APR.

2, 2018 | USD 20

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EOR
REPORT
OFFSHORE
OPERATIONS

TURKEY’S BASIN-CENTERED GAS PLAY

MEETING NEW BUNKER SULFUR RULES
UNDERSTANDING DISTILLATION TRAYS

180402ogj_C1 1 3/26/18 4:43 PM

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180402ogj_C2 2 3/26/18 4:43 PM

 CONTENTS
Apr. 2, 2018 Volume 116.4

GENERAL INTEREST SPECIAL REPORT SPECIAL REPORT

OFFSHORE OPERATIONS EOR REPORT
Selling US LNG to KPC lets prefeasibility
Europe requires study for Kuwaiti refining Study questions CNOOC studies steam
commercial terms, capacity expansions stratigraphic traps’ recovery in offshore Bohai
speakers say 29 predrill risks heavy oil field
24 Edwige Zanella Wankun Xu
Sonatrach updates Jamie Collard Fengyi Zhang
British Columbia offers refining plans Dawei Wang
conditional LNG 30 36 Tingting Wu
project incentives Xiaoha Dong
25 BPCL lets contract Continuous pack-off Jinze Xu
for Kochi refinery inflow control device Zhangxin Chen
Papua New Guinea 31 lowers water cut offshore
white paper addresses China 46
domestic gas use Chevron Phillips Feng Li
25 Chemical commissions Xiaoping Li Nanofluids hold EOR
USGC ethane cracker Bailin Pei potential in Egypt’s
ADNOC signs deals 31 Songmei Zhang Western Desert
with Total, CNPC Hailong Wang Sayed Gomaa
for offshore concessions Argentina moving to Guojiang Feng Adel Salem
26 develop tight shale oil Jianchang Wu Mohamed Hassan
and gas, speakers say Xiaoling Li
Wide WTI-WCS spread 32 52
cuts oil sands output 56
28 ADNOC lets contracts for
Ruwais refinery Subsea pipeline projects
Court rejects NYSDEC’s 34 advance in 2018
appeal of FERC’s Valley Christopher E. Smith
Lateral ruling
28 72
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WATCHING GOVERNMENT 85
on p. 36. Photo from Ophir Energy. P1

180402ogj_1 1 3/28/18 11:46 AM

180402ogj_2 2 3/27/18 3:37 PM
 THRACE BASIN PROSPECT FIG. 1
VALUE CREATION FIG. 10
BULGARIA Black Sea
Statoil partnered blocks 2.5
Other licenses
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Present-value investment, million $

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Study questions CNOOC studies steam Study evaluates refiners’ Subsea pipeline projects
stratigraphic traps’ recovery in offshore Bohai options to meet 2020 advance in 2018
predrill risks heavy oil field bunker fuel sulfur rules Christopher E. Smith
Edwige Zanella Wankun Xu Tayseer Abdel-Halim 72
Jamie Collard Fengyi Zhang Matthew Yu
36 Dawei Wang 60
Tingting Wu
South Africa oil and Xiaoha Dong BEYOND BACK-TO-
gas law could accelerate Jinze Xu BASICS: PROCESS
exploration in 2018-19 Zhangxin Chen PRINCIPLES AND
Tayvis Dunnahoe 46 CONCEPTS—5:
40 Understanding how
Nanofluids hold EOR distillation trays work
Basin-centered gas potential in Egypt’s Norman P. Lieberman
play developed Western Desert 68
in western Turkey Sayed Gomaa
Tayvis Dunnahoe Adel Salem
44 Mohamed Hassan
52

Continuous pack-off
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lowers water cut offshore
China
Feng Li
Xiaoping Li
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56

180402ogj_3 3 3/28/18 11:46 AM

 HRM FOR THE
OIL & GAS OGJ
INDUSTRY
®

In Houston John Thorogood Drilling Global Consultant LLP,

410 Pages/Hardcover/2016
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OGJ ®
Newsletter International News
for oil and gas professionals
GENERAL INTEREST Q U IC K TA K E S
Cypriot gas dispute colors Turkey-EU summit
A meeting in Varna, Bulgaria, between Turkish President Recep
Tayyip Erdogan and leaders of the European Union ended with
repeated EU condemnation of Turkey’s recent interference with
oil and gas exploration off Cyprus.
“The European Union stands united behind the Republic
of Cyprus,” declared Donald Tusk, president of the European
Council, in Varna.
Just days before the summit, the EU had said it “strongly
condemns Turkey’s continued illegal actions in the Eastern
Mediterranean and the Aegean Sea and underlines its full soli-
darity with Cyprus and Greece.”
Omer Celik, EU affairs minister, called that statement “not
acceptable for Turkey.”
Turkish military vessels in February prevented Eni from
moving a drilling rig to Block 3 off Cyprus from Block 6, where
it had drilled a gas discovery designated Calypso (OGJ Online,
Feb. 9, 2018).
Turkey’s government says the exclusive economic zone
claimed by Cyprus overlaps Turkish territory and argues that
gas development sanctioned by the Greek Cypriot government
violates rights of Turkish Cypriots in the divided island.
The unresolved dispute over oil and gas exploration off Cy-
prus simmered in the background as Erdogan, Tusk, and oth-
er EU officials debated broader controversies over migration,
combatting terrorism, the rule of law in Turkey, and Turkey’s
involvement in Syrian conflicts.
After the meeting, Erdogan said EU membership remains “a
strategic goal” of Turkey, which has been in negotiations over
EU accession since October 2005.
Statoil’s name to be changed to Equinor
Statoil SA will become Equinor.
The name will change after a shareholder vote scheduled
May 17. The Norwegian government, Statoil’s majority share-
holder, supports the proposal by the board of directors.
“The name change supports the company’s strategy and de-
velopment as a broad energy company,” a company statement
said.
6 Oil & Gas Journal
180402ogj_6 6
Apr. 2, 2018
For up-to-the-minute news,
visit www.ogjonline.com
Dio named chairman, president of BP Americas
Susan Dio has been named chairman and president of BP
Americas Inc.
She has worked for BP for 33 years, most recently as chief
executive of BP Shipping. A chemical engineer, Dio has worked
in the US, UK, and Australia.
She succeeds John Minge, who has led BP Americas since
February 2013. At the request of the National Petroleum Coun-
cil, Minge will chair a study of carbon capture, utilization, and
storage.
He will retire from BP in March 2019.
Watkins to step in as Shell US president
Royal Dutch Shell PLC has made changes to its US leadership
team.
Former Maersk Oil Chief Executive Officer Gretchen Wat-
kins will succeed Executive Vice-Pres. Greg Guidry, who will
leave Shell June 31, following 36 years with the company. Wat-
kins will join Shell on May 1 and will be appointed executive
vice-president unconventionals, effective July 1. She will report
to the upstream director and be based in Houston.
Shell Oil Co. Pres. and US Country Chair Bruce Culpep-
per plans to step down Dec. 31 following 37 years of Shell ser-
vice. Concurrent with Culpepper stepping down, Watkins will
assume the role of Shell Oil president and US country chair.
While serving in her expanded role, Watkins will retain her
title as executive vice-president unconventionals.
EXPLORATION & DEVELOPMENT Q U IC K TA K E S
Governors extend Tri-State shale deal through 2021
The governors of Ohio, Pennsylvania, and West Virginia agreed
to extend a 2015 agreement to cooperate on developing shale oil
and gas resources in their states through Dec. 31, 2021. Their
Mar. 21 action continues an effort to show the Appalachian ba-
sin’s shared goal to assure the gas will attract manufacturers to
the region instead of simply being exported, Pennsylvania Gov.
Tom Wolf (D) said in Harrisburg.
“The shale gas resources in the Appalachian basin represent
enormous economic opportunity not just for Pennsylvania, but
for the region as a whole,” Wolf said. “We have a unique propo-
sition: abundant and low-cost feedstock for petrochemical and
3/28/18 12:16 PM
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 ICE BRENT / NYMEX LIGHT SWEET CRUDE US INDUSTRY SCOREBOARD — 4/2
$/bbl
71.00
70.00
69.00
4 wk. 4 wk. avg. Change, YTD YTD avg. Change,
Latest week 3/16 average year ago1 % average1 year ago1 %
68.00
67.00 Product supplied, 1,000 b/d
66.00
Motor gasoline 9,276 9,102 1.9 9,055 8,672 4.4
65.00 Distillate 3,899 4,081 (4.5) 4,051 3,940 2.8
64.00 Jet fuel 1,723 1,643 4.9 1,684 1,594 5.6
Mar. 21 Mar. 22 Mar. 23 Mar. 26 Mar. 27
Residual 322 399 (19.3) 299 439 (31.9)
Other products 5,267 4,304 22.4 5,511 4,945 11.4
TOTAL PRODUCT SUPPLIED 20,487 19,529 4.9 20,600 19,590 5.2
WTI CUSHING / BRENT SPOT Supply, 1,000 b/d
$/bbl Crude production 10,360 9,090 14.0 10,141 9,009 12.6
71.00 NGL production2 3,995 3,471 15.1 4,003 3,531 13.4
70.00 Crude imports 7,487 7,863 (4.8) 7,714 8,171 (5.6)
69.00 Product imports 2,065 2,187 (5.6) 2,095 2,214 (5.4)
Other supply2 3 2,410 1,973 22.1 2,324 2,257 3.0
68.00
TOTAL SUPPLY 26,317 24,584 7.0 26,277 25,182 4.3
67.00 Net product imports (2,756) (2,736) — (2,739) (2,666) —
66.00
65.00 Refining, 1,000 b/d
64.00
Mar. 21 Mar. 22 Mar. 23 Mar. 26 Mar. 27 Crude runs to stills 16,240 15,482 4.9 16,404 16,176 1.4
Input to crude stills 16,557 16,140 2.6 16,751 16,503 1.5
% utilization 0.9 86.7 — 0.9 89.3 —

NYMEX NATURAL GAS / SPOT GAS - HENRY HUB Latest Previous Same week Change,
$/MMbtu
Latest week 3/16 week week1 Change year ago1 Change %
2.700 Stocks, 1,000 bbl
2.680 Crude oil 428,306 430,928 (2,622) 533,110 (104,804) (19.7)
2.660 Motor gasoline 243,065 244,758 (1,693) 243,468 (403) (0.2)
2.640 Distillate 131,044 133,066 (2,022) 155,393 (24,349) (15.7)
2.620 Jet fuel–kerosine 40,976 41,582 (606) 41,829 (853) (2.0)
2.600
Residual 32,746 33,416 (670) 39,573 (6,827) (17.3)
2.580 Stock cover (days)4 Change, % Change, %
2.560
Mar. 21 Mar. 22 Mar. 23 Mar. 26 Mar. 27
Crude 26.4 26.9 (1.9) 34.2 (22.8)
Motor gasoline 26.2 26.6 (1.5) 26.7 (1.9)
Distillate 33.6 33.5 0.3 38.1 (11.8)
ICE GAS OIL / NYMEX HEATING OIL Propane 26.9 26.4 1.9 37.3 (27.9)
¢/gal Futures prices5 3/23 Change Change Change,%
200.00
198.00
Light sweet crude ($/bbl) 64.16 61.31 2.85 48.50 15.66 32.3
196.00 Natural gas, $/MMbtu 2.63 2.73 (0.10) 2.96 (0.33) (11.1)
194.00
192.00 1
Based on revised figures. 2OGJ estimates. 3Includes other liquids, refinery processing gain, and unaccounted for crude oil. 4Stocks
190.00 divided by average daily product supplied for the prior 4 weeks. 5Weekly average of daily closing futures prices.
188.00 Source: Energy Information Administration, Wall Street Journal
186.00
Mar. 21 Mar. 22 Mar. 23 Mar. 26 Mar. 27

BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE
2,400
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU 2,100
2,271

¢/gal 2,058

93.00 1,800
91.00
1,500
89.00
87.00 1,200
85.00
83.00 300
213
81.00 0
79.00 Feb. 17 Mar. 17 Apr. 17 May 17 Jun. 17 Jul. 17 Aug. 17 Sept. 17 Oct. 17 Nov. 17 Dec. 17 Jan. 18 Feb. 18
Mar. 21 Mar. 22 Mar. 23 Mar. 26 Mar. 27
Note: Monthly average count

BAKER HUGHES RIG COUNT: US / CANADA

NYMEX GASOLINE (RBOB)2/ NY SPOT GASOLINE3 1,000
¢/gal 900 995
809
203.00 800
202.50 700
202.00 600
201.50 500
201.00 400
200.50 300
200.00 200
199.50 100 185 161
Mar. 211 Mar. 221 Mar. 231 Mar. 261 Mar. 271 0
1Not 1/6/17 1/20/17 2/3/17 2/17/17 3/3/17 3/17/17 1/5/18 1/19/18 2/2/18 2/16/18 3/2/18 3/16/18
available 2Reformulated gasoline blendstock for oxygen blending
3Nonoxygenated 1/13/17 1/27/17 2/10/17 2/24/17 3/10/17 3/24/17 1/12/18 1/26/18 2/9/18 2/23/18 3/9/18 3/23/18
regular unleaded
Note: End of week average count

8 Oil & Gas Journal | Apr. 2, 2018

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 plastics manufacturing, all within the same geographic foot-
print.” Ohio’s John R. Kasich (R) and West Virginia’s James C.
Justice (R) also signed the extension.
Under the Tri-State Shale Coalition agreement, the states
work together on issues in infrastructure, workforce develop-
ment, and marketing to harness the potential of Appalachian
gas and natural gas liquids, Justice said. The coalition identi-
fies key areas for cooperation to help the gas industry grow,
and holds annual summits where government, education, and
industry leaders share information and best practices, he noted.
Kasich pointed out that since becoming part of the coali-
tion in 2015, horizontal shale wells in Ohio have produced an
average 19.2 million bbl of oil and 1.36 tcf of gas—increases
of 275.5% and 619.4%, respectively, from the 3-year average
preceding the agreement. Production of gas has increased each
consecutive year since 2014, he added.
“Instead of competing, our three states are working together
to promote the region as a center for shale-related manufactur-
ing,” said Justice.
Pemex, Lewis to develop Eagle Ford field
Mexican state oil company Petroleos Mexicanos (Pemex) signed
an exploration and extraction contract with privately held US
firm Lewis Energy Group for work in Olmos field in the north-
ern border state of Coahuila, the company said.
With an expected investment of $617 million, the goal is to
assess and develop the Eagle Ford field in Mexico with sights
set on producing 117 MMcf of natural gas by 2021, Pemex said.
Lewis Energy has drilled more than 500 wells in the Eagle
Ford, focusing on natural gas production. The company has
executed a public works contract in Olmos field for 14 years.
Olmos field is estimated to contain 800 bcf of gas.
India extends open-acreage bid round
India’s Directorate General of Hydrocarbons has extended into
May 2 the bidding under its open acreage licensing program,
which opened Jan. 18 (OGJ Online, Jan. 19, 2018).
The Ministry of Petroleum and Natural Gas unit gave no
reason for the extension.
The round, for which bidding originally was scheduled to
close Apr. 3, offers 55 blocks covering 59,282 sq km nominated
by oil and gas operators. It’s India’s first use of open-acreage
licensing.
Of blocks open for bid, 46 are onshore, 8 are in shallow
water, and 1 is in deep water.
China, Philippines eye joint exploration
The governments of China and the Philippines say they’re mov-
ing toward cooperative offshore oil and gas exploration.
The countries have been locked in a territorial dispute over
parts of the South China Sea.
The island nation won an arbitration challenge to China’s
claim to most of the sea in 2016. Brunei, Malaysia, Taiwan, and
Vietnam also dispute the Chinese claim.
10
180402ogj_10 10
Last year, Philippines President Rodrigo Duterte approved
negotiations with the Chinese government over the possibility
of joint exploration (OGJ Online, Aug. 17, 2017).
After a meeting this month with Philippine Foreign Sec.
Alan Peter Cayetano, Wang Yi, the Chinese foreign minister,
told reporters the countries will “in a prudent and steady way
advance cooperation on offshore oil and gas exploration.”
Cayetano said the talks yielded “very positive momentum.”
Apache finds oil at Garten prospect in UK North Sea
Apache Corp., Houston, reported making an oil discovery on
Block 9/18a Area-W in the UK North Sea. The Garten discovery
well lies 6 km south of the Beryl Alpha platform.
The Garten well targeted a downthrown structural closure
and encountered more than 700 ft of net oil pay in stacked,
high-quality Jurassic-aged sandstone reservoirs. Recoverable
resource is expected to exceed 10 million bbl of light oil, which
is at the high end of predrill estimates, Apache said. Apache has
a 100% working interest in the Garten block.
This latest discovery is the company’s fourth commercial
find in the Beryl area in the past 3 years, said John J. Christ-
mann IV, Apache’s chief executive officer and president. These
discoveries have spanned several play types ranging from the
Tertiary to the Triassic. “Apache’s strategy to focus on explora-
tion near operated facilities is set to deliver significant produc-
tion without the long cycle time of large scale projects,” Christ-
mann said.
The Garten discovery well will be suspended as a future
producer and tied back to the Beryl Alpha platform. Apache
is working closely with the Oil and Gas Authority (OGA) to
obtain the regulatory approvals to initiate production, which is
anticipated in first-quarter 2019.
Mubadala developing gas field off Malaysia
Mubadala Petroleum, Abu Dhabi, expects production to begin
by the first quarter of 2021 from Pegaga natural gas field off-
shore Malaysia.
The company and its partners will develop the field with
an integrated central processing platform on an 8-legged jacket
designed for 550 MMscfd of gas plus condensate.
Produced fluids will move through a new 38-in. subsea
pipeline linked to an existing system for transport to the Ma-
laysia LNG plant in Bintulu.
The field is in 108 m of water on Block SK 320 in Central
Luconia province off Sarawak.
Mubadala, operator with a 55% interest, state-owned Petro-
nas Carigali, with 25%, and Sarawak Shell Bhd., with 20%, ex-
pect to invest more than $1 billion in the project.
Mubadala let a contract for engineering, procurement, con-
struction, installation, and commissioning to Sapura Fabrica-
tion Sdn. Bhd.
Pegala is one of three discoveries made during 2013-14 on the
block. Others are Sirih and Sintok (OGJ Online, June 23, 2014).
Oil & Gas Journal | Apr. 2, 2018
3/28/18 12:16 PM
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 BSEE implements permitting process QA program
The US Bureau of Safety and Environmental Enforcement has
implemented a new quality assurance process to review and
assess its permitting systems. The process aims to help inform
best practices for offshore energy permitting, BSEE Director
Scott A. Angelle said.
“Taking these actions now will promote BSEE’s effective
monitoring of permit processes and provide an avenue to prog-
ress toward overall improvements such as decreased processing
delays,” he said.
The new directive by BSEE’s Office of Offshore Regulatory
Programs requires the agency to periodically review and assess
permitting processes for consistency, timeliness, and efficiency
across the US Department of the Interior agency’s districts and
regions.
The quality assurance process will be conducted by careful-
ly selected teams of BSEE staff who will develop the assessment
plans and conduct the assessments, the agency said. These as-
sessments will review permitting and include in-person site
visits to district or regional offices where applicable, it indi-
cated
DRILLING & PRODUCTION Q U IC K TA K E S
BSEE plan will increase inspection time offshore
The US Bureau of Safety and Environmental Enforcement will
begin a new program on Apr. 1 that will increase physical in-
spection time offshore while saving nearly $20 million over 3½
years, the US Department of the Interior agency reported. A
team in its Gulf of Mexico regional office in New Orleans de-
veloped the approach as it explored ways to make inspections
more efficient and reduce helicopter operating expenses, it said.
“This new process will allow BSEE inspectors to increase
physical inspection time on offshore oil and gas facilities,” not-
ed Michael Saucier, who supervises district field operations in
the region.
Using technology that provides inspectors access to onshore
electronic records, inspectors now will have much more time
to inspect operations offshore at more than 2,200 facilities in
the gulf, BSEE said. It also will reduce helicopter operating ex-
penses by 15% without affecting safety and environmental pro-
tections, it added.
The agency pointed out that production from the US Outer
Continental Shelf accounts for 1 of every 6 bbl of crude pro-
duced in the US. “With 98% of all OCS energy produced from
the Gulf of Mexico, it is critical that BSEE continues to maxi-
mize efficiency and ensure that oil and gas operations are con-
ducted safely and in an environmentally sustainable manner,”
it said.
Pearl to boost gas flow in Kurdish Iraq
Pearl Petroleum Co. Ltd., a five-company consortium based
in Sharjah, has signed a 10-year gas sales agreement with the
Kurdistan Regional Government (KRG) that will allow produc-
12
180402ogj_12 12
tion from Khor Mor natural gas field in Kurdish Iraq to increase
to 385 MMcfd by yearend from 305 MMcfd at present.
The company last year reached an arbitration settlement
with the KRG that included $1 billion in cash for past receiv-
ables and a commitment to expand investment and operations
(OGJ Online, Oct. 23, 2013).
The expansion is to include a multiwell drilling program in
Khor Mor and Chemchemal fields, operated for Pearl by Cres-
cent Petroleum and Dana Gas, which hold 35% interests each
in the consortium.
Pearl said debottlenecking will achieve the initial produc-
tion increase from Khor Mor.
It plans to boost output from the fields eventually to 900
MMcfd.
A 58-km, 24-in. pipeline connects the Khor Mor field and
gas processing plant with a power station at Chemchemal field
to the north. A 116-km, 24-in. pipeline connects Chemchemal
with a power station at Erbil.
Other partners in Pearl Petroleum are OMV, MOL, and
RWEST.
Gas flow starts at B15 field off Malaysia
Sapura Exploration & Production (Sarawak) Inc., Kuala Lum-
pur, has started production from B15 natural gas field off Sar-
awak, East Malaysia.
The field, discovered in December 2010, is on Block SK310.
It produces through a processing platform linked by a 35-km
pipeline to an existing system carrying gas to the Malaysia LNG
plant at Bintulu.
The company expects B15 production to peak at 100 MMcfd.
Sapura E&P (Sarawak) operates the Block SK310 produc-
tion-sharing contract with a 30% participating interest. Other
interests are state-owned Petronas Carigali, 40%, and Diamond
Energy Sarawak Sdn. Bhd., a subsidiary of Mitsubishi Corp.,
30%.
PROCESSING Q U IC K TA K E S
RNPK delivers first batch of high-octane gasoline
PJSC Rosneft subsidiary JSC Ryazan Oil Refining Co. (RNPK)
has produced the first batch of AI-100 high-octane gasoline at
its 18.8 million-tonne/year Ryazan refinery about 120 miles
southeast of Moscow.
Production of the low-sulfur gasoline, which occurred in
mid-March, is a result of implementation of Rosneft’s broader
program to modernize and upgrade operations of its Russian
refineries for production of fuels meeting more stringent global
environmental quality specifications, Rosneft said.
Designed for high-power engines, the new product also has
passed all qualification and benchmark tests for compliance
with fuels conforming to the Eurasian Economic Commission’s
technical specifications for the K5 emission class (equivalent
to Euro 5-quality environmental standards), the operator said.
According to Rosneft’s web site, the following projects are
Oil & Gas Journal | Apr. 2, 2018
3/28/18 12:16 PM
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180402ogj_13 13 3/26/18 3:23 PM

 currently under implementation at RNPK’s refinery:
• Reconstruction of the diesel fuel hydrotreating unit.
• Construction of a two-unit desulfurization plant for dry
hydrocarbon gases with a saturated amines regeneration block.
• Construction of a production complex for elemental sulfur
applying the Klaus method, with storage, shipping, and opera-
tion infrastructure.
• Construction of the crude-vacuum distillation Unit 5.
• Reconstruction of treatment installations.
• Construction of the vacuum gas oil hydrocracking com-
plex.
The projects come as part of Rosneft’s company-wide refin-
ery modernization plan launched in 2008, which includes the
construction of 30 units and reconstruction of more than 20
units at Rosneft’s Russian refineries between 2012 and 2020.
Feasibility study due for Mozambican refinery
Empresa Nacional de Hidrocarbonetos EP (ENH), Mozam-
bique’s state-owned oil company, has completed a tender seek-
ing expressions of interest (EOI) from consultants to conduct
a study evaluating the feasibility of constructing what would
become the country’s first refinery.
Closed as of 10:00 a.m. local time in Mozambique on Mar.
16, the tender invited interested parties to submit their EOIs to
participate in an upcoming tender process for the provision of
consultancy services for “the elaboration of the feasibility study
for refinery deployment in Mozambique,” according to ENH
tender documents.
To be based on proposed crude supplies from the Rovuma
basin, Mozambique basin, and imported feedstock from the in-
ternational market, the EOI was to include the following:
• A technical report that analyzes the various alternatives
for hydrocarbon processing as well as type and quantity of the
products depending on the national and regional market.
• An economic evaluation.
• A market study at both the local and regional levels.
MEGlobal lets contract for Freeport MEG plant
Dubai-based MEGlobal International FZE, a unit of Kuwait’s
first international petrochemical joint venture Equate Petro-
chemical Co., has let a contract to Fluor Corp. to provide me-
chanical construction of its monoethylene glycol (MEG) plant
now under construction at Dow Chemical Co.’s currently ex-
panding Oyster Creek petrochemical complex in Freeport, Tex.
Fluor’s mechanical construction scope includes the installa-
tion of equipment, steel, and piping for the 700,000-tonne/year
MEG process unit, the service provider said.
First announced in March, the grassroots MEG plant comes
as part of MEGlobal’s program to create greater flexibility to
satisfy grown demand for ethylene glycol products in the US
and Asia-Pacific markets, as well as strategy to expand the com-
pany’s global footprint (OGJ Online, Mar. 28, 2016).
The new MEG plant, which will receive ethylene feedstock
from Dow’s currently expanding Oyster Creek ethylene pro-
14
180402ogj_14 14
duction site under a long-term supply agreement, remains on
schedule for startup in mid-2019 (OGJ Online, Oct. 26, 2016).
Equate Petrochemical is an international JV of Kuwait’s
state-owned Petrochemical Industries Co., 42.5%; Dow, 42.5%;
Boubyan Petrochemical Co., 9%; and Qurain Petrochemical In-
dustries Co., 6%.
TRANSPORTATION Q U IC K TA K E S
Inpex further delays Ichthys LNG start-up
Japanese operator Inpex has announced a further delay in its
Ichthys LNG project off Western Australia, pushing back the
on-stream date by at least 2 months.
The company had set a deadline of Mar. 30 to begin produc-
tion from the $37-billion development which, in turn, was a
6-month delay of a previous schedule.
Inpex now expects to complete commissioning of the cen-
tral processing facility near the field offshore Kimberley and
bring the gas on stream between April and May.
This will be followed by production and shipment of con-
densate via the giant Ichthys Venturer floating production,
storage, and offloading vessel at the field and then LNG and
LPG in sequence from the Darwin liquefaction plant.
Inpex said commissioning of the first LNG production train
has been completed, as has the FPSO and subsea production
systems. The company hopes to hold to the new timetable
but concedes the activity schedule may fluctuate depending
on weather conditions at the numerous worksites, along with
preparation activities and other factors.
Perenco begins FLNG operations offshore Cameroon
Perenco has begun production at Cameroon LNG via Golar
LNG Ltd.’s floating LNG (FLNG) production unit Hilli Episeyo.
Hilli Episeyo arrived in Cameroon in late November. A ship-
to-ship transfer of cool down LNG with the Golar Bear took
place in mid-December 2017, followed by the introduction of
feed gas from the onshore processing plant. Commissioning of
the FLNG’s refrigerant trains continued into February.
Gazprom has an 8-year purchase agreement for all of Cam-
eroon LNG’s anticipated 1.2 million tonne/year production
from FLNG Hilli.
Golar said its experience with conversion and commission-
ing FLNG Hilli would be applied to the Fortuna project in Block
R off Equatorial Guinea. Ophir Energy PLC and OneLNG, a
joint venture of subsidiaries of Golar and Schlumberger, in late
2016 established a joint operating company to develop Fortuna
using the Golar Gandria FLNG. Golar Gandria is now at Keppel
Shipyard in Singapore.
Phase 1 Fortuna development would tie four gas wells back
to FLNG Gandria, targeting an eventual plateau output of 2.2
million tpy. First gas is expected in 2019. Fortuna Phase 2
would double production via an additional 5 wells and a sec-
ond FLNG.
Oil & Gas Journal | Apr. 2, 2018
3/28/18 12:16 PM
 WATER TECHNOLOGIES

180402ogj_15 15 3/26/18 3:23 PM

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Denotes new listing or Events_Learn_Listing sociation Midstream homepage.html 16-18. angelesbasin/western- tion, Tehran, website:
a change in previously 9-11. Annual Convention, regional-meeting-2018 https://www.expocheck.
published information. Austin, web site: https:// SPE/IADC Managed 22-26. com/en/expos/27898
Oil & Gas Investment gpamidstream.org/ Pressure Drilling & Un- 30.
Symposium (OGIS), New 15-18. derbalanced Operations Association of Inter-
York, web site: www.ipaa. Conference & Exhibition, national Petroleum Offshore Technology
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com/mexico-gas-sum- rum.com/conference. site: www.spe-ksa.org/ Oil & Gas International
Operational Excellence mit-energy-forum 11-12. SPE International Confer- html 18. atse/ 23-26. Licensing Symposium
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com/?utm_medium_ spe.org/events/en/2018/ alliance-expo-annual- Conference, Banff,
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Conference for Oil & enform.ca/events/psc/
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Seminar, Bergen, lngsummit.org/ 25-26.

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Calif., web site: http:// tional Oil, Gas, Refining
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at EAGE Confer- utm_medium=Banner& cow, web site: www. events/4th-international- coreconferences.com/ Neuquen, web site:
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homepage.html 11-14. (RPGC2018), Mos- Singapore, web site: Section 2018 Energy 3rd World Congress on com/ 15-16.
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globalpetroleumshow. ence & Exhibition, Ab- org/events/en/2018/ Libyan-European Oil Offshore Northern Seas
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Africa Oil & Gas Local conference/18ofcs/ 28-29. Natural Gas Recovery, no/2018/ 27-30.
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etrade.org/alc/?utm_ Oil & Gas Exhibition hai, web site: https:// Engineering, Dubai, tion—Americas, The
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conference/ 5-6.
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tion & Production Oil & Gas Thailand
of Unconventional (OGET) 2018 & Petro-
Resources Symposium, chemical Asia 2018,

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180402ogj_19 19 3/26/18 4:43 PM

