Thursday, January 31, 2013

REPOST: Oil, gas prices increase among mixed economic data

This Oil and Gas Journal article talks about the changes in oil and gas prices considering various aspects in oil production and mixed economic data.

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Oil prices continued to advance Jan. 30, and natural gas prices rebound with a new front-month contract in the New York market among mixed economic indicators.

“Crude inched higher on recent momentum and European optimism despite the report of a large build in [US crude] inventories,” said analysts in the Houston office of Raymond James & Associates Inc. Energy stocks were mixed, with the Oil Service Index falling 0.8% but the SIG Oil Exploration & Production Index rising 0.2%.

“The oil market’s reaction to gross domestic product data was different from the likes of the markets for gold and the other precious metals, with participants appearing more concerned about the oil demand ramifications of a fragile US economy than what the data implied about the Federal Reserve System’s commitment to monetary accommodation,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “However, later in the day after the Federal Open Market Committee announcement, the market regained its composure, and bolstered by the prospect of continued quantitative easing, prices were pushed higher to close the day firmly in the black.”

At the close of a 2-day meeting, the FOMC said it will maintain its monthly $85 billion bond-buying stimulus plan, claiming the recent stall in the tepid US economy is likely temporary. Esther George, the first woman president and chief executive officer of the Kansas City Federal Reserve Bank, voted against that policy in her first ballot as one of four new members of the 12-member FOMC. Long-time observers reported no new committee member in decades had cast a dissenting first-time ballot. However, George expressed concern that “continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations,” the FOMC reported.

Since 2008, the Fed has held overnight interest rates near zero. Through its purchases of securities to force longer-term borrowing costs lower, it has tripled its balance sheet to $3 trillion. Yet the US economy remains week and unemployment high.

On Jan. 31, the dollar showed little reaction to an increase in US jobless claims as the euro weakened against it. The US Department of Labor reported first-time applications by US residents for unemployment benefits unexpectedly increased by 38,000 to a seasonally adjusted 368,000 in the week ended Jan. 26. Officials were expecting a drop in new applications following decreases in the previous 2 weeks to a 5-year low. More than 5.9 million US residents received benefits in the week ended Jan. 12, the latest data available, an increase of 250,000 from the previous report.

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US inventories

The Energy Information Administration reported Jan. 31 the withdrawal of 194 bcf of natural gas from US underground storage in the week ended Jan. 25, less than the Wall Street consensus of a 204 bcf decrease. That left 2.8 tcf of working gas in storage, 202 bcf less than the comparable period in 2012 but 304 bcf above the 5-year average.

EIA earlier said commercial US crude inventories escalated 5.9 million bbl to 369.1 million bbl that same week, more than double Wall Street’s consensus for a 2.5 million bbl increase and surpassing the aggregate gain reported in the previous 3 weeks. However, gasoline stocks fell 1 million bbl to 232.3 million bbl last week, opposite analysts’ expectations of a 1 million bbl gain. That’s on top of a 1.7 million bbl decline in the week ended Jan. 18. Finished gasoline inventories increased last week while blending components decreased. Distillate fuel stocks fell 2.3 million bbl to 130.6 million bbl last week, surpassing the outlook for a 500,000 bbl decline.

The total increase in “Big Three” inventories of crude, gasoline, and distillates “was a bit smaller relative to consensus estimates,” Raymond James analysts said. “Other petroleum products increased sizably in aggregate, with a large build in unfinished oils. Refinery utilization also bounced back to 85% after three consecutive declines.”

Ground said, “Highlighting concerns over off-take from the Seaway Pipeline, Cushing, Okla., crude oil inventories rose 285,000 bbl: this was an added drag to the West Texas Intermediate price.”

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Energy prices

The March contract for benchmark US sweet, light crudes increased 37¢ to $97.94/bbl Jan. 30 on the New York Mercantile Exchange. The April contract gained 39¢ to $98.38/bbl. On the US spot market, WTI at Cushing was up 37¢ to $97.94/bbl.

Heating oil for February delivery inched up 0.81¢ to $3.12/gal on NYMEX. Reformulated stock for oxygenate blending for the same month escalated 6.53¢ to $3.04/gal.

The new front-month March contract for natural gas regained 7.7¢ to $3.34/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., took back 4.7¢ to $3.24/MMbtu.

In London, the March IPE contract for North Sea Brent rose 54¢ to $114.90/bbl. Gas oil for February was up $4.50 to $990.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes advanced 91¢ to $111.43/bbl.

