sandikie is currently fortunate enough to be witnessing a spectrum of companies ranging from Australia, China, Spain, America and the UK, not to forget close links with a Nigerian company. With all the provisions in place, Liberia is trickling its way towards having its oil doors opened to the world. All it needs now is someone to open them.

“We are at the initial stages in our oil programme doing oil exploration with seismic acquisition interpretation”

Jacob Saa Sandikie has served as National Oil Company of Liberia’s Vice President for Technical Services since November 2003. He was previously Assistant Minister for Energy, and Head of the Department of Energy, Ministry of Lands Mines and Energy (MLM&E). He is an Energy Specialist with a Master of Energy Resources degree (MER) from the University of Pittsburgh, US.

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EXPLORATION

Exploration in peace As the southern nations of Africa continue to struggle for energy, Tanzania finds itself promoting peace in an attempt to attract further exploration and future investment.

William Ngeleja, Minister for Energy and Minerals for Tanzania, opens the lid on Tanzania’s plans for the future.

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he southern nations of Africa have been in a perpetual struggle for years. Political instability, severe levels of poverty and a lack of sufficient infrastructure have all played their part in keeping this struggle alive. In order to redress the balance, a significant input into the development process of the continent, through an establishment of a reliable and efficient energy system needs to emerge – and quickly. For Tanzania, however, this ideological dream could become a reality in the very near future.

To ensure it does, William Ngeleja, Minister for Energy and Minerals in Tanzania, is drawing upon all his experience in the private sector to work towards a better future for Tanzania, through the exploitation of both their energy and mineral sectors. In doing so, Ngeleja hopes that it will reignite the stagnant socio-economic state of the nation and attract the attention of potential private investors.

Experience “I currently hold the post of Minister for Energy and Minerals; before then I served as Deputy Minister for a year,” explains Ngeleja.

“My background comes from the private sector where I started working with PricewaterhouseCoopers immediately after my graduation in 1994. When they merged in 1997 I became a permanent member of staff. It wasn’t until July of 2005 that I crossed over to politics and was elected by my party in the intra-election to contest for the general election. I won the seat and became a member of parliament.”

It goes without saying then that Ngeleja is certainly an asset to the Tanzanian Ministry; his experiences in the private sector have undoubtedly served him well in times of confrontation and decision-making. A prime example: The recent revoke of the tender for the purchase of two generators located on Dar es Salaam and Mwanza by the government.

Without the generators, the 160 megawatts needed to run the national grid will need to be accounted for elsewhere.

“We said there were some procedural inconsistencies that we discovered in due cause of the process,” admits Ngeleja. “That’s why we decided to revoke the tender, but then so too had the same companies which had managed to reach the fi nal stage of evaluation.

They’re not open tender for the international, so there’s not going to be an international race for the ones who had not bid and for those who had not participated during the fi rst tendering process. We’re just exposing this document for the ones that had been shortlisted and that had confided for fi nal evaluation.

To ensure that the recent power shortages attributed to Tanzania Limited’s overcharging of electricity are avoided in the future, Ngeleja asserts that steps are being taken to learn from the mistake, including many by the government. “One of them,” explains Ngeleja, “is the purchase of generators to generate 160 megawatts to make sure that we address the shortage that addresses the country now. The other thing is that our coalmine is expected to generate power of up to 200 megawatts; it is almost online because we’ve secured the credit and we have secured the facility from the Chinese government to fund the project, which is about US$400 million. The project will start soon and is expected to take roughly 20 to 24 months. That will help us address that.

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“The other thing that the government is trying hard to improve at the moment is the infrastructure that is in existence today, because one of the reasons we fed that shortage was due to poor infrastructure. Once it is improved, we believe that the loss that is experienced now will be reduced. Another effort that we are involved in is working hand in hand with the relevant provisional parties to start using gas. Once we start doing this, it will help us to reduce the current costs that we are incurring. The ultimate objective is to purchase this through government institutions or through the government itself, because in terms of the law, the government can be a procuring entity. We are looking at all of those options.”

“One thing that I can assure them of is that Tanzania is a proper and conducive-based nation for investment" Indeed, with gas being a far cleaner fuel, there is a sense of unavoidable pressure from the international stage to be more carbon friendly.

Ngeleja admits the presence of this pressure, but makes it clear that they are also looking at the justifiable aspects of the situation; how they would go about it and how it would be managed are all questions that need to be answered. Ngeleja fi rmly believes that it’s the government’s intention to be self-sufficient and to have reliable and secure power in the country. One such potential step forward lies in the new mining act.

However, the potential to change taxation rates both within and outside the industry could have a knock on effect for the Tanzanian government.

“Well, the new mining act will not affect the taxation in the existing mining industry. The new mining act is intended to address all the weaknesses and the shortcomings that we have identified over time due to the implementation of the 1997 mining policy and the 1998 mining law. What we are saying is intended to address all those shortcomings and weaknesses that we have identified. In order to make this new mining act effective, we’ll have to synchronise with the other existing laws which operate hand in hand with the mining legislation.

“There are quite a number of laws that also need to be amended with a view for addressing the weaknesses and shortcomings that we have identified over time. It’s not something that is going to negatively impact because we consider it.

The whole process has been engaging all these

players. In December we ran a two day workshop that we had invited all the players, especially mining companies, large and small, to participate in the process.

“We wanted to be all inclusive and not leave anyone who isn’t engaged in the process, because at the end of the day the ownership of that law would be for all of us and not zoned by the government. We don’t want to leave a chance for complaining later that we weren’t thoroughly engaged or consulted, so it’s going to be a good thing because it impacts all of the parties.”

Selling safety Another factor that has already made an impact on Tanzania is the public optimism of Ngeleja in discovering oil within the region, and how such discoveries have already started to benefit the country. “I’ve said on a number of occasions,” affirms Ngeleja, “that we are very optimistic because we look at the number of the larger companies that have come to Tanzania to do exploration for oil and gas and the influx is very positive.

Today, we’ve got more than 13 companies that are doing exploration for oil and gas in the country; we have production and sharing contracts with a number of them – more than 20. And this year is going to be even more promising because now drilling has started one of the companies, Tullow, has started drilling.

“They are drilling because they have established; they’ve got the motivation to William Ngeleja graduated with a degree in Law from get to that level of drilling. We are very Dar es Salaam University optimistic for the simple reason that we in 1994 before going on to work as an Advocate for look at the number of companies that PricewaterhouseCoopers up until 2000. Currently, have come to explore in Tanzania. One Ngeleja holds the position thing that I can assure them of is that of Minister for Energy and Minerals for Tanzania.

Tanzania is a proper and conducivebased nation for investment. Th is is a democratic country, but looking at the geographic location of Tanzania you fi nd that Tanzania is a risker area for investment because whoever invests in us – be it mining, in oil and gas, in other sectors – will be investing in our six landlocked countries that border Tanzania.

“Also, peace is one of the essential ingredients for investment, and Tanzania is a peaceful country. Actually, in most cases it’s referred to as the most peaceful country on the African continent. We believe that these factors make Tanzania very competitive in terms of investment and exploration. But also the law; Tanzania respects rules of law. The process of how we conduct business in Tanzania is very diplomatic and the government has been trying hard to make sure to improve the legal framework, but also the policies of the country and the institution.”

Th is sentiment of improving Tanzania’s legal framework remains core to progressing the country in terms of its exploration and attracting further investors. In addition, promoting Tanzania as a peaceful country will speak volumes to such potential. But in order for it to be fully realised, it is consistency that will ultimately need to prevail. Then, and only then, can Tanzania prove itself as a pioneer in peaceful exploration for the southern nations of Africa.

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ASK THE EXPERT

Trial Surveys’ Philip Schalekamp explains the intentions behind South Africa’s Medupi power plant.

SURVEYING PROJECTS AND DATA MANAGEMENT AT MEDUPI

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rail Surveys (Pty) Ltd, engineering survey specialists in portunity to demonstrate the capacity of local companies to deliver partnership with Panel B Consultants JV (comprising successfully on mega projects. “Trail Surveys has extensive physical and of Arcus Gibb, SSI and Knight Piesold), are currently site management survey experience and the capacity, infrastructure and responsible for the consulting surveying at Eskom’s expertise to tackle a project of this magnitude,” says Trail Survey’s CEO Medupi power plant project, Lephalale, in South Africa’s Philip Schalekamp.

Limpopo Province.

Medupi’s civil works component includes the construction of all the The need for Eskom to provide reliable and sufficient electricity concrete foundations and structures, the building work and the construcis critical for industrial and sustainable development in South Africa. tion of all auxiliary works – the water treatment plant, auxiliary boilers, Eskom is the world’s eleventh-largest power utility in coolers and substations. It also includes backfi ll, road terms of generating capacity. The company generates construction and earthworks. and distributes approximately 95 percent of South South Africa and Eskom face continual problems Africa’s electricity and supplies 60 percent of the total with the skills crisis. “Local people are receiving trainelectricity consumed on the African continent. ing as part of the contractual agreements for the civil The Eskom Medupi Power Station project components of the Medupi projects,” says Schalekamp.

(Medupi) is one of several projects aimed at solving “Trail Surveys are also providing onsite training in the current energy crisis in South Africa. Eskom has survey skills. We recognise that there is a major survey several power diversification options but they are skills deficiency in South Africa with a resultant severe insufficient to meet the forecast demand for electricimpact on our industry, especially on productivity, acity over the next 20 years – coal fi red options are still curacy, quality and safety issues.” required for expansion during this period.

A company within the Trail group of companies, Medupi, due for completion in 2017 with the first Philip Schalekamp is the CEO and the Technology Surveying and Mining Academy founding member of Trail Surveys (Pty) unit scheduled to be commissioned in early 2012, will Ltd. His vision and tenacity have taken (TSMA) is a CETA-accredited training service prohis company forward in terms of its be a six-pack dry cooled coal-fi red generating plant, substantial expertise and capacity. vider to the construction industry. TSMA is accredited comprising some 4 700 MW of installed capacity. It Schalekamp is also an executive director to present the South African Qualification Authority’s of the geomatics training academy TSMA will utilise high-tech supercritical boilers, which will (Pty) Ltd. He holds a National Diploma (SAQA) registered National Certificate in Surveying in Surveying and is registered with the operate at higher temperatures and pressures than South African Council for Professional and (NQF 4). TSMA has rapidly established a reputation older boilers, giving greater efficiency and conse- Technical Surveyors and the South African for excellence in the field of surveying training and Geomatics Institute. quently better use of natural resources. recently signed a three-year national contract with Trail Surveys, a Pretoria based company with a ESKOM to provide training and skills development in southern, northern and eastern African footprint, the field of Geomatics. provides a multidisciplinary surveying service in the fields of civil The construction of the Medupi power station is already having a engineering, civil construction, hydrography, mining, cadastral and significant effect on the lives and the economy of the small community architecture. The company has a diverse and extensive client base that of Lephalale (formerly Ellisras). There are currently approximately 8500 includes various government departments, municipalities and consulworkers on site and this number is expected to peak at 10,000. Lephatants in Southern Africa and contractors and civil consultants in other lale’s gross domestic product (GDP) is expected to increase by about 95 African countries. percent a year as a result of the power station construction activities, Projects such as Medupi offer South African companies the opwith about 40 percent of the project cost spent locally.

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PIPELINES

DUCT tales Adam Wynne Hughes details the achievements and priorities of the International Pipeline and Offshore Contractors Association (IPLOCA).

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he business challenges involved in the execution of mammoth pipeline projects worldwide are numerous and complex. In this complicated world, relationships are all-important – among clients, contractors, sub-contractors, suppliers, and of course, governments and local communities impacted by pipeline construction.

The International Pipeline and Offshore Contractors Association (IPLOCA) exists to support and foster these relationships, provide a forum for sharing ideas and to engage all members of the pipeline supply chain while promoting the highest standards in the pipeline industry and maximising use of new technologies.

Headquartered in Geneva, IPLOCA currently boasts 106 corporate members – key international pipeline and offshore contracting companies as well as their subcontractors – and 115 associate members who represent the manufacturers and suppliers of vital products, equipment and services to the pipeline industry. It also has four academic members.

The association membership is truly global, composed of companies in Algeria, Argentina, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Denmark, Egypt, France, Germany, Greece, Hungary, India, Iran, Italy, Japan, Kazakhstan, Korea, Lebanon, Malaysia, Mexico, Netherlands, Poland, Romania, Russia, Saudi Arabia, Singapore Spain, Sweden, Switzerland, Syria, Turkey, UAE, UK and USA.

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2010: KEY PRIORITIES Value to members and recognition of IPLOCA by key oil and gas stakeholders Health, safety and environment: To promote the common interest of members and foster a high level safety culture across the industry New technologies: To stimulate industry-wide technology, processes, and contractual relationships for pipeline projects One-on-one engagement of members around the world through increased number of local and regional meetings in local languages Increased involvement with training and professional organisations to facilitate and publicise careers in pipeline construction

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Pipeline innovation Pipe laying methodology has changed little in the last 40 years, despite technological advancements in almost every other field, but members of the association are working together to seek opportunities for improvement that will benefit the entire industry.

To this end, a First Edition of Onshore Pipelines: The Road to Success made its debut in September 2009 at the association’s 43rd Annual Convention in San Francisco, the result of a multi-company collaboration under the IPLOCA umbrella. Some 45 companies participated, including Bredero Shaw, Caterpillar, CCC Group, Entrepose, Fluor, Gulf Interstate Engineering, Heerema, Land & Marine, Rosen, Saipem, Serimax, Spiecapag, Tekfen, Technip, NACAP, Volvo, Willbros, BP, Chevron, ENI, Petrobras and others.

Around 100 individuals attended meetings and workshops and contributed their time and expertise to the production of this document, which describes state-of-the-art project development and proposes new execution practices and equipment for onshore pipeline projects.

The 372-page document, now available online at the IPLOCA website, presents in considerable detail onshore pipeline construction phases from front end loading through contract development, analysis and management of risks, to project execution.

“We must manage people involved at all levels on the job, and nurture good human relations with communities of different beliefs and cultures all along the pipeline route”

A two-day meeting in March 2010 in Geneva addressed development of the Second Edition of Onshore Pipelines: The Road to Success.

Advances in pipeline technology are actively encouraged by the association, not only via the Novel Construction Initiative but also under the more general umbrella of New Technologies. To this end an award, sponsored by BP, is given every other year at the IPLOCA Annual Convention

Safety first Health, Safety and Environmental Management are of paramount importance to IPLOCA members. Each year the individual member companies provide their Health and Safety statistics to the association and these are made available in aggregate to the members who can monitor their progress in relation to the industry at large.