 JOURNALLY SPEAKING
IOR and geosciences
Industry has expanded the definition of improved
oil recovery (IOR) and advanced its application to
economically produce more of the world’s oil that
already has been discovered.
The Midcontinent Section of the Society of Pe-
troleum Engineers has hosted a biennial IOR con-
ference in Tulsa since 1978. E. Lance Cole, general
chairman of the SPE IOR 2018 Conference, hopes
to emphasize geosciences during the conference
set for Apr. 14-18.
In the spirit of cooperation across disciplines,
this year’s agenda includes for the first time a short
course on development geology.
“IOR without due respect for the geosciences
can handicap any project,” Cole told OGJ. He also
advocates that operators “look at IOR projects
PAULA DITTRICK
across the world to glean what applies” to their
Upstream Technology own particular projects.
Editor Cole is intersociety collaboration manager at
the Society of Exploration Geophysicists. He leads
SEG’s efforts to collaborate with other professional
societies to organize major technical conferenc-
es and workshops. He
works with geoscientists
worldwide.
“Geoscience is part of
everything…geoscien-
tists themselves are get-
ting more sophisticated
in how they describe a
reservoir and forecast
how it will perform,”
Cole said. “In IOR, as
well as all areas of oil
and gas, incremental im- Cole
provements come when
people work hard and make step advances.”
Before joining SEG, Cole was president of Pe-
troleum Technology Solutions Inc., which pro-
vided engineering consulting for the Petroleum
Technology Transfer Council.
“I facilitated brainstorming between very small
independent producers and leading researchers in
US National Laboratories,” Cole said. “As produc-
ers described their problems, researchers could
readily see where their research—which often was
not directly related to oil and gas—could with mi-
nor adaptation provide disruptive solutions.”
20
180402ogj_20 20
Disruptive technology
This year’s conference theme is “Acceptance, Perse-
verance, and Disruption Enhance Future IOR.”
Cole said acceptance “means coming to terms
with a realistic future oil-price scenario.” He said
operators of both deepwater and unconventional
plays have learned they must earn profits in cur-
rent economic circumstances rather than waiting
for higher crude prices.
Industry leaders need perseverance to achieve
incremental advances in IOR techniques.
Cole considers disruption a positive force, not-
ing the offshore industry has developed many
deepwater successes through a series of disruptive
technological advancements.
He also believes disruption has redefined “the
playing field” for IOR and enhanced oil recovery.
“Looking at unconventional resources, the combo
of horizontal drilling and hydraulic fracturing
could be considered the disruptive technology.”
Geoscience
Development geology
is key to managing IOR
projects, said organiz-
ers who decided to in-
clude such a course. The
American Association of
Petroleum Geologists de-
veloped the course.
Terngu Utim will
teach the course on Apr.
14, providing informa-
tion about reservoir Utim
characterization, reser-
voir behavior, and res-
ervoir connectivity analysis. He plans to discuss
how to design wells to fulfill their designated roles
in IOR projects.
Utim is managing consultant at XPSG LLC, a
geoscience and field development consulting com-
pany based in Houston.
Formerly with Nexen and Shell, he has par-
ticipated in IOR projects involving carbonates
(Permian basin) and siliciclastic formations (Gulf
of Mexico and West Africa deepwater as well as US
and West Africa onshore).
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:46 AM
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 EDITORIAL
Regulatory repair
They’ll call it an assault on environmental protec-
tion. Pressure groups and their friends in politics
and the media will complain that the Environmen-
tal Protection Agency has advanced its unholy cam-
paign against regulation yet again.
What EPA in fact will do when it and the Na-
tional Highway Traffic Safety Administration
(NHTSA) ease vehicle fuel-efficiency standards is
to accommodate excesses of the Obama adminis-
tration to economic reality. This has occurred fre-
quently in the yearling administration of President
Donald Trump. EPA Administrator Scott Pruitt, to
his credit, seems unfazed by the by the condem-
nation his repairs have provoked.
Change coming
At this writing, details had not been disclosed
about changes to Obama-era standards for vehicle
greenhouse gas emissions and corporate average
fuel economy (CAFE). An EPA spokeswoman had
confirmed that revisions were sent to the White
House Office of Management and Budget, the last
step before publication. And an official of NHTSA,
which administers the program with EPA, had told
the Senate Committee on Commerce, Space, and
Technology that a proposal would be made about
Apr. 1.
For the oil and gas industry, this is mildly wel-
come news. For American motorists, it represents
strong economic relief. And for the environment,
it’s hardly the catastrophe many will call it.
Characteristically, the Obama administration
opted for maximum regulation when a review of
its vehicle-mileage targets indicated problems with
practicability. In 2012, the EPA and NHTSA had
toughened requirements for new light-duty vehicles
through 2025 under a complex system regulating
emissions and mileage together through a standard
expressed as miles per gallon. Because require-
ments can cover no more than 5 years, standards
for later years were estimates, subject to a midterm
evaluation.
That evaluation, conducted in 2016, revealed
problems. Motorists favored heavier vehicles. While
automakers had hoped to balance fleet emissions
with sales of electric vehicles and hybrids, market
patterns in mid-2016 made clear that aggressive
targets wouldn’t be met. Vehicle manufacturers
22
180402ogj_22 22
sought relaxation of the 2022-25 standards. In its
final weeks, the Obama administration declined.
In early weeks of the Trump administration, auto-
makers requested that the scheduled toughening of
standards not be made. Trump’s EPA and NHTSA
now seem ready to oblige.
Before howling begins from the environmental-
ist left, a few observations are in order.
Congress authorized CAFE standards to ad-
dress fuel supply, not environmental protection.
Emissions of greenhouse gases and their effect on
globally averaged temperature were not matters of
concern in 1975, when lawmakers passed the En-
ergy Policy and Conservation Act in response to the
Arab oil embargo of 1973-74. Embracing conven-
tional wisdom of the day, lawmakers thought US
production of crude oil would irreversibly decline,
consumption of gasoline would strongly increase,
prices of oil prices would relentlessly climb, and de-
pendency on imported oil would perpetually grow.
Conventional wisdom of the mid-1970s was thor-
oughly wrong.
More by political fusion than by law, oil supply
gave way to air emissions, especially greenhouse
gases, as the dominant reason to regulate vehicle
fuel mileage. This is nothing to regret. Limiting
emissions is desirable, and improving vehicle fuel
mileage is one way to go about it. But the value of
limiting emissions should be weighed against costs
of the effort and related to the diminished value of
improving vehicle fuel mileage to address vanish-
ing challenges of oil supply.
Energy mistakes
In 2012, of course, the EPA and NHTSA would have
none of that. The regulatory approach then was to
cut the use of fossil energy however possible, wher-
ever possible, regardless of cost, no matter how
little the effort might influence global temperature.
Climate myopia seduced the Obama administra-
tion into a series of appalling energy mistakes, from
which Pruitt and others in the Trump administra-
tion are now rescuing consumers and the economy.
The Obama team blissfully regulated to raise
the costs of energy forms it disliked and of vehicles
Americans want but that regulators wished them not
to buy. Popular reaction against imperiousness of
this type helps explain why Trump is president.
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:46 AM
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 GENERAL INTEREST
Selling US LNG to Europe requires
commercial terms, speakers say
Nick Snow
Washington Editor
Europe’s natural gas market is evolving from politically
driven projects to commercial agreements, and US suppli-
ers will need to move more aggressively on those terms if
they expect to be a substantive part of it, speakers suggested
at a Mar. 22 conference. “US suppliers have an opportunity
to step in now and line up customers when prices are low.
The biggest question is who will take the strategic risk,” said
Mindaugus Jusius, chief executive at AB Klaipedos Nafta,
Lithuania’s state oil products and gas terminal company.
“The US government did its part to start reforming poli-
cies, but US gas is owned by companies which need to start
moving the conversation about liquefied natural gas in Eu-
rope from political to commercial terms,” added Amos J.
Hochstein, senior vice-president for marketing at Tellurian
Inc. in Houston, during the discussion on expanding glob-
al gas infrastructure hosted by LNG Allies and Our Energy
Moment.
Hochstein added, however, that it will be necessary for
the US, as well as Europe, to increase its gas pipeline capac-
ity because Permian basin production associated with crude
oil has risen so dramatically. “It’s at a critical point; $150 bil-
lion of new infrastructure will be needed domestically. With
all the growth in the Permian, there’s not capacity to ship gas
to Louisiana,” Hochstein said. “If governments in both the
US and Europe aren’t willing to put infrastructure in place,
real progress won’t be made.”
Magnolia LNG LLC Chief Executive Greg M. Vesey noted
that it is important for more US suppliers to understand the
changing customer base in Asia as well as Europe. “More
traders are becoming interested. They’re in a new tier which
has regasification capacity. We met several of them yesterday
at a [US Trade and Development Agency] briefing in Hous-
ton,” he said.
Vasey predicted US companies will be able to compete in
Europe because their prices will reflect those at the Henry
Hub, which move more often with markets than gas based
on contracts. “The right set of terms will make deals hap-
pen,” he said.
Goran Francic, managing director at LNG Hrvatska in
Croatia, which is developing an offshore LNG import ter-
24
180402ogj_24 24
minal that will use a floating storage unit, said that an open
season to determine interest and investment will follow soon
once the government makes a final investment decision in
June and issues location and construction permits soon af-
ter.
‘They shouldn’t wait’
“We’re thinking of using the FSU not just for regasification,
but also to bunker other projects,” Francic said. “A lot of US
companies have been around in the past. They shouldn’t
wait for small European national companies which would
be their customers to lock capacity in during the open sea-
son. They should be there too.”
Poland Sec. of State Piotr Naimski said the first US LNG
cargoes have begun to arrive at the country’s LNG termi-
nal, but suggested that US suppliers will need to start offer-
ing more medium-term contracts to keep competitive with
gas, which is arriving by pipeline from Norway’s continental
shelf and North Africa. “Contracts will need to be construct-
ed to make risk attractive to customers,” he said.
“European terminals receive almost 100 billion cu m
(bcm)/year of LNG already,” said Naimski, who also is the
country’s plenipotentiary for strategic energy infrastructure.
“We also know that Europe is [Russian state supplier Gaz-
prom’s] most important market, with 175 bcm/year of sales.
There’s an opportunity for Eastern and Central Europe to
take back what the Soviets took 25 years ago, but the Rus-
sians are very deeply rooted in the region. We are trying to
create a civilized, free gas market.”
Lithuanian Energy Minister Zygimantas Valciunas said,
“One dream came true when we received the first gas ship-
ment from Poland in 2017. The Klaipedos terminal ended a
6-year Russian monopoly in the Baltic states. Gas prices im-
mediately dropped in half. We have another dream now—
steady supplies from US companies—which we hope won’t
take as long.”
Valciunas said, “We now have a good mix of pipeline and
LNG supplies in the Baltic states. But there is a 330-bcm im-
port gap developing in Europe. The question is who will be
there to fill it: Russia or the US?”
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:53 AM
 Valciunas said the US, which already has sanctions on
Russia in place, should be prepared to use provisions in the
Countering America’s Adversaries Through Sanctions Act to
block the Gazprom-backed Nord Stream 2 pipeline project.
Thirty-nine US senators urged the Trump administration to
use that and other tools at its disposal in a letter to US Presi-
dent Donald Trump several days earlier (OGJ Online, Mar
15, 2018).
British Columbia offers
conditional LNG
project incentives
The government of British Columbia has proposed condi-
tional incentives for LNG projects in a move that tests a gov-
erning coalition of the New Democratic and Green parties.
It said new conditions and incentives provide a frame-
work for “other industries in British Columbia in similar
circumstances” but targeted details to the delayed LNG
Canada proposal for a liquefaction plant near Kitimat. The
plant would have two trains able to yield at least 6.5 million
tonnes/year.
LNG Canada, a joint venture led by Shell, postponed a fi-
nal investment decision on the project in 2016 (OGJ Online,
July 12, 2016).
The incentives
The BC government said these incentives will apply to LNG
Canada if the venture decides by Nov. 30, 2018, to proceed
with the project:
• Performance payments in lieu of the provincial sales
tax. LNG projects do not now receive the exemption appli-
cable to input costs, which other manufacturing facilities do.
To receive the exemption during construction of the initially
proposed facility, LNG Canada would need to agree to pay
the province annual operating performance payments for 20
years equivalent to what it would have paid in the sales tax
during the initial construction period.
• Tailored application of climate-mitigation regulations.
The government said it recognizes that “energy-intensive,
trade-exposed industries, including the natural gas sector,
face unfair competition when competing globally with ju-
risdictions that do not impose carbon taxes.” LNG Canada
would be subject to a new “clean growth incentive program”
instead of requirements under the Greenhouse Gas Indus-
trial Reporting and Control Act.
• Industrial electricity rates. The LNG project would pay
the general industrial electricity rate charged by BC Hydro
for other industrial customers in the province.
• Removal of the LNG income tax. The government said
Oil & Gas Journal | Apr. 2, 2018
180402ogj_25 25
it will introduce legislation to repeal a tax, imposed by a for-
mer Liberal government, that it called cumbersome and will
use instead “a number of other tax and royalty measures un-
der its new fiscal framework to ensure that British Columbia
gets a fair return for its natural gas resource.”
The government also said it would introduce legislation to
repeal the Project Development Agreement Act, which con-
tains measures it said “effectively indemnified proponents
against changes” and will make other changes to “improve
the transparency and consistency with which it assesses in-
dustrial development opportunities.”
‘Competitive issue’
Three LNG export proposals have been canceled in BC.
The government said it and LNG Canada conducted a
joint financial analysis of the project.
“This analysis corroborated evidence and information
from internationally recognized LNG analysts that BC has a
competitiveness issue and formed the basis of a mutual un-
derstanding upon which the province is prepared to commit
measures that will increase the competitiveness of British Co-
lumbia’s LNG industry,” the government said in a statement.
Premier John Horgan said the province will assess LNG
projects against four conditions: a “fair return” for BC’s natu-
ral resources, jobs and training, respect for and partnership
with First Nations, and environmental protection.
Andrew Weaver, Green Party leader, in January threat-
ened to break from the coalition with the New Democrats
over what he called the “LNG folly,” which he said would
make achievement of provincial climate goals impossible.
The government seeks to reduce greenhouse gas emis-
sions against 2007 levels by 40% by 2030 and 80% by 2050.
He now says the Greens will wait until autumn and assess
progress toward the climate targets.
LNG Canada partners are Shell Canada Energy, 50%; Pet-
roChina, 20%; and Korea Gas Corp. and Mitsubishi Corp.,
15% each.
Last month the joint venture notified two of its four po-
tential engineering, procurement, and construction contrac-
tors that they had been short-listed for selection.
The finalists are a partnership of TechnipFMC PLC and
KBR Inc. and a partnership of JGC Corp. and Fluor Corp.
Papua New Guinea white paper
addresses domestic gas use
Rick Wilkinson
OGJ Correspondent
Papua New Guinea has formulated a new white paper on the
oil and gas industry, stressing the importance of increasing
domestic gas usage in the country.
25
3/28/18 11:53 AM
 GENERAL INTEREST
Petroleum Minister Fabian Pok used his keynote address
to the Papua New Guinea Petroleum & Energy Summit in
Port Moresby last week to say that the new policy is aimed
at introducing best practices in the industry throughout
the country and urging more citizens to become directly
involved to drive the electrification of Papua New Guinea
through the use of domestic gas.
Pok added that a new ministry would be established to
administer this when the white paper’s provisions were writ-
ten into law.
He said the huge success of the PNG-LNG project has re-
duced the perception of political risk in the country and point-
ed out the importance of harmony and mutual respect between
government and the companies involved in the industry.
The white paper, he said, was formulated out of the les-
sons learned from the ExxonMobil Corp.-operated PNG-
LNG project.
Recommendations in the document include setting up an
investment framework and robust third-party access regime
for strategic gas pipelines and related infrastructure; putting
in place a domestic market obligation over domestically pro-
duced gas up to a certain percentage of national gas produc-
tion, pro-rata across all producers; and providing a flexible
and responsible national content requirement so that gas ex-
plorers and producers maximize the local labor and content
in their operations.
Changes in policy will not be retrospective, but they will
apply to three proposed projects that have yet to be issued
with development licenses: the offshore Pasca A gas facility
in the Gulf of Papua, the P’ynang gas development in West-
ern Province, and the Elk-Antelope project in Gulf province.
No new petroleum development licenses or gas agree-
ments will be entered into until the new policies have been
implemented.
The white paper is currently with the National Executive
Council awaiting approval before it is tabled in parliament.
Further consultations on the white paper will take place be-
fore the September/October parliamentary sitting.
ADNOC signs deals with Total,
CNPC for offshore concessions
Abu Dhabi National Oil Co. (ADNOC) has signed agree-
ments with Total SA and China National Petroleum Corp.
(CNPC) in which the French and Chinese companies will
be awarded stakes in Abu Dhabi’s new offshore concessions.
Under the terms of the agreements, Total has been award-
ed a 20% interest in the Umm Shaif and Nasr concession and
a 5% interest in the Lower Zakum concession. Total contrib-
uted a participation fee of $1.15 billion to enter the Umm
Shaif and Nasr concession and a fee of $300 million to enter
the Lower Zakum concession.
26
180402ogj_26 26
Meanwhile, CNPC, through its majority owned listed
subsidiary PetroChina, has been awarded a 10% interest in
the Umm Shaif and Nasr concession and a 10% interest in
the Lower Zakum concession. The concession entry fees are
valued at about $1.175 billion, with PetroChina paying $575
million to enter the Umm Shaif and Nasr concession and
$600 million to enter the Lower Zakum concession.
Both concessions will be operated by ADNOC Offshore
on behalf of all concession partners.
Details of the deals
ADNOC Group Chief Executive Officer Ahmed Al Jaber
said, “Total brings deep knowledge and understanding of
Abu Dhabi’s offshore oil and gas fields, as well as specialist
expertise and technology that will help accelerate the devel-
opment of the giant Umm Shaif gas cap. ADNOC has recent-
ly seen encouraging results from the first gas cap production
pilot well at Umm Shaif, which will play an important role in
delivering our 2030 smart growth strategy and a sustainable
and economic gas supply.”
The Umm Shaif and Nasr concession and the Lower Za-
kum concession have been created from the former ADMA
offshore concession, which Total has been a partner in since
1953. It has been divided into three separate concession areas.
In the Umm Shaif and Nasr concession, Total joins Italy’s
Eni, which was recently awarded a 10% stake. Umm Shaif
field’s Arab reservoir is characterized by a huge condensates-
rich gas cap—one of the largest in the region. “Based on AD-
NOC’s development and initial piloting activities in the gas cap,
the concession partners will further pursue the technical and
economic evaluation of the development,” the company said.
The gas cap overlays an oil rim which, in combination
with Nasr, has a crude production capacity of 460,000 b/d.
ADNOC plans to process 500 MMscfd of gas from Umm
Shaif’s gas cap to help meet Abu Dhabi’s growing demand
for energy and reduce reliance on imported gas. The con-
densates, from the gas cap, will be refined to extract higher
value products.
In the Lower Zakum concession, Total joins an Indian con-
sortium, led by ONGC Videsh, Japan’s INPEX, as well as Eni
as stakeholders. ADNOC is finalizing opportunities, with po-
tential partners, for the remaining 10% of the available 40%
stake in the Lower Zakum concession, and for the remaining
10% stake in the Umm Shaif and Nasr concession. ADNOC
retains a 60% majority share in both concessions.
In February 2017, CNPC was awarded an 8% interest in Abu
Dhabi’s onshore concession, operated by ADNOC Onshore. It
also has a 40% stake in the Al Yasat concession with ADNOC.
CNPC joins Eni SPA (10%) and Total (20%) as partici-
pants in the Umm Shaif and Nasr concession; and an ONGC
Videsh-led consortium (10%), Inpex Corp. (10%), Eni (5%)
and Total (5%) as participants in the Lower Zakum conces-
sion. ADNOC retains 60% majority shares in both conces-
sions.
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:53 AM
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 GENERAL INTEREST
Wide WTI-WCS spread cuts oil sands output
Cenovus Energy Inc. is limiting production from its oil sands
projects in Alberta, citing the suppression of bitumen values
by transportation bottlenecks (OGJ Online, Feb. 21, 2018).
“When Canadian heavy oil is selling at a wide discount to
West Texas Intermediate (WTI) due to transportation bottle-
necks, we have significant capacity to store barrels in our oil
sands reservoirs to be produced and sold at a later date when
pipeline capacity improves and differentials narrow,” Ceno-
vus Pres. and Chief Executive Officer Alex Pourbaix said in
a press statement.
Since February, he said, the company has reduced pro-
duction from its Christina Lake and Foster Creek thermal
projects while injecting steam at normal rates.
Production capacities are 210,000 b/d at Christina Lake
and 180,000 b/d at Foster Creek.
The Cenovus statement projected first-quarter oil sands
Court rejects NYSDEC’s appeal of
FERC’s Valley Lateral ruling
Nick Snow
Washington Editor
A US federal appeals court denied the New York Department
of Environmental Conservation’s (NYSDEC) appeal of the
Federal Energy Regulatory Commission’s decision that NYS-
DEC waived authority to issue or deny a water-quality cer-
tification for the Millennium natural gas pipeline’s 7.8-mile
Valley Lateral when the state agency did not act within the
federal Clean Water Act’s Section 401 1-year timeframe (OGJ
Online, Sept. 18, 2017).
“We conclude that the department waived its authority to
review Millennium’s request for a water-quality certification
under the Clean Water Act by failing to act on that request
within 1 year,” Circuit Judge Jose A. Carbanes said in a Mar.
12 decision in US Appeals Court for the Second Circuit in
New York. “We also conclude that FERC does have jurisdic-
tion over the pipeline. Accordingly, we deny the petition for
review.”
The decision effectively will allow construction of the proj-
ect in Orange County, NY, to resume. Three organizations
welcomed it.
“This decision is great news for New York workers and con-
sumers who have been harmed by attempts to stifle energy
infrastructure modernization in the state,” API New York Ex-
ecutive Director Karen Moreau said in Albany. “Further, ad-
28
180402ogj_28 28
production of 350,000-360,000 b/d.
The statement said the strategy will affect monthly pro-
duction rates but did not change the company’s projection
for average oil sands output in 2018 of 364,000-382,000 b/d.
Last month, the Alberta government said transportation
problems have prevented the province from benefiting from
the recent rise in global oil prices.
The normal discount of Western Canadian Select (WCS)
crude to WTI widened after a 2-week shutdown last Novem-
ber of TransCanada’s Keystone pipeline, which has operated
below capacity rates since restarting. The other major pipe-
line for export of oil sands production, the Enbridge Main-
line system, is at capacity.
Rail transport has responded slowly.
Since November, the provincial government said, the
WCS-WTI different has doubled to $28/bbl.
“Alberta heavy oil producers are currently forgoing an esti-
mated $30-40 million/day in revenue as a result,” it said.
ditional pipeline infrastructure will help New Yorkers guard
against potential gas shortages.”
Business Council of New York State Pres. Heather C. Bric-
cetti said, “The decision shows that [NYSDEC] cannot impede
the transport of interstate natural gas by refusing to act on a
request for a certification.”
In Houston, Consumer Energy Alliance Pres. David Holt
said the ruling sent a clear message not only to New York
regulators, but also state agencies across the country where
officials often try to add unnecessary and redundant delays
during permit application reviews.
“Critical pipeline projects have been held up with permit-
ting processes that are increasingly being abused in an effort
to delay development. Unfortunately, low-income families, se-
niors, and households across the Northeast and New England
are left with the bill,” Holt said.
“Those who rely on affordable energy have already endured
their third major Nor’easter this year—and because of regula-
tory overreach and a lack of pipeline capacity—paid the high-
est price for natural gas in the industrialized world in January,”
Holt said. “The region’s supply situation was so bad this winter
that they imported Russian LNG when ample supplies of do-
mestic energy were available and waiting for delivery.”
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:53 AM
 GENERAL INTEREST

KPC lets prefeasibility study for Kuwaiti refining capacity expansions

Robert Brelsford
Downstream Technology Editor

Kuwait Petroleum Corp. and its

subsidiaries have let a contract to
Jacobs Engineering Group Inc., Dal-
las, to deliver a prefeasibility study
to support downstream capacity
expansions in Kuwait in support of
KPC’s long-term strategic plans and
directions up to 2040.
As part of the contract, which in-
cludes the option of proceeding to a
detailed feasibility study, Jacobs will
evaluate how domestic Kuwaiti re-
fining capacity can be expanded in
a cost-effective way that will enable
the refineries to provide advantaged
feedstocks for integrated petrochem-
ical production, the service provider
said. KPC, through subsidiary KNPC, operates refineries that are undergoing modernization and
The studies will cover evaluation expansion works as part of KNPC’s Clean Fuels Project. Photo from KNPC.

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 GENERAL INTEREST
and optimization of alternative process configurations using
an integrated linear program model, various technical studies,
licensor evaluation, cost estimation, financial modeling, and
risk assessment and management, with a focus on increasing
refining capacity and optimum petrochemical integration, Ja-
cobs said.
Jacobs did not disclose further details regarding the con-
tract or the specific projects to be included as part of the study.
KPC, through its subsidiary Kuwait National Petroleum
Co. (KNPC), operates the 466,000-b/d Mina Al-Ahmadi re-
finery about 28 miles south of Kuwait City on the Persian
Gulf, and the 270,000-b/d Mina Abdullah refinery, both of
which are undergoing modernization and expansion works to
transform into an integrated 800,000-b/d merchant refining
complex as part of KNPC’s Clean Fuels Project (CFP) under
Sonatrach updates refining plans
Robert Brelsford
Downstream Technology Editor
State-owned Sonatrach is weighing the purchase of a refin-
ery abroad to process Algerian-produced crude oil to fur-
ther help reduce Algeria’s high costs for and reliance on im-
ported petroleum products, Abdelmoumen Ould Kaddour,
Sonatrach’s chief executive officer, told Algeria Press Service
(APS).
Without disclosing specific details of the potential transac-
tion, Ould Kaddour said Sonatrach has launched a project to
Sonatrach is weighing the purchase of a refinery abroad to process Algerian-produced
crude oil. Photo from Sonatrach.
30
180402ogj_30 30
Kuwait’s 2030 strategy, which aims to enhance growth in its
refining manufacturing sectors as well as upgrade the refiner-
ies to produce clean-burning fuels conforming to Euro 5 stan-
dards (OGJ Online, Feb. 14, 2018; Nov. 28, 2017).
Through recently formed subsidiary Kuwait Integrated
Petroleum Industries Co. (KIPIC), KPC also owns the grass-
roots 615,000-b/d Al-Zour integrated refining complex under
construction as part of the CFP in southern Kuwait, the first
unit of which is scheduled to be completed by May 2019, with
pipelines for delivery of feedstock to the refinery to be ready
by October 2019, according to a recent presentation from KPC
(OGJ Online, Jan. 22, 2018).
KPC most recently said it expects to start up the remainder
of the CFP in May.
consider buying a refinery outside of Algeria, negotiations for
which are still under way.
The proposed purchase comes as part of Sonatrach’s new
strategy of resource development, under which the company
plans to process its own oil and gas production instead of sell-
ing it into the market, according to APS.
Alongside the potential refinery purchase, Ould Kaddour
also disclosed that Sonatrach expects to complete the refur-
bishment and revamping of the operator’s 2.7 million-tonne/
year refinery in Algiers before yearend in a project that previ-
ously intended to increase crude processing capacity at the
site to 3.6 million tpy (OGJ Online,
June 5, 2017; Dec. 22, 2010; Sept. 24,
2010).
A contract launching Sontrach’s
previously announced construction
of a grassroots 5 million-tpy refin-
ery at Hassi Messaoud is scheduled
to be signed within the next 2-3
months, while relevant provisions
for an earlier announced 5 million-
tpy refinery at Tiaret—which will
cost between $2-5 billion—has yet
to be launched (OGJ Online, Mar. 8,
2016).
Ould Kaddour did not address
plans for a third previously an-
nounced 5 million-tpy refinery the
company previously said it would
build in Biskra.
In addition to the three proposed
grassroots refineries at Hassi Mess-
aoud, Tiaret, and Biskra, Sonatrach’s
program to help meet energy de-
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:53 AM
 mand of Algeria’s domestic market by 2040 also includes
construction of a 4.6-million tpy gas oil hydrocracker and a Chevron Phillips
4-million tpy catalytic reformer to enable production of Euro
5-quality diesel and gasoline at its existing 16.5 million-tpy Chemical commissions
refinery in Skikda, both of which most recently were sched-
uled for completion in 2019 (OGJ Online, Dec. 20, 2016). USGC ethane cracker
Robert Brelsford
Downstream Technology Editor
BPCL lets contract for Kochi refinery
Chevron Phillips Chemical Co. LP (CPCC), a joint venture
Robert Brelsford of Chevron Corp. and Phillips 66, has completed startup of
Downstream Technology Editor a 1.5 million-tonne/year ethane cracker at the combine’s Ce-
dar Bayou facility at Baytown, Tex., finalizing the second
India’s state-owned Bharat Petroleum Corp. Ltd. (BPCL) phase of its previously announced $6-billion US Gulf Coast
has let a contract to Petrofac Ltd. to provide engineering, petrochemical project (OGJ Online, Apr. 8. 2014).
procurement, and construction services for a project to in- CPCC has successfully introduced feedstock into and
crease production of Bharat Stage 6-quality fuels (equivalent started operation of the ethane cracker, the operator said.
to Euro 6) at its refinery near Kochi, at Ambalamugal, Er- Official commissioning of the cracker follows CPCC’s
nakulam district, in the Indian state of Kerala. earlier announcement in late 2017 that it had reached me-
Petrofac’s scope of work under the 27-month, lump-sum chanical completion of the cracker and started a series of
contract includes EPC as well as precommissioning and assis- rigorous commissioning activities, system checks, and fi-
tance-with-commissioning services for a new block of motor nal certifications to ensure the unit’s safe and reliable start-
spirit (MS, gasoline) refining units at Kochi, the service pro-
vider said.
While it did not reveal the number or capacities of MS units
proposed under the contract, Petrofac did confirm a contract
value of about $135 million.
Announcement of the BS 6-quality fuels project follows BP- DELIVERING
CL’s earlier completion and commissioning of all units under
the Kochi refinery’s integrated expansion project (IREP), which GLOBAL
intended to expand crude processing capacity at the refinery SOLUTIONS FOR
to 15.5 million tpy from 9.5 million tpy with the addition of a
crude distillation unit, FCCUs, and a delayed coker to enable E &P CHALLENGES
the production of fuels that meet Europe’s latest emissions stan-
dards (OGJ Online, July 25, 2017; July 11, 2016).
While BPCL confirmed startup of all units under Kochi’s • Drilling & Completion
IREP in its latest sustainable development report to interested • Well Control
parties, the operator has yet to verify the refinery has fully
reached its new processing capacity of 15.5 million tpy. • Reservoir & Production
According to the latest data available from BPCL, the Kochi
refinery reached its highest-ever throughput of 11.787 million
tpy in fiscal year 2016-17, while data from India’s Ministry of
Petroleum and Natural Gas for January showed the refinery’s
prorated installed processing capacity for fiscal year 2017-18
at 12.995 million tpy.
BPCL also has undertaken its propylene derivates petro-
chemical project at Kochi to diversify the refinery’s output of
niche petrochemicals, which will be produced from polymer-
grade propylene supplies resulting from increased crude pro-
cessing at the site (OGJ Online, Dec. 9, 2014).
The 45.88 billion-rupee PDPP currently is scheduled to be
completed in May. +1.713.956.0956 • Sierra-Hamilton.com

Oil & Gas Journal | Apr. 2, 2018 31

180402ogj_31 31 3/28/18 11:53 AM

 GENERAL INTEREST
CPCC has completed startup of a 1.5 million-tpy ethane cracker at its Cedar Bayou facility at Baytown, Tex. Photo from CPCC.
up (OGJ Online, Dec. 20, 2017).
CPCC previously told OGJ that it expects the cracker to
achieve full-production rates sometime during 2018.
The unit will produce at least 1.5 million tpy of ethylene
to support CPCC’s ethylene business and as feedstock for the
operator’s two nearby 500,000-tpy polyethylene units at Old
Ocean, Tex., which began commercial operation in November
2017 (OGJ Online, Sept. 20, 2017).
First announced in March 2011, the USGC petrochemi-
cal project comes as part of CPCC’s strategy to help meet ro-
bust global demand for ethylene and ethylene derivatives by
taking advantage of abundant shale gas feedstock produced
from ongoing development of US shale resources.
Argentina moving to develop tight
shale oil and gas, speakers say
Nick Snow
Washington Editor
With the largest shale gas resources and tight oil deposits
second only to those of the US in the Western Hemisphere,
32
180402ogj_32 32
Completion of both phases of the USGC petrochemical
project marks a new era of growth for CPCC, according to
Mark Lashier, CPCC’s president and chief executive officer.
“With global demand for ethylene and polyethylene poised
for sustained long-term growth, the [USGC] petrochemicals
project will allow [CPCC] to deliver high-quality products
to our customers across the country and around the globe,”
Lashier said, referring to project as the most transformational
undertaking in the company’s history.
“Our company and our growing employee base, the com-
munities we call home, and the entire [USGC] region’s econ-
omy will benefit for decades to come as our project comes to
life,” Lashier added.
Argentina is trying to attract more foreign investments by
continuing to improve government policies, speakers said
during a Mar. 27 discussion at the Inter-American Dialogue.
But the South American nation faces substantive challenges
as it tries to make operating conditions there more transpar-
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:53 AM
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180402ogj_33 33 3/28/18 11:53 AM

 GENERAL INTEREST
ent and predictable, they added.
“Our general economy has grown for seven consecutive
quarters, and poverty is going down,” said Fernando Oris
de Rosa, Argentina’s ambassador to the US. “Foreign direct
investment grew to $10.7 billion in 2017, and we’d like more.
Fiscal and tax reforms have been passed, and discussions
with organized labor are planned. Ultimately, we want to
move from populism to transparent, realistic policies which
become permanent.”
More reforms need to move from transitions to perma-
nence, said Omar Gutierrez, governor of Neuquen province
where most of the tight oil and gas supplies are in the Vaca
Muerta formation.
“We eliminated gas and oil retentions and installed a
pricing regime that has encouraged development. We also
have done away with consumption subsidies and allowed
prices to rise. With drilling costs half of what they were, un-
conventional oil and gas now has a greater share of our prov-
ince’s total production, and 20-22% of Argentina’s,” he said.
Argentina has become the only Latin American country
on a par with the US due to the alignment of its govern-
ment at several levels with all the stakeholders, said Paolo
Carvajal, a consulting member at international management
services firm Arthur D. Little’s Houston office. “Today, we
can talk about a 50% gain in efficiency per square foot there.
Multinationals like ExxonMobil, Chevron, and Shell are
there along with YPF, the national oil company,” she said.
“We expect that in 2025, Argentina’s oil and gas produc-
tion will have tripled. But it will need to overcome chal-
lenges, including infrastructure, investment climate stabil-
ity, unions, developing qualified human resources and an oil
services sector, and smoothly adopting natural gas market
prices,” Carvajal said.
From pilots to development
Gutierrez noted that of Argentina’s 26 tight shale oil and
gas concessions, three are being developed now and three
to four more are expected to get under way soon. “We have
a plan all the actors are monitoring and are involved in. To-
night, I will be in Houston for an event where I expect to
discuss this in more detail. We’ve seen capital from many
sources and expect to see more projects move from the pilot
to the development phase,” he noted.
“We want to make our energy prices competitive so the
rest of the country’s economy can follow,” said Gutierrez.
“We also have begun to export gas to Chile, with generally
good results. Vaca Muerta will give us an efficient energy
hub which will drive our national economy.”
Carvajal said, “Argentina has been fortunate because it
has been able to develop unconventional resources without
as much local and labor opposition as in other Latin Ameri-
can countries. But local issues will need to be addressed.
This alignment has let Argentina lead the unconventional
resources charge in Latin America. But investments will be
34
180402ogj_34 34
needed in other sectors as well.”
Full stakeholder participation is essential, Gutierrez said.
“We have a comprehensive plan with dynamic properties.
Companies also have shared what they have learned. This
has led to a constructive dialogue where all the actors are
contributing,” he said.
Carvajal said Argentina President Mauricio Marci’s gov-
ernment has enacted several good reforms, but oil and gas
multinationals have long memories and face equally long
waits before prospects being producing. “We’re talking
about production that would begin 35 years in the future, so
the situation could change,” she suggested.
Gutierrez thinks that this looks increasingly less likely.
“The government is one of four main actors. It is putting
many ideas forward, but everyone else is participating too,”
he said. “We’ve done a lot in 3 years. Vaca Muerta has shown
what can be done. There is not a single negative result in the
pilot programs so the companies will continue to invest. We
also are about to announce plans for a huge new gas pipe-
line so companies will be able to move what they produce to
their customers.”
ADNOC lets contracts
for Ruwais refinery
Robert Brelsford
Downstream Technology Editor
Abu Dhabi National Oil Co. (ADNOC) subsidiary ADNOC
Refining (formerly Takreer) has let two contracts to Samsung
Engineering Co. Ltd. of South Korea to provide engineering,
procurement, and construction services for separate projects
on its 80,000-b/d Ruwais refining complex in the UAE.
The combined value of the contracts—both signed on
Mar. 26—exceeds $3.5 billion, ADNOC said in a release.
Under the first contract, Samsung Engineering will de-
liver EPC services for ADNOC’s previously announced
$3.1-billion project to increase crude processing flexibility
and improve margins at the Ruwais refinery’s 417,000-b/d
West plant to enable the site to process up to 420,000 b/d
of Upper Zakum crude or similar medium-sour crude types
from the market in lieu of fellow UAE-produced, light, sweet
Murban crude (OGJ Online, Feb. 8, 2018).
Increased crude-processing flexibility at the refinery, in
turn, will free higher-priced Murban crude for export sales
to global oil markets to help UAE garner greater returns from
its domestically produced oil resources, ADNOC said.
As part of the second contract, Samsung Engineering will
provide EPC services for a $473-million waste-heat recovery
project (WHRP) at the refinery, which—via an upgrade to
four giant gas turbines with closed-cycle power generation
technology—will generate an additional 230 Mw of electric-
Oil & Gas Journal | Apr. 2, 2018
3/28/18 11:53 AM
 GENERAL INTEREST

ADNOC Refining let contracts for EPC services for projects on its 80,000-b/d Ruwais complex in the UAE. Photo from ADNOC.

ity for sale and 62,400 cu m/day of water by capturing refin-

ery waste heat currently vented into the atmosphere.
The WHRP also will play a large role in reducing the en-
vironmental impact of the Ruwais complex’s refining and
power operations, as well as help improve overall energy ef-
ficiency at the site, ADNOC said.
ADNOC earlier announced the award of a contract to a
joint venture of CB&I, Houston, and Samsung Engineering
for the crude flexibility project (CFP), under which CB&I
said it would provide engineering and procurement services
for two atmospheric residue desulfurization units equipped
with technology licensed by CB&I-Chevron Corp. joint ven-
ture Chevron Lummus Global, as well as engineering, pro-
curement, fabrication, and construction of 14 flat-bottom “I can think of no one better to translate the complexities of
tanks and 10 process heaters for the project (OGJ Online, natural gas liquids into a more easily understandable subject.”
Feb. 9, 2018). — Frank H. Richardson, President and CEO, Shell Oil Company, Retired
ADNOC’s multibillion-dollar investment in crude-qual- Natural Gas Liquids: A Nontechnical Guide
ity arbitrage and waste-heat recovery at Ruwais follows the is a comprehensive overview of NGLs from
operator’s late-2017 announcement that it will boost produc- production in the oil patch to consumption in
tion capacity of supergiant Upper Zakum offshore field by the fuels and petrochemicals industries.
350,000 b/d to 1 million b/d and it broader plans to grow
Learn what is behind natural gas liquids:
its refining capability and expand petrochemical production • How they are produced
three-fold to 14.4 million tpy by 2025 (OGJ Online, Nov. 15, • How they are transported
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Other planned projects under the downstream invest- and petrochemicals industry
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Oil & Gas Journal | Apr. 2, 2018 35

180402ogj_35 35 3/28/18 11:53 AM

 TECHNOLOGY
Study questions stratigraphic
traps’ predrill risks
Edwige Zanella
Jamie Collard
Westwood Global Energy Group
London
Stratigraphic traps made headlines in
2017 with the discovery of an estimated 1
billion boe of recoverable resources in the
Stabroek block offshore Guyana within
the Payara, Snoek, and Turbot discover-
ies. The Turbot-1 discovery well was an
EXPLORATION &
ExxonMobil-operated joint venture’s (JV) DEVELOPMENT
fifth exploration test of the Liza play fol-
lowing the giant 2015 frontier Liza-1 dis-
covery. Liza-1 encountered more than 90
m of net pay in Late Cretaceous deepwa-
ter turbidite sandstones in a stratigraph-
ic trap. The JV had already discovered
almost 2 billion boe of recoverable re- SPECIAL
sources at Liza where a final investment REPORT
decision (FID) has been taken on the first
phase of field development.
On the other side of the Atlantic, however, recent strati-
graphic trap exploration has been less fruitful, with unsuc-
cessful wells in Senegal, Cote D’Ivoire, and Guinea chasing
the same play concept of Late Cretaceous turbidite sandstones.
Despite their large resource potential (Fig. 1) and a low av-
erage finding cost (drilling cost only) of $0.90/boe, only 22%
of global exploration wells targeted stratigraphic traps in con-
ventional plays during 2017. This figure is 19% for the entire
period from 2008-17, with little variation year-on-year.
Predrill risks
Stratigraphic traps are perceived to have higher predrill geo-
logical risk than other structural trap types like anticlinal
structures and tilted fault blocks. Some companies even add
an extra geological risk factor to stratigraphic traps by de-
fault.
Westwood Global Energy Group has looked at 270 com-
pleted exploration wells targeting stratigraphic traps in clas-
This article is extracted from Westwood Energy’s “Are strati-
graphic traps more risky,” published in October 2017.
36
180402ogj_36 36
tic reservoirs from 2008 to 2017 to investigate the higher
risk perception and examine industry performance in its
search for stratigraphic traps.
Stratigraphic trap formation
The stratigraphic traps considered in the study are formed
by reservoir sand pinch-outs encased in sealing claystones
or mudstones. Traps are often created around the time the
sands are deposited. Combination traps in clastic reservoirs
involve a combination of sand pinch-out with folding, fault-
ing, or both. This usually requires structural deformation
post-deposition of the reservoir sands.
There is a wide spectrum between the rarer pure strati-
graphic trap and a combination trap, and sometimes little
difference between the two. For this study, a trap is desig-
nated stratigraphic when the stratigraphic component of the
trap is the most important for the accumulation of hydro-
carbons. Carbonate reef build-ups can also form significant
stratigraphic traps but are not included in this analysis.
Only six basins in the world have had more than 10 strati-
graphic traps drilled since 2008. Almost 25% of the explora-
tion wells targeting stratigraphic traps have been drilled in the
North Sea basin, followed by the Africa Equatorial Margin in-
cluding Sierra Leone-Liberia, Ivorian and Tano basins, the Ru-
vuma basin off Mozambique and Tanzania, the Carnarvon ba-
sin in Australia, and the Sergipe-Alagoas basin offshore Brazil.
Fewer than 10 stratigraphic traps have been tested in the Suri-
name-Guyana Basin to date, but the play is emerging rapidly.
Stratigraphic traps in clastic sediments can be formed
in all depositional environments where processes result in
lateral lithology changes from sands to nonreservoir facies.
They can also occur in different tectonic settings. The major
focus of stratigraphic trap exploration in the 2008-17 period
has been the Cretaceous and Tertiary deepwater turbidite
complexes in passive margin settings.
Discoveries
Most hydrocarbons discovered in stratigraphic traps have
been in Late Cretaceous and Oligocene reservoirs (Fig. 2).
The Late Cretaceous plays are dominated by oil, with a large
proportion of estimated discovered resources (>3 billion
boe) in the Suriname-Guyana basin. An estimated 1.5 bil-
lion boe of recoverable oil and gas have been discovered in
Late Cretaceous stratigraphic traps in the Sergipe-Alagoas
Oil & Gas Journal | Apr. 2, 2018
3/26/18 3:23 PM
 TRAP TYPE DISCOVERY DISTRIBUTION, 2008-17 FIG. 1a basin. An estimated 37 tcf of gas have
been discovered in Oligocene strati-
Resource range FIG. 1a
P100 graphic traps, dominated by the gas
P90 Stratigraphic discoveries of the Ruvuma basin.
Combination More than 15 billion boe of oil and
Exceedence probability, %

P80
Four-way dip gas resources have been found in strati-
P70
Faulted graphic traps since 2008. The range of
P60 discovery size is wide, with a mean of
P50 almost 440 MMboe (Fig. 1). This range
P40
is comparable to combination traps,
which have a mean resource of 500
P30
MMboe and finding cost of $0.60/boe.
P20

P10 Faulted traps

0 Faulted traps represent 50% of all explo-
0 0.1 1 10 100 1,000 10,000 ration prospects drilled during the study
Resources, MMboe period and have a narrow resource range
Source: WGE Wildcat Database
with a mean resource of 44 MMboe, 10
Resource distribution, MMboe FIG. 1b times smaller than stratigraphic traps.
The faulted traps finding cost of $2.20/
Trap type P90 P50 Mean P10 P1 Discoveries
boe is more than double the finding cost
Stratigraphic 3 46 438 700 6,430 77 of stratigraphic traps.
Combination 3 44 500 740 7,380 88 Resource distributions reflect that
Four-way dip 1 13 210 270 3,100 108 most large fault blocks have already been
Faulted 2 13 44 100 500 321 drilled and that the larger remaining ac-
cumulations are stratigraphic or have a
stratigraphic component in their trap-
ping mechanism.