This Dr. Ali Ghalambor Facebook page shares the latest news on the oil and gas market.

Wednesday, January 30, 2013

From bust to boom: Technology upgrade boosts oil production

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The global oil business is drilling its way to a great year ahead. Despite the usual setbacks, a boosted crude oil production is redefining a new era of growth for the petroleum sector. For the most part, thanks to the technological explosion, previously untapped oil reserves will be extracted with more juice.

Yes, juice. Sometimes a fruit just needs a little more squeezing for more glass serving. That’s why blenders come in handy. In the oil industry, technology, too, has to come into play. Oil companies simply cannot take a backseat when so much crude oil is left untapped because the conventional tools and technique can no longer cope. In the face of growing demand for global oil supply, the oil sector simply has to find ways to go around the exploration and production challenges beneath underground reservoirs. Petroleum engineers saw the same trend shaping up. Something has to be done, and this is the challenge. As a response, giant oil firms continue to pour in barrels of money in technology development. In recent years, oil production systems start to be set up for innovation, while technical people are called on to step up.

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At present, advanced drilling and production technologies are giving good results. In fact, in the past decades, horizontal drilling, completions techniques, and computer-assisted geologic modeling remarkably changed the oil production landscape. Now the gaze of most oil players is set on the Arctic region and other places with heavy frontier acreage challenges. The technological upgrade is making the oil sector bold. Wherever people look, truly, it’s something good.

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Ali Ghalambor was an American Petroleum Institute endowed professor and is the co-author of the book “Petroleum Production Engineering: A Computer-Assisted Approach.” This Twitter page provides more updates on the oil sector.

Monday, January 28, 2013

REPOST: Oil to Resume Upward March as Global Economy Heals

This article from talks about the rise of crude oil prices and its effect on the U.S economy.

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U.S. benchmark crude oil prices are expected to resume their march towards triple digits as stock markets respond to improved economic data in the U.S. and China, according to CNBC's latest oil market sentiment survey.

January U.S. Non-farm Payrolls released on Friday and this week's U.S. Federal Reserve policy meeting will set the tone for oil markets with investors looking for more evidence that the economic recovery is gaining momentum.

Most economists polled in late January by Reuters expect the Fed's ultra-loose monetary policy to stay in place well into next year despite the modest growth forecast for the U.S. economy.

About 155,000 jobs are forecast to have been added in the month, a Reuters poll showed. The U.S. unemployment rate is expected to hold steady at 7.8 percent. The U.S. economy will likely show that it has "bottomed" in the first-quarter, Michael Kurtz, Global Head of Equity Strategy at Nomura told CNBC's 'The Call' on Tuesday.

The picture for employment in the U.S. is "generally improving, slowly but surely," Sean Hyman, Editor of Moneynews at Ultimate Wealth Report told CNBC's 'Squawk Box' on Tuesday. "We're seeing economic improvement around the world particularly in China and India as well" and that could help lead to a "pick up" in demand for natural resources.

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"2013 will be a bright year for commodities overall," he added.

Eight out of 12 respondents -- or two-thirds -- believe prices will rise this week; two forecast prices will hold steady at current levels while two say prices may pullback.

Although U.S. crude futures failed to test $100 a barrel last week, some expect the psychological level to be breached this week.

"In the near-term, we could either consolidate the recent gains and head sideways or have a shallow pullback before the next burst higher," Hyman said. "Longer-term resistance comes in at around the $103-$105 area, so I believe it minimally makes it up to there."

But if prices do rise and stay elevated above triple digits, some fear this may disrupt the economic recovery and hit sentiment on the equity markets. Higher oil prices would constitute an "added tax on consumers," Michael Gayed, chief investment strategist and co-portfolio manager at Pension Partners, LLC.

U.S. crude futures notched up its seventh straight week of gains on Friday as signs of a recovering global economy brightened the outlook for fuel demand. A seven week run has not been seen since February-April 2009. Brent crude settled unchanged last Friday at $113.28 a barrel, off the session high of $113.84. U.S. crude fell 7 cents to settle at $95.88, off a high of $96.56 and up 0.3 percent on the week.

"The relentless grinding higher has been impressive in oil and equities since the beginning of the year," said Kirk Howell, Partner at Spy Ridge Capital. "I'm not in the business of trying to call tops as much as it is tempting to at this point. I'm neutral directionally but would own hedged upside calls in oil. Your loss is limited at such low volatility and you win on any significant move. Cheap options can get cheaper but it's worth buying cheap insurance when you don't think you need it."