Environmental management – complicated because the physical circumstances of projects vary so much – is similarly at the forefront in discussions and monitoring. Each year IPLOCA grants awards in Health and Safety (sponsored by Chevron) and every two years makes awards in Environmental Management (sponsored by Shell), also presented at the Annual Convention.

Clearly, standardisation of process will make for better familiarity, greater ap-

IPLOCA: THE FACTS Founded: 1966 in Paris Member companies: 106 Associate member companies: 115 Countries represented: Algeria, Argentina, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Denmark, Egypt, France, Germany, Greece, Hungary, India, Iran, Italy, Japan, Kazakhstan, Korea, Lebanon, Malaysia, Mexico, Netherlands, Poland, Romania, Russia, Saudi Arabia, Singapore Spain, Sweden, Switzerland, Syria, Turkey, UAE, UK and USA

2009-2010 Leadership President: Adam Wynne Hughes, Land & Marine Project Engineering, UK First Vice President: Karl Trauner, Habau, Austria Second Vice President: Osman Birgili, Tekfen Construction, Turkey Treasurer: Phil Bond, Pipeline Induction Heat, UK Immediate Past President: Bruno de La Roussière, Entrepose, France

plication and therefore better results all round, and IPLOCA is working to facilitate this as part of its own agenda.

The human factor Yet perhaps the most serious challenge for the pipeline construction industry remains the lack of manpower. IPLOCA, along with many industry members, is seeking solutions in this area and through the working of its Training Committee is embarking on specialist seminars, while polling its members around the world for their needs and feedback.

Most recently, IPLOCA has organised a training seminar designed specifically for pipeline managers on “Communication Skills in an Intercultural Environment”.

“The pipeline construction industry remains a great challenge,” said Ibrahim Zakem, Managing Director of Zakhem International Construction Limited in Kenya. “We must manage people involved at all levels on the job, and nurture good human relations with communities of different beliefs and cultures all along the pipeline route. Our pipeline engineers are always there to foresee any problems and resolve them in a timely way through training programs, fostering good relations with the people directly involved irrespective of their ethnicity, creed or culture. We have appointed a team of experts on a permanent basis to plan and resolve the problems that may confront us on ongoing or future pipeline projects.”

IPLOCA is proud to represent and serve its membership base worldwide for the benefit of the industry at large. Dialogue and collaboration under the IPLOCA umbrella can do much to move the industry forward at a time of unprecedented demand for water, oil and gas. n For more information visit www.iploca.com

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DYNAMIC SECURITY_mar10 13/04/2010 09:33 Page 78

EXECUTIVE INTERVIEW

Security and fire management in Africa Cosmo Moyo of Dynamic Security Technologies Ltd highlights the emergence of the electronic security and fire management industry in Africa.

Tell us about Dynamic Security Technologies Ltd the company.

Cosmo Moyo. Dynamic is a privately owned Tanzanian / South African company with a joint venture in Equatorial Guinea and a representative in Nigeria. The company specialises in the installation and services of electronic security and fire management products.

rooms, power generation control rooms, telecoms control rooms and dragline engines.

Please note that halogen gas has been outlawed and replaced with FM200, which is environmental and human friendly.

Earlier you briefly touched on the video smoke detectors, can you please tell us more about this product.

CM. Well, the automatic fire extinguishing system is a good conventional product, at least in its detection aspects. But good is not good enough in a world of excellence.

It should be noted that the ionisation detection process takes a little longer and is hardly applicable in very large warehouses let alone wide open high risk areas. How do we monitor and detect fire in petroleum depots, petrochemical plants and lumber yards?

The video smoke detector turns to solve all these challenges, by detecting fire at its very inception. It records the sequence of events so that engineers may later study and prevent the cause of that fire in future. It also acts as a security camera. The video smoke detector is a must for all new fire detection installations and a great compliment to be added on existing installations.

What are the products and services that the company specialises in?

CM. Our core products are Access Control Systems, automatic fire extinguishing systems, video surveillance and CCTV monitoring systems. Access Control Systems are a wide and varied field but to simplify it we should answer two questions. Firstly we should ask what entrance needs to be accessed, the answer to this will determine the barrier applicable to the solution e.g. gate, turnstile, traffic boom etc. Secondly, we should ask what kind of technology will operate “Coming to CCTV monitoring the barrier? Is it the Biometric finger reader, a reand video surveillance we also mote control, loop detection, proximity tag etc. find that the situational Dynamic has a variety of barriers such as motorised automatic gates, traffic booms, turnrequirements determine stiles and doors. These barriers may be operated the solution” or controlled by biometric finger readers, proximity tags, remote controls or swipe cards deIt looks like your organisation covers a subpending on the requirements of the client.

However it should be noted that the Biometric is gaining popularity because stantial area in the security and fire management industries. Can you tell of its fraud proof characteristics. Furthermore these Access Control Systems us who your target markets are? may come as simple stand-alone systems or sophisticated IT intergrated sysCM. The African economic growth is fuelled by resources, telecoms, power tems with time barring and entrance barring capabilities. These are solutions generation, banking and oil and gas companies. It is natural for us to follow to monitor who enters where and when and are a perfect tool for workers developments in these industries and claim our share of the action. Some of clocking in and out of work. our products such as the automatic remote controlled gates are targeted at exComing to CCTV monitoring and video surveillance we also find that ecutive up market residences and embassies. Dynamic is also registered by the the situational requirements determine the solution. We have simple standSouth African Police Service as its security service supplier and adviser. alone systems for up-market residences, small shops etc and we also get advanced internet protocol based systems with remote viewing, zooming What other peripheral products do you offer?

CM. We sometimes get requests for full body scanners from airports and capabilities and multiple monitoring points. Mines, airports, power generamines. I am glad to say we have proven products in this field. We also do election plants and large corporations are but some of the entities employing these tric fencing and perimeter intrusion beam detectors. n state of the art video monitoring systems. Video monitoring has also been developed as a fire smoke detector.

Our other major product is the automatic fire detection and extinguish systems using anti-combustion gases. We install these in premises where water sprinklers can’t be used. These premises include computer server

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Cosmo Moyo is Managing Director for Dynamic Security Technologies Limited. Moyo went into the Electronic Security business in 1995. Dynamic Security Technologies Ltd initially specialised in automatic remote controlled gates and later diversified to include electronic and fire security systems. A former locomotive engineering technician, Moyo is studying for an MBA, and currently lives in Cape Town with his family.

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PPSA_mar10 13/04/2010 09:36 Page 80

PIPELINES

The whole hog Lloyd Pirtle celebrates 20 years of the Pigging Products & Services Association (PPSA) and reviews why its creation was so important.

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lmost all of the bulk fluids used in the modern world are transported by pipeline. Crude oil, natural gas, refined products, water and countless others. To travel through a pipeline, fluids must be pumped.

Pumping requires pressure to be exerted on the fluid and this pressure creates stress in the pipe wall. Stress can cause failure – and failure of a pipeline could be catastrophic. Clearly, the integrity of any pipeline is of paramount importance.

Any vessel or structure subjected to stress must be regularly maintained and inspected. Aircraft, boilers, buildings – even regular servicing of an automobile are typical examples. But, unlike pipelines, all of these are easily accessible. Whether traversing land or sea, pipelines are buried, so the only way to ensure their integrity is from the inside. Obviously maintenance engineers or inspectors cannot be sent through a pipeline, so it is necessary to devise some other means of doing this. The answer is to use tools, which are known as pigs. Pigs can be used for cleaning and removing unwanted gases or liquids – or more sophisticated ones for detecting damage, corrosion, movement of the pipe and other potentially serious problems.

Pigs travel through a pipeline driven by the product flow – they are in effect free moving pistons. They can be subdivided into two broad categories: conventional pigs which are used to perform maintenance tasks such as cleaning or drying, and in line inspection (ILI) tools that provide information about the pipeline’s condition. Conventional pigs are usually very simple devices fitted with brushes and seals and are used on a routine basis. ILI tools are very different. They carry sensors to detect and locate any problems as well as the battery power and computer equipment to enable them to analyse and store all the resulting data.

To get some idea of the degree of sophistication required for ILI tools, consider the inspection of a 36-inch (approximately 1000mm) diameter, 100mile pipeline (i.e. a relatively short and not especially large pipeline). The ILI tool, may travel at speeds of up to 16 kilometres per hour which means it must inspect, analyse then store the data for 13 square metres of pipe wall every second for around 10 hours.

Pipeline pigging has been practised for well over 100 years, but as pipelines became longer and strategically more important, pigging had to be taken more seriously. Various ILI tools were made, but the real breakthroughs began with the advances in computer technology in the 1980s. During this period, there was a proliferation of different pigs and services offered which made it difficult for the pipeline owners and operators to know what was available and to decide which, if any, was best for their particular circumstances.

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It became apparent that although it was important for operators to be made aware of the pigging products and services available to them, it was equally important for the suppliers to be made aware of the needs of the operators.

In 1989, Scientific Surveys Limited and Gulf Publishing Company held the first Pipeline Pigging Technology Conference in Houston, Texas. It was realised that, as most prospective members would be there anyway, the Houston Conference would be an ideal place to hold a meeting to discuss and

“Pipeline pigging has been practised for well over 100 years, but as pipelines became longer and strategically more important, pigging had to be taken more seriously” finalise the formation of a trade association. The aims and objectives had to be established and prospective members had to be recruited. The pigging industry was very keen to get together and before the second conference opened in Houston in 1990, there were 19 provisional members. After the necessary legal formalities, the Pigging Products & Services Association or PPSA was finally incorporated on May 1, 1990.

Since then, PPSA has been a remarkable success story. Membership has risen from 19 to 90 and now includes virtually every organisation in the world that is involved with this very specialised and important activity. n For more information visit www.ppsa-online.com

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POLYGUARD_mar10 13/04/2010 09:36 Page 82

ASK THE EXPERT

New regulatory requirements for coating systems Richard Norsworthy examines the new US regulations governing non-shielding coated systems.

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he United States Department of Transportation (DOT) has called for the use of non-shielding pipeline coatings on natural gas pipelines that meet the new regulations for increasing Maximum Allowable Operating Pressure (MAOP). When selecting a pipeline coating, the ‘non-shielding’ characteristics may be more important than other issues that are normally considered.

The Pipeline and Hazardous Materials Safety Administration is now responsible for implementing the regulations for the US DOT. The Code of Federal Regulations, Title 49: Transportation, Part 192 – Transportation of Natural and Other Gas by Pipeline, has recently added Part § 192.112 which says: “Additional design requirements for steel pipe using alternative maximum allowable operating pressure. For a new or existing pipeline segment to be eligible for operation at the alternative maximum allowable operating pressure (MAOP) calculated under § 192.620, a segment must meet the following additional design requirements. Records for alternative MAOP must be maintained, for the useful life of the pipeline, demonstrating compliance with these requirements.”

Under this new section pipeline operators are allowed to raise the MAOP of certain natural gas pipelines if they meet or exceed certain listed requirements. One of these requirements is part “(f) Coatings”.

The pipe must be protected against external corrosion by a non-shielding coating. Coating on pipes used for trenchless installation must be non-shielding and resist abrasions and other damage possible during installation. These are significant statements that require those companies that want to raise the MAOP of these pipelines for more through-put to meet or exceed these requirements.

‘Non-shielding’ in this context means if the coating system adhesion fails and water penetrates between the pipe and the coating, corrosion on the pipe is significantly reduced or eliminated because cathodic protection (CP) current is able to protect the pipeline in these disbonded areas. To adequately protect underground pipelines, a coating must conduct CP current when disbondment occurs. Today’s pipeline coatings are effective and provide a dielectric shield to CP when properly adhered to the surface. The problems begin when the coating does not adhere to the pipe surface.

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Shielding on the other hand diverts CP current from reaching the pipe surface allowing corrosion to occur. When disbondment or blistering occurs, most coating types divert current from its intended path, therefore, CP current can not adequately protect the external surfaces of a pipe. The socalled “cathodic protection shielding effect” prevents cathodic protection current to flow to areas submitted to corrosion risk under disbonded coatings.

Each coating manufacturer attempts to make coatings that will not fail. The problem is all pipeline coatings fail for one reason or another. Those that fail by disbonding are the most susceptible to CP shielding. Each type has particular properties that allow it to be shielding or non-shielding to CP current if disbondments occur.

“Coating on pipes used for trenchless installation must be non-shielding and resist abrasions and other damage possible during installation” There have been, and continue to be, many articles written concerning the problem with pipeline coatings that shield CP. Though no coating system can be totally immune to CP shielding, some have a proven track record of being non-shielding.

Disbonded coatings that shield CP have been and continue to be a problem for the pipeline industry. The failure mode of the coating is critical. This is the reason for these US DOT regulations for the companies that want to increase the operating pressure for certain natural gas pipelines. Of course, there are other requirements that are not discussed in this paper that must be followed to meet this regulation change.

Many in the pipeline industry recognise the importance of using pipeline coatings with proven non-shielding characteristics. To minimise or eliminate the CP shielding issues encountered in the past, more pipeline companies are using and requiring these non-shielding pipeline coatings no matter the MAOP. Does your company? n

Richard Norsworthy has published numerous papers on corrosion control, and authored the chapter on Coatings for Underground or Submersion Service in Uhlig’s Corrosion Handbook. He is a NACE instructor for courses in basic corrosion, CP, and Coatings Used in Conjunction with CP. In 1995 he started Lone Star Corrosion Services, which became part of Polyguard Products in 2007.

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SAMI (DPS) AD:25 June

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SPECIAL FEATURE

LET THERE BE

LIGHT

Every year, African households and small businesses spend upwards of US$17 billion on lighting, dominated by fuel-based sources such as kerosene; yet despite this huge expenditure, consumers receive little value in return. Two projects aim to change all this – Marie Shields ďŹ nds out more.

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NESCO estimates that 1.6 billion people, mainly ing affordable, clean and efficient modern lighting and energy solutions in developing countries, have no access to elecspecifically for Sub-Saharan Africans. According to the Lighting Africa’s tricity. One in four people today obtain light with website, it hopes to leverage global expenditures on fuel-based lighting kerosene and other fuels, as well as candles and to develop, accelerate and sustain the market for modern off-grid lightbattery-powered torches. However, these sources ing alternatives that offer African consumers considerably more value are either polluting, inefficient, or both. for their money.

An examination of the inefficiencies of kerosene by the Lumina The initiative aims to provide efficient lighting technologies, such as Project proves illuminating: users of kerosene lighting pay 150 times those containing the latest LED, florescent, human-cranking and solar, more per unit of useful energy services than those in electrified homes so that consumers have access to energy sources that are clean, efficient with compact fluorescent lamps (and 600 times more than for traditional incandescent lamps). The Project estimates that, in aggregate, this fuel-based lighting costs the world’s poor US$38 billion each year, and results in about 190 megatons of CO2 emissions, the most important greenhouse gas.

