Wednesday, December 26, 2012

Well productivity and the efficiency norm

Oil field operation has always been a complex, difficult process. Threats of formation damage are common occurrence if not a natural offshoot of improper system put in place. Any bad case within the bounds of that scenario typically streams back and affects well productivity. Thus, maintenance and prevention are necessary courses of actions.

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While proper execution of drilling and completion operations and good management of the whole production is a first best step, the maintenance and damage prevention aspects must be made on the realm of ordinary procedures. Ever since well productivity gained the well-deserved attention from oil drilling operators, petroleum engineers constantly work on designing better, more efficient operational protocols for oil and gas field production system. Industry experts like Ali Ghalambor, whose publication of the important “Well Productivity Handbook: Vertical, Fractured, Horizontal, Multilateral, and Intelligent Wells” provided significant resources for students and field practitioners alike on well productivity, recognize the importance of oil and gas field development plans.

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Well productivity may be summed up into several things--optimized operations, improved efficiency, and even cost-effective solutions; but it is always about two things: productive maintenance and prevention. In oil and gas drilling and completion operations, any type of damage to well productivity is costly and crippling. Like in any field, either it is contained or failure becomes the norm.

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Tuesday, December 25, 2012

Reviewing Ali Ghalambor's "Petroleum Production Engineering: A Computer-Assisted Approach"

In a time when almost every industry is seeing an unprecedented dynamism in keeping up with the fast-paced technological turnover, Ali Ghalambor makes sure that the petroleum engineering sector does not lag behind. To help the oil and gas industry cope with technological changes, Dr. Ghalambor, together with Dr. Buyon Guo and Dr. William Lyons, penned “Petroleum Production Engineering: A Computer-Assisted Approach.”

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Purposively written to educate aspiring petroleum engineers, “Petroleum Production Engineering: A Computer-Assisted Approach” provides useful guidelines in designing, analyzing, and optimizing petroleum production systems. The book encompasses the entire gamut of petroleum production and features technical calculations while leveraging on computer-based spreadsheet programs.

The book is broken down into four parts:

• Part one discusses the fundamentals of petroleum production engineering. It also presents empirical models for production decline analysis and gives a primer on the performance of oil and natural gas wells.

• In part two, Ali Ghalambor et al. talks about the different principles governing the design and selection of the main components of petroleum production system. This includes the following: well tubing, separation and dehydration systems, liquid pumps, gas compressors, and pipelines for oil and gas transportation.

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• Part three provides an introduction on artificial lift methods. These consist of sucker rod pumping systems, gas lift technology, electrical submersible pumps, and other artificial lift systems.

• Lastly, part four delineates all production enhancement techniques which are currently available. Examples are identifying well problems and designing acidizing jobs, and guidelines to hydraulic fracturing and job evaluation techniques and production optimization techniques.

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Wednesday, December 19, 2012

Going deep: Offshore pipeline and challenges in the oil and gas industry

The offshore pipeline industry has long been trailing a maze of challenges since its vibrant growth in the ‘70s. The subsequent discovery of gas fields during the North Sea offshore exploration spawned a new need for large, long-distance pipelines that will transport oil and natural gas across the continents. While the North Sea experience marked a new development in the oil and gas industry, the harsh climate and deep, hostile sea conditions in various discovered oil and gas sources eventually inspired a new innovation: deepwater pipeline technology.

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Amidst today’s growing demand for oil and gas, the petroleum industry scrambles to find new areas for explorations. While predictions on the depletion of oil sources keep cropping up in various influential circles, the other half-truth centers on the contention that the only reason for such fear is the growing inability to tap other sources within dangerous environments. Beneath the facades of all opinions, the main locus of issue actually slides down to the subject of keeping up with the challenges posed by hostile environments where rich sources of gas and oil can be found. The matter calls for two things: a new technology or an innovative improvement of an existing technology like offshore pipelines.

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Offshore pipeline technology has evolved. It continues even up to this day. Nevertheless, given today’s collective sight on the Arctic as the potential source of oil and gas, offshore pipeline engineering faces a greater challenge; maybe even bigger in the wake of the Deepwater Horizon blowout in the Gulf of Mexico.