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Many are questioning whether the grind higher in oil markets can continue.

Data from the ICE Europe Exchange shows that hedge funds and other leveraged investors raised their net-long exposure in Brent crude oil to a new record of 153,913 contracts of futures and options during the week ending 22 January.

"Such an increase in speculative net-long raises the question of whether the positioning is becoming unsustainable," said Ole Hansen, Head of Commodity Strategy at Saxo Bank in Denmark.

Oil markets are "still very much in risk on sentiment and during such times fundamentals plays a lesser role," Hansen noted. "We have a whole host of U.S. data this week which could set the near term tone but for now momentum in Brent remains positive also helped by the worry of a geopolitical event such as the attack today on an oil pipeline in Algeria."

Suspected Islamist militants attacked an oil pipeline in northern Algeria on Monday, killing two guards and wounding seven other people, a security source told Reuters, though flows were not disrupted.

For updates on the oil and gas sector, visit this Dr. Ali Ghalambor Facebook page.

At a glance: How the oil and gas extraction industry works

In the past decades, oil explorations around the world have taken an aggressive turn and were seen taking geographic challenges posed by environmentally hostile areas, which include frigid regions, deep water locations, and previously uncharted desert zones. All the efforts are continuously inspired by the growing global demand for oil. In view of these facts, it is important to understand how the oil and gas extraction industry works. There are four major processes involved. These include the following:

Exploration. This phase involves the discovery of oil or natural gas deposits, as well as exploratory drillings.

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Well development. This phase immediately follows after the exploration phase comes out with positive results on economically recoverable fields. Construction of wells happens on this stage.

Production. This phase involves the extraction and separation of reservoir fluids(oil, gas, water) and the processing of oil.

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Site abandonment. This phase may either happen after the exploration stage when wells are determined nonviable for oil or gas production, or when a production well has already been maximized of its potential.

Currently, the oil and gas extraction industry remains one of the most vibrant sectors in the world. Based on the Organization of the Petroleum Exporting Countries (OPEC) data, the demand for crude oil will rise up to 96.1 million barrels per day by 2015, 102.2million barrels per day by 2020, and 113.3 million barrels per day by 2030. This significant increase only points to one thing: Oil will still remain as the world's most important source of energy in the next decades. The oil sector, as a multi-billion dollar industry, will simply continue to produce oil for the global consumption.

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Ali Ghalambor was an American Petroleum Institute endowed professor and is the author of the “Natural Gas Engineering Handbook.” For more related content about the oil and gas extraction industry, follow this Twitter page.

Thursday, January 24, 2013

REPOST: US oil company donated millions to climate sceptic groups, says Greenpeace

This article talks about the controversy between Koch Industries and global warming sceptics.

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 A Greenpeace investigation has identified a little-known, privately owned US oil company as the paymaster of global warming sceptics in the US and Europe.

The environmental campaign group accuses Kansas-based Koch Industries, which owns refineries and operates oil pipelines, of funding 35 conservative and libertarian groups, as well as more than 20 congressmen and senators. Between them, Greenpeace says, these groups and individuals have spread misinformation about climate science and led a sustained assault on climate scientists and green alternatives to fossil fuels.

Greenpeace says that Koch Industries donated nearly $48m (£31.8m) to climate opposition groups between 1997-2008. From 2005-2008, it donated $25m to groups opposed to climate change, nearly three times as much as higher-profile funders that time such as oil company ExxonMobil. Koch also spent $5.7m on political campaigns and $37m on direct lobbying to support fossil fuels.

In a hard-hitting report, which appears to confirm environmentalists' suspicions that there is a well-funded opposition to the science of climate change, Greenpeace accuses the funded groups of "spreading inaccurate and misleading information" about climate science and clean energy companies.

"The company's network of lobbyists, former executives and organisations has created a forceful stream of misinformation that Koch-funded entities produce and disseminate. The propaganda is then replicated, repackaged and echoed many times throughout the Koch-funded web of political front groups and thinktanks," said Greenpeace.

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"Koch industries is playing a quiet but dominant role in the global warming debate. This private, out-of-sight corporation has become a financial kingpin of climate science denial and clean energy opposition. On repeated occasions organisations funded by Koch foundations have led the assault on climate science and scientists, 'green jobs', renewable energy and climate policy progress," it says.

