Ogjournal20160104 DL

JAN.
4, 2016 | USD 20
International Petroleum News and Technology | www.ogj.com
FORECAST &
REVIEW
SICHUAN BASIN ANALYSIS

TIGHT RESERVOIR PRODUCTION
FEED ANALYSIS LIFTS UNIT PERFORMANCE
FRP PIPELINE THERMAL SUPERIORITY
160104ogj_C1 1
12/28/15 3:15 PM
A MUST-ATTEND EVENT!
2016 AFPM
ANNUAL MEETING
Two days. Latest insights.

Endless networking opportunities.
Inviting destination. Plan now.
AFPM Annual Meeting

March 13-15, 2016
San Francisco, CA
160104ogj_C2 2
2016
AFPM
afpm.org/Conferences
12/28/15 3:15 PM
160104ogj_1 1
12/28/15 3:14 PM
CONTENTS
Jan. 4, 2016 Volume 114.1
WORLD OIL MARKET AT A GLANCE
FIG. 1
Global oil demand, supply
World oil demand growth, y-o-y change
97
3.5
96
Nick Snow
36
OECD
3.0
China
2.5
Non-OECD excl. China
95
2.0
Million b/d
House, Senate pass

budget bill with crude
export ban repeal intact
Venezuela should disband,

replace PDVSA, former
official recommends
Demand
Million b/d
GENERAL INTEREST
Supply
94
93
1.5
1.0
0.5
92
0.0
91
-0.5
90
22
-1.0
2013
2014
2015
2016
2013
2014
2015
2016
Nick Snow
33
Local firms dominate

Mexicos onshore
third-phase Round 1
EIA: US crude oil

supplies jump by
4.8 million bbl
Matt Zborowski
37
33
OPEC world oil outlook

sees $95/bbl oil in 2040
Meridian Energy
Group plans refinery
for North Dakota
Paula Dittrick
Robert Brelsford
Business groups legally

challenge EPAs
ground-level ozone limits
Legislative vote due on

new plan for St. Croix
refining complex
Nick Snow
Robert Brelsford
IHS examines oil sands

costs, competitiveness
Paula Dittrick
Study calls for stronger

rules to prepare for
potential dilbit spills
US judge rejects bid for

new review of Enbridge
cross-border lines
Pemex allocates $23

billion to downstream
improvements
34
38
34
SPECIAL REPORT
FORECAST & REVIEW
Oil market, still oversupplied,

to ease toward balance in 2016
Conglin Xu
Laura Bell
22
38
35
40
Nick Snow
36
40
REGULAR FEATURES
Deloitte study affirms

DOE technology role
41
COVER
One of BPs most prolific producers in the Gulf of
Mexico, the Na Kika platform is a hub for 8 subsea fields, with more than 100 miles of infield
flowlines which make up the gathering system.
It is designed to process up to 130,000 b/d of
oil and 550 MMcfd of natural gas. OGJs annual
Forecast & Review, starting on p. 22, looks at
whats to come in supply and demand for oil
and gas in 2016 and examines what took place
in the market during 2015. Photo from BP.
160104OGJ_2 2
OG&PE
P1
NEWSLETTER 8
LETTERS/CALENDAR 16
JOURNALLY SPEAKING 18
EDITORIAL 20
SERVICES/SUPPLIERS 91
STATISTICS 93
MARKET CONNECTION 96
ADVERTISERS INDEX 99
EDITORS PERSPECTIVE/
WATCHING GOVERNMENT 100
12/29/15 1:40 PM
160104ogj_3 3
12/28/15 3:14 PM
SYNCRUDE EXTRACTION PLANT, UPGRADER CONFIGURATION
GUYANA-SURINAME, FRENCH GUIANA BASINS
Gravity vertical-density gradient lineaments

Mining
Aborted Triassic-Early Jurassic rift
Dolerites, basalt dikes; Permian-T
Tholeitic dikes, Triassic-Early T
Faults
Discoveries
Hydrocarbon shows
Dry wells
Sea surface seepages
Tertiary channels
Source kitchens
Tambaredjo-Calcutta field
A tl an t i c Oc e a n
20
m
Sho
re li
Demerara
Rise
ne
Liza-1
Sweet gas to utilities
Extraction,
froth treatment
plant
Sour gas
Fluid coker,
three units
Diluent,
whole
Diluent
bitumen
Coke
Diluent recovery,
three units
Atmospheric
topped Vacuum
bitumen
LGO
LC-Finer,
one unit
Light gas oil

hydrotreater,
two units
Syncrude
Sweet
Premium
H2
Heavy gas oil

hydrotreater,
two units
H2
Vacuum
topped
bitumen
42
Sulfur
H2
Bottoms
Vacuum
distillation,
one unit
Crystalline basement
Amine,
sulfur
plants
H2
Virgin LGO
GMES-1
Sedimentary blanket
Naphtha
hydrotreater,
two units
FIG. 1
Natural gas
68
Hydrogen plant,
four units
TECHNOLOGY...
EXPLORATION & DEVELOPMENT
DRILLING & PRODUCTION
PROCESSING
TRANSPORTATION
New study expands

understanding of
Central-South Atlantic
breakup
China tight reservoirs

perform better over
time through MSF
Feed-monitoring
strategy improves
hydrotreater reliability
FRP crude pipeline

shows thermal
superiority to steel
Xiuyu Wang
Shenglai Yang
Yu Pu
Feng Zhou
Ye Zhang
Jason Wiens
Craig McKnight
Andre Taguinod
Wayne Schiewe
Kun Huang
Jiali Wu
Hongfang Lu
Yi Jiang
Liangxue Cai
Yannis Bassias
42
New analysis unifies

reservoirs in northeastern
Sichuan basin
68
52
ESP pump selection,

evaluation improve
well inflow, volumes
Lei Huang
Zongyang Dai
Zheng Li
Ren Luo
Lingping Zeng
76
Nelson-Farrar
monthly cost indexes
Fuzzy logic addresses

turbine vibration on
Algerian gas line
Gary Farrar
70
Kevin P. McCoy
60
46
THRESHOLD PRESSURE EXPERIMENT
Abdelhafid Benyounes
Ahmed Hafaifa
Guemana Mouloud
NELSON-FARRAR
QUARTERLY
COSTIMATING:
Yearly refinery
construction indexes
listed for 85+ years
FIG. 1
84
Gary Farrar
74
Pressure gauge
Core holder
3D SOIL MODEL
FIG. 1
Valve
Tube
Confining-pressure
pump
y
z
52
160104OGJ_4 4
a-z01
Oil container
76
12/29/15 1:40 PM
Visit us at WWW.CLARION.ORG or call us at +1 713 449 3222

11 TRAINING COURSES
INTERNATIONAL CONFERENCE
EXHIBITION
A. Advanced Pipeline Risk

Management
B. DOT Pipeline Safety
Regulations - Overview and
Guidelines for Compliance
C. Introduction to Excavation
Inspection & Applied NDE for
Pipeline Integrity Assessment
D. Pigging & In-line Inspection
E. Defect Assessment
Calculations Workshop
F. Defect Assessment in pipelines
G. Pipeline Integrity Management
H. Pipeline Repair Methods,
Hot Tapping, and In-Service
Welding
I. Managing Cracks and Seam
Weld Anomalies on Pipelines
J. API Recommended Practice
1173 - Pipeline Safety
Management System
Requirements
K. Hydrostatic Testing of Pipelines
The industrys only forum

devoted exclusively to pigging for
maintenance and inspection, as well
as pipeline integrity evaluation and
repair.
A key feature of the conference is

the opportunity to visit one-onone with the worlds top providers
of ILI, pigging for cleaning,
geometry, sealing, ILI prep, and
other utility applications. Over 120
companies will be represented.
160104ogj_5 5
Technical papers will cover: ILI

data assessment, Prioritization
of repairs, New tools, Improving
tool performance, External coating
inspection with ILI tools, Pig
launch and receiving systems, New
regulations, Is your pipeline clean
enough? ... and much more.
ALL NEW FOR 2016!

A HALF-DAY BRIEFING ON
PIPELINE PIGGING & INTEGRITY
IN NON-TECHNICAL LANGUAGE
A bewildering display of
technology and tools will be
on display at the PPIM 2016
conference. This new class is
designed to familiarize you with
all of it in an easy-to-understand
way without a lot of the technical
jargon that can be so confusing.
12/28/15 3:14 PM
WELDED METAL
BELLOWS
OGJ
In Houston
Publisher Jim Klingele, jimk@pennwell.com
When your
applications demand
zero leakage & high
cycle life seals in the
most demanding
environment.
Welded Bellows Provide
Zero leakage dynamic seal
High cycle life
Superior reliability
Operation in extreme environments
Stainless Steel or High Nickel alloys
Applications Include
Compensators, Seals,
Accumulators and
Automatic Thermal Valves.
Editor Bob Tippee, bobt@ogjonline.com

Managing Editor-News Steven Poruban,
stevenp@ogjonline.com
Managing Editor-Technology Christopher E.
Smith, chriss@ogjonline.com
Exploration Editor Tayvis Dunnahoe,
tayvisd@ogjonline.com
Upstream Technology Editor Michael T. Slocum,
michaels@ogjonline.com
Downstream Technology Editor Robert Brelsford,
rbrelsford@ogjonline.com
Senior Editor-Economics Conglin Xu,
conglinx@ogjonline.com
Staff Writer Matt Zborowski,
matthewz@ogjonline.com
Special Projects Paula Dittrick,
paulad@ogjonline.com
Special Correspondent Alan Petzet,
alanp@ogjonline.com
Editorial Assistant Vannetta Dibbles,
vannettad@ogjonline.com
In Tulsa
Statistics Editor Laura Bell,
laurab@ogjonline.com
Senior Art Director Michelle Gourd,
michelleg@pennwell.com
Editorial Graphic Designer Lena Banuet,
lenab@pennwell.com
Senior Illustrators Mike Reeder, Chris Hipp,
Dan Rodd
Production Director Charlie Cole
Production Manager Shirley Gamboa
Ad Services Manager Zac Nash
In Washington
High Pressure
Bellows Seal
Washington Editor Nick Snow,

nicks@pennwell.com Tel 703.533.1552
Editorial Advisory Board
Subsea
Compensator
Bellows Seal
Subsea Junction Box

Assembly with Integral
Bellows Compensator
For Engineered Solutions to

help improve your well production
www.metalbellows.com
Andrew J. Slaughter Deloitte Services LP,

Houston
John Thorogood Drilling Global Consultant LLP,
Insch, Scotland
Steven Tobias Hess Corp., Houston
Shree Vikas ConocoPhillips Co., Houston
Clark White Targa Resources Inc., Houston
Colin Woodward Woodward International Ltd.,
Durham, UK
Editorial Offices
Oil & Gas Journal
1455 West Loop South, Suite 400,
Houston, TX 77027
Tel 713.621.9720; Fax 713.963.6285
www.ogjonline.com
P.C. Lauinger, 1900-1988
Corporate Officers
Chairman, Robert F. Biolchini
Vice Chairman, Frank T. Lauinger
President and Chief Executive Officer Mark C.
Wilmoth
Executive Vice President,
Corporate Development and Strategy, Jayne
A. Gilsinger
Senior Vice President, Finance and
Chief Financial Officer, Brian Conway
Vice-President/Group Publishing Director
Paul Westervelt, pwestervelt@pennwell.com
Vice-President/Custom Publishing Roy Markum,
roym@pennwell.com
Subscriber Service
P.O. Box 2002, Tulsa OK 74101
Tel 1.800.633.1656; 918.831.9423;
Fax 918.831.9482 ogjsub@pennwell.com
Circulation Manager Linda Thomas,
lindat@Pennwell.com
Custom Article Reprints
Reprint Marketing Manager, Rhonda Brown,
Foster Printing Co. Tel 866-879-9144 (ext.
194);
Fax 219-561-2023 web site
www.marketingreprints.com
Pat Dennler Motiva Enterprises LLC, Port

Arthur, Tex.
Doug Elliot Bechtel Hydrocarbon Technology
Solutions/IPSI (Advisor), Houston
Fernando Feitosa de Oliveira Pasadena Refining PennWell Corporate Headquarters
System Inc., Pasadena, Tex.
Andy Flower Independent Consultant,
1421 S. Sheridan Rd., Tulsa, OK 74112
Caterham, UK
Michelle Michot Foss Bureau of Economic
Geologys Center for Energy Economics,
The University of Texas (Houston)
Michael Lynch Strategic Energy & Economic
Research Inc., Amherst, Mass.
Tom Miesner Pipeline Knowledge & Development, Houston
Ralph Neumann Badger Midstream Energy LP
Kent F. Perry RPSEA, Houston
Ignacio Quintero Chevron Pipe Line Co.,
Houston
Member Alliance for Audited Media & American
John A. Sheffield John M. Campbell & Co.,
business Media
Lechlade, UK
Oil & Gas Journal (ISSN 0030-1388). Oil & Gas Journal is published 12x per year - monthly the first Monday of each month in print and other Mondays
in digital form by PennWell Corporation, 1421 S. Sheridan Rd., Tulsa, OK 74112. Periodicals postage paid at Tulsa, OK 74112 and at additional
mailing offices. SUBSCRIPTION PRICES: in the US: 1 year $89; Latin America and Canada: 1 yr. $94; Russia and republics of the former USSR, 1 yr.
2,200 rubles; all other countries: 1 yr. $129, 1 yr. premium digital $59 worldwide. These rates apply only to individuals holding responsible positions
in the petroleum industry. Single copies are $20 each. Publisher reserves the right to refuse non-qualified subscriptions. POSTMASTER: Send address
corrections to Oil & Gas Journal, P.O. Box 3497, Northbrook, IL 60065. Return Undeliverable Canadian Addresses to: P.O. Box 1632, Windsor, ON N9A
7C9. Oil & Gas Journal and OGJ is a registered trademark. PennWell Corporation 2016. All rights reserved. Reproduction in whole or in part without
permission is prohibited. Permission, however, is granted for employees of corporations licensed under the Annual Authorization Service offered by the
Copyright Clearance Center Inc. (CCC), 222 Rosewood Drive, Danvers, Mass. 01923, or by calling CCCs Customer Relations Department at 978-7508400 prior to copying. We make portions of our subscriber list available to carefully screened companies that offer products and services that may be
important for your work. If you do not want to receive those offers and/or information via direct mail, please let us know by contacting us at List Services Oil & Gas Journal, 1421 S. Sheridan Road, Tulsa OK, 74112. Printed in the USA. GST No. 126813153. Publications Mail Agreement no. 40612608.
160104OGJ_6 6
12/29/15 1:40 PM
Local service,
global neighbor
More than 100 locations in 21 countries means

were where you need us, when you need us
Our local service centers operate 24 hours a day, 7 days a week,
365 days a year. No matter what your needs are, our team of
multi-skilled technicians are ready to assist you whenever
and wherever you need us. As OEM experts, we help prevent
problems and resolve your issues faster because we understand
your products and we care.
nov.com/Aftermarket
To find a service center near you, download the
GO NOV app from the App Store or Google Play.
2016 | National Oilwell Varco | All rights reserved
160104OGJ_7 7
12/29/15 2:41 PM
OGJ
Newsletter
Jan. 4, 2016
International News
for oil and gas professionals
GENERAL INTEREST Q U IC K TA K E S
BPs US Lower 48 unit buys Devons New Mexico assets
BP PLCs newly separated US Lower 48 onshore business has
acquired all of the New Mexico assets belonging to Devon Energy Corp., Oklahoma City. A purchase price was not disclosed.
The move significantly expands BPs operations in the
San Juan basin spanning northern New Mexico and southern
Colorado, and marks the first major acquisition by its Lower 48
business in more than 7 years, the company reported.
The bulk of the acquired assets consist of Devons operated
interest in the Northeast Blanco unit, a section of federal lands
in San Juan and Rio Arriba counties of New Mexico, where BP
has had a presence since the 1920s.
The company anticipates taking over operations of the units
480 wells spread across 33,000 gross acres in first-quarter 2016
after receiving required government agency approvals. In the
San Juan basin, the company holds more than 550,000 net
acres and has net production of 100,000 boe/d.
In early 2015, BP began operating its Lower 48 onshore
operations as a separate business (OGJ Online, Mar. 4, 2014),
which is led by David Lawler (OGJ Online, Aug. 20, 2014).
BP says the unit has begun to demonstrate higher capital
efficiency and lower operating costs. The unit has a material
resource base of 7.5 billion bbl across 5.7 million net acres, with
net production of 290,000 boe/d.
Devon this month agreed to acquire 80,000 net surface acres
in the Anadarko basin STACK play from Felix Energy LLC, a
Denver-based portfolio company of EnCap Investments, for
$1.9 billion (OGJ Online, Dec. 7, 2015). In a second deal, Devon
agreed to acquire 253,000 net acres in the Powder River basin
for $600 million.
It said the deals will be funded with $1.35 billion of Devon
equity issued to sellers and $1.15 billion of cash on hand and
borrowings.
Israel approves development of giant offshore gas fields

Israel has greenlighted the respective development and expansion of Leviathan and Tamar natural gas fields in the Mediterranean Sea.
Noble Energy Inc., Houston, says it was notified by the Israeli government that it will implement a natural gas frame-
160104OGJ_8 8
For up-to-the-minute news,

visit www.ogjonline.com
work, resolving and providing exemption from claims of the

antitrust authority with respect to the Leviathan partners acquisition of petroleum rights in the underlying permits (OGJ
Online, Sept. 4, 2015).
The framework also enables marketing of Leviathan gas to
Israeli customers for the first time. The development of Leviathan will substantially expand Nobles capacity to deliver gas
to Israel and the region, as well as provide a second source
of domestic gas supply and redundancy of infrastructure for
Israel.
Noble says it has taken steps to move forward with development of Leviathan and expansion of Tamar by advancing
technical work and negotiating gas sales agreements. Noble is
updating and finalizing capital investment requirements.
A final investment decision for each project is estimated to
be taken before yearend. Noble operates Leviathan and Tamar
with 36% and nearly 40% working interests, respectively.
DEA completes acquisition of E.On E&P Norge

DEA Deutsche Erdoel AG, Hamburg, reported completion of
the acquisition of all the shares of E.On E&P Norge AS (OGJ
Online, Oct. 14, 2015). E.On E&P Norge becomes a subsidiary
of DEA Norge AS. The purchase more than doubles DEAs Norwegian production to 75,000 boe/d.
The deal includes 43 licenses in the North, Norwegian, and
Barents seas. DEA Norge now holds 72 licenses.
DEA adds equity interests in producing oil and gas fields
Skarv, Njord, and Hyme, and additional developments and discoveries including Snilehorn, Snadd, and Fogelberg.
The transaction was approved by the Norwegian Ministry of
Petroleum and Energy, the Ministry of Finance, and the European Union competition authority, DEA said.
Wintershall to keep assets; Tellus deal wont close

Wintershall Holding GMBH said an agreement to sell certain
North Sea assets to Tellus Petroleum AS will not be completed
(OGJ Online, June 18, 2015).
Following a request from Tellus, Wintershall said it has consented to release Tellus from its obligations under the sales and
purchase agreement. The deal involved interests in four nonoperated fields, a 15% interest in the Wintershall-operated Maria
development, and seven exploration licenses.
Oil & Gas Journal
12/29/15 1:40 PM
ARE YOUR INVESTMENTS

GROWING AS PLANNED?
Jeffrey Saut, Chief Investment Strategist at
will be in Houston on February 24th
to speak on investment strategies for the future. Its a cant miss talk that will
help you navigate the turbulent waters that characterize todays markets.
Jeffrey Saut is the Chief Investment Strategist
a regular and popular contributor to Bloomberg TV,
at Raymond James Financial Services. A market
Fox News, CNBC, NPR and PBS, and he is regularly
observer and analyst for more than 40 years,
quoted in The Wall Street Journal, The New York
Jeffreys acumen is unmatched in developing
Times, Fortune Magazine, Barrons, Business Week
market strategies that fit the times. His insightful
and SmartMoney.
and colorful market commentary have made him
February 24 | 6:30 - 8:00 PM | Royal Sonesta, Discovery Ballroom

Houston, TX
Presented by
y
RSVP by 2.19.16
Securities offered through Raymond James
Financial Services, Inc.
Member FINRA/SIPC.
160104ogj_9 9
713.425.5340 Jaclyn.Beasley@raymondjames.com
RaymondJames.com/saxonfinancial/events
550 Westcott, Suite 460 Houston, TX 77007
12/28/15 3:14 PM
ICE BRENT / NYMEX LIGHT SWEET CRUDE

$/bbl
38.25
38.00
37.75
37.50
37.25
37.00
36.75
36.50
US INDUSTRY SCOREBOARD 1/4

4 wk.
average
Latest week 12/18
Dec. 23
Dec. 24
Dec. 251
Dec. 281
Motor gasoline
Distillate
Jet fuel
Residual
Other products
Dec. 291
TOTAL PRODUCT SUPPLIED
Crude production
NGL production2
Crude imports
Product imports
Other supply2 3
TOTAL SUPPLY
Net product imports
YTD avg.
year ago1
Change,
%
9,277
3,608
1,613
270
5,272
20,040
9,216
3,896
1,568
309
5,208
20,197
0.7
(7.4)
2.9
(12.6)
1.2
(0.8)
9,151
3,901
1,574
204
4,881
19,711
8,852
3,852
1,499
237
4,750
19,190
3.4
1.3
5.0
(13.9)
2.8
2.7
9,180
3,337
7,852
1,861
2,068
24,298
(2,215)
9,116
3,116
7,592
2,019
2,410
24,253
(1,377)
0.7
7.1
3.4
(7.8)
(14.2)
0.2
9,316
3,192
7,341
2,008
2,342
24,199
(1,733)
8,538
2,850
7,407
1,768
2,274
22,837
(1,653)
9.1
12.0
(0.9)
13.6
3.0
6.0
16,634
16,785
92.7
16,485
16,614
93.4
0.9
1.0
16,099
16,380
91.4
15,848
16,142
90.4
1.6
1.5
Refining, 1,000 b/d

Dec. 23
Dec. 24
Dec. 251
Dec. 281
Dec. 291
Crude runs to stills

Input to crude stills
% utilization
Latest week 12/18
Latest
week
Previous
week1
484,780
220,495
151,315
39,451
43,480
490,657
219,384
151,976
38,274
42,757
Same week
year ago1 Change
Change
Change,
%
Stocks, 1,000 bbl

Crude oil
Motor gasoline
Distillate
Jet fuelkerosine
Residual
Stock cover (days)4
Dec. 23
Dec. 24
Dec. 251
Dec. 281
(5,877)
1,111
(661)
1,177
723
387,209
226,097
123,847
35,873
35,007
Change, %
97,571
(5,602)
27,468
3,578
8,473
25.2
(2.5)
22.2
10.0
24.2
Change, %
Dec. 291
Crude
Motor gasoline
Distillate
Propane
Futures prices5 12/25
ICE GAS OIL / NYMEX HEATING OIL

/gal
111.00
110.00
109.00
108.00
107.00
106.00
105.00
104.00
YTD
average1
Supply, 1,000 b/d
NYMEX NATURAL GAS / SPOT GAS - HENRY HUB

$/MMbtu
1.940
1.880
1.820
1.760
1.700
1.640
1.580
1.520
Change,
%
Product supplied, 1,000 b/d
WTI CUSHING / BRENT SPOT

$/bbl
38.00
37.75
37.50
37.25
37.00
36.75
36.50
36.00
4 wk. avg.
year ago1
Light sweet crude ($/bbl)

Natural gas, $/MMbtu
29.1
23.8
41.9
71.1
29.5
23.8
43.0
78.9
(1.4)
(2.6)
(9.9)
Change
23.6
24.5
31.8
59.3
36.62
1.95
36.27
1.81
0.3
0.1
55.79
3.63
23.3
(2.9)
31.8
19.9
Change Change,%
(19.17)
(1.68)
(34.4)
(46.2)
Based on revised figures. 2OGJ estimates. 3Includes other liquids, refinery processing gain, and unaccounted for crude oil. 4Stocks
divided by average daily product supplied for the prior 4 weeks. 5Weekly average of daily closing futures prices.
Source: Energy Information Administration, Wall Street Journal
Dec. 23
Dec. 24
Dec. 251
Dec. 281
Dec. 291
BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU

/gal
53.50
53.00
52.50
52.00
39.00
38.50
38.00
37.50
Dec. 9
Dec. 10
Dec. 111
Dec. 141
3,600
3,300
3,000
2,700
2,400
2,100
1,800
1,500
600
300
0
2,047
1,757
290
Nov. 14
Dec. 151
Dec. 14
Jan. 15
Feb. 15
Mar. 15
Apr. 15
May 15
Jun. 15
July 15
Aug. 15
Sept. 15
Oct. 15
Nov. 15
Note: Monthly average count
NYMEX GASOLINE (RBOB)2/ NY SPOT GASOLINE3

/gal
126.50
126.00
125.50
125.00
124.50
124.00
123.50
123.00
1Not
BAKER HUGHES RIG COUNT: US / CANADA

2,000
1,840
1,700
1,400
1,100
850
700
650
450
1
Dec. 91
Dec. 101 Dec. 111
Dec. 141
Dec. 151
available 2Reformulated gasoline blendstock for oxygen blending

regular unleaded
3Nonoxygenated
250
126
256
50
10/10/14 10/24/14
10/17/14
11/7/14
10/31/14
11/21/14
12/5/14
11/14/14 11/28/14
12/19/14
12/12/14
10/9/15
10/23/15
12/26/14 10/16/15
11/6/15
11/20/15
12/4/15
10/30/15 11/13/15 11/27/15
12/18/15
12/11/15
12/25/15
Note: End of week average count
10
160104OGJ_10 10
Oil & Gas Journal | Jan. 4, 2016
12/29/15 1:40 PM
Something Big is
Coming to Gas and
Flame Detection
Gas Measurement Instruments
Be the first to know.

Register for the live event @ www.GasandFlameDetection.com
160104ogj_11 11
12/28/15 3:14 PM
Sequa Petroleum NV, 100% owner of Tellus, cited the current market environment.
Sequa said the Gina Krog transaction with Total E&P Norge
AS is expected to close in early 2016. Tellus would gain 15% in
the Gina Krog unit (OGJ Online, Oct. 19, 2015).
Sequa said Tellus is evaluating a deal to acquire 0.554% interest in the Ivar Aasen field from OMV (Norge) AS in light of the
decision not to proceed with the Wintershall transaction.
as a result of its $55 million common equity investment.

Piceance Energy in September entered into a joint venture
with Wexpro Co., a subsidiary of Questar Corp., to develop gas
in the basin (OGJ Online, Sept. 23, 2015).
The Piceance currently produces gas both from the Mesaverde tight gas sand formation, developed vertically; and
from the Mancos shale formation, which is being developed
both vertically and horizontally.
EXPLORATION & DEVELOPMENT Q U IC K TA K E S
Lundin finds oil south of Edvard Grieg field
USGS: Barnett shale resources estimate doubled

The Barnett shale could contain 53 tcf of gas, according to the
latest assessment from the US Geological Survey.
Updating from its 2003 assessment, USGS reported that
undiscovered, technically recoverable resources could also include 172 million bbl of oil and 176 million bbl of natural gas
liquids.
The Barnett shale, which lies in Texas, was included in
USGSs 2003 assessment of conventional and unconventional
(continuous) reservoirs of the Bend Arch-Fort Worth basin
province. At the time, the play was said to contain 26.2 tcf of
undiscovered natural gas and 1 billion bbl of undiscovered natural gas liquids within the Barnett shale.
The revised assessment follows the successful introduction
of horizontal drilling and hydraulic fracturing in the region.
The 2003 assessment relied solely on vertical drilling, USGS
said in a press release. Since that time, more than 16,000 horizontal wells have been drilled in the formation, producing
more than 15 tcf of natural gas and 59 million bbl of oil.
Laramie Energy to buy Piceance basin assets

Piceance Energy LLC, doing business as Laramie Energy Co.
and financially backed by Par Pacific Holdings Inc., has agreed
to acquire certain properties in the Piceance basin of Colorado
for $157.5 million. The assets comprise 89 MMcfed of existing
production during November, 283 bcfe of proved developed
producing reserves as of November, and more than 53,000 net
operated acres and more than 18,000 net nonoperated acres.
Par Pacific says the assets estimated proved reserves total
541 bcfe; 2P reserves total 1.2 tcfe; and 3P reserves total 5 tcfe
each as of November.
The acreage has 5,000 drilling locations, with more than
90% of operated acreage held by production. Pro forma for
the deal, Laramie will have 140 MMcfed of production for the
month of November.
The deal also includes 195 miles of gas gathering lines with
21,000 hp of owned compressors. A significant portion of the
operations acquired is directly adjacent to existing Laramie operations with the potential for meaningful cost savings upon
consolidation, Par Pacific notes.
The deal is expected to close on or before Mar. 1, 2016. As
part of the financing, Houston-based Par Pacifics ownership
interest in Laramie is expected to increase from 32.4% to 42.3%
12
160104OGJ_12 12
The Rolvsnes exploration well 16/1-25 S, 6 km south of Edvard

Grieg field, encountered a gross 30-m oil column in porous granitic basement in PL338C, which is operated by Lundin Petroleum ABs subsidiary Lundin Norway AS.
The new well is located in the central North Sea, 3 km south
of Lundins earlier Edvard Grieg South discovery made in 2009.
The well lies on the southwestern flank of the Utsira High.
Pressure data and oil type indicate that the petroleum system
is in communication with the original discovery. Production
tests achieved 265 bo/d through a 3664 -in. choke. The operator
is planning further study to prove potential for an extended
reach well from the Edvard Grieg platform.
Gross contingent resources for Rolvsnes, including the Edvard Grieg South discovery, is estimated at 3-16 million boe.
Upside potential for prospect is 10-46 million boe, Lundin said
in a press release.
Exploration well 16/1-25 S is the second well drilled in
PL338C, which was carved out from PL338 in late 2014 (OGJ
Online, Feb. 24, 2015). Well 16/1-25 S was drilled to a total
depth of 2,096 m below mean sea level in 106 m of water. The
Bredford Dolphin semisubmersible drilled the well, which will
now be permanently plugged and abandoned.
Lundin Norway is operator of PL338C with 50% working
interest. Partners include Lime Petroleum Norway and OMV
(Norge) AS with 30% and 20% working interest, respectively.
Lundin started oil production on Nov. 28, 2015, from Edvard Grieg field in PL338 (OGJ Online, Nov. 30, 2015).
DRILLING & PRODUCTION Q U IC K TA K E S

Shell terminates contract for second Arctic drilling unit
Royal Dutch Shell PLC has elected to cancel its contract with
Transocean Ltd. for the harsh environment semisubmersible
Polar Pioneer before its July 2017 expiration date.
Shell recently terminated its contract with Noble Corp. for
the Noble Discoverer drillship (OGJ Online, Dec. 18, 2015).
Both units were part of Shells Chukchi Sea summer exploration drilling program (OGJ Online, Sept. 28, 2015).
Transocean says it will be compensated for the early termination of the Polar Pioneer contract through a lump-sum payment that includes adjustments for reduced operating costs and
demobilization to Norway.
12/29/15 1:40 PM
Statoil cancels Transocean drillship contract

Norways Statoil ASA reported it will cancel its contract with
Transocean Ltd. for the Discoverer Americas ultradeepwater
drillship. The drillship has been on contract with Statoil since
2009, supporting Statoils exploration activities in East and
North Africa and in the Gulf of Mexico.
Statoil said it was, in the current environment, unable to
secure additional activity for the rig for the remainder of the
contract period, ending in May 2016.
Tore Aarrebert, head of rig procurement, said, Discoverer
Americas has been a very good performer for Statoil, contributing to test deepwater and ultradeepwater prospectivity in
Tanzania, Egypt, and the Gulf of Mexico and appraising the
multiple high-impact discoveries in Tanzania.
Statoil, in fall 2014, used the drillship to make its seventh
discovery on Block 2 offshore Tanzania with the Giligiliani-1
finding 1.2 tcf of gas in place (OGJ Online, Oct. 14, 2014). Afterwards, the drillship was to move to the Kungamanga prospect in the central part of the block.
Cairo driller buys Ben Loyal jack up

ADES Advanced Energy Systems, Cairo, has bought the Ben
Loyal jack up drilling rig from KCA Deutag, Aberdeen, for an
undisclosed price.
KCA Deutag acquired the rig, which was built in 1981, in
2005. The rig had been under contract in the Gulf of Mexico
until last October.
The cantilever unit can drill to as deep as 25,000 ft in as
much as 300 ft of water.
Cidade de Saquarema FPSO arrives in Brazil

The Cidade de Saquarema floating production, storage, and
offloading vessel docked on Dec. 20 at the Brasa shipyard in
Niteroi of Rio de Janeiro state, where lifting operations and integration of processing plant modules will be completed.
The 346.5-m-long, 32.6-m-high FPSO is slated to be anchored in 2,200 m of water in the central portion of Lula field
in the Santos basin presalt. Operations from the unit will begin
in the first half of 2016.
Converted from a very large crude carrier at CXG yard in
China, the FPSO will have capacity to process up to 150,000
b/d of oil, compress 6 million cu m/d of gas, and store up to 1.6
million bbl of oil.
Lula field in Block BM-S-11 is operated by Petroleo Brasilierio SA (Petrobras) with 65% interest in partnership with BG
E&P Brasil Ltda. 25% and Petrogal Brasil SA 10%.
PROCESSING Q U IC K TA K E S
Western Refining, Northern Tier to merge
Western Refining Inc., El Paso, and Northern Tier Energy LP
have entered an agreement to merge Northern Tier into Western. Northern Tier owns a 97,800-b/sd, high-conversion refinery at St. Paul Park, Minn., operates 165 convenience stores
160104OGJ_13 13
under the SuperAmerica brand, and supports 89 franchised

convenience stores under the same brand.
Western operates two refineries with combined capacity of
151,000 b/d, one in El Paso and the other in Gallup, NM.
Under a revised deal, Northern Tier unit holders are to receive $15 cash and 0.2986 of a Western share in exchange for
each Northern Tier common unit (OGJ Online, Oct. 26, 2015).
They have the option to select all-cash or all-stock consideration, subject to proration.
According to news reports, the transaction is worth about
$2.4 billion.
Lotte Chemical lets contract for Louisiana MEG plant

Lotte Chemical Louisiana LLC, a subsidiary of South Koreas
Lotte Chemical Corp., has let an additional contract to CB&I,
Houston, for an associated monoethylene glycol (MEG) plant to
be built next to its 1 million-tonne/year ethane cracker project
with Axiall Corp., Atlanta, in Lake Charles, La. (OGJ Online,
June 18, 2015).
As part of the contract, valued at more than $365 million,
CB&I will provide construction services for the MEG plant, the
service provider said on Dec. 21.
Lotte Chemical previously let a contract to CB&I to provide
construction planning and reviews, as well as early works services, for the proposed MEG unit, which will sit adjacent to the
planned cracker (OGJ Online, Oct. 30, 2015).
To be owned and operated by Lotte Chemical, the $1.1-billion MEG plant, once completed, will be the nations largest and
provide the company 600,000 tpy of MEG for export to Europe
and Asia, said Soo Young Huh, Lotte Chemicals president and
chief executive.
LACC LLC, a subsidiary of Axiall and Lotte Chemical USA
Corp.s 5050 joint venture Eagle US 2 LLC, recently announced its final investment decision to build the steam cracker and MEG plant at a total cost of $3 billion nearby Axialls
Lake Charles chlor-alkali manufacturing plants to take advantage of existing infrastructure, competitive US shale feedstock
resources, and ethylene distribution infrastructure (OGJ Online, Dec. 18, 2015).
Pemex lets contract for Salamanca refinery

Pemex Transformacion Industrial (formerly Pemex Refinacion),
the newly created fuel processing subsidiary of Mexicos stateowned Petroleos Mexicanos (Pemex), has let a contract to Samsung Engineering Co. Ltd., Seoul, for work related to the second
phase of the countrys ultralow-sulfur diesel (ULSD) project at
the Antonio M. Amor refinery in Salamanca, Guanajuato, about
250 km northwest of Mexico City.
As part of the $552-million contract, Samsung Engineering
will deliver engineering, procurement, construction, and commissioning for a 38,000-b/sd hydrodesulfurization (HDS) unit,
a 5,000-b/sd sour water stripper, and the revamp of three existing HDS units with a total capacity of 53,000 b/sd, the service
provider said.
13
12/29/15 1:40 PM
This latest contract for the second phase of the Salamanca

program follows Pemexs $80-million contract award last year
to Samsung Engineering for detailed engineering and procurement of long-lead items for the projects first phase, which was
completed during September (OGJ Online, Feb. 18, 2015).
Samsung Engineering said it expects to complete the Salamanca ULSD project in its entirety during third-quarter 2018.
Earlier in the month, Pemex said it would spend a total of
$3.9 billion to build 19 plants and modernize 17 existing units
at all six of its Mexican refineries as part of its nationwide ULSD
program in an effort to help reduce the countrys need for ULSD
imports (OGJ Online, Dec. 9, 2015; Sept. 15, 2014).
TRANSPORTATION Q U IC K TA K E S
Chevron signs HOA for Gorgon, Wheatstone LNG
Chevron Corp. has signed a nonbinding heads of agreement
with China Huadian Green Energy Co. Ltd. for the supply of
LNG from the Gorgon and Wheatstone projects off Western
Australia.
When the deal is finalized, China Huadian will receive as
much as 1 million tonnes/year of LNG for 10 years beginning
in 2020.
China Huadian is a subsidiary of China Huadian Group, one
of the largest state-owned electric power generation companies
in China.
BG Group, ETP get FERC approval for Lake Charles LNG

