Oil & Gas Supplement November 2014 by Infrastructure ME

OIL AND GAS SUPPLEMENT 2014

PUShING ThE bOUNDArIES Technology is reshaping the hydrocarbon landscape

INTRODUCTION

GROUP GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD GROUP COO GINA O’HARA

PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5713 EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 5473 CONTRIBUTING EDITOR ASHISH SARAF ashish.saraf@cpimediagroup.com +971 4 375 5495 ADVERTISING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 433 2857 SENIOR SALES MANAGER JUNAID RAFIqUE junaid.rafique@cpimediagroup.com +971 4 375 5716 MARKETING MARKETING MANAGER LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 DESIGN ART DIRECTOR SIMON COBON JUNIOR DESIGNER PERCIVAL MANALAYSAY CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH M rajeesh.nair@cpimediagroup.com +971 4 440 9147 PRODUCTION MANAGER JAMES P THARIAN james.tharian@cpimediagroup.com +971 4 440 9146 PRODUCTION MANAGER VIPIN V. VIJAY vipin.vijay@cpimediagroup.com +971 4 375 5713 DIGITAL DIGITAL SERVICE MANAGER TRISTAN TROY MAAGMA Published by

REGISTERED AT IMPZ PO BOX 13700, DUBAI, UAE TEL: +971 4 440 9100 FAX: +971 4 447 2409 WWW.CPIMEDIAGROUP.COM A supplement of Infrastructure Middle East Printed by Printwell Printing press LLC © Copyright 2014 CPI. All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

Technology reboot he global oil & gas industry is experiencing a new wave of productivity thanks to gamechanging technologies. Directional drilling and hydraulic fracturing have helped unlock resources that were labelled unconventional and made them commercially viable. New advances in Enhanced Oil Recovery (EOR) techniques are helping revive old oil fields, while 3D simulations and data-driven decisions are helping optimise yield and throughput of existing ones. Improvement in sub-surface imaging has enabled significant discoveries, like Brazil’s giant offshore fields. The single biggest impact of these technological advances has been to increase the known resource base of hydrocarbons. Ultimately recoverable resources have more than doubled since the early 1980s, from just 1.7tn barrels to more than 3.8tn barrels, possibly pushing the spectre of peak supply further into the future. On the flip side, the oil & gas industry is confronting a human resource challenge as young people give the industry a miss for jobs in the knowledge and service sectors. The question on everyone’s mind is: how and where are we going to find the skilled people who know how best to use these technologies? For Gulf nations looking to create job opportunities for their youth, this presents a fantastic opportunity in capacity building.

Upstream 04

Anoop K Menon Editor Infrastructure Middle East anoop.menon@cpimediagroup.com

Top 10 Oil & Gas projects 26

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ROUND UP

Upstream Total has installed advanced LIPS (Laser Induced Pyrolysis System) technology at the Total Research Centre Qatar (TRC-Q) at the Qatar Science and Technology Park (QSTP). LIPS uses a high-powered laser directed at the surface of rock samples, or ‘petroleum cores’, to obtain a high resolution analysis of the organic carbon present in those cores, which indicates the presence of oil and gas. It is mainly used for the evaluation of new unconventional oil and gas resources and to gauge well productivity. “LIPS will bring additional data to Qatar,” said Daniel Dessort, Geochemistry Senior Project Leader at TRC-Q and LIPS designer. “Broadly speaking, the organic carbon in sediments is difficult to locate and requires using logging techniques. Tarmats [in reservoirs], oil shale and shale gas vary widely in thickness, from a few centimetres to several decametres. Their common feature is their rich organic carbon content.” Abu Dhabi Marine Operating Company (ADMA-OPCO) and British Petroleum (BP) have signed agreement to develop a new technology for Enhanced Oil Recovery (EOR). The new agreement entails Carbonate Ionic Design EOR technology similar to the LoSal EOR technology, which BP is deploying at the Offshore UK Clair Ridge field but which, applied to carbonate reservoirs, “will be a significant step forward,” said ADMA-OPCO. Under the agreement, BP will provide support to ADMA-OPCO

INFRASTRUCTURE MIDDLE EAST

Qatar Science & Technology Park Total’s QSTP research centre was set up in 2009

in conducting a Single Well Chemical Tracer Test (WCTT) and carrying out laboratory tests to evaluate Carbonate Ionic Design EOR potential in ADMA-OPCO’s fields. Saudi Aramco has signed a contract with the Shandong Electric Power Construction Corporation (SEPCO) to design and build a Master Gas System Booster Gas Compression Station. The massive project will help to deliver sales gas produced in the Eastern Province to customers in the western region of the Kingdom, such as King Abdullah Economic City, the growing petrochemicals complex at Petro Rabigh and the Independent Power Plant on the west coast. The Master Gas programme is part of Saudi Aramco’s strategy to diversify the

company’s portfolio of local energy consumption and reduce reliance on liquid fuel. The Master Gas System Booster Gas Compression Station project will greatly expand the capacity of the East-West Pipeline system to deliver sales gas around the Kingdom, from its current capacity of 8.4bn standard cubic feet per day (SCFD) to 9.6bn SCFD by the end of 2016. By 2018, that capacity will have increased further to 12.5bn SCFD. Japan Oil Development (JODCO), a wholly-owned subsidiary of INPEX Corporation, Japan, recently announced that it had commenced oil production from the Umm Lulu Oil Field offshore Abu Dhabi. INPEX has jointly developed the Umm Lulu Oil Field with Abu Dhabi National Oil Company (ADNOC), BP and Total.

Khazzan Project in Oman The compressor station on the LR5 Drilling Rig

Oil & Gas Supplement 2014

Full field development of the Umm Lulu Oil Field is currently in progress, and after completion, the field is expected to produce oil at a peak rate of 105,000 barrels per day (bpd). The oil produced from the Umm Lulu Oil Field in the first development phase is transported via an existing subsea pipeline to Zirku Island, and eventually supplied to customers in Japan and other Asian countries as Upper Zakum Crude. JODCO owns participating interests in the producing oil fields of Umm Shaif, Lower Zakum, Umm Lulu, Upper Zakum2, Umm Al-Dalkh and Satah. In addition, INPEX owns interests in the Nasr Oil Field under development. BP Oman has awarded two longterm drilling contracts for the Khazzan project in Block 61. KCA Deutag has been awarded $400m worth of contracts for the construction and operation of five new build land rigs for Khazzan. The rigs are being assembled in Nizwa to help maximise employment opportunities in Oman. Additionally, Oman’s Abraj Energy Service has been awarded more than $330m in contracts to supply three drilling rigs for the full field development of the Khazzan Project. Sanctioned in December 2013, the Khazzan Project represents the first phase in the development of one of the Middle East’s largest unconventional tight gas plays. The full field development of the Khazzan Project will involve a drilling programme of around 300 wells over 15 years to deliver plateau production of 28.3m cubic metres of gas per day. This volume is equivalent to an increase of around a third in Oman’s total daily domestic gas supply.

AnAlysis

PRICE IMPACT

Keeping the faith According to Moody’s, continued growth in oil demand will check any precipitous long-term fall in oil prices ince demand for oil will continue to grow, the recent sharp drop in oil prices is unlikely to be followed by a precipitous longterm fall, according to Moody’s Investors Service. The rating agency hasn’t changed the price assumptions for oil it uses in its ratings analysis, it says in its report ‘Drilling and Services Companies Most Vulnerable to Tumbling Oil Prices’. In September, Moody’s announced that it had lowered the Brent crude price assumptions used for rating purposes to $90/barrel (bbl) through 2015 – a $5/bbl drop from the ratings agency’s previous assumptions for 2015. Moody’s also reduced its price assumptions for WTI crude to $85/bbl from $90 through 2015. Despite growing supply, particularly in the US, longer-term pricing should remain above $80 a barrel, given growth in global demand. That said, Moody’s cautions that prices could easily dip into the $70s/bbl range in the next several months. Oil prices dropped during the summer of 2014, reflecting slower economic growth in some of the world’s major economies, a strengthened US dollar and growing non-OPEC supply. Concerns about a slowdown in the pace of growth in China, and weaker economic conditions in Brazil, Russia and much of Europe – including Germany and France – point to a slight retreat in crude demand as well. Moody’s Managing Director Steve Wood says it is hardly shocking that oil prices have weakened in the face of growing supply. “The large movements in oil prices in 1973, 1979, 1986 and 1990 were all in response to supply shocks. It wasn’t until about 10 years ago that we saw prices rise because of spiking demand. In that sense, we’ve gone back to the future – supply is driving oil prices. In other words, excessive supply is driving prices down.” Wood attributes the sharp drop in midOctober to expectations of weaker demand

US is the largest producer of petroleum and natural gas in the world US IS THE LARGEST PRODUCER OF PETROLEUM AND NATURAL GAS IN THE WORLD estimated US, Russia, and Saudi Arabia petroleum and natural gas production quadrillion Btu million barrels per day of oil equivalent United States Russia Saudi Arabia

natural gas

petroleum

2008

2009

2010

2011

2012

2013

2014e

Source: U.S. Energy Information Administration Note: Petroleum production includes crude oil, natural gas liquids, condensates, refinery processing gain, and other liquids, including biofuels; barrels per day oil equivalent were calculated using a conversion factor of 1 barrel oil equivalent=5.55 million British thermal units (Btu)

growth in China and Europe at the same time that Saudi Arabia has threatened to defend market share rather than acting as OPEC’s – and the world’s – swing producer. The other significant factor is the strengthening US dollar. Because oil is denominated in dollars, a stronger dollar leads to lower oil prices. Moody’s research note noted that lower prices will hurt Exploration and Production (E&P) companies’ revenues immediately, with most of the drop falling straight to the bottom line because of their high operating leverage. The impact of lower oil prices in the oil and gas sector will be most felt by producers, including integrated oil companies and national oil companies. Some of the drop will be mitigated by hedges and offset by lower operating costs. If lower prices persist and E&P companies reduce capital spending and their demand for services, drilling and oilfield services companies will definitely come under pressure.

“Drillers and service companies will feel the most pain as producers react quickly to cut their costs,” says Wood. “Even if we don’t see a dramatic drop in rig counts or activity, we would expect to see pushback on prices and day-rates that service companies are able to charge producers. Drillers and service companies without contracts or that work on a ‘call out’ basis will be hurt the most.” Wood points out that if lower oil prices persist, production growth could slow in North America. He continues: “Shale wells typically have high initial decline rates, so a slowdown in activity would reduce throughput volumes for mid-stream companies. Gathering and processing companies with percent of proceeds contracts will see lower revenue. Retail fuel prices tend to be sticky on the way down, so refiners’ margins will benefit in the immediate term until pump prices catch up with lower feedstock costs.”

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SpoTLIghT

pLANTpAx

A modern DCS for your CapEx If you’re using a large, cumbersome legacy DCS system to run your production, you face low flexibility, integration difficulties and higher TCO. With PlantPAx from Rockwell Automation, this no longer needs to be the case. By Alain Hermans f you’re building a new production facility or migrating legacy systems, you need to prepare for the future with a modern DCS – one that is adaptable to your needs, both now and in the future. The alternative is to stay with what you have and accept that you will have to adapt your new installation to your existing system’s limitations. Modern production facilities in the oil and gas industry require much higher flexibility

I 04

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through modular design and significantly higher levels of integration. PlantPAx from Rockwell Automation provides just such a solution, in the form of a modern DCS that allows you to optimise your production while helping reduce your risk and lower your total cost of ownership (TCO). When building up your plant, you want to ensure that all skid-based systems and builders, such as metering, GOSP, boiler and turbines, can be easily connected to your DCS even if they have their own embedded process control systems.

Oil & Gas Supplement 2014

PlantPAx provides a scalable and modern DCS that allows the small systems used for small skids to be easily integrated. Using the same programming tools and faceplates for small, medium and large process control systems significantly reduces engineering and commissioning, while optimising operator experience. PlantPAx is already running production facilities around the world and helping to reduce TCO, while providing integrated reporting to production managers, quality managers and plant managers.

SPOTLIGHT

safety and users can stay in control of unplanned shutdowns at all times. The standalone AADvance and TMR solutions from Rockwell Automation integrate into PlantPAx through EtherNet I/P, which allows operators to check system status at any time.

Do you want to stay dependent on your DCS supplier for maintenance contracts and possible planned upgrades – and as a result pay a premium price?

Rockwell Automation believes you should have a choice of partner for your project implementation and services at no extra cost. PlantPAx is an open platform available from either systems integrators or the Rockwell Automation solutions group. This gives you a choice of partner and will help lower TCO, as all PlantPAx components are standard, off-the-shelf products. The core of PlantPAx, the Logix hardware and software solution, is used today in virtually all industry sectors across the globe for both discrete and process control applications. Applications demanding a redundant solution are addressed with the same controllers as simplex solutions – the system is that powerful. As process control systems provide more and more options, information is key to translating this to meaningful information for the operators. PlantPAx can provide advance diagnostics and PID information to operators in order to reduce MMTR and improve production outputs. PlantPAx on a virtual machine allows users to quickly reinstall an OWS or EWS and reduce their risk when running PlantPAx on one of our Industrial Data Centres. Running your production with a modern DCS allows you to optimise your facility while reducing your TCO, but what if you need to shut down in a controlled way?

Rockwell Automation provides an ICSS to help towards production facility

Why keep paying a premium price when you want to add small applications onto your DCS system?

PlantPAx is a scalable solution that allows you to extend your system to match your needs, without paying for extra licences. What’s more, you can make changes or additions without interrupting production. Do you want to reduce energy bills without having to go through multiple standalone solutions?