The groups include many of the best-known conservative thinktanks in the US, like Americans for Prosperity, the Heritage Foundation, the Cato institute, the Manhattan Institute and the Foundation for research on economics and the environment. All have been involved in "spinning" the "climategate" story or are at the forefront of the anti-global warming debate, says Greenpeace.

Koch Industries is a $100bn-a-year conglomerate dominated by petroleum and chemical interests, with operations in nearly 60 countries and 70,000 employees. It owns refineries which process more than 800,000 barrels of crude oil a day in the US, as well as a refinery in Holland. It has held leases on the heavily polluting tar-sand fields of Alberta, Canada and has interests in coal, oil exploration, chemicals, forestry, and pipelines.

The majority of the group's assets are owned and controlled by Charles and David Koch, two of the four sons of the company's founder. They have been identified by Forbes magazine as the joint ninth richest Americans and the 19th richest men in the world, each worth between $14-16bn.

Koch has also contributed money to politicians, the report said, listing 17 Republicans and four Democrats whose campaign funds got more than $10,000from the company.

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Greenpeace accuses the Koch companies of having a notorious environmental record. In 2000 the Environmental Protection Agency (EPA) fined Koch industries $30m for its role in 300 oil spills that resulted in more than 3m gallons of crude oil leaking intro ponds, lakes and coastal waters.

"The combination of foundation-funded front groups, big lobbying budgets, political action campaign donations and direct campaign contributions makes Koch Industries and the Koch brothers among the most formidable obstacles to advancing clean energy and climate policy in the US," Greenpeace said.

A spokeswoman for Koch Industries today defended the group's track record on environmental issues. "Koch companies have consistently found innovative and cost-effective ways to ensure sound environmental stewardship and further reduce waste and emissions of greenhouse gases associated with their operations and products," said a statement sent to AFP by Melissa Cohlmia, director of communication. She added: "Based on this experience, we support open, science-based dialogue about climate change and the likely effects of proposed energy policies on the global economy."

To read news about the oil and gas sector, visit this Dr. Ali Ghalambor Facebook page.

Wednesday, January 23, 2013

Advanced drilling technologies revolutionize oil sector

The advancement in oil and gas exploration and production technology is doubtless one of the key components of the current global oil boom. The technological explosion that started to make huge impact in the oil sector in the past years now results to more efficiency in oil explorations and drilling operations.

Since they are more equipped, especially with advanced seismic imaging tools, oil drilling operators became more capable of efficiently and cost-effectively extracting oil from previously untapped sources commonly found in deeper and more remote and frigid regions. Some of the advanced drilling technologies that revolutionized the oil sector are the following:

Horizontal drilling - Characterized by a vertical well that deviates horizontally within the reservoir rock

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Multilateral drilling - Characterized by wells branched out from a single main well to reach different targets, allowing engineers to tap oil reserves at reservoir compartments at different depths

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Extended reach drilling - Characterized by very long horizontal wells that enable producers to tap oil reserves at great distances away from the surface hole

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Complex path drilling - Characterized by a single drill hole with complex paths intended to reach multiple targets

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At present, there is a continuous advancement in drilling operations. The advent of advance technologies has simply reduced the technical difficulties in drilling operations. These new approaches do not only save time, money, and other resources, but more importantly, reduce the environmental impacts of the operations, and increase safety.

Ali Ghalambor was an American Petroleum Institute endowed professor and is the co-author of the book “Gas Volume Requirements for Underbalanced Drilling: Deviated Holes.” For more related content about oil drilling technologies, follow this Twitter page.

Monday, January 21, 2013

REPOST: Crude prices advance modestly

This Oil and Gas Journal article talks about the modest increase of crude prices caused by the hostage takeover in Algeria.
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 Crude prices continued rising Jan. 18 for the third consecutive trading session largely because of increased political tension caused by a hostage takeover by Islamic militants at a gas processing plant in Algeria (OGJ Online, Jan. 16, 2013). Algerian special forces stormed the plant Jan. 19 to end the 4-day siege. Initial reports indicated 32 rebels and 23 hostages died, but the death count later climbed to 81 with the discovery of more bodies and the subsequent death of one wounded hostage who had been freed. Bomb squads continued to sweep the facility for hidden explosives (OGJ Online, Jan. 18, 2013). 

On Jan. 21, Walter de Wet at Standard New York Securities Inc., the Standard Bank Group, reported, “The front-month Brent crude contract is moving largely sideways today” in line with the US dollar “that has also done very little since markets opened.” He said, “The Brent market has failed to break convincingly above the $112/bbl level since mid-November, and we maintain that the bias from current price levels lies to the downside. We believe that demand growth would not be strong enough this year to offset growing supply from non-OPEC members.”

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In the US futures market, the front-month contract for benchmark crudes “continued to benefit from post-Seaway pipeline interest as well as some growing optimism over the US economy,” Ground said. “The market still looked confident, adding 7.6 million bbl to speculative longs and once again shedding speculate shorts for the fifth consecutive week, although only 2.3 million bbl were shed this past week (compared with the 7.9 million bbl of the previous week).”

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Energy prices

The February contract for benchmark US light, sweet crudes made a modest advance of 7¢ to $95.56/bbl Jan. 18 on the New York Mercantile Exchange. The March contract increased 10¢ to $96.04/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month futures contract up 7¢ to $95.56/bbl.

Heating oil for February delivery gained 3.13¢ to $3.05/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 2.84¢ to $2.80/gal.

The February natural gas contract continued to rally, up 7.2¢ to $3.57/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rebound by 8.5¢ to $3.51/MMbtu.

In London, the March IPE contract for North Sea Brent was up 79¢ to $111.89/bbl. Gas oil for February regained $3.25 to $955.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 91¢ to $108.92/bbl. So far this year, OPEC’s basket price has averaged $108.56/bbl.

Dr.Ali Ghalambor is one of the prominent figures in the oil and gas sector. Visit this Facebook page to get more news about the oil and gas industry.

Sunday, January 20, 2013

Offshore pipeline and the arctic challenge

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Over the past decade, offshore pipeline technology has been widely used in oil and gas explorations across the world. The industry has long recognized the need for reliable pipeline networks for the transportation of oil and gas. This issue has now taken more significance when the global petroleum industry started to focus on offshore operations in the Arctic locations. Due to extreme conditions in the arctic areas, the offshore pipeline technology provided significant solutions to exploration challenges under extreme conditions. Nonetheless, despite the intensive efforts in developing industry standard mechanisms for effective use of Arctic pipelines, issues on design, installation, operation, and maintenance continue to pose challenges. This is the reason for continuous R&D work on offshore pipelines fundamental design principles.

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Arctic subsea pipelines drive one of the complex elements of subsea operations that challenge oil production firms—from the design and construction of long-distance pipeline projects to installation, maintenance, and operation of offshore pipeline infrastructure. Petroleum engineers recognize that there is so much to learn and consider in the design, construction, and installation of offshore Arctic pipeline and the whole subsea systems. Loading conditions take most of the bulk of primary consideration in most cases. Currently, oil and gas explorations in remote Arctic locations are given the most premium solutions and technology.

Offshore pipeline is a high-stake industry since offshore pipeline operations in Arctic regions are often high-value and high-cost projects. There’s just so much at stake to ignore every room for improvement. It is just fitting that extreme attention is given to Arctic pipeline systems and other areas related to offshore pipeline infrastructure designs and installation, operation, and maintenance strategies.

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Ali Ghalambor was an American Petroleum Institute endowed professor and is the co-author of the book “Offshore Pipelines: Design, Instillation, and Maintenance.” Follow this Twitter page for more related content on offshore pipelines.

Thursday, January 17, 2013

REPOST: Critical facilities security 'top priority' in oil and gas markets

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This article talks about the importance of structural security in oil production facilities.

 Frost & Sullivan's latest market report suggests the perceived vulnerability of oil and gas infrastructures worldwide continues to drive investment in security.

The security of critical facilities remains the uppermost priority for the global oil and gas industry. Escalating demand for oil and gas, the construction of new facilities and physical and cyber threats to these installations have led to growth in the oil and gas infrastructure security market.

New analysis from Frost & Sullivan, published in a report entitled: 'Global Oil and Gas Infrastructure Security Market Assessment', finds that the market earned revenues of $18.31 billion in 2011 with estimates suggesting this figure will reach $31.27 billion in 2021.

However, the potential vulnerability of oil and gas infrastructures to various threats – both physical and cyber – is a matter of great concern for operators. That concern is causing them to invest heavily in security.

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Driving the requirement for security solutions

“Global oil and gas companies are investing capital in new infrastructure projects, driving the need for security solutions at these facilities,” noted Frost & Sullivan's aerospace, defence and security senior research analyst Anshul Sharma. “With increasing awareness of threats, companies are adopting a security-risk management approach and implementing risk assessment of their facilities to ensure security Return on Investment (ROI).”

There's a growing preference for total solutions, it seems, with the flexible integration of individual security systems like access control, video surveillance and intrusion detection on one platform.

Heavy investments in cyber security are also projected due to various attacks on energy facilities in the past five years.

“The threats may vary from information theft to a terrorist attack, but the economic impact and financial damage in case of an attack will be much more significant,” explained Sharma. “It would also depend on the motive of the attacker. For example, a cyber attack to remotely control a SCADA system can have more serious consequences than a cyber attack to steal information.”

The cost of advanced security technologies, the lack of resources for managing security, compliance and operations, and low spending on cyber security threaten market prospects.

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Design of integrated security provision

“Suppliers of security systems should aim at designing an integrated security solution that proactively identifies, assesses and mitigates risks and threats originating from within the facility as well as from well beyond it,” advised Sharma.

“For their part, oil and gas companies and the operators of critical oil and gas facilities need to complete a thorough threat and risk assessment of their facility to ensure there is no overspending or underspending on security-related matters.”

This Dr. Ali Ghalambor Facebook page offers diverse information about the oil and gas sector.

Wednesday, January 16, 2013

Offshore pipeline: Challenges in the Arctic settings

Prompted by the increasing global demand for oil, the need to reduce environmental risks, and inspired by the advancement in pipeline design and subsea drilling operation systems, energy players in the international market started to turn their attention to the Arctic and other environmentally hostile areas under sub-freezing temperature. Unique conditions in these locations, however, pose significant challenges to offshore pipeline systems. Some of these are the important loading conditions which include the following:

Ice gouging or scour. First recognized in the 1970s as a challenging condition for Arctic pipelines, ice gouging or scour refers to the grooves in the seabed caused by ice cuts. Usual solutions include the placement of subsea pipeline in a deeper, safer, burial depth.

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Upheaval buckling. This refers to the pipelines’ vertical displacement often caused by high temperature and pressure. Consideration of burial depth and placement of protection against high ice loads may help avoid this threat.

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Permafrost thaw settlement or frost heave, or both. This problem causes strain on pipelines often found in locations where the pipeline route is along the line of continuous or discontinuous permafrost. Solutions include installation of pipelines that can withstand strains.

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Strudel scour. This often occurs during early spring when river outflows inundate the winter sea ice. When the water penetrates through the ice holes, the subsequent erosion of sea floor may expose the buried subsea pipeline. Careful consideration of burial depths of pipelines may be the best protection against strudel scour.

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Currently, loading conditions are highlighted as among the most crucial challenges in offshore pipeline design, installation, operation, and maintenance. Improvement in these areas must truly be taken into consideration to preserve the pipeline mechanical integrity.

Ali Ghalambor was an American Petroleum Institute endowed professor and is the co-author of the book “Offshore Pipelines: Design, Instillation, and Maintenance.” Visit this Twitter page for more on offshore pipelines.

Tuesday, January 15, 2013

REPOST: Good policies crucial to US refining success, API official says

This Oil and Gas Journal article written by Nick Snow features the said importance of refining reliable motor fuels to the energy future of the United States." 

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A strong US energy future heavily depends on being able to refine reliable motor fuels, suggested Cindy Schild, refining senior manager at the American Petroleum Institute. Sound decisions on the proposed Keystone XL crude oil pipeline, the Renewable Fuels Standard, and refinery regulations could make a major positive difference, she maintained.

“Our nation’s energy future has never looked better, in large part because of our rapidly advancing ability to tap into vast new oil and natural gas resources right here in the United States,” Schild told reporters during a Jan. 15 teleconference. “But a strong energy future for our nation depends also on our ability to refine and distribute the fuels from these resources.”

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Her comments coincide with API’s launch of a new television commercial highlighting the refining industry’s importance in the US.

Refiners have contributed significantly to US air quality improvement over several decades, Schild observed. “Since 1990, they have invested more than $137 billion meeting environmental requirements,” she said. “Over that time, pollution levels for the six common air pollutants, including ozone, have substantially declined, as have total emissions of toxic pollutants.”