The Lumina Project, founded by Dr. Evan Mills of California’s Lawrence Berkeley National Laboratory in the early 1990s, aims to cultivate 2 technologies and markets for affordable low-carbon off-grid lighting in the developing world. Mills and his team began exploratory work on fuel-based lighting in the early 1990s, In 2001 the Project received a small amount of funding from the International Energy Agency, allowing it and reliable, at price points that are comparable to typical expenditures to prepare an estimate of the global energy, cost and carbon burden of for kerosene. A further aim is to create a level playing field rather than electric and off-grid lighting. picking winners or specific technologies to endorse, supporting all who In addition to Mills, the project team includes 17 people from are willing to commit to market development. the Laboratory and Humboldt State The initiative involves both internaUniversity, and from Kenya. Mills and tional as well as country-based activities.

Lighting Africa currently has a budget Humboldt’s Dr. Arne Jacobson serve as In parallel to international activities that of roughly US$12 million provided by a principal investigators at their respective are designed to benefit all of Africa, e.g. variety of partners, including: institutions. the web portal, international conferThe Lumina Project’s fi rst meanences and the product quality assurance • Global Environment Partnership ingful funding came in 2007 from The programme, Lighting Africa is conductFacility • Department for Rosenfeld Fund of the Blum Center for ing specific on-the-ground activities in • Energy Sector International Developing Economies at UC Berkeley, several African countries.

Management Development followed later that year by grant from the In addition to the initial work conAssistance Program • Asia Sustainable & Global Roundtable on Climate Change to ducted in the pilot countries of Ghana • Public-Private Alternative Energy work at the Millennium Village in Sauri, and Kenya, subsequent programme acInfrastructure Program in Western Kenya. Th is work enabled the tivities are currently being implemented Advisory Facility • Good Energies, Inc. establishment of a collaboration with in Ethiopia, Rwanda, Senegal, Tanzania • Renewable • Norway Humboldt, through which the project and Zambia. Drawing from the lessons Energy and • Luxembourg team members were able to embark on learned from Lighting Africa’s pilot Energy Efficiency • Netherlands in-depth lab work evaluating product phase, programme activities will be quality, and spend more time in the field refi ned to maximise their effectiveness, understanding end-user needs and preferences. country operations will be expanded to other African countries, and the The Project’s initial efforts inspired the International Finance Corprogramme will create tools and methodologies that can be extrapolated poration and the World Bank to create their own initiative, Lighting across Africa (and potentially beyond) to foster the continued spawning Africa, which aims to support the global lighting industry in developof market formation over time.

“The Project estimates that, in aggregate, this fuel-based lighting costs the world’s poor US$38 billion each year, and results in about 190 megatons of CO emissions, the most important greenhouse gas"

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However, lack of availability of the relevant technology could prove to be a hurdle. According to the Blum Center for Developing Economies, while some lighting manufacturers have been inspired by the efforts of the two projects to enter the off-grid LED market, there are currently no commercially available off-grid lighting products that achieve a satisfactory balance between end-user cost and lighting product performance.

For this reason, Lumina project researchers are developing and implementing an international framework for quality assurance by the end of 2010. The Lumina team is also working to ensure there are at least five high-quality, affordable off-grid lighting products available in Kenya and other African markets, with the hope that this will accelerate development of viable off-grid lighting products. The Project is also carrying out other activities analysing and documenting the health benefits of switching from kerosene lighting to LED-based off-grid lighting.

In another positive development, US Energy Secretary Steven Chu announced at the Copenhagen climate conference last December the

THE FOLLOWING TYPES OF SERVICES ARE CURRENTLY PROVIDED BY LIGHTING AFRICA: Market information Lighting Africa is conducting research in order to share critical business intelligence with companies and organisations interested in entering the Africa off-grid lighting market. Such information includes data on consumer needs, lighting uses and preferences, current expenditures on off-grid lighting, potential distribution channels, prevailing policy and regulatory frameworks and sources of finance.

Quality assurance In close consultation with other stakeholders, Lighting Africa is developing a multi-pronged quality assurance program aimed at helping consumers make informed purchasing decisions while also aiding manufacturers in improving product quality to best meet consumer needs and expectations.

Business linkages Strengthening ties between the global lighting industry and local service providers to design, develo, and deliver lighting products to off-grid communities in Africa. For example, Lighting Africa facilitates business linkages through its interactive business-to-business website, a social networking tool which convenes the industry around topical areas.

Consumer awareness In order to inform consumers about modern off-grid alternatives to fuel-based lighting such as kerosene lamps and empower them to make educated purchasing decisions, Lighting Africa is planning to conduct consumer awareness and information campaigns in a number of African countries.

US$35

US$185 BILLON

Fuel-based lighting accounts for 17 percent of the global lighting market, a demand of US$38 billion Blue: Annual global expenditures on electric lighting equalling US$185 billion Orange: Annual global expenditures on fuel-based lighting equalling US$35 Source: Evan Mills, International Association of Energy Efficient Lighting and Lawrence Berkely National Laboratory

launch of a new initiative to promote clean energy technologies in developing countries.

The Renewables and Efficiency Deployment Initiative (Climate REDI) will accelerate deployment of renewable energy and energy efficiency technologies in developing countries.

Climate REDI includes three new clean energy technology programmes and the funding needed to launch a renewable energy program under the World Bank’s Strategic Climate Fund, including the Solar and LED Energy Access Program, which will accelerate deployment of affordable solar home systems and LED lanterns to those without access to electricity. Th is programme is expected to yield immediate economic and public health benefits by providing households with low-cost and quality-assured alternatives to kerosene.

With this new programme coming on top of all the work currently being done by both the Lumina Project and Lighting Africa, it seems the future could fi nally be looking brighter for the millions of Africans currently living without access to affordable, non-polluting sources of power.

“There are currently no commercially available off-grid lighting products that achieve a satisfactory balance between end-user cost and lighting product performance"

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EXECUTIVE INTERVIEW

Riding the new power wave Idika David discusses the steps Nigeria is taking to hasten the introduction of renewable energy.

Can you tell us about Skylit Ltd? Idika David. Skylit Tech. Co. Ltd. (STC) is an electrical engineering fi rm, incorporated in Nigeria in response to the growing challenges and needs of the industrial and power sectors of the Nigerian economy and the challenges of global climatic pollution. For over two decades, Nigeria has suffered under a sporadic power supply, sub-standard electrical products and spares, coupled with the paucity of technical expertise.

However, a thorough assessment of the myriad problems of both the industrial and social infrastructure of the economy led to the birth of Skylit Tech. Ltd. Having grown core competencies and expertise in design, installation, operation and maintenance of all aspects of alternative Power Systems, Skylit is significantly positioned to blaze the trail through innovative technology and services.

What are your areas of competence?

ID. We have specialised skills in design, installation, operation and maintenance of power and alternative power systems such as: electrical installations; alternative electrical power systems including solar and wind systems and power turbines. We also deal in electrical power and back-up systems that stretch to UPS, inverters and DC systems.

What are the advantages of alternative power systems over fuel powered generators?

ID. A wonderful benefit of alternative power systems is that they are environmentally friendly. They do not produce gases or other by-products like other generators do, which poison the environment and anybody that happens to be nearby. There are enough pollutants in today’s society, so choosing an alternative power system is an environmentally sound choice. Another benefit is that alternative power is renewable, hence is harnessed free of charge and will not run out like other sources

such as diesel and coal. Alternative power systems are the best choice where there is no easy way to get electricity to a remote place. Another advantage is that they are noiseless and above all, alternative power systems are very cost effective.

Are you suggesting that alternative power systems are more cost effective than fuel powered generators?

ID. On a long-term basis defi nitely yes, and on a short-term basis in most cases yes. Take for instance a medium sized organisation that spends an average of four million naira on fuel a year, in thirty years, they would SKYLIT’S VISION be spending a hundred and To carve a niche as a market leader twenty million naira on fuel in electrical without factoring infl ation, technologies now such an organisation and power could install a solar powered products that are environmentally system which we guaranteed friendly and cost for a minimum of 30 years at effective. a fraction of that price.

While on the short term, OUR MISSION To become the take for instance a Nigerian preferred company bank, with a network of about for major electrical 200 branches that needs to engineering power its security lights, sesolutions in Nigeria and the West curity gadgets, access systems African suband computer servers after regions. closing hours (7pm to 6am).

To do these they have to keep their fuel generators running through the night, and in keeping their fuel generators running through the night they use millions of naira in fuel. Adding this to the cost of the generators and the cost of maintaining the generators – but with a special alternative power system from Skylit Ltd and at a rate more affordable than fuel generators – such organisations can power their computer servers, security lights, security gadgets, access systems etc, all through the night all year round without any additional cost.

Idika David oversees affairs at Skylit Techniques Limited. David obtained a BSc in Engineering from Ahmadu Bello University, Zaria, with an MSc in Power. He has over 16 years’ experience in engineering designs, installations, operations and maintenance, and vast experience in rural and urban electrification, industrial and manufacturing automations, power and alternative (renewable) power systems. He is a member of the Nigerian Society of Engineers (NSE), and a Chapter President of the Full Gospel Business Men’s Fellowship International (FGBMFI).

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SOLAR ENERGY

Saving up the sun Power & Energy talks to Mike Taylor of the Solar Electric Power Association and the Solar Energy Industries Association’s Rhone Resch about the challenges facing solar as it begins to play an ever more prominent role in the renewable energy mix.

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olar energy, in common with other renewable energy sources, has been enjoying a surge in popular support, both here in the US and internationally. But questions remain, primarily around reliability and ease of transmission. Mike Taylor, Director of Research and Education for the Solar Electric Power Association, points out that solar energy is more complicated than most people think.

“Solar energy presents a little more complex picture than traditional renewable or centralised generating sources,” he says. “There’s a market for distributed solar as well as centralised solar. With centralised solar projects, there are a large number of announcements out there, a few thousand megawatts; at that scale, these projects will be able to fit into the existing transmission system.

“But as the industry scales up even further, we will start to see transmission issues, similar to the wind industry, as being a limiting factor within the centralised project growth. They may diversify away from corridors where wind energy is; solar and wind areas of development aren’t necessarily going to overlap, so they’ll potentially be separated from one another.

Solar is not going to necessarily align with the existing wind projects.”

Taylor does concede that the general issue of transmission is similar to that of the wind industry, with both sectors experiencing rapid growth. “These solar projects need to find ways and transmission paths to get into the grid and fi nd their way to load, and there are a number

of groups and studies out there that are working diligently on this. The problem for wind industry is here and now, whereas with the solar industry, the centralised projects are largely still in the announcement phase, so we haven’t run up against any practical, tangible limitations based on installed projects at this point.

“You can certainly forecast that that would happen, but I think we’re still a few years away from seeing that as being the driving force in the industry. A lot of these announced projects have financing and permits to get; they have a number of issues to work their way through.”

Taylor points out that by contrast, the other half of the solar industry, distributed solar, is a unique niche in which residential, commercial and utility projects are being done on a localised level. He explains that this is being accomplished, in some cases, through random disbursement, when a homeowner or commercial businesses decides to utilise solar. “A lot of the utility announcements have been for large aggregated projects that are individually one to two megawatts,” he adds. “They sit well within the distribution system, but they’re announcing them in chunks, anywhere from five megawatts up to 500 megawatts.

“So you’re seeing these distributed projects being proposed and moving forward at a scale that matters. I call them ‘distributed power plants.’ The utility puts in one to two megawatt projects at 100 different locations around their territory, so they can fit within the urban grid on the distribution system. They can be strategically located so they’re not overburdening

PROFILE Taylor Association r Name : Mike e w o P c ri t c lar Ele Education d n a Company: So h rc a e s e ector of R Position : Dir ents have m e c n u o n n a tility e “A lot of the u ojects that ar r p d te a g e r g g a been for large megawatts” o tw to e n o y individuall

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Mike Ta ylor

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History of SEPA The Solar Electric Power Association is a non-profit, businessto-business organisation that works primarily with electric utilities across the United States. Its aim is to bridge the gap between the solar industry and the electric utilities, helping to facilitate the use and integration of solar power.

The Association aims to help the electric utilities with their understanding of markets and technology and to help create dialogue between other electric utilities, so they can learn from each other, as well as with the solar industry. SEPA has more than 700 members, 110 of whom are electric utilities.

Most of the major utilities across the United States are members of SEPA, and there are also a large number of solar industry members interested in learning about the utility market and utility issues so they can understand how we can facilitate the market through and with utilities, rather than against and opposed to facilities.

one distribution time. We’re starting to see this model being explored, especially by the California utilities, and Duke Energy in North Carolina and PSE&G in New Jersey are also stepping up with this model.”

According to Taylor, the growth of distributed solar changes the nature of the issues: instead of it being a transmission problem or a problem on the distribution line, those installing distributed solar must work with local city and building and permitting offices, signing leases with large big-box warehouses or big-box office stores. He believes it is an innovative diversification that is unique to the solar industry.

Storage issues One of the major issues related to solar energy, and renewables in general, is the question of storage. Taylor says that at the distribution level storage is not as critical because it is integrated into the system. It’s associated with load in a lot of cases, and the relative amount of solar to the load is not so much that it causes huge problem. However, as penetration levels increase on any particular localised area, isolated issues do start to occur.

From an operational standpoint, Taylor says that having these individual solar systems with a small amount of storage – on the order of 15 minutes to an hour – could assist in the coordination of the variability that a utility might experience. “As we get higher and higher penetrations on the distribution level, a small amount of storage can go a long way to helping 75 percent of the problem.

“You have two factors that are reducing the risk of that variability.

One is geography: you’ve got all of these solar systems spread out over a 50 to 100 mile area. Not all of them are going to be increasing in power at the same time, so you’ve got geographic risk mitigation. You could also see, as utilities move forward with smart grid initiatives, smart meter initiatives and a small amount of storage integrated into these systems, that it becomes a much more powerful way to deploy this distributed resource.

“It’s no longer about passively reacting to the sun and injecting the power into the grid, it could become a very usable and tangible resource that utilities can deploy. But that’s still in the near future, when these do need a small amount of storage. You do need smart grid capabilities and better communication capabilities. So that’s a near to medium-term ideal.

“On a centralised system side, you have to again bifurcate it by technology, whether it’s concentrating solar power and you’re using thermal storage, or whether it’s photovoltaics. At this point, there are no large-scale solar storage announcements for photovoltaics. There are no ready solutions for having a large amount of storage for centralised photovoltaic projects. There are for projects having 100-megawatts of storage that can deploy for an hour or two hours, but for larger projects it’s not technically or economically feasible.”