BG Groups Lake Charles LNG export project has received approval from the US Federal Energy Regulatory Commission
to construct and operate a natural gas liquefaction and export
plant in Lake Charles, La.
BG Group is developing the project with Energy Transfer
Equity LP and Energy Transfer Partners LP. Energy Transfer
owns an existing LNG regasification terminal in Lake Charles,
which will be converted to a liquefaction plant.
The project has conditional authorization from the US Department of Energy for the export of up to 2 bcfd of natural
gas, roughly 15 million tonnes/year of LNG, to non-free trade
agreement nations (OGJ Online, Aug. 8, 2013).
BG Group and Energy Transfer expect to make final investment decisions in 2016, with construction to start immediately
following and first LNG exports anticipated about 4 years later.
BG believes the brownfield site and the ready supply of gas
from the US grid will give the project a competitive advantage.
Energy Transfer will own and finance the proposed plant while
BG Group will be responsible for the offtake.
Energy Tranfer subsidiary Trunkline Gas will provide pipeline transportation services to supply the plant.
The companies filed with FERC in March 2014.
GLNG signs gas agreement with AGL
254 petajoules of gas as feedstock for the joint ventures LNG

plant on Curtis Island near Gladstone in Queensland.
The gas will be delivered to the Wallumbilla hub east of
Roma over 11 years starting in January 2017. Prices will be
based on an oil-linked formula. The gas will be sourced from
AGLs coal seam gas (CSG) fields in the Surat and Bowen basins
in southeast Queensland.
The agreement gives added reserves to GLNGs diverse gas
supply portfolio that already comprises supply from the groups
own CSG fields plus gas from Santos portfolio, underground
storage gas and other third-party supplies.
GLNG shipped its first LNG cargo in October and since that
time the plants Train 1 has already produced above nameplate
capacity. Six cargoes have now left the plant.
Commissioning work on Train 2 has begun and it is on
schedule to come on stream in second-quarter 2016.
Santos has 30% interest in GLNG. Other interest holders are
Petronas 27.5%, Total SA 27.5%, and Kogas 15%.
LNG offtake contracts have been signed with Petronas and
Kogas.
DOE studies examine impacts of LNG exports

The US Department of Energy is making two studies available
that examine cumulative impacts of LNG exports under 29
proceedings, DOEs Fossil Energy Office (FEO) said in a notice
scheduled to appear in the Dec. 29 Federal Register. Comments
will be accepted for 45 days thereafter, it said.
It said DOE commissioned the studies to inform its decisions on applications to export LNG to customers in countries
that do not have a free-trade agreement with the US. Federal
law requires DOE to determine whether such exports would be
in the US national interest in each case.
FEO said that the first study, which the US Energy Information Administration published in October 2014, assessed how
specific scenarios of increased LNG exports could affect domestic energy markets.
At DOEs request, EIA did the study to update a 2012 LNG
export scenarios study using baseline cases from EIA 2014 Annual Energy Outlook, it said.
The Center for Energy Studies at Rice Universitys Baker Institute and Oxford Economics performed the second study.
FEO said it is a scenario-based assessment of the macroeconomic impact of levels of US LNG exports from sources in the
Lower 48 US states in volumes of 12-20 bcfd under a range of
assumptions, including US resource endowment, US gas demand, international LNG market dynamics, and other factors.
It issued the notice to enter the two studies in the administrative record of 29 non-FTA export proceedings, and invite
comment on the studies as applied to each proceeding.
FEO noted that comments must be limited to the methodology, results, and conclusions of the studies on the factors evaluated.
The Santos Ltd.-led Gladstone LNG (GLNG) group has executed an agreement with Australian Gas Light Co. (AGL) to buy
14
160104OGJ_14 14
12/29/15 1:40 PM
160104OGJ_15 15
12/29/15 1:40 PM
2016 EVENT CALENDAR

Denotes new listing or Global Oil & Gas:
Middle East & North
a change in previously
Africa, Cairo, web site:
published information.
www.global-oilgas.
com/MENA 27-29.
SPE Hydraulic Fracturing Technology Conference & Exhibition, The

Woodlands, Tex., web
site: www.spe.org/
events/hftc/2016/ 9-11.
6th Annual World Refining Technology Summit

2016, Las Vegas, web
site: www.refiningtechnology.com/ 24.
Potentiality & Future

of Energy, Amman,
Jordan, web site: www.
spe.org/events/16abas/
9-10.
JANUARY 2016
SPE International ConNAPE Summit,

ference & Exhibition
Houston, web site:
on Formation Damage
napeexpo.com/shows/ Control, Lafayette, La.,
about-the-show/summit web site: www.spe.org/
9-12.
events/fd/2016/ 24-26.
EnerComs The Oil &

Services Conference
14, San Francisco, web
site: www.theoilandservicesconference.com
9-10.
6th Myanmar Oil &

Gas Exhibition (OGEX
Myanmar), Yangon,
API Exhibition on
International Standards Myanmar, web site:
www.myanmaroilexhi(AXIS) 2016, Kuala
bition.com/ 28-29.
Lumpur, web site:
www.api.org/eventsand-training/calendar- Black Sea Oil & Gas
Summit, Vienna, web
of-events/2016/axis
site: www.theenergy13-15.
exchange.co.uk/event/
black-sea 28-29.
North Africa Downstream Summit,
Cairo, web site: www.
FEBRUARY 2016
northafricadownstream.com/ 17-19.
IADC Health, Safety,
Environment & TrainWorld Future Energy
ing Conference &
Summit, Abu Dhabi,
Exhibition, Houston,
web site: www.worldweb site: www.iadc.
futureenergysummit.
org/event/2016-iadccom/ 18-21.
health-safety-environment-training-confer2016 Exploration &
ence-exhibition/ 2-3.
Production Winter
Standards Meeting,
Austin, web site: www. Independent Oil &
Gas Association West
api.org/Events-andVirginia Winter Meeting
Training/Calendar-ofEvents/2016/epwinter (IOGAWV), Charleston,
W.Va., web site: https://
18-22.
iogawv.com/ 2-3.
2016 API/AGA Joint
Committee on Pipeline Pipeline Pigging &
Integrity Management
Welding Practices,
Austin, web site: www. Conference, Houston,
web site: www.clarion.
api.org/Events-andorg/ppim/ppim16/inTraining/Calendardex.php 8-11.
of-Events/2016/aga
20-21.
ARC Industry Forum,
Annual Offshore West Orlando, web site:
www.arcweb.com/
Africa Conference
& Exhibition, Lagos, events/arc-industryforum-orlando 8-11.
web site: www.offshorewestafrica.com/
Topsides, Platforms &
26-28.
Hulls, Galveston, Tex.,
SPE/IADC Middle East web site: www.topsidesevent.com 9-11.
Drilling Technology
Conference & ExhibiInternational Petroleum
tion, Abu Dhabi, web
(IP) Week, London, web
site: www.spe.org/
site: www.energyinst.
events/medt/2015/
org/events/ip-week 9-11.
26-28.
16
160104ogj_16 16
The 4th East Africa

Oil & Gas Summit &
Exhibition (EAOGS),
Nairobi, Kenya, web
site: www.eaogs.com/
10-12.
Australasian Oil & Gas

Exhibition & Conference, Perth, web site:
aogexpo.com.au/
24-26.
Canadian Energy
Research Institute
(CERI) 2016 Oil & Gas
Symposium, Calgary,
web site: ceri.ca/index.
php?option=com_
content&view
=article&id=177:ceriIADC Drilling Africa
MARCH 2016
2016-oil-and-gasConference & Exhibition, Cape Town, web IADC/SPE Drilling Con- symposium-mainpage&catid=35 14-15.
site: www.iadc.org/
ference & Exhibition,
event/drilling-afriFort Worth, web site:
ca-2016 15-16.
2016 Spring Comwww.spe.org/events/
mittee on Petrodc/2016/ 1-3.
leum Measurement
Midcontinent Digital
Oilfield Conference,
IADC/SPE Drilling Con- Standards Meeting,
Dallas, web site: www.
Tulsa, web site: digiference & Exhibition,
api.org/Events-andtaloilconference.com/ Fort Worth, web site:
Training/Calendar-of17-18.
www.spe.org/events/
Events/2016/springdc/2016/ 1-3.
copm 14-18.
International Polyolefins Conference, Hous- 2016 Canadian Exton, web site: www.
ploration Geophysical 2016 API Maritime
Energy Transportation
spe-stx.org/conference. Society (KEGS) Geophp 21-24.
physical Symposium, Forum (METF), New
Toronto, web site: www. Orleans, web site:
www.api.org/EventsIran Oil & Gas Post
kegsonline.org 5.
and-Training/CalendarSanctions, London,
of-Events/2016/METF
www.iranoilgas-sumNACE Corrosion,
15-16.
mit.com/ 22-24.
Vancouver, BC, web
site: nacecorrosion.org/
IADC International
CERAWeek, Houston, 6-10.
Deepwater Drilling
web site: ceraweek.
Conference & Exhibicom/2016/ 22-26.
ASME Hydraulic
Fracturing Conference tion, Rio de Janeiro,
web site: www.iadc.
Pipe Line Contractors & Exhibition, Housorg/event/drillingAssociation (PLCA)
ton, web site: https://
Convention, Scottsdale, www.asme.org/events/ africa-2016 15-16.
Ariz., web site: www.
hydraulic-fracturingWPC 2016: 31st World
plca.org/ 23-27.
conference 7-10.
Petrochemical ConferIADC Drilling HSE&T
Middle East Geoscienc- ence, Houston, web
Asia Pacific 2016
es Conference (GEO), site: www.ihs.com/
events/wpc-2016/
Conference & Exhibi- Manama, web site:
home.html 15-18.
tion, Kuala Lumpur,
geo2016.com/ 7-10.
web site: www.iadc.
Global Oil & Gas Turkey
org/event/asia-pacific- SPE Symposium:
(formerly TUROGE),
hset.2016/ 24-25.
IraqThe Petroleum
Ankara, web site: www.

oilgas-events.com/
TUROGE-Conference
16-17.
China LNG International
Summit & Exhibition, Beijing, web site: chinalngsummit.com/ 16-18.
Gas Compressor
Association Expo &
Conference, Galveston,
Tex., web site: www.
gascompressor.org/
meetings 21-23.
SPE EOR Conference
at Oil & Gas West Asia,
Muscat, web site:
www.spe.org/events/
ogwa/2016/ 21-23.
SPE/ICoTA Coiled Tubing & Well Intervention
Conference & Exhibition, Houston, web site:
www.spe.org/events/
ctwi/2016/ 22-23.
Subsea Tieback Forum, New Orleans, web
site: www.subseatiebackforum.com/index.
html 22-24.
Offshore Technology
ConferenceAsia,
Kuala Lumpur, web
site: 2016.otcasia.org/
22-25.
East Africa Oil &
Gas Summit, Dar es
Salaam, Tanzania, web
site: www.eastafricaogs.com/ 28-29.
4th European Flow
Measurement Workshop 2016, Noordwijk,
Netherlands, web site:
www.efmws.eu/ 29-31.
SPE Symposium: Cyber
Security & Business
Resilience for the
Oil & Gas Industry,
Abu Dhabi, web site:
www.spe.org/events/
aabd/2016/ 29-31.
12/28/15 3:14 PM
2016 EVENT CALENDAR

China International
Petroleum & Petrochemical Technology &
Equipment Exhibition
(CIPPE), Beijing, web
site: www.cippe.com.
cn/2016/en/ 29-31.
SPE Mexico Health,
Safety, Environment
& Sustainability Symposium, Mexico City,
web site: www.spe.
org/events/lahs/2016/
30-31.
SPE SMN Sand Management EuroForum,
Aberdeen, web site:
www.sandmanagement.com/ 30-31.
APRIL 2016
AAPG SEG International Conference
& Exhibition 2016,
Barcelona, web site:

www.seg.org/web/icebarcelona-2016/ 3-6.
tion on Health, Safety,

Security, Environment
& Social Responsibility
(HSSESR), Stavanger,
web site: www.spe.org/
SPE Canadian Heavy
Oil Association (CHOA) events/hse/2016/ 11-13.
Slugging It Out Conference, Calgary, web site: LNG 18, Perth, web
www.spe.org/events/
site: lng18.org/ 11-15.
sio/2016/ 5.
Global Oil & Gas Atyrau
SPE Improved Oil
Exhibition, Atyrau,
Recovery Conference, Kazakhstan, web site:
Tulsa, web site: www. oil-gas.kz/en/exhibition/
speior.org 9-13.
about-the-exhibition/
12-14.
Kuwait Oil & Gas Summit, Kuwait, web site: SPE/IADC Managed
www.cwckuwait.com
Pressure Drilling & Un10-12.
derbalanced Operations
Conference & Exhibi2016 GPA Convention, tion, Galveston, Tex.,
New Orleans, web site: web site: www.iadc.org/
https://gpaconvention. event/2016-speiadcmanaged-pressureorg/ 10-13.
drilling-underbalancedoperations-conferenceSPE International
exhibition/ 12-13.
Conference & Exhibi-
Join your
Industry peers
this March
at the only event in North America
that brings all links of the
hydraulic fracturing
supply chain together!
BOOK BY JAN. 22
AND SAVE $200!
REGISTER ONLINE
TODAY.
go.asme.org/fracturing
ASME 2016
HYDRAULIC FRACTURING
Conference & Exhibition
March 7-10, 2016

Hilton Houston North, Houston, TX
DELIVERING
GLOBAL
SOLUTIONS FOR
E &P CHALLENGES
Drilling & Completion
Well Control
Reservoir & Production
ASME's Hydraulic Fracturing Conference draws long-sought

focus to the central role of mechanical engineering in
shale-development and hydraulic fracturing. This four-day
conference will deliver cutting-edge solutions for operations;
specically, the construction, delivery and production of
unconventional wells, associated infrastructure and applied
solutions. It will feature wellbore and surface equipment,
including pumps, transmissions and power a critical focus, as
these areas account for nearly 80% of equipment costs.
Meet Your 2016

Keynote Speakers
STEVEN OTILLAR
Partner
Akin Gump
Strauss Hauer &
Feld LLP
Breakdown of this Year's

Conference Topics:
March 7th Pre-conference
Workshops: Hydraulic Fracturing
101, The Three R's of Production
Rejuvenation: Remediation,
Recompletion and Refracturing,
and Health, Safety and
Environment
RAM SHENOY
March 8th Economics,

Environmental & Regulatory Issues,
Drilling Operations
Chief
Technology
Officer
March 9th Alternative Power

Systems, Surface Equipment,
Pumping and Logistics
ConocoPhillips
March 10th Production Operations,

Refracturing, and Water
Management
WHO SHOULD ATTEND? Hydraulic Fracturing 2016 convenes industry

leaders and decision makers including manufacturers, engineers, and
supply chain executives within the hydraulic fracturing space.
+1.713.956.0956 Sierra-Hamilton.com
160104ogj_17 17
The American Society of Mechanical Engineers (ASME)
17
12/28/15 3:14 PM
JOURNALLY SPEAKING
Imagining gas transport

Where has imagination gone in natural gas transportation? Where are the submarines? Where are
the dirigibles?
Nowadays, pipelines get all the attention, some
of it unconstructive. Theyre the cheapest way to
move fluid hydrocarbons, after all. And, in places,
they have compelling advantages of location.
No submarines here
BOB TIPPEE
Editor
18
160104OGJ_18 18
The Fort Worth basin, for example. Last month, the

US Geological Survey doubled its estimate of the
Barnett shales undiscovered, technically recoverable
gas resource to 53 tcf. With all that potential gas supply conveniently situated in far-inland Texas, center
of the pipeline and gas-market universe, theres scant
need for ingenuity. Submarines? Forget it.
Unlike the Fort Worth basin, the Appalachian
basin remains logistically underserved. Combined potential of the Marcellus and Utica shales
exceeds the Barnetts. Initial assessments by the
USGS of undiscovered, technically recoverable gas
resources are 84 tcf for the Marcellus and 38 tcf for
the Utica. Both plays are young.
But limitation of market access would be limiting development even if abysmal gas prices
werent already doing the job. Its that fact of gas
life that attracts obstructionist attention. Pipeline
opponents know transport insufficiency keeps gas
in the ground.
The history of Alaskan natural gas affirms this
relationship. Estimates of the states gas reserves
have been as high as 35 tcf. Thats reserves, not
resources: gas known to exist and to be economically and technically recoverable.
Now, though, the Energy Information Administration puts Alaskan gas reserves at only 6.7
tcf. The hydrocarbons havent gone anywhere.
They just have no way to move away from the
North Slope and therefore cant be recovered. EIA
slashed its reserves estimate in 1988. For submarine transport of natural gas, that was not a good
day.
Yes, submarines once received serious attention as a way to move gas North Slope gas below
Arctic ice. The final environmental impact statement for the ill-fated, 4,790-mile pipeline known
as the Alaska Natural Gas Transportation System
(ANGTS) in 1976 described two alternatives for
underwater vessels.
In one, methane would have been liquefied at

a deepwater port and loaded aboard 1,000-ft-long
submarines with 170-ft beams for transport to
Portland, Maine, where it would have been gasified and carried away in conventional pipelines.
The scheme required 45 ships.
In the other alternative, gas would have been
processed into methanol and carried in nuclearpowered subs. A less-intriguing marine option
would have employed ice-breaking LNG carriers.
Other than the ANGTS system, proposals for
land transport of North Slope gas were unexciting:
dense-phase gas or methanol pipelines, railroads,
and monorail. Ho-hum.
But then there was gas by air. Now thats something to think about.
One proposal was for carriage of LNG in pods
under wings of 12-engine aircraft fueled by cargo
boil-off. Each plane would have had a gross weight
more than four times that of a Boeing 747a limit, no doubt, to where these monsters might land.
Another creative proposal envisioned a flying
machine called Helifloat combining attributes of
the helicopter, buoyancy craft, and airplane. Central to the concept was what sponsors called induction airfoil lift.
And then there was the dirigibleah, the dirigible. A combination of LNG and unliquefied
gas would be carried aloft in a streamlined, unmanned cargo ship with a length of 6,130 ft and
maximum diameter of 1,345 ft, accompanied by a
manned control blimp and drone scouts.
The 1976 document specifically targeted the
New York-Philadelphia market for gas delivery
by airship. The cost of Arctic gas delivery by this
method was said to be comparable to that of pipeline gas from the Gulf Coast.
Zooming imagination
So let imagination zoom. Envision airships longer
than a mile carrying Appalachian basin methane
to New York, or, if not welcome there, to morehospitable markets with space to land near pipeline
connections. Imagine the political implications of
so much destination flexibility.
Fanciful? Of course. But its something for environmental obstructionists to fret about, which
makes it worth a dream or two.
12/29/15 1:40 PM
160104OGJ_19 19
12/29/15 1:40 PM
EDITORIAL
Stealing the show

At the start of a presidential election year, with the US
facing fateful energy decisions and a still-populous
slate of mostly smart and articulate contenders for the
Republican nomination pounding issues hard, Donald Trumps biological insults of Democratic frontrunner Hillary Clinton captivate news. Good grief.
Obsession with Trump degraded a Dec. 15 Republican debate on national security. Neither questioners nor candidates saw fit to extend discussion
to an inescapably related and nearly simultaneous
development: President Barack Obamas unilateral alignment of his country with international
flailing against climate change. Although candidates managed to illuminate shades of difference
on terrorism, immigration, and how those issues
interrelate, collateral issues gave way to the question whether anyone could land a haymaker on
Trumps prideful chin. The answer was no.
Energy in oblivion
On several levels, this is regrettable. The real estate tycoon might commandeer the nomination
but cant be elected president. He exaggerates too
much, treats policy questions simplistically, and offends too many voters in too many identity groups.
He and his defiant supporters must think those
lapses dont matter. Theyre wrong. Because Trump
makes a controlling majority of Americans, across
the whole political spectrum, cringe, his bombastic
candidacy represents a futile distraction that plays
to corrosive Republican caricatures and steals attention from candidates with broader appeal.
In the December debate, moreover, Trumps
talent for show-stealing shoved into oblivion any
chance to address the crucial link between climate
activism and security. That link is energy, which is
inseparable from matters of national defense and
central to policy-making related to climate.
On energy, the 2016 presidential election will
be historically important. The Democratic candidate will promise to press the Obama administrations crusade to replace hydrocarbons, with its
aggressive targets for greenhouse-gas emissions,
hopeless attempts to choreograph energy use, and
environmentally unwarranted toughening of pollution standards to raise costs of fossil energy. By
choking economic growth, the measures Obama
pursues and a Democratic successor would sus-
20
160104OGJ_20 20
tain inevitably will weaken defense capabilities

already in decline.
Supporters of Obamas state-centered overhaul of the energy economy parrot the claim that
climate change represents the main threat to US
security. Apparently, Americans dont believe
that. When surveyed, most of them rank security
against terrorism high on their lists of worries and
climate change consistently and remarkably low.
Against what he must see as this plebian misunderstanding, Obama offers condescending lectures
and indefensible assurances about possibilities and
cost. He has lost his audience. In word and deed he
aligns himself with extremists wanting to replace
economic energy with costlier substitutes and insists such a transition can be effected politically at
net economic gain. That argument defies logic and
has been disproven in every country that has turned
it into policy. Americans have good reason to doubt
Obamas promises about cost-free energy transformation, the late-game attempt to implement which
will make this a feverish year for energy policy.
The executive orders and regulatory initiatives
certain to proliferate in 2016 as the president campaigns for climate sainthood will, if implemented,
stagger the economy and strain the budget, diverting funds from defense and the fight against terrorism. Theyll be bad for the economy, bad for
security, and defended with the usual, smirking
refusal to acknowledge what should be obvious
by whoever wins the Democratic nomination. The
proffered mistakes should be easy targets for Republicans willing to respond.
A perishable transformation
The perishability of Obamas energy transformation is
no excuse for inaction. Once Americans experience
the costs, learn how much more of their freedom and
treasure the climate crusade will claim, and feel the real
insecurity that results from growing threats and weakening defense, theyll demand a reversal of course.
Until that happens, though, many mistakes can
occur. Americans shouldnt have to endure the
pain, which can be prevented by honest answers
to better questions than anyone asks now about
energy and security. A presidential campaign
headlined by serious issues rather than celebrity
antics should be the perfect forum.
12/29/15 1:40 PM
35th Executive Conference and Related Events
February 22-26, 2016 Houston, Texas
Energy Transition: Strategies for a New World

IHS Energy CERAWeek is the preeminent annual
executive conference of industry leaders and
government ofcials, offering new ideas, insight,
and discussions on major strategic issues facing the
global energy industry.
CERAWeek 2016 will focus on the changing energy
landscape within oil, natural gas, coal, and renewables
both globally and regionally.
Topics Include:
Strategies for a low price
environment
Climate change strategies
post-COP21
Swing producer? The
future of North American
unconventional oil and gas
Natural gas vs coal: the battle
for markets
Electric power: generation
and transmission in a new
world of energy regulation
Energy geopolitics
Future energy demand:

mobility, efciency, machine
intelligence
Regional opportunities and
risks: Latin America, Africa,
South and Central Asia, the
Arctic, India, and China
Technology, innovation,
automation, and the new
focus on costs
Energy nance: the new face
of risk
REGISTER NOW
To register or for more information, please visit
www.ceraweek.com or call +1 800 447-2273
IHS (NYSE: IHS) is the leading source of insight, analytics and expertise in critical areas that shape todays business landscape. Businesses and governments in more than 150 countries around the
globe rely on the comprehensive content, expert independent analysis and exible delivery methods of IHS to make high-impact decisions and develop strategies with speed and condence. IHS
has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable,
protable growth and employs approximately 8,600 people in 32 countries around the world.
160104ogj_21 21
12/28/15 3:14 PM
GENERAL INTEREST
Oil market, still oversupplied,

to ease toward balance in 2016
WORLDWIDE SUPPLY AND DEMAND*
Conglin Xu
2015
2016
1st
2nd
3rd
4th
1st
2nd
3rd
4th
Qtr.
Qtr.
Qtr.
Qtr.
Year
Qtr.
Qtr.
Qtr.
Qtr.
Year
Million b/d
Senior Editor-Economics
Laura Bell
Statistics Editor
DEMAND
OECD
Americas . . . . . . .
Europe . . . . . . . . .
Asia Pacific . . . . . .
Total OECD. . . . . .
24 .2
13 .4
8 .8
46.5
24 .1
13 .5
7 .7
45.3
24 .7
14 .1
7 .8
46.7
24 .4
13 .5
8 .3
46.2
24 .4
13 .7
8 .1
46.2
24 .3
13 .4
8 .7
46.4
24 .1
13 .7
7 .6
45.4
24 .6
13 .9
7 .8
46.4
24 .7
13 .6
8 .4
46.7
24 .4
13 .6
8 .1
46.2
Non-OECD
FSU . . . . . . . . . . .
Europe . . . . . . . . .
China . . . . . . . . . .
Other Asia . . . . . . .
Latin America . . . .
Middle East . . . . . .
Africa . . . . . . . . . .
Total Non-OECD . .
4 .6
0 .7
11 .0
12 .4
6 .7
7 .7
4 .1
47.1
4 .9
0 .7
11 .3
12 .5
6 .8
8 .3
4 .1
48.6
5 .0
0 .7
11 .3
12 .3
6 .9
8 .6
4 .0
48.8
4 .9
0 .7
11 .4
12 .9
6 .9
8 .0
4 .1
49.0
4 .9
0 .7
11 .3
12 .5
6 .8
8 .2
4 .1
48.4
4 .7
0 .7
11 .3
12 .9
6 .6
7 .9
4 .2
48.4
4 .8
0 .7
11 .7
13 .0
6 .8
8 .4
4 .2
49.7
5 .0
0 .7
11 .7
12 .8
6 .9
8 .9
4 .1
50.1
4 .9
0 .7
11 .8
13 .2
7 .0
8 .2
4 .3
50.1
4 .8
0 .7
11 .6
13 .0
6 .8
8 .3
4 .2
49.6
Total Demand . . . .
93.6
93.9
95.4
95.3
94.6
94.8
95.1
96.5
96.7
95.8
Supply
OECD
Americas . . . . . . .
Europe . . . . . . . . .
Asia Pacific . . . . . .
Total OECD . . . . . .
19 .9
3 .4
0 .4
23.7
19 .5
3 .5
0 .4
23.4
19 .9
3 .3
0 .5
23.8
19 .9
3 .4
0 .5
23.8
19 .8
3 .4
0 .5
23.7
19 .5
3 .4
0 .5
23.4
19 .2
3 .2
0 .5
23.0
19 .3
3 .0
0 .5
22.9
19 .6
3 .3
0 .5
23.4
19 .4
3 .2
0 .5
23.2
Non-OECD . . . . . . .
FSU . . . . . . . . . . .
Europe . . . . . . . . .
China . . . . . . . . . .
Other Asia . . . . . . .
Latin America . . . .
Middle East . . . . . .
Africa . . . . . . . . . .
Total Non-OECD . .
14 .0
0 .1
4 .3
3 .6
4 .6
1 .3
2 .3
30.3
14 .0
0 .1
4 .4
3 .6
4 .5
1 .2
2 .3
30.1
13 .9
0 .1
4 .3
3 .5
4 .5
1 .2
2 .3
30.0
13 .9
0 .1
4 .3
3 .5
4 .5
1 .2
2 .3
29.9
14 .0
0 .1
4 .3
3 .6
4 .5
1 .2
2 .3
30.1
13 .9
0 .1
4 .3
3 .5
4 .6
1 .2
2 .3
30.0
13 .9
0 .1
4 .3
3 .5
4 .6
1 .2
2 .3
29.9
13 .8
0 .1
4 .3
3 .4
4 .7
1 .2
2 .3
29.8
13 .8
0 .1
4 .3
3 .4
4 .7
1 .1
2 .3
29.8
13 .9
0 .1
4 .3
3 .5
4 .7
1 .2
2 .3
29.9
Processing gains . .
Global biofuels . . .
2 .2
1 .8
2 .2
2 .4
2 .2
2 .6
2 .2
2 .4
2 .2
2 .3
2 .3
1 .9
2 .3
2 .4
2 .4
2 .7
2 .3
2 .4
2 .3
2 .4
Total Non-OPEC . .
58.1
58.2
58.6
58.4
58.3
57.6
57.5
57.7
57.9
57.7
OPEC . . . . . . . . . . .
Crude . . . . . . . . . .
NGL . . . . . . . . . . .
Total OPEC . . . . . .
30 .5
6 .4
36.9
31 .5
6 .5
38.0
31 .7
6 .6
38.3
31 .7
6 .6
38.3
31 .4
6 .5
37.9
31 .7
6 .7
38.4
31 .9
6 .8
38.7
32 .0
6 .8
38.8
31 .9
6 .9
38.8
31 .9
6 .8
38.7
Total supply . . . . . .
95.0
96.2
96.9
96.7
96.2
96.0
96.2
96.5
96.7
96.4
Stock change . . . .
1 .4
2 .3
1 .5
1 .4
1 .6
1 .2
1 .1
0 .6
*Note: Totals may not add due to rounding .

Source: International Energy Agency; OGJ estimate of OPEC crude supply 4Q 2015 through 2016
Global oil markets remain oversupplied at

the start of 2016, with
inventories at recordhigh levels, the Organization of Petroleum
SPECIAL
Exporting Countries
REPORT
refusing to set production limits, and
supplies from Iran set to increase.
As oil prices dip below $40/bbl, nonOPEC supply is shrinking fast. After
leaping by 3.7 million b/d during 200814, annual average US crude oil production will be down 400,000 b/d in 2016.
According to the International Energy Agency, global oil demand grew by
1.8 million b/d in 2015 on the strength
of better-than-expected demand from
countries in the Organization for Economic Cooperation and Development
and steady non-OECD growth. In 2016,
global demand growth will slow slightly.
Shrinking non-OPEC supply, growing
demand, and depleted OPEC spare production capacity should move the global
oil market toward balance and strengthen
the crude price by late 2016. OPEC crude
production will remain the wild card.
US ENERGY DEMAND
2014
2015
Trillion btu
Oil . . . . . . . . . . . . . . . . . . .
Gas . . . . . . . . . . . . . . . . . . .
Coal . . . . . . . . . . . . . . . . . .
Nuclear . . . . . . . . . . . . . . . .
Hydro, other . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . .
34,881
27,491
17,991
8,329
9,621
98,455
35,439
28,660
16,210
8,290
9,460
98,082
Change,
%
2016,
trillion btu
1 .6
4 .3
(9 .9)
(0 .5)
(1 .7)
(0.4)
35,758
28,889
16,161
8,124
9,744
98,677
Change,
%
0 .9
0 .8
(0 .3)
(2 .0)
3 .0
0.6
2014
2015
2016
% share of total energy
35 .4
27 .9
18 .3
8 .5
9 .8
100.0
36 .1
29 .2
16 .5
8 .5
9 .6
100.0
36 .2
29 .3
16 .4
8 .2
9 .9
100.0
Source: 2014 US Energy Information Administration; 2015 and 2016 OGJ estimate and forecast .
22
160104OGJ_22 22
12/29/15 1:43 PM
WORLD OIL MARKET AT A GLANCE
FIG. 1
Global oil demand, supply
World oil demand growth, y-o-y change
97
3.5
96
Supply
Demand
OECD
3.0
China
2.5
Non-OECD excl. China
95
Million b/d
Million b/d
2.0
94
93
1.5
1.0
0.5
92
0.0
91
-0.5
90
-1.0
2013
2014
2015
2016
Non-OPEC oil supply, y-o-y change
2013
2015
2016
OECD commercial oil inventories
3.0
3.2
US
2.5
Other
2.0
Total
Max/Min 2010-14
3.1
1.5
1.0
0.5
Average 2010-14
2014
3.0
Billion bbl
Million b/d
2014
2015
2.9
2.8
2.7
0.0
2.6
-0.5
-1.0
2.5
2013
2014
2015
2016
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
Source: IEA, EIA, OGJ analysis
In the US natural gas market, rising production, recordlevel storage, and mild winter weather will suppress prices.
World economy growing

The US dollar has appreciated by more than 10% in real
effective terms since mid-2014, while many commodity
exporters with flexible exchange rate experienced sizable
currency depreciation. Growth has slowed considerably
among commodity-exporting emerging markets and developing economies.
In its most recent World Economic Outlook (WEO), issued in October, the International Monetary Fund (IMF)
estimated global growth of 3.1% in 2015, down from 3.4%
in 2014, but projected growth of 3.6% in 2016.
In advanced economics, growth rates of 2% in 2015 and
2.2% projected for 2016 are stronger than in the recent
past. Last years strength reflected the modest recovery in
160104OGJ_23 23
the euro area and a return to growth in Japan, supported

by declining oil prices, supportive monetary policy, and, in
some cases, currency depreciation.
The pickup in advanced economies is tempered by lower growth in commodity exportersparticularly Canada
and Norwayand in Asia outside of Japan.
IMF also noted that, although unemployment is declining, underlying productivity growth in advanced economies remains weak, including in the US, where the recovery is more entrenched.
Emerging-market economic growth is hovering close
to 4% in 2015 vs. 4.6% in 2014, reflecting declining commodity prices, export weakness, and the realigned Chinese
economy. Brazil is in the worst recession since the 1930s,
while India is the bright spot in emerging markets, generating growth in gross domestic product of 7.3%.
Improvement is projected this year in emerging-mar-
23
12/29/15 1:43 PM
GENERAL INTEREST
OGJ FORECAST OF US SUPPLY AND DEMAND

12016
Volume,
% change
1,000 b/d
from 2015
12015
Volume,
% change
1,000 b/d
from 2014
DOMESTIC DEMAND
Motor gasoline . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,141
7,556
1,585
(0 .1)
(0 .1)
(0 .1)
9,154
7,567
1,587
2 .6
2 .4
3 .6
Jet fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,513
1,051
462
(1 .2)
(1 .2)
(1 .2)
1,532
1,064
468
4 .2
2 .8
7 .6
Distillate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,100
3,545
555
2 .2
2 .2
2 .2
4,010
3,467
543
(0 .7)
(1 .3)
3 .8
Residual . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
212
117
95
(9 .8)
(9 .8)
(9 .8)
235
130
105
(8 .6)
(10 .3)
(6 .3)
LPG and ethane . . . . . . . . . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,580
2,564
16
4 .8
4 .8
4 .8
2,461
2,446
15
0 .5
1 .0
(44 .4)
Other products . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,055
1,855
200
1 .4
1 .4
1 .4
2,026
1,829
197
2 .7
2 .0
9 .4
TOTAL DOMESTIC DEMAND . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,601
16,659
2,942
0 .9
0 .9
0 .9
19,418
16,503
2,915
1 .6
1 .3
3 .8
EXPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,853
4,432
421
1 .1
1 .1
1 .1
4,800
4,384
416
14 .9
16 .8
(1 .4)
TOTAL DEMAND . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,454
21,091
3,363
1 .0
1 .0
1 .0
24,218
20,887
3,331
4 .0
4 .2
3 .1
SUPPLY
DOMESTIC PRODUCTION
Crude & condensate . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,900
7,861
1,039
(4 .5)
(4 .5)
(4 .5)
9,319
8,231
1,088
7 .0
8 .3
(1 .8)
NGL & LRG . . . . . . . . . . . . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,360
3,293
67
3 .2
3 .2
3 .2
3,255
3,190
65
8 .0
8 .0
4 .8
Total US field production . . . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,260
11,154
1,106
(2 .5)
(2 .3)
(4 .1)
12,574
11,421
1,153
7 .2
8 .2
(1 .5)
Renewable fuels, oxygenates . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,090
1,065
25
(0 .5)
(0 .5)
(0 .5)
1,095
1,070
25
2 .1
2 .0
8 .7
IMPORTS
Crude oil . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,460
6,331
1,129
2 .2
2 .2
2 .2
7,300
6,195
1,105
(0 .6)
(0 .8)
0 .4
Products & unfinished oils . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL IMPORTS . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,110
1,849
261
(2 .3)
(2 .3)
(2 .3)
2,160
1,893
267
13 .9
9 .9
52 .6
9,570
8,180
1,390
1 .2
1 .1
1 .3
9,460
8,088
1,372
2 .4
1 .5
7 .5
Processing gain, loss, etc . . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,100
910
190
5 .8
5 .8
5 .8
1,040
860
180
(3 .7)
(3 .7)
(3 .7)
TOTAL NEW SUPPLY . . . . . . . . . . . . . . . . . . .

Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,020
21,308
2,712
(0 .6)
(0 .6)
(0 .7)
24,169
21,439
2,730
4 .5
4 .8
2 .8
STOCK CHANGE . . . . . . . . . . . . . . . . . . . . . . .
Dist . 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dist . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(434)
218
(652)
(49)
552
(601)
CRUDE RUNS TO STILLS . . . . . . . . . . . . . . . .

TOTAL INPUT TO STILLS . . . . . . . . . . . . . . . . .
TOTAL REFINING CAPACITY . . . . . . . . . . . . . .
REFINING UTILIZATION (%) . . . . . . . . . . . . . .
16,200
16,480
18,150
90 .8
0 .1
0 .3
0 .8
(0 .5)
16,179
16,430
18,000
91 .3
2 .1
1 .7
0 .7
1 .0
TOTAL INDUSTRY STOCKS2 . . . . . . . . . . . . . .