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US refiners compete globally, and need commonsense operating and regulatory policies to do so effectively, she continued. “With such policies, we can continue creating cleaner fuels and products in technologically advanced facilities here in the US where it means jobs for Americans, and security and revenue to our government,” Schild said.

This Dr. Ali Ghalambor Facebook page offers the latest news and updates on the oil and gas sector.

Monday, January 14, 2013

What causes the corrosion of deepwater pipes?

Deepwater pipelines are extremely important as they transport oil and natural gases from the distant gas and oil reservoirs to the awaiting consumers. In the US, it is estimated that there have been major natural gas and oil pipelines built since 1998.
Pipelines are properly planned and designed to ensure that there is a small probability for damage and repairs. However, several factors remain to be a threat to the integrity of these pipes. Among these is the inevitable corrosion of pipelines.
There are different causes of corrosion. The decay of pipes is commonly caused by the following:
Stress-corrosion cracking
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Stress-corrosion cracking is the cracking of the pipe due to the combined action of corrosion and tensile stress. Tensile stress is caused by the cyclic fluctuations that occur in the operation of the pipelines. These fluctuations reduce the threshold stress of the pipes.
Microbiological-influenced corrosion
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Microbiological-influenced corrosion is caused by the presence of microorganisms. While the existence of microorganisms on the metal surface does not necessarily conclude to metal decay, their by-products promote corrosion and accelerate it.
Galvanic couple formation
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Galvanic corrosion is caused when two dissimilar metal types are in contact with each other through the presence of an electrolyte. In this type of corrosion, one of the metals which has more active corrosion potential forms the anode and corrodes, while the metal which has less corrosion potential forms the cathode and is protected. The circuit of this type of corrosion is completed by the environment in which the cathode promotes the oxidation of the other metal, hence weakening the integrity of the pipe.
Countering corrosion underwater and at great depths is risky and challenging, not to mention costly. A detailed and careful plan and installation of the pipelines is a must. Apart from the financial repercussions it can cause, leaking of pipelines has adverse effects on the environment and in the long run, in the health of the people.
Dr. Ali Ghalambor is known in the industry circuit for his remarkable contributions in the oil and gas sector. For more information on offshore pipelines and pipeline corrosion, visit this blog. 

Thursday, January 10, 2013

Repost: Oil slips as US crude and gasoline stockpiles grow

This article from is about a report of increasing US crude supplies outweighing a business prediction for higher demand this year:
The price of oil slipped to around $93 a barrel Wednesday as a report of rising U.S. crude supplies outweighed a forecast for higher demand this year from aluminum giant Alcoa.

By early afternoon in Europe, benchmark oil for February delivery was down 9 cents to $93.06 a barrel in electronic trading on the New York Mercantile Exchange. The previous day, the contract fell 4 cents to finish at $93.15 a barrel.

The American Petroleum Institute trade group said Tuesday that U.S. crude supplies grew by 2.4 million barrels last week, while gasoline stocks increased by 7.9 million barrels.

Those figures were much higher than the expectations of analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos, who forecast a rise of 1.5 million barrels for crude oil and an increase of 2.6 million barrels in gasoline stocks.

The Energy Department’s Energy Information Administration releases its crude inventories report — the market benchmark — later Wednesday.

Demand for aluminum has been hurt by the weak global economy, but Alcoa predicted a 7 percent increase in demand this year, slightly better than the 6 percent increase in 2012. The company’s fourth-quarter earnings were in line with forecasts while revenue exceeded Wall Street expectations.

“The outlook for global commodities is likely to remain uncertain in the next twelve months with low growth hampering demand especially in Europe,” Michael Hewson of CMC Markets said in an email commentary.

Brent crude, used to price international varieties of oil, was down 1 cent to $111.93 a barrel on the ICE Futures exchange in London.

This Ali Ghalambor Facebook page offers updates about the oil and gas sector.

Deepwater pipelines: Challenging and conquering the depths

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Rapid modernization and globalization has posed a significant effect in the world today. Excluding the repercussions it has on the environment, it has posed a threat in the maintenance of supply of oil and natural gases. While it is deemed that these are nature’s gift in great amounts, tapping into them is another issue.

Because of the increasing demand in oil products and because of the fact that oil reserves have been almost drained to nothing, the oil industry has been scourging the seas for new reservoirs, conquering the depths to ensure that there is enough supply of the so-called “black gold.”

Offshore Pipelines, which Dr. Ali Ghalambor wrote together with Tian Ran Lin, Shanghong Song, and Jacob Chacko, states that there is a growing interest in offshore pipelines. It is said that more than third of the worldwide growth in drilling came from deepwater and offshore pipelines. Although this has been a growing trend for the last 10 years, deepwater pipelines pose a different challenge compared to the more conventional hydraulic fracturing.

In deepwater extraction of oil reserves, the most critical issues are: collapse resistance, low variation in actual mechanical properties, and sour service resistance.

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Collapse resistance means that the pipelines should be able to withstand internal pressure at certain depths. As the exploration goes deeper, the yield strength and the wall tolerance of pipelines should increase. During the wielding process of the pipes, it is expected that pipes should have a low variation in actual yield strength, not exceeding the specified maximum strength of 100 mega pascals. If such restrictions and specifications are observed, buckling can be avoided during the laying process. Sour service resistance is another factor that must be considered. If line pipes and risers are exposed to sour environment, clean pipes are mandatory to ensure that pipes are corrosion-resistant.

Other considerations are the conditions of the seabed and the repair contingencies. The seabed is governed by different terrains that threaten the integrity of the pipelines. These terrains that can challenge the strength of pipes are: faults, unstable slopes, mudflows, and turbidity. Another consideration is the repair that comes with deepwater pipelines. While the probability of damage and repairs in a properly planned offshore pipeline is small, the risk that comes with it is a big concern as addressing repairs underwater is difficult and challenging.

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Tuesday, January 8, 2013

Hydraulic fracturing and stimulating ground wells

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Sand, water, and pressure -- these are the basic components in extracting energy resources confined underground. The process of extracting petroleum and natural gases from rock reservoir formations found in the deep confines of the earth is called hydraulic fracturing. Through a pressurized fluid inserted into drilled holes or wellbore in rock formations, oil and gases are extracted.

Oil and gas experts, such as Dr. Ali Ghalambor, Tian Ran Lin, Shanghon Song, and Jacob Chacko, attest that hydraulic fracturing is used to increase or restore the rates at which petroleum, water, or natural gases can be produced in the natural reservoirs. While this method has many uses such as in preconditioning rocks in mining, heat extraction in geothermal systems, and geologic sequestration of carbon dioxide, hydraulic fracturing is mainly used in arousing production from oil and gas reservoirs.

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To stimulate ground wells, a hydraulic fracture is formed by pumping a fracturing fluid into the wellbore. With sufficient pressure, the fluid can bore further into the cracks so that the reserves can be easily reached and the oil can be easily extracted.

Used since the 18th century, fracking stimulates rock oil wells, and it has been proven to be an efficient method for extracting oil reserves. In recent times and with the advancement of technology, hydraulic fracturing has been used in the extraction of unconventional oils and gas resources. By the advancement of the method in recovering deposits, untapped resources such as shale gas, tight gas, and coalbed methane can now be made available.

While hydraulic fracturing has increased the yield of oil wells and gas reserves, careful installation is needed as drilling holes in rock formations can cause an adverse effect on the environment. Such effect includes increased instability of the earth floor, accident oil spills, and water contamination.

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Know more about hydraulic fracturing here.

Wednesday, January 2, 2013

Above barriers: Underbalanced drilling

Drilling operations do not stop; only the ways and means change overtime. Since foremost of the popular alternatives practiced today is underbalanced drilling (UBD), it is only fitting for all players involved to examine how this rapidly expanding trend is attracting an overwhelming amount of success and appreciation at the same time.

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Underbalanced drilling technique is characterized by a wellbore pressure maintained lower than the formation pressure typically observed in drilling operations. Unlike the conventional drilling method which keeps wells to be drilled overbalanced, UBD technique is defined by that intentional lowering of hydrostatic head pressure. Primarily used to reduce formation damage, UBD technology answers the need to go around difficulties on drilling wells in mature, low-pressure reservoirs or sources where conventional drilling methods are no longer feasible.

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Despite its popular use, underbalanced drilling is not a new phenomenon. It is said that similar methods are already being used several decades ago. While this technique has advantages, petroleum engineers like Ali Ghalambor know that continuous studies on the UBD application has to be made.

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The increasing issue on oil depletion that causes consistent forms of panic is often a matter of perception on the lack or absence of solution. For the oil and gas sector, the issue really hinges on the requirement for alternatives. The UBD technique, despite its current limitations, is without doubt a groundbreaking achievement for an industry segment that rises above barriers.

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