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The question for now does not rest on whether offshore pipeline development can be carried out; it’s whether those people involved can do it safely and thoroughly.

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Tuesday, December 18, 2012

Weighty issues on well productivity

Though always overshadowed by the economic and political side of the oil industry, the technical aspects that pertain to oil-drilling operations have its share of weighty issues that need to be brought, even once in a while, into the open. It boils down to one thing—well productivity.

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Throughout the many decades since the oil boom started to define a new global age of progress, well productivity always has a progressive form—different ages, different methods, different approaches, and different views. Well productivity only points to a single concept—improvement; others prefer the term “efficiency.” For the current crop of seasoned petroleum engineers like Ali Ghalambor, it must be a guarded and consistent form of efficiency. Gone are the days when cost-affectivity must only be the sole aim. When the price of oil, for example, dropped many years ago, productivity damage was deliberately ignored over the need to minimize production costs. Over the years, the instability of oil production and the skyrocketing price of oil in the market fortunately made well production and damage prevention an utmost priority.

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Amidst the glaring hues of issues and conflicts typical of a dynamic oil industry in the global stage, the weighty issues on well productivity lies on one certain need: keeping the steady supply of oil and gas resources throughout the world in safe and environmentally responsible manner. Any approach that veers away from that will just make things fall short.

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Sunday, December 16, 2012

Offshore pipelines and safety calls on deepwater drilling operations

When the Deepwater Horizon blowout (BP oil spill) hit the Gulf of Mexico in April 2010, capped with a 4.5 billion dollar fine on the oil group held responsible for the five million barrels of leaked oil, it probably highlighted one of the biggest challenges in the petroleum industry—the need for effective maintenance and reliability in oil and gas fields offshore operations.

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The case of the sunken Deepwater Horizon drilling rig is tragic at all levels. Despite the moratorium on deep-water drilling in the Gulf of Mexico, the case itself exploded the volatile issue on the safety of offshore oil and gas exploration and operations. In recent years, the trend for deep-water pipeline technology has put the development of offshore pipelines at the center of petroleum engineering agenda. The highly informative book Offshore Pipelines: Design, Installation, and Maintenance, written by Ali Ghalambor, Boyun Guo, Shanhong Song, Jacob Chacko, and Tian Ran Lin, exposes the key issues on the topic that many people could find really handy. Covering the maintenance and support system, methods and tools for cost-effective operations and system reliability, as well as fundamentals needed to design, install, and commission pipeline projects, the book became a significant resource for engineers and management personnel involved in deepwater drilling operations.

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Today, deepwater pipeline systems continue to play a critical role in offshore oil drilling activities. But like any technical fields, it is always fraught with risks. Heaven forbid, a single oil spill does not have to happen again. Through proper knowledge of the right strategies, the world should be able to avert such disasters.

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Thursday, December 13, 2012

Drilling growth: Technology-backed oil industry in a big leap

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The oil and gas business is rapidly heading toward a new direction. Along with the rise of high technology, oil and gas production is now endowed with a formidable infrastructure only fitting to an industry long valued for its significant role in building societies. While no amount of argument can dispute the fact that the growing global demand for oil tilts the unsteady balance between global security and instability, it remains to be seen whether the recent advancements in technology-assisted oil drilling explorations and operations could actually spell a difference.

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New technology always supplants the old. For an industry reeling in a state of panic in the past decades due to the intermittent crisis in global oil production, the emergence of new exploration and drilling tools that could help tap reserves even in the most dangerous places brings a reason for optimism and relief. Dr. Ali Ghalambor, petroleum engineer who authored and co-authored books on the similar trend such as frac-packing operations and well productivity, could not agree more that the entry of technology in the oil and gas production is not an inadvertent phenomenon. It has always been a product of decades-long of studies and experiment—and yes, maybe a great deal of dreaming and visions.

While there will always be political and economic sides in the dynamics of the oil and gas industry, it is comforting for all involved that innovative technologies serve the same cause—to create new, efficient ways for oil and gas production. That indeed is a big leap.

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Wednesday, December 12, 2012

U.S. Natural Gas Exports Poised For Takeoff

This article talks about the increasing role of the US in natural gas exportation.