Refined products . . . . . . . . . . . . . . . . . . . .
Crude oil . . . . . . . . . . . . . . . . . . . . . . . . . .
SPR crude oil stocks . . . . . . . . . . . . . . . . .
1,240
799
441
695
(3 .9)
(2 .0)
(7 .2)
1,290
815
475
695
10 .4
5 .2
20 .9
0 .6
IMPORT DEPENDENCY
Total Imports % Domestic Demand . . . . . . . .
Net Imports % Domestic Demand . . . . . . . .
48 .8
24 .1
48 .7
24 .0
ket and developing economies, with

growth forecast at 4.5%. In particular, economic performances of countries in distress in 2015 (including
Brazil, Russia, and some countries in
Latin America and the Middle East),
while remaining weak or negative,
are projected to be stronger this year,
more than offsetting the expected
slowdown in China. Contributing to
the improvement are recessions less
deep than before, spillover from the
stronger pickup in
activity in advanced
economies, and the
easing of sanctions
on Iran.
The IMF projects
that
Chinas growth
SPECIAL
will
slow
to 6.3% in
REPORT
2016 from 6.8% in
2015, as the government has attempted to increase the
economic role of domestic consumption.
Oil demand rising

Global growth in oil demand of 1.2
million b/d is forecast in 2016 by the
IEA. Last years demand increase was
the highest in 5 years, supported by
robust gains from China, the US, India, and Europe.
In 2015, total OECD demand increased to 46.2 million b/d from 45.7
million b/d a year earlier. Oil demand
in OECD Americas averaged 24.4 million b/d vs. 24.1 million b/d a year
earlier, led by strong US gasoline demand. Demand averaged 13.7 million
b/d in OECD Europe, up from the
2014 average of 13.4 million b/d, led
by rising diesel fuel demand. Demand
from OECD Asia Oceania was down
slightly.
Outside the OECD last year, collective demand grew to 48.4 million
b/d from 47.1 million b/d a year earlier.
Despite the macroeconomic backdrop and the consensus of earlier expectations, Chinese demand climbed
to 11.3 million b/d in 2015 from 10.6
million b/d a year earlier, half of total
Preliminary estimate . 2Million bbl at end of period .
24
160104OGJ_24 24
12/29/15 1:43 PM
GENERAL INTEREST
non-OECD growth. Gains were robust in consumption of gasoline, jet
fuel, and LPG/ethane.
Oil demand in 2016 in OECD
countries, averaging 46.2 million b/d,
will be little changed from the 2015
level. Growth of 1.2 million b/d in
non-OECD demand will account for
the global demand increase. The expected demand slowdown reflects
factors in last years growth unlikely
to be a strong this year.
IEA estimated that demand in
OECD Europe countries will dip in
2016, while demand across OECD
North America and OECD Asia Pacific will be largely flat.
Asia excluding China will post
the largest demand gain in the nonOECD group in 2016, adding about
500,000 b/d to 13 million b/d. Chinas oil demand in 2016 is expected to
increase to 11.6 million b/d.
US NATURAL GAS SUPPLY AND DEMAND

2013
2014
2015
bcf
160104OGJ_25 25
2016,
bcf
Change, %
16/15
Marketed production
Texas . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . .
Federal Gulf of Mexico . . . .
Other states . . . . . . . . . . . .
Total production . . . . . . . . .
7,634
2,360
1,309
14,259
25,562
7,953
1,980
1,255
16,149
27,337
8,155
1,905
1,306
17,677
29,043
2 .5
(3 .8)
4 .1
9 .5
6 .2
8,220
1,800
1,200
18,530
29,750
0 .8
(5 .5)
(8 .1)
4 .8
2 .4
Imports
Canada . . . . . . . . . . . . . . . .
Mexico . . . . . . . . . . . . . . . .
LNG . . . . . . . . . . . . . . . . . .
Total imports . . . . . . . . . . .
2,785
1
97
2,883
2,634
2
59
2,695
2,592
1
86
2,679
(1 .6)
(55 .0)
45 .8
(0 .6)
2,400
1
56
2,457
(7 .4)
11 .1
(35 .1)
(8 .3)
Supplemental gas . . . . . . . .
Losses, etc .* . . . . . . . . . . . .
Total new supply . . . . . . . .
55
(1,319)
27,181
60
(1,626)
28,466
58
(1,910)
29,870
(2 .7)
17 .5
4 .9
60
(1,967)
30,300
2 .7
3 .0
1 .4
Supply from storage . . . . . .

Total supply . . . . . . . . . . . .
546
27,727
(253)
28,213
(230)
29,640
(9 .1)
5 .1
(100)
30,200
(56 .5)
1 .9
Exports . . . . . . . . . . . . . . . .
Total consumption . . . . . . .
1,572
26,155
1,514
26,699
1,780
27,860
17 .6
4 .3
2,130
28,070
19 .7
0 .8
*Extraction losses and unaccounted for gas

Source: 2013 and 2014 Energy Information Administration; 2015 and 2016 OGJ estimates and forecast
OIL, GAS, PRODUCTS PRICES
Global supply mix

Outside the US and OPEC, oil production increased more than 300,000
b/d, outpacing expectations. Brazil,
Canada, and Russia contributed important gains.
Despite a plunging rig count, US
liquids production proved resilient
because of improving efficiency onshore and growth in in the Gulf of
Mexico. Average US crude and condensate production was up 7.7% for
the year, at 9.32 million b/d. In the
major shale plays, production at the
end of the year was falling monthto-month by more than 100,000 b/d,
with only the Permian basin continuing to show increases.
OPEC crude supply averaged an
estimated 31.4 million b/d in 2015,
up 1.1 million b/d from the 2014 average on the strength of increases in
Saudi Arabia and Iraq. Saudi production jumped to 10.2 million b/d
from 9.7 million b/d in March 2015
and remained at that level or above at
least through November. Iraqi output
reached a record high 4.5 million b/d
in November after averaging 3.7 mil-
Change, %
15/14
Year
1976 . . . . . . .
1977 . . . . . . .
1978 . . . . . . .
1979 . . . . . . .
1980 . . . . . . .
1981 . . . . . . .
1982 . . . . . . .
1983 . . . . . . .
1984 . . . . . . .
1985 . . . . . . .
1986 . . . . . . .
1987 . . . . . . .
1988 . . . . . . .
1989 . . . . . . .
1990 . . . . . . .
1991 . . . . . . .
1992 . . . . . . .
1993 . . . . . . .
1994 . . . . . . .
1995 . . . . . . .
1996 . . . . . . .
1997 . . . . . . .
1998 . . . . . . .
1999 . . . . . . .
2000 . . . . . . .
2001 . . . . . . .
2002 . . . . . . .
2003 . . . . . . .
2004 . . . . . . .
2005 . . . . . . .
2006 . . . . . . .
2007 . . . . . . .
2008 . . . . . . .
2009 . . . . . . .
2010 . . . . . . .
2011 . . . . . . .
2012 . . . . . . .
2013 . . . . . . .
2014 . . . . . . .
2015* . . . . . .
Crude oil
Average
Average
landed
US wellhead
cost of
price
imports
$/bbl
8 .19
8 .57
9 .00
12 .64
21 .59
31 .77
28 .52
26 .19
25 .88
24 .09
12 .51
15 .40
12 .58
15 .86
20 .03
16 .54
15 .99
14 .25
13 .19
14 .62
18 .46
17 .23
10 .88
15 .56
26 .72
21 .84
22 .51
27 .56
36 .77
50 .28
59 .69
66 .52
94 .04
56 .35
74 .71
95 .73
94 .52
95 .99
87 .39
45 .70
13 .32
14 .36
14 .35
21 .45
33 .67
36 .47
33 .18
28 .93
28 .54
26 .67
13 .49
17 .65
14 .08
17 .68
21 .13
18 .02
17 .75
15 .72
15 .18
16 .78
20 .31
18 .11
11 .84
17 .23
27 .53
21 .82
23 .91
27 .69
36 .07
49 .29
59 .11
67 .97
93 .33
60 .23
76 .50
102 .92
101 .00
96 .99
88 .16
46 .40
Products
No . 2
Unleaded
fuel oil
gasoline
wholesale
pump price
price
/gal
61 .4
65 .6
67 .0
90 .3
124 .5
137 .8
129 .6
124 .1
121 .2
120 .2
92 .7
94 .8
94 .6
102 .1
116 .4
114 .0
112 .7
110 .8
111 .2
114 .7
123 .1
123 .4
105 .9
116 .5
151 .0
146 .1
135 .8
159 .1
188 .0
229 .5
258 .9
280 .1
326 .6
235 .0
278 .8
352 .7
364 .4
352 .6
336 .7
245 .0
NA
NA
36 .9
56 .9
80 .3
97 .6
91 .4
81 .5
82 .1
77 .6
48 .6
52 .7
47 .3
56 .5
69 .7
62 .2
57 .9
54 .4
50 .6
51 .1
63 .9
59 .0
42 .2
49 .3
88 .6
75 .6
69 .4
88 .1
112 .5
162 .3
183 .4
207 .2
274 .5
165 .7
214 .7
290 .7
303 .1
296 .6
274 .1
163 .5
Natural gas
Average
delivered
Henry Hub
commercial
spot price
price
$/Mcf
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
1 .89
1 .72
2 .75
2 .49
2 .09
2 .26
4 .31
3 .96
3 .38
5 .47
5 .89
8 .69
6 .73
6 .97
8 .86
3 .94
4 .37
4 .00
2 .75
3 .73
4 .44
2 .75
1 .64
2 .04
2 .23
2 .73
3 .39
4 .00
4 .82
5 .59
5 .55
5 .50
5 .08
4 .77
4 .63
4 .74
4 .83
4 .81
4 .88
5 .22
5 .44
5 .05
5 .40
5 .80
5 .48
5 .33
6 .59
8 .43
6 .63
8 .40
9 .43
11 .34
12 .00
11 .34
12 .23
10 .06
9 .47
8 .91
8 .10
8 .08
8 .90
8 .00
*Estimated
Source: 1976-2014 US Energy Information Administration; 2015 OGJ estimates
25
12/29/15 1:43 PM
GENERAL INTEREST
US PRODUCTION OF CRUDE OIL AND LEASE CONDENSATE

1
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 b/d
District 1:
Fla., N.Y., Pa., W. Va. . . . . .
Cumulative
1859-2015,
1,000 bbl
51
51
46
46
39
39
26
26
22
22
20
21
15
15
20
20
20
20
22
22
2,883,689
2,872,729
District 2:
Illinois . . . . . . . . . . . . . . . . .
25
Indiana . . . . . . . . . . . . . . . .
6
Kansas . . . . . . . . . . . . . . . .
127
Kentucky . . . . . . . . . . . . . .
8
Michigan. . . . . . . . . . . . . . .
19
Nebraska . . . . . . . . . . . . . .
8
North Dakota . . . . . . . . . . . 1,168
Ohio . . . . . . . . . . . . . . . . . .
69
Oklahoma . . . . . . . . . . . . . .
335
Others2
6
Total Dist. 2 . . . . . . . . . . . . 1,771
26
7
136
9
20
8
1,087
41
343
7
1,684
26
7
128
8
21
8
860
22
314
7
1,401
24
6
120
9
20
8
665
14
239
6
1,111
25
5
114
6
19
7
419
13
201
5
814
25
5
111
7
19
6
310
13
185
5
686
25
5
108
7
17
6
218
13
183
5
587
26
5
108
7
17
7
172
14
185
5
546
26
5
100
7
15
6
124
14
175
5
477
28
5
98
6
14
6
109
15
172
5
458
3,687,642
570,295
6,640,352
799,811
1,312,504
522,629
3,310,232
1,174,882
15,236,875
81,714
33,336,936
District 3:
Alabama . . . . . . . . . . . . . . .
27
Arkansas. . . . . . . . . . . . . . .
18
Louisiana . . . . . . . . . . . . . . 1,360
Mississippi . . . . . . . . . . . . .
69
New Mexico . . . . . . . . . . . .
414
Texas . . . . . . . . . . . . . . . . . 3,760
Total Dist. 3 . . . . . . . . . . . . 5,648
27
19
1,305
67
339
3,451
5,208
28
18
1,200
67
276
2,781
4,370
26
18
1,206
67
233
2,226
3,776
23
16
1,243
66
195
1,712
3,255
20
16
1,426
66
179
1,481
3,188
20
16
1,439
64
168
1,406
3,113
21
17
1,125
60
162
1,341
2,726
20
17
1,237
57
162
1,328
2,821
21
17
1,272
48
164
1,317
2,839
709,934
1,825,964
32,681,926
2,505,874
5,994,905
68,309,510
112,028,113
178
80
96
173
663
135
72
83
158
528
108
66
72
150
448
90
69
68
146
396
83
76
63
141
375
81
86
60
145
363
72
96
54
148
372
64
99
49
145
370
63
90
46
141
357
2,203,339
1,791,233
1,476,671
7,291,365
13,154,766
482
605
1
Total Dist. 5 . . . . . . . . . . . . 1,088
497
611
1
1,109
515
596
1
1,112
526
587
1
1,114
561
585
1
1,147
600
607
1
1,208
645
629
1
1,275
683
652
1
1,336
722
666
1
1,389
741
684
1
1,426
17,475,910
29,187,132
54,376
46,717,418
US total . . . . . . . . . . . . . . . 9,319
8,710
7,450
6,475
5,634
5,478
5,353
5,000
5,077
5,102
208,109,851
Total Dist. 1 . . . . . . . . . . . .
District 4:
Colorado . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . .
Wyoming. . . . . . . . . . . . . . .
198
83
107
194
Total Dist. 4 . . . . . . . . . . . .
761
District 5:
Alaska
California
Nevada
Preliminary. Includes Missouri, South Dakota, and Tennessee.
IMPORTS OF REFINED PRODUCTS

1
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 b/d
Gasoline . . . . . . . . . . . . . . . .
Kerosene . . . . . . . . . . . . . . .
Jet fuel-kerosene . . . . . . . . .
Distillate . . . . . . . . . . . . . . . .
Residual . . . . . . . . . . . . . . . .
Unfinished oils . . . . . . . . . . .
Other2 . . . . . . . . . . . . . . . . . .
...................
Total US . . . . . . . . . . . . . . .
66
1
122
193
301
589
887
2,160
49
94
195
173
547
839
1,897
45
1
84
155
225
656
963
2,129
44
1
55
126
256
598
992
2,072
105
3
69
179
328
687
1,198
2,569
134
2
98
228
366
606
1,146
2,580
223
3
81
225
331
677
1,138
2,678
302
2
103
213
349
763
1,400
3,132
413
3
217
304
372
717
1,410
3,436
475
5
186
365
350
689
1,520
3,590
Preliminary. 2Includes plant condensate.

Source: US Energy Information Administration
lion b/d in the first half of the year, according to EIA.

Average oil supply reached 96.2 million b/d in 2015, implying a strong, 1.6 million b/d build in inventories.
On Dec. 4, OPEC took no action on either the group
26
160104OGJ_26 26
production target or actual output despite global oversupply. Also at the meeting, OPEC members voted unanimously to reactivate Indonesias OPEC membership, despite its
remaining a net importer of crude oil.
12/29/15 1:43 PM
GENERAL INTEREST
SUPPLY AND DEMAND FOR CRUDE IN THE US

1
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 b/d
SUPPLY
Crude imports2 . . . . . . . . . . . . . . . .
Crude production . . . . . . . . . . . . . .
Crude adjustment . . . . . . . . . . . . .
7,300
9,319
257
16,876
7,344
8,703
238
16,285
7,730
7,442
254
15,426
8,527
6,489
136
15,152
8,935
5,658
182
14,775
9,213
5,474
92
14,779
9,013
5,361
83
14,457
9,783
4,950
15
14,748
10,031
5,079
27
15,137
10,118
5,102
41
15,261
Total demand . . . . . . . . . . . . . . . . .
16,179
480
0
16,659
15,848
351
0
16,199
15,312
134
0
15,446
14,999
67
0
15,066
14,806
47
0
14,853
14,724
42
0
14,766
14,336
44
56
14,436
14,648
29
19
14,696
15,156
27
7
15,190
15,242
25
8
15,275
Crude stock change (industry) . . . .
217
86
(20)
86
(78)
13
21
122
(53)
(14)
475
695
1,170
393
691
1,084
357
696
1,053
365
695
1,060
331
696
1,027
333
727
1,060
325
727
1,052
326
702
1,028
286
697
983
312
689
1,001
Total supply . . . . . . . . . . . . . . . . . .
DEMAND
Crude refinery runs . . . . . . . . . . . .
Crude exports . . . . . . . . . . . . . . . .
Crude into SPR . . . . . . . . . . . . . . .
Primary (industry) . . . . . . . . . . . . .
SPR . . . . . . . . . . . . . . . . . . . . . . . .
Total crude stocks (million bbl) . . .
1
Preliminary . 2Includes imports for the Strategic Petroleum Reserve . 3Includes Alaskan crude in transit .
US ENERGY CONSUMPTION AND EFFICIENCY
1950 . . . . . . . . .
1955 . . . . . . . . .
1960 . . . . . . . . .
1965 . . . . . . . . .
1970 . . . . . . . . .
1975 . . . . . . . . .
1980 . . . . . . . . .
1985 . . . . . . . . .
1990 . . . . . . . . .
1995 . . . . . . . . .
2000 . . . . . . . . .
2001 . . . . . . . . .
2002 . . . . . . . . .
2003 . . . . . . . . .
2004 . . . . . . . . .
2005 . . . . . . . . .
2006 . . . . . . . . .
2007 . . . . . . . . .
2008 . . . . . . . . .
2009 . . . . . . . . .
2010 . . . . . . . . .
2011 . . . . . . . . .
2012 . . . . . . . . .
2013 . . . . . . . . .
2014 . . . . . . . . .
1
2015 . . . . . . . .
2
2016 . . . . . . . .
GDP,
billion
2009
$
Energy
consumption,
trillion
btu
Energy
consumption
per GDP,
2009 $
(Mbtu)
2,184 .0
2,739 .0
3,108 .7
3,976 .7
4,722 .0
5,385 .4
6,450 .4
7,593 .8
8,955 .0
10,174 .8
12,559 .7
12,682 .2
12,908 .8
13,271 .1
13,773 .5
14,234 .2
14,613 .8
14,873 .7
14,830 .4
14,418 .7
14,783 .8
15,020 .6
15,354 .6
15,583 .3
15,961 .7
16,346 .1
16,754 .8
34,616
40,208
45,086
54,015
67,838
71,965
78,067
76,392
84,485
91,032
98,819
96,172
97,647
97,921
100,094
100,193
99,492
101,027
98,906
94,138
97,480
96,902
94,487
97,241
98,455
98,082
98,677
15 .8
14 .7
14 .5
13 .6
14 .4
13 .4
12 .1
10 .1
9 .4
8 .9
7 .7
7 .7
7 .6
7 .5
7 .3
7 .0
6 .9
6 .6
6 .3
6 .5
6 .6
6 .5
6 .2
6 .2
6 .2
6 .0
5 .9
Oil
energy
consumption,
trillion
btu
Oil energy
consumption
per GDP,
2009 $
(Mbtu)
Natural
gas energy
consumption,
trillion
btu
Natural gas
energy
consumption
per GDP,
2009 $
(Mbtu)
Total oil
and natural
gas energy
consumption,
trillion
btu
Total
oil and
gas energy
consumption
per GDP,
2009 $
(Mbtu)
Oil and
natural gas
energy
% of total
energy
31,632
37,410
42,137
50,577
63,522
32,732
34,205
30,925
33,552
34,441
38,286
38,190
38,226
38,790
40,227
40,303
39,824
39,491
36,907
34,959
35,489
34,824
34,016
34,613
34,881
35,439
35,758
14 .5
13 .7
13 .6
12 .7
13 .5
6 .1
5 .3
4 .1
3 .7
3 .4
3 .0
3 .0
3 .0
2 .9
2 .9
2 .8
2 .7
2 .7
2 .5
2 .4
2 .4
2 .3
2 .2
2 .2
2 .2
2 .2
2 .1
5,968
8,998
12,385
15,769
21,795
19,948
20,235
17,703
19,603
22,671
23,824
22,773
23,510
22,831
22,923
22,565
22,239
23,663
23,843
23,416
24,575
24,955
26,089
26,805
27,491
28,660
28,889
2 .7
3 .3
4 .0
4 .0
4 .6
3 .7
3 .1
2 .3
2 .2
2 .2
1 .9
1 .8
1 .8
1 .7
1 .7
1 .6
1 .5
1 .6
1 .6
1 .6
1 .7
1 .7
1 .7
1 .7
1 .7
1 .8
1 .7
37,600
46,408
54,522
66,346
85,317
52,680
54,440
48,628
53,155
57,112
62,110
60,963
61,736
61,621
63,150
62,868
62,063
63,154
60,750
58,375
60,064
59,779
60,105
61,418
62,372
64,099
64,647
17 .2
16 .9
17 .5
16 .7
18 .1
9 .8
8 .4
6 .4
5 .9
5 .6
4 .9
4 .8
4 .8
4 .6
4 .6
4 .4
4 .2
4 .2
4 .1
4 .0
4 .1
4 .0
3 .9
3 .9
3 .9
3 .9
3 .9
108 .6
115 .4
120 .9
122 .8
125 .8
73 .2
69 .7
63 .7
62 .9
62 .7
62 .9
63 .4
63 .2
62 .9
63 .1
62 .7
62 .4
62 .5
61 .4
62 .0
61 .6
61 .7
63 .6
63 .2
63 .4
65 .4
65 .5
Estimated . 2Forecast .
IEA projects NGL production by OPEC members,

which is not subject to the groups output ceilings,
will continue to climb, averaging 6.8 million b/d this
year, led by increases in Iran and Qatar. Last year the
organizations NGL supply averaged 6.5 million b/d.
IEA calls for oil output to decrease in non-OPEC
producers in 2016. The only non-OPEC region to
post an increase will be Latin America, where output is forecast to average 4.7 million b/d vs. a year-
160104OGJ_27 27
SPECIAL
REPORT
earlier average of 4.5 million b/d. OECD Americas supply will average 19.4 million b/d this year,
down 400,000 b/d from last year.
Including processing gains and global biofuels,
IEA forecasts that 2016 non-OPEC supply will average 57.7 million b/d, down from last years 58.3
million b/d.
OGJ estimates that OPEC crude output will average 31.9 million b/d this year, up 500,000 b/d
27
12/29/15 1:43 PM
GENERAL INTEREST
CRUDE IMPORTS BY COUNTRY OF ORIGIN 1

2
Algeria3 . . . . . . . . . . . . . . . .
Angola3 . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . .
Colombia . . . . . . . . . . . . . . .
Congo, former Zaire . . . . . . .
Congo (Brazzaville) . . . . . . .
Ecuador3 . . . . . . . . . . . . . . .
Gabon . . . . . . . . . . . . . . . . .
Indonesia . . . . . . . . . . . . . . .
Iran3 . . . . . . . . . . . . . . . . . .
Iraq3 . . . . . . . . . . . . . . . . . .
Kuwait3 . . . . . . . . . . . . . . . .
Libya3 . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . .
Mexico . . . . . . . . . . . . . . . . .
Nigeria3 . . . . . . . . . . . . . . . .
Norway . . . . . . . . . . . . . . . .
Oman . . . . . . . . . . . . . . . . .
Qatar3 . . . . . . . . . . . . . . . . .
Saudi Arabia3 . . . . . . . . . . . .
Trinidad & Tobago . . . . . . . .
United Arab Emirates3 . . . . .
United Kingdom . . . . . . . . . .
Venezuela3 . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . .
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 b/d
Total imports . . . . . . . . . . . .
3
126
5
3,199
0
360
0
8
239
6
33
0
189
217
4
0
664
52
9
0
0
990
5
2
9
788
393
7,300
6
139
2
2,882
0
294
0
4
213
16
20
0
369
309
5
0
781
58
9
0
0
1,159
5
13
10
733
317
7,344
29
201
1
2,579
1
367
0
18
232
24
18
0
341
326
43
0
850
239
17
3
0
1,325
8
2
21
755
329
7,730
120
222
6
2,425
1
403
0
29
177
42
6
0
476
303
56
0
975
406
26
9
0
1,361
27
0
18
912
527
8,527
178
335
9
2,225
2
397
11
53
203
34
20
0
459
191
9
0
1,102
767
53
41
5
1,186
33
7
36
868
711
8,935
328
383
10
1,970
4
338
9
70
210
47
33
0
415
195
43
3
1,152
983
25
12
0
1,082
45
2
120
912
822
9,213
281
448
11
1,943
8
251
9
64
181
63
15
0
449
180
61
7
1,092
776
58
30
8
980
40
39
103
951
965
9,013
312
504
33
1,956
11
178
0
67
214
58
16
0
627
206
68
2
1,187
922
30
17
0
1,503
23
4
78
1,039
728
9,783
443
498
2
1,888
6
137
0
63
198
63
15
0
484
175
84
1
1,409
1,084
56
32
0
1,447
48
9
101
1,148
640
10,031
362
513
5
1,802
19
141
0
27
272
60
16
0
553
179
66
7
1,577
1,037
98
35
1
1,423
67
5
130
1,142
581
10,118
Total from OPEC . . . . . . . . .
2,641
3,005
3,493
4,031
4,209
4,553
4,355
5,415
5,388
4,783
Includes imports for the Strategic Petroleum Reserve . 2Preliminary . 3OPEC member .
EXPORTS OF REFINED PRODUCTS AND CRUDE

*2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 b/d
Gasoline . . . . . . . . . . . . . . . .
Distillate . . . . . . . . . . . . . . . .
Residual . . . . . . . . . . . . . . . .
Lubricants . . . . . . . . . . . . . . .
Coke . . . . . . . . . . . . . . . . . . .
Asphalt and road oil . . . . . . .
LPG . . . . . . . . . . . . . . . . . . .
Other refined products . . . . .
Total refined products . . . . .
Crude . . . . . . . . . . . . . . . . . .
Total exports . . . . . . . . . . . .
433
1,218
333
74
542
18
785
918
4,320
480
4,800
442
1,101
364
67
541
23
537
749
3,824
351
4,160
373
1,134
362
73
524
25
332
664
3,487
134
3,621
409
1,007
388
75
503
30
196
529
3,137
67
3,204
479
854
424
68
499
31
148
435
2,938
47
2,985
296
656
405
62
449
30
132
281
2,311
42
2,353
195
587
415
57
391
27
100
209
1,981
44
2,025
172
528
355
60
377
23
67
191
1,773
29
1,802
127
268
330
59
366
19
57
179
1,405
27
1,433
142
215
283
55
366
15
56
160
1,292
25
1,317
*Preliminary .
from 2015, with Iran forecast to increase producstock build of 600,000 b/d this year, down more
tion once international sanctions targeting its oil
than half from the 2015 level. Most of the build is
sector are suspended, probably in the first half.
expected in the first half of the year. Global storage
Since mid-2012, Irans crude exports are down
capacity should not come under pressure, accordby more than 1 million b/d due to sanctions. Proing to IEA. A total of 230 million bbl of new storage
duction is down by 750,000 b/d from presanccapacity is to be commissioned in 2016, more than
SPECIAL
tion levels. IEA estimates that Iran could produce
REPORT half in Chinese and Indian facilities for strategic
3.4-3.6 million b/d, up 500,000-700,000 b/d from
storage, as well as new terminals in North America,
current levels, within 6 months of sanctions being
China, the Middle East, and Europe.
lifted.
Inventories in OECD countries in October were 260
Demand and supply at projected levels imply an average
million bbl above the average of the past 5 years, repre-
28
160104OGJ_28 28
12/29/15 1:43 PM
GENERAL INTEREST
ROTARY RIG ACTIVITY BY STATES*

YTD avg. through
Dec. 18, 2015
Alabama . . . . . . . . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . .
Offshore . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . .
North . . . . . . . . . . . . . . . . . .
Inland waters . . . . . . . . . . . .
South . . . . . . . . . . . . . . . . . .
Offshore . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . .
Mississippi . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . .
North Dakota . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . .
Gulf Coast . . . . . . . . . . . . . .
Offshore & inland waters . . .
North . . . . . . . . . . . . . . . . . .
Panhandle . . . . . . . . . . . . . .
East . . . . . . . . . . . . . . . . . . .
West Central . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . .
Total US . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . .
Inland Waters . . . . . . . . . . . . .
Offshore . . . . . . . . . . . . . . . . .
Canada-land . . . . . . . . . . . . .
Canada-offshore . . . . . . . . . . .
Grand total. . . . . . . . . . . . .
2014
2013
2012
2011
2010
2009
2 .3
11 .2
0 .0
6 .5
13 .2
12 .4
0 .8
38 .9
0 .7
0 .2
1 .9
0 .4
13
1 .5
78
28 .1
4 .8
11
34
0 .0
5 .1
1 .7
2 .1
0 .3
53 .1
0 .0
85 .3
25
118 .2
42
0 .0
434 .8
92 .9
0 .9
4 .9
19 .4
26 .8
44 .8
245 .3
7 .5
18 .8
27 .2
0 .0
988.8
949 .4
5
35 .8
5 .8
9 .8
0 .0
11 .5
41 .9
40 .5
1 .4
67 .8
1 .7
0 .4
1 .6
1 .8
28 .5
3 .2
110 .6
27 .8
15 .2
16 .1
51 .6
0 .0
12 .9
8 .5
2 .0
0 .9
91 .6
0 .0
176 .2
40 .5
199 .3
55 .4
0 .4
880 .9
176 .2
2 .2
16 .7
63 .6
41
105 .6
475 .7
25 .1
28 .6
53 .8
0 .0
1,860.7
1,788 .7
14 .8
57 .1
4 .9
9 .2
0 .3
13 .7
38 .1
36 .4
1 .7
63 .4
1 .8
0 .0
3 .7
1 .3
26 .9
0 .6
107 .9
23 .4
20 .4
15 .4
48 .8
0 .5
10 .8
11 .5
1 .4
2 .6
77 .1
0 .0
173 .1
32 .1
178 .6
58 .9
1 .3
835 .1
162 .3
4 .6
21 .1
65 .3
41 .6
91 .1
449 .2
29 .3
28 .1
48 .4
0 .8
1,761.4
1,684 .6
20 .7
56 .1
5 .4
7 .1
0 .2
21 .3
44 .0
43 .3
0 .7
64 .4
1 .4
0 .1
1 .0
1 .0
30 .3
2 .7
123 .8
35 .7
18 .1
26 .2
43 .7
1 .8
10 .8
20 .0
0 .9
1 .3
83 .7
0 .3
187 .9
18 .4
195 .8
84 .1
0 .9
899 .3
171 .9
2 .3
26 .0
71 .1
61 .2
93 .5
473 .4
36 .9
25 .9
46 .6
1 .4
1,918.7
1,852 .3
19 .0
47 .4
6 .5
6 .5
0 .0
34 .4
44 .8
44 .7
0 .1
71 .9
1 .2
0 .0
1 .3
1 .0
28 .6
5 .1
164 .5
96 .9
17 .0
21 .8
28 .9
2 .2
9 .3
9 .0
1 .0
3 .3
79 .1
0 .0
168 .2
10 .9
180 .2
109 .7
0 .8
840 .3
154 .4
3 .2
32 .9
70 .7
112 .7
81 .5
384 .9
27 .6
21 .4
48 .3
1 .5
1,878.6
1,828 .8
17 .6
32 .3
5 .0
7 .7
0 .0
39 .1
32 .0
31 .8
0 .5
57 .7
1 .2
0 .0
1 .8
3 .3
20 .4
5 .5
191 .5
134 .2
13 .7
16 .1
27 .5
0 .0
10 .7
6 .6
1 .6
5 .6
62 .2
1 .2
113 .5
7 .4
127 .5
84 .7
0 .6
658 .7
119 .9
3 .6
35 .7
59 .8
146 .9
68 .6
224 .2
26 .6
23 .1
40 .3
3 .4
1,538.9
1,493 .3
14 .2
31 .5
3 .7
7 .7
0 .0
44 .1
22 .8
22 .0
0 .8
50 .4
0 .6
0 .0
0 .8
2 .1
19 .6
9 .7
150 .0
89 .2
8 .1
14 .8
37 .9
0 .0
10 .1
2 .7
0 .3
3 .4
43 .7
2 .2
49 .4
7 .9
94 .4
41 .7
0 .3
432 .2
88 .2
3 .4
24 .8
34 .8
150 .7
38 .5
91 .7
18 .3
22 .2
40 .0
7 .1
1,087.4
1,035 .3
8 .2
43 .9
192 .8
2 .5
1,184.1
374 .5
1 .7
2,236.9
350 .6
2 .4
2,114.4
362 .6
1 .0
2,282.3
417 .3
1 .4
2,297.3
343 .5
1 .8
1,884.2
221 .5
1 .2
1,310.1
*Note: May not add due to independent rounding .
US economy, energy
Economic data indicate the US economy will continue to
grow, led by more solid gains in consumer spending and
steady improvements in housing construction. OGJ forecasts that the US economy will grow 2.5% in 2016.
US energy demand will grow 0.6% this year, OGJ forecasts, following last years contraction to 98.08 quadrillion
btu (quads) from a 2014 total of 98.45 quads. The 2014 and
2015 numbers are from EIA and are subject to frequent
revision.
Demand for petroleum products this year will grow
only marginally, 0.9%, following growth of 1.6% last year.
160104OGJ_29 29
2007
2006
4 .5
8 .3
0 .0
50 .4
41 .2
40 .4
0 .8
114 .0
1 .0
0 .0
0 .5
1 .7
11 .3
10 .2
167 .3
67 .9
20 .4
25 .6
53 .3
1 .1
13 .1
10 .7
0 .1
3 .3
78 .6
6 .0
68 .1
11 .6
200 .0
23 .0
1 .6
898 .4
187 .1
10 .1
41 .7
81 .9
305 .8
93 .9
178 .0
41 .6
26 .9
73 .9
10 .6
1,879.0
1,791 .8
22 .0
65 .3
4 .6
8 .4
0 .0
45 .4
35 .4
33 .8
1 .6
106 .7
0 .4
0 .3
0 .1
2 .0
13 .8
9 .0
177 .0
57 .9
24 .6
33 .8
60 .7
1 .5
14 .0
16 .9
0 .1
2 .2
78 .1
6 .4
38 .9
13 .2
188 .2
15 .6
1 .5
834 .3
180 .3
10 .5
36 .7
60 .5
294 .8
94 .6
156 .9
41 .1
31 .6
73 .6
7 .6
1,767.8
1,669 .8
25 .7
72 .6
4 .6
8 .0
0 .0
24 .0
33 .3
29 .3
4 .0
88 .5
0 .3
0 .3
0 .0
0 .0
9 .6
7 .2
188 .4
57 .5
19 .2
38 .5
73 .2
2 .2
10 .3
21 .3
0 .0
1 .3
93 .8
6 .4
31 .5
7 .5
178 .7
15 .7
1 .1
746 .4
170 .3
14 .8
33 .5
68 .2
243 .3
79 .0
137 .5
40 .2
26 .5
99 .0
2 .6
1,648.7
1,536 .6
22 .2
89 .9
380 .4
1 .2
2,260.6
340 .0
2 .5
2,110.3
466 .5
3 .6
2,118.8
Source: Baker Hughes Inc .
senting the largest overhang over 5-year average in at last

10 years.
2008
The expected slowdown reflects deceleration in gasoline,

jet fuel, and other products demand. Oil will remain the
dominant energy source in the US, holding 36.2% of the
market.
Gas consumption is set to increase 0.8%, with lower
residential and commercial consumption being offset by
increases in the electric power and industrial market. This
compares to a 4.3% increase last year. The natural gas market share will stand at 29.3% this year.
US oil demand
In 2015, US liquid fuel consumption growth was led by
motor gasoline, which is estimated to have increased by
233,000 b/d, or 2.6%, as effects of lower gasoline prices
and employment growth outweighed increases in vehicle-
29
12/29/15 1:43 PM
GENERAL INTEREST
MARKETED NATURAL GAS PRODUCTION 1

2
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
MMcfd
Alaska . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . .
Federal offshore . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . .
929
5,296
3,434
6,917
21,936
4,857
3,673
32,259
79,301
944
5,411
3,226
6,312
21,730
4,894
3,430
28,744
74,690
927
6,594
3,275
5,874
20,672
5,091
3,587
24,366
70,386
960
8,075
3,322
5,529
20,425
5,525
4,119
21,193
69,147
999
8,356
3,481
5,203
19,222
5,961
4,984
17,647
65,853
1,033
6,154
3,623
5,006
18,292
6,365
6,157
15,202
61,833
1,087
4,197
3,846
5,090
18,769
6,464
6,665
13,191
59,309
1,089
3,763
3,951
5,227
18,910
6,215
6,358
12,518
58,031
1,188
3,741
4,159
4,887
16,776
5,611
7,668
11,305
55,332
1,218
3,729
4,409
4,627
15,200
4,976
7,951
11,067
53,177
Volume change . . . . . . . . . . .
Percent change . . . . . . . . . .
4,611
6 .2
4,304
6 .1
1,239
1 .8
3,294
5 .0
4,021
6 .5
2,523
4 .3
1,278
2 .2
2,699
4 .9
2,155
4 .1
53,177
2 .5
Imports . . . . . . . . . . . . . . . . .
Exports . . . . . . . . . . . . . . . . .
7,339
4,875
7,364
4,296
7,899
4,307
8,574
4,423
9,504
4,129
10,249
3,114
10,278
2,938
10,886
2,632
12,624
2,253
11,469
1,983
Includes nonhydrocarbon gases . 2Preliminary .