The storage picture is looking better for thermal storage on the concentrating solar power side. Taylor cites as an example of this projects in Spain that have integrated solar thermal storage, and research being done in the US, including the announcement for a project with fi xed hours of storage in Arizona called Solana, for which Arizona Public Service will be purchasing the power from Abengoa Solar.

Thermal projects generally have slower ramp rates than PV and wind, as Taylor explains: “They can adjust the flow rates of the fluids inside and, even without storage, manage them in a way that’s a little more friendly to the grid. There’s a better buffer in the way they operate, because thermal fluids have an inertia that you can manage. For example, if you know that you see clouds coming across the horizon, you can manage that.

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Solar Power International Solar Power International (SPI), previously called Solar Power Conference and Expo, was created in 2004 when the Solar Electric Power Association (SEPA) and the Solar Energy Industries Association (SEIA) joined together in partnership to create a business-to-business solar conference and expo.

With an industry growth rate of more than 40 percent per year, the two associations felt there was a need for a single event in which industry could come together with potential customers, policymakers, investors, and other parties necessary for continued rapid growth.

The event, held annually at the end of October, has grown from 1100 attendees to more than 22,500 in five years.

“But pairing it with three to six hours of storage does allow you to deploy this resource in a way that can benefit the utility grid and the project, in the sense that the better your project can perform and correlate with peak, providing a firm capacity backup, the better the economics of the project should be. You should be compensated for that benefit you’re providing to the grid.”

Coming events At the time of our interview, SEPA was busy with preparations for the annual Solar Power International conference in Anaheim. The conference, organised jointly with the Solar Energy Industries Association, attracts more than 22,000 attendees from both electric utilities and the solar industry.

“It’s in the top two in the world, in terms of the size of the conference,” Taylor says. “It’s an expo and a conference, with more than 45 sessions that attendees can go to. We also have a large exhibit hall that has more than 800 exhibitors and in a few hundred thousand square feet.

“Anyone who is anyone in solar in North America and the western hemisphere, and increasingly, internationally, comes to this event to understand and meet with electric utilities. That’s where SEPA’s niche is, in coordinating events and sessions and workshops for electric utilities – networking events so people can meet each other and get to know the solar industry. The solar industry is there. The fi nance people are there.

The installers are there. Pretty much anyone who is into the solar market goes to this conference.

“There are a lot of solar and renewable events occurring: they’ve increased precipitously in the last two years. Because our event is organised by the two solar non-profits in the United States, we like to think we’re neutral to the profit motive. Revenues from this drive the work that SEIA and SEPA do to try to help feedback programmes for, in our case, utilities, and in SEIA’s case, for the solar industry. We’re taking the proceeds from this event and driving them back into the respective membership and industries to help facilitate the marketing even further.

“What always surprises me is that the conference holds 4000 or 5000 people. The other 15,000 to 20,000 people are coming to go to the expo and to network and to learn about technology and to have meetings with each other. They’re not there to sit in conference rooms and watch presentations. They’re there to do business.”

Mike Taylor is Director of Research and Education for the Solar Electric Power Association.

Rhone Resch of the Solar Energy Industries Association explains how solar fits into the energy puzzle.

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ong before the arrival of the American Recovery and Reinvestment Act, Rhone Resch and the Solar Energy Industries Association was working behind the scenes to highlight solar as a viable solution to America’s energy worries. With some of the world’s best solar, the US is well placed to create energy from the sun and has the opportunity to leverage solar to play a pivotal role within the country’s energy mix.

However, Resch does admit that solar currently has some shortcomings. “Although solar isn’t more cost effective at the moment, it certainly has the potential to be much more cost effective than traditional sources of fossil fuels,” he says. “In large part it’s because you manufacture solar.

You don’t mine it or drill for it, and because of that you’re able to scale up the manufacturing and drive down costs per unit; and as we do, so you will see the price of solar continue to go lower and lower while the traditional forms of energy continue to go higher.”

New jobs Solar’s emergence as a viable alternative energy source is already beginning to show across the US. Attempting to kill two birds with one stone, President Obama’s tactic of deploying further jobs into the solar industry will hopefully meet the need of America’s rising unemployment rate. Obama has pledged to invest US$150 billion into creating five million new ‘green collar’ jobs – solar manufacturing and installation forming an important part of that number.

Resch notes that those states that have been hardest hit by the recession – Ohio, Michigan, Indiana and Illinois – are those that are now creating and fi lling solar employment positions. Workers made unemployed in the automotive or other manufacturing sectors are now turning to solar; tradesmen are being employed to install solar.

“When you install solar you’re using the tradesmen, the backbone of our economy,” says Resch. “We’re re-employing those who have been

“We cannot wait 10 years before we start to address climate change” let go by industries that can no longer survive in the United States; and we’re giving new opportunities in an industry that is sustainable, that provides good quality jobs, and well-paying jobs for the future.”

Despite this, integrating solar as a vital part of the country’s energy mix is no easy task. In the second quarter of 2009, the SEIA spent US$54,000 lobbying the government on solar power, whereas Chevron spent US$6 million to further its own interests. The capital funds of fossil fuel corporations are much greater and have traditionally held the lobbying power in Congress. Key to overcoming this is presence, explains Resch. He notes that every quarter the association

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is increasing its presence and educating Congress on the value of solar energy. “It’s important, not necessarily to just look at the numbers of dollars spent, but to look at some of the accomplishments that we’ve achieved over the last year and to see the return on the investment of those dollars.

“For example, in the bailout bill in October of last year we got a long-term extension and expansion of the tax credits for solar energy in the United States, and that’s a 30 percent tax credit for businesses. It was expanded to be a 30 percent tax credit for homeowners as well, which is an eight-year extension, so that’s a huge victory providing stability for our industry to grow in the United States.”

He also points to the 19 provisions in the stimulus bill for solar energy companies, significantly more than the oil and gas industry.

The SEIA has been very strategic in working with Congress to ensure its policies and incentives are heard, and the market is likely to expand quickly. “What’s critical is that we’re getting the industry engaged and to appreciate the role that Washington can play in the energy sector,” says Resch.

“That means inviting their congressmen out to ribbon cuttings or openings of new factories. To invite senators to briefi ngs on energy. To visit them when they come to Washington and tell them about the new employees that they’re hiring and the new technologies that they’re developing. Combined,

PROFILE e Resch ssociation A s ie Name : Rhon tr s u d In lar Energy Company: So EO sident and C Position : Pre e e marketplac th in l a n ig s e pric “A very clear more with te e p m o c to r will allow sola ssil fuels” traditional fo

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what this creates is a grassroots capability that has the potential to be second to none, and the grassroots is absolutely critical if we are going to be successful in Washington.”

Since the American Recovery and Reinvestment Act was announced, the DOE has systematically been providing awards and funding for solar, for R&D projects or university partnerships to addresses the technology barriers that create the high cost of solar usage.

The number of solar awardees for the funds is high, but Resch explains that the technologies aren’t commercial yet. “We certainly can expect the R&D investment to result in new products in the next several years,” he says.

He notes the success of the provisions of the stimulus bill for the solar industry, which are now starting to pay dividends, such as making the investment tax credit refundable. By turning it into a grant, applicants can now receive a check from the federal government for 30 percent of the cost of the system, rather than a 30 percent tax credit. As well as this, the stimulus bill also created an expanded loan guarantee programme and a new tax credit for manufacturing.

“All of these are critical to address some of the challenges we face in a recession economy. Specifically, that those companies who used to invest in solar projects last year may not this year, because either they’re not loaning money on the debt fi nancing or they don’t have the tax equity on the tax side, and subsequently we found at this time last year that investment dollars were drying up for the solar industry. We were able to address both of those issues in the stimulus bill and we’re starting to see in the third quarter the demand for solar increase significantly due to these new programmes,” he says.

five megawatts to 500 megawatts, and depending on the transmission infrastructure you can connect some smaller projects to existing transmission lines that have the capacity to absorb more electrons. Now, you may not be able to build a 500 megawatt power plant on that line, but you certainly can build a 50 megawatt power plant on that line. You will see solar start to improve the efficiency of transmission by making sure that the transmission lines are being as fully utilised as possible.

“Finally, in the long run, we need to build new transmission in the United States. We have partnered with the American Wind Energy Association and developed a study and recommendations called Green Power Super Highways. It outlines all of the recommendations that are necessary in order to build new transmission in this country. It takes more than 10 years to build a new transmission line, and we cannot wait 10 years before we start to generate electricity from solar farms in the southwest. We cannot wait 10 years before we start to address climate change, so the siting and the fi nancing and the permitting of these new transmission lines is critical,” he says.

Resch believes that it won’t be long before solar reaches a par with traditional fossil fuels. Solar is already cost competitive in certain areas of the country and is a viable cost alternative for natural gas.

Natural gas is used to generate peak electricity, as well as base loads, and aligned with the time that solar can be maximised.

He notes that solar is displacing the most expensive electrons to consumers: “Peak prices in California vary depending where you are, but in PG&E they’re US$0.37 per kilowatt hour and in San Diego Gas and Electric in the south, they’re US$0.42 per kilowatt hour.

“Those are double the current price of electricity, and solar is the lowest cost option in those areas already. It is critical that state governments create an accurate price signal for electricity that not all electrons are the same. That you can’t have the same rate 24 hours a day, seven days a week. Rather, when the utility is paying more for its electricity, consumers should pay more for their electricity. Th at becomes a very clear price signal in the marketplace that will allow solar to compete more with traditional fossil fuels.”

Public attitudes have long supported solar; promoting its benefits to the legislatures is the hard part. A recent poll conducted by Kelton Research on behalf of the SEIA showed that 92 percent of the American public want the US to use more solar energy. Support from solar transcends party lines and economic strata.

“People strongly support greater use of solar energy – there are not many things in the world that achieve a 92 percent public support rate. It’s putting us up in a category with puppy dogs and ice cream in terms of popularity and that is fantastic, but what we also need to do is to be smart about it and to make sure that it’s not just a technology that people like, but a technology that people start to utilise and that we get Congress and the state governments to support greater use of solar energy.”

“A very clear price signal in the marketplace will allow solar to compete more with traditional fossil fuels”

Solar transmission One of the worries surrounding a big change in America’s fuel mix is how the various types of renewable sources will fit into the grid, given that the transmission structure was built for the traditionally dominant fossil fuel resources. Resch explains that solar fits in many ways; one being distributed generation capacity. “Solar generates electricity at the point of consumption. By putting solar on your roof, you’re putting a small power plant on your home or your business that will provide a substantial amount of its energy, so it relieves some of the stress on the grid because those electrons come from the solar panels on your roof rather than a power plant that may be 100 miles away.

“So greater use of distributed generation certainly helps to alleviate stress on the grid and cuts down on the need for major expansions.

The second is that solar can be used by utilities to alleviate some of the hot spots: certain areas of the grid have more congestion than others.

By putting solar on buildings strategically in those areas, again, you can alleviate that stress on the grid.

“The third is that you can build solar farms in the dessert or on landfi lls or on brown field spaces or other areas and can directly connect to interstate transmission lines. These solar farms could range from

Rhone Resch is the President and CEO of the Solar Energy Industries Association.

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ASK THE EXPERT

Solar-powered PC labs Markus Pam explains the benefits of using photovoltaic solar panels to power computer equipment in Nigerian schools.

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n November 2002, 35 secondary schools and colleges were selected in the six geopolitical zones of Nigeria as the pilot phase for PC Labs for Schools (Diginet Centres), funded by the Education Trust Fund Nigeria in collaboration with SchoolNet Nigeria.

Each site was provided with the DireqLearn thin client solution, which included 20 network computers with a server, VSAT connectivity (KU Band), educational content – GCSE curriculum (UK), and technical training for 140 teachers.

One of the major challenges of the scheme was the lack of access to a stable power supply, as the grid supply is either not available at all or sporadic and as such not reliable. Fifteen of the schools were selected to be powered by solar photovoltaic, while others were to be powered by generators.

Pamtronics Nigeria Ltd. was subcontracted to perform the installation of the solar power system for the 15 schools. The requirements for each site contained the following main components: solar modules (5170 peak watts), comprised of 94 pieces of 55 watts Isofoton modules; inverters (6000 watts), two units of Mastervolt 300 watts; charge controllers (120 watts/24 volts, six pieces of 20 A Steca controllers); and batteries (4000 AH/12 volts), 20 pieces of 200 AH/12 volts (Fullriver).

Installation was completed between 2003 and 2004, and each is functional to date. This scheme has proven very effective in ensuring reliable power supply for the PC labs, which serve as internet cafes and computer training centres for the community around the schools after school hours.

The system powers the 20 PCs, a server, VSAT, a printer, eight lights and four fans for the labs. Reports indicate that unlike the generator-powered centres, which worked for only a short time after installation due to the lack of a

“One of the major challenges of the scheme was the lack of access to a stable power supply” sustained source of fueling or generator breakdown, the solar-powered centres continued working stress-free for years. This was the case even without any maintenance arrangement put in place, as it was not contained in the contract agreement.

Markus Pam is Managing Director and CEO of Pamtronics Nigeria Ltd.

The schools that had solar panels installed as part of the PC Labs for Schools project were: Government Secondary School, Akim Qua, Calabar, Cross River State Government Girls College Dala, Kano, Kano State Government Technical College, Kano Rumfa College, Kano Gboluji Grammar School, Ile Oloju, Ondo State Government Secondary School Gwale, Kano College of Arts and Islamic Studies, Minna, Niger State Loretto Special School, Adazi, Anambra State Government Science School, Akim, Calabar, Cross River State Government Science School, Biliri, Gombe State Government Technical College, Kumo, Gombe State Government Day Technical College, Gombe, Gombe State Government Science School, Gombe, Gombe State Government Girls Secondary School, Doma, Gombe State Government Secondary School Tarauni, Kano, Kano State

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EXECUTIVE INTERVIEW

Start with the sun The future of business in Africa belongs to companies who can adapt to the shifting economic landscape: nowhere is this more critical than in energy cost management. Alternative Energy provides a watershed that a growing number of companies are keying into. Derek Nwafor, CEO of Solidlight Limited, expands on the subject.

What are the challenges involved in providing alternative energy solutions to large scale and retail clients?

Derek Nwafor. The greatest challenge to us on this campaign is a lack of awareness of these systems and the quality assurance that comes with them. In our interactions with the public, we find that once this is overcome, other issues are easily addressed. As in other countries, building architecture and even ergonomics hardly take into consideration the possibility of clean energy systems, the failure of conventional systems or the rise in the cost of energy being experienced around the world today.