Shale gas is the energy topic of the day. Production is increasing, but so is gas demand – for electric generation, transportation, and as an industrial feedstock. However, perhaps the most significant dynamic with the potential to drive natural gas prices up in the foreseeable future is a growing push to export LNG from the US. That particular dynamic has recently gone into hyper-drive, with numerous liquified natural gas (LNG) export requests having been filed with the US Department of Energy in the past few years.

Consider this: according to the Energy Information Administration, total natural gas consumption for 2011 was 24.3 trillion cubic feet (Tcf), and 2012 consumption looks to be on the order of 26 Tcf. In the meantime, just since mid-August, US companies have filed for permits with the USDOE to export 7.8 Tcf of LNG – about 30% of current total domestic consumption. Totalrequests year-to- date equal 11.2 Tcf (though almost 1 Tcf is for re-export of Canadian gas). Add to that, the 5.3 Tcf of exports requested last year, and you get approximately 16.5 Tcf. That’s over 60% of current domestic consumption. It’s also more than the amount of US LNG export capacity from five brownfield and three Greenfield projects in play that are listed in a recent Wood MacKenzie report.

Of course, not all of these planned facilities will get permitted or built. But some will, and perhaps a good number, because the economics are compelling and the market is there.

At the September LNG Producer-Consumer Conference in Tokyo, the Indian delegate was quoted as saying that India’s LNG import capability will multiply five-fold in as many years. It’s not likely to stop there, in a country of over a billion inhabitants, with their enormous energy problems. For its part, post-Fukushima Japan has shut down all but 2 of its 54 reactors, and Tokyo Electric Poweris reportedly in talks with North American suppliers(and negotiating with Washington) to secure long-range gas contracts to supply gas-fired generators. There is a big hole to fill and gas will help fill it.

Clearly, much of the LNG imported by these and other Asian countries will be sourced from places other than North America. Today, 18 countries export the gas to 25 importing nations (with Qatar supplying almost a third of all global LNG in 2011). The US is the new kid on the block, supplying only .1% of the world’s exports last year. However, a powerful combination of robust pipelines, multiple vendors, and world class shale reserves is likely to turn the US – and especially the Gulf Coast – into a favored supplier. If permits can be secured, export growth could occur relatively quickly.

The process of condensing natural gas into a liquid at -160 degrees Celsius reduces its volume by a factor 600, and makes it economic to ship. But the industry is enormously capital-intensive and costs are considerable: A “typical” investment includes an outlay of one to two billion dollars for liquefaction facilities, over two hundred million per vessel for LNG tankers, and half a billion to a billion dollars for receiving terminals. Yet even with those costs, the economic incentive is there. Currently, the North America pays just over $3 per mmBtu, while the Japanese spot market price hovers around $13. In part that’s because Asian gas prices are linked to oil. According to Reuters, long-term contract shipments to Japan would likely be priced at less than $10 per mmBtu. That’s a powerful market differential. Investments in supplying LNG to hungry Asian markets may yield payback periods of under five years for the first players into the game, Woods MacKenzie notes.

The laws of economics dictate that, in the long run, supply and demand reach an equilibrium. LNG facilitates that equilibrium dynamic by linking land-locked North American supplies to world markets. The arbitrage opportunity may eventually diminish if Asian gas and oil prices are de-linked (gas is currently indexed to oil, but there is a strong movement to change that). In the meantime, however, that price differential constitutes a powerful incentive.

The Obama Administration has been looking at this LNG export issue, with a study and recommendations (thrice delayed) due to be released in December. To some degree, this push for numerous twenty-year (or longer) export permits seems to have caught just about everybody off guard. In fact, theEnergy Information Administration study from January of this year evaluating this issue posits a high case scenario of 12 Bcf/day. In the meantime, exporters have lined up quickly, and export requests for 1.25 times that amount have been submitted in the past two years.

Although it can take several years and billions of dollars to build the LNG facilities, the LNG price differential and export dynamic truly make gas markets more “liquid.” This is bound to have a long-term upward impact on US natural gas prices. The challenge for the Obama Administration will be how to balance international free markets with the long-sought goal of US energy security. It won’t be easy.