REFINERY RUNS BY DISTRICTS

2015
Input to
Crude
crude
% of
1
runs
stills1
operable
1,000 b/d
capacity
Crude runs
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 b/d
East Coast . . . . . . . . . . . . . . . . . . . 1,014

Appalachian Dist . 1 . . . . .
92
Total Dist . 1 . . . . . . . . . . . . . . . 1,106
1,013
92
1,105
86 .3
94 .2
86 .9
1,000
87
1,087
949
89
1,038
827
92
919
1,009
88
1,097
1,037
81
1,118
1,171
89
1,259
1,332
90
1,421
1,426
87
1,513
1,418
94
1,512
Ill ., Ind ., Ky .2 . . . . . . . . . . . . . . . 2,315

Minn ., Wisc ., Daks . . . . . . 461
Okla ., Kan ., Mo . . . . . . . . . . . 815
Total Dist . 2 . . . . . . . . . . . . . . . . . 3,591
2,311
488
815
3,613
92 .1
99 .2
95 .7
93 .8
2,246
462
815
3,523
2,181
446
779
3,406
2,210
450
782
3,442
2,191
440
741
3,372
2,115
420
746
3,281
2,004
408
723
3,135
2,079
412
730
3,221
2,131
401
694
3,226
2,161
413
723
3,297
Texas: . . . . . . . . . . . . . . . . . . . . . . . . .
Inland . . . . . . . . . . . . . . . . . . . . . . . 650
Gulf Coast . . . . . . . . . . . . . . . . . 4,220
Louisiana Gulf . . . . . . . . . . . . . 3,274
N . La ., Ark . . . . . . . . . . . . . . . . . . 221
New Mexico . . . . . . . . . . . . . . . . 125
645
4,211
3,398
201
125
93 .6
91 .9
93 .0
82 .7
97 .5
650
4,063
3,212
206
123
640
3,918
3,072
209
112
612
3,707
3,092
208
115
601
3,460
3,063
219
105
565
3,609
2,966
189
105
558
3,407
2,781
170
103
584
3,276
2,749
182
107
570
3,417
3,035
187
106
610
3,445
2,913
197
95
Total Dist . 3 . . . . . . . . . . . . . . . . . 8,491

Total Dist . 4 . . . . . . . . . . . . . . . . . 602
Total Dist . 5 . . . . . . . . . . . . . . . . . 2,389
Total US . . . . . . . . . . . . . . . . . . . . 16,179
8,580
602
2,531
16,430
92 .3
92 .7
86 .3
91 .3
8,254
581
2,402
15,847
7,951
578
2,339
15,312
7,734
573
2,331
14,999
7,448
545
2,346
14,808
7,433
540
2,351
14,724
7,020
540
2,382
14,336
6,899
536
2,571
14,648
7,315
542
2,560
15,156
7,260
553
2,621
15,242
Preliminary . 2Includes Appalachian Dist . 2 .

fleet efficiency. When fuel prices are low, vehicle

movements and the worldwide slowdown in raw
buyers tend to favor sport utility vehicles and light
materials production. Growth this year reflects
trucks.
recovery of those influences on diesel use.
OGJ forecasts that gasoline demand will be essenJet fuel demand averaged 1.53 million b/d during
tially flat this year, averaging 9.14 million b/d. Higher
2015, a 4.2% increase from a year earlier. Jet fuel depump prices and a resumption of the long-term trend
mand will slip to 1.51 million b/d this year due to higher
SPECIAL
toward improved vehicle fuel efficiency will offset the
prices and continued consumption efficiency.
REPORT jet fuel
demand strengthening that comes with employment
OGJ forecasts that this years demand for LPG
growth.
and ethane will increase 4.8% from last year to
Demand for distillate fuel, which includes diesel fuel
2.58 million b/d, reflecting increased propane demand and
and heating oil, will increase 2.2% from a year ago to 4.1
expanded petrochemical plant capacity.
million b/d this year. According to EIA data, US diesel
Residual fuel oil demand, which has been declining for
consumption was flat in 2015 after growing strongly in
decades, will fall to 212,000 b/d this year from the 2015
2013 and 2014, mirroring a slowdown in inland freight
average of 235,000 b/d.
30
160104OGJ_30 30
12/29/15 1:43 PM
GENERAL INTEREST
US REFINED PRODUCTS, NATURAL GAS LIQUIDS, AND CRUDE STOCKS

1
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,000 bbl
Gasoline2 . . . . . . . . . . . . . . .
Motor3 . . . . . . . . . . . . . . . .
Aviation3 . . . . . . . . . . . . . . .
Special naphthas . . . . . . . . .
Kerosene . . . . . . . . . . . . . . .
Distillate . . . . . . . . . . . . . . . .
Residual . . . . . . . . . . . . . . . .
Kerosine jet fuel . . . . . . . . . .
Natural gas liquids & LRG . . .
Unfinished oils . . . . . . . . . . .
Other refined products . . . . .
Total products stocks . . . . . .
Crude stocks (ex . SPR) . . . .
Total stocks (ex . SPR) . . . . .
SPR stocks . . . . . . . . . . . . .
Total stocks (incl . SPR) . . . .
231,303
230,335
968
1,459
1,897
141,692
40,164
41,245
194,441
88,334
74,464
815,000
475,000
1,290,000
695,000
1,985,000
241,460
240,368
1,092
1,375
2,124
136,286
33,662
38,274
175,364
78,345
68,324
775,214
393,341
1,168,555
690,959
1,859,514
228,904
228,034
870
1,262
1,886
127,543
38,144
37,183
128,425
77,959
67,035
708,341
357,063
1,065,404
695,969
1,761,373
231,958
230,888
1,070
1,228
1,759
134,809
33,951
39,620
153,268
82,284
68,136
747,013
365,496
1,112,509
695,268
1,807,777
224,302
223,147
1,155
1,061
2,449
149,212
34,189
41,483
129,374
78,809
62,578
723,457
330,679
1,054,136
695,951
1,750,087
220,540
224,328
219,435
223,282
1,105
1,046
1,016
1,121
2,419
2,476
164,306
165,964
41,347
37,168
43,218
43,397
120,782
112,628
80,624
79,893
59,872
57,605
734,124
724,580
333,430
325,179
1,067,554 1,049,759
726,545
726,616

1,794,099 1,776,375
214,738
213,550
1,188
1,438
2,248
146,013
36,057
37,969
126,909
83,463
60,241
709,076
325,840
1,034,916
701,823
1,736,739
219,369
218,107
1,262
1,571
2,804
133,944
39,338
39,458
105,870
81,209
58,736
682,299
286,105
968,404
696,941
1,665,345
213,226
211,806
1,420
1,609
3,373
143,651
42,397
39,129
125,109
83,782
66,349
718,625
312,276
1,030,901
688,605
1,719,506
Preliminary . 2Includes reformulated, oxygenated, and other finished gasoline . 3Includes blending components .
Demand for all other petroleum products will increase

1.4%, following an increase of 2.75% a year ago, and average 2.05 million b/d. These products include petrochemical feedstocks, special naphtha, still gas, waxes, and miscellaneous products, as defined by EIA.
US output stalls
US crude oil production growth has ceased. OGJ forecasts
average output in 2016 will drop to 8.9 million b/d from
9.32 million b/d last year. US crude oil production averaged
8.7 million b/d in 2014.
Average monthly US crude production peaked in April
2015 at 9.58 million b/d and declined in 5 of the six following months, according to the EIA. From the peak rate,
production in November was down 420,000 b/d for total
US and 460,000 b/d for the Lower 48.
According to EIAs Drilling Productivity Report, legacy
declines from existing wells by December had been exceeding output from new wells since May, with total production set to fall by 115,000 b/d in the last month of 2015.
US shale oil producers, having slashed budgets throughout 2015, plan to pare spending further this year. Companies including Devon Energy Corp., Continental Resources
Inc., and Marathon Oil Corp. released preliminary 2016
plans for capital spending that fall by double-digit percentages.
Output from the Gulf of Mexico averaged 1.54 million
b/d in 2015, up 10.4% from the 2014 level. Twelve projects were scheduled to come online in the Gulf of Mexico
in 2015 and 2016. In 2016, production from the gulf is
expected to increase to 1.6 million b/d, while oil production in Alaska will continue to fall, reflecting declines from
legacy fields.
With expected additions of natural gas processing, NGL
production will climb to an average 3.36 million b/d this
160104OGJ_31 31
year from 3.25 million b/d in 2015 and 3.01 million b/d in
2014.
Crude imports to rise

As Lower 48 oil production declines and the refining industry adds light crude processing capability, crude oil
imports are likely to increase despite the end of a ban on
crude exports. OGJ forecasts that the US will import 7.46
million b/d of crude in 2016. This will be a 2.2% increase
after a 0.6% decline in crude imports last year.
In 2015, US product imports surged by 13.9%, reflecting strong domestic demand. Imports of petroleum products is forecast to fall by 2.3% this year to average 2.11
million b/d, driven by a slowdown in consumption growth,
higher refinery throughput, and full storage.
Last year, Canada was the top exporter to the US, averaging 3.2 million b/d. Saudi Arabia, which exported about
1 million b/d of crude to the US last year, was followed by
Venezuela, Mexico, and Colombia.
Total crude imports from the OPEC countries averaged 2.64 million b/d last year, 36.2% of the total. In 2014,
crude imports from OPEC averaged 3 million b/d, 40.9%
of the total.
The US will export 4.85 million b/d of oil this year,
mostly products. In 2015, US oil exports averaged 4.8 million b/d, up from 4.17 million b/d a year earlier. The end of
the 40-year-old ban on crude oil exports should have little
immediate impact on US oil trade.
Oil in storage
US commercial crude oil stocks in 2015, averaging 466
million bbl, were up 22% or 85 million bbl from the prior
year. Stocks of motor gasoline were up 2% from last year to
average 225 million bbl. Distillate fuel oil stocks were up
13% from the prior year to 139 million bbl. Average jet fuel
31
12/29/15 1:43 PM
GENERAL INTEREST
stocks were up by 7% from the prior year. Total inventories
of all oils excluding the Strategic Petroleum Reserve were
up 13% from year ago levels, averaging 1.262 billion bbl.
Crude oil in storage, excluding that in the SPR, will
fall to 440 million bbl at the close of 2016, OGJ forecasts.
This is down from a yearend 2015 total of 475 million bbl,
which was 22% higher than a year earlier.
The total volume of oil products in storage also will
move lower from the end of 2015. OGJ forecasts that product stocks will total 799 million bbl at the end of this year,
down from the year-earlier total of 815 million bbl.
The amount of crude in the SPR last year grew to 695
million bbl from 691 million bbl a year earlier.
by low gas prices and coal plant retirements. The share of

power generation fueled by natural gas increased to 32%
last year from 27.3% in 2014, while coals share decreased
to about 34% from 39.3% a year earlier. In 2016, OGJ forecasts that gas demand growth from power generation will
ebb due to slower coal retirements.
Commercial and residential demand for gas shows weakness
following warmer-than-normal East Coast and Midwest winter
weather. Industrial use of gas will increase this year, as new industrial projects, particularly in the fertilizer and chemicals industries, come online.
Collectively, OGJ forecasts that US gas consumption will
climb 0.8% this year, following a 4.3% increase last year.
Total marketed production increased 6.2% last
Refining rates high
year to 29 tcf. OGJ forecasts that marketed producIn 2015, US refiners benefited from falling crude oil
tion this year will increase 2.4% to 29.7 tcf.
prices and robust demand, particularly for gasoline.
Companies have slashed drilling in the wake of
Product exports also jumped 14% from the year-ago
a prolonged period of depressed prices. According
level. Taking advantage of favorable economics, refinto Baker Hughes Inc. data, the overall gas rig count
ers kept utilization high and delayed maintenance.
decreased to 168 units by Dec. 18, 2015, from 338
SPECIAL
Crude runs averaged 16.18 million b/d in 2015,
the same period a year ago.
REPORT
up 2.1% from a year earlier. Total input to stills
However, increases in drilling efficiency, the
averaged 16.43 million b/d, up 1.7% from the 2014
backlog of uncompleted wells, and new pipeline
level. Based on EIA figures for operable capacity
capacity will support growing natural gas producof 18 million b/d, the refinery utilization rate for 2015 was
tion in the forecast period, albeit at a much slower pace.
91.3%, compared with 90.4% a year earlier, when operable
Most of the growth is expected to come from the Marcapacity was pegged at 17.87 million b/d.
cellus shale. According to estimates from Simmons & Co.,
During 2015, refinery production rates increased 2.46%
new potential takeaway capacity coming online in the Marfor gasoline, 2.36% for jet fuel, and 1.12% for distillate fuel.
cellus and nearby Utica shales totals 4.3 bcfd for the second
Residual fuel production declined 3.68%.
half of 2015 and totals 4.2 bcfd in 2016.
According to Muse, Stancil & Co., estimated refining
Due to increased domestic production, US imports of
cash margins during 2015 averaged $22.46/bbl for the
gas will fall again this year, by a larger margin than in
West Coast, $11.53/bbl for the Gulf Coast, $5.80/bbl for
2015. Total imports will fall to 2.54 tcf from 2.68 tcf a year
the East Coast, and $18.27/bbl for the Midcontinent. A year
earlier, primarily driven by a loss of imports from Canada.
earlier, cash margins were $15.04/bbl on the West Coast,
Natural gas exports to Mexico, particularly from the Ea$8.50/bbl for the Gulf Coast, $3.99/bbl for the East Coast,
gle Ford shale in South Texas, continue to surge because
and $19.43/bbl for the Midwest.
of growing demand from Mexicos electric power industry
The average composite cost of crude oil for US refincoupled with flat gas production in Mexico.
ers during 2015 was estimated at $50.3/bbl, down from
LNG gross exports also will increase with the start-up
$92.22/bbl a year earlier.
of the Sabine Pass LNG liquefaction plant planned for earFor 2016, OGJ projects that crude runs and gross inputs
ly 2016. OGJ forecasts that total gas exports will increase
will continue to creep up, while the utilization rate will slip
19.7%, following a 17.6% climb in 2015.
slightly due to higher operable capacity. Crude runs are exUS working gas in storage throughout 2015 averaged
pected to average 16.2 million b/d. Total inputs will move
2.78 tcf, 23% higher than the 2014 average, with South
up 0.3% to 16.48 million b/d, and total operable capacity is
Central region contributing the most. During the second
forecast to reach 18.15 million b/d this year.
half of the year, the amount of gas in storage has stayed
Near-term depressed crude prices combined with still-posiabove the recent 5-year average. On Nov. 20, natural gas
tive gasoline fundamentals will extend refining prosperity into
working inventories reached a record high of above 4 tcf,
2016. Downside risk for the group includes declining US tight
according to EIA data.
oil production and the eventual easing of the crude-price slump.
Natural gas prices are depressed. The average Henry
Hub spot price of gas last year sank to an estimated $2.75/
US gas market
MMbtu from $4.44/MMbtu a year earlier. And the average
Gas demand from US electric power generation in 2015
delivered commercial price of gas last year declined 10%
increased by 4.15 bcfd, or 19%, relative to 2014, boosted
from 2014 to average $8/Mcf.
32
160104OGJ_32 32
12/29/15 1:43 PM
GENERAL INTEREST
House, Senate pass

budget bill with crude
export ban repeal intact
Nick Snow
Washington Editor
The US Senate approved an omnibus budget bill including language which would repeal the 40-year-old
ban on exports of domestically produced crude by 65
to 33 votes. The Dec. 18 action came hours after the
House passed the same measure by 316 to 113 votes.
The bill now heads to the White House, where US
President Barack Obama is expected to sign it. It won
crucial support from several Democrats because it also
would revive expired tax credits for alternative energy
sources ranging from wind and solar to biodiesel.
Leading oil and gas industry associations immediately expressed their approval. This is a historic moment in our energy renaissance, American Petroleum
Institute Pres. Jack N. Gerard said. Lifting this ban
will help put downward pressure on gas prices, create
jobs, grow our economy and lower our trade deficit.
The US is producing more energy than ever before, with production at its highest levels in decades,
Independent Petroleum Association of America Pres.
Barry Russell observed. The ability to export surplus US crude oil is a much needed shot in the arm for
Americas producers and the economy, and will generate significant savings for American families and consumers.
The American consumer is the beneficiary of todays decision by Congress, said ConocoPhillips Chief
Executive Ryan M. Lance, who also chairs Producers
for American Crude Exports (PACE). Its particularly
important at a time when our industry is experiencing
a period of extreme volatility and uncertainty
More work remains

National Ocean Industries Association Pres. Randall
B. Luthi also applauded the congressional actions,
but added that more needs to be done. About 87% of
Americas federal offshore areas remain closed off to
oil and gas exploration and production. This is inexcusable and, quite frankly, backwards, he said.
Other crude export ban repeal advocates welcomed
the House and Senate votes. Business leaders representing every sector of the US economy applaud Congress for voting to end the outdated ban on American
oil exports, said American Electric Power Co. Chief
Executive Nicholas K. Akins, who chairs the Business
160104OGJ_33 33
Roundtables Energy and Environment Committee.

By voting to lift the ban on oil exports, Congress has
made it possible to unleash American energy around the
world, said Karen Harbert, president of the US Chamber
of Commerces Institute for 21st Century Energy.
By embracing a modernized policy that recognizes
our newfound energy abundance, we are opening the
door to increased jobs, economic growth, and the ability
to act as a stable and secure energy supplier for our key
allies, said Margo Thorning, senior policy advisor for the
American Council for Capital Formation.
EIA: US crude oil supplies

jump by 4.8 million bbl
US commercial crude oil inventories, excluding those in
the Strategic Petroleum Reserve, increased 4.8 million bbl
for the week ended Dec. 11 from the previous week, the
Energy Information Administration estimated.
At 490.7 million bbl, crude oil inventories remain near
levels not seen for this time of year in at least the last 80
years, the Petroleum Status Report said. The boost in oil
supplies was more than many analysts had expected.
Analysts polled by the Wall Street Journal in advance
of the reports release had anticipated crude oil inventories
would fall 1.4 million bbl. Separately, the American Petroleum Institute said its own estimate for the week ended
Dec. 11 showed an increase of 2.3 million bbl.
Light, sweet crude prices on the New York market traded
lower Dec. 16 immediately after EIAs report was released.
Traders also awaited news from the Federal Reserve, which
was expected to announce during the afternoon of Dec.
16 that it will raise interest rates for the first time in years.
Gasoline inventories climb

EIA said total motor gasoline inventories increased 1.7
million bbl last week, and the agency described that level
as being in the upper half of the upper half of the average range. Both finished gasoline inventories and blending
components inventories increased.
Distillate fuel inventories increased 2.6 million bbl last
week, which EIA said was in the upper half of the average
range for this time of year. Propane-propylene inventories
fell 1.7 million bbl last week but remained well above the
upper limit of the average range.
US refinery inputs averaged over 16.6 million b/d for the
week ended Dec. 11, which was 41,000 b/d less than the previous weeks average. Refineries operated at 91.9% of capacity.
Gasoline production increased, averaging 10 million b/d
for the week ended Dec. 11 while distillate fuel production
33
12/29/15 1:43 PM
GENERAL INTEREST
decreased, averaging 5.1 million b/d.
US crude oil imports averaged more than 8.3 million
b/d, up 291,000 b/d from the previous week.
Over the last 4 weeks, crude oil imports averaged 7.9 million
b/d, which was 6.3% above the same 4-week period last year.
Total motor gasoline imports, including finished gasoline and gasoline blending components, averaged 660,000
b/d for the week ended Dec. 11 while distillate fuel imports
averaged 84,000 b/d, EIA said.
OPEC world oil outlook

sees $95/bbl oil in 2040
Paula Dittrick
Special Projects Editor
The Organization of Petroleum Exporting Countries said the

group was unlikely to reduce its production levels next year,
but it does expect to cut production in future years. Regarding non-OPEC supply, the group expects US and Canadian
liquids production to reach 19.8 million b/d in 2020.
The 19.8 million-b/d forecast calls for an increase of 2.5
million b/d compared with 2014 US-Canada production levels. OPEC forecast US-Canada tight oil production at 5.2 million b/d in 2020 compared with 2015 levels of 4.4 million b/d.
In the annual World Oil Outlook released Dec. 22, OPEC
forecast the price for its basket of crudes will reach $70/bbl in
2020 and $95/bbl in 2040.
OPEC said it likely will cut its own production to 30.6 million b/d in 2019 compared with November production of 31.7
million b/d, which the group called its highest production
level in 3 years.
The supply and demand balance in 2015 has been one of
oversupply with stock levels rising to well above the 5-year
average, the outlook said. This past year has been a test for
all producers and investors who have had to face up to the
realities of a shifting global oil industry.
On the demand side, OPEC sees world oil demand rising
to 97.4 million b/d by 2020, marking an increase of 500,000
b/d from the previous outlook demand forecast. By 2040, the
latest outlook forecasts oil demand at 110 million b/d.
From the supply perspective, in last years WOO,
non-OPEC liquids were expected to rise to 61.2 million
b/d by 2020, whereas this year, the number has dropped
by 1 million b/d to 60.2 million b/d. All this means that
by 2020, the requirement for OPEC crude is anticipated
to be at 30.7 million b/d, an increase of 1.7 million b/d
from last year, WOO said.
Oil-related investment requirements are estimated to
be $10 trillion from 2015-40, WOO added.
OPEC member countries maintain their readiness to invest in the development of new upstream capacity, in the
maintenance of existing fields, and in the building and expansion of the necessary infrastructure, WOO said.
Business groups legally challenge EPAs ground-level ozone limits

Nick Snow
Washington Editor
The US Chamber of Commerce and National Association of

Manufacturers said they will legally challenge the US Environmental Protection Agencys ground-level ozone requirements. The groups separately said they have petitioned the
US Court of Appeals for the District of Columbia for a review.
Their moves came more than 2 months after EPA said
it would reduce allowable ground-level ozone limits under National Ambient Air Quality Standards to 70 ppb
from the 75 ppb level it set in 2008 (OGJ Online, Oct. 1,
2015). Oil and gas trade associations, along with other
business groups, immediately said it went too far. Environmental and some public health groups said it did not
go far enough.
EPA set an unattainable mandate with this new ozone
34
160104OGJ_34 34
standard that will slow economic growth opportunities,

said William Kovacs, US Chambers senior vice-president
for environment, technology, and regulatory affairs.
This new standard could halt progress in communities across the country as businesses are forced to slow expansion plans and outside development looks to other regions, he warned. EPA has created a web of regulations
that makes it almost impossible for businesses to succeed
in this already tough economic climate.
Karen A. Harbert, president of the US Chambers Institute for 21st Century Energy, said, Through no fault
of their own, many communities have yet to meet EPAs
2008 ozone standard, making it almost impossible for
them to realistically meet the new standard unless they
make painful decisions that the public will likely not
accept.
NAM filed its petition through its Manufacturers Center
for Legal Action. EPAs ozone regulation, which could be
one of the most expensive in history, is unworkable and
overly burdensome for manufacturers and Americas job
12/29/15 1:43 PM
GENERAL INTEREST
creators, said Linda Kelly, NAM senior vice-president and
general counsel.
Further, our air quality is improving, and ozone levels
are down more than 30% since 1980, yet the [Obama] administration insists on moving forward with tightening an
already stringent standard, she said.
Tightening ozone standards could increase costs to
the American public, reduce the nations ability to compete internationally, and threaten US jobs, the American
Petroleum Institute said on a policy issues page at its
web site.
It cited a recent NERA Economic Consulting studys
findings that a stricter ozone regulation could reduce US
gross domestic product by $270 billion/year and $3.4
trillion from 2017 to 2040, and result in 2.9 million/
year fewer jobs or job equivalents on average through
2040.
IHS examines oil sands

costs, competitiveness
Paula Dittrick
Special Projects Editor
Canadian oil sands costs had moderated following years

of cost escalations, but an IHS report said realities associated with the 2014-15 oil price collapse could see shift in
oil sands relative competitiveness with other key sources
of supply.
The new IHS oil sands dialogue report, entitled Oil
Sands Costs and Competitiveness, explored past, present, and future trends and what a changing business environment could mean for the future competitiveness of oil
sands investment.
Prior to the oil price collapse, oil sands were competitive with other key sources of supply in the medium to high
cost range, depending on the type of project, said Kevin
Birn, senior director of IHS Energy. Lower prices are now
lowering costs globallyincluding in the oil sands. In this
paradigm, oil sands competitiveness position may shift
for better or worse.
Oil sands production more than tripledfrom 600,000
b/d to more than 2.3 million b/din 2015 from 2000,
making oil sands a pillar of global supply growth.
IHS expects oil sands output will continue to rise to
3 million b/d by 2020, largely through the completion of
projects that were already under construction.
As output grew, the cost to construct projects rose more
than 70% during 2000-14 because many projects were truly
160104OGJ_35 35
first-of-a-kind, with limited access to labor and services in a

region that lacked sufficient infrastructure, the report said.
Labor costs contributed to historical oil sands cost escalation given that labor is the largest component of oil sands
projects and the most susceptible to regional pressures. But
overall cost pressures had moderated in recent years, in
part from weaker steel prices.
Compared with 2014, operating costs are down 20%
and capital costs are down 6%. IHS estimated breakeven
prices for oil sands projects fell by about $5/bbl on average in 2014 and could be down by another $5/bbl by
Dec. 31.
With sufficient infrastructure in place and labor and
service markets expanded after more than a decade of
strong investment and production growth, future production growth will be driven by the expansions, the report
said.
IHS expects that more than 70% of oil sands production
growth during 2015-20 will come from expansions.
Now that significant infrastructure has been built over
the past 15 years, the oil sands industry is shifting to a new
period where success will be measured by efficient operation of existing facilities, Birn said. Growth will be driven
by incremental expansions. The current lower oil price environment is abetting this transition as new projects are
delayed and producers increasingly focus on best practices
and operational excellence.
Lower oil priceswhich have fallen to half or less of
2014 levelscould shift the relative competitive position
of oil sands, the report said. This could mean that, among
companies that invest globally, projects in other regions
could be prioritized over Canadian oil sands.
However, several factorsin addition to the shift toward the expansion of existing projects over new ones
support ongoing investment in the Canadian oil sands, the
report said.
Those factors include anticipated lower labor costs in the
future. Companies are redesigning projects to lower costs
by reducing scale of future projects plus lowering maintenance and operating costs through greater standardization
of project designs and replacement parts.
Service sector capacity has expanded with oil sands
growth, and modular fabrication capacity has expanded
greatly. Modular design allows projects to be constructed
in pieces and then later assembled onsite.
Oil sands competitive position will not only be shaped
by the efforts of the oil sands industry, but also regional and
global conditionsincluding changes to other sources of
supply in the world, Birn concluded. The current level of
prices will further drive innovation for cost efficiency. The
challenge facing the oil sands is how much producers can
lower their cost structures and, in the future, the degree to
which the pace of cost escalation can be successfully managed.
35
12/29/15 1:43 PM
GENERAL INTEREST
US judge rejects bid for

new review of Enbridge
cross-border lines
Nick Snow
Washington Editor
A federal district judge ruled that two Enbridge Energy LP

crude oil pipelines from Canada, which the partnership
plans to either expand or replace, do not require a fresh US
Department of State review because their original authorization was a presidential determination that is not subject
to review.
The White Earth Nation, an Ojibwe tribe in Minnesota,
sued to make DOS conduct reviews under the National Environmental Policy Act and National Historic Preservation
Act for the projects involving Enbridges two 1,000-mile
pipelines from Alberta to Superior, Wis. Four environmental organizations intervened in the proceeding.
Enbridges plans call for replacing Line 3, for which it
obtained a presidential permit in January 1968, and increasing its average capacity to 760,000 b/d. It also plans
to expand the capacity of Line 67, which received a presidential permit in 2009, from 400,000 b/d to 570,000 b/d
initially and 800,000 b/d ultimately.
DOS notified Enbridge on July 24 that the projects did
not require its authorization. Plaintiffs argued that the action violated NEPA, NHPA, and the federal Administrative
Procedures Act.
US District Judge for Minnesota Michael J. Davis rejected the argument because DOSs determinations were presidential in nature and not subject to judicial review.
Reprints of any OGJ article may

be purchased from Rhonda Brown,
Foster Printing Co.,
4295 Ohio St.,
Michigan City, Ind. 46360
1-866-879-9144 ext. 194
rhondab@fosterprinting.com
www.marketingreprints.com
36
160104OGJ_36 36
Here, Enbridge reached out to [DOS] to obtain confirmation that the replaced project for the border segment
was consistent with the 1991 permit covering Line 3, and
that the bypass project was outside the scope of the Line
67 permit as the interconnections were outside the border
segment, he wrote.
He also rejected the plaintiffs claims of an APA violation
because they were not based on an agency action.
Todays decision leaves in place the [DOS] approval
of Enbridges use of Line 3 and Line 67 consistent with
its existing permits, an Enbridge spokeswoman said on
Dec. 9. The interconnections are simply leveraging the
flexibility we have under our existing permits to meet our
obligations to shippers, and to continue the vital service
of transporting reliable, secure supplies of North American crude oil.
Lawyers for the environmental groups said they were
disappointed with the ruling, and were considering a range
of options including a possible appeal.
Venezuela should disband,

replace PDVSA, former
official recommends
Nick Snow
Washington Editor
While Venezuelas new legislative majority faces many immediate concerns with the Nicolas Maduro regime following a Dec. 6 election, it also should begin to disband and
replace Petroleos de Venezuela SA (PDVSA), a former board
member of the national oil company said.
I believe PDVSA is impossible to upgrade, said Gustavo Coronel, a petroleum geologist and consultant on energy geopolitics and public policy who was a member of the
Venezuelan Congress before then-President Hugo Chavez
dissolved it. It should be replaced by another model of oil
industry management in Venezuela.
The process would take at least 2 years, he said during a
Dec. 17 Hudson Institute forum on the elections in which
Maduros political opposition won a super-majority and the
ability to challenge the presidents rule.
It also will be politically difficult, because PDVSAs national status is almost a matter of religion
in Venezuela, like [Petroleos Mexicanos] in Mexico,
which began reforms and quickly ran into opposition, Coronel said.
But it will be necessary since Chavez diverted PDVSAs
oil export revenue into ambitious social programs for the
12/29/15 1:43 PM
GENERAL INTEREST
poor, and instituted heavily discounted or free sales to
Cuba and neighboring Bolivarian socialist countries, he
said.
The resulting lack of operational reinvestment and
maintenance, coupled with a migration of geologists, engineers, and other specialists to neighboring nations oil
firms, has left PDVSA in ruins, Coronel said. Other speakers said it has become the countrys main money launderer
as drug cartels and criminals have moved in to the national
government.
Open doors for investment

Venezuela still has considerable lighter oil resources that
might be developed in addition to its well-known heavy oil
reserves, observed Evan Ellis, a professor of Latin American studies at the US Army War College Strategic Studies
Institute. It will need to open the doors for investment not
only from ExxonMobil and similar large publicly traded
multinational oil companies, but also from the Russians
and, particularly, the Chinese, who are there already, he
said.
Oil exports bring in 96% of Venezuelas foreign revenue,
but they have fallen dramatically as production has declined and prices have plunged to about $36/bbl, Ellis said.
PDVSA has made no new refining upgrade investments,
and has to import lighter crude to blend with the heavy
Orinoco grade, he said.
It has a large array of problems reflecting a decaying infrastructure, Ellis said. PDVSA itself needs an immediate
management change to begin restoring its core functions.
It also might want to consider short-term auctions to bring
in some immediate cash.
Speakers agreed that the oppositions winning a supermajority in the national legislature in the recent elections
was significant because it could start to limit Maduro and
his regimes actions. They also said that the government
has begun to fight back, instituting communal councils nationwide which amount to a shadow legislature and could
create confusion.
The country also has become a haven of terrorism for
groups as far away as Hezbollah because it can issue passports which otherwise would have to be forged, noted a
third speaker, Douglas Farah, a national security analyst
and consultant who is an International Assessment and
Strategy Center senior fellow.
The Colombian drug cartel FARC also has arrived, but
is losing interest in Venezuela, he said. Even for criminal
enterprises, theres very little to be gained from supporting
a country thats going down the toilet, Farah said. But the
opposition will need to uproot the clandestine structures
these groups have built. If it doesnt, they will never go
away.
160104OGJ_37 37
Local firms dominate Mexicos

onshore third-phase Round 1
Matt Zborowski
Staff Writer
Twenty-five entities comprising individual companies or

consortia were awarded contracts on Dec. 15 for Mexicos
Round 1 Phase 3, marking the entry of 22 firms into the
countrys oil and gas sector, according to Mexicos National
Hydrocarbons Commission (CNH).
Forty entities, of which 26 were individual companies
and 14 consortia, qualified for the auction covering onshore conventional blocks in the states of Chiapas, Nuevo
Leon, Tabasco, Tamaulipas, and Veracruz.
Of the 22 firms entering the country, 9 operate independently and the rest are grouped into 5 consortia. Entities based in Mexico were awarded 18 of the contracts,
and no major international oil and gas firms participated.
Each block has at least two bidders to ensure an entity is
in place should another choose to not move forward with
a contract.
The third phase involved smaller fields scattered around
the country, contrasting with the second phase in which
CNH awarded three of five shallow-water blocks (OGJ Online, Sept. 30, 2015).
Of the 25 contracts, 17 are oil fields and 8 are gas fields
in the Burgos basin. The Mexican government projects the
tender will result in peak production of 77,000 b/d of oil
and investment of $1.1 billion.
Appetite for these blocks is at a high with many companies offering bids with surprising royalties, said Alfredo
Alvarez, Ernst & Youngs Mexico oil and gas leader. Most
of the over-royalties offeredon top of regular royaltyon
gross revenue landed between 30% and 60%, far higher
than minimums set from 0% to 10%.
One participant even offered 85% plus a 7.5% royalty
on gross. High royalties are good, but some cases in L3
they seem too high to sustain, he said. Some bidders may
not sign the contract and second places will step up. He
also noted the great diversity among the participating
companies.
Auctions big winners

Alvarez said the big winners are Compania Petrolera Perseus SA de CV, Servicios de Extraccion Petrolera Lifting de
Mexico SA de CV, Canamex Dutch BV, Diavaz Offshore,
SAPI de CV, Roma Energy Holdings LLC, and Grupo Diarqco SA de CV, all from Mexico; and Renaissance Oil Corp
SA de CV and Strata Campos Maduros SAPI de CV, both
from Canada.
Of the Mexican firms mentioned by Alvarez, Perseus
was awarded Tajon A and B fields in Veracruz and Fortu-
37
12/29/15 1:43 PM
GENERAL INTEREST
na Nacional field in Tabasco; Lifting was awarded Cuichapa-Poniente in Veracruz in close proximity to Canamexs
awarded Moloacan; a former service provider for Pemex,
Diavaz was awarded Barcodon in Tamaulipas and Catedral
in Chiapas; Roma was awarded Paraiso in Tabasco; and Diarqco was awarded Mayacaste and Calicanto in Tabasco.
Of the Canadian firms mentioned by Alvarez, Renaissance was awarded Mundo Nuevo A and B, Topen, and
Malva, all in Chiapas; and Strata was awarded Pena Blanca
and Carretas in Nuevo Leon, and Ricos in Tamaulipas.
A Geo Estratos SA de CV consortium from Mexico led
all with four contracts awarded: Ponton, Tecolutla, La Laja,
and Paso De Oro A, B, and C, all in Veracruz.
Next up is the highly anticipated fourth phase, comprising 10 deepwater areas in the Gulf of Mexico. Six of those
exploration blocks reside in the Salina basin and four in
the Perdido fold. CNH says it will announce those awards
during third-quarter 2016 at latest.
Meridian Energy Group plans

refinery for North Dakota
Robert Brelsford
Downstream Technology Editor
Meridian Energy Group Inc., Irvine, Calif., has let a contract to Vepica CA, Caracas, and BASIC Equipment, Houston, to provide preliminary studies for its proposed 55,000b/sd Davis refinery to be built on 620 acres near Belfield,
ND, in the heart of southwestern North Dakotas Bakken
shale region.
As part of the contract, Vepica and BASIC Equipment
will perform a series of engineering studies to define the
design basis, costs, and schedule for the planned high-conversion refinery, which would serve Bakken crude oil producers and local liquid fuels and chemicals markets, the
service companies said.
Upon completion of the studies, the two service providers additionally will work with Meridian to complete
permitting and approval requirements as well as finalize
full-project financing for the refinery, including support
services during the projects detailed design, procurement,
construction, and startup phases.
A value of the contract was not disclosed.
While Vepica and BASIC Equipment did not reveal a
specific timeframe for execution of preliminary studies for
the grassroots refinery, the companies said Meridian recently has undertaken a series of scoping and optimization studies based on crude assays provided by its likely
tolling partners and expects to begin detailed design and
38
160104OGJ_38 38
engineering on the project during early first-quarter 2016.