Alain Hermans is Process Automation Manager, EMEA, Rockwell Automation

Saving energy is key to improving your bottom line; with the energy management tools embedded in PlantPAx, energy management is no longer a futuristic concept. Instead, it is something you can deploy today. Providing reports on the correlation between gas, steam, electricity fuel consumption at your production facility, in real time, allows you to quickly react and adjust your key process control loops. So the question is simple! Are you looking for a next-generation DCS to help reduce your engineering and commission, while improving your operator experience and improving your bottom line? If the answer is yes, discover more at: www. rockwellautomation.com/rockwellautomation/ industries/oil-gas/overview.page

“As process control systems provide more and more options, information is key to translating this to meaningful information for the operators” ALAIN hERMANS, pRoCESS AUToMATIoN MANAgER,EMEA, RoCKWELL AUToMATIoN

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AnAlysis

DYNAMIC CHANGE

World liquid fuel use to rise 38% Asia and the Middle East to account for 85% of global liquid fuel use by 2040 orld petroleum and other liquid fuel consumption will increase 38% by 2040, spurred by increased demand in developing Asia and the Middle East, according to projections in International Energy Outlook 2014 (IEO2014), released by the US Energy Information Administration (EIA). “The growth outlook for liquid fuels use will be largely driven by demand in the developing world, especially in Asia and the Middle East,” said EIA Administrator Adam Sieminski. “Those two regions combined account for 85% of the total increase in liquid fuels used worldwide over that period.” World markets for petroleum and other liquid fuels have entered a period of dynamic change in both supply and demand. The changes in the overall market environment have led the EIA to reassess its outlook for longterm global liquid fuel markets in IEO2014. Key IEO2014 findings include: World liquid fuel use is projected to grow from 87 million barrels per day (MMbbl/d) in 2010 to 119 MMbbl/d in 2040. The potential for growth in demand for liquid fuel is focused on the emerging economies of China, India and the Middle East, while liquid fuel demand in the US, Europe and other regions with wellestablished oil markets seems to have peaked. After a long period of sustained high oil prices, efficiency and fuel switching have reduced or slowed the growth of liquid fuel use among mature oil-consuming countries. Developing Asian countries (including China and India) account for 72% of the world increase in liquid fuel consumption, with Middle East accounting for another 13%. OPEC oil producers are the largest source of additional liquid fuel supply between 2010 and 2040. OPEC crude and lease condensate accounts for 14 MMbbl/d of the 33 MMbbl/d increase in total liquid fuel supply. The IEO2014 Reference case assumes

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Middle East power sector still accounts for 12% of total liquid Middle east PoWer sector still accoUnts fuel consumption in 2040 For 12% oF total liQUid FUel consUMPtion in 2014 Middle East liquid fuels consumption by end-use sector million barrels per day Other Electric Power

Transportation

Industrial

Source: EIA, International Energy Outlook 2014

CMY

OPEC producers invest in incremental production capacity that enables them to maintain a share of between 39% and 44% of total world liquid fuel production throughout the projection. Middle East OPEC member countries alone account for 90% of the total growth in projected OPEC crude and lease condensate production. Non-OPEC crude and lease condensate production increases by 10 MMbbl/d. Rising world oil prices attract investment in areas previously considered uneconomic. Middle east scenario

Liquid fuel demand in the Middle East grows substantially in the IEO2014 Reference case, by 4.4 MMbbl/d from 2010 to 2040, as a result of strong population growth rates, second only to those in Africa, and rising incomes. Liquidintensive industrial demand also plays a major role, with consumption in the chemical sector leading the growth of industrial demand. Delays in petroleum subsidy reforms

Oil & Gas Supplement 2014

(outside of Iran) and strong growth of income per capita support significant expansion of transportation sector demand for liquid fuel in the region. In the later years of the projection, it is likely that some subsidy reform will occur, and the resulting higher prices will begin to slow the growth in demand for liquid fuel. Demand for liquid fuel in the electric power sector declines from 2010 to 2040 in the Reference case, as many countries increasingly turn to lower-cost natural gas and, to a lesser extent, nuclear and renewable fuels, in an effort to increase the volume of petroleum available for export. The timing of the shift from reliance on liquid fuel for power generation remains uncertain, however, as the region faces delays in improving infrastructure and there are limits on the supply of alternative fuels for power generation. For instance, Saudi Arabia has been unable to meet rapid growth in electricity demand with power generated from domestic natural gas, and has had to import fuel oil for power generation.

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OIL FIELD SERVICES

Do you think the downward trend in oil prices will have a negative impact on upstream projects in the region, and by extension the oil field services business?

From our experience, historically, oil prices have always tended to fluctuate. However, a lot of our business is based on long-term contracts related to upstream projects, where investments are huge and companies making these investments aren’t going to cancel projects because of a short-term spike or drop in oil prices. But we will definitely be worried if there are extreme movements in oil prices, as we have experience with some of these roller coaster-type scenarios in the past. Oil field services companies have played a key role in enabling the rise of National Oil Companies (NOC) to global prominence. But in AlMansoori, you also see a strong, regional player in the oil field services sector. Are there some lessons from your experience?

LOCAL LEADER

Standing tall Ibrahim Al-Alawi, Deputy CEO, AlMansoori Specialised Engineering, speaks to Anoop K Menon on how his home-grown oil field services company has learnt to thrive in an industry dominated by Western companies 8

INFRASTRUCTURE MIDDLE EAST

Oil & Gas Supplement 2014

Worldwide, the oil field services sector has traditionally been dominated by Western companies. They pioneered a lot of the technologies since the beginning of the industry 100 years ago. Oil companies – IOCs or NOCs – have always turned to them in order to access these cutting-edge technology and services. We started the company in the late 1970s, and established ourselves during the boom of the early 1980s. In fact, we were one of the pioneers of the indigenous service sector globally. Even today, you won’t find too many home-grown companies in this sector. While we have been fortunate in this regard, the same cannot be said for the local oil field services sector. The local sector has not really developed the capacity it should have if one looks at the long heritage of the oil and gas industry in our region. We are very happy with the position we are in now, but there is always room for improvement. Given the expansion in the upstream sector throughout the region, there is enough work to go around. Our growth will not come at the expense of our competitors and vice-versa. In fact, in some countries, there is a shortage in terms of equipment and people that we or our competitors can put on the ground. There isn’t enough of both to satisfy the demand. Moreover, we have always looked to the future; we have always wanted to grow our

OIL FIELD SERVICES

business, develop our technologies and our people, which puts us in a unique position compared to other indigenous service companies. We can compete head-to-head with the Western majors and win contracts on our own merit, which is something we are very proud of. What is the biggest advantage you bring to the table?

The biggest advantage we bring to the table is our network of contacts within the region. We are established throughout the Middle East & North Africa [MENA] region, where we have local offices and people working for us. Being from the region, I am very proud to say that in most of the countries we work in, the majority of the workforce is local, which gives us an edge over major Western competitors. We also have a long-term growth strategy in place. As we evolved and reached a certain size, we realised that growth for the sake of growth isn’t healthy. We needed to have a strategy to grow and put resources where we could achieve the best returns. Every year, we do our budget and forecasting with a major focus on the next calendar year but then we also have a long-term view, through five-year plans, to keep an eye on the future. Is AlMansoori’s long history in the region an important consideration for customers when it comes to contracts?

Customers who look at price tend to give contracts to the lowest bidder. But those who look at the value proposition don’t go with the cheapest; rather, they prefer to go with those who will give them the best value for money. In such a scenario, our history and reputation gives us a good advantage. Our tagline says “Always AlMansoori”, because once they work with us, they always ask us to come back thanks to the high quality of our services. Again, the big players in our industry sell technology; we sell service. The big boys will go in, see what the customer’s problem is and tell them how they are going to solve it technically. We go in, listen to our customers and try to give them what they are expecting to receive, which is why they always come back to us. Do the local oil companies, with their accumulated years of experience, still need IOCs?

Local oil companies have tremendous operational experience spanning some 40

Tough oil Problematic reservoirs are going to become more frequent in the future

“Being from the region, I am very proud to say that in most of the countries we work in, the majority of the workforce is local, which gives us an edge over major Western competitors” IbRAhIM AL-ALAwI, DEpUTy CEO, ALMANSOORI SpECIALISED ENgINEERINg

years, and they don’t need any help producing the easy oil. Where they will need IOCs are the problematic reservoirs that are going to become more frequent in the future. The challenge for the next 30 years is going to be water cuts, decreased productivity, aging facilities, smaller and more complex reservoirs – the kind of problems they never had in the region but something that IOCs have frequently tackled in other parts of the world. IOCs will bring their expertise to fields where we need highly technical solutions. In the oil & gas industry, you see companies

competing and partnering at the same time. Is this philosophy being embraced by oil field services companies too?

Oil companies have always been competitors and partners. For example, in Abu Dhabi, the ADCO concession was developed by a consortium of BP, Shell, Exxon-Mobil and Total. When it comes to development, they join forces, though they also compete in other sectors. In the last 10 years, we have seen IOCs partnering with the NOCs, examples of this trend being India’s ONGC Videsh and Malaysia’s Petronas Carigali. In the oil field services sector too, we have ‘friendly’ competition where though we compete for contracts, we also do business with each other. For example, if we have a shortage of equipment or cannot deliver, we make an agreement with our competitors to rent people or equipment from them. In the end, we all want to satisfy our customers, and it doesn’t pay to be antagonistic because tomorrow, we may need each other. Technology has always been a crucial differentiator for the oil field services industry. Where does AlMansoori stand in this regard?

We are not so big as a Schlumberger or a Halliburton, and we don’t have access to a lot of capital, so we have to be very careful where we deploy our capital. Where technology is concerned, we understand

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OIL FIELD SERVICES

Secure business Abu Dhabi, Saudi Arabia and Oman are expected to stick to their long-term spending plans

that if we sit still, we will be left behind. In the absence of an R&D department, we seek out and partner with small companies that offer niche technologies and bring those technologies to the region as a value-added service for our clients. One of the new technologies we are introducing here is called multi-phase flow meter, which measures individual water, oil and gas flow rates in simultaneous flow. This is very unique and provides huge advantages for our customers because they can get the information they need in real time. At the same time, it is important to remember that you can always get the technology but the main challenge is applying it locally. That’s where local experience counts. The region’s oil & gas industry has been praised for its high safety standards. But when oil companies contract work out to the oil field service companies, aren’t they also outsourcing the safety aspect as well?

At AlMansoori, we are very proud of all the international certifications we have achieved for safety, environment and quality. When we completed the certification goals we set for ourselves, we found that we are actually ahead of our customers. At the same time, if it wasn’t for them, perhaps we wouldn’t have

INFRASTRUCTURE MIDDLE EAST

“In the near term we see huge potential in East Africa, so we have set up base in Uganda” IbRAhIM AL-ALAwI, DEpUTy CEO, ALMANSOORI SpECIALISED ENgINEERINg

achieved that. They demand high standards from us, which forces us to upgrade ourselves to meet and exceed those expectations. From a business standpoint, are you content to stay focused on the Middle East?

Right now, the majority of our growth comes from Abu Dhabi, Saudi Arabia and Oman. Given their robust long-term spending plans, we are pretty confident that our business is secure for the immediate future. But we are not ignoring other areas either. In fact, in the near term we see huge potential in East Africa so we have established an operations base in Uganda. We have also worked in Ethiopia and Somaliland. At the moment, we are working in 27 countries but have a permanent presence – an office or a base – in only 15 of them. In the

Oil & Gas Supplement 2014

rest, we have people and equipment on-site, because as an industry we don’t have a very large footprint. It is easy to ship equipment in and out, the most difficult logistics piece being customs clearance and formalities for crossing borders. What are your plans for the future? Are you planning any acquisitions? Are you interested in exploring service opportunities in the region’s rapidly growing downstream industry?

We are always searching for ways to add value to our customers; we are always listening to their concerns and their challenges and trying to find ways to help them. If there is a shortage of a certain service, we will definitely study whether we should be getting into it; if there is a technology missing, we will go out and source that technology. For us, an acquisition is always a strategic decision, not a commercial one. Being a private company with limited resources, we have to think twice before we spend money. We don’t want to buy a company just to make money from it. When we acquire companies, it is to gain technology or some other value add. As for developing downstream service capabilities, in the oil & gas business there is a clear-cut divide between upstream and downstream. We have never worked in the latter so we don’t understand it.

Worldwide Suppliers of Specialist Electrical Equipment Are exhibiting at

Come and visit us on the IDC Stand, Hall 2 - Stand 2310 R&M Wholesale Electric LLC was set up to revolutionise the distribution and supply of Industrial and Hazardous Area electrical equipment and cables to major oil and gas projects in the region. R&M Wholesale Electric is a fully fledged joint venture between the UK’s R&M Electrical Group and Wholesale Electric Supply of the USA, combining the geographic strengths and capabilities of two of the world’s leading electrical distributors to offer a service and capability that is unique in the Middle East. Operating out of Dubai and Abu Dhabi our operations in the region have recently been expanded with the launch of a new joint venture partnership with Siraj Naybur in Basra – Iraq.

R&M Wholesale Electric LLC (Dubai) M-03 Al Joud Centre , Al Quoz 1 PO BOX 282566, Dubai Tel: 00971 4 346 8240 Fax: 00971 4 346 8241 Email: sales.uae@rm-electrical.com

R&M Wholesale Electric LLC (Abu-Dhabi) Office No. 11 Mussafah MW5 / 14, Abu Dhabi Tel: 00971 2 550 3370 Fax: 00971 2 550 3220 Email: sales.uae@rm-electrical.com

Siraj Naybur (Iraq) Manawi Basha, Basrah Iraq Tel: 00964 781 1125188 Email: info@sniraq.com

Digital OilfielDs

WELL PERFORMANCE

The data advantage

Andrew Dennant, Oil & Gas Director MEA, Emerson Process Management, speaks to Infrastructure ME about the smart oil fields of the future

hy is automating upstream becoming increasingly important?

The main factor driving digital oilfields is that easy oil is more-or-less finished, and operators need to make better production decisions. These decisions must be data-based, and implemented quickly, if they are to yield real benefits. Automation addresses both of these requirements – more instrumentation generates more, better, validated data on which to base the decisions; it also provides the networks and control hardware to implement those decisions in real time. Automation forms the foundation on which the digital oilfield is built. Without good data and the ability to implement decisions, the higher-level applications of the digital oilfield cannot generate actionable information. What are upstream production areas where automation delivers the greatest impact?

In many cases, the benefits of automation are cumulative. At the very least, an instrumented wellhead will allow operators to understand when fundamental characteristics such as temperatures and pressures change. If an operator installs wellhead monitoring and control, for example, then not only are they are able to ‘see’ what they are producing, but they can react when production characteristics change unexpectedly. These changes could be an increase in corrosion or sand production.

INFRASTRUCTURE MIDDLE EAST

If automated well testing is also installed, then testing at the appropriate intervals allows decisions to be made about optimising choke positions or ESP speeds, together with the ability to go back after the change has been made to validate that it was effective. Traditionally, well testing has taken a long time, with test separators needing time to stabilise, and has required a great deal of manual intervention as personnel had to travel to remote locations to change valve positions. With multiport flow selectors and multiphase flowmetres, all of this can be automated with reduced footprint, weight and capital cost. What are the biggest benefits of digital oilfields?