STRATIGRAPHIC EXPLORATION RESULTS FIG. 2

Wells, commercial discoveries FIG. 2a Resources, MMboe FIG. 2b

Pleistocene Pleistocene
Pliocene Pliocene
Miocene Miocene
Oligocene Oligocene
Eocene Eocene
Paleocene Paleocene
Upper Cretaceous Upper Cretaceous
Lower Cretaceous Lower Cretaceous
Upper Jurassic Upper Jurassic
Middle Jurassic Middle Jurassic
Low Jurassic Low Jurassic
Triassic Triassic
Permian Permian
0 20 40 60 80 0 2,000 4,000 6,000 8,000
Total Commercial Oil Gas
Source: Westwood Energy Wildcat Database.

Oil & Gas Journal | Apr. 2, 2018 37

180402ogj_37 37 3/26/18 3:23 PM

 TECHNOLOGY

AFRICA DEEPWATER EXPLORATION, 2008-17 FIG. 3

SIERRA
Fatala Sabu
LEONE
ea FZ
Guin Savannah GHANA TOGO BENIN NIGERIA
Djembe COTE D’IVOIRE
Mercury LIBERIA
ne FZ
a Leo
Sierr Si
Venus er Carmine Deep
Jupiter ra L S.G. Lahou Houmelan
eo Nighthawk Azobe TEN
Montserrado ne Jubilee
-L Kosrou Buffalo
ib Timbo Starfish
Mesurado er Saumon
ia Sankofa Z
M Narina F
ar Saphir he Dry hole
Atlantic Ocean Goshtern in Apalis nc
ma Noncommercial discovery
Iroko Ro
FZ Aigle Tana Commercial discovery
aul’s ian Morue
Ivor sin
St. P
Bee Eater Ayame basin Oil
ba Rossignol
0 Miles 186 Gas
Colibri 2016-17 completed wells
Pelican
0 Km 300 FZ Fishery zone

Success rates lack of sufficient hydrocarbon charge or lack of effective trap

Westwood’s study looked at both the technical success rate
(TSR), which is the number of hydrocarbon discoveries di-
vided by the number of exploration wells, and the commer-
cial success rate (CSR), which considers the number of com-
mercial discoveries only.
Globally, stratigraphic traps have an average TSR of 49%
over the 2008-17 period, comparable to other trap types.
The average CSR of stratigraphic traps is only 26%, 10 per-
centage points lower than the CSR of faulted traps. To un-
derstand this difference, the performance of stratigraphic
traps needs to be reviewed on a basin and play analogue
basis to remove other play element risks that could have a
greater impact than the trap type itself.
The Cretaceous turbidite play along the Africa Transform
Margin covers basins from Sierra Leone to Benin (Fig. 3).
While stratigraphic traps along the margin have had a high
TSR of 61%, their CSR is only 11%. Only the Tano basin has
delivered commercial volumes so far, with a TSR of 69% and
a CSR of 31%.
After the discovery of the Jubilee field in 2007, offshore
Ghana, the search for Jubilee look-alikes started, spreading
westwards along the Africa Transform Margin. Exploration
along this margin focused on Late Cretaceous turbidite slope
channel complexes and basin floor fans detached from the
up-dip canyon feeder systems.
Sixty-eight post-Jubilee exploration wells have been
drilled on the margin, yielding only two development proj-
ects, the TEN (Tweneboa, Enyenra, and Ntomme discover-
ies) cluster development, which came on stream in 2016, and
the Sankofa (Sankofa and Gye Nyame discoveries) project
that achieved first oil in 2017.
Failure analysis
Failure analyses of dry wells that have sufficient published
information indicate that the main causes of failure were
and seal. Failure causes for noncommercial discoveries are
different than for dry holes because in these cases hydrocar-
bons are present.
The primary causes of commercial failure are reservoir
quality, which is either too thin or displays low porosity and
permeability, and trap areal extent, meaning the trap is small-
er than predicted. Both result in the gross rock volume of the
accumulation being on the low side of predrill expectation.
Another cause of commercial failure in some cases is
charge limitation and timing of hydrocarbons migration.
These cases are probably the hardest to diagnose with a sin-
gle exploration well but can result in underfilled traps and,
when recognized, impact the understanding of the play.
Understanding failure, success
The high CSR of the Tano basin lies in its structural configu-
ration, defined by the Romanche fracture zone to the South
and the St. Paul fracture zone to the North. The Jubilee field
JV recognized that the ramp-like geometry of the eastern
Tano basin allowed connected turbidite sand systems to
pond and that local structure of the South Tano High creates
a hydrocarbon migration focal point.1 The Ivorian and Sierra
Leone-Liberia margin has a more abrupt morphology, which
creates isolated turbidite systems and a lack of well-defined
hydrocarbon migration focal points.
Sediment provenance also contributes to differences in
CSRs. Tano basin sediments are derived from a more granit-
ic hinterland, delivering cleaner sands, whereas the sediment
sources in the Sierra Leone and Liberia areas are dominated by
metamorphic rocks, resulting in a lower quality reservoir.
In many cases, the stratigraphic nature of the traps has
taken the blame, when other causes are actually responsible
for low CSRs and the reduced exploration potential of the
whole margin. In areas where turbidite systems can be con-
nected and hydrocarbon migration focal points exist, there

38 Oil & Gas Journal | Apr. 2, 2018

180402ogj_38 38 3/26/18 3:23 PM


is a greater chance of commercial success.
The study also investigated the low commercial success
rates of stratigraphic traps in the mature North Sea (22%
CSR) and Carnarvon basin (8% CSR) since 2008. Post-well
failure analysis conducted by the UK regulator in 2015 con-
cluded that frequent failure of stratigraphic trap tests was
due to an over-dependence on geophysical attributes, such
as amplitude anomalies or AVO.2 This dependence led to
wells being drilled on poorly defined prospects and to over-
estimated predrill chances of success.
In the Carnarvon basin, only 14 of 115 recorded explora-
tion wells have targeted stratigraphic traps. Although a lim-
ited number, all but one of these prospects was reported by
companies to be well-defined by seismic attributes, yielding
a single commercial discovery. In both basins, the failure of
stratigraphic traps is more related to an over-reliance on geo-
physical tools than the nature of the trapping mechanism.
Stratigraphic traps are not inherently more risky than oth-
er trap types. The key is for explorers to recognize whether
they have the right tools and processes to explore effectively
for commercial discoveries. Making this determination calls
for a sound geological model integrating the trap element
into the entire petroleum system analysis, reliable geophysi-
cal calibration, and the effective use of analogue data.
Get Out Of Trouble, Stay Out Of Trouble.
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Reinforce Production Tubulars
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180402ogj_39 39
TECHNOLOGY
References
1. Tullow Oil, “Capital Markets Day Presentation,” Oct. 1,
2008.
2. Mathieu, C., “Moray Firth – Central North Sea Post Well
analysis,” UK Oil and Gas Authority, Dec. 8, 2015, pp. 208.
The Authors
Edwige Zanella (ezanella@westwoodenergy.com)
is a senior associate at Westwood Global Energy
Group, London. She has also served as geolo-
gist and exploration manager at Lasmo Plc and
Nexen Petroleum UK Ltd. She holds an engi-
neering degree in petroleum geoscience from
IFP School, Rueil-Malmaison, France. She is a
member of the American Association of Petroleum Geologists
(AAPG) and the Petroleum Exploration Society of Great Britain
(PESGB).
Jamie Collard (jcollard@westwoodenergy.com)
is an analyst at Westwood Global Energy Group.
He holds a BS in geology from the University of
Bristol and an MS in petroleum geoscience from
the University of Manchester. He is a member of
AAPG and PESGB.
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 TECHNOLOGY

South Africa oil and gas law could

accelerate exploration in 2018-19
Tayvis Dunnahoe
Exploration Editor

With active exploration offshore South es began drilling in 2004.

Africa later in 2018, the administration Offshore activity has remained limited
of newly elected President Cyril Rama- since mid-2014 in the wake of lower oil
phosa’s commitment to finalizing its oil prices and political uncertainty in South
and gas law could encourage more foreign Africa’s resource development ministry.
investment. South Africa’s newly-elected EXPLORATION & SPECIAL Lower operating costs and rising oil pric-
President Cyril Ramaphosa has moved DEVELOPMENT REPORT es in the last year, however, have drawn
swiftly to reshuffle his cabinet following some companies into the region.
his Feb. 15 inauguration. His appoint- With the potential for more certain
ment of Gwede Mantashe to Mineral Resource Minister is oil and gas rules slated for late 2018 and several drill-ready
expected to accelerate passage of South Africa’s Minerals and prospects, South Africa’s offshore region may reveal several
Petroleum Resources Development Act (MPRDA) Amend- world class discoveries.
ment bill. The bill has been before par-
liament for 5 years, and President Ra-
maphosa has called for its finalization. SOUTH AFRICA BLOCKS FIG. 1
South Africa’s mining industry has
ANGOLA
languished. Heavy, often contentious,
regulations govern exploration per-
mits, mining authorizations, tax, roy- Mowe Bay
alties, and other industry related func-
tions. Many of the country’s laws have
Windhoek BOTSWANA
been mired in disputes and legal chal-
lenges that tend to deter, rather than
Walvis Bay
attract, foreign investment. Block Gaborone
PEL 37
Once the MPRDA Amendment NAMIBIA
bill is passed, the increased certainty
South Johannesburg
in exploration and development pro- Atlantic Luderitz
grams should encourage more foreign Ocean
investment. Bloemfontein

SOUTH
Historical operations AFRICA LESOTHO
The oil and gas industry drilled about
Block
300 wells offshore South Africa from 2B Cape Mossel Port
South Indian Town Elizabeth
the late 1980s to the early 1990s. Atlantic Ocean Bay
Ocean
During apartheid and after transition-
NAMIBIA
ing to South Africa’s current form of SOUTH AFRICA
government, offshore oil and gas ex-
0 200
ploration had fewer incentives. Little Miles Block
activity occurred through the late Km 11B/12B
0 322
1990s until Pioneer Natural Resourc-

40 Oil & Gas Journal | Apr. 2, 2018

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 TECHNOLOGY

Brulpadda prospect BLOCK 11B/12B FIG. 2

Total SA recently sold 25% interest in
exploration Block 11B/12B offshore SOUTH AFRICA
Total block
South Africa to Qatar Petroleum (OGJ Oil field
Online, Feb. 5, 2018). The transac- GTL plant, 36,000 b/d Gas field
tion remains subject to regulatory ap- Plettenberg Bay Prospect
proval, but the partnership on Block Pipeline
Mossel Bay Refinery
11B/12B (Fig. 1) is preparing for the
high-potential Brulpadda-1AX well
scheduled to be drilled on the block at Block 11B/12B, 18,734 sq km
the end of 2018. Block 11B/12B covers Petro SA
19,000 sq km in 200-1,800 m of water EM gas field FA gas field
in the Outeniqua basin about 175 km FO gas Total SA
discovery Oil mature kitchen
offshore southern South Africa (Fig. 2). Sable oil field
Total attempted to drill Brulpadda-
1AX in Winter 2014, but the well was
suspended after harsh conditions ex- Petro SA Paddavissie
ceeded rig specifications. Low riser fairway
angle restrictions, poor sea-state com-
pensation systems, and insufficient
Oryx, Oribi oil fields
power to dynamically position the rig
SOUTH AFRICA
forced the company to plug and aban-
don the well. Five giant 2D seismic, Cape Town
The Brulpadda-1AX re-entry is ex- 0 62 prospects 1 km × 2 km grid
Miles
pected to commence in December and 0
Km 100
follows Total’s extensive metocean
study to monitor current, wind, and
waves in the area to better understand
conditions. The operator has contracted Odfjell Drilling “The team is also very familiar with the Jubilee field in Gha-
Co.’s Deepsea Stavanger, a sixth-generation semisubmersible na and the La Ceiba and Okume fields in Equatorial Guinea,
rig capable of drilling the Brulpadda well during the Cape all of which have some common elements to Block 11B/12B
summer. in South Africa and to Petroleum Exploration License (PEL)
Africa Energy Corp. CEO Garrett Soden described Block 37 Namibian geology [submarine fans],” Soden said.
11B/12B as a “unique exploration situation” where five am- The Brulpadda-1AX well is highly ranked in Total’s glob-
plitude supported closures all conform to structural closure. al portfolio. Infrastructure is not a concern as there is ex-
The Brulpadda well will test the first of these. isting oil and gas production next to Block 11B/12B. The
Predicted volumes are more than 500 MMbbl and the Mossel Bay gas-to-liquids facility operates at a third of its
complex could exceed 2 billion bbl of prospective resources. capacity with a connecting pipeline about 70 km away. The
Africa Energy owns 49% of Main Street, which holds a 10% Cape Town oil refinery is also nearby. Drilling techniques
stake in Block 11B/12B (subject to Government approval). and procedures are tested and proven and South Africa’s
Total maintains 45% operating interest with CNR Interna- geological environments are well known. Brulpadda could
tional holding the remaining 20%. be the start of a world class development offshore South Af-
The Brulpadda prospect is part of the Paddavissie turbi- rica, much like Jubilee was for Ghana.
dite play that covers more than 2,000 sq km and is a simi-
lar play to the much smaller Oryx and Sable complexes to Block 2B
the northwest in the adjacent Bredasdorp basin (Fig. 3). On South Africa’s western coast, Africa Energy is advanc-
These complexes contain stratigraphically and structurally ing a farmout with plans to drill an exploration well in 2019
trapped oil and gas in reservoir quality channel sandstones on offshore Block 2B (Fig. 1). The company was granted a
that form feeders to the outboard Paddavissie fan systems. 2-year renewal of its exploration license by South Africa’s
Source rocks in the fetch area comprise both mid-Aptian Petroleum Agency in February (OGJ Online, Feb. 27, 2018).
and Hauterivian shales that entered maturity in early Tertia- Block 2B covers 3,604 sq km in 50-200 m of water. The
ry and are presently within the main stage of oil generation. block contains the A-J1 oil discovery drilled by the former
Africa Energy’s current team has, with various employ- South Africa state-owned Soekor in 1988. The A-J1 well
ers, been exploring Africa continuously for the last 30 years. tested light oil from a Lower Cretaceous sandstone section.

Oil & Gas Journal | Apr. 2, 2018 41

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 TECHNOLOGY

BRULPADDA PROSPECT FIG. 3

trend in the region is like the East African Rift where major
oil accumulations have recently been discovered in Kenya’s
0 12.4
Miles South Lokichar basin and Uganda’s Albert rift.
Km 20
0 Soden told OGJ that six prospects have been identified on
11B/12B Block 2B, containing an estimated 400 million bbl of pro-
spective resources. The southern and northern graben com-
bined contain a total of more than 800 million bbl, most of
which is in 150 m of water only 25 km offshore. The com-
A pany plans to farm out 50% or more of the block on an es-
timated well cost of less than $20 million. “The 2019 drill-
Brulpadda
Luiperd ing opportunity will occur 9-12 months after the farmout is
A’
complete,” Soden said.
Prospects
Africa Energy currently holds 90% participating and op-
Deep prospects
erating interests in Block 2B. Crown Energy AB holds the
Leads
remaining 10% through a subsidiary company.

The A-J graben is a rift basin related to the Atlantic opening
during the Early Cretaceous. In addition to the A-J southern
graben, Block 2B also includes prospective acreage in the
northern graben. According to Africa Energy, the greater rift
Namibia
Tullow Oil will drill on the Cormorant prospect in the Wal-
vis basin offshore Namibia in September 2018. PEL 37 cov-
ers 17,295 sq km of the northern Namibian offshore region
about 420 km south of the Angolan-Namibian border (Fig.
1). PEL37 water depths range from 400-1,500 m. The Cor-
morant and other prospects including Albatross, Seagull,
and Gannet, lie in 400-600 m of water.
HRT Participacoes em Petroleo SA, Rio de Janeiro, recov-
ered noncommercial amounts of oil in its Wingat-1 well on

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Block 2212 in the Walvis basin in 2013 (OGJ Online, May
22, 2013). Block 2212 is directly south of PEL 37. The Mu-
rombe-1 well, drilled in the same license as Wingat-1, in-
tersected a mature oil-prone source in the Aptian sequence.
Tullow has acquired 3,440 sq km of 3D seismic in PEL
37 and has delineated several prospects consisting of Low-
er Cretaceous submarine fans that are stratigraphically
trapped. During the 2013 seismic campaign, an additional
1,000 km of 2D seismic data were acquired in the southern
part of PEL 37, indicating that the Lower Cretaceous fan play
extends southwards and could be further explored if war-
ranted.
Recent drilling in the Namibian offshore has proven the
presence of an Aptian Type II source rock with >3% total or-
ganic carbon as intersected in the Murombe-1 and Wingat-1
372 Pages/Hardcover/2011 wells in the Walvis basin.
The company and its partners plan to test this play in
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 TECHNOLOGY

Basin-centered gas play developed

in western Turkey
limkoy and Kesan formations. In December, the com-
Tayvis Dunnahoe pany completed four production tests from eight frac
Exploration Editor stages in the Kesan formation, yielding a 24-hr aggre-
gate test rate of 2.9 MMcfd.
Canadian Valeura Energy Inc. and partner Statoil Valeura Energy has participated in numerous
ASA are planning a three-well delineation drilling EXPLORATION &
drilling programs throughout the southern Thrace
and testing program commencing third-quarter DEVELOPMENT basin since 2013 and play types have ranged from
2018 on the Banarli and West Thrace licenses in conventional shallow gas exploration prospects in
northwest Turkey’s Thrace basin, west of Istanbul the overlying Danismen and Osmancik formations
and extending to the borders of Greece and Bul- to the tighter gas prospects in the Mezardere and
garia (Fig. 1). underlying Teslimkoy and Kesan formations (OGJ Online,
In the meantime, Valeura is tying the Yamalik-1 discov- Mar. 22, 2016). The company’s basin-centered gas concept
ery on the Barnarli license in to its gas production network is targeting the pervasive overpressured unconventional gas
for further testing and long-term production and sales. De- resources in the synclinal parts of the Thrace basin.
sign work is under way for the production facilities and gath-
ering pipeline at an anticipated cost of $3 million. First sales Basin-centered gas play
from Yamalik-1 are targeted for second-quarter 2018. Valeura identified potential for a basin-centered gas accumu-
Yamalik-1 was drilled to 4,196 m and hydraulically frac- lation (BCGA) play in Thrace basin through drilling results
tured and production tested in fourth-quarter 2017. The well and regional geological modelling from 2011 to 2013. The
discovered a 1,300-m natural gas and condensate column in company then captured rights to a majority of the Thrace
overpressured reservoirs below 2,900 m in the Tertiary Tes- BCGA fairway through 2016.
Yamalik-1 was the first deep ex-
ploration well in the project, and was
THRACE BASIN PROSPECT FIG. 1
drilled under a farm-in agreement
giving Statoil 50% interest in forma-
BULGARIA Black Sea tions deeper than 2,500 m within
Statoil partnered blocks
Other licenses
Area the Banarli and West Thrace licens-
Discovery
shown RUSSIA es. Statoil invested $69 million in the
Yamalik-1 project, according to Valeura’s most
recent investor presentation. Valeura
TURKEY
holds 50% in the deep formations in
the Banarli license and 31.5% in the
GREECE Istanbul deep formations in the West Thrace.
Pinnacle Turkey Inc. holds the remain-
West Thrace Banarli ing 18.5% interest in West Thrace.
Sea of Marmara BCGA plays are among the more
economically important unconven-
Mediterranean Sea 0 Miles 31 tional gas systems in the world. They
0 Km 50
TURKEY are made made up of pervasive, basin-
wide gas accumulations trapped in low

44 Oil & Gas Journal | Apr. 2, 2018

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 TECHNOLOGY

THRACE BASIN CROSS SECTION FIG. 2

Tekirdag fields Guney Osmanli-1 Yayli-1 Yamalik-1 Ergene-1 Misinili-1 N
S 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000
0
Pressure, psi

500
Normal pressure Hydrostatic
gas fields
1,000

1,500
Depth, m

Transition pressure

2,000

Osmancik
2,500 0.8 psi/ft
Over Mezardere Overpressured 2,500 m
3,000
pressure
Teslimkoy
zone of interest 3,000 m
Water =
3,500 0.433
psi/ft Kesan
4,000 m
4,000
Yamalik-1

5,000 m

0 Miles 6.2
0 Km 10

permeability rock. In the US alone, basin-centered gas accu- ed the company’s thesis of a “large unconventional, basin-
mulations provide 15% of the country’s annual production, centered gas-condensate resource,” but also acknowledged
equal to 4 tcf/year. that exploration is in an early phase.
Valeura’s Thrace basin play fairway is defined by the on- D&M’s broad range of recoverable gas from 3.2 tcf to
set of overpressures and a hydrocarbon generation window. more than 20 tcf is a function of uncertainty related to lim-
To date, eight deep wells on the fringe of Thrace basin have ited stimulation and production testing from the overpres-
displayed high overpressures below 2,500 m at 0.68-0.77 sured Teslimkoy and Kesan formations in the Thrace basin.
psi/ft. The Yamalik-1 measured 0.80-0.84 psi/ft at 4,100 m The firm has assigned a 74% chance of development for
depth. These wells also contain increased mud gas and in- the gas prospect based on economic field size and the appli-
terpreted gas saturation in the reservoir. All tested wells have cation of existing fracing technology. Follow-up well depths
recovered gas to surface. are estimated to be about 5,000 m and therefore not exces-
The play area’s pressure seal covers 400,000 acres. The sive in cost. The Yamalik-1 well, drilled to 4,196 m, was lim-
depth contour through Yamalik-1 at 3,100 m extends across ited by rig capability but the base of the well was still in
175,000 gross acres. The Yamalik-1 encountered almost 500 gas-bearing sands that were successfully flow tested, Valeura
m of net sand in Teslimkoy and Kesan reservoirs. The shal- said.
lower Mezardere and Osmancik reservoirs have not been The company’s existing infrastructure and customer base
tested in the basin’s center (Fig. 2). is capable of handling more than 35 MMcfd compared with
current sales through the system of less than 10 MMcfd. Tur-
Prospect development key also meets 99% of its current gas demand by imports,
Dallas-based DeGolyer & MacNaughton (D&M) reported providing an opportunity for domestic producers.
on Feb. 6 that Valeura Energy’s estimated working interest
unrisked mean resources were 10.1 tcf, which includes 236
million bbl of condensate. Working interest risked mean
prospective resources are an estimated 5.2 tcf of gas, 165
million bbl of which is condensate. Valeura’s Chief Executive
Officer Sean Guest said the independent evaluation support-

Oil & Gas Journal | Apr. 2, 2018 45

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 TECHNOLOGY

CNOOC studies steam recovery

in offshore Bohai heavy oil field
Wankun Xu opment. The reservoirs, usually depos-
Fengyi Zhang ited at more than 1,000 m, are classified
Dawei Wang into three types:
Tingting Wu • Thin water-zone.
CNOOC Ltd. Tianjin Bohai • Thicker water-zone.
Oilfield Institute DRILLING & SPECIAL • Lean zone.
Tianjin, China PRODUCTION REPORT Researchers studied thermal recov-
ery processes for each type of reservoir
Xiaoha Dong to determine which process worked best
China University of Petroleum given reservoir thickness, oil viscosity, reservoir permeabil-
Beijing ity, vertical and horizontal permeability ratio, and water-oil
thickness ratio.
Jinze Xu Reservoir simulation studies and field experiences dem-
Zhangxin Chen onstrated CSS-SD works best in heavy-oil reservoirs with
University of Calgary thin-bottom water. SAGD was most appropriate in thick bot-
Calgary tom-water reservoirs with horizontal wells. CSS-SD yielded
a higher cumulative oil-steam ratio (COSR) and recovery fac-
A combination of cyclic steam stimulation (CSS), steam drive tor in the lean-zone reservoirs.
(SD), and steam-assisted gravity drainage (SAGD) can im- Table 1 provides the classification of Bohai offshore field’s
prove thermal recovery in heavy oil reservoirs in Bohai off- heavy oil reservoirs: NanBao 35-2 (NB 35-2), QinHuangD-
shore oil field in the central Bohai Gulf. ao 35-2 (QHD), LvDa-1 (LD-1), LvDa-2, LvDa-3 and LvDa-4.
Bohai’s heavy oil reservoirs present severe heterogeneity The representative wells are B04M in NB 35-2 reservoir, LD-
and complex water zones, properties that complicate devel- 2-4N in LD-2 reservoir, and LD-4-1 in LD-4 reservoir.
Other researchers had found CSS-
SD and SD outperformed SAGD for
BOHAI FIELD HEAVY OIL RESERVOIR Table 1 developing thin water-zone heavy oil
Reservoir type Thin water zone Thicker water zone Lean water zone reservoirs in onshore fields.1-5 The au-
Reservoir names MB35-2, QHD, LD-1 LD-2, LD-3 LD-4 thors of this article focused on CSS-SD
Reservoir depth, m 1,100 900 950 and SD for developing an offshore thin
Oil viscosity, cp 600-3,000 >30,000 10,000
Reservoir thickness, m 5-15 30-55 < 20 water-zone heavy oil reservoir, com-
Water-oil net ratio 0-3 1-20 —
paring and analyzing the recovery per-
formances of all three processes on the
different types of reservoirs.
BOHAI FIELD RESERVOIR, FLUID PROPERTIES Table 2 The existence of lean zones ef-
Properties Thin water zone Thicker water zone Lean water zone fects the formation and expansion of
Reservoir depth, m 1,100 900 950 a steam chamber, limiting the useful-
Porosity, % 0.378 0.323 0.310
Absolute permeability, ness of SAGD.6 Bohai field’s lean zone
10-3 sq μm 3,000 2,992 3,200 led this article’s authors to study CSS
Kv/Kh ratio 0.3 0.5 0.3
Thickness, m 8 30.9 20 and SD for that area.
Net-to-gross ratio 0.8 0.8 0.8
Initial oil saturation, % 67 73 70
Oil viscosity, cp at 50 ºC.
Formation pressure, MPa
667
10.8
35,079
9.2
10,000
9.5
Numerical simulation models
Formation temperature, ºC. 56 47 47 Figs. 1-3 show the three reservoir mod-
Formation compressibility, kPa-1 1.6×10-5 7.7×10-6 4.6×10-6
Water-oil net ratio 0.5 10 — els and numerical simulation models
developed for each. The thin water-

46 Oil & Gas Journal | Apr. 2, 2018

180402ogj_46 46 3/26/18 4:43 PM

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 TECHNOLOGY

zone heavy oil reservoir model has a 5 × 51 × 21 grid system THIN-WATER ZONE FIG. 1
(400 m × 102 m × 48 m). The thicker water-zone heavy oil
reservoir model has a 5 × 51 × 49 grid system (400 m × 102
m × 330 m). The lean-zone heavy oil reservoir model has a 5
× 51 × 20 grid system (400 m × 102 m × 20 m).
Refined grids produced similar simulation results. A sim-
ulator automatically selected the time steps to ensure stabil-
ity of the numerical schemes (finite volumes in space and
adaptive time integration). Both the steam injection well and
the oil well have a 300-m horizontal section.
Table 2 shows the parameters used in simulation runs.
8m
Oil viscosity is highest in the thicker water-zone heavy oil reservoir
reservoir. The models figured the same production con- thickness
straints into the CSS and SD processes. The steam quality is
80%. The steam injection rate is 240 tonne/d.
For SAGD, the temperature difference is controlled with-
in 15 ºC. The operation pressure is 3 MPa. The three models
simulated a 20-year production life based on the anticipated
life of the offshore platform.
Switching CSS to SD in the simulations after seven cycles
allowed strategic consideration of the CSS-SD combination.

Results and Discussions

Figs. 4-6 show the recovery performance results from a se-
ries of simulations on the different heavy oil reservoirs. Mod-
els forecast effective thermal recovery methods by recovery
rate, recovery factor, and COSR for each reservoir type.
Fig. 4 shows the CSS-SD process yielded the highest re- Bottom
covery results for the thin-water zone. water
The COSR of CSS-SD process increased by 11% com- zone
pared with CSS performance.
Fig. 5 shows results for the thicker water-zone where the
SAGD process had the best recovery factor, recovery rate,
and COSR.
The oil recovery factor of CSS was only 5% due to high-
er formation thickness, existence of
a bottom aquifer, and CSS’s limited
thermal sweep efficiency. In addition, THICKER-WATER ZONE FIG. 2
its recovery rate and COSR were the
lowest.
Fig. 6 shows the simulated recovery 30 m
rate, recovery factor, and COSR results reservoir
of the three processes of the lean-zone thickness
heavy oil reservoir. The CSS-SD re-
covery process model shows the high-
est recovery factor, recovery rate, and
COSR for the lean zone.
The CSS model shows the lowest Bottom
oil recovery rate and COSR, resulting water
from its limited thermal sweep effi- zone
ciency.
For the recommended CSS-SD
combination, CSS established a heat
connection between the steam injec-

48 Oil & Gas Journal | Apr. 2, 2018

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 TECHNOLOGY

LEAN-WATER ZONE FIG. 3

tion well and the production well before the SD process
starts.

Sensitivity studies
Sensitivity studies for the three processes and their corre-
sponding reservoir models examined the effects of reservoir
parameters on performance. For offshore oil reservoirs, the
recovery rate is a more important indicator than the oil re-
covery factor.
The recovery rate and COSR measure recovery perfor-
mance. Researchers numerically studied the thermal recov-
ery processes’ adaptability in Bohai field’s reservoir types.
Table 3 shows the results and final recommendations. For
the heavy oil reservoir with a thin water zone, a CSS-SD
process is suitable. The studied formation is relatively thin
(8-15 m), permeability is greater than 1,000 × 10 -3 μm 2, Kv/
Kh ratio is higher than 0.3, and the water zone is low with a
20 m
reservoir
water-oil net ratio of < 1.
thickness SAGD is suitable to a reservoir more than 25 m thick,
with a thicker water zone, horizontal permeability greater
than 2,000 × 10-3 μm 2, and a Kv/Kh ratio higher than 0.3.
For a heavy oil reservoir with lean water zones, CSS and
SD processes are suitable. Other reservoir parameters appli-
cable to this choice are thickness greater than 15 m, oil vis-
cosity less than 30,000 cp at 50° C., horizontal permeability
greater than 1,000 × 10 -3 μm 2, and Kv/Kh ratio higher than
0.3.

Acknowledgments
The authors acknowledge the financial support of Nation-
al Science and Technology Major Project (20162X05058-
001-008), CNOOC Ltd. Tianjin Bohai Oilfield Institute,
the NSERC/AIEES/Foundation CMG Chair, and the AITF
(iCORE) Chair.

References
1. Butler, R., “Thermal Recovery of
THIN-WATER ZONE FIG. 4
Oil and Bitumen,” Prentice Hall, Engle-
wood Cliffs, NJ, 1991.
45 3.0 0.18
2. Farouq Ali, S., Jones, J., and
Oil recovery
40 Meldau, R., “Practical Heavy Oil Recov-
2.5 factor 0.15
35 Recovery rate
ery,” University of Alberta, Edmonton,
Oil recovery factor, %

1979.
Recovery rate, %

30 2.0 COSR 0.12

3. Kendall, G., “Importance of Res-
25 ervoir Description in Evaluating In-situ
COSR

1.5 0.09
20 Recovery Methods for Cold Lake Heavy
Oil,” Petroleum Society of Canada Jour-
15 1.0 0.06
nal of Canadian Petroleum Technology,
10 Vol. 16, No. 1, January 1997, pp. 41-47.
0.5 0.03 4. Kasraie, M., and Farouq Ali, S.,
5
“Heavy Oil Recovery in the Presence
0 0 0 of Bottom Water,” Petroleum Society
CSS-SD SD CSS
of Canada Annual Technical Meeting,
Recovery method
Calgary, June 10-13, 1984.

Oil & Gas Journal | Apr. 2, 2018 49

180402ogj_49 49 3/26/18 4:43 PM

 TECHNOLOGY

RECOMMENDED RECOVERY METHOD, BOHAI FIELD Table 3

Heavy oil reservoir type Recovery method Thickness, m Oil viscosity, cp at 50° C. Permeability, 10-3 sq μm Kv/Kh Water-oil net ratio

Thin water zone CSS-SD >8 600-3,000 > 1,000 > 0.3 <1
Thick water zone SAGD > 25 5,000-200,000 > 2,000 > 0.3 0-20
Lean zone CSS-SD > 15 < 30,000 > 1,000 > 0.3 —

Improved Oil Recovery, Tulsa, Apr.

17-20, 2013.
THICKER-WATER ZONE FIG. 5

45 3.0 0.18
Oil recovery
40 factor
2.5 0.15 The authors
35 Recovery rate Wankun Xu (xuwk@
Oil recovery factor, %

cnooc.com.cn) is a res-
Recovery rate, %

30 2.0 COSR 0.12

ervoir engineer at Binhai
25 New Area of Tianjin,

COSR
1.5 0.09 Bohai oil field since July
20 2010. He researched
15 1.0 0.06 multiple-thermal fluid
mechanisms and offshore
10 thermal recovery pro-
0.5 0.03 grams, such as CSS and SAGD, during
5 2010-16. He obtained his BS and MS in
0 0 0 oil and gas field development engineer-
SAGD CSS-SD SD CSS ing, from China University of Petroleum,
Recovery method East China.

Zhang Fengyi (zhang-

fy3@cnooc.com.cn) is
LEAN-WATER ZONE FIG. 6
a CNOOC Ltd. Tianjin
Bohai Oilfield Institute
45 3.0 0.12 reservoir engineer with
40
Oil recovery more than 10 years’
factor experience in the oil and
2.5
35 Recovery rate gas industry. He holds a
0.1
Oil recovery factor, %

BS (2004) and MS (2007) in reservoir

Recovery rate, %

30 2.0 COSR engineering from China University of

25 Petroleum. His research interests are
COSR

1.5 0.08 development and production of offshore

20 heavy oil.
15 1.0
Dawei Wang (wang-
0.06 dw13@cnooc.com.cn) is
10
0.5 a reservoir engineer at
5 Binhai New Area of Tian-
jin, Bohai oil field since
0 0 0.04
CSS-SD SD CSS July 2012. He researched
the development pro-
Recovery method
grams of offshore heavy
oil field from 2012-17. He holds a BS
(2004) in chemical engineering and an
MS (2009) and PhD (2012) in oil and gas field development
5. Delamaide, E., and Moreno, W., “Enhanced Oil Recov- engineering from Southwest Petroleum University, China.
ery of Heavy Oil in Reservoirs with Bottom Aquifer,” Society
of Petroleum Engineers (SPE) Western Regional Meeting, Tingting Wu (wutt2@cnooc.com.cn) is a res-
Garden Grove, Calif., Apr. 27-30, 2015. ervoir engineer at Binhai New Area of Tianjin,
Bohai oil field since July 2011. She researched
6. Samuelsen, E., Langlais, V., Svanes, T., Dalen, V., and numerical simulation technology in thermal re-
Tyler, K. “Evaluation of Flooding Strategies for a North Sea covery for offshore oilfields and thermal recovery
Reservoir Using Stochastic Techniques to Model Heteroge- technologies for heavy oil reservoirs, such as
neities,” SPE-Department of Energy Ninth Symposium on thin interbed common heavy oil reservoir and

50 Oil & Gas Journal | Apr. 2, 2018

180402ogj_50 50 3/26/18 4:43 PM

 TECHNOLOGY

massive block extra-heavy oil reservoir during 2011-16. She

obtained her BS and MS in oil and gas field development engi- of Geosciences, Beijing. He researches heavy oil, oil sands, and
neering from Northeast Petroleum University. shale gas.

Xiaohu Dong (dongxh0578@gmail.com) is an as- Zhangxin Chen (zhachen@ucalgary.ca) is a

sistant professor at the Department of Petroleum
Engineering, China University of Petroleum,
Beijing, since 2016. Previously, he worked as a
postdoctoral fellow at the University of Calgary,
2014-16. He holds a BS (2009) and PhD (2016)
in petroleum engineering from the China Uni-
versity of Petroleum, Beijing. Dong’s research includes phase
behavior modeling in unconventional resources and thermal
and non-thermal recovery methods for heavy oil.
Jinze Xu (jinzxu@ucalgary.ca) is a PhD stu-
dent at the University of Calgary Department
of Chemical and Petroleum Engineering. He
obtained an MS (2015) in petroleum engineering
from the University of Calgary and a BS (2011)
in petroleum engineering from China University
University of Calgary petroleum engineering pro-
fessor. He currently holds the Natural Science
and Engineering Research Council Chair, and
Computer Modelling Group Chair and is the In-
dustrial Research Chair in Reservoir Simulation,
and the Alberta Innovates Technology Future
(iCORE) Industrial Chair in Reservoir Modeling. He is director
of the University of Calgary’s iCentre for Simulation & Visualiza-
tion. He earned a PhD (1991) from Purdue University, West
Lafayette, Ind.,an MS (1985) from Xi’an Jiaotong University,
China, and a BS (1983) from Jiangxi University, China. He was
a professor and reservoir engineer at Xi’an Jiaotong University,
Peking University, University of Minnesota, Texas A&M Univer-
sity, and Southern Methodist University. His research interests
are reservoir engineering and numerical reservoir simulation for
conventional and unconventional reservoirs.

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180402ogj_51 51 3/26/18 4:43 PM

 TECHNOLOGY

Nanofluids hold EOR potential

in Egypt’s Western Desert
Sayed Gomaa Reservoir engineers seek ways to alter
Al-Azhar University the wettability from oil wet to water wet or
Cairo from water wet to highly water wet in ef-
forts to change total recovery factor. Wet-
Adel Salem tability affects fluid distribution, relative
Suez University
DRILLING & SPECIAL permeability, and flow behavior through
Suez PRODUCTION REPORT porous media. Nanoparticles have great
potential for altering rock wettability.
Mohamed Hassan
Belayim Petroleum Co. Experimental work
Cairo Researchers used a 70,000-ppm brine prepared with NaCl
salt. This concentration represents average Egyptian oil field
Alumina nanoparticles in a displacing brine alter rock wet- reservoir water salinity. The core samples came from an
tability and increase the ultimate recovery factor in Egypt’s Egyptian oil field in the Western Desert.
Western Desert, providing a new method of enhanced oil A pycnometer measured the brine and oil density, and a
recovery (EOR). rolling ball viscometer measured viscosity. The bulk volume,
Nanoparticles are believed to have great potential in wet- pore volume, and porosity were measured using a helium
tability alternation of cores, improving recovery factors. Re- porosimeter and the liquid saturation method. Researchers
searchers ran a series of core flooding experiments to de- used a gas permeameter and a liquid permeameter to mea-
termine the effect of different concentrations of aluminum sure the core permeability.
oxide (alumina, Al2O3) nanoparticles. Researchers fully immersed the core in a beaker contain-
An ultimate recovery factor of 81.13% at 10 g /l. alumi- ing the prepared brine. The core was placed in a vacuum
na nanofluid led to a 20.75% oil recovery over what was saturator for 2 hr to ensure full saturation.
achieved by water flooding. Laboratory workers prepared nanofluids, which went
Al2O3 changes the wettability of the sandstone rock. Af- into a probe sonicator or a bath sonicator.
ter nanofluids are injected into the core sample, it became Sonication takes 2 hr to guarantee full suspension of
more water wet. Researchers measured contact angles to de- nanoparticles in the fluid. During sonication, specific sound
termine rock wettability and recovery factors. waves are forced through a solution, agitating its particles.
The resulting disruptions can better
mix the solution or accelerate dissolu-
FLOODING APPARATUS FIG. 1 tion of solids inside the liquid.
Pressure transducer Sound waves cross alternating
high-pressure and low-pressure re-
gions. Frequency of the sound waves
Core holder measures how often the particles vi-
brate. Sonication of nanoparticles is
Oil
accumulator most effective at ultrasonic frequencies
above 20 kHz.
An increased frequency leads to
Nano better agitation and suspension of
accumulator Brine Confining the nanoparticles. Researchers used
pressure Graduated
accumulator a probe sonicator with a frequency of
pump cylinder
50 kHz. It worked with an amplitude
range of 30-90%.
Pump
Fig. 1 shows a schematic of the
flooding apparatus. The core is placed

52 Oil & Gas Journal | Apr. 2, 2018

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 TECHNOLOGY

in the core flooding device. Oil is in- RECOVERY FACTOR* FIG. 2

jected into the core under high-pres- 100
sure differential, enabling oil to re-
place brine. This process stops when
no more brine exits the core. At this 80
point, the production water cut is zero.

Recovery factor, %
A low pumping rate during flood- 60
ing adheres to Darcy’s law. Volumes of
produced oil and brine are measured,
40
and their flow rates calculated. The
pressure difference and process time
are also monitored at each step. 20
Researchers use these parameters to
calculate and plot the recovery factor 0
and relative permeability curves. 0 1 2 3 4 5 6
The core represents an oil reservoir. Pore-volume injected, cc
*Nano alumina 10 g/l.
Any remaining brine inside the core
is considered connate water. The vol-
ume of brine produced is calculated
through graded tubes and considered PERMEABILITY FACTOR* FIG. 3

to be the volume of oil in place. 1.2

Researchers calculate the amount
of pore volume (PV) remaining, con- 1.0
Relative permeability, Kr

sidered to be the interstitial water vol-

ume, using the data to determine criti- 0.8
cal water saturation and oil saturation.
0.6
Nanoparticles identification
The Egyptian Petroleum Research In- 0.4
stitute (EPRI) prepared the alumina
particles. The prepared alumina is a 0.2
Oil
nano-sized highly crystalline alpha- Water
type alumina powder synthesized by 0
0.65 0.70 0.75 0.80
microwave combustion at 900 w for
Water saturation, fraction
5 min with a metal-fuel molar ratio of *Nano alumina 15 g/l.
1:3.
A high-resolution transmission
electron microscopy (HRTEM) test before the next experiment.
Contact angle, different
sized the alumina nanoparticles. An X- The experimental procedure fol-
concentrations
ray diffraction test on very fine parti- Nano alumina, g/l. Contact angle, ° lows:
cles with a spherical shape showed the • Place the saturated core plug in-
0 32.443
presence of a highly crystalline phase. 3 82.442 side the core-flooding device.
5 97.781
Injection of an Al2O3 nanofluid in- 7 127.727 • Apply confining pressure until
side an oil reservoir leads to decreased 10 129.226 all injected fluid passes through the
residual oil saturation, increased oil core to ensure there are no leaks in the
production, and increased overall ul- device. A hydraulic pump fixed at 500
timate recovery from the field. psi creates the confining pressure.
The nanofluid injection occurs in the tertiary recovery • Place the oil inside the core-flooding device and inject
phase after the water flood. Researchers injected multiple pressure on the oil inside the rock sample.
concentrations of nanofluid into the core plug: 3 g/l., 5 g/l., • Transfer the brine solution from the core sample to a
7 g/l., and 10 g/l. graduated tube.
Lab workers cleaned the core between tests by removing • Calculate the brine solution volume using the gradu-
it from the flooding device and soaking it overnight in a sol- ated tube. The brine represents the oil in place.
vent. The core was heated in an oven to evaporate all fluids • Calculate the connate water saturation.

Oil & Gas Journal | Apr. 2, 2018 53

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 TECHNOLOGY
ALUMINA NANOFLUID CONCENTRATION
90
80
70
Oil recovery factor, %
60
50
40
30
20
10
0 1 2 3
Pore volume injected, cc
*Water flood
• Continue the experiment for 2 hr to ensure no addi-
tional brine solution can be removed from the core.
Results
Researchers determined initial volume of oil in place was
10.6 cc, oil saturation was 67.67%, and the connate water
saturation was 32.33%.
In the base run, the core sample was water flooded (WF)
with no nanofluid. Researchers started by injecting 0.2 PV
and periodically monitored the recovery with increased in-
jections going up to 5 PV.
The oil recovery factor increased as the injected pore vol-
ume increased. The water injection continued until no more
oil was produced and all output fluid was water or up to the
economic limit. The recovery factor was 60.38% of original
oil in place.
In the nano alumina flooding, the concentration of the
Al2O3 nanofluid is 3 g/l. of brine solution. This represents
about 3,000 ppm or 0.3 wt %, one of the most commonly
used concentrations in nanoparticle research.
Researchers prepared the alumina nanofluid using 0.15 g
of alumina nanoparticles, which were added to 50 ml brine
inside a beaker. They set a sonicator inside the beaker to an
amplitude of 50% with one pulse on and one pulse off. The
sonication process lasted until no nanoparticles precipitated
at the beaker bottom.
The nanofluids went inside the vessel while the vessel
was placed on a magnetic stirrer and a magnet placed in-
side the vessel. The vessel was closed properly to ensure all
the pressure was used to push the fluid inside the rock core
sample.
Researchers put 0.2 PV inside the vessel under constant
pressure to inject the alumina nanofluid inside the rock
sample. The amount of water produced, oil produced, time
of production, and pressure were determined and recorded
54
180402ogj_54 54
FIG. 4 for additional calculations.
This same procedure was repeated
with PV of 0.4, 0.6, 0.8, and 1.0. Re-
sults were collected to calculate water
cut, the amount of residual oil, the in-
cremental oil recovery, and the ulti-
mate oil recovery.
Nano alumina, g/l. Maximum recovery factor with 3
0* g/l. of alumina nanofluid was 74.38%,
3 a 14% higher recovery factor than the
5 water flooding base run.
7
The relative permeability curve in-
10
dicates increased wettability of the
15
rock. The point of intersection for the
4 5 6 nanofluids test shifted toward water
wet. This meant a better mobility ra-
tio and increased estimated ultimate
recovery (EUR). The point of inter-
section was 72.5% water saturation vs
67.5% with water flooding.
In a 5g/l. concentration alumina nanofluid experiment,
the recovery factor was 74.58%, up 0.71% from the 3 g/l.
test. The 5 g/l. test increased the recovery factor by 14.71%
over the water-flooding base run.
Relative permeability’s intersection point moved to about
73.5% water saturation, meaning the core become more wa-
ter wet with 5 g/l. than with 3 g/l, indicating a better mobil-
ity ratio and EUR.
The 7 g/l.-concentration alumina nanofluid experiment
showed a 76.13% recovery factor, marking a 1.04% incre-
mental recovery from the 5 g/l. run and running about
15.75% higher than the water-flooding base run.
Relative permeability showed an increasing wettability of
the rock sample. The point of intersection for the 7 g/l. con-
centration was 75.5% water saturation.
Fig. 2 shows results from testing a 10 g/l. concentration,
finding a maximum recovery factor of 81.13%, 5% higher
than the previous case and about 20.75% higher than the
water-flooding base run. The relative permeability curve
shows rock wettability moved toward the water-wet region.
The point of intersection was 79% water saturation.
Fig. 3 shows the 15 g/l. concentration experiment yield-
ing the lowest recovery factor. The intersection point of the
relative permeability curve also was lower than the experi-
ment with a 10 g/l. concentration. The 15 g/l. intersection
point decreased to 66.64% water saturation, less than the
water flooding base run. Researchers concluded that fluid
containing high concentrations of nanoparticles can cause
blockage of the pores, decreasing oil production.
Fig. 4 compares the recovery factors achieved by using
different alumina nanofluid concentrations.
Wettability changes
Ultimate recovery and relative permeabilities of a reservoir
Oil & Gas Journal | Apr. 2, 2018
3/26/18 3:25 PM
 TECHNOLOGY

hinge upon the wetting behavior of the PERMEABILITY INTERSECTION, POINT MOVEMENT FIG. 5
rock, which can be water wet or oil 100
wet. An adjustment to the wettability
of a reservoir can achieve higher pro-
duction. 90

Intersection point, %
Researchers used a high-resolution
camera to measure the contact angle at 80
different concentrations from 0 g/l. to
10 g/l. The table shows that as the con-
70
centration increases, the contact angle
increases, a change in wettability to-
ward water wet. 60
The contact angle is the angle, con-
ventionally measured through the liq- 50
uid, at which a liquid-vapor interface 0* 3 5 7 10 15
meets a solid surface. It quantifies the Nano alumina concentration, g/l.
*Water flood
wettability of a solid surface by a liq-
uid.
Results confirm the relative perme-
ability curves findings and the intersection point findings.
The wettability increase explains the improved incremental The authors
recovery factor by alumina nanofluid over conventional wa- Sayed Gomaa (sayed.gomaa@bue.edu.eg) is an
ter flooding. associate professor of petroleum reservoir engi-
The intersection point on the relative permeability curve neering at Al-Azhar University and The British
indicates the degree of rock wettability. Fig. 5 shows the in- University in Egypt. He holds a BSc (1999) and
tersection point corresponding to a water saturation higher MSc in petroleum engineering (2005) from Al-
than 50%, a water-wet rock. The nanofluid concentrations, Azhar University and PhD (2010) in petroleum
except for 15 g/l., made the rock more water wet, increasing engineering from Azerbaijan State Oil Academy.
the recovery factor above that of conventional water flood-
ing. Adel Moh. Salem Ragab (adel.salem@suezuni.
edu.eg) is an associate professor and head
Acknowledgments of the petroleum engineering department at
The authors thank the British University in Egypt, Fu- Suez University. He obtained a PhD (2008) in
ture University in Egypt, and the Egyptian Petroleum petroleum engineering from Leoben University,
Research Institute for providing research equipment and Austria. He also earned a BS and MS from
core plugs. Suez Canal University, Egypt. Previously, Adel
was assistant professor at American University in Cairo for 4
Bibiliography years, Future University in Egypt for 2 years, and Suez Canal
Li, S., Genys, M., Wang, K., and Torseter, O., “Experimental University for 3 years. He has published more than 45 papers
Study of Wettability Alteration during Nanofluid Enhanced Oil on EOR, characterization of formation damage, nanotechnol-
Recovery Process and Its Effect on Oil Recovery,” Society of Pe- ogy of EOR, and smart drilling fluids, oil shale, well testing, and
troleum Enginers (SPE) Reservoir Characterization and Simula- radial drilling.
tion Conference and Exhibition, Abu Dhabi, Sept. 14-16, 2015.
Ragab, A., and Salem, M., “Unlocking Reservoir Poten- Mohamed Hassan (Mohamed.hassan813@
tial using Robust Hybrid Nanoparticles Designed for Future gmail.com) is a petroleum engineer for Belayim
Enhanced Oil Recovery,” Mediterranean Offshore Conference & Petroleum Co. He holds a BS (2016) in pe-
Exhibition, Alexandia, Egypt, Apr. 19-21, 2016. troleum engineering from British University in
Sheshdeh, M., “A Review Study of Wettability Alteration Egypt.
Methods with Regard to Nano-Materials Application,” SPE
One Day Conference, Bergen, Norway, Apr. 22, 2015.
Torsater, O., Li, S., and Hendraningrat, L., “A Coreflood In-
vestigation of Nanofluid Enhanced Oil Recovery in Low-Medium
Permeability Berea Sandstone,” SPE International Symposium
on Oilfield Chemistry, The Woodlands, Tex., Apr. 8, 2013.

Oil & Gas Journal | Apr. 2, 2018 55

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 TECHNOLOGY
Continuous pack-off inflow control
device lowers water cut offshore China
Feng Li
Xiaoping Li
Southwest Petroleum University
Chengdu, China
Bailin Pei SPECIAL
Songmei Zhang REPORT
Hailong Wang
Guojiang Feng
Jianchang Wu
Xiaoling Li
Anton Bailin Oilfield Technology Co. Ltd.
Beijing
Researchers lowered the water cut and increased oil produc-
tion during a trial of a continuous pack-off inflow control
device (CP+ICD) in an offshore horizontal well in 300 m of
water in Liuhua oil field, eastern South China Sea.
CP + ICD technology was developed to resolve high wa-
ter-production issues for horizontal wells. Previously, CP +
ICD proved successful in the sandstone reservoirs of on-
shore northwestern China oil fields (OGJ, Oct. 3, 2016, p.
48 and OGJ, May 1, 2017, p. 52).
This article discusses the technology’s first trial on a car-
bonate reservoir. It also marks the first offshore trial for CP
+ ICD.
Effective water control is a well-known problem in Li-
uhua field where industry reports cumulative oil produc-
tion at 10% estimated OOIP. Operators often shut in Liuhua
wells due to 99.5% basic sediment and water production.
The Cenozoic carbonate reservoir involves a one-porosi-
ty, two-permeability flow system characterized by fractures
and minor faults. CP + ICD minimizes water production
along a well’s horizontal section because injected particles
buffer water flow through the annulus.
CP + ICD differs from a swellable packer inflow control
device (SP + ICD), which compartmentalizes a horizontal
section into units. CP + ICD works in old wells unsuitable
for mechanical packers and in poor-sealing wells having ir-
regular wellbores or twisted casing.
Operators can restart shut-in wells because CP + ICD
maximizes oil production while limiting water-production
volumes after a water breakthrough. Heterogeneity of forma-
tions combined with reservoir fluid properties can cause an
uneven flow or water coning toward the horizontal section.
56
180402ogj_56 56
The water-coning interval might be a small percentage of
the entire wellbore, yet the overall water cut still can be high.
Darcy’s law establishes a strong correlation with the mobility
ratio of in-situ water and oil.
Equations 1-2 show the mobility ratio of water and oil
in Liuhua reservoir. The water rate of the high-permeability
zone is more than three times higher than the oil rate in low-
permeability zones, assuming oil viscosity of 130 cp.
Fluid moves through the reservoir’s fractures and faults to
EQUATIONS
m 0 = K 0 /n 0 and m W = K W /n W (1)
M = m W /m 0 = K W ) n W (2)
NOMENCLATURE
m 0 = oil mobility, md/mPa : s
K 0 = oil permeability, md
n 0 = oil viscosity, mPa : s
m W = water mobility, md/mPa : s
K W = water meameability, md
n W = water viscosity, mPa : s
M = mobility ratio,dim ensionless
the wellbore. The ICD screen chokes water flow after water
breakthrough.
Industry has used SP + ICD to remedy high-water pro-
duction for more than 20 years, but it can be hard to isolate
horizontal sections using mechanical packer installations.
Some wellbores develop irregularities while drilling into
unconsolidated reef limestone reservoirs. Consequently, a
mechanical packer’s seal malfunctions. Upon water break-
through, oil production declines so drastically that operators
shut in the wells.
The CP + ICD is self-adaptable to various wellbore con-
ditions. Light, stable particles are injected into the annular
space between the ICD screen and wellbore wall. The par-
ticles, which take the place of mechanical packers in a con-
ventional ICD, also help control sand production.
Fig. 1 shows how CP + ICD minimizes the axial flow
Oil & Gas Journal | Apr. 2, 2018
3/26/18 4:43 PM
 TECHNOLOGY

relative to the radial flow. A 7-in. cas-

ing houses the 3.5-in. ICD screen. The Well A4H4
ICD pipe is 10 m long with a 1-m junc- Date Oil rate, Water rate, Liquid rate, BS&W, % Drawdown,
cu m/d cu m/d cu m/d MPa
tion.
Fig. 2 shows minor faults and mini Pre-operation October 2015 8 1,782 1,790 99.5 0.66
Post-operation February 2017 39 2,038 2,077 98.1 5.55
fractures that provide direct commu-
nication with oil-bearing zones in Li-
uhua field. All wells experienced water
breakthrough within weeks of coming on stream. Produc- zontal section into six units. A 99% water cut was recorded
tion stabilized after the water cut reached 90%. after 9 days of operation.
Reservoir characteristics indicated fractures and faults.
Field trials Researchers detected wellbore irregularities. They also un-
Earlier SP + ICD trials proved incapable of controlling water successfully tested chemical-based water-control technology.
in Liuhua field’s fracture-fault system. The SP + ICD and au- A CP + ICD trial on Well A4H4 filled the 575-m lateral
tonomous inflow control device (AICD) trials involved two with CP particles. The trial was successful without engi-
wells with five swellable packers installed to divide a hori- neers having to locate water-breakthrough points, fractures,
and faults.
Well A4H4 was shut in during De-
FLOW RESISTANCE FIG. 1 cember 2015 after producing 99.5%
basic sediment and water (BS&W).
Wellbore Inflow control screen Fig. 3 shows the CP + ICD well com-
Axial direction pletion with an 8 ½-in. open hole. Per-
meability was wide ranging, averaging
300 md. The oil had 130 cp viscosity.
Well A4H4 demonstrated water
coning. The water cut reached over
90% within weeks of water break-
through. Production dropped dramat-
ically with water accounting for most
of the produced fluid, making the well
economically unfeasible.
The table shows a direct compari-
son of data from before and after the
Radial direction
CP + ICD trial, indicating improved oil
production and lower water produc-
tion in 4 weeks. But the direct compar-
ison could be misleading given altered
RESERVOIR WATER CHANNEL FIG. 2 operational circumstances. Part of the
oil rate might result from additional
liquid production. Other operating
concerns include extra water disposal
Open hole expenses or the need to reduce liq-
uid production from other wells given
constrained Liuhua oil-processing ca-
pability.
Researchers also indirectly com-
Mini fracture
pared production data through index-
es. The water production index slid to
around 14% of baseline data before the
Water trial because the ICD screen imposed
breakthrough an additional drawdown to reduce
zone
water in the breakthrough unit. The
oil-production index reacted similarly
although not as dramatically. The oil

Oil & Gas Journal | Apr. 2, 2018 57

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 TECHNOLOGY
WELL A4H4 COMPLETION
Hanged packer, 1,383 m
index number was about half the baseline data number.
Dimensionless water-oil ratio (WOR) post-trial was down
78% overall compared with WOR pretrial data. If the same
liquid production rate can be maintained, oil production
could increase by 2.6 times, although production started to
decline following the trial.
Acknowledgment
The authors would like to thank the collaborative efforts of
CNOOC Shenzhen, Southwest Petroleum University, and
Anton Bailin Oilfield Co. Ltd. Special thanks to CNOOC
for sharing data and permission to publish the results.
Bibliography
Al-Khelaiwi, F., and Davies, D., “Inflow Control Devices: Ap-
plication and Value Quantification of a Developing Technology,”
Society of Petroleum Engineers (SPE) International Oil Confer-
ence and Exhibition, Veracruz, Mexico, June 27-30, 2007.
Ellis, T., Erkal, A., Jokela, T., Kvernstuen, S., Leung, E., Moen,
T., Porturas, F., Skillingstad, T., Vorkinn, P., and Raffn, A., “In-
flow Control Devices: Raising Profiles,” Oilfield Review Winter,
December 2009, Vol. 21, No. 4, pp. 30-37.
Lee, B., Fassam, F, Galimzyanov, A., Faizal, S., and Vicario, R.,
“ICD Evaluation Study Using Numerous PLT Runs to Optimize
Design Practice and Maximize ICD Value,” International Petro-
leum Technology Conference, Kuala Lumpur, Dec. 10-12, 2014.
Okwananke, A., Isehunwa S., Adeosun T., and Adeboye Y.,
“Water Cresting Predictions in Horizontal Oil Wells,” Advances
in Sustainable Petroleum Engineering Science Journal, Septem-
ber 2012, Vol. 4, No. 3, pp 109-124.
Permadi, P., Lee, R., and Kartoatmodjo, R., “Behavior of Water
Cresting Under Horizontal Wells,” SPE Annual Technical Confer-
ence and Exhibition, Dallas, Tex., Oct. 22-25, 1995.
Zeng, Q.S., Wang, Z.M., and Yang, G., “Comparative Study on
Passive Inflow Control Devices by Numerical Simulation,” Tech
58
180402ogj_58 58
FIG. 3
ICD screen, 1,404 m
Continuous pack-off particles
Science Press S.L., Vol. 9, No. 3, May 2013, pp. 169-180.
Youl, K., Suhana, W., Regulacion, R., and Jorgensen, T., “Pas-
sive Inflow Control Devices and Swellable Packers Control Water
Production in Fractured Carbonate Reservoir: A Comparison
with Slotted Liner Completions,” SPE-IADC Drilling and Exhibi-
tion, Amsterdam, Mar. 1-3, 2011.
Sun, X., and Bai,, B., “Comprehensive Review of Water Shutoff
Methods for Horizontal Wells,” Petroleum Exploration and De-
velopment, December 2017, Vol. 44, No. 6, pp. 1022–1029.
The authors
Feng Li (feng_li@cnooc.com.cn) is an upstream
department head of CNOOC Shenzhen, manag-
ing the oil and gas production in the East Part
Region, South China Sea. He is pursuing a
PhD with State Key Laboratory of Oil and Gas
Reservoir Geology and Exploitation, Southwest
Petroleum University, Chendgu, China.
Xiaoping Li (lixiaoping@swpu.edu.cn) is a profes-
sor at Southwest Petroleum University. He holds
a PhD in petroleum engineering from Southwest
Petroleum University. He specializes in reservoir
engineering and well test analysis.
Bailin Pei (wpbl3-11@vip.163.com) is an as-
sociate professor in the petroleum engineering
department at China University of Petroleum in
Beijing. He holds a BS and MS in petroleum en-
gineering from Southwest Petroleum University
and a PhD in hydromechanics from the Univer-
sity of Science and Technology of China, Hefei.
His research covers horizontal well water control,
sand prevention, and inflow control devices.
Oil & Gas Journal | Apr. 2, 2018
3/26/18 4:43 PM
 TECHNOLOGY

Songmei Zhang (zsm@antonbailin.com) is a Jianchang Wu (wjc@antonbailin.com) has

senior reservoir engineer at Anton Bailin Oilfield
Technology specializing in water-control issues
and sand prevention. Zhang graduated from
China University of Petroleum in Beijing with an
MS (2004) in petroleum engineering.
Hailong Wang (whl@antonbailin.com) is a reser-
voir engineer at Anton Bailin Oilfield Technology.
He graduated from China University of Petroleum
in Beijing with a BS (2011) in petroleum engi-
neering.
Guojiang Feng (fgj@antonbailin.com) is a me-
chanical engineer at Anton Bailin Oilfield Tech-
nology. He has 17 years oil and gas experience.
He graduated from Harbin University of Science
and Technology, China, with a BS (2000) in
mechanical engineering.
worked for Anton Bailin Oilfield Technology since
2013. He started his oil and gas career in 2006,
focusing on well-screen design. He received a
BS (1995) in manufacturing engineering from
the North China Institute of Aerospace Engineer-
ing, Langfang.
Xiaoling Li (lxl@antonbailin.com) is an experi-
enced reservoir engineer, having worked in both
China and Australia. She completed her BS in
petroleum engineering (1991) from Petroleum
University (East China) and is pursuing a PhD
with the University of Queensland, Brisbane,
Australia.

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 TECHNOLOGY
Study evaluates refiners’ options to
meet 2020 bunker fuel sulfur rules
LC-LSFO ATB UPGRADE FIG. 1

LC-FINING Heavy oil treater Product

Tayseer Abdel-Halim reactors (HOT) fractionator
Matthew Yu
Chevron Lummus Global Gas cooling, Hydrogen makeup
purification,
Richmond, Calif compression

Refiners need to modify their product

Medium-pressure, HOT
slate to conform to increasingly strict medium-temperature Medium-pressure
environmental regulations as efforts (MPMT) separator separator
(MPS) Naphtha
to reduce atmospheric emissions have
extended to fuel oil burned at sea.
In October 2008, the International
Heavy oil Diesel
Maritime Organization (IMO)—the
separator
United Nations agency responsible for (HOS)
HOT
the safety, security, and environmen- Vacuum
ATB
residue Gas oil (GO) VDU
tal stewardship of international ship-
ping—adopted new, geographically VGO
based standards to Filter
Hydrogen
limit exhaust emis-
LSVR
sions from engines
that power ocean-
going vessels. These LC-LSFO VTB UPGRADE FIG. 2
standards require
ships operating in LC-FINING Integrated hydrotreater Clean product
PROCESSING reactors (IHT) fractionator
areas with air-qual-
Hydrogen
ity problems—des- makeup
Gas cooling,
ignated as Emis- purification, compression
sion Control Areas
(ECAs)—to meet even tighter emis-
sion limits. While portions of the
GO IHT
new standards have been gradually
phased in over the last several years, High-pressure,
high-temperature HOS MPS
final regulations are slated to take ef- (HPHT) separator
fect in 2020, putting refiners with HDT naphtha
relatively large production of residual
VDU
fuel oil at risk for adverse impacts to
Filter Euro 5 diesel
profitability.
To comply with these stricter regu- Hydrogen
Vacuum
lations, the shipping industry is con- residue Treated
sidering either burning IMO-compli- Fractionator VGO UCO
HOT
ant fuels or retrofitting ships with an
exhaust-gas scrubber or an LNG fuel
system. All three options have serious LSFO
operational and economic detriments

60 Oil & Gas Journal | Apr. 2, 2018

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 that impact refiners exposed to bun- BASE-CASE REFINERY FIG. 3
ker fuel markets.
Naphtha Benzene
This article presents refiners with hydrotreater
several commercially proven bottom- Raffinate
Arab Light, (NHT);
of-the-barrel processes that enhance Heavy crude continuous C7, reformate
blend Naphtha catalytic reformer
earning potential in the face of these Crude,
(CCR); benzene,
new bunker fuel requirements, includ- Distillates toluene, xylenes
vacuum C3
(BTX) unit
distillation
ing a detailed techno-economic analy- unit;
Vacuum
C4 Alkylate
gas oil Desulfurized Alkylation
sis to compare the different processes. 16,000 tpy (VGO)
VGO (DS) VGO FCC,
hydrodesulfurizer
(HDS) gas FCC gasoline
New specifications, options Vacuum
residue
plant
Slurry oil to fuel oil
Unconverted
Current specifications for bunker fu- oil (UCO) Light-cycle oil (LCO)
Hydrocracker
els—in effect since January 2012—lim- Diesel
it sulfur globally to 3.5 wt %. With the To
fuel oil
global specification slated to drop to 0.5 Hydrotreated (HT) jet
wt % in 2020, however, the impending Distillate
To fuel oil hydrotreater HT diesel
regulations will threaten the profitabil-
Naphtha
ity of refiners which produce a relative- Visbreaker
ly large proportion of residual fuel oil.1 Visbroken residue to fuel oil
Since 2015, ships operating in ECAs To fuel oil
Natural gas,
have been required to use fuels with a refinery fuel gas (RFG) H2
H2 plant
maximum sulfur level of 0.1 wt %, re-
duced from 1.0 wt % in 2010. Table 1
summarizes the historic and proposed
fuel sulfur standards and anticipated CASE 1: RESIDUE HYDROTREATER (RDS), RFCC FIG. 4
start dates for ECA and global fuel sul- Benzene
fur limits. Arab Light, Existing
Heavy crude Raffinate
While these emission reductions blend Naphtha NHT, CCR, Revamp
BTX C7, reformate
theoretically can be achieved by in- Crude, New
vacuum
stalling onboard flue-gas desulfuriza- distillation Distillates C3
tion, this technology has been com- unit;
C4 Alkylate
16,000 tpy VGO DS VGO Alkylation
mercially proven only in land-based VGO HDS FCC,
industrial applications and is unlikely gas FCC gasoline
Vacuum plant
to be commercially accepted in a ship- residue Slurry oil
based setting in the foreseeable future. UCO
Hydrocracker LCO
Issues surrounding use of this tech- Diesel
nology—including the discharge of HT jet
Distillate
treated wastewater—must be resolved, hydrotreater HT diesel
making the number of ships that LCO
would be retrofitted for it unclear. It is Naphtha
LCO C3
more likely that ships will be retrofit- RDS Distillate
ted to burn low-sulfur diesel fuel while C4 Alkylate
DS atmospheric residue Alkylation
operating in ECAs. RFCC,
gas plant DS FCC
Refiners that serve the bunker fuel Natural gas, RFG H2 FCC gasoline Gasoline gasoline
H2 plant
market have started considering future Slurry oil
hydrotreater
options.

Refiners’ options IMO FUEL SULFUR STANDARDS Table 1

The options available to refiners pro- Timing ECA fuel sulfur limit, wt % Global fuel sulfur limit, wt %
ducing high-sulfur fuel oil (HSFO) are
Before July 1, 2010 1.5 —
limited and include: Before Jan. 1, 2012 — 4.5
• Continuing business as usual. On and after July 1, 2010
On and after Jan. 1, 2012
1.0
—
—
3.5
Profitability of HSFO will become less On and after Jan. 1, 2015 0.1 —
On and after Jan. 1, 2020 — 0.5
attractive as prices decline. While a

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 TECHNOLOGY

ECONOMIC ANALYSIS RESULTS Table 2

Case Base 1 2 3 4 5 6
LC‐FINING,
Visbreaking RDS, RFCC Delayed Coker delayed coker LC-MAX, E-Gas LC-MAX LC-SLURRY
Crude Price, $/bbl –––––––––––––––––––––––––––––––––––––Volume, b/d ––––––––––––––––––––––––––––––––––––
Arabian Light 43.89 175,000 175,000 175,000 175,000 175,000 175,000 175,000
Arabian Heavy 42.39 175,000 175,000 175,000 175,000 175,000 175,000 175,000
Imported Feed Price, $/tonne –––––––––––––––––––––––––––––––––––––Volume, tonne/year ––––––––––––––––––––––––––––––––––––
MTBE 694.00 299 707 353 349 608 333 321
Natural Gas 361.55 108 535 368 546 — 663 551
Isobutane 440.00 — 182 — — — — —
Coke 40.00 — — — — 1,224 — —

Products Price, $/tonne ––––––––––––––––––––––––––––––––––––– Volume, tonne/year –––––––––––––––––––––––––––––––––––––

Refinery-grade 445.93 108 315 162 146 118 118 118
propylene
Benzene 629.00 60 60 52 52 47 53 50
Sulfur 25.00 178 365 301 360 456 358 373
Fuel coke 30.00 — — 1,161 — — — —
Anode coke 200.00 — — — 516 — — —
Asphalt 200.00 — — — — — 367 —
Price, $/bbl ––––––––––––––––––––––––––––––––––––– Volume, thousand b/d –––––––––––––––––––––––––––––––––––––
Naphtha 46.93 — 12.6 14.6 16.1 14.3 14.3 14.9
Euro-5 95 RON 65.37 108.5 162.0 117.4 119.1 127.5 117.7 117.7
Gasoline
Jet A‐1, kerosine 58.78 7.2 — — — — — —
Euro-5 diesel 60.41 117.9 182.1 200.3 212.4 220.1 220.1 221.0
3.5% sulfur HSFO 36.12 111.0 — — — — — —
0.3% sulfur LSFO 37.97 — — — — — — 4.1
Slurry oil 26.12 — 6.7 — — — — —
Delta net revenue, $ — Base 698.4 503.4 779.9 978.6 808.8 797.9
million/year
TIC, $ million — — 3,283 2,363 3,597 4,929 3,594 3,341
NPV, $ million — — 1,393 994 1,646 1,771 1,817 1,950
IRR, % — — 25.5 25.4 26.6 23.3 28.3 30.8
Simple payout, years — — 4.7 4.7 4.6 5.0 4.4 4.2

change to lower-sulfur crude is possible, higher pricing for
these crudes typically makes this a costly option.
• Investing to reduce the sulfur content of produced fuel
oil to continue serving the bunker fuel market. Investments in
process options should be carefully evaluated based on dif-
ferentials in pricing of low-sulfur fuel oil (LSFO) vs. HSFO.
• Exiting the fuel oil market completely. Many refiners
are considering implementation of bottom-of-the-barrel up-
graders to produce more low-sulfur distillates, including
marine diesel.
The changes outlined by IMO will have repercussions for
many refiners, particularly in the Asia Pacific region where
much of the world’s bunker fuel is produced. Refiners will
need to consider available investment options to remain
profitable as the market for HSFO is eliminated.
Desulfurization of atmospheric or vacuum residues re-
mains the predominant technology available for producing
0.5 wt % LSFO from residues and is widely used throughout
the Asia Pacific region. Proper integration of atmospheric or
vacuum residue desulfurization into an existing refinery can
offer additional processing benefits that can improve return
on investment. Using this technology to produce LSFO with
less than 0.1 wt % sulfur to comply with proposed regula-
tions for ECA compliant fuels, however, will be difficult and
impractical.
Refiners seeking to exit the fuel oil market are consider-
ing several available bottom-of-the-barrel technology options.
Technology overview
In addition to traditional bottom-of-the-barrel technologies
such as atmospheric residue desulfurization and delayed
coking, Chevron Lummus Global (CLG) developed the LC-
FINING technology platform—consisting of LC-FINING,
LC-MAX, and LC-SLURRY technologies—for improved res-
idue conversion and selectivity towards high-value distillate
products.
Some of the major benefits of CLG’s technology platform
include:
• Ebullated catalyst beds developing minimal pressure-
drop buildup.
• Recycle pump at the bottom of the reactor creating
nearly isothermal reactor conditions.
• High-level conversion to distillate products.
• High onstream factor.
The technology platform has been further enhanced by
recent features:

62 Oil & Gas Journal | Apr. 2, 2018

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 TECHNOLOGY

• Integrated hydrotreating simplifies the fractionation
and production of finished clean products.
• Integrated two-stage hydrocracking maximizes the
amount of high-value distillates produced from the unit, in-
cluding selective cracking to produce Euro V diesel.
• An interstage separator in the reaction section consid-
erably increases conversion and per-train capacity by reduc-
ing the vapor superficial velocity and gas hold-up in the re-
action section.
Continuing advancements
To address the IMO regulations taking effect January 2020,
CLG recently patented a new process focused on producing
finished LSFO.
LC-LSFO is an enhancement to the LC-FINING tech-
nology platform that produces low-sulfur bunker fuel from
unconverted residue oil. LC-LSFO applies the process tech-
nology developed for LC-SLURRY to unconverted residue
vacuum tower bottoms (VTB) and atmospheric tower bot-
toms (ATB). The processed VTB-ATB is then treated in a
fixed-bed reactor with CLG’s hydrotreating catalyst.
CLG’s LC-LSFO pilot unit has operated using 27 differ-
ent feeds in more than 30 different operating conditions,
improving on the already high-conversion LC-FINING pro-
cess, with the last unconverted barrels converted to low-sul-
fur bunker fuel or used as feedstock to an RFCC unit.
Figs. 1-2 show flow schemes for ATB and VTB upgrading,
respectively.
This article examines the potential economic benefit of
various modified refinery configurations incorporating these
technologies in a typical 350,000-b/d Asia Pacific refinery.
A 50-50 blend of Arabian Light and Arabian Heavy
crudes was assumed for all cases in the accompanying eco-
nomic analysis. These crudes were selected because they are
processed throughout the world but especially in the Asia
Pacific region, where a large portion of the world’s bunker
fuel oil is produced.
Fig. 3 shows the base-case configuration for a refinery
equipped with a visbreaker.
The authors evaluated six modified refinery configura-
tions and the benefits associated with each of these vari-
ations (see accompanying box). In each case, the existing
visbreaker unit was replaced with one or more bottom-of-
the-barrel technology options.
Figs. 4-9 show simplified block-flow diagrams of the six
modified refinery configurations.
Economic evaluation
Platts data from 2015 provide the price basis for economic
analysis, together with CLG’s internal projections for LSFO
and HSFO pricing following the IMO sulfur reduction to
maximum 0.5 wt %.

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Oil & Gas Journal | Apr. 2, 2018 63

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 TECHNOLOGY

CASE 2: DELAYED COKER FIG. 5

Arab Light,
Case descriptions
Benzene
Heavy crude Existing
blend Naphtha Raffinate Revamp Case 1: RDS, RFCC integrated with new
NHT, CCR,
Crude, BTX
vacuum
C7, reformate New distillate hydrotreater, alkylation unit.
distillation Distillates C3 The RDS, RFCC process configuration
unit;
16 million VGO
C4 Alkylate is used to enhance production of gasoline
DS VGO Alkylation
tpy VGO HDS FCC, or LSFO (Fig. 4). Investment in this process
gas FCC gasoline
Vacuum plant configuration depends on feed metals (e.g.,
residue Slurry oil nickel, vanadium), as processing high-metal
UCO
Hydrocracker LCO crudes requires larger catalyst volumes to
Diesel
achieve desired product qualities, increas-
HT jet ing project cost and deteriorating overall
Distillate
hydrotreater HT diesel economics.
Naphtha Though typical RDS units have frequent
LCO
Light-cycle turnaround cycles (every 6-15 months),
Delayed gas oil (LCGO)
coker
units can be designed with multitrain, inde-
Heavy-cycle pendent RDS modules to maintain RFCC ca-
gas oil (HCGO) pacity during catalyst changeout, increasing
onstream factor and refinery profitability.
Coke Natural gas, RFG H2 This configuration is particularly attractive
H2 plant
when economics favor a high-gasoline yield.

Case 2: Delayed coker, new distillate

CASE 3: LC-FINING, DELAYED COKER FIG. 6
hydrotreater integrated with new hydro-
cracker.
Benzene
Arab Light, Existing Delayed cokers have the benefit of elim-
Heavy crude Raffinate
blend Naphtha NHT, CCR, Revamp inating fuel oil production. This configura-
BTX C7, reformate
Crude, New tion has the lowest investment cost of the
vacuum
distillation Distillates C3 options evaluated (Fig. 5). Distillate prod-
unit;
C4 Alkylate ucts require extensive hydroprocessing,
16 million VGO DS VGO Alkylation
tpy VGO HDS FCC, however, and large quantities of low-value
gas FCC gasoline fuel grade coke are typically produced. Fu-
Vacuum plant
residue Slurry oil ture environmental regulations also may
UCO impact profitability of this processing unit.
Naphtha Hydrocracker LCO
Diesel
LC-FINING
unit Distillates, HT VGO Case 3: LC-FINING, delayed coker inte-
VGO HT jet grated with new distillate hydrotreater,
Distillate
UCO hydrotreater HT diesel hydrocracker.
LCO
LC-FINING uses CLG’s ebullated-bed
Naphtha
reactor technology, allowing for an im-
Delayed LCGO
coker proved onstream factor (3+ years) com-
HCGO pared to traditional fixed-bed reactors. The
Natural gas, RFG H2
combined LC-FINING and delayed coking
H2 plant
process configuration results in very high
Anode coke
vacuum-residue conversion (typically 60-
85%), eliminates fuel oil production, and
minimizes coke production (Fig. 6). This
process produces high-value anode coke as
opposed to the fuel coke produced by a de-
layed coker-only configuration. This option
can be particularly attractive as an addition
to an existing coking refinery planning to

64 Oil & Gas Journal | Apr. 2, 2018

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 TECHNOLOGY

CASE 4: LC-MAX, E-GAS FIG. 7

process more or heavier crudes.
Benzene
Arab Light, Existing
Heavy crude Raffinate
Case 4: LC-MAX, E-Gas unit integrated blend Naphtha NHT, CCR, Revamp
with new distillate hydrotreater, hydro- BTX C7, reformate
Crude, New
cracker. vacuum
distillation Distillates C3
LC-MAX is an improvement on LC- unit;
C4 Alkylate
FINING technology, integrating a solvent 16 million VGO DS VGO Alkylation
tpy VGO HDS FCC,
deasphalting (SDA) unit with LC-FINING gas FCC gasoline
Vacuum plant
ebullated-bed reactors (Fig. 7). Inclusion of residue Slurry oil
the SDA section enhances unit reliability, re- Hydrocracker
UCO
LCO
duces required reactor volumes and catalyst Diesel
additions, increases residue conversion, and HT VGO
improves product quality. LC-MAX is capa- HT jet
ble of extremely high vacuum-residue con- Distillate
hydrotreater HT diesel
version (typically 80-90%) and eliminates Naphtha
LCO
fuel oil and coke production. The unconvert- LC-MAX Distillates,
ed residue from the LC-MAX unit, along with unit VGO
Natural gas, RFG H2
imported coal-coke, can be converted into H2 plant
a hydrogen-rich synthesis gas for substitute Imported coke, coal
UCO E-Gas H2
natural gas production or power generation gasification
using E-Gas gasification technology.

Case 5: LC-MAX integrated with new

distillate hydrotreater, hydrocracker. CASE 5: LC-MAX FIG. 8
This proposed configuration is similar to
Benzene
Case 4 but excludes the E-Gas gasification Arab Light, Existing
Heavy crude Raffinate
unit (Fig. 8). Without the E-Gas unit, high- blend Naphtha NHT, CCR, Revamp
BTX C7, reformate
quality asphalt is produced. This option re- Crude, New
vacuum
quires substantially reduced capital invest- distillation Distillates C3
ment compared with Case 4. unit;
C4 Alkylate
16 million VGO DS VGO Alkylation
tpy VGO HDS FCC,
Case 6: LC-SLURRY integrated with new gas FCC gasoline
Vacuum plant
distillate hydrotreater, hydrocracker. residue Slurry oil
LC-SLURRY achieves nearly full conver- Hydrocracker
UCO
LCO
sion of vacuum residue (95%+) and elimi- Diesel
nates low-value slurry oil and coke produc- HT VGO
tion (Fig. 9). The LC-SLURRY process uses HT jet
Distillate
LC-FINING ebullated-bed reactors inte- hydrotreater HT diesel
grated with a catalyst recovery unit, which Naphtha
LCO
filters out the catalyst from the bottoms oil LC-MAX Distillates,
in a series of diluent-added filter loops. The unit VGO
Natural gas, RFG H2
spent catalyst is then sent offsite for metals H2 plant
reclamation.
UCO
LC-SLURRY is currently the only slurry
technology to demonstrate long-term 90%+
vacuum residue conversion with little to no
fouling due to the unique characteristics of
its ISOSLURRY catalyst. This process also
demonstrates superior selectivity and prod-
uct quality at the same conversion level as
compared with thermal slurry hydrocracking
processes.

Oil & Gas Journal | Apr. 2, 2018 65

180402ogj_65 65 3/26/18 4:43 PM

 TECHNOLOGY

CASE 6: LC-SLURRY FIG. 9

Alongside providing a payout pe-
riod of 5 years or less, the cases de-
Benzene
Arab Light, Existing liver large improvements in refinery
Heavy crude Raffinate
blend Naphtha NHT, CCR, Revamp margins while eliminating the refiner’s
BTX C7, reformate exposure to the dwindling HSFO mar-
Crude, New
vacuum ket. The optimal option for any refiner
distillation Distillates C3
unit; will be based on a variety of factors
C4 Alkylate
16 million VGO DS VGO Alkylation such as initial cost, natural gas avail-
tpy VGO HDS FCC,
gas FCC gasoline ability, and environmental factors.
Vacuum plant
residue Slurry oil The delayed coker configuration
Hydrocracker
UCO
LCO
(Case 2) requires the least amount
Diesel of investment but also provides the
HT VGO smallest revenue increase over the
HT jet
base case. A similar payout period can
Distillate be realized with the higher-cost invest-
hydrotreater HT diesel
Naphtha ment options of RDS with RFCC (Case
LCO
LC-Slurry Distillates,
1) and LC-FINING with delayed coker
unit VGO (Case 3). Cases 1 and 3 have notably
higher net present values (NPV) and
Natural gas, RFG H2
H2 plant similar internal rates of return (IRR) as
compared with Case 2.
UCO to low-sulfur fuel oil (LSFO)
LC-MAX (Case 5) and LC-SLURRY
(Case 6) options report the most favor-
able economics of the cases evaluated
Assumptions used to develop these economic estimates with similar investment requirements as Case 1 and Case
included: 3. While LC-MAX with E-Gas (Case 4) is the most capitally
• Project life, 15 years. intensive option and has the longest payback period, it may
• Interest rate, 8%. be a desirable option if natural gas prices are high or avail-
• Inflation, 2%/year. ability is scarce.
• Investment escalation, 2%. Fig. 10 shows a comparison of the different configura-
• Initial feed inventory, 5 days. tions based on each respective configuration’s potential to
• Owner’s costs, 10% of total investment cost (TIC). create value. (Capital efficiency hurdle is the ratio of NPV-to-
• Contractor risk-profit, 5% of TIC. capital expenditure at present value.)
Table 2 summarizes results of this evaluation, including While an individual operator will undoubtedly have its
assumed crude and product prices. own minimum hurdle by which it evaluates different pro-
spective projects, CLG’s pilot studies
show that both LC-SLURRY and LC-
VALUE CREATION FIG. 10
MAX technologies have the potential
to more than double the returns gener-
2.5
ated by using a single technology con-
figuration (e.g. delayed coking).
LC SLURRY
2.0
LC MAX LC MAX-GSFR
References
NPV, million $

LCF-DCU 1. “Ships face lower sulphur fuel

1.5
RDS-RFCC requirements in emission control areas
DCU from 1 January 2015,” International
1.0 Maritime Organization, Briefing: 44,
hurdl
e December 23, 2014.
fficiency
0.5
Capital e

0
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Present-value investment, million $

66 Oil & Gas Journal | Apr. 2, 2018

180402ogj_66 66 3/26/18 4:43 PM

 TECHNOLOGY

The authors
Tayseer Abdel-Halim (tabdelhalim@chevron.
com) is vice-president of Chevron Global Tech-
nology Services Co. Before joining Chevron,
he served as director of heavy oil at KBR Inc.
Abdel-Halim has more than 46 years’ experi-
ence in heavy oil, hydrogen production, and
corporate planning. He holds an MS (1975) in
chemical (refining) engineering from the University of Tulsa.
Matthew Yu (matthew.yu@chevron.com) is a
technical service engineer for Advanced Refin-
ing Technologies (ART), a joint venture between
Chevron Corp. and W.R. Grace & Co., where he
supports clients using ART’s premium atmo-
spheric residue desulfurization catalyst technol-
ogy. He previously worked as a process design
engineer for both Chevron Lummus Global and Chevron’s
refinery in Richmond, Calif. Yu holds a BS (2010) in chemical
engineering from the University of California at Davis.
Manuscripts welcome
Oil & Gas Journal editors are happy to consider
for publication manuscripts about exploration and
development, drilling, production, pipelines, LNG,
and processing (refining, gas processing, and basic
petrochemicals). These papers may be highly technical
in nature and appeal or they may analyze oil and
natural gas supply, demand, and markets. OGJ accepts
manuscripts submitted exclusively to it or those adapted
from oral and poster presentations. An Author Guide is
available at www.ogj.com; click “Home,” then “Submit
an article.” Or, contact Christopher Smith, Managing
Editor—Technology (chriss@ogjonline.com; 713/963-
6211; or, fax 713/963-6282), Oil & Gas Journal, 1455
West Loop South, Suite 400, Houston TX 77027 USA.

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180402ogj_67 67 3/26/18 4:43 PM

 TECHNOLOGY
BEYOND BACK-TO-BASICS: PROCESS PRINCIPLES AND CONCEP TS — 5
Understanding how distillation trays work
Norman P. Lieberman
Process Improvement Engineering
Metairie, La.
A distillation tray is used to mix vapors and liq-
uids together. The better the mixing, the more effi-
ciently the tray works. Tray efficiency also depends
on two other factors: how well the droplets of en-
trained liquids are separated from the vapor’s flow
rising from the tray deck and how well the bub- PROCESSING
bles of vapor are separated from the liquid flowing
down from the tray deck through the downcomer.
Regarding tray fractionation efficiency, the latter
factor is of secondary importance. The former factor—i.e.,
entrainment—is of primary importance. It’s what Stokes’s
law is all about.
Entrainment, tray efficiency
As a young man, I would often dream of meeting my child-
hood heroes: Nikola Tesla, Daniel Bernoulli, Isaac Newton,
Sir George Stokes.
On one occasion, I dreamed that I’d passed on to my eter-
nal and heavenly home and was welcomed by my famous
colleagues and fellow scientists.
GENERAL INTRODUCTION
Geared to young and seasoned professionals alike, “Beyond
back-to-basics: Process principles and concepts” is a new
series of articles designed to present a straightforward ap-
proach to mastering the principles and concepts all process
engineers should be able to apply without the need of a
computer.
While simulations and models are useful for examining
long-term operational issues, they cannot replace the di-
mension of human logic and reason required when tackling
the array of complex—and sometimes life-threatening—
situations that occur in process plants.
Using experiences from the author’s more than 50-year
career in the process industry, articles in the series will pro-
vide approaches to understanding core process concepts
in ways that will equip the engineer to walk out of an office,
into a plant, and directly resolve process deficiencies via
small operational changes or simple retrofits.
This is the fifth article in the series.
68
180402ogj_68 68
“Welcome, Norman, to the Eternal Life,” Stokes
announced to me cordially. “Can we answer any
questions?”
“Well, yes, Mr. Stokes. I’m interested in entrain-
ment. On earth, this is a big problem affecting frac-
tionation efficiency. I assume it’s also a problem
here in the Eternal World. Can you tell me, then,
what factors increase entrainment?”
Stokes explained several main factors that im-
pact entrainment. These include:
• Droplet size. The smaller the drop, the greater the rate of
entrainment.
• Viscosity of the continuous phase. High viscosity promotes
entrainment.
• Density difference between the vapor and liquid phases.
Reduced density difference promotes entrainment.
• Velocity. Higher velocities promote entrainment as well.
“I’ve actually reduced all these factors into a simple equa-
tion,” Stokes explained with a smile. “I call it Stokes’s law.”
Mathematically, we say entrainment is proportional to V
x (DV ÷ DL)0.5, where V = velocity of vapor phase, DV = den-
sity of vapor phase, and DL = density of liquid phase.
“But Mr. Stokes,” I objected, “how about viscosity and the
droplet size?”
“Well, Norman, the droplet size is usually unknown. Vis-
cosity of a vapor phase is usually small, and I normally ne-
glect it. By small, I mean less than 0.3 cp.”
“That’s all quite interesting. But if I could take a single
step to suppress entrainment, which is a source of evil on
earth, what would you recommend?”
“The best option would be to avoid high localized veloci-
ties of the vapor phase. Norman, I would also…”
“Wait a bit, Mr. Stokes!” Nikola Tesla interrupted. “Mr.
Lieberman has arrived in Eternity prematurely. He’s being
deported at once, back to his earthly home in New Orleans.”
Liquid entrainment, fractionation
Originally, the process of distillation did not utilize trays.
It relied on pots (Fig. 1). The pots, which were very large,
completely separated the liquid phase from the vapor phase
before the liquid and vapor left each pot. That is, there was
no entrainment.
Each pot was an individual separation stage. If the sepa-
Oil & Gas Journal | Apr. 2, 2018
3/26/18 3:25 PM

SAFETY NOTE: INSPECTING REFINERY DISTILLATION TOWERS
Most refinery distillation towers will be fouled with iron sul-
fide. The black, fine material that you find hard to wash off
your hands is not normally coke but iron sulfide.
Iron sulfide will not autoignite until it dries out. When it
does dry, it will begin to burn at ambient temperatures, and
the sulfide deposits will tend to smolder rather than flare up.
The heat liberated is relatively small, as the sulfides burn
with a pale blue flame not visible in sunlight.
The danger is not heat, but sulfur dioxide (SO2) libera-
tion in a confined space. SO2 is deadly at 1,000 ppm. It will
kill you just as fast and efficiently as hydrogen sulfide. I’ve
almost learned this deadly lesson from personal experience
on two occasions.
In general, refinery distillation towers should be chemi-
cally cleaned for iron sulfide removal before the tower is
opened for inspection. Note that iron sulfide is not water
soluble. Citric acid is one solvent that can safely remove iron
sulfide deposits.
ration of vapor and liquid phases was perfect, the pot had a
separation, or stage efficiency, of 100%. The more pots that
were arranged in series, the greater the degree of separation
that could be achieved between the two products.
In our case, we are trying to separate propane and butane
as efficiently as possible. To avoid the expense and mechani-
cal complexity of dozens of these pots, the distillation col-
umn was invented about 180 years ago.
Each tray is intended to represent a pot, or at least a por-
tion of a pot. If the tray really is working as well as a pot, it’s
said to have 100% tray fractionation efficiency. If the tray is
only working half as well as the pot, it is said to have a 50%
tray efficiency. The usual cause of low tray efficiency is en-
trainment due to excessive vapor velocity.
As the distance between the liquid level on the tray below
THREE-STAGE PRIMITIVE DISTILLATION UNIT
Cooling
CW
water (CW)
Feed
Bottoms
product,
butane
Heat Heat
Oil & Gas Journal | Apr. 2, 2018
180402ogj_69 69
TECHNOLOGY
and the tray above gets smaller, it takes less vapor velocity
to blow the liquid from the lower tray up to the tray above.
For example, let’s say that I’m separating propane from
butane. My propane product (i.e., LPG in 5-gal containers
sold in Walmart) has a maximum butane spec of 2%. If the
vapor rate flowing up through a tower increases, the drop-
lets of liquid from a lower tray will be entrained and blown
up to the tray above. As the liquid in the lower tray is rich in
butane, the entrained droplets will increase the butane con-
tent of the upper tray. Eventually, as the entrained droplets
reach the top tray, the overhead LPG propane product will
be contaminated with butane. Thus, fractionation efficiency
is reduced.
Foam
The fluid on a distillation tray deck is not actually liquid but
foam or froth. The vapor bubbling up through the holes on
the tray deck mixes with the liquid from the tray above to
form foam. The foam overflows the low dam into the down-
comer (Fig. 2). If the downcomer is too small, however, the
foam fills up the downcomer and backs up onto the tray
above it. The foam level on the tray then increases. As the
froth or foam level increases on the tray, so does the height
of the entrained liquid, or spray height.
When the spray height from the tray below reaches the
tray above, tray fractionation efficiency becomes worse due
to entrainment.
Reflux
More reflux improves tray fractionation efficiency. The trays
work harder and better due to the increased vapor and liquid
traffic on the tray decks.
The problem is that the reflux comes from the vapor
generated by the reboiler. If there is too much vapor flow
through the tray decks, then the vapor velocity may become
excessive. According to the law of Mr. Stokes, my mentor in
the Next World, this will cause exces-
FIG. 1
sive spray height, or entrainment.
It’s rather like exercise, where too
CW much running actually can be bad for
one’s health. Too much reflux and too
much reboiler heat are going to make
Overhead fractionation efficiency worse rather
product, than better due to entrainment.
propane Of course, you can’t just increase the
reflux rate without more reboiler duty
because the reflux is just condensed va-
por generated from the reboiler that ris-
es through the trays, through the over-
head condenser, and into the tower’s
reflux drum.
Heat
Downcomer backup
Downcomers often back up onto the
69
3/26/18 3:25 PM
 TECHNOLOGY
tray above, causing a high froth or foam level on the tray and
a consequent entrainment of droplets of liquid to the tray
above the tray draining into the downcomer.
Usually, it’s not the downcomer itself that has too small
an area. It’s more typically because the downcomer is too
short. The height of foam in the downcomer is mainly a con-
sequence of the pressure drop of the vapor flowing through
the tray above the downcomer (Fig. 2). As the vapor flows
through this tray, it undergoes a pressure drop due to the
restriction of the caps, or orifices, on the tray deck and the
weight of the liquid on the tray deck.
In other words, the pressure of the vapor below the tray
pushes up the foam height in the downcomer. Once the
downcomer becomes full of foam, the foam backs up onto
the tray above that downcomer. The extra weight of foam on
the tray deck then increases the pressure drop of the vapor
through that tray deck, which in turn increases the force
pushing up the liquid out of the downcomer.
The problem feeds upon itself until the tower’s trays
above the tray where the problem began start to operate in a
state called “fully developed flood.”
A tray downcomer can also fill with foam because it can’t
drain out of the downcomer fast enough. This common prob-
lem is most often caused by a too-small downcomer clear-
ance (Fig. 2). A reasonable downcomer clearance is usually
2-3 in. Any clearance less than 1.5 in. is likely to result in
downcomer flooding and liquid backup on the tray above.
Unfortunately, if the downcomer clearance is greater than
the tray’s outlet dam height, the downcomer will also back
up onto the tray above. This is called unsealing of the down-
comer. Vapor will blow into the bottom of the downcomer and
displace the liquid flow, resulting in fully developed flood.
As you read this section, keep in mind that the down-
comer is full of frothy foam and not the denser liquid phase.
Hence, this foam is rather easily displaced by the vapor
flowing up through an unsealed tray downcomer.
DISTILLATION-TRAY ENTRAINMENT
Weir
Tray deck
Entrainment
Downcomer
Foam
Downcomer
clearance Foam
Downcomer
70
180402ogj_70 70
BENEFIT OF VALVE-CAP TRAYS
Valve caps are supposed to act as check valves to retard
liquid leakage through tray decks. This appears not to be
the case. The valve caps don’t seem to appreciably reduce
tray deck leakage. What they certainly do in refinery dirty
services is to stick to the tray decks. This restricts vapor
flow and pushes up the foam level in the downcomer, caus-
ing the tray to flood.
My practice is to use a grid-type tray. This is like a valve
tray, but the cap is in a fixed position. It’s more or less the
same as a sieve tray but with about 10-15% more capacity.
Tray efficiency
Certainly, tray fractionation efficiency is reduced by entrain-
ment, which is also called jet flood. Most tray efficiency
problems, however, are caused by tray decks that are not
level. The liquid on the tray deck may leak through the per-
forations on the trays in those areas which are lowest. The
vapor flow will be concentrated at the highest tray deck ar-
eas. This all results in vapor-liquid channeling, which is bad
for tray vapor-liquid contacting efficiency.
The out-of-levelness of a tray that will cause a large loss in
tray fractionation efficiency is related to the pressure drop of
the vapor flowing through the tray deck holes or valve caps.
If the low points of a tray (i.e., portions of the tray deck be-
low the tray support ring) are less than the pressure drop of
the vapor flowing through the tray deck perforations, then
the liquid will leak through the tray deck and fail to come in
good contact with the vapor flow.
To calculate the pressure drop of the vapor through the
tray perforations, use the following equation:
DP = K x (DV ÷ DL) x V2 = inches of liquid, where DV, DL =
density of vapor, liquid; V = hole velocity, fps; K = 0.3 (sieve
trays); K = 0.9 (valve-cap trays); and K =
FIG. 2
0.6 (grid-type trays).
Valve caps do not appreciably retard
the tendency of liquid to leak through
the tray deck panels. Bubble-cap trays
would retard the liquid leakage through
the tray decks, but are unfortunately sel-
dom used in a modern distillation tower
(see accompanying box).
I asked Mr. Isaac Newton while I was
awaiting my transport back home from
the After Life about why bubble caps
were no longer used in hydrocarbon dis-
tillation service.
“Norm,” Isaac explained, “the answer is
that there is no answer. That goes also for
the meaning of life. Only God knows.”
Oil & Gas Journal | Apr. 2, 2018
3/26/18 3:25 PM
 TM
I NCLUDI NG

SAVE THE DATE

SEPTEMBER 11-13, 2018

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180402ogj_71 71 3/26/18 3:25 PM

 TECHNOLOGY

Subsea pipeline projects

advance in 2018
Christopher E. Smith system crossing the Baltic Sea from Russia
Managing Editor, Technology to Germany (Fig. 1). It will use 48-in. OD
pipe following roughly the same path as
Nord Stream, placed into service by Gaz-
Even with offshore field development prom in 2012 and operating at 93% of its
having slowed in the wake of the 2014 oil SPECIAL own 55-bcmy capacity.
price collapse, a variety of subsea pipeline TRANSPORTATION REPORT Nord Stream in January 2018 received
projects are underway. Each meets pro- the construction and operation permit
ducers’ need to rationalize the paths by required to lay roughly 55 km of pipe
which their hydrocarbons get to market, some of the larger through German territorial waters to landfall near Greifswald.
natural gas projects taking land-based production to land- Nord Stream expects to start construction in 2018. But new
based consumers even as growth at both ends of the LNG legislation in Denmark could prohibit construction in its ter-
market accelerates. ritorial waters and route alternatives are being developed.
What follows is a regional breakdown of the more signifi- More than 70% of the roughly 200,000 pipe joints re-
cant offshore pipeline projects. quired for the project had been produced as of January 2018.
Allseas will perform pipelay.
Europe Statoil SA is building two pipelines to export production
Nord Stream 2 is a 1,200 km, 55-bcmy natural gas pipeline from its Johan Sverdrup development to shore. Gas will trav-

NORD STREAM 2 FIG. 1

Oslo FINLAND
NORWAY Vyborg
Helsinki
St. Petersburg
Stockholm Baltic
Sea Ust-Luga
North
Tallinn
Sea

ESTONIA
SWEDEN
eam

RUSSIA
eam
Str

DENMARK
Str
rd
No

rd

Riga
No

Copenhagen
LATVIA

RUSSIA
LITHUANIA
Vilnius
Greifswald Atlantic
RUSSIA Ocean
BELARUS
POLAND Operating gas
GERMANY 0 100 pipelines
Miles
Km Minsk Nord Stream 2
0 161
Source: Gazprom

72 Oil & Gas Journal | Apr. 2, 2018

180402ogj_Rev_72 72 3/28/18 10:22 AM

 TURKSTREAM FIG. 2

MOLDOVA UKRAINE

Sea of
Azov RUSSIA
ROMANIA

Krasnodar
Anapa

Russkaya CS
Bucharest Beregovaya CS

Black Sea

am
tre
eam
BULGARIA TurkStr

eS
RUSSIA

Blu
Atlantic
Ocean
Luleburgaz TURKEY Samsun
Istanbul Operating gas pipelines
GREECE
TurkStream
0 100 Prospective gas pipeline
Miles
Km Compressor stations
0 161
Source: Gazprom

el 156 km through 18-in. OD pipe to a hot-tap connection
to the Statpipe system and continued shipment to Karsto.
Oil will use a 283-km, 36-in. OD pipeline to reach Mong-
stad. Saipem’s Castorone will perform pipelay in 2018, us-
ing pipes fabricated in Japan by Nippon Steel & Sumitomo
Metal Corp.
DEA Norge AS will move gas produced at its Dvalin field to
the Heidrun development via 14.9 km of 12-in. OD pipe, from
which it will travel another 7.5 km to a tie-in with the Polarled
trunk line. Dvalin production is expected to begin in 2020.
In an effort to expand and diversify export routes for its
natural gas to Europe, Gazprom is building the TurkStream
pipeline across the Black Sea from the Russkaya compres-
sor station near Anapa to Luleburgaz, Turkey (Fig. 2). The
1,090-km TurkStream will follow the route of the once-
planned South Stream pipeline for 660 km and a new 250-
km corridor toward European Turkey for the balance of its
subsea route.
Allseas Pioneering Spirit is laying the 32-in. OD pipe,
having reached Turkish waters in November 2017. Gazprom
expects the first of two 15.75 bcmy strings to enter service
in 2019, supplying domestic Turkish demand. Gas from the
second string will continue to southern and southeastern
Europe.
The 878-km Trans Adriatic Pipeline (TAP) will transport
natural gas sourced from the Shah Deniz II field in the Cas-
pian Sea through an interconnection with the Trans Anato-
lian Pipeline (TANAP) at Kipoi on the Greek-Turkish border,
crossing Greece, Albania, and the Adriatic Sea (115 km) be-
fore landfall in southern Italy. The offshore section will use
36-in. OD pipe, the onshore 48. First gas deliveries to Italy are
targeted for 2020. Construction was two-thirds complete as
of February 2018. TAP is owned by BP (20%), SOCAR (20%),
Snam (20%), Fluxys (19%), Enagas (16%), and Axpo (5%).
An EU-funded study is underway regarding building a
159-km natural gas pipeline between Gela, Italy, and Deli-
mara, Malta, connecting the island nation to the European gas
grid via Sicily. The 22-in. OD pipe would move 2 bcmy, with
a planned construction start in 2020 allowing first shipments
by 2024. Malta is also studying the feasibility of building LNG
bunkering infrastructure in conjunction with the project.
Middle East
At least two projects are under consideration to move gas
from the Leviathan field offshore Israel and Cyprus to Euro-
pean markets. The first of these is IGI Poseidon SA’s Eastern
Mediterranean (EastMed) pipeline project. The 10 billion cu
m/year (bcmy) system would move produced gas to Cyprus
for processing before shipping it to Greece via Crete (which
would extract 1 bcmy). Israel and Turkey are also negotiating
a 10-bcmy pipeline to move Leviathan gas to Turkey and, via
interconnection with TANAP, the European gas grid. The
line would use 292 miles of 24-in. OD pipe.
Saudi Aramco in November 2017 signed agreements to-

Oil & Gas Journal | Apr. 2, 2018 73

180402ogj_Rev_73 73 3/28/18 10:22 AM

 TECHNOLOGY

SUR DE TEXAS-TUXPAN FIG. 3

cides with expansion of Bapco’s Sitra
refinery. The pipeline will use a variety
of pipe diameters (12, 18, and 22-in.
OD) over its 115 km, 74 of which will
be on land and the other 41 offshore in
the Persian Gulf.
National Iranian Gas Export Co. is
Texas
studying building a pipeline to Oman
MEXICO to export natural gas for both con-
sumption in Oman and conversion
to LNG. The 380-km pipeline would
feature a 180-km offshore stretch. A
gas supply agreement between the two
countries calls for shipment of 28 mil-
lion cu m/day, roughly two-thirds of
Matamoros
which would be consumed locally. Ini-
tial gas flows planned for 2019 depend
on the start of construction.
Tamaulipas

Pacific
Ocean
Pacific Gulf of
Ocean MEXICO Mexico
0
Miles
200
0
Km
322
Source: TransCanada Mexico
taling $4.5 billion for assorted oil and gas projects. Includ-
ed among these were what Aramco terms free flow pipe-
line packages allowing an early start to development of the
Haradh gas increment program. The packages will total
450 km of pipeline, installed by early 2019 to deliver 290
MMscfd of free-flowing gas from Haradh field to Hawiyah
gas plant and allow sustained production until compression
plants are complete. China Petroleum Pipeline Co. will com-
plete the work.
Abu Dhabi-based National Petroleum Construction
Co. will install 25.5 km concrete-weight coated 30-in. OD
trunkline between the new TP-21 platform in the Persian Gulf
and the onshore Safaniya GOSP-1 gas-oil separation plant.
Saudi Aramco and Bahrain Petroleum Co. (Bapco) in
2018 plan to finish work on a 350,000 b/d crude oil pipe-
line. The line will move Saudi crude to Bahrain for refining,
replacing an older 230,000 b/d line. The expansion coin-
Sur de
The Americas
Texas-Tuxpan TransCanada Corp. and Sempra En-
Altamira ergy’s Sur de Texas-Tuxpan natural
gas pipeline will move 2.6 bcfd of US-
Tuxpan sourced gas to Mexico using a subsea
Gulf of route beginning off Brownsville, Tex.,
Mexico and Matamoros, Mexico, and running
south to Altamira and Tuxpan (Fig.
Veracruz
3). It will supply Comision Federal de
Electricidad (CFE) power generation
plants with fuel. Gas will feed into the
pipeline from a line between the Agua
Dulce hub in Nueces County, Tex., and
Brownsville. The line will also inter-
connect with the Tuxpan-Tula pipeline
to supply CFE powerplants to the west.
It will use 500 miles of 42-in. OD pipe.
Construction began in Altamira in May
2017 with an estimated completion time of 30 months.
Williams Cos.’ Northeast Supply Enhancement natural
gas project includes a 23.5-mile, 26-in. OD loop into NY
waters of Raritan Bay from Middlesex County, NJ. Williams
subsidiary Transco will operate the pipeline as part of its
system and expects to have it in service in time for the 2019-
20 winter heating season.
BP Trinidad & Tobago (BPTT) will use a 21-km, 26-in. OD
pipeline to export up to 600 MMcfd of dry natural gas from
its Angelin project to the 14.8-mtpy Atlantic LNG plant in
Point Fortin, sending liquids to the Galeota terminal. Angelin
lies in 65 m of water. Pipeline construction is expected to be
complete in 2019.
Other projects
A few other large projects are in various stages of discus-
sion but have not yet moved to development. Edison SPA

74 Oil & Gas Journal | Apr. 2, 2018

180402ogj_Rev_74 74 3/28/18 10:22 AM

 May 22-24, 2018 #PNEC2018
MARRIOTT HOUSTON WESTCHASE
HOUSTON, TEXAS, USA
WWW.PNECCONFERENCES.COM

REGISTER EARLY AND SAVE!

Save $150 on Full Conference Registration when you register by April 20, 2018.

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OWNED & PRODUCED BY: PRESENTED BY: SUPPORTED BY: HOSTED BY: CONNECT WITH US ON:

180402ogj_75 75 3/26/18 3:25 PM

 TECHNOLOGY

reports the 8 billion cu m/year (bcmy)

Galsi pipeline delivering gas from Al-
geria to Italy as expected to go on
stream in 2018. A feasibility study on
the 890-km pipeline was completed in
2005 but work on the system has yet
to begin. The system would include
two sections: an international section
from El Kala, Algeria, to Porto Botte in
southern Sardinia (310 km) and a do-
mestic section running overland from
WE PROVIDE PETROLEUM Porto Botte to Olbia (300 km) and sub-
sea from Olbia to Piombino, Tuscany
INDUSTRY PROFESSIONALS (280 km).
WORLDWIDE WITH TIMELY, Edison says the leg between Algeria
and Italy would be the deepest subsea
IN-DEPTH AND RELEVANT pipeline ever built, with a maximum
depth of 2,885 m.
RESOURCES REQUIRED TO STAY Two offshore pipeline projects would
ABREAST OF ENERGY TOPICS, compete to bring gas from the Middle
East to India: one starting in Iran, the
MAKE INFORMED DECISIONS AND other in Oman. The 1,200-km pipe-
EFFECTIVELY PERFORM MISSION line from Iran would largely parallel the
shoreline between the two countries
CRITICAL JOB FUNCTIONS. and serve as a substitute for the onshore
Iran-Pakistan pipeline which India
pulled out of under US pressure. Gaz-
prom has expressed interest in building
the pipeline, but would like to supply
gas to Pakistan as well via Gwadar.
South Asia Gas Enterprise (SAGE)
envisions building a 1,300-km, 1.1-
bcfd capacity pipeline through deep
water between Oman and India. Con-
struction between a compressor sta-
tion in Oman and a terminal in Guju-
rat, India, would take 10 years. Iranian
gas sourced from Chabahar could also
be shipped through this pipeline.
Talk of building a pipeline between
Oman and India has been occurring
since at least the mid-1990s (OGJ, Aug
1., 1994, p. 27).
The Morocco-Nigeria Gas Pipeline
(MNGP) would carry Nigerian natural
TO FIND OUT MORE, VISIT gas to Morocco via an offshore route
beginning in Ghana as an extension of
WWW.PENNENERGY.COM TODAY! the already-operating West Africa Gas
Pipeline. The roughly 4,000-km pipe
is discussed as a replacement for the
long-muted Trans-Saharan Gas Pipe-
line to provide a non-LNG alternative
for moving Nigerian production to Eu-
ropean markets.

76 Oil & Gas Journal | Apr. 2, 2018

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 APRIL 2018 VOL 64; NO. 5
OGPE.COM

OIL, GAS
&petrochemequipment
¨

W H AT ’ S N E W F O R O N S H O R E & O F F S H O R E : U P S T R E A M , M I D S T R E A M , D O W N S T R E A M O P E R AT I O N S

Offshore Technology Conference Edition

Gas analyzers serve well surface logging

Real-time, high-resolution geosteering
RockView technology is announced “to make real-time, high-
resolution geosteering possible for the first time.”
The new service uses measurements gathered from a full
range of sensors on COLT and POLARIS BHAs to enable more
accurate wellbore placement plus tangible decrease in footage
drilled out of zone. RockView helps avoid difficulties in predict-
ing exact target reservoir position from the surface.
AnTech Ltd.: Exeter United Kingdom
For FREE Information, select #1 at ogpe.hotims.com
PetroAlert® Model 9200 Gas Analyzer combines selective
detection of a gas chromatograph with continuous monitoring
abilities of a total hydrocarbon analyzer.
It performs fast (<30 sec) C1 - C5 analysis at a detection limit
of <10 ppm as methane while monitoring total hydrocarbons
from 0.003 to 100% as methane — during drilling.
AMETEK MOCON-Baseline: Lyons CO
For FREE Information, select #2 at ogpe.hotims.com

Rotary steerable for high-volume shale drilling

RSS™ Rotary Steerable Scout is new and specifically designed
for high-volume shale drilling: vertical, nudge, tangent, and
lateral well profiles with continuous rotation from the surface.
The new electronic control module with a digital mud valve
(patent pending) is housed in a slow-rotating housing for isola-
tion from high shock, vibration, stick-slip, and torsional
oscillations.
RSS™ is fully mud operated. It is built on the proven and
latest mechanical Vertical Scout® measurement and control
electronics platform developed by Sanvean Technologies® em-
bedded into the tool to deliver precise steering control.
Scout Downhole Incorporated, Turbo Drill Industries Inc.:
Conroe TX
For FREE Information, select #3 at ogpe.hotims.com
Pipeline leak detection services
Instrumented and optical fugitive methane emission surveys
monitor well site or gathering and boosting station components
within each company-defined area.
Among services: patrol surveillance within high-pressure
pipeline transmission corridors for fugitive emissions, changes
in areas of high consequence, or complex cross-overs.
Red Hen Systems: Fort Collins CO
For FREE Information, select #4 at ogpe.hotims.com

180402ogj_P1 1 3/26/18 5:07 PM

 OGPE.com New Products & Services

OG&PE
®

Vice President/Group Publisher Paul Westervelt

Editor J.B. Avants
Production Director Charlie Cole
Production Manager Shirley Gamboa
Art Director Clark Bell
Digital Audience Development Manager Jim Cowart
Social Media Marketing Analyst Anna Alaback
Marketing Manager Myla Lowrance

On-demand & low-volume manufacturing,

fast-turn & advanced prototyping services EDITORIAL OFFICES
On-Demand Manufacturing Services comprise a broad range Oil, Gas & Petrochem Equipment
1421 S. Sheridan Road, Tulsa OK 74112 • PO Box 1260, Tulsa OK 74101-1260
of processes and technologies from prototyping through p 918.832.9351 • www.OGPE.com
production
In addition to traditional manufacturing and investment
casting patterns — a number of additive manufacturing ser-
SALES OFFICES
vices are offered These include stereolithography, selective laser
North America Italy
sintering, direct metal printing, colorjet printing, and fused 1421 South Sheridan Road, Tulsa OK 74112 Ferruccio & Filippo Silvera
deposition modeling Free literature offers complete details 201-374-1911 Tel. 39 02 28 46716
Ed Tiscornia info@silvera.it
3D Systems Corporation: Atlanta EdT@PennWell.com
For FREE Information, select #6 at ogpe.hotims.com France, Spain, Portugal, Belgium
United Kingdom, Scandinavia, The Netherlands and Southern Switzerland
and The Middle East Stefania Piciotti Thompson
Graham Hoyle +33 6 21 23 67 02
+ 44 1934 733871 StefaniaT@PennWell.com
GrahamH@PennWell.com
Central & South America
Germany, Switzerland, Russia, Austria, and Paul Westervelt
Eastern Europe 713 499 6305
Andreas & Wilhelm Sicking pwestervelt@PennWell.com
49 0 2903-3385-70
WilhelmS@PennWell.com

Singapore
Michael Yee
+65 9616 8080
Yfyee@singnet.com.sg

For assistance with marketing strategy or ad creation,

please contact PennWell Marketing Solutions
Subsea electrical network integrity monitoring Vice President Paul Andrews • (240) 595-2352; pandrews@pennwell.com
V-IR Network Integrity Monitoring System is newly developed
to provide more cost effective subsea fault-finding to minimize
CORPORATE OFFICERS
maintenance and repair Chairman Robert F. Biolchini
The multi-LIM improves IR visibility by dividing a subsea 1939-2017
network into monitored sections It uses V-SLIM subsea line Vice Chairman Frank T. Lauinger
integrity monitoring nodes at strategic network points — installed President and Chief Executive Officer Mark C. Wilmoth
using divers or underwater ROVs Full details are yours free Executive Vice President, Jayne A. Gilsinger
Viper Innovations Ltd.: Portishead, Bristol United Kingdom Corporate Development and Strategy

For FREE Information, select #7 at ogpe.hotims.com Senior Vice President, Brian Conway
Finance and Chief Financial Officer

AD INDEX APRIL 2018

Need Reprints of your ad or recent editorial?
Contact Jill Kaletha at Mossberg & Co. for a quote:
D&L Oil Tools 3 SENSONICS Ltd 9 800 428 3340 x149 / jkaletha@mossbergco.com
Graco High Pressure Equipment Company 7 S Himmelstein and Company 4
MOXA 5 Advertiser Product & Service Followup 10 Oil, Gas & Petrochem Equipment makes every reasonable effort to verify its content.
Oilfield Improvements 6 38th ILTA Conference & Tradeshow 11 However, neither Oil, Gas & Petrochem Equipment nor our parent firm,
For Print / Online Advertising Information, Assistance:
PennWell Corporation, assume responsibility for validity of manufacturer
http://www.ogpe.com/index/advertise.html
claims or statements made in published items.

P2 April 2018

180402ogj_P2 2 3/26/18 5:07 PM

 NEW
GETS IT RIGHT.
Our new family of retrievable tubing anchor/catchers provides
bi-directional holding power with full bore opening allowing for
T
increased annular flow and capillary tube bypass area. Increase PATENING
PEN D
production with revolutionary Trilobite Hydro and Quarter Turn
Anchors. D&L Oil Tools has been providing customer-driven
solutions for over 27 years.

For more information, call or visit our website.

WE KNOW
DOWNHOLE
(800) 441-3504 | dloiltools.com
For FREE Information, select #401 at ogpe.hotims.com

180402ogj_P3 3 3/26/18 5:07 PM

 OGPE.com New Products & Services
Industrial flow energy solution is all-in-one
complete, with three advanced technologies
Manage and optimize flow measurement in facilities of all
sizes with new Big-3™ flow energy solution.
It comprises QuadraTherm
640i/780i thermal flow meters, In-
novaMass 240i/241i vortex flow me-
ters, and new InnovaSonic 207i ul-
trasonic flowmeter. Big-3™ shares
the same Raptor firmware and many
of the same software apps.
As a complete, accurate solution,
it’s designed for compressed air, natu-
ral gas, steam, or hot and chilled
water flows. The configuration helps facilities engineers avoid
challenges of dealing with an assortment of companies to obtain
the right instrumentation required for flow energy
measurement.
Complete Big-3™ solution and components data are free.
Sierra Instruments: Monterey CA
For FREE Information, select #9 at ogpe.hotims.com
TORQUE TRANSMITTERS
The Right Torque Solution Now
Will Save A Lot of Headaches Later
Measuring and applying correct torque to equipment
can prevent costly breakdowns and improve efficiencies
in all types of drilling operations, such as:
✔ Leg load balancing for jack-up oil rigs,
✔ Torque monitoring and/or calibration
of make-up/breakout machines,
✔ Top drive torque measurement and
control, in-line measurment of
torque as PMI of motors, pumps,
compressors and more,
✔ Load distribution and balancing for
winches and hoists, and
✔ Measure actuation torque for valves.
For over 50 years, all Himmelstein
torque measurement devices have
been proudly engineered and
manufactured in the USA. Contact
us to learn how our experience and
solutions can help you
The MCRT 39000X has been certified by both ABS and
DNV to become a standard for oil fielduse. All devices
ship with an ISO 17025 accredited calibration.
& COMPANY
www.himmelstein.com
800-632-7873
For FREE Information, select #403 at ogpe.hotims.com
P4 April 2018
180402ogj_P4 4
MCRT ®
39000X
Visit Booth 4277
at the OTC Show, Houston,
April 30-May 3, 2018
Platform delivers self-service capabilities,
simplifies creation of AI-driven applications
Maana “Q” is available to advance the core Maana Knowledge
Platform with enhanced self-service capabilities. These enable
subject matter-experts and business analysts to use the Maana
Computational Knowledge Graph to develop a digital knowledge
layer over operational and industrial data.
Maana Exploration, Development, Production, Downstream,
Trade and Finance, and Risk and Compliance Knowledge Plat-
form serves broad and varied oil and gas sectors. These include
well offset analysis, upstream exploration, digital connected
wells, predictive maintenance, crude corrosion mitigation, re-
duced refinery corrosion via water-in-crude prediction, LNG
demand/supply/pricing forecasts, well risk assessment, and HSE.
Maana: Palo Alto CA
For FREE Information, select #10 at ogpe.hotims.com
3-phase power quality loggers simplify tasks
Fluke 1740 Series Power Quality Loggers simplify how you
collect and report utility power quality trends.
Compact designs are used
to study and monitor utility
PQ and demand to industry
standards. They offer ad-
vanced data aggregation and
analysis to save time, reduce
manpower, and eliminate er-
rors associated with tradi-
tional data collection. 1740s are fully IEC 61000-4 30-compliant
and meet Class A requirements.
Models can simultaneously log more than 500 parameters
for each averaging period. This allows technicians to analyze
power quality in detail and to correlate intermittent events with
detailed waveform data to identify disturbance root causes.
Fluke Corporation: Everett WA
For FREE Information, select #11 at ogpe.hotims.com
HiP-manufactured air-driven liquid pumps
Sprague Hydraulic Pumps are manufactured with specific
pressure ranges and configurations to meet a broad range of
high-pressure demands.
The positive-displacement pumps
convert air-drive pressure into hy-
draulic discharge pressure with out-
puts up to 36,500 psi.
Models maintain a liquid-air bal-
ance indefinitely in a holding condi-
tion with minimal energy consump-
tion and no increase in fluid
temperature or parts movement.
Complete Sprague Hydraulic
Pumps specifications and information are yours free.
HiP: High Pressure Equipment Company: Erie PA
For FREE Information, select #12 at ogpe.hotims.com
3/26/18 5:07 PM
 Your Industrial IoT, Simplified

Easy Modbus data acquisition, MQTT support, and

4G LTE routing
Developers that want to get their Industrial IoT applications up and running quickly
should look into Moxa’s UC-8112-ME-T-LX, a highly versatile and programmable
4G LTE Modbus data logger. It is engineered to withstand extreme temperatures
without cooling fans or heaters and supports Moxa’s easy-to-use ThingsPro Suite.
With built-in data compression, data processing, wireless management, MQTT support,
and Modbus data management features, you can save thousands of dollars in
programming and datad plan costs.

See a live demonstration at the 2018 Offshore Technology Conference, Moxa Booth #5325.
For FREE Information, select #404 at ogpe.hotims.com

180402ogj_P5 5 3/26/18 5:07 PM

 OGPE.com Products
New Products & Services

Engineering and pipeline integrity management Vibration accelerometers monitor combustion

services with cross-functional global resources
Complete engineering and
pipeline integrity manage-
ment services are available
to “leverage cross-functional
global resources to customize project plans so clients and their
assets stay protected, productive, and profitable.”
The Integrated Engineering team supports complex pipeline
and facilities projects which require multiple mechanical to civil/
structural and electrical/controls disciplines. They provide com-
prehensive, turnkey designs critical to safe, reliable operation.
The Integrity Management team ensures asset integrity and
longevity as it protects, maintains, and monitors assets. It per-
forms in-line inspection, pressure testing, direct assessments,
serves cathodic protection, and enables compliance.
The Operational Services Team provides comprehensive
services that integrate quality and preserve the life of client assets
via capabilities that include pipeline design and construction
management utilizing trenchless technologies.
Lake Superior Consulting: Duluth MN
For FREE Information, select #14 at ogpe.hotims.com
turbines that burn NG to generate electricity
Models 357A94 & 357A95
charge accelerometers offer
1,200°F. extreme service as dif-
ferential output designs with a UHT-12 sensing element and
integral hardline cable terminating in a 7/16-27 two-pin
connector.
They monitor vibration of combustion turbines that burn
natural gas to generate electricity.
Model 357A94 has an axis of measurement parallel to the
direction of the mounting screw, while Model 357A95 has an
axis of measurement perpendicular to the direction of the mount-
ing screw.
Both feature new UHT-12 proprietary crystal technology
sealed in a hermetic package for long-term reliability. With
UHT-12 there is no pyroelectric output to ensure accurate low-
frequency measurements as well as reduced thermal noise spikes
to eliminate false alarms during monitoring.
Complete accelerometers specifics are yours free.
PCB Piezotronics Incorporated: Depew NY
For FREE Information, select #15 at ogpe.hotims.com

Oilfield Improvements®
ULTRA-FLOW®
FIELD-INSTALLED
CENTRALIZERS/
PARAFFIN SCRAPERS
Full-circle Wiping
of Tubing I.D.
More Gripping
Force on Sucker Rods
More Fluid Flow-by
Volume
Longer Useful LIfe
from Longer Vanes
& Bearing Surfaces
Positive Wear
Indicators
Amodel with Glass Fill
CALL 1-800-LES WEAR
(800-537-9327) OR YOUR
Oilfield Supply Store
www.rodguides.com
Æ signals.
1902 N. Yellowood Ave.
Broken Arrow, Oklahoma 74012 U.S.A.
Software offers live port pressure & fracture gradient monitoring
GEOSuite is released with a number of updates including live pore pressure and
key usability enhancements.
Key features of the pore pressure monitoring surveillance workflow include pre-
drill model creation using seismic velocities, real-time PPFG calculation from a
choice of methodologies, end of well PPFG presentation with interpreted PP profile,
and automated PPFG daily report.
GEOSuite features a range of methodologies for PPFG calculation and top hole
pseudo-density options and composite density curve facility. Among updates are
curves to easily compile composite curves and easily turn display on/off.
Geologix Limited: Norwich United Kingdom
For FREE Information, select #17 at ogpe.hotims.com
Oil, gas, water fibre optic pipeline leak detection monitoring
Hawk FOS: fibre optic leak detection systems help oil, gas, or water pipelines
avoid undetected leakage and its environmentally and financially damaging risks.
They utilize an in-field fiberoptic cable which
not only tells you about leak occurrence but gives
accurate location of any potential leakage. This
enables very rapid in-field assessment and repair.
FOS combines multiple measured sound, tem-
perature, and vibration variables within one cable
to automatically cross reference and remove false
Multivariable sensing detects changes in temp-
erature caused by liquid or gas movement in pipe
leaks; sound and vibration from pipe leaks or third-party intrusions; and change in

FAX 918-250-4666 stress / strain experienced due to pipe bending or loss of support.
Hawk Measurement: Nunwading Australia, Lawrence MA
For FREE Info, select #406 at ogpe.hotims.com For FREE Information, select #18 at ogpe.hotims.com

P6 April 2018

180402ogj_P6 6 3/26/18 5:07 PM

 New Products & Services OGPE.com

Ejectors entrain gas, produce micro-bubbles for Thermal flow meters feature new data logger
oil-in-water separation Model FT4X thermal mass flow meters for oil and gas pro-
Liquid-driven ejectors are cessing feature a new data log-
available to accommodate pro- ger which records flow rate,
duced water where they help totals, as well as other events
quickly remove oil from pro- and alarms.
cess streams. Data logger features: 40 daily
They entrain gas to produce totals, settable contract time
ultra-fine bubbles — micro- that defines the Contract Day,
bubbles — at targeted size ranges to improve oil-in-water sepa- time/date stamped alarm and
rator efficiency, notes the manufacturer. event logs, seven-year history,
Using a micro-bubble ejector as a secondary stage in oil/water power off totalizer, density dis-
separation yields a low maintenance solution to provide reduc- play, and gross heating value
tion in running costs. Full micro-bubble ejectors data are free. based on selected gas composition.
Transvac Systems Ltd.: Derbyshire United Kingdom FT4X’s Gas-SelectX provides an expanded selection of gases
For FREE Information, select #19 at ogpe.hotims.com from three menus: O&G for C1 - C9+, nitrogen, and CO2 gases
to mix in 0.1% increments, pure gas for 11 common gases, and
Breather valves accommodate valve sizes well mixed gas for 11 common gases available to mix in 0.1%
An increased number of breather valve configurations are an- increments.
nounced to best fit valve size with an application — to reduce Fox Thermal Instruments Incorporated: Marina CA
oversizing and number of valves needed to fulfill For FREE Information, select #21 at ogpe.hotims.com
requirements.
Their design is taken from automo-
tive and lean manufacturing philoso-
phies to deliver more flow performance
with easy maintenance via better access
to internal parts.
Models are designed to work in Extreme
combination with this manufacturer’s
flame arresters so less spare parts are needed and upgrade to Conditions
higher performance is provided.
FNC Tank Protection Division, & Pressures
Fabbrica Nazionale Cilindri S.p.A: Cisalog Italy.
For FREE Information, select #20 at ogpe.hotims.com
Nobody Does it Better
Optical gas imaging Count on our proven
camera guidebook valves, fittings &
Information and tips to help tubing for ALL
you get the most of optical your oil, gas &
imaging cameras is provided petrochem needs
in a new and free guidebook.
Explained is how OGI cam-
eras use spectral wavelength
filtering and Stirling cooler cold-filtering technology to visualize
infrared absorption of such gases as methane, sulfur hexafluoride,
carbon dioxide, carbon monoxide, and Freon refrigerants.
Petrochemical and chemical operations incorporate OGI High Pressure
technology for safer, more efficient ‘Smart LDAR’ (Leak Detection Equipment
and Repair) programs. Inspectors can quickly detect fugitive Company
emissions and leaks to pinpoint the source immediately. This
leads to prompt repairs, reduced emissions, and greater regula- HiP…Our Name is High Pressure
tions conformity. Erie, PA • USA • 814.838.2028 • HighPressure.com
FLIR Systems: Meer Belgium
For FREE Literature, select #250 at ogpe.hotims.com For FREE Information, select #407 at ogpe.hotims.com

April 2018 P7

180402ogj_P7 7 3/26/18 5:07 PM

 OGPE.com New Products & Services

Free tank farm foundations, solutions literature High-angle release connectors

This free brochure illustrates and summarizes tank farm found- Xtreme Release Connectors
ation project successes. are high-angle designs to en-
Presented is how the com- hance safety and reduce envi-
pany “engineers the ground, ronmental risks, with time and
making a solid foundation us- money savings — by increasing
ing smart and efficient meth- a vessel’s operating window.
ods, fast and worth the By having no maximum dis-
money.” connect angle, Xtreme also al-
Terminal petrochemical tank, universal terminal, and tank lows a vessel’s crew enough
farm ground improvement successes are shown and summarized. time to respond to challenging
Four foundation techniques are presented and diagrammed: scenarios without risk of get-
deep vibro, deep-soil-mixing, compaction grouting, and rigid ting stuck to a wellhead or damaging the connector if they do
inclusions. The company also offers Soilfrac existing tank no react fast enough.
remediation Process. Subsea Technologies Ltd.: Aberdeen
Keller Holding GmbH: Offenbach Germany For FREE Information, select #25 at ogpe.hotims.com
For FREE Literature, select #252 at ogpe.hotims.com
Premium connections alternative
Top seal is barrier to produced sand rust that TEC-LOCK semi-premium connection is
negatively affects insert pumps introduced as an alternative to premium
The SandBlaster Top Seal helps prevent connections.
particles from collecting at the bottom of It is engineered to surpass API perfor-
the annular space between the working mance guidelines and features close-tolerance
barrel and production tubing. Four ports plus wedge-style thread forms
above the fins continually flush away any Designed for extended reach horizontal
buildup. wells that require high bending plus compres-
The seal provides a barrier to produced sive and torsional resistance — TEC-LOCK
sand and rust against insert pumps. Since BTC and BTC-S minimize connection stresses
most production tubing is not perfectly They also eliminate the open ‘J’ area to create
round and has some rust or scale buildup a flush ID for turbulent free flow and reduced tool hang-ups.
SandBlaster Top Seal’s Viton fins conform They are available 4.5 to 9.625 in. for multiple make and break
to tubing ID regardless of shape or condition. This creates a capabilities.
barrier to solid particles. Hydostatic pressure equalizes on both When used with their manufacturer’s SealLube thread sealant,
sides of the fins so particles are not forced past SandBlaster. TECK-LOC Wedge provides a gas leakproof seal on a product
Kajon Oil Tools: Houston without a metal-to-metal seal. It’s available 4.5 to 7 in.
For FREE Information, select #23 at ogpe.hotims.com Hunting Energy Services: Houston
For FREE Information, select #26 at ogpe.hotims.com
Small, tablet with ruggedized touch screen
newly announced to serve in dirt, extremes Hazardous location 4-20 mA transmitter sensors
MTB-7 Tablet is announced with rugged- meet I.S. standards
ized touch screen for use in challenging, dirty, LORD 4-20 mA hazardous
extreme conditions. location transmitter sensors
This IP68 and Mil-STD 810G water, dirt, meet current global intrinsi-
smoke and dust-rated tablet comprises full cally safe standards.
Windows operating system so an entire data The CS, ATEX, and IECEx
collection process can be carried out from transmitters allow you global
start to finish. Fast processor, light weight, reach to benefit from reduced
and ergonomic design also offer minimal inventory since you can stock fewer part numbers, it’s noted.
fatigue. The new certification expands this company’s I.S. offerings
MTB-7 also provides 7-in. extra-bright to nearly all pressure, temperature, load/force/torque, and ex-
PCAP touchscreen display plus all-day/up to ternal 4-20 mA transmitter amplifier designs with a single set
15-hr battery. Complete tablet details are free. of universal electronics.
Chassis Plans: San Diego LORD Sensing, Stellar Technology: Cary NC
For FREE Information, select #24 at ogpe.hotims.com For FREE Information, select #27 at ogpe.hotims.com

P8 April 2018

180402ogj_P8 8 3/26/18 5:07 PM

 New Products & Services OGPE.com

Quick connection sensor + cable system = Power sensitive fluidic control in oil tools offered
overfill prevention by new valve
Scully Connect overfill prevention system This new Magnetically Latch-
is now on the market. ing Solenoid Valve serves
The patented new quick connection sen- power sensitive fluidic control
sor and cable design combines proven optic in oil tools or where control
sensing technology with pre-wired connec- systems would benefit from
tions. These features save time, eliminate reduced power consumption
mis-wiring and bypassing sensors to deliver and lower heat generation.
dependable, trouble-free connections to These valves are unlike tra-
prevent downtime. ditional solenoid designs which require continuous voltage to
Scully Connect also eliminates the need be activated from their natural state, and therefore consume
for tools and allow quick sensor replacement more energy. Magnetically latched design requires only a mo-
in minutes. Additional overfill prevention specifics are free. mentary pulse to switch and remain ‘in-state’ (open or closed).
Scully Signal Company: Wilmington MA Permanent magnets within the valve’s coil consume less than
For FREE Information, select #28 at ogpe.hotims.com 1 joule of energy to be activated (and remain switched on). This
compares to standard spring loaded 12-v solenoid valves with
Stainless pressure regulators, valve boosters 26 ohm coil which would require around 5.5 w to open and
To support offshore production or other corrosive environments, about 0.35 w to hold in open position.
a new line of stainless steel pneumatic pressure regulators Lee Products Ltd.: Bucks United Kingdom
and volume boosters is available. For FREE Information, select #31 at ogpe.hotims.com
The entire product line comprises
rugged construction, use of corrosion-
resistant materials, with 316L stain-
less steel used in the housings. For Ultimate Machinery Protection
Regulators operate on supply pres-
sure up to 290 psi and offer up to
500 scfm flow capacity volumes to
regulate air, inert gas, or sweet and Sentry G3 ticks all the right boxes
sour gases.
Vibration Monitoring Turbine Supervisory
Two large flow boosters handle up
to 150 and 250 psig supply pressure Overspeed Protection
respectively, to deliver an output pres-
sure of up to 150 psig.
ControlAir Incorporated: Amherst NH
For FREE Information, select #29 at ogpe.hotims.com

Rugged mobile touch computers

XT100 touch computers are introduced
to be “packed with every business-critical
feature that enterprise organizations
require.”
The slim smartphone designs withstand
repeated 4-ft drops to concrete and are
sealed to IP65 standard for protection
against water, dust, and extreme
temperatures.
With support for the widely deployed
Android 6 operating system, XT100 pro-
vides intuitive user interface to reduce training time. Google
Mobile Services certification ensures you have access to all Google
Universal module for all vibration, position, speed and temperature
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April 2018 P9

180402ogj_P9 9 3/26/18 5:07 PM

 OGPE.com Advertiser Product & Service Followup and New Equipment

March “Advertiser Product & Service Followup”

Companies featured on the upper portion of this page advertised their equipment, product, system, or service specialties in the
March 5 Oil & Gas Journal’s OG&PE Section. These summaries provide opportunities to request free information or
literature: Go to OGPE.com — Click ‘PRODUCT INFO’ (white type at top of website) to receive response from these highly
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Flame resistant NFPA 2112 whole-garment-certified coveralls

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New Firestop fire-resistant material is announced as “thinner and lighter than any current pas-
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P10 April 2018

180402ogj_P10 10 3/26/18 5:07 PM


Join more than 4,500 terminal
industry professionals at the
premier annual event for liquid
terminal owners and aboveground
storage tank operators.
ILTA 2018 is the one place to attend
informative conference sessions
and in-depth training courses,
as well as find innovative solutions
and the latest technology from
over 330 trade show exhibitors.
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180402ogj_P11 11
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3/26/18 5:07 PM
 SERVICES | SUPPLIERS
THE ENERGY INDUSTRIES COUNCIL
Celebrates 75 years
EIC trade association for companies that
supply goods and services to the energy
industries worldwide — celebrated its
75th Anniversary on March 15. It held an
exclusive members’ afternoon tea at The
House of Lords, hosted by Lord Popat
and with special guest of honor Minister
of State for Trade and Export Promotion,
Baroness Rona Fairhead.
Approximately 100 EIC members
attended, representing companies of all
sizes from across the full range of energy
sectors, plus EIC staff and friends from
industry and government.
The EIC was founded in London in
1943 by 13 power supply chain compa-
nies wanting to diversify and export into
oil and gas markets abroad. It has grown
to include over 600 member organizations
throughout oil and gas, power, nuclear,
and renewables sectors. The EIC has a
global network of seven offices: London,
Aberdeen, Teesside, Dubai, Houston,
Kuala Lumpur, and Rio de Janeiro.
BAKER HUGHES, MCDERMOTT
Partner to compete offshore
Baker Hughes, a GE company and Mc-
Dermott International will partner to offer
integrated offshore energy services to bet-
ter compete with other growing players.
Their first partnership will provide
integrated front-end engineering work for
British Petroleum’s Senegal and Maurita-
nia West Africa developments.
“Increasingly, industry players are
looking for commercially-innovative busi-
ness models and integrated offerings
that help reduce costs as they increase
efficiency and productivity,” said Graham
Gillies, Baker Hughes, a GE company Vice
President of Subsea Production Systems
& Subsea Services.
77
180402ogj_77 77
SCHLUMBERGER
Awarded 2,000-ton module contract
Noble Energy has awarded Schlumberger
an engineering and supply contract for a
2,000-ton single-lift process module to be
installed on the Leviathan Platform.
Announced by OneSurface, Schlum-
berger President Mohamed Kermoud,
scope of the contract includes pretreat-
ment, salt removal, and generation of
monoethylene glycol for reinjection in the
subsea flowlines for hydrate inhibition.
Schlumberger’s PUREMEG reclamation
and regeneration system is a proprietary
technology to be supplied as a single-lift
module for installation on the production
platform.
Project management, engineering,
fabrication, installation support, and life-
of-field activities will be managed by a
globally integrated team.
BALDOR ELECTRIC COMPANY
Is now ABB
ABB will integrate the Baldor Electric
Company name into its global ABB brand
as part of its Next Level strategy which in-
cludes harmonizing different ABB-owned
brands under the global ABB master
brand.
ABB Robotics and Motion Division
President Sami Atiya noted Baldor, now
ABB, will continue to manufacture, design,
and market brands of Baldor-Reliance
motors and Dodge mechanical power
transmission products from 15 U.S. manu-
facturing locations. It will also continue
to support ABB’s entire U.S. motors and
generators business unit, including ABB-
branded IEC motors, large AC motors,
generators, and related services from
the motors, generators, and mechani-
cal business headquarters in Fort Smith,
Arkansas.
WELL-SENSE
Launches U.S. business, appoints director
Aberdeen-based downhole technology
specialist Well-SENSE has launched Well-
SENSE Incorporated as a Houston-based
subsidiary to bolster its United States
presence. At the same time, Tad Bostick
has been appointed Western Hemisphere
Commercial Director.
In making the an-
nouncement, CEO Craig
Feherty notes Tad began
his career with Western
Geophysical, working in
surface seismic explora-
tion and borehole seismic Bostick
logging. He has held
various field engineering,
technical support, and product manage-
ment positions. In his new role, he will
lead the company’s operations and ex-
pand delivery of its FiberLine Intervention
technology (FLI) in the region.
TURBOMACHINERY LABORATORY
Names new director
Dr. Eric Petersen has been named Direc-
tor of The Turbomachinery Laboratory,
a center of the Texas A&M Engineering
Experiment Station and part of The Texas
A&M University System.
The Nelson-Jackson
Professor in the Depart-
ment of Mechanical
Engineering at Texas A&M
University, is a 10-year
Turbo Lab veteran. His
research encompasses Petersen
gas dynamics, propulsion,
combustion, shock waves,
chemical kinetics, optical diagnostics
and spectroscopy, laminar and turbulent
flames, and rocket combustion. He has
authored more than 400 journal and con-
ference papers in these areas. He holds
three Mechanical Engineering Degrees.
As Turbo Lab Director, Petersen will
oversee all operations of the Lab and
Symposia Office including industry and
government-sponsored research, educa-
tion, and workforce development initiatives
including short courses and symposia.
OCEANEERING INTERNATIONAL
Acquires Ecosse Subsdea Ltd.
An Oceaneering International Incorporated
wholly owned subsidiary has acquired
Ecosse Subsea Limited, provider of
offshore engineering, seabed preparation,
route clearance, and trenching services.
The announcement was made by Ocea-
neering President and Chief Executive
Officer Roderick A. Larson.
Oil & Gas Journal | Apr. 2, 2018
3/27/18 3:37 PM
 SERVICES | SUPPLIERS
Ecosse enabling technologies ac-
quired in the transaction include modular
SCAR Seabed System which completes
the entire trenching work scope, as well
as its newly developed SCARJet trench-
ing systems for use with standard work
class ROVs. They add jetting and post-lay
trenching capabilities to existing pre-cut
methods offered by the SCAR plowing
tools.
TECHNICAL TOOLBOXES
Names CTO
Drew Lafleur has been appointed Chief
Technology Officer of Technical Toolboxes,
global provider of integrated and cloud-
based pipeline software, consulting, and
industry training for pipeline engineering
and technical professionals. The an-
nouncement is made by Martin Fingerhut,
CEO.
Based in Houston,
Lefleur will lead and
manage the company’s
technical team. He will fo-
cus on company strategy
to identify and prioritize
development initiatives,
Lafleur
select technologies and
methodologies to employ
and set timetables for the evaluation, as
well as development and deploy all Techni- EMERSON
cal Toolboxes’ technology applications,
and technical training courses.
HEXION INCORPORATED
Completes proppant mfg. plant expansion Emerson’s Synthesis order-to-cash soft-
The Oilfield Technology Group of Hexion
Incorporated has completed its resin
coated proppant manufacturing plant ex-
pansion in Sturgeon County, north of Fort
Saskatchewan Canada.
Plant capacity and logistics capabil- Terminals Chief Executive Officer Mike
ity have been significantly increased to
efficiently service the Canadian market,
according to Jerry Kurinsky, Senior Vice
President and General Manager.
Working with CN Rail, their primary
rail service provider, the expanded and
Oil & Gas Journal | Apr. 2, 2018
180402ogj_78 78
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He joined Frames’ management board
March 1, replacing Jacques Melman who
will continue to serve as Chief Operating
Officer. Together with
Ronald Vochteloo, who
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 STATISTICS
Additional analysis of market trends is available
IMPORTS OF CRUDE AND PRODUCTS through OGJ Online, Oil & Gas Journal’s electronic
information source, at http://www.ogj.com.
— Districts 1-4 — — District 5 — ———— Total US ————
3-16 3-9 3-16 3-9 3-16 3-9 3-17*
2018 2018 2018 2018 2018 2018 2017
––––––––––––––––––––––––— 1,000 b/d ––––––––––––––––––––––––—
Total motor gasoline ............. 561 603 2 1 563 604 326
Mo. gas. blending comp..... 438 592 2 1 440 593 318
Distillate............................... 122 222 0 0 122 222 127
Residual ..............................
Jet fuel-kerosine ..................
231
36
91
47
7
15
131
52
238
51
222
99
329
104
OGJ CRACK SPREAD
3-23-18* 3-24-17* Change Change,
Propane-propylene .............. 114 106 35 37 149 143 135 ———–—$/bbl ——–—— %
Other ................................... 593 627 141 77 734 707 956
SPOT PRICES
Total products ...................... 1,657 1,696 200 298 1,857 1,997 1,977
Product value 76.58 62.04 14.54 23.44
Total crude ........................... 6,087 6,411 990 1,174 7,077 7,585 8,307 Brent crude 64.82 50.10 14.72 29.38
Crack spread 11.76 11.94 (0.18) (1.48)
Total imports ........................ 7,744 8,107 1,190 1,472 8,934 9,579 10,284
FUTURES MARKET PRICES
*Revised. One month
Source: US Energy Information Administration Product value 83.30 65.59 17.70 26.99
Data available at PennEnergy Research Center. Light sweet crude 64.16 47.85 16.31 34.09
Crack spread 19.13 17.74 1.40 7.87
Six month
EXPORTS OF CRUDE AND PRODUCTS Product value
Light sweet crude
82.53
62.24
65.77
49.65
16.76
12.59
25.49
25.35
–––––––––––––––– Total US –––––––––––––––– Crack spread 20.29 16.12 4.18 25.92
3-16-18 3-9-18 *3-17-17
––––––––––––––– 1,000 b/d ––––––––––––––– *Average for week ending.
Finished motor gasoline 686 785 592 Source: Oil & Gas Journal
Jet fuel-kerosine 359 133 191 Data available at PennEnergy Research Center.
Distillate 997 1,492 1,217
Residual 192 330 262
Propane/propylene 1,041 809 808
Other oils 1,718 1,613 1,714
Total products 4,993 5,162 4,784
Total crude 1,573 1,487 550
Total exports 6,566 6,649 5,334
NET IMPORTS
Total 2,368 2,933 4,950
Products (3,136) (3,165) (2,807)
Crude 5,504 6,098 7,757

*Revised.
Source: Oil & Gas Journal
Data available at PennEnergy Research Center.

CRUDE AND PRODUCT STOCKS

—–– Motor gasoline —––
Blending Jet fuel, ————— Fuel oils ————— Propane-
Crude oil Total comp. kerosine Distillate Residual propylene
District ———————————————————————————— 1,000 bbl —————————————————————————
PADD 1 ..................................... 12,736 59,668 55,188 8,860 44,933 6,938 3,263
PADD 2 ..................................... 111,757 58,775 52,592 7,439 31,532 1,890 9,882
PADD 3 ..................................... 232,961 83,784 73,837 12,881 38,128 18,923 22,384
1
PADD 4 ..................................... 22,462 8,082 6,285 804 3,740 257 1,230
PADD 5 ..................................... 48,389 32,756 30,631 10,993 12,711 4,737 —

Mar. 16, 2018 .......................... 428,305 243,065 218,533 40,977 131,044 32,745 36,759
Mar. 9, 2018 ............................. 430,928 244,757 220,542 41,581 133,066 33,416 38,820
Mar. 17, 20172 .......................... 533,110 243,469 218,877 41,828 155,392 39,572 44,334
1
Includes PADD 5. 2Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.

REFINERY REPORT—MAR. 16, 2018

REFINERY –––––––––––––––––––––––––––– REFINERY OUTPUT –––––––––––––––––––––––––––
–––––– OPERATIONS –––––– Total
Gross Crude oil motor Jet fuel, ––––––– Fuel oils –––––––– Propane-
inputs inputs gasoline kerosine Distillate Residual propylene
District ––––––– 1,000 b/d –––––––– –––––––––––––––––––––––––––––––– 1,000 b/d –––––––––––––––––––––––––––––––

PADD 1 .............................................. 944 940 3,106 85 266 22 175

PADD 2 .............................................. 3,658 3,654 2,534 246 1,073 41 454
PADD 3 .............................................. 9,088 8,992 2,342 834 2,510 246 1,001
1
PADD 4 .............................................. 650 655 323 37 205 13 210
PADD 5 .............................................. 2,667 2,536 1,626 542 449 85 —
Mar. 16, 2018 ..................................... 17,007 16,777 9,931 1,744 4,503 407 1,840
Mar. 9, 2018 ....................................... 16,687 16,367 10,097 1,766 4,478 463 1,890
Mar. 17, 201172 .................................. 16,183 15,801 9,730 1,635 4,828 407 1,763

18,550 Operable capacity 91.7% utilization rate

1 2
Includes PADD 5. Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.

79 Oil & Gas Journal | Apr. 2, 2018

180402ogj_79 79 3/27/18 3:37 PM

 STATISTICS
OGJ GASOLINE PRICES BAKER HUGHES RIG COUNT OGJ PRODUCTION REPORT 1 2
3-23-18 3-24-17
Price Pump Pump 3-23-18 3-24-17 –—— 1,000 b/d —–—
ex tax price* price
3-21-18 3-21-18 3-22-17 (Crude oil and lease condensate)
Alabama............................................ 1 2 Alabama ................................. 18 20
————— ¢/gal ————— Alaska ............................................... 9 5 Alaska .................................... 515 524
Arkansas ........................................... 1 1 California ............................... 488 498
(Approx. prices for self-service unleaded gasoline) California .......................................... 14 8 Colorado ................................. 433 295
Atlanta .......................... 188.5 238.0 211.9 Land................................................ 14 8 Florida .................................... 6 6
Baltimore ...................... 190.8 243.0 222.4 Offshore .......................................... 0 0 Illinois .................................... 25 23
Boston ........................... 196.0 240.9 217.9 Colorado ............................................ 31 30 Kansas ................................... 99 101
Buffalo .......................... 189.3 252.0 229.4 Florida ............................................... 0 0 Louisiana ............................... 1,569 1,530
Miami ............................ 194.0 253.9 217.9 Michigan ................................ 15 16
Illinois ............................................... 0 2 Mississippi ............................. 51 51
Newark .......................... 192.4 247.9 219.4 Indiana.............................................. 0 0 Montana ................................. 55 58
New York........................ 200.3 263.0 242.9 Kansas .............................................. 0 0 New Mexico............................. 575 440
Norfolk........................... 218.1 258.9 240.4 Kentucky............................................ 0 0 North Dakota .......................... 1,230 1,016
Philadelphia .................. 178.8 255.9 229.4 Louisiana .......................................... 57 53 Ohio ........................................ 57 49
Pittsburgh ..................... 184.9 262.0 241.0 N. Land ........................................... 35 31 Oklahoma ............................... 505 440
Wash., DC...................... 234.1 276.0 238.9 S. Inland waters .............................. 3 4 Pennsylvania .......................... 23 16
PAD I avg .................. 197.0 253.8 228.3 S. Land............................................ 7 1 Texas ...................................... 4,337 3,664
Utah ....................................... 92 88
Offshore .......................................... 12 17 West Virginia .......................... 32 22
Chicago ......................... 214.5 268.2 270.7 Maryland ........................................... 0 0 Wyoming ................................. 237 201
Cleveland ...................... 189.8 236.2 229.7 Michigan ........................................... 0 0 Other states ........................... 61 38
Des Moines .................... 191.3 240.2 224.2 Mississippi ........................................ 4 4
Detroit ........................... 179.3 240.0 225.2 Montana ............................................ 1 0 Total 10,423 9,096
Indianapolis .................. 194.9 255.2 223.7 Nebraska ........................................... 0 0
1
OGJ estimate. 2Revised. Source: Oil & Gas Journal.
Kansas City ................... 201.8 237.6 210.7 New Mexico........................................ 88 48 Data available at PennEnergy Research Center.
Louisville ....................... 198.4 242.8 217.9 New York............................................ 0 1
Memphis ....................... 209.7 253.5 219.8 North Dakota ..................................... 53 43 US CRUDE PRICES
Milwaukee ..................... 199.5 250.8 214.8 Ohio................................................... 22 21 3-23-18
Minn.-St. Paul ............... 205.8 252.8 223.3 Oklahoma .......................................... 120 118 $/bbl*
Oklahoma City ............... 194.9 230.3 208.8 Pennsylvania ..................................... 40 33 Alaska-North Slope 27° ......................................... 60.29
Omaha .......................... 198.9 246.6 225.4 South Dakota..................................... 0 0 Light Louisiana Sweet ........................................... 61.25
St. Louis ........................ 217.7 253.5 210.9 Texas ................................................. 499 404 California-Midway Sunset 13° .............................. 60.70
Tulsa ............................. 190.5 225.9 208.8 Offshore .......................................... 1 1 California Buena Vista Hills 26° ........................... 70.84
Wichita .......................... 199.9 242.3 215.8 Inland waters .................................. 0 0 Wyoming Sweet ..................................................... 62.13
PAD II avg ................. 199.1 245.1 222.0 Dist. 1 ............................................. 37 41 East Texas Sweet ................................................... 59.50
West Texas Sour 34° .............................................. 57.25
Dist. 2 ............................................. 31 33 West Texas Intermediate........................................ 62.25
Albuquerque .................. 188.6 225.9 206.9 Dist. 3 ............................................. 17 15
Birmingham .................. 189.1 228.4 211.9 Oklahoma Sweet.................................................... 62.25
Dist. 4 ............................................. 13 10 Texas Upper Gulf Coast ......................................... 56.00
Dallas-Fort Worth .......... 189.0 227.4 209.9 Dist. 5 ............................................. 3 1 Michigan Sour ....................................................... 54.25
Houston ......................... 185.0 223.4 205.8 Dist. 6 ............................................. 26 20 Kansas Common ................................................... 61.50
Little Rock ..................... 190.7 230.9 204.9 Dist. 7B ........................................... 2 8 North Dakota Sweet ............................................... 53.75
New Orleans .................. 189.0 227.4 207.8 Dist. 7C ........................................... 36 32 *Current major refiner’s posted prices except N. Slope lags 2 months.
San Antonio ................... 185.0 223.4 206.9 Dist. 8 ............................................. 304 215 40° gravity crude unless differing gravity is shown. Source: Oil & Gas
PAD III avg ................ 188.1 226.7 207.7 Dist. 8A ........................................... 15 18 Journal. Data available at PennEnergy Research Center.
Dist. 9 ............................................. 1 1
Cheyenne.......................
Denver ...........................
195.0
207.1
237.4
247.5
226.3
230.5
Dist. 10 ........................................... 13 9 WORLD CRUDE PRICES
Utah .................................................. 7 9 $/bbl
Salt Lake City ................ 197.1 245.0 231.3 West Virginia ..................................... 17 11 OPEC reference basket Wkly. avg. 3-23-17 65.08
PAD IV avg ................ 199.8 243.3 229.4 Wyoming............................................ 30 16 –– Mo. avg., $/bbl ––
Others NV-1 ....................................... 1 0 Jan.-18 Feb.-18
Los Angeles ................... 268.4 340.3 321.6
Phoenix.......................... 252.4 289.8 262.9 Total US ........................................ 995 809 OPEC reference basket....................... 66.85 63.48
Portland ........................ 224.7 279.9 242.9 Total Canada ................................ 161 185 Arab light-Saudi Arabia ....................... 67.42 64.03
San Diego ...................... 264.7 336.6 295.6 Grand total ................................... 1,156 994 Basrah light-Iraq ................................. 66.11 62.31
San Francisco................ 282.5 354.4 299.1 US oil rigs.......................................... 804 652 Bonny light 37o-Nigeria........................ 69.92 66.02
Seattle........................... 241.2 309.0 277.8 US gas rigs........................................ 190 155 Es Sider-Libya ...................................... 68.23 64.36
PAD V avg ................. 255.7 318.3 283.3 Total US offshore ............................... 13 18 Girassol-Angola.................................... 69.77 66.09
Total US cum. avg. YTD ..................... 964 736 Iran heavy-Iran..................................... 65.85 62.27
Week’s avg. .................. 204.9 254.6 230.6 Kuwait export-Kuwait ........................... 65.74 62.14
Feb. avg... ..................... 208.2 256.3 228.0 Marine-Qatar........................................ 66.36 63.14
Jan. avg......................... 203.3 251.4 233.5 Rotary rigs from spudding in to total depth.
Definitions, see OGJ Sept. 18, 2006, p. 46. Merey-Venezuela .................................. 59.14 57.68
2018 to date ................. 205.0 253.5 — Murban-UAE ......................................... 68.81 65.88
2017 to date ................. 183.7 230.3 — Source: Baker Hughes Inc.
Data available at PennEnergy Research Center. Oriente-Ecuador ................................... 63.53 60.28
*
Saharan blend 44o-Algeria ................... 69.93 66.01
Includes state and federal motor fuel taxes and state Other crudes
sales tax. Local governments may impose additional taxes.
Source: Oil & Gas Journal. Fateh 32o-Dubai ................................... 66.15 62.69
Data available at PennEnergy Research Center. Minas 34o-Indonesia ............................ 60.91 58.15
Isthmus 33o-Mexico ............................. 67.57 64.83
Brent 38o-UK ........................................ 69.13 65.16
Urals-Russia ........................................ 68.69 63.01
Differentials
WTI/Brent ............................................. (5.43) (3.01)
Brent/Dubai.......................................... 2.98 2.47
REFINED PRODUCT PRICES IHS PETRODATA RIG COUNT Source: OPEC Monthly Oil Market Report.
Data available at PennEnergy Research Center.
3-16-18 3-16-18 MAR. 23, 2018
¢/gal ¢/gal Total Marketed Marketed US NATURAL GAS STORAGE1
supply supply Marketed utilization 3-16-18 3-9-18 3-16-17 Change,
Spot market product prices of rigs of rigs contracted rate (%) –——––—— bcf —––——– %
US Gulf of
Motor gasoline No. 2 Distillate Mexico. . . . . . 84 48 36 75.0 East.................................... 270 314 317 (14.8)
(Conventional-regular) Low sulfur diesel fuel South Midwest.............................. 315 350 513 (38.6)
New York Harbor ......... 181.40 New York Harbor ......... 190.90 America 42 36 30 83.3 Mountain ............................ 90 93 137 (34.3)
Gulf Coast .................. 184.90 Gulf Coast .................. 190.90 Pacific ................................ 169 169 207 (18.4)
Northwest South Central 602 606 938 (35.8)
Los Angeles ................ 196.10 Europe. . . . . 96 77 59 76.6 Salt ................................ 182 186 299 (39.1)
Motor gasoline West Nonsalt........................... 419 420 639 (34.4)
(RBOB-regular) Kerosine jet fuel Africa. . . . . . 59 43 26 60.5
New York Harbor ......... 210.70 Gulf Coast .................. 182.10 Middle Total US ............................. 1,446 1,532 2,112 (31.5)
East. . . . . . . 176 163 120 73.6 Change,
No. 2 heating oil Propane Southeast Dec.-17 Dec.-16 %
New York Harbor ......... 185.90 Mont Belvieu .............. 80.50 Asia. . . . . . . 90 74 44 59.5
Worldwide. . . . 790 659 472 71.6 Total US2 ............................ 3,039 3,297 (7.8)
1
Working gas. 2At end of period.
Source: EIA Weekly Petroleum Status Report. Source: IHS Petrodata Source: Energy Information Administration
Data available at PennEnergy Research Center. Data available in PennEnergy Research Center Data available at PennEnergy Research Center.

Oil & Gas Journal | Apr. 2, 2018 80

180402ogj_80 80 3/27/18 3:37 PM

 STATISTICS
PACE REFINING MARGINS WORLDWIDE NGL PRODUCTION
Jan. Feb. Mar. Mar. 12 month Change vs.
2018 2018 2018 2017 Change Change, average previous
——––—––––— $/bbl –––––––––—— % Dec. Nov. — production — —— year —–
2017 2017 2017 2016 Volume
US Gulf Coast ————–—–––— 1,000 b/d ———––———— %
Composite US Gulf Refinery.............. 11.55 10.73 10.40 11.76 (1.36) (11.6)
Mars (Coking) .................................. 11.78 11.22 10.63 11.53 (0.90) (7.8) Brazil ................................... 142 135 131 116 15 13.3
Mars (Cracking) ............................... 8.75 8.35 7.66 9.15 (1.49) (16.3) Canada................................ 940 910 856 791 64 8.1
Bonny Light ...................................... 6.47 5.87 5.67 6.63 (0.96) (14.5) Mexico ................................. 235 241 277 304 (28) (9.0)
US PADD II United States ...................... 3,936 4,054 3,736 3,478 258 7.4
Chicago (WTI)................................... 14.02 9.24 10.51 11.15 (0.64) (5.7) Venezuela ............................ 154 179 186 198 (12) (5.9)
US East Coast Other Western
Brass River ...................................... 6.80 5.60 4.92 5.40 (0.48) (8.9) Hemisphere ....................... 222 216 213 216 (3) (1.5)
East Coast Comp ............................. 8.55 7.29 6.50 7.02 (0.52) (7.4) Western
US West Coast Hemisphere.................. 5,629 5,735 5,399 5,103 295 5.8
Los Angeles (ANS) ............................ 9.73 11.89 15.93 13.36 2.57 19.2
NW Europe Norway................................. 351 338 342 349 (6) (1.8)
Rotterdam (Brent) ............................ 0.28 1.17 (0.42) 1.25 (1.67) (133.6) United Kingdom ................... 55 75 81 72 9 12.0
Mediterranean Other Western
Italy (Urals) ...................................... 1.54 3.59 3.13 3.38 (0.25) (7.4) Europe ............................... 9 9 9 8 1 6.9
Far East
Singapore (Dubai) ............................ 4.15 5.23 5.00 4.52 0.48 10.6 Western Europe ............. 415 422 432 429 3 0.7

Source: Jacobs Consultancy Inc. Russia ................................. 823 821 817 791 26 3.3
Data available at PennEnergy Research Center. Other FSU ............................ 468 463 447 264 183 69.1
Other Eastern
Europe ............................... 15 16 17 16 1 4.7
Eastern Europe .............. 1,306 1,300 1,281 1,071 210 19.6
US NATURAL GAS BALANCE
DEMAND/SUPPLY SCOREBOARD Algeria .................................
Egypt ...................................
450
200
450
200
490
199
502
202
(12)
(3)
(2.4)
(1.2)
Libya.................................... 50 50 50 50 0 0.0
Dec. Total YTD Other Africa ......................... 117 147 155 131 24 18.5
Dec. Nov. Dec. 2017–2016 ––– YTD ––– 2017–2016 Africa.............................. 817 847 895 885 10 1.1
2017 2017 2016 change 2017 2016 change
——————————— bcf ——————––—————
Saudi Arabia........................ 1,880 1,878 1,867 1,838 29 1.6
DEMAND United Arab Emirates .......... 681 679 670 646 24 3.7
Consumption ................... 3,067 2,347 2,867 200 27,089 27,486 (397) Other Middle East ................ 860 841 841 739 102 13.9
Addition to storage .......... 80 203 87 (7) 3,306 2,975 331
Exports ............................ 300 288 251 49 3,168 2,335 833 Middle East..................... 3,421 3,398 3,378 3,223 155 4.8
Canada ......................... 81 74 97 (16) 917 771 146
Mexico .......................... 136 134 112 24 1,543 1,377 166 Australia.............................. 48 51 50 55 (4) (8.0)
LNG ............................... 83 80 42 41 708 187 521 China................................... 12 12 12 12 0 0.0
Total demand .................. 3,447 2,838 3,205 242 33,563 32,796 767 India .................................... 128 129 125 116 9 7.5
Other Asia–Pacific ............... 146 147 147 150 (3) (1.8)
SUPPLY Asia–Pacific ................... 334 339 334 332 2 0.5
Production (dry gas) ........ 2,427 2,322 2,206 221 26,863 26,663 200 TOTAL WORLD ................. 11,922 12,041 11,719 11,044 675 6.1
Supplemental gas............ 5 6 5 0 56 57 (1)
Storage withdrawal.......... 773 288 762 11 3,559 3,325 234 Totals may not add due to rounding.
Imports ............................ 277 242 281 (5) 3,039 3,006 33 Source: Oil & Gas Journal.
Canada.......................... 265 236 272 (7) 2,960 2,917 43 Data available at PennEnergy Research Center.
Mexico ........................... 1 0 0 0 1 1 0
LNG................................ 11 6 9 2 78 88 (10)
Total supply ..................... 3,482 2,858 3,254 227 33,517 33,051 466 OXYGENATES
NATURAL GAS IN UNDERGROUND STORAGE Dec. Nov. YTD YTD
Dec. Nov. Oct. Dec.
2017 2017 2017 2016 Change 2017 2017 Change 2017 2016 Change
—————————— bcf —————————— ———————––—––– 1,000 bbl –––—————————
Base gas 4,359 4,354 4,355 4,380 2,477 Fuel ethanol
Working gas 3,039 3,732 3,817 3,297 (258) Production .................. 32,809 32,469 340 376,619 364,979 11,640
Total gas 7,398 8,086 8,172 7,677 2,219 Stocks ......................... 23,048 22,863 185 23,048 19,531 3,517
Source: DOE Monthly Energy Review.
Data available at PennEnergy Research Center. MTBE
Production .................. 1,624 1,571 53 16,685 17,342 (657)
Stocks ......................... 1,320 1,201 119 1,320 1,116 204
Source: DOE Petroleum Supply Monthly.
Data available at PennEnergy Research Center.

US HEATING DEGREE–DAYS
Nov. Oct. Nov. — Total degree days YTD —
2017 2017 2016 % change 2017 2016 % change
New England ................................................................ 746 237 672 11.0 4,866 4,875 (0.2)
Middle Atlantic ............................................................. 702 214 609 15.3 4,248 4,378 (3.0)
East North Central........................................................ 774 292 582 33.0 4,492 4,535 (0.9)
West North Central ....................................................... 806 363 569 41.7 4,779 4,529 5.5
South Atlantic .............................................................. 323 89 290 11.4 1,700 1,977 (14.0)
East South Central ....................................................... 408 147 339 20.4 2,109 2,422 (12.9)
West South Central....................................................... 179 59 154 16.2 1,078 1,308 (17.6)
Mountain ...................................................................... 487 355 513 (5.1) 3,747 3,694 1.4
Pacific .......................................................................... 351 178 331 6.0 2,694 2,402 12.2
US average*............................................................ 491 193 418 17.5 3,035 3,096 (2.0)

*Excludes Alaska and Hawaii.

Source: DOE Monthly Energy Review. NOTE: No new data at press time.
Data available at PennEnergy Research Center.

81 Oil & Gas Journal | Apr. 2, 2018

180402ogj_81 81 3/27/18 3:37 PM

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83 Oil & Gas Journal | Apr. 2, 2018

180402ogj_83 83 3/27/18 4:03 PM

 ADVERTISING SALES ADVERTISERS INDEX
US Sales
Mike Moss, (713) 963-6221, mikem@pennwell.com.
Stan Terry, (713) 963-6208, stant@pennwell.com. COMPANY NAME PAGE COMPANY NAME PAGE
Grace Jordan, (713) 963-6291, gracej@pennwell.com

Australia / New Zealand

Mike Twiss, Miklin Business Services, Unit 15, AFGlobal Corp 5 OWES 47
3 Benjamin Way, Rockingham, Western Australia 6168; www.afglobalcorp.com/drilling w ww.offshorewindsummit.com
Tel +61 8 9529 4466, Fax +61 8 9529 4488
Email: miklinbusiness@bigpond.com ARCA 19 PennEnergy 76
Brazil / South America www.arca-valve.com www.pennenergy.com
Paul Westervelt, (713) 449-6305, pwestervelt@pennwell.
com. 1455 West Loop South, Suite 400, Houston, TX Ariel Corp 11 PennWell Books 4, 35, 42, 59, 78
77027 www.arielcorp.com/whoweare www.pennwellbooks.com

Canada Atlas Copco Group 17 PeruPetro SA 18

Stan Terry, (713) 963-6208, stant@pennwell.com www.epiroc.com www.perupetro.com.pe
France / Belgium / Spain / Portugal / Bodycote 9 Petroleum Equipment & Services
Southern Switzerland / Monaco www.bodycote.com Association C4
Stefy Picoitti Thompson, Tel +33 (0) 6 21 23 67 02, Fax
www.pesa.org
+33 (0) 4 89 81 99 82, stefaniat@pennwell.com.
Chaparral Energy 16
Germany / Austria / Northern Switzerland / www.chaparralenergy.com Pipeline Energy Expo 82
Eastern Europe / Russia / Former Soviet Union www.pipelineenergyexpo.com
Sicking Industrial Marketing, Kurt-Schumacher-Str. 16, D&L Oil Tools P3
59872, Freienohl, Germany. Tel: 49(0)2903.3385.70, www.dloiltools.com Pipeline Week 71
Fax: 49(0)2903.3385.82; E-mail: wilhelms@pennwell. www.pipelineweek.com
com; www.sicking.de <http://www.sicking.de> Andreas Deepwater Operations 21
Sicking www.deepwateroperations.com PNEC 75
www.pnecconferences.com
Italy Diamondback Industries 13
Ferruccio Silvera, Viale Monza, 24 20127 Milano Italy;
Tel:+02.28.46 716; E-mail: info@silvera.it www.diamondbackindustries.com PumpWorks 63
www.pumpworks.com
Japan Enventure 39
e.x.press sales division, ICS Convention Design Inc. www.eventureGT.com/eseal S. Himmelstein & Company P4
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Tokyo 101-8449, Japan, Tel: +81.3.3219.3641, Fax: Flotek C3
81.3.3219.3628, Masaki Mori, E-mail: Masaki.Mori@
ex-press.jp
www.flotekind.com Saudi Aramco C2
www.aramco.jobs/ogj
China / Korea / Singapore / Asia-Pacific Global Petroleum Show 43
Michael Yee, 19 Tanglin Road #05-20, Tanglin Shopping www.globalpetroleumshow.com/register Sensonics Ltd P9
Center, Singapore 247909, Republic of Singapore; Tel: 65 www.sensonics.co.uk
9616.8080, Fax: 65.6734.0655; E-mail: yfyee@singnet. Graco High Pressure Equipment
com.sg Company P7 Sierra Hamilton 31
United Kingdom / Scandinavia / Denmark / www.highpressure.com www.sierra-hamilton.com
The Netherlands / Middle East Greatwall Drilling Company 7 Star Communications 64a
Graham Hoyle, 10 Springfield Close, Cross, Axbridge,
Somerset BS26 2FE, Phone: +44 1934 733871 Mobile: www.gwdc.com.cn www.star-communications.us
+44 7927 889916, grahamh@pennwell.com or ghms@
btinternet.com ILTA P11 Topsides 33
www.ilta.org/aocts www.topsidesevent.com
OGJ Reprints
Jill Kaletha, Mossberg & Co, 800-428-3340 x149, Leistritz 29 TUBACEX 67
jkaletha@mossbergco.com, Attn: Jill Kaletha, www.leistritz.com www.tubacex.com
Mossberg & Co, 301 E. Sample Street, South Bend,
IN 46601 Liebherr Components 23 Universal Pressure Pumping Inc 2
www.components.liebherr.com www.universalpressurepumping.com
Custom Publishing
Roy Markum, Vice-President/Custom Publishing, roym@ Moxa P5 Veolia 15
pennwell.com, Phone: 713-963-6220, Fax: 713-963-
www.moxa.com www.veoliawatertech.com/events
6228
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Should you need assistance with creating your ad,
please contact Paul Andrews, Vice President
pandrews@pennwell.com, 240.595.2352
This index is provided as a service. The publisher does not assume any liability for errors or omission.

PennWell
1455 West Loop South, Suite 400, Houston, TX 77027
www.ogj.com

Oil & Gas Journal | Apr. 2, 2018 84

180402ogj_Rev_84 84 3/29/18 9:43 AM

 THE EDITOR’S PERSPECTIVE WATCHING GOVERNMENT

Automated opinion
clogs permitting
Nick Snow
of energy projects Washington Editor
by Bob Tippee, Editor

Automated opinion undermines discourse and

too often overwhelms legitimate public concern
about energy projects.
Pressure groups routinely clog project
Tillerson’s farewell remarks
permitting with mass-produced submissions
Some of his harshest critics relinquish it or allow it to be com-
during public-comment periods.
The tactic is obstructionist—and undemo- conceded that Rex. W. Tillerson promised. Once you’ve done so,
cratic. always was a gentleman in his it is very, very hard to regain it. So
Sure, pressure groups have the right to
nearly 14 months as US Secretary guard it as the most precious thing
submit as many comments as they like.
But repetition doesn’t validate message. of State. It apparently was not you possess.
And repetition aimed at swamping commentary enough to keep President Donald “And finally, I hope you will
is pernicious.
Trump from firing him after weeks continue to treat each other with
Meridian Energy Group Inc. has usefully
deconstructed a flood of comments submit- of rumors that the retired Exxon- respect. Regardless of the job
ted about the 55,000-b/sd refinery it wants to Mobil Corp. chief executive was on title, the station in life, or your role,
build in two phases in the Bakken shale region
his way out. everyone is important to the State
of North Dakota.
The state Department of Health’s division of Tillerson nevertheless made Department. We’re all just human
air quality issued a draft permit-to-construct for some important points to State beings trying to do our part,” Til-
the proposed Davis refinery in December and
Department employees in his Mar. lerson said.
accepted public comments for 45 days.
When the comment period closed on Jan. 22 farewell address that deserve
26, 2018, the division had received nearly
11,000 submissions.
wider attention. ‘Each of us chooses’
“The country faces many chal- In closing, he asked each of them
Meridian responded to all of them. It also
analyzed the sources. lenges—in some instances per- “to ensure one act of kindness
In a Mar. 20 press release, the company re- plexing foreign affairs relationships, each day toward another person.”
ported that 97.5% of the comments were form
and in other instances serious His next observation—“this can be
letters, “essentially e-mail blasts from several
different member-based web sites.” national security threats. In these a very mean-spirited town”—was
One organization with 1.3 million mem- times, your continued diligence met with laughter and applause.
bers submitted 10,068 form letters via e-mail
and devotion to the State Depart- “But you don’t have to choose to
through its web site.
According to Meridian, none of the form ment’s mission has never been participate in that,” Tillerson con-
e-mails contained comments relevant to the more necessary,” he told them. tinued. “Each of us gets to choose
technical or legal basis for the draft permit is-
Tillerson expressed his hope the person we want to be, and the
sued in December.
“While 1.8% of the comments received were that each of them would be guided way we want to be treated, and the
from North Dakota respondents,” Meridian said, by and their actions driven by two way we will treat others.”
“over 22% were from the West Coast, specifi-
main priorities: First, to value the It’s not likely we’ll ever know
cally Oregon, Washington, and California.”
William Prentice, Meridian chief execu- safety and security of themselves, whether he regretted accept-
tive officer, said reviewing and analyzing the their loved ones, and their col- ing Trump’s invitation to become
comments were “almost as exhausting as the
leagues. And second, to main- Secretary of State. He possibly
application review process itself.”
He credited work by the health department tain a commitment to personal has identified things he would
for depriving opponents of a “substantive ba- accountability so they could hold have done differently while he
sis” for their resistance to the project.
others accountable in a positive was there. But he also may recall
Especially interesting is Meridian’s observa-
tion that the form emails didn’t address techni- environment underpinned by hon- moments during Cabinet meetings
cal or legal underpinnings of the draft permit. esty and integrity. when he wondered if he was the
Apparently, senders were interested more in
“Never lose sight of the most only adult in the room.
numerical spectacle than genuine issues, more
in jamming a system than actuating persua- valuable asset you possess: your Maybe this is why most of the
sion. personal integrity,” he urged. “Not country’s top business leaders
Meridian said only 2.5% of all comments
one of you was gifted it; you were avoid federal service. Tillerson, at
received were unique. But they deserve 100%
of official attention. born with it. It belongs to you, least, tried.
and always has and will belong to
(From the subscription area of www.ogj.com,
you and you alone. Only you can
posted Mar. 23, 2018; author’s e-mail: bobt@
ogjonline.com)

85 Oil & Gas Journal | Apr. 2, 2018

180402ogj_85 85 3/27/18 3:38 PM

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[energyreview]
AN IN DEPTH REVIEW OF THE OIL & GAS SECTOR IN THE CANARY ISLANDS

CANARY ISLANDS

AFRICA

THE MID ATLANTIC HUB

Located at the crossroads between Africa, Europe and the Americas, Spain’s Canary Islands
offer the advantages of Europe 60 miles from Africa, great tax regime and quality of life

E
ver since Christopher Columbus stopped here in 1492 on required technical, organizational and financial capabilities,”
his historic journey to the Americas, the Canary Islands have says Vicente Marrero Domínguez, President of the islands’
played a pivotal role in trans-Atlantic transport and trade. Maritime Cluster.
Now, as the West African offshore emerges as one of the world’s Supported by a corporate tax rate of just 4%, a pro-business
fastest growing oil and gas regions, the Spanish islands are administration, a qualified workforce and an enviable quality of
assuming a new role as a logistics hub for operators and services life, the islands look well poised for a new chapter in their history.
companies in the region. More than a dozen platforms and rigs “With our connectivity, our security and of course our location,
are currently being serviced in ports across the seven-island I think the Canaries could be a hub between three continents,”
archipelago, which is located just 60 miles off the West African Clavijo says.
coast but which offers all the security and stability of a member It is not only as a base for African offshore development that
of the European Union. the Canaries are carving out a new role for themselves on the
“Oil and gas companies here have access to Western Africa, global energy map. As the shipping industry steadily evolves
because geographically that is where we are located, but they towards the use of LNG as a fuel, the islands are also ideally
also have all the legal and positioned as a mid-Atlantic
fiscal guarantees of the “Oil and gas companies here have access to center for bunkering.
EU, because politically Western Africa, because geographically that is Historically, the islands
we are part of Europe,” played a crucial part in
where we are located.”
says Fernando Clavijo, the trans-Atlantic trade as a
President of the Government Fernando Clavijo, the President of the Government of the Canary Islands coaling station for freighters
of the Canary Islands. plying the route between
With more than five hundred years’ experience of Atlantic Europe and the Americas. To this day, they are still Spain’s leading
seafaring and trade, the islands are no newcomers to the bunkering center. And while the times of coal-powered ships are
maritime industry. Across the ports of the archipelago, local ship long gone, the arrival of a new generation of LNG-fueled vessels
repair companies are busy refocusing their activities on offshore could see the Canaries reclaim their traditional role as an Atlantic
platforms, while multinational giants such as Rolls-Royce have bunkering hub. The government and port authority of Tenerife
also set up bases here. have already published ambitious plans, supported by the EU,
“The oil and gas industry now knows that there is a group to transform the island into a regional center for this new era in
of companies and shipyards in the Canaries which have all the maritime transport.

Project Direction / Editorial Content: Nathalie Martin-Bea • Photography: Oscar Segura

180402ogjStarCom_1 1 3/13/18 2:41 PM

 Within the EU…
K
nown by the Romans as ‘the fortunate isles’, in the 21st Reflecting the islands’ capabilities as a platform for large-scale
century the Canary Islands seem blessed with the best of operations in Africa and beyond, in 2014 the UN World Food
both worlds: while enjoying all the legal security and world- Programme inaugurated a logistics hub in the Port of Las Palmas.
class infrastructure of a member of the European Union, they are Since then, the WFP has used the base to respond to events in
located next to one of the fastest-growing economic regions of the countries in West Africa, as well as in the Caribbean. During the
developing world and are allowed by the EU to charge a corporate ebola crisis, the base played a critical role in the transshipment,
tax rate of just 4%. preparation and delivery of emergency equipment and food by sea.
“The EU-approved tax sys- While its ports and airports are taking increasing advantage
tem tries to compensate for the of the archipelago’s strategic location, increasing investments in
fact that we are a small region education and training are making sure that investors here have
far from mainland Europe,” says access to a diverse and qualified workforce. Many of the region’s
Pedro Ortega Rodríguez, the re- young workers are multilingual or have strong English language
gional minister for the economy, skills—another byproduct of the tourism industry. And with
industry, commerce and knowl-
edge. “Nevertheless, we are also
in a good position to serve the E.U. LEGAL FRAMEWORK
West African market, especially
in the maritime sector.
“We are an excellent business
Fernando Clavijo,
President of the Government platform, an attractive place to
of the Canary Islands live, and a good hub from which
to connect to the rest of the
world. Our economy is already feeling the impact of the growth of
the offshore sector and the development of the African continent.”
While the 4% tax rate is an immediate attention-grabber, the
competitive advantages of the islands extend well beyond the world
of financial accounts and investment incentives. The international
Full application of the
connectivity of the Canary Islands, their communications EU legal system:
infrastructure, the availability of large pool of qualified labor, and
Data protection
their growing experience in offshore services, have all transformed
Free competition
the archipelago into the location of choice for energy companies
Financial regulations
operating in Africa and the mid-Atlantic Basin.
“We are becoming a hub for business in the region,” Ortega says.
International
“In the maritime sector, we want to ensure that the Canaries offers
anti-corruption measures:
access to world-class ports and gives businesses the perfect platform
for their operations in Africa. Many multinationals companies are US FCPA Due Diligence
already establishing bases here, in energy and mining, to serve their
African businesses.”
As an island region, transport connectivity has always been
critical to the economic development of the Canaries. In this area,
the islands’ heritage as one of Europe’s most popular destinations for
tourism and leisure has played an invaluable role: with more than three public and three private universities on the islands, 36,000
16 million tourists visiting annually, over 540 direct flights each students in higher education and thousands more attending
year connect the Canaries to the UK alone, from six international 180 professional training centers, the workforce of the Canary
airports all across the archipelago. Islands is increasingly well prepared for the specialist challenges
With such a high level of connectivity with Europe, the focus now of the future.
is on increasing air and maritime links to the African continent. “Our “Our universities and training centers are going to produce all
air connections to Africa are increasing, especially to the countries the professionals that are needed,” Ortega says. “At first, we had
that are closest to us and we are looking to expand with countries to bring in people from abroad in the energy sector, but now
that are further away in Africa.,” says Pablo Martín Carbajal, the locals are being trained and they are going to take over those
CEO of Proexca, the islands’ official agency for internationalization jobs. Our ports are full of rigs now, because operators know that
and investment. “Our maritime connections extend to almost every they will receive the high quality on time service they need at
country in West Africa and the Gulf of Guinea.” competitive conditions.”

180402ogjStarCom_2 2 3/13/18 2:41 PM

 at 4% corporate tax
Wherever they operate in the islands, thanks to the ZEC and transparency that comes
(the Canary Islands Special Economic Zone), O&G companies from setting up in an EU
committed to create jobs in the Canaries and set up subsidiaries member state may be just
here will benefit not only from the 4% corporate tax rate but from as important to companies
a range of other advantages. operating here. All businesses
Chief among them, dividends paid by entities in the islands to in the islands are governed
their parent company in most overseas jurisdictions are exempt by the EU legal framework,
from withholding tax, while companies in the ZEC are also exempt with all the protections that
from the canarian VAT (IGIC) that applies for imports, reducing implies to both companies
the cost of merchandise. The low tax scheme tool ZEC, which and individuals. Furthermore,
was authorized by the European Commission in 2000, applies all the islands are fully compliant
across the territory of the Canary Islands and has played a vital role with all EU and OECD
in the region’s economic development. norms and regulations on tax Pedro Ortega Rodríguez
transparency and tax evasion. Regional Minister of Economy,
Industry, Commerce and
Just in 2017, the ZEC Knowledge
TAX INCENTIVES authorized 136 companies to
enjoy the benefits of the special regime, who between them have
% EU corporate tax rates committed to invest 103 million euros and to create 1,640 jobs
The Canary Islands Special Zone (ZEC), offers the lowest corporate tax in the Canary Islands.
in Europe and further discounts for R&D activities. This special rate
will apply to a maximum amount of the income tax, depending on the While legal certainty and tax incentives are powerful forces
number of jobs created. Reduction of up to 90% of non-distributed net driving the economic success of the islands, it is perhaps two
profit from taxable base. Companies can also take advantage of close to
5.8 million 800 ft² of Free Trade Zones. more intangible factors that represent the region’s most important
competitive advantages: the climate and the quality of life.
Belgium 34
Speak to anyone with the fortune to live here and they will tell
France 33
you that the climate is the best in the world, while the islands
Germany 30
are home to top-tier medical and educational institutions, plus
Luxembourg 27
leisure and cultural opportunities on a par with anywhere in
Spain 25
Europe. “In the five years that we have been welcoming people
Netherlands 25
here from the offshore industry, whether from Ireland, Scotland,
Austria 25
Norway, the Netherlands, Korea or Japan, they are all stunned by
Switzerland 24
the quality of our infrastructure, our schools and our hospitals
Italy 24
when they come here for the first time,” says Claudio Lamas,
UE Average 22
founding partner of law firm Islaw Abogados.
Portugal 21
Expatriate workers and their families enjoy total personal
United Kingdom 19
security on the Canary Islands, with very low crime rates and
Poland 19
almost no incidence of tropical diseases or extreme weather
Ireland 12,5 Source: Sociedad Canaria events. “There is very little rainfall, no mosquitos, and no
CANARY ISLANDS 4% del Fomento Económico S.A.
PROEXCA, 2016 figures
hurricanes,” says Mr. Chang, partner at Islaw. “People sometimes
compare us to the Caribbean but our climate is stable and our
streets are safer. For employees and their families the safety and
the quality of life they can enjoy here is priceless.”
“The exemption on capital gains, in which dividends are As well as high levels of personal security, EU membership
included, is very important specially for foreign companies also implies a high level of professionalism and transparency,
from outside the European Union,” explains Beatriz Barrera, the supported by strong institutions and a rock-solid rule of law.
president of the ZEC. “In the Canary Islands, they obtain the Companies operating in the Canary Islands benefit from a
same treatment as European entities pro-business environment which has no rival in the region for
“A company does not make investment decisions solely due efficiency and speed of responses. “We have a very modern
to tax incentives. A geographical area has to be economically and agile property registry and commercial registry, so that
attractive. However, taxation is a very important factor. It is an companies can be set up in just two or three days. We have set
important tool for diversifying and internationalizing our economy up in a strong legal tradition and we are also an efficient and
and creating jobs in non-tourism sectors such as oil and gas.” relatively inexpensive jurisdiction,” Lamas says. “All these, and
While the tax incentives have a powerful appeal to companies it is also one of the few places in the world where you can work
operating in the Canaries, Barrera says that the legal stability outdoors every day of the year.”

180402ogjStarCom_3 3 3/13/18 2:41 PM

180402ogjStarCom_4 4 3/13/18 2:41 PM
 Boosting offshore services
S
ince the start of the millennium, riding the wave of high oil
prices and rising demand for West Africa’s rich hydrocarbon
resources, the Canary Islands have become the preferred
port of call for drillships and platforms plying the route to the
continent’s offshore fields. In their wake, the ports of Gran
Canaria and Tenerife have seen a flourishing trade develop in
technical services and supplies for the offshore sector, led in large
part by local players. Offshore services providers on the islands
offer a wide range of services including maintenance and repairs,
quality-control inspections, sheet-metal work, waste treatment,
and others. All types of bunkering services are also available
around the clock, making the islands a center for refueling in the
North Atlantic.
TENERIFE’S PORT AUTHORITY CONTINUES
TO EXPAND CAPACITY
T he Port Authority of Santa Cruz de Tenerife manages
three ports on Tenerife, as well as three facilities on
the smaller, neighboring islands of La Gomera, La Palma
and El Hierro. Its newest facility is the Port of Granadilla,
situated in the southeast of the island, which entered
operation in November 2017. Its external quay stretches for
2.5 kilometers, with more mooring space to come and seven
million square meters of land for development.
“We still have to complete the Ribera quay,” notes Ricardo
Melchior, the Port Authority’s Chairman. “By the end of
2019, we will have a port with very large capacity. Santa Cruz
could also grow more. We have ports for the next 20 years.
We have important maintenance and repair services [and] are
growing at a significant pace. We used to have six companies
two years ago and we now have 70.”
180402ogjStarCom_5 5
The Canary Islands service an average of 25 rigs/year
Compared to competitors on the African mainland, the islands
enjoy a series of strategic advantages: world-class air, maritime
and telecoms connectivity, very competitive fiscal incentives and,
most importantly, membership of the European Union, with all
the legal guarantees and stability that goes with it.
“The main reasons to set up base here were obvious—the
location and the political stability,” says Odd Are Tveit, CEO
of Norwegian subsea supplier Otech and of GCSB, a local joint
venture with developer Satocan. Other international services
companies who have established operations in the Canary Islands
include Korea’s Hyundai and the UK’s Rolls-Royce Marine, while
IOCs such as Chevron, Petrobras and Total regularly use the
archipelago’s suppliers to service their rigs and vessels.
The Port Authority cur-
rently has one floating dock
in place and is about to
bring a second facility from
a local company, Tenerife
Shipyards, onstream, mak-
ing it the only place in the
mid and South Atlantic Ricardo Melchior
that can repair big vessels, President of Port Authority of
Melchior says. The island Santa Cruz de Tenerife
also benefits from great air,
maritime and telecoms connectivity with the biggest nations
in West Africa, including Côte d’Ivoire, Gambia, Nigeria and
Senegal: “Geographically we are in Africa, our administration is
in Europe, and our emotions are in America,” he smiles.
3/13/18 2:41 PM
 PROXIMITY TO STRATEGIC PORTS UP TO 18 OFFSHORE SERVICES AVAILABLE
Distance by sea from the Canary Islands

To Nigeria > 7 days PORT OF LA LUZ PORT OF SANTA CRUZ

To Aberdeen/ Stavanger > 6 days LAS PALMAS DE TENERIFE
To Houston > 13 days
3.008 ha anchorage area 9.176 ha anchorage area
17 km quays and berths 16.8 km quays and berths
5-24 m draught range 6-25 m draught range
8 tug boats 11 ro ro boarding ramps
16 ro-ro boarding ramps

Storage facilities Storage facilities

424.600 m covered area
2
40.000 m2 open air area
158.544 m3 cold area
332.000 m3 bunker area
48.387 m2 covered area
72.357 m2 open air area
176.189 m3 cold area
179.864 m3 bunker area

As the hydrocarbon boom intensifies, the provision of
specialist training is also developing fast, with hundreds of ISO-
certified courses taught on the islands to thousands of energy
sectors employees. Homegrown providers, such as Grupo Stier
(see p.13), may soon have to vie for a share of the lucrative
marketplace with global names such as Maersk Training.
According to the latest data available from the regional
government, offshore services currently employ about 45,000
workers, with 20,000 new jobs expected by 2020. Over 25 rigs
and drillships were serviced in the islands last year, generating an
average income of 10 million euros per oil platform.
The Port of Las Palmas is emerging as the center of the region’s
services industry, with local shipyard Astican at its heart. Astican
provides its offshore clients with a full-service offering that covers
nearly all their requirements. The company has a Syncrolift dry-
docking system with a lifting capacity for vessels up to 36,000
DWT; seven docking lanes, 600-ton mobile cranes, and a
deepwater quay covering 140,000 square feet with a draft of 68
feet, an extended berthing area of almost 900 feet and close to
200 feet width. The facility has an open-door storage area, two-
thirds of which is bonded and hence free from customs duties.
“We developed a concept that was used in the industry a few
years ago: the one-stop-shop philosophy,” says Germán Suárez
Calvo, Astican’s CEO. “One of our main objectives was to cut costs
to rig owners coming to Las Palmas, not just to our shipyards…
and also to third parties like OEMs. That way, we remove hidden
costs and inefficiencies.”
Astican’s expertise extends from conversion projects to the
installation of electrical and HVAC systems to mechanical, piping
and steel work. Its team of 200 engineers and professionals
includes divers, a flying squad and rope-access specialists. An
IT company associated with the group—INERZA—provides
telecommunications, virtual private networks and cybersecurity
services. Astican is also involved in decommissioning, with

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 a customer portfolio that reads like a Who’s Who of the West
African energy business. Foremost among its partners is global
leader Rolls-Royce Marine. In 2010, a Norwegian rig owner
decided on Las Palmas as a base for its West African projects, but
rather than send thrusters back home for repair, a costly exercise
given the size of the equipment, it suggested that Astican talk to
Rolls Royce. “We want to replicate this with the rest of the value
chain; we have a long term commercial agreement with risers and
we are now chasing Schlumberger, NOV, General Electric; we are
talking to the big guys,” Suárez Calvo says.
Decommissioning is another growing activity for Astican. “We
have been cooperating with Transocean and we are studying the
decommissioning of 15 platforms for Petrobras”, Suárez Calvo
says. “We have to identify what part of the job should be carried
out in western countries.”
Another local company based in Las Palmas is also seeing
strong potential for decommissioning and shipbreaking services,
as operators looking for a more socially and environmentally
way of disposing of their platforms at end of life. With increased
concern about the human environmental toll of scrappage
“Over the last 15 to 20 years,
Canarian ports and port companies have
had to develop a business fabric to serve
the energy sector.”
Antonio Castañeda, Alfaship’s Manager
services in countries such as Bangladesh and Turkey, the Canary
Islands are well positioned to become the first port of call for
decommissioning vessels in the Atlantic Basin.
“We could carry out 100% of the decommissioning procedure,”
says José Mancebo, Operations Director at Logiscrap. “We are
already in discussions with a potential business partner who
wants us to decommission one of their rigs here in Las Palmas.
Unlike other countries, in the Canary Islands we have to abide by
strict environmental and labor regulations.”
From decommissioning specialists to ship agents, businesses
in the oil and gas value chain in the Canaries are confident that
they can provide world-class
services while also reducing
costs. “The companies have
increasingly demanded cost
savings, so we carry out all the
logistic processes and we don’t
outsource to third parties,”
explains Alfaship’s Manager,
Antonio Castañeda. The family
business is celebrating its 30th
anniversary. With offices in 10
Spanish ports, including two
on the Canary Islands, Alfaship
offers a diversified catalog Germán Suárez Calvo
of agency services. Alfaship’s CEO, Astican
businesses include an offshore
agency division in Las Palmas and Tenerife, which serves traffic in
the area, a brokering and chartering department, and a customs
brokerage and a legal affairs unit.
“Over the last 15 to 20 years, Canarian ports and port companies
have had to develop a business fabric to serve the energy sector,”
says, Antonio Castañeda. “From the start, it was clear this would
imply substantial future traffic. So, the port has adapted in order to
be attractive for shipowners and become a strategic point for rigs.”
Iryna Krasnikava, commercial manager in charge of business
development at Alfaship, says the company has followed market
trends closely. “We have moved in synch with the oil and gas
market in its development. The first rigs that arrived did so
for bunkering. Later, the infrastructure for repairs and service
provision began specializing in the offshore industry. Then,
personnel transfers and logistics began to develop.”
As demand for services evolved, so did Alfaship, Castañeda
says. “The stage that is ahead of us is very interesting because we
can apply all the know-how we have acquired during these years.
Besides of our vast experience with O&G companies, we have a
good in-house training program, so I dare say we are ready for

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180402ogjStarCom_7 7 3/13/18 2:41 PM

 any challenges market can bring.”. Alfaship is ISO 9001, 14001,
OHSAS 18001 and TRACE-certified and works transparently to
ensure that clients, including the Noble Drilling, Ocyan, Boskalis,
Siem Offshore, Allseas, know they have a partner they can trust.
Elsewhere on the islands, big names including CGG Veritas,
PGS, Polarcus and SDV are regular users of services from
Canarship, a maritime agency and integrated logistics provider.
Established in 2000 in Tenerife and part of the Romeu Group,
Canarship has rapidly expanded to Gran Canaria and now has a
presence in all of Spain’s major ports. “We started serving mainly
the seismic industry which was stopping here before going to
West Africa or Brazil,” explains Javier Delgado, the company’s
director. “Then, we became involved in the rig business and
signed agreements with some of the largest companies.”
“They always think the Canary Islands are beaches, fun and a
tourism paradise. They are quite surprised when we start to talk
about the potential of the ports, the repair facilities and all the
advantages we have here.” In recent years, Canarship has signed
service agreements with drilling contractors such as Ensco,
Seadrill, Ocean Rig and auxiliary rig companies like Floatel, and
it has expanded its team to cope with rising demand.
Terminal TCT, Santa Cruz de Tenerife
shipping agent with a rapidly growing bunkering, cargo handling
“In our offices at the Canary Islands we
and logistics offering. “Demand just for bunkering fuels in the
have a professional team that includes Canary Islands is rising by rates of 5 to 7% annually, while we
naval engineers.” are also supplying new services for oil rigs,” Mayor says. “But I
think that both the Port of Las Palmas in general and Atlansea
Javier Delgado, Canarship Director are prepared. The port has been able to expand and adapt and
I think that it will become one of the main ports in the region
“In our offices at the Canary Islands we have a professional for stopovers, repairs and operational bases. With qualified
team that includes naval engineers in order to be more specialized personnel and a port in great condition, we are certainly up to
and able to offer more value in our agency service,” Delgado says. the challenge. We are reliable, cost-competitive and strategically
The services industry in the Canary Islands are responding well located, with ports that can attend to all the needs of the energy
to the surge in demand, says José Mayor, CEO at Atlansea, a local industry in Africa.”

PORTS AUTHORITY OF LAS PALMAS SETS SIGHTS ON SERVING

OPERATIONS SECTOR

L ying on the main maritime route from Europe to the

Gulf of Guinea, the port of La Luz in Las Palmas, on
Gran Canaria, is an ideal base for drillships serving offshore
A joint-venture between
Norway’s Coast Center Base
and Canarian company
fields. At the start of 2018, nine vessels were moored in the Zamakona signed a $22
port, which can handle ships up to 100,000 tons. La Luz million deal in 2016 to
is now ramping up its facilities to serve the fast-expanding develop a platform and
operations sector. FPSO repair center at La
According to Luis Angel Ibarra, the President of the Ports Luz. The Ports Authority
Authority of Las Palmas, thanks to investments already aims to award a concession
committed, La Luz’s Reina Sofia quay will be extended by to the JV this year that will
350 meters. Once completed, the port will have over 2,000 allow it to offer cutting-edge
meters of deepwater mooring space, more than any other services from the La Esfinge Luis Angel Ibarra
President of the Ports Authority
facility on the neighboring continent. The Port Authority is quay: “The offshore sector of Las Palmas
now studying plans for a new $37-million dry dock, attached has experienced substantial
to the Reina Sofa quay, for which it is looking to attract growth over the last five years,” Ibarra points out, “and this will
private-sector capital. continue to a larger extent over the next three or four years.”

180402ogjStarCom_8 8 3/13/18 2:41 PM

 Free zones set their sights high
A s well as the special corporate tax rate that applies across the
entire archipelago, the Canary Islands offer two of the largest
free zones in Spain, on the islands of Gran Canaria and Tenerife.
In both free zones, companies are able to store, process and
distribute their goods without incurring duties or indirect taxes,
while bureaucratic procedures have been streamlined and red
tape cut to a minimum. The establishment of the two zones has
consolidated the islands’ position as a natural platform for serving
markets in West Africa.
In recent years, companies in the oil and gas sectors have
expanded their presence in both zones. At the free zone at the
Port of Las Palmas, which is the older of the two, local ship repair,
maintenance and logistics specialists such as Transcoma, which
brought Transocean to the Las Palmas Port, are expanding their
services to the offshore sector. Oryx Energies of Switzerland has
built a terminal with over 220,000 m3 capacity of bunkering
fuels at the port.
“About 30 companies in the oil and gas sector are currently
operating here,” says Carlos Ester Sanchez, president of the Gran
Canaria Free Zone. “Some of them are already planning to expand
their operations. It shows how well our system works for them.
The connectivity of the port and the facilities that are available are
very attractive to energy businesses.”
With a depth of 30 metres, the port can welcome the largest Free Trade Zone of Santa Cruz de Tenerife
cargo vessels on their way to and from Africa, mainland Europe transhipment of goods from duty-free zones on both sides of the
and the Americas. “As a door to Africa for the rest of the world, ocean. With the Canary Islands at its heart, the corridor would
we are looked on favourably by companies who want to make us reinforce Tenerife’s strategic role in the transport of merchandise
their logistics hub,” Ester Sanchez explains. “And when it comes between the Americas, Europe and Africa.
to repairing ships and offshore platforms, the Las Palmas Port is So far, more than 150 free zones from 36 countries in Europe,
on the cutting edge.” Africa and the Americas pledged their support. “We initially
In Tenerife, the free zone’s ambitions extend well beyond the proposed just a mid-Atlantic corridor,” says Ricardo Melchior, the
immediate region. The free zone is spearheading the creation of head of the port authority of Tenerife. “Interest has been so high
a Free Corridor of the Atlantic which would enable the tariff-free that we have extended the proposal to cover the whole Atlantic.”

180402ogjStarCom_9 9 3/13/18 2:41 PM

 From Tenerife…
I
n today’s oil and gas industry, successful exploration, profitable
production and the effective management of downstream
services and marketing all depend as much on computing
power and data analytics as on the traditional hardware of the
energy sector.
In Tenerife, home to the second most powerful supercomputer
in Spain and to a growing network of technology parks, businesses
across the upstream and services sectors can enjoy access to all the
processing power and connectivity they may need—plus the staff with
the technical skills to make sure that they get the most out of them.
“Technology is changing the geography of the Canary Islands,”
says Carlos Alonso Rodríguez, the President of the Cabildo of
Tenerife, the island’s governing council. “With the growth of our
Information Technology and Communications sector, physical
“Our cable connectivity, our datacenter
and our supercomputer represent a
very strong platform for attracting
companies to Tenerife.”
Carlos Alonso Rodríguez, President of the Cabildo of Tenerife
distance is becoming less relevant and our communications
infrastructure is becoming more competitive.”
Elected in 2013, Alonso has made investment in innovation
and communications the centerpiece of his economic plan for the
island, the largest and most populated in the entire archipelago.
Alonso’s so-called Tenerife 2030 strategy, which enjoys a budget
of 100 million euros a year, is focused on transforming the island
for the digital age by investing in education, innovation and
digital infrastructure.
“Tenerife 2030 is a smart island strategy,” Alonso explains. “It
represents our long-term vision for Tenerife. Its aim is to develop
the capacities of our human talent and above all to prepare
younger people for a complex, fast-change and globalized world.
It is about supporting creativity, innovation and entrepreneurship
and about moving towards a digital society.
“The oil and gas industry is completely reliant on the management
of information and data. In Tenerife, we have the qualified people
and the infrastructure that is needed to process this data and create
value. When I talk about Tenerife to businesses, energy companies
are among the first to understand this.”
The cornerstone of Tenerife’s digital economy is formed by a
fast-growing network of submarine cable connections to Africa,
Europe and the Americas. Run by a number of independent
operators, these connections provide the island with world-
class data transmission capabilities and speeds, plus a high
degree of redundancy. For example, one 17,000km connection
passes through Tenerife and several West African countries on
its journey from France to South Africa, delivering companies on
the island with the highest degree of international connectivity in
the archipelago.
Linked up to all these submarine cables, the jewel in the crown
of Tenerife’s ICT infrastructure is D-ALiX, a giant datacenter
that is largely powered by wind and solar energy. The facility
is situated at the ITER complex, an institute which focuses on
technology and renewable energy and which is also home to
the second most powerful supercomputer in Spain, with total of
17,800 computing cores and
36 TB of memory. Combined,
the technologies on offer at
D-ALiX provide organizations
of all kinds and sizes with the
complete range of colocation,
hosting and processing
services they may need to
expand their businesses. For
example, companies operating
in the African energy sector no
longer have to send data all
the way back to continental
Europe but can store, process Carlos Alonso Rodríguez
President of the Cabildo of
and analyze their data in Tenerife
nearby Tenerife. Furthermore,
thanks to its use of power from local photovoltaic plants and wind
farms, the site is also one of the greenest datacenters in the world.
“D-ALiX has connected Tenerife to the rest to the world at
low cost and with a high quality service,” says Antonio García
Marichal, the minister in charge of innovation, education, culture
and sports on the island council. “We have many foreign clients
who are using the supercomputer to process the data they gather
in other countries.”
For O&G companies looking to simulate seismic basins or
increase the efficiency of drilling through data analytics, in
complete security, Tenerife has no competition in the region.
In the near future, García Marichal adds, the island will expand
its existing network of connections: consortia of investors are
currently assessing the construction of new submarine cables
to the Americas and enhancing links to Portugal. Another, even
more powerful supercomputer is also in the works.
The Institute of Technology and Renewable Energies supports innovation in Tenerife

180402ogjStarCom_10 10 3/13/18 2:41 PM

 to the world!
As well as developing the computing and communications most talented and creative workforce in the region. “Oil and
infrastructure that are now so sought after by energy businesses, gas companies see that we have a long-term strategy in place for
Tenerife is also investing heavily in giving young people developing our human capital,” Alonso says. “When they come
new skills not only in technology but also in languages and here, they understand that we are providing them with a very
entrepreneurship. The island is already home to an increasingly good ecosystem for their long-term investments.”
multicultural and multilingual
talent pool as well as two
well-rated universities and a
growing network of research
institutes and technology
parks. The Tenerife Science
and Technology Park, which
currently runs two business
incubators in the Santa Cruz
de Tenerife Exhibition Centre
and in the University of La
Laguna, is also developing a
new site in Cuevas Blancas in
the north of the island.
“The spaces that the
technology park offers are
almost at 100% occupancy
today, so we are developing
new and more advanced
infrastructure to welcome
additional companies to the
island,” says García Marichal,
who is also the CEO of the
park. “A lot of biotechnology,
IT, animation studios and
production companies are
setting up at our sites and
accessing a wide range of
incentives, such as the use
of centers for professional
training.”
Looking further to the future,
the current government’s aim
is on the younger generation.
As part of the Tenerife
2030 plan, schoolchildren
will be given the chance to
study abroad and will receive
education at the Tenerife
Science and Technology Park
in STEM-related subjects such
as robotics and programming,
preparing them for high-
technology future careers in
energy and other fast-growing
sectors.
Alonso’s stated aim is to
provide Tenerife with the

180402ogjStarCom_11 11 3/13/18 2:41 PM

 A hub for R&D
F
rom pre-salt oil fields off Brazil to shale gas in the US
and high-pressure high-temperature (HPHT) wells in the
North Sea, oil explorers and producers are pushing up
against the boundaries of current industry know-how. In this
environment, research and innovation have assumed a critical
role across the energy sector, as the upstream races to develop
new technologies for finding and extracting hydrocarbons while
also reducing costs.
For most oil majors, cooperation with research institutes
and universities has become a core part of their business.
Although the Canary Islands are a relative newcomer to the
world of oil and gas, the islands’ long sea-faring tradition
means that companies in the energy sector will benefit from INFactory Building in Tenerife, an innovative business incubator
extensive expertise in maritime technology, as well as from a tax In some sectors of the energy industry, the Canaries are at
framework that incentivizes R&D. the cutting edge of innovation. The Canaries Oceanic Platform
“Companies whose activities require investment in R&D (PLOCAN) off the coast of Gran Canaria is one of the world’s
will find very favorable conditions in Gran Canaria,” says leading test centers for the research, demonstration and
Cosme García Falcón, managing director of SPEGC, the operation of marine technologies, especially technologies
economic development agency of Gran Canaria. “The direct related to marine renewable energy and underwater vehicles.
aid given by the Spanish government through the Centre for Later this year, PLOCAN aims to install a 5MW offshore wind
the Development of Industrial Technology (CDTI) and the tax turbine, which will become the first bottom-fixed offshore wind
deductions for investments in this type of costs can amount up turbine in all of Southern Europe and the first worldwide to be
to 75% of the investment carried out. installed with no need for costly heavy-lift vessels.
“Moreover, there is a very supportive ecosystem which assists “PLOCAN provides a magnificent test bed for all companies who
startups in offshore and maritime technology sectors.” want to experiment in oceanic environments,” says García Falcón.

THE JEWEL OF THE CROWN

I n the digital era, in which companies can live or die based

on their ability to access and process huge volumes of data,
one of the Canary Islands’ greatest assets may be located in
The construction of
this infrastructure, com-
bined with availability
an unassuming building in the industrial park of Granadilla, of the TEIDE-HPC su-
on the island of Tenerife. percomputer at the same
It is the D-ALiX datacenter at this site that is helping site, has served as a cata-
organizations of all shapes and sizes take advantage of the lyst for the growth of the
best connectivity and the fastest processing powers in the region’s Information and
region. The center serves as a Neutral Access Point for Communications Tech-
nology sector. Increasing
numbers of IT services Antonio García Marichal
“Large companies can use the second Minister for Innovation,
companies are using the Education, Culture and Sport,
most powerful supercomputer in Spain datacenter to offer critical Government of Tenerife
here in Tenerife” services such as managed
services and application management, all without needing
Antonio García Marichal, Minister for Innovation, Education, to invest in their own infrastructure.
Culture and Sport, Government of Tenerife “The D-ALiX project connects Tenerife and the
Canaries to the rest to the world at a lower cost and with
carriers and enterprises operating not only in the Canary better quality service,” says Antonio García Marichal,
Islands but across Western Africa: multiple submarine Tenerife’s minister for innovation. “This has led to the
cables from different telecom companies provide world-class rapid development of entirely new sectors that could
connectivity to other Canary Islands, to the African continent not have come here before because of the cost of
and to the European mainland. communications.”

180402ogjStarCom_12 12 3/13/18 2:41 PM

 Completing the value chain
W
hen one of the world’s leading suppliers of ship
designs and turbines to the offshore sector was TRAINED TO
looking for a new base for the Atlantic Basin, it did
not take long before it selected the strategically located Astican
THE HIGHEST STANDARDS
shipyard in Las Palmas on Gran Canaria.
For Rolls-Royce Marine, the port is perfectly placed to service
growth in the booming offshore market in Africa and beyond.
W ith a history in the
Canary Islands
that stretches back more
By setting up in Las Palmas, it has given rig and drillship than 20 years, maritime
owners, operators and contractors in the region easy access to services specialist Grupo
maintenance and repair facilities, helping transform the Port of Stier is one of the region’s
Las Palmas into a world-class services center. primary providers of
“We are home to a business cluster that is capable of meeting offshore training. Located
all the demands of the energy industry for repairs and logistics, on a government leased
and also for technical, professional and personal services,” says land in the Puerto de
Ida Stier
Cosme García Falcón, head of the SPEGC, the island’s economic Taliarte on Gran Canaria,
CEO Grupo Stier
development agency. the Stier Offshore Training
“We have already become a hub for rig owners,” says Germán Center provides a wide range of approved training to the
Carlos Suárez Calvo, CEO at Astican. “In Las Palmas we currently fast-growing offshore and maritime industries. The facility
have 12 rigs. In Tenerife there are 10. At a time when the oil is accredited for OPITO, the global industry standard in
majors are requesting heavy cost cuts from their providers, oil oil and gas safety. As well as offshore survival training, it
services companies can use the Canary Islands as a one-stop- also provides courses in foreign languages and specialist
shop where Original Equipment Manufacturers such as Rolls- maritime skills. Such is the success of the center that Stier
Royce are based. It is a solution which removes inefficiencies and is planning for September a second center in Tenerife
reduces costs for service providers and their clients.” focused on GWO/LMG Training.
Across the archipelago, a wave of investments in hard
infrastructure such as ports, communications networks and operations here back in 2012. Partnering with local developer
desalination plants, as well as in training and digitization, have Satocan, Otech is one of the owners and shareholders of the Gran
turned the Canary Islands into the ideal platform for servicing Canaria Subsea & Offshore Base (GCSB). The base at the Port of
the West African energy industry. Arinaga provides logistics, ship agency and facility services.
“When you think about all the training programs that we “Using our offshore facility base here, companies can store critical
have established, then it is clearly no coincidence that Rolls- parts and equipment that they can share across their operations,”
Royce or Otech chose Las Palmas,” president Clavijo says. says Odd Are Tveit, the CEO of Otech and of GCSB. “It makes
Norway’s Otech was one of the first international services sense, especially at a time when everyone is cutting costs, to have a
companies to spot the potential of the Canary Islands, starting central storage base which can be used for different regions.”

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180402ogjStarCom_13 13 3/13/18 3:32 PM


GCSB, an Otech and Satocan JV, at Arinaga Port, Gran Canaria
GCSB’s site on Gran Canaria includes more than 650 meters
of deepwater quay, with depths of up to 15 meters, enabling
a wide range of logistics and harbour services for visiting
clients. Manufacturers are also using the base to supply subsea
structures for African offshore operations.
“In our base, the port is directly connected to the logistics area.
We can transport materials and unconventional equipment directly
into our clients’ customized facilities,” Odd Are Tveit explains.
At the same time as meeting the offshore industry’s services
requirements, the islands are also investing heavily in state-
of-the-art IT infrastructure. At the same time as meeting the
offshore industry’s services requirements, the islands are also
investing heavily in state-of-the-art IT infrastructure.
ON THE CUTTING EDGE
A t a time when emerging technologies in seismic mapping,
data analytics and even artificial intelligence are making
major headway in the oil and gas sector, the technology
research in the Canary Islands represents a significant
competitive advantage. Get ready to lead the Future, reads
the slogan of University La Laguna in Tenerife; “50% of the
jobs that we will see in the future do not exist today, says
Antonio Martinón, rector of ULL; “It’s under that spirit that
we prepare our students”.
“We have the capacity to work together
with companies in the energy field
in areas such as education, training
technology and research”
Rafael Robaina, Rector, University of Las Palmas de Gran Canaria
The islands are home to university researchers for whom
R&D in the energy industry is a strategic priority. Nowhere
else in the region can companies access such a high level of
scientific talent or raw computing power. At the University of
Las Palmas de Gran Canaria (ULPGC), relationships between
180402ogjStarCom_14 14
One of the first jobs carried out last year by Techfirm Canarias
after its establishment was to implement a new telecom system
for a rig that Transocean was reactivating in Las Palmas.
“We introduced an IPTV solution to improve crew welfare,
restarted safety and security systems, and installed a new video
conferencing capability,” says Pierre de Rozario, a veteran in
oil and gas telecoms who founded Techfirm Canarias (TFC) in
2017. “We expect to play a big part in developing innovative
communications for operators in the West African region,
for example using VSAT satellite technologies and LTE/4G
broadband services.”
On the island of Tenerife, a network of science parks is
now home to a thriving ecosystem of technology startups, all
benefitting from Tenerife’s world-class broadband infrastructure
and from the support of the Tenerife 2030 strategic plan. “We
“The Port of Las Palmas is already
servicing 14 rigs a year, which shows
how competitive we are.”
Cosme García Falcón, Director General,
Sociedad Promoción Económica de Gran Canaria
have set up broadband communication networks and we have
trained personnel that can meet the needs of any company that
chose to establish itself here, just as if they had set up in Berlin or
Miami,” says Antonio García Marichal, the minister in charge of
innovation, education, culture and sports on the island council.
Platea 4D monitoring center at ULPGC
academic researchers and companies from across the energy
sector have become increasingly close.
“We have always had a lot of contact with the energy
sector, especially with the renewable energy sector,” says
Rafael Robaina, the rector of ULPGC.
One of the most impactful innovations to have emerged
from the labs of ULPGC is the Platea 4D system, which enables
companies to plan ahead for environmental emergencies
such as a spill. The software allows users to simulate risk
scenarios in 2D and 3D, based on powerful data analytics,
and to design preventative measures to minimize the threat.
The award-winning solution helps energy companies not
only to comply with legislation but also to take effective
action whenever required.
3/13/18 2:41 PM
 The next Aberdeen for
West Africa operations
A
s the depletion of reserves in the North Sea accelerates
and returns on investment plummet, the center of
gravity for the European oil and gas sector is moving
south. With new technologies opening up the West African
basin and oil prices rising again, the Canary Islands are now
in prime position to assume Aberdeen’s mantle as the energy
capital of Europe.
Few if any of the sun-starved oil workers of the North Sea
and their families would resent a move to the Canary Islands:
with 4,800 hours of natural light per year, annual average
temperatures of 22 degrees Celsius and 256 kilometers of
beaches, it is no accident that every year the islands welcome
some 16 million tourists, more than Dubai which received close CLiquid qui am reprovidebis
to 15 million in 2016. Add a well-regarded network of local and
international schools, universities and hospitals, plus leisure
options including 24 golf courses and four national parks, and it
is not hard to see why the islands are becoming one of the most PLOCAN, the Oceanic Platform test site in Gran Canaria
sought-after destinations for oil and gas expatriate workers. can also get their thrusters, risers and IT systems serviced. Every
“We are in a safe location, with good educational facilities part of the value chain is located here.”
and an unbeatable quality of life,” regional president Fernando It is not only its connectivity and maritime infrastructure that
Clavijo says. “It is a very comfortable place for energy workers are attracting international energy companies to the Canary
to live in with their children.” Islands. As an island region, with few natural resources of its
Although the islands cannot yet match Aberdeen for the own, the Canaries have made it a priority to invest in the skills
strength in depth of oil and gas services, their long tradition in of its talented and creative people.
maritime trade has endowed them with world-class ports and “We are developing an ambitious programme of specialization,
ship maintenance companies. Leading international offshore linked to the new demands of the value chain of the sector,”
specialists are also setting up operations in the islands, including explains Cosme García Falcón at SPEGC, the economic
Rolls-Royce Marine, Otech of Norway and GEV Group of the UK, development agency of Gran Canaria.
injecting new specialist capacities into the fast-developing sector. More multilingual and outward-looking than other parts
“We have very convenient logistics and outstanding technical of Spain, the people of the Canaries are now seizing the
capabilities,” says Germán Suárez Calvo, the CEO of leading opportunities of a new chapter in their history.
local shipyard Astican. “When customers come to the Port of As Carlos Alonso, president of the Tenerife Council says, “As
Las Palmas for ship maintenance at the Astican shipyard, they Africa continues to develop, it’s a win win situation for us.”

www.logiscrap.com

180402ogjStarCom_15 15 3/13/18 2:41 PM

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THE CANARY ISL ANDS

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180402ogjStarCom_16 16 3/13/18 2:41 PM