Project permit applications also are due to be filed with
government officials in early 2016, according to Vepica and
BASIC Equipment.
Meridian, which expects to receive expedited permitting for the proposed plant, currently is finalizing plans
to break ground on the project during first-half 2016, the
company said.
Pending permit and regulatory approvals, the refinery
would enter operation sometime in 2018, according to Meridian.
If approved, the Davis refinery would become North Dakotas third, as well as only the second greenfield construction in the US since 1976 (OGJ Online, May 4, 2015).
With proximity to nearby crude feedstock and ample
supplies of low-cost natural gas supplies to fuel processing activities, the Davis plant also would have direct access
to major transportation infrastructure, including two main
highways, oil and gas pipelines, and the Burlington Northern Santa Fe (BNSF) rail line, which runs directly through
the refinery site, according to Meridian.
As part of the proposed construction plan, Meridian
said it also intends to build a crude oil feedstock offloading
and refined fuels uploading terminal to take advantage of
BNSF rail line access.
A first phase of the refinerys construction would feature
at least a 20,000-b/sd processing plant as well as associated
terminal installations, according to the companys web site.
Meridians move to advance the Davis refinery follows a
July announcement from Quantum Energy Inc., Tempe, Ariz.,
and joint-venture partner Native Son Holdings LLC, The
Woodlands, Tex., that the pair will build a new 40,000-b/d
refinery in Berthold, ND (OGJ Online, July 21, 2015).
While the partnership already has filed a minor-source
air quality construction permit application for the proposed Berthold plant with the North Dakota Health Departments division of air quality (OGJ Online, July 30,
2015), a specific timeline construction of the planned $645
million refinery has yet to be released.
Legislative vote due on new plan

for St. Croix refining complex
Robert Brelsford
Senators of the 31st Legislature of the US Virgin Islands

will vote by the end of December on a proposed operating
agreement between the government and Limetree Bay Terminals LLC (LBT), subsidiary of ArcLight Capital Partners
12/29/15 1:43 PM
GENERAL INTEREST
LLC, Boston, that could lead to the restart of terminal assets connected to Hovensa LLCs idled refinery at Limetree
Bay, on the island of St. Croix (OGJ Online, Jan. 18, 2012).
In addition to restarting Hovensas storage terminal operations, which shut down in February 2015 following a
December 2014 vote by the 30th Legislature of the USVI to
quash the companys proposed sale of the refinery to Atlantic Basin Refining Inc. (ABR) (OGJ Online, Nov. 14, 2014),
the agreement also provides for the possibility of resuming
crude processing at the shuttered 500,000-b/d refinery, according to documents and testimony posted to the legislatures website.
Called by USVI Gov. Kenneth Mapp to a special session that began on Dec. 17 following the Dec. 16 end of
regular session, legislators heard additional testimony from
officials representing local government agencies, ArcLight,
LBT, consultants, and area residents on Bill No. 31-0283,
which provides for adoption of the proposed operating
agreement.
The most recurrent hurdle facing the operating agreement during testimony, which lasted through the early
hours of Dec. 22, came down to issues of employment for
USVI residents, more than 2,000 of whom became jobless
following Hovenas 2012 closure of the refinery.
The weakness in this agreement and in the conversations weve had really is the jobsweve lost 2,000 jobs
and were talking about creating 200 jobs, said Sen. Nereida Rivera OReilly, who voted against ABRs 2014 proposal
to take over the Hovensa complex (OGJ Online, Oct. 29,
2014).
Outside of that [however], were looking at an agreement thats probably the best drafted, crafted legal document involving the government of the Virgin Islands in its
history, OReilly said, adding her intention to vote in support of adopting the agreement.
With a commitment from ArcLight that it would revise
language in the proposal to address concerns expressed
by government officials during testimony regarding future economic opportunities and jobs for USVI, the Senate
plans to vote on the final, updated agreement during a session to be held in St.
Thomas before Dec. 31, according to Sen. Kurt A. Vialet.
A specific date of the planned session, however, was not
disclosed.
Operating agreement
The latest operating agreement follows Hovensas deal
to sell the St. Croix terminal assets to LBT as part of the
Chapter 11 Section 363 process under Hovensas voluntary
Chapter 11 bankruptcy proceedings in the US Bankruptcy
160104OGJ_39 39
Court for the District of the Virgin Islands, which Hovensa

filed due to insufficient liquidity to complete any asset sales
on its own (OGJ Online, Sept. 21, 2015).
Designed to ensure ongoing operations and economic
activity at the St. Croix complex, the agreement outlines
LBTs plan to refurbish, restart, operate, and expand the oil
storage terminal, as well as to explore options for resuming
crude processing at the refinery.
The agreement, which was signed by USVIs government and ArcLight on Nov. 30 following the bankruptcy
courts approval of Hovensas deal with ArcLight, provides
specifically for the following:
$220 million in an upfront payment to the USVI government and up to $15 million in other payments as part
of a total deal of $360 million.
A commitment to operate the oil storage and terminal
for at least 25 years and up to 40 years.
A minimum of 80 full-time workers, at least 80% of
whom must be long-term USVI residents. Arclight also will
invest at least $125 million over the first 2 years of the
agreement to create additional job opportunities.
Ongoing revenue to be paid to the USVI government,
including an annual payment of 9% of revenue, increasing
to 10% if nancial targets are met.
A commission of 10% to the government if the operation is sold, with a guaranteed commission of $25.5 million.
A commitment to restart the renery, or at the governments option, dismantle any part of the renery that
is not being used after undertaking an 18-month period
to evaluate potential profitability associated with resuming
processing operations at the site.
Donating 330 acres of land, 130 units of housing, a
vocational school, and a community center to the government.
An annual payment of $150,000 as rent for submerged lands.
Along with other benefits, including investments in environmental remediation, the proposed operating agreement represents a total value of more than $800 million
for USVI, Gov. Mapp said in a letter presenting the deal to
legislators.
ArcLight already has entered into a binding 10-year contract with China Petroleum and Chemical Corp. (Sinopec)
under which the Chinese state-run firm would utilize 10
million bbl of crude oil storage at the St. Croix complex to
store, blend, and trade supplies from Latin America, North
America, Europe, and Africa, according to testimony presented during the recent special session.
Freepoint Commodities LLC, Stamford, Conn., also has
entered into binding commitments to lease 3 million bbl of
storage capacity at St. Croix, Sheldon Pang, vice chairman
of Freepoint Commodities, said in prepared testimony to
the Senate.
39
12/29/15 1:43 PM
GENERAL INTEREST
Study calls for stronger rules to

prepare for potential dilbit spills
Nick Snow
Washington Editor
The US Department of Transportation should modify its

regulations and planning to strengthen preparedness for
accidental spills of diluted bitumen, or dilbit, from pipelines, a new report from the National Academies of Science,
Engineering & Medicine (NASEM) recommended.
Its findings came on Dec. 8 as the US Department of
State continued to consider applications from other pipelines to transport dilbit from Alberta into the US following
President Barack Obamas denial of a cross-border permit
to TransCanada Corp. for its proposed Keystone XL project
(OGJ Online, Nov. 6, 2015).
DOT and Congress requested the study in 2013 as a follow-up to one that found that dilbit is no more likely than
other heavy oils to be accidentally released from a pipeline
(OGJ Online, June 25, 2013).
They asked what were then known as the National
Academies to investigate whether, if a spill occurs, dilbits
properties sufficiently differ from other oils characteristics
to warrant changes to preparedness or cleanup regulations
and to spill response plans.
Such changes are warranted, the committee concluded.
It said that while dilbit behaves similarly to other crude
oils immediately following a spill, exposure to the environment induces rapid physical and chemical changes known
as weathering, which are unique to dilbit.
Becomes heavy residue

Within days, dilbit starts to turn into a heavy, viscous,
sediment-laden residue that cannot be recovered easily using traditional response techniques, the report said. The
residue strongly tends to adhere to surfaces, and poses particular challenges if it is spilled into a body of water because the residues can submerge or sink to the bottom, it
indicated.
The report said these changes after weathering call for
greater concern compared with commonly transported
crude oil and special response strategies and tactics. Regulations and practices at the US Pipeline & Hazardous Materials Safety Administration (PHMSA) do not currently take
dilbits unique properties into account, nor do they encourage effective planning for dilbit spills, it said as it called for
a more comprehensive and focused approach.
It specifically called on PHMSA to modify its Part 194
regulations so that spill response plans can effectively anticipate and ensure more effective cleanup and mitigation
measures when spills occur by:
40
160104OGJ_40 40
Requiring response plans to describe activities and

resources to mitigate impacts of dilbit spills, including capabilities to detect, contain, and recover submerged and
sunken oil.
Consulting with the US Environmental Protection
Agency and the US Coast Guard (USCG) to obtain their
input on whether response plans are adequate for dilbit
spills.
Requiring response plans to describe procedures by
which, if a spill occurs, pipeline operators will inform a
designated federal or state official of the source and industry-standard name of any spilled dilbit within 6 hr. If requested, they also should provide a sample of the oil and
information on its specific composition within 24 hr.
PHMSA, together with EPA, USCG, and state and local
governments, should take advantage of the Area Response
Planning Process to increase coordination and share lessons learned to strengthen preparedness for dilbit spills,
the report said.
EPA, USCG, and the oil and pipeline industry should
support development of effective, environmentally friendly
techniques to detect, contain, and recover submerged and
sunken oils in aquatic environments, it urged.
It recommended that USCG revise its oil-grouping classification system to more accurately reflect dilbit properties
and recognize it as a potential nonfloating oil, and called
on the National Oceanic and Atmospheric Administration
to lead an effort to recover all relevant data which could facilitate advanced protective modeling for dilbit spills from
pipelines.
Although many differences between dilbit and other
crudes are well established, some remaining areas of uncertainty hamper effective spill responses, the report said.
Further research is needed, including the ecological and
human health risks weathered dilbit may pose, techniques
to intercept and recover submerged oil in moving water,
and alternatives to dredging to recover sunken oil.
The recommendations set forth in our report represent a practical and pragmatic approach to mitigating the
unique concerns associated with spills of [dilbit], said Diana M. McKnight, a professor of civil, environmental, and
architectural engineering at the University of Colorado at
Boulder who chaired the committee.
Pemex allocates $23 billion to

downstream improvements
Robert Brelsford
Mexicos Petroleos Mexicanos (Pemex) said it will spend

$23 billion on projects designed to modernize and reduce
12/29/15 1:43 PM
GENERAL INTEREST
greenhouse gas emissions from the countrys six refineries.
Announced by Mexican President Enrique Pena Nieto during a Dec. 8 event held at the 315,000-b/d Miguel
Hidalgo refinery in Tula, Hidalgo state, the investment
program comes as a result of partnerships and alliances
formed by Pemex with private and foreign investors following Mexicos 2014 sweeping energy reform (OGJ Online,
Aug. 21, 2014; Aug. 18, 2014), the state-run company confirmed in a release.
To boost production of ultralow-sulfur gasoline (ULSG),
Pemex will invest a total of $3.1 billion in projects at all
six of its refineries, which upon completion, will result in
a final ULSG output of more than 210,000 b/d and reduce
GHG emissions by 90%, the company said.
At the Miguel Hidalgo refinery, the ULSG investment
consists of a $250 million project that includes installation of a 30,000-b/d desulfurization plant, an amine regenerator, a cooling tower, and ventilation systems for highburning hydrocarbons and acid gas, as well as number of
associated installations.
The company said it also will spend another $3.9 billion
to build 19 plants and modernize 17 existing units at all
six refineries as part of its previously announced plan to
reduce the sulfur content of Mexicos diesel production to
help reduce the countrys need for imports.
Last year, Pemex planned an investment of only $2.8
billion into increasing ultralow-sulfur diesel (ULSD) production at just five of its refineries (OGJ Online, Sept. 15,
2014).
The ULSD project at the Tula refinery, which is scheduled to begin in January 2016, will cost an estimated $770
million, the company said.
In addition to its ULSG and ULSD investments, Pemex
has dedicated another $13 billion to modernization and
expansion projects at three of its refineries, including the
Miguel Hidalgo refinery at Tula, the Antonio M. Amor refinery in Salamanca, Guanajuato, and the Antonio Doval
Jaime refinery in Salina Cruz, Oaxaca.
At a revised total cost of $5 billion, the Tula expansion
and reconfiguration will increase the refinerys crude oil
processing capacity by 25,000 b/d to 340,000 b/d (OGJ
Online, Nov. 18, 2015), Pemex said.
The remaining $3 billion in planned investments will
cover electricity cogeneration projects already under way
at the companys Tula and Salina Cruz refineries, the
275,000-b/d Hector R. Lara Sosa refining complex in Cadereyta, Nueva Leon, and the Cactus gas processing complex in Chiapas state.
Pemex said that, once completed, the $23 billion in
downstream projects would enable a 7 million-tonne/year
reduction in the Mexicos carbon dioxide emissions.
160104OGJ_41 41
Deloitte study affirms

DOE technology role
Incubation of oil and gas technology by the US Department
of Energy has had a measurable impact on recent innovation by the industry, according to an analysis of patent data
by the Deloitte Center for Energy Solutions.
The firm analyzed a nonpublic database of 8,003 patents from DOE in relation to its own database of 2.1 million patents and more than 75 million patent citations.
The study focused on industry patents from the Deloitte
databased granted during 2006-14.
This timeframe was selected on the basis that it would
capture patents that had an impact on the recent past without digressing into academic pursuits, Deloitte said.
Of the patents from DOE, which the firm said should
include the bulk of DOE investments in the oil and gas
space, 7,230 could be matched to the Deloitte database.
The key findings:

8.6% of all patents from major oil and gas firms cited
at least one DOE-funded patent.
55.8% of all DOE patents produced prior to 2006
were cited by at least one oil and gas firm.
DOE patents have a median shelf life of 16.5 years.
In 2012-14, there were six areas other than oil and gas
that cited oil and gas patents at least 100 times.
62% of DOE oil and gas innovations were created by
academic and nonprofit entities, while 5% were created by
private firms focused on oil and gas. The rest were created
by firms other than oil and gas.
Of patents filed by 42 oil and gas organizations in 200614, a category labeled wells led a list of technology areas
companies patented when citing DOE patents. The category attracted 506 citations.
The top DOE patent by citation from private oil and gas
companies is entitled Downhole data transmission system, published Dec. 30, 2003. It received 78 citations.
With 77 citations each were Annular wire harness for
use in drillpipe, May 21, 2001, and Real-time reservoir
fracturing process, Aug. 27, 2002.
The most recently published DOE patent on the top-20
list followed with 71 citations: Canister, sealing method
and composition for sealing a borehole, June 28, 2005.
DOE has had a measurable impact on the oil and gas
patent landscape, especially considering it contributes substantially to the United States energy [research and development] expenditures and often focuses its efforts in areas
that experience less patent activity, the study said.
41
12/29/15 1:43 PM
TECHNOLOGY
New study expands understanding

of Central-South Atlantic breakup
Yannis Bassias
Amphore Energy Inc.

Houston
Observed NNW-SSE lineaments represent old

tential in the past 20 years. The margin has two
faults reactivated during Cretaceous E-W drift that
active petroleum systems confirmed in the basins
helped create a favorable Tertiary-to-present strucof Guyana-Suriname and French Guiana (Fig. 1).
tural and depositional environment for southward,
These petroleum systems share at least one resshoreward hydrocarbon migration in the South
ervoir with Venezuela and West Africa, but the
American Central Equatorial Atlantic margin.
margins hydrocarbon migration mechanisms reEXPLORATION &
This margin covers the exclusive economic zones
main unclear. This article expands understanding
DEVELOPMENT
of Guyana, Suriname, and French Guiana, and exof the Central-South Atlantic breakups historitends across the eastern border of Venezuela and
cal effects on contemporary migration pathways.
the northern border of Brazil. Geological parallels
It also compares basement structural framework
between the Brazilian and West African margins have led to
with satellite derived vertical gravity gradient and identifies
optimism regarding the Atlantic margins hydrocarbon pothe distribution of seepages near shows and production sites
GUYANA-SURINAME, FRENCH GUIANA BASINS
FIG. 1
Atlanti c Ocean
20
m
Sho
Demerara
Rise
re l
ine
Gravity vertical-density gradient lineaments

Aborted Triassic-Early Jurassic rift
Dolerites, basalt dikes; Permian-Triassic
Tholeitic dikes, Triassic-Early Triassic
Faults
Discoveries
Hydrocarbon shows
Dry wells
Sea surface seepages
Tertiary channels
Source kitchens
Tambaredjo-Calcutta field
Liza-1
GMES-1
Sedimentary blanket
Crystalline basement
42
160104ogj_42 42
12/28/15 3:14 PM
to better understand onshore extrapolation of the migration process.
CENTRAL ATLANTIC OCEAN, EARLY RIFTING
FIG. 2
Demerara plateau
Recent activity
Faults lying NNW-SSE of Early Jurassic age were reactivated during the
Cretaceous E-W drift and created favorable Tertiary-to-present structural
and depositional trends of the same direction. These trends privileged southwards migration toward the shore.
Hydrocarbons then traveled along
Guyana
preferential paths to the surface.
Production (16,000 b/d) in this
large equatorial area comes from shallow heavy oil reservoirs onshore Su100 km
riname. More than 25 wells have also
been drilled offshore Suriname and
Florida peninsula
Guyana in an area exceeding 170,000
sq km.1 2 Several on the shelf and in
100 km
shallow water either had noncommercial shows or were positioned offstructure. The most successful well
was the Liza-1 discovery by ExxonMobil Corp. on Stabroek block 120 miles
off Guyana. The 17,835-ft exploration
well was drilled in 5,719 ft of water
and encountered 295 ft of oil-bearing
sandstone reservoirs (OGJ Online,
May 20, 2015).
Seven wells were drilled in a
27,000-sq-km area off the coast of
French Guiana but with generally disappointing results. One exception was
Zaedyus (GM-ES-1) drilled in 2,048 m
of water by Tullow Oil PLC in 2011.
The 5,711-m well encountered 72 m of
oil bearing turbidites at the eastern slope of the Demerara
Plateau (OGJ Online, Sep. 9, 2011).
Deep lineaments, early rifting

A network of NNW-SSE lineaments appears along the Atlantic margin coast on offshore vertical gravity data (Fig. 2).
These lineaments denote relics of deep faulting associated
with the early rifting of the Central Atlantic Ocean in Early
Jurassic (190-170 million years).
These satellite-derived vertical gravity gradients represent variations in the subsurface and beneath the ocean.
Vertical gravity gradients are a high-pass filtered version of
gravity that reveals seamounts and plate boundaries in areas
where bathymetry data are not available.3 Along the Suriname coast, studies have observed the graben-rift system in
the ENE-WSW direction, perpendicular to the NNW-SSE
lineaments, with around 60 strike to the coast (in yellow
160104ogj_43 43
Suriname
French Guiana
on Fig. 2).2 This feature is related to the early rifting event

several researchers have investigated.4-10
The same lineaments are on the southern edge of Floridas
peninsula (F on Fig. 2) and seem to be concomitant with the
direction of the initial break up between North America and
Africa at 190 million years (Fig. 3). This occurred before a
change in plate motion from NNW-SSE to NW-SE at 170
million years.10
The reconstruction in Fig. 3 suggests North America is
fixed. The blue and red zones represent the coastal magnetic
anomalies of North Americas east coast and Africas west
coast. The dashed blue line represents the Blake Spur magnetic anomaly. G, D, and F represent respectively the Guinea
plateau, Demerara plateau, and Florida peninsula.
43
12/28/15 3:14 PM
TECHNOLOGY
CONTINENTAL SHIFT
FIG. 3
North America
North America
AFRICA
AFRICA
F
D
190 million years

170 million years
Cretaceous stress release

During Late Jurassic-Early Cretaceous (170-120 million
years) the rifting progressed to the south and a transtensional regime released the stress along the coast of GuyanaSuriname-Guiana, allowing Africa and South America to
drift apart along transform fault systems. During this EW
stretching part of the NNW-SSE motion, faults were reactivated, leading to extensional structures and creating space
for the emplacement of tholeitic dikes (Fig.1).
These tholeitic dikes were mapped onshore French Guiana and Suriname and encountered on several wells described as basement.11-14 From Late Cretaceous the equatorial margin remained thermally and structurally undisturbed,
which developed Eocene and younger sand deposits in both
shelf and deepwater environments and built future reservoirs.
Source rock, seepage concentration

Cretaceous sediments from onshore wells in Suriname, east
of the Tambaredjo block, have biomarkers indicating a Jurassic or Lower Cretaceous-age petroleum system with a maturity window starting around 90 million years.2 The rock
types indicate a different source rock than that of the Tambaredjo and Calcutta producing fields, which produce from
Cenomanian-Turonian. This Type II marine source rock
(Canje formation, similar to the La Luna shale) shows matu-
44
160104ogj_44 44
rity initiating much later, at 45-40 million years, and migration is mainly SSE on the tracks of the mapped Cretaceous
and Early Tertiary channels.2
Landsat and Spot optical and radar images detected both
concentrations of oil-slick areas of light oil and high seep
densities in the eastern portion of Surinames offshore and
the western portions of French Guianas.2 Seepage density
distribution is consistent with the following:
Direction of the Late Cretaceous and Early Tertiary
channels.
Range of the Aptian top surface that represents the major carrier bed.
Deep NNW-SSE faulting direction detected on gravity
maps.
Distribution of shows in wells.
These features indicate a preferential SSE direction of
migration towards the coast of the larger Guyana equatorial margin. West of the Demerara plateau, an evident correlation exists between the NNW-SSE deep lineaments, oil
shows in the wells, seepage locations at the water surface,
and most likely the onshore production of heavy oil. East
of the Demerara Plateau we note that the wells are located
close to the observed lineaments (Fig. 1). The Late Tertiary
channel system of the margin has a southward direction and
the seepage density is concentrated close to the neck (updip)
rather than the mouth (downdip) of these channels.
12/28/15 3:14 PM
TECHNOLOGY
Cretaceous, Eocene reservoirs

The observed NNW-SSE lineaments are Early Jurassic faults
that were reactivated during Cretaceous E-W drift and
helped create a favorable Tertiary-to-present structural and
depositional environment for southward, shoreward hydrocarbon migration. This hypothesis is supported by the fact
that the margins Late Tertiary channel system has a N-S direction and the seepage density is concentrated close to the
neck updip rather than the mouth of the channels.
Further understanding of this mechanism and a large
surface geochemistry sampling will identify advantageous
locations along the entire equatorial margin where the preservation of offshore Cretaceous and Eocene reservoirs occurs.
rie, A., Guerrot, C., Rossi, P., Truffert, C., Theveniaut, H., Phillips, D., and De Avelar, V.G., Transamazonian crustal growth
and reworking as revealed by the 1:500,000-scale geological
map of French Guiana, 2nd edition, Gologie de la France,
No. 2-3-4, 2003.
12. Geological Map of the French Guiana at 1:500,000
scale, BRGM (2003), edition BRGM.
13. Geological Map of Suriname at 1:500 000 scale
(1977): Geologisch Minsbouwkundige Dienst, Amsterdam.
14. Veldkamp, J., Gravity Surveys in Suriname and the
Netherlands Leeward islands area, 1958-1965, Netherlands
Geodetic Commission, Publications on Geodesy, Vol. 3, No. 3,
1969, pp. 1-77.
References
1. International Competitive Bid Round 2013, The
Demerara PlateauAn Exploration Opportunity in Offshore
Suriname, Staatsolie NV Annual Report 2012, Apr. 14, 2013.
2. Suriname, The Next Giant Plateau, Staatsolie NV,
American Association of Petroleum Geologists International
Conference and Exhibition, Singapore, Sept. 16-19, 2012.
3. Sandwell, D.T., Satellite Geodesy, Scripps Institution
of Oceanography, University of California, San Diego, topex.
ucsd.edu/marine_topo.
4. Guyet, S., Unternerh, P., and Mascle, A., The French
Guiana margin and theDemerara Plateau: Geological History
and Petroleum Plays, Special Publication of the European
Association of Petroleum Geoscientists, No. 4, 1994, pp.
411-422.
5. Pindell, J. and Dewey, J.F., Permo-Triassic reconstruction of western Pangea and the evolution of the Gulf of
Mexico/Caribbean region, Tectonics, Vol. 1, No. 2, April
1982, pp. 179-211.
6. Pindell, J., Kennan, L., Sanek, K.P., Maresch, W.V., and
Draper, G., Foundations of Gulf of Mexico and Caribbean
evolution: Eight controversies resolved, Geologica Acta, Vol.
4, No. 1-2, 2006, pp. 303-341.
7. Greenroyd, C. J., Peirce, C., Rodger, M., Watts, A.B.,
and Hobbs, R.W., Crustal structure of the French Guiana
margin, West Equatorial Atlantic, Geophysical Journal International, Vol. 169, No. 3, June 2007, pp. 964987.
8. Greenroyd, C.J., Peirce, C., Rodger, M., Watts, A.B.,
and Hobbs, R.W., Demerara Plateau the structure and
evolution of a transform passive margin, Geophysical Journal
International, Vol. 172, No. 2, February 2008, pp. 549-564.
9. Bird, D., and Burke, K., Pangea breakup: Mexico, Gulf
of Mexico, and Central Atlantic Ocean, expanded abstract,
Society of Exploration Geophysicists, January 2006.
10. Labais, C., Olivet, J.L., Aslanian, D., and Roest, W.,
An alternative early opening scenario for the Central Atlantic
Ocean, Earth and Planetary Science Letters, Vol. 297, No.
3-4, September 2010, pp. 355-368.
11. Delor, C., Lahondere, D., Egal, E., Lafon, J.M., Coche-
160104ogj_45 45
The author
Yannis Bassias (ybassias@amphorenergy.com) is
president of Amphore Energy Inc., Houston, and
works on frontier exploration areas of the Indian
and Atlantic Oceans. He has also served as president and CEO of Georex from 1997-2012. Before
joining the petroleum industry he was associate
professor in the National Museum of Natural History, Paris. He holds a PhD (1984) from the University Pierre et
Marie Curie, Paris. He is a member of the American Association
of Petroleum Geologists, the Society of Exploration Geophysicists, the Petroleum Exploration Society of Great Britain, and the
Association of International Petroleum Negotiators.
45
12/28/15 3:14 PM
TECHNOLOGY
New analysis unifies reservoirs

in northeastern Sichuan basin
Lei Huang
Zongyang Dai
Southwest Petroleum University
Chengdu, China
Zheng Li
Weihe Energy Development Co. Ltd.
Shanxi, China
Ren Luo
Lingping Zeng
SOUTHEAST SICHUAN BASIN TECTONIC ZONE
Petrochina Southwest Oil & Gasfield Co.

Chengdu, China
The Carboniferous gas pool of Shaguanping began production in 1982.

Wenquanjing was brought onstream
in 2003. They have respective gas
46
160104ogj_46 46
Maliuba
Guanyinshi
Luojiazhai
Leixi
Wenxi Carboniferous
Dachuan
Region of interest
Fault
Leiyinpu
Shaguanping
Structure line
County seat
Kaijiang
SHAGUANPING, WENXI CARBONIFEROUS RESIDUAL THICKNESS
FIG. 2
Y2 X1 rous Y1
e
bonif
Y3
i Car
0 1
Wenx
X3
km
X4
X6
X5
X7 X8
X12
X2
X10
X1 nping
a
agu 6 0 m X11
Sh
40 m
20
Fault
X9
Wells
History
Yuexichang
Recent exploration and development

of the Carboniferous system in the
northeastern portion of Chinas Sichuan basin has improved the data available to researchers. Further study
is providing solutions to problems
of identifying connectivity within
the regions gas
EXPLORATION &
reservoirs.
DEVELOPMENT
Research has
identified western
Wenquanjing and
Shaguanping as adjacent stratigraphic structural gas-bearing combination
traps previously to be independent.
This article shows that the connectivity between Carboniferous gas pools in
western Wenquanjing and Shaguanping is perfect and that they belong to
the same stratigraphic-structural combination trap.
Wubaochang
FIG. 1
12/28/15 3:14 PM
TECHNOLOGY
SHAGUANPING, WENXI CARBONIFEROUS SEISMIC INTERPRETATION
FIG. 3
Bajiaochang
C
00 Y
,6
-3
-3,600
-3,200
B
0
Y2
-3,600
Wenxi Carboniferous
Y3
km
Y1
B'
-3,200
-3
,6 X3
00
Y - X
X12
X10
X1
-4,400
0 X6
-4,80
0
-5,
00
00
80
0
Y5
X5
-4,800
-4,
-4,4
X4
-5,000
Shauguanping
X7 X8
Y5
X2
00
,4
-4
Y6
Fault
Wedge out
X9
A'
X11
-4,800
Well
A
A' Profile line
-4,800
0
-5,00
C'
bearing areas of 27.43 sq km based on a countour of -4,400

m and 14.03 sq km calculated by a gas-water interface of
-3,800 m.
Studies of trap types and characteristics of the pools in
western Wenquanjing and Shaguanping have yielded positive results. On the Carboniferous interface structure chart,
the Wenxi and Shaguanping tectonic zones are in the west
of Wenquanjings latent anticline zone, and are connected by
a saddle. The positional connection between these two gas
pools, or its absence, has challenged geologists for years, but
most researchers considered them to be independent.
General geology
Wenxi and Shaguanping gas pools are in Kaijiang and Xuanhan Counties, Sichuan Province, China, and belong to the
Wenquanjing tectonic zone in a median fold, high-dip region in the southeast Sichuan basin (Fig. 1). Wenxi, in the
west of Wenquanjing tectonic zone, is at the junction of Shuangshimiao and the Huaying Mountains in a high-dip tectonic region of eastern Sichuan. The Shaguanping tectonic
zone is a nosing structure in the southwest part of Wenxis
faulted anticline.
After the Caledonian and Yunnan crustal movements, the
Carboniferous stratum was weathered and eroded in a large
area. Only the Middle Carboniferous (Huang formation) remains and appears disconformable in its contact with the
overlying Permian. Well data and regional background have
160104ogj_47 47
revealed that the distribution of the Carboniferous stratum

is continuous from Wenxi to Shaguanping, with one denudation pinchout area on its east side.
The formation gradually thins eastward until it finally
pinches out. The Carboniferous strata are generally 40-70m thick, but vary due to a number of faults in the area. In
Shaguanping, from Wells X2 to X9, the Carboniferous strata
thin in an eastward direction, from 60 m to pinchout. In the
main part of Wenxi, the thickness of Carboniferous strata is
generally 20-60 m, but the formation is not present in Wells
Y3 and Y7.
The overlying Permian Liangshan formation and underlying Silurian argillaceous rocks are in direct contact, which
forms denudation pinchout in a lateral shielding trap (Fig.
2). Shaguanping and the west of Wenxi are leaped by a deep
fault, which has amplitude of hundreds of meters, creating
an efficient shield for migration and accumulation of natural
gas. Wenxi and Shaguanping Carboniferous gas pools are
formed through stratigraphic-tectonic combination traps.
Structural relationship
The most important features of a gas reservoir are the unified pressure system and gas-water interface. The pressure
system is a reservoir integration controlled by the same pressure source and the gas-water interface. Each can influence
reservoir fluid to transfer pressure.
Shaguanping Carboniferous gas field has a unified pres-
47
12/28/15 3:14 PM
TECHNOLOGY
SHAGUANPING, WENXI CARBONIFEROUS LATERAL SECTIONS*

GR
X6
RT
GR
X10
5,230
RT
GR
X4
RT
GR
X3
4,420
4,660
5,240
4,670
3,920
4,680
3,930
4,690
3,940
4,700
3,950
4,710
3,960
4,720
3,970
4,730
3,980
4,740
3,990
4,440
4,680
5,260
4,450
4,690
5,270
4,460
4,700
5,280
4,470
4,710
5,290
4,480
4,720
5,300
*GR = Gamma ray, RT = Resistivity. Depths = m
4,490
Gas-water interface
The Wenxi-Shaguanping Carboniferous gas reservoir is one
of few gas pools in China without produced water. A gas
reservoir is concentrated in the core of Kaijiang-Liangping
palaeohigh. The trap has good characteristics of inheritance
from the previous tectonic evolution, allowing it to easily
form oil and gas reservoirs with high coefficients of fullness.
The Carboniferous well with the lowest bottom elevation
serves as the gas-water interface for this analysis.
Well X6, at the southwest of the Shaguanping structure,
featured the lowest production elevation, with a bottom of
-4,798.72 m. Accordingly, the gas-water interface of the
Wenxi-Shaguanping reservoir should be below -4,800 m. In
addition, making use of the gas water intersection, the data
obtain the gas-water interface elevation of -5,300 m. So the
160104ogj_48 48
Y2
RT
GR
Y4
RT
4,250
4,260
4,270
Reservoir bed
4,280
H1 member
4,290
4,300
H2 member
H3 member
Silurian
4,310
4,750
sure system, and the entire reservoir is connected. Data from

well interference testing also show several wells in Wenxi
as connected. The connectivity analysis of oil and gas reservoirs usually includes dynamic and static aspects.The research conducted for this article mainly used static data.
Seismic interpretation in 2010 showed Wenxi and Shaguanping to be high points of two adjacent secondary anticline structures in Wenquanjings latent anticline zone (Fig.
3). The saddle connecting these formations shows a minimum altitude of -3,950 m, lower than the gas-water interface
(-3,800m) identified in the Wenxi gas pool and higher than
the gas-water interface (-4,400 m) in the Shaguanping gas
pool.
There are no grooves, no lithology mutations, and no major fault transverse structures between the two high points,
and the reservoirs are continuous. Based on these structural
characteristics, a single gas accumulation with a unified gaswater interface is more likely than these formations being
two independent gas pools.
48
GR
4,670
4,430
5,250
RT
FIG. 4
gas-water interface of the unified Wenxi-Shaguanping Carboniferous gas reservoir should be -4,800-5,300 m.
The average of the two methods produces a gas-water interface of -5,050 m (Fig. 6), lower than previously speculated. This interface provides a 180-sq km gas-bearing area
in Wenxi-Shaguanping.
Reservoir connectivity
Connectivity is an important parameter for hydrocarbon
reservoirs, providing the basis for communication between
wells. Carboniferous reservoirs mainly contain arenite dolomite rock and silty-fine breccioid dolomite. Reservoir space
is primarily intragranular, intergranular dissolved pores,
and moldic pores, with some caves. Longitudinally, the Carboniferous is developed in upper and lower reservoir sections. The thickness of the lower reservoira debris-beach
facies reservoiris the largest. This lower section has better
properties and is the main production layer of the Carboniferous system.
Taking 2% as the lower limit of effective reservoir porosity yields a single-well log interpretation accumulative
thickness of 22-27 m and stable transverse contrast (Fig. 4).
The upper reservoir section is developed in the Huanglong
formations third member. The reservoir consists mainly of
caves and fissures caused by karst and tectonic movements.
Carboniferous reservoirs are primarily fracture and cavetype. Longitudinally, the reservoir is thin, with a short lateral-extended distance.
The Wenxi area features developed faulted structures and
strongly folded local strata. The reservoirs fracture extension direction and tectonic axis are basically the same. A
large number of fissures associated with fractures help in
vertical and horizontal communication. The log interpretation for Wells Y1 and Y4, for example, shows that the reservoir section is fractured, and corresponding core-count
12/28/15 3:14 PM
TECHNOLOGY
Subsea depth, m
seam density can reach 13 m.