Consequently clients have to optimise all electrical devices and fittings to derive value from alternative energy systems. Un-informed fi nancial institutions also pose a challenge, as lenders in Africa are seemingly unaware of the viability of alternative energy as an investment and as such are unwilling to support such ventures. The recently revamped Nigerian pension system currently holds funds in excess of US$3 billion which can be invested in alternative energy projects across the country.

What is the government’s role in enhancing the proliferation of alternative energy systems in Nigeria?

DN. The Nigerian government needs to provide more support for clean energy technology in the country. On the legal front, the laws guiding the generation of power by private entities needs to be amended to allow market forces to determine pricing and allow power stations to choose their clients. Current legislation states that a portion of each station’s output must be channelled directly into the national grid; this is paid for by the government at a rate fi xed by themselves.

The import tariff for alternative energy generation systems should be suspended for at least 20 years.

Subsidies and grants should be provided for various institutions (for example in health, agriculture, science and technology development and education) to support a transition to solar or wind energy. The government itself should broaden its deployment of sustainable systems beyond solar street-lights to creating sub-stations for localities. Also tax breaks can be given to companies that are engaged in generating alternative energy.

How can alternative energy help to jumpstart small and medium-sized enterprises in Nigeria?

DN. Coming from successfully deploying Grid-tied inverters with capacity totalling over 100kvA, we propose the development of mini and medium scale industrial parks for businesses preferably in light manufacturing, food processing and some service providers. These parks will be powered with solar energy, providing clients electricity for 16 out of every 24 hours. We believe that with consistent, predictable and well-priced power, most start-up businesses in Nigeria can survive the crucial first five years of business.

“The import tariff for alternative energy generation systems should be suspended for at least 20 years” What methods can be used to wean big business from the use of fossil fuels?

DN. Th is can be achieved by the sensitisation of senior management, shareholders and business owners through such forums as their Annual General Meetings. The long-term value to be derived by deploying alternative energy systems outweighs the comforts of retaining antiquated practices, which cost several times more than sustainable energy systems over time.

Change in this vital area of any business has to be understood and driven from the top, and as mentioned earlier, shareholders are the preferred audience as they stand to benefit from increased growth of their investments.

Derek Nwafor is CEO for Solidlight Limited, a leading alternative energy company in Lagos, Nigeria. A former Banker and Business Development Executive, Nwafor’s career has spanned the financial services, logistics and corporate surrport services sector. An alumnus of the prestigious University of Ibadan, he has also taken management courses at the Lagos business school.

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Plug in to Predictable Power

Just as the sun rises to herald the start of each business day your energy source need not be any less abundant and dependable.

Talk to us today and learn how organisations and communities are making use of freely available energy. ...EVERYDAY

Email: enquiries@solidlightonline.org Tel: 234 1 891 2007 • 234 (0)806 406 8009 • 234 (0) 808 299 5701

SolidLight.indd 1

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WIND POWER

Christian Egal, CEO of EDF Energy Renewables and Christian Kjaer of the European Wind Energy Association tell Huw Thomas that the forecast for wind energy is extremely good.

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Christian Egal of EDF Energy Renewables looks at the sustainability of wind power in the UK.

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hen EDF Energy and EDF Energy Nouvelles announced their partnership to form EDF Energy Renewables in June 2008 it underlined a growing consensus that the industry needs to get serious about developing alternative power sources. Furthermore, the new company’s establishment in the UK ref lects the country’s massive potential as a generator of wind energy. As an island nation, the surrounding seas offer access to one of the most abundant supplies of reliable wind anywhere in the world. When we meet up with CEO Christian Egal in EDF’s central London office, the UK’s suitability is something he is extremely keen to stress. “Renewable energy is growing everywhere in the world. But in this country the mix is different,” he says. “Wind energy has had huge growth for five years, but what is specific to the UK is that Great Britain is an island so we can take advantage of this location with all the renewable energy linked to the sea. Offshore wind is definitely the main renewables potential in the UK, as well as wave and tidal energies, which are very promising as well. But those are still at the latest development phase.”

Plans for UK wind energy can only be described as ambitious. There is currently about 8GW of installed or planned capacity in place. The UK government’s strategic energy assessment recently reported that British seas could eventually supply a further 25GW of power, enough to serve the needs of all the country’s homes. But while there exist tremendous possibilities, actually realising them will require a great degree of effort.

“It’s a huge challenge,” Egal agrees. “Nobody has ever built a wind farm 100 kilometres off the coast in the North Sea. It will be difficult but what is absolutely fantastic in this business is that everybody is very confident in the capability of the supply chain and the players to deliver.” Obviously, the costs associated with such a huge project present difficulties of their own. Installing turbines that far off the coast, even in the comparatively shallow North Sea, is a far more logistically trying operation than sitting them onshore. Farm sites are picked for their exposure to wind, which means they must be built in often very difficult conditions. Building offshore takes twice as long and costs twice as much as a similar project on land. But according to Egal, the UK Crown Estate’s plans are helping to mitigate this problem by targeting huge capacity. Th is encourages all the major players to get involved and creates significant economies of scale.

“If you were to put one turbine in the North Sea, it would never happen,” Egal says. “If you want to put 500 or 1000 wind turbines there, that is much more achievable.”

Building the wind farms is far from the only challenge. Getting the power they generate to where it is needed also requires some new think-

ing. “One of the other challenges is the grid,” Egal continues. “How to connect it has to be a large scale approach rather than an individual approach for a single wind farm. Maybe in the long-term perspective it will be a European approach because if we build a wind farm for the UK in the North Sea, it could also be connected to Sweden or Denmark. Maybe we’ll see in the next decades a power grid all over Europe, based on offshore wind farms located all over the seas?” Th is vision of an integrated European power infrastructure is one that crops up regularly in talks with those in the industry. Given the speed and efficiency that normally characterises major pan-European projects, you would be forgiven for thinking such a future remains a long way off. While Egal concedes that it remains a huge undertaking, his confidence that it is achievable is infectious. As far as he is concerned, renewable energy, and specifically wind, is an idea whose time has come. “It’s very exciting,” he says. “Wind energy is the most dynamic industry all over the world, even in this very tricky period it is still growing.”

Counting the cost While there is no argument that Europe desperately needs new sources of power if it is to remain successful, critics of renewable energy contend that it is simply not cost effective without massive government subsidies. So can renewables ever off er value for money?

“It’s a complex approach,” Egal admits. “Renewable energy all across the world is still supported by public subsidy. The schemes that the countries select are different. The Renewables Obligation Certification (ROC) mechanism is specific in the UK, but in every country there are mechanisms that make renewable investment possible. Because of the current energy market there is no possibility to make a renewable asset profitable. We are not far away, not at all. For example, last year, when the market price was not particularly high, it was at the level where it was much higher than the cost of renewable energy. But to make the operators decide on the investment they need a certain level of visibility on the long-term. So all renewable energies are, lets say, incentivised by public schemes, which make the investment possible.

The principle of renewable energy is that it starts from public, government willingness, worldwide European and country willingness to do it, and each country provides to the operators the appropriate scheme to make it happen. So is the mechanism proposed to the operator in the UK enough to be profitable? Yes. If it was no, there wouldn’t be any capacity, so it is profitable. Of course, there are some projects that are more profitable than others, and it’s down to a professional approach to make the difference.”

While this makes a certain amount of sense, it doesn’t answer the question of whether renewable energy will ever be able to stand on its own two feet. The current system allows the power companies to stay

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in the black, but only on the back of government and consumer support. Will renewable energy ever be able to compete on a level playing field? “I would say yes,” replies Egal. “The ROC mechanism is providing some additional revenues to renewable energy up to a certain level of achievement. If the global target is reached, the ROC mechanism will stop. Currently the principle is the target is to achieve nine percent of power from renewables. The actual value is four percent. So the ROC mechanism is there to incentivise the utilities to deliver some renewable energy up to certain level of achievement and when the end target is reached, the public support will stop. It’s logical.”

It is only natural that renewable energy is initially going to cost more than more traditional sources of power. While coal and gas have a massive installed base, wind and the like are effectively starting from scratch. If we are serious about our commitment to getting more and more of our energy from renewable sources, these short-term costs are something that we will just have to bear. In any case, as traditional sources such as oil and gas start to dwindle and become harder to access, the market may make renewable energy considerably more competitive.

Unfortunately the current economic climate is particularly unfriendly. Sources of funding are tight and in many areas there seems little appetite for any investment that isn’t going to quickly bring big returns. Nonetheless, Egal is clear that EDF Energy Renewables remains on track to hit its targets. “It does have some impact, but more in the short-term,” he says. “We have to deliver a gigawatt by 2012, so we have to be very attentive to the whole capability to invest in this wind farm in this difficult period. If we speak about the next phase to deliver even by 2015 or 2020, it’s another story.

That will require a huge amount of money, but we can hope that it will be after the crisis that we are facing now. I am not saying it will be easy, it will be billions and billions of euros to invest in these facilities. As you know EDF as a whole has some other projects as well, so it is challenging.”

technologies are improving every year,” Egal confi rms. “It is amazing because we now have some that are 160 metres in diameter that generate 6MW. If you look at a wind turbine only 20 years ago, they were only 15 or so metres in diameter and generated only 50KW. Who would’ve imagined 10 years ago that we could build and install some 6MW wind turbine? As an example, EDF Energy Nouvelles, part of EDF Energy Group, has stakes with other partners in a wind farm of 30MW capacity with just six wind turbines. It is based 30 kilometres offshore and each wind turbine has a rotor diameter of 126 metres.”

And the technology is still developing. Egal tells us about projects working towards turbines able to produce 10MW and turbines based on floating platforms that can exploit the wind in deep-sea locations. With the huge capacity of today’s turbines it is not technology that is holding the more widespread adoption of wind power back. Rather it is outside factors that limit its large-scale implementation. The aforementioned issues with the grid are a major stumbling block, the lack of high power transmission lines making it extremely difficult to get energy from the remote areas where it is generated to the urban centres where it is most needed. Additionally, the UK planning process can throw plenty of obstacles in the path of speedy expansion. “To develop wind energy is really a very long-track with a lot of hurdles and particularly in this country,” Egal confi rms. “The planning system is very long-track, but I think it more or less always happens. And if we have an ambitious target, within a certain amount of time, you have to take into account certain difficulties. But I would rather have a slow planning process where you generally get permission rather than a quick one where you do not.”

On the whole though, Egal seems optimistic about the potential for wind and other renewable energy, both in the UK and across the world. “When we look at the overall capacity we have 120,000MW installed all over the world,” he says. “Last year, for example, we installed more wind energy than gas or coal. Wind energy has developed more in European countries and the US than in developing countries, but if you look at the possibility of wind farms in China for example, there is no limit.”

That is not to say we should expect to see a major uptake of renewable energy in the developing world all that soon. Egal sees it as a responsibility of those in more affluent nations to keep working on the problem until it can become affordable for everybody. “I think the fair approach has been taken by the European countries but renewables remain more expensive than coal, gas and so on,” he says. “European countries and the US are paying to make these technologies as profitable as the other technologies in the near future. Can we really ask the developing counties to pay for these technologies? I don’t think so, and I think we recognise that and that we have to pay this premium.

Climate change, which is the basis of these developments, has given us huge responsibilities across Europe, so I think it is very fair approach for us to pay for the fi rst stages of the development and allow others to take advantage of these developments when it is more fi nancially viable. In terms of the possibility to implement wind energy in these countries, it could happen very quickly. It’s just about timing.”

Each wind turbine has a rotor diameter of 126 metres

Further alternatives Though EDF Energy Renewables’ principal focus is on wind power, due to its comparative maturity and the UK’s geographical suitability, it is also exploring other potential avenues. “We are looking at wave and tidal technologies, which are not as mature as wind energy, even offshore.” Says Egal. “We rely on the R&D department within EDF, we are looking at wave technologies as well. We are very attentive and we are following feedback on this work. Our business is to invest in modern technologies with good profitability, so it could happen in the next two or three years.” Solar power also remains in contention. Though the UK isn’t known for its warm weather, solar energy’s success in the not particularly sunny Germany demonstrates that, as technology improves and becomes less expensive, it does have a part to play in Europe’s renewable future.

But from a UK perspective, it is wind that is going to provide the big gains. Wind is one of the most well-established renewable energy sources and has developed rapidly over the past few decades. “Wind

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With renewable energy targets needing to be hit by 2020, Christian Kjaer explains how the unlikely can become possible if the correct logic is applied.

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he European Union has set a binding target of 20 percent of its energy supply to come from wind and other renewable sources by 2020. In order to achieve this 20 percent energy target, more than one-third of the European electrical demand would have to come from renewables, with wind power expected to deliver 12-14 percent. So how realistic is this target? Well, Christian Kjaer, Chief Executive of the European Wind Energy Association (EWEA) believes that this is completely possible. “To reach the targets set out by the European union we would have to increase total wind power capacity in Europe by 9.5 gigawatts per year over the next 12 years. Given that we increased wind power capacity by 8.5 gigawatts last year, it’s not an ambitious aspiration,” he explains. It is quite clear that wind energy will take the lion’s share of the energy target that the European Union has set, but the target also calls for hydro resources and biomass to be fully utilised. “I would say it’s certainly achievable to reach 20 percent renewables although whether we meet the projections for biomass remains to be seen. It’s all down to how effectively the members are going to implement renewables – that’s the big question mark,” adds Kjaer.

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While it is widely believed that the development of wind energy across Europe is limited by existing power infrastructure, Kjaer believes that this is not a hugely limiting factor in regard to the physical grid. “We do have some restrictions if we look at certain regions of Europe. There are regions in Spain where you get 40-50 percent of the electricity coming from wind, so there are certainly limitations on how much you can expand there unless you do something with the internal infrastructure of the grid itself,” he explains.

Challenges So, challenges do remain in terms of how the grid is operated. Kjaer believes that it is vital to start putting together plans that allow investors to invest in new infrastructure, as projects take an extended amount of time to get on track. “We certainly need to change operations and look at the way we operate our grid if we want to meet the 2020 renewable target.

There is no question that the biggest challenge over the next 10 years is grid infrastructure. The grid is already a limiting factor because of course we don’t have electricity infrastructure offshore. We need to start planning to prevent this becoming a challenge in the future,” says Kjaer. “In short there are limitations, certainly offshore with the lack of grid, but we need to stop and put in place measures that concentrate on companies investing and building in the sector. There are some institutional problems with this, such as a lack of funding, but we simply haven’t invested enough in our infrastructure for decades now and that needs to change if we want to make a dramatic change in the way we get our energy in the future.”

While offshore wind is more expensive due to the sky-high costs of foundations and the grid that needs to be built offshore, it will always provide a larger wind resource. Kjaer hopes that as more economies of scale are introduced to the system and wind turbines are mass-produced, offshore will be recognised for the stronger resource that it is. “The offshore market in Europe is more or less at the level that we were in 1992 and 1993 onshore, so we haven’t even come close to reaping the benefits and getting the cost reductions down in the same way as onshore in the last 20 years,” he says.

“In order to do that we need economies of scale and that’s why it’s so important that you have some companies that are focusing very heavily on this, including in the UK, Germany and Norway, as well as France. But again offshore infrastructure is a much more imminent issue to solve compared to onshore because there aren’t any grids.”

Kjaer goes on to explain that the benefit of improving offshore grids is that it is possible to build interconnections between countries that means it would be possible to improve the electricity and tracing of electricity over the borders of Europe, giving consumers the cheapest electricity possible.

By planning infrastructure investment it will benefit in terms of maximising the exchange between various member states as well as putting the infrastructure where there are offshore wind resources or weight power resources and improve the functioning of the internal electricity market while meeting targets for renewables. “What we do in terms of offshore infrastructure is extremely important, and here we are in need of faster action than onshore in terms of new infrastructure. We need to figure out structures that allow us to make smart plans in how we build electricity infrastructure offshore at a bilateral or regional country level. It’s very much a similar challenge that we’re standing in front of as when we were building the oil and gas infrastructure. We would like for that planning to be a

bit more international in nature, and a bit more co-ordinated among individual European countries than we saw with oil and gas because it makes sense in terms of electricity markets.”

There is no doubt that grid infrastructure is going to be the most important issue to work on in the next decade, along with the development of the power market and a much higher degree of interconnection between the European member states. While it will be possible to learn something from the onshore infrastructure for increasing offshore wind farms particularly around grid development, Kjaer believes that from an infrastructure perspective we in Europe have never cared much about what happens on the other side of the border, which means it may well be harder to do so this time around. “Don’t repeat what we’ve done onshore because there needs to be co-operation in terms of infrastructure plan-

“In short there are limitations, certainly offshore with the lack of grid, but we need to stop and put in place measures that concentrate on companies investing and building in the sector” ning,” advises Kjaer. “Let’s not repeat the nationalistic approach that we have taken on for the last 100 years of onshore when we planned grids.

Instead it’s even more important that we co-operate as the benefits of offshore are that much higher.”

Power generation As Europe looks to expand both onshore and offshore wind generation capacity it becomes clear that wind alone cannot be responsible for all of our power generation because of the variable nature of wind power.

So how exact a proportion of European energy can be realistically generated by wind? Kjaer believes it depends on how big an integrated power system it is possible to construct, so the amount of wind energy put into the system at a European level depends on how integrated the European grid system turns out to be. Of course the bigger the geographical area, the more firm power is generated from wind energy so there is a huge benefit in the geographical dispersion of wind energy. However, in order to get that geographical dispersion it means that the grid has to have the same sort of dimensions, which is why interconnections are so valuable because a more interconnected grid means that variability becomes irrelevant. “This is why we believe that the infrastructure is so important, and it’s not only about integrating wind energy but also about improving competition in the electricity market.”

Kjaer goes on to say that while no-one is suggesting that wind energy should provide 100 percent of all European Union power, if it was well integrated and utilised it could have a large segment of the electricity market. “If we used the enormous hydro resources that we have in Norway or Sweden for example, which complements wind energy extremely well, I have no doubt that we can have a system based on 100 percent renewable electricity, be it biomass, wind, large hydro,

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small hydro or geothermal, but it requires a complete change in our way of thinking about operating systems and requires that we start utilizing that.”

Indeed, Kjaer believes that there are no technical barriers to wind energy producing 25-40 percent of Europe’s electricity.

He highlights Denmark as having plans to use wind power alone to generate 50 percent of its electricity by 2020, and of course if that’s possible in a small geographical area like Denmark why shouldn’t it be possible Europe wide? “In reality there are no technical barriers to having half of Europe’s electricity supplied by wind energy, but that will be beyond 2020, when we expect to be on target and see between 14 and 19 percent of our energy coming from here. By 2030 I see wind energy will provide at least a quarter of our electricity and I think there’s still quite a long way to go in terms of increasing wind energies,” explains Kjaer.

Progress In terms of moving forward, Kjaer explains that the key projects currently underway in the European wind energy space are extremely interesting and that the sector is learning a great deal from these developments. He also points to Eastern Europe as an interesting area, with Romania, Bulgaria and Poland in particular getting serious about renewable energy. “The speed at which the conditions have been put in place to attract investors in great,” says Kjaer.

“It’s interesting to see how these countries have approached the whole debate about the renewables directive, putting in place measures in terms of grid access and payment frameworks.”

So how does Kjaer envisage the wind energy space progressing in the future as Europe reaches its 2020 deadline? “It’s a truly interesting time,” replies Kjaer, “because we have come from a past in which we actually didn’t need more new electricity generating capacity.

We actually had excess capacity until a few years ago, which is no longer the case because we are shutting down old power plants and have to build new ones. What the European Commission is saying is that between now and 2020 we have to build approximately 350,000 megawatts of new electricity generating capacity, which is equal to 50 percent of all capacity that’s currently running in the European Union.”

Kjaer explains that the interesting element over the next 12 years will be seeing where that capacity will come from – where wind will be in relation to its main competitors in terms of new electricity generating capacity. “If we look at investments over the last 10 years, Europe

We increased wind power capacity by 8.5 gigawatts last year

has really been investing in wind power and gas, and I think it will be really interesting to see how wind energy compares in terms of cost with building a new gas fi red power plant,” he says. Kjaer sees three elements that are very much in wind energy’s favour. Firstly that it is quicker to build a wind farm than a new coal or gas fi red power plant. Second is the fact that from 2013 coal and gas power plants will have to pay for every ton of CO2 that is emitted. And third is that with a coal or gas fi red plant it is vital to take into account future fuel prices in order to understand the cost of operations. “One of the main benefits of wind power is that the cost of carbon and fuel prices will be zero over the next 20 years of operation, whereas you can’t guarantee that for coal and gas fi red plants, you just don’t know what fuel and carbon prices will be.

“The competition over the next 12 years will be who gets to build those 350,000 megawatts that we need in the European Union and it will be between coal, gas and wind energy and with the current outlook for fuel prices, wind energy looks like an increasingly attractive investment.”

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Catching the breeze How AfriWEA is pioneering Africa’s wind energy movement to encourage renewable energy on the continent.

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n 2002, the continent of Africa received 148 MW of installed capacity for wind power generation – a mere 0.5 percent of the global total. Compare that with India, which in 2002 had a global market share of six percent, and it was clear to see that while equatorial regions held an ability to successfully harness and utilise wind energy, for many that was far from the case. To redress the balance and fight Africa’s corner, the African Wind Energy Association (AfriWEA) was formed in the same year with the mission statement of encouraging manufacturers, developers, governments, renewable energy owners and individuals to promote and support wind energy development on the African continent.

The following November, it organised the second annual World Wind Energy Association conference in Cape Town, attended by over 1000 delegates from 50 different countries. Fast-forward to today, and its membership exceeds 90 people spanning 19 countries. It has evolved somewhat from its original inception, and now not only champions wind energy for Africa, but also provides a network through which support around the world can be given or obtained on wind energy matters. In addition, AfriWEA also hopes to facilitate consultation between all types of parties: the energy industry, local and national governments, academic institutions, not to mention the general public and other institutions concerned with the conservation of the environment.

Unfortunately, with funds being limited and current resources stretched, AfriWEA is limited to what it can do; still it shines bright with intentions for the future. Firstly, the organisation of local, national and international conferences, workshops and training courses will be an integral part of AfriWEA’s vision to spread valuable knowledge and experience throughout their membership and provide a more educated, coherent and united voice of support for wind energy. Perhaps more importantly

will be the task of changing people’s perceptions on wind turbines from a grass roots level; this means teaching for future generations as they will ultimately become their own wind harvesters. Highlighting the practical changes they can bring to their own communities has been, and will continue to remain, AfriWEA’s primary objective.

Acting as an advisory limb to the wind energy movement, AfriWEA also recognises the importance of delivering technology in an appropriate manner and provides equal support to large grid connected projects and smaller stand alone systems alike. This sentiment goes the distance to highlight the ease with which wind energy could be harnessed on every level, whilst showing that AfriWEA is an association focused on wind energy integration for Africa, in Africa; of course, it hopes to introduce larger wind farms and projects from the international stage, but in order for this to become a reality, the smaller introductions need to be made first.

After all, the introduction of wind energy to Africa will do far more than provide renewable energy for a continent that sorely needs it – it will also advance regional cooperation by encouraging communication and collaboration between other African renewable energy committees. In doing so, the hope is to contribute to economic development, alleviate poverty, aid the protection of the environment and improve the quality of life for the people of Africa.

In this early phase, the Association is looking to increase membership so that it has a broader knowledge, experience and resource base. Membership is free in order to enable and encourage individuals to also obtain membership of their own national wind energy associations or the World Wind Energy Association. Becoming a member will bring you into a large network of experts in the field from all across the continent and provide a forum through which ideas and experience can be exchanged. Only by creating, nurturing and implementing ideas from the ground up can the mission of AfriWEA be fully realised.

“Highlighting the practical changes they can bring to their own communities has been, and will continue to remain, AfriWEA’s primary objective”

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POWER GENERATION

With the industry of power generation being one of competition and logistics, Allangba Faustin deconstructs his experiences within the field and offers some advice on how to survive.

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he world of power generation thrives on the work of many through the inspiration of a few; evolving technology and updated methods have undoubtedly shrunk the distance between this dynamic in recent decades, yet it still remains true to its core. In order to achieve any substantial gain, one must either carry the luckiest charm in the world – and still believe in faith – or work in harmony with diligence and risk in a field that requires impeccable levels of experience and comprehension.

With 60 members of staff spanning five departments, Allangba Faustin, Manager of Engineering and Production for PETROCI, is part of the latter. Overseeing all aspects of the company from drilling to reservoir, production and gas distribution engineering, Faustin takes an avid interest in everything PETROCI both upstream and down – including their marketing.

“Th is morning,” smiles Faustin, “I had a meeting with all five of the departments to give them instruction and coordinate activity on the

platform and also on the gasoline units. They’re the units that when we buy the natural gas, we take it through a system that extracts the heavy part of the gas, then we light that part before it is sent to the relevant industrial sites. Th is is what we do on a daily basis as the engineering and production managers at PETROCI.”

Discovery In addition to the daily programme of checks and routines, PETROCI have also undertaken vast levels of work with 3D reservoir modeling, some of which has led to important commercial discoveries on the Ivory Coast.

“We make discoveries through seismic and various other techniques that can be used to have a prospect on another well that makes the discovery. We put all the data in our simulation model, which can help us set down a field production plant. The model will tell us what we should drill at different places and at which places we should drill to optimise

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our production. The model will also tell us the recovery factor, how much oil we can produce and for how long we can produce this oil. With the same model, we can display all the reservoir parameters such as fruit saturation, water saturation and the evolution of this kind of saturation during the lifetime of a field. Based on this we can estimate the cost of a plant that we are going to put down to produce the field.”

Essentially, the model details precisely which time the desired production will be delivered alongside how long the field will be producing and how many wells need to be drilled in order to produce the field. In addition, the necessary water quantities that need to be injected in order to support the reservoir pressure – and on the odd occasion how much gas is needed to perform a gas lift – are also registered by the model; while it is without doubt a model of complexity, it provides Faustin with all the information needed to optimise production. “Th is is how it works,” continues Faustin. “When I was just an engineer this is the work I was doing.

Now I’m the manager I have staff doing this job every day at PETROCI for the company.

“Our biggest fi nding is a field in CÔte d’lvoire that was made in 2001. There’s water there ranging from 1500 metres to 2000 metres offshore. It is the biggest fi nding in deep water right now in the Ivory Coast and we have a reserve of around 200 million barrels of oil and about 150 TFC of recoverable and associated gas. Besides that, we also have a small discovery on the gas side in shallow water offshore.

“Then we have our older fields like the Espoir field that we have been producing for about seven years. Th is field had been discovered by Feliz Petroleum back in the 1980s and had been produced for some time from 1982 to 1990. Since the oil price was declining, Feliz found that it was no longer economic and they abandoned the field.

“In early 2000, Ranjha Oil came and took over the field and started producing it with water injection and secondary recovery generators.

Th is field now produces at an extremely good rate with the water injection; something around 20,000 barrels of oil per day and about 18 million cubic feet of natural gas is sold. What is good about natural gas in the Ivory Coast is that we don’t burn or flare the gas. We sell all that we produce to the power plants.”

“The most recent challenge we had was solving how to get one of our more recent fields to produce. First, when we discovered the field, we used what we call an expandable sand control system (ESS) to prevent sand entering the well. Unfortunately, after one year of production the system failed, putting us from 50,000 barrels per day to something around 16,000 barrels per day. We had to return to our studies, go back and re-drill part of the well with a brand new system. We did that and it seems to work right now, so we’ve gone back from 16,000 barrels per day to around 26,000-27,000 barrels of oil per day.”

On the other end of the spectrum to the challenges facing producers such as Faustin is the technology that helps them on a daily basis. Specific to PETROCI is the use of geophysical technology and its ability to improve exploration risk rates and reduce costs within unconventional resources such as oil shale. Faustin details an example of an inversion technique of 3D seismic interpretation that an engineer used to identify a clear flat spot in the natural gas side of the field that worked to full effect. It is without doubt that the technology is helping on levels that no other solution can. But even with this new-found helping hand, the world’s rising energy demand is stirring up uncertainties within the future of the industry with regards to supply being able to keep up with demand.

“We’ll be able to keep up with demand,” asserts Faustin, “but only for the next 20 to 50 years. However, I think that it will be difficult to keep up with the demand. Beyond that, we need to think about some new kind of energy. It may be cheap, it may be more expensive than oil energy, but we need to think about some kind of new energy. There are so many of them. Right now people think oil is expensive – I don’t think so. All the alternative energy is more expensive than the oil. Using technology – for example to get something out of sugar cane or an agricultural product – is an energy that has some cost.

“For the near future we still have oil. We’re currently running some more discovery outlets deep offshore in places like Brazil and the Ivory Coast – specifically some speculative seismic in roughly 3000 metres to 4000 metres of water. We think that discovery can keep up with the demand for the next coming 20 to 50 years, but after that we need to have something else that will come up to face the demand of energy in the world.”

Whilst others may argue with the specifics, Faustin has certainly hit the metaphorical nail on the head. But until the time that a viable and infi nite alternative energy source is uncovered, it will remain in the hands of people like Allangba Faustin and companies such as PETROCI to continue tapping into our word’s resources and providing the people with what they need: energy.

“What is good about natural gas in the Ivory Coast is that we don’t burn or flare the gas. We sell all that we produce to the power plants”

Challenges Despite the seeming ease with which Faustin discusses the gas and oil producing fields, there still remain many challenges in deep water production – specifically those of an engineering context. To begin with, a significantly viable commercial discovery has to be made and approved before any sniff of a development plant can emerge. Using the Ivory Coast as an example, however, Faustin declares that while their commercial fields are not that big when compared to Ghana or Nigeria, they have set up a development plant that can be extremely economical, both in the building and running of the plant. What becomes clear is that materials and techniques that are not too expensive are pivotal in beating the challenges of production.

Allangba Faustin is the Engineering and Production Manager of PETROCI. He graduated from the University of Tulsa, Oklahoma, with a degree in Petroleum Engineering in 1981.

He then completed an MSc degree in Engineering Management from the same University in 1982. He started his petroleum engineering career at PETROCI, the Côte d’Ivoire national petroleum company, in March 1983.

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RENEWABLES

PURE AND

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Dan Frederiksen presents his one, simple recommendation for Africa to promote the deployment of existing low-emission technologies.

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n February 22, 2010, the Ambassador of Denmark, Dan Frederikson, took the stand at the Africa Investor CEO Forum on Infrastructure, Energy and Clean Technology Projects and Awards ceremony in Cape Town, South Africa, and presented his opinions on the potentials of low-emission technologies. Not only that, but he outlined one, simple recommendation for Africa to promote the deployment of their existing low-emission technologies with advice from the Copenhagen Climate Change Conference.

“First of all, I wish to assure you that I am very pleased to be part of this panel and to speak to this important audience about two issues that affect us all, namely energy and climate change,” began Frederiksen. He then went on to highlight the importance of the COP15 Climate Change Conference in Copenhagen in December of last year. “In Copenhagen, it is paramount that the world leaders come together and agree on an ambitious new agreement.”

“Denmark faced a severe energy crisis in the first part of the 1970s, which made us radically change our energy policies. It’s those two events – the COP15 and Denmark’s energy experience during the last three decades – that inform my speech.” Indeed, it was under the request of the organisers of Africa Investor that Frederiksen give one, simple recommendation for the continent to ensure the deployment of existing low-emission technologies.

“This has not been an easy task,” admits Frederiksen. “Coming up with only one recommendation to a series of complex issues which are keeping heads

of states, science, industries and civil society very busy these years. Furthermore, this one recommendation would have to be suitable for the entire continent of Africa, with its 53 different countries and enormous diversity. Before I reveal my recommendation, I would like to take this opportunity to present some of the key aspects related to the issues of energy and climate change.

“First of all, why is the deployment of existing low-emission technologies so important? Well, it can no longer be questioned that our almost uniform dependence on fossil fuel is the main culprit to climate change. The signs of climate change are everywhere around us – from melting glaciers to heavy floods and hurricanes – and draught and fires as South Africa is experiencing.

All scientific prognoses show that Africa is the continent that will be hit the hardest. In other words, the message from science is clear: We have to act now and we have to act with ambition.

“Secondly, low-emission technologies assist in diversifying energy supply, thereby providing a more stable and secure supply of energy for the benefit of our economies. Think back for a moment at the energy crisis in South Africa early last year. Had South Africa had a couple of wind farms or other renewable sources, maintenance of coal fired power stations and wet coal would not have been such a large problem. But by relying on coal for almost the entire energy production, South Africa ended up losing almost two percent GDP growth in the first quarter of 2008.

At the COP15 in Copenhagen in December, representatives from countries worldwide met to reach an agreement on ways to address the challenges

SIMPLE

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of climate change. Of interest to Denmark, and specifically to Frederiksen, was that more economically developed countries took a leading role in committing to serious reductions in CO2 emissions. In addition, the agreement in Copenhagen also intended to enable emerging countries, such as those in Africa, to both form a cleaner path towards prosperity and afford them an ability to adapt to and mitigate the consequences of climate change. “The aim is to lay the foundation for a new beginning in Copenhagen; a new beginning towards a low carbon economy,” as Frederiksen puts it.

“There is no doubt that finance is key in reaching an agreement.

Denmark is already assisting poor countries to cope with climate change and we are committed to do more. The Danish government has recently launched the recommendations of its ‘Africa Commission’ – and two of the five international initiatives arising from this commission are: Access to sustainable energy as well as commitment to African entrepreneurship and access to finance for small and medium-sized enterprises. These areas are strongly interlinked.”

“In addition to this, open and guaranteed access to the grid where Transmission System Operators – normally the old state monopolies – are required to finance, construct, interconnect, and operate the transformer stations and transmission and distribution infrastructure for renewable energy technologies has been pivotal. Finally, a general carbon tax on all forms of energy, adding additional income for renewable energy generators has produced a significant change.

“In other words, the ‘Danish Model’ is an example of the private and public sector working together, promoting change for the common good and in the process not only producing green energy, but also making money for the state coffers and empowering ordinary people while tearing down monopolies. How many more plus-words can you ask for?”

On the subject of plus-words, Frederiksen then returned to his brief on the one recommendation to African countries. “Some of you may have guessed it already. My one recommendation for Africa to promote deployment of existing low-emission technologies is: Change the legislative frame-

“It takes political will and determination by all. Governments and municipalities have to come to the party to secure legislative changes, but businesses also have to contribute with know-how, project organisation, willingness to finance in a non-mature marked et cetera. And ordinary citizens have to pay the bills – as always – including a start-up premium. But once you get started the experience at hand shows that there is no trade off between growth, creating jobs and going green.

You can do all of that at the same time.”

“

“I would now like to present to you the main features of the Danish energy experience over the past three decades. Denmark has transformed from being 99 percent dependent on foreign energy sources such as imported oil and coal in 1970 to becoming a net exporter of natural gas, oil and electricity today. We have the largest portfolio of wind projects integrated into the power grid. Now around 20 percent of Denmark’s electricity supply comes from wind power.

“There is a commercial side to this story, as Danish companies are now among the leaders in the field of wind technology employing almost 30,000 people. The wind industry takes home more than six and a half percent of Denmark’s total export income. Similar to countries such as Germany, we have also made significant gains in the field of energy efficiency. Consider this: Energy consumption in Denmark has grown only four percent from 1980 to 2004, even though the economy grew more than 64 percent in fixed prices in the same period of time. This is proving that green growth is possible.

“These accomplishments have not been obtained without major changes in the legislative framework, which, of course, have hurt some players and benefited others. Some of the most important steps have been: Opening up the market for Independent Power Producers (IPPs); 60 percent of all wind energy in Denmark is produced by windmills owned by individuals or small cooperatives. Ownership is not by big multinationals, or by the state – but by people like you and I. Secondly, a feed-in tariff requiring utilities to buy all power produced from renewable energy technologies at a rate equal to 70 to 85 percent of the consumer retail price of electricity.

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“South Africa has started a national process of greening its coal based economy – which will open the doors for wind farms and other renewable energy sources – and South Africa also plays an important role globally to get a legally binding climate change framework agreed, which will give further impetus to lowering greenhouse gas emission and securing a green future for the next generations.”

”

work governing the energy sector. The key words are decentralisation and diversification.

“Decentralisation of the production of energy, which will allow Independent Power Producers – often owned by individuals or small cooperatives – to become players at a level playing field with the old monopolies.

Diversification implies promoting renewable sources such as solar and wind energy to be introduced. Thereby not only going green, but also providing for supply security and having back-up systems when one source of energy supply for one reason or the other is in trouble.

“However, for this to happen measures such as feed-in tariffs, access to the grid and the introduction of a carbon tax on energy or another subsidising mechanism in the transition phase are needed. It takes political will and determination by all. Governments have to come to the party to secure legislative changes, but businesses also have to contribute with know-how, project organisation, willingness to finance in a non-mature marked et cetera. And ordinary citizens have to pay the bills – as always – including a start-up premium.

But once you get started the experience at hand shows that there is no trade off between growth and going green. You can do both at the same time.”

With the Desertec Concept entering the field of play in Africa, and renewable energy conjuring up more interest year upon year, Frederiksen’s advice is looking like it could one day become part of a bigger blueprint for African renewable energy. The proof, as they say, is in the pudding. n Dan Frederiksen is the Ambassador for Denmark in South Africa. He graduated with an MSc in Political Science in 1982 from the University of Aarhaus in Denmark.

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SAFETY FOCUS

IN SAFE HANDS

The oil and gas industry faces mounting challenges when it comes to preventing accidents and injuries, as well as the impact of its operations on the environment. Julian Rogers catches up with Yassin Darwish, Danagas, Egypt HSE Manager, to get his take on standards.

The oil and gas industry is perceived by some young people as a dangerous career choice. How have health and safety efforts and standards improved in recent years?

Yassin Darwish. In recent years we have set up a committee for the oil and gas operating companies in Egypt. We are trying hard to solve all the problems and trying also to improve the standards. Our main concern nowadays is with our local contractors in Egypt because they are not meeting any of the international standards. So we are working hard on this issue with cooperation, of course, from the government to have new legislations. Th rough these many committees and with the government

and five NGOs running right now we are working on those issues. We feel we are improving and trying to make it safer for the corporations and also preserve the natural resources as much as we can. We have training for all issues relating to HSE in the oil and gas industry to raise standards for the workforce.

And what would you say are the main risks that oil and gas workers face today?

YD. We have huge challenges in Egypt with our local workforce and also in the community because literacy in Egypt is not high. The ignorance to the safety, health and governmental issues is very high, while educa-

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YD. If you take the IOC, they are working to their standard set of rules.

Then comes the difficulty of understanding and implementing this in different cultures. As I said earlier, there is ignorance in some countries – not just Africa but worldwide. If you are educated in HSE from your first year with an oil and gas company you never achieve what an IOC wants, especially if you work in many countries. Of course, there is a standardised approach when it comes to the environment because there are conventions that we have adhere to. But how we implement those conventions and how we understand them, that is a challenge. I believe the NGOs have a much stronger understanding of this. They have a lot of enforcers so are more effective than governments on these issues.

tion on health and safety issues is not very effective. We can say that our workforce falls into two categories: they follow the rules while they are on the sites but when they go outside our worksites they are exposed to the community that is not following the rules. One of the many challenges in Egypt in general is road safety, and according to the WHO we have one of the highest fatality rates in the world.

What’s the best approach to tackling HSE issues and complying with legislation?

YD. Most of the oil and gas companies are following very fi rm procedures, but compared to the whole global community we are not so effective.

However, the Egyptian government is very cooperative on these issues in trying to reduce incidents as much as possible. Also, in the tender process they look for HSE statistics and the history of the company. An IOC will normally have high HSE statistics but if they have environmental fi nes in other countries, for instance, they will face restrictions. We are working on these issues.

It is well documented that the oil and gas industry faces skills shortages, with experienced personnel approaching retirement and graduates tending to pursue other careers. How is this affecting HSE efforts?

YD. In HSE in Egypt it is not easy to fi nd high calibre and well-educated staff that have the right experience. However, this is not a just a problem for Egypt – it is a worldwide concern. We try to improve this situation through education. We now have some UK certificates and also American certificates we are trying to introduce in Egypt. Most of the workforce now gets education and we also try to help new generations so that old HSE managers are passing on their experience to tomorrow’s managers.

The MENA region can be a fairly inhospitable region with hot and dusty conditions to contend with, not to mention security and political concerns. How does this affect work?

How does the approach of the IOCs differ to that of NOCs? YD. Standards are created by the companies and most of them want to work to the minimum standards in order to prevent incidents. There are a lot of IOCs who are trying to continually improve the standards and, at the same time, carry out sustainability or corporate social responsibility (CSR). Some companies are taking responsibility to try and improve awareness and understanding of the impact on the local communities.

On the other hand, other companies with different standards may be doing physical things like refurbishing a community facility. This means there is a large variance between standards of the oil companies.

Do you foresee any major changes in Egypt with HSE over the next few years and how will this impact on your operations?

YD. I think Egypt is moving ahead right now in its effort to improve standards. You can see improvement because we are trying to communicate and interact more as IOCs when it comes to HSE. With these strong relationships we are approaching governments and NGOs because they are very willing to help. I believe that in five years from now we will be very effective with this as an industry. They, like us, are trying to protect the environment and our natural resources.

“One of the many challenges in Egypt in general is road safety, and according to the WHO we have one of the highest fatality rates in the world” Has the global economic downturn affected HSE standards within the industry as a whole?

YD. I don’t want to name companies, however most operate to the same international standards and if they violate these standards they may be fi ned, so they need to make sure they do the right thing. What we are trying to also do now in Egypt is standardise IOC standards according to the best that are out there. We are also negotiating so that we have government, not IOC, standards and this is enforced as the minimum HSE requirements. In Egypt it is not fi rm at the moment but we want to make it clear and not from the interpretation of any company. Th is will improve HSE standards in Egypt a lot.

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ASK THE EXPERT

Safe greening: growing profits and values for your company David Omaghomi, HSE’s Senior Environmental Consultant, discusses how understanding the world of waste could have a significant impact on your company.

E

nvironmental, financial and regulatory impacts of waste generation, treatment and disposal are a major concern to oil and gas, power generation, construction and manufacturing industries. Implementing an enterprise wide ‘green’ project could be the way to increase bottom line whilst adding values.

Since the industrial age, waste generation and its impacts remain an inexorable outcome of operational activities; with the attendant implications like treatment and disposal costs, reputation management, liabilities and regulatory issues that could arise from environmentally unfriendly practices.

Over the past decade, concepts that focus on environmental stewardship have gripped the collective intellect of humankind, challenged our capacity to be self-aware, and established a common global imperative to respond to critical issues that arise from world-wide climate change and natural resource conservation.

Yet, while most enterprises have already undertaken some form of ‘green’ initiative, very few have established an enterprise-level ‘green’ strategy that responds to the new global imperative. It is critical that they assess all initiatives and make targeted investments to ensure the

highest possible return without adding to the overall cost base.

But before decisions and investments are made, senior leadership must be able to clearly state the green agenda’s current status, the shortand long-term goals of the portfolio, and how the green strategy aligns with the business’ strategy.

Each company needs to chart its own course, because following an industry leader’s path is not a prudent decision in moving a green agenda forward. A key component in this process is an ‘honest broker’ that helps assess and understand where the organisation stands on the sustainability maturity pathway.

Current priorities and applicable requirements will then dictate the appropriate steps toward implementing the green agenda.

To help proponents experience the immense benefits of environmental stewardship, HSE has developed numerous client specific environmental improvement management projects that help you understand your current state of green value potentials, identify opportunities, as well as implementing and monitoring their compliance.

During the course of implementing your green programmes, several distinct and important functions that are not being performed well or at all may be identified and addressed through specific environmental infrastructure enhance-

Conceptional model linking corporate environmental management and performance with firm value Environmental Management System Environmental Performance - Policy - Planning Process - Resources & Implementation - Progress Measurement - Performance Results - Periodic Review & Reporting

Environmental Signalling

- Unmanaged - Regulatory Compliance Reporting -Media Coverage - Managed - Industry Codes of Conduct -Press Releases, Advertisements -Corporate Environmental Reports

Firm Risk

- Business Risk - Financial Risk - Environmental Risk

Firm Value

- Cost of Equity Capital - Market Value of Equity - Credit Risk

ments, or through investments in the capabilities of the organisation’s human or information management resources.

Conducting a purposeful knowledge or skill building initiative is often a critical activity on the pathway to improved environmental and business performance, requiring timely and high quality information. Hence, information management analysis and improvement activities can play a pivotal role in helping your organisation to meet its environmental improvement goals and communicate its accomplishments efficiently, clearly and credibly to all interested stakeholders.

From experience, corporations that are environmentally sound create additional value for stockholders through being less risky business entities and therefore, being accorded a lower cost of capital. This shows that firms that improve their environmental management system and their future environmental performance will be able to increase shareholder wealth.

With decades of experience, our solutions not only promote the development and dissemination of standardised approaches to environmental management, they also embrace the concepts of sustainability and eco-efficiency, in which industrial activities are critically examined in terms of raw material, water, energy, and non-renewable resource use, as well as relative to more conventional aspects such as toxic pollutant emissions and waste generation.

Our fine blend of expertise and flexibility in managing a wide range of Environmental Health & Safety projects for multi-sector clients in African communities are cost effective, easy to implement and proven to boost your company’s values whilst improving profit margins – the core concern for managers.

We would be glad to conduct a free assessment of your facility or operations and provide an easy to understand report.

David Omaghomi is a Senior Environmental Consultant with HSE Management Ltd and is currently the Environmental Co-ordinator for Sterling Oil Exploration & Energy Production Co. He has led several public and private projects that help impact communities and add profits and values to the clients.

120 www.ngpowerenergyafrica.com

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www.hseafrica.com

BEING GREEN & SAFE TAKES THE RED OUT OF YOUR PROJECT FINANCES Experience, People, Technology and Flexibility to do it right along your entire value chain, are the strengths that have enabled us to remain in the forefront of providing bespoke Environmental Health & Safety solutions for our people anywhere in Africa.

We provide a variety of on-site or technology based Health, Safety and Environmental products, manpower and services like training, risk assessments, audits and regulatory management so you can eliminate losses and concentrate on operational matters 24/7.

Contact us today for a FREE assessment of your facility/ operations anywhere in Africa or visit www.hseafrica.com for a complete list of our products, trainings, products and enterprise wide solutions.

Introducing...

‘African SSHE Digest’ An interesting and interactive professional magazine with a focal point on the general management of safety, security, health & environmental issues by Governments and Corporations across Africa..

coming soon For details, subscription and advertising contact:

Africa

SSHE Digest

T: +234 813 239 4832 E: info@africasshedigest.com www.africasshedisgest.com

Improving your profits and values couldn’t be less costly.

PROJECT LOCATIONS IN OVER 7 COUNTRIES

HSE Management Ltd, Ground Floor, ITS Building, 2 Araromi Street, Onikan, Lagos - Nigeria T: +234 1 742 7371 or +234 1 877 4730 | E:info@hseafrica.com or hseafrica@gmail.com

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SUMMITS 122

Next Generation Utilities North America Summit 2010 The Fairmont Turnberry Isle Resort, Miami, Florida 9th - 11th November, 2010 In today’s troubled climate, the utilities sector is in the midst of unprecedented transformation. Several factors are driving fundamental change: liberalisation and increased competition, strategic mergers and acquisitions, regulatory pressure around climate change, systems reliability, convergence, electricity and renewable concerns.

Whilst there are a dozen sponsors in attendance at the summit, the programme is designed with the end user in mind. The delegate attendance is comprised of the most well respected executives in the utilities industry and the meeting format is designed to surpass the traditional exchange of business cards and allow executives to have a good discussion on a personal level.

Upcoming oil and gas and utility summits by GDS International NGO US Summit 2010 NG Oil&Gas Africa Summit 2010 GDS business executives select and invite more than 50 of the most senior exploration and production decision makers in the African Oil and Gas market.

Our business analysts talk with invited executives to discover their most pressing E&P demands.

These demands are matched with the leading solutions in the E&P market and only 25 appropriate companies are invited to participate. Each company engages in a minimum of 16 business meetings, two round table discussions, keynote speeches, fi ne dining and unlimited networking over the three-day event.

E&P delegates from the oil and gas industry and solution providers from the upstream technology sector, select in advance a series of one-to-one solution briefings for the best possible itinerary.

They also work with GDS senior editorial staff to pre-determine round table topics and participants to create relevant and thought provoking discussions.

Events.indd 122

The Four Seasons Resort & Club, Austin, Texas 3rd - 5th November 2010 The prospects of limited growth in nonOPEC production, and the expected start of economic recovery later this year, which should increase oil consumption and the demand for OPEC oil, are the main factors supporting the upward price path. In other words, it appears that oil is recovering from the low points and we are beginning the long awaited upswing.

The Next Generation Oil&Gas US Summit 2010 provides an arena for senior level executives to meet with their peers and discuss management objectives in a relaxed and vibrant environment. www.ngosummit.com

13/4/10 09:01:39

SUMMITS 123

Next Generation Utilities Europe Summit 2010 InterContinental, Vienna 5th - 7th October 2010 The European power sector is at a critical juncture. The European Union’s 20-20-20 policy targets are driving a revolution in power technology and there are an abundance of old and polluting utilities that are in dire need of repair.

The Next Generation Utilities Europe Summit October 2010 will provide a number of different networking channels to execute and promote business including a series of focused interactive workshops. Senior decision makers will engage in business meetings with solution providers who are specific to their business challenges and areas of future investment.

NG Oil & Gas APAC Summit 2010 The Four Seasons, Jakarta 19th - 21st October 2010 The APAC regional governments’ continued commitment to promote private-sector investment in order to meet worldwide energy demands promises massive rewards to a host of organisations, from National Oil Company subsidiaries, indigenous providers and international oilfield service companies all of which are well-established within the region or are looking to target APAC for the very fi rst time.

The Next Generation Oil&Gas APAC Summit 2010 will bring together senior level executives in a unique networking opportunity that promotes industry in a relaxed environment. www.ngosummitapac.com

NG Oil&Gas Africa Summit 2010 La Palm Royal Beach Hotel, Accra, Ghana 28th - 30th September 2010 The Next Generation Oil&Gas Africa Summit 2010 will once again serve as an arena for senior level executives to engage in clear and focused dialogue with their peers and examine their management objectives in a relaxed and vibrant environment. www.ngoafricasummit.com

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CONOCO PHILLIPS ED P 124-125_13 July 13/04/2010 09:17 Page 124

GLOBAL FOCUS 124

Global upstream challenges In a panel discussion on global upstream challenges at the Oil & Money Conference in London, ConocoPhillips CEO Jim Mulva provided an IOC response to turbulent times and challenges.

I

n discussing our upstream challenges, I’ll start with the obvious – the world economic downturn. It has caused the largest decline in energy demand in 25 years. Oil prices that took eight years to reach $147 per barrel – after stagnating for two decades – lost more than two-thirds of that value in eight months. Today, they are $70 – but may not hold. Compounding this are government fiscal takes.

A number of countries raised their takes during the boom, assuming that prices would remain high. Now, most have not lowered them. Also, reserve replacement costs are more than double their 2003 levels. They are not falling as fast as prices did.

All these factors challenge the economics of new investments. Government seems to assume that we will invest anyway. But perhaps the screws have now been tightened too much. World upstream investments are down by $100 billion this year, or 21 percent, according to the IEA. There are other challenges, like restricted access. In many resource-rich countries, the best (if not all) opportunities go to NOCs and IOCs are left out, despite their expertise and access to capital and markets. There is also climate change legislation pending in key countries. This creates uncertainty over what the rules and costs will be.

Investment flees uncertainty. We need the world to decide what it will or will not do. And finally, we face political hostility. Fossil fuels are unpopular because of their price volatility and perceived carbon impact. So governments are promoting renewable sources. At best, they are ignoring oil and gas policy – while overlooking how natural gas could ease the transition to a low-carbon economy. Since fossil fuels must provide 80 percent or more of world energy even by 2030, this is like Nero fiddling while Rome burns.

These challenges and flawed policies have serious implications. They could lead to new energy price spikes once the world economy recovers.

Further, today’s energy downturn is not like the 1980s. We are unlikely to have a long production surplus and weak oil prices this time. The drop in oil demand then was three times today’s decline. Conventional non-OPEC

crude production was rising then, thanks to the North Sea and Mexico. Now, it is falling. And unlike then, world demand now is primarily driven by the rising prosperity of the developing world’s 5.6 billion people. They outnumber the population of the OECD countries by nearly five to one, and the margin is growing.

So demand growth will inevitably resume, and renewable energy cannot meet it alone. Unless our industry is ready, and governments have the right policies, supply could fall short. This would damage the world economy and undermine living standards.

At ConocoPhillips, we are dealing with these challenges today, while also anticipating tomorrow’s needs.

We have adjusted our operating and capital programs to live within our means; the best projects continue, while others have been deferred. We are working with suppliers to reduce costs. We are maintaining balance sheet strength by managing our debt. And we are engaging in the public debate over climate change, energy security and taxation.

But despite these immediate steps, we are maintaining our long-term strategy. We are funding our commitments and preserving optionality. We continue spending through the cycle in our resource-play drilling programs.

And we are focusing on our core businesses, while continuing renewable energy R&D, but at a measured pace.

Obviously, there is much government must do. First is improving access. The world has ample oil and gas, and we can produce it efficiently while protecting the environment. We just need access. Second, government must stop viewing our industry as a cash cow. Some $12 trillion in global oil and gas investment is needed by 2030 to ensure adequate supply. These investments cannot occur if our funds are taxed away. Third, government must encourage development of all energy sources, and not pick ‘winning’ technologies. The public, through the market, can determine the best sources far more efficiently than government. And finally, government must coordinate its policies on energy and climate. Otherwise, policy conflicts could undermine both.

So there are solutions to our challenges, provided that we, and most importantly government, take the right steps. n

CONOCO PHILLIPS ED P 124-125_13 July 13/04/2010 09:18 Page 125

GLOBAL FOCUS 125

“These challenges and flawed policies have serious implications. They could lead to new energy price spikes once the world economy recovers”

IN REVIEW 126

On the shelf Taking an in-depth look at the impact of the economy across all industries, P&E uncovers the best of this quarter’s business book releases.

The World is Curved Hidden Dangers to the Global Economy, by David M. Smick

A timely, controversial and engrossing examination of global fi nance and the crisis engulfi ng us all, The World is Curved highlights the next potential crisis points and the thicket of hidden problems facing the entire global economy. Picking up from where Thomas L. Friedman’s The World is Flat left off, Smick focuses on the globalization of finance and how today’s risky environment came about. He provides an insider’s perspective on the potential nightmare scenarios of the future.

P&E SAYS: A must-read for investors, business people and anyone interested in the fi nancial crisis.

Smick provides a thoughtful insight and raises important issues that need to be fully debated. A great guide on how to survive in these turbulent times.

Crossroads The End of Wild Capitalism and the Future of Humanity, by Peter Nolan

Drawing on thinkers as diverse as Karl Marx, Adam Smith, Sigmund Freud, Charles Darwin and Confucius, Nolan analyzes the achievements and shortcomings of capitalist globalization over the past three decades. For Nolan the global fi nancial crisis marks the end of the era of ‘wild capitalism’ and what follows next is an open question as humanity stands at a crossroads – one path leads to cooperation, one to confl ict.

P&E SAYS: A dense, detailed and carefully constructed argument stating a case for a tripartite alliance between the US, China and the Muslim world. Nolan remains upbeat and places equal weight on mankind’s instinct for survival through cooperation as well as the equally inherent destructive competitiveness of globalization.

It’s Not as Bad as You Think Why Capitalism Trumps Fear and the Economy Will Thrive, by Brian S. Wesbury

An upbeat antidote to the doom and gloom forecasts of the fi nancial future, Wesbury demonstrates that while the future may be hard to predict, it will ultimately be profitable over the long haul. Ranked as one of the top economic forecasters by the Wall Street Journal and USA Today, Wesbury shows how to prosper now and in the future with an analysis of tomorrow and a guide through yesterday.

P&E SAYS: In this easy-to-follow and engaging forecast of the future, Wesbury’s objectivity and optimism provide welcome relief to the daily bad news stories that have dominated the news for so long.

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Your World.

COVERED From the people you hire to the products you sell, if you’re in business, we’ve got it covered...

Next Generation Power & Energy A poll of 4000 utility executives posed the simple question: what keeps you up at night? The answers were costs, new technologies, ageing infrastructure, congested transmission and distribution, viable renewables and inadequate generation capacity.

ALSO AVAILABLE FOR: US & EU

EU Editition ion ition

d US E

Find out more: www.ngpowerenergyafrica.com

Next Generation Pharmaceutical

Business Management

Approximately 50% of new drug development fails in the late stages of phase 3 – while the cost of getting a drug to market continues to rise. NGP is written by pharmaceutical experts from the discovery, technology, business, outsourcing, and manufacturing sectors. It is committed to providing information for every step of the pharmaceutical development path.

Available for: EU

What business processes work? What are the proven, successful strategies for taking advantage of domestic and international markets?

Business Management is about real, daily management challenges. It is a targeted blend of leadership and learning for key decision makers in government and private enterprise.

Available for: US, EU, MENA

Find out more: www.ngpharma.com

Find out more: www.bme.eu.com

Oil & Gas

Infrastructure

Collaboration between Government and multinationals to ensure the energy supply is developing on two fronts. O&G is the definitive publication for stakeholders and service companies to read about the regional projects, technologies and strategies affecting their group.

Available for: MENA, US, Russia

Infrastructure provides insight on how developers can achieve critical objectives by integrating leading-edge solutions across their operations – helping them to make informed decisions about technology and operations solutions for all of their areas of responsibility.

Available for: US, EU

Find out more: www.americainfra.com Find out more: www.ngoilgasmena.com

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PHOTO FINISH 128

A southern Sudanese child walks near the town of Mayom in Unity state.

The oil-rich but largely underveloped southern Sudanese region borders former civil war enemies in north Sudan and is suffering from attacks blamed on northern nomadic Misseriya people.

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