Offshore World June July 2014 by Offshore World

June - July 2014 Vol. 11 No. 4 ` 150

OFFSHORE WORLD VOL. 11 NO.4

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Contents INTERVIEW Implementing Sub-sea Transnational Gas Pipeline - Superhighways on Fast Track

VOL. 11 NO. 4 JUNE - JULY 2014 MUMBAI ` 150

– Subodh Kumar Jain, Managing Director, Siddhomal Group

OFFSHORE WORLD R.NO. MAH ENG/ 2003/13269 Chairman Publisher & Printer Chief Executive Officer

‘Maximising Profitability without Subsidies’ 23

Jasu Shah Maulik Jasubhai Shah Hemant Shetty

– P Padmanabhan, Managing Director, Numaligarh Refinery Limited (NRL)

EDITORIAL Editor Features Writer Editorial Advisory Board Design Team Events Management Team Subscription Team Production Team

Mittravinda Ranjan (mittra_ranjan@jasubhai.com) Rakesh Roy (rakesh_roy@jasubhai.com) D P Mishra, H K Krishnamurthy, N G Ashar, Prof M C Dwivedi Arun Parab, Amol Patkar Abhijeet Mirashi Dilip Parab V Raj Misquitta (Head), Arun Madye

FEATURES Evaluation of Reactive Clay in Indian Shale 14 – Jajati Nanda, Anil Patil & Jyoti Waikar

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Threat to Oil & Gas Sector of India: A Microbial Perspective 19

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Mini and Tiny Refineries 28

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– Prof M C Dwivedi & Nikhil P Parikh Reducing Hydrocarbon Losses in Refineries 31 – John Popielarczyk Energy Commodities Exhibit Mixed Price Movement (May – June 2014) 33 – Niteen Jain & Nazir Moulvi

NEWS FEATURE Insight into Sino-Russia Gas Pact 37 – Timera Energy LNG: Benefits of Long-term Supply Contracts for Indian Buyers 39 – Akshat Singh Iraq Crisis: Impact on Indian Economy 42 – Swati Saxena India’s Oil Supply & Demand Gap Widening 43 – Rakesh Roy

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Offshore World | 4 | June - July 2014

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interview

Implementing Sub-sea Transnational Gas Pipeline Superhighways on Fast Track India has been mulling over transnational Gas pipelines over the past two decades, while the Chinese government has gone ahead and implemented five projects within a decade, which has further consolidated the position in world markets as the preferred Pipeline Gas destination. South Asia Gas Enterprise (SAGE), part of the Siddhomal Group, has proposed in building a series of subsea pipeline from the Middle East, to bring natural gas to Indian market. However the project SAGE has been in a limbo for a very long time due to geopolitical issues. Subodh Kumar Jain, Managing Director, Siddhomal Group, spoke exclusively to Offshore World on various aspects of proposed project and why it makes sense to install the Middle East Subsea Pipeline Project. Excerpts…

www.oswindia.com

What are your thoughts on the Sino-Russia historic gas agreement with the transnational pipeline deal and China has once again gone one step ahead towards securing energy supplies for the next three decades? Russia holds almost 16.8 per cent of world’s gas reserves, estimated at around 1103.6 TCF which makes it 2 nd largest after Iran. The country has stepped up the efforts to increase its gas export markets over the last decade beyond its traditional European market and established strategic ties with China for the geopolitical reasons to reduce reliance on European market which has been traditionally receiving supplies from Russia. There have been speculations on price over the deal as nothing concrete is available and there have been numerous guesstimates ranging from USD 8.5 to USD 10 per MMBTU as the price of gas over the next 30 years.

develop the international gas linkages both onshore and offshore pipelines, though the talks have been going on for the last two decades.

China has established gas linkages with other neighbouring & nearby countries as well, through gas pipelines, to meet the gas requirements and reduced dependency on LNG which would require them to set up re-gassification plants in the country. It is commendable how China has gone ahead and established linkages with Russia in less than a decade, whereas, India has failed to

Whether onshore or offshore, pipeline projects are considered to be viable. For offshore pipeline Projects there is added advantage of not having to pay Transit Fee.

Offshore World | 6 | June - July 2014

How far can the transnational pipelines go towards securing energy supplies in Indian context? The US Department of Energy has predicted the shortfall of 3560 MSCFD by 2030 in India. Lack of availability of hydrocarbon resources has further created the urgent need for the country to establish linkages to secure long term gas supplies towards energy security of the country. Globally, gas transportation networks are well established with cross country pipelines both onshore and offshore running across Northern Europe, China, Russia to Europe, USA to Canada and West Africa.

Though, Middle East, India’s traditionally strategic trading partners, holds over 2,000 TCF of natural gas reserves, including Qatar, Iran and Turkmenistan, we

interview Middle East Gas Routes to India

MEIDP Project Features

have failed to establish cross country gas pipelines due to various geopolitical issues to secure energy supplies, which can significantly contribute towards our energy security.

pipeline projects, are techno commercially viable, however the geopolitical issues have been a major bottleneck in execution of these projects.

We, as a country, seem to lack the political will to do such Projects, in a Time Bound Manner.

On the contrary, subsea pipelines do not face any such issues and with the advancements in technology the projects are very much viable now-a-days.

As Iran, the largest gas reserves globally, is looking for export markets; Qatar is targeting newer gas markets owing to shale gas boom in the USA which has resulted in demand disruption of supplies from the country; Iraq has accelerated its gas development programme and is gearing up to supply to global markets. This would be created a win-win situation for India as well as Middle East countries. In case of India, the online transnational gas pipeline projects, be it Turkmenistan, Afghanistan, Pakistan India (TAPI) or Iran-Pakistan India (IPI)

Geopolitically, the undersea pipeline through the Arabian Sea would be a much safer option for India to secure long term energy supplies. Having said that, the landed price of natural gas would be lesser as compared to the landing price of LNG in the country and long term gas supplies come with the added advantage of price stability unlike LNG prices which are subjected to constant fluctuations due to countinious geopolitical instability in various regions of Middle East.

Th US Department of Energy has predicted the shortfall of The 35 3560 MSCFD by 2030 in India. Lack of availability of hydrocarbon resources has further created the urgent need for the country to establish linkages to secure long term gas supplies towards energy security of the country. www.oswindia.com

Offshore World | 10 | June - July 2014

SAGE’s project to install Middle East to India Gas Pipeline (MEIDP), and is working on the feasibility of project to bring the natural gas supplies to India through subsea pipelines to the Gujarat coast. This project is a pioneering step in India’s quest for energy security for rapid economic growth with cleaner energy. What are the features of the proposed energy corridor? SAGE features an upstream Middle East Natural Gas-Gathering System connecting Multiple Gas Sources in the Middle-East. From this GULF Gas Hub, the SAGE family of deepwater pipelines will cross the Arabian Sea to the south of the Territorial Waters and Economic Exclusion Zones of all Third Party Countries and will mainly follow a route to India, reaching a depth of 3500 meter, which was extensively surveyed 15 years ago. The SAGE pipelines are envisaged as ‘Common Carriers’ that will provide a gas transportation infrastructure to multiple Gas Sellers in the Middle East and multiple Gas Buyers in India, for an estimated Tariff in the region of USD 1.5/ USD 1.75 per Million BTU from the Oman/ Iran coast to the Indian coast. We have envisaged three natural gas pipelines through this

interview route over the next decade with capacity of 31 million standard cubic meters per day of gas which is sufficient for 7000–7500 MW power generation and producing several million tonnes of fertilisers annually. Each SAGE pipeline will deliver around 8 TCF of Natural Gas to India over 25 years (31 mmscmd). This pipeline project will complement LNG sales to India, due to the increasing volatility of LNG pricing as an internationally traded spot-market commodity. Due to recent Indian Rupee steep depreciation, the subsidised Power & Fertiliser Industry needs more Pipeline Gas to remain competitive. The new SAGE ‘Energy Corridor’ which plans to complete its 1 st phase by end-2017 will enable Middle East/Gulf Suppliers to deliver Natural Gas to Gas Buyers in India. How do you compare the offshore MEIDP pipeline with the onshore pipelines like TAPI & IPI? Direct connectivity, I see as one of the biggest advantages with the MEIDP pipeline, since unlike IPI or TAPI it would not cross any of the borders of any such countries which are geopolitical conflicts. This added advantage is the transit charges do not have to be paid, which usually adds to the cost, third there are no external threats to the pipelines due to any political issues etc. The SAGE pipeline comes directly to India, avoiding Pakistan/Afghanistan, the countries have been mostly disturbed with internal conflicts and growing insurgencies activities. Also, there are no technical issues now-adays related to deep water pipeline – over the years there has been significant advancement in technology and there are several successful projects already in operation and there are many.

Middle East has proven to be reliable and long term Oil & Gas supplier to India and MEIDP/SAGE pipeline is another step in this direction. Talk about the techno commercial feasibility of the proposed MIEDP project. Since the feasibility studies were carried out, the techniques of deepwater pipelay and line pipe manufacture have matured as the Oil & Gas Industry has accumulated substantial experience of working in very deep waters. Quantified Risk Assessment shows this very deepwater environment to be a benign and protective environment for the system. One of the biggest advantages of the pipeline is long Term Gas supply through pipeline comes at stable price, unlike the volatile LNG prices. Availability of Gas through Transnational Gas pipelines will also help in determining real market price for Gas, as in Europe. What is the current stage of the project and when do you intend to go for awarding the contract? We are working with the Experts from deepwater and hired ace contractors and specialists from worldover for this project. Our Technology partner, Peritus Consultants is by far the best globally and we have signed MoU with the leading oil & gas deepwater pipeline specialists Saipem (Italy), Heerema Marine Contractors (HMC)/ INTECSEA/Tata – Corus/Enginers India Ltd (EIL). We have received significant technical inputs from several pipeline manufacturers like Corus, which is also partner in the MoU and regulatory agency DNV, Norway has approved the pipe size for safety approvals.

It iis time to move for ward and to realise at least one Transnational Ga Gas pipeline in the next few years, in order to generate confidence and hope in the countr y and generate power using a more environmentally friendly Fuel. www.oswindia.com

Offshore World | 12 | June - July 2014

Indian Pipe Mills WELSPUN and JINDAL Saw have also undertaken lots of Pipe Tests for pre-qualification for SAGE Project. Geo-physical Survey activities has completed in mid-June 2013 with the Vessel, FUGRO GAUSS (Germany) in the Arabian & Oman Seas with positive results. This will help to move to FEED Study stage and award of EPC Contract by end year 2014/ Mid 2015. The SAGE Consortium plans to attract Investors both from India and the Middle East and to provide them with the opportunity for investment in the downstream developments facilitated by access to SAGE gas, such as Power and Fertiliser plants and City Gas Distribution in India. How important it is for India to execute the project on fast track? Most countries depend on 15 to 20 per cent of energy generated through Natural Gas. The growing energy demand comes from India’s household needs and consumer sectors like Power & Fertliser, thus the country cannot continue depending entirely on Coal, Nuclear Energy, Hydel and Renewable and needs to diversify the energy basket. It is time to move forward and to realise at least one Transnational Gas pipeline in the next few years, in order to generate confidence and hope in the country and generate power using a more environmentally friendly Fuel. SAGE Project got somewhat delayed due to the UN/EU/US Sanctions in Iran. Recent development indicates a positive headway as EU and the US have eased many of their curbs after Tehran began implementing a deal to curb its nuclear programme. We have been trying to convince all the stakeholders about the Technical/ Commercial viability of the Project and hope to get further Government support for our Initiative. It’s a Win-Win situation for everyone!

Now : Mobile App of Offshore World For Android & Apple Platforms Download FREE App from

Feature Clay Analysis

Evaluation of Reactive Clay in Indian Shale Shale formations are composed of clays, feldspars, carbonates, and quartz as major ingredients. Among all the constituents, clays are the most important parameter from an application point of view because of their possibly sensitive nature; they are further categorised as migrating (illite, kaolinite, and chlorite) and reactive (smectite and mixed layers) clays. Smectite is always considered as reactive clay, and it appears in shale as an individual phase or as a component of mixed layer clay. This article outlines the laboratory methods used to measure the concentration of reactive clay minerals in shale and their controlling parameters. The process includes analysis of samples by X-ray Diffraction (XRD), Cation Exchange Capacity (CEC), and Capillary Suction Time (CST) tests. The samples used for the study include shale samples from Indian origin. The data obtained from each method are reported, including the effect of brines for inhibiting clay reactivity.

Source rock shale formations have become one of the primary sources for future oil and gas exploration in many par ts of the world, including India. However, even though the term shale is often used to describe the unconventional reservoirs that are being exploited today, only a few shales are capable of producing hydrocarbons; produc tive shale reser voirs would be more accurately defined as organic-rich source rocks, and most of their oil or gas generated has been expulsed over geologic time and trapped in conventional reservoir rocks 1 .

Shale formations are defined as a fine-grained, clastic sedimentary rock having low permeability, containing highly diverse mineralogy, ranging from carbonate-rich formations dominated by calcite, dolomite, and siderite to lesser amounts of aluminosilicates. However, many shale formations are rich in silicates, including quartz, feldspar, and clay minerals, as dominant phases, and carbonates are a minor component. Shale formations with rich clay concentrations should be handled systematically because the interaction between the rock materials and waterbased fluids (used during well operations) is an important parameter that affects successful production. The presence of reactive (swelling) clays, such as smectite and/or mixed layer clays, causes a formation to be considered water sensitive. Both qualitative and quantitative measures of shale characteristics can be used to informally classify shale as having high, moderate, or low reactivity. The objective of this approach is to determine the type of tests required to anticipate problems likely to be encountered with reactive clays present in shale. The six www.oswindia.com

Offshore World | 14 | June - July 2014

shale samples considered in this study were derived from producing wells. X-ray Diffraction (XRD) XRD can be performed on formation cuttings or cores. Preferably, samples are washed with suitable organic solvent and dried before XRD analysis is conducted. XRD is used for the identification of minerals present in shale samples. The sample is crushed and powdered to pass through a 200-micron screen, loaded in a specially designed sample holder, and placed in the instrument. The sample is scanned from a series of angles by X-ray beam. The crystalline structures of individual minerals present diffract the X-ray beam, resulting in a XRD pattern for each mineral in the sample. Software identifies the minerals present and determines semi-quantitative amounts of each. Dry sample powder analysis is often supplemented by a clay fraction analysis, which is achieved by separating the clay fraction from the bulk sample. A water dispersion is prepared from the powdered sample. The coarse non-clay portion is allowed to settle, and the clay fraction from the upper layer of the fluid is placed onto a glass slide. The glass slide, along with the clay portion, is dried and analysed by XRD for clay phases. The presence of smectite clays is further enhanced by treating the clay slide with glycol and scanning the slide on the XRD instrument. Because of the limitations of obtaining pure standards and because of the crystalline nature of the samples, XRD provides only semi-quantitative data for the mineralogical composition. The higher the smectite clay content, the more likely the shale will be reactive to swelling. Therefore, XRD data can be used in conjunction

Feature Re Reactive shale with a high smectite content usually has a high CST value. Th Therefore, CEC is directly propor tional to the CST value. In addition, CST can be used to evaluate the effect of saline water on shale dispersion tendencies for specific shale formations.

with other results when determining treatment options for shale formations with high clay content. Cation Exchange Capacity (CEC) CEC is a measure of the exchangeable cations present in the shale as clays. These exchangeable cations are positively charged ions that neutralise the negatively charged clay particles. Most of the exchangeable ions in shale samples are from the smectite clay. The CEC measurements are expressed as milliequivalents per 100 g (meq/100 g) of clay. Typically, CEC is measured using the API recommended process Methylene Blue Capacity Test 2. This test requires one gram of finely ground dried sample be dispersed in water using a small amount of dispersant (diluted sulfuric acid and hydrogen peroxide), which is then boiled gently for few minutes, allowed to cool to room temperature, and titrated with methylene blue solution. The end point is reached when a drop of sample suspension placed on a filter paper results in a faint blue color surrounding the dyed solids. The CEC can be analysed in a laboratory or at the wellsite with a minimum amount of equipment. The higher the CEC value, the more reactive is the shale. The non-reactive phases (quartz, carbonates, etc.) typically have very low CEC values (≤ 1). Other clays (illite, muscovite, chlorite, and kaolinite) exhibit CEC values better than nonreactive phases but lower than reactive phases. However, reactive clays (smectite and mixed layer) exhibit higher values, depending on their concentration. Capillary Suction Time (CST) Test The Institute of Water Pollution Control in the UK originally used the CST device to measure the time required for a slurry filtrate to travel a given distance on a thick porous filter paper3. This technique is adapted to measure the CST of clay or shale slurries. The CST test studies the filtration characteristics of aqueous systems utilising the capillary suction pressure of a porous paper to affect filtration. When a suspension is filtered under the influence of this suction pressure, the rate at which filtrate spreads away from the suspension is controlled predominately by the filterability of the suspension. The CST automatically measures the time (in sec) for the filtrate to advance between radially separated electrodes when a fixed area of special filter paper is exposed to the suspension. A small amount of sample is mixed with the desired quantity of water or brine in a small commercial blender cup, and the mixture is used for the test. Time is measured using a stop watch. Reactive shale with a high smectite content usually has a high CST value. Therefore, CEC is directly proportional to the CST value. In addition, CST can be used to evaluate the effect of saline water on shale dispersion tendencies for specific shale formations. A study was conducted to measure the effect of deionised (DI) and saline water of different concentrations on the reactive nature of clays. www.oswindia.com

Samples Taken for Study Six subterranean shale formation samples from Indian origin were studied for mineralogy by XRD, and the presence of swelling clay characteristics were studied by CEC and CST tests. All samples were taken from producing wells. The results showed a correlation with the presence of swelling (reactive) and non-swelling clays. Samples not containing swelling clays showed small CEC values and a minimum response to CST. All samples were treated and analysed using similar processes to help avoid errors. Results of XRD Analysis The samples were scanned for XRD study (Table 1). XRD patterns were generated for six samples, and data were analysed using library data from the International Center for Diffraction Data (ICDD). None of the samples were observed to have an individual smectite phase. However, smectite was observed as a component of the mixed layer clay, along with illite. Carbonate phases were observed in all samples, except Sample 6, which was dominated by aluminosilicates. Moderate carbonate concentrations (< 20%) were observed in Samples 1 and 4, and Samples 2, 3, and 5 were observed to contain high carbonates. Table 1: XRD Analysis of Shale Samples 1 through 6 Phases

Shale 1 Shale 2 Shale 3

Shale 4 Shale 5 Shale 6

Quartz (%)

Calcite (%)

—

Dolomite (%)

—

Na-feldspar (%) 11

K-feldspar (%)

Trace

—

Pyrite (%)

Trace

—

Illite (%)

Chlorite (%)

—

Kaolinite (%)

—

Illite-Smectite — Mixed Layer

—

Results of CEC Analysis The samples presented different CEC values (Table 2) in accordance with the concentration of swelling clay in the samples. Samples 1, 2, and 3 displayed very low CEC values because of the absence of swelling (reactive) clays. Samples 4, 5, and 6 were observed with some CEC value because of the presence of smectite as part of the mixed layer clay.

Offshore World | 16 | June - July 2014

Feature

Th integrated study of different parameters can reveal the nature of reactive The cla clay in shale samples so that the proper assessment and treatment of a shale formation can be determined, enabling the use of drilling or fracturing processes.

Table 2: CEC Values of Shale Samples 1 through 6 Parameter

Shale 1 Shale 2 Shale 3 Shale 4 Shale 5 Shale 6

CEC (meq/100 g) 2

Results of CST Analysis The samples with the presence of reactive clay were observed to have higher CST values when treated with DI water (Table 3). Results were also tabulated for change (decrease) in CST values when the samples were treated with various saline solutions (Figure 1). The study showed that (among the solutions tested) the best control in CST values was obtained with a 3% potassium chloride (KCl) solution. The KCl solution at a 7% concentration also helped to further decrease the CST values; however, from a commercial feasibility viewpoint, the 3% KCl solution was more acceptable for field application. The CST values in Table 3 were determined as an average of three readings. Samples 1, 2, and 3 were not observed to contain any smectite or mixed layer phase, but some CST values were observed in the samples. This might be a result of the presence of illite, which was also determined to be controlled by the salt solutions. Table 3: CST Values (in sec) of Shale Samples 1 through 6

Conclusion The integrated study of different parameters can reveal the nature of reactive clay in shale samples so that the proper assessment and treatment of a shale formation can be determined, enabling the use of drilling or fracturing processes. The quantitative and semi-quantitative methods recommended in this study can be used in combination to interpret and understand the chemistry of a shale formation, and proper classification can be used to categorize the reactivity and anticipate the potential instability mechanism with fluids. The study infers the following: • The reactive nature of clay samples can be measured by CEC and CST tests. These are simple tests and can be performed at any location. • CEC and CST tests are directly proportional parameters to the reactive clay (smectite or mixed layer) concentration in shale, and this can be controlled using saline water. • Migrating clays (illite, kaolinite, and chlorite) show some sensitivity toward CST values, which also can be regulated using saline water. • A KCl (3 and 7%) solution in water was determined to be the most suitable for controlling reactive clay, though other types of saline waters or saline waters with mixtures of salts also can be used, depending on commercial and technical parameters. • A minor development in CST value was observed with the 7% KCl solution compared to the 3% solution. From a commercial viewpoint, 3% KCl brine was recommended.

Parameter

Shale 1 Shale 2 Shale 3 Shale 4 Shale 5 Shale 6

CST in DI Water

40.2

31.5

39.4

113.0

66.8

144.6

CST in 3% KCl

28.3

28.1

27.6

31.2

29.2

34.0

CST in 7% KCl

27.6

27.4

26.8

30.6

28.4

33.8

1. Dusterhoft, R., Williams, K., Kumar, A., and Croy, M. 2013. Understanding Complex Source

CST in 5% NH4Cl

31.2

30.6

28.4

31.5

29.6

34.3

Rock Petroleum Systems to Achieve Success in Shale Developments. Paper SPE 164271

CST in 3% NaCl

36.7

30.9

33.4

39.3

37.6

40.7

presented at the SPE Middle East Oil and Gas Show and Conference, Manama, Bahrain,

CST in 1.5% KCl + 32.7 1.5% NaCl

29.4

31.6

35.5

34.8

35.1

CST in 2% KCl + 29.7 1% NaCl

28.8

References:

10–13 March. http://dx.doi.org/10.2118/167271-MS. 2. Methylene Blue Test for Drill Solids and Commercial Bentonites, in API RP 13I, Laboratory

28.3

32.0

30.4

34.1

Testing for Drilling Fluids and ISO 10416:2002, seventh edition. 2004. Washington, DC: API. 3. Wilcox, R.D., Fisk, J.V., and Corbett, G.E. Filtration Method Characterizes Dispersive Properties of Shales. SPE Drilling Engineering 2 (2): 149–158.

Figure 1: Change in CST values (in sec) before and after treatment with salt solutions. www.oswindia.com

Offshore World | 18 | June - July 2014

Jajati Nanda Sr Scientist Halliburton Technology E-mail: jajati.nanda@halliburton.com Anil Patil Sr Scientist Halliburton Technology E-mail: anil.patil@halliburton.com Jyoti Waikar Sr Lab Professional Halliburton Technology E-mail: jyoti.waikar@halliburton.com

Feature Microbial Souring

Threat to Oil & Gas Sector of India: A Microbial Perspective Indian crude contains high levels of sulphides, causing ‘souring’ which is a constant threat to the country’s precious assets of oil and natural gas reservoirs, refiners, pipelines and transportation facilities. This article provides in-depth insight into the cause of souring and its impact to the industry and various new technologies evolved that are practiced worldwide successfully and how it may be adapted to Indian scenario too. Dr Amit Bhattacharya Dow Microbial Control Dow Chemical International Pvt Ltd Email: abhattacharya@dow.com

A sustainable source of energy is the dream of all nations. Rapid Industrialisation and modernisation of traditional processes has so far only resulted in enhancing the need for a constant source & supply of energy for developed and still developing economies. In fact energy import has been the biggest impact on the Current Account Deficit (CAD) for majority of economies. The changing global scenario and ever increasing burden of energy import has now influenced many countries to undertake major ventures of local oil & gas exploration. India, a country with immense natural resources, has embarked on this mission for developing indigenous source of oil and gas. India is 6 th largest consumer of oil in the world and 9th largest crude oil importer, with the industry contributing more than 15 per cent to the Gross Domestic Production (GDP). In Addition to this, the fact that India is one of the least explored countries in the world and the discovery of quite a few new gas fields along Eastern coast, the Oil & Gas industry in India seems set to be steering itself on an exciting new path. Exploration and production spent in the country has been almost doubled in recent years. The country’s gas pipeline coverage has increased substantially and domestic gas supplies are expected to increase. Through various onshore and offshore projects, the oil and gas sector for India is one of the six core industries. Today India can stake claim to giant offshore projects, ultramodern environment friendly refineries and high-tech Offshore World | 19 | June - July 2014

pipelines and transportation facilities. Unfortunately the country’s precious assets of oil and natural gas deposits are facing tremendous threat of ‘souring’ due to high levels of sulphides in crude oil. In offshore oil fields, deoxygenated seawater is often injected into the reservoir in order to sustain reservoir pressure and enhance secondary recovery. An anoxic condition combined with high numbers of Sulphate Reducing Bacteria (SRB) in oil reservoirs, pipelines, and installations is resulted in the production of Hydrogen Sulphide (H 2S) (Vance and Thrasher, 2005). It is a toxic and corrosive gas that is responsible for a variety of environmental hazards and economic losses due to reservoir souring and the consequently low production of oil and Microbial Induced Corrosion (MIC) (Davidova et al., 2001; Eckford and Fedorak, 2002). The rate of pitting corrosion has been attributed to sulphate and thiosulphate reducing bacteria (Crolet, 2005). New technologies based on synergistic blends of biocides which provide more heat stable, long lasting with fact acting, broad spectrum control are available. These technologies are practiced worldwide successfully and should be adapted to Indian scenario too. Microbiology of H 2 S Generation and Microbial Induced Corrosion (MIC) MIC can locally enhance corrosion and cause pits due to generation of sulphide. It happens much faster, can be more difficult to detect and to treat. This extensive sulphide www.oswindia.com

Feature Tod India can stake claim to giant offshore projects, ultramodern environment Today fri friendly refineries and high-tech pipelines and transportation facilities. Unfortunately the country’s precious assets of oil and natural gas deposits are facing tremendous threat of ‘souring’ due to high levels of sulphides in crude oil. generation in the crude pipeline is directly correlated with microbiological profile of the reservoir and biofilms associated with reservoir and pipelines. Microbiological studies revealed the presence of huge diversity of thermophilic and hyperthermophilic anaerobic microorganisms from high temperature, petroleum rich strata from a number of geographically distant sites (Orphan et al., 2000). Many reservoir studies have also confirmed that there are microorganisms present in extreme conditions (high temperature and pressure) prevalent in reservoirs (Myhr et al., 2002). Petroleum reservoirs constitute a group of unique terrestrial sites, because they present an unusual combination of extreme environmental conditions including temperature, pressure, and salinity. Petroleum composition varies widely between reservoirs, which might have an impact on the microbial biodiversity of such environments (Tello et al., 2004). Some ‘ancient lineage’ bacteria and archea (extremophiles; which can survive at extreme temperature of 80˚C-90˚C and pressures of ~200 bars; Figure 1) collectively known as Sulphate Reducing Prokaryotes (SRPs) have been ‘waiting’ down-hole for many, many years (Pederson, 2000). It is proved that bacteria like sulphate reducing bacteria commonly known as SRBs (Figures 2, 3 & 4) are universally present in oil reservoirs (Nilsen et al., 1996).

Figure 3: SRB growth in Solid media (API) developed in Dow Microbial Control, Mumbai Lab

Figure 4: Microscopic view of SRBs developed in Dow Microbial Control, Figure 1: Microscopic view of Archea developed in Dow Microbial Control,

Mumbai Lab

Microbial studies revealed the presence of a rich and diverse community of bacteria and archea including (i) fermentative, (ii) sulphate, thiosulphate, and sulphur-reducing, and (iii) methanogenic species in petroleum reservoirs (Salinas et al., 2004). Sulphate-reducing bacteria are physiologically unique among living organisms in being able to reduce sulphates to sulphides; they are also capable of reducing sulphites, thiosulphates and elementary sulphur to sulphides by following mechanism shown in Figure 5.

Figure 2: SRB growth in liquid API broth developed in Dow Microbial Control, Mumbai Lab. a. Positive control (growth of SRB pure culture procured from ATCC), b. negative control (un-inoculated broth, c. API broth inoculated with formation water) www.oswindia.com

Practically every type of soil and natural water contains SRPs and they are widely distributed in the seas and oceans. In earlier times they have been identified as essential agents in the anaerobic corrosion of buried ferrous pipes (Butlin et al., 1948). Sulphate reducing bacteria were thought to be strict anaerobes (Pfenning et al., 1981), but it was later demonstrated that some SRBs grow in the presence of O 2 as well as reduce O 2 to H 2 O. Their

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Feature

Figure 5: Common mechanism to H 2 S generation in SRBs

growth may occur in the presence of 2-3 ppm of oxygen (Bultin et al, 1948). They can be re-activated from their dormancy by the perturbation generated by the extraction work (chemicals, water, and reduced temperature). Now a days it is common knowledge that injection of sea water stimulate growth of thermophilic sulphate reducers because of high concentrations of sulphate are introduced with the injected water (Nilsen, 1996) and causes reservoir souring. To date, most petroleum microbiological work has centred on water flooded reservoirs that offer a cooled, oxygen-free, saline environment, which meets the environmental requirements of many different groups of bacteria. As discussed earlier, microbiologically influenced corrosion or simply MIC is the deterioration of a metal by a corrosion process that occurs directly or indirectly as a result of the metabolic activity of microorganisms. MIC can be considered in two categories – anaerobic and aerobic. The sulphate reducing bacteria are considerably most critical microbes in anaerobic MIC. They reduce sulphate to sulphide and promote formation of sulphide film i.e., their characteristics form of respiration uses sulphate and results in sulphide formation (Postgate, 1984). The petroleum production environment is particularly suitable for the metabolism of SRB because it handles large volumes of de-aerated water from underground reservoirs. This water is rich in nutrients and due to H 2S dissolution it can become very sour. SRBs can cause corrosion of a wide range of metals including of low grade carbon steels stainless steels.

Figure 6: Scanning electron micrograph of a native biofilm that developed on a mild steel surface in an 8-week period in an industrial water system. Source: Rodney Donlan and Donald Gibbon, authors. Licensed for use, American S o c i e t y f o r M i c ro b i o l o g y M i c ro b e L i b ra r y. Av a i l a b l e f ro m : h t t p : / / w w w. microbelibrary.org/

Fi g u re 7 : M i c ro s co p i c v i e w o f A P B s d e ve l o p e d i n D ow M i c ro b i a l Co n t ro l,

Biofilms and Its Impact on H 2S Levels and MIC Another major contributor to increased levels of H 2S in reservoir and crude pipelines is the ‘biofilm’ formation. A biofilm is a group of microbial cells that is associated with a surface, enclosed in a matrix of primarily polysaccharide material, and cannot be easily removed by rinsing (Figure 6). Materials such as clay or silt particles, mineral particles, corrosion particles, depending on the environment in which the biofilm has developed, may also be found in the biofilm matrix. Biofilm-associated organisms (sulphate reducers, sulfidogens, fermentative bacteria, manganese and iron reducers, methanogens, and acetogens; Figure 7) also differ from their planktonic (freely suspended) counterparts with respect to the genes that are transcribed. Biofilms may form on a wide variety of surfaces, including living tissues, indwelling medical devices, industrial or potable water system piping, or natural aquatic systems (Donlen et al., 2002). These biofilm microorganisms have been shown to bring forth specific mechanisms for initial attachment to a surface, development of a community structure and ecosystem, and detachment.

Mumbai Lab

One theory about the mechanism of MIC depicts that biofilms promote corrosion by inducing the formation of ‘corrosion cells’. This is thought to occur as a consequence of aerobic respiratory activity within biofilms that leads to the establishment of local cathodic and anodic regions on the steel surface, which promotes electron flow (Neria-Gonza´ lez et al, 2006). Another explanation is that MIC is promoted by anaerobes such as sulphate-reducing and iron-reducing bacteria (IRBs). In the biofilm, the sulphate reducers consume hydrogen and induce corrosion by the formation of ferrous sulphide and the iron reducers promote corrosion by reductively dissolving the protective ferric oxide coat that forms on the steel surface (Potekhina et al, 1999). Bacterial communities in biofilms developed on the surface of materials in natural environments are heterogeneous, and therefore there is significant uncer tainty concerning how these communities affect corrosion in a given environment. The knowledge of

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www.oswindia.com

Feature

De Developing optimal microbial control programmes first requires a thorough dia diagnosis and understanding of the microbial problems affecting a production site. This often requires the use of advanced microbiological methods like ATP count, biofilm studies, high throughput systems and molecular biology techniques. bacterial diversity in the biofilms is helpful to understand the interactions between corrosive bacteria and metal sur face, as well as with other micro-organisms, and provides the basis for the development of new and better means for the detection and prevention of corrosion. Measures to Control Souring and H 2S Many studies have been done to understand the origin and impact of Biogenic H 2S gas in the reservoir and in the crude oil which have a direct correlation with MIC (Neria-Gonza´ lez, et al, 2006). It should be the top priority to take necessary measures to protect those invaluable natural resources. There are sufficient studies and data available through various scientific journals, electronic media and various symposia every year which suggests why and how this over increasing problem can be tackled. Many examples from across the globe are available on various new technologies and treatment regimes which can be employed in Indian scenario to suppress this burning issue of souring of crude oil. New concepts and innovative products are now available which can treat the problems from their root. These innovative products have shown their remarkable competency over old and conventional treatments in the field worldwide. Variations in the factors like geochemistry of wells, microbial diversity in the subsurface environment, water and substratum chemistry, and the presence of biofilm on surfaces within water flow zones magnifies the complexity of the problem. Thus, mitigating soured wells and preventing bio-souring is challenging. Because of the heterogeneity in the physico-chemical parameters of oil and gas wells and the added complexity of the subsurface microbiological communities, it is unlikely that one microbial control programme will be applicable to mitigate all wells; it is more likely that a site-specific solution will be needed. Developing optimal microbial control programmes first requires a thorough diagnosis and understanding of the microbial problems affecting a production site. This often requires the use of advanced microbiological methods like ATP count, biofilm studies, high throughput systems and molecular biology techniques. Once a thorough understanding of the problem is made, advanced solutions can then be developed and applied. This requires the use of advanced biological testing techniques, field application knowledge and a broad portfolio of biocidal actives to choose from, as well as close collaboration with site operators. Then new technologies based on synergistic blends of correct biocides (heat stable, long lasting with fact acting, broad spectrum) are available to control the souring problem due to H 2S generation.

If not controlled with immediate effect, this may lead to major economical loss to the country. On the contrary, if we take a proactive approach and equip ourselves to cope up with this situation by employing new innovative products and following the same for new projects, then positive, money-saving impacts may be realised. For example, non-sour grade materials and weld procedures can be used in systems where sulphide levels are well controlled. In addition, the demand for chemical corrosion inhibitors can be lower in low-sulphide systems and the need for corrosion monitoring and other testing may be lessened. Finally, health and safety concerns for a low-sulphide system are mitigated relative sour systems. These benefits can save costs that are difficult to quantify because each project tends to be different. However, sour service-grade material is reported as being 15 per cent or more expensive than nonsour-service carbon steel (McElhiney, 1996). Conclusion The oil and gas industry has had a positive economic impact on India but in order to maintain sustainable production, microbial associated souring must be controlled via the use of efficient, targeted treatments of both reservoirs and infrastructure. References: Butlin,K. R., Adams, M.E. and Thomas, M. 1948. The Isolation and Cultivation of Sulphate –Reducing Bacteria. Crolet, J.L. 2005. Microbial corrosion in the oil industry. In Petroleum Microbiology, Edited by B. O llivier & M. Magot. Wa shington, DC: American Societ y for Microbiology, 143–169. Davidova, I., Hicks, M.S., Fedorak, P.M., Suflita, J.M. 2001. The influence of nitrate on microbial processes in oil industry production waters. J Ind Microbiol Biotechnol. 27:2,80-6. Eckford R.E., Fedorak P.M. 2002. Planktonic nitrate-reducing bacteria and sulphate-reducing bacteria in some western Canadian oil field waters. J Ind Microbiol Biotechnol. 29:2,83-92. McElhiney, J.E., Hardy, A.J. Littleton, C., Tony, Y. Rizk, J., Stott, F.D., Robert D., Eden, 1996. Study examines sulphate-reducing bacteria activity. Oil and Natural gas, 94:50 Tello, E. M., Fardeau, M.-L., Thomas, P., Ramirez, F., Casalot, L., Cayol, J.-L., Garcia, J.-L. & Ollivier, B. 2004. Petrotoga mexicana sp. nov., a novel thermophilic, anaerobic and xylanolytic bacterium isolated from an oil-producing well in the Gulf of Mexico. Int J Syst Evol Microbiol 54: 169–174. Myhr, S., Lillebø, B.L., Sunde, E., Beeder, J., Torsvik, T. (2002). Inhibition of microbial H 2S

There are infrequent but alarming indications that sulphide levels have crossed the threshold permissible limit which is a warning signal of asset deterioration. www.oswindia.com

production in an oil reservoir model column by nitrate injection. Appl Microbiol Biotechnol, 58(3):400-8.

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interview

‘Maximising Profitability without Subsidies’ With current refining capacity of 215 MMTPA (4.4 million barrels per day) and another 90 MMTPA (1.9 million barrels per day) capacity enhancement in the pipeline, India is expected to emerge as a global refining hub in foreseeable future. But a formidable challenge before Indian refiners pertains to crude oil security. Therefore, adequate supplies of crude oil at cost effective levels are imperative requirements for sustained profitability, says P Padmanabhan,

Managing Director, Numaligarh Refinery Limited (NRL). In an exclusive interview with Offshore World , he details about NRL’s current capacity, product mix, marketing & distribution strategy, and future capacity expansion & refinery configuration, etc. Padmanabhan also shares insight into significant approaches taken by NRL to address the feedstock issue, improve profitability & product quality of the refinery.

Global refining capacity planned up to 2017 is around 6.1 million barrels per day, with half of capacity being set up in Asia Pacific region. Where does Indian stand on the global refining map? India has witnessed rapid proliferation of refining capacity in recent times. As on 1 st April, 2014, India’s refining capacity was 215 MMTPA (4.4 million barrels per day). Capacity enhancement by another 90 MMTPA (1.9 million barrels per day) is in the pipeline. With such significant capacity, India is expected to emerge as a global refining hub in foreseeable future. Over the last couple of years, how have the gross refining margins of Numaligarh refinery been impacted amidst high volatility in feedstock pricing & subsidy burdens? What strategies have you undertaken to maintain the positive momentum? NRL does not bear the burden under subsidy scheme as the Company is not engaged in retailing of subsidised petroleum products. NRL is also not required to share the subsidy burden of Oil Marketing Companies unlike the upstream oil companies. However, volatility in Offshore World | 23 | June - July 2014

feedstock pricing does affect NRL’s Gross Refining Margin (GRM). In order to improve GRM on sustained basis, NRL has been implementing various value added projects. During 2012-13 and 2013-14, NRL’s GRMs were USD 10.52/bbl and USD 12.09/bbl respectively, which were amongst the highest in the Industry. We are always looking at opportunities to maximise value addition. What are the current biggest challenges ahead and how are you gearing up? What steps have you taken to address the feedstock issue, improve profitability & product quality? The major challenge before NRL pertains to time bound implementation of the refinery expansion project after finalisation of the Detailed Feasibility Report. This project is essential for NRL to achieve economic scale of operations for ensuring sustenance and growth. NRL’s refinery expansion from 3.0 to 9.0 MMTPA is envisaged to be facilitated through processing imported crude that would be transported from an Eastern port to Numaligarh through a dedicated pipeline. This is largely expected to address the feedstock availability issue. Process configuration and technology selection for the new units are expected to be the www.oswindia.com

inter view interview

best available globally in order to maintain the Company’s legacy of delivering high quality products. What are the current capacity & the product mix of the refinery, and how do you plan to expand the product basket and the marketing & distribution strategy for the new products in India & internationally? Existing capacity of NRL’s refinery is 3.0 MMTPA. Product slate of NRL comprises LPG, Naphtha, Motor Spirit, Aviation Turbine Fuel, High Speed Diesel, Superior Kerosene Oil, Raw/Calcined Petroleum Coke and Sulphur. Paraffin and Microcrystalline Wax are being added to the product slate after commissioning of the Wax plant, which is in final stages of completion. Over 85 per cent of NRL’s products are marketed in Northeastern, Eastern and parts of Northern India by its holding company Bharat Petroleum Corporation Limited (BPCL). With regard to international market access, NRL’s products have since long been exported to Bhutan. Intermittent exports to Bangladesh through river route have taken place. NRL’s Naphtha is being periodically exported through the Haldia port. An agreement has been signed with an oil Company in Nepal for supply of MS and HSD www.oswindia.com

Facts on Refinery Current capacity (yearly)

3.0 MMTPA (million metric tonnes per annum).

Targeted enhanced 9.0 MMTPA. Expected completion of NRL’s refinery expansion project capacity (by year …) would be known after finalisation of project DFR. Nelson Complexity

NRL’s Nelson Complexity Index is of the order of 9.0.

Crude Mix

NRL currently utilises only domestic crude from North Eastern oil fields.

Proposed Investment

Investment in NRL’s refinery expansion from 3.0 to 9.0 MMTPA alongwith a crude oil pipeline from an Eastern port to Numaligarh is estimated in the range of ` 15,000 crore.

Existing units

Crude/Vacuum Distillation Unit; Delayed Coker Unit; Hydrocracker Unit; Hydrogen Generation Unit; Coke Calcination Unit; Motor Spirit Plant and Sulphur Recover Unit.

Proposed new units

Would be determined after finalisation of DFR for Refinery Expansion project.

Products for Indian market LPG, Naphtha, Motor Spirit, Aviation Turbine Fuel, High Speed Diesel, Superior Kerosene Oil, Raw/Calcined Petroleum Coke and Sulphur. Paraffin and Microcrystalline Wax would be available shortly after commissioning of the Wax plant. Products for export

Diesel, Naphtha, Motor Spirit.

Current crude processing 9.0 TMT/day capacity per calendar day Targeted crude processing 27.0 TMT/day capacity per calendar day

Wi Without any doubt, a Refining - Petrochemical integration is the be best practice in our industry. It not only helps in value addition but also protects revenue generation by being a natural hedge against fuel or petrochemical price volatility. Offshore World | 24 | June - July 2014

inter view interview

from NRL’s Siliguri Terminal, located about 35 km from Nepal border. Supplies to this effect are expected to materialise very shortly. NRL is also pursuing an Indo-Bangla product pipeline for sustained product export to Bangladesh. This project is actively supported by the governments in both nations. Actions have been initiated for conducting route survey and detailed feasibility studies for the project. Export of auto fuels to Myanmar might well be another emerging possibility. What are the new & niche products Numaligarh refinery is producing currently and in the pipeline? (Please provide detailed insights into the products, applications and targeted markets as well) NRL’s existing product slate has been stated earlier. Wax is being added to the product slate shortly. After commissioning of the Wax plant, NRL would be in a position to produce upto 50 TMT Wax per annum, which would be nearly 40 per cent of domestic demand. NRL’s Wax could potentially be exported as well. Needle Coke is another speciality product of NRL, for which trial production has started. Apart from above, possibility of producing other valueadded products such as Linear Alkyl Benzene (LAB), Hydrogenated Pyrolysis Gasoline (HPG) and Para Xylene are being explored. In the contex t of applications, NRL’s Wax could be utilised in candle, cosmetic and

Product (Existing & New )

Current production (FY 2013-14) in TMT

Produc tion – post expansion / integration with petrochemical unit

LPG Naphtha MS ATF SKO HSD RPC/CPC Sulphur

53 161 309 73 172 1719 68 4

(Would be determined after finalisation of DFR for Refinery Expansion

pharmaceutical industries. Needle Coke is primarily a requirement for steel and aluminium industries. LAB, HPG and Para Xylene are primarily utilised in detergent, fuels, petrochemicals and chemical industries respectively. May we have your comments on value addition at the refinery & integration with petrochemicals unit as an economic growth driver? How are you implementing

this at Numaligarh refinery and how will this improve the overall profitability of the refinery? Without any doubt a Refining - Petrochemical integration is the best practice in our industry. It not only helps in value addition but also protects revenue generation by being a natural hedge against fuel or petrochemical price volatility. Venturing into petrochemicals production is expected to be a realistic proposition after implementation of the refinery expansion project. We are also looking at synergy with M/s Brahmaputra Cracker and Polymers Limited (BCPL) which is implementing the Assam Gas Cracker Project at Lepetkata in Assam’s Dibrugarh District. The proposition would however be driven by factors such as adequate demand generation in proximate markets. How are you addressing the factors influencing refinery configuration in future – convergence of refining & petrochemical operations, energy optimisation, achieving environmental protection, economies of scale and feedstock flexibility

Th challenge, for those pursuing refinery expansions and new The ref refineries, pertains to obtaining statutory clearances in time bound manner. These are macro level issues to be addressed through representation with government authorities. Offshore World | 25 | June - July 2014

www.oswindia.com

interview

(Please provide us a peek into the latest technology upgradations through revamps & new installations)? Various refiner y configurations for NRL’s expansion project are being studied and the final configuration would be determined after finalisation of the Detailed Feasibility Repor t (DFR). NRL’s Nelson Complexity Index consequent to refiner y expansion is expected to be relatively high due to advanced secondar y processing envisaged for incorporation. Although, higher complexity factor would mean higher investment, on the brighter side, it would permit increased value addition. NRL has been on the forefront of energy conservation and environmental protection. The Company’s certification under ISO 50001 for energy management and ISO 14001 for environment management besides bagging three Energy Conservation Awards from the Centre for High Technology (CHT) in 2013 bears testimony to the statement. Economy of scale is planned to be achieved through implementation of the refiner y expansion project, as stated earlier. The issue on feedstock flexibility is being addressed through appropriate technology selection for the new units that would permit processing of medium to heavy Sulphur crude oil from impor ted sources. At NRL preser ving of the environment is one of our highest need and we have zero tolerance towards environmental degradation. How is the refinery deriving maximum value out of the bottom of the barrels? Innovative steps taken by Numaligarh refinery to improve? Prudent and contemporar y technology selec tion by NRL during refiner y conceptualisation stage has facilitated maximisation of distillate yield, which is over 90 per cent. There is minimal generation of heav y ends comprising petroleum coke and Sulphur. There is no generation of black oil or residue. NRL has been utilising Chevron www.oswindia.com

Hydrocracking and Halder Topsoe Hydrogen generation technologies for maximising the value upgradation of produc ts. As a typical instance of innovative step taken towards per formance improvement, NRL had taken the initiative of utilising natural gas as fuel and feed in the refiner y in lieu of Naphtha. Another example is when we almost stopped Naphtha expor t which is value destruction and innovatively found more value added outlet for our product. This initiative has led to improvement in distillate yield, reduction in operating cost and hence refining margin, besides reduction in carbon footprint. At NRL, we constantly looking at oppor tunities to upgrade value and minimise cost, which has been ingrained in our DNA. What are the exercises undertaken towards maximum utilisation of existing assets? NRL’s capacity utilisation is being maximised through optimisation of process parameters within the constraint of crude oil availability. The LPG bottling plant and Motor Spirit Plant are being operated beyond their installed capacity. These are instances of efforts towards greater utilisation of assets, to the extent possible. What are the other external future unforeseen challenges the Indian refiners will have to be prepared for & in your view, how should the Indian refining industry counter the same? A formidable challenge before Indian refiners pertains to crude oil security. Adequate supplies of crude oil at cost effective levels are imperative requirements for sustained profitability. The other challenge, particularly for those pursuing refinery expansions and in case of new refineries, pertains to obtaining statutory clearances in time bound manner. These are macro level issues to be addressed through representation with government authorities. Our biggest challenge is to maximise our profitability without depending on subsidies.

Offshore World | 26 | June - July 2014

Feature Bottom of Barrel

Mini and Tiny Refineries As crude oil is produced in remote, non-consumer locations, while major centers of refining and consumption are widespread, thus making smaller refining units unviable due to high transport and logistics costs for moving the crude. The author believes that smaller and older oil fields and those abandoned in past as ‘uneconomical’ will have to be reactivated to recover every trace of oil or gas as demand outstrips production, where the ‘Mini and Tiny Refineries’ will become relevant in future.

The current minimum, economically viable capacity for a petroleum refinery appears to be 6 million tons (preferably 9 million tons) per year. This is because of high transport and logistics costs and increasing complexity to reduce residual product (bottom of barrel) to around 10 per cent. With exception of USA and Russia, crude oil is produced in remote, non-consumer locations, while major centers of refining and consumption are widespread in countries like Europe, Japan, China, India, South Korea, etc. This causes huge movement of crude oil and refined products, making smaller units unviable. Under special circumstances refineries with lower capacities are being operated. • At places away from sea port and oil pipeline, with small capacity oil field and adequate local market, eliminating transport or logistic factors. • Refinery specially designed to produce feedstock for a petrochemical unit at remote location and local market for products. • Local availability of ‘odd’ type of crude oil, difficult to blend and process with other crude oils. • Availability of ‘easy to refine’ stocks like oil field and gas field condensates, which could be refined with zero bottom of the barrel. • Political and social compulsions.

process oil field and gas field condensates to make motor gasoline, kerosene and diesel. Some produce value-added industrial solvents, for paint, varnish, resin, paint removal applications, vaporisable mosquito oils, insecticidal sprays, and process fluids; refluxing and reaction media, extraction solvents, rust preventive formulations, etc. Some of these units produce special naphtha stocks for steam reforming to make petrochemicals and fertilisers. Such units have simple process schemes like Atmospheric distillation, Vacuum distillation (in some cases). Desulfurisation may be required with some stocks. Gasoline fraction from straight run distillation particularly those of condensates generally have major concentration of linear saturated hydrocarbons, with low octane number; 80 to 84. This could be sometimes upgraded by blending with high octane stocks or subjected to octane improvement processes like catalytic reforming including platforming, alkylation, hydroisomerisation etc. A number of Mini Refineries are operated on crude oils, because of low production of oil and also low local demand. For example; demand for petroleum products in Bangladesh is about 3 million tons per year and Crude

Mini Refinery In most cases, feedstock is priced lower than that of international price and logistic costs are low. Refinery units with 50,000 tons to 2 million tons per year capacity could be called as ‘Mini Refineries’. These are mostly located in isolated places and process locally available feedstocks to meet local demands for fuels and other petroleum products. A number of these www.oswindia.com

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Eastern Refinery at Chittagong, Bangladesh

Feature

Indian Perspective While there were a large number of small refinery units in India in 1970s, however due to non-availability of feedstock and non-conducive government policies most of these have closed down. Nikhil P Parikh, Secretary, All India Oil & Petroleum Mini Refiners Association, details about the rationale behind for the setting of Mini Refiners Association in India, the current & future scenario of min refiners in the country and why Indian mini refineries manufactures shifting their focus to MENA (Middle East and North Africa) regions. The Association for Mini Refineries in India was established for importing feedstock (crude, condensate) for small scale oil refiners at a time when the manufactures started facing the shortage of feedstock availability due to the capacity expansions and value additions by large scale petroleum refiners from public & private sector companies. The members jointly established linkages from various sources to secure the feedstock for the refineries with the intention of minimise the risk of financial liability and to handle large parcel from overseas. Mini refiners for crude oil refining and condensate process are produced industrial products like Hexane, Normal Pentane, Iso Pentane, Mineral turpentine oil, Furnace oil, Light diesel oil and various such products by manufacturing at minimum margin and support the petroleum industries by in-house technical expertise. The manufacturers of mini refineries have the technical capabilities of processing high density waxy residues from refineries to produce white fuels of high & light densities. The high density cut can be further processed to produce value-added products for the industries like paint, pharma, etc. Modular Mini Refinery vs Conventional Refinery While the refining capacity in India is almost surplus and the gross refining margins (GRMs) has gradually been declined, mini refiners are able to maintain high GRMs of the order USD 75-100 per ton of crude, due to small size of operation thus lower OPEX, which is very high as compared to the large scale refiners. Despite the poor returns from petroleum refinery investment, mini-refineries, from simple diesel production units to more sophisticated cracking refineries are increasingly becoming a flexible and cost-effective supply option for crude producers in remote regions in countries like UAE, Oman, Sauda Arabia, Kazakhstan, etc - even Afghanistan has a very big potential. This is particularly where there is a need to adapt rapidly to meet local demand. Investment in mini refiners are more workable where a location in close proximity and with access to crude supply and mini refinery decreases the distribution costs in remote regions and project finance to support regional development.

Present & Future Scenario On the raw materials front, non-availability of feedstock like crude and condensate is often a handicap for scaling up mini refinery projects in India. Moreover, big private refiners in the country, who are mainly in petroleum products export business, donâ&#x20AC;&#x2122;t part their crude parcels to the manufactures of mini refineries and even the government-owned refiners donâ&#x20AC;&#x2122;t part their parcels to encourage the mini refiners in India. Currently, there are three/four limited projects of mini refinery functioning in India. Though, all those refining have the same kind of distillation process that the manufacturers of mini refinery are doing now, but they can easily get the crude from ONGC. In the near future, the country may not be seen such degree of projects unless the government would not abolished all the limitation in marketing of diesel, petrol, fuel oil, gas oil. Moreover as per the mandate by the Government, gas condensate suppliers have to renew the license each year to continue supplies in the Indian market, which is a very tedious & time consuming process. Why MENA? The Middle East countries are abundantly endowed with oil and gas resources. MENA countries account for 58 per cent and 43 per cent of proven crude oil and natural gas reserves respectively, making this region of vital importance to the present and future of the global oil and gas market. Many Indian manufacturers of mini refiners have already shifted their base to Middle East due to ease in availability of crude and also gas condensate, bank finance, hassle free conditions, no restriction on import and export, logistically best suitable area, etc. African region, which is now recognising as the hot bed for hydrocarbon assets worldwide, has seen bigger potential for small scale refiners because big refineries are still not visible in these countries. Although, due to the high sulfur presents in the crude of these regions, developed nations like USA & EU are not much interested in importing crude to distillate in their refiners. Thus, the manufacturers of Indian mini refineries are looking these countries as their next destination.

Offshore World | 29 | June - July 2014

www.oswindia.com

Feature

Feature Oil production is about 1 million ton per year. Eastern Refinery (1 million tons/yr) at Chittagong processes this oil to meet about 50 per cent demand of motor fuels. This refinery is due for expansion to 3 million tons per year. Such refineries include Dehydration and Desalting Atmospheric Distillation, Vacuum Distillation, and mainly produce, LPG, gasoline, kerosene, diesel and fuel oil. Octane upgradation process and Desulfurisation process may also be included, if required. Light residual fuel oil is 40 per cent or more, for topping units and about 25 per cent for units with vacuum distillation. For waxy crudes, dewaxing and wax production units may also be included. For high asphalt crudes, bitumen process is included. Some units have industrial solvents and process fluid production processes to improve economics. There were a large number of such units in India in 1970s. However due to non-conducive government policies and interference by local authority most of these have closed down. Some units operate as part or subsidiaries of major government oil companies. These include Guwahati Refinery (1 million ton), Dighoi Refinery (0.65 million ton) CPCL – Narimanam Refinery (1 million ton) all under IOCL, and Tatipaka Refinery (0.1 million ton) under BPCL. Tiny Refinery Tiny Refineries are small primitive batch distillation units, with batch size of 5 kl to 200 kl. These have rectification column, vapour condenser, reflux drum, reflux circulation system and product collectors. Residual bottom is also cooled and taken as a product. The major advantage is flexibility; that any number of distillate products with different boiling ranges could be taken in every batch. There may be batch to batch change of feedstock as well as product specifications. A number of batch units may be operated parallel. In such case these may be heat integrated so that heat of a batch could be used to preheat another batch. Energy saving is around 30 per cent and also batch time is reduced. Such units are useful at the beginning of the development of an oil field or gas field, as small quantities of crude oil or condensate are produced during exploratory drilling and well testing etc. Proper utilisation of these becomes difficult particularly in logistically remote and isolated locations. Obviously, these units disappear if a major oil or gas resource is found and major collection

and refining facilities are established. Some oil or gas sources are too small for the development of economically feasible processing or collection facilities. However these quantities are enough to meet local or in-house demand. In the initial period of development and exploration, a number of such units come up in the area to process and utilise crude oil and condensate. During 1890 to 1920, hundreds of such units dotted California, Pennsylvania, Texas and other oil producing areas of USA. In India first such unit was put in Margarita near Digboi around 1896. More than 100 units operated in Assam, Gujarat, Maharashtra in 1970s when India’s exploration was at fast pace and new resources were being developed. Dubai and UAE Iran, Iraq, Saudi Arabia, Turkey etc, have large number of such units which process crude oils and condensates from small Oil/Gas fields and wash oil from the oil tankers and bulk storage tank farms and pipelines. Emerging gas & oil industry in Bangladesh has given rise to 10–15 tiny refineries in last few years. Myanmar oil and gas sector is developing fast with the China, and global E&P players like, Shell, Total etc are investmenting more than 14 billion USD in exploration and pipelines in the country. In the recent bids for 36 exploration blocks, provisionally selected companies include, majors like Chevron (USA), Royal Dutch Shell (UK), Reliance Industries (India), Petronas (Malaysia) etc projected investment about USD 300 billion in Myanmar. An interesting aspect of Myanmar oil industry is presence of thousands of tiny oil diggers and refiners. Each of these occupies a small yard where small drills are used to make shallow oil holes, producing 10 to 200 barrels oil per day. The oil is decanted to remove associated water and then distilled in primitive wood fired retorts to distil out light fractions (BP up to around 2500C). The temperature of still is high (450 – 5000C) and distillation time is large (10 – 15hrs), so that heavy bottom fractions thermally decompose giving unsaturated light fractions. Distillate yield is 85-90 per cent; another 8-10 per cent is coke. At the end of the process coke is chiselled out of the retort. Typically these retorts are 2 kl to 5 kl capacity and a batch takes one or two days. A typical unit has 8 to 10 such retorts running parallel. Equipment is of primitive and of crude design and last 30-40 per cent distillate fraction is of poor quality with high degree of unsaturation. Thermal efficiency is very low and working conditions are unsafe. Other such rising destinations are Vietnam, South Sudan, Nigeria, Indonesia and some Central Asian Countries. Conclusion Oil and gas is becoming ‘short supply’ as demand out strips production. Smaller and older oil fields and those abandoned in past as ‘uneconomical’ will have to be reactivated to recover every trace of oil or gas. This is where the Mini and Tiny refineries will become relevant in future.

M C Dwivedi Former Professor - Department of Chemical Engineering Indian Institute of Technology Bombay, Mumbai Email: mcdpetroleum@yahoo.co.in

Local Tiny Refinery in Manmar www.oswindia.com

Offshore World | 30 | June - July 2014

Feature Case Study

Reducing Hydrocarbon Losses in Refineries Reducing hydrocarbon (HC) loss is especially critical for refineries in parts of the world—Europe, India, and Japan, to name a few—where expensive energy places added pressures on margins. Quick-hit HC loss-reduction wins can save from USD 2 to 10 million per year for a typical 100,000 barrel per day (bbl/d) refinery. Additional annual savings exceeding USD 10 million typically are achieved through subsequent no- and low-capital investments.

A significant economic opportunity exists for refineries to improve hydrocarbon (HC) loss management, which deserves more effort than it typically gets, especially in regions with high fuel prices. Many refineries, especially the lowest performers, do not have a good understanding of HC loss in their facilities and what their poor practices cost them. The use of knowledgeable outside help can be effective in developing a HC management programme. In many cases, significant reductions in HC loss can be made with little or no capital cost simply by changing refinery practices. Measuring HC Loss HC loss—or refinery loss as it is also known—is defined as: Total Processed Input – Total Processed Output – Fuel that is both Produced and Consumed by the Refinery Discussions of HC loss sometimes debate whether fuel produced in the refining process that is subsequently consumed by the refinery should be included as HC loss. HSB Solomon Associates LLC (Solomon) considers refinery-produced fuel a product, because refinery-produced fuel consumed in the refinery ultimately displaces purchased fuel. In essence, consuming refinery-produced fuel is an economic optimisation between the value of the fuel as a saleable product and the price of an alternative external fuel supply for the refinery. In the end, refiners should manage fuel consumption like a loss, but separately from HC loss. That said, effective management of both is critical to refinery profitability. HC loss is always measured in mass or weight percent. The refiner y mass balance includes the effec t of inventor y changes in the refiner y. These changes i n c l u d e c r u d e o i l a n d p u rc h a s e d f e e d s to c k s a n d blendstocks, intermediate products (work in process), and finished products. Offshore World | 31 | June - July 2014

A good refinery mass balance is needed to quantify the difference between HC input and HC output. Very simply put, if it is not fuel consumed, it is a loss. HC includes impurities such as sulfur and nitrogen bound in the HC molecules and H2 as an input or output. However, HC excludes non-HCs such as sediment and water in crude oil, feedstocks, or products. Complicating the distinction between fuel and loss is the fact that the measurement of fuel gas produced and consumed in the refinery is not always accurate. However, there are some known areas to be considered: • Based on the Solomon Worldwide Fuels Refinery Performance Analysis (Fuels Study), total fuel consumed and HC loss in refineries is typically 5–7 weight percent (wt %) of processed input worldwide. HC losses in refineries average approximately 0.6–0.7 wt %, based on data provided to Solomon. • There is a wide disparity between high performers and low performers, with high performers (first quartile or Q1) averaging 0.1–0.2 wt % and low performers (fourth quartile or Q4) averaging 1.2–1.3 wt %. • The gap between Q1 and Q4 performers can easily exceed USD 20–30 million per year for a 100,000 barrel per day (bbl/d) refinery. • From a chemical and physical perspective, refineries processing higher-sulfur lower-gravity crude oil should have more physical losses than refineries processing low-sulfur light crude oil. Statistically, the impact of gravity and sulfur on HC loss is negligible relative to other variables. • Indian refiners have similar performance to the Solomon Europe, Middle East, and Asia Pacific peer results. In general, these results are consistent with other published industry sources and Solomon experience. There may be some noise in the data, especially for low performers. By definition, www.oswindia.com

Feature underreporting refinery-consumed fuel would result in reporting increased HC loss (Figure 1).

• − − − − − − • − −

Figure 1. HC Loss* (*Excludes CO2 vented from H2 Plants)

−

Managing HC Loss There are two components to HC loss: process mass losses and controllable losses. Process mass losses stem from impurities such as sulfur and nitrogen that must be removed to meet product specifications or for processing reasons. Processing converts HC input into products such as water (H2O), carbon dioxide (CO2), ammonia (NH3), hydrogen sulfide (H2S), and sulphur dioxide (SO2) that have no market value. These materials are lost when vented to the atmosphere, disposed of, or lost in wastewater. These losses, which generally are fixed by the selection of feedstocks and productquality requirements, typically represent less than 20 per cent of total HC loss. Some small improvements can be made if there is significant product-quality giveaway. Converting the materials to a saleable product can improve margins and reduce this loss. Ultimately, reductions come down to feedstock selection and product quality as determined by optimised economics. Controllable HC losses include flares, refinery effluent, process leaks, tank evaporation, slop evaporation, solid waste, and theft. On average, refineries with Q1 returns on investment (ROIs) have approximately 0.2 wt % lower controllable loss than refineries with Q4 ROIs. This statistic bolsters Solomon’s belief that the difference between high performers and low performers is that high performers pay attention to details and look for opportunities to maximise profitability. Solomon observation of low performers is as follows: • They do not have a good understanding of the magnitude of HC loss. • They have difficulty producing good monthly and annual mass balances. • They do not have an ongoing effective programme to identify and eliminate sources of HC loss. • They do not monetise the cost of HC loss.

− −

A good refinery mass balance exists. Primary custody transfer meters are accurate and unbiased. Fuel gas measurement is accurate to differentiate fuel consumption from HC loss. Flares are metered and monitored. Crude oil, feedstock, intermediate, and product densities are kept up to date in flow meters and tank inventory systems. An accounted loss table in the monthly and annual mass balances exists and that table identifies and attempts to quantify sources of losses. HC loss is monetised. A good HC loss reduction programme exists under which sources of routine losses are identified, monitored, and eliminated. Flaring is minimised except in emergencies. Leaking relief valves are minimised. Flare-gas recovery systems recover any gas sent to the flare under normal conditions. Slop oil production is minimised. Slop oil production is routed to vaporcontrolled slop tanks in closed systems. Slop oil to sewers is minimised; and sewers are covered to minimise evaporative losses. Detailed procedures are established to minimise slop and flare losses during shutdowns and startups. Procedures are established to manage draining of vessels, heat exchangers, pumps, and lines for inspection and maintenance. Tanks are well maintained. Sources of HC vented directly to the atmosphere are eliminated.

Role of Third-party Assistance in Managing HC Loss Despite the challenges presented by HC losses, refinery personnel already know the sources for many of the losses. Independent third parties (such as consultants) have the ability to support what employees already know about losses and present a compelling business case to resolve them. Having someone with experience finding similar problems and assisting clients to implement effective solutions at other facilities gives confidence to management and improves the efficiency and effectiveness of solutions. Another advantage of third-party assistance is cost-efficient training in HC management. A two day training course in HC loss management can discuss all of the basic principles, where to find the losses, how best to measure them, and how to manage them. A good programme has participants actively engaged in identifying the refinery’s problems. The consultant can then help the client further investigate and define those issues in a follow up to the training. Finally, the consultant can assist in developing an efficient, effective solution, drawing on outside experience with similar problems. Impacts and Benefits Solomon has led successful programmes to reduce HC loss at refineries, petrochemical plants, and terminals around the world. Our consultants have identified quick-hit HC loss reduction wins—improvements achieved with little or no cost that could be implemented in 90 days or less—varying from USD 2–10 million per year. Additional savings of greater than USD 10 million per year are typically achieved with additional no- and low-capital investments.

What a Good HC Loss Management Programme Looks Like Generally speaking, a good HC loss management programme exhibits the following characteristics: www.oswindia.com

Offshore World | 32 | June - July 2014

John Popielarczyk Project Manger HSB Solomon Associates LLC

Energy Watch

Energy Commodities Exhibit Mixed Price Movement (May – June 2014) Energy commodities exhibited mixed price movement in the two-month period of May and June 2014. Helped by EU lawmakers’ consideration on permanent measures to curb allowances surplus, European Union allowances (EUA) traded on ICE-ECX platform rose by highest i.e. 7.59 per cent. On the other hands, weak demand sentiments led natural gas futures prices (traded on NYMEX-CME platform) to drop the most i.e. 7.35 per cent in the two-month period.

Downbeat US data and reports of ample US crude oil supplies led NYMEX (CME) crude oil (light sweet) futures to start the month of May at USD 99.42 per barrel, fractionally down by 0.32 per cent from previous month’s close. With oil prices then moving up, the opening day’s low of USD 98.74 eventually emerged as the two month (May-June) low. Following the registering of period-low, lingering political uncertainty in Ukraine, technical bounce and unexpectedly strong jump in US nonfarm payrolls (for April) helped the rise in oil prices. However, data releases showing lower than expected Chinese manufacturing PMI as well as hefty US crude oil supplies kept the rise in oil prices under check. Later, release of US economic data showing a jump in US Housing starts as well as upcoming US summer driving season, raising the expectations for energy demand

320

lifted the oil prices. Further, fresh turmoil in Ukraine and Libya fuelled worries about potential disruptions to global crude oil supplies. Further reports of larger than expected drop in crude oil inventories, and fears of a civil war in Libya ensured steady movement in oil prices. Nevertheless release of weak US manufacturing data at the start of the month of June hinting on the possibility of weaker demand for oil and continued ramping up of crude oil supply kept some pressure on rising oil prices. Later, oil prices moved up helped by positive monthly data on US nonfarm payrolls lifting prospects for energy demand. Increase in Japan’s GDP and a lift in Asian stocks from positive Chinese export data also elevated prospects of higher crude oil demand. Furthermore, stimulus measures by the European Central Bank raised

Futures price movement (May - June 2014)

120

310

108

300

290

280

270

NYMEX Heating oil (USd/gal) - LHS

NYMEX Gasoline (USd/gal) - LHS

NYMEX WTI crude oil (USD/barrel)

ICE Rotterdam Monthly Coal (USD/MT)

Source: Bloomberg Offshore World | 33 | June - July 2014

www.oswindia.com

Futures price movement (May - June 2014) 0.20

6.00 ICE-ECX CERs (Euro/tonne) - LHS

0.17

NYMEX Natural gas (USD/mmBtu)

5.60

ICE-ECX EUAs (Euro/tonne)

0.14

5.20

0.11

4.80

0.08

4.40

0.05

4.00

Source: Bloomberg

the outlook for energy demand thereby boosting global crude oil prices. Subsequently, bigger-than-expected decline in US crude oil supplies led oil prices to rise further. However again, scares of slower global growth as the World Bank trimmed its global growth forecast kept oil prices rise in check. In the final fortnight of the two-month period, oil prices got support from unresolved geopolitical tensions in Libya fueling global supply concerns. Further escalations in violence in Iraq adding worries over the supply outlook as Al-Qaeda-affiliated militants, ISIS, set out to capture full control over major cities in Iraq, helped the surge in oil prices. Although, the major oil producing regions in southern Iraq remained insulated from imminent threat, violence in northern and central parts of Iraq led to sharp rise in prices, demonstrating that oil supply was no longer viewed as secure. As ISIS insurgents continued their onslaught, fears persisted to rise that the militants might seize the capital Baghdad and oil producing Kurdish and southern regions, disrupting global oil supply. The ongoing clashes between the Iraqi government forces and ISIS led NYMEX crude oil futures to register a month-high of USD 107.73 per barrel on June 20. Following the month-high, oil prices traded range-bounded and restrained as supply fears were eased by strong US crude stockpiles and releases of few weak US economic data. Finally, NYMEX crude oil futures closed the month of June at USD 105.37 registering a rise of 5.64 per cent in two-month period of May and June.

Amongst other energy commodities, ICE Rotterdam monthly coal futures prices continued the trend of past few months of moving down; eventually registering a fall of 2.47 per cent in the two-month period. While, healthy coal supply and expectations of weak demand helped the decline in coal prices, threat of export disruptions in Colombia and a supply squeeze in India resisted major fall in prices. Finally in emission segment, while futures prices of EUA traded on ICE-ECX platform (as mentioned earlier) rose by 7.59 per cent over two-month period, futures prices of CER (Carbon Emission Carbon Emission Reduction) traded on ICE-ECX platform registered no change in prices over the two-month period. EUA prices were boosted as permanent measures to curb allowances surpluses from the market were under consideration of EU lawmakers. EU lawmakers were negotiating reforms to the blocâ&#x20AC;&#x2122;s cap-and-trade emissions program, the worldâ&#x20AC;&#x2122;s biggest that include the creation of a permit reserve to control supply and help lift prices to levels that ultimately discourage burning of fossil fuels. Notably, the proposals follow three years of debate for a plan that started in March to withhold some allowances and return, or backload, them to the market at the end of the decade. (The views expressed by the authors are their personal opinions.)

Like crude oil prices, futures prices of its derivate i.e. heating oil and gasoline (traded on NYMEX-CME platform) also moved up in the two-month period of May-June, registering a rise of 1.22 per cent and 2.30 per cent respectively. Apart from oil and its derivates, the other major energy commodity natural gas futures traded on NYMEX (CME) platform registered a price fall of 7.35 per cent in past two months. Initially, mild temperatures in US coupled with steady rise in US natural gas inventory levels led to the fall in natural gas futures prices. Later, forecasts of milder weather in US, denting gas demand sentiments pushed down the gas prices. www.oswindia.com

Offshore World | 34 | June - July 2014

Niteen M Jain Senior Analyst, Department of Research & Strategy Multi Commodity Exchange of India Ltd E-mail: niteen.jain@mcxindia.com Nazir Ahmed Moulvi Senior Analyst, Department of Research & Strategy Multi Commodity Exchange of India Ltd E-mail: nazir.moulvi@mcxindia.com

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news features

Insight into Sino-Russia Gas Pact The recent Sino-Russia gas deal has finalised at a time when Europe & the US are expressing concerns around security of supply from dependence on Russian energy exports. The article provides insight into the deal and how it will impact the different global pipeline gas supplies and LNG imports to the Asian gas market in future.

The Chinese have driven a hard bargain in closing a 38 bcma supply deal that is priced on a similar basis to Russia’s existing European supply contracts. But in return, Russia has secured a central role in supplying the Asian gas market over the next decade. Russia has also thrown down the gauntlet to global LNG exporters courting China.

The deal also opens up east coast Russian LNG exports. Volumes from the Kovyktinskoye and the Chayanda field could also supply gas to Gazprom’s proposed Vladivostok LNG project. And the pipeline also facilitates exports from other Russian producers.

The Russia–China deal and the associated Power of Siberia pipeline should facilitate both: • Future incremental sales of pipeline gas to China, both from Gazprom and potentially other Russian producers. • The future export of Siberian gas from east coast Russian LNG terminals, on the doorstep of Asia’s largest buyers, Japan, Korea & India.

But it is early days and there are large capex hurdles to be overcome before gas flow becomes a reality. It is expected that the overall cost for the Kovyktinskoye and Chayandinskoye upstream development, Power of Siberia pipeline and processing costs could exceed USD 40 billion.

These factors present a substantial competitive threat to as-yet-uncontracted LNG producers in Australia, Canada and Africa, particularly given the higher combined production & shipping cost base of these exporters. DEAL SUMMARY Deal Volume & Infrastructure: An initial agreement has been reached on 38 bcma of gas, which will flow from Russia’s Eastern Siberian gas fields down a new ‘Power of Siberia’ pipeline into gas hungry North Eastern China. The pipeline within Russia is then planned to continue onto Vladivostok to support future Russian LNG exports. The route is shown below: The planned pipeline infrastructure may support up to 60 bcma over time. It is estimated that 125 bcma of gas demand in northern China by 2025, illustrating the growth potential through this and other pipelines.

Deal Price: A range of analyst views on deal pricing have been circulating over the last two weeks. The headline reported deal price was somewhere between USD 350-380/tcm, equivalent to USD 9.5 to 10.4/MMBtu. But some analysts are estimating slightly higher contract prices by the time the gas flows in 2019 (up to around USD 11/MMBtu). The deal is oil-indexed and full pricing details have not been revealed, so all estimates are subject to uncertainty. There are also other factors in play that impact dealvalue e.g. the Russian vs Chinese share of pipe capex and upstream development costs. But what is important is that the deal price, at somewhere around USD 10/MMBtu, is comparable to current German border prices for oil-indexed Russian contracts (after the various concessions granted to pricing formulae in recent years). This appears to be marginally cheaper than estimates of Turkmen gas at the Chinese border (USD 11.00-11.50/MMBtu). And importantly, it is well

Source: Gazprom

Offshore World | 37 | June - July 2014

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south of recently signed Asian LNG contracts which are closer to USD 16/MMBTu at current oil prices. The Politics Russia looks to have accepted price concessions to get the deal done at a time when Europe & the US are expressing concerns around security of supply from dependence on Russian energy exports. It is no coincidence that the deal has been struck in the midst of the political jousting around Ukrainian sovereignty. But the Russians have exaggerated the level of competition for Russian gas. Alexey Miller, CEO Gazprom, recently has stated that “Europe has lost the competition global for LNG, and in a single day it has just lost the competition for the world’s pipeline gas as well”. Talk like this makes impressive headlines back in Russia, but Russian exports are not a question of ‘either/or’ to Europe vs China. The gas for the Chinese deal is currently ‘stranded’ in east Siberia with no infrastructure linking it to the West Siberian producing province (which supplies Europe and which has some 100 bcma of excess production capacity). If there was really such a squeeze on Russian gas, China would not have been able to beat the deal price down to the extent that it has managed. The deal is important to China but Russia is only one of a diversified mix of supply sources for the Chinese including: • Domestic Production: China has a substantial unconventional gas resources with the government targeting 80 bcma of shale gas production by 2020 (although realistically by 2020 production will likely fall well short of this). • Turkmenistan, Uzbekistan & Kazakhstan Pipeline Gas: China is currently importing around 20 bcma a number that could triple by the start of next decade, and with potential to increase further if pipeline capacity can be expanded, given Turkmenistan’s massive reserves. • LNG: China imported about 25 bcm in 2013 but is rapidly developing more regas capacity and is an investor in a number of upstream and liquefaction projects, both under construction and planned (e.g. in Australia, East Africa and Canada). Nevertheless, it is reasonable to expect that the pricing of Russian pipeline gas may take on a very important role in influencing pricing in the evolving Asian gas market. The Importance of Pricing The new Russia-China deal at around USD 10/MMBtu (given current oil pricing) suggests Russia is at least initially willing to sell gas at the Chinese border at a similar price level to that of its European supply contracts. But the deal also facilitates development of Russian East coast LNG sales. For Russia this deal is a strategic enabler which allows them to: • Increase future pipeline supply from East Siberian fields to China, at (what Russia hopes would be) higher price levels • Export LNG to other Asian buyers via east coast terminals on ‘traditional’ oil indexed terms • Potentially pave the way for the previously tabled Altai pipeline route to transport West Siberian gas into North West China – thus eventually monetising the 100 bcma or so of ‘surplus’ Russian production capacity www.oswindia.com

The recent Russia-China pipeline deal (which took 10 years to come to fruition) has clearly improved Russia’s current strategic positioning vis-a-vis the Asian market. However future developments in the wider supply arena and China’s future strategic positioning may frustrate some of Russia’s aims in this regard. Firstly, the monetisation of 38 bcma of otherwise ‘stranded’ East Siberian gas represents a reduction in Asian LNG demand of 38 bcma of LNG (all other things being equal) and hence this volume will be available to challenge Russia’s pipeline gas market share in Europe. Secondly, a mild European and Asian winter has seen European hub prices and Asian spot LNG fall sharply. And despite the outlook of a slow restart of Japanese nuclear plants, new supply is on the way with the PNG LNG project soon to start up and the first of many new Australian LNG projects coming onstream next year. As a result, sentiment is moving towards the ‘oversupply’ scenario. The Third factor is the degree of future success China has in creating supply options and competition, despite the likely continued rapid growth of its natural gas demand. In addition to further Russian pipeline supplies (from East and West Siberia) these include upside in Central Asian pipeline imports, shale gas development if successful, LNG projects with Chinese interests and future spot and contracted LNG supplies. While Russia may be hoping that the pricing of volumes of Russian pipeline gas into China may become an impor tant new Asian price benchmark, it is not clear that this suits China’s future requirements. China’s aims might be better ser ved by maximising its own domestic production and creating competition between different pipeline gas supplies and LNG impor ts. It is quite possible that at some point in the nex t 5 to 10 years, China declares that all impor ts into the countr y be priced on a netback basis from its Shanghai hub, regardless of the aspirations of suppliers. Such a move is more likely to succeed in a well-supplied LNG market. The recent Russia-China 38 bcma pipeline deal ironically makes such an eventuality more achievable.

Courtesy: Timera Energy, a UK-based company, offers senior consulting expertise on value and risk in the global LNG and European energy markets.

Offshore World | 38 | June - July 2014

news features

LNG: Benefits of Long-term Supply Contracts for Indian Buyers India is one of the fastest growing economies in Asia wherein the demand for crude oil and natural gas is increasing at a rapid rate. Natural gas, being a cleaner source of energy, is utilised heavily by sectors (consumers) such as power and fertiliser in India. However, consumers have switched to LNG (Liquefied Natural Gas) to fulfill their demand given the decline in domestic production of natural gas and a lack of pipelines that could potentially fetch gas from Central Asia and Middle East. This article highlights the importance of Indian players signing long-term LNG contracts.

Present Suppliers The Table below highlights the LNG suppliers of India, wherein, Qatar has the largest share in exports to India.

Indian government has a natural gas allocation policy, according to which, sectors such as - Fertilisers, LPG and Power - get the first priority in receiving domestically produced natural gas. This makes LNG a major source of fuel for various other sectors such as Refineries, CGD (City Gas Distribution) and Sponge Iron. These sectors rely heavily on LNG to fulfill their demand.

Country

The natural gas demand in India is expected to outpace the supply by 2019-30, this substantial gap between supply-demand would reach 130 MMTPA (Million Metric Tons Per Annum). This gap can be reduced only by importing LNG. However, feasible import of LNG requires dependable long-term contracts and enough capacity to re-gasify LNG. These long-term contracts provide an option of a continuous supply of gas and encourage investments in terminals required for liquefaction and re-gasification.

Imports (MMTPA)

Percentage Share

Algeria

0.4

Egypt

0.6

Nigeria

1.4

10%

Qatar

10.9

80%

Yemen

0.4

Total

13.7

100%

Source: Journal – LNG Global Challenges, Opportunities and Imperatives for India

Other Suppliers India may look up to other suppliers of LNG such as Algeria, Malaysia and Indonesia which together account for 22 per cent of the global supply of LNG. Regions such as East Africa present greater opportunities for India to strengthen its supply.

LNG – Sourcing in India At present, LNG is imported in India through three types of contracts – Long-term, short-term and spot basis contract. Long-term Contracts: India imports 58 per cent of its LNG under long-term contracts which are generally for 15-20 years. Table 1 shows the existing long-term LNG contracts between Indian Importers & global exporter.

22% Global LNG Suply Come from Countries like Algeria, Malaysia and Indonesia

Table 1: LNG Long-term Contracts in India Importer

Exporter

Volume (MMTPA) Term (Year) Year-Starting Export Year-Signing Contract

Gujarat State Petroleum Corporation BG Group

2.5

2015

2013

Gujarat State Petroleum Corporation Gazprom

2.5

2016

2011

Petronet LNG

Ras Laffan Liquefied Natural Gas Corporation. Ltd. 5.0

2004

N/A

Petronet LNG

Ras Laffan Liquefied Natural Gas Corporation. Ltd. 2.5

2009

N/A

Petronet LNG

Exxon Mobil Corporation

1.5

2015

2009

Petronet LNG

Gazprom

2.5

N/A

2011

Petronet LNG

United LNG LP’s

4.0

2017

2013

GAIL India

Ras Laffan Liquefied Natural Gas Co. Ltd.

GAIL India

Sabine Pass Liquefaction Company

3.5

2017/18

N/A

GAIL India

Gazprom

2.5

2018/19

N/A

GAIL India

US Dominion Cove Point

2.3

2018/20

N/A

Total

28.8

Source: Journal – LNG Global Challenges, Opportunities and Imperatives for India

Offshore World | 39 | June - July 2014

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Also, the fact that it will take years for domestic production to catch up with local demand necessitates buyers to sign long-term contracts. Source

Regime

APM Gas

APM (Administered Price 4.20 Mechanism)

Panna-Mukta-Tapti Fields

Discovered Fields

4.60-5.65

Ravva Field

Discovered Fields

3.50-4.30

Lakshmi and Gauri Field

Discovered Fields

4.60-4.75

Hazira Field

NELP (New Exploration 4.65 Licensing Policy)

NELP

4.20

LNG (spot prices)

Imported Gas

9.00-20.60

LNG (long-term contract Imported Gas prices)

6.24-13.28

Source: Journal – LNG Global Challenges, Opportunities and Imperatives for India

Importance of Long-term Contracts in LNG Value Chain LNG requires heavy investment on both sides – for supplier as well as for buyer. It is not only necessary to maintain supply, but also to ensure that the other half of LNG value chain (comprising of regasification terminals, marketers and end users) is operating smoothly. This requires construction of re-gasification terminals, pipeline infrastructure to distribute gas to customers. So far, investments in LNG business have come from individual companies such as Shell (Hazira Terminal) or Petronet LNG - a consortium formed by oil and gas operators like ONGC, IOCL, GAIL and other foreign firms. These firms have constructed all the re-gasification terminals in India to import LNG and are in the process of expanding the capacity of existing terminals and constructing new terminals as well. The distributors play a key role in plugging the supply-demand gap in India but still their imports do not fully bridge the gap. The current demand of natural gas in India is 272 mmscmd whereas the domestic supply is 111.26 mmscmd. Total LNG imported is 75.96 mmscmd (Dahej terminal – 36 mmscmd; Hazira terminal – 12.96 mmscmd; Dabhol terminal – 18 mmscmd; Kochi terminal – 9 mmscmd). This supply-demand gap is about 85 mmscmd that can potentially be fulfilled by end-consumers if they go ahead and invest in re-gasification plants – a costly proposition indeed. However, the alternative to investing in regasification plants is to ink longterm supply contracts with existing players, which can be a cost effective proposition for the buyers. Those local consumers of natural gas such as power companies, refineries and CGD could lock in long-term supply contracts if they have not already done so. This will ensure that they are not left scrambling for gas supplies when needed. It is imperative for large consumers to start planning for securing the supplies as demand for natural gas is bound to go up in the coming years. This is evident from the fact that for most sectors LNG is becoming an important source of feedstock. www.oswindia.com

Price (USD/MMBTU)

Source: Journal – LNG Global Challenges, Opportunities and Imperatives for India

Fertilisers Indian government has made it mandatory for all urea (a widely used fertiliser) production plants to be converted to gas-based plants from naptha since gas-based plants require less investment and are more efficient. This makes fertiliser a large consumer of natural gas. Power Sector It is cheaper to generate power through coal as compared to natural gas. However, few issues like lack of domestic coal development, high cost of imported coal, and increase in the usage of captive power plants have made power sector rely heavily on natural gas. Refineries For refineries, natural gas is a cleaner source of fuel and also acts as an alternative for naptha which is used for hydrogen production in refineries, making them the largest consumers of LNG. City Gas Distribution Due to lack of availability of domestically produced natural gas, this sector has to completely depend on LNG to fulfill its demand. It is the third largest consumer of LNG in India after refineries and power. With LNG supply expected to increase in 2017, these end-consumers can directly strike long-term contracts with suppliers of LNG like most of the end-consumers in Japan, Korea does.

Local consumers of natural gas such as power companies, refineries and CGD could lock in longterm supply contracts to ensure that they are not left scrambling for gas supplies when needed.

Offshore World | 40 | June - July 2014

Prime consumers of LNG can directly sign long-term contracts with LNG producers and also acquire stakes in LNG projects at nascent stages just like the firms in Europe, Japan, Korea does. December 2013 - January 2014 Vol. 10 No. 6 ` 150

February - March 2014 Vol. 11 No. 2 ` 150

OFFSHORE WORLD

Benefits of Long-term Contracts • Long-term contracts have their own benefits as they ensure that there is no uncertainty in the supply of LNG for users (downstream) • This is turn reduces the risks involved in the capacity investments • In volatile market, long-term contracts ensure price stability for suppliers.

VOL 11 NO 2

Advanced Technologies Leaders Speak: Oil & Gas World Expo 2014 >> Pg 6

FEBRUARY - MARCH 2014 Mumbai ` 150

Recommendation Prime consumers of LNG can directly sign long-term contracts with LNG producers. They can also acquire stakes in LNG projects at nascent stages. This way they can secure their supply just like the firms in Europe, Japan, Korea does. For smaller consumers like CGD, steel, etc, imported LNG is available at higher price. Here, it is important for the suppliers and marketers of LNG to sign contracts/deals which are economical for smaller players in the industry. Long-term contracts assure supply and are cheaper than the spot contracts. Going forward, these contracts would gain popularity in keeping pace with the demand. References • Economic Times • Journals, Articles, Newsletters • Referred from an online journal – LNG Global Challenges, Opportunities and Imperatives for India

(The views expressed by the author are his personal opinions.)

OiL

World Expo 2016

International Exhibition & Conference February 2016 | Mumbai, India

Dear Readers, Offshore World (OSW), a bimonthly publication of Jasubhai Media & CHEMTECH Foundation, disseminates into the entire hydrocarbon industry from upstream to midstream to downstream. The endeavour of OSW is to become a vehicle in making “Hydrocarbon Vision 2025” a reality in terms of technologies, markets and new directions, and to stand as a medium of reflection of the achievements and aspirations of Indian hydrocarbon industry. OSW, the niche bi-monthly publication, has been extensively covered technological advances, reviews & forecasts, new products, processes & solutions, upcoming projects, market trends, R&D, events, products review, book review, industry surveys, environment management, news & views, interviews, awards, outstanding performance by individuals & organizations, case studies and practice oriented and well researched articles and features by industry experts for more than a decade. You can contribute in the magazine with technical articles, case studies, and product write-ups. The length of the article should not exceed 1500 words with maximum three illustrations, images, graphs, charts, etc. All the images should be high resolution (300 DPI) and attached separately in JPEG or JPG format. Have a look at Editorial calnder of OSW - www.oswindia.com To know more about Chemtech Foundation, Jasubhai Media and other publication and events, please our website –w w w. chemtech-online.com.

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Offshore World | 41 | June - July 2014

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Iraq Crisis: Impact on Indian Economy Islamist Militant group ISIS has upraised a wide-ranging crisis in war-torn Iraq; where leeway of arriving at normalcy in the near future appears very slim. The article raises the burning question is - “Whether the sectarian violence in Iraq have any impact on the Indian economy?”

India is profoundly dependent on the Middle East to fulfill its oil requirements out of which around 13 per cent is being imported through Iraq only, which makes Iraq the second largest oil exporter for India. India imports nearly 4 million barrels per day (bpd) of crude oil; more than a third of its total import bill -of which more than half a million bpd come from Iraq. The escalating worries from Sunni rebels in Iraq have upraised an alarming state for Indian economy. India, having a partial yet important enslavement on Iraq has already started facing the heat in many ways.

Crude oil prices have increased sharply and pecked 9 months’ highest level recently. Such a massive upsurge in prices will increase the import cost, thus putting pressure on subsidies. The Indian government spends approximately USD 24 billion a year on diesel and cooking fuel subsidies, with a one dollar rise in oil price leading to USD 1.3 billion additional burden on the annual subsidy bill, aggravating concerns on the government’s fiscal balances. Subsidy grants are assessed quarterly, based on the average oil price in the preceding quarter, which means that the higher expected oil price would increase the subsidy burden in the second half of this fiscal. Economy Spill-overs Further, rising crude oil prices would translate into sustained diesel price hikes. Currently, India is buying crude oil at USD 111.25 a barrel (or ` 6,688 per barrel). Increase in crude oil price to USD 120 a barrel, translating into a rupee realisation of ` 7,200 a barrel, would subsequently result in the diesel price hike of ` 5 per litre. Sustained due-North oil prices for few more months would therefore result in a significant negative impact on India’s fiscal deficit and economic growth. As per estimates, this would increase the subsidy costs by ` 200-225 billion in the current fiscal year, raising apprehensions over the achievement of a fiscal deficit target of 4.1 per cent of GDP, acceded by the previous government. The newly elected Finance Minister Arun Jaitley not only have to derive the prudent measures to lessen the frightening situation of food inflation but also have to face the risk of swelling import bills. Albeit, India’s Consumer Price Index (CPI) inflation for the month of May eased to 8.3 per cent, still enough to raise eyebrows and the Wholesale Price Index (WPI) inflation came stronger than expected at 6.0 per cent, a five-month high. This of course portrays that inflation remains on the top of the list of priority based concerns in government’s kitty. Amid mounting oil prices, government may announce a fuel price hike where a ` 1/litre increase in diesel price could lead to 0.8-1 per cent point rise in retail inflation, again a shattering impact on Indian economy, which is already experiencing a low growth rate since last few years. The consequent impact in terms of higher transport cost puts further pressure on inflation. High inflation may cause a fall in demand and would www.oswindia.com

significantly affect the industrial growth, which in turn may lead to depressing state of facility shutdown and layoffs. The Indian currency also felt the burn of the escalating Iraq unrest as recently, the rupee touched its lowest level since late April as higher oil prices are straining government finances. The value of rupee is directly proportional to India’s Current Account Deficit (CAD). CAD is the amount that India owes in foreign currency to the world. With soaring oil prices, any subsequent rise in import bills would widen the current account gap which may exert a pressure on Indian rupee. India may not be Affected? Despite the intensifying Iraq flux, the Reserve Bank of India governor Raghuram Rajan is not too stressed or concerned and stated that as far as the external cues are concerned, India is in a much better position than last year and is well prepared to face such global uncertainties. He further supported his statement by saying that sufficient reserves (thanks to the effective measures timely taken in last one year), comparatively low CAD (from USD 21.8 billion in June 2013 to USD 4.1 billion in December 2013) and increased foreign exchange reserves (from USD 275 billion in August 2013 to USD 312 billion for the week ended June 6, 2014) would underpin the Indian economy. Another reason why India need not to fear from Iraq’s wobbly situation is the fact that most of India’s oil pipeline comes from southern Iraq. So far the militants have taken control of Iraq’s largest oil refinery in Baiji, northern Iraq, which is a major supplier of oil to Iraq’s domestic market and the oilfields in southern Iraq are unaffected. This means, the supply interruption could intensify the scarcity of electricity and availability of gasoline in Iraq only. However, the government is closely monitoring the entire situation to take the speedy measures required, if any. To evade this type of economic jolts from external fronts in a long run; the government has asked energy companies to prepare a contingency plan for oil imports in order to curb the pressure of stoking inflation and disturbing fiscal calculations. Back on Track Inspite of dependency on Middle East for oil imports; the economic state of India is more reliant on how the domestic factors will shape up. All eyes are now on the new government’s reform measures and policy actions. Even the global investors are keenly observing that whether the new government would be able to deliver the great expectations of putting the Indian economy back on a new growth trajectory.

Offshore World | 42 | June - July 2014

Swati Saxena Manager – Equity Retail Research Religare Securities Ltd

news features

India’s Oil Supply & Demand Gap Widening The energy demand is on rise with social and economic development in the country and the current hydrocarbon demand is much more than the domestic crude oil production. The article outlines India’s latest oil production & demand, import scenario and overseas upstream assets acquisition overview.

The gap between India’s oil demand and supply is widening, as demand reached nearly 3.7 million barrels per day (bbl/d) in 2013 compared to less than 1 million bbl/d of total liquids production. It is expected that India’s demand will more than double to 8.2 million bbl/d by 2040, while domestic production will remain relatively flat, hovering around 1 million bbl/d (Source: US Energy Information Administration). India Petroleum & Other Liquids Production and Consumption 2000-14

Oil Import India has increased its total net oil imports from 42 per cent of demand in 1990 to an estimated 71 per cent of demand in 2012. India’s demand for crude oil and petroleum products is projected to continue rising, barring a serious global economic recession. India’s crude oil imports reached nearly 3.9 million bbl/d in 2013. Saudi Arabia is India’s largest oil supplier, with a 20 per cent share of crude oil imports. In total, approximately 62 per cent of India’s imported crude oil came from Middle East countries. The second-biggest source of imports is the Western Hemisphere (19 per cent), with the majority of that crude oil coming from Venezuela. Africa contributed 16 per cent of India’s crude oil imports (Source: Global Trade Atlas). India Petroleum & Other Liquids Imports by Source 2013

Source: US Energy Information Administration

Exploration and Production India held nearly 5.7 billion barrels of proved oil reserves at the beginning of 2014 (Source: Oil & Gas Journal). About 44 per cent of reserves are onshore resources, while 56 per cent are offshore. Most reserves are found in the western part of India, particularly the Western offshore area near Gujarat and Rajasthan. The Assam-Arakan basin in the northeastern part of the country is also an important oil-producing region and contains more than 23 per cent of the country’s reserves and 12 per cent of the production (Source: Ministry of Petroleum & Natural Gas, India). India Crude Oil Production by Region 2013

Source: Global Trade Atlas

Overseas Acquisition In view of unfavorable demand–supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas is one of the important components to shield the domestic energy sector from global price volatility. Indian companies hold large stakes in Sudan’s GNOP block, Russia’s Sakhalin-1 project, and Venezuela’s San Cristobal and Carabobo blocks. Amerada Hess Corporation sold key oil fields in Azerbaijan to ONGC in 2012. Also, ONGC, OIL, and RIL have taken stakes in gas plays in Mozambique, shale gas assets in the United States and Canada, and oil and gas assets in Myanmar, and the companies are actively pursuing other overseas upstream deals. Oil CPSEs viz. OVL, IOC, OIL, BPCL, HPCL and GAIL have acquired E&P assets in more than 20 countries. Oil & Natural Gas Corporation Videsh Limited (OVL) has produced about 8.357 Million Metric Tonnes (MMT) of oil and equivalent gas during the year 2013-14 from its assets abroad in Sudan, Vietnam, Venezuela, Russia, Syria, Brazil, South Sudan and Colombia. The estimated crude oil & natural gas production target in 2014-15 is about 8.155 MMT of oil and equivalent gas (Source: ONGC).

Source: Ministry of Petroleum & Natural Gas, India

- Rakesh Roy Offshore World | 43 | June - July 2014

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OSW Marketing Intiative

Inspectahire relies on the FLIR GF320 Optica Gas Imaging camera for maintenance inspections and hydrocarbon leak detection in the offshore oil and gas industry Established in 1981, Inspectahire is a leading international supplier of specialist remote visual inspection technology and solutions to companies in many industries around the world. Supported by the most advanced technologies around, Inspectahire helps its customers manage their safety, profitability and environmental impact of their assets. When the company is tasked with the detection of fugitive hydrocarbon emissions, FLIRs GF320 Optical Gas Imaging (OGI) camera is their preferred technology to use.

Inspectahire offers equipment rental, contracting and project engineering services supported by a team of skilled engineers who have a wealth of inspection knowledge and experience. Their expertise extends to a wide range of equipment and assets, both onshore and offshore, and in all environments - including harsh and hazardous. All Inspectahires advanced inspection solutions are carried out in accordance with the requirements of ISO 9001 best practice. Oil & gas industry Having worked for three decades in the O i l & G a s i n d u s t r y, b o t h i n t h e N o r t h Sea and worldwide, Inspectahire

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has built up a strong expertise in this sector. Safety and cost are two of the biggest concerns in the offshore oil and gas industry today. Inspectahire realizes this as no other and therefore aims to tackle those challenges by using the best technologies available. The offshore oil and gas industry are proactive in their search for the best technologies for detecting emissions that may affect the safety, profitability and environmental impact of their assets, comments Cailean Forrester, Managing Director of Inspectahire. At Inspectahire we strive to identify and offer the best available technological solutions for all remote inspection scenarios.

Offshore World | 44 | June -July 2014

OSW Marketing Intiative

Dangerous gas leaks are a concern to every oil and gas production plant. Not only do some of the gases harm the environment, butthe leaks also cost companies substantial amounts of money. The company has been using thermal imaging cameras for a very long time to detect dangerous gas leaks,comments Cailean Forrester Thanks to thermal imaging cameras, we can easily detect gases in difficult to reach or hazardous locations. And we can help companies prevent costly downtime of their production plant. Contact measurement technologies vs. thermal imaging We have been using certain contact measurement tools like laser detectors or leaks sniffers,says Cailean Forrester. But the problem is that you have to go right up to the object, which is not always safe or even possible. In other words, this approach is

limited and not very precise. With a thermal imaging camera like the GF320 however, you can keep a safe distance and still detect gas leaks with great precision.

Accurate and ergonomic The Inspec tahire team is using the GF320 opticalgasimagingcameraformaintenance

inspections and for all its hydrocarbon detection jobs, in hydrocarbon production plants or for the inspection of any material that uses hydrocarbon as a fuel. The GF320 camera offers a range of tangible benefits compared to traditional hydrocarbon leak sniffers, because it can scan a broader area much more rapidly and monitor areas that are difficult to reach with contact measurement tools. The portable camera also greatly improves operator safety, by detecting emission at safe distance. Th e c a m e r a i s v e r y e rg o n o m i c a n d v e r y sensitive,comments Cailean Forrester. If a hydrocarbon leak is there, you will certainly see it with the GF320 camera, even if it is a small one. Small leaks can become big ones, that is why it is important to be able to detect them in an early stage. With the GF320, we are sure of an accurate and reliable detection.

Offshore World | 45 | June -July 2014

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Hydrographic and Geophysical Survey Systems

Established in 2010, Unique Hydrographic Systems Pvt Ltd (UHSPL) represents Unique Maritime Group in India, offers the services and capabilities of the Unique Maritime Group to customers in the Indian subcontinent. Based in Navi Mumbai, the comapny provides a complete range of specialised engineering solutions and services for the marine, diving and survey industries within the region. With one of the largest rental pools in the world, we offer a comprehensive range of equipment for various projects, including those related to hydrographic & geophysical surveys. The company also has a large inventory of survey and oceanographic rental equipment and classed diving equipment such as saturation diving systems, air and mixed gas diving systems, launch and recovery systems, winches and other diving related products. Wh i l e H yd ro g r a p h i c s u r ve y d e a l s w i t h t h e measurement and description of features which affect maritime navigation, marine construction, dredging, oil exploration/drilling, pipeline damage assessment and related disciplines, geophysical survey chiefly deals with spatial studies. We also have exclusive representations with some of the biggest global companies specialising in the production of top-range survey equipment. Aided by the technical expertise of our engineers, we are able to supply, install, maintain and provide full equipment training for our customers wherever in the world they may be. Our wide range of survey solutions can be classified as follows: • Supply & Rental of Hydrographic, Oceanographic, Geophysical & Geotechnical Survey Equipment • Complete Integrated Survey Solutions • Environmental & Oceanographic Monitoring Solutions • Remotely Operated or Autonomous Operated Under water Vehicles for Marine, Sur vey & Inspection • Underwater Security Solutions Unique Hydrographic Systems Pvt Ltd has a wide range of equipments available in our rental pool www.oswindia.com

for hydrographic and geophysical survey. Some of these include side scan sonars, Delta Sparkers, Multibeam echosounders, Acoustic Doppler Current Profilers among many others. Our project capabilities also include: • DGPS Network • Airborne Sensor Testing • Unmanned Aerial Systems • Marine Salvage Operations • Environmental Monitoring Systems • Automatic Weather Station Networks • Canal Skimming and Dredging Systems • River Canal Dredging Machines and Services • RTDAS – Real Time Data Acquisition Systems • Dynamic Underkeel Clearance System (DUKC) UHSPL was recently contacted for the hire of sur vey equipment for a project which mainly focused on the development of Greenfield port at Mbora, Senegal. The project was Hydrographic, Geophysical, and Oceanographic in nature and included the use of several survey equipments like the Side scan sonar and Marine Magnetometers. We were also contacted for the hire of equipment for a survey project that involved the development of a port at Gopalpur, Odisha. Equipments hired for this job were: Multibeam echo sounders, Gy ro s, M a r i n e M a g n e to m e te r a n d S i d e s c a n sonar systems. Another notewor thy projec t involved the use of our equipments and technical exper tise for a Myanmar-based Project. The project required t h e u s e o f e q u i p m e nt s f o r va r i o u s k i n d s o f hydrographic surveys such as pre-dredging surveys, progress Surveys for monitoring daily progress, Interim sur veys and Post Dredging Sur veys for balance dredging work. The project envisages an upgradation of a port on the south-western coast of Myanmar and development of a 225kmlong waterway between the port and Setpyitpyin (Kaletwa) in Myanmar along the Kaladan, which f l o w s f ro m M i zo ra m . Th e Fa c i l i t y e nv i s a g e s connectivity between Indian Ports on the eastern seaboard and the particular Port in Myanmar and Offshore World | 46 | June -July 2014

Bow mounted multibeam transducer arrangement on a vessel

C-Nav DGPS equipment in our rental pool

ODOM Echotrac single beam echosounder

TRDI Sentinel Workhorse (ADCP + Waves Array)

OSW Marketing Intiative then through riverine transport and by road to Mizoram, thereby providing an alternate route for transport of goods to North-East India. The project has been entirely funded by the Government of India. The entire duration of dredging including period for installation of Navigational aids is expected to be approximately 10 months. Our single beam echo-sounders were among the few equipment used which are fully functional with dual channel and allows for fast acquisition of bathymetric survey data. The equipment can be operated from any vessel as per requirements. It is chiefly used by various departments like port & harbor authorities, educational institutions and environmental agencies in applications ranging from dredging and engineering surveys to beach profiling for environmental studies. The project also required a smart software package for hydrographic surveying and processing of data. We provided them with our HYPACK®, which is a Windows based software package integrated to provide complete survey results from the beginning till the end. A hydrographic project we are proud to be associated with was done by our office Unique System FZE in the UAE for our client in Abu Dhabi which involved the installation of EM 2040 multibeam echo sounder units in 2 different vessels at Abu Dhabi, UAE. The other equipments that were set up by our team included the TSS Motion Sensor, Valeport minisound velocity profiler and the mini SVS sound velocity sensor. The Vessels are installed with the New Generation high performance shallow water Dual Rx Single Swath multibeam Echosounder from Kongsberg called the EM 2040 D. The EM 2040 is a new advanced multibeam echo sounder with extremely high resolution and is the first system to bring all the advanced features of the deep water multibeams to the near bottom sounding environment. General Setup of Instruments in the Vessel: The project involved 2 identical vessels having 12.2m length and 3.35m width with powerful engines suitable for maneuvering and keeping straight survey lines. The Vessels size and draft gives it the ability to survey during normal sea conditions. The vessel has a draft of approximately 0.7m below the waterline.

The Sonar transducers are installed on a vertical boom at the BOW of both the vessels. It can be manually lowered and raised using a special arrangement which is fixed permanently to the top of the bow mount structure. During the start of the survey, the transducer boom is lowered and locked into position using a locking assembly on the bottom side of the movable assembly. Upon completion of the day’s survey the transducer boom is raised by undoing the lock and manually winding the steer. This protects the sensitive and expensive transducers from collisions, thus preventing conditions such as high-speed fatigue and other unforeseen incidences which could occur when it is operating beyond the normal surveying conditions. The transducer assembly is a downward looking rigid stainless steel frame connected at the end of the stable vertical boom where the transducer can be connected below the frame. The sound velocity probe for surface sound velocity recording was also accommodated on the same frame. The whole assembly is lowered into water during the time of data collection. Trials were conducted at different vessel speeds with different loads for both the boats and found that the installation was rigid and stable at all conditions and well under tolerance limits. The TSS MAHRS Motion sensor is fixed inside the survey room close to the centre line, and inside the specified cabin to avoid any installation disturbance. This system is used for the compensation of Roll, Pitch, and Heave of the vessel and also to obtain true heading data. The Position information is supplied by a Trimble SPS GPS unit with RTK corrections received from 3G mobile network. Both the PU’s and the SIS Workstation are installed in a 19” rack mounted on the working table, next to the dual monitors. A sound velocity profiling is required in-order to compensate for the sound velocity error effects. The Valeport Mini SV Profiler is used for this purpose which is portable and deployed whenever profile is required. The data is downloaded and converted to SIS acceptable format and entered to SIS which then rectifies all sound velocity errors. An SV Probe is connected at the transducer head to receive the online sound velocity reading in SIS directly. After finishing installation, all physical and angular offsets of the vessel and sensors were carried out by a professional Land Surveying company. Offshore World | 47 | June -July 2014

Co m m i s s i o n i n g : Co m m i s s i o n i n g o f t h e f i r s t Vessel was carried out at Esnad Por t in Abu Dhabi by our team of engineers along with the assistance of Kongsberg in the presence of the engineering and survey team of the client. The HAT results were tabulated and handed over to the client for verification. The system was found to be working properly receiving data from all sensors. A calibration was done to ensure system performance. During calibration, the correction values were obtained and these values were applied as required in SIS software. The SAT survey was also post processed to ensure that the system is able to perform as given in the product description. The weather conditions were good with sea state 0 and wind force 0. The product description for EM 2040 states that the total RMS accuracy (assuming good external sensor data and accurate aligned transducers and sensors) is expected to be better than: 0,10% of the depth (from vertical up to 45 degrees) ; 0,15% of the depth (up to 60 degrees) ; 0,30% of the depth (up to 70 degrees). The statistic analyses show that the mean noise for the whole area is within 0,10% of water depth and thereby within the specifications. Commissioning of the second Vessel was also carried out in a similar fashion at Esnad Port in Abu Dhabi by our team of engineers along with the assistance of Kongsberg in the presence of the engineering and sur vey team of the client. The HAT results were tabulated and handed over to the client for verification. The system was found to be working properly receiving data from all sensors. A calibration was done to ensure system performance. During calibration, the correction values were obtained and these values were applied as required in SIS software. The SAT survey was post processed again to ensure that the system is able to perform as given in the product description. The weather conditions were good with sea state 0 and wind force 0. Data Verification: Data verification survey was carried out using our Hypack /Hysweep software at a later stage to check the quality of EM 2040 D system onboard both vessels with the obtained calibration results applied in SIS. Cross line survey was carried out and the results were compared and found to be within IHO Special order standards. www.oswindia.com

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India Gas Price Hike to be Balance between Reforms & Interest of Poor: OilMin New Delhi: As a lot of speculation over the impending natural gas price hike, Dharmendra Pradhan, Oil Minister, said that a right decision will be taken at the right time by balancing the urgency of reforms with the interest of the poor. D h a r m e n d ra Pra d h a n Oil Minister

He said that the government is examining all aspects of the issue. We are deeply into it. A

Pricing Reforms are much Needed to Escalate India’s Gas Production: IHS New Delhi: If immediate pricing reforms of gas are not implemented, India’s natural gas production will stagnate at current levels and the country will have to import heavily to meet its growing energy demand, a report by US-based consultancy IHS has warned. The report said that low regulated gas prices have precipitated a supply shortfall in India, but proposed that reforms to the pricing formula could yield higher domestic production and boost India’s economy. With the current gas price USD 4.2 per MBTU and no reforms, the production will stagnate at 3 billion cubic feet (Bcf ) per day and India will need to import around 9.7 bcf per day LNG to meet demand. The unmet demand would imply a significant drag on India’s economy, the report said. The report suggested if rates are allowed to increase USD 8.5 per MBTU, as set out in the reforms initiated by the previous government, an additional output of 1.95 Bcf per day could come in 10 years.

GAIL to Import LNG Cargoes Mumbai: GAIL India Ltd, the public sector gas company, is planning to import 36 liquefied natural gas (LNG) cargoes during the current financial year to meet the acute shortage of gas in the country in 2014- 15. The company had imported 26 cargoes in 2013- 14. While 18 of these shiploads will be from medium-term supplies that have been contracted, the rest will be picked up from the spot market. The company plans to charter 6- 8 LNG carriers for shipping gas from the US to India. GAIL aims to sign more deals with the US for sourcing LNG as it hopes to lock-in customers for existing contracts by the end of July, company officials informed. GAIL has a deal to buy 3.5 million tonnes per annum (mtpa) of LNG for 20 years from the US-based Cheniere Energy and has also booked capacity for another 2.3 mtpa at Dominion Energy’s Cove Point liquefaction plant. GAIL aims to trade 1 mtpa of the super-cooled gas sourced from the US through its trading arm in Singapore. For future deals with the US, Gail plans to strike back-to- back agreements with buyers and sellers instead of first striking deals and then looking for customers. www.oswindia.com

right decision will be taken at the right time. Refusing to speculate on the timing or what the decision will be, Pradhan said that bringing back the ‘derailed’ economy on track is the top most priority for the government and it will do whatever it takes for bring back the momentum. The first increase in natural gas prices in four years was to be originally effective from April 1 2014. However, before a new rate could be unveiled, the general elections were announced and its implementation got deferred. This hike in gas price could be extended to end of the year.

Oil & Gas Industry Seeks Sanctity of PSCs from New Govt New Delhi: Despite of big discoveries, India’s exploration activity has not up to the mark due to arbitrary policy changes, lack of respect for sanctity of contracts and deteriorating risk-reward ratio, but the situation can be revived with proper measures, the exploration industry has told the new government. Seismic surveys, a key activity in the hunt for hydrocarbons, plummeted 91 per cent in the five years to 2012-13 in onshore blocks and 95 per cent in the more challenging offshore regions. Further, the number of wells drilled has dipped 22 per cent in the country, the Association of Oil and Gas Operators (AOGO) has estimated. AOGO urges on urgently needs to step up exploration as it imports 80 per cent of the oil it consumes. Private risk capital has dried up. Exploration activity has nosedived over the last five years, said AOGO, which represents top companies in the private and public sector including BP Plc, ONGC, Reliance Industries, BG, Cairn India and others, said in a letter to the cabinet secretary. It has suggested that the country must realistically assess its geology, focus on providing geological information, improve the risk-reward ratio for investors and remove, or at least minimize unnecessary controls that do not add value. Develop robust PSC-based economic model with the help of experts for understanding of overall economics by key decision makers, it said. Top industry executives say that the oil ministry has not honoured the sanctity of contracts and interpreted it differently from time to time depending on what is expedient and convenient. This, executives say, is huge deterrent for exploration activity.

India may Get LNG from Yamal Project New Delhi: Energy-starved India is likely to get liquefied natural gas (LNG) from the Novatek-operated Yamal LNG project. A Gazprom group company has signed a framework agreement with privately-held Novatek to buy 3 million tonnes of LNG per annum from Yamal, where a gas liquefying plant is under construction. A full-fledged agreement between Gazprom Marketing & Trading and Novatek will be signed in the near future and is expected to be valid for 20 years. Most of the gas is destined for India. Gazprom can use the gas from Yamal to supply the 2.5 million tonnes that is contracted to GAIL. By supplying Yamal LNG to GAIL, Gazprom could free up the 1 million tonnes from Sakhalin-2, meant for India, and sell it in the Far East.

Offshore World | 48 | June - July 2014

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India Private Oil Refiners GRMs may likely Reduce New Delhi: Private Indian refiners’ gross refining margins (GRMs) is likely easing as capacity expansion being added in West Asia and China, beside the US flooding the South American and European markets with refined products. While China expected to add about 1.5 million barrels a day capacity over 2015-2018, and Saudi Arabia alone adding a total of 1.2 million barrels a day capacity over three new refineries between 2013 and 2019, they will have feedstock advantage and produce ultra-clean fuels destined for the European market. Export-oriented Indian private refiners such as Reliance and Essar might suffer the most from the US, which is sending increasing amounts of product into South America and Europe. The US refiners have a significant cost advantage from the growing flood of domestic tight oil production, currently affording them the best margins in the world. Cracking margins against Light Louisiana Sweet on the US Gulf Coast have been as much as 20 times higher than Dubai cracking margins in Singapore at times in previous months.

Bangladesh to Get Gas from India Kolkata: India’s H-Energy East Coast Private Ltd (HEECPL) has sought clearance for a Liquefied Natural Gas (LNG) terminal in West Bengal’s Digha that will also supply gas to Bangladesh. This will help Bangladesh tide over its now-chronic gas shortages until such time it finds fresh deposits of natural gas and gets to use them mainly for generating power. The 8 million tonne LNG terminal will come up in the Digha offshore on the West Bengal coast and will not only supply gas to north and east India but also to Bangladesh. Through a 2050-km long pipeline from Haldia port in West Bengal to Jagdishpur in Uttar Pradesh, it will supply LNG to industrial locations on the upcoming Amritsar-Kolkata growth corridor in several Indian states between Punjab and West Bengal. The pipeline will be laid by the state-owned Gas Authority of India Limited (GAIL) at the cost of ` 7,060 crore.

CEO Elango Quits Cairn India

It is predicted that by 2015, China could be sitting on around four million barrels a day of excess refining capacity, and some 2.5 million barrels a day of capacity will be added in the Middle East region by the turn of the century, with a total of nearly 3.6 million barrels a day of the currently planned projects seen likely coming to fruition in the coming decades.

New Delhi: After waiting in the wings as interim chief executive of Anil Agarwal-led Cairn India Limited for two years, P Elango has quit citing personal reasons. The former Oil and Natural Gas Corporation executive had taken charge in August 2012 after Rahul Dhir. Elango was with Cairn India for 18 years and was initially involved with their Ravva field off Andhra Pradesh. The board has accepted the resignation and made Chief Financial Officer Sudhir Mathur the new interim CEO.

Public sector refiners’ margins are expected to continue growing, as these largely cater to the domestic market. They would not be impacted by the changing international scene unless India moves towards complete market deregulation and Reliance and Essar make a retail push within the countr y.

Navin Agarwal, Chairman, Cairn India, said that Elango has had a successful stint at Cairn. He leaves Cairn India in the hands of a strong technical and business organisation. Cairn India has a terrific future and I am confident that Sudhir Mathur and the team will steer the organisation to realise its true potential.

Oil PSUs’ Revenue Loss Could Halve by end-FY16

BPCL, HPCL may Get Crude from Crain Mumbai: State-owned Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) have shown interest in buying crude oil from Cairn India Ltd. Cairn sells crude only to two Gujarat-based private refiners — Reliance Industries Ltd in Jamnagar and Essar Oil Ltd in Vadinar. A 590-km pipeline moves crude oil from Cairn’s Barmer fields in Rajasthan to Salaya in Jamnagar district.

New Delhi: Interest cost has risen due to a significant rise in working capital requirements, owing to delay in payments from the govt. Given the efforts to move towards market-linked diesel prices and an expected decline in crude oil prices, under-recoveries on petroleum products are expected to drop to half those in 2013-14 through this financial year and the next, said a report by CRISIL.

With a new 79-km pipeline connecting Salaya to a terminal in the Arabian Sea close to commissioning, Cairn is seeking new customers to supply crude through the sea route.

PAT (profit after tax) of downstream companies will increase by ` 33-36 billion on a year-on-year basis in 2014-15 and by another ` 7-10 billion in 201516, as their interest cost will decline and they won’t have an under-recovery burden, the report said.

Once the pipeline from Cairn’s Barmer field in Rajasthan reaches the coastal terminal in Gujarat, these state-owned firms could source crude from it. Selling to the state-run marketers could help Cairn potentially improve its earnings over time.

On the other hand, upstream companies, which typically share 40-50 per cent of the total under-recovery burden, will see a sharper ` 105-120 billion yearon-year improvement in PAT in 2014-15 and a further improvement of ` 70-75 billion in 2015-16.

Offshore World | 49 | June - July 2014

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India Kuwait, Abu Dhabi may Store Crude Indian Caverns

India Replaces US as Largest Importer of Nigeria’s Crude

New Delhi: Oil-rich Kuwait and Abu Dhabi are in talks with India to store about 2 million tonne of crude oil in Indian caverns, which the country could use during emergencies such as supply constraint due to geo-political turmoil in producing countries.

New Delhi: India has replaced the USA as the largest importer of Nigeria’s crude with China and Malaysia following closely. The US, which had traditionally taken the bulk of Nigeria’s crude, has in recent months drastically reduced its demand, which now stands at about 250,000 barrels per day.

Kuwait Petroleum Corporation (KPC) and Abu Dhabi National Oil Company (ADNOC) have confirmed that they are willing to fill crude in two compartments of caverns at Visakhapatnam and Mangalore.

India, however, now purchases some 30 per cent of Nigeria’s daily crude production which currently hovers around 2.5 million barrels.

Govt Slaps Additional Penalty on RIL India Logs Largest Decline in Gas Production, Consumption in 2013 New Delhi: India, the fourth largest energy consumer globally, recorded the largest volumetric decline in natural gas production and consumption last year, according to BP Statistical Review of World Energy 2014. Natural gas production in the country fell a massive 16.3 per cent to 33.7 billion cubic meters from 40.3 bcm in the previous year. India, which is world’s 11 th largest consumer of gas, saw consumption fall by 12.2 per cent to 51.4 bcm in 2013 from 58.8 bcm in the previous year. On both counts, India “recorded the largest volumetric decline in the world,” it said. However, it recorded the second largest volumetric increase in coal consumption on record and accounted for 21 per cent of global growth. While coal production was up 0.1 per cent at 228.8 million tons of oil equivalent, consumption soared 7.6 per cent to 324.3 million tons. The review said India’s oil production was almost unchanged at 894,000 barrels per day (42 million tons) while consumption was up 1.2 per cent at 3.72 million bpd (175.2 million tons).

Mumbai: The government has slapped an additional penalty of USD 579 million on Reliance Industries for producing less than targeted natural gas from its KGD6 block, Oil Minister Dharmendra Pradhan said. The penalty is in the form of disallowing costs incurred. The Minister said that RIL had put up production facilities to produce 80 mmscmd of gas but has failed to adhere to the approved field development plan in terms of drilling and putting on stream the required number of wells. The Production Sharing Contract (PSC) allows RIL and its partners BP Plc and Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government. Disallowing costs will result in government’s profit share rising by USD 195 million from 2010-11 to 2013-14, he said. In a written reply to a question, Pradhan said gas output from the Dhirubhai-1 and 3 gas field in the eastern offshore KG-D6 block was supposed to be 80 million standard cubic meters per day but actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14. This year the output has been only 8.05 mmscmd.

L&T Hydrocarbon Bags Contract from Kuwait Oil Co Ashok Varma Appointed ONGC’s Director (Onshore)

Ashok Varma, Director (Onshore), ONGC

New Delhi: Ashok Varma has been appointed Director (Onshore) of Oil and Natural Gas Corp (ONGC). Prior to his joining as Director (Onshore), he was heading ONGC’s Eastern Offshore Asset at Kakinada, where he was instrumental in putting the Eastern Offshore Asset on production. Earlier, Varma steered Imperial Energy in Russia, a subsidiary of the ONGC Videsh Ltd (OVL), as the Chief Executive Officer and played an important role in the Sakhalin project in Far East Russia.

A graduate in Petroleum Engineering from Indian School of Mines, Dhanbad, Varma joined ONGC in 1977 as Assistant Engineer at Assam. He was posted to OVL, the overseas investment arm of ONGC, between 1996 and 2006 and was instrumental in acquisition of 20 per cent participating interest in Sakhalin-1 project in Russia in 2001. www.oswindia.com

Mumbai: L&T Hydrocarbon, a wholly-owned subsidiary of L&T, has secured a contract valued at USD 846 million (` 50.76 billion) from Kuwait Oil Company (KOC). L&T Hydrocarbon will execute a complete engineer-procure-construct contract for a gathering centre for KOC. KOC is a subsidiary of Kuwait Petroleum Corporation (KPC) and is fully owned by the State of Kuwait. Located in north Kuwait, the oil gathering facilities will receive crude from the Raudhatain fields. The centre is designed for a multi-stage process that will separate 100,000 BOPD (barrels of oil per day) of crude oil, 240,000 BWPD (barrels of water per day) of water and 62.5 MMSCFD (million standard cubic feet of gas per day) of associated gas to meet the quality requirements of downstream operations, the company said. L&T’s contract includes project management, detailed engineering, procurement, supply, construction and pre-commissioning. The new facilities will support KOC’s long-term strategy for the development of the North Kuwait fields to increase oil production to one MMBOPD by 2015-2016.

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India Russia Eyes Gas Pipeline Deal with India New Delhi: Likely a mega gas pipeline deal between Russia and India could be possible in coming year. Russian Ambassador Alexander Kadak, who visited India recently, said that Moscow wants to work on a pipeline to India through the Himalayas that could become the biggest-ever energy project in history. On the sidelines of the BRICS summit in Brazil, Russian President Vladimir Putin and Prime Minister Narendra Modi discussed the possibility of building another

pipeline along the route of the planned TAPI (Turkmenistan-AfghanistanPakistan-India), which would carry hydrocarbons to India. The project would take an estimated five years and approximately USD 40 billion to construct. “We are planning to examine feasibility of the Indian initiative to construct a land pipeline which would run from Russia’s southern border to India either along the projected TAPI route or through the Himalayas,” said Kadak.

RIL to Restart Fuel Retailing 56 Blocks Identified for Shale Gas Production New Delhi: Dharamendra Pradhan, Minister of State (I/C) for Petroleum & Natural Gas, has informed the Lok Sabha in a written reply that under the first phase of assessment of shale gas and oil, exploration and exploitation, at present, 56 Petroleum Exploration Lease (PEL)/ Petroleum Mining Lease (PML) blocks (ONGC 50, and OIL – 6) have been identified by National Oil Companies (NOCs). These blocks are located in the states of Assam (7 blocks), Arunachal Pradesh (1 block), Gujarat (28 blocks), Rajasthan (1 block), Andhra Pradesh (10 blocks) and Tamil Nadu (9 blocks).

Mumbai: Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is said to be preparing the ground to restart its 1,400-odd fuel retailing outlets in the country. According to RIL fuel retailers, the company has begun gauging its dealers’ preparedness and willingness for this. RIL had in May 2008 closed its fuel retail outlets due to mounting losses, since it was selling fuel at rates much higher than the subsidised prices of state-owned oil companies. According to industry players, the company commands a share of less than 0.5 per cent in the fuel retail market.

Cairn Seeks Nod to Export Barmer Crude ONGC has drilled one well where coring has been completed. In addition, ONGC has collected cores from another seven wells. The Government has already notified the policy guidelines for exploration and exploitation of shale gas and oil by National Oil Companies (NOCs) in their onland Petroleum Exploration Lease (PEL) / Petroleum Mining Lease (PML) blocks awarded under the nomination regimes. As per the policy, the NOCs will undertake a mandatory minimum work programme in a fixed time frame for shale gas and oil exploration and exploitation, so that there is optimum accretion and development of shale gas and oil resources.

ONGC Mulls OMPL-MRPL Merger New Delhi: ONGC is evaluating a proposal to merge ONGC Mangalore Petrochemicals (OMPL) with Mangalore Refinery and Petrochemicals (MRPL). The petrochemical complex, set up over 442 acre in Mangalore, is expected to be commissioned by August, after a delay of more than a year. The ` 5,750 crore-worth petrochemical project is currently promoted by ONGC and MRPL, both of whom hold a total equity of 49 per cent. The PSU firm is in talks with Kuwait Petroleum, Qatar Petroleum and Emirates National Oil Company, among others to sell remaining stake in OMPL. P P Upadhya, Managing Director of MRPL, told that the final decision on whether OMPL has to be merged with MRPL is to be made by the promoter. “The proposal is under discussion. It depends on the parent company on how they want to go ahead with the recommendations,” he said.

Jaipur: The petroleum ministry is evaluating a proposal by Cairn India for exports of crude oil produced at its Barmer fields, which are the country’s largest inland oil producing fields. The government has sought a detailed note from Cairn India after the company’s promoter Anil Agarwal met petroleum minister Dharmendra Pradhan to sought permission to allow export of Barmer crude. Under current law, companies are not allowed to export crude oil. Oil producing companies are obliged to sell their entire produce only to the government or a nominee it appoints. Keen to export crude to Japan and Singapore, Cairn is currently producing huge volumes of heavy crude in Rajasthan. If Cairn’s proposal is accepted, it would be a significant step as India meets 80 per cent of its crude oil requirements through imports. Cairn would become the first company to export crude oil from India.

Panel to Suggest Alternative Gas Pricing New Delhi: The government plans to consult a group of eminent people possibly led by former minister Suresh Prabhu or a ‘specialised agency’ to review natural gas pricing, including the UPA-approved Rangarajan Formula that would have doubled gas rates. The committee’s modalities include holding workshops and inviting comments through the internet for preparation of its final report, sources said. Its report could come by August 31, allowing the government a month to announce the new pricing formula and the reviewed guidelines by the deadline of end-September. The panel would also consider the observations made by Parliament’s standing committee on the sector, apart from the contractual and legal requirements if an alternative to the Rangarajan formula is suggested. According to the latter formula, gas prices were to be revised every quarter.

Offshore World | 51 | June - July 2014

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India India to Create Dynamic Business Model for Strategic Crude Oil Reserves New Delhi: India is planning a major push to fill its strategic crude oil reserves based on a dynamic business model and possible foreign investments, said Dharmendra Pradhan, Petroleum Minister. A business model is being evaluated to meet the fund requirement, given current high crude oil prices. State-owned Indian Strategic Petroleum Reserves Ltd (ISPRL), which is building three strategic storage facilities at Visakhapatnam, Mangalore and Padur to beef up oil reserves, has already conducted road shows. Pradhan informed Rajya Sabha through a written reply that the Visakhapatnam project is expected to be completed this year, whereas the Mangalore and Padur reserves are expected to be completed next year. When completed, the three facilities will have a combined capacity of 5.39 million tonnes (mt)—capable of sustaining 13 days of consumption, to add to India’s current crude reserves that can support around 74 days of consumption. Based on the crude oil and product storage already existing with the oil companies and also taking into consideration the storages being built by ISPRL, it was estimated that to have a total cover of 90 days on net oil imports, the country would require additional crude oil storage of approximately 13.32 million metric tonnes by 2019-20, the minister said. In order to further increase the strategic crude oil storage capacity, ISPRL through Engineers India Ltd, has prepared a detailed feasibility study for the construction of another 12.5mt of crude oil storages at four locations—Bikaner, Rajkot, Chandikhol and Padur.

CGD Firms to Get Priority in Gas Allocation Rejig New Delhi: In a major revamp of natural gas allocation policy, the government will give city gas projects selling CNG to automobiles and piped cooking gas to households top-most priority for receipt of domestically produced gas. Presently, urea-manufacturing fertiliser plants have the first right over the domestically produced gas, followed by liquefied petroleum gas (LPG) plants and power stations. City gas distribution (CGD) projects are ranked fourth. This priority listing is now being changed to give CGD firms like Indraprastha Gas Ltd (IGL), which sells CNG to automobiles and piped gas to households in national capital. CGD firms like IGL currently get 8.32 million standard cubic meters per day (mscmd) of gas out of total domestic supplies of about 77 mscmd. As city gas projects get rolled out in newer cities, the requirement of the sector will grow and so the government is now giving it top priority. According to the new allocation policy being finalised, additional requirement for CGD will be first met by imposing proportionate cuts in the domestic gas presently being supplied to sectors other than priority sectors as decided by the Petroleum Ministry. www.oswindia.com

OilMin Plans to Reduce Gulf Crude Dependence New Delhi: The oil ministry has chalked out a strategy to gradually reduce energy sourcing from politically volatile countries in the Gulf region and explore importing natural gas from Russia, Iran and CIS countries, government sources said. In a recent presentation to the prime minister, the oil ministry also proposed a new regime to manage oil-field contracts. In the current system the contractor recovers costs before sharing profit with the government. In the proposed system, the two sides share revenues from the day production starts. “The matter is under active consideration of the government,” one source said. Officials say the simpler new regime should minimise state interference in oil-field affairs and boost private investment, leading to higher output and better energy security. To improve energy security, oil ministry officials say the country should avoid heavy dependence on oil and look at opportunities to import natural gas from all possible sources. India is planning to source crude oil from Canada after it has developed Venezuela as one of the major suppliers outside the Gulf countries. “African oil producing countries are willing to export on long-term basis and Indian refiners are in talks with them,” the official said.

PSU Refiners in Expansion Mode New Delhi: Public sector oil refiners IOC, BPCL and HPCL will jack up their refining capacity by 37 per cent to 185.3 million tonnes by 2016-17 by expanding existing units and commissioning a new plant at Paradip in Odisha. State refiners currently own 19 refineries with a total capacity of 135.066 million tonnes. Indian Oil Corp (IOC) is the market leader with 54.2 million tonnes capacity at its 7 refineries. It also controls Chennai Petroleum that operates 11.5 million tonnes of capacity. IOC will this year commission its 15 million tonnes refinery at Paradip, said Oil Minister Dharmendra Pradhan. Presently, the project (being built at a cost of ` 29,777 crore) is in last phase of completion and has achieved 96.7 per cent overall physical progress. Besides Paradip, HPCL will expand its Mumbai refinery by 1.7 million tons to 8.2 million tons and its Visakhapatnam unit from 8.3 million tons to 9 million tons this fiscal. BPCL will raise capacity of its Mumbai unit by 1.5 million tons to 13.5 million tons and Bina to 7.2 million tons from the current 6 million tons. CPCL will raise capacity of its Manali unit from 10.5 million tonnes to 11.1 million tons, he said. Mangalore Refinery and Petrochemicals Ltd (MRPL) will expand refining capacity by one million ton to 16 million tons this fiscal. By 2016-17, IOC will marginally raise its Haldia unit capacity to 8 million tonnes from 7.5 million tonnes currently while also expanding Mathura by 3 million tonnes to 11 million tonnes. Pradhan said HPCL plans to expand its Visakhapatnam unit to 15 million tonnes and BPCL will take capacity of its Kochi refinery to 15.5 million tonnes from the current 9.5 million tonnes.

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International New Oil Reservoir at Romanian Black Sea China, Venezuela Ink Oil Pact China: China and Venezuela have signed a series of deals that will see the pair co-operate on the development of oil projects, with crude also being shipped from the South American oil powerhouse. A total of 38 new agreements were signed between Chinese President Xi Jinping and Venezuelan counterpart Nicolas Maduro.

Romanian: OMV Petrom has discovered a new oil reservoir on the continental shelf of the Romanian Black Sea. The reservoir in the shallow-water Istria XVIII offshore perimeter was identified by OMV’s Marina 1 exploration well at a cost of about EUR 19 million. The well was drilled to a depth of approximately 2,150 m below the seabed with production potential of 1,500-2,000 bpd. If the discovery is proved to be commercially viable, OMV plans to commence production from the new reservoir over the next three to four years and may require investment of more than EUR 100 milliion.

More Gas Found at Offshore Tanzania China is to ex tend a USD 4 billion credit line to Venezuela, to be put into a joint fund for infrastructure and economic development in the South American countr y, in return for crude and oil products. The deal will see around 100,000 barrels per day of oil go to China.

Tanzania: Statoil and co-venturer ExxonMobil have made what they call a high-impact gas discovery in the Piri prospect offshore Tanzania, marking the sixth discovery on Block 2 by the companies. Piri-1, which was drilled using the Discoverer Americas drillship, is located 2 km south-west of the Lavani-1 well in 2,360 m of water. Discoverer Americas is currently drilling the Binzari prospect on Block 2. Both the firms have discovered an additional two to three trillion cubic feet in the Piri-1 well, increasing the block’s total discovery to approximately 20 trillion cubic feet. Norway-based Statoil owns a 65 per cent interest in the Tanzania licence while ExxonMobil Exploration and Production Tanzania holds the remaining 35 per cent.

Bids Placed for Abu Dhabi Fields Abu Dhabi: Leading international players have placed their bids for taking up stakes in onshore oilfields, capable of producing 1.6 million barrels per day, covered under the Abu Dhabi Company for Onshore Oil Operations (ADCO) concession.Among the earlier partners, Anglo-Dutch super-major Shell, French major Total and UK’s BP have placed their bids, which are being evaluated by Abu Dhabi. Others competing for the new deal include, US player Occidental Petroleum, Italy’s ENI , China National Petroleum Corporation (CNPC), Norway’s Statoil, Japan’s Inpex and Korea’s National Oil Corporation.

US Shale Oil Production to Reach 9.6m bpd by 2019 USA: The United States’ shale oil production is expected to grow from its current capacity of 8.4 million barrels per day (bpd) to 9.6 million bpd by 2019, said Daniel Poneman, US Deputy Secretary of Energy, on the sideline of ‘Energy and Security in a Changing World,’ at Abu Dhabi He said that the United States’ increasing shale oil production has allowed the country to become a net exporter after years of importing energy. Today, 40 per cent of the country’s natural gas production comes from shale annually. Shale has utterly transformed USA’s energy economy. In the last four to five years, reliance on imports of oil dropped from 60 per cent to less than 40 per cent. To achieve such significant levels of shale production, the US has invested a total of USD 137 million from 1978 till 1992 in order to use technology to facilitate shale production.

US Offers Gulf of Mexico for Exploration USA: The US Bureau of Ocean Energy Management (BOEM) has decided to offer more than 21 million acres offshore Texas for oil and gas exploration and development in a lease sale featuring all available unleased areas in the Western Gulf of Mexico planning area. Western Gulf of Mexico Lease Sale 238 is scheduled to be held in New Orleans, Louisiana, on 20 August 2014. Sale 238 will feature 4,026 blocks, covering approximately 21.6 million acres, located from nine to 250 miles offshore, in water depths ranging from 5 m to 3,346 m. The proposed lease sale is expected to produce 116 million to 200 million barrels of oil and 538 billion to 938 billion cubic feet of natural gas.

OPEC’s Oil Market Share to Shrink in 2015 UK: Organisation of the Petroleum Exporting Countries (OPEC) expects its share of the world oil market to shrink in 2015 for a third year running, due in part to the US shale oil boom, giving the exporter group little comfort from an acceleration in global demand. Making its first 2015 forecast in a monthly report, the OPEC said demand for its oil next year would average 29.37 million barrels per day (bpd), down 310,000 bpd from 2014. The report by the 12-member OPEC points to ample supplies next year, especially if there is further progress in resolving outages in OPEC countries Libya, Iraq and Iran. Those production problems have curbed supply this year and helped support prices above USD 100 a barrel. OPEC expects US production to average 13.12 million bpd in 2015, up 880,000 bpd from 2014 and the highest increase of all non-OPEC countries. OPEC’s report also indicates that the demand for its crude next year will fall further below its output target of 30 million bpd. Offshore World | 53 | June - July 2014

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news

International

Global 2014 Oil Demand Likely Oil Discovery in Trinidad and Tobago Low: IEA T&T: Repsol has made a new hydrocarbons discovery in the Teak field, offshore Trinidad and Tobago, in the TSP USA: The International Energy Agency has cut its forecast for 2014 oil demand to 92.7 million barrels a day due to weaker than expected global economic growth. The revised forecast shows a drop of 130,000 barrels a day from the IEA’s prediction a month ago.It reflects the ‘growing realisation that macroeconomic conditions, although still likely to strengthen in the second half of the year, will probably now do so at a less dramatic pace than previously forecast’. International Monetary Fund Chief Christine Lagarde warned that the strength of the global economic recovery could be “less robust than expected” appeared to be borne out by a series of economic data released recently.

block east of the island of Trinidad. The find in the TB14 well has upgraded the northern portion of the Teak B field that was not known to exist before. The newly-discovered area is estimated to contain over 40 million barrels of oil in place, which increases the field’s current reserves, extends its productive life and adds new output.

Europe’s biggest economies reported slumping industrial production — a key indicator of economic health. The United States said late June its economy shrank a steep 2.9 per cent in the first quarter, its worst contraction in five years. On the supply side, members of the Organisation of Petroleum Exporting Countries (OPEC) pumped out 40,000 barrels a day less in June to 30.03 million on a daily basis, with decline in Iraqi output partly offset by small increases from Saudi Arabia, Iran, Nigeria and Angola.

First Offshore Oil in East Africa

Repsol operates the field with a 70 per cent interest, partnered by co-venturers Petroleum Company of Trinidad and Tobago (Petrotrin) and The National Gas Company of Trinidad and Tobago (NGC), with a 15 per cent stake each. The TB14 well, which has produced 1,200 barrels of oil a day in testing, adds to the start-up in June of the TB13 well, which added 1,384 bopd to the field’s output. The new wells add 24 per cent to the block’s existing production, which averaged 10,900 bopd during 2013.

Kenya: Pancontinental Oil and Gas NL has verified that the recently completed Sunbird-1 well off the southern Kenyan coast has intersected an oil column – the first oil ever discovered off the East African coast. The gross oil column is assessed to be 14 m (46 ft) thick beneath a gross gas column of 29.6 m (97 ft) in a reefal limestone reservoir in the Sunbird Miocene Pinnacle Reef in area L10A. The Sunbird Reef is an ancient Miocene pinnacle reef buried beneath 900 m (2,953 ft) of younger sediment.

Sinopec Verifies China’s First Shale Gas Gas Discovery at Pharos-1 in Browse Basin China: The Chinese government has verified shale gas reserves in Sinopec Corp’s Fuling field in the southwest Australia: Karoon Gas Australia Ltd, a partner in the WA398-P block, has stated that movable hydrocarbons were detected in the Pharos-1 well in the Browse basin offshore Western Australia. The well reached a TD of 17,126 ft (5,220 m). Wireline logging operations are ongoing. Pharos-1, the sixth and final well in the Browse basin Phase 2 exploration drilling campaign, is situated about 5.59 mi (9 km) northeast of Proteus-1 and will be a further test of the Proteus-Crown trend. The well, Pharos-1, is targeting an extension of the discovery made at Proteus-1, which established reservoir quality and condensate-bearing gas in the Montara formation.

CPP to Construct Oil Depot in Iraq Iraq: Iraq’s cabinet has approved a USD 607 million contract with China Petroleum Pipeline (CPP) for the construction of an oil storage depot near its Nassiriya oilfield in the south of the country. The oil ministry delayed last month an international tender for the development of the Nassiriya field and construction of an associated 300,000 barrel a day refinery. www.oswindia.com

of the country, signalling the official launch of the commercial development of China’s first large shale gas field. The Ministry of Land and Resources verified proven reserves of nearly 107 billion cubic metres (bcm) in the Fuling shale gas field in Chongqing municipality. As of June 30, daily output in 29 test wells in Fuling totalled 3.2 million cubic metres. Accumulated shale gas output from those wells reached 611 million cubic metres, Sinopec said.

Oil Discovers at Bue Prospect Norway: VNG Norge AS has made an oil discovery in the Bue prospect near Njord field in the Norwegian Sea, while results from an appraisal well adjusted resource estimates for the Pil discovery.The company and the Norwegian Petroleum Directorate said the drilling occurred in PL 586, which VNG Norge operates. VNG Norge drilled exploration well 6406/12-3 A (Bue) some 2.1 km from 6406/12-3 S (Pil). The Bue well encountered an 18-m oil column in sandstones from the Rogn formation, with reservoir quality varying from good to very good, VNG said. Pressure data indicates no communication between the discoveries in Pil and Bue. Preliminary calculations indicate Bue has 1-4 million standard cu m of recoverable oil and condensate. Appraisal well 6406/12-3 B, drilled 1.7 km from Pil, encountered an 82-m oil column in Upper Jurassic reservoir rocks of good quality, VNG said. Resource estimates for Pil have been adjusted to 8.8-21.1 million standard cu m of recoverable oil and condensate and 2.7-6.1 billion standard cu m of recoverable gas. The two wells, drilled by Transocean Ltd.’s Transocean Arctic semisubmersible rig in 324 m of water, were terminated in the Jurassic Melke formation. They were not production tested. Both will be permanently abandoned. Offshore World | 54 | June - July 2014

products

LEAK DETECTOR Compressed air is one of the most expensive kind of power supplies. The LEAK-DETECT represents the highest technology for pinpointing leaks in air systems. The easy and professional way to reduce energy costs. LEAK DETECT finds any gas disappearing out of a pressure system. Anywhere :in tubes, couplings, valves, sealing, packagings, etc. Any gas disappearing out of a pressure system is a leakage which generates a sound. The sound of small leaks is mostly ultrasonic. Humans cannot hear it because the frequency is above the human hearing range. The LEAK DETECT receives the ultrasonic sound that escapes from the leak point, processes it and displays its strength. The larger the leak, the higher the indication. In addition to the display, the electronic generates an audio leak sound for the ear phones.

The FGD3 is a flammable gas detector head supplied with an LCD readout and pushbutton calibration feature. The FGD3 is available in lots of different gases such as chlorine, CO, methane, sulphur dioxide, VOC and more. For details contact: Mech Tech Engg Co A-105, Aditya Park, C S Road, Dahisar (E) Mumbai 400 068 Tel: 022-28972647

OIL AND GAS PIPELINE LEAKAGE DETECTORS For pipelines larger than 4-inch dia, SmartBall offers unparalleled leak sensitivity and accurate location capability. It is easy to deploy and can be used to complement existing pipeline integrity programs or as an integrity check on non-piggable lines. The device consists of an instrumented aluminum core in a urethane shell. The device contains range of instrumentation, including an acoustic data acquisition system that listens for leaks as the ball travels through the pipeline.

For details contact: Tribotech No: 133, Hindustan Kohinoor Indl Complex L B S Marg, Vikhroli (W), Mumbai 400 083 Tel: 022-25777295, 67997858 | Fax: 91-022-67997859

LPG GAS ALARM RDS Series gas leak alarm is a kind of wall-hung household gas alarm designed to detect the concentration of combustible and toxic gases or vapours. Provides visual and audible signals when the gas concentration reaches preset level, remind you take prompt favorable action, can start up other link equipment, ventilate gas or shut off gas supply to avoid fire, explosion, suffocation and other evil accident. Alarms are available for liquefied petroleum gas (LPG), natural gas (methane), propane, hydrogen, town gas and smoke. For details contact: RDS Enterprises C-312, New Ashok Nagar, Nr Mayur Vihar, Phase No: 1 Opp: Metro Station, New Ashok Nagar, New Delhi 110 096 Tel: 011-22716897

FLAMMABLE GAS DETECTOR

SmartBall differs from conventional inspection pigs, in that it is not a full-dia instrument. The ball is smaller than the pipe dia. It rolls silently through the pipeline and the absence of mechanical noise allows unsurpassed acoustic sensitivity. The device can detect pin-hole size leaks as low as 0.03 gallons per minute (0.1 liters/min). This is exponentially more sensitive than CPM-based leak detection systems; and the advantage increases along with pipeline dia. Leak location accuracy is within 10 ft and given additional reference points can be even further tightened. The device can be deployed and retrieved using existing pigging facilities. In non-piggable lines, the device can be launched using off-the-shelf fittings. Travel time is 28 hours for up to 4-inch lines and up to 110 hours for larger lines For details contact: N K Seals Pvt Ltd U 149, MIDC Nagpur, Maharashtra 440 016 Tel: 07104-234210, 325094

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products

SHUTTLE SUB

LPG/CNG LEAK DETECTORS

Deep Blue Engg UK Ltd announced the introduction of the Shuttle Sub. The new lift and deployment system is a large payload-carrying, remotely operated vehicle (ROV). The Shuttle Sub offers an efficient and costeffective way to deploy heavy payloads - such as cables and umbilicals - to and from the seabed. It is used to install and retrieve equipment, lay cable and conduct salvage operations. Even when laden with a payload of 100 tonnes, the buoyantcontrolled Shuttle Sub can float, dive, surface and maintain neutral buoyancy, so it is ideally suited for work being carried out in deepwater environments on – or near - the seabed. Where the Shuttle Sub is unique is that it is also the payload carrier, transferring deployment and retrieval tasks to the ROV. It also removes the loads from cables and umbilicals during deployment when they are suspended between the vessel at the surface and the seabed.In addition, deployment is very accurate when using the Shuttle Sub because equipment or cable can be placed into position as opposed to working with the lift line, which makes accurate positioning difficult. The Shuttle Sub, which will be available in two sizes, has a payload capacity of 50 and 100 tonnes. The vehicle itself weighs slightly less than its payload capacity and uses a “cartridge-based” carrying system similar to the container method used in the shipping industry. A crane mounted on the support vessel lifts the empty Shuttle Sub into the sea, followed by the payload cartridge, which is lowered into the Shuttle Sub. Different cartridges are designed for different applications, eg, cartridge variants currently include a reel for laying cable, a drum for deploying long steel tube flying leads and lifting equipment for salvage operations. Future plans include the intervention and capping capability, and a cartridge with a subsea drilling capability. The current design can be deployed in water depths to 1,500 metres. Deep Blue plans to develop a Shuttle Sub capable of working at 3,000 metres, followed by greater depths in the future. For details contact: Deep Blue Engineering UK Ltd Unit J Three Mills Trading Estate, Old School Lane, Hereford England, United Kingdom HR11EX Tel: +44 (0)1432 351 890 E-mail: david.webster@deepblueengineering.co.uk

Gas leak detectors are wall hung/hand held gas detectors designed to detect gas leaks and avert gas accidents, thus saving precious lives and property. It provides an audio visual alarm (early warning) in case gas leak concentration reaches a preset level and alerts you to take prompt action.

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It has a relay output for automatic activation of exhaust fan, hooter, solenoid valve, etc. CMRI / CCOE certified Gas Leak Detector heads continuously monitors the presence of flammable gases. For details contact: Subham Safety House House No: 36-A, Shalimar Bagh Main Ajmer Road Jaipur, Rajasthan 302 021

LPG GAS SENSOR,TRANSMITTER, DETECTOR Intelligent Gas Alarm India offer LPG sensor transmitter/ detector/analyzer from MSR Electronic, Germany. It finds application in gas bank, LPG bottling plant, LPG booster station, LPG store, heat processing, furnace, engine room, testing rooms, automobile, defence, warship, anniling plant, chemical plants, oil and gas, fire safety, kitchen, refinery, combustion area, mines, confined space, LPG pipeline, etc. For details contact: Intelligent Gas Alarm India Pvt Ltd 350, Ramgali-8, Kusum Vihar, Jagatpura, Jaipur, Rajasthan 302 017 Tel: 0141-4033769 | Fax: 91-0141-4033769

LPG SENSOR

LPG/CNG GAS LEAK DETECTOR

For details contact: Bombay Ammonia Refrigeration Co No: 9/47 Indl Area, Kirti Nagar, New Delhi 110 015 Tel: 011-46254660, 25927524 | Fax: 91-011-25927524

Designed for permanent installation, the unit is able to monitor the presence of combustible gases such as LPG, CNG, LNG, etc, in a variety of applications. Local and an optional remote alarm indicator console provides audio-visual alarm status from all detector heads.

K P Engg offers LPG level sensor for right multi-valves with mechanical reading by means of a gauge directly on the multi-valve (tank level indication from empty to full is shown in a clockwise direction). It transforms the float position into an electric signal to the switch unit/ indicator. K P Engg are making huge type of different standard sensors for all types of multi-valves with accurate led indication according to float position. For details contact: K P Engg Everest Indl Zone, Vavdi, Serv No: 20, Plot No: 30 Opp: Poonam Dumper, Gondal Road Highway, At Vavdi Village Rajkot, Gujarat 360 004

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products

PORTABLE MULTI-GAS DETECTOR Industrial & Comml 3 continuous sample supplied by Gas Alarm monitoring multi-gases plants, etc.

Services offers Cannonball draw multi-gas detectors Marketing for detection and in confined area, process

Cannonball 3 includes a sealed case coupled with an oversized, scratchresistant, self-healing display. The Cannonball 3 can be configured to detect oxygen, combustible gases and vapours and wide variety of toxic hazards. The optional high sensitivity HC-PPM LEL provides broad range of monitoring at PPM levels for nearly all toxic and combustible gases and vapours to address a wide range of health and safety concerns. The gas sample is drawn into the Cannonball 3’s internal sensor chamber by a field-replaceable internal pump module. As an option, the Cannonball 3 may be equipped with a dilution pump module, which allows for the proper monitoring of combustible gases and vapours in oxygen-deficient or inert (oxygen-free) atmospheres without a dilution orifice or labour-intensive manual calculations.

HYDROCARBON ANALYSERS Hydrocarbon analysers measures total hydrocarbons using a vacuum flame ionization detector. The system is designed to minimise the loss of hydrocarbons prior to analysis in the FID chamber. The sample is maintained at 191°C through the use of a heated filter and heated sample line. Fittings are made with stainless steel, which has low gas adsorption properties. Warm up time from 20°C to 191°C is approximately one hour. Once the FID reaches temperature, the flame lights automatically. Calibration is also automatic. Freely adjustable measurement ranges ensure accuracy for a wide variety of test applications.The SEMTECH-FID meets the US EPA 1065 compliance requirements for in-use testing. The FID flame will light automatically after 30 minutes of warm-up time. The system will calibrate itself automatically after flame ignition. The SEMTECH-FID has freely adjustable measurement ranges between 0-10 and 0-30,000 ppm C3H8. Sample probe, heated filter, coalescing filter and Nafion dryer are integrated into the tube electronics. A heated sample line delivers the sample to the FID chamber at 191°C. The system contains a catalyst, enabling the use of room air for the FID chamber combustion air. A full colour, graphic touch screen displays live data, and enables system setup and basic functions, such as zero and span.

For details contact: Industrial & Comml Services Plot No: 47, Street No: 11, H M T Nagar, Nacharam Hyderabad, Andhra Pradesh 500 076 Fax: 91-040-27159006

For details contact: Jupiter Scientific Co No: 9, Ammapet Main Road, Salem, Tamil Nadu 636 001 Tel: 0427-2268001, 2260176, 6530244 | Fax: 91-0427-2268001

LPG AUTOMATIC SHUT OFF DEVICE

HYPER DUPLEX TUBES

Indus International offers excellent quality of LPG automatic shut off device. These are used for log cylinders which saves life and saves gas as well. The shut off mechanism works on the bernoulli principle. A sudden increase in gas flow (for example from the hose rupturing) changes the pressure around the shut off element, lifting it up and causing it to plug the exit to the chamber and stop the flow of gas completely. The shutoff element will stay in this position until you push down on the gauge. The gauge pin then pushes the shutoff element back down into the chamber, so resetting it ready for normal operation For details contact: Indus International E-133, Greater Kailash-1 New Delhi 110 048 Tel: 011-41633313

Sandvik Materials Technology is a leading global supplier of high alloyed seamless stainless steel tubes. Particularly the Duplex grades where Sandvik has pioneered its evolution over the years. One such grade is Sandvik SAF 2707 HD. This is also called Hyper Duplex and complies with UNS and ASTM Standards. This grade offers high resistance to Pitting Corrosion (PREN~49), Crevice Corrosion and Stress Corrosion Cracking in high chloride bearing environments. This grade can also be used in brine environments as well as for certain organic acid applications. Sandvik also has welding solutions in SAF 2707 HD which is important for fabricating heat exchanger equipment’s. For details contact: Sandvik Asia Pvt Ltd Pune Mumbai Road, Dapodi Pune, Maharashtra 411 012 E-mail: karan.jain@sandvik.com / tube.india@sandvik.com

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products

OIL PURIFIERS

OIL PURIFICATION EQUIPMENT

Oil purifiers supplied by Chaudhary Marine are very high on efficiency, which are designed to suit the requirements and specifications of their clients. For details contact: Chaudhary Marine Plot No: 293, Nr TCI Transport Alang Bhavnagar Road, Bhavnagar Bhavnagar, Gujarat 364 081 Tel: 0278-2560443

For details contact: Hima Marketing Pvt Ltd F-101, 201, 202 & 301 Laxmi Residency 7-1-55/1, Dharam Karan Road, Ameerpet Hyderabad, Andhra Pradesh 500 016 Tel: 040-23750705 | Fax: 91-040-23732920

OIL PURIFIER The Pall HLP6 oil purifier combines the excellent efficiency of mass transfer purifiers with an exceptional level of reliability and ease of use. Water contamination in oil systems is responsible for major maintenance and operational problems of critical components in lubrication and hydraulic circuits. From power generation turbines to paper machines, these problems include increased corrosion in the system, especially at bearing locations; increased oil oxidation and acid build-up; and sluggish response of control systems. For details contact: Pall India Pvt Ltd Sumer Plaza, 6th Floor, CTS-419, Marol Maroshi Road, Andheri (E), Mumbai 400 059 Tel: 022-67995555, 67995649 | Fax: 91-022-67995556

ELECTROSTATIC OIL PURIFIER Accurate Oil Care (Cleaning) offers premium quality electrostatic oil purifier. These electrostatic oil purifiers are highly demanded in the market owing to their good functionality and cost-effectiveness. It finds application in oil refineries. For details contact: Accurate Oil Care (Cleaning) No: 1300/2 Warje Malwadi ,Nr Water Tank, Mahatma Phule Chowk Pune, Maharashtra 411 058 Tel: 020-20250038

OIL PURIFICATION & CLARIFICATION SYSTEM

OIL PURIFIER Oil purifier is the equipment to make crude oil pure and usable. The purification is done immediately after receiving the crude oil in the oil purifier. Superior quality filter is fitted with the purifier for efficient purification.

For details contact: Shree Vahanwati Marine Export No: 6, Sanjivani Complex, Jail Road Bhavnagar Bhavnagar, Gujarat 364 002 Tel: 0278-6541306, 2520670 www.oswindia.com

Pall presents the second in its family of HLP Series fluid conditioning purifiers â&#x20AC;&#x201C; the HLP22 Oil Purifier. The HLP Series combines the water removal performance of mass transfer purifiers with high reliability and ease-of-use to help ensure maximum equipment up-time and lowest cost of ownership â&#x20AC;&#x201C; enabling one to focus on their process and not their equipment.

HMT Ltd offers compact oil purification and clarification system. It finds use in curbing expenditure of oil to its fullest advantages by recycling and reusing the spent oil through this recovery system. The oil purification and clarification system OPCS-01 of capacity 1,000 lph is well suited for purification and separation of water from mineral oil, as well as for separation of liquid mixtures, or for the purification of fluid from solid constituents (dirt, dust, etc). For details contact: HMT Ltd H-2, M I D C, Chikalthana Indl Area, Aurangabad, Maharashtra 431 006 Tel: 0240-2485008, 2485596 | Fax: 91-0240-2485007

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events diary Moscow Refining, Gas & Petrochemicals Week Date: 15 - 18 September 2014 Venue: Lotte Hotel, Moscow, Russia Event: The Moscow Refining, Gas and Petrochemicals Week with its traditionally technically-strong programmes, unrivalled access to the major players in the Russian Downstream sector and the highest quality networking opportunities.The 5 days of intensive networking and engaging presentations will be attended by over 500 attendees with over 80 respected speakers. The pragmatic event will be a major affair of Heads of Refining, Petrochemicals and Gas Processing from Major Oil Companies, General Directors of Regional Refineries, Petrochemical and Gas Plants, Heads of Technical Departments, Chief Engineers, Chief Technologists, Project Directors, Design Institutes, Engineering Contractors, Technology, Solutions & Equipment Providers, Industry Consultants and Analysts, Government Agencies.

ENERASIA will bring together the business leaders, decision makers and Industry stalwarts from the energy sector looking for the best solution for their business, under one roof. It provides a platform to meet, interact and share ideas with potential clients in a quality time. It also provides an excellent opportunity to pull together leads, initiate sales, build and strengthen business relationships and much more. For Detail Contact: Enerasia Marketing Office 102, Shanti Arcade, 132 Feet Ring Road Naranpura, Ahmedabad – 380 013 India Telefax: +91 79 27496737, 27494266 E-mail: booking@enerasia.in Website: www.enerasia.in

For details contact: Euro Petroleum Consultants 44 Oxford Drive, Bermondsey Street London, SE1 2FB, UK Tel: +44 20 7357 8394 Fax: +44 20 7357 8395 Email: conferences@europetro.com www.europetro.com OSEA 2014 Date: 2-5 December 2014 Venue: Marina Bay Sands, Singapore Event: OSEA is the biennial tradeshow that has served the offshore Oil & Gas market and its supporting industries since 1976. Established as the region’s most well-attended Oil & Gas event, it has continuously attracted a high quality attendance. Tapping into the region’s increasing need for more sophisticated technologies and solutions, an international representation of exhibitors will put up a comprehensive showcase for buyers from Asia and beyond. OSEA2014 will bring in more than 1,600 exhibitors from over 45 countries / regions, showcasing latest applications / equipment for the Oil & Gas industry. As a preview to the upcoming Online Show Catalogue, this is a sneak peak of some key exhibitors. For details contact: Singapore Exhibition Services Pte Ltd No. 1 Jalan Kilang Timor #09-02 Pacific Tech Centre Singapore 159303 TEL: +65 6233 6638 FAX: +65 6233 6633

ENERASIA 2014 Date: 26 -28 September 2014 Venue: Pandit Deendayal Petroleum University (PDPU) Raisan, Gandhinagar Gujarat, India Event: ENERASIA 2014 will be an international Summit where world energy leaders will participate in Mega Exhibition, a Human Resource Conference and various Seminars. The International Summit will provide a global level platform for stake holders of the energy sector to discuss innovative concepts, investment ideas and sustainable energy solutions.

Monetising Mature Fields Summit 2014 Date: 28-29 October 2014 Venue: Dubai, United Arab Emirates Event: With a soaring global hydrocarbon demand, the need to both develop new and existing production assets in a cost effective way has never been more important. With increased production costs from mature fields, operators are increasingly utilising evermore technologically advanced methods of enhanced recovery, reservoir stimulation and targeted resource acquisition in order to maintain and extend the life cycle of mature production assets. This senior level summit will address how developing and enhancing a mature portfolio can yield high rewards by expanding existing reservoir capacity, and how harnessing stranded hydrocarbon resources and through the use of cutting edge technology can both slow field declination and radically extend the life of a field. The conference will cover areas like Overcome the practical challenges of commercialising mature assets, Assess the latest EOR technologies, Develop a post peak production life extension strategy. For details contact: International Research Networks – Sponsor 10-18 Vestry Street, 1 st Floor London, N1 7RE Tel +44 (0) 20 7111 1615 | Fax +44 (0) 20 7183 7945

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book shelf

Strongly advocating a world systems approach to managing oil and gas projects and programs, the book covers quantitative and qualitative techniques. It addresses technical and managerial aspects of projects and illustrates the concepts with case examples of applications of project management tools and techniques to real-life project scenarios that can serve as lessons learned for best practices. An in-depth examination of project management for oil and gas projects, the book is a handbook for professionals in the field, a guidebook for technical consultants, and a resource for students.

RISK GOVERNANCE OF OFFSHORE OIL AND GAS OPERATIONS Editors: Preben Hempel Lindøe, Michael Baram & Ortwin Renn Hardcover: 450 Price: USD 95.98 Publisher: Cambridge University Press Book Description: This book evaluates and Bo compares risk regulation and safety management co for offshore oil and gas operations in the United fo SStates, United Kingdom, Norway, and Australia. IIt provides an interdisciplinary approach with legal, technological, and sociological perspectives on their efforts to assess and prevent major accidents and improve safety performance offshore. Presented in three parts, the volume begins with a review of the technical, legal, behavioral, and sociological factors involved in designing, implementing, and enforcing a regulatory regime for industrial safety. It then evaluates the four regulatory regimes that encompass the cultural, legal, and other contextual factors that influence their design and implementation, along with their reliance on industrial expertise and standards and the use of performance indicators. The final section presents an assessment of the resilience of the Norwegian regime and its capacity to keep pace with new technologies and emerging risks, respond to near miss incidents, encourage safety culture, incorporate vested rights of labor, and perform inspection and self-audit functions. This book is highly relevant for those in government, business, academia, and elsewhere in civil society who are involved in offshore safety issues, including regulatory authorities and industrial safety professionals.

COMMISSIONING OF OFFSHORE OIL AND GAS PROJECTS Authors: Trond Bendiksen and Geoff Young Paperback: 244 Price: USD 58.50 Publisher: AuthorHouse

GAS AND OIL RELIABILITY ENGINEERING Author: Eduardo Calixto Hardcover: 520 Price: Usd 99.95 Publisher: Gulf Professional Publishing

BBook Description: The book describes the uutmost importance of thorough planning aand preparations to streamline the execution of your projec t, in order to avoid the spectacular cost and schedule overruns often encountered on today’s mega-projects in the oil and gas industry. It explains, in practical terms, which strategic principles, tools, techniques, structure and organization you need to have in place to assure yourself that your project will meet the cost and schedule targets. The book focuses on the all-important Commissioning phase, the stage of the game where all the poor planning and preparations manifest themselves as costly delays. The book should be mandatory on all project managers’ desks, and in all management students’ curriculums.

BBook Description: The advent of reliability eengineering tools coupled with the cost of oil aand gas operations has changed the paradigm oof maintenance technology. A simple strategy of efficient replacement of failed equipment/ component has been transformed into a more complex but proactive approach for keeping equipment running at peak efficiency concept of “total process” reliability engineering and maintenance. Applied Oil and Gas Reliability Engineering: Modeling and Analysis is the first book to apply reliability value improvement practices and process enterprises lifecycle analysis to the Oil and gas Industry. With this book in hand, engineers also gain a powerful guide to the most commonly used software modeling tools which aid in the planning and execution of an effective maintenance program.

P R O J E C T M A N A G E M E N T F O R T H E O I L A N D G A S I N D U S T R Y: A WORLD SYSTEM APPROACH Authors: Adedeji B Badiru and Samuel O Osisanya Au HHardcover: 781 PPrice: USD 102.98 PPublisher: CRC Press BBook Description: Project management for oil and gas projects comes with a unique set of challenges that include the management of science, technology, and engineering aspects. Underlining the specific issues involved in projects in this field, Project Management for the Oil and Gas Industry: A World System Approach presents step-by-step application of project management techniques. Using the Project Management Body of Knowledge (PMBOK®) framework from the Project Management Institute (PMI) as the platform, the book provides an integrated approach that covers the concepts, tools, and techniques for managing oil and gas projects.

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Offshore World | 60 | June - July 2014

RNI No: MAHENG/2003/13269. Date of Publcation: 1â&#x20AC;&#x2122;st of every alternate month.