SHAGUANPING, WENXI CARBONIFEROUS: DEPTH, PRESSURE
FIG. 5
Carboniferous supergene karstifi-2,500
cation created abundant karst caves
and fractures, which were beneficial to
Y1
karst reservoir development. But brec-3,000
ciation weakened depositions effect in
Y4
the reservoir. The overlying Permian
Y2
-3,500
Liangshan formation mudstone and
X4
top of the Carboniferous supergene
X14
Z1
-4,000
X13 X3
karst zone also help preserve this natX2
ural gas reservoir.
X11
The physical properties of Carbon-4,500
y = -440.91x + 22,105
iferous reservoirs in this area have obR2 = 0.8026
vious differences among each of the
-5,000
wells. Single-well deliverability tests
57
58
59
60
61
62
63
64
also differ, but showed strong hetFormation pressure, MPa
erogeneity against the background of
overall connection. Some wells need
fracturing and acidizing to enhance
CARBONIFEROUS FORMATION PRESSURE
Table 1
Fm pressure
Reduced Fm pressure
reservoir connectivity and increase
Well
MPa
Pressure coefficient
Year commissioned
natural gas output.
C2
59.416
1.1
1992
This Carboniferous reservoir has a
C1
66.452
1.8
1992
Z1
63.894
62.832
1.6
1998
close relationship with sedimentary faY1
57.07
58.229
1994
cies, dolomite thickness, and fracture
Y2
57.901
58.241
1.4
1997
Y4
58.278
58.709
2003
development. For example, Well X3 is
X2
60.212
58.745
1984
X13
58.657
57.422
1986
between Wenxi and Shaguanping. The
X14
59.176
58.169
1.44
1986
X3
58.871
57.871
1989
Carboniferous strata are 81-m thick,
X4
58.427
57.686
1987
and consist of dense limestone and
X11
59.717
57.634
1987
powder crystal dolostone with a lower
proportion of grain dolostones. Weak
tectonic movement also means an absence of major faults. Yield, however,
can be low even after fracturing and acidizing. The Carbonent of 0.225 MPa/100 m. The pressure distribution in Wenxi
iferous strata of Well X15 is only 2.5 m thick and tests with
and Shaguanping gas pools is 5759 MPa. The formation
a light amount of gas, proving that there is no direct relapressure and subsea depth in Wenxi and Shaguanping are
tionship between the reservoirs effective thickness and its
linear-dependent (Fig. 5) and differ from adjacent Well Z1,
full thickness.
which has a pressure of 62.832 MPa.
Pressure analysis
Gas component
Original pressure coefficient is the ratio of original formation

pressure and hydrostatic pressure and is an important component of pressure analysis. A normal pressure coefficient is
0.81.2. Coefficients higher than 1.2 are considered abnormally high and those below 0.8 abnormally low. Well Y1 in
the Wenxi gas pool has a pressure coefficient of 1.44, similar
to the 1.4 found in gas wells in Shaguanping. Both of these
fields connect to an abnormally high-pressure gas pool.
This study recorded the original formation pressure of
several Carboniferous gas wells in Wenxi, Shaguanping,
and Bajiaochang to analyze reduced pressures (Table 1).
We first converted the measured depth into vertical depth,
and then into altitude (bushing elevation-vertical depth).
We then unified the conversions with pay formation pressures to -3,500 m above sea level with a gas pressure gradi-
The acid content of natural gas can also be used as a basis for
judging connectivity, especially when formation pressure is
insufficient to provide evidence. Analysis of the CO2 content
in more than 30 wells in both fields showed a 0.8-1.46%
concentration in Wenxi and 0.38-1.85% in Shaguanping,
demonstrating similarity between the two regions.
Analyses of static and dynamic factors confirm that Carboniferous gas traps in Wenxi and Shaguanping are interrelated and have reservoir connectivity. Pressure coefficients,
reduced pressures, and CO2 content are also similar in the
two areas, suggesting that the two Carboniferous reservoirs
are connected with the same pressure system and same gaswater interface.
The Wenxi-Shaguanping collective reservoir has an overflow point between Tanmuchang and Shaguanping. The
160104ogj_49 49
49
12/28/15 3:14 PM
TECHNOLOGY
SHAGUANPING, WENXI CARBONIFEROUS GAS PROFILES
FIG. 6
Bibliography
Chen, Z., Forecast, Classification

and Assessment for Gas Reservoirs of
0
1
T
Carboniferous Stratigraphic-Structural
km
P
Combination Traps in Eastern Sichuan,
-4,000
C2
Acta Petrolei Sinica, Vol. 21, No. 3,
S
May-June 2000, pp. 25-30.
-4,500
Committee of Gas and Oil Field
Development Standards, Methodology for the Initial Pressure and the
B
B'
Hydrodynamic System Hydrocarbon
C2
0
1
Reservoirs, Beijing: Petroleum Industry
-3,000
T
P
km
Press, 1999.
C2
Kang, B., Zhang, F., and Zhang,
P
J.,
Control
Factors of Carboniferous
P
-3,500
S
C2
P
C2
Stratum-structure
Composite Traps in
C2
the
East
of
Sichuan,
Journal of Oil and
S
-4,000
Gas Technology, Vol. 30, No. 1, 2008,
C
C'
pp. 184-187.
-3,000
Li, A., Yi, H., Tu, J., and Wang, F.,
P
0
1
T
C2
Determining
the Gas Water Interface of
-3,500
km
Wenxi
Carboniferous
Gas Reservoir in ZG Field
P
Carboniferous
-4,000
by
Pressure
In
Tersection Method,
C2
Shaguanping
P
Gas layer
-4,500
Natural
Gas
Industry,
Vol. 25, suppleS
C2
Water
layer
mentary
issue
A,
2005,
pp. 35-37.
Gas-water boundary
-5,000
Li, J., Xu, G., and Yan, W., Identification and Prediction of Fractures in
Carboniferous Reservoirs of Shaguantraps main peak is in the western high point of Wenxi, with
ping Gas Field, East Sichuan Basin, Natural Gas Industry,
the top at -2,820 m. The subset high point is the fault nose
Vol. 28, No. 11, 2008, pp. 49-52.
structure of Shaguanping with the top at -3,620 m (Fig. 6).
Margot, G.G., Louis, J., and Durlofsky, L., Modeling Fluid
The lowest entrapped line is below -5,100 m, and the closure
Flow in Oil Reservoirs, Annual Review of Fluid Mechanics,
exceeds 2,300 m. According to these parameters, the hydroVol. 37, 2005, pp. 211-238.
carbon bearing area of the trap exceeds 200 sq km.
Ran, H., Gas Water Distribution Characteristics of CarbonAnalysis of the tectonic history and Carboniferous hydroiferous Gas Reservoirs in East Sichuan and a discussion on
carbon accumulation data in eastern Sichuan basin confirms
Their Geneses, Natural Gas Industry, Vol. 21, No. 1, 2001,
that the gas-filling coefficient of the high point in Wenxi and
pp. 52-56.
other high points is 100%.
Wang, Y., Chen, S., and Xu, S., Formation Conditions and
Exploration Technique of Gas Reservoir for Paleozoic ErathFurther analysis
em-Upper Proterozoic Suberathem in Sichuan basin, Beijing:
The analysis of Wenxi-Shaguanping gas reservoirs further
Petroleum Industry Press, 2001, pp. 118-145.
deepens the geological knowledge of Carboniferous gas resXiao, S., Xia, M., and Wang, D., Evaluation and Research
ervoirs. It also provides the geological basis for development
on Accumulation Features of Carboniferous Reservoirs in Linof the gas reservoir, improves the likely success rate of develbei Structure of East Sichuan, Petroleum & Oilfield Developopment wells, and lays the foundation for the reasonable and
ment in DaQing, Vol. 24, No. 4, 2005, pp. 28-30.
efficient development of its gas resources.
Xu, G., Wang, D., Wang, Q., Zhou, L., and Zhang, R.,
With the exception of the Cambrian Longwangmiao
Sedimentary Microfacies Feature and the Reservoir Permeformation discovery in the Moxi region of Anyue gas field,
ability Units in Carboniferous, Shaguanping, Eastern SichWenxi-Shaguanping is a promising single bulk-gas reservoir
uan, Journal of Southwest Petroleum University (Science &
of marine carbonate rocks and hydrocarbon exploration in
Technology Edition), Vol. 32, No. 2, 2010, pp. 170-174.
the Sichuan uplift has more potential. Similarly, CarboniferYu, H., He, S., and Zhang, H. Analysis of Formation Facous gas reservoirs in the Wenxi-Shaguanping and Kaijiangtors of Carboniferous in West Wenquanjing Field of Northeast
Liangping paleohigh regions have not produced water to
Sichuan and Its Exploration Prospect, Science Technology
date, showing promise for further exploration.
and Engineering, Vol. 7, No. 17, 2007, pp. 4454-4458.
A
A'
Depth, m
-3,500
50
160104ogj_50 50
12/28/15 3:14 PM
TECHNOLOGY
The authors
Zheng Li (lizheng1958@126.com) is an engineer

in Shanxi Gas Group Weihe Energy Development
Co. Ltd. He holds a BSc and an MSc (2012) in
mineral prospecting and exploration from Southwest Petroleum University.
Lei Huang (huang250105@163.com) is a PhD

candidate in geological resources and geological engineering at the School of Geoscience and
Technology, Southwest Petroleum University,
Chengdu, China. She holds a BSc and an MSc
in mineral prospecting and exploration from
Southwest Petroleum University.
Zongyang Dai (Daizongyang@hotmail.com) is an
associate professor in the School of Geoscience
and Technology, Southwest Petroleum University. He holds a BSc and an MSc in geological
resources and geological engineering from
Ren Luo (luoren@petrochina.

com.cn) is an engineer at Petrochina Southwest
Oil & Gasfield Co. He holds an MSc in mineralogy, petrology, and mineral deposit geology from
Lingping Zeng(zenglingping@petrochina.com.
cn) is an engineer at Petrochina Southwest Oil &
Gasfield Co. He holds a BSc in resource reconnaissance engineering from Chengdu University
of Technology.
PIPE LINE CONTRACTORS ASSOCIATION

The Pipe Line Contractors Association was established in 1948 and negotiates labor agreements, encourages safe
practices in pipeline construction and seeks the resolution of problems common to all those in the industry.
The purposes of this Association are as follows:
(a)
To make membership in the Association a reasonable assurance to the public of the skill, integrity and responsibility of its
members.
(b)
To maintain the standards of the pipeline contracting business at the level

necessitated by its quasi-professional character and to establish members of the Association in the public mind as contractors who fulfill obligations in good faith.
(c)
To promote more cordial and cooperative relations among pipeline contractors and between pipeline contractors and those
(d)
To encourage efficiency among pipeline contractors and their employees.
with whom they deal or have contact.

(e)
To seek correction of injurious, discriminatory or unfair business methods practiced by or against pipeline contractors.
(f)
To eliminate as far as possible the occurrence of injury and death to pipeline

contracting employees.
For more information on the Association or membership opportunities,

please visit our Web site at:
www.plca.org
1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Ph: 214.969.2700 Fax: 214.969.2705
160104ogj_51 51
51
12/28/15 3:14 PM
TECHNOLOGY
China tight reservoirs perform

better over time through MSF
Xiuyu Wang
Shenglai Yang
Yu Pu
China University of Petroleum
Beijing
DRILLING &
PRODUCTION
Feng Zhou
Sinopec Southwest Oil & Gas Co.
Chengdu
Ye Zhang
Chongqing Institute of Geology
and Mineral Resources
Chongqing
Network fracturing horizontal wells is efficient at the beginning of production but its advantage over multi-stage fracturing diminishes over time.
THRESHOLD PRESSURE EXPERIMENT
Understanding a reservoirs production capacity and flow

mechanisms is critical to maximizing production, but these
variables are more complex in tight reservoirs than in conventional reservoirs due to smaller pore size and special flow
characteristics.
Mathematically simulated fracture-design for tight oil and
gas reservoirs has been researched extensively, but relatively little work has been done using fluid flow in actual prospects.1-4
This article examines tight-reservoir fluid flow using cores
from the Well Shun-9 prospect area in Chinas Tarim basin.
Relative permeability, pressure sensitivity, and threshold
pressure-gradient tests were performed on the cores.
Based on the test results, economic analysis, and reservoir
simulation, this article evaluates the effectiveness of different
completion methods in the Well Shun-9 drainage areas, comparable to tight reservoirs around the world. It finds that network fracturing may be uneconomic compared to multistage
horizontal fracturing, especially after a
well has been producing for 3 years or
more.
FIG. 1
Parameters, core properties

Pressure gauge
Core holder
Valve
Tube
Oil container
Valve
Injection pump
52
160104ogj_52 52
Confining-pressure
pump
Measuring relative permeability is the

first step in investigating flow behavior
for any reservoir. In tight reservoirs, however, there is more interference between
two phases, larger flow resistance, and a
more obvious threshold pressure gradient, making measurement complex.
Published studies on oil-water relative permeability in tight oil reservoirs are
scarce, though methods and results have
been introduced regarding gas-water relative permeability.56 These studies provide
overviews of gas-water relative permeability using common methods like injecting gas and water under steady-state
conditions, as well as alternative methods
such as capillary-pressure measurements
on unconfined samples.
For this article, however, we applied
the relatively simple and effective nonsteady state method for measuring the
relative permeability of tight cores.
Well Shun-9 has an average gas per-
12/28/15 3:14 PM
Relative permeability
meability of 0.18 md.7 The formation oil

CORE RELATIVE-PERMEABILITY CURVES
FIG. 2
at reservoir condition has a viscosity of
Cores*
1.0
1.44 MPas at ambient temperature and
X-1 Krw
ultimate viscosity of 1.96 MPas. Oil denX-1 Kro
sity is 0.8027 g/cu m. Both the formation
X-2 Krw
water and injection water had salinity of
0.8
8,888.66 mg/l.
X-2 Kro
Fig. 1 shows our approach to measurX-3 Krw
ing threshold pressure, comprised of a
X-3 Kro
fluid-injection pump, core holder, confin0.6
ing-pressure pump, and an intermediateoil container. An intermediate-water container was connected to the core holder to
measure relative permeability.
0.4
To analyze formation pressure we
maintained upstream pressure at about
0.3 MPa and downstream pressure at
about 0.1 MPa with an average pore pres0.2
sure of 0.2 MPa.
We slowly increased confining pressure. Beginning at 3 MPa and moving to 5
MPa, 10 MPa, 20 MPa, 30 MPa, 40 MPa,
0.0
and 50 MPa at 30-min intervals. At each
0.0
0.2
0.4
0.6
0.8
1.0
pressure, nitrogen gas must flow into the
Water saturation
core for at least 30 min to measure gas
*Krw = relative water permeability, Kro = relative oil permeability.
permeability.
Once gas permeability was measured,
we decreased confining pressure back to
CORE PHYSICAL PROPERTIES
Table 1
the starting values and waited 1 hr for
Absolute
each pressure to equilibrate.
Core
Diameter, cm
Length, cm
Porosity, %
permeability, md
Testing
To measure threshold pressure the
X-1
2.5
7.676
5.30
0.12
Relative
permeability
cores were vacuumed for at least 8 hr and
X-2
2.5
7.394
7.23
0.21
Relative
saturated with oil. Five pressure points
permeability
were applied and the flow rate was reX-3
2.5
7.830
8.42
0.26
Relative
corded until pressure stabilized.
permeability
Threshold-pressure results were modX-4
2.5
7.710
4.94
0.11
Pressure
sensitivity
ified with effective-stress sensitivity data
X-5
2.5
6.732
7.39
0.20
Pressure
to improve accuracy because the consensitivity
fining pressure was increasing along the
X-6
2.5
7.536
8.41
0.29
Pressure
core during the experiments. The flowsensitivity
rate-versus-pressure gradient was plotted
X-7
2.5
6.866
6.18
0.14
Threshold
pressure
and the threshold-pressure gradient obX-8
2.5
7.194
8.79
0.23
Threshold
tained from the plots.
pressure
The relative permeability measureX-9
2.5
6.838
8.47
0.31
Threshold
ments used the non-steady state method
pressure
and the selected cores were saturated
with prepared formation water and installed in the core holder. Water was injected at 0.2 ml/min until 10 pore volume
Table 1 lists the physical properties of Well Shun-9 sandstone
(PV) to reach water-effective permeability.
cores including length, diameter, porosity, and gas permeability.
Oil injected into the core displaced water until 10 PV, or until
Nine cores were used and divided into three groups for each test
water was no longer produced, to establish connate water saturaaccording to their permeability value.
tion. Finally, water was injected to displace oil until 30 PV, and
Permeability values generally are obtained by looking
data were recorded.
at stress dependency and fracture closure and reopening,
160104ogj_53 53
53
12/28/15 3:14 PM
TECHNOLOGY
CORE PRESSURE-SENSITIVITY CURVES
FIG. 3
0.30
X-4
X-4
X-5
X-5
X-6
X-6
0.25
Permeability*
0.20
stress
stress
stress
stress
stress
stress
increase
decrease
increase
decrease
increase
decrease
0.15
0.10
0.05
0.00
10
15
20
25
30
35
40
45
50
55
Effective stress, MPa

*Permeability measured by 103 dynamic viscosity/sq m.
Relative-permeability curves
GENERALIZED CORE PERMEABILITY DAMAGE
FIG. 4
1.00
X-4
X-5
X-6
0.90
0.80
Permeability*
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
10
20
30
Effective stress, MPa
40
50
60
*Total reservoir permeability divided by oil permeability.
CORE THRESHOLD-PRESSURE CURVES
FIG. 5
0.5
X-7
Flow rate, ml/min
0.4
X-8
X-9
0.3
0.2
0.1
0
0
20
40
60
80
Pressure gradient, MPa/m
54
160104ogj_54 54
which affect reservoir permeability and

production. Fracture closure is one of
the main mechanisms for a high decline
rate in early production.
We, however, combined stress-sensitivity data to analyze relative permeability results. Fracture effect was not taken
into consideration because our sample
core fractures were already closed due to
the change in pressure between downhole and the lab. This analysis can take
several months using a large tight-core
sample. Sensor and pump drifts can reduce accuracy over time, so a small sample is recommended.
100
120
140
Fig. 2 shows the relative-permeability

curves of three Well Shun-9 cores (X1, X-2, X-3) under reservoir conditions.
Table 2 shows the key reservoir features.
The cores permeability was 0.12-0.26
md and the curves show good repeatability.
A tight-oil reservoir exhibits different
relative permeability than a conventional reservoir, including large connate water saturation, large residual oil saturation, and a narrow two-phase flow zone.
Displacement efficiency, which is also
recovery efficiency in laboratory conditions, is lower than 60% for tight-rock
samples, and the lower the rock permeability the smaller the recovery efficiency.
This trend of relative permeability
curves shifting with a cores absolute
permeability is not obvious, however,
because the permeability of the three
cores is too similar. All three samples exhibit water-wetting features.
Understanding the relative permeability of oil and water is important for the
Well Shun-9 area because the reservoir
has high initial water saturation (46%).
The area also contains bottom water that
can enter the oil zone during horizontal
fracturing if the fracture height is not
well controlled.
Relative permeability data shows that
a small increase in water saturation will
lead to a considerable decrease in oil
relative permeability, which can greatly
reduce oil production.
12/28/15 3:14 PM
TECHNOLOGY
PRESSURE-FIELD DISTRIBUTION AFTER 1 YEAR PRODUCTION*
FIG. 6
Vertical well
S = 0.02
Fractured vertical
S = 0.55
Network fracture vertical

S = 0.74
Horizontal well
S = 0.51
Fractured horizontal
S = 0.95
Network fractured horizontal

S = 1.01
*S stands for corresponding drainage area in sq km, calculated by counting grid numbers to which pressure drop has been propagated.
KEY RESERVOIR FEATURES

Core
Permeability, md
Table 2
Equal-permeability
point, md
Water saturation, %
Oil saturation, %
Permeability at
oil saturation, %
Displacement
efficiency, %
Wettability
X-1
0.12
0.63
0.41669
0.2351
0.1114
0.5627
Water-wetting
X-2
0.21
0.61
0.40570
0.2242
0.1169
0.5896
Water-wetting
X-3
0.26
0.61
0.39600
0.2140
0.1361
0.5993
Water-wetting
Pressure-sensitivity analysis
Pressure sensitivity is an important feature of any tight oil reservoir because it affects fluid flow and overall oil production.
Fig. 3 illustrates the pressure-sensitivity analysis of three Well
Shun-9 cores (X-4, X-5, X-6) using nitrogen as the gas medium.
To determine pressure sensitivity, we began with a confining pressure of 3 MPa and a corresponding effective stress of
2.8 MPa. For convenience, the confining pressure was taken
as equal to the effective stress, despite the 0.2 MPa difference.
The upper effective-stress value was set at 50 MPa to simulate
formation pressure of 74.2 MPa.
Fig. 3 shows the relationship of the cores gas permeability
with effective stress. At the beginning, permeability decreases
quickly with increasing effective stress, but the drop slows after
30 MPa. Permeability at an effective stress of 50 MPa can decrease to as little as one-tenth of the original permeability. Compression began in pore throats rather than pore bodies and the
permeability decrease was subject mainly to throat constraints.8
After effective stress dropped to a certain value, the shrinking of
the openings in the rock reached its minimum and the decrease
of permeability became equal to overall well-decline rate.
160104ogj_55 55
Permeability increased very slowly for all three cores studied

during the first stage of the recovery-buildup process and the
relationship curves are almost as flat. This similarity between
the curves reflects plastic deformation of the reservoir rock under high effective stress (in this case >30 MPa), with elastic deformation more obvious at lower stress.
The stress decrease curve deviates sharply from the stress
increase curve, confirming irreversible permeability damage
during oil production.
Cores X-4, X-5, and X-6 had permeability losses of 68%,
49%, and 48%, respectively, when effective stress was reduced
to 3 MPa from 50 MPa. At 3 MPa, permeability is about onethird its original value.
Testing established a correlation to describe the stress-permeability relationship for stress sensitivity (Equation 1).
Fig. 4 plots the relationship between K/Keff0 and effective
stress. The trend satisfies a quadruplicate functional-equation
form and the correlation coefficient is larger than 0.995. Pressure sensitivity in the Well Shun-9 area has a considerable impact on pore structures and oil production rates.
55
12/28/15 3:14 PM
TECHNOLOGY
SIMULATION MODEL RESERVOIR PARAMETERS
Table 3
Top reservoir depth, m
5,500
Reservoir thickness, m
12
Formation pressure, MPa
74.2
Porosity, %
6.14
Permeability, md
0.18
Oil density (reservoir condition), g/cu m
0.8027
Oil viscosity (reservoir conditions), mPas
1.9559
Reservoir simulation, model
Gas-to-oil ratio L/L-1
1.15
Surface temperature, C.
27
Temperature gradient, C.100 m-1
2.25
Pressure gradient, overlaying formation; Pam-1
22,620
A numerical simulator modelled Well Shun-9 fractures. Reservoir properties, black-oil PVT tables, and relative permeability
curves were analyzed and put into the model, with non-Darcy
effects taken into account. Table 3 describes the simulations
reservoir parameters
The model places one production well in the center of a
3,240 m 2,040 m block. For a vertical well, the wellbore is in the middle of
the block, and for a horizontal well, the
FIG. 7
horizontal section is evenly distributed
along the model center.
Fractures modeling used narrow,
high-permeability grids, with grid transmissibility equal to fracture conductivity. The grids were gradually refined toYears
ward the wellbore to avoid convergence
1
problems.
Explicitly building the fracture into
3
the model allows calculation of the matrix-to-fracture flow for each step in each
grid block. The fracture geometry, direction, and connectivity with the wellbore
are modeled based on fracture design
and geo-mechanical studies from the oil
field.
The fractures impact appears only as
a modification to the productivity of the
well without any representation of the physical matrix-fracture
interaction. There is no quantification of geological heterogeneitys effect.
The data used in the simulation model came from field operators or were generated in the laboratory. Relative permeability data were used because of Well Shun-9s high initial water
saturation.
The fracture-design simulator estimated average fracture
width and conductivity. We established fracture parameters for
each completion method tested that included horizontal section
length, flow conductivity, length of intervals between fractures,
half-fracture length, number of stages, and for network fracturing, the scale.
-1
Pore pressure gradient, Pam
10,400
NET PRESENT VALUE

1.4
1.2
1.0
$, million
but the effect is limited because of formation damage caused

as formation pressure decreases and effective stress on the rock
increases.
The permeability drop counteracts the increased pressure
differential and, based on the pressure-sensitivity analysis, rock
permeability can drop to almost zero and may even make the
well lose productivity.
0.8
0.6
0.4
0.2
0
Network fractured
horizontal well
Multistage fractured
horizontal well
Threshold-pressure gradient
Fig. 5 shows the linear relationship between flow rate and formation pressures. The curves, however, do not pass through
the original of the coordinates, a feature of non-Darcy flow.
The regression line meets the x-axis and the intercept is
threshold pressure. The threshold-pressure gradient can be calculated using threshold pressure divided by the length of each
core and it increases as the permeability of rock decreases.
When the permeability of the cores increases to 0.23 md
(Core X-8) and 0.31 md (Core X-9) from 0.14 md (Core X-7),
threshold pressure decreases to 0.31 MPa/m and 0.20 MPa/m,
respectively, from 0.66 MPa/m.
The average threshold pressure gradient is 0.32 MPa/m for
the cores examined, which is high compared with conventional
reservoirs.
A high threshold-pressure gradient requires reasonable wellbottom flow pressure for oil to flow into the wellbore. Lowering the well-bottom flow pressure increases oil production
56
160104ogj_56 56
Non-Darcy effects
Flow in porous media follows Darcys law when it is laminar.
In tight oil reservoirs, however, flow deviates from Darcys
law due to the threshold-pressure gradient.
12/28/15 3:14 PM
TECHNOLOGY
OIL PRODUCTION, DIFFERENT DEVELOPMENT METHODS
Table 4
Daily production, cu m/day

Method
1 month
3 months
1 year
3 years
0.40
0.37
0.36
0.34
Fractured vertical well
11.22
6.81
4.50
Network-fractured vertical well
25.55
9.52
5.72
7.36
5.69
Fractured horizontal well
37.49
Network fractured horizontal well
38.32
Vertical well
Horizontal well
Cumulative production, cu m
1 months
3 months
12.88
46.63
1 year
135.43
3 year
378.59
3.24
462.43
1,162.51
2,436.70
5,002.63
3.95
1,142.20
2,315.37
3,999.52
7,175.20
4.30
3.22
247.92
792.83
1,963.50
4,487.56
13.58
6.85
4.60
1,771.91
3,475.68
5,535.22
9,282.21
14.60
7.36
5.00
3,344.42
4,690.77
6,826.73
10,881.92
Equation 2 represents general

fracturing horizontal wells shows
EQUATIONS
flow through porous media.9 The
efficiency at the beginning of pro4
2
K/ Keff0 = C 0 Peff + C 1 Peff + C 3
(1)
left side of the equation represents
duction but its advantage over
Where:
pressure gradient. The top term on
multi-stage fracturing diminishes
K = absolute permeability at different
the equations right side represents
over time and the increased cueffective stress,md.
Darcy flow. The bottom term repmulative production is only 14.7%
K eff0 = permeability at low effective
resents non-Darcy flow. The Beta
higher after 3 years (Table 4).
stress,md.
factor is a function of the shape of
Fig. 7 shows net present value
pore throats, porosity, and permefor the two completion methods.
C0, C1,C2, C3 = fitting coefficients.
ability.
Each method is profitable at asPeff = effective stress,MPa.
Multi-rate well tests, correlasumed economic parameters. Nettions, or core testing can determine
work fracturing is more efficient
DP nV
= K + bV 2
(2)
the Beta factor: the lower the perfor a short time and multi-stage is
DL
meability, the larger the Beta facmore efficient for periods >3 years.
Where:
tor and the greater the non-Darcy
b = Beta factor
effects. Despite a fractures high
Acknowledgments
conductivity, pressure losses due
The authors acknowledge the finanto non-Darcy effects can be significial support of the National Procant and ignoring them can result
gram on Key Basic Research Project
in overestimating production.
(973 Program, No. 2015CB250904) and Key Project of NaReservoir simulators have options to input the beta factor
tional Science Foundation of China (No. 41330319).
for each layer or to calculate it using porosity and grid permeability. This enables more accurate flow models by acReferences
counting for changes in pressure and fluid saturation along
1. Belyadi, A., Aminian, K., Ameri, S., and Boston, A.,
fractures.
Performance of the hydraulically fractured horizontal wells in
Simulation results, economics

Comparing pressure distribution and drainage area allows
analysis and comparison of a reservoirs production parameters under different completion methods.
Fig. 6 shows pressure-field distribution after producing
for 1 year under different completion methods. The shape
and size of the pressure contour reflect the drainage areas
scope.
Table 4 shows daily and cumulative oil production using
different completion methods at 1 month, 3 months, 1 year,
and 3 years, larger drainage areas having greater production.
For horizontal and vertical-well development, network fracturing improves productivity more than conventional fracturing and both are better than not fracturing at all. Network
160104ogj_57 57
a low permeability formation, SPE Eastern Regional Meeting,

Morgantown, WV, Oct. 13-15, 2010.
2. Sehbi, B.S., Kang, S., Datta-Gupta, A., and Lee, W.J.,
Optimizing fracture stage and completions in horizontal wells
in tight gas reservoirs using drainage volume calculations,
North American Unconventional Gas Conference and Exhibition, The Woodlands, Tex., June 14-16, 2011.
3. Bunger, A.P., Zhang, X., and Jeffrey, R.G., Parameters
affecting the interaction among closely spaced hydraulic fractures, SPE Hydraulic Fracturing Technology Conference, The
Woodlands, Tex., Jan. 24-26, 2011.
4. Wu, R., Kresse, O., Weng, X., Cohen, C.E., and Gu,
H.,Modeling of interaction of hydraulic fractures in complex
fracture networks, American Geophysical Union, Fall Meeting, San Francisco, Calif., Dec. 9, 2011.
5. Byrnes, A.P., Understanding, Exploring, and Devel-
57
12/28/15 3:14 PM
TECHNOLOGY
oping Tight-Gas Sands, Chapter 5: Issues with Gas Relative
Permeability in Low-Permeability Sandstones, the American
Association of Petroleum Geologists Hedberg Series, No. 3,
2008, pp. 63-76.
6. Cluff, R.M., and Byrnes, A.P., Relative Permeability
in Tight Gas Sandstone Reservoirs: The Permeability Jail
Model, SPWLA 51st Annual Logging Symposium, Perth, June
19-23, 2010.
7. Khan, W.A., Rehman, S.A., Akram, A.H., and Ahmad,
A., Factors affecting production behavior in tight gas reservoirs, SPE/DGS Saudi Arabia Section Technical Symposium
and Exhibition, Al-Khobar, Saudi Arabia, May 15-18, 2011.
8. Lei, Q., Xiong, W., Yuan, J., Cui, Y., and Wu, Y.S.,
Analysis of stress sensitivity and its influence on oil production from tight reservoirs, SPE Eastern Regional Meeting,
Lexington, Ky., Oct. 17-19, 2007.
9. Dake, L.P., Fundamentals of Reservoir Engineering,
17th edition, Elsevier, Amsterdam, 1998.
The authors
Xiuyu Wang (wangxiuyu7@139.com) is an
associate professor at the China University of
Petroleum, Beijing. She holds a Ph.D from the
University of Wyoming, Laramie, and is a member of the Society of Petroleum Engineers.
Shenglai Yang is a full professor at the China

University of Petroleum, Beijing. He holds a Ph.D
from the China University of Mining and Technology, Beijing, and is a member of the Society of
Petroleum Engineers.
Yu Pu is an MS candidate at the China University

of Petroleum, Beijing.
Feng Zhou is an engineer for Sinopecs Southwest Oil & Gas Co. He holds an MS in petroleum
engineering from the China University of Petroleum, Beijing.
Ye Zhang is vice president of the Chongqing

Institute of Geology and Mineral Resources in
China. He holds an MS in petroleum engineering
from Chengdu University of Technology, China.
International Petroleum Week

9 11 February 2016
InterContinental Park Lane, London
Hosted by:
Navigating through uncertainty

IP Week Dinner
2016 speakers include:
Guest of Honour and Speaker:
Ryan M. Lance
Chairman and Chief
Executive Ofcer,
ConocoPhillips
Dr Fatih Birol HonFEI
Hosnia S. Hashim
Andr Goffart
Executive Director,
International Energy Agency
VP Operations,
Kuwait Foreign Petroleum
Exploration Company
Senior Vice President,

Development and Support
to Operations,
Total S.A.
View the latest programme and speaker line up at www.energyinst.org/ip-week

Enter discount code Oil
and Gas Journal and save 100 off the standard rate*
In partnership with:
IP Week 2016 Gold Sponsors:
160104ogj_58 58
12/28/15 3:14 PM
Register Early!
august 23-25, 2016

greater columbus convention center
Columbus, Ohio, USA
REGISTER BY JULY 18 AND SAVE $105

ON FULL CONFERENCE REGISTRATION.
Join over 1,500 oil and gas, and power professionals for the second annual POWER-GEN Natural
Gas conference and exhibition targeting gas-fired generation related to the development of natural
gas reserves in the Marcellus and Utica shales of the Appalachian Basin. Participate in this
event and join some of the top names in the energy industry to discuss the issues surrounding
technology, operation, construction and maintenance of gas-fired power and production from
unconventional hydrocarbon resources.
TOPICS OF INTEREST
OIL & GAS
Growth in Gas Markets

Contracts and Regulation
Logistical Developments
Evolution of Appalachian Basin Gas Supply
Political Issues
POWER
Large Frame Gas Turbines

Operations and Maintenance
Siting and Construction
Small Gas Turbines and Gas Engines
FOR DETAILS ON REGISTRATION TYPES AND RATES,

PLEASE VISIT WWW.POWER-GENNATURALGAS.COM.
PRESENTED BY:
OWNED & PRODUCED BY:
p o w e r - g e n n a t u r a l g a s . c o m
160104ogj_59 59
12/28/15 3:14 PM
TECHNOLOGY
DRILLING &
PRODUCTION
ESP pump selection, evaluation

improve well inflow, volumes
Kevin P. McCoy
The discharge head connects the equipment to tubing

giving produced fluids a conduit to the surface. A pressure
line from the discharge head to the downhole sensor enables
discharge-pressure measurement.
Each pump stage is formed by combining an impeller and
a diffuser with the matched rotating impeller keyed to the
pump shaft. This creates the lifting force or head.
Warren E&P Inc.

Long Beach, California
Variable-frequency drives (VFDs), allow a much wider operating range on selected electric submersible pump (ESP)
equipment than might otherwise be possible. This can be
beneficial when an ESP is installed in
a new well where the production range
ESP STAGES, HOUSING
is uncertain.
While a pumpjack-operated well is
complex and requires massive equipment, the daily volume of oil or fluids
produced from the well can be easily calculated. Conversely, an electric
submersible pump (ESP) is a simple
device, but its behavior is complex because production volumes are a function of rotational speed and fluid head.
This article provides guidelines for
how to design and size an ESP for new
wells, removing some complexity and
the misperceptions that can accompany it. The article is based on Warren
E&P Inc.s experiences in its California
wells. It is not intended to address very
high viscosity wells, high gas-oil-ratio
(GOR) production, or high temperature-ultra deep wells.
FIG. 1
ESP Systems
Fig. 1 shows an ESP system with a discharge head, pump, intake, seal assembly, a motor connected to the pump by
a long shaft, and a downhole sensor.
60
160104ogj_60 60
Radial
Mixed
Separator
Seal
Motor
Sensor
12/28/15 3:14 PM
TECHNOLOGY
The diffuser directs fluid to the next
impeller and does not rotate. Pump efficiency and head generation is a function of the diameter of the impeller
and the rate of rotation. The smaller
the diameter of the impeller, the less
head generated, which results in more
stages and longer pumps to raise fluid
from the reservoir to the surface.
California operators typically use
ESPs designed for about 100-5,000
barrels of fluid per day (bf/d). Pump
stages can be classified as either radial,
mixed, or hybrid flow. Produced fluids
usually have entrained gas. While the
GOR may be 80-500 scf/bbl, the gasliquid ratio may only be 20-30 scf/bbl.
Oil produced by ESP can be 8-18 API.
FLOW-STAGE FLUID REDIRECTION
FIG. 2
Mixed flow, 120 flow change
Radial flow, 180 flow change
Radial, mixed-stage
160104ogj_61 61
Efficiency, %
Power, hp
Maximum: 1,399.80 b/d
Best efficiency, 1,166.50 b/d
Minimum, 333.29 b/d
Head depth, ft
PUMP PERFORMANCE CURVE*

FIG. 3
Fig. 2 illustrates both mixed and radial-flow stages. Radial stages are ef30
70
3,000
Power
ficient but do not handle gas or solids
Head
well. Radial-flow staged pumps can be
Efficiency
24
56
2,400
run in more benign wells with known
flow ranges, no scale, and limited sand
18
42
1,800
or low-gas content.
Fluid in a radial design is flung
outward to the edge of the stage and
12
28
1,200
then redirected 180 back to the center. From the center, the fluid moves
6
14
600
upward into the next stage, and then
repeats the cycle.
0
0
0
If solids are present in the fluid,
0
450
900
1,350
1,800
2,250
they tend to be directed against the
Production, b/d
diffuser wall during redirection and
*AR Modular TD ESP, 223 stages at 39.99 hz, 2,333 rpm, Sapphire Pressure Gauge 0.98, no viscous correction.
against the central shaft following the
180 change, resulting in severe erosion. This problem worsens as the amount of sand or other
flow and there is less erosion.
solids increases.
Under most circumstances, the lower the solids content of
Radial stages tend to have a very thin vertical section. The
the fluid, the longer the equipment will run. Warren has 17
clearance between the impeller and diffuser is small. Solids
ESPs that have been in operation for more than 84 months.
separation occurs via fluid dynamics, sand grains tending to
Warren recently replaced many long-lived ESPs, largely
drop out and plug the impeller due to restricted flow from
due to corrosion of either the motor (the anode ceased to
the diffuser inward. Scale deposits that break loose can also
function) or holes in the tubing string. Larger anodes, interdamage a radial stage and result in plugging.
nally coated tubing from top to bottom, and chemical capilMixed-flow stages can handle higher gas-fluid ratio wells
lary tubes set to discharge at the anode, alleviate this issue.
and fine particulates better, offering a wider range of operaBelow the pump is an intake that allows fluids (gas, wation than radial-type stages.
ter, and oil) to enter. Separation of some of the gas may occur
Warren has had mixed-flow ESPs handle up to 10% sand
through a static rotor system or a dynamic rotor system that
with the equipment still running after 24 months. In such
imparts a velocity to the stream. Fluids are spun, the gas is
cases the pump was simply moved upward out of the movstripped off from the center, and the fluids move to the outing sand instead of cleaning the wellbore. Mixed flow stages
side of the device to enter the pump.
tend not to redirect fluid and solids as drastically as radial
Below the intake is a seal or protector system. The seals
61
12/28/15 3:14 PM
TECHNOLOGY
TYPICAL MULTIFREQUENCY PLOT, UP-THRUST, DOWN-THRUST REGIONS*
enable expansion or contraction of oil

in the motor, and isolate the oil from
8,000
Down-thrust region
the wellbore. Seals are commonly reFrequency curves
7,000
ferred to as bags or labyrinths. Bags
Productivity
40.0 h
z
6,000 42.5 hz
typically are used for horizontal wells
Best efficiency
45.0 h
z
and labyrinths for vertical wells.
47.5 h
5,000
z
Below the seals is an asynchronous
50.0 h
z
4,000
52.5 hz
motor.
Warren usually runs derated
Up-thrust region
55.0 hz
3,000
57.5 hz
motors
that can handle higher mo2,469 ft
60.0 h
z
mentary electrical currents, resulting
2,000
43.0 hz
in longer run lives and longer times
1,000
between workovers. Its additional
0
horsepower is useful during startups
0
500
1,000
1,500
2,000
2,500
3,000
3,500
when solids have settled in the ESPs
Estimated flow 1,130 b/d
Total flow, b/d
Actual flow
1,100 b/d
upper stages.
*AR Modular ESP TD 1750, 223 stages, no viscosity correction. Pump-setting depth, 4,635 ft; TVD, 3,062 ft, 1,359 psi; facility pressure, 185 ft, 80 psi;
Below the ESPs gauge package is an
estimated friction 69 ft, 30 psi; fluid over pump, 847 ft, 376 psi; total head required, 2,469 ft, 1,093 psi.
anode designed to dispense chemicals
for corrosion control or emulsion control.
EXAMPLE WELL DATA
Table 1
Warren typically powers the ESP with a No. 4 AWG
round cable, which is more than adequate for installations
Well
WTU 2218
up to 175 HP. Wellbore clearance is sufficient to allow pasAPI
037-30331
sage of the cable, and its round shape easily joins to the
AFE no.
WTU-14-1859
pass-through mandrels used in the tubing hangar. Only
Formation
Ranger
tight-clearance liners require a flat cable, which is then
Reservoir pressure, psi
1,200
changed to round in the intermediate casing for cost savings.
Reservoir temperature, F.
143
A 14 or 38 -in. chemical line runs beside the power cable to
Well type
Horizontal (SSWWSS)
a specially designed anode where chemicals are dispensed
Pump setting depth, MD, ft
4,086
through a one-way check valve inside the anode that prePump setting depth, TVD, ft/psi
2,989/1,327
vents high-pressure reservoir fluids from flowing up the
Facility pressure, ft/psi
185/80
chemical line.
Estimated friction, ft/psi
69/30
Warren uses plug-in-style connections at the surface
through the tubing hangar, ensuring isolation of wellbore
Fluid over pump (Year 1), ft/psi
338/150
fluids from the atmosphere while enabling a quick connectTotal head needed (Year 1), ft/psi
2,905/1,193
disconnect feature. The motor and cable can also be tested
Fluid over pump (Year 2), ft/psi
550/244
when the tubing hangar is landed and the blowout preventer
Total head needed (Year 2), ft/psi
2,693/1,193
stack is still on the well, potentially saving time and money.
Casing
7 in. 26.4 #K-55 LT&C
ESPs are powered from the surface and can be run across
Tubing
2 in. J-55 6.5
the line with soft starts or using variable speed drives
Liner
4 in. 11.6 #K-55 LT&C
(VSDs). An across-the-line configuration is less expensive,
Initial production
Year 1
but the pump will only have one speed. Changes in fluid
Gross fluid rate, bf/d
300-1,500
inflow may require the installation of a choke at surface or
Oil rate, b/d
55
recycling of fluids to prevent pumping the well dry. The high
Water rate, b/d
1,450
influx current can also be damaging to the downhole equipWater cut
96%
ment.
Soft starts help initiate production, but once a well is
Oil gravity, API
13.0
running,
the ESP is limited to 60 hz. VSDs allow soft starts
Gas-oil ratio, scf/bbl
50
while at the same time accounting for changes in reservoir
pressure and fluid inflow.
VSDs noise, however, can result in data transmission and
harmonics problems. Their imperfect sine wave can also
lead to cable-insulation stress and hazardous peak voltages.
Warren works with service companies to design equipment
that operates at a typical frequency of 48 Hz, resulting in
Head depth, ft
FIG. 4
5
7
62
160104ogj_62 62
12/28/15 3:14 PM
SEPTEMBER 20-22, 2016

TM
The Woodlands Waterway Marriott Hotel & Convention Center

The Woodlands, Texas USA
WWW.PIPELINEWEEK.COM
OIL & GAS PIPELINE

CONFERENCE
AND
INCLUDING
GITA PODS
USER CONFERENCE
CALL
FOR
ABSTRACTS
DEADLINE TO SUBMIT: FRIDAY, FEBRUARY 12, 2016
ABSTRACTS ARE NOW BEING ACCEPTED FOR THE 3RD ANNUAL PIPELINE WEEK FEATURING THE 25TH ANNUAL
GITA OIL & GAS PIPELINE CONFERENCE & EXHIBITION AND THE 12TH ANNUAL PODS USER CONFERENCE.
GENERAL CATEGORIES INCLUDE:
Asset Management
Mobility
Analytical Planning
Operational Awareness
Integration/Interoperability
Project Planning and

Records Management
Construction Standards/Data
Standards
Convergence of Information
Technology and Operational
Technology Systems
Existing and Emerging

Standards
Pipeline Integrity/Integrity
Management (from GIS or
non-GIS perspective)
FOR ABSTRACT GUIDELINES AND SUBMISSION INFORMATION, VISIT

WWW.PIPELINEWEEK.COM
OWNED & PRODUCED BY:
PRESENTED BY:
FLAGSHIP MEDIA SPONSORS:
160104ogj_63 63
12/28/15 3:15 PM
TECHNOLOGY
PUMP CURVES
Flex 17.5, 205 stages
8,000
70 hz
7,000
55 hz
4,000
50 hz
3,000
45 hz
40 hz
5,000
4,000
3,000
2,000
2,000
1,000
1,000
0
0
500
1,000 1,500 2,000 2,500 3,000 3,500
500
7,000
65 h
z
6,000
60 h
z
5,000
55 h
z
FIG. 5c
3,000
DN17550, 156 stages
FIG. 5d
65 h
z
60 h
5,000
50 h
48 hz
45 hz
z
40 h
z
4,000
6,000
Head depth, ft
Head depth, ft
DN1750, 202 stages
1,000 1,500 2,000 2,500 3,000 3,500

Total flow, b/d
Flow rate, b/d

8,000
FIG. 5b
40.0
h
42.5 z
hz
45.0
h
47.5 z
h
50.0 z
52.5 hz
h
55.0 hz
57.5 hz
60.0 hzz
6,000
60 hz
5,000
TD1750, 223 stages
7,000
65 h
z
6,000
Head depth, ft
FIG. 5a
Head depth, ft
8,000
FIG. 5
60 h
z
4,000
55 h
z
3,000
50 h
z
2,000
45 h
z
40 h
z
2,000
1,000
1,000
0
0
0
500
1,000 1,500 2,000 2,500 3,000 3,500

Flow rate, b/d
ESP run times exceeding 84 months on many wells and generally reaching 60-72 months.
Pump design
Warren uses three standardized pump designs. The first is
for tar formations found at 2,600-2,700 ft total vertical depth
(TVD). The best solution for these formations is a pancakeradial pump, however, the thick initial production of oil-water emulsion precludes running the more efficient pump. A
mixed-flow pump, therefore, is installed even though, later,
water will become the predominant phase.
The Ranger and Upper Terminal formations, from 3,0003,600 ft TVD, typically use a mixed flow pump because of
the wide range of gross-fluid production and the production of fine particulates. Production is as much as 3,500 bf/d
from horizontal wells 250 ft apart, depending on formation
64
160104ogj_64 64
500
1,000 1,500 2,000 2,500 3,000 3,500

Flow rate, b/d
characteristics and injection support.

