oil review africa 5 2012

AfricaAfricaCovering Oil, Gas and Hydrocarbon Processing

Volume 7 Issue Five 2012

www.oilreviewafrica.com

Europe m10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

■ Geology - p40 ■ Gas - p42 ■ Exploration - p46 ■ Technology - p58

Nigeria -independents

breaking through

Challenges andopportunities ofAfrica’s O&G

Ghana’s localcapability

South Africa - benefitsfrom Mozambique’sgas fields

Managing theassembly line

Corrosionmanagement

New generationvessels

Understanding subseaseparation

Waste management

Scott Aitken, Co-Chief Executive OfficerAtlantic Energy.See page 20.

ORA 5 2012 Cover Final_cover.qxd 12/10/2012 14:51

South Atlantic Petroleum

By building strong and diverse joint venture partnerships, we pride ourselves in continuously developing our

deepwater exploration capabilities which are being deployed in exploring over 60,000km2 of operated

acreages in sub-Saharan Africa.

Block 1(Benin)

Juan de Nova (T.A.A.F.)

Belo Profond (Madagascar)

OML 130(Nigeria)

S01 ORA 5 2012 Start_Layout 1 02/10/2012 15:53

Oil Review Africa Issue Five 2012 3

Editor’s noteJUST AS THE 20th century was the age of oil, the 21st could prove to bethe age of gas. The east coast of Africa has yielded a series of hugediscoveries over the past couple of years, with the biggest finds offshoreMozambique, and now Tanzania. The threat of piracy might loom large,but it has not prevented a new scramble for east Africa, led by some ofthe world’s biggest oil companies. Suddenly Mozambique and Tanzania,which until recently did not even feature on the world energy map, havebecome some of the gas industry’s hottest real estate. And with theregion still relatively unexplored, there could be plenty more where thatcame from.

Meanwhile, on the west coast, The Nigerian draft Petroleum IndustryBill has been hailed as a landmark opportunity to introduce a new era ofreform in the country’s oil and gas industry, where the biggestbeneficiaries will be the indigenous companies, who are already breakingthrough the shadows to compete with the IOCs.

In Ghana too, steps are being taken to increase the efforts to enforcethe government’s local content policy.

The Seven Borealis helideck is notable as the largest offshore helideck in production.

ColumnsIndustry news and executives’ calendar 4

AnalysisAfrica’s O&G: Challenges and opportunities 10Interview with Rolake Akinkugbe, head of EcoBank’s energy research.

Gas grabs the headlines again 12Crude markets: Low expectations or high risk? 14Who benefits from the east coast gas bonanza? 16

Country FocusNigeria 18After years in the shadows of the international oil companies, Nigeria’s independentsare breaking through.Deizani Alison-Madueke explains the PIB.

Ghana 28Local capability in all aspects.

South Africa 32Mozambique’s gas fields - a boon for Mossel Bay’s gas-to-liquids refinery?

Libya 36Libya targets oil production to increase to 1.8mn bpd in 2013.

E&PNews and developments 44Drilling giants reach new depths as offshore exploration evolves.

DownstreamNews and developments 50A round-up of recent downstream news from around the region.

LogisticsManaging the assembly line 54Logistics remains one of the greatest tests oil companies face in Africa, especially intough operating areas like the Niger Delta.

TechnologyCorrosion Management 56Long-term coating solutions to stop CUI.A step change in corrosion monitoring.

Deep well challenges: The hunt for black gold 60Understanding subsea separation 68Disposing of the unwanted elements brought to the surface during o&g production.

New-generation vessels 72A new generation semi-submersible vessel is changing the game.An advanced vessel for West African pipelay.

Innovations 80

EnvironmentalFrom ‘waste problem’ to ‘valued resource’ 78

A leading light in Nigeria’supstream industry is Oando plc, thecountry’s biggest indigenousintegrated energy player.

Challenges andopportunities ofAfrica’s O&G

Ghana’s localcapability

South Africa - benefitsfrom Mozambique’sgas fields

Managing theassembly line

Corrosionmanagement

New generationvessels

Understanding subseaseparation

Waste management


Volume 7 Issue Five 2012

www.oilreviewafrica.com

10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

Scott Aitken, Co-Chief Executive OfficerAtlantic Petroleum.See page 20.

Nigeria -independents

breaking through

■ Geology - p40 ■ Gas - p42 ■ Exploration - p46 ■ Technology - p58

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

Contents


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Oil Review Africa Issue Five 2012

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E x e c u t i v e s ’ C a l e n d a r 2 0 1 2OCTOBER

10-12 Upstream & Downstream Oil and Gas Expo 2012 ABUJA www.expowestafrica.com

12-14 Oil and Gas Recruitment CAPE TOWN www.eliteic.net

16-18 TOG TRIPOLI www.wahaexpo.com

16-18 Lagos Power LAGOS www.lagos-power.com

17-18 DRC Oil & Gas FORUM KINSHASA www.oilgas.ipad-africa.com

22 - 25 Artificial Lift Conference and Exhibition CAIRO www.spe.org

23-24 Oil & Gas Upstream Logistics & Supply Chain Conference 2012 JOHANNESBURG www.fairconsultants.com

23-25 Practical Nigerian Content PORT HARCOURT www.ncipnc.com

24-26 Tanzania Mining, Energy/Oil & Gas and Infrastructure Indaba ARUSHA www.tanzaniaindaba.com

29-30 Global Energy 2012 GENEVA www.globalenergygeneva.com

29-2 Nov 18th African Oil Week CAPE TOWN www.petro21.com

NOVEMBER4-6 Algeria Future Energy ALGIERS www.algeria-future-energy.com

5-7 Logistics West Africa LAGOS www.cwc-logistics.com

5-8 ADIPEC 2012 ABU DHABI www.adipec.com

6-8 Power-Gen Africa 2012 JOHANNESBURG www.powergenafrica.com

11-15 Nigeria Oil & Gas Exploration LAGOS www.nape.org.ng

12-14 The East Africa Oil and Gas Summit NAIROBI www.eaogs.com

20 OPITO’s Third Global Conference to Focus on Managing the Safety Chain ABU DHABI www.opito.com

20-22 MPC 2012 TRIPOLI www.mpc2012.com

21-23 Sudan Oil, Gas and Energy Exhibition KHARTOUM www.expoteam.info

27-29 Côte d'Ivoire Oil & Gass ABIDJAN www.cotedivoireoilandgas.com

27-30 World LNG Summit BARCELONA www.world.cwclng.com

30-2 December Oil & Gas Recruitment Summit LONDON www.eliteic.net

2013FEBRUARY

4 7th Sub Saharan Africa CAPE TOWN www.petro21.com

18-21 Nigeria Oil & Gas ABUJA www.cwcnog.com

MARCH11-13 Mozambique Gas Summit MAPUTO www.mozambique-gas-summit.com

19-21 Offshore West Africa ACCRA www.offshorewestafrica.com

19-23 ARA Week 2013 MARRAKECH www.ifrra.org

26-28 5th African Petroleum Conference and Exhibition LIBREVILLE www.cape-africa.com

APRIL9-11 Ocean Business SOUTHAMPTON www.oceanbusiness.com

Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

WITH OVER 900 delegates from 75 countries and 85presentations from leading speakers representingindependents, national oil companies, governments,licensing agencies and banks, the 19th Africa Oil Week willtake place from 29 October - 2 November 2012 at the thePavilion Conference Center in Cape Town, South Africa.

The Global Pacific & Partners' event will be held alongwith the 14th Scramble for Africa Strategy Briefing, the 47thPetroAfricanus Dinner, the 9th African Independents Forumand the 19th Africa Upstream Conference, ending with thetraditional 'braai' (barbeque) on the Cape waterfront.

Showcase presentations will be made by key companiesand investors in Africa. For instance Dr Duncan Clarke,chairman and CEO of Global Pacific & Partners, will talkabout future opportunities for independents in Africa. Duringthe Upstream Conference new explorations and discoveriesin Equatorial New Guinea, Nigeria, Mozambique and theMaghreb countries will be revealed. Executive vice-president, Ian Cooling of Anadarko will tell of theexploration journey his leading super-independent madeacross the continent during the PetroAfricanus Dinner.

Many of the leading players involved in the EasternAfrica acreage and gas boom are either on the speakerprogramme or have registered as delegates andexhibitors.

Pavilion Conference Centre in Cape Town.

Africa Oil Week to reveal African future

ZAMBIA HAS AWARDED a US$500mncontract to Trafigura, to supply thecountry with petrol and diesel for oneyear, according to energy permanentsecretary, George Zulu.

Trafigura will supply Zambia with216mn litres of petrol and 21mnlitres of diesel during the contractperiod starting from October, Zulusaid in a statement.

“The country is now assured of astable and continuous supply of fuel,”he said. Zulu added that thegovernment was still talking tobidders for a separate contract tosupply Zambia with 1.4mn tonnes ofoil over two years.

Trafigura signs$500mn Zambia oil contract


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PIPELINE EQUIPMENT ANDservices firm TD Williamson(TDW) has announced thesuccessful completion of a hottapping operation offshoreAngola on behalf of PonticelliAngoil The project, which was TDW’sfirst in Angola, has created apoint that will allow a live flareline to be safely connected to adeposit line attached to a floating production,storage and off oading (FPSO) vessel.Rudy Lenom, project coordinator for TDW in Africa,explained, “By connecting the two lines, theoperator will be able to burn – or flare – anyexcess associated natural gas that is released fromthe oilfield during production.”Despite the cramped working conditions upon theFPSO vessel, TDW took a total of three days to

complete the project, andproduction was at no pointshut down.Ponticelli Angoil projectmanager Herve Cardeau said,“With the requirement that thehot tap operation be carriedout quickly and safely withoutshutting down production, wewere extremely satisfied withTDW’s ability to achieve this

so efficiently, especially in such a small space.“It meant that we realised considerable savingsin time and costs, especially in comparison tothe costs that would have been incurred had webeen required to shut down the line, even for afew hours.”Looking forward, Ponticelli Nigeria Ltd hascommissioned TDW to carry out a series of hottapping operations offshore Nigeria.

6 Oil Review Africa Issue Five 2012

SHELL HAS NETTED US$400mn from the disposal of itsstake in Nigerian onshore block OML 34 after completingthe sale to an indigenous consortium as part of itsdivestment of assets in the volatile Niger Delta region.

ND Western, which comprises Niger Delta Petroleum,Walter Smith and Petrolim, is acquiring Shell’s 30 per centinterest in the lease, having also gained a 15 per centstake from Total and Eni to give it a total of 45 per cent.

Nigerian Petroleum Development Corporation willassume control of the block with a 55 per cent stakeinherited from its state-run parent NNPC.

OML 34 covers 950 sq km in Delta State and includesthe Utorogu, Ughelli and Warri River fields and relatedfacilities, with combined production of about 300 mmcfd

of gas and 15,000 bpd of oil and condensate.The latest disposal by Shell follows the recently

completed US$100mn sale of its interest in OML 40 toElcrest.

The OML 34 sale is the seventh such transfer ofNigerian leases carried out by the Anglo-Dutch supermajorsince 2010 as it curbs its exposure in the troubled oilproducing region, where its operations have been hit bymilitant activity and crude theft as well as environmentalissues.

However, Shell said in a statement that it “remainscommitted” to maintaining a long-term presence inNigeria, both onshore and offshore.

MARITIME TRAINING SPECIALIST Seagull, has securedLiberia’s approval for its unique security training package.Liberian approval comes little more than a month afterSeagull announced that it had been awarded NorwegianMaritime Authority (NMA) approval for the new securitytraining package, which is to be made available in October.

Receiving Liberian approval so shortly after gettingNMA approval underscores industry recognition of theimportance of Seagull’s courses in ensuring seafarers aretrained properly in all security matters. Shipowners cannow be confident that their seafarers can demonstrate thenecessary competency and proficiency.

The package complies fully with the Manilaamendments to the STCW Convention and Code, whoserevised version introducing more stringent requirements foronboard security training with particular regard to attacksby pirates came into force in January this year.

Under the amendments, all seafarers must haveapproved ship security training, varying according to theirlevel of responsibility. They must receive generic securityawareness and familiarisation training, while those withspecific security-related roles must have appropriate

training for their role. The new Security Onboard training system offers three

courses certified by Norwegian classification society DetNorsk Veritas through the SeaSkill programme.

Seagull has developed two new CBT training levels. Level1 addresses security-related familiarisation and awareness forall seafarers and Level 2 covers the requirements of seafarerswith designated security duties. The existing SSO course, thedesignated Level 3 of the Seagull Security Onboard trainingsystem, has also been updated.

Level 1 includes two e-learning modules; one onsecurity awareness and one on piracy and armed robbery.These are backed up by a work book including a securityfamiliarisation checklist. Level 2 comprises an onboardcourse for personnel with security duties, which includesthe same two e-learning modules on security awareness,and on piracy and armed robbery.

Level 3 training comprises the same two modules asLevel 1 and 2, CBT 115 Security Awareness and CBT 156Piracy and Armed Robbery, with the addition of a specificSSO e-learning module and workbook. This is deliveredthrough the CBT 121 Ship Security Officer course.

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Shell cashes in OML 34 chips

Liberia approves Seagull security training

Hot tapping success offshore Angola

A TANZANIAN PARLIAMENTARYcommittee chief has said thecountry’s PetroleumDevelopment Corporation (TPDC)could be split into a regulatorand a national oil company underimpending legislative reforms. "TPDC, as it is now, has massiveconflict of interest as it is both aregulator and investor at thesame time ... This creates a lot ofinefficiencies," Zitto Kabwe,chairman of the parliamentarypublic corporations accountscommittee, which oversees therunning of state agencies, toldReuters.The region's second biggesteconomy has said it expects tohave the country's first-ever gaspolicy in place in November andis drafting a natural gasutilisation master plan andlegislation to regulate theindustry.A keenly-awaited deep-waterlicensing round originallyscheduled for September hasbeen postponed pending aparliamentary vote on the newgas policy.Zitto said the auditing of actualcosts incurred by oil and gascompanies was a big challengefacing the sector."The proposed national oilcompany must take upgovernment shares in privatecompanies with oil blocks,while the regulatory authoritymust enter into contracts andmanage these contracts,including the auditing ofcontracts," he said.Many industry alarm bills wereringing when newly-appointedMinister of Energy & Minerals,Sospeter Muhongo, declared areview of all oil and gas contractsentered into by the TPDC.Some politicians and civilsocieties have called for amoratorium on the issuance ofnew oil and gas explorationrights until Tanzania caneffectively manage its gasreserves.In June, Tanzania nearly tripledits estimate of recoverablenatural gas resources to up to28.74tcf from 10 trillionfollowing recent majordiscoveries.

Tanzania’s TPDC‘may split into two’


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THE UGANDAN GOVERNMENT has said thatits estimated oil reserves in the LakeAlbertine Rift basin have increased from 2.5to 3.5bn barrels, following months ofrigorous appraisal and drilling activities.Ernest Rubondo, the head of the country'sPetroleum Production and Explorationdepartment, said that over the past severalmonths oil exploration companies have appraisedvarious wells in blocks 1 and 2, boosting thepotential of the basin."I can confirm that the our reserves haveincreased to 3.5bn barrels," Mr. Rubondo

said, adding that the basin still has potentialfor more discoveries.Blocks 1 and 2 are operated by Total andTullow Oil respectively. Uganda firstannounced commercial oil in the basin in2006, but the East African nation is yet tostart crude pumping amid a spat withcompanies over the oil production plans andrefining options. Tullow, Total and Cnoocsaid earlier this year that they would investat least US$10-12bn to develop the oilfields by 2017.The government has appointed a panel to

review and approve the oil developmentplans but it has not yet indicated when theplan is likely to be approved. According toTullow, first oil output is expected 36 monthsafter the approval of the plan.

PETROSA, SOUTH AFRICA'S national oilcompany, has purchased Sabre Oil andGas Holdings for an undisclosedamount, giving the company a stake inGhana’s offshore Jubilee fieldThe company also bought out Sabre’sinterest in the Deepwater Tano and WestCape Three Points blocks, in Ghana.The Jubilee oil field is located 60 km offshore and is the largest field inGhana, with total proven reserves of around 600mn barrels. The Deepwater Tano and the West Cape Three Points have existing oil and gasdiscoveries, for which development plans are in progress, according to PetroSA.Consent for the purchase was granted by Ghana’s energy minister, Dr JoeOteng-Adjeim, and followed a bidding process that shortlisted PetroSA alongwith two other international oil companies.PetroSA’s chief executive officer, Nosizwe Nokwe-Macamo, said theacquisition was part of the company’s strategy to increase its African footprint.“This deal provides PetroSA with a unique opportunity to establish apresence in this highly prospective region,” said Nokwe-Macamo. “We arevery happy to be working with reputable partners such as Anadarko,Kosmos, Tullow and, of course, our counterparts, the Ghana NationalPetroleum Corporation. This deal provides PetroSA with a uniqueopportunity to establish a presence in this highly-prospective region.”

TOTAL HAS ANNOUNCED that it has expanded its presence in Mozambiquethanks to a farm-in agreement with Petronas that will see it acquire a portionof the Malaysian state-owned oil company's interest in the Rovuma Basin.

The deal will see Total take a 40-per cent interest in the production sharingcontract that covers offshore blocks Area 3 and Area 6 that are located withinthe Rovuma Basin, while Petronas will remain operator of the blocks.

The two blocks cover an area of approximately 15,280 sq km with waterdepths of up to 2,500 m.

While Total is already active in Mozambique and other countries in EastAfrica, the deal is further confirmation of the region's status as anincreasingly-important source of hydrocarbons. This year has already seen asix month-long takeover battle between Royal Dutch Shell and Thailand'sPTTEP for the ownership of Cove Energy – which holds an 8.5-per centstake in the Barquentine gas field in Rovuma offshore Area 1 (where theoperator is Anadarko). Both Shell and PTTEP see the potential for LNGdevelopments in Mozambique.

"After Kenya and Uganda, Total is entering into the southern part ofthe prolific Rovuma Basin, whose oil potential might equal the gaspotential of the northern part," said Jacques Marraud des Grottes, Total'ssenior vice president for exploration and production in Africa, in astatement. "The farm-in significantly strengthens our long-term presencein exploration and production in East Africa. Exploration wells areexpected to be drilled shortly."

Total buys into Mozambique’s Rovuma Basin

KENYA IS SEEKING to learn from Nigeria howto effectively manage oil revenues, accordingto the Energy Minister Kiraitu Murungi, whomade this disclosure when he led a delegationto the Department of Petroleum Resources(DPR), National Petroleum InvestmentManagement Services (NAPIMS), and NigerianAssociation of Petroleum Explorationists(NAPE) in Lagos.According to him, “Kenya has just discoveredoil and we are here to learn a good lesson fromNigeria. We are taking a copy of the country’sPetroleum Industry Bill (PIB) so we can use itto modernise our exploration and petroleumact. We have to build our capacity and improveour management efficiency to make sure thatoil revenues are properly managed betweenthe multinationals, governments and the host

communities,” he said.According to the Chairman/CEO of CamacEnergy, Dr. Kase Lawal, where Kenya is today,with the discovery of oil and now gas, they arefar ahead where Nigeria was when first oil fieldwas found in Oloibiri in 1952. He pointed outthat the minister knew what he wanted for hiscountry and how he wanted to utilise the littleopportunity of exploration in his country asthere was really nothing much to teach him asboth countries were sharing experiences asfellow Africans in a partnership mode.According to him, “we are sharing informationas partners and they are taking the bestpractices on some of the places where wedidn’t do too well at the beginning and theyare actually coming up with a blueprint on thebenefit of the country’s oil and gas sector.

“What CAMAC has done since its existence asone of the pioneers in indigenous companies inNigeria is that we have expanded into manyAfrican countries like Angola, Gabon, Liberiaand Ghana and Kenya and we are veryinstrumental in the local content vehicles.“The experience with Kenya is a natural one.One where they have done a lot of work withbest practices in other countries. So, coming toNigeria as the largest producer of oil and gas inAfrica is one that essentially summed it all.Osten Olorunsola, Director NigerianDepartment of Petroleum Resources, said:“The lesson we have learnt right now is thatNigerians need transparency andaccountability in everything we do becauseother African countries are also watching usand learning from us.”

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PetroSA acquires stake in Jubilee field

Kenya seeks Nigeria’s help in O&G sector

Uganda’s oil reserves up to 3.5bn barrels

S02 ORA 5 2012 News_Layout 1 02/10/2012 17:41

Authorised financial services and registered credit provider (NCRCP15).The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). SBSA 126901 09/12Moving Forward is a trademark of The Standard Bank of South Africa Limited

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BY THIS TIME TOMORROW AFRICA WILL HAVE PRODUCED OVER 8.8 MILLION BARRELS OF OILAnd that’s nothing compared to what the continent will be doing twenty years from now. Making the most of untapped potential will never be an easy business. It means making sure you have the most important information in the hands of the best people. Which is why the people we recruit are dedicated expertswith knowledge and understanding well ahead of their time. And after 150 years on this continent, time is one thing for whichwe’re sure there is no substitute.

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S02 ORA 5 2012 News_Layout 1 02/10/2012 17:41


WWHAT’S YOUR VIEW of thecontinent’s oil and gas sector’sprospects?

The world today is consuming around 89 mn bpd ofoil, and, in the general context that we are runningout of conventional sources of oil, in about fouryear’s time, we will need to find around an extra20mn bpd – and that is on the assumption thatthere is no level of GDP growth globally. However,if we see any economic growth we will see anincrease in global oil demand, and that’s veryinteresting from an African viewpoint because of itsemerging, frontier markets. I think African sourcesof oil, particularly frontier sources of oil, arebecoming increasingly more attractive.

What makes Africa’s frontier markets sointeresting?Africa is under-explored, and so investors find thatattractive. It’s a lesser known terrain for explorers.It’s also the competition landscape – you haveyour traditional major international oil companies,but you also have independent explorers. Tullow,for example, and the likes of Anadarko, AfricanPetroleum, African Oil Corporation, and all theothers. Then you have the indigenous oil players,but you also have national oil companies fromemerging markets. Clearly, Africa offers a near-level playing field and offers room for entry for allsorts of players.

I know you have strong views of the way theextractive industries are viewed. Would youexpand on that?This is something I feel very strongly about,particularly as someone who covers the oil and gasindustry. So many people see the extractive

industry in Africa as just an extract and exportmodel where the local population and economydoes not feel any benefit.. But I see so muchpotential for the energy sector in Africa and I thinkthat’s something governments need to tune into.

I see gas in particular as presenting hugebenefits to African economies. It will graduallyaccount for a growing proportion of the region’senergy mix and gas, more than any otherhydrocarbon, has the greatest potential impact foreconomic transformation. I’m thinking gas forpower generation in Africa, gas for fertiliser, and gasfor petrochemicals.

African governments are moving towards amodel where they impose a supply obligation,where they say a percentage of gas production hasto go into domestic supply, and the challenge ofthat is you need to have a regulatory frameworkthat supports the policy, so utility tariffs have to becompetitive, but I know some governments aremoving towards increasing tariffs over time.

This raises the subject of the new gasdiscoveries offshore Tanzania and Mozambique.Yes. East Africa now has almost 100 trillion cubicfeet of gas which will soon start to rival Africa’slargest gas reserves holder, Nigeria, which has186 tcf. The key challenge for gas as acommodity in Africa, is whether governments canthink strategically.

I think East Africa has a real advantagebecause of its geographic proximity to Asianmarkets. It would make sense to develop somesort of energy hub. I think that there are lots ofopportunities for African resources and we’ve seena high level of M&A transactions. It’s actuallyinteresting to watch the whole play for EastAfrican assets. For me, the regions within Africa,where I’m relatively bullish about prospects, arethe traditional Gulf of Guinea region and south ofthe Gulf of Guinea, where there’s been a lot ofpre-salt exploration off the coasts of Namibia,Angola and Congo (Brazzaville), as well as theEast Africa Rift system and the Rovuma Basin area– these are seeing a great deal of activity.

What are the principle challenges? It’s the same issues that crop up time and timeagain. How do you effectively manage revenue thatcomes from oil and gas, how do you ensuretransparency, how do you ensure that there’s somesort of local value creation for African countries thatproduce oil and gas? These would be my thoughts.

Rolake Akinkugbe, Head of Oil and GasResearch at Ecobank.

I’m thinking gas for powergeneration in Africa, gas for

fertiliser, and gas forpetrochemicals.

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Rolake Akinkugbe heads the pan-African bank Ecobank’s energy research. She talkedwith Oil Review Africa’s contributing editor, Stephen Williams, about this hugely excitingera for Africa’s hydrocarbon industry.

Africa’s O&G: Challenges and

opportunities

AUSTRALIA’S AGRI ENERGY has entered an agreement with Canada-listedStatesman Resources to pursue oil and gas opportunities in Africa. As part of the agreement Agri will acquire a 49.9 per cent interest inStatesman’s wholly-owned subsidiary, Statesman Africa, which wasrecently awarded a 75 per cent interest in Block 14 in north-west Sudan.Agri said the minimum expenditure over the three year term of theexploration production sharing agreement for Block 14 was US$12mn andadded it had advanced Statesman US$800,000 to provide interim fundingand would form part of its overall 49.9 per cent funding obligations.“North-eastern Africa represents an area of significant growth andactivity in the oil and gas sector and the 100,000 sq km explorationblock secured in northern Sudan is a significant entry point for a

company of our size,” Agri managing director Gregory Channon said. “We look forward to working with Statesman and our other partners inBlock 14 and are excited about the potential of this block which is closeto many of Africa’s largest producing regions.”Agri said Block 14, which lies adjacent to the border with Egypt andLibya, was underexplored with only partial gravity coverage, 1200 kmof 2D seismic and one shallow stratigraphic well on the block. It added the prospectivity of the block was defined two deep untestedsub-basins, the Mourdi and Mesaha, with the previous operator Sudapetidentifying a multi-billion barrel resource inventory.Preliminary work carried out by Statesman has indicated the largestlead could hold a mean potential resource of 600mn barrels.

Agri and Statesmen team up in Africa

S02 ORA 5 2012 News_Layout 1 02/10/2012 17:41

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TTHE INTERNATIONAL GAS market is beingtransformed by the development of vastnew reserves of ‘unconventional’ suppliesin North America. Huge discoveries

elsewhere are almost certain too, but environmentalconcerns are holding back their exploitation. As aresult different regional gas markets are beingformed which have profound implications for thecommercialisation of Africa’s surplus gas.

BP’s latest annual energy survey* stresses thekey role the hydraulic fracturing revolution playedin turning around the gas market in the USA in2011 – but so far has made little impact elsewhere.Indeed in South Africa – probably the best hope forshale gas anywhere in SSA – a moratorium hasrecently been placed on development because ofenvironmental fears, just as in France. In bothcountries the search continues nevertheless.

Already-high gas prices in most other countriesincreased broadly in line with oil last year, withChina accounting for by far the largest increase inworld gas consumption. In 2011 this clean andflexible fuel supplied nearly one-quarter of totalglobal commercial energy consumption, almostprecisely the same as in the 12 months before.

And in that year Africa as a whole supplied6.2 per cent of the world’s gas supplies,consuming in return only 3.4 per cent andthereby making yet another huge contribution tothe security of energy supplies.

Significant local discoveriesAs significant local discoveries in both East andWest continue to be made this positive input toevening out the world’s gas imbalances is certain togrow; Africa simply does not have the distributioninfrastructure to absorb much more, however manynew gas-fired power stations are built. Algeria,Egypt, Nigeria and welcomed-back Libya continue todominate the regional supply pattern.