Although the financial rewards can be immense, the greatest savings are in reducing risk to personnel. With automated fields, people spend far less time in harm’s way in the oil field. Most operational decisions can be implemented remotely, and maintenance travel can be rationalised. Greater access to diagnostics of the devices, the hardware and the well conditions allow technicians to be better prepared when they do visit the field, often halving the travel requirements as there is no need to go once to diagnose the problem and then again to fix it. What’s more, a mobile worker in the field can stream video to a remote expert in a collaboration centre, who can give instructions in real time. In addition to this, Emerson’s customers usually measure their payback

Oil & Gas Supplement 2014

Andrew Dennant

periods on investments in digital oilfields in weeks or months rather than years. What are the digital oilfield technologies – hardware and software – supplied by Emerson Process?

At Emerson, we create, customise and support applications with the goal of allowing operators to run their fields to maximise profit per day, rather than barrels per day. We have applications like Gas Lift Optimisation, which monetises the costs and profits associated with gas lift, and optimises the value of the gas used to enhance production. We have static and dynamic reservoir modelling software, permanent downhole gauges, and wellhead monitoring and control equipment. Emerson manufactures the broadest range of wireless devices in the industr as well as traditional wired devices and RTUs. We make choke control valve positioners, control and shutdown valves, actuators and positioners, as well as multiport flow selectors and single and multiphase flowmeters. We manufacture watercut meters, corrosion meters and sand meters. In fact, our control system, with electronic marshalling and smart SIS, changed the way that projects are executed.

Multidiscipline Support Systems for Infrastructure Projects Oglaend System has supplied the oil and gas industry with multidiscipline support systems for more than 35 years. In addition we also have an extensive track record with infrastructure projects.

Road and railway tunnels

We deliver integrated Multidiscipline support for cable ladders and cable trays in HDG and SS including all fixtures for light installation, radio cable, CCTV and detectors. Support for road signs, ventilation and piping.

Powerplants

Heavy duty cable ladders and trays, high voltage cable cleats, racks and instrument stands. We have a proven track record and can deliver multidiscipline support systems for all electro & mechanical disciplines. We recommend using stainless steel or fibre glass to avoid magnetic attraction.

Road and railway bridges

Solutions for cable support both inside and underneath the bridge, for concrete or steel bridges with or without cable ladders. We can customize solutions for all kind of supports to suit your project.

Airports

Systems for cables in culverts, with concrete insert rails or bolted. Cable management systems for terminal buildings, airplane docking equipment, carparks etc.

For projects in the Middle East please contact: Oglaend Industries Middle East LLC P.O. Box 90456 Dubai U.A.E. DIRC Offices, Plot 597-201, Office G-9, Dubai Investments Park DIRC Warehouses, Unit W9-C2 Tel: + 971 4 887 8134 Fax: + 971 4 887 8143 E-mail:sales@oglaend.ae www.oglaend-system.com

Norway · Sweden · Denmark · Holland · UK · Dubai · Korea · Singapore · Malaysia · Russia · USA · China

SPOTLIGHT

Demand positive Gates Engineering executives Joe MacGillicuddy & Garnett Bazley elaborate on their company’s go-to-market strategy for the region’s fast expanding oil & gas services sector ates Engineering & Services is part of the Gates Corporation, which has its headquarters in Denver, USA. As leaders in fluid engineering for the oil & gas market, Gates Engineering & Services delivers premium products and services that include the supply, installation and commissioning of hydraulic and industrial hoses, hydraulic solutions, filtration and flushing systems, chemical cleaning, onsite maintenance, pumps and power transmission products. Main activities are directed at the oil & gas, marine, offshore and industrial sectors. Gates Engineering & Services’ footprint extends across the GCC, with operational locations in the UAE, Oman, Bahrain, Qatar and Saudi Arabia. The distribution network expands into Turkey, Iraq, Egypt, Jordan and Africa. The oil & gas sector has always been a key market for Gates Engineering & Services. Based on rig count data in the region, market intelligence reports and our relationship with key oil & gas service providers, we predict further growth in the market. We are also seeing an increase in the number of new builds and rig refurbishment projects, which has contributed to a higher demand for our products and services. Our product supply into this expanding sector includes our premium range of Gates oilfield hose and couplings, which is made

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up of high pressure mud hose, blow-out prevention systems and BlackGold hydraulic hose. We also offer onsite mobile workshop containers, which allow the assembly of standard hydraulic hose in the field. To complement our product range, Gates Engineering and Services also offers hose management, including the tagging of hoses and creation of a database to track individual hoses. We feel that this ongoing scheduled maintenance is crucial in preventing downtime. In addition to standard products, we are also able to design, manufacture and install spooler systems and other equipment required in the market. Our customers also have the option to rent equipment such as filtration skids, HPUs, PODs and centrifugal pump skids. Although not a requirement, we recommend our own manpower as well as equipment, which gives customers the opportunity to use our expertise and the benefit of having qualified technicians on-site to ensure that equipment is operating at optimum levels. Our top customers include service companies and rig owners. Fast-moving products in the region include high-pressure mud hose, transfer hose and our newly launch rubber BOP hose. As political stability returns and projects come online, we expect further revenue from these products. In terms of the services we offer, flushing and chemical cleaning (pickling and passivation), remain in high demand from both local government-owned companies and private

Oil & Gas Supplement 2014

entities. We are seeing growth in these areas, especially in Qatar, Oman and Saudi Arabia. Exciting futurE

This is an exciting time for Gates Engineering & Services as we have just launched our 16C hose throughout the US. This product has passed the most stringent fire, flex and exposure tests in the industry. Gates is the first company to offer cut and couple technology – what this means for the customer is that our lead time is reduced to weeks instead of months as has been the industry standard. Our faster response time will allow customers to downsize their inventories and the replacement product can be with them within the month, decreasing costly downtime. Gates places a lot of importance on Research & Development (R&D). We want to stay ahead of the crowd when it comes to launching innovative products that the market needs. We will continue to work on expanding our hydraulic range in order to offer a more complete hose and coupling rig package, including high-temperature, low-temperature and transfer hoses. We will also continue to offer the high quality services and engineered products that our customers expect from the Gates brand. Joe MacGillicuddy is Divisional Business Development Manager, EMEA & Garnett Bazley is Senior Business Development Manager – Engineering & Services, EMEA, Gates Engineering & Services

FINISHED PRODUCTS › Oilfield Hose & Couplings › Hydraulic Hose & Couplings › Industrial Hose & Couplings › Hydraulic Components › Filtration Products › Pumps › Belts

HYDRAULIC TUBING & PIPING › Design, Bending, Installation › Hot Oil Flushing › Chemical Cleaning › Hydraulic Pressure Testing › Filtration Services › Flushing for District Cooling › Rental Equipment

DESIGN & BUILD › Special Builds › Integration › Maintenance Planning › Hydraulic Skidding Systems › Filtration Systems › Air Dryer Packages › Drill Line Spoolers

HYDRAULIC SYSTEM REFURBISHMENT › Troubleshooting › Commissioning › Component Refurbishment › Retrofit & Upgrades › Technical Surveys › Certification

HOSE & BELT MANAGEMENT › Audit & Survey › Inspection, Maintenance & Recertification (IMR) › Sentry ID › Training › Heavy-Duty Belt Service › Supply & Installation

The world's most trusted name in belts, hose and hydraulics. GATES ENGINEERING & SERVICES MENA Headquarters, Jebel Ali Free Zone Dubai, United Arab Emirates Telephone +971 4 886 1414 Fax +971 4 886 1413

To minimise downtime and maximise equipment integrity, contact Gates today. mena@gates.com <> Gates.com

CYBERSECURITY

DEFENCE STRATEGY

Tackling the threat

Hamed Diab, Regional Director-Middle East, McAfee speaks to Anoop K Menon on the significance of cybersecurity for critical national industries generation of security. We call it McAfee Threat Intelligence Exchange.

ith critical infrastructure becoming the target of cyber-attacks, there is a feeling that cybersecurity for these assets needs a lot of more focus and spend than has been the case so far. Why have we become increasingly vulnerable to cyber-attacks?

Thanks to the explosion of connectivity, it is expected that by 2020, there will be 50 billion IP addresses in the world. This equates to nine different IP addresses per head for a global population of six billion. We think we have seen the explosion of the Internet but with the Internet of Things (IoT), which is the new wave, you will also have to deal with the problem of big data and information flows going over the Net. The dimension of the problem, it goes without saying, is big. All this connectivity was built without considering the security of the information. It was architected without considering the security aspects of these information flows. The next question is: how does security really work? If I have a firewall and antivirus on my end-point, am I secure? The reality is that the attacks are increasingly getting sophisticated. Unless you are really cohesive, and able to connect, correlate and check all the data that comes into your enterprise network, you will not able to make sense of the attacks or the threats. Security is important because when you are attacked or under attack, the time taken to respond to it becomes critical. Whether it is banks, oil & gas assets or even the government, the cost of stoppage of work due to cyber-attacks can run into billions. Where these sectors are revenue earners for the country, the impact is much higher. Security thus becomes important because of the need for business continuity. Thatâ&#x20AC;&#x2122;s where McAfee, as part of Intel Security, can play a major role because of the breadth and depth of technologies at our disposal. You can correlate and understand

INFRASTRUCTURE MIDDLE EAST

In your view, are traditional industries like oil & gas more aware of the risks posed by cyberattacks than before?

Hamed Diab

what is happening, whether it from end point, data centre or cloud on a real time basis. The important thing is to have all of this information talk to each other, cohesively, on a real-time basis.

As a matter of fact, we have seen innovations from the region especially around digitising the security around the oil & gas industry. For example, the operations network supporting SCADA and DCS systems were always kept separate from the enterprise networks, and still are but with more attention being paid to how to architect that into a new way utilising security to their advantage and make sure they are enabling this. This is important because of the nature of the attacks. For example, the Night Dragon attack systematically targeted the enterprise networks of major energy companies in the US and Europe and stole proprietary data, over a period of three years. Whatever the reason for these attacks, the intention is definitely malicious. The bottom line is how to protect the network. Are they giving it the priority it deserves?

Could you elaborate on how McAfee and Intel Security can help key economic sectors like oil & gas secure themselves against cyber-attacks?

Intel Security is driving the trend in terms of coming up with new ways of correlating all the information. We are building new infrastructure for the Internet to work in a bus architecture. Today, there are bottlenecks in Internet connectivity because a lot of people build APIs to connect or make adjustments to connect different devices or foreign devices. With bus architecture, you are helping everybody dump all the information in a way that they understand the same language. If the threats came through the end point, then the end-point can correlate the information in the same language that your network device can understand, whether it is an Intrusion prevention system (IPS), Firewall. That type of information flow is important in the next

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In fact, it is no longer an option. They have to have factor cybersecurity into their priorities. Most of the Chief Information Officers (CIO) are changing their attitudes towards security and approaching in a more holistic way. Rather than focus on the technical, it is about how important security is, what is most critical and what can keep him or her awake at night. Thatâ&#x20AC;&#x2122;s where McAfee, as an Intel Security company, has built a broad portfolio, not only from a technological standpoint but also from consultancy and people perspectives to help customers enhance their security operations based on best practices. You can bet that we will be always ahead in the game. The more accessible the devices, the more the vulnerabilities. With the wave of mobility, you will have a major gap because of the prevalence of open source applications that are most vulnerable to attacks.

SPOTLIGHT

CRITICAL VARIABLE

Temperature innovations Okazaki Manufacturing Company continues to push the envelope on temperaturerelated products for the global oil & gas industry ounded in Kobo, Japan in 1954, Okazaki Manufacturing Company (OMC) has grown into a multinational manufacturer of temperature related products. With a turnover in excess of $110m, OMC is one of the largest manufacturers of Mineral Insulated (MI) thermocouple and RTD cable, which constitutes the initial building block of industrial temperature sensors. Today, OMC designs and manufactures a wide range of reliable, high quality, high accuracy temperature measurement products. The company operates from a

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series of specialist sales support offices worldwide, backed up by a team of local representative companies with specialised instrumentation departments. OMC’s 13,120sqm Main Manufacturing Factory, established in 2012, is the company’s flagship facility for sensor production and

A unique design, VortexWell thermowell incorporates a helical strake design, rather like car aerials or cooling tower fins

Oil & Gas Supplement 2014

incorporates manufacturing innovations like laser and robotic welding and the latest machining and deep hole drilling centres. OMC also has manufacturing sites outside Japan in the US and Taiwan. Innovation has always been OMC’s strength, as can be seen in its products for the oil & gas industry. VortexWell

The VortexWell Thermowell offers a solution where the standard thermowell profile fails to meet the industry standard ASME PTC 19.3 TW 2010. A unique design, VortexWell Thermowell incorporates a helical strake design, rather like car aerials or cooling tower fins. After

SPOTLIGHT

extensive R&D using the latest CFD software, as well as independent evaluation, OMC was able to visualise and accurately compare the flow behaviour of the VortexWell helical strake design with a standard tapered thermowell. During analysis, the standard tapered thermowell showed classic shedding behaviour as expected, whereas the VortexWell demonstrated no signs of regular flow behaviour. The VortexWell helical strake design disturbed the flow sufficiently to interrupt the regular formation of vortices. While a small vortex was observed in the wake of the VortexWell, this was a localised stagnation point and didn’t shed. However, the most significant comparison made was with regard to the pressure fields. For the standard tapered well design, an oscillating pressure field was observed around the structure. The VortexWell displayed a constant and stable pressure field, presenting no dynamic variations. As this pressure is the source of vortexinduced vibrations, it can be assumed that the VortexWell would experience a significant improvement in operation compared to a standard thermowell design.

and STATOIL, the Fan Tip thermocouple is ideal for any process burning or heating applications, including hazardous area oil and gas, chemical and petrochemical installations. The Fan Tip is suitable for gas-fired, light fuel oil and heavy fuel oil heaters. The sheath can be supplied in either 316 stainless steel for gas-fired heaters, Hastelloy-X for light fuel oil, or dual sheath HR-160 version for arduous, heavy fuel oil applications. The design of the FanTip thermocouple is such that it can be used in all process heater applications. The length of the sheath can be increased by up to 30 metres. The sheath can be bent in a cold state to meet any fixture and exit point on the heater tube. Working With epC ContrACtors: A suCCess story

OMC, as a part of its proactive sales activity, approached an Engineering, Procurement and Construction (EPC) company in Houston and held a ‘Lunch and Learn’ programme on thermowell design compliant

with ASME PTC 19.3 TW 2010 and on engineering a thermowell design upon the failure of this calculation process. Several weeks after the exercise, our Houston sales office was approached by an instrument engineer from the EPC, which then was working on an ethylene oxide project related to a new build in Texas. The project was well into the build stage and ready for commissioning, but was now running behind due to delay in the specification and supply of five relatively inexpensive temperature assemblies. A purchase order had been placed well in advance for the supply of over 180 temperature assemblies with a regular supplier to the EPC and an approved listed vendor (not OMC) of the end user. But at the eleventh hour, there still was no solution coming from this supplier to engineer the five thermowells that had failed the calculation while maintaining an OD to fit into the connection nozzle and immersion length to ensure the thermocouple tip was in the process pipe. Okazaki was approached to offer a solution, and within a few hours of carrying out a review of the process data, we submitted a detailed quotation and technical proposal with GA drawings and calculations based on our VortexWell design. The items were ordered and delivered within a time frame of four weeks as requested. The EPC noted that its engineer had spent over 60 man hours trying to find a solution before he contacted OMC. His only comment was: why didn’t we visit him sooner? The comment from the client engineer was: why wasn’t OMC used from the very beginning?

FAntip

The FanTip skin thermocouple is used in the measurement of the Tube Metal Temperature (TMT) within process-fired heaters and furnaces. The FanTip has a unique fan-shaped head that enables it to be easily welded to any type of process heater tube. This means the user gets a more accurate temperature measurement on the surface of the tube. Construction and tip profile accuracy is now between +4 and +6 degrees Celsius of the true tube temperature. Currently used by BP, Esso, Exxon Mobil Oil & Gas Supplement 2014

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TEN GCC OIL & GAS PROjECTS

OIL & GAS PROJECTS In the GCC, oil & gas projects are underpinned by strategic long-term plans that seek to preserve the competitiveness of member countries in hydrocarbon production. Infrastructure ME presents the key projects that matter 20

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Oil & Gas Supplement 2014

HEAvy OIL PRODUCTION FACILITIES PROjECT – RATQA OIL FIELD

OWNER: Kuwait Oil Company (KOC) BUDGET: $4.3bn PROGRESS: Under construction The Ratqa Field development is part of Kuwait’s efforts to meet its target of producing 4mbpd of oil by 2020. The project involves an Engineering, Procurement and Construction (EPC) contract to build new heavy oil production facilities with capacity to produce 60,000bpd in the first phase. The scope of work includes steam injection and production of heavy oil along with tank farms and a 270,000 bpd pipeline. Petrofac has emerged as the lowest bidder for the scheme, followed by South Korea’s SK Group. By 2020, KOC expects production from the oil field to touch 120,000bpd. KOC recently invited BP, Total, Royal Dutch Shell, ExxonMobil and Chevron to bid for enhanced technical service agreement for the project.

PROjECTS TEN GCC OIL & GAS PROJECTS

SATAH AL RAAz BOOT (SARB) FIELD DEvELOPMENT PROjECT

OWNER: Abu Dhabi Marine Operating Company (ADMA-OPCO) BUDGET: $3.5bn PROGRESS: Under construction The development project is part of the overall scheme of ADMA-OPCO to add 300,000bpdof additional production from its new offshore fields, with about 100,000bpd coming from the SARB oilfield to be developed through seven packages. Last year, Petrofac was awarded the Engineering, Procurement, Installation and Commissioning (EPIC) contract for offshore package three of this development, while Hyundai Engineering was awarded onshore package number 4. Bids for the onshore utilities and infrastructure package are still under evaluation. When completed in April 2017, SARB will be the first Offshore Digital Intelligent Oil Field Development in the UAE.

IDD AL SHARGI NORTH DOME OIL FIELD ExPANSION PROjECT PHASE 5

OWNER: Occidental Petroleum Qatar BUDGET: $3bn PROGRESS: EPC award stage Idd-Al-Shargi is the largest crude oil field in Qatar, with 150m barrels estimated in 2008. The EPC contract comprises five packages: upgrading the Halul Island facilities, central processing platform, 40km flowline, 40km export pipeline and two wellhead platforms. In May this year, the owner released two packages for the scheme – process platforms including living quarters accommodating 206 beds, two wellhead platforms and 12 wells. Bidders include South Korea’s Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries; McDermott from the US; the UAE’s National Petroleum Construction Company; Italy’s Saipem; and South Korea’s Samsung Industries. The majority of work will be offshore.

KHURAIS OIL FIELD ExPANSION PROjECT

OWNER: Saudi Aramco BUDGET: $3bn PROGRESS: EPC award stage Using the most advanced intelligent field applications, the Khurais facilities are designed to produce 1.2m bpd of Arabian Light crude oil across three oil fields: Khurais, Abu Jifan and Mazalij The objective of the Khurais Oil Field Expansion Project is to increase production capacity at the Khurais Central Processing Facilities (CPF) by 300,000bpd as well as to enhance production from the Mazalij and Abu Jifan fields by installation of a satellite Gas Oil Separation Plant (GOSP) by 2017. In October 2013, contracts for the Front End Engineering Design (FEED) were awarded to Foster Wheeler. The project has been divided into five EPC contracts: CPF expansion, sea water pipeline, Mazlij-Abu Jifan pipeline, offsite and utilities and site preparation. Italy’s Saipem is the front runner for the CPF facility while, Athens’ Consolidated Contractors Company is the front runner for the pipeline packages.

Oil Oil&&Gas GasSupplement Supplement2014 2014 INFRASTRUCTURE INFRASTRUCTURE MIDDLE MIDDLE EAST EAST 21

TEN GCC OIL & GAS PROjECTS PROJECTS

AL-DABBIyA OIL FIELD DEvELOPMENT PROjECT PHASE 3

ABU DHABI SOUTH EAST FULL FIELD DEvELOPMENT PROjECT

NORTH EAST BAB FIELD DEvELOPMENT PROjECT PHASE 3

OWNER: Abu Dhabi Company for Onshore Operations (ADCO) BUDGET: $1.5bn PROGRESS: EPC Award Stage

OWNER: ADCO BUDGET: $1bn PROGRESS: Invitation to Bid (ITB) stage

OWNER: ADCO BUDGET: $1bn PROGRESS: EPC contract awarded

The South East Full Field Development project related to Asab Sahil, Qusahwira and Mender crude oil fields is part of Abu Dhabi’s plan to reach 3.5m bpd production by 2018 to maintain 40% market share of the global oil production estimated at that time. The project involves an EPC contract to increase the oil field’s production capacity by 143,000bpd to 1.8m bpd by 2017. ADCO selected Australia’s WorleyParsons to perform the FEED for the scheme. The scope of work includes oil lines booster pumps, water alternating gas wells, separators, gas injection compressors, water injection pumps, water disposal pumps and flow-lines. CH2M Hill has bagged the project management consultancy. ITB is slated for the fourth quarter of this year.

Following the completion of the FEED stage in the second quarter of 2013 by Technip Abu Dhabi, the EPC contract for the development of the NEB phase three was awarded in April to a consortium of GS Engineering and Construction of South Korea, and Dodsal Abu Dhabi. The EPC completion date is scheduled for the fourth quarter of 2016. ADCO’s plan is to expand oil production from the Rumaitha and Shanayel oilfields, part of the NEB group of fields, from 46,000 barrels of oil per day (BOPD) to 85,000 BOPD by the first quarter of 2017. The project scope includes additional wells and flow lines, the replacement and modification of existing facilities and the building of new surface facilities that will sustain production targets from 2017.

This project involves an EPC contract for the third phase development of Al-Dabbiya onshore oil field, about 31km from Abu Dhabi city. The Al-Dabbiya field forms part of Adco’s North East Bab (NEB) asset, which also comprises Rumaitha and Shanayel. Al-Dabbiya is considered an offshore field as most of the wells are on lowlying natural and artificial islands. The phase 3 expansion project will double NEB’s production capacity. FEED was completed by Technip. In June, Daewoo of South Korea, GS Engineering & Construction of South Korea, Petrofac of UK, Saipem of Italy, Tecnicas Reunidas of Spain and Technimont of Italy submitted commercial bids for the EPC contract. An award is expected before the end of the year.

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Oil & Gas Supplement 2014

PROjECTS TEN GCC OIL & GAS PROJECTS

ABU BUTABUL GAS FIELD DEvELOPMENT PROjECT

OWNER: Oman Oil Company Exploration and Production (OOCEP) BUDGET: $1bn PROGRESS: Commercial operations stage Abu Butabul gas field in Block 60 has the distinction of being Oman’s first tight gas project. Last month, the Oman Daily Observer reported that OOCEP, the upstream subsidiary of the Sultanate’s energy investment arm Oman Oil Company, is preparing to bring the gas field into commercial production, thereby becoming the first Omani operator to add unconventional tight gas to the nation’s expanding gas base. The gas processing plant is expected to reach a plateau production of 70m standard cubic feet per day by the end of this year. Along with gas, the facility will also produce condensates averaging 6,000bpd. Block 60 is a roughly 1,580 sq km concession spread across the wilayats of Ibri and Haima.

SAUDI ARABIA - BAHRAIN CRUDE OIL PIPELINE PROjECT

OWNER: Saudi Aramco BUDGET: $350m PROGRESS: FEED study completed The project involves an EPC contract for the installation of a 115km, 24-30-inch diameter crude oil pipeline between Saudi Arabia and Bahrain. The 350,000bpd crude oil pipeline will replace the existing 230,000bpd line. Australia’s WorleyParsons executed the FEED work. The new link is a key pre-requisite for Bahrain Petroleum Company’s (BAPCO) planned Sitra refinery expansion up to 500,000 bpd total capacity, which is estimated to cost upwards of $6bn. Crude oil will flow from Saudi Aramco’s Abqaiq facility via the pipeline, 74km of which will run overland and the rest under the Gulf. The Abqaiq Plants facility is Aramco’s biggest oil processing and crude stabilisation facility. The EPC tender is slated to be announced by the end of this year, and the pipeline is expected to be commissioned by the third quarter of 2016.

MIDyAN GAS FIELD DEvELOPMENT PROjECT

OWNER: Saudi Aramco BUDGET: $300m PROGRESS: Under construction The project involves an EPC contract for the development of non-associated gas from the onshore Midyan field to produce 75m cubic feet a day (cf/d) of gas and 4,500bpd of condensate for a period of 20 years. The project also includes building two 98km pipelines to deliver gas and hydrocarbon liquids to a power plant near the western city of Duba. This will enable efficient generation of power and avoid the burning of high-value diesel. The FEED was carried out by Mustang Engineering from the US. The EPC contract was awarded to India’s Larsen & Toubro (L&T) in May 2013. Construction work is underway, and the project is scheduled to be online in mid-2016. Midyan is the first large offshore non-associated gas field developed by Saudi Aramco in the Red Sea.

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ENHANCED OIL RECOVERY

PRODUCTIVE WELLS

Solar aids crude recovery GlassPoint promises to decrease the region’s EOR gas utilisation By Anoop K Menon

lassPoint Solar, a leading provider of solar steam generators to the oil & gas industry for Enhanced Oil Recovery (EOR), recently raised $53m in equity funding to accelerate the deployment of its technology in the region. Apart from existing investors like Chrysalix Energy Venture Capital, Nth Power and RockPort Capital, this funding round also saw participation from the State General Reserve Fund (SGRF) – Oman’s largest sovereign wealth fund – and Royal Dutch Shell. GlassPoint’s pilot project in southern Oman with Petroleum Development Oman (PDO) has been operating successfully since late 2012. The system, which generates an average of 50 tonnes of steam daily, is an operational baseline for large-scale projects in Oman and throughout the region. Rod MacGregor, President & CEO of GlassPoint, says: “Looking beyond the benefits of the cash infusion, what makes this round special is the support from the government of Oman through SGRF and from Shell, a leader in the EOR field. In my opinion, the strategic focus and value we get from their participation is more important than the dollars.” In fact, Oman was the first Gulf country to implement EOR, after its oil production peaked in 2000. Oman successfully used EOR to arrest the decline in production and restore it to 2000 levels. Recently, Kuwait announced that it would begin significant EOR projects in Ratqa

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oil field in the north and in the neutral zone with Saudi Arabia in the south. Bahrain has also announced plans for EOR implementation. “Currently, only Oman, Kuwait and Bahrain are doing heavy oil production using EOR. But at some point, every country in the region will start doing EOR; it is not a question of if, but when,” says MacGregor. So how does GlassPoint’s solar EOR technology compare with other EOR techniques like polymer injection or CO2 flooding? The oil producer has two decisions to make, explains MacGregor. One: should he use thermal EOR, and specifically steam? If it is steam, the second question is: which fuel should he burn to produce steam? Should he burn gas, oil or diesel? Or should he use solar? “From our point of view, it is all about saving gas,” says MacGregor. “Most countries in the Gulf are gas-constrained, so they would rather use the gas for generating electricity, desalinating water or industrial development than EOR. By replacing gas-fired steam generation with solar, we can reduce EOR gas consumption by up to 80%. In the case of Oman, 23% of the Sultanate’s gas supply is consumed by its oil fields, and most of that is for steam generation. The gas saved through EOR can also be redirected to LNG export.” However, the GlassPoint chief points out that there cannot be a one size fits all approach when it comes to EOR. An oilfield needs to be screened thoroughly to arrive at a suitable EOR technique. “In general, if it is shallow and thick, thermal is the best; if it is shallow and

Oil & Gas Supplement 2014

Rod MacGregor, President & CEO, GlassPoint

towards the lighter end of heavy, you can use thermal or polymer; if it is light oil, you can use CO2 injection or something similar. For solar EOR to work, we need three things: heavy oil, sunshine, scarce or expensive alternative fuel. If either of these conditions are not met – for example, Canada has heavy oil but no sunshine – solar EOR will not make sense.” Interestingly, the oil company pays for the steam, not the equipment. “They pay us to build the solar field, and once we are done, they own and operate the field,” says MacGregor. “Sometimes, we take up operations and maintenance contracts, though our main business is engineering, procurement and construction (EPC).” So will the weakening oil prices impact the economics of EOR, and solar EOR in particular? “Producing oil using EOR techniques generally costs more than producing them otherwise,” says MacGregor. “If oil prices were to drop low enough, then EOR won’t make sense; but again, that actual number will differ from field to field. However, historical evidence always points to volatility in oil prices; therefore, it is something that you keep your eye on because you never really know what is going to happen.”

Looking to maximise your assets and reduce your operational costs? For you, business improvement could be increased efficiency and productivity. In an industry where downtime costs more than in any other, it requires tighter asset management and condition monitoring. We can help you reduce your cost, upgrade legacy systems or make better use of the data your generate.

Visit us at ADIPEC 2014 on stand 1320 and learn how to maximise your assets, increase productivity and lower your operational costs.

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