The Ford formation uses a pancake stage and is set at
mid-perforation, or about 300 ft into the formation at 5,000
ft TVD.
Radials are typically used for gross fluid rates less than
1,000 bf/d that have more water than highly viscous crude
and little to no thick emulsions.
Warren uses mixed-flow stages for higher flow rate wells.
They are effective in the tar formation despite the resulting
inefficiency. Mixed-flow stages handle solids much more efficiently than radial stages, with less plugging and wear.
Warren employs VFDs on all ESP installations. The drive
increases flexibility and optimizes fluid-over-the-pump and
pump rates, allowing a mean time-to-failure of more than
84 months.
12/28/15 3:14 PM
TECHNOLOGY
160104ogj_65 65
PUMP RATE, FREQUENCY RELATIONSHIP
FIG. 6
65
Frequncy, hz
60
55
50
Flex 17.5, 205 stages
DN 1750, 202 stages
TD 1750, 223 stages
DN 1750, 156 stages
45
40
0
500
1,000
1,500
2,000
2,500
3,000
Fluid production, b/d
ESP PUMP PERFORMANCE COMPARISON
FIG. 7
Frequency, pump rate
FIG. 7a
65
D800N, 216 stages
DN1750, 279 stages
60
Frequency, hz
Examples of real-world circumstances

and their effect on design include:
Example 1. An operator was starting production on a new Monterey, Calif., well. Tank measurements showed
inconsistent production volumes. The
pump was running at 43 hz and the
fluid over the pump was 376 psi. The
site typically ran at 80 psi, with estimated friction of 30 psi. The pump
was set at 4,635 ft maximum depth
(MD), or 3,062 ft TVD. A fluid column
of that height exerts 1,359 psi of downward pressure. The required head the
pump had to overcome, therefore, was
1,359 + 80 + 30 376 psi = 1,093 psi,
or 2,469 ft of head.
Fig. 4 demonstrates how to determine the volume produced by the ESP
in these conditions. Draw a line across
the graph at 2,469 ft. Interpolate 42.545.0 hz by drawing a line perpendicular to a tangent on the 42.5 hz curve.
PowerPoint software can create a
bar to position sideways for fluid interpolation or perpendicular to the blue
lines for frequency interpolation.
Estimated pump production was
1,130 bf/d. The wells actual production equaled 1,100 bf/d. The test was
accurate.
Example 2. Four pump suppliers
received the same information regarding the WTU 2218 well in the Ranger
formation (Table 1). The pump was to
be set at 4,086 ft MD or 2,989 ft TVD
(hole angle >80) and needed to handle 300-1,500 bf/d, comprised of 9-57
b/d oil and 214-1,195 b/d water.
Fluid over the pump was designed
for 150 psi, which included back pressure of 80 psi and estimated friction of
30 psi. The total head required to lift
fluid from the reservoir was 2,905 ft
or 1,287 psi.
Fig. 5 shows the four different
pump curves provided by the suppliers. The rates and frequencies for each
of the pumps were derived following
the process outlined in Example 1 (Table 2). Warren prefers to start pumps
at 42 hz, let the gravel pack build and
then run the pump at 48 hz. The slow-
55
45
40
0
200
400
600
800
1,000
1,200
Horsepower requirement, pump rate
FIG. 7b
120
D800N, 216 stages
DN1750, 279 stages
Motor limitation 71.4 hp
100
80
hp
Applications
60
40
20
0
0
200
400
600
800
1,000
1,200
65
12/28/15 3:14 PM
TECHNOLOGY
PUMP RATE-FREQUENCY RELATIONSHIP*

Flex 17-5
205 stages
Flex 17
Rate
Mixed flow
Frequency
TD1750
223 stages
TD 1750
Rate
Mixed flow
Frequency
Table 2
DN1750
158 stages
DN1750
202 stages
DN1750
Rate
DN1750
Rate
Mixed flow
Frequency
Mixed flow
Frequency
100
43.5
250
41.9
200
47.1
100
41.6
200
43.8
500
42.6
500
49.8
200
42.3
500
45.2
750
43.9
700
51.3
500
44.7
1,000
48.0
1,000
45.1
1,000
53.5
1,000
47.9
1,500
52.5
1,500
49.8
1,500
57.4
1,500
52.4
2,000
58.2
2,000
56.6
2,000
62.8
2,000
58.5
2,500
65.3
2,500
66.0
110.1 bf/d/hz
118.6 bf/d/hz
114.5 bf/d/hz
*Rate is measured in bf/d, frequency is measured in hz.
er the pump turns, the less wear-and-tear on the equipment

and the longer the life.
The barrels of fluid moved for each hz change should be
reasonably constant and not flat to control fluid production. The proposed gear is matched with pumps operating at
about 100-120 bf/d/hz change (Table 2).
Fig. 6 plots Table 2 data. The Flex 17-5 pump starts higher
than Warrens normal operating conditions and only reaches
the desired rate of 1,500 bf/d.
The DN1750 158-stage pump runs at 53 hz for 1,000 bf/d.
The DN1750 202-stage and the TD1750 223-stage pumps
have similar characteristics. The TD1750 is a little flatter in
the lower rates, making it marginally harder to control if the
drive software cant tolerate changes of 0.1 hz or less. Both
200+-stage pumps could be used.
lis G. Vickers, Warren Resources Inc.,

and Peter Hege, Luis Moncada, and
Braidon Waggoner, GE Oil & Gas Artificial Lift.
The authors
Kevin P. McCoy (kmccoy@warrenresources.

com) is the petroleum
engineering manager for
Warren E&P Inc.s California fields. Prior to joining
Warren, he held positions with several international companies in operational, development, and management
roles. McCoy holds a BS in mechanical engineering from the
University of Manitoba, Winnipeg.
98.4 bf/d/hz
Michael Anderson (michael.anderson@doverals.

com) is a senior area leader for GE Oil & Gas
Artificial Lift. He has been in the industry for
more than 34 years. Anderson is pursuing a
degree from Arizona State University, Phoenix,
in business management and business communications.
Maximum horsepower
A third example illustrates how to determine maximum
horsepower needed to achieve optimal flow.
Example 3. A supplier had the option of running a
pump in a well with potential production of 100-800 bf/d.
The curves for two different pump types were analyzed and
plotted.
Fig. 7 shows how each pump performed relative to frequency. The first frequency-rate plot shows how sensitive an
ESP pumping rate is to frequency changes. The 279-stage
pump is too difficult to control, with greater potential fluidvolume changes at smaller frequency changes.
The second HP-rate plot shows the horsepower required
at any given rate and the frequency associated with that
horsepower. If the pump is limited by horsepower constraints (as it was in this design) the maximum fluid rate
becomes apparent and redesign might be called for.
Acknowledgments
Manuscripts welcome
Oil & Gas Journal editors are happy to consider for
publication manuscripts about exploration and development, drilling, production, pipelines, LNG, and
processing (refining, gas processing, and basic petrochemicals). These papers may be highly technical in
nature and appeal or they may analyze oil and natural
gas supply, demand, and markets. OGJ accepts manuscripts submitted exclusively to it or those adapted
from oral and poster presentations. An Author Guide
is available at www.ogj.com; click Home, then Submit an article. Or, contact Managing EditorTechnology (chriss@ogjonline.com; 713/963-6211; or, fax
713/963-6282), Oil & Gas Journal, 1455 West Loop
South, Suite 400, Houston TX 77027 USA.
The authors wish to acknowledge the contributions of El-
66
160104ogj_66 66
12/28/15 3:14 PM
The Petroleum Industry
BIG PICTURE
Youve Been Seeking!
NOW AVAILABLE!
Joseph Hilyards timely book provides a broad

perspective on the oil and gas industry, with
primary focus on the United States. It takes the
reader on a tour of the operations used to find
and evaluate resources, and then to produce,
store, and deliver oil and gas.
BENEFITS AND FEATURES
Understand the latest technologies used
in challenging environments, such as ultra
deepwater, shale formations, and tar sands
Expand your knowledge in other areas of the
oil and gas industry
Gain insight into the workings of the global
oil and gas markets
332 Pages/Hardcover/2012
ISBN 978-1-59370-254-0
Price $89.00 US
Learn about the range of products made from

oil and gas
ORDER YOUR COPY TODAY!

www.PennWellBooks.com
1.800.752.9764
160104ogj_67 67
FIND US!
12/28/15 3:15 PM
TECHNOLOGY
Feed-monitoring strategy
improves hydrotreater reliability
Jason Wiens
Craig McKnight
Andre Taguinod
Wayne Schiewe
Syncrude Canada Ltd.
Syncrude Canada Ltd. has devised

and implemented a feedstock monitoring strategy to prevent the reemergence of popcorn coke that previously
caused several production outages of a
light gas oil (LGO) hydrotreater at its
350,000-b/d oil sands operations in
Fort McMurrary, Alta.
To understand the potential for hydrotreater fouling, Syncrude sampled
the hydrotreaters
LGO and naphtha
blending streams,
identifying a relationship between
diene and bromine
numbers.
Using this rePROCESSING
lationship,
Syncrude
developed
separate equations
to minimize the formation of popcorn coke foulant by establishing the
maximum bromine number and coker
LGO (KLGO) content allowable in hydrotreater feed.
SYNCRUDE EXTRACTION PLANT, UPGRADER CONFIGURATION

Mining
Sweet gas to utilities
Extraction,
froth treatment
plant
Sour gas
Fluid coker,
three units
Diluent,
whole
Diluent
bitumen
Coke
Diluent recovery,
three units
Atmospheric
topped Vacuum
bitumen
LGO
Naphtha
hydrotreater,
two units
FIG. 1
Amine,
sulfur
plants
Sulfur
H2
Virgin LGO
LC-Finer,
one unit
Light gas oil

hydrotreater,
two units
Syncrude
Sweet
Premium
H2
Bottoms
H2
Vacuum
distillation,
one unit
Heavy gas oil

hydrotreater,
two units
H2
Vacuum
topped
bitumen
Natural gas
Hydrogen plant,
four units
Syncrudes processes
Syncrudes production of Syncrude
Sweet Premium (SSP) crude oil from
western Canadian oil sands involves a
series of processes, including mining,
extraction, froth treatment, upgrading,
secondary upgrading, and blending.
After its separation from sand during the extraction and froth treatment
stages, resulting bitumen moves to the
upgrader for primary conversion. The
upgrader features three fluid coking
68
160104ogj_68 68
Syncrudes fouling investigation team positively identified popcorn coke formed

through the polymerization of diolefins in ASU feed as the cause of foulant recovered
from the units top tray during a March 2010 bed skim (Fig. 2).
12/28/15 3:15 PM
The 2011 cleaning of consecutive bundles of heat exchangers from an ASU preheat train revealed a peculiar trend: in all cases, the
first heat exchanger in the series of three was spotlessly clean, while the second and third exchangers were heavily fouled (Fig. 3).
units and one LC-Fining hydrocracking unit. Once the bitumens naturally occurring LGO component and diluent
naphtha have been recovered, these streams go to secondary upgrading units, which include two heavy gas oil hydrotreaters, two LGO hydrotreaters, and two naphtha hydrotreaters.
The two LGO hydrotreaters, however, differ in terms of
both feed and function. One unit features single-stage hydrotreating and mainly is used for hydrodenitrification
(HDN) and hydrodesulfurization (HDS) of virgin LGO and
vacuum LGO feed.
The second hydrotreater, or the aromatics saturation unit
(ASU), works in two stages. The first stage primarily involves
HDS and HDN, with the second stage designed to maximize
aromatics saturation. This hydrotreater receives a feed blend
of coker, LC-Finer, treated, and vacuum LGO.
Fig. 1 shows the configuration of Syncrudes extraction
and upgrading operations.
Unplanned outages
Syncrudes ASU completed its inaugural 3-year operational
run from September 2006 to April 2009 without interruptions. After months 9 and 17 during its second operating
cycle, the ASU began to exhibit large drops in first-stage bed
pressure that required feed outages.
To alleviate pressure drop, Syncrude performed skims of
the top catalyst bed. Subsequent analysis of the bed samples
showed that the deposition of popcorn coke formed by polymerization of diolefins led to the pressure drop.
A variety of operating conditions can favor the formation
of popcorn coke.1 Temperatures in the 232-324 C. range
are required for the polymerization reaction to occur. At
temperatures below this range, the polymerization reaction takes place too slowly to cause fouling. At temperatures
160104ogj_69 69
SYNCRUDE UPGRADING
UNITS; AVERAGE DIENE NUMBER
Table 1
Naphtha
LGO
Fluid Coker 1
14.4
6.1
Fluid Coker 2
10.6
5.7
Fluid Coker 3
16.1
7.7
Sample not taken
1.8
n/a
0.7
LC-Finer
Vacuum distillation
unit
above this range, depolymerization dominates.

The second process condition conducive to formation of
popcorn coke is the presence of a sufficiently high concentration of conjugated diolefins. Significant fouling typically
occurs when feed diene numbers above 4 g I/100 g are found
using Universal Oil Products Collection (UOP) method 32682.1
Though Syncrude routinely performs testing of the bromine number (essentially a measure of the concentration of
mono-olefins) in feed sent to its LGO hydrotreaters, little
analysis or monitoring of the feeds diene content was done
before the bed pressure drops that led to ASU feed outages.
The average time to run an analytical diene number test
and receive its results is about 5 hr. Measuring the diene
number of the ASUs direct feed via standard analytical
methods would not provide information quickly enough to
also monitor the operation. Syncrude, as a result, organizing a sampling campaign to measure the bromine and diene
numbers of the source LGO and naphtha found in the upgrader. Based on these data, the team developed correlations
that evaluate the polymerization potential of LGO feed. The
first correlation relates fouling potential to the measured
69
12/28/15 3:15 PM
TECHNOLOGY
EQUATIONS
N D,corr = 0.151 * N br,meas
N D,thresh - 2v D
N br,meas,thresh =
0.151
N D,corr = 0.055 * %KLGO + 1.61
(1)
2v corr = (2v KLGO) 2 + (2v D) 2

N D,thresh - 2v corr - 1.61
%KLGO =
0.055
(4)
2v KLGO = 95% confidence interval in the %KLGO correlated diene number correlationexcluding
(2)
the uncertainty contribution fromEquation1
(3)
N Br,meas = Measured bromine, bBr/100g

N Br,meas,thresh = Maximummeasured value of the Plant 18 -
(5)
2 feed bromine number tolimit fouling for 95% of

the operating time, gBr/100g
Nomenclature
N D,corr = Correlated diene number, gI/100g
2v D = 95% confidence interval in the correlated
N d,tresh = Threshold diene number before commencement
diene number - measured bromine number correlation
of polymerization, gI/100g
2v corr = combined 95% confidenceinterval

in the %KLGO - correlated diene number correlation
%KLGO = Percentage of coker LGOinblendedPlant 18 - 2 feed, %
Correction
bromine number, while the second relates fouling potential to KLGO content.
A previous version of this table appeared in the Dec. 7, 2015, issue of Oil &
Gas Journal. This is the correct version.
Fouling mechanism
NELSON-FARRAR COST INDEXES1

Refinery construction (1946 basis)
Explained in OGJ, Dec. 30, 1985, p. 145.
1962
Pumps, compressors, etc.
222.5
Electrical machinery
189.5
Internal-comb. engines
183.4
Instruments
214.8
Heat exchangers
183.6
Misc. equip. average
198.8
Materials component
205.9
Labor component
258.8
Refinery (inflation) index
237.6
1980
2012
2013
2014
Aug.
2014
July
2015
Aug.
2015
777.3
2,170.6
2,221.1
2,271.9
2,269.9
2,307.7
2,316.2
394.7
514.8
516.7
515.8
515.5
517.3
516.4
512.6
1,047.0
1,046.8
1,052.9
1,055.9
1,061.5
1,063.4
587.3
1,477.0
1,509.9
1,533.6
1,538.7
1,555.9
1,561.1
618.7
1,220.9
1,293.3
1,305.0
1,305.0
1,305.0
1,305.0
578.1
1,286.1
1,317.5
1,335.8
1,337.0
1,349.5
1,352.4
629.2
1,579.7
1,538.7
1,571.8
1,577.0
1,445.6
1,423.0
951.9
3,055.6
3,123.4
3,210.7
3,219.1
3,298.1
3,299.6
822.8
2,465.2
2,489.5
2,555.2
2,562.3
2,557.1
2,548.9
July
2015
Aug.
2015
Refinery operating (1956 basis)

1962
1980
2012
2013
2014
Aug.
2014
100.9
810.5
968.1
1,123.7
1,264.8
1,148.3
934.0
944.8
93.9
200.5
287.9
308.3
312.8
298.8
309.5
310.2
123.9
439.9
1,407.5
1,506.4
1,541.3
1,505.0
1,543.4
1,562.3
131.8
Invest., maint., etc.
121.7
Chemical costs
96.7
Operating indexes2
226.3
489.4
489.1
493.1
503.6
498.6
503.6
324.8
896.5
905.3
939.4
942.0
950.6
947.6
229.2
517.2
502.6
472.3
476.1
443.8
446.1
Fuel cost
Labor cost
Wages
Productivity
Refinery
103.7
Process units
103.6
312.7
637.5
661.8
688.5
674.2
659.9
660.0
457.5
739.0
802.6
865.3
821.3
752.5
755.4
These indexes are published in the first of each month and are compiled by Gary Farrar, OGJ Contributing Editor.
Add separate index(es) for chemicals, if any are used. Indexes of selected individual items of equipment and materials are
also published on the Quarterly Costimating page in first issues for January, April, July, and October.
2
70
160104ogj_70 70
Foulant-sample recovery occurred

during the March 2010 bed skim of a
heat exchanger filter, hydrotreater top
tray (Fig. 2), and top catalyst bed. Samples were tested to determine the fouling mechanism.
Syncrude determined the foulant
had a hydrogen-to-carbon ratio of 0.69
to 0.92. It was also isotropic when
viewed under polarized light. These
sample characteristics were consistent both with those of popcorn coke1
and with Syncrudes past experience,
allowing investigators to positively
identify popcorn coke formed through
polymerization of diolefins in the
ASU feed as the cause of fouling. This
mechanism was confirmed through
observation during a 2011 plant turnaround.
Each preheat train in the ASU uses
three heat exchangers in series to heat
the feed to 300 C. from about 110 C.
before final heating by an associated
furnace.
The 2011 turnaround included
opening and cleaning all heat exchangers. During cleaning, a peculiar
trend emerged: in all cases, the first of
three heat exchangers was spotlessly
clean, while the second and third were
heavily fouled (Fig. 3).
The temperature of foulant formation in the heat exchangers was con-
12/28/15 3:15 PM
TECHNOLOGY
DIENE-BROMINE RATIO
FIG. 4
20
Fluid coker naphtha-LGO
LC-Finer LGO
Vacuum LGO
15
Diene, wt%
sistent with the threshold temperature range for popcorn coke formation
(232-324 C.),1 confirming the investigation teams conclusion that fouling was a result of popcorn coke. Data
showed that popcorn coke was formed
in the heat exchangers, where it eventually spalled off and was entrained
into the catalyst bed.
95% confidence
10
Sampling
Syncrude continued to collect weekly
samples of LGO from its fluid cokers
(FLK), LC-Finer, and vacuum distillation unit (VDU), as well as naphtha from the FLKs. All samples were
nitrogen-blanketed, and exposure to
sunlight was avoided.
Alberta Innovates, Edmonton,
Alta., analyzed the samples diene
(performed by UOP-326-82) and bromine (performed by ASTM D-1159)
content.
0
0
20
160104ogj_71 71
60
Bromine, wt%
80
100
120
NELSON-FARRAR COST INDEXES1

Refinery construction (1946 basis)
1962
Diene, bromine number

Relative to the KLGO, the LC-Finer
and VDU LGO contained only a small
concentration of diolefins. Syncrude
expected this, as virgin material from
the VDU should be relatively saturated, and hydrogenation reactions
should suppress diolefin formation in
the LC-Finer.
Table 1 summarizes diene number
data of samples collected from Syncrudes primary upgrading units.
Results showed there was variation
in measured diene values of KLGO
from the three FLK units, which typically stems from differences in feed
distillation to the units. The sources of
KLGO containing progressively lower
diene numbers were units fed progressively higher fractions of atmospheric-topped bitumen (ATB), which contained approximately 10% virgin LGO
at the time of sampling.
The concentration of diolefins (estimated with diene number) and monoolefins (estimated with bromine
number) are not generally correlated.
Because mono- and diolefins are derived from the cracking of bitumen
pitch in Syncrude feed, Syncrude de-
40

222.5
189.5
Internal-comb. engines
183.4
Instruments
214.8
Heat exchangers
183.6
Misc. equip. average
198.8
Materials component
205.9
Labor component
258.8
Refinery (inflation) index
237.6
1980
2012
2013
2014
Sept.
2014
Aug.
2015
Sept.
2015
777.3
2,170.6
2,221.1
2,271.9
2,276.5
2,316.2
2,315.2
394.7
514.8
516.7
515.8
515.9
516.4
515.5
512.6
1,047.0
1,046.8
1,052.9
1,055.9
1,063.4
1,062.8
587.3
1,477.0
1,509.9
1,533.6
1,536.1
1,561.1
1,563.8
618.7
1,220.9
1,293.3
1,305.0
1,305.0
1,305.0
1,305.0
578.1
1,286.1
1,317.5
1,335.8
1,337.9
1,352.4
1,352.5
629.2
1,579.7
1,538.7
1,571.8
1,582.0
1,423.0
1,414.5
951.9
3,055.6
3,123.4
3,210.7
3,228.3
3,299.6
3,312.0
822.8
2,465.2
2,489.5
2,555.2
2,569.8
2,548.9
2,553.0
2012
2013
2014
Sept.
2014
Aug.
2015
Sept.
2015
Refinery operating (1956 basis)

1962
1980
100.9
810.5
968.1
1,123.7
1,264.8
1,177.1
944.8
906.5
93.9
200.5
287.9
308.3
312.8
301.3
310.2
330.0
123.9
439.9
1,407.5
1,506.4
1,541.3
1,507.3
1,562.3
1,619.4
131.8
Invest., maint., etc.
121.7
Chemical costs
96.7
Operating indexes2
226.3
489.4
489.1
493.1
500.2
503.6
490.8
Fuel cost
Labor cost
Wages
Productivity
Refinery
103.7
Process units
103.6
324.8
896.5
905.3
939.4
944.8
947.6
949.1
229.2
517.2
502.6
472.3
480.4
446.1
429.4
312.7
637.5
661.8
688.5
679.4
660.0
663.2
457.5
739.0
802.6
865.3
833.1
755.4
748.4
These indexes are published in the first of each month and are compiled by Gary Farrar, OGJ Contributing Editor.
Add separate index(es) for chemicals, if any are used. Indexes of selected individual items of equipment and materials are
also published on the Quarterly Costimating page in first issues for January, April, July, and October.
2
71
12/28/15 3:15 PM
TECHNOLOGY
DIENE, KLGO FEED (HYDROTREATER) CONTENT
FIG. 5
80
7
KLGO content
Diene no.
KLGO, wt%
60
5
4
40
3
2
20
Correlated diene, wt%
1
0
August 2010
0
August 2012
August 2011
DIENE VS. KLGO FEED BALANCE
FIG. 6
8
95% confidence
Equation 5
Diene, wt%
2
95% confidence,
Equation 1
0
0
20
40
60
80
100
KLGO, wt%
termined correlation between the two

may be possible.
Fig. 4 shows the relationship between the diene and bromine numbers
for fluid coker, LC-Finer, and virgin
LGO, as well as for coker naphtha.
Equation 1 describes the datas linear relationship.
The 95% confidence limit of the
correlated diene number is 2D=2.0
g I (grams of iodine)/100 g. The correlation describing the diene-bromine
ratio is essentially the same whether exclusively LGO or naphtha data.
LGO-naphtha combined data are used
to correlate diene and bromine numbers.
72
160104ogj_72 72
Equation 1 offers the first tool for

monitoring the fouling potential of the
hydrotreater feed, using the bromine
number as a surrogate for the diene
number.
Because unit operation must remain below the threshold diene number to limit fouling (defined here as the
minimum diene number where polymer formation is significant enough
to cause fouling), the maximum bromine number that should be measured
in the hydrotreater feed stream is obtained by subtracting the correlation
uncertainty using Equation 2.
Defining a threshold diene number, ND,thresh , allows establishment of
the maximum bromine number that

can be measured in the feed stream
without risking significant fouling,
NBr,meas,thresh.
KLGO content-to-fouling
The correlated diene number (obtained
from Equation 1) and the KLGO content in the hydrotreater feed are generally well correlated (Fig. 5).
Fig. 6 presents the relationship between the correlated diene number
and the KLGO content in the ASU
feed. Equation 3 crudely describes this
relationship. Syncrude determined the
uncertainty in the fit of this correlation
to the correlated diene number to be
2KLGO = 1.8 g I/100 g, showing that
correlating the diene number solely to
the KLGO content in the hydrotreater
feed is an oversimplification. The correlation, for instance, assumes the content of LC-Finer LGO is constant in the
feed, as it has a different diene number
than virgin LGO. Syncrude also noted
that the correlation does not account
for the effect of feed distillation on the
FLKs, which can have a substantial
impact on diene content.
But because the correlation in
Equation 2 encompasses an extended
operating historymore than 2 years
of operating datathese variations in
plant operation would be accounted
for in the calculated uncertainty.
A simple combination of uncertainties determines the statistical limit on
KLGO blending. The uncertainty in
the relationship established by Equation 2 is a composite of two individual
uncertainties: the uncertainty in the
correlation between the historical hydrotreater diene number data and the
percentage of KLGO used in blending
Plant 18-2 feed (Equation 2), and the
uncertainty in Equation 1 used to correlate the diene number from the measured bromine number.
Equation 4 combines these uncertainties.
From Equation 4, a combined total uncertainty of 2corr=2.7 g I/100 g.
(95% confidence interval) is calculated
for correlating the diene number from
12/28/15 3:15 PM
TECHNOLOGY
FIRST STAGE ASU PRESSURE DROP*
FIG. 7
Science & Technology, Vol. 21, No. 3-4,

2003, pp. 673-680.
120
Run 2
Run 3
100
Skim
The authors
Pressure drop, psid
80
Jason Wiens (wiens.jason@

syncrude.com) is a senior
engineer in research and
development at Syncrude
Canada Ltd., where he
serves as project leader for
the fluid coker reliability improvement project. He holds
a PhD (2010) in chemical
engineering and BS (2005) in chemical engineering with a specialization in biotechnology,
both from the University of Saskatchewan,
Saskatoon. Jason is a member of APEGA.
Skim
60
40
20
0
June 2009
June 2010
June 2011
June 2012
June 2013
June 2014
* Syncrude alleviated pressure drop excursions during Run 2 by performing bed skims.
the percentage of KLGO in hydrotreater feed (Fig. 3).