So where, at a time of unprecedented changeoccasioned by the discovery of brand newsupplies, is the world gas market – which reliesso much less on international trade than oil,despite the earlier LNG revolution – now headed?By 2035 the influential International EnergyAgency calculates that global output couldincrease many times over, much of this growthbeing seen right here in SSA in countries such asfast-growing Tanzania. But for now, offsetting thisenormous win-win potential, there is a vast andpotentially disruptive difference growing betweengas prices in North America, Europe and the FarEast, and in how they are set. Right now

indexation against the price of crude oil prevails.Energy history tells us that such an imbalance

cannot last. It is far from certain that the so-calledshale gale will blow across all continents, althoughChina could – eventually – rival today’s USA as themost significant country to be affected.

What seems unlikely for the present is that thenewly-formed Gas Exporting Countries Forum willsucceed in stitching together a cartel along thelines of the highly successful OPEC organisation,which continues to have such an impact on oilproduction levels and therefore earnings in Algeria,Angola, Libya and Nigeria. There are simply toomany alternative major sources of gas supply ontap, and the market as a whole is too muchdisturbed by the recent vast increase in NorthAmerican and potentially global availability topermit such a restrictive development.

LNG is Africa’s major contributionAfrica’s major contribution to the world’s gasbalance is undoubtedly in the form of liquefiednatural gas. ‘Invented’ in the USA but pioneered bySonatrach and Shell in Algeria this strategicallylocated Mediterranean country remains thecontinent’s largest all-forms supplier, althoughNigeria is now number one in LNG – frozen gas ismuch more costly to deliver than by pipe. But it’smuch more flexible in terms of where it can be sentto, including diversion at short notice, so LNG can

be used to plug energy gaps. Its huge value in thisrespect alone was clearly seen after Japan’s majornuclear accident and resulting energy shortfall lastyear.

As new projects shape up in both East andWest – the latest in Tanzania - the problem forAfrica’s existing and potential exporters remainsone of potential global over-supply. Not only isAustralia moving up to displace market-makingQatar from its current top spot, but some USreceiving (re-gasification) terminals are now,because of the fracking revolution, beingconverted at relatively low cost into jointliquefiers and exporters too. The first of theseturned-around plants could be in business by2015, taking advantage of the massive regionaldifferentials that now exist in world gas prices.

Further down the line ‘floating LNG’ (processedin movable barge-mounted plants, excellent forexploiting stranded resources here in Africa) and

The drillship Ocean Rig Poseidon and supportvessels at the Zafarani location.

So where, at a time of unprecedented change

occasioned by the discoveryof brand new supplies, is the world gas market

now headed?

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It will be many years before the “shale gale” blows through domestic gas markets inAfrica. But LNG exporters are already taking note of its possible effects.

Gas grabs the headlines

again

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eventual development of Russia’s huge offshoreShtokman field suggest even more marketdisruption could be on the way.

On the positive side China could become one ofthe world’s largest buyers, with something like 20reception terminals for LNG at various stages ofplanning, construction or operation currently in theframe. Japan and South Korea are far ahead in thelead as customers currently.

As the global trade in LNG continues to grow –again by more than 10 per cent last year – thelevel of price competition can only rise at the sametime, putting off potential entrants to this capital-intensive and -rising industry which can make suchlucrative use of otherwise unsalable gas, as inestablished Equatorial Guinea.

Last year. according to BP’s Statistical Review,Africa’s total LNG exports amounted to 57bn cm,just under 19 per cent of the global total. The figurewould have been even higher if Libya’s exports toSpain not been temporarily lost. The US, southernEurope and various prosperous industrialisedcountries in the Far East are the principal customersfor these fast-growing supplies, with Nigeria clearlyin the regional lead.

Faced with all this mostly happy change theIEA has sown the idea of a coming ‘Golden Ageof Gas’, fuelled by the massive recent increasein known resources.

“But for that to happen,” it warned on 29 May,“governments, industry and other stakeholdersmust work together to address legitimate publicconcerns about the associated environmental andsocial impacts.”

“If [these] are not addressed properly, there is avery real possibility that public opposition todrilling … will halt the unconventional gasrevolution in its tracks.”

At the same time it proposed a matching setof ‘Golden Rules’ underlining the importance offull transparency, measuring and monitoringenvironmental impact with the engagement oflocal communities, improved project planning,and so on.

These will certainly increase development costs,the OECD Agency warned, but these could in manycases be offset by lower eventual operating costs.

In short, another handy win-win situation seemsto be on its way.

“Just as the 20th century was the age of oil, the21st could prove to be the century of gas” said theUK weekly Economist in a major survey of this keyfuel on 14 July 2012 Pulitzer Prize-winning analystDaniel Yergin agreed in his earlier study The Quest”(IHS Cambridge Energy Research Associates, 2011),in which the “truly global” nature of today’s gasmarket is very positively commented on.

However to benefit from all this change the

current embarrassingly inconvenient regionalprice differentials simply must be addressed, andto achieve this Africa’s gas exporters – primarilyof LNG, but the North’s pipeline operators too –have got to be more fully involved in a price-setting process that seems increasinglyanachronistic. Right now they don’t haveanything like a big enough say. ■

bp.com/statisticalreview


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Gasol aims to develop theLNG market in West Africa.

Just as the 20th century was the age of oil,

the 21st could prove to bethe century of gas.



TTHE PLATTS 5TH Annual Crude Oil Markets Conference and Forum inLondon in May, organised by Platts, a leading global energyinformation provider and publisher of benchmark price references, wassub-headed 'Exploring Regulatory Change, Benchmark Evolution, and

Shifting Fundamentals'. However, the topics discussed were often appropriate notonly to esoteric oil terminology but to mainstream news headlines.

The US shale oil and gas bonanza, the effect of growing local demand onSaudi Arabia’s exports, and fuel efficiency are all obviously relevant to the priceand production of oil in the years to come. But there are less obvious factors:the Fukushima disaster has increased Japanese reliance on oil and gas; Chinesedevelopment — and hence its reliance on oil — may eventually stall as itspopulation ages; Greece leaving the euro could affect the rest of Europe,bringing another recession and diminished oil demand; and if Iran closes theStraits of Hormuz the effect on oil transportation could be catastrophic.

Ruth Cairnie, EVP, Strategy and Planning, Royal Dutch Shell tried to take onthe difficult task of summarising diverse megatrends and assessing long-termdevelopments in a keynote address entitled ‘The New Upstream Environment —'Understanding New Risks and Capitalising on Future Opportunities'.

Some trends are, on the face of it, easy to summarise. We can, for instance,confidently expect a global surge in demand and global population growth.With these changes will come stresses — on water and food supply and, byextension, energy. However, “by 2050”, Cairnie said, “we will have to supplyover 50 per cent more energy and do that at the same time [as] reducinggreenhouse gas emissions to half the levels they were at the beginning of thecentury”. Renewable energy will play a part, but 40mn barrels of oil equivalentper day will still need to be developed just to maintain production. Could Iraq,Brazil and the Arctic — to name just three potential oil hotspots — supply asignificant part of that? And what about the US shale oil and gas bonanza?

However, while there are trends that we can predict, there are alsogeopolitical events that we may not have expected that could affect oil supplyand price. Who would have foreseen the Arab Spring, the Eurozone crisis, and‘black swan’ events like Fukushima and Deepwater Horizon? Meanwhile, anemerging trend — the diminished public trust in oil companies over safety andthe environment — will need to be balanced against the unavoidable pushtowards more challenging hydrocarbons and frontier operating environments, aswell as cost escalations and skills shortages. One likely outcome is that limitedresource access and growing competition may eventually require new andinnovative partnering strategies between IOCs and NOCs.

Not surprisingly perhaps, it doesn’t look as though the price of crude willtumble. That was the view of Sabine Schels, senior director and globalcommodity strategist, Bank of America, Merrill Lynch, in her talk entitled 'OilMarket Dynamics in 2012 — Stability or Greater Volatility on the Cards?' “Highoil prices are here to stay for quite some time,” was Schels’ summary.

Oil supply facing great pressuresJohannes Benigni, Managing Director, JBC Energy, focused on such trends as theincreasing effectiveness of sanctions again Iran, Iraq’s inability to hit its outputtargets, and local and international pressure on Saudi Arabian supply, as well asthe fact that non-OPEC crude supply is also finding it difficult to fill the gap. Oilsupply is clearly facing great pressures. On the other hand, demand hasdeclined and will continue to do so in the US and OECD countries. But not all ofthis decline is down to belt-tightening. As Peter Hughes, director head of energypractice, Ricardo Strategic Consulting, pointed out, 55-60 per cent of oildemand is from one sector: transportation. He predicted that car fuel efficiency

will improve markedly in all regions and could be a major factor in limiting oildemand over the long term.

Nevertheless world demand, led by pretty much everywhere else, includingAfrica and the Middle East but especially China, will rise this year and probablyfor some years to come.

So where are the extra barrels that will be needed coming from? RuthCairnie of Shell mentioned the Arctic of course, and there are expectations thatshale oil will offer one to three million barrels a day by 2020. This is a veryimprecise estimate but that’s because, as Benigni said, “every shale oildevelopment is different”.

Iran’s potential is clearly unlikely to be realised. Nor is that the only worry ina region where security issues, sanctions, civil war and piracy are, or could be,concerns. World refining capacity, ironically, is abundant. IEA Oil Industry andMarkets Division head David Fyfe referred to “a tidal wave of new capacitybeing built in the emerging markets”.

But refining is hardly the IEA’s major concern right now. Like most of us,it is focused on the supply side where hold-ups in Libyan supply andunexpected stoppages in non-OPEC producers got worse in early 2012, faroutstripping the allowances (about 300-400,000 bpd) made by the IEA forfactors like hurricanes and stoppages.

Like everyone else, Fyfe’s presentation ('Oil Market Update: Has the TideTurned?') cited “still fairly robust non-OECD developing market demand”. Theodd thing is that global expenditure on oil seems higher than the level atwhich oil use should show signs of decline. So why isn’t it declining? Japanis easy to explain: LNG and oil are filling the nuclear power gap. However,many heavily import-dependent emerging markets are, it seems, “subsidingoil at the point of use”. “That’s why,” said Fyfe, “you can still have relativelyrobust growth in the face of $100 oil.”

There was much more analysis at the conference, in the main incisiveand well judged. But equally, speakers admitted that there was much theycouldn’t predict; events like Fukushima, Deepwater Horizon and theEurozone crisis all make that clear.

However, access to expert opinion that can take a better than educated guessat the likely outcome of both long-term trends and shorter-term threats is at least away to be ready for some of them. Which is why we need events like this one. ■

World demand will rise this year andprobably for some years to come.

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The Platts 5th Annual Crude Oil Markets Conference and Forum took place earlier thisyear. However, as Phil Desmond reports, quite a few of the event’s expert assessmentsare likely to remain true for some time.

Crude markets: Low expectations

or high risk?


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TTANZANIA HAS FOLLOWED Mozambiqueinto the natural gas big time, it seems. Arecent note from IHS* energy analystMarne Beukes on Statoil’s latest gas

discovery off Tanzania is headed: East Africa GasBonanza Expands As Statoil Hits More Gas OffshoreTanzania. And yet Beukes points out, "This part ofthe country's offshore has been neglected in earlierdrilling programmes." Why?

“It is,” she explains, “more expensive to drilloffshore and in the deepwater; you need thefinance and expertise. The majors and supermajorshave the ability — with a few exceptions for smallercompanies like Kosmos which made the Jubileediscovery in Ghana. Only when the majors enteredTanzania from 2010 did exploration kick off.”

Now of course exploration has gone evenfurther; this is Statoil’s second gas encounteroffshore Tanzania and with the company’sTanzanian drilling programme just getting off theground, the potential for more gas encounters inthe Tanzanian part of the Rovuma Basin is seen asstrong by IHS. But how strong compared to, say,Mozambique?

“The Rovuma Basin only extends into theTanzanian offshore for a few blocks, so nowherenear as large as in Mozambique,” says Beukes. Onthe other hand, exploration is still in its early stagesin Tanzania and Statoil has made a sizeablediscovery early on. Other wells have still to bedrilled so the potential is fairly large but, saysBeukes, “it remains to be seen if the discoveries areas big as Mozambique.”

But does being neighbours in exploration ofthe Rovuma basin have possible downsides ingeological terms? Could gas reserves migratefrom one country’s claim to that of another?Probably not. Beukes says that hydrocarbonreserves are capped either by a fault or a salt cap,which is why they can accumulate over the yearsin the first place. That said, she adds, “If there is areserve that crosses the border it can be achallenge but what often happens is that thatarea is declared a joint development zone (JDZ)”.This has happened in Nigeria and Sao Tome andcould possibly be the basis of an arrangementbetween Ghana and Cote d'Ivoire.

Mozambique up and runningMozambican gas production is already up andrunning. Could that country’s experience be usefulto Tanzania? It may in particular be able to offersome lessons in dealing with offshore threats frompiracy. Perhaps that’s why Anadarko, which first

signed an oil and natural gas exploration andproduction concession contract with theMozambican government in 2006 and is currentlydesigning the onshore liquefaction facility with itspartners, has decided on the pipeline-to-onshore-plant option, rather than invest in the largelyuntried FLNG. “Eni is said to be considering FLNG,but then so did Anadarko.” Beukes points out. Eni isanother major gas player and recently announcedan enormous new offshore natural gas discovery.

Still, she adds: “I think we shouldn't rule outFLNG. Remember that Mozambique does haveissues regarding armed banditry at ports so evenonshore is not entirely safe; however, this is abenign risk compared to maritime piracy.”

Well defined export marketSo where will this gas go? In fact the export marketcan be fairly well defined. “India, Taiwan and SouthKorea have already been mentioned as likelybuyers but it could include other Asian buyers likeJapan, depending on what their demand situation islike in the next few years,” says Beukes. Japan isarguably the wild card since the Fukushima disasterencouraged it to embrace non-nuclear power.Certainly Asia remains the most likely target

overall: the distance to many other markets wouldmake them uneconomic to target and besides,North America wants to produce its own LNG on alarge scale too — and clearly can. Whatever elsehappens, however, Tanzania will probably followMozambique into some sort of overseas markets.“I think the Tanzanian government has long beenpushing for gas exports in the event of a sizeablediscovery or discoveries,” suggests Beukes.

Of course the international gas export markethas changed. Qatar was able to arrange veryadvantageous term contracts for its LNG when itwas the one big player. Today more players, morecompetition and more price pressure are now thenorm. Or so it would appear. What happens asPapua New Guinea, Australia and others come online to challenge East African supply?

This is not an easy question to answer. IHSbelieves that Asian long-term demand (post-2020)is uncertain, and dependent on many factors likeChinese economic growth and Japan's continuousreliance on LNG to replace nuclear. At the moment,though, there is no reason to believe that long-termsupply contracts are obsolete. In fact Beukes pointsout that Australian LNG projects have still beensecuring long-term projects. “There was the one for25 years with Kansai and APLNG for instance quiterecently. Also,” Beukes adds, “it depends on howthe Mozambican LNG project developers — or anyin the region — choose to market the gas output.Angolan LNG sells the gas on the international spot

The Rovuma Basin has one of the mostprolific conventional gas plays in the world.

“I think we shouldn't rule out FLNG.“

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First it was Mozambique. Now it’s Tanzania’s turn — or it could be. But, Vaughan O’Gradyasks Marne Beukes*, who wants to buy natural gas from these two new arrivals on thegas supply scene? How much will be available? And how valuable is it in a world ofmultiple gas suppliers?

Who benefits from the east coast

gas bonanza?


market,” she points out , although Angola's outputis much less than Tanzania’s will be.

At the same time there is going to be areasonable-sized local and regional market forMozambican and Tanzanian gas. Gas can be pipedto South Africa, for example, albeit at greatexpense due to the distance, and Tanzania doeshave some gas-fired electricity capacity. NearbyKenya has industries that could switch to LNG asa source of energy. However, the local marketwill remain too small to use all the gas. Certainly,while some will be kept for domestic and poweruse, the bulk of Mozambique’s vast output of gaswill be for the export market.

The idea of a gas hub alongsideMozambique and (if gas is found) Kenya issurely an interesting concept.

Tanzania will potentially be exporting at thesame time as its neighbour so how about an EastAfrican gas hub? The idea of a gas hub alongsideMozambique and (if gas is found) Kenya is surely aninteresting concept. On the face of it, the signs aregood. There is already a history of economic andpolitical co-operation through the East AfricanCommunity (EAC), some linguistic overlap and ahistory of regional trade. And in any case, co-operation might be necessary to avoid destructivecompetition. But how much potential forconstructive co-operation is there in reality?

Beukes isn’t sure. There have been plans formany years for an integrated pipeline network inthe region but it may be many more years beforethis actually exists, she says, suggesting thatregional cooperation may only extend only as faras pipelines and gas-fired electricity networks.“Other than that the potential is limited,” shepoints out, “simply because if Tanzania's own gasreserves are enough to satisfy its own domesticneeds — and maybe even export — there will beno need to trade in gas.”

There’s the South African market of course,but, as we have already heard, it is going to costa lot to ship offshore gas to that country's GTLfacilities in Secunda and Sasolburg. “Other EastAfrican countries like Uganda rely more onhydropower than gas,” says Beukes, “and unlessthere is a sudden change in their energy policy todiversify sources I don't think the regional tradein gas will be that big.”

Threatening regulatory environmentBut if that isn’t a problem perhaps the potential forwhat IHS calls a "threatening regulatoryenvironment" could be. Mozambique is alreadyplanning to hike the percentage the state companyacquires in blocks and, says Beukes, “I see Tanzaniaoften mirrors what Mozambique does — firstMozambique talks of changing fiscal terms

following discoveries, and then Tanzania andKenya.” Thus the economics of gas production arehard to judge definitively just yet.

Or indeed the skills contribution of thecountries housing the gas. How ready are Tanzaniaand Mozambique in terms of skills to shareventures with foreign companies, given that neitherhave long-term experience?

“Practically they are not,” Beukes says. “Butoften these types of countries will have theirinterest carried by the company they are partneringwith, using their capital and skills. If talking about ajoint venture between the two countries, again forupstream exploration this is likely to also involve acarried interest and the involvement of bigcompanies.” Even in the downstream sector withpipelines, it seems, the governments will be relyingat least for the finance and expertise oninternationals. But it’s not as if Mozambique inparticular is completely unused to dealing with bigprojects. As Beukes points out, “Mozambiqueseems to have been able to cope well with the railand mining projects so far and can also usemigratory labour from South Africa.” ■

*IHS is a leading source of information and insightin energy, economics, geopolitical risk,sustainability and supply chain management.www.ihs.com


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Exploration & Production: South Atlantic PetroleumSOUTH ATLANTIC PETRLOLEUM’S (Sapetro) successstory started soon after landing its first Nigerianblock, OPL 246, about 150 km south of PortHarcourt, in 1998. This area included the huge Akpofind, which has now been hived off into OML 130,and is operated by China’s CNOOC. First productionfrom the field started in 2009, with Akpo expectedto reach peak production of 225,000 barrels of oilequivalent per day (boepd) shortly.

Building on its Nigerian production success, thecompany has widened its footprint, first toneighbouring Benin, where it operates offshoreBlock 1, with first output from the re-developedSèmè field due next year. Across the continent, ithas also acquired an interest in a pair of blocks inthe Mozambique Channel, which is now attractinghuge investment following a succession of big gasfinds.

Perhaps unsurprisingly given this rapid rise toprominence - Sapetro is one of the country’s topindie oil producers - Sapetro is bullish aboutNigeria’s policy to boost local content in the energysector. “The local content act is a laudable act,”says Sapetro’s Hetty Nosa-Ehima. “While it isrecognised that full compliance with the act maybe challenging for the international oil companiesinitially, eventually it will become a durablemechanism to develop the industry with theindigenous resource being the key industry drivers.”Within the company itself, offshore developmentactivity and the exploration of other assetselsewhere in Africa has led to huge capacitybuilding, honing local skills and talent. And this isspreading through the industry, she reckons. “Wehave leveraged our understanding of the Act, whichhas enabled us to utilise some of our Nigerian-based service companies in executing workcommitments on our other African assets.”

Platform Petroleum Platform Petroleum is another successful Nigerianindependent producer, lifting off in 2004 when itwas handed the Asuokpu/Umutu marginal field assole operator. Within a few years, Platform hadbrought the field - since renamed Egbeoma - intoproduction, commencing maiden output inSeptember 2007. The early development of thefield, located in OML 38 in the north central NigerDelta, marked a triumph for the company and itsfinancing partner, Newcross. The team tested andcompleted two wells, commissioned a 10,000 bpd

flow station and built a 48 km pipeline to linkUmutu eastwards to ENI’s export Kwale facility. Thispipeline would later be used by other operators tomove oil from surrounding fields, netting thecompany a fee for its usage. By the end of 2011 thecompany was enjoying oil production from itsinvestments of around 2,600 bpd.

Austin Avuru, Platform’s founding chiefexecutive, attributes the company’s success overthe past decade to pure hard work and dedication.“We are not magicians,” Avuru was quoted assaying in a recent interview. “But we get thingsdone.”

But his team are clearly thinking bigger. In2009, Platform formed a new joint venture,Seplat, with another small Nigerian independent,Shebah Petroleum. And with established Frenchoil firm Marel & Prom behind them, the grouptook on upstream concessions from Shell, Totaland ENI. Seplat landed an interest in OML’s 04,38 and 41, three blocks in the onshore westernNiger Delta covering about 2,650 sq km, with 30wells and a production capacity of approximately35,000 bopd and 110 mmscfd of gas. All the gasproduction from the assets is sold to the NigerianGas Company, through existing pipeline networks.Seplat’s production from these assets is around16,800 boepd, which boosts Platform’s own netoutput by a further 3,696 bpd.

Mono PuliAnother major independent is Moni Pulo Ltd (MPL).Founded by Dr Lulu-Briggs, Muni Pulo is the soleoperator of OML 114. This covers a total area of465 sq m with a cluster of 17 horizontal productionwells and two water injection wells. Production isthrough two production platforms installed on thedeveloped Abana field. MPL’s production assetsalso include the Agbani Floating Production Facility(FPF) complete with water injection facilities toprocess oil and gas from OML 114.

The crude oil produced is transported via a 42km,12 inch sub-sea pipeline to a Floating ProductionStorage and Offloading (FPSO) facility. The FPSOserves as our storage and offloading facility.

"Being the sole operator of our asset OML 114was at times a steep learning curve but it wasworthwhile because we were able to acquirecompetencies and skills which have prepared us forthe demands of the development of our three newoil blocks", said Lulu-Briggs.

MPL has gone a long way to ensure compliancewith the Nigerian government’s gas flare out policy.Produced associated gas currently being flared willbe re-injected into a dedicated reservoir for storage.An injector well for this purpose has been drilledand completed. Gas compression facilities will becommissioned in the first quarter of 2010.

The re-injection will continue until the timewhen the gas master plan of the company is readyfor implementation.

First Hydrocarbon NigeriaFirst Hydrocarbon Nigeria was established in directresponse to the Nigerian government's policy toincrease indigenous participation in the Nigerianupstream oil and gas sector. FHN started on astrong footing, and this can be traced to thebacking of its parent company Afren. Its top

Aerial view of the FPSO offshore the Akpo field.

In 2009, Platform formed anew joint venture, Seplat,

with another small Nigerianindependent, Shebah

Petroleum.

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After years in the shadows of the international oil companies, Nigeria’s independents arebreaking through. Here’s our pick of the bunch.

Simply the

best

S04 ORA 5 2012 Nigeria_Layout 1 02/10/2012 16:05

management looks like an Afren alumni and it hasalso "put in place a world-class Nigerian seniormanagement with a proven track record of securinglocal and international financing for oil and gasassets in Nigeria, and also developing assets fromexploration through appraisal development andproduction quickly."

FHN's main asset is OML 26, located onshore inthe Niger Delta, covering 480 sq km. The block hastwo fields that are currently in production (Oginiand Isoko), both of which offer large scale upsidethrough implementation of a phased developmentprogramme and three discovered but as yetundeveloped fields (Aboh, Ovo and Ozoro).Significant additional exploration potential has alsobeen defined on OML 26, with estimates of 615mmboe gross unrisked prospective resources acrossmultiple prospects that will continue to be workedon in parallel to and integrated with thedevelopment plans for OML 26.

NPDC LtdThe Nigerian Petroleum Development Company(NPDC) Ltd is a fully-owned subsidiary of theNigerian National Petroleum Corporation (NNPC),and is engaged in Oil & Gas Exploration andProduction activities in the hydrocarbon-richregions of coastal Nigeria, both onshore andoffshore; and more recently, around EquatorialGuinea. Its vision is to be Nigeria's premier E&Pcompany, profitably operating a global PetroleumE&P business using current technology.

According to Mrs Madueke, Minister ofPetroleum Resources, by 2015, withi its growth plan,

NPDC would be rubbing shoulders with the Petrobrasof this world. Currently it has a reserve base of240mn barrels and a production capacity of 70,000bpd. Its operations are centred mainly in the NigerDelta - Edo, Delta, Balyesa and Rivers - and also inthe Okono/Okpoho offshore field OML 119.

In seeking to attain its vision, MPDC intends topursue an accelerated exploration and production ofunderdeveloped proven reserve in all of its blocksthrough agreed arrangements, and begin aggressiveexploration activities in deep offshore blocks won incompetitive bidding or assigned to it.

Pan Ocean Oil Corp (Nigeria) LtdPan Ocean Oil Corporation (Nigeria) Ltd. wasincorporated in 1973. Since then, it has beenoperating as an exploration and production companyin a Joint Venture (OML 98) with the NNPC, onshorethe northern fringe of the Niger Delta.

In 2007, Pan Ocean purchased another block,OPL 275 to be developed as a Production SharingContract (PSC). When OPL 275 comes on stream, itwill increase the present production volumes.

Pan Ocean is a trailblazer in the bid to achievethe gas flare out objective of the FederalGovernment. Since 1984, Pan Ocean went aheadwith its initiative on gas utilisation despite thechallenges of an under-developed Nigeria GasMarket. The Ovade-Ogharefe Gas processing plant,said to be the largest in West Africa, earns carboncredits for its operations under the CleanDevelopment Mechanism (CDM) of the KyotoProtocol. The gas plant is currently the largestcarbon emission reduction project in West Africa.

WaltersmithWaltersmith Petroman Oil Ltd was incorporated in1996 as a joint venture between Waltersmith andAssociates Ltd, a Nigerian company, and PetromanOil Ltd of Calgary, Canada, to operate as an oilexploration and production company. In 2001,Walter Smith Petroman Oil Ltd became a wholly

owned Nigerian company with the divestment ofPetroman Oil Ltd.

The company subsequently participated inthe marginal oil field licensing round forindigenous companies and was awarded theIbigwe field located in OML 16 by the FederalGovernment of Nigeria in 2003. The award wason a joint interest basis with Morris Petroleumand Waltersmith as the operator.

Waltersmith executed a farm-out agreementwith Shell Petroleum Development Company andits Joint Venture Partners including the NNPC in2004 to effectively take over the field fordevelopment. In June 2008 Waltersmithcommenced production and crude export from theconcession area.

"Our activities are grounded on the bestbusiness practices, good governance and strongcommitment to social and environmentalresponsibilities for the benefit of humanity!"

Atlantic Energy Atlantic Energy is a privately owned upstream oiland gas company founded in 2010 by Nigerian andInternational Exploration and Production (E&P)executives with an extensive track record, market-leading insight and extensive experience in theNigerian independent E&P sector.

Atlantic Energy’s vision is to build one of theleading indigenous Nigerian oil and gas explorationand production companies in targeting 1,000mmboe reserves and 150,000 boepd production intwo countries by end 2015.

The corporate organisation has been developedthrough experience in the Nigerian E&P sectorwhere a small overseas headquarters is utilised tosupport the financial and technical functions withinthe main organisation in Nigeria.

Brittania-UBrittania-U Nigeria Limited is an indigenouscompany incorporated on 4th December, 1995under the laws of the Federal Republic of Nigeria.

In a very short period of operation, the companyhas established subsidiaries and/or sister entitiesthat belong to either the hydrocarbon exploitationchain or provide services to the businesses in thehydrocarbon chain. This has made Brittania-Ubecome more integrated and versatile in the oil &gas industry and allied services.

Integrated Energy Services Oando plcAnother leading light in Nigeria’s upstream industryis Oando plc, the country’s biggest indigenousintegrated energy player. The company commencedwork in the upstream sector but its success has ledto deep involvement in energy services and in thedownstream and midstream segments, from refiningto retailing fuel. It now owns over 500 retail andcommercial fuel outlets across Nigeria and otherparts of West Africa. Upstream operations remainvital, however. The company’s upstream unit OandoExploration and Production Ltd recently signed afarm-in agreement with Network Exploration &Production Nigeria (NEPN) for the acquisition of a 40per cent interest in the Qua Iboe field (OML 13). This


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Oando won the Nigeria best company of the year at NOG 2012 held in Abuja.

MPDC intends to beginaggressive exploration

activities in deep offshoreblocks.


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field, awarded to NEPN as part of the 2003 marginalfield round, is located onshore near the mouth ofthe Qua Iboe River in Akwa Ibom state, about 2 kmfrom Mobil Producing Nigeria’s Qua Iboe exportterminal. The asset is estimated to contain 11.3mnbarrels of reserves. Oando’s chief executive WaleTinubu said the latest acquisition is consistent withthe group’s aim of expanding its upstream portfoliowith a mix of producing or near term assets andorganic growth. “The Qua Iboe field will be the thirdmarginal field with pre-existing proven undeveloped

reserves in Oando’s portfolio,” he said. The companyalready holds more than a dozen exploration andproduction assets, both in Nigeria and across WestAfrica. A measure of the company’s growinginternational status, it is secondary listing on SouthAfrica’s Johannesburg Stock Exchange, in addition toits Nigerian Stock Exchange presence.

Pipeline & well services: BG Technical Nigerian services provider BG Technical worksacross two core areas, pipelines and wells,supporting upstream operators both at home andalso abroad. After cutting its teeth in the localmarket, the company has now completedassignments across West Africa, from Ghana toGabon. And yet, interestingly, BG Technical’sexecutive director Geoff Onuoha says the strengthof the domestic market has held back international

expansion. “We have worked in Ghana and Gabonand also Togo, but because the Nigerian market isgrowing so fast, it has slowed our internationalgrowth.” The company provides essential pipelinemaintenance services to operators, such ascleaning, descaling, inspection, plus commissioningwork which includes pressure testing services. Onthe well services side, its work includes wirelinemeasurement services, wireline logging andcompletions. It has also established manufacturingfacilities. Onuoha admits he is also “positive” localcontent rules. “It is opening up areas of the marketwhere we were not able to participate before,especially offshore. People are now noticing us.”Naturally, this has impacted growth at thecompany, with BG Technical effectively doubling inscale in the two years since the new local contentrules were introduced.

Transportation services Caverton HelicoptersNigerian transport services firm CavertonHelicopters is growing fast on the back of thenation’s lucrative oil and gas sector. The youngcompany is in the process of upgrading its fleetwith more advanced aircraft, receiving support frombig international operators such as Shell, one of itsmain clients. Caverton is purchasing a fleet of sixnew AW 139 aircraft, partly facilitated by a loan ofUS$85 million from the oil giant. The fleetexpansion will make Caverton the largest operatorof the aircraft in sub-Saharan Africa. The companyoperates mainly from facilities in Lagos, PortHarcourt and Warri. Like other successful Nigerianplayers it is increasingly active overseas, with onemulti-year contract for aerial surveillance work andpassenger transfer services on the Chad-Cameroonpipeline. The pipeline carries crude oil from theDoba oil fields in Chad, a landlocked country, toCameroon via a 1,070 km underground pipelinethat runs through three pump stations, a pressurereduction station, and an offshore export terminal.Caverton’s chairman Remi Makunjuola said thisproject underscored the “increasing confidence inthe competence of Nigerian companies.” ■


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MPDC intends to begin aggressive exploration activities in deep offshore blocks.

A measure of Oando’sgrowing international status,

it is secondary listing onSouth Africa’s Johannesburg

Stock Exchange

CHAIRMAN OF THE Board of Brass Liquefied Natural Gas, Dr.Jackson Gaius-Obaseki has said that the project would take off onor before the end of the first quarter of 2013. Dr Gaius-Obasekidisclosed this when the Board and management team of BLNGvisited Governor Seriake Dickson recently.According to him, the final investment decision (FID) will be takensoon and he called on all stakeholders to collaborate effectively toachieve this target.In his presentation, the Managing Director of BLNG, Mr. Lorenzo DiLorenzo said contracts for the construction of Gas TrainsEngineering and Procurement, Onshore and Offshore worksincluding loading facilities have been awarded to Bechtel.The Managing Director noted that the project, when operational,will not only provide sustainable development for localcommunities in the Niger Delta, but also complement FederalGovernment’s gas flare-down policy and buy into global KyotoProtocol Objectives.According to him, BLNG has so far trained over 125 technicians at

the Petroleum Training Institute, Effurun, Warri in Delta State aswell as built a community information centre and a health facilityat Twon-Brass as part of its corporate social responsibility.To demonstrate its commitment to the project, Governor Dicksonnoted that his administration is prioritising the Nembe-Brass roadand the development of a deep seaport in the state.According to him, the design of the road will make provision forthe construction of a railway on the long term to connect the stateto commercial centres such as Onitsha.Commending the company for its training programmes, Hon. Dicksonurged the BLNG to complement his administration’s efforts at givingspecialised training to more youths in areas such as underwaterwelding with a view to making them relevant for the project.The governor acknowledged BLNG’s recognition of the relevance ofthe Nigerian Content Development and Monitoring Board, pointingout that the activities of the board could lead to a multiplier effectthat would actually accommodate grievances that might beexpressed by some of the host communities.

Brass LNG project to take off in first quarter of 2013


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TTHE NIGERIAN DRAFT Petroleum IndustryBill 2012 was submitted to the NationalAssembly on 19th July. Less than afortnight later, Nigeria’s Minister of

Petroleum, Deizani Alison-Madueke presented atthe New World Nigeria summit. Many were there tohear her discuss the long awaited bill which, whenpassed into law, will be the overriding guide for theoil and gas industry in Africa’s largest oil producer.

The Petroleum Industry Bill (PIB) has beenhailed as a landmark opportunity to introduce anew era of reform to Nigeria’s oil and gas industrythat will better exploit the country’s vast potential,restore transparency and facilitate a thrivingindustry and overall economy. It will, if passed bythe legislature, replace an aggregation of some 16existing petroleum industry laws that havegoverned the sector for a half-century of oil and gasoperations in the country.

The mammoth 223-page PIB seeks to reform,deregulate and liberalise the oil and gas sector.That much was made clear by Nigeria’s Minister ofPetroleum, Deizani Alison-Madueke during herpresentation to the New World Nigeria investmentsummit, held at the luxury Dorchester Hotel inLondon in early August. The thee-day New WorldNigeria event was sponsored by Nigeria’s Bank ofIndustry and the Nigeria Olympic Committee, andexpertly organised by Brand Communications. Aswell as the Minister of Petroleum, it drew togethera number of high-level Federal government officialsand State governors.

Discussing the PIB, Alison-Madueke tolddelegates: “This bill provides for a dynamic butprudent fiscal policy framework across the valuechain which provides the incentives for sustainedinvestments and productivity whilst delivering bestreturns to Nigeria.”

New national oil companyThe PIB will unbundle the Nigeria NationalPetroleum Corporation and create a new nationaloil company (NOC) that will promote indigenousoperational capacity development. Almost asimportantly, the deregulation will allow the NOCand its joint ventures to list on the Nigeria Stock

Exchange’s (NSE), impacting the whole of Nigeria’sfinance industry. The NOC will be permitted to floatup to 30 per cent of its shares within six years andthe Nigerian Gas Company (NGC) 48 per cent of itsshares within the same period.

It is the fiscal and regulatory reforms that havecreated so much debate and delay to the PIB’sintroduction. Legislators have been working on thedocument for a number of years – and it did nothelp when several versions of the bill with variousamendments were widely circulated.

Nevertheless, Alison-Madueke was able toconfirm that the fiscal regime (for both royaltiesand tax) will, under the PIB, be predicated onproduction as opposed to terrain and investmentrespectively. The Company Income Tax Acts’ rate is30 per cent regardless of geographical location,while the Nigeria Hydrocarbon Tax (NHT) andProduction Bonus will be based on production asopposed to investment. “It is fair to both small andlarge producers,” Alison-Madueke says. Theproposed NHT rate is 50 per cent in the case ofonshore/swamp/shallow offshore and 25 per centfor deepwater operations.

Two distinct regulatory institutions are beingproposed by the PIB with both an UpstreamPetroleum Inspectorate and Downstream PetroleumRegulatory Agency.

Dissenters and criticsPerhaps it is inevitable that with such a complexpiece of legislation concerning a key economic

sector there should be dissenters and critics.These tend to focus on the end-of-year deadlinefor an end to gas flaring as being too ambitious;that too much power will reside with thePresident and Minister to grant, revoke andallocate licences; and the proposed regulatoryinstitutions not being truly independent but underthe supervision of the Minister.

A very unscientific poll of the New WorldNigeria delegates found broad agreement withAlison-Madueke’s proposals. When asked ifanything had been learnt from the minister’spresentation, one senior banking figure told OilReview Africa: “Yes and no. It was nice to actuallyhear the oil ministry articulate some of the thingsbehind the PIB. I’ve never been that worried aboutthe content, because I actually think Nigeria is stillthe benchmark against which the other African oilproducing countries operate. That’s a very importantpoint. My only worry is that the length of time thatit’s taking to write the bill! The biggest beneficiariesof this bill, by any yardstick, will be the indigenouscompanies, the local companies.” ■

“The biggest beneficiaries ofthis bill, by any yardstick,

will be the indigenouscompanies, the local

companies.”

The mammoth 223-page PIBseeks to reform, deregulate

and liberalise the oil andgas sector.

The Nigerian draft Petroleum Industry Bill (PIB) has been hailed as a landmarkopportunity to introduce a new era of reform to Nigeria’s oil and gas industry. Stephen Williams reports.

Explaining

the PIB

Deizani Alison-Madueke recentlypresented at the New WorldNigeria summit.

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THE NIGERIAN CONTENTDevelopment andMonitoring Board (NCDMB)and the Nigerian NationalPetroleum Corporation(NNPC) have resolved tointegrate Nigerian Contentinto downstreamoperations of the oil andgas industry, including theTurn-Around Maintenance(TAM) planned for the four refineries within the next two years.This was part of the strategic agreement reached between the topmanagement of NNPC led by the Group Executive Director, incharge of Refineries and Petrochemicals, Mr. Anthony Ogbuigwe andthe Executive Secretary of NCDMB, Mr. Ernest Nwapa in Yenagoa.Nwapa said appreciable progress had been achieved in the upstreamsubsector of the industry where his agency had set up an effectiveprocess for interfacing with operators and service companies topositively influence their activities, pointing out that a similarmodel needed to be worked out for the downstream.To achieve this, Nwapa said: "Institutional synergies must beenhanced at strategic levels, where the NCDMB would be able toobtain the subsector's long term plans, so as to identifyopportunities, devise programmes and interface points that will bestgrow Nigerian Content in the downstream without disruptingoperations".This, he said, would "engender job creation, spur local equipmentmanufacturing, retain spend, transfer technology and deliver otherbenefits of implementation".

SHELL PETROLEUM DEVELOPMENT Company of Nigeria (SPDC), a subsidiary ofRoyal Dutch Shell (Shell), has completed the US$102mn sale of its 30 percent interest in Oil Mining Lease (OML) 40 in the Niger Delta to ElcrestExploration and Production Nigeria

The divestment is part of Shell's strategy of refocusing its onshoreinterests in Nigeria and is also in line with the Federal Government ofNigeria's aim of developing Nigerian companies in the country's upstream oiland gas business. Including this license, six onshore lease assignments havebeen completed by SPDC in Nigeria since 2010.

"These divestments mark another step in the strategy to re-focus theSPDC portfolio,” said Mutiu Sunmonu, the company’s country chairman inNigeria. “SPDC is positioned well for investment and growth opportunities inall areas, including domestic gas, which will be delivered with the support ofour government, partners and the people of Nigeria."

Shell, which has been in Nigeria for more than 50 years, has stated that itremains committed to keeping a long-term onshore and offshore presence.Elcrest Exploration and Production Nigeria Limited is a majority Nigerian-owned consortium consisting of Starcrest Nigeria Energy Limited and ElandOil and Gas Limited.

OML 40 covers an area of nearly 500 sq km and includes the Opuama,Abiala and Adagbassa Creek fields and related facilities. Operations had beensuspended since 2006 because of militant activity.

Total E&P Nigeria Ltd (10 per cent) and Nigerian Agip Oil Company Ltd(five per cent) have also assigned their interests in the lease, effectivelygiving Elcrest a 45 per cent interest.

NIGERIA’S PETROLEUM MINISTER, Mrs Diezani Alison-Madueke,has reiterated the government’s support for local oil companies inall aspects of the oil and gas sector, saying plans were in the worksby the government to raise funds in support of genuine localinvestors wishing to exploit opportunities in the sector.She spoke at the inauguration of Orient Petroleum Plc’s AnambraRiver Production Facility in Aguleri-Otu in Anambra State, the firstoil production from an inland basin in Nigeria.According to Alison-Madueke, President Goodluck Jonathan hasdirected both the Ministry of Petroleum and the Ministry of Financeto set up an inter-ministerial committee to fashion out modalitiesfor raising financial support for indigenous oil companies likeOrient who are ready to invest not only in production but also inrefining to add value to the crude oil and gas locally beforeexporting in order to generate employment for the youth and moremoney for the country.Maintaining that the significance of the event was not just in thediscovery and production of oil from an inland basin, she said thegood thing was that the achievement was by an indigenous company.“This shows the way we want to go in the industry; we want toencourage more indigenous oil companies to emulate OrientPetroleum Resources in investing not just in production but also inrefining. “We are working with the Ministry of Finance to set up aninter-ministerial committee to work out ways to give financial supportto indigenous companies to bring in modular refineries,” she stated.

Nigeria pledges support for local oil firms

A MULTI-BILLION naira gas project that will boost power generation inNigeria by 1,000 MW, could be ready for commissioning by the end ofthe year.The project is being executed by a consortium of private investorswhich include Frontier Oil Limited, Gulf Energy Nigeria Limited andSepta Energy Nigeria Limited, in the Esit Eket Local Government Areaof Akwa Ibom.Briefing the Akwa Ibom Governor, Chief Godswill Akpabio, in Uyo, theChairman of Frontier Oil Limited, Chief Odoliyi Lolomari, said that theplant had the capacity to produce two million cubic feet of gas.Lolomari, who led management teams of the three companies, saidthat the 62-km gas pipeline from Esit-Eket area to Ibom Power Plantand Aluminium Smelter Company of Nigeria, ALSCON, all in Ikot AbasiLocal Government Area, would also be ready.The chairman described the plant as an important project and a majormilestone in the life of Frontier Oil Limited. Responding, Akpabio thanked the companies for the successful completionof the project. He said that the project was strategic to the transformationagenda of President Goodluck Jonathan in the power sector.“This is a practicable step by the private sector to look into gas flaring;Akwa Ibom is proud to partner with you on this project.“We will continue to encourage you. We will encourage every privateindustry, at least one in every local government area, to createemployment opportunities for our children.“We have set aside funds to encourage the private sector to establishthe industries. The oil and gas industry should also invest in othersectors, particularly the agro-allied industry.”The governor lauded the cordial relationship between the companiesand the host communities and urged them to create employmentopportunities for indigenes of the host communities.The MD of Frontier Oil Ltd, Mr Dada Thomas, said that the companyhad made substantial progress in the ongoing Uquo Field developmentand construction of the gas plant. He requested President GoodluckJonathan, through Akpabio, as well as notable players in the powerand petroleum sector, to witness the inauguration of the projects.

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Shell Nigeria sells OML stake to Elcrest

Private sector gas project NNPC, NCDMB to integrate NigerianContent into refineries


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S05 ORA 5 2012 Ghana_Layout 1 02/10/2012 16:46


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ALDUCO ENERGY WAS set up to help companies meet their objectives throughassisting them to ensure the integrity of their facilities. It provides asset integritymanagement services for new and mature facility owners. Its core activitiesinclude Non-Destructive Testing (NDT), Risk-Based Inspection (RBI), corrosioncontrol and Cathodic Protection.

Protecting oil and gas facilitiesOil & Gas infrastructure locally, regionally and globally has one thing in common,which is corrosion problems. Managing corrosion is one of the key challengesfacing operators in their drive to maintain the integrity of their assets. Stringentregulatory and company requirements are making companies ensure the integrityof their infrastructure by implementing asset integrity management solutions, tomake sure their facilities are in a safe operating condition, as failure to do socould result in facilities whose integrity are compromised, the result could becostly unplanned shut downs, accidents, major financial loss, environmentaldamage and even potential fatalities with serious legal consequences.

The challenge faced by asset owners especially those that operate offshore isthe complexity and high cost of replacing subsea corrosion control systems,especially depleted Cathodic Protection (CP) systems, ie, anodes. The oil & gasindustry is constantly engaging the services of specialist corrosion controlcompanies like Alduco Energy to assist them to mitigate their corrosion problems.From its two bases in Nigeria and Equatorial Guinea, Alduco Energy has beingproviding the world’s most innovative and cost effective Cathodic Protection (CP)solutions, to assist operators in extending and maintaining the integrity of their

assets including platforms, FPSOs, pipelines and other subsea infrastructure.Alduco Energy has carried out numerous retrofits of depleted CP systems that

were no longer protecting the facilities they were intended to protect, due todamage or because they had reached the end of their design life. This has beendone in record time, with minimum disruption to the operations of the oil & gascompanies, and with cost savings in some cases as much as 80 per cent. AlducoEnergy’s solutions have helped to extend the life, by between five to 20 years, ofmany oil & gas facilities in the Gulf of Guinea. Alduco Energy’s client list includesExxonMobil, Marathon Oil, Hess, SBM Offshore, EGLNG, Perenco, Noble Energy,Atlantic Methanol Production Co, Globestar, Cakasa, and Consolidated ContractorsCompany, among others.

In recognition for its work in the oil & gas industry in the Gulf of Guinea,the company was given the prestigious award of National Company of the Year2012 by the international Oil & Gas publication, The Oil & Gas Year (TOGY).The award was presented to the Managing Director of Alduco Energy, AlfredoJones, by His Excellency the Minister of Mines, Energy & Industry of EquatorialGuinea, Gabriel Mbaga Obiang Lima.

Alduco Energy takes its local content obligations very seriously, and toenable it to be at the forefront of the latest Asset Integrity Managementmethods and technology, it has formed a joint venture (J/V) with DeepwaterCorrosion Inc, a world leader in the provision of life extension solutions foroffshore oil & gas facilities. Deepwater Corrosion Inc engineers from Houstonwork alongside Alduco engineers in Nigeria, enabling technology transfer andbuilding the capacity of the team, which in turn has permitted the company tooffer its world class services to its clientele in the Gulf of Guinea, competingwith well established international companies and in some casesoutperforming them.

Alduco Energy is a Nigerian company that has being makingwaves in the oil & gas industry in the Gulf of Guinea.

Making waves in the services sector



TTHE GHANA PETROLEUM Commission(GPC), the government body set up tosupervise the oil sector, is stepping upefforts to enforce the government’s local

content policy in the oil and gas industry. KwabenaDonkor, the managing director of the commission -which also awards licences and oversees legislation– has issued a warning to foreign oil companies inthe country that they will soon be obliged tocomply strictly with rules concerning work permits.

Before arriving in the country, expatriates willhave to submit resumés, a clean police record andother documents to the GPC for scrutiny andapproval. Before Donkor’s announcement, most oilcompanies simply submitted paperwork to thestate-owned oil company, the Ghana NationalPetroleum Corporation (GNPC), without waiting forits agreement to bring in workers from abroad. Theauthorities agreed to that simple practice tocircumvent official red tape. In addition to Donkor’swarning, the GPC has sent written inquiries to oilcompanies active in Ghana about their plans toboost the number of locals in their workforce.According to the GPC, the companies will alsoimpose a minimum requirement of Ghanaianworkers on offshore oil rigs.

The policy’s stipulationsLocal content, according to the GNPC, is the levelof use of Ghanaian local expertise, goods andservices, people, businesses and financing in oil andgas activities. The local content policy stipulatesthat all regulatory authorities, operators,contractors, sub-contractors and any other entitiesinvolved in any project, operations, activity ortransaction in the Ghanaian oil and gas industryshall consider local content as an importantelement in their project development andmanagement philosophy for project execution.

The policy seeks to give first consideration toGhanaian independent operators in the award of oilblocks, oil field licenses, oil lifting licences and inall projects for which contract is to be awarded inthe Ghanaian oil and gas industry. An importantfeature of this policy stipulates that, where bids arebeing evaluated, and where bids are otherwiseequal, the bid containing the highest level ofGhanaian content shall be selected. Such aprovision sounds great for local Ghanaian operatorsand businesses and will in effect place Ghanaiansat the forefront of the nation’s oil business in arelatively shorter period.

In the case of non-Ghanaian ownership andoperations, the entity must provide for the

participation of a citizen of Ghana in an interest of atleast five per cent in the exploration and productionactivities under petroleum licenses. Anotherimportant feature of the policy is that a fund, Oil andGas Business Development and Local Content Fund,is to be established to support local capabilitydevelopment aspects of the local content framework.The fund will be used primarily for education, trainingand research and development in oil and gas.

Sources of the fund will include contributionfrom licensed operators, oil and gas revenue, levies,grants and other support from Ghana’sdevelopment partners. The ministry of energy willoversee the disbursement of the fund. This isundoubtedly fitting for a developing nation likeGhana but it remains to be seen how effective theadministration of this fund will be.

In general, the move by government isexpected to obligate operators to attach significantimportance to local content and to ensure that asmany benefits as possible are retained in the localeconomy by indigenes.

Developing local capabilityThe issue of local participation in the country’snascent oil industry is of grave importance to thegovernment. Integrating Ghanaians into all aspectsof the oil and gas industry will be of maximumbenefit to the country. ‘It is our wish that within adecade, the country will be able to achieve at least90 per cent local content and local participation inthe oil and gas industry,’ Energy Minister Joe Otengsaid earlier this year. Oteng told a trades union groupin Accra recently that plans were far advanced toprepare a schedule by which the strategy would berolled out in advancing the stake of Ghanaians in theindustry as stipulated in the policy frameworkdocument – the Local Content and LocalParticipation in Petroleum-related Activities - whichwas approved by the cabinet earlier this year.

‘We hope to see the development of localcapability in all aspects of the oil and gas value chainthrough education, skills and expertise development,transfer of technology and know-how and activeresearch and development activities,’ Oteng said.

Scholarship packages availableIn order to meet the high expertise and skillsneeded in the industry, building the capacity of thelocal people had become paramount and thegovernment, in collaboration with operatingcompanies, had arranged scholarship packages forGhanaians to pursue further studies in various fieldsas part of the nation’s capacity-building and local

The issue of local participation in the country’s nascent oilindustry is of grave importance to the government.

Such a provision will in effect place Ghanaians at

the forefront of the nation’s oil business in arelatively shorter period.

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Integrating Ghanaians into all aspects of the oil and gas industry will be of maximumbenefit to the country. Jon Offei-Ansah reports.

Local capability in

all aspects


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content efforts to achieve desired levels ofexpertise and know-how over time.

The government is also rolling out an Oil andGas Capacity Building Project which would focus onbuilding capacity to manage Ghana’s oil resources.‘In addition, the government is collaborating with

the upstream oil companies working in Ghana toprovide overseas training to Ghanaians as part ofthe local content provisions in the respective oiland gas contracts,’ Oteng said. Through suchstrategic oil and gas-

driven industrialisation programmes, thegovernment believes the manufacturing sectorwill receive a significant boost, which will in turncontribute to a rapid and sustainable growth ofthe economy.

The operator of the country’s major Jubilee

oil field, Tullow Oil, says local content build-upis at the heart of its operations because of thecommercial advantages. According to Tullowcommunications manager Gayheart Mensah,local capacity building and capabilitydevelopment helps to ease access to local rawmaterials for the company whilst creatingshared prosperity in the country.

A business imperative‘We see local content as a business imperative. Itmakes commercial sense. If you are able to developthe local capacity of communities within which youoperate, it helps you to source your raw materialsand other services required locally,’ he said. Mensahadded that Tullow has devoted time and resourcesto invest in training of local suppliers across thecountry to service the budding oil and gas industry.

‘We have set up an entire department solelyfocusing on local content and the purpose is tocome up with measures and interventions that willhelp us to focus on developing local capacity insupport of the oil and gas industry,’ Mensah toldthe Ghana News Agency (GNA) recently. A TullowGroup Scholarship Scheme was recently launchedin conjunction with the British Council to helpdevelop local skills and expertise in the oil industryby supporting post-graduate degrees, technicaltraining and vocational studies. ■


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Local content is seen as abusiness imperative.

Local content build-up is at the heart

of Tullow’s operations.

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GHANA IS EXPECTED to produce its first gas from the Atuabo Gasprocessing Plant by January 2013 after the completion of the firstphase of the project by December 2012.The first phase involves the construction and installation of equipment.Victor Kofi Sunu-Attah, a Project Development Manager from theGhana National Gas Company (GNGC), stated this during a recentpresentation in Accra.The initial projected feed gas rate from Atuabo will be 150 mmscfd.The project, being undertaken by GNGC and its Chinese contractorsSinopec, includes the construction of associated infrastructure atAtuabo and surrounding communities in the Western Region.The facility will process gas from the Jubilee field into clean fuels andfeedstock for the domestic and export markets while promoting thedevelopment of the country’s petrochemical industries to eliminate theflaring of gas.Mr. Sunu-Attah indicated that “GNGC has been given its marchingorders by the Ministry of Energy to give the first gas to the Volta RiverAuthority (VRA) by February of the same year (2013).” He explainedthat there has to be a pre-commissioning and commissioning of thepipeline. Pre-commissioning is a series of processes carried out on thepipeline before the final product is introduced while commissioningmeans introducing the gas into the pipeline.Mr. Sunu-Attah noted that the first phase of the project includes the“completion of storage facilities and an offshore buoy for export ofliquefied petroleum gas (LPG) and condensate at Domunli in theWestern Region.He said the medium-long term development and expansion phase ofthe project includes a network of pipelines from the FPSO facility andother reserves from the basin to the gas processing plant.In the near future, he said GNGC will float shares on the stock marketto ensure “wider Ghanaian participation in petroleum activities andeconomic and social benefits from broadening ownership in thecountry’s natural resources.

Ghana’s gas ready by January


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S06 ORA 5 2012 South Africa_Layout 1 02/10/2012 17:43


RRECENT NEWS ON the oil and gas sectorin sub-Saharan Africa has beendominated by discoveries of vastresources in several countries including

Ghana, Uganda, Tanzania and Mozambique.Tanzania tripled its estimated gas reserves in

June after offshore finds by Norway's Statoil,ExxonMobil and Britain's BG Group and is studyingvarious models for managing revenues from gasproduction, including a sovereign wealth fund tofacilitate the use of natural gas revenues and tospeed up development.

East Africa's second-biggest economy, Tanzania,joins other African countries like Nigeria and Ghanawho are also moving towards state-ownedinvestment funds for revenues generated from theenergy sector. It is also working on a new nationalgas policy, gas utilisation plan and legislation toregulate the industry.

The country’s recoverable onshore and offshoregas reserves are estimated at 28.9 tcf. Gasexploration has escalated since 2010 and there arenow about 18 companies involved. According tothe World Bank, Tanzania could see an increase inrevenue of up to US$3bn a year from gas exports.Other advantages include boosted powergeneration with some 350 MW of electricity in thenational power grid currently coming from naturalgas. The target is 3,500MW by 2015.

In Kenya, Tullow Oil said it planned toaccelerate drilling after making the East Africanstate's first discovery earlier this year.

Alongside Africa Oil, Tullow is deploying tworigs in Kenya and one in Ethiopia this year toconfirm reserves after the Ngamia-1 welldiscovered more than US$100m of light oil. Chieffinancial officer, Ian Springett, commented in Julythat Kenya has the potential to exceed Uganda,where Tullow plans to invest more than US$10bnwith its partners to access an estimated 2.5-bnbarrels of oil. The British company's Kenyanexploration acreage may hold as much as 10-bnbarrels. Tullow's first-half output in Kenya averaged77,400 barrels with production expected to exceed90,000 bpd by the end of the year.

Tullow said that a potential export pipeline fromUganda could cross Kenya to bring oil to a port onthe Indian Ocean coast. In Ghana, it has appliednew production methods intended to almost doubleoutput to 120,000 bpd by next year.

Large natural gas discoveries off the coast ofMozambique have also put that country in thespotlight. According to Bain and Company,“Mozambique is in place to become one of the

world’s largest exporters of LNG, and largeinternational oil companies are the obviousplayers as they have the technical know-how andscale to develop, operate and maintain massivegas fields in deep waters.

Anadarko Petroleum estimates its reserves offnorthern Mozambique at 1.4 tcm and Eni recentlyannounced that a new discovery at its Mamba fieldwould take gas in place to about 1.95 bcm.

Sasol initiatives in MozambiqueSouth African multinational Sasol says itsinitiatives in Mozambique include the expandednatural gas central processing facility in Temane.It also plans to develop additional gas-firedelectricity generation in Mozambique, inpartnership with the country's state-owned powerutility, Electricidade de Moçambique.

For South Africa’s national oil company,PetroSA, Mozambique's proximity means that thegas fields could be a boon for its gas-to-liquidsrefinery in Mossel Bay, which faces decliningsupplies. The gas revolution in Mozambique isexpected to give PetroSA supply options for theMossel Bay plant, its main revenue driver.

Currently, PetroSA's hopes for feedstocksolutions hinge on the production of gas from itsSouth African offshore gas field as part of ProjectIkhwezi, which entails producing gas from a new

field about 80km off the coast. The first gas isscheduled to flow from this field next year withproduction expected to continue for about six years.PetroSA said further development of other gasprospects near the field could help to sustain thelife of the Mossel Bay refinery until 2025.

"Project Ikhwezi creates a critical opportunityfor sustaining the operations of our gas-to-liquidsrefinery. It ensures that we continue to play avital role in the South African petrochemicalsmarket. Most importantly, PetroSA will continueto be a source of much-needed employment inthe southern Cape," PetroSA CEO NosizweNokwe-Macamo said.

The company said the drilling operation for thefive Project Ikhwezi wells was scheduled to start inNovember and should be completed by the secondquarter of 2015. It will take approximately sixmonths to complete each of the five wells, withwork on installation of subsea pipelines expected tostart in the last quarter of this year.

PetroSA has also entered into a co-operationagreement with its Mozambique counterpart,PetroMoc, and wants to jointly develop and operatea gas-to-liquids refinery in Mozambique.

PetroSA aims to be downstream player The relationship with PetroMoc could help PetroSAachieve its aim to be a player in the downstreamsector as part of its strategy to become a fullyintegrated, commercially competitive national oilcompany supplying at least 25 per cent of SA'sliquid fuel needs by 2020. Its acquisition in May ofBP's inland petroleum storage facilities is part ofthe plan to enter the downstream market.

PetroSA is planning to build a large crude oilrefinery, the cost and size of which will be

PetroSA's Project Ikhwezi.

Mozambique's proximitymeans that the gas fieldscould be a boon for its

gas-to-liquids refinery inMossel Bay.

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34

Lack of supply has hampered development of the natural gas industry – until now.

Mozambique’s gas fields - a boon for Mossel Bay’s

gas-to-liquids refinery ?


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determined by the joint study agreement it signedwith Chinese oil and gas group Sinopec. The costsof the refinery, also known as Project Mthombo,have previously been estimated at $9bn, with acapacity of 360 000 barrels a day.

In August PetroSA announced an agreementwith Anadarko Petroleum for the exploration ofblocks off the South African coast. EvertonSeptember, Petro SA’s vice president for newventures said: “This deal represents a significantlandmark in the development of the oil and gasindustry in South Africa. Anadarko has anexcellent track record in successful explorationand production.”

Although South Africa does not havesignificant proven gas reserves, the potential forreserves to be found remains a possibility,according to a report by PwC. Chris Bredenhann,PwC Southern Africa Energy Leader, said thatwhile the introduction of more natural gas intothe energy mix in South Africa could lead to areduction in greenhouse gas emissions, thedominance and relatively low cost of coal waspreventing natural gas from taking a larger share.

While the debate about hydraulic fracturing forshale gas in the Karoo continues to grab thespotlight amid environmental concerns about theecologically sensitive and arid region, PwC said thebroader discourse about the role of gas in the

energy mix needed to continue. Based on the extent of actual and proposed on-

and offshore exploration activity, the number oflicense applications submitted to the gas regulator,and the specific energy needs of the country, PwCfound that there is significant interest in exploring forand developing a natural gas industry in South Africa.

Barriers to the development of the industrycould be overcome by importing gas, although thecountry would then be exposed to commodity andexchange rate risks. Although Government hadindicated support for increasing the share of naturalgas in the energy mix, another barrier was the lackof a credible industry development plan.

Also, in terms of South Africa law, mineralresources belong to the state and not thelandowner. Bredenhann said this created anincentive for landowners to allow for explorationand production.

For a natural gas market to develop in SouthAfrica, certainty of supply is required.

There is significant, although unprovenpotential for indigenous natural gas reserves,mostly in the form of shale gas in the Karoo, butthe impact of coal bed methane gas should alsonot be underestimated. In addition, thediscoveries in Mozambique and Tanzania couldprovide additional gas resources.

The report states that demand for natural gas

will be influenced by carbon constraints, as itbecomes increasingly difficult to obtain funding forcoal-fired power stations due to the high levels ofgreenhouse gas emissions. “This will more thanlikely lead to increased demand for natural gas andrenewable energy,” said Bredenhann.

The immaturity of the natural gas industry inSouth Africa means there’s not muchcompetition. Bredenhann says this can beattributed to the lack of indigenous supply andthe dominant position of Sasol in the localmarket. This position is protected by the Gas Act,which gives Sasol exclusivity for the importationof natural gas from Mozambique until 2014.

Given the significant investment required tobuild pipelines and processing facilities, anotherfactor affecting competition is the capital intensityof the industry. ■


So

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The Coega Development Zone.



LIBYA IS CURRENTLY producing an average 1.6mn bpd and expects toincrease output by 30,000-40,000 bpd by early 2013 once repairs toone of the pipelines in eastern Libya are completed, according to NuriBerruein, National Oil Company Chairman."We have held back production from some oil fields in order to preservewellhead integrity so that we do not cause any damage," Berruein said,adding that a pipeline being built in partnership with Wintershall ofGermany would be completed "in record time," allowing oil productionto resume at higher levels from three or four fields in the Sirte Basin thatis currently being held back.NOC and Wintershall agreed in June to build a new pipeline to replace acorroded pipeline that links a cluster of fields in the eastern Sirte province,the first major infrastructure project to be undertaken since the end of therebellion that ousted Moammar Gaddafi in October last year.When completed, export capacity is expected to rise by 100,000 bpd.Foreign oil companies shut down production and evacuated staff fromLibya at the start of the anti-Gaddafi rebellion in early 2011, leading toa total shutdown of production in the OPEC member state. Libya wasproducing an estimated 1.6-1.7mn bpd before the crisis and has beenable to restore capacity to its previous levels relatively quickly since theend of the civil war.Berruein said the target was to produce 1.8mn bpd by 2013 and reiteratedthe target of two mn bpd by 2015, which Oil Minister AbdulrahmanBenyezza has said remained the target under an existing five-year plan.Oil exports are averaging 1.1-1.2mn bpd, slightly below earlierestimates, as all Libyan refineries have resumed full operations. The220,000 bpd Ras Lanuf refinery, which resumed normal operations

earlier in September, is operating at 180,000 bpd, Berruein said. Gas production is still at around two-thirds pre-crisis volumes becauseof technical problems with some subsea wells that still need to bebrought back, he said, adding that he expected gas exports to Italy tobe restored to their previous level by the end of the year.Having restored oil production to pre-crisis levels, Libya is now lookingahead to a stepped-up exploration campaign in an effort to boost bothits oil and gas reserves, expanding and upgrading its oil refineries aswell as developing its shale gas reserves.Berruein said the foreign oil companies that were awarded explorationacreage in 2006 and 2007 are due to resume their activities in early 2013.He said BP, which won one a major exploration deal during the Qadhafiera, had committed to drilling five wells in deep offshore waters,hopefully before the end of 2014, assuming the right drillship is secured. Most of the seismic surveys have been completed and companies thathave made discoveries offshore will have to return to Libya to assesstheir discovery.Total's managing director in Tripoli, Bernard Avignon, said that theFrench major, with partners Wintershall of Germany and NOC, plans tobegin offshore exploration next month.Libya has had four bidding rounds since December 2004, shortly afterUS and UN Security Council sanctions that had held back Libya's oil andgas sectors for several years were lifted.Future bidding rounds will have to be tweaked because Libya needs state ofthe art exploration for the less prospected areas and for the deep offshore."We are not going to offer any concessions until a proper government isin place," Berruein said.

37

Libya

Libya targets oil production increases to 1.8mn bpd in 2013



THE CHANGE IN landscape initiated by theArab Spring has provided severalopportunities and challenges forinternational oil companies (IOCs) thatoperate in North Africa. OMV Senior VicePresident Dr. David Latin recently spoke toThe Energy Exchange outlining thesechallenges as well as the steps taken tobuild a sustainable oil and gas industry in theNorth African region.Prior to the war, oil in Libya accounted for 70per cent of the country’s GDP, 95 per cent ofexports and nearly 90 per cent ofgovernment revenue, estimates theInternational Monetary Fund, placingsignificant stress on OMV and other IOCs.Dr. Latin said that the industry provides

significant value to the countries theyoperate in, in terms of jobs, revenues,infrastructure and community relation work.With the political environment still evolvingas newly appointed officials take office, Dr.Latin stated that rapid decision making isone of the key challenges faced by OMV inthe midst of all the ambiguity. In addition,security has to be managed carefully,particularly in Libya and in Tunisia.Libya, the world’s ninth largest oil-producingcountry with more than 47bn barrels of oil,holds the largest oil reserves in Africa. Thisoil-rich nation is ideal for IOCs to thrive in;however the current lack of capabilitybuilding is a challenge as it constrainsgrowth. as well as the implementation of

multi-billion dollar projects.Dr. Latin said: “We want to build localcapability and to utilise local content andcontracts wherever we are able, but wealso want to be able to execute activitiesto very high standards in a relatively shortperiod of time.”In an effort to maximise local content andretain industry knowledge in North Africa,OMV is currently running specificdevelopment programmes. Around 10 per centof the organisation’s current global productioncomes from Libya, where they remain acommitted partner with plans to grow theirbusiness over the next five years. In addition,OMV is also actively evaluating opportunitiesin other North African countries.

PT MEDCO ENERGI Internasional (MEDCO), a publicly listed oil and gascompany in Indonesia, has announced that it will be launching a jointoperation company in Libya. This will be initiated in October and it willbe overseeing the development project of its oil field in the country.The to-be developed oil fields are found in area 47 which received thecommercial approval of the Libyan government in December. 18 oilwells have been discovered in the area and they will be exploited byMedco Energi Internasional and the Libyan Investment Authority (LIA).The stakes of the joint operating company will be divided betweenthree institutions; namely the Libyan government, the LibyanInvestment Authority and Medco Energi Internasional with 50 per centof the stakes accorded to the government and the remainder will beshared among the other two respectively.Medco president director, Lukman Mahfoedz, said the joint venture willcost US$800mn. Medco will invest US$200mn in the project, funded byinternal cash and bond proceeds. He added that the project has been inthe preliminary engineering stage and it will produce 50,000 bopd.Production is expected to begin in 2015. The project, according to him,was planned during the reign of Ghadaffi but the outbreak of thepolitical conflict which late uprooted him delayed it.

Medco Energi is the first Indonesian company operating in the oil & gasexploration and production business listed on the Jakarta StockExchange since 1994. And it is trying to stand out at the internationalstage as it focuses on oil and gas, power generation and renewablefuels. Less then two weeks after the ruthless assassination of USambassador in Libya, this new oil exploitation is interpreted as apositive signal by Libyan authorities, who were fearingdisinvestment.

MABRUK OIL OPERATIONS is one of the oil companies operating onbehalf of National Oil Corporation (NOC) and Total E&P. The company hasthree main operational sites in Libya with its main office in Tripoli.The Mabruk Field is an onshore field located about 170 km south ofSirt. The Al-Jurf field is an offshore field situation close to the Tunisianborder, 1,200 km off the coast and 150 km from Tripoli. A fixeddrilling and production platform (BD1) in a water depth of 87 m islinked to an FPSO in 83 m of water via 10" sea line of about 3 kmdistance. The production here reached maximum capacity of 40,000bopd in less than a year from production start. The company needed to have a reliable and high performance networkfor data and voice applications, critical for the company business.The VSAT network implemented by the Digital Group connects threesites, the HQ in Dal-Elmad Complex in Tripoli (Mabruk's headquarters),Al-Jurf (BD-1 and FPSO) and Mabruk Field. The satellite used is T 11N (Telesat) located at 37.5° west on Ku-band -this satellite has been in service since 2009 and is the preferred choice

for VSAT and IP solutions.Because this network will be used for data and voice traffic, areliable connection and quality of service (QoS) is needed, so SCPC(single channel per carrier) technology was used. It is a reliableapproach that can guarantee QoS in terms of data transmissionrates and voice quality, albeit at higher running costs because thesatellite capacity is not shared.Internet service has also been provided to Al-Jurf field (BD-1 andFPSO) on the same equipment, where the uplink is used on the samecarrier, but the downlink is used on another carrier. The service is forinternational internet backbone connectivity between the Europeaninternet backbone and customer facilities via the hub through asingle satellite hop.The total bandwidth for this network is 10Mbps, where the inbound foreach remote site is 2.5Mbps and the outbound is 5Mbps. For eachremote site there are 20 voice channels working via the VSAT systemand the quality of the voice is perfect.

New oil exploitation joint venture

Mabruk Oil operations' VSAT network

Illustrating OMV programmes to develop local content in North Africa

Lib

ya


S07 ORA 5 2012 Geology_Layout 1 02/10/2012 17:46


BG GROUP IS planning anew 3D seismic surveyover the L10A and L10Blicence areas, off Kenya,after shoots carried outearlier this year yieldedpromising results.

The British companywill carry out a 2280 sq-kmshoot over the western portion of the licence areas, covering the cluster of largeMiocene reefs and the large Crombec lead.

BG completed both 2D and 3D seismic surveys over the licence areas earlierthis year, with joint venture partner Pancontinental saying that, whileprocessing and interpretation was still ongoing, preliminary results had been“very encouraging”.

It noted a cluster of more than 10 potential Miocene reefs had beenidentified from the seismic surveys, in water depths of about 500 m and within50 km of the port of Mombasa.

It was also through these surveys that the large Crombec lead wasidentified, a large anticline in the western portion of the licence areas whichhas apparent four-way dip closure from the Lower Jurassic to the Tertiary.

Pancontinental noted the lead had sands onlapping the crest whichindicated a growth structure.

The new 3D survey is scheduled to kick off in November, with interpretedresults expected to be available by the second quarter of next year.

The joint venture is considering starting drilling operations in the licenceareas next year.

DOLPHIN GEOPHYSICAL HASreceived a Letter of Intent byShell South Africa Upstream BVfor up to 8,000 sq km 3Dseismic acquisition, offshoreSouth Africa. The survey will beacquired by M/V Polar Duchessand will commence in Q4 2012. M/V Polar Duchess is a purposebuilt high-end 3D seismicvessel, capable of towing 14 streamers at 100 m separation."We are very pleased to be working for Shell on this survey, our first for asuper-major” says Atle Jacobsen, CEO. “This is the second high profile 3D jobthat Dolphin have been awarded this month and is a confirmation that DolphinGeophysical have developed into becoming a recognised supplier of seismicservices after only 18 months in business".

Major 3D seismic survey in South Africa

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BG plans more Kenyan seismic

BEACH ENERGYLTD started a1,800-km 2Dseismicprogramme onthe South blockof LakeTanganyika,Tanzania.Early resultsindicated a riftstructure andstyle similar to that seen in the Lake Albert portion of the riftwhere Tullow Oil has discovered oil.Fugro Oceansismica is doing the survey that is expected tolast two months followed by seven months of interpretation. A local ferry, MV Mwongozo, was converted into a seismicacquisition vessel including quality control equipment tomake possible identification of prospects and leads of interest.Infill seismic is scheduled to follow the 2D work.In June 2010, Beach signed a Production Sharing Agreementwith the Tanzanian Petroleum Development Corporation andthe government of Tanzania covering the Lake TanganyikaSouth block. Since that time, Beach has conducted aerial high-resolutiongravity and magnetic surveys and a bathymetry survey overthe lake, which has satisfied its financial commitment for thefirst four year term of its exploration agreement with thegovernment.

Beach starts seismic survey on LakeTanganyika

Namibia seismic survey steaming aheadSERICA ENERGY'S SEISMIC operations are progressing as plannedoffshore Namibia. The 10-streamer vessel Polarcus Nadia started the 4,150-sq km 3Dsurvey in the Central Luderitz basin is nearly complete. Data acquired to date has been of good quality, according to Serica ,and should lead to fuller delineation of numerous potentiallysignificant prospects that have already been identified.



BP AND ENI subsidiary International Egyptian OilCompany (IEOC) have reported two gas discoveriesat Taurt North and Seth South in the pair’s NorthEl Burg offshore concession in Egypt’s Nile Delta.The British supermajor said the pair of finds werethe fourth and fifth to be made in the concessionfollowing the Satis-1 and Satis-3 Oligocene deepdiscoveries and last year's Salmon-1 shallowPleistocene discovery.

The two latest wells were drilled by IEOC onbehalf of operator BP using the Scarabeo IV rig inwater depths of 110 and 78 m respectively.

“The wireline logs fluid samples, and pressuredata confirmed the presence of gas in onePleistocene interval in Taurt North and two Plio-Pleistocene intervals in Seth South,” BP said.

The concession lies in water depths of 60 to100 m, and is situated between the BP-operatedRas El Bar development concession and the IEOC-operated offshore Baltim development concession.At Ras El Bar BP operates the concession on a 50per cent stake under its Pharaonic PetroleumCompany joint venture with Egyptian GeneralPetroleum Company (EGPC) and Egypt Natural GasHolding (Egas), with IEOC holding the other half.

In June, BP and IEOC saw first gas threemonths early from Ras El Bar’s Seth field, whereoutput is expected to reach 170 mmscfd.

BP has interests in a total of eleven concessionsin the Nile Delta, with operatorship of six.

AUSTRALIAN JOINT VENTURE partner, Pancontinental Oil & Gas, has revealed an important new gasdiscovery has been made in Kenya with the Mbawa deep-water exploration well. The company announced the Mbawa-1 well, operated by Apache, measured 52 net metres of gas pay in theprimary Cretaceous sandstone target.The well is still drilling towards an expected total depth of 3275 m, and there is a secondary target reservoiralong the way.Pancontinental chief executive, Barry Rushworth, said Mbawa is "the first ever substantive hydrocarbondiscovery offshore Kenya. With drilling continuing to a deeper exploration target, these interim results maybe the first part of the story in this well, and they are certainly just the beginning of the main story of oiland gas exploration offshore Kenya.”The well is being drilled using the drillship Deepsea Metro 1 in a water depth reaching 860 m.

Apache makes first offshore Kenya gas discovery

42

Gas

BP and Eni make doublegas find off Egypt

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TANZANIA WILL REVIEW all contracts withoil and gas exploration companies by theend of November, as the East African nationoverhauls its laws following a string ofmajor natural-gas discoveries.The government will examine more than 20contracts to ensure that they are in the"best interests of the Tanzanian people,"said Eriakimu Maswi, permanent secretaryat Tanzania's Energy and Minerals Ministry.The government also wants to ensureTanzania's state energy firm plays an activerole in oil and gas projects.Tanzania's move comes amid a growingtrend across the continent, wheregovernments of newly resource-rich nationsattempt to balance their citizens' desire for ashare of any future wealth with sufficientincentives to attract foreign investment.East Africa's coastal waters are estimated tohold up to 441 tcf of natural gas. Tanzania,whose own reserves estimates have nearlytrebled after discoveries by firms like Statoil,Ophir Energy and BG Group, is expected tojoin Kenya and Mozambique as a majorenergy export hub to Asia. Like Tanzania,Mozambique is also mulling a new law toreplace its existing resources legislation.

Tanzania to revise gasdrilling deals

S08 ORA 5 2012 Gas_Layout 1 02/10/2012 17:48

International showcase and conference for oil exploration, production, refining and petrochemicals, where service and supply

companies meet oil and gas producers and refiners.

Exhibit sectors include: Exploration and production technology LNG Pipelines

Refinery development HSE Training

The exhibition runs alongside Infrastructure Libya 2013 – the International Exhibition & Conference for Libya’s Rebuilding Programme.

For further information go to:

22-25 April 2013 Tripoli International Fairground

S08 ORA 5 2012 Gas_Layout 1 02/10/2012 17:48


ENI, ALONGSIDEVITOL, has signed amemorandum ofunderstanding (MoU)with Ghana’sgovernment todevelop gas in theOffshore Cape ThreePoints (OCTP) blockin the Tano basin.The MoU outlines thekey principles forfuture developmentof the discoveriesand commercialisation of the gas within the contract area. The MoUfocuses mainly on the domestic gas market, in which Eni and its jointventure partners want to be at the forefront. The agreement is in line with Eni's growth strategy in the region andreaffirms the company's leading position in exploiting indigenous gasresources and contributing to the socio-economic growth of thecountries where it operates. Eni will operate the OCTP block with a 47.222 per cent stake,with Vitol holding a 37.778 per cent interest and state-ownedGNPC 15 per cent.VitoEni has been present in Ghana since 2009 and currently operatesthe OCTP and Offshore Keta exploration blocks.

KBR HAS BEEN awarded a feed contract to perform work for the topsides andhull associated with a new-build, double-sided, single-bottom hull FloatingProduction Storage and Offloading (FPSO) vessel. The FPSO will be situated offshore Angola and FEED is scheduled to beginimmediately, with a duration of 12 months. KBR's scope covers the permanently moored FPSO using a spread mooringsystem. The vessel will be capable of storing a minimum of 1mn BBLS andhousing 130 persons on board. The topsides will utilise a single traindesigned to process 80,000 bopd and 90 mmscfd at an export pressure of3,500 psi. The water injection facilities will be designed to inject up to130,000 barrels of water per day. Services for the project will be based out of KBR's offices in Houston,Gothenburg and Luanda. KBR's Luanda office will play a major role in supplyinglocal employee content for the project. "This project builds upon KBR's long-standing commitment to the Africanregion and further solidifies our position as a leading FPSO provider," saidDennis Calton, President, Oil & Gas. "KBR has been present in Africa for nearly 60 years and has executednumerous projects in Angola. I am confident that KBR's successful completionof this project will position us for additional services during the EPC phase." Produced gas will be transported via pipeline and stabilised crude oil will bekept in the FPSO hull tanks and exported through a deepwater single pointmooring export terminal. The crude will be transferred using a mid-water oiloffloading line from the FPSO to the SPM buoy. Produced gas will bedehydrated and transferred via a gas export line to a client-owned facility. Thedesign service life of the FPSO facility is 20 years.

KBR wins contract for offshore Angola FPSO

44

Gas

Eni, Vitol sign Ghana gas accord

S08 ORA 5 2012 Gas_Layout 1 02/10/2012 17:48

S09 ORA 5 2012 E&P_Layout 1 02/10/2012 17:05


SWISS-HEADQUARTERED FOSTERWheeler has signed a three-yearframework agreement withApache Corporation to provideconsultancy services to itsupstream operations in Egypt. Foster Wheeler said a subsidiaryof its global engineering andconstruction group had signed thedeal with Apache subsidiaryApache Khalda Corporation, ajoint venture with state playerEgypt General PetroleumCorporation.

The services to be provided by FosterWheeler under the framework agreementinclude design, engineering and projectmanagement to assist Apache in thedevelopment and implementation ofupstream projects in Egypt.The US independent is currently chasing sixblocks in Egypt’s latest onshore round.The pair of companies previously workedtogether last year when Foster Wheelersecured a deal with Apache Khalda toprovide project management consultancyservices on a compression project for theQasr gas condensate field.

DEPLETING SHALLOW WATER reserves and a lack ofnew shallow water discoveries means that offshoreexploration and production activity in deepwaterregions is becoming a new fashion, stated a report byGBI Research.The report said that the search for hydrocarbons in morechallenging areas has been on the rise, as advances indrilling technologies have led to the discovery of giantdeepwater oil and natural gas fields worldwide,prompting ambitious International Oil Companies (IOCs)and National Oil Companies (NOCs) to drill in remoteoffshore areas in search of fresh fossil fuel reserves.Until the early 1990s, offshore exploration and drillingin deepwater areas was considered an economicallyunattractive option. However, with the near-completeexploitation of shallow water and onshore resources,and recent advances in drilling technology, deepwaterexploration is now feasible and profitable, the researchshows. Offshore rigs such as advanced semi-submersibles are capable of drilling in water depths

exceeding 1,524m, and some sixth-generationenterprise-class drillships possess water depthcapabilities of up to 3,658m. This has led to asignificant rise in deepwater and ultra-deepwaterExploration and Production (E&P) activity across theglobe, and governments worldwide are promoting theindustry in hopes of achieving energy self-reliance, theresearch found.Offshore West Africa and offshore Angola in particularare proving to be hotbeds in terms of deepwateroffshore drilling activity and expenditure, it discovered.As oil and gas E&P activity moves into deeper waterdepths, the market for the services of deepwaterdrilling contractors and offshore rigs operating indeepwater and ultra-deepwater environments willwitness strong growth, the report claimed.It added that offshore day rates for drillships and semi-submersibles are already steadily rising, and this inturn will drive the construction industry for offshoredrilling technologies.

OPHIR ENERGY HAS announcedthe successful completion of its2012 three-well drillingprogramme in Block R, EquatorialGuinea. All three wells exceededpre-drill recoverable resourceestimates. The Fortuna West-1(R6) exploration well in Block R,Equatorial Guinea has added anadditional 1.0 tcf (169 mmboe) ofrecoverable resources. The wellencountered gas in the primarytarget of the western lobe of theFortuna Complex, in thesecondary deeper Viscata prospectand there is further potentialupside in the Felix prospect.

Nick Cooper CEO of Ophir said:"The success of Fortuna West-1across multiple targets improvesour overall understanding of theFortuna Complex and ViscataChannel Levee Complex withinBlock R. The well discovered over1.0 tcf of recoverable gas, and hassignificantly derisked otherexploration targets within theBlock. Based on the results of thisthree-well drilling campaign, wehave increased our 2C resourceestimate to 3.0 tcf, and havereduced the risk on the remainingestimated 10 tcf of inventory.

The Fortuna wells, combinedwith the Tonel discovery,provide confidence to proceedwith commercialising the gasvia LNG export. A follow-upexploration and appraisaldrilling programme in 2013 willfurther advance this valuablegas asset toward development."

Ophir boostsresource estimateswith BLock R

Apache Khalda Corporation, a jointventure with state player Egypt General

Petroleum Corporation, has retained FosterWheeler to work on design, engin

ENI HAS MADE the first oil discovery in the Offshore Cape Three Points (OCTP) block, located in the TanoBasin offshore Ghana, about 50 km off the coast of Ghana. The discovery is relevant as it may have thepotential for commercial development and confirms the importance of the block also in terms of thepresence of oil, as well as natural gas and condensates. Eni plans for the immediate drilling of other wellsto delineate the size of the discovery and confirm the feasibility of commercial development.The discovery was made through the Sankofa East-1X well, which reached a total depth of 3,650 m, in825 m of water, and encountered 28 m with gas and condensate and 76 m of gross oil pay in Cretaceoussandstones. During the production test, carried out in the oil level, the well produced about 5,000 highquality bopd. The flow rates, during the production test, were constrained by surface infrastructures.In addition, there are ongoing engineering studies for the development and commercialisation of gasreserves of the block in accordance with the principles sanctioned in the Memorandum ofUnderstanding recently signed by Eni, Vitol and Ghana National Petroleum Corporation (GNPC) withthe Minister of Energy of Ghana. The MoU focuses particularly on the domestic gas market, in whichEni and its joint venture partners wish to play a prominent role.Eni, through its subsidiary Eni Ghana Exploration and Production Limited, is the operator of the OCTPblock with a 47.222 per cent share. Other partners are Vitol Upstream Ghana Ltd, with a 37.778percent share, and state company GNPC with a 15 percent share. GNPC has an option for anadditional 5 percent share.Eni has been operating in Ghana since 2009 and currently operates two exploration offshore blocksOCTP and Keta.

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Drilling giants reach new depths as offshore exploration evolves

West Africa increasing O&G e&p in deep offshore areas

Apache signs up Foster Wheeler in Egypt

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UK JUNIOR BOWLEVEN has added anew region to its African portfolio asit snapped up a large slice in anonshore Kenyan play. The company has farmed into Block11B by taking 50 per cent from localplayer Adamantine Energy.The “extensive and highlyprospective exploration acreageposition” gives BowLeven exposureto a new hydrocarbons province,following on from its position inCameroon.The block covers about 14,000 sqkm encompassing the Loeli, Lotikipi,Gatome and South Gatome basins.

“The basins are to the north of theLokichar Basin where a significantoil discovery has been made inrecent months with the Ngamia-1well,” BowLeven said.“Analysis of the existing gravityand magnetics and seismicdatasets suggest the basins inBlock 11B are of similar form toLokichar and analogous geologicalplays and petroleum systemelements are expected.”BowLeven is to fund an initialwork programme of geophysicaland 2D seismic, expected to costaround US$10mn.

TANZANIA HAS POSTPONED the launch of a keenly-awaited deep-waterlicensing round originally scheduled for September pending aparliamentary vote on a new gas policy in October.

The country is set to offer nine new deep-water blocks, includingone ultra-deep permit, in its fourth licensing exercise that will focus onacreage to the south.

The latest round was due to be launched at a 13 September roadshowin Houston, with another to be held in Singapore and one in London inOctober, with a similar event scheduled for March in Arusha, Tanzania.

Bids were due to be submitted during a nine-month period thatcloses in the middle of May 2013, when the offers will be opened inDar-es-Salaam.

However, state-owned Tanzania Petroleum Development Corporation(TPDC) said in an undated statement that “the roadshow schedule willstart again immediately after the parliamentary ratification” of the newgas policy, following the vote next month.

Completion of the bid round data package is still on schedule andwill be available for potential bidders by the end of this month, givingthem more time to evaluate the blocks before the delayed roundlaunch, TPDC stated.

A series of gas discoveries by BG Group and Statoil off Tanzania, alongwith similar finds off Mozambique, have stoked exploration interest in theemerging East Africa play.

TOTAL EXPECTS TO drill eight exploration wells inUganda by the end of next year, and will spendabout US$650mn on its activities in the sameperiod, a senior company official said. The companyhad entered Uganda’s petroleum industry earlierthis year when it and China’s CNOOC each took athird of Tullow Oil’s exploration assets in thecountry for a total of US$2.9bn.

"Total E&P Uganda is currently continuing theexploration, delineation and appraisal campaigninitiated by the previous operators," Total E&PUganda general manager Loic Laurandel said."The first oil exploration well will be drilled bythe end of 2012 and eight new exploration wellswill be drilled by the end of 2013."

Uganda discovered oil in its west along theborder with the DRC in 2006. Production had beenexpected to start early this year but wrangling overtax and other issues delayed development.

Laurandel said Total, which operates Block 1 onthe northern tip of Lake Albert, would spend aboutUS$650mn on exploration and appraisal drilling andseismic data acquisition by the end of next year.

Tullow said the refinery's capacity should notexceed 60,000 bpd to be attractive to investorsbut the government said a facility with amaximum output of 120,000 bpd was viable andcould easily attract investors.

Total supports the project but Laurandel said thecompany could not comment on whether it will invest

in it or state its preferred size of facility becausedisclosure of its positions was likely to underminediscussions with the government.

"Sufficient resources exist (1.8 to 2.2bnbarrels) to deliver a plateau production rate of200,000 to 230,000 bpd in support of anappropriately sized refinery," Reuters quoted himas saying. "We think that an international crudeoil export pipeline, combined with an optimallysized refinery will provide the maximum benefitto the wider Ugandan economy."

Uganda is expected to conduct a licensinground for hundreds of square kilometres ofexploration acreage after parliament passes new oillaws expected by the end of this year.

Total to spend $650mn in Uganda

CANADIAN EXPLORER, SIMBA Energy has secured productionsharing deals for three Chad blocks to further expand its Africanasset portfolio.The company put pen to paper on Monday on a so-called Protocoled’Accord under which a work programme for the first year ofexploration on the onshore tracts must be finalised by 20 October.Simba will hold 100 per cent stakes in all three prospectiveconcessions, each of which could be “a company-maker in its ownright”, according to managing director for operations Hassan Hassan.Two of the blocks, Chari Sud Block I and Chari Sud Block II, cover atotal area of more than 10,000 sq km and are located south of theMangara and Badila oilfields being developed by Griffiths Energy andGlencore International.The pair of concessions, located in the southern margins of the Dobaand Doseo basins, are believed to have structural similarities to theproducing fields, while pipeline infrastructure is located in the vicinityof Chari Sud Block I.The third concession, Erdis Block III, spans 15,700 sq km in the Erdisbasin where numerous oil discoveries have been made to the north inLibya, where it is called the Kufra basin.Simba also holds interests in blocks in Kenya, Republic of Guinea andis waiting to finalise a PSC for Block 3 in Mali, while it also hasapplications pending for blocks in Liberia and Ghana.

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Tanzania delays round launch Simba gains 100% stakes in 3 PSCs in Chad

Bowleven nets Kenyan acreage

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OPHIR ENERGY HAS resumed theTanzanian drilling campaign to beexecuted with BG Group, itspartner in this Joint Venture. Themulti-well programme commenceswith appraisal and satelliteexploration around the Jodari fieldin Block 1 offshore Tanzania.The first three wells in thiscampaign will be Jodari South-1, Jodari North-1 and a re-entry intoJodari-1. The current drilling programme will focus on further definingthe resource potential of the Jodari discovery. In March, the Jodari-1 discovery well proved 4.5 tcf of gas in place inthe Lower Tertiary intraslope channel play. To date the Ophir-BG JointVenture has discovered 13.5 - 21 tcf of gas-in-place across Blocks 1, 3and 4 offshore Tanzania.The Deepsea Metro 1 (UDW drillship) has now returned to Block 1 andwill drill the top-hole section of Jodari North-1 before moving to drillJodari South-1 and a side track from Jodari South into the main Jodarifield. The rig will then return to complete Jodari North-1. A Drill StemTest (DST) will be performed in 1Q 2013.Jodari North-1 is located 40 km NE of the port of Mtwara and isapproximately 6 km NNW of the Jodari-1 well location. Jodari South-1is located approximately 35 km NE of Mtwara and is approximately 3.5km SW of the Jodari-1 well location. Combined, these three wells willconfirm reservoir parameters across the Oligocene aged main reservoirof the Jodari complex.

CHEVRON HAS CONFIRMED earlier reports that it scooped a pair ofdeep-water block awards in Sierra Leone's latest awards round. The US supermajor has been handed a 55 per cent interest in blocksSL-08A and SL-08B where it will also be operator.Reports in recent months have shown that Chevron had won blockinterests off Sierra Leone and would be partnered by Odye and Noble. However, the size of each party's stake, as with other awards in the

country's concession round, was being discussed.Noble is picking up a 30 per cent stake in the play with Odye goinghome with 15%. Sierra Leone National Oil Company has a 15 per centback-in option at final investment decision time.The two blocks are situated between 120 and 180 km off SierraLeone in average water depths ranging from 1500 - 3000 m. The totalacreage is spread over 5500 sq km.

TOTAL EXPECTS TO pump commercial oil productionfrom its fields in Uganda to start from 2017, a yearlater than previous estimates had suggested, as theforeign firms charged with developing the country'snascent energy sector try to overcome a host ofissues that have delayed operations.Total entered Uganda earlier this year after a long-delayed deal by British wildcatter Tullow Oil PLC tosell two-thirds of its exploration assets in thecountry to the French major and China's Cnooc.was finally approved."We are working closely with our partners and theUgandan government to get the necessaryapprovals to enable us deliver first oil by late2017," said Loic Laurandel, Total E&P Uganda'sgeneral manager.However, Mr. Laurandel's assessment of when oilproduction will commence is a full year laterthan initially hoped. When the partnerscompleted the US$2.6bn deal in February, Tullow

Oil Exploration Director Angus McCoss said firstoil should come by 2016.The hold-up has been due in large part to wranglingbetween the Ugandan government and the partnersover how the fields should be developed and thecrude best used. The partners can only beginoperations in earnest once the government approvesits development plan. First commercial oil will likelyarrive 36 months after the approval of thedevelopment plan, Tullow has said.Total, which plans to invest about US$650mn inexploration and appraisal drilling in Uganda by theend of next year, expects initial output of around20,000 barrels of a day from its block on thenorthern tip of Lake Albert. This will gradually risebefore reaching 200,000 to 230,000 bpd by 2020,said Mr. Laurandel.According to Mr. Laurandel, Total will also seekmore exploration licenses in Uganda once thecountry opens the next licensing round, expected

later this year or early next year."We are committed to extend our stay in Ugandaas much as we can, we shall definitely seek morelicenses," Mr. Laurandel added.Uganda has six unlicensed oil blocks and at least10,000 square kilometers of relinquished acreagein the Lake Albertine Rift basin which will beauctioned during the next licensing round.The next licensing round will be commencedafter the enactment of three oil bills, which arecurrently before parliament

Ugandan oil one year later than planned

THE OIL COMPANY Dar Petroleum has said it will begin oil production inSouth Sudan as soon as possible following a security deal signed with Sudan,though getting back to full production remains several months away.Dar Petroleum President Sun Xiansheng promised investors and SouthSudan's government that the company will eventually return production toan average of 180,000 bpd. South Sudan in January shut down its oilproduction after accusing Sudan of stealing its crude.When South Sudan peacefully broke away from Sudan last year, it inheritedthe majority of the region's oil. But South Sudan's oil must be pumpedthrough pipes owned by Sudan, which said it had taken the south's oil in lieuof unpaid fees for the use of its export and processing facilities. Whentensions increased, the south shut down its industry, costing both sidesmillions in lost revenue.The two sides have signed agreements after four days of talks between bothcountries' presidents. Those agreements paved the way for a resumption ofsouthern oil production.In August, South Sudan Oil Minister Stephen Dhieu Dau said it could takebetween four and six months before the Upper Nile fields reach fullproduction again. Dar Petroleum's general manager of exploration andproduction, Chen Huanlong, said that estimate is correct.Huanlong said the company will need to "warm up the pipes" for onemonth. After that, Huanlong said they would "approach the productionplateau" in three months. But Huanlong said this would happen only if thegovernment contracts and orders were prepared as soon as possible."Dar Petroleum contributes 80 to 90 per cent of government revenue.We are the national builders. We will change the nation," said BaidzawiChemat, Dar Petroleum’s general manager of finance and services.According to him, if Dar Petroleum can deliver on its promisedproduction target, it will mean around 65mn barrels each year wortharound US$5bn for South Sudan.

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Chevron confirms Sierra Leone blocks

South Sudan to pump as soon as possibleBG Group begins appraisal at Jodari Field

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AUSTRALIA-LISTED MOLOPO Energy has beenawarded its first production right in South Africa,covering a 200,000 ha area in the Free Stateprovince. Molopo made the production right application ofthe Virginia licence area based on its previouswork during the exploration phase during whichtime the area was estimated to hold proven plusprobable reserves of about 23 bcf.The Australian company said its initial phase ofdevelopment of the licence area would involvethe tie-in of four of the 11 pilot productionwells, which are currently producing at about1.2 mmcfd.Initial output from the development is expected

to be about 600,000 cfd of natural gas whichwill be compressed for transportation.The capital investment outlined in theproduction right is about US$15.6mn, withUS$2.5mn to be invested in the first year,US$4mn in the second and US$8.9mn in thethird year.Molopo said the timing and detailed scope ofthe development plans for the licence areawould be finalised over the coming months.It added that the longer, full field developmentcould result in the development of more than200 wells, depending on success in furtherdelineation of the resource as well as progresson gas commercialisation opportunities.

MAERSK DRILLING IS expanding its activities in West Africa withthe signing of a contract for the jack-up Maersk Endurer withAddax Petroleum, owned by Sinopec, which is one of the largest oiland gas producers in the world. The contract duration is two yearsand the value is around US$100mn. Expected commencement islate October 2012.“We are pleased to have signed this contract with a very experiencedoperator in West Africa, which is a priority market to us due to itssignificant resources and importance to the global oil and gas supply,”says Martin Fruergaard, Chief Commercial Officer in Maersk Drilling.The Maersk Endurer is a harsh environment jack-up. It was acquiredby Maersk Drilling in 1996 and significantly refurbished andupgraded for work on the challenging Shearwater field in the UK Sector of the North Sea. The extensivemodification scope covered, amongst others, a new accommodation block, new drillfloor/derrick and fullcompliance for HPHT operations.

THAILAND'S STATE-RUN PTT Exploration &Production has discovered two oilfields onthe Hassi Bir Rekaiz project in Algeria. The OGB-1 exploration well hit oil in theOrdovician reservoir which flowed at anaverage rate of about 485 barrels per dayduring testing.PTTEP noted that the Triassic Argilo GreseuxInferieur (TAG-I) reservoir also exhibited oilflows but would need to be assessed further.The TAG-I reservoir was the same formationin which oil was encountered in the Rhourde

Terfaia-1 wildcat which was drilled earlierthis year and flowed at a rate of about 1000bpd of oil and 300,000 cfd of gas duringtesting.PTTEP said the fifth exploration well to bedrilled in the Hassi Bir Rekaiz project area,BOG-1, also hit oil in the Ordovician and TAG-I reservoirs. It added the well flowed at an average rateof about 553 bpd from the Ordovicianreservoir and 1870 bpd from the TAG-Ireservoir during testing.

PTTEP and its partners are currently carryingout the first exploration phase at the HassiBir Rekaiz project which will see them drill atotal of nine exploration wells. The sixth well in the programme is expectedto be spudded by the end of the month.PTTEP operates the Hassi Bir Rekaiz project,holding a 24.5 per cent stake, with ChinaNational Offshore Oil Company also holding24.5 per cent and Algerian national oilcompany Sonatrach holding the remaining51 per cent equity.

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Maersk Drilling secures offshore West Africa contract

PTTEP hits Algerian double

Molopo gets S African production right

RWE DEA EGYPT has confirmed an extension of the North Sidi Ghazy-1x discovery in the Nile Delta with asuccessful development well.NSG-1-2 was drilled in the North Sidi Ghazy structure and reached TVD of 2,843m below the sea surface. The well confirmed the extension of gas resources and Messinian (Abu Madiformation) reservoir properties on the eastern side of the field.RWE Dea has now moved the Weatherford 94rig to the South Sidi Ghazy-1-2 well to develop the northern extension of the South Sidi Ghazy-1xdiscovery.The North Sidi Ghazy-1x gas discovery flowed about 1 mmcmd of gas on a 50/64 in. choke.Thelatest well has been temporarily suspended and will be completed as producer, along with other wells, laterthis year.

RWE confirms Nile Delta discover extension

Maersk Endurer.

Canada OilJunior movesinto SudanEMPEROR OIL, A Canadian JuniorOil & Gas Company, has expandedits focus into Sudan – a countrywhere China is leading the foreignoil investment arena having morethan 200 Chinese companiesactive in Sudan. With majorplayers dominating the arenasuch as China, Malaysia, andIndia, Emperor Oil is a UScompany determined to make aname for itself in this part of theworld.In 2011, after the separation ofSudan and South Sudan, SUDAPET(Sudan’s state owned oilenterprise) has been acceleratingits oil exploration anddevelopment activities in Sudanwhere there is still vast potentialfor oil reserves. There arereportedly plenty of blocks thathave not been fully explored, sothere could be more finds. As aresult, Sudan made licensingrounds available. They are ratedthe third largest producer in sub-Saharan Africa after Angola andNigeria with some 6.6bn barrelsin reserves. Together, Sudan andSouth Sudan produce 460,000 bpdand there appears to betremendous unexplored potential.Emperor Oil has entered into anMOU with State PetroleumOverseas Inc. to assist in thedevelopment of three previouslydiscovered oil fields in Sudan’sBlock 7 oil concession. Thediscovery wells (one in each field)are believed to have significantproduction potential and EmperorOil is eager to capitalise on thevast opportunities they believeare available in the region.

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Source: Baker Hughes

The Baker Hughes Rig Count tracks industry-wide rigs engaged in drilling and related operations, which include drilling, logging, cementing, coring, well testing, waitingon weather, running casing and blowout preventer (BOP) testing.

AUGUST 2012 - OIL & GASTHIS MONTH LAST MONTH LAST YEAR

Country Oil Gas Misc Oil Gas Misc Oil Gas MiscALGERIA 29 16 1 30 15 0 23 7 1ANGOLA 9 0 0 6 0 0 7 0 0 CONGO 2 0 0 2 0 0 7 0 0 GABON 7 0 0 6 0 0 4 0 1 KENYA 0 0 2 0 0 2 0 0 1 LIBYA 11 0 0 9 0 0 0 0 0 NIGERIA 13 4 1 13 3 1 12 3 1 SOUTH AFRICA 0 0 0 0 0 0 0 0 0 TUNISIA 1 1 1 0 1 1 2 0 1 OTHER 11 0 12 13 1 2 9 0 0 Total 83 21 17 79 20 6 64 10 5

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AFRICA OIL HAS announced the spudding in Kenya of the Paipai-1exploration well located in onshore Block 10A, on September 29, 2012.The well is planned to drill to a total depth of 4,112 m and will testCretaceous and Jurassic sandstone targets. The well is operated by TullowOil who hold a 50 per cent working interest. Africa Oil holds a 30 per centworking interest in the Block. The Paipai-1 will be drilled using the SaksonPR-5 rig and is targeting gross best estimated prospective resources of121mn barrels by the Company's independent resource evaluator.Keith Hill, President and CEO of Africa Oil, commented, "The Paipai wellwill test Cretaceous and Jurassic targets in the Anza graben, whosegeologic history is comparable and on trend with producing basins ofSudan. Paipai-1 will test a large structural trap in what is considered to be

an oil-prone area of the Anza basin. Legacy wells have encounteredsignificant oil and gas shows, but newly acquired seismic surveys havehelped improve mapping and identify the Paipai prospect as a favorableand potentially high-impact exploration target. A discovery at Paipaiwould extend the producing plays of Sudan into Kenya and open apotentially significant and new petroleum province within Kenya wherethe company is already implementing an accelerated explorationprogramme after the Ngamia-1 discovery in the Tertiary Rift Play earlier inthe year. With plans in place for three drilling rigs to be operational beforethe end of the year, the company is entering an exciting period of activitywith multiple high impact exploration targets expected to be drilledbefore the end of 2013."

Tullow spuds Paipai well in Kenya

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THE PERMANENT SECRETARY in the Ministry of Energy andMineral Development, Fred Kabagambe-Kaliisa said thegovernment is inviting strategic partners and producingcompanies to be lead developers in the construction of an oilrefinery estimated to cost about US$2bn.Mr Kabagambe-Kaliisa, in a recent interview, added that the co-investor has to be a person well known in the oil industry andwith a dependable profile."We are talking about US$2bn. Noone in Uganda has that kind ofmoney. Of course government can offload its share onto themarket and all Ugandans have a right to buy shares," he wasquoted as saying.He added: "We have done our market research. If you take thecore market segment alone, buyers include Uganda, EasternCongo, Rwanda and Burundi and for this market alone, 60,000bpd is enough. This market alone can sustain the refinery and wewill stop importing fuel." The permanent secretary said Uganda will start producing oil forpower generation in 2014 with production of at least 10,000 bpdand in 2015, they would like to have the first phase of therefinery in place and then, in 2017, have the final phase of therefinery with about 60,000 barrels which could be expanded later.He also clarified that there no oil has been produced forcommercial purposes but there has been prolonged testing in theBuliisa area.Mr Kabagambe-Kaliisa added that they have to get the oil out forchemical analysis of texture to determine what type of refinerywill be required. About ten barrels were taken abroad wherethere are high-tech labs.

Geoffrey Muleme

ANADARKO PETROLEUM IS in talks with Eni to build an LNG plant inMozambique as part of a plan to jointly develop their recent major gasdiscoveries off the East African country's coast.

Large natural gas discoveries since late 2011 off the coasts ofMozambique, Tanzania and, most recently, Kenya, have transformed East Africainto one of the world's most promising energy provinces, potentiallychallenging Qatar and Australia for key export markets in Asia.

"We are in talks with Eni about combining efforts both on the offshoredevelopment and on building a liquefaction facility onshore," said ScottMoore, Vice President of Marketing.

After the most recent discovery in June, Anadarko said the high-endestimate for total gas in the Rovuma-1 find is approaching 100 tcf. A

consortium led by Anadarko plans to bring the gas to shore, where it will beliquefied and shipped to Asian and other markets.

The total cost of offshore development and construction of a new two-trainliquefied natural gas terminal is estimated at around US$15bn, said Mr. Moore,who was speaking on the sidelines of a conference in Singapore.

A final investment decision is expected next year, with the first LNGpossibly hitting the market in 2018.

The Anadarko discovery is located close to another huge reserve found byEni, which has discovered close to 70 tcf of gas in the region, of which 50trillion are part of the same geological structure as the Anadarko discovery.

An Eni spokeswoman confirmed talks are ongoing with Anadarko on jointoffshore development,

SOUTH SUDAN HAS finally agreed to transport its oilvia a pipeline from Lamu port. The country hadearlier said that they would transport their oil byroad instead. The 2,000-km pipeline is estimated tocost approximately US$3bn.The pipeline will allow South Sudan to export itsoil via the Kenyan port of Lamu, freeing thelandlocked country from reliance on a routethrough Sudan. The route had earlier this yearbeen shut down following the two countries

disagreement over how much the Jubagovernment should pay to transport its oil outputthrough Sudan. This has however been resolved.Construction of the pipeline is expected to beginby June 2013 and last two years. It will be able totransport between 700,000 barrels and onemillion barrels of Southern Sudanese crude perday. Though the country says they don’t have themoney now, South Sudan has a total of sevenbillion in proven reserves.

Lamu-Juba oil pipeline to cost $3bn

ENERGY MINISTER DIPUO Peters has recommitted government's supportfor Project Mthombo, the much-awaited PetroSA oil refinery at Coega.In reply to a question from an ANC MP, Peters said that PetroSA -and its potential partner, the Chinese state-owned group Sinopec -were reviewing the business case for the construction of a newrefinery at Coega. Organised business in the Eastern Cape believes Mthombo has thepotential to be a major catalyst for socio-economic transformation ofthe province through job creation. Peters said her department was still committed to Project Mthombo. She said the review of the business case included aspects such as thesize of the refinery, the schedule and the related costs.Peters also said such an infrastructure project would create a "massivenumber of jobs" during construction and sustain increased levels ofeconomic activity during operations.On electricity, Peters said inflation would be among the criteria usedto determine future electricity tariffs. In a written reply to a parliamentary question posed by theDemocratic Alliance, Peters said she would ensure inflation-basedpricing was part of the overall tariff structure for the next multi-yearelectricity price determination."The pricing policy covers all the issues that must be taken intoaccount when dealing with tariff determination, including the rate ofreturns as well as associated economic impacts. Inflation does getconsidered in the pricing methodology," her reply stated.Peters said a study of South Africa's competencies, capabilities andneeds for the proposed nuclear build programme had been submittedto the International Atomic Energy Agency (IAEA).Replying to a question from DA MP Lance Greyling, Peters said such aself-assessment report was required by the IAEA, and its findingswould be made known once the process was completed.In terms of the 2010 Integrated Resource Plan, the government plansto build between six and eight nuclear reactors that would eventuallygenerate 9600MW of power.

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am Anadarko tags Mozambique LNG facility at US$15bn

Review set for S Africa refinery projectUganda govt invites partners for oil refinery

S10 ORA 5 2012 Downstream_Layout 1 02/10/2012 17:49


NIGERIAN OIL AND gasfirm Orient PetroleumResources disclosedthat by the December2013 it wouldcommence the refiningof 20,000 bpd of crudeoil at a new oil refinery in the south-eastern part of the country.Despite being one of the top ten oil producers in the world, Nigeriaimports petroleum products and supplies its local demand at asubsidised rate accumulating heavy financial burden on budget. In2012, US$5.5bn of the country’s US$29.3bn total budget wasswallowed by fuel subsidy.The prolonged dilapidated state of its refineries has contributed tothe sour development. Previous efforts to build new refineries werecancelled or have been unexplainably sluggish.According to Reuters, Africa’s biggest oil producer has only fourrefineries at the moment, with an estimated production capacity of445,000 bpd but their eventual production is only 30 per cent of thereported capacity.OPR Chairman Emeka Anyaoku said at the inauguration of theproject: “We expect that by the end of next year we should berefining 20,000 barrels of oil every day and gradually after that wewill build up to 35,000 then 55,000 and possibly higher.”

TANZANIA DEPUTY MINISTER for Energy and Natural Resources, StephenMasele, has been in discussions with Statoil Vice President, Tim Dodson, toconvince BG Group PLC to support building an LNG plant in Tanzania."Despite being a costly project in its implementation, its completion will bevery beneficial to the government and the country at large and that is whywe are insisting on developing it in dry lands," Masele said.Dodson, however, remained sceptical, noting that with 9 tcf of naturalgas already discovered in Tanzania it is insufficient at present for aviable LNG project.He did say that Statoil can talk to BG to see if building an LNG processingfacility might be possible through co-operation, with either the Tanzaniangovernment or foreign partners. The costs involved are not insignificant.Building an LNG plant costs at least US$1.5bn per 1mn mt per annum, areceiving terminal costs US$1bn per 1 bcf per day throughput capacity andLNG tanker vessels cost US$200mn-US$300mn apiece.Generally, since the early 2000s, competition and new technologies haveseen the prices for construction of LNG plants, receiving terminals and vesselsfall, making LNG more competitive as an energy source, but recently risingmaterial costs and demand for construction contractors have driven up prices."Roughly, the host country can expect to get around 40 per cent of totalrevenues depending on the tax regime and the production sharingagreement," said World Bank official Jacques Morisse."This means for Tanzania around 7 per cent of its projected (gross domesticproduct) or about a third of its current fiscal revenues if all above reservescan be exploited. These fiscal resources, while considerable, will not besufficient to transform Tanzania."

For more informationlog on to www.portwest.com or call or sales team at +44 (0) 1709 894575 or email [email protected]

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S10 ORA 5 2012 Downstream_Layout 1 02/10/2012 17:49

Project Databank & Project FocusCompiled by Data Media Systems

Project Sector Facility Budget Status Start Date Completion Date

ADDAX - Oron Redevelopment & Extension Offshore Oil & Gas Field 400000000 EPC Q3-2005 Q4-2012BRASS LNG - Brass River LNG Plant Gas Liquefied Natural Gas (LNG) 3500000000 EPC ITB Q4-2004 Q4-2016CHEVRON NIGERIA - Escravos Gas Gas to Liquids (GTL) 1700000000 EPC Q3-2001 Q4-2013Gas-to-Liquids (GTL) ProjectCHEVRON TEXACO - Agbami Oil Field Development Offshore Oil Field 5000000000 EPC Q1-1998 Q4-2014Ebok Development Oil Oil Field Development 450000000 EPC Q2-2007 Q2-2013FLEX LNG - LNGP1 (Floating LNG Production) Offshore Floating Production (FPSO) 500000000 EPC Q1-2006 Q4-2015 Storage and OffloadingFPR - Araromi Refinery Project Refining Refinery 3000000000 FEED Q2-2010 Q4-2017MART RESOURCES - Oil Oil & Gas Field 500000000 EPC Q4-2008 Q4-2014Umusadege Field DevelopmentNNPC - Olokola LNG (OKLNG) Plant Gas Liquefied Natural Gas (LNG) 20000000000 EPC ITB Q1-2005 Q1-2016Ofon Field Development Phase 2 Offshore Offshore Platform 500000000 EPC Q2-2007 Q1-2014Okoro and Setu Fields Development Oil, Offshore Oil Field Development Unknown EPC Q3-2006 Q4-2013OYO Field Development Oil, Offshore Oil Field Development 1000000000 EPC Q1-2006 Q4-2014Southern Swamp Associated Gas Gas Production 1000000000 EPC Q1-2011 Q1-2015Gas Solution Project (SSAGS )Stubb Creek Field Oil Oil Field Development 200000000 EPC Q4-2003 Q3-2012TEPN - Nkarika Field Offshore Offshore Platform Unknown EPC Q1-2001 Q4-2014TOTAL - Egina Field Development Oil Oil Field Development 2000000000 EPC ITB Q4-2003 Q4-2015TOTAL - OML 58 Upgrade Phase 1 Oil, Offshore Oil & Gas Field 1000000000 EPC Q1-2006 Q2-2013TOTAL - OML 99 Ikike Field Offshore Offshore Platform Unknown EPC Q2-2009 Q4-2015YFP - Aje Blk OML 113 Offshore Offshore Platform 10000000 EPC Q4-2004 Q4-2014

OIL, GAS AND PETROCHEMICAL PROJECTS

Project Name Ofon Field Development Phase 2

Name of Client EPNL- Elf Petroleum Nigeria Ltd

Budget ($ US) 2,700,000,000

Award Date Q4-2011

Facility Type Offshore Platform

Status EPC

Start Date Q2-2007

End Date Q1-2014

Location Ofon, Nigeria

Project Summary

Project Backgrounds

Nigerian National Petroleum Corporation and Total have launched Phase 2 of the Ofon Field Development Project.

Project Status

In February 2012, Construction and installation works have been started.Eiffage Construction Metallique is constructing the platform from standardbuilding blocks to be deployed in Oil Mining Lease 102, some 65km off theNigerian coast, in water depths of 40 m. The platform will accommodate up to140 personnel, generating around 45 m3/day tonnes of waste water per day.Engineering work will be done by Sofresid in Lorient and OOP in Lago.A consortium of Actemium Oil & Gas Engineering (AOGE) and Yokogawa wasselected for providing the detailed engineering,functional analysis, HIPS detail studies, instrument data base management,supply of machines vibration monitoring system and electrical network powershading 5,000 I/O.

Nexans will provide Halogen free, thermoset compound SHF2 or XLPE lowsmoke PVC outer sheath to reduce gas flaring.The project is scheduled to come on stream in 2014.In August 2012, Wärtsilä Hamworthy was awarded a contract to supplysewage treatment facilities to the Eiffage to use on Ofon Field DevelopmentPhase 2.The ST50C treatment plant has been designed to operate within harshoffshore conditions in both a hot and humid salty environment, where it willalso be subject to sand-laden winds. Incorporating pumps, blowers andinstrumentation, the stainless steel unit will be designed, constructed andtested at Wärtsilä Hamworthy’s factory in Poole.

S11 ORA 5 2012 Technology A_Layout 1 02/10/2012 17:12

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MMAKING AFRICA’S OIL industry tickis no easy business. From haulinggiant offshore platforms across theoceans, to feeding the roughnecks

on the rigs, supplying the oil and gas sector is ahuge, often mind-boggling, task.

In Nigeria, like other major oil-producing states,a vast team of contractors has been assembled tomeet the industry’s diverse needs, whether that becatering, heavy lifting or power generation. In theNiger Delta region, that list also includes moreprominent security.

But despite all the complexities, the systemworks, facilitating a steady flow of new upstreamprojects including the multi-billion dollardevelopment of mighty deepwater schemes, suchas Nigeria’s Bonga field, led by Shell.

This US$3.5bn scheme, which came onstream in2005, became the country’s first major deepwateroil project, and a milestone for the thousands ofcontractors employed to make it happen.

Further south, Angola’s rise to world oilprominence in the deepwater sector is in large parta testament to the finely-tuned logistics skills ofthe international oil companies (IOCs) and theirhighly sophisticated contracting teams.

Here, Total, Chevron and other companies - likeShell - have become masters in managing the longlogistics chain, a decisive factor in controlling thebillion dollar budgets at stake.

And increasingly this means deploying morelocal content in major upstream projects.

Kizomba triumphOne of the more recent deepwater projects to comealive, this July, was the production start from theKizomba Satellites Phase 1 offshore Angola’s Block15, led by Esso Angola, a local unit of US super-major ExxonMobil.

It will ultimately produce 100,000 bpd from theMavacola and Clochas fields, some 153 km off thecoast, in water depths of 1,372 m.

This project, completed ahead of schedule,entails the development of 18 wells with subseatiebacks to the existing Kizomba A and B floating,production, storage and offloading (FPSO) vessels.

Significantly, the development includes a highlevel of Angolan content, with approximatelyUS$1.5bn invested in local goods and services.

"Nearly 100 per cent of the topsides and subseaequipment were fabricated in Angola, and we haveprovided more than 10,000 hours of skill-based trainingto Angolan contractor personnel for the project," saidStephane de Mahieu, Esso Angola’s managing director.

Heavy loadsKizomba, like numerous other projects offAngola’s coast, shows just how far the deepwaterlogistics and services industry has come in thiscorner of the world.

With many of Africa’s new and upcoming fieldslocated hundreds of kilometres offshore, thechallenges in putting together such complexprojects are truly immense.

But amid all the high-tech activity and intricatesubsea work taking place - managed in no shortmeasure by masses of computing power - it is easyto overlook perhaps the most spectacular aspect ofthis whole business, namely, scale.

It is a sight to behold in the simple hauling ofrigs and platforms to their ultimate destinations,using gargantuan heavy lift and transportationequipment from specialist contractors. It is anessential but little-reported service to the large oiland gas operators like Shell and others.

One of the heaviest lifts yet in West Africa wasprovided by Saipem for ExxonMobil as part of itsrecent Yoho field development.

The Italian contractor, part of the Eni group,lifted the 11,650 tonne deck module for theoffshore Yoho field using the Saipem S7000 vessel,one of several heavy lifters in the company’s fleet.

The entire module was raised and carried using

four super tough cable slings - each weighingapproximately 42 tonnes - from steel ropes andmoorings expert Franklin Offshore.

This equipment is built to last, not only in termsof carrying the weight, but also in coping withtough environments such as rough seas and remotedeepwater locations.

Local contentLike Angola, recent years have seen greaterpressure to employ local contractors in Nigeria toget the job done. This has meant an ever closerrelationship for small indigenous firms working withthe IOCs in all areas of the oil and gas chain.

This year, Arco Marine and Oilfield Services Ltd,commenced delivery of fast passenger boats toFrench oil giant Total, part of a US$36mn order.

At the launch of the first two boats, at Onne Portin Rivers State, Arco Marine’s managing directorYomi Jemibewon said his company had worked veryclosely with Total to complete the order.

The boats will offer safe and secure transport toTotal’s offshore platforms but will continue todeliver value to the country and its indigenizationefforts going forward.

“The boats are high-speed personnel carriers to beoperated 100 per cent by Nigerians,” said Jemibewon.

The final boats in the four-vessel contract aredue for delivery early next year, he said.

Foreign expertiseThat does not mean expert foreign contractors arenot still heavily engaged in meeting the industry’s

One of the more recent deepwater projects to comealive, this July, was the production start from theKizomba Satellites Phase 1 offshore Angola’s Block 15.Seen here is the Kizomba B FPSO.

Despite all the complexities,the system works.

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Logistics remains one of the greatest tests oil companies face in Africa, especially intough operating areas like the Niger Delta

Managing the

assembly line


diverse and complex needs.Wartsila Hamworthy, a UK unit of Finland’s

Wartsila marine and energy group, recently baggedan order in Nigeria to supply a sewage treatmentplant for an accommodation module on Total’sOfon field second phase development.

The stainless steel treatment plant is designedto operate in harsh offshore conditions in both ahot and humid salty environment, where it will alsobe subject to sand-laden winds. The Ofon II projectconsists of four new platforms: two productionplatforms, a processing platform and anaccommodation platform.

The accommodation module will sit 65 kmoffshore in water depths of 40 mm, with space forup to 140 personnel.

The project will mainly recover offshore gas, tobe compressed then shipped to shore.

Wartsila Hamworthy has previously worked ontwo of Total’s other flagship offshore Nigeriandevelopments, Akpo and Usan.

Logistics hubsIn the more developed oil centres, like Nigeria andAngola, the services and logistics industry is nowwell established, though this is not always the casein upcoming territories such as Ghana.

Logistics experts like private UK-based firm Intelshave also carved out a niche providing specialist ports

and storage areas, and accommodation units, to bringtogether these diverse industry suppliers, frompipeline experts to IT services.

It’s largest oil and gas logistics zone is locatedat Onne in Port Harcourt in Nigeria, a hub for muchof the country’s offshore activity in recent years.

The intention is to replicate the oil service centresthat have sprung up in Aberdeen and Stavanger thatsupply the more mature North Sea region.

Support services at Onne available includeshipping and air freight; barges and tugs; drydocks; catering, diving and drilling expertise,among many others.

Combined with other providers, local andinternational, it is a set-up that has enabled placeslike Nigeria and Angola to create world-class oiland gas industries, despite the multiple and ever-complex challenges faced.

With more African countries unearthing oil andgas - in West Africa, and now on the continent’seastern flank, and inland - this expertise may wellbe in demand elsewhere.

No matter how much gas is found offMozambique, no matter how deep the water levels,the sophistication of the oil and gas industry’slogistics chain is up for the job. ■

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istics

Valve maintenance on the Bonga FPSO.



CCORROSION UNDER INSULATION

(CUI) is not a new problem, but it can be a serious one if it is not tackled on time. Commonly shared by

the Oil and Gas Industry, CUI has caused majorleaks which led to loss in production and healthand safety incidents. Thus, the consequences ofCUI can be expensive, accounting for as much as60 per cent of a company’s static equipmentmaintenance costs.

Taking place underneath the thermalinsulation due to water ingress, CUI is a realthreat for asset integrity. Therefore, assetowners are looking for cost-effectivemaintenance and repair options that can solvethis unresolved problem.

A CUI profileCUI refers to the external corrosion of pipingand vessels fabricated from low-alloy steels,carbon-manganese or austenitic stainlesssteels that occurs underneath thermalinsulations due to water ingress. On stainlesssteel, CUI can cause induced stress corrosioncracking while on carbon steel corrosionmanifests itself as generalised or localisedwall loss.

Common causes of water ingress arecladding or jacketing poorly installed,deterioration of the insulation over time andsubstrates lacking in protection, ie, barriercoatings. Along with the presence of water ormoisture on the substrate, there are otherconditions that accelerate the corrosion rate,these being the presence of contaminantseither in the water, the insulation and/or thesubstrate and the operating temperature of thepiping and vessels.

The source of the contaminants can beexternal (ie, marine environments) or beproduced by the leaching from the insulationmaterial itself. However, high chloridecontents of water can contribute to theappearance of one of the most dangeroustypes of corrosion in the industrial sector,which is chloride external stress corrosioncracking (Cl-ESCC) if operating temperaturesexceed 60˚C (140˚F).

With regards to the operating temperatureof piping and vessels, there is differentevidence to suggest that the temperaturerange should be between -4˚C (39˚F) and175˚C (347˚F) for CUI to occur. However, themost critical temperature range identified has

been between 30˚C (86˚F) and 120˚C(248˚F), as it is cited on the UK Health andSafety Executive (HSE) website. Along withthe HSE, US data has indicated typicalcorrosion rates of 0.5 mm/year attemperatures of 80˚C (176˚F) underinsulation for carbon manganese steels.Within the oil and gas Industry the mostcritical range has been identified by assetowners to be between 30˚C (86˚F) and 80˚C(176˚F). Though failures can occur over awide range of temperatures, CUI will rarelyoccur when equipment is operatingcontinuously at temperatures above 150˚C(302˚F); however there is increased risk duringperiods of shutdown.

The thermal insulation itself can contributeto the acceleration of corrosion rate by holdingthe moisture and any dissolved chemicals (i.e.chlorides) on the surface even as thetemperature increases. This situation createsconditions that are more aggressive than thoseassociated with a typical marine atmospherewhere typical corrosion rates are 0.1 mm/year.Some types of insulation are more susceptibleto trap moisture without letting it dry outproperly and others (i.e. those manufacturedwith calcium and silicate) may containleachable chloride compounds.

As the effects of CUI are not visible andcan be highly localised, they can potentiallycause disastrous loss of containment andequipment failure if they are not detected byinspection. Therefore, the prevention of CUI isthe best way to reduce those risks.

Polymer technologies for CUIIn the market there are many options availablefor the prevention of CUI, the most commonbeing the use of cladding to protect theinsulation from the external environment.However, main disadvantages of cladding arethat these are prone to leakage at the jointswhen poorly installed increasing the risk ofwater ingress.

There are other options such as surfacetreatment technologies like petrolatum tapes,

solvent based asphaltic mineral fibre tapes andconventional epoxy coatings, but none ofthese have proved to be infallible solutions.Another solution is the use of Thermal SprayAluminium (TSA) in which a metal or organicpowder is melted and spray deposited on to asurface in order to provide protection. Somedrawbacks of TSA are that surfaces must begrit blasted and prepared until obtaining a Sa2 ½ profile. The surface preparation must becarried out during shut down periods which arecostly for asset owners as they must stopproduction. In addition, there is evidence thatsuggests that TSA is failing in service whenexposed to prolonged periods of immersion.

Another option to overcome CUI is the useof organic protective barrier coatingsdeveloped with the latest polymer technologyto protect the substrate. These types of organiccoatings offer both a proactive and a reactivesolution for CUI. They are reactive as once theproblem appears it can be solved easily andproactive as they prevent the onset of CUI ifsubstrates of pipelines and vessels are lined.However, asset owners have requested acertain performance criteria to manufacturersof organic linings for the development ofprotective barrier coatings to prevent CUI asthey are essential to ensure plant productionin the long-term.

These requirements include the application ofthe coating directly onto hot substrates with aminimal preparation of the surface. In addition, thelinings must resist aggressive partial immersionenvironments, offer long-term corrosion resistanceand be safe and easy to apply. Moreover,applications must be multi-coat with fast overcoattimes and solutions must be cost-effective.

With these criterias in mind, BelzonaPolymerics Ltd, a manufacturer of highperformance solutions based on polymertechnologies, designed a range of suitable

Fig 1. The mechanical ‘dove tail’ lock between the irregulargrit blasted surface profile and 100 per cent solids coating.

Thermal insulation itself cancontribute to the acceleration

of corrosion rate.

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This article discusses the reliability of organic polymeric barrier coating technologies inmitigating and preventing corrosion under insulation compared to other options.*

Long-term coating solutions to

STOP CUI

Fig 2. Heat Activated or Surface Tolerant coatings penetratethe open steel substrate surface.

S12 ORA 5 2012 Technology B_Layout 1 02/10/2012 15:39

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products for CUI. Main features of the BelzonaSolutions for CUI are that these can be appliedin-situ onto minimally prepared metalsubstrates. Surface preparation can be doneusing a simple application technique, ie, witha wire brush. This way of preparing the surfaceeliminates the need to grit blast and theadditional costs and safety complications ofcarrying out this procedure such as,environmental control, creation of a habitat(confined space), contamination of thesurrounding area, spark risks, among others.Another important characteristic of theBelzona Solutions for CUI is that they haveheat activated curing properties which

generate suitable adhesion on the substrate. Adhesion on the substrate is generated

thanks to the opportunities that a hot corrodedsteel substrate presents as porosity of thesteel increases with the heat. Therefore, in thissituation the coating is capable of penetratingin to the substrates surface granular structureafter minimal surface preparation and createsa similar mechanical lock to the one acquiredby grit blasting. In addition, once the coatinggets in contact with surfaces between 30˚C(86˚F) and 150˚C (302˚F), the 100 per centsolids coating viscosity reduces and itpenetrates the substrate even more beforecuring and creating the mechanical bond.Figures 1 and 2 illustrate this idea.

Case study: UK refinery condensatevessel protected against CUIIn June 2001, a severe CUI problem wasdetected in a condensate vessel which operatesat 85˚C (185˚F) during a routine inspection. Thecorrosion, if left untreated, could have causedconsiderable damage. Therefore, a suitablesolution which did not interrupt operations wasrequired by the asset owner.

The refinery opted for an on-line solutionusing a mono component; heat activatedorganic barrier coating Belzona 5851-HABarrier due to operation and surfacepreparation requirements. Therefore, thesurface was prepared to a St3 (SSPC SP3)standard using power tools and loose surfacerust was removed by power wire brushing. Thesurface was then cleaned and de-greased. Thesurface temperatures of the vessel rangedbetween 50 ˚C (122 ˚F) and 110 ˚C (230 ˚F) atthe top and due to the requirement of aminimum temperature for the application ofthe heat activated product, the coating wasapplied by brush down two thirds of the vessel.The second coat was then applied after thefirst coat cured. The application was completedin four hours and the product fully cured

within three hours.In February 2002, an initial inspection was

carried out after several months of continualoperations of the vessel. When sections of theinsulation were cut away to inspect thecondition of the coating, it was found in goodcondition. Later on in 2008 and 2011 otherinspections were done, and they confirmedthat the original application still remained ingood condition after ten years in service. ■

* Adriana García, Marketing Executive-Oil andGas, Petrochemical and Bulk Chemicals,Belzona Polymerics Ltd.


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Fig 6. Condition of the coating in 2002 after being inspected

Fig 3. Surface preparation

Fig 4. Brush application

Fig 5. Completed application

AS PART OF its continuing efforts to address the growing needsand demands of the region’s oil and gas segment and generalpipeline industries, Jotun Powder Coatings has revealed astrategic move to expand its current pipeline coatings portolio. Tobolster this move, the company has combined its powder andliquid coatings to create and develop a new extensive range ofpipeline coating solutions; providing transmission pipelines withthe requjired protection - both inside and out. The movecomplements Jotun’s efforst to increase its regional market shareover the next three years.The move also aims to create a one-stop shop for Jotun’scustomers and provide a single point of contact to meet theunique pipeline coating needs of oil and gas companies andpipeline applicators - making the entire process smoother, moreefficient, quicker and more economical.To date, Jotun currently enjoys a 30 per cent market share ofthe Middle East pipeline coatings market and plans to

significantly increase its presence over the next three years.Jotun is widely recognised as a leading pipeline coatingsolutions provider; protecting more than 100,000-km ofpipelines over the last 30 years.“Combining both liquid and powder coatings to create a newrange of pipline coating solutions that provide the bestprotection inside and out is in line with our move towardsachieving an increased presence in the region’s pipeline coatingssegment,” said Andrea Meconcelli, Global Commercial Directorfor Functional and Architectural - Jotun Powder Coatings and theGlobal Concept Manager for Jotun Pipeline Solutions. “Ourdedication towards the research and developments of improvedpowder and liquid coating solutions has placed us at theforefront of the coatings industry. Jotun will continue to remainsteadfast in its commitment to meet the demands of our growingcustomer base by offering a more streamlined supply chaincovering all stages - from quotation to delivery.”

Expanded pipeline coatings portfolio



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A combination of ageing plants, greater fluid corrosiveness and tightening of HSSErequirements has made corrosion management a key consideration for oil and gascompanies. Peter Collins* reports on an innovative continuous monitoring system usedto mitigate corrosion.

A step change in

corrosion monitoringCC

ONTINUOUS MONITORING PROVIDESasset and integrity managers with anup-to-date picture of how theirinfrastructure is coping with the

demands placed upon it. This information informsdecision making about maintenance andreplacement, optimisation of prevention/mitigationstrategies, and feedstocks. Continuousmeasurement presents a step change in the levelsof corrosion rates that can be determined and theaccuracy of that determination.

Plant integritySteel pipework and vessels are always at risk ofcorrosion or erosion. Unless monitored there is arisk of failure which may impact the safety ofworkers and the environment, quite apart from thefinancial costs of operational interruption, of repairsand of reputational damage.

As oil and gas operators produce and processever more corrosive or erosive hydrocarbon streamsthe demands on plant metallurgy steadily increase.

Permanently installed sensor systems deliver acontinuous picture of asset condition over time, ata comparable cost to that of a single manualinspection. This picture can be correlated withprocess conditions that may be causing corrosion orerosion, and with strategies to minimise corrosionsuch as inhibitor use, enabling the asset managerto move beyond merely knowing whether corrosionor erosion is occurring to understanding why and atwhat rate. This understanding enables operators tomake better-informed decisions.

The need for continuous monitoringThere are various established techniques for theperiodic assessment of pipe and vessel integrity.However periodic inspections do not delivercontinuous pipework condition data that can becorrelated with either corrosion and erosion drivers- process conditions, crude constituents andabrasive solids - or inhibitor use to enableunderstanding of the impact of process decisionsand inhibitor strategy on plant integrity. Manualacquisition of ultrasonic wall thickness data is alsofrequently associated with repeatability limitationsand data logging errors.

Permanently installed sensor systems on theother hand deliver continuous high quality data.Permasense has developed an ultrasonic sensorthat can be installed on pipes/vessels operating atup to 600°C. This sensor has been certified asintrinsically safe for use in the most hazardous ofenvironments, and is proven in operation over a

number of years in refinery environments, and morerecently in upstream facilities.

Permanent installations show that wherecorrosion is taking place it is often intermittentrather than continuous. In such cases it is particularlyvaluable to be able to correlate thickness data overtime with process and/or inhibitor parameters.Moreover, the data highlights which prevention ormitigation strategies are most effective.

System designAt the core of the Permasense system is anultrasonic sensor mounted on stainless steelwaveguides (figure 1). The waveguides isolate thesensor electronics from extreme temperatures andguide the ultrasonic signals to the pipe wall andback without excessive signal degradation anddistortion. The system can monitor pipe wallthicknesses of over three mm in a wide range ofsteels and other alloys. The frequent measurementof corrosion allows for metal loss detection at thelevel of tens of microns.

Each sensor is equipped with a radio andcommunicates with other sensors and a gateway(base station) within a 50m range. The sensorsform an independent mesh or wireless network(figure 2) and each sensor radio can act as a relay,

or repeater, enablingthe network to spanhundreds of metresfrom the gateway.

Data is channelledvia the gateway to adatabase on aconnected computer. If,as is usual, thiscomputer is networked,browser-basedvisualisation softwareenables thecorrosion/inspectionengineer to view the dataat their desk. The datacan also be exported inany of the file formatsrequired by thevarious processmonitoringapplications,enabling

Permanently installed sensorsystems deliver a continuous

picture of asset conditionover time, at a comparable

cost to that of a singlemanual inspection.

Figure 2. The Permasense system.

Figure 1: ThePermasense sensor.


seamless transfer and read-in to those packagesand thus correlation with the process data at thesensor location.

Cost effective for large scale deploymentAll Permasense sensors are battery poweredmeaning no cabling is required. This minimisesinstallation costs and enables use in remote areasand on a large scale.

The sensor is secured on the pipe/vessel bymeans of two studs which are welded onto thepipe. For pipe wall temperatures below 100°C thestuds can also be welded onto girth clamps,themselves mounted on the pipe. Stud mountingallows for dry coupling - no couplant is requiredbetween the waveguide tip and the pipe wall. This,together with multi-year battery life, eliminates theneed for expensive maintenance access betweenturnarounds. Stud-based mounting also enablesgeometric flexibility and reduces installation timeto just minutes; a two-man installation team cantypically install 50 sensors per day.

Robust wireless network communicationThe sensor has been designed using high-gradematerials to allow for many years of continuousoperation, and a number of systems have been inuninterrupted operation for four years.

To ensure the system performs in the event of ablockage of an individual pathway, or the loss of asensor, there are multiple pathways for datatransmission through the mesh back to the gateway(Figure 2) to ensure data retrieval.

The gateway channels data transmitted from allthe sensors located in the network. Typically wallthickness measurements are sent every 12 hours;but this interval can be changed at any time for anysensor, to as little as every few minutes ifnecessary, depending on the monitoring or metalloss determination requirement at that location.

Data is stored in the computer database toguarantee security and this allows the user to viewa full history of data readings helping to build up aclearer picture of corrosion and erosion rates.

ApplicationsThe system has a wide range of applications in oiland gas and petrochemical facilities. To date inrefineries, for example, these include virtually allcrude unit lines, air coolers, furnaces, heatexchangers, pumps, amine units, cokers andcracking units. Upstream, systems are in service incentral processing facilities and feeder lines inonshore production, on offshore gas productionplatforms and in LNG plant. Pipe materials includecarbon, chrome and stainless steel. Typicallocations for sensor installation are on elbows,known thin spots, and areas of particularturbulence. Older units, particularly those operatingoutside of design specification, are particularlyworthy of attention.

The system allows facility operators to monitorlocations continuously without the repeated cost ofaccess, and for little more than the cost of a singlemanual inspection. Continuous measurementpresents a step change in the levels of corrosionrates that can be determined and the accuracy ofthat determination. By correlating metal loss datawith process data (composition, hold-up,temperature for example) a true understanding canbe gained of what changes in what parameters aredriving corrosion and erosion.

The system enables operators to make better-informed decisions about changes according tothese parameters to minimise impact on their plant.Furthermore, users are now optimising theirinhibitor strategies through the insights gainedfrom the data.

Continuous monitoring on near-end-of-life linesenables turnarounds to be scheduled with muchgreater confidence. In a recent example, a systeminstalled on a line with an expected remaining lifeof 12 months enabled line replacement to bepostponed by a very valuable six months.

Inspector safetyIn plants with aggressive rates of corrosion,particularly where the corrosion is intermittent andthe remaining life is uncertain, frequent manualinspection is common. If a shutdown is necessary toenable manual inspection (because of high operatingtemperatures or for safety reasons for example) theloss of throughput can come at a high cost.

Some locations in a facility can be hard to reach,meaning technicians incur safety risks in gainingaccess. Where high pipework/vessel temperatures areinvolved ensuring technician safety during manualinspection becomes even more challenging.

Permanently installed systems reduce thesafety risks associated with collection of plantcondition data. In several facilities Permasensesystem users have also been able to eliminate theperiodic shutdowns previously required to enableoperator access at high pipework temperature.

The installed systems are also now deliveringdata where inspector availability is limited oraccess is difficult for environmental reasons.

Gelsenkirchen experienceCorrosion monitoring was conducted on cast carbonsteel u-bends with a wall thickness of approx. 25mm(1in.), operating at 380°C (720°F) in the Gelsenkirchenrefinery operated by BP to ensure continued safeoperation (figure 3). Because the high temperatureprevented accurate manual ultrasonic wall thicknessmeasurement, and would have exposed inspectors tosignificant hazard, the Permasense continuousmonitoring system was installed (figure 4): thissecured operation with confidence until turnaround.The system has been delivering reliable measurementdata for over three years now.

ConclusionOperators using the Permasense solution forcontinuous corrosion monitoring have a moreaccurate and timely understanding of the corrosionand erosion rates occurring in their facility. Whereinhibitors are in use the system is giving a greaterunderstanding of their effectiveness. Thecontinuous provision of data allows potentialcorrosion hotspots to be remotely monitored in realtime and at time intervals of the operator’schoosing, as frequently as every few minutes ifnecessary. This insight allows asset managers tomake more informed decisions to the benefit ofplant integrity, safety and operating costs.

The system has been tried and tested in someof the most inhospitable environments andoperates at pipework temperatures running at up to+600°C. It allows operators the freedom to choosemonitoring locations irrespective of howinaccessible they are thanks to the use of ultrasonicsensors and wireless networks for data retrieval.

The system has been deployed in refineries andupstream facilities, including offshore platforms,worldwide. The experience of 11 oil companiesoperating the system has proved that the data itgenerates enables significantly better informeddecision making in managing their assets. ■

Peter Collins, CEO of Permasense Ltd, UK


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Figure 3 - Measured wall thickness for sensors installed on one carbon cast steel U-bend.

Continuous monitoring onnear-end-of-life lines enablesturnarounds to be scheduled

with much greaterconfidence.

Figure 4. Carbon steel u-bend with Permasense sensor.


S13 ORA 5 2012 Technology C_Layout 1 03/10/2012 10:24


DDESPITE MOVES TOWARD greaterenergy efficiency and a turbulenteconomic climate, global demand foroil and gas shows no sign of letting

up. Consumption in the developed world may beflatlining, but China will more than double its oilconsumption from 2000 to 2015, while in Indiademand will increase by about 75 per cent.

Debate continues about when “peak oil” will bereached, but the fact remains that a huge amountof oil is still in the ground – enough to last severaldecades by most estimates. The problem is thatmuch of the “easy” oil has been found, anddemand for energy is taking exploration andproduction to ever-tougher extremes of geographyand climate. The deepwater (more than 500 m andultra-deepwater (more than 1,500 m) energy sectorrepresents one of the major growth areas for the oiland gas industry, but exploiting these reservespresents tough technical challenges.

“This is a very onerous environment,” says JohnDrury, Business Group Director for Trelleborg’sbusiness that focuses on the offshore industry. “Therisks multiply exponentially with depth, andoperators are looking for fail-safe solutions.”

One issue with ever-deeper wells is that the hotoil cools and thickens on its way to the surface,slowing the flow and potentially causing blockages.One of Trelleborg’s many product lines for the oiland gas industry is thermal insulation material toprevent this cooling.

“Our materials are engineered to cope withenvironments at extreme depth plus temperatureswell in excess of 100°C,” says Drury.

Safety has long been a priority for the offshoreoil and gas industry, but the Deepwater Horizonexplosion in the Gulf of Mexico, which resulted in11 deaths and the largest accidental oil spill inhistory, thrust the issue into the spotlight.

“Operators are introducing increased risk-mitigation strategies to avoid these sorts ofincidents in the future,” says Drury. “There shouldbe further opportunities for our safety-relatedproducts as legislation is introduced.”

Among Trelleborg’s wide range of safetysystems for the offshore oil and gas industry are theElastopipe deluge system for fire protection,microspheres for smothering fires and flexible fire-retardant coatings. Trelleborg is also working oninnovative buoyancy solutions that improve safetyby reducing the load on the long pipes bringing oilup more than a kilometer from the seabed.

The industry, which accounts for about 10 percent of Trelleborg’s total sales, has witnessed

increased globalisation in recent years as newdeepwater fields are exploited, such as off the coastof Vietnam, Brazil and West Africa.

“In Brazil there is heavy investment to enablethe construction of ships in the country, whereashistorically they might have been built in Korea,”says Drury. “Similarly in Southeast Asia there is ashift toward deeper waters, and at the same timecountries in the region are looking to develop morelocally based supply chains.”

To capture these opportunities, suppliersincluding Trelleborg are setting up production inthese new markets.

Competition tougher than everBut while the opportunities are plentiful, thecompetition is tougher than ever.

“There are a lot of building projects ongoing, butpeople are being very aggressive to win andeveryone is very conscious about margins,” saysThor Hegg Eriksen, Business Unit President forTrelleborg’s business that focuses on the offshoreindustry. “This seems a bit of an anomaly for a

business that is making so much money on theoperator side. But there is not really a directcompetitor that is able to offer such a broad productportfolio from as many locations as Trelleborg.”

Industry observers see an intriguing periodahead, with expected regulatory changes on safety,national oil companies becoming more outwardlooking, the rise of Asia as a supplier and consumer,and increased investment in deepwater drilling.

“There are changes going on, and it is aninteresting environment,” says Eriksen. “But withour core competencies, our ability to work on aglobal scale and our extensive innovation work,Trelleborg is well positioned to see what happensand to jump on the opportunities as they arise.”

On the riseWith the deepwater discoveries off its Atlanticcoast representing a third of all worldwide oildiscoveries in the past five years, Brazil is widelytouted as the next oil giant. Petrobras, which hasgrown to become the world’s third-largest oil andgas company by market capitalization, will beinvesting some US$224bn by 2014, much of it inplatforms, rigs and other infrastructure.

To supply this booming market, Trelleborg isinvesting heavily in Brazil, acquiring an existingfactory and building another on a greenfield site.“Brazil is becoming hugely important,” says BrianMcSharry, President of Trelleborg’s U.S. business

Trelleborg O-rings.

One issue with ever-deeperwells is that the hot oil

cools and thickens on itsway to the surface.

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Deeper wells and renewed safety concerns pose new challenges for the offshore oil andgas industry. Providing solutions offers both opportunities and rewards.

Deep well challenges;

the hunt for black gold


essential.

www.marellimotori.com


that focuses on the offshore industry. “We havestudied the market conditions and recognised thesignificant potential, and as a result we haveestablished a major presence there.”

The new facility, located in Brazil’s oil capital,Macaé, will manufacture a wide range of polymer-based solutions for offshore topside and subsea oiland gas exploration.

“There is no other manufacturing on this scale inthe country,” says McSharry. “We will be able to reachnear capacity relatively quickly, and the size of thefacility is such that if we need to expand, we can.”

The second factory, at Santana de Parnaiba, wasacquired in April 2011, together with a nipple hosetechnology for transferring oil from floating production,storage and offloading vessels and terminals.

“This product completes our product andsolution portfolio,” says Managing Director Xavier-Alexandre Delineau. Another line at the factory willproduce printing blankets to cater to the growingLatin American printing market.

Petrobras has set aggressive objectives on localcontent for its projects, so the factories areimportant for Trelleborg to access Brazil’s oil andgas market. “One of our goals is to have two world-class factories serving the global offshore andmarine offloading business, and we have a plan inplace to sustain and develop our leadershipposition,” Delineau says.

Avoiding explosive decompression failureWhen engineers specify a seal material for anapplication, they have to consider such things asworking temperatures, pressure and compatibilitywith chemicals. In oil and gas applications thereare other critical criteria that must be considered,such as explosive decompression.

Inherently, elastomer seals contain voids. Gas orgas mixtures in contact with elastomer surfacesduring oil and gas processing are absorbed andsaturate elastomer seals. At high pressure thisabsorbed gas is in a compressed state. Whenexternal system pressure is reduced, either rapidlyor over a relatively short period of time, thecompressed gas nucleates, inflating at the voidswithin the elastomer. Depending on the strengthand hardness of the elastomer, this can cause theelastomer to break or crack.

No elastomer can be completely ED resistant.However, Trelleborg has engineered the XploR™range of sealing materials that demonstratesunrivaled ED resistance for each elastomer type.

An innovative systemTrelleborg has developed a new stackable version of itsinnovative RiserGuard® system that provides a solutionfor rigs with limited storage space while offering thesame high protection as the original system.

“We originally developed our RiserGuard

product to help protect bare riser joints as theywere handled and run on the rig,” says AlanMcBride, Vice President of Drilling at Trelleborg’sbusiness that focuses on the offshore industry. “Inaddition, the product would enable the riser to berun and pulled quicker, saving valuable rig time.”

The new joints can be stacked alongsidebuoyant riser joints in the same deck storage area,thanks to strategically placed protective sectionsspaced within the RiserGuard that transfer loadsbetween the joints and the deck.

“Always keen to meet the changing wantsand needs of our customers, we recognised theneed to be able to stack the riser joints anddecided to develop a stackable version of theproduct,” McBride says. ■

www.trelleborg.com


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Trelleborg has developed a new stackable version of itsinnovative RiserGuard system that provides a solutionfor rigs with limited storage space.

RATHGIBSON, A LEADING manufacturer of welded, welded and drawn, andseamless stainless steel, nickel, and specialty alloy tubing, producesumbilical tubing with enhanced tensile strength and corrosion resistancefor a wide range of operating temperatures and pressures.

The increasing water depths and higher working pressures makesubsea an extremely harsh environment.

RathGibson offers laser-welded Lean Duplex 19D, a cost-efficientalternative for subsea umbilical applications. Zinc cladding is added forimproved external protection against corrosive-inducing, temperature-fluctuating subsea conditions. RathGibson's zinc clad Lean Duplex 19Dtubing undergoes extensive quality testing, including x-ray, eddy current,ultrasonic, and final acceptance testing (FAT) to meet and exceed ASTM-A789 and ASTM-A790 specifications.

Since 2001, RathGibson has placed over 6,500 km of its zinc clad leanduplex welded tubing in dynamic and static subsea umbilical applications.The company's umbilical tubing is currently installed in waters up to 2.3 kmin depth and lengths up to 52.3 km. Stated John Sinks, Vice President —International Sales, “RathGibson’s umbilical tubing for the subsea industry isprecisely engineered for various applications, such as control lines, flyingleads, electrical lines, chemical injection lines, and hydraulic lines."

RathGibson's umbilical tubing complements the offshore productportfolio provided by parent company, The PCC Energy Group, a memberof the Precision Castparts Corp. The PCC Energy Group provides rawmaterial and components integral to Oil Country Tubular Goods (OCTG)products, blowout preventers (BOPs), high pressure/high temperature(HP/HT) pressure control equipment, manifolds, splash zone piping, andrisers and flexjoints.

RathGibson, a PCC Energy Group Company, is a worldwidemanufacturer of precision engineered straight ngths, coil, and U-Bendtubing for diverse industries such as power generation, renewable, oil andgas, petrochemical, chemical, food and dairy, beverage, pharmaceutical,and general commercial.

Umbilical tubing withstands harshsubsea environments

tel: +218 (0) 21 361 01 73 ext 200fax: +218 (0) 21 361 82 80mobile: +218 (0) 92 747 53 70email: [email protected]: www.budgetlibya.com


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Oil and Gas Production FacilitiesGas-fuelled Power Generation SystemsOperation and Maintenance servicesIntegrated Oil and Gas SolutionsAftermarket OEM spare parts and Manpower Services

S14 ORA 5 2012 Technology D_Layout 1 02/10/2012 17:38


WWITH THE ADVENT of subsea processing the oil, gas, sand andwater emerging from the well are separated at the sea-bedwith only the useful oil and gas elements being transported tothe surface. The bulk of the waste components can be ‘re-

injected’ into the reservoir, boosting the reservoir pressure, giving a fasterproduction rate. The re-injection process can also dramatically increase thepercentage of oil and gas that can be recovered from a given reserve.

Subsea processing functionsSubsea processing can encompass a number of different processes to helpreduce the cost and complexity of developing an offshore field. The main typesof subsea processing include subsea water removal and re-injection or disposal,single-phase and multi-phase boosting of well fluids, sand and solid separation,gas/liquid separation and boosting, and gas treatment and compression.

There are a number of reasons why operators may choose to installsubsea processing equipment. First of all, most subsea processing willincrease the recovery from the field, thus increasing profits. Additionally, byenhancing the efficiency of flowlines and risers, subsea processingcontributes to flow management and assurance. Also, subsea processingenables development of challenging subsea fields, while reducing topsideexpenditures for equipment. Furthermore, subsea processing convertsmarginal fields into economically viable developments.

Shell's BC-10 project offshore Brazil was the world's first subsea systemwith gas/liquid separation and boosting. Developed via 13 subsea wells, sixsubsea separators and boosters, and an FPSO, the BC-10 project beganproducing heavy oil from ultra-deepwaters in July 2009.

Advantages and challenges of subsea separationSubsea separation is used to avoid topside separation facilities, thereby reducingtopside structure and payload requirements, to remove water from theproduction stream, or to separate gas from liquid subsea. It further reduces theamount of production transferred from the seafloor to the water's surface,debottlenecking the processing capacity of the development. Also, byseparating unwanted components from the production on the seafloor, flowlines and risers are not lifting these ingredients to the facility on the water'ssurface just to direct them back to the seafloor for re-injection.

Re-injection of produced gas, water and waste increases pressure within thereservoir that has been depleted by production. It also helps to decreaseunwanted waste, such as flaring, by using the separated components to boostrecovery. Additionally subsea boosting negates backpressure that is applied tothe wells, providing the pressure needed from the reservoir to transferproduction to the sea surface.

From the subsea separation challenges standpoint, while there is a distinctneed for simplicity of use and maintenance in all subsea equipment, the use ofequipment like compressors, pumps and control valves, either single phase ormultiphase, at the sea floor offers challenges for performance, reliability andmaintenance. A long subsea tie-back and a deeper water depth would requirelonger umbilicals, which, in turn, would require the use of larger electricalpower supplies on the surface or the production platform due to the greateramount of power losses sustained over longer distances. While the spacerequired on board a platform for the processing equipment is reduced, there is agreater need for more space just to house the power supplies. This can mitigatethe advantages of having a reduced footprint for the processing equipment.

Another disadvantage to using subsea processing equipment is the

maintenance cost and the expenses for intervention should a failure (due tosand production etc) or leak occur. In most cases, production will have to beshut down and expensive repair jobs carried out or in some extreme cases, itmight be found more efficient to replace the failed equipment or in some cases,based on cost studies, there might be reason to provide a backup system inplace for all subsea equipment.

Subsea separation technologiesSubsea separation technologies involves separation either in two phase or three phase.1. Two-phase (gas-liquid or liquid-liquid) Gas-liquid separation: Subsea gas-liquid separation is one of the alternatives tomultiphase boosting to extend the distances of multiphase transportation. Thedevelopment of offshore gas and oil reserves continues to move into deeperwaters and marginal fields. The economics of many of these fields do not justifythe use of fixed leg platforms or of floating production facilities. Afterseparation, the liquid phase is typically pumped to the surface facility to enablehigher efficiency pumping, minimise flow assurance risks, overcome thehydraulic head of the water column or diminish tie-back limitations. Typicallythe gas phase free flows to the surface facility. In all cases the back pressure onthe wells and reservoir can be significantly reduced, thereby increasingproduction and reserves, and also minimising operational flow assurance issuessuch as hydrate formation and slugging. It’s also effective in enabling theproduction of complex reservoirs containing heavy, viscous oil and lowpressures. This approach has been successfully applied in Shell’s Perdido andParque das Conchas (a.k.a. BC-10) projects and Total’s Pazflor.

Subsea processing can encompass a numberof different processes to help reduce the

cost and complexity of developing anoffshore field.

Figure 1. Subsea processing facilities (photo courtesy Prescott, 2012).

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Disposing of the unwanted elements brought to the surface during oil and gas production- primarily sand and water (at times gas) - can present a challenge, particularly as thewaste water can contain small traces of potentially harmful hydrocarbons.

Understanding

subsea separation


®

WORLDWIDE LEVEL AND FLOW SOLUTIONS

Below are a few benefits of subsea gas-liquid separation when it iscombined with pumping of the liquid phase to one line and natural flow ofgas in a separate riser; 6 There is a low pressure drop in the gas line, this has the advantage of

eliminating the compressor topsides.6 Low erosion velocity for the top of the riser due to low gas velocity.6 Reduced hydrate risk because of the possibility to decompress the separator

and deep water flowline through the gas riser.6 Easier restart of wells by lowering separator pressure.6 Possibility of using a standard centrifugal pump to lift the liquid.

Liquid-liquid separation: the water phase is typically pumped either into adisposal formation as in Statoil’s Tordis project or back into the producingreservoir (which increases reservoir sweep and recovery) similar to Petrobras’Marlim project. Either approach lightens the produced fluids column and reducesthe backpressure on the wells and reservoir. The gas and oil phase can be flowednaturally to surface or pumped, either separately or comingled back together.

The separation technologies employed have been gravity based (whichemploys gravity to separate the phases) or cyclonic (which employs spin andcentrifugal forces to enhance the separation between phases).2. Three-phase (gas-liquid-water)Subsea three phase separators are used to separate gas, oil and water phases.Three phase separation involves gas/liquid separation like two phase, and alsoinvolves liquid/liquid separation (water and oil). It is used to optimise gasseparation using the gas for re-injection purposes and for water floodingenhanced oil recovery. It also increases oil production.

The basic design aspects of three phase separation are identical to thosediscussed for two phase separation. The only additions are that moreconcern is placed on liquid-liquid settling rates, and that some means ofremoving the free water shall be added.

Some three phase separators are called free water knockouts. They aredesigned to separate the free water phase from the oil. Flow to the separator maybe directly from a producing well. In this case, significant amounts of gas may bepresent and the separator will typically be called a three phase separator.

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Figure 2. This FMC graphic of the Statoil Tordis field separation and boosting moduledepicts gas/liquid separation, oil/ water separation, multi-phase pumping, water injectionpumping and the separation of solids (photo courtesy of Intech Engineering, 2007)

There are a few benefits of subsea glass-liquidseparation when it is combined with pumping

of the liquid phase to one line and naturalflow of gas in a separate riser.


Subsea actuation technology: hydraulic or electric?Subsea processing and separation requires remote actuation of its processcontrol valves controlling fluid switching and control of flow-rate and pressure.Usually, these valves have been remotely actuated by means of a high pressurehydraulic system. A major drawback with hydraulic actuation is the complexity,inefficiency and cost of the hydraulic power supply system. Usually located atthe surface, the hydraulic supply can be situated up to 100+ km remote fromthe subsea installation. Inherent in this approach is the use of two customdesigned hydraulic hoses for both high pressure supply and low pressure return.These hoses represent a major infrastructure investment causing power lossesand are potentially vulnerable to damage.

On the other hand, electric actuation technology though in its infancy, looksto dominate the market in the future because of some key advantages, namely:

Firstly, the reduced cost of an electrical rather than hydraulic umbilical. This isparticularly relevant to installations with large ‘step-outs’ (horizontal pipelinedistances between the well and the surface). If the electrical power is transmittedat high voltages and low currents then relatively compact cables can be used.

Secondly, there is reduced environmental impact, particularly whencompared with a single hose, total-loss hydraulic system.

ConclusionOne of the key requirements for successful subsea equipment use is extremereliability, as maintenance is very difficult and prohibitively expensive. Finally, inorder to influence the choice of separation system below are key considerations:6 How will separated streams be handled?

6 Is there sufficient physical room to install the required separation equipment?6 Do we expect sand or solids in the flowstream? How about other impurities?6 Are foaming and corrosive tendencies likely to occur?6 Are there waste products to be disposed of?6 What of these elements or others are likely to impact flow assurance?6 Do we expect liquid slugging or surging?

Chikezie Nwaoha (AMIMechE, MOSHAN) is an independent researcher and agraduate of Petroleum Engineering (with specialty in process engineering. ■

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The Pazflor development plan is strikingly innovative, based largely on the installationof separation and pumping units on the seabed.

Electric actuation technology looks todominate the market in the future.

European Headquarterand ManufacturingHeikensstraat 69240 Zele, BelgiumPhone: +32 (0)52 45 11 11Fax: +32 (0)52 45 09 93e-mail: [email protected]

HEAVY DUTY ECLIPSE®

®

FOCUSEDLEVELMEASUREMENT



IIT’S NOT EVERY year a new vessel isrecognised as a true game-changer. Theanticipated Dockwise Vanguard has beendesigned to enable operators and

contractors to consider opportunities for megaoffshore units which were, until now, consideredunthinkable. The Dutch marine contractorDockwise’s new generation vessel—currently underconstruction—will enter the heavy marine transportmarket with anticipation.

Next generation requirementsThe next decade is expected to see a growingdemand for transportation and installation projects,particularly for the transport of integrated offshoreunits to remote locations. Today, these fullyintegrated offshore units such as TLPs andsemisubmersibles are currently transportedseparately. Other units, such as spar buoys andFPSOs, can only be transported up to a certain sizeand are usually wet-towed to their destination.

Existing semisubmersible heavy-lift vesselscan’t transport the next generation of platforms.The world’s current largest semisubmersible heavy-lift vessel, the Blue Marlin—also owned byDockwise—can carry structures of up to 76,000metric tons. While capable of transporting somemega structures (such as BP’s Thunder Horse), theBlue Marlin is limited in its ability to transportlarger and heavier units. Many of these newer unitsrequire a new type of vessel with a significantlyincreased carrying capacity along with an increaseddeck size and flexibility.

In light of next generation requirements,Dockwise decided to invest in a completely newvessel capable to transport super-sized offshorestructures.

Innovative design The Dockwise Vanguard was engineered to surpasscurrent heavy marine transport limitations. Thevessel’s accommodation block and navigationbridge are located on the extreme starboard side.The vessel has no bow, and this, along with otherdesign features, gives the vessel a uniqueappearance. Furthermore, the deck covers a surfaceof 275 m by 70 m, equipped with movable casingssuitable for overhang in all directions.

In addition, the vessel has a dedicated designfor ultra-heavy units weighing up to 110,000 metrictons. Optimised deck strength and extreme wide-load capabilities are at the heart of the designphilosophy; as are the vessel’s stabilitycharacteristics. It is equipped with a 27 MWredundant propulsion system consisting of twofixed propellers at the aft and two retractableazimuth thrusters at the bow. These can reach amaximum transit speed of 14 knots, whichtranslates to average service speeds of 11-13 knotswith cargo. In addition, the vessel allows for 16meters water above deck, accommodating cargoeswith a higher draft.

New opportunitiesThe Dockwise Vanguard’s capabilities present newopportunities which were unthinkable until now.Companies in the oil and gas industry can nowspecify much larger and heavier offshore structures,and these can be integrated at a single fabricationsite. These mega structures can then be transportedonboard the vessel to remote offshore locations,even in harsh climates where no commissioningfacilities are available. This feature can help reduce

costs and optimise the overall project. In essence,the new vessel will play an important role in thefield development philosophy of oil and gas majors,since it will be capable of transporting fullyintegrated mega offshore units.

The vessel’s design is also expected to helpoperators and developers create value. With itscapabilities, timely and risky phases of offshoreprojects can be managed prior to hookup andcommissioning. Interface optimisation, higherdegree of risk mitigation, lower insurancepremiums, improved schedule flexibility, andreduced time-to-production – as well as reduced

The Dockwise Vanguard’scapabilities present new

opportunities which wereunthinkable until now.

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New generation semi-submersible vessel changing the game

Future of exceptional

heavy marine transport

S15 ORA 5 2012 Technology E & F_Layout 1 02/10/2012 17:54

offshore man-hours – are a few examples ofopportunities. In addition, the vessel’s advancedtechnical capabilities enable it to offer acompletely new service: offshore dry-docking.

Offshore dry-dockingIncreasingly, FPSOs are being located in remoteareas which lack support infrastructure. In thiscircumstance, an offshore dry-docking service canbe specially valuable. The Dockwise Vanguard’sFPSO dry-docking capacity offers inspection,maintenance, and repair opportunities (amongstothers) at different conditional modes. The FPSOcould remain connected to its mooring and turretsystem while keeping the riser systems intact, withthe possibility of continuing limited production. Inthis scenario, the FPSO will still be able to freelyweathervane around the turret mooring, withcontrolled heading made possible by the vessel’spropulsion system.

In order to fully realise this new offshoreservice, Dockwise received an “approval inprinciple” from ABS following the commissioning ofa hazard identification (HAZID) safety assessment.This assessment took place in the presence of amultidisciplinary team of experts andrepresentatives from two oil and gas majors.

Industry AnticipationThe Dockwise Vanguard continues to capture theinterest of oil and gas majors. Three contractshave been agreed, each transporting behemothsized platforms. The maiden assignment will loadand transport Chevron’s Jack/St.Malo 50,000 tonsemisubmersible hub production facility from theSamsung yard to Kiewit’s Corpus Christi facility inthe US Golf Coast. Upon completion, it will returnto Korea for its second assignment to transportEni’s Goliath FPSO—52,000 ton cylindrical Sevan-

type platform—from Hyundai Heavy Industries tothe Eni Norge Goliat Field in the Barents Sea. Thethird assignment consists of transporting a 45,000ton spar buoy for Statoil. The platform, measuringapproximately 200 m in length with a 50 mdiameter, will be transported from either Korea orFinland—subject of yard choice—to AastaHansteen (ex Luva) field in the Vøring area.

The vessel’s design philosophy received twoawards by maritime organisations. The first awardwas from the Royal Association of Dutch ShipOwners for the KVNR Shipping Award 2011. Thisaward recognised the Dockwise Vanguard as the

most innovative vessel. The second recognition,an OTC Spotlight on New Technology Awardbestowed at this year’s conference, alsorecognised the vessel’s innovative design. Inselecting a new technology winner, the jury’sdecision was based on the following criteria:new, innovative, proven, broad interest, andsignificant impact.

With its innovative design, the DockwiseVanguard symbolises the future of exceptionalheavy marine transport. This next generationvessel is uniquely capable to offer a new worldof opportunities. ■


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SSAFETY, EFFICIENCY AND effectiveness underpin Subsea 7'smanagement and operation of its fleet. Value and integrity are keywatchwords in its commercial arrangements. The company, whichspecialises in seabed-to-surface engineering, construction and

services to the offshore energy industry, counts amongst its assets the SevenBorealis – a pipelay/heavylift vessel scheduled to serve, first, Total, at theAngola CLOV project. A recent tour of the Borealis reaffirmed Subsea 7'semphasis on safety, efficiency and effectiveness. The vessel is highly capable,and its crew are trained and supported in maintaining a strict regime of secure,systematic operation.

The vessel's capabilities and equipment are extensive, too. Observe that ithas its own cargo barge, to supply the vessel. See that its towers can bemobilised at each location. Understand that the main line of the S-lay systemcan be adjusted to suit any configuration, any process - to accommodate anyclient requirements.

Most recently, the Seven Borealis has been sited in Schiedam, in theNetherlands, at Huisman's facility, where outfitting has been completed beforemobilisation to West Africa. A global enterprise offering extensive experience inthe design and manufacture of heavy construction equipment for on andoffshore companies, Huisman has prepared the Seven Borealis to handle a pipeevery three minutes.

More equipment for better pipelayThere is more to be learnt about the vessel's capabilities. The Seven Borealis isequipped with an S-lay system to lay pipe from 11cm to 117 m. For laying pipein extreme deep water, the J-Lay tower, positioned starboard, can be used andcan lay pipe from 10cm to 61cm in water depths of up to 3,000 m. There arethree two-hundred tensioners on the .

There is a large red structure within - a sheath, which folds down tosupport manoeuvrability of the winches. There is a 600-ton abandonmentrecovery winch, and a 200-ton winch, both for S-lay. There is a 200-tonwinch for J-lay operations. There are, also, selected small winches forspecialist operations. There is a 200 metre S-lay tensioner - which consists ofan upper track, a lower track and supporting equipment. It is rail-mounted,and ensures accurate load measurement.

The Seven Borealis features, also, a window large enough to accommodatein-line structures - T pieces, for example - after welding.

Focusing further on the vessel's heavy equipment, Mr Gilbert showed therotary crane, which operates 600mm wire. The crane was tested at 500 tons,said Mr Gilbert, "and didn't even flinch”. Just as impressive, note here that theJ-lay can turn to any angle, so that it can operate independently of the ship'sown direction. Note, also, that the three-section stinger can be configured tosuit specific operations. It can, in fact, create a pipe radius from 70 to 300 m.

“The stinger on the Borealis is up there with one of the biggest around." saidSimon Gilbert, an offshore manager at Subsea 7. Mr Gilbert managesoperational matters, from crane management to pipe handling and deployment.Speaking, recently, on the deck of the Borealis, Mr Gilbert also highlighted thevessel's "world-class ROVs" - remotely operated vehicles, both of which arecontrolled from one controller.

Additionally, the Seven Borealis has its own gas systems producing oxygenand acetylene. The commercial partnership ensuring safe and secure operationhere is the technology firm iGas, which was chosen by Subsea 7 due to itsexperience in delivering gas supply and distribution projects throughout Europeand beyond - utilising cost-effective and advanced technology and design.

Last to see externally, sited high on the vessel, the helideck is notable asthe largest offshore helideck in production, capable of landing the largestoffshore helicopters.

Evidence of advanced administrationInside the administrative bowels of the Seven Borealis, the softwareunderpinning the ROVs is developed by Schilling Robotics. With Schilling'ssupport, Subsea 7 designed the ROV control station in-house to exceed theconcept of "fit-for-purpose" – in Simon Gilbert's words - offeringcapabilities that not a lot of comparable vessels have.

Development of the ROV control stations may be associated withdevelopment of a paperless system for task planning. This is atechnologically advanced vessel, not just in terms of its ability to deliverflexlay capabilities, but also in terms of administrative functionality.Within the Seven Borealis, one sees the deployment of an integratedsystem of software, hardware and defined processes to manageinformation through creation, capture, storage, retrieval, distribution andretention.

Looking across the navigation bridge, one can affirm that there are no papercharts - it is all electronic, and with comprehensive use of GPS systems.Looking, then, for a practical example in internal and external communications,one can observe that the Seven Borealis is fitted with Cisco IP phoneequipment. A few steps away from the navigation bridge, there is evidence onthe chief officer's desk on the working bridge, in the form of a Cisco IP Phone7962G – a capable, high-end unified communications device designed to meetthe needs of managers and administrative assistants. With programmablebuttons and interactive soft keys applicable to all call features and functions,this hands-free speakerphone and handset offers hi-fidelity wideband audio, andfeatures a built-in headset connection and an integrated Ethernet switch,representing a sound choice of communications hardware - user friendly andone of the easiest phones to use, offering stable IP telephony (obviously,depending on the capacity and stability of data connection). Observe that evena detail such as choice of phone indicates in keeping with Subsea 7's emphasison effective, efficient operation. ■

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How Subsea 7 will serve Total in Angola with the unique subsea capabilitiesof the Seven Borealis.

An advanced vessel for West African

pipelay

The Seven Borealis heli-deck is notable as the largest offshore heli-deck in production.


S16 ORA 5 2012 Waste HO_Layout 1 02/10/2012 17:56


THE PATENTED BAKER Hughes TeleCoil™ systemoffers real-time downhole information, maximisingthe efficiency of virtually any coiled-tubing (CT)operation. Real-time collar location enables thenecessary depth accuracy for precisionapplications, such as perforating and zonalisolation.Bottomhole differential pressure and tooldifferential pressure information—with temperaturedata—offer continuous optimisation of a widerange of common applications including milling,stimulation, cleanouts, sand removal, debrisremoval, and gas lifting.The TeleCoil conductor, which is preinstalled insidethe CT, is impervious to aggressive fluids such asacids, cement, and sand slurries. The small-diameter conductor has a negligible impact on thepumping pressure drop along the coil and theoverall reel weight.The TeleCoil conductor’s protective jacket is sized forthe necessary strength and stiffness to withstanddynamic tension and compression forces encounteredduring spooling and pumping operations.

The system—which uses standard end fittings andattaches to the BHA with mechanical andelectrical quick connectors—requires only minutesto hook up in thee conductor connects to a dataacquisition system that processes and charts thedownhole information.

REINFORCING ITS ROLE as a major supplier of electricpropulsion technology for liquefied natural gas (LNG)ships, GE's Power Conversion business recentlyreceived a series of new orders from South Koreancompanies Daewoo Shipbuilding & MarineEngineering and Hyundai Heavy Industries. The GEequipment will be installed on 23 new LNG ships andrepresents total propulsion power of 1,105 MW.“These orders clearly demonstrate that GE’s expertisein electric propulsion for LNG applications isrecognized worldwide by the major players in thesector,” said Paul English, marine vertical leader forGE’s Power Conversion business. “Our continuousinvestment in innovation and competitive solutionsallows us to customise and optimise our offerings tomeet ship owners’ specific requests.”

The scope of GE’s contracts includes MV7000converters, induction motors, transformers,generators, main and cargo switchboards andpropulsion control systems. Manufacturing for allpropulsion motors is based in GE’s rotating machinesplant in Nancy, France, while the propulsion systemsare engineered at the GE merchant marine center ofexcellence in Belfort, France.GE’s motors and converter are designed andoptimized to make the propulsion systems easy tomaintain. The induction machines are driven bypress-pack IGBT Pulse Wide Modulation (PWM)converters to offer high levels of reliability in acompact design. GE’s global electric propulsionsystems provide customers with high efficiency,availability and layout flexibility.

ON 24 AUGUST, Smit Lamnalcolaunched SL Gabon, the first tugbranded under its new corporateidentity, following the integration ofSmit’s terminal handling activitieswith Lamnalco in July 2011.

Built by Damen Shipyards Galati inRomania, SL Gabon is also the first oftwo newbuilds contracted for a fiveyear period by Total Gabon to providesupport in the offshore oilfields and toassist tanker operations at the onshoreterminal of Cap Lopez, at Port Gentil,Gabon. The second tug, SL Libreville, isdue for delivery next month.

“It is great that the first newbuilddecked with our new corporate

colours visualises the integration oftwo international marine serviceproviders,” said Smit Lamnalco CEODaan Koornneef.

The newbuilds are Stan Tug 4200-type tugs, rugged twin-screw vesselswith 68 tonnes bollard pull.Accommodating a crew of 16 and fullyair-conditioned, the vessels can be usedfor towing, pushing, push-pull, berthing,anchor handling, hydrographical survey,line handling, firefighting, salvage,diving support and pollution controloperations in all waters.

The Total Gabon contract renewsa longstanding partnership betweenthe oil major and Smit Lamnalco.

The newbuildings replace two olderDamen-built vessels, and join theexisting tugs Smit Manji and SmitOzouri, built in 2007. For Total Gabon,the latest renewal extends arelationship in Gabon that can betraced back through SMIT to 1998.

“As well as symbolising theongoing trust placed in us by ourcustomers through our integration,the delivery confirms our willingnessto commit to building new vessels forenergy majors operating in promisingmarkets,” said Mr Koornneef. “GivenPort Gentil’s remote location, it iscritical that marine support servicesare robust and reliable.”

First Smit Lamnalco branded tug launched FMC TECHNOLOGIES ANDSulzer Pumps have jointlydeveloped a powerful newmultiphase pump systemoptimised for harsh subseaenvironments.The new pump systemleverages Sulzer Pumps’ pumphydraulics with FMCTechnologies’ high-speedpermanent magnet motortechnology and subsea systemdesign and integrationexperience.The helico-axial type pump ispowered by a 3.2-MWpermanent magnet motor andis capable of withstandingpressures up to 5,000 psi. Byusing permanent magnet motortechnology, less maintenanceis required and greater speed,efficiency and power can beachieved providing end-userswith more operationalflexibility for subseaprocessing, said the companies.“The collaboration betweenFMC and Sulzer Pumps Ltd. hasresulted in what we believe tobe the most powerful, efficient,and flexible subsea pumpsystem available on themarket,” said Rob Perry,director of subsea processing atFMC Technologies.“They industry wants moreenergy on the mudline tosupport their efforts to boostproduction and improveeconomics, and I am happy tosay we have delivered asolution,” Perry continued.Full qualification testing of thesubsea pump unit wascompleted earlier this summerat Sulzer Pumps' purpose builttest facility in Leeds, UK.

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Real-time downhole communication system



THE ROBUST GO Range now provides amore compact and reliable solutionfor automating heavy duty valveapplications found in the gathering,transmission, compression andstorage of gas. Re-designed to provide longer andmore efficient service in theharshest of environments with theminimum of maintenance, thenew generation of Rotork GOactuators has undergone animportant upgrade, includingstreamlined manufacturing andproduct improvements. As a resultGO actuators are now lighter, morecompact and incorporate advancedchanges to functionalspecifications. The improvedmodular design enables thesmallest number of components to meet a widevariety of valve torque and control requirements. The GO range uses the pipeline gas as the motive

power source. The gas is delivered to oil tanks thatconvert the gas into hydraulic pressure and thispressurised hydraulic oil is used to drive industry-

preferred Rotork scotch-yoke quarter-turn or linearvalve actuators. A complete range of sizes isnow available to suit virtually any valve size orclass. Using pressurised oil as the driving forceprovides powerful and smooth actuator controland isolates the cylinder from the pipeline gas.This prevents contaminants from entering thehydraulic cylinder, eliminating corrosion andseal deterioration and extending actuator life.

At the centre of the gas-over-oil system, themulti-function manifold block integrates gas

control functions to facilitate a wide range ofvalve control options. Standard

gas control systems arecomplemented withoptional equipmentdesigned by RotorkFluid Systems for

functions includingLine Break, Low Pressure Close, High DifferentialInhibit and Emergency Shutdown (ESD). In all casesoperation is simple and intuitive.

FOLLOWING PREVIOUS SUCCESSES in Gabon, Baker Hughes hascarried out its next well completion in the Gamba sandstone reservoirusing inflow control and gravel pack technology, the company said ina recent press release.The subsea horizontal well is located in the Dussafu Block OffshoreGabon and is the company’s fifth project in the region. The wellpenetrates the Gamba sandstone reservoir, which averages at athickness of 45ft and overlies a significant angular unconformity,underneath which is located an oil column of approximately 170ft. Thesandstone has a porosity level of around 30 per cent, with apermeability range of one to three Darcies. This contrasts with theDentale sands which are much more variable, with levels between 18 to30 per cent. The challenges posed by this job, as well as others in thesame field, required the ability to gravel pack inflow control devices forfines control due to the complex geology, according to Baker Hughes.The completion consisted of an openhole gravel pack system, the ModelCS-300™, and use of an Excluder2000™ screen with Equalizer Helix™inflow control technology, with the length of the screens in the open

hole reported to have reached 626 m According to the company, this isthe longest gravel-packed uniform inflow control completion usingExcluder2000 screen with Equalizer Helix inflow control technology todate. The equipment and services for the upper completion section ofthe subsea well were also supplied by Baker Hughes.The Model CS-300™ system was used to ensure that hole stability wasmaintained during screen deployment, packer setting, and gravelpacking by maintaining hydrostatic pressure on the filter cake at alltimes. The gravel pack held the sand in situ and maintained boreholestability by moving the sand filter to the borehole wall, ensuringcompletion longevity, the company claim.Baker Hughes went to identify further advantages of their method,including the fact that the Excluder2000™ screen with Equalizer Helix™technology acts as the basis of a uniformed flow system. The benefits ofsuch a system include the prevention of water coning in the sandstoneformations and the prevention of screen plugging and erosion. Furthermore,the system enables inflow to be managed passively and eliminates axialflow by filling annulus with gravel, the company comments.

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Baker Hughes promotes technology used in Gamba reservoir well completion

New generation of gas-over-oil pipeline valve actuators



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TTHE OIL AND gas sector in Africa hastraditionally focused much of itsattention on operational concerns suchas geology and geophysics, production

methodology, social license to operate andtransportation of hydrocarbons. Wastemanagement, as an operational issue, has often lostin the competition of priorities.

Waste materials include non-sector specificwastes such as those found on any construction orcommercial site such as spent lubricating oil,vehicle parts such as tyres and filters, medicalwaste from clinics, kitchen waste, packing materialsfor equipment and consumables, and office waste.

Drill cuttings, muds, produced water,hydrocarbon-contaminated soils and debris,cement, and used catalysts and testing materialscomprise the bulk of sector specific wastes.Refineries, LNG plants, compressor stations,pipelines and other dedicated facilities have theirown unique waste streams.

A combination of factors, including higheroperating standards, better environmentalcommitments, and increased public and regulatoryscrutiny are pushing the management of wastematerials up the agendas of oil and gas operators.

Rising community concern While many communities value the employmentand economic activity that the oil and gas sectorbrings, they do not want to be stuck with wasteproducts -- and likely have limited capacity to dealwith waste. Communities living in close proximityto natural resource development, and who feel theyhave not been treated equitably, have participatedin disrupting activities such as harassment andintimidation of employees, picketing, interruption ofoperations and even sabotage.

They can also find powerful champions in localand international non-governmental organisations(NGOs), which can quickly mount global campaignsfeaturing interviews, images, and even videofootage purported to be evidence of a company’spoor stewardship.

Unsafe disposal and scavenging by localcommunities increase the potential forenvironmental releases. This is a particular problemfor containers used to hold spent lubricants,catalysts, and other hydrocarbons, or packaging,blocking, liners, and other wood contaminated byits initial use. These may be scavenged for local useby community members and even workers.

For example, when geo-synthetic liners are usedas roofing and walls, and containers and filters are

used as vessels for cooking and carrying water, thepopulation may be put in direct contact withpotentially harmful substances.

Improper disposal of materials and scavengingof liners can also pollute surface and groundwater,a serious problem for communities that depend onsurface streams and hand-dug wells for their watersupplies, and where people may already spendhours each day carrying water.

Many countries rely on tourism for foreign exchangeincome, with much of their population dependent inpart or entirely on tourism for their livelihoods. There isthe perception and concern that the resource sector’sleftovers will harm the landscape, reducing its appeal totour companies and tourists.

There are few national regulations on waste andproduced water management for the resourcesector, and specifically the oil and gas industry.This, however, increasingly means that internaloperating standards and/or international bestpractices, including those developed by the IMF,the World Bank Group, and the UN are applied.

Frequently, the ‘International Best ManagementPractices’ and internal operating standards havebeen established in the developed world, wherecompetent third-party waste managers andregulatory authorities are in place.

Missing out on opportunitiesMany resource companies miss out on the potentialbenefits available from what they may consider“waste” products, turning them from an operationalexpense into a positive socio-economic benefit tosurrounding communities or a source of modestincome, possibly both.

While a heavy vehicle or piece of constructionequipment may be past its service life from thecompany’s point of view, some effort will find anearby buyer who will be glad to buy it -- possiblyhelping create employment as a result. Obsoleteand surplus computer equipment can also find aneager new owner in the community. The same goesfor many ‘waste’ products -- right down to thepacking crates used to ship equipment. While thismay not spell ‘opportunity’ in more advancedeconomies, in less-developed countries localpeople may be glad of jobs that involve dis-assembling packing crates, with the resultinglumber finding a new use as construction material,providing it is free of contamination.

The result is that what was considered ‘waste’can help the company generate revenue, reducewaste-handling costs, and build better relationswith local communities.

Oil and gas companies must make sure that their waste management practices do not damage the natural environment,which provides livelihood for many, such as this fishing crew on Lake Kivu on the Rwanda-Congo border.

A combination of factors ispushing the management of

waste materials up theagendas of oil and

gas operators.

Leon Bredenhann and Benjamin Yanda* look at the kinds of waste that oil and gasoperations generate, the forces pushing towards more sustainable solutions to this wasteproblem, ways to reduce the costs of waste management, opportunities to generaterevenue from waste and how these steps can help reduce long-term liabilities and risks.

From ‘waste problem’ to

‘valued resource’



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A need to re-think developed world solutionsIncreasingly oil and gas operators, with strongtrack records outside the region, are takingsignificant exploration and production positionsacross much of the African continent. Thesecompanies, headquartered in North America,Australia, Europe and even Asia, tend towardemploying solutions that work in a ‘developedworld’ waste management context. Prevalentassumptions include: capital spendingcompensates for the high cost of labour; parts andsupplies are readily available; transport over longdistances is dependable with fixed times and costs;and that there is an established market andindustry to handle waste materials.

The African reality will require that solutions beadaptable, creative, and even tailored specifically to theparticular geography and waste streams in question.

In much of Africa it may be difficult to findemployees able to operate sophisticatedequipment, while less-skilled labour may beplentiful. Long distances, unreliable roads and insome cases, risk from civil unrest and banditry canmean that road transport is problematic. Reliablethird-party waste transporters and managers maynot exist in the entire region or country.

Operators will have to put considerable effortand preplanning into solutions for surplus andwaste materials. But given the growing concernsabout business-as-usual waste disposal,companies that make extra effort to build theirwaste-management skills within the specificcontext can be rewarded with lower costs, fewerrisks, positive community relations, beneficialsocio-economic impacts and a more secure andpredictable environment. Waste management,from the operator’s perspective is a low-threshold entry point where local and nationalcompanies can provide the necessary goods andservices.

Begin with the end in mindWaste management has had varying degrees ofimportance to the oil and gas industry; however,its role as a driver of operations and costs isexpanding. Part of the solution must be early‘closure planning’ -- determine the idealsituation at the project’s end, and make it apriority part of the planning process.

Active planning will include many site andproject specific practices, which are not thefocus of this article. A key is to make wise wastemanagement a part of the operating culture.This will reduce long-term costs, as well asdecrease environmental and social impacts, risksand liabilities.

The current trend in waste management is toredesign the classic waste management

“pyramid” in which the largest percentage ofwaste materials is “disposed of” in a landfill,with no further use planned. Increasingly, thetrend is towards reducing the amount of wasteproduced, re-using materials, and recycling --with disposal being considered a last, andshrinking, resort.

Locally-appropriate solutions are keyIn planning for waste management andresponding to issues that arise, operators mustbe careful to ensure that the solutions theychoose are appropriate to local conditions. Forexample, high rainfall in some areas may resultin the selection of a high-density polyethylene(HDPE) cover for a potential landfill, to eliminateinfiltration into the landfill. Local communitiesmay find that the HDPE material is a highlydesirable material for roofing their own homes,resulting in the scavenging referred to earlier.

Another technique, easily implementable forlow cost that will eliminate potentially hazardousscavenging is to shred all materials prior totransport. A strong planning team, includingadvisors experienced in waste managementissues, particularly in providing solutions in anAfrican context, is a big part of success.

Community understanding and consultationare a critically important part of developing goodrelations with local communities and therebyincreasing the chance of successful projects. Thismust include the waste management processwhere conflicts and misunderstandings havedeveloped many times in the past and acrossmany regions, including outside of Africa.

Good relations with local communities mustinclude the leaders, the average stakeholder,and those most impacted by the projectcomponents. These relationships should bedeveloped in the stakeholders’ language andtailored to meet them in a proactive butequitable engagement. This will assist tominimize conflict and create solutions --possibly even establishing ways to reuse thecompany’s waste materials. ■

* Leon Bredenhann, Associate, is DivisionalLeader: Integrated Waste Solutions with GolderAssociates Africa (Pty) Ltd. based in Pretoria.Benjamin Yanda is Oil and Gas Sector Leader forAfrica with Golder Associates in Durban

Waste management’s role asa driver of operations and

costs is expanding.

CATERPILLAR HAS INTRODUCED its new Cat CX48-P2300 transmission,designed specifically for hydraulic fracturing associated with well stimulationand completion. Weighing in at 1,601 kg, the CX48-P2300 is the lightestweight transmission available for frac applications.

With an input power of 1,716 bkW and peak input torque of 9,024 N•m,the CX48-P2300 also features improved durability to match engine life, andan industry-high horsepower-to-weight ratio. Its cutting-edge controls aretailored for the frac market, with a focus on safety and flexibility. The starterinterlock feature ensures the engine cannot be started while the transmissionis in gear, and the quick-to-neutral switch allows the operator to put thetransmission in neutral immediately.

“We designed this petroleum transmission for the specific needs and

demands of heavy well fracturing applications,” said Carl Thiele, CaterpillarGlobal Petroleum technical sales manager. “This transmission offers increasedreliability and durability, and yet is simple to install and maintain, resulting inlower owning and operating costs, and reduced downtime – all things thatare of utmost importance to our customers.”

Features enabling the simplified installation and maintenance include anintegral PTO; integral filters with bypass indicator; reduced external hoses;rigid-mounted ECU with wire harness and remote mount capability; low oillevel indicator and oil pressure monitoring.

Cat engines, generator sets and transmissions are backed by the worldwideCat dealer network with trained technicians to ensure service support is neverout of reach.

Caterpillar’s new transmission for well fracturing

Material surplus to the oil and gas industry, such as used equipment and even packing material, can find a secondaryuse in local communities, helping to improve the lives of people such as these farmers in the eastern DR Congo.



GE INTELLIGENT PLATFORMS has unveiled anew production wellhead equipped to dealwith harsh environmental challenges. The company said in a statement that thewellhead solution can "survive temperatureextremes from the desert heat of theArabian Peninsula to the Arctic cold ofSiberian oilfields". The wellhead comes with integrated logiccontrol and safety functions that enableeasy detection of fire and gas detection, aswell as an emergency shutdown mechanism."In addition, it enables rapid implementationfrom discovery to startup so operators canachieve faster recovery of oil and gas," thestatement said. "The unique combination ofintegrated control and safety, environmentalruggedness and low power consumptionmakes this wellhead control solution idealfor E&P operators to increase productionuptime and asset performance whilelowering total cost of ownership."GE also said that, compared to traditionaldeployments and systems withoutdiagnostics, its new wellhead solutionprovides 50 per cent faster deployment, a 35per cent reduction in engineering costs forexpansions and maximised production with65 per cent reduction in field service cycletimes.

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GE unveils new wellheadsolution

BAKER HUGHES RECENTLY introduced MetalMuncher™ AMT (advanced milling technology)cutters to achieve greater efficiency and longerruns with cutting and milling systems used forcasing exits and wellbore intervention. Cleanand efficient milling operations help operatorsreduce risks and prevent nonproductive time.

The new cutting structures, featuring insertshapes and metallurgies customised for specificapplications, provide more efficient cutting andenhanced durability and impact resistance,resulting in longer runs and fewer trips.

Engineered using pressed sintered tungstencarbide, the AMT cutters are available in avariety of shapes and metallurgies. Dependingon the application, a milling tool may includeseveral types of AMT cutters to optimise variousaspects of the milling operations. The cuttersare designed to mill even the toughest steels,including high chrome and nickel-contentmaterials. The durable technology increasesmilling penetration rates, extends effectivetime on bottom in high volume millingapplications, and enables greater flexibilityduring the milling process.

Baker Hughes expands line ofAMT cutters

S17 ORA 5 2012 Innovations_Layout 1 02/10/2012 17:29

SCHLUMBERGER, CHEVRON AND Total haveannounced that Total is joining thecollaboration to further develop the Intersectnext-generation reservoir simulator. Total willcontribute engineering resources and expertiseto expand the Intersect simulator effort. The Intersect simulator is an industry first,combining Chevron’s reservoir simulationcapabilities and reservoir managementexperience with the leading software

development capability and commercialexperience of Schlumberger. Using advancedmathematical techniques, the Intersectsimulator goes beyond the capabilities ofcurrent-generation software to simulate largeand complex reservoirs using high-resolutionmodels. This allows operators to test a largenumber of scenarios to increase theeffectiveness of development plans and designinnovative production systems to maximise

field recoverable reserves. "We look forward to a productive partnershipbetween the three parties and welcome thecontribution of Total to continue to broadenIntersect’s capabilities," said Ashok Belani,executive vice president, Technology,Schlumberger. "The jointly developed productwill leverage the practical and global expertiseof Chevron and Total in managing diverse andcomplex oil and gas reservoirs.”

REDLINE COMMUNICATIONS GROUP, a leading provider of broadband wirelesssolutions for machine-to-machine (M2M) communications, has announced asignificant contract with a leading American oil and gas company for a high-capacity wireless network for communications between wells, other assets, anddrilling rigs in the oilfield, and their centralised control offices.This oil company customer, already using Redline’s system in other partsof the world, is expanding its operations to Oman and has turned toRedline once again to meet their exacting communications requirements.Delivery of products and services associated with the contract, which isexpected to represent approximately 10 per cent of Redline’s annualrevenue for 2012, begins immediately with full deployment of thenetwork expected to take up to 18 months.“This contract is a major achievement for Redline and we are proud to have

been selected as the network backbone for yet another oilfield project with thiscustomer,” said Eric Melka, CEO of Redline. Redline’s advanced wireless broadband system, which leads the industry inreliability, distance, capacity and low-latency, allows personnel to monitor andcontrol oil field production – including the ability to capture data in real-timefrom thousands of M2M sensors at remote sites.The Virtual Fiber™ network will be built using Redline’s RDL-3000 and ELTE-MTsystems, rugged and reliable wireless broadband equipment designed byRedline for harsh environments, and engineered and built to the exactingstandards required by the energy sector.“Major oil and gas producers worldwide are turning to real-time monitoring andcontrol capabilities to expand production at new, existing and mature oilfields,”said Bojan Subasic, Redline’s associate vice president development and production.

Redline’s new wireless oilfield network

ICT

Intersect next-generation reservoir simulator

Aggreko Middle East Ltd. ......61Alduco Energy ....................27, 63Arik Air Internatioanl Ltd. ......45ARKeX Ltd.....................................17Atlantic Energy Holdings Ltd. ..............................88Broron Oil and Gas Limited....41Budget ..........................................70Container World Pty Limited 11DMS GLOBAL ..............................57Duraband ....................................42Emerson Process Management ................................5Eunisell Limited..........................31Exterran ........................................71Fugro Geoteam AS ......................7GCA Energy Limited ................29GEFCO............................................59Gil Automations ........................47HB Rentals ..................Cover wrapHenmak Tecnologies Ltd. ......77i360 Group ..................................40Ibafon Oil Ltd ..............................25IceBlue Refrigeration Offshore Ltd.................................53Italgru S.r.l.....................................79Kwikspace Modular Buildings (Pty) Ltd. ....................81Lumbegh Services Ltd ............28Magnetrol International N.V. 74Marelli Motori S.p.A. ................69

Montgomery Libya (Oil & Gas Libya 2013) ..............43NHV Aviation ..............................31Nynas South Africa ..................36Oil Country Tubular Ltd (OCTL) ....................65PEM Offshore Inc. ......................23PennWell Corporation ............83Petroleum Agency South Africa ................................37Portwest Clothing Ltd. ............55Prakash Steelage Limited ......73Rana Diving S.p.A. ....................39Red Helix International Ltd. ..44RWE Dea AG ................................51Saudi Leather IndustriesCompany Ltd...............................85SGS Inspection Services Nigeria Ltd..................49Smit Lamnalco Netherlands b.v..........................20South Atlantic Petroleum ........2Spina Group S.r.l.........................13Standard Bank (Stanbic)............9Tilone Subsea Limited ............19Tolmann Allied ServicesCompany Ltd ..............................33Toprope ........................................35United Metallurgical Company / JSC OMK ................87Yahsat ............................................15

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