YoungPetro - 18th Issue - Summer 2016

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SUMMER /  2 016 ISSUE #18



ditor’s Letter E

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Gaining the knowledge and pursuit of science during the studies and even our lives is essential. As a magazine promoting pro-active way of studying we think that international conferences and meetings can give you more than just simple knowledge. That is why in this, almost holiday, issue we are showing you reports from three different conferences. The idea behind the first ‘East meets West’ Congress was to gather people from different parts of the world, from different universities, from different companies in one, common idea – the idea without any barriers. This spring YoungPetro was also a part of EuroPOWER Conference in Warsaw and ASEC 2016 in Zagreb, extraordinary events gaining both professionals and students and giving opportunities to broaden participant’s knowledge. As always we are bringing the effects of outstanding researches. Jakub Frankiewicz, during his Erasmus exchange in Croatia had the possibility to investigate and compare Polish and Croatian offshore plans. Bakhtawar Khattak’s paper aims to quantify the effectiveness of polymer flooding compared with water flooding and study their recovery mechanisms. With every issue YoungPetro’s editorial board does its best to give you the highest quality and up to date information. Thanks to you we are most recognizable student petroleum magazine in the world! Your contribution and opinions are the greatest reward for us. Thank you very much for being with us for the 18th time, I hope you’ll have a great summer!

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Editor-in-Chief Natalia Krygier n.krygier@youngpetro.org

Marketing Karolina Zahuta Graphic designer: Patrycja Lanc

Deputy Editor-in-Chief Patryk Bijak p.bijak@youngpetro.org

Proof-readers Adam Sikorski

Art Director Natalia Rodzińska n.rodzinska@gmail.com Editors Filip Czerniawski Agata Gruszczak Wojciech Kurowski Maksymilian Łękowski Alina Malinowska Jakub Pitera Monika Saczyńska Scientific Advisor MSc Tomasz Włodek

ISSN 2300   -1259

Published by An Official Publication of

The Society of Petroleum Engineers Student Chapter P o l a n d • www.spe.net.pl

Ambassadors Josiah Wong Siew Kai – Malaysia Alexander Scherff – Germany Manjesh Banawara – Canada Ahmed Bilal Choudhry – Pakistan Muhammad Taimur Ashfaq – Pakistan Viorica Sîrghii – Romania Athansios Pitatzis – Greece Publisher Fundacja Wiertnictwo - Nafta - Gaz, Nauka i Tradycje Al. Adama Mickiewicza 30/A4 30 - 059 Kraków, Poland www.nafta.agh.edu.pl


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On Stream – Latest News

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Patryk Bijak

ASEC 2016

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Irena Mijatovic, Ivan Bosnjak

All together in Cracow! 11 Natalia Krygier

XXIII Energy Conference EuroPOWER 14 Filip Czerniawski

South-East Asia LNG demand, opportunities, 17 and risks for Global LNG Industry Athanasios Pitatzis

Croatian offshore gas plans – all or nothing 24 Jakub Frankiewicz

Mining in the outer space – difficulties 31 and possibilities Maksymilian Łękowski

Quantitative Analysis of Water and 35 Polymer Flooding – A Study of the North Sea Bakhtawar Khattak

How It Works? 52 Wojciech Kurowski



Patryk Bijak

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 On Stream – Latest News Patryk Bijak

Drilling for Aliens

Honeybee Robotics is working with NASA to develop a robotic space drill that can bore through miles of rock and ice in such places as Mars or Jupiter’s moon Europa to search for life underground. The drill has to be able to function autonomously on very low power, make its way through an alien surface, and work in concert with other robotic equipment to collect and analyse what is brought back to the surface. The engineers at Honeybee are not expecting the thing to go up on the next rocket, but perhaps in 20 years it will be a part of our exploratory tool kit. When that happens, what has started as a drill may become the first contact we have ever established with extraterrestrial life. New Saudi Energy Minister reaches out

During the last OPEC meeting in Vienna in early June, it turned out clear that the new Saudi Energy Minister Khalid al-Falih takes the organisation seriously, as he showed coming to the Austrian capital a few days before the conference. Observers pay attention to every detail, even the

smallest change in the cartel. At present, OPEC is not as unanimous as a few years ago with supply changing on a regular basis. Nowadays Saudi Arabia is acting on their own, which often harms other countries belonging to OPEC. The fuel crisis in France

Fuel supply crisis in France, which triggered protests and strikes against the government’s reform of the labour law, is not yet over. The reason for the difficulties with the fuel supply in the country, which prompted the authorities to even reach for the strategic stocks, are a fuel depot blockade and strikes at refineries. In an interview for the daily newspaper ‘Le Parisien,’ the Prime Minister Manuel Valls said once again that he would not bow to the protesters’ demands. ‘The responsibility to endure till the end falls on me’ he said. The wave of protests was a response to President François Hollande’s socialist government’s attempt to pass unpopular labour law reforms. The reforms open the way to extending the working week from the current 35 to 48 hours, and to allowing to work 12 hours, should such a need arise. The government justifies the need for liberalisation of the labour code with the necessity of adapting French companies to international competition. 

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Find us on Facebook facebook.com/YoungPetro


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For online version of the magazine and news visit us at youngpetro.org

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ASEC 2016

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 ASEC

2016

Irena Mijatovic, Ivan Bosnjak

The Faculty of Mining, Geology and Petroleum Engineering, together with the University of Zagreb SPE Student Chapter was host of The 3rd Annual Student Energy Conference, held from March 9th to 12th, 2016. The extensive Conference programme was divided into three days of lectures and trainings held by students and distinguished guests from Croatia and several other countries. The fourth day of the programme was reserved for establishing connections and building new friendships among students through team building activities. On the day of the opening ceremony, the introductory speech was given by the President of SPE Student Chapter Croatia, Mr. Mario Jukic. Also, a warm welcome to all participants was

delivered by the former Chapter's President, Mr. Filip Krunic, the Faculty's dean, Mr. Zoran Nakic and the President of SPE Croatian Section, Mr. Vladislav Brkic. The opening Ceremony was embellished by the SPE Student Chapter's Men Choir, which performed several traditional Croatian ballads. The choir’s performance was met with great enthusiasm and applause from the audience. The opening ceremony was followed by, according to students' opinion, the most interesting part of Conference programme, which was the panel discussion on ‘Exploration activities in Adriatic Sea, Yes or No?’ The discussion covered topics ranging from geophysical explorations, drilling activities, field development, production


Irena Mijatovic, Ivan Bosnjak

optimisation issues, transportation and gathering and HSE topics to geopolitical analysis of current situation in oil and gas industry. Along with these topics, the Conference welcomed speakers with talks on Geothermal Energy Recovery as an alternative and ecologically provable energy source, CO2 underground storage developments,

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possible problems in oil transportation pipeline systems, the Croatian LNG project stages and much more. What is more, the workshop section took place in the Faculty's Computer Lab, where world-renowned ECLIPSE and PROSPER software packages were used and the students had an opportunity to run through typical field examples.

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More than 360 participants attended the Conference, with over 50 foreign participants (Padjadjaran University from Indonesia, Gubkin Russian State University of Oil and Gas from Russia, National Mineral Resources University from Russia, AGH University of Science and Technology from Poland, University of Miskolc from Hungary, Ivano-Frankivsk National Technical University of Oil and Gas from Ukraine, Mining University of Leoben from Austria and Technical University of Berlin from Germany). The participants listened to next-to-excellent students’ presentations and the presentations delivered by two Zagreb Faculties’ and foreign universities’ representatives. Twenty distinguished lecturers from the industry shared stories from their extensive experience and encouraged students not to give up on their studies in this harsh period for the industry.

ASEC 2016

The Conference was held under the high patronage of the President of the Republic of Croatia, Mrs. Kolinda Grabar-Kitarovic and the Mayor of Zagreb, Mr. Milan Bandic. The organisation of the Conference was financially supported by the Faculty of Mining, Geology and Petroleum Engineering, SPE Croatian Section, INA d.d., Croatian Hydrocarbon Energy, PSP Okoli d.o.o., PPD d.o.o.. Mreza TV and YoungPetro were the media patrons of the Conference. The fourth edition of this successful Conference will be held in March 2017 in Croatia. More information will be available on our web page: ÈÈ http://spes.rgn.hr and Facebook page: ÈÈ https://www.facebook.com/SPEZG See you all in Croatia in a while! 


Natalia Krygier

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All together in Cracow! Natalia Krygier

For the 7th time students from the farthest corners of the world met at the ‘East Meets West’ International Student Petroleum Congress & Career Expo organized by AGH University of Science and Technology SPE Student Chapter. Throughout the years EmW has become a major, international student event and its popularity is rising every year. The idea behind the congress is to gather people from different parts of the world, universities and companies, the whole Oilfield Industry family in one place where they can make new friendships, meet inspiring people and the brightest minds from all around the world. Technical Presentations, Paper Student Contest, Poster Session, Workshops focus on Oil and Gas exploration and production. Panel Sessions taking

part simultaneously with Career Exhibition and Recruitment Sessions, all beautifully culminated with social events rich in Polish cuisine and culture, making the Congress one of a kind. Again the venue of the conference was held in Cracow, Poland. As the city is sometimes called – the heart of Europe – it is also a former capital of Poland and seat of former kings. The city was set in the place were routes of traders from east and west were crossing. Cracow is undoubtedly among those historical metropolises where heritage not only substantially determines contemporary life, but also settles the matter of the city’s position in Europe. The honorary host of East meets West – AGH University of Science and Technology,

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one of the best technical universities in Central Europe, was established on 20th October 1919. The university cherishes its traditions and educates students to be honest and responsible, both at work and as members of the society, according to its motto: ‘Labore creata, labori et scientiae servio’ (Created in labour, I serve labour and science). 2016 ISPC&CE East meets West started on 20th of April. It was attended by approximately three hundred students from more than twenty countries. As always ‘East meets West’ received huge support from petroleum industry companies, such as: Orlen Upstream, United Oilfield Services, EY MOL Group, Schlumberger, National Oilwell Varco, FMC Technologies and ILF Consulting Engineers. The participants had a chance to present results of their research, ask questions related to the presentations and meet inspiring people. There was a very rich mix of people from the industry and students. The Congress gathered many professionals from different companies, who presented their latest technologies, explained

All together in Cracow!

the company’s policy, strategic plans, and vision and mission goals. During this year’s conference the attenders had a chance to take part in two workshops in order to improve their knowledge and skills. Thanks to National Oilwell Varco, the participants could attend the meeting the theme of which was: ‘Drill bits: types and applications.’ By courtesy of FMC Technologies, our guests had an opportunity to gain knowledge in the field of Subsea Technology. The main topic was the process of operating, mobilising and taking advantage of the existing life span of the Xmas Tree by wet parking. All of the above sessions were held in small tailored groups, which enabled the delivery partners to pass the knowledge effectively on to and create an encouraging environment for the participants. On Thursday and Friday (21th and 22th of April) the attending students shared the results of their scientific research in the form of presentations and posters. The jury noted the exceptionally high


Natalia Krygier

level of competition, with the winners showing creative and unorthodox solutions to particular problems. The students who won this year’s undergraduate contests were: Erini Adamopoulou from Greece (DTU Denmark) for her work at ‘Performance of chemical herders for in-situ burning of crude oil in ice infested waters,’ Nicola Zivelonghi and Christian Mudrak from Austria (NTNU Trondheim) for their poster, which was a theoretical investigation of the flow behaviour of an outcrop analogue reservoir model from Ait Ourir, Morocco. The winner of the PhD Panel became Riverson Oppong from Ghana, representing Gubkin Russian State University of Oil and Gas (Russia) with his presentation on Ghana’s “Oil Fever” and its transformation into economic growth. Of course all the participants had a chance to feel the spirit of Polish hospitality. Each evening there were different activities organised for all the students in order to provide them with opportunities to enjoy Cracow. On the first evening of

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the event a private dinner in a restaurant on the main square in Cracow had place. Professionals, specialists from the universities and students seated all together at long tables, which let them learn more about each other, relax and enjoy delicious Polish cuisine. The Final Party took place in Shakers Music Club and was kept to celebrate the end of a set of brilliant days. It was a chance to rest and relax after three days of hard work, diligence, stress, new experiences and lots of various emotions. Gathering students and Oil & Gas professionals to ensure a place for an international discussion, knowledge and experience exchange in a friendly atmosphere was always the aim of the event. We find it really rewarding that so many people have enjoyed the congress, which is constantly growing and becoming a firmly-established point in the calendars of the international audience from petroleum industry. See you next year in Cracow on 5-7th of April 2017!

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XXIII Energy Conference EuroPOWER

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XXIII Energy Conference EuroPOWER Filip Czerniawski

XXIII Energy Conference EuroPower was held on 13th and 14th April 2016 in Westin Hotel, Warsaw. The meeting was organised by MMC Polska group. The conference gathered key members of the biggest firms in Polish energy sector, government ministers, scientists and commerce representatives. Special guests of the conference were the Deputy Minister Andrzej Piotrowski and Michał Kurtyka from the Polish Ministry of Energy. The event gathered around 500 participants in two days. Overview of the energy sector in Poland

The discussion started with the panel about priorities and directions that the energy sector in Poland should be heading in the future. The main part of the talks covered the topic of energy security. Michał Kurtyka reminded us that in close future Poland would still be dependent on coal energy and it should be taken into consideration while creating European climate policy. At this moment, the government have to figure out if there is a necessity to change the strategy and how to make the energy sector more diversified. The other panels during that day tackled the possibilities that could be brought about by changing the main policy. ‘Innovation and new technologies in energy sector’ was the second panel during the first day. The panellists discussed the national low-emission programme and whether it constitutes a chance to transform Poland’s economy or a threat and that would only cause problems to the country’s market. Even though in the panel the participants agreed that there should be adjustments to European Union

policy introduced, some of them claimed that EU restrictions are far too strict to Poland’s reality and it is simply impossible to adjust to it. European Union policy’s influence on the Poland

During the second day of the conference, the participants discussed a demanding subject of creating unitary energy market in the European Union. While discussing this important matter, the speakers reminded of the Paris Sustainable Innovation Forum resolutions and EU ’s directions for the energy sector. The major problem when it comes to those regulations is that one cannot create a mutual strategy that would be adequate for each country. This is why Leszek Juchniewicz, the moderator of this panel focused on how this knotty idea could influence Poland’s economy and the security of Poland’s energy. Another very absorbing discussion was held within the ‘Energy Data Driven Company’ panel, which consisted of an analysis of data obtained from the customers. In the future these huge amounts of information could be used to answer the customers’ needs. A data analysis will give a solution much faster than it is reached nowadays. This idea is also quite a disturbing one since the information to be analysed is obtained without people’s awareness. The last topic tackled on the EuroPOWER conference was the current energy situation in Poland. Tadeusz Skoczkowski stated that a blackout is not a threat to Poland and that the energy sector is consistent and stabile. He said that a current challenge is to search for innovation in energy and try to make the sector more diversified.


Filip Czerniawski

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In every panel the participants had an occasion to listen to noteworthy representatives of different organisations, such as: Maciej Bando – President of Energy Regulatory Office, Dariusz Kaśków – Chairman of Energa, Jarosław Broda – Vice-Chairman of TAURON Polska Energia, Krzysztof Skóra – Vice-Chairman of KGHM Polska Miedź, Eryk Kłossowski – Chairman of PSE Polskie Sieci Elektroenergetyczne. Each discussion provided a chance to listen to wise and experienced people like Janusz Steinhoff, who shared his opinion on unacceptable situation in the coal industry in Poland and his vision on how to deal with this problem in close future. The conference was a place where, by listening to others, one could get a wider view on the energetic sector

References 1. http://konferencjaeuropower.pl

XXIII Energy Conference EuroPOWER

in Poland and Europe. To conclude, I would like to quote one of the very special participants of the event. I think this sentence offers an accurate view of the conference: Firstly, it is a place to exchange views. Secondly, this is also a place where sometimes we create new ideas. But it is most important so that these ideas and these views which we create here arise in the real economic life. Maciej Bando President of Energy Regulatory Office We encourage you to join the next, 24th edition of EuroPOWER conference on 9th–10th of November 2016! 


Athanasios Pitatzis

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 South-East

Asia LNG demand, opportunities, and risks for Global LNG Industry Athanasios Pitatzis it using LNG. Also, Exxon Mobil predicts that by 2040, Asia Pacific is projected to get more than 40 percent of its gas from other regions, and likely will have overtaken Europe as the world’s largest net gas importer.

ÞÞGreece thanospitatzis@hotmail.com  Country   E-mail According to Exxon Mobil Outlook for Energy 2016 report, global demand for natural gas is seen rising by 50 percent from 2014 to 2040, faster than most other fuels and more than twice as fast as oil. In the same report, Exxon Mobil claims that nearly half the growth in global gas demand through 2040 is expected to be met through inter-regional trade, most of

According to U.S Energy Information Administration (EIA , International Energy Outlook 2016 report), one other hopeful prediction for global natural gas demand is that consumption of natural gas worldwide is projected to increase from 120 trillion cubic feet (Tcf) in 2012 to 203 Tcf in 2040. Furthermore, EIA in the same report predicts that World LNG trade will increase significantly,

Natural gas – projections Gas trade balance by region Conventional production

Unconventional production

BFCD 150

Demand

Fig.1 - Natural Gas Projections, Source: The Outlook for Energy 2016 Version | ExxonMobil. Retrieved May 13, 2016, from http://corporate. exxonmobil.com/en/energy/energy-outlook

Net exports 125

Net imports

100 75 50 25 0

'10 '20 '30 '40 '10 '20 '30 '40 '10 '20 '30 '40 '10 '20 '30 '40 '10 '20 '30 '40 '10 '20 '30 '40 '10 '20 '30 '40 Africa Europe Russia/Caspian Middle East Asia Pacific North Amerika Latin America

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South-East Asia LNG demand, opportunities, and risks for Global LNG Industry

Liquefaction capacity additions over the 2015–19 time period will increase global capacity by over 30% LNG capacity addidtions billion cubic feet per day

Australia

Colombia

Indonesia

Malaysia

United States

Fig.2 - Future Liquefication capacity until 2019, Source: International Energy Outlook 2016 World energy demand and economic outlook – U.S Energy Information Administration. Retrieved May 12, 2016, from http://www.eia.gov/ forecasts/ieo/world.cfm from about 12 Tcf in 2012 to 29 Tcf in 2040. As far as South – East Asia (OECD Asia and NONOECD Asia countries) gas future demand EIA in the International Energy Outlook 2016 report predicts that will increase from 22,4 Tcf in 2012 to 63 Tcf in 2040. South-East Asia LNG market has two categories, the first one is the mature LNG markets and the second one is recent and emerging Asia LNG Markets. Asia LNG mature markets include: ÈÈ ÈÈ ÈÈ

Japan South Korea and Taiwan

On the other hand, recent and emerging Asia LNG markets include: ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ

China India Singapore Thailand Indonesia Malaysia Pakistan Bangladesh Vietnam

According to EIA until 2019 Global Liquefaction capacity will increase by 30 percent. China LNG Future Imports

China LNG future imports will be an essential element for the global LNG suppliers (current and future players) survival. Recent statements from the International Energy Agency (IEA, 2015 World Energy Outlook report) predicts that China future gas demand will be 315 bcm/y for 2020. China future gas demand will determine from these factors: ÈÈ

ÈÈ ÈÈ

ÈÈ

ÈÈ ÈÈ

The future Chinese energy mix with an increasing role of nuclear and renewables and a decreasing role of coal Future China Economic growth China next economic model will move or not to a lower carbon-intensive economy China future natural gas reforms regarding their domestic gas market, for example, the liberalization of China natural gas market Political Instability Fast growing aging population

It is evident from the above inputs that future China natural gas demand faces many uncertainties, and accurate predictions cannot be made.


Athanasios Pitatzis

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Historical (BP Stats) NDRC 2020 Supply High NDRC 2020 Supply Low CNPC 2015 High CNPC 2015 Business as Usual CNPC 2015 Low IEA New Policies Scenario 2015 High Demand Assumption Low Demand Assumption

Fig.3 - China Historical and Future Natural Gas Demand from Various Sources, Source: Asian LNG Demand: Key Drivers and Outlook Report, Oxford Institute for Energy Studies, Retrieved 12 June of 2016, https://www.oxfordenergy.org/publications/asianlng-demand-key-drivers-outlook/ Fig.4 - China Future LNG Imports – Low and High Cases (Bcm/y), Source: Asian LNG Demand: Key Drivers and Outlook Report, Oxford Institute for Energy Studies, Retrieved 12 June of 2016, https://www. oxfordenergy.org/ publications/asianlng-demand-keydrivers-outlook/

Low Case High Case

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ďƒ´

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South-East Asia LNG demand, opportunities, and risks for Global LNG Industry

Demand Domestic Production Pipieline Imports LNG Imports Fig.5 - China Supply and Demand on Base-Low Case Demand Assumptions bcm/y, Source: Asian LNG Demand: Key Drivers and Outlook Report, Oxford Institute for Energy Studies, Retrieved 12 June of 2016, https://www.oxfordenergy.org/ publications/asian-lng-demand-key-drivers-outlook/

Demand Domestic Production Pipieline Imports LNG Imports Fig.6 - China Supply and Demand on High Case Demand Assumptions bcm/y, Source: Asian LNG Demand: Key Drivers and Outlook Report, Oxford Institute for Energy Studies, Retrieved 12 June of 2016, https://www.oxfordenergy.org/ publications/asian-lng-demand-key-drivers-outlook/


Athanasios Pitatzis

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One other key element which will determine the future Chinese LNG imports is the future China natural gas production. A major percentage of this future gas production is estimated to produce from the China vast shale gas reserves. Despite the potential and the momentum the development of China shale/conventional gas reserves face many challenges. These key challenges as I have mentioned already in one of my previous articles are: ÈÈ

ÈÈ

Uncertainty in water supply, which is necessary for the development of shale gas reserves during the process of fracking Monopoly over pipelines network

ÈÈ ÈÈ

ÈÈ ÈÈ

Monopoly over exploration rights Unfair competition between China NOCs and International Oil Companies (IOCs) Imperfect policy system Poor infrastructure

In conclusion, according to Howard V Rogers and its report ‘Asian LNG Demand: Key Drivers and Outlook’ on Oxford Institute for Energy Studies the future China LNG imports has two possibly scenarios. (Observe the graphs below) The main gas pipelines routes from which China import gas are:

Japan Low and High LNG Import Cases (BCM/Y) Japan Low Case Scenario

Japan High Case Scenario

Fig.7 - Japan Future LNG Imports – Low and High Cases (Bcm/y), Source: Asian LNG Demand: Key Drivers and Outlook Report, Oxford Institute for Energy Studies, Retrieved 12 June of 2016, https://www.oxfordenergy.org/publications/ asian-lng-demand-key-drivers-outlook/

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South-East Asia LNG demand, opportunities, and risks for Global LNG Industry

India Future LNG Imports Low Case Scenario India Future LNG Imports High Case Scenario

Fig.8 - India Future LNG Imports – Low and High Cases (Bcm/y), Source: Asian LNG Demand: Key Drivers and Outlook Report, Oxford Institute for Energy Studies, Retrieved 12 June of 2016, https://www.oxfordenergy.org/publications/ asian-lng-demand-key-drivers-outlook/ ÈÈ ÈÈ

ÈÈ ÈÈ

Pipeline Imports – Myanmar Pipeline Imports – Turkmenistan & Central Asia Pipeline Imports – East Siberia Pipeline Imports – West Siberia

ÈÈ

ÈÈ

Future Energy Reforms in electricity and natural gas market Unpredicted natural disasters like earthquakes or tsunamis which can affect the energy policy of Japan

Japan Future LNG Imports

India Future LNG Imports

The main factors which will determine the Japan future LNG imports are:

Some of the key threats – challenges for the future India LNG imports are:

ÈÈ

ÈÈ

ÈÈ

ÈÈ

ÈÈ

The different scenarios for nuclear factories re-starts for power generation The proportion of the renewables in the future energy mix If the country achieves the energy efficiency targets which have already set If Japan can achieve or not in the future an economical extraction of its vast Methane Hydrates deposits Future Stable Economic Growth

ÈÈ

ÈÈ

ÈÈ

ÈÈ ÈÈ

The increasing role of the coal in the India energy mix India economy current and future growth is weak due to many factors such as corruption, poor infrastructure, and fiscal deficits India future domestic shale/conventional gas production Political Instability Geopolitical Tensions with Pakistan


Athanasios Pitatzis

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Asia LNG Future Demand and Supply Balance

of energy can challenge significantly the future development of the LNG industry worldwide Europe can be a new destination for Qatar and the USA LNG exports which were estimated to exported to Asia Decreasing both capital and operating costs for the developers of new projects will be a major target LNG exporters will participate in cooperation with LNG buyers in future LNG receiving terminals with general business aim to increase the LNG demand worldwide Changing in the future contracts of the LNG market

Based on the above graph it is evident that Asia LNG market is oversupplied and will be for the next 8–9 years, this means that LNG spot prices in Asia will remain flat for a long time. My personal estimation is that we can see Asia LNG spot prices between 4–6$ per MMBtu until 2022 at least. Furthermore, due to the future, an extended period of low LNG prices many projects for LNG exports terminals will not get an FID and exist plants which are under construction in a case of future small Asia LNG imports will face many economic challenges.

ÈÈ

Conclusion

Athanasios Pitatzis is an Industrial/Petroleum Engineer and Member of the Greek Energy Forum. He specializes in the development of oil & gas markets in Southeast Europe and the Mediterranean. Also, he is the owner of the website Energy Routes in which he publishes all of his articles for global oil and gas industry, http://energyroutes.eu/ The opinions expressed in the article are personal and do not reflect the views of the entire forum or the company that employs the author. Follow Greek Energy Forum on Twitter at @GrEnergyForum and Athanasios at @thanospitatzis. 

The primary outcomes from our analysis for the Global LNG Industry are: ÈÈ

ÈÈ

ÈÈ

LNG exporters will have small amount of profits for many years National, regional and international policies will affect the future Asia LNG demand significantly Technological improvements and decreasing costs of renewables and storage

ÈÈ

ÈÈ

ÈÈ

Asia's Potential LNG Supply/Demand Asian LNG supply Contracted supplies from Russia, Africa, Canada etc.* US Contracts Sold to Asian Buyers Contracted supplies from Middle East into Asia Uncontracted/flexible supplies from Middle East Asian LNG demand *Excludes portfolio volumes Note: Only SPAs and equity volumes are taken into consideration under contracted supplies. Source: FGE estimates

Fig.9 - Asia’s Potential LNG Supply/Demand, Source: Global LNG Hub, Facts Global Energy Company Presentation A New World Oil Order Emerging in 2016 and Beyond?, By Dr. Fereidun Fesharaki, Chairman, February 18, 2016, Australian Institute of Energy, Sydney, Australia, http://www.globallnghub.com/

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Croatian offshore gas plans – all or nothing

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 Croatian

offshore gas plans – all or nothing

Jakub Frankiewicz

**AGH University of Science and Technology ÞÞPoland jtfrankiewicz@gmail.com   University   Country   E-mail Nowadays states are searching for individual sources of oil and gas in order to constantly improve their national energy security and become independent of price fluctuations on the world market, armed conflicts or political instabilities. Countries located in close vicinity to Russia, especially in Eastern Europe or significantly dependent on Russian gas, do it with particularly strong determination. The paper outlines steps taken in this respect by Poland and Croatia. Each of the two countries has a specific standpoint. Poland attempted to take advantage of the American experiences, aiming at repeating shale success at home. Croatia, after years of stagnation, wants to resume exploitation of the Adriatic oil and gas reservoirs. Each country has chosen a different path to success, but will either of them reach their goals? Similarly to Poland, oil and gas exploration in Croatia enjoys a longstanding tradition. First wells were constructed in 1860s. The first gas field in Croatia was discovered in 1917, while the first oilfield in the country was found in 1941[1]. Until late 1950s exploration continued in several places throughout the country, mainly at shallow depths. In 1952, INA – Naftaplin, the national oil company was established. Later on, the oil and gas exploration gained momentum and many discoveries were made over the next thirty years. During the 1960s more than 170 wildcats were

made and another 180 over the following decade, with a meaningful discovery in Ivana Gas Field in Northern Adriatic, where the Jadran-6 well was drilled in 1973 [2]. This discovery initiated investing in some platforms thanks to which six new gas fields in the Northern Adriatic were discovered. Summing up, 19 oil or oil and gas accumulations and 13 gas accumulations were discovered. In 1980s and 1990s the trend continued. However, over the initial years of the new century the number of drilled wells diminished noticeably. In 1996, a Croatian-Italian joint venture was formed between INA and ENI in order to explore the Northern Adriatic [3]. The result was far better than expected with seven new gas fields discovered. Large numbers of documented gas reserves and plentiful fields led to the division of the whole area into three exploration fields. Despite their considerable scale, the gas fields satisfy merely 60% of the domestic market demand. The remaining 40% needs to be imported. As evidenced in the table above, about two thirds of natural gas demand is covered by domestic production. This is a decidedly good result. Yet, the missing quantity continues to pose a problem as it is mainly imported from one country demonstrating monopolistic inclinations on the European gas market, i.e. Russia. Aware of having to face this problem in the near future, the government is about to sell new licenses for exploration and exploitation of hydrocarbons in the northern Adriatic and in the Pannonian Basin in northern Croatia. The Italian part of the Adriatic is very rich in hydrocarbons. Is Croatian similar? Is it going to be a game-changing event? Will Croatia remain a gas leader in Balkan region?


Jakub Frankiewicz

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Natural Gas

2010

2011

2012

2013

Consumption

3241,5

3165,0

2971,7

2809,9

Import

1069,6

876,1

1357,7

1270,4

Production

2727,2

2471,4

2013,1

1856,1 Units: [mln m3]

Tab.1 - Consumption, Import and Production of natural gas in Croatia - Annual Energy Report. Ministry of Economy, 2013.

A quick glance at location and geology

The Adriatic Sea can be divided into reservoirs differentiating three main basins: northern, central and southern [4]. The Northern Basin is situated southeast from the Po Depression all the way to the Istria Platform. This basin is described as a Pilo-Pleistocene sequence laying on a thick distorted Oligo-Miocene and Mesozoic carbonate platform. The Central Basin is situated between the Istria Cabronate Platform in the north and the Gargano arch in the south. The southern part has a different geological character to that in the north. The Southern Basin is located south from the Gargano Arch. It is the deepest basin and significantly differs in character from the other two. The basin extends much beyond the Croatian border. Playing the Russian rouletee

For decades, Croatia tried to explore and extract gas from the deposits located in the central and southern part of the Adriatic. The first concessions were granted to the INA , the giant state-owned monopolist on the oil and gas market. After a joint venture between INA and ENI was established in 1996, some new reservoirs were found and the production started. For example: Marica and Katarina Fields started production in 2004 and 2006, respectively, Annamaria, Ana, Vesna and Irina Fields started production in 2009 [3].

Croatia, encouraged by the successful exploration of the oil and gas fields in the northern part of the Adriatic, aims at achieving similar results in the central and southern part. Currently, there are 19 operational offshore natural gas platforms, of which 17 are operated by INAGIP Ltd (INA –ENI incorporated joint venture) and two by ED-INA Ltd (INA- Edison incorporated joint venture)[1]. Seeking to encourage international investment in the offshore gas sector, Croatian government enacted a series of reforms in 2013, including updating the nation’s hydrocarbons laws, establishing new legal and fiscal terms and forming a dedicated agency - the Croatian Hydrocarbon Agency - to oversee oil and gas activities [7][8]. Having introduced all the necessary alterations to the law and its accession to the EU, Croatia was able to launch the long-awaited tender procedure for offshore exploration. After nearly three decades of stagnation, finally, the offshore activity gained momentum. For the first time in history, the country opened its maritime borders to foreign capital, coming significantly closer to increasing gas extraction and reducing its dependence on imports. The upcoming auction attracted interest of the industry, which is a testimony to the great potential of the area and the successfully implemented legal reforms. The first round of tender started in April 2014. It included 29 offshore blocks, most of them in waters of medium depth. The size of each block varies from 1000 to 1600 square kilometres; water depth ranges from less than 50 to 1300 metres [9].

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Croatian offshore gas plans – all or nothing

26

Fig.1 - Depression in Adriatic offshore. Exploration and production activities in northern Adriatic Sea, successful joint venture INA and ENI, T. Malvić, M. Durekovic, Z. Sikonja, Z. Cogelja, T. Ilijas, I. Kruljas, Nafta, 2011 In the meantime, Croatia also opened a tender for onshore licenses in Slavonia, eastern Croatia. Six blocks were offered with areas varying from 2100 to 2650 square kilometres [10]. Previously, some part of these blocks had been drilled for oil. The onshore tender was completed much faster and without such significant delays as its maritime counterpart. All blocks were sold to three companies: INA (one), OANDO PLC (one) and VERMILION ZAGREB EXPLORATION (three). The duration of the license is up to 30 years, which includes up to five years for exploration and up to 25 years for exploitation [11]. While the government were trying their best to attract potential investors, many voices opposing the drilling in the Adriatic could also be heard. Not only did the environmentalists oppose the

process, but also ordinary citizens did it out of fear of reduction in revenues from tourism and fishing. The Croatian society remains divided: 52% oppose drilling, appreciating natural beauty more than the potential benefits of gas extraction. Simultaneously, the supporters of drilling emphasize that it may be instrumental in overcoming recession and becoming independent of gas imports. The main threat are the potential oil spills. They could seriously contaminate the Croatian coast, causing irreversible damage to the environment and destroying the country’s fishing and tourism industries, which are sources of its substantial income. On the one hand, the government strongly supports the project, stressing that it will improve the country economic situation, possibly even making gas exports a reality. At the same time, they point to Norway, as an example of a country efficient at protecting its nature, while collecting


Jakub Frankiewicz

27

Fig.2 - Croatian Offshore License Block Boundaries. Croatian Hydrocarbon Agency, 2015 revenues from the oil industry. It is also frequently mentioned that Italy has been exploiting its several drilling areas in the Adriatic without any major accidents so far[12]. Opponents, such as ‘SOS Adriatic’, point out that the Adriatic has a very specific shape, making it extremely difficult to clean in the event of an oil spill. At the same time, they fear that the potential infrastructure will disfigure the landscape, reducing revenues from tourism [13]. Other antagonists, including the mayor of the city of Dubrovnik – a highly popular tourist destination visited by thousands annually – recently signed a resolution against drilling and is strongly persuading the society against it, claiming that the beauty of the country is much more worthy. The tender procedure ended in November 2014 and the companies which placed offers for concessions

were announced less than a month later. A total of 15 out of 29 blocks found potential buyers, which greatly exceeded the expectations of the government. The offers were submitted by three consortiums: OMV with Marathon Oil, ENI with MedOilGas and Croatian INA . Neither global giants like Chevron or Shell, nor companies from the Middle East placed offers on any of the blocks. Eventually, having reviewed the bids, the government granted 10 concessions [14]. The contracts with the selected companies should have been signed in late March or April 2015. However, the deadline was extended several times due to certain problems with the neighbouring countries. At last, contracts were signed in June. Yet, the OMV and Marathon Oil consortium did not sign the contract for all their concessions as a result of a potential border discrepancy with Montenegro. Following the success, the government

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ďƒƒ

28

Croatian offshore gas plans – all or nothing

Fig.3 - Onshore blocks. Croatian Hydrocarbon Agency, 2014

Fig.4 - Comparison of exploration and production activities of countries which have access to Adriatic Sea. Croatian Hydrocarbon Agency, 2014


Jakub Frankiewicz

announced the second round of tender, which should have been launched in autumn 2015 [15]. The 2nd round of tender have not been announced yet, due to the collapse of oil and gas market. Until today, no endeavour was taken in blocks sold in the 1st round of tender. Not wasting a chance

The collapse of the global market could not have come at a worse time for Croatia. Global factors such as oil supply causing a plunge in oil prices or cost reductions introduced by oil companies are highly concerning. However, global factors may possibly have less impact than anybody could suspect. It may be much more damaging if Croatia, once again, fails to keep its promises to investors. Croatian history is full of examples where fast track investments have fallen flat due to polarization of public opinion, which resulted in investment disputes. One should also keep in mind the fact that offshore licensing has not been completed. Only the first round of tender was held and 19 blocks still remain to be sold. If the situation on the global market does not change, the future tenders may prove to be less successful than the original one. All depends on the companies’ standpoint, as well as oil and gas prices on the world market. It is, however, certain that all potential investors will be keeping a close eye on the situation of the concessions already sold. Concession holders may, in fact, encounter serious problems. The lack of oil or gas will surely be an essential threat. However, the all-encompassing bureaucracy may also prove highly problematic and affect the conditions outlined in the tender. A good example is the still unexplained dispute over border discrepancy with Montenegro, which has already contributed to the resignation of one the consortiums. The potential losses may total millions of dollars and one must remember that branding losses are more severe than the lack of gas in the purchased exploration blocks.

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The last factor possibly impacting the success of the project are the environmental issues. Without well-conducted social campaigns and open dialogue, even the best ideas cannot be implemented. These issues are of particular importance in a country deriving most of its revenue from tourism and now facing potential contamination. If efforts to convince the public opinion fall flat, foreign companies may not want to take the risk of drilling, leading to the collapse of the entire project. Surely, one should not unconditionally compromise environmental safety in the name of corporate revenue. But is there really any way our economy can move forward without new industrial investments? The obvious reply should be: yes, there is. Yet, for Croatia, the only reliable answer is: time will tell. Conclusion

The cases described above demonstrate two countries’ attempts at independence in terms of gas imports. Each country tried its best to attract potential investors, however tenders were held at a difficult time for the oil industry. Poland lost its chance mainly due to flawed and inefficient cooperation between local institutions and the greed of the officeholders. The state simply cannot introduce taxes on a resource whose existence remains questionable. In addition, frequent alteration to the mining law caused confusion and uncertainty among industry players. If global trends on the market improve and, in the meantime, Poland conducts a successful legal reform, shale gas may still prove to be a real success, rather than a pipedream. Everything depends on the officials and their political will. Croatia has just completed the first round of tender. Yet, one consortium has already withdrawn because of the existing ambiguities. Despite some successful reforms, bureaucracy may still be an obstacle discouraging new investors from undertaking exploration. Environmental issues pose another urgent problem. Only a carefully prepared social campaign can convince local

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30

people that oil industry and the environment can coexist successfully. At the moment, the future of drilling in Croatia remains uncertain. One has to wait and see what the future holds. Both described countries share the ambition to become independent from imported gas. Each

Croatian offshore gas plans – all or nothing

of them realizes it in a specific way, but both have stumbled upon certain legal problems and the crisis in the oil industry. There is no definite answer as to which should be the chosen path. The most important thing is to make the first step; a step closer to success. 

References: 1. Istrazivanje i eksploatacija ugljikovodika na Jadranu - što trebamo znati?, Croatian Hydrocarbon Agency, Zagreb 2015 2. Exploration and exploitation history, Croatian Hydrocarbon Agency, Zagreb, 2015 3. T. Malvić, M. Durekovic, Z. Sikonja, Z. Cogelja, T. Iliajas, I. Kruljas, Exploration and production activities in northern Adriatic Sea, successful joint venture INA and ENI, Nafta 2011 4. R. Wrigley, A. Marszałek, K. Rodriguez, N. Hodgson, Offshore Croatia – Hunting ‘Big Oil’ in the centre of Europe, First Break 2014 5. The Exploration and Exploitation of Hydrocarbons Act, The Croatian Parliament, Zagreb 2013 6. The Concession Act, The Croatian Parliament, Zagreb 2008 7. 1st Offshore licensing round for license for exploration and production of hydrocarbons, The Government of the Republic of Croatia, Zagreb 2014 8. 1st Onshore licensing round for license for exploration and production of hydrocarbons, The Government of the Republic of Croatia, Zagreb 2014 9. 1st Onshore licensing round results, Croatian Hydrocarbon Agency, azu.hr 10. Interview: Offshore exploration will not endanger Croatian’s tourism, offshoreenergtoday.com, April 2015 11. Why oil drilling in the Adriatic is problematic, soszajadran.hr, November 2015 12. 1st Offshore licensing round results, Croatian Hydrocarbon Agency, azu.hr 13. Croatia confirms offshore license recall. New round in September, offshoreenergytoday.com, July 2015


Maksymilian Łękowski

31

 Mining in the outer space – difficulties

and possibilities Maksymilian Łękowski

Earth, our planet, was formed about 4.54 billion years ago. Even though first humanlike creatures likely to be our ancestors began to live here about 150 million years ago, genus might have started its life merely 2.8 million years ago on this scale. Nevertheless, it is a fair amount of time that shows us how long it took to adjust Earth as a planet so that it became a home for humans. Since many geological processes and human evolution from primitive to modern man have lasted for ages, many advanced technologies that are now used on a daily basis could be developed. Plenty of them are elaborate and require chemical elements and energy resources. With current world’s population

and its demands, the Earth’s resources turn out to be relatively modest. Where else could we look for them? The find the answer might be found in the outer space. Resources are running out

There are 92 chemical elements occurring naturally on Earth and about another 20 produced in laboratories. Unfortunately, only 30 chemical elements are crucially spread. Many do not know that carbon is just the fifteenth chemical element when it comes to its amount in the lithosphere (only 0.048%). Again, this amount appears to be

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Mining in the outer space – difficulties and possibilities

particularly small especially when one thinks of its wide usage. Carbon is just an example; however, many people already know that many resources are running out. People look for alternative solutions, should crucial resources, such as petroleum start to lack. Energy is produced from alternative sources, such as: light and the heat from the Sun (solar energy), biomass, wind (wind power), etc. Those examples are fairly new sources that started to be exploited and they indicate the way that people follow when other resources are running out. However, innovation is constrained and our thinking does not have to go beyond unconventional and sophisticated forms to seek salutary solutions and effects. Actually, we might find the resources we needin the outer space, but where exactly?

impossible to harvest anything from there for now. All we know about Venus is based on radar photography technique and a few signals from a Soviet space probe that in 1972 functioned in the clouds of Venus for barely an hour and suddenly stopped working. The temperature on Mars is completely different and we would face freezing on its surface. One would not call it a habitat but surely the temperature is bearable for humans and machines. On August 6, 2012 a car-sized robot called Curiosity landed on Mars. One of the rover’s goal was to investigate the chemical, isotopic, and mineralogical composition of the Martian surface and near-surface geological materials. In December 2012, Curiosity’s two-year mission was extended indefinitely.

How far can we get?

Drilling on the Martian surface

In one of YoungPetro issues (15th, Spring, “Drilling in space”) our former editors Alina Malinowska and Edyta Stopyra did a great work and wrote about mining on Mars and on the Moon. Today I will try to elaborate on this topic focusing on Mars and updating it with the information about work progress and I will also present difficulties and possibilities that can be encountered in the outer space.

In 2013 the Curiosity rover successfully completed its first drilling tests, using its drill to ‘hammer’ a couple of holes in a slab of bedrock. This very first hammering test involved hitting the bedrock with the drill to create a shallow depression, but without any rotation of the drill bit.

Since Earth is third planet in the Solar System, our neighbours, Mars and Venus, seem to be the only destinations (when it comes to planets) whose exploration is feasible. Unfortunately, Venus is 25 million miles closer to the Sun than Earth, so it means that light comes there two minutes earlier than to us.

By the April 2016 Curiosity has drilled into Mars for the 10th time at a site named Lubango, on sol 1320. The rock was formed in a wet environment characterized by neutral pH and low salinity. The analysis confirmed that the rock contains iron minerals which oxidize in the surface and are not yet oxidized underground. Those are just first desirable steps into Mars exploration which might yield in the future. Common problems with Mars

Considering their size and composition, the two planets are very similar. However, a small difference between their orbit sizes influenced substantially their fate. The temperature of 740 K on the surface of Venus and the pressure over 90 times higher than on Earth make it almost

It is a really interesting planet to explore and many issues must be taken into consideration if pondering upon its exploration, e.g. costs of transportation, time effectiveness, low development of technologies, etc. First of all, there


Maksymilian Łękowski

is almost no oxygen on the planet, 0.146% of its atmosphere is far too low to live through. But surely we ought to forget about humans living on Mars for many, many years. The lack of oxygen may also cause problems with machines’ functioning. The above mentioned Curiosity and its engine had to operate on different technology than the engine is used, for instance, in cars. Moving parts were eliminated and the idea was to use a radioisotope thermoelectric generator, shortly called RTG or RITEG. It is an electrical generator that uses an array of thermocouples to convert the heat released by the decay of a suitable radioactive material into electricity by the Seebeck effect (conversion of heat directly into electricity at the junction of different types of wire) [4]. Although these generators are used in space satellites and space probes, it is still quite an expensive technology. In fact, its cost is just a small percentage of the costs of getting to Mars. Happily, SpaceX and Falcon offer lower and lower prices for transportation of goods and technology to both the International Space Station and Mars. As we can see, mainly the costs of this venture are extremely high and for this moment we would not claim it all adds up

33

to value for money. However, the technology is constantly changing and developing so one day it might be more efficient to extract resources in the outer space. We cannot also exclude people living on Mars. It took Earth billions of years to become home for humans so why not to give the same amount of time to Mars and let our descendants see if it is possible? Fuels

To understand Mars architecture, an important factor is to have methane as rocket fuel. Its production would have place on the surface of the planet. Most of today’s fossil fuels are oils made in a complicated process involving hydrocarbons. It is far easier to produce methane or hydrogen. What happens is that hydrogen becomes liquid in temperatures close to absolute zero. Since corpuscles are really tiny, it is difficult to make them flow through a metal cover and crush them. Due to the hydrogen density, its storage is highly expensive. Therefore, currently hydrogen is not a good fuel for that matter. On the other hand, methane is much easier to use. Methane liquefaction continues in temperatures close to those

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Mining in the outer space – difficulties and possibilities

in which liquid oxygen is formed, so after putting it in a bulkhead between two levels we would not have to worry about different states of matter. Methane is the cheapest fossil fuel on Earth and spaceflight to Mars requires a lot of energy. The atmosphere on Mars is composed of carbon dioxide, and soil enriched in water and ice. As we can see from this simple chemical reaction: ÈÈ

CO + 2H 2O -> CH 4 + 2O2

there is a process of combustion. However, the production of methane requires high-tech and

the costs are still extremely high. But it does not mean that we should not try. To sum up

Exploring the outer space is very fascinating and challenging as well. We must overcome many complication to be able to discover different planets and celestial bodies. Human curiosity is endless and one should do their best to contribute to our common development. In retrospect, who would have thought that mining and energy projects will get to the outer space? 

References: 1. 2. 3. 4. 5. 6.

Bill Bryson, A Short History of Nearly Everything Ashlee Vance, Elon Musk http://planetary.org/blogs/emily-lakdawalla/2016/quick-curiosity-update-sol.html https://en.wikipedia.org/wiki/Radioisotope_thermoelectric_generator http://planetaria.ca/2013/02/curiosity-hammers-a-rock-and-completes-first-drilling-tests http://space.gizmodo.com/8-places-where-the-curiosity-rover-left-drill-holes-on-1733961382


Bakhtawar Khattak

35

Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea Bakhtawar Khattak

**University of Aberdeen, United Kingdom ÞÞPakistan bakhtawar.khattak.14@aberdeen.ac.uk   University   Country   E-mail Oil recovery by reservoir pressure maintenance methods such as water flooding can only recover about 10-20% of oil from a field. For this reason enhanced oil recovery methods such as polymer flooding are conducted to increase recovery beyond that obtained from pressure maintenance methods. The aim here is to quantify the effectiveness of polymer flooding compared with water flooding and study their recovery mechanisms. It was shown that polymer injection specifically for reservoirs in the North Sea are not significantly effective due to the presence of light oil, which can easily be swept by water flooding alone. Polymer flooding in a light oil reservoir gives only about 1-2% more incremental oil compared to water flooding. However, polymer concentration and sweeping time are two very strong components of a polymer flooding strategy which, if applied correctly, can lead to better oil recoveries in the long run. Unconventional reservoirs have become a vital source for oil due to reduction in crude oil production and uncertainty in natural gas prices. In comparison to conventional sandstone and carbonate reservoirs, unconventional reservoirs are not very well understood. As oil and gas are

non-renewable resources the demand for them will only increase in the future. Thus, the exploitation of unconventional reservoirs is crucial to fill the gaps between the supply and demand of our hydrocarbon needs. Enhanced oil recovery (EOR) techniques are required to produce oil from unconventional reservoirs depending on the type of oil present inside them. The most common type of chemical EOR method used is polymer flooding, which essentially increases the sweep efficiency by maintaining the fluid front when the oil is moving towards a production well. Polymers have a viscoelastic property, which means they tend to elongate and compress when moving through a porous medium of varying pore sizes. The rapid changing of diameter of the pores increases microscopic efficiency through pulling and stripping mechanisms, but compared to the increase in sweeping efficiency it provides this is considered minimal [1, 2]. Polymer flooding also has an economic impact, because less water is injected and produced from the field when compared with a simple water flooding technique. However, polymer flooding also has many problems associated with it since it causes permanent damage to the formation due to polymer being absorbed in the sub surface [1]. If oil is still left behind inside the formation after the flooding process, it will be more difficult to extract it due to its reduced permeability, and in most cases would need hydraulic fracturing for subsequent oil recovery.

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Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

The key objective of this study is to evaluate the EOR potential of polymer and water flooding and to study the mechanism with which a polymer flooding proves superior to a simple water flooding technique. For the purpose of achieving this objective, different production plans will be simulated for both the flooding techniques keeping the model constant for both the simulations so that the results can be compared in a closely controlled environment. A black-oil simulation software called PETRELRE developed by Schlumberger will be used for all the simulation procedures. The results of the simulation will be analysed and compared to assess whether a polymer technique would prove beneficial for an oilfield when compared to water flooding, and why it does or does not prove itself better and more reliable. 1. Simulation Procedures

For the purpose of this study a real reservoir found in the North Sea was used for all simulations. The values assigned to the model came from an article entitled “Auk Field Development: A Case History Illustrating the Need for a Flexible Plan” by Ray Buchanan and Laurens Hoogteyling [3].Two softwares were mainly used to make the Reservoir Thickness, ft (m)

30 (9.1)

Porosity, %

12 to 20

Oil Saturation, %

50 to 80

Permeability, darcies

5 to 20

Oil Water Contact, ft (m)

7750 (2360)

Tab.1 - Zechstein reservoir data Gas-oil ratio (GOR), scf/bbl

115

Oil gravity, API

38

Saturation pressure, psi

800

Viscosity, cP

1.2 Tab.2 - Zechstein PVT properties

structural static model and dynamic model of the reservoir, these were Schlumberger Flogrid 2014.1 and Schlumberger Petrel RE 2013.1. 1.1. Introduction to the Auk Field

The Auk Field is located at the south-west of the Fulmar hub in block 30/16 of the North Sea. Production started in late 1972 due to the information gathered by four appraisal wells, with its peak production period in October 1975. Well A11 and A08 produced a total of 75000m3 of oil per day close to the region of appraisal well 30/16-3. The reservoir pressure declined at this point and was thus lower than it was initially anticipated; hence the initiation of water injection was post-poned [3]. Operated by Shell/Esso the discovery well 30/16-1 first stumbled upon oil bearing Zechstein dolomite in 1971 under a Cretaceous chalk unconformity. The underlying Rotliegend formation below the dolomite was found to be water bearing, which meant that the actual reservoir was very thin with the oil water contact at 2350m below sea level. Appraisal wells 30/16-2 and 30/16-3 located to the south-east and east of the first appraisal well also confirmed the existence of the oil producing Zechstein dolomite. However, appraisal well 30/16-4 north-east of the discovery well found chalk resting on the water bearing Rotliegend sand with the entire Zechstein eroded, which represented the end of the reservoir boundary [3]. Well testing carried out on the Auk field showed that the Zechstein dolomite was oil producing with a rate of 938m3 of oil per day, suggesting that the Zechstein layer could be highly fractured with high permeability. The oil found in the reservoir was light, undersaturated and of very good quality with an API gravity of 37. However, there were many uncertainties in the information gathered by the four appraisal wells mainly due to the poor seismic data obtained prior to drilling. This led to the areal spread and structural altitude being initially very poorly defined. The initial oil in place, which was estimated to be between 3:2 and 6:3 106 sm3, was thus questionable [3].


Bakhtawar Khattak

37

1.2. Static and Dynamic Models

Using the data provided in Table 1, the static model of the reservoir was made. Table 2 contains the data which was used to make the dynamic model of the reservoir, which was interpolated throughout the entire gross rock via a Random Gaussian method, which gave the model varying levels of heterogeneity. Figure 2 shows the distribution of the final dynamic model of the reservoir porosity. In most reservoir rock formations the permeability in the horizontal k x and ky are almost the same. Figure 3 shows the distribution of Permeability in the k x (same for ky). The permeability in the k z direction is low compared to k x and ky. So as standard practice the permeability multiplier of k z is set to 0.1 of k x and ky (shown in Equation 1 and 2).

ÈÈ

k x = k y > k z

(1)

ÈÈ

k z =

(2)

0 :1 k x

1.3. Oil Initially in Place (OIIP) Forecasting

After the dynamic model up-scaling the oil-water contact was added a depth of 2360 m to the model. Separating the fluid zones would help evaluate the volume of oil present inside the reservoir. Volumetric analysis conducted on the model showed that the reservoir had 7 106sm3 of oil. According to our reference document [3], it was initially estimated that the OIIP of the reservoir was between 3:2 to 10:6 106sm3, which, with the results obtained from the volumetric analysis, is well within range proposed in the literature. 1.4. Field Development Strategy

There were two field development strategies made for the Auk field simulations. The first strategy called the ‘Base Case’ (shown in Figure 5)

consisted of putting one production well close to the zone of appraisal well 30/16-3 because this is where the well test results for the Auk Field showed promising flow rate performance. The well was set to produce for 10 years to see how much oil can be produced from the reservoir by natural pressure depletion. The base case will help in evaluating the primary recovery effectiveness of the reservoir since no method of reservoir pressure maintenance will be used. The second development strategy called the ‘Water Injector Case’ (shown in Figure 6) consists of a typical 5-spot well pattern in the field with one production well (white) in the center of the Auk field and four injector wells (blue) around the production well. The Water Injector Case would serve the purpose of calculating the effectiveness of secondary and tertiary recovery processes on the field by pushing water and polymer through the four injector wells, which will be the third development case called the ‘Polymer Injector Case’. 2. Results and discussion

All simulation cases ran for a total field production time of 10 years to give better comparable values for oil recovery for the Base case, Water Injector case, and Polymer Injector case. Table 4 shows all controlled parameters that were consistent for all simulation cases. The base case consisted of one production well producing under the natural pressure depletion of the reservoir. Figure 7 , Figure 8 and Figure 9 show the reservoir cumulative oil production, oil production rate and the reservoir pressure at the end of 10 years. It can be seen from Figure 9 that the reservoir pressure almost linearly falls from the start of oil production. This leads the oil production rate (shown in Figure 8) of the field also to decrease almost linearly as the base case development strategy progresses. This behaviour of the reservoir can be traced back to Darcy’s law, where the change in pressure rate is responsible for the volumetric flow

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Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

Case

STOIIP (in oil)

Recoverable oil

Volumetric

5:82 106sm3

3:43 106sm3

Tab.3 - Volumetric Analysis Summary

Simulation Start Date

1 Jan 2015

Field Oil Production Start Date

5 May 2015

Polymer Slug Start Date (where applicable)

1 Jan 2019

Polymer Slug End Date (where applicable)

1 Jan 2020

Water Injection Start Date (where applicable)

1 Jan 2020

Simulation End Date

1 Jan 2025

Oil Production Rate

2000 sm3/day

Water Injection Rate (where applicable)

4000 sm3/day

Bottom Hole Pressure

500 bar

Tubing Pressure

450 bar

Tab.4 - Controlled Parameters of Simulations

of the reservoir fluid. As the reservoir pressure falls the oil production rate also starts to fall according to Equation which shows that the fluid flow-rate is directly proportional to the pressure change inside the formation. 2.2. Water Injection Case Results

As mentioned in field development strategy (Section 2.4),the water injector case consisted of four injectors and one production well which were in the same location as in the base case. Simulation results for 10 years of field production showed slightly different results compared with the base case due to the addition of four injector wells in the field.

Figure 10 shows the cumulative oil production for the Water Injector Case and the Base Case. It can be seen that the water injector case produced around 1:30 106sm3 of oil at the end of 10 years. The reason for this can be interpreted better by looking at the reservoir pressure and the field oil production rate which are shown in Figure 11 and Figure 12 respectively. When evaluating Figure 11 it is apparent that when all four injectors turn on in the start of 2020 the field pressure data shows that the reservoir pressure is better maintained till the end of the development plan, compared to the base case. This leads to better oil production rates for the 10 year development strategy, when a secondary oil recovery technique is used for the Auk field. When comparing the trends of the oil production rate plot it can be seen that for the water injector case in the year 2020 the oil production rate is maintained at 320 sm/day3 for the next 3 years until 2023 where it shows signs of declining. In contrast, for the base case not only is the oil production rate smaller in year 2021 compared to the water injector case but it continuously decreases until 2025. The shaded region in Figure 12. shows the incremental oil recovery of the water flooding method, which is defined as the oil recovered by an EOR technique exclusively. 2.3. Polymer Injector Case Results

The polymer slug in the polymer injector case was injected into the field at the start of 2019, and was followed by starting the water injectors at the start of 2020 similar to the water injector case. The Polymer Injector Case showed very small increase of oil recovery when compared to the water injector case as shown in Figure 13. Two main reasons can help to explain why the polymer injection failed to show significant recoveries over the water injector case. These include the API gravity of the oil inside the reservoir and the fact that the polymer slug was not given sufficient time to sweep the reservoir. The oil inside the Auk Field is a very light


Bakhtawar Khattak

oil with an API gravity of 38 which can be easily swept away by a simple water flooding technique inside the formation. Since polymer flooding is a tertiary form of recovery or an enhanced oil recovery method it is mainly targeted to recover oils that are heavy and extremely viscous, which is why compared to the water injector case the recovery factor is very small.

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2.5. Results Summary

Figure 14 and Figure 15 show similarly small changes to the oil production rate and the pressure response of the reservoir. To confirm that the total time for which the polymer slug swept the reservoir was really small for the polymer injector case, the development strategy was modified to evaluate this prediction in another case called the Polymer Mod Case. Here the polymer slug was injected into the reservoir at the start of simulation (5th May 2015) and followed by a slug of water until the simulation end date (1 January 2025) to give sufficient time for the polymer to sweep the formation effectively.

Table 5 displays the oil recovery of all simulation cases. It is important to note that the total oil recovery factor is strongly dependent on the simulation time given for each development strategy. All cumulative oil production graphs for the three cases show a trend going upwards at the end of simulation time. This could mean that if the simulations were ran for more than twenty or thirty years, they could show very significant oil recoveries, especially when considering the Base Case and the Water Injector case. However, in section 2.3 the volumetric report for the Auk Field showed that the total recoverable oil was of around 3:43 106. According to the figures shown by the volumetric report, the total amount of recovered oil from the total possible recoverable oil would be 34.69% for the Base Case, 36.15% for the Water Injector Case, and 36.44% for the Polymer Injector Case, which is very promising for just 10 years of field oil production time.

2.4. Polymer Mod Case

3. Conclusion

As mentioned in the previous section, the modified polymer injector case was designed to see if the low oil recovery could be due to the polymer not having been given sufficient time to sweep the formation. The polymer slug for this simulation was injected at the start of the simulation for one year followed by injecting water until the end of the simulation in 2025. Figure 16, Figure 17 and Figure 18 show the cumulative oil production, oil production rate and reservoir pressure, respectively, for the Polymer Mod Case. The oil production cumulative graph (Figure 16) shows better oil recovery for the Polymer Mod Case. Likewise it shows better incremental oil recovery rates when comparing the oil production rate of the graph. This is because the pressure graph (Figure 18) for the Polymer Mod Case shows very good pressure maintenance from the polymer slug and the water injection, which barely drops from the start of the production date until the end.

Simulation results for water and polymer flooding showed significant incremental oil recovery rates for both methods compared to the oil production rate by natural pressure depletion of a reservoir. However, when comparing polymer flooding recovery to a water flooding method, there was a very small increase in oil recovery of about 0.2%, which is not significant enough to convincingly say that polymer flooding is better. This is the case for reservoirs containing light oils, since these types of oils can easily be mobilized by water alone. Polymer flooding could prove significantly better for heavy oil reservoirs where the viscosity of water is not sufficient enough to give favourable mobility ratios. Sweeping time for a polymer slug is also very important in considering oil recoveries. The results of this report showed a massive incremental oil recovery when the polymer slug was injected in the start of the field production cycle. Simulations in this

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40

Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

report were only run for 10 years of field production. However, when compared to production cycles in real world reservoirs that produce for 30–40 years, the results are convincing enough to conclude that polymer injection is better than water injection methods. It can conclusively be said that for reservoirs in the North Sea implementation of polymer flooding is not required since most of the oil in the North Sea ranges between 35–40 API gravity, which is considered to be lightoil. If water flooding alone was given enough time to produce, it would recover the same amount of oil that a polymer flooding can. Ifproduction time is not an issue, it will be uneconomical to implement polymer floods here. Recommendations

Simulations shown in this report lack accuracy since they have not been history matched to actual field data. Ideally for any studies involving

Case

Oil Produced (sm3)

Oil Recovered

Base

1,38 106

20.44%

Water Injection

1,24 106

21.30%

Polymer Injection

1,25 106

21.47%

Tab.5 - Simulation Results Summary

Fig.1 – Auk Field contour map

simulations, history matching is one of the most important factors which can accurately predict how a field would react to changes. The polymer flooding model based in this report was multiplied by a co-efficient for variables such as polymer concentration, adsorption and viscosity, which also changed the relative permeability of the model by the same factor. However, in reality the relative permeability changes dynamically with change to the polymer. For this reason a proper function should be used to give better estimations. Studies into sensitivity analysis such as injection rate and polymer slug velocity should also be conducted since these are the most important factors that need to be considered before a flooding process can be implemented. Lower injection rates might give favourable oil recovery due to the fact that the polymer has more time to interact with the formation. However, given that the adsorption of polymer damages formation, it does not necessarily mean that the injection rate should be always kept to a minimum. 


Bakhtawar Khattak

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Fig.2 - Dynamic Model – Porosity Distribution

Fig.3 - Dynamic Model – PermX Distribution

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Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

Fig.4 - Dynamic Model – PermZ Distribution

Fig.5 - Base Case – One Production Well


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Fig.6 - Water Injector Case – a 5 Spot Well Pattern Showing One Production Well and Four Injector Wells

Oil Production Cumulative

Fig.7 - Base Case – Cumulative Oil Production

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Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

Oil Production Rate

Pressure

Fig.8 - Base Case – Oil Production Rate

Fig.9 - Base Case – Reservoir Pressure


Bakhtawar Khattak

45

Oil Production Cumulative

Pressure

Fig.10 - Water Injector Case – Oil Production Rate

Fig.11 - Water Injector Case – Reservoir Pressure

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Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

Oil Production Rate

Oil Production Cumulative

Fig.12 - Water Injector Case – Oil Production Rate

Fig.13 - Polymer Injector Case – Cumulative Oil Production


Bakhtawar Khattak

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Oil Production Rate

Pressure

Fig.14 - Polymer Injector Case – Cumulative Oil Production

Fig.15 - Polymer Injector Case – Reservoir Pressure

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Quantitative Analysis of Water and Polymer Flooding – A Study of the North Sea

Oil Production Cumulative

Oil Production Rate

Fig.16 - Polymer Mod Case – Cumulative Oil Production

Fig.17 - Polymer Mod Case – Oil Production Rate


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Pressure

Fig.18 - Polymer Mod Case – Reservoir Pressure

References 1. N.A. James, J. Sheng, Status of polymer flooding technology, Journal of Canadian Petroleum Technology. 2. W. Littmann, Polymer Flooding, Elsevier Science. 3. L. H. Buchanan Ray, Auk field development: A case history illustrating the need for a flexible plan, Journal of Petroleum Technology.

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3


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How It Works?

52

How It Works? Wojciech Kurowski

Today, I would like to present you how exactly a drilling fluid works. For most of people who have never heard about it before, the drilling fluid is an insignificant liquid. Nevertheless for oil engineers it is a “spiritual” substance which allows them to accomplish any wellbore.

ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ

exports hydraulic energy to tools and bits, controls corrosion, ensures adequate formation evaluation, simplifies cementing and completion, minimizes impact on environment.

Types. A brief history of drilling fluid.

The first mention about the drilling fluid we can find in archeological artifacts. Everything indicates that water was the first kind of drilling fluid. In the era before Christ, the Chinese were using water to soften and permeate ground. It facilitated exploitation of hydrocarbons (probably oil). A few centuries later, local oil engineers from Texas established a new useful term: “mud”. It is believed that the drillers used the mud from water-downed field to lubricate a drill bit.

Depending on the drilling methods, the used equipments and the type of drilled rocks we have to use different kind of the mud. At this point we ought to pay attention on their special features and notice their physical and chemical differences. Many types of drilling fluids are used without any changes but some wells require different components or their combination. Based on above information we can highlight three main categories: ÈÈ ÈÈ

Nowadays, the technology and chemistry of drilling fluids have become more complex and turned out to specific branch of knowledge. Properties.

Properly designed and performed the mud has to fulfill several basic functions inter alia: ÈÈ ÈÈ ÈÈ ÈÈ ÈÈ

ÈÈ

removes cuttings from well, suspends and releases cuttings, controls formation pressures, maintains wellbore stability, cools, lubricates and supports the bit and drilling assembly, minimizes formation damage,

ÈÈ

water-based, oil-based, gaseous.

Additionally, more and more oilfield service providers are using new components like polymers, synthetic oils or foams. How it works?

The preparation of suitable formulation requires description of behavior of the mud, therefore, oil engineers have to choose appropriate rheological model using specialized computer programs and complex mathematical equations. Currently, we can distinguish two methods of injection. The first one assumes that the drilling


Wojciech Kurowski

fluid is pumped from the mud pits to the drill pipe. Fluid under pressure flows through the drill pipe to the bottom where it sprays out of nozzles on the drill bit and then flows back between the drill string and the wall of the hole, carrying the drill cutting to the surface, where it is recovered and cleared.

53

The second method is very similar with the only difference that the drilling fluid is pumped from the mud pits to the annular space. Considering that the drilling fluids are only chemical substances we should appreciate their invaluable roles. 

References: 1. www.rigzone.com 2. www.wikipedia.org

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