Syncrude used the total uncertainty calculated by Equation 4 to establish KLGO blending limits for the
ASU feed. The diene number to target
to minimize foulant production was
determined by rearranging Equation
2 with total correlation uncertainty
(Equation 5).
Determining a threshold diene content, ND, thresh , above which polymerization is deemed significant established a safe operating envelope. The
investigation team determined fouling
due to diolefin polymerization should
be manageable if the percentage of
KLGO calculated in Equation 5 was
not exceeded.
Implementation
As part of Syncrudes production plan,
the maximum KLGO content in the
feed (Equation 5) is targeted, while the
maximum measured bromine number
of the feed (Equation 2) is an absolute
limit.
Fig. 7 presents the pressure drop
across the top bed of the ASU for the
operating cycles before and after im-
160104ogj_73 73
plementation of the new operating

envelopes. The run prior to implementation (Run 2) demonstrated pressure drop excursions after 9 and 16
monthsrequiring bed skims to regain operabilityas well as a critical
pressure drop by the end of the 2year run.
The new operating envelopes were
implemented at the beginning of Run
3. Adhering to the operating envelope
established by the sampling correlations allowed Syncrude to prevent the
reemergence of popcorn coke in the
LGO hydrotreaters.
Although only sporadic Run 3 pressure-drop data are available (Fig. 7),
the ASU was able to achieve its targeted 3-year run cycle without interruption before entering a scheduled spring
2014 turnaround.
Acknowledgments
The authors thank Peter Ronan, Sherry
Noyes, and John Adjaye for their assistance in this work.
References
1. Wiehe, I.A., Mitigation of the
fouling by popcorn coke, Petroleum
Craig McKnight (mcknight.

craig@syncrude.com) has
28 years experience at
Syncrude Canada Ltd., where
he serves as senior technical associate for Syncrude
Research and Development.
He has been responsible
for research projects in
all areas of Syncrudes upgrading operations. McKnight holds an MS (1987) and BS
(1984) in chemical engineering from Queens
University, Kingston, Ont., and is a member of
the Association of Professional Engineers and
Geoscientists of Alberta (APEGA).
Andre Taguinod (andre.
taguinod@esso.ca) joined
Syncrude Canada Ltd. in
2005 after earning his BS in
chemical engineering from
the University of Calgary,
Calgary, Alta. At Syncrude,
he worked as an operations
support engineer in off
sites, gas treating, and hydrotreating. Since
2014, Andre has been on a developmental
assignment as a hydroprocessing engineer at
ExxonMobil Research and Engineering Co.s
Canadian engineering office. Andre is a registered professional engineer in Alberta.
Wayne Schiewe (wayne.
schiewe@gmail.com) is now
retired from his position as
senior technical advisor for
Syncrude Canada Ltd. He
held a number of senior
technical and leadership
positions within Syncrude
in the bitumen processing
operations area, as well as
in research and development. Wayne holds
a BS (1978) in chemical engineering from the
University of Alberta, Edmonton, Alta., and is a
member of APEGA.
73
12/28/15 3:15 PM
e l s o N
-F
a r r a r
u a r t e r l y
INDEXES FOR SELECTED EQUIPMENT ITEMS

Date
Materials Labor
compo- component
nent
1926
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
87.7
93.2
83.2
76.0
72.2
68.0
68.3
73.5
74.3
78.2
86.7
84.7
82.0
82.2
84.5
86.2
86.7
87.6
89.7
100.0
122.4
139.5
143.6
149.5
164.0
164.3
172.4
174.6
176.1
190.4
61.5
64.5
64.5
66.5
60.0
49.0
49.0
55.5
55.0
60.0
66.5
71.5
73.0
74.5
77.0
82.0
86.5
88.5
90.0
100.0
113.5
128.0
137.1
144.0
152.5
163.1
174.2
183.3
189.6
198.2
Misc.
equipment
94.0
89.0
87.0
84.0
82.0
79.0
76.0
74.0
76.0
77.0
80.0
81.0
82.0
83.0
84.0
85.0
86.0
88.0
90.0
100.0
114.2
122.1
121.6
126.2
145.0
153.1
158.8
160.7
161.5
180.5
NelsonFarrar
inflation
index
Date
72.0
71.0
72.0
70.3
64.9
56.6
56.7
62.7
62.7
67.3
74.6
76.8
76.6
77.6
80.0
83.7
86.6
88.1
89.9
100.0
117.0
132.5
139.7
146.2
157.2
163.6
173.5
179.8
184.2
195.3
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Materials
component
201.9
204.1
207.8
207.6
207.7
205.9
206.3
209.6
212.0
216.2
219.7
224.1
234.9
250.5
265.2
277.8
292.3
373.3
421.0
445.2
471.3
516.7
573.1
629.2
693.2
707.6
712.4
735.3
739.6
730.0
Labor
component
208.6
220.4
231.6
241.9
249.4
258.8
268.4
280.5
294.4
310.9
331.3
357.4
391.8
441.1
499.9
545.6
585.2
623.6
678.5
729.4
774.1
824.1
879.0
951.9
1,044.2
1,154.2
1,234.8
1,278.1
1,297.6
1,330.0
Misc.
equipment
192.1
192.4
196.1
200.0
199.5
198.8
201.4
206.8
211.6
220.9
226.1
228.8
239.3
254.3
268.7
278.0
291.4
361.8
415.9
423.8
438.2
474.1
515.4
578.1
647.9
662.8
656.8
665.6
673.4
684.4
NelsonFarrar
inflation
index
205.9
213.9
222.1
228.1
232.7
237.6
243.6
252.1
261.4
273.0
266.7
304.1
329.0
364.9
406.0
438.5
468.0
522.7
575.5
615.7
653.0
701.1
756.6
822.8
903.8
976.9
1,025.8
1,061.0
1,074.4
1,089.9
Date
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Materials
component
748.9
802.8
829.2
832.8
832.3
824.6
846.7
877.2
918.0
917.1
923.9
917.5
883.5
896.1
877.7
899.7
933.8
1,112.7
1,179.8
1,273.5
1,364.8
1,572.0
1,324.8
1,480.1
1,610.5
1,579.7
1,538.7
1,571.8
Labor
component
1,370.0
1,405.6
1,440.4
1,487.7
1,533.3
1,579.2
1,620.2
1,664.7
1,708.1
1,753.5
1,799.5
1,851.0
1,906.3
1,973.7
2,047.7
2,137.2
2,228.1
2,314.2
2,411.6
2,497.8
2,601.4
2,704.3
2,813.0
2,909.3
2,985.6
3,055.6
3,123.4
3,210.7
Misc.
equipment
703.1
732.5
769.9
797.5
827.5
837.6
842.8
851.1
879.5
903.5
910.5
933.2
920.3
917.8
939.3
951.3
956.7
993.8
1,062.1
1,113.3
1,189.3
1,230.6
1,239.7
1,224.7
1,256.4
1,286.1
1,317.5
1,335.8
NelsonFarrar
inflation
index
1,121.5
1,164.5
1,195.9
1,225.7
1,252.9
1,277.3
1,310.8
1,349.7
1,392.1
1,418.9
1,449.2
1,477.6
1,497.2
1,542.7
1,579.7
1,642.2
1,710.4
1,833.6
1,918.8
2,008.1
2,106.7
2,251.4
2,217.7
2,337.6
2,435.6
2,465.2
2,489.5
2,555.2
Yearly refinery construction indexes listed for 85+ years

Gary Farrar
Contributing Editor
Here are yearly values for the Nelson-
Farrar refinery inflation cost index since that was the date of index inception. Val1926.
ues from 1926 to 1945 were back calcuThey are based on 1946 as 100, since lated.
I TEMIZED REFINING COST INDEXES
The cost indexes may be used to convert prices at any date to prices at other dates by ratios to the cost indexes of the same
date. Item indexes are published each quarter (first week issue of January, April, July, and October). In addition the Nelson
Construction and Operating Cost Indexes are published in the first issue of each month of Oil & Gas Journal.
*References
Index for earlier year in

Costimating and Questions
on Technology issues
Code 0543
OGJ
OGJ
OGJ
OGJ
OGJ
OGJ
Code 531-10-1
Code 613
Code 613-0222
Code 613-0281
Code 1022-02-73
Code 613-01-03
Code 613-01-04
Code 613-0267
Code 614
Chemical Marketing
No. 13, May 19, 1958, p. 181

No. 4, Mar. 17, 1958, p. 190
No. 4, Mar. 17, 1958, p. 190
No. 4, Mar. 17, 1958, p. 190
July 7, 1975, p. 72
No. 4, Mar. 17, 1958, p. 190
No. 4, Mar. 17, 1958, p. 190
No. 4, Mar. 17, 1958, p. 190
Oct. 5, 1964, p. 149
Apr. 1, 1963, p. 119
No. 94, May 15, 1961, p. 138
July 5, 1965, p. 117
No. 58, Oct. 12, 1959, p. 186
No. 94, May 15, 1961, p. 138
No. 58, Oct. 12, 1959, p. 186
Oct. 5, 1964, p. 149
No. 58, Oct. 12, 1959, p. 186
Operating cost
(based on 1956 = 100.)
1954
1972
2012
2013
2014
Aug.
2015
Power, industrial electrical

Fuel, refinery price
Gulf cargoes
NY barges
Chicago low sulfur
Western US
Central US
Natural gas at wellhead
Inorganic chemicals
Acid, hydrofluoric
Acid, sulfuric
Platinum
Sodium carbonate
Sodium hydroxide
Sodium phosphate
Organic chemicals
Furfural
98.5
85.5
85.0
82.6
84.3
60.2
83.5
96.0
95.5
100.0
92.9
90.9
95.5
97.4
100.0
94.5
131.2
152.0
130.4
169.6
168.1
128.1
190.3
123.1
144.4
140.7
121.1
119.4
136.2
107.0
87.4
137.5
1,042.4
923.8
3,403.2
3,460.4
3,238.2
4,176.7
3,368.3
2,499.5
1,215.3
414.9
439.1
1,224.5
800.8
1,097.6
844.2
1,048.9
1,513.7
1,008.5
1,064.2
3,403.2
3,460.4
3,238.2
4,176.7
3,368.3
3,189.3
1,138.7
414.9
439.1
1,153.0
750.3
1,028.4
844.2
1,037.0
1,496.5
1,077.8
1,211.5
3,403.2
3,460.4
3,238.2
4,176.7
3,368.3
3,912.8
1,083.7
414.9
439.1
1,098.4
714.0
978.6
844.2
1,002.4
1,446.5
1,173.9
899.1
3,403.2
3,460.4
3,238.2
4,176.7
3,368.3
2,378.4
1,077.1
414.9
439.1
928.8
709.5
972.6
844.2
832.3
1,201.1
MEK, tank-car lots
82.6
87.5
625.0
625.0
625.0
625.0
Reporter
Phenol
90.4
47.1
500.3
500.3
500.3
500.3
Code 614-0241
74
160104ogj_74 74
No. 58, Oct. 12, 1959, p. 186
12/28/15 3:15 PM
o s t i m a t i N g
I TEMIZED REFINING COST INDEXES
*References
Index for earlier year in

Costimating and Questions
on Technology issues
1,562.3
503.6
Employ & Earn

Employ & Earn
No. 41, Feb. 16, 1969

No. 41, Feb. 16, 1969
2,866.3
3,848.5
3,210.7
2,950.6
3,947.7
3,299.6
Eng. News Record

Eng. News Record
OGJ
No. 55, Nov. 3, 1949

No. 55, Nov. 3, 1949
May 15, 1967, p. 97
1,780.7
1,169.8
1,342.5
2,072.6
1,728.2
952.5
1,305.4
1,046.5
516.7
1,107.4
1,395.8
798.0
1,046.8
1,293.3
1,171.5
1,310.4
1,294.2
1,421.5
2,080.4
1,509.9
1,951.1
1,379.9
999.5
2,059.5
1,827.1
1,204.8
1,375.6
2,077.9
1,743.1
963.2
1,360.7
1,086.9
515.8
1,125.3
1,400.6
798.2
1,052.9
1,305.0
1,178.5
1,320.9
1,312.7
1,457.9
2,099.7
1,533.6
2,014.9
1,489.7
1,025.0
2,112.1
1,764.0
1,235.6
1,404.7
2,111.9
1,729.4
985.7
1,430.4
1,129.4
516.4
1,123.7
1,395.8
756.4
1,063.4
1,305.0
1,178.5
1,320.9
1,312.7
1,445.7
2,099.2
1,561.1
2,083.9
1,363.4
955.8
1,970.2
Computed
Code 13
Code 1342
Code 135
Code 1015
Code 134
Code 132
Code 133
Code 117
Code 1173
Code 1175
Code 1174
Code 1194
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Computed
Code 1042
Computed
Manufacturer
Code 81
Code 81102
Code 811-0332
July 8, 1962, p. 113

No. 61, Dec. 15, 1949
No. 20, Mar. 3, 1949
May 30, 1955, p. 104
Apr. 1, 1963, p. 119
No. 20, Mar. 3, 1949
No. 22, Mar. 17, 1949
Oct. 2, 1967, p. 112
May 2, 1955, p. 104
May 2, 1955, p. 104
May 2, 1955, p. 104
No. 31, May 19, 1949
No. 36, June 23, 1949
Mar. 16, 1964, p. 154
Mar. 16, 1964, p. 154
Mar. 16, 1964, p. 154
July 1, 1991, p. 58
June 8, 1963, p. 133
June 27, 1955
No. 34, June 9, 1949
July 4, 1988, p. 193
No. 7, Dec. 2, 1948
No. 7, Dec. 2, 1948
July 5, 1965, p. 117
1,480.2
1,824.2
1,956.2
1,399.3
1,510.6
1,871.3
1,983.2
1,410.4
1,540.5
1,899.9
2,017.8
1,424.6
1,563.7
1,928.8
2,031.7
1,407.0
Code 114
Code 112
Code 1191
Code 621
Feb. 17, 1949

Apr. 1, 1968, p. 184
Oct. 10, 1955, p. 267
May 16, 1955, p. 117
346.9
319.9
337.5
330.6
349.4
365.5
225.9
221.2
386.7
265.5
246.4
125.3
350.9
3,343.8
3,227.7
2,170.6
1,837.6
1,387.7
1,984.2
1,031.9
1,101.8
2,211.1
3,270.2
1,154.5
699.2
2,331.4
3,363.2
2,907.9
2,221.1
1,727.8
1,356.2
1,889.0
982.5
1,049.0
2,073.8
2,946.5
1,152.3
674.4
2,384.3
3,392.1
2,895.4
2,271.9
1,775.9
1,419.2
1,969.8
1,024.5
1,093.8
2,153.6
2,933.8
1,181.8
692.8
2,445.5
3,365.3
2,576.6
2,316.2
1,536.2
1,408.7
1,666.9
866.8
926.4
1,911.4
2,611.4
1,175.9
635.3
2,471.2
Code 1015-0239
Code 1017-0611
Code 1141
Code 1017
Code 1017-0831
Code 1017-0711
Code 1017-0733
Code 1017-0755
Code 1017-0400
Code 1017-0622
Code 1072
Computed
Code 1149
Jan. 3, 1983, p. 76
Jan. 3, 1983, p. 76
No. 29, May 5, 1949
Jan. 3, 1983, p. 73
Apr. 1, 1963, p. 119
Jan. 3, 1983, p. 73
Jan. 3, 1983, p. 73
Jan. 3, 1983, p. 73
Jan. 3, 1983, p. 73
Jan. 3, 1983, p. 73
No. 5, Nov. 18, 1949
Oct. 1, 1962, p. 85
No. 46, Sept. 1, 1940
Nelson-Farrar Refinery (Inflation Index)

(1946)
179.8
438.5
2,465.2
2,489.5
2,555.2
2,548.9
OGJ
May 15, 1969
Nelson-Farrar Refinery Operation

(1956)
88.7
118.5
637.5
661.8
688.5
660.0
OGJ
No. 2, Mar. 3, 1958, p. 167
Nelson-Farrar Refinery Process Operation

(1956)
88.4
147.0
739.0
802.6
865.3
755.4
OGJ
No. 2, Mar. 3, 1958, p. 167
Operating cost
(based on 1956 = 100.)
1954
1972
2012
2013
2014
Aug.
2015
88.7
97.2
210.0
197.0
1,407.5
489.4
1,506.4
489.1
1,541.3
493.1
Construction labor cost (1946 = 100)

Skilled const.
174.6
Common labor
192.1
Refinery cost
183.3
499.9
630.6
545.9
2,746.0
3,636.7
3,055.6
2,796.5
3,732.8
3,123.4
161.4
143.6
144.7
193.1
188.1
159.1
141.1
138.5
159.9
157.7
171.2
161.9
150.5
171.7
190.7
156.8
151.0
173.8
154.6
198.5
197.8
181.2
238.0
324.4
212.4
252.5
322.8
274.9
342.0
218.4
199.6
216.3
211.0
271.0
149.3
233.3
274.3
266.7
281.9
278.5
346.5
328.4
272.4
353.4
303.9
310.6
1,804.9
1,136.8
1,338.5
2,020.7
1,718.2
935.0
1,270.5
1,016.7
514.8
1,098.6
1,368.3
815.7
1,047.0
1,220.9
1,133.7
1,229.3
1,199.2
1,424.4
2,027.4
1,477.0
1,960.4
1,210.0
870.6
1,793.9
159.9
165.9
161.9
159.0
278.5
324.4
269.1
231.8
195.0
182.7
166.5
187.1
198.7
187.0
177.0
169.0
193.4
180.0
147.3
123.0
197.0
Operating labor cost (1956 = 100)

Wages and benefits
Productivity
Equipment or materials (1946 = 100)

Bubble tray
Building materials (nonmetallic)
Brickbuilding
Brickfireclay
Castings, iron
Clay products (structural, etc.)
Concrete ingredients
Concrete products
Motors and generators
Switchgear
Transformers
Engines (combustion)
Exchangers (composite)
Copper base
Carbon steel
Stainless steel (304)
Fractionating towers
Hand tools
Instruments (composite)
Insulation (composite)
Lumber (composite)
Southern pine
Redwood, all heart
Machinery
General purpose
Construction
Oil field
Paintsprepared
Pipe
Gray iron pressure
Standard carbon
Steel-mill products
Alloy bars
Cold-rolled sheets
Alloy sheets
Stainless strip
Structural carbon, plates
Welded carbon tubing.
Tanks and pressure vessels
Tube stills
Valves and fittings
*Code refers to the index number of the Bureau of Statistics, US Department of Labor, Wholesale Prices Itemized Cost Indexes, Oil & Gas Journal.
160104ogj_75 75
75
12/28/15 3:15 PM
TECHNOLOGY
FRP crude pipeline shows

thermal superiority to steel
Kun Huang
Jiali Wu
Hongfang Lu
Chengdu, China
Yi Jiang
TRANSPORTATION
CNOOC Energy Technology & Services

Oilfield Construction Engineering
Tianjin, China
Liangxue Cai
Thermal insulation properties of fiber-reinforced (FRP) plastic crude oil pipelines are superior to seamless steel pipelines.
Operating a crude oil pipeline at too low a temperature can
lead to wax precipitation, a major economic and safety prob-
3D SOIL MODEL
y
z
CROSS-SECTION MESHING
lem. Not only does wax precipitation lead to increased energy

consumption during operation, but it can also initiate pipeline gelling. On the other hand, too high a temperature can
cause serious scaling. Scaling not only affects the quality of
the crude oil, but also causes pipeline corrosion and reduces
service life.
In the last 5 years studies on crude pipeline operating
temperatures have narrowed their focus to oil temperature in
pipelines, heat loss from pipelines, heat transfer coefficients,
and the temperature field around pipelines during their normal operation.1-5 One study, focused on temperature drop after shutdown of buried hot oil pipelines, used Fluent software
to simulate the soil-temperature field distributions at different air and oil temperatures and for different coefficients of
thermal conductivity and also obtained temperature field
distributions under the influence of different conditions.
This study simulated non-steady states based on steady
states and obtained temperature field distributions after shutdown.6 It examined the Hong-Ke fiber-reinforced plastic oil
pipeline running from the Honglian
pump station of the Hongshanzui field
to a nearby thin-oil processing station.
FIG. 1
It establishes physical and mathematical models for non-steady state heat
transfer between the pipeline system
and the soil and defines boundary
conditions, using Fluent for numerical simulations. Pipephase software
was used for simulation analysis of
the temperature drop along the HongKe pipeline. A field experiment on the
Hong-Ke pipeline validated the results
accuracy and reliability. The study
used air temperature, period of operation, pipeline material, oil flow temperature, buried depth, and distance
FIG. 2
to the pipeline wall as influencing factors.
Basic theory
Soil temperature generally remains
constant below the surface zone. This
article does not consider phase changes in the earth or changes in its thermal
parameters under natural conditions
76
160104ogj_76 76
12/28/15 3:15 PM
EQUATIONS
and makes the following assumptions:
Only pure heat conduction exists
between the pipeline and soil.
Thermal contact resistance between the pipeline and soil can be (and
is) ignored.
Soil surrounding the pipeline is a
homogeneous medium.
Changes in elevation along the
pipeline are also ignored.
The pipelines thermal influence
zone ranges from -10 m to 10 m on its
horizontal axis and from -8 m to 0 m
vertically.
These assumptions led to a rectangular heat dissipation model with
the following dimensions: a pipeline
length of 50 m, an axial cross section
of 20 8 m, and a coverage depth of
1.0 m (Fig 1). A convective heat transfer boundary condition was specified
on the earths surface, with adiabatic
boundary conditions at X = -10 m and
X = 10 m and Y = -8 m defined as the
constant temperature boundary condition.
Gambit software established a 3D
model of the soil surrounding the buried pipeline, generating the mesh used
in Fluent (Fig. 2).
Mathematical model
Fluent uses different control equations
for different heat transfer boundaries
when simulating the temperature field
of soil. The non-steady state conditions
of buried hot oil pipelines involve the
mass conservation equation, momentum conservation equation, energy
conservation equation for fluid flows
inside pipelines, the heat conduction
equation for soil outside pipelines, and
the standard k- two-equation model. Reynolds averaged Navier-Stokes
(RANS) methods calculate turbulence.7 8
Equation 1 is the continuity equation, Equation 2 the momentum conservation equation, and Equation 3 the
energy conservation equation.
The equations contain turbulent
stress, pu i 'u j ', and the additional turbulent heat flux, C p p u i 'T', and therefore are not closed. The Reynolds
160104ogj_77 77
2t
2
2t + 2 | Q tu i V = 0
2 Q tu i u j V
2t 2
2 uj
2
1 2
2 ui
= - 2 x + 2 x S n 2 x - tu i ' u j ' X + 3 2 x T n 2 x Y
2x
2t Q tu i V +
2tT
2tT
2
2T
C p T 2 t + u i 2 x Y = 2 x S k 2x i - C p tu i ' T' X + z' + S T
n 2 ' 2 t
f = t S 2ux XS 2ux X
2 Q ku i V
2k
2 n eff 2k
2u i 2
2u i 2u j 2
t 2t + t 2x j = 2 x S v k 2 x X + n t # 2 | S 2 x X + | S 2x j + 2x i X & - tf
2 Q fu i V
2f
f2
f
2 n eff 2f
2u i 2
2u i 2u j 2
t 2t + t 2x i = 2x i S v f 2x i X + C 1 n t k # 2 | S 2x i X + | S 2x i + 2xi X & - C 2 t k
n t 2T
2u i 2u i 2
tu i ' u j ' = n t T 2x j + 2xi Y - 3 tkd ij, t u i 'T = Pr 2x i
t
n eff = n + n t, n t = C n C D tk 2 /f
(1)
(3)
(2)
(4)
(5)
(6)
(7)
(8)
Where:
i and j = indicators1, 2, and 3
t = oil density inside the pipeline,kg/cum
u = velocity vector,m/s
p = oilpressure,Pa
T = oil temperature,K.
z = dissipation function
k = turbulence kinetic energy, sqm/sq s
f = dissipationrate sq sm/cu s
n = oil dynamic viscosity,Pa $ s
n t = turbulant viscosity,kg/ (m $ s)
C 1, C 2, C n and C D = empirical constants, the default values of whichinFLUENCE =
1.44,1.92, 0.09, and1.0 respectively
Prt = turbulent Prandtl number, 0.85 by default
2Ts
2
2
2
2Ts
2Ts
2Ts
t s c s 2t = 2x S m s 2x X + 2y S m s 2y X + 2z S m s 2z X
Where:
t s = soil density,kg/cum
(9)
c s = soil specific heat capacity, J/ (kg $ K.)

m s = soil termal conductivity coefficient, W/ (m $ cC)
2Ts
m s 2y = a a Q Ts - Ta V
2Ts
-m s 2r r = R = a 0 Q T - T0 V
Ts r = R = T0 r = R
2Ts
2x = 0
Ts = Tn
0
+
0
(10)
(11)
(12)
(13)
(14)
Where:
a 0 = heart transfer coefficient, oil - to - pipe wall; W/ (m $ cC)
a a = heart transfer coefficient, soil - to - atmosphere; W/ (m $ cC)
T0 = temperature,inside pipe wall,K.
R 0 = pipe inside radius,m
Ta = air temperature,K.
Tn = temperature, constant subsurface zone;K.
L = horizontal thermalinfluence boundary,m
H = vertical thermalinfluence boundary,m
77
12/28/15 3:15 PM
TECHNOLOGY
3D MESHING
FIG. 3
SOIL TEMPERATURE DISTRIBUTION*
FIG. 4
279
280
281
282
283
284
285
SOIL TEMPERATURE, STEADY-STATE FRP PIPE*
279
284
289
294
299
FIG. 5
305
310
313
* K.
SOIL TEMPERATURE ISOTHERMS*
FIG. 6
290
288
286
284
282
280
278
* K.
78
160104ogj_78 78
stress equation was introduced, and

the k- model used, to close the equations. Equation 4 defines, , the turbulence dissipation rate, and allows the
standard two-equation model to be
expressed as shown in Equations 5-8.9
The temperature field of the soil
surrounding a pipeline can be regarded as the temperature field of a homogeneous semi-infinite solid under periodic boundary conditions, and can
be described using a differential equation. Equation 9 is the 3D unsteady
heat transfer equation for soil.
Boundary conditions
The assumptions of the physical model led to the boundary conditions defined by Equations 10-14. Equation
10 represents the convective heat exchange between soil and atmosphere
and Equations 11 and 12 the conductive heat exchange between soil and
the FRP pipeline. Equation 13 defines
the adiabatic boundaries of the vertical planes 10 m away from the pipeline
to both the left and right and Equation 14 the constant temperature of
the boundary 8 m below the surface.
The combination of flow and pipe
diameter determined inlet velocity within a preselected inlet boundary condition. The pipelines outlet
boundary condition was set as free
outflow.
Project profile
The Xinjiang Petroleum Investigation
Design and Research Institute designed the Hong-Ke FRP oil pipeline,
which began operation end-2011. The
pipeline is 31.7 km long with a nominal diameter of 200 mm. It lies 1 m
below the surface and operates at a
safe pressure of 5.5 MPa. The soils in
the areas along the pipeline are primarily loam and light loam. The climate is characterized by cold winters,
hot summers, and large temperature
differences between night and day.
Table 1 details physical parameters
of both Hong-Ke and the surrounding soil, as used in Fluent calculations.
Properly reflecting data changes re-
12/28/15 3:15 PM
TECHNOLOGY
Fig. 4 shows the temperature distribution of soil under natural conditions

and Fig. 5 the temperature distribution of the surrounding soil when the
FRP oil pipeline reaches steady state
at an air temperature, tf, of 12 C. and
an oil temperature, tw, of 40 C. Under
natural conditions the soil exhibited a
linear temperature field, in stark contrast to the curved temperature field
shown while under the influence of
the hot oil pipeline.
Fig. 6 shows the soils temperature
field in isotherms, highlighting the
curved distribution in place while the
pipeline is operating. According to the
temperature values in the figure, as
the soil depth increases, the effect of
the hot oil pipeline on the temperature
field lessens.
160104ogj_79 79
38
36
34
32
0
10
15
20
Pipeline length, km
25
30
35
HONG-KE, AUGUST 2014
FIG. 8
Field experiments
Numerical simulation
Validation
10
15
20
Pipeline length, km
25
30
35
SOIL TEMPERATURE, NO PIPELINE
FIG. 9
25
20
Temperature, C.
Validating the established numerical

simulation model of the temperature
field required comparison with HongKe. The pipelines length was problematic when using Fluent, as it can
suffer errors when simulating models
with a high length-width ratio. Pipephase, therefore, was used for simulation validation of the temperature
changes along the pipeline. The temperature value of the soil at the buried
depth calculated by Fluent was used as
the ambient temperature in Pipephase
simulations, which were in turn used
to validate the accuracy of the temperature value of the soil.
FRP pipe wall roughness measured
0.00533 mm, with a thermal conductivity coefficient 0.4 w/(mC.). The
thermophysical parameters of the soil
and flows, pressures, and tempera-
FIG. 7
40
Temperature, C.
Numerical simulation
HONG-KE, AUG. 1, 2014
Average temperature drop, C.
quires using dense meshes at the wall

of the pipeline. Sparse meshes are used
in the large area outside the pipe wall
to reduce the size of the model. The
crude in the pipeline and the pipewall
were displayed primarily as hexahedral
meshes, and the soil outside the pipeline primarily as triangular meshes.
Figs. 2-3 show meshing results.
15
10
5
Depth, m
0.5
0.8
1.0
1.5
-5
2.0
3.0
4.0
-10
100
200
Day
300
400
79
12/28/15 3:15 PM
TECHNOLOGY
TEMPERATURE COMPARISON*
FIG. 10
10 hr
500 hr
1,000 hr
1,500 hr
tures at the inlet and outlet of the pipeline were set to the same values as the
operating parameters set in the Fluent
simulation. Table 2 shows simulated
soil temperatures at 1 m based on air
temperature changes in August 2014.
Fig. 7 illustrates the temperature-drop
curve along the Hong-Ke pipeline Aug.
1, 2014.
The temperature-drop curve shows
the rate of decline decreasing as distance grows. Table 3 and Fig. 8 show
temperature drop along the Hong-Ke
pipeline for 30 days in August, including errors. Comparing the data obtained through the software simulation
with the data from the field operation
shows a consistent trend in temperature drop and some errors in values.
When Fluent simulated soil temperature, the air temperature outside
the soil was assigned the daily mean
temperature instead of changing with
time. The thermal conductivity coefficient of soil also changes as air temperature changes, but was set to a fixed
value during Fluent simulation, causing the values obtained through simulation to differ from those obtained
in the field. The simplified simulation
pipeline showed high accuracy and
validated the correctness of the model.
Air temperature
Fig. 9 shows 2014 simulation results
for soil temperature at depths of 0.54.0 m as air temperature changes. Natural temperature curves for the soil
unaffected by the pipeline appeared as
a group of smooth cosine curves. As
depth of the soil increased, the amplitude of the cosine curves decreased
gradually until approaching zero. Temperature changes also shrank as depth
increased. Temperature field results
under natural conditions simulated by
Fluent were consistent with reality.
2,000 hr
2,650 hr
Operation period
279
* K.
80
160104ogj_80 80
284
289
294
299
305
310
313
Simulated changes in soil and crude

oil temperatures occurred for periods
ranging from 0 to 2,650 hr (Fig. 10).
The pipeline constantly released heat
during its operation. Affected by the
12/28/15 3:15 PM
TECHNOLOGY
hot pipeline, the soils initial temperature field was redistributed. The soil
near the pipeline initially was affected greatly by the hot oil pipeline. As
pipeline operation continued, heat diffused. The soil temperature field did
not immediately reach steady state due
to delays in its temperature waves.
Comparison also shows the soil
temperature not initially reaching
stability. After 10 hr of operation, the
pipeline had only had a small effect,
heat diffusion limited to the pipe wall.
An obvious soil temperature increase
only appeared after 500 hr.
Pipeline material
Different pipeline materials have different thermophysical parameters, different coefficients of thermal conductivity, and different thermal insulation
properties. This article studied both
FRP and seamless steel pipelines. Table
4 shows their performance parameters.
Fig. 11 shows temperature distribution of the soil after crude transport
through both an FRP pipeline and a
seamless steel pipeline, with a steady
state reached at an oil flow temperature of 40 C. At this state the temperature of soil surrounding the seamless
steel pipeline reached 37 C., while
that of soil surrounding the FRP pipeline was 25 C.
The FRP pipeline had a smaller ef-
PHYSICAL PARAMETERS
Table 1
Soil density, kg/cu m

Soil specific heat capacity, J/(kgC.)
Soil thermal conductivity coefficient, W/(mC.)
Thermal conductivity coefficient, FRP pipeline; W/(mC.)
Thermal conductivity coefficient, oil; W/(mC.)
Convective heat transfer coefficient, soil-to-atmosphere; W/(mC.)
Heat transfer coefficient, oil flow-to-inside pipe wall; W/(mC.)
Wind speed, m/s
Average air temperature, C.
Lower soil boundary temperature, C.
Buried depth, m
ID, m
WT, m
1,800
2,500
0.95
0.40
0.14
25.06
117.88
3.7
7.8
6.0
1.0
0.190
0.005
SOIL TEMPERATURE
Date, August
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Table 2
Atmospheric temperature, C.
Soil temperature, 1-m depth; C.
29.5
31.5
29.5
28.5
28.5
27.0
27.5
25.0
26.5
27.5
24.0
24.0
22.5
22.0
23.5
21.0
19.0
21.0
22.5
25.0
25.5
27.5
28.5
27.5
23.5
23.0
25.0
26.5
26.5
18.5
13.48
13.55
13.62
13.69
13.74
13.80
13.93
13.99
14.12
14.18
14.25
14.31
14.39
14.45
14.52
14.59
14.66
14.72
14.81
14.89
14.92
14.99
15.08
15.14
15.27
15.35
15.39
15.42
15.48
15.55
TEMPERATURE DISTRIBUTION*
FIG. 11
FRP pipeline
Seamless steel pipeline
298
292
310
288
286
284
282
296
294
292
29
290
288
286
284
282
* K.
160104ogj_81 81
81
12/28/15 3:15 PM
TECHNOLOGY
ENVIRONMENTAL EFFECTS ON SOIL TEMPERATURE
FIG. 12
40
Temperature, C.
30
20
Oil flow temperature
10
Atmospheric
temperature
Oil temperature, C.
20
30
40
50
-10
-20
-30
0
100
200
Day
300
SOIL TEMPERATURE WITH PIPELINE
400
FIG. 13
30
Temperature, C.
25
Buried depth, m
0.8
1.0
1.2
1.4
1.6
20
15
100
200
Day
300
SOIL TEMPERATURE VS. PIPE CENTER
400
FIG. 14
24
22
Horizontal
Vertical, downward
Vertical, natural temperature field
20
18
Oil flow temperature studies used tw

of 20 C., 30 C., 40 C., and 50 C.
to analyze changes in soil temperature
with time. A certain point in the soil
surrounding the pipeline was studied
and any changes in the temperature
at this point with changes in the air
temperature and oil flow temperature
noted (Fig. 12).
Oil flow temperature inside the
pipeline significantly affected the temperature of the surrounding soil. The
thermal insulation performance of the
FRP pipeline and delay in the soils
temperature waves caused temperature changes in the soil to lag changes in air temperature. The lowest soil
temperature occurred 55 days after the
lowest air temperature.
Buried depth
10
Temperature, C.
fect on the temperature field of the

surrounding soil than the seamless
steel pipeline and an increasing number of oilfields in China are using FRP
pipelines to transport crude oil.
16
Ensuring all other transportation conditions were unchanged, simulation

used a buried pipeline depth of 0.8-1.6
m and an oil flow temperature of 30
C. to obtain soil temperature changes. Fig. 13 shows the results
Fig. 13 shows soil temperature as
influenced by pipeline depth. As the
air temperature changed, the soil temperature increased at a slower rate as
the buried depth of the pipeline increased. When the buried pipeline
depth was shallow, moreover, the soil
temperature field was significantly affected by the environment, especially
when air temperature was high.
14
Distance to pipeline wall
12
Fig. 14 shows simulation results regarding temperature change over time

for certain points in a horizontal direction from the pipeline and below
the pipeline. Distance from the pipeline influences soil temperature, and
the temperature increases at different
rates. Temperatures of soil near the
10
8
6
4
0
82
160104ogj_82 82
4
Distance from center, m
12/28/15 3:15 PM
TECHNOLOGY
pipeline increased rapidly, whereas
those of the soil far from the pipeline
increased at a slower rate.
In the horizontal direction, temperatures at points 3.5 m away from
the pipelines center almost reached
stable values. The temperature field
of soil 4.5 m vertically away from the
pipelines center was nearly unaffected
by the hot oil pipeline. Temperature
changes of soil outside the pipeline
were concentrated primarily within a
certain range and the assumption of
the simplification of an infinite area
of soil into a finite area was validated
(Fig. 14).
References
1. Wheeler J.A., Simulation of heat
transfer from a warm pipeline buried
in permafrost, American Institute of
Chemical Engineers National Meeting,
New Orleans, Mar. 11-15, 1973.
2. Xing, X.K. and Zhang, G.Z.,
Determination of temperature field of
crude oil pipeline, Oil and Gas Storage
and Transportation, Vol. 18, No. 12,
December 1999, pp. 28-30.
3. Wu M. and An B.W., Crude
pipeline computer model considering overall heat transfer coefficient
changes along pipeline, Oil and Gas
Field Surface Engineering, Vol. 17, No.
3, March 1998, pp. 5-8.
4. Li N.S., Li H.S., Ding D.W., and
Wan S.X., Singular perturbation method of phase change temperature of
petroleum pipeline in seasonally frozen
ground regions for irregular boundary
configuration, Journal of Glaciology
and Geocryology, Vol. 25, No. 4, April
2003, pp. 453-460.
5. He S.S., Yu W.B., Chen W.G., Yu
Z.F., and Jin H.J., Non-linear analysis
of temperature fields around the buried
oil-pipeline in permafrost regions,
Northeast China, Journal of Glaciology
and Geocryology, Vol. 30, No. 2, February 2008, pp. 287-295.
6. Wang M. and Yu Y.Y., Buried
oil pipeline in the CFD simulation of
shutdown temperature drop, Science,
Technology, and Engineering, Vol. 11,
No. 22, 2011, pp. 5281-5285.
160104ogj_83 83
7. Chen L.Q., Wu S.J., Lu H.F.,

Huang K, and Zhao L.J., Numerical
simulation and structural optimization
of the inclined oil-water separator,
Plos One, Apr. 13, 2015.
8. Gong G.C. and Mei Z., Discussion on some concepts of coupling
problem of multi-field in numerical
simulation, Journal of Hunan University, Natural Science Edition, Vol. 26,

No. 6, June 1999, pp. 71-77.
9. Liang D.W. and Wang G.Q.,
Modification of two-equation turbulence models with compressibility and
its application, Acta Aerodynamica
Sinica. Vol. 18, No. 1, January 2000,
pp. 98-104.
The authors
Kun Huang (swpuhk@126.com) is a professor at the School of Petroleum Engineering, Southwest Petroleum University of China, Chengdu.
He specializes in oil and gas gathering and processing technology
theory. He holds an MA in computer application technology from University of Electronic Science and Technology of China, Chengdu.
Jiali Wu (gali511@163.com) is a postgraduate student at
the School of Petroleum Engineering, Southwest Petroleum University
of China, Chengdu. She specializes in oil and gas storage and transportation security theory and technology. She holds a BA in oil and
gas storage and transportation engineering from Southwest Petroleum
University. She is a member of Society of Petroleum Engineers (SPE).
Hongfang Lu (luhongfang_sci@126.com) is a postgraduate student at
of China, Chengdu. He specializes in pipeline stress analysis technology. He holds a BA in oil and gas storage and transportation engineering from Southwest Petroleum University. He is a member of American
Society of Civil Engineers (ASCE).
Yi Jiang (jiangyi2@cnooc.com.cn) is an assistant engineer at CNOOC
Energy Technology & Services Ltd., Tianjin. She specializes in oil and
gas gathering and processing technology theory. She holds an MA in
oil and gas storage and transportation engineering from Southwest
Petroleum University.
Liangxue Cai (cailiangxue-184@163.com) is a lecturer at
of China, Chengdu. He specializes in oil and gas storage and transportation engineering construction technology. He holds a PhD in oil and
gas storage and transportation engineering from China University of
Petroleum, Beijing.
83
12/28/15 3:15 PM
TECHNOLOGY
FUZZY CONTROLLER
FIG. 1
Fuzzy system
Fuzzification
TRANSPORTATION
Defuzzification
Rule
base
Normalization
Fuzzy logic
addresses turbine
vibration on
Algerian gas line
Sensor
Denormalization
Process
Control parameters
Ahmed Hafaifa
University of Djelfa
Algeria
Guemana Mouloud
University of Medea
Algeria
Traditional techniques for addressing

vibration in gas turbines are unable to
adapt to complex modern operating
environments. Uncontrolled dynamic
vibration can lead to premature aging
of turbine components, or unacceptable noise and vibration. To achieve operational efficiency in gas turbine control, this article proposes new methods
based on artificial intelligence tools
and applies them to Sonatrachs gas
compression station Medjebara SC3
in Djelfa, Algeria, on the Hassi RmelBejaia (GG1) pipeline, part of a 1,400km natural gas line connecting Algeria
to Europe. This article proposes using
fuzzy-logic techniques to examine a
gas turbine system that includes several interacting components, the failure
of which could lead to both lost revenues and lost lives.
This study will first examine the
contribution of fuzzy techniques to
the modeling of different control pa-
84
160104ogj_84 84
Sontrachs SC3 gas compression station is equipped with the

Solar Titan 130 gas turbine and auxiliary equipment shown here.
The turbine generates roughly 20,000 hp, helping transport gas
from Algerias Hassi RMel field to Europe (Fig. 2).
12/28/15 3:15 PM
TECHNOLOGY
EQUATIONS
J FCM (Z,U, V) = | | (nik) m D 2ikA
c
(1)
i=l k=l
Where:
Z = data set
U = " n ik $, the matrix of fuzzy partition withC # Ndimension
V i = " V 1, V2, g, V c $, the center vector of classes V i ! 0 n and1 ' i ' c

D 2ikA = (z k - v i) T A (z k - v i)
Where:
(2)
Fuzzy modeling
1 # i # c,1 # k # N
1
n ik =
2
c
| j 1S DD ikAjkA Xm - 1
Where:
(3)
1 # i # c,1 # k # N
|
|
|
=
|
N
vi =
K=1
N
(n ik) m z k
K =1
v 1i
K=1
N
K= 1
(4)
(n ik) m
(n ik(1)) m z k
(n ik(1)) m
;1 # i # c
(5)
D 2ikA = (z k - v 1i ) T A (z k - v 1i )
(6)
Where:
1 # i # c,1 # k # N
1
2
|j 1 S DD ikAjkA Xm - 1
n ik(1) = 0if D ikA 2 0 and n ik(1) ! [0,1]
n ik(1) =
(7)
With | i nik(1) = 1; up to U (1) - U (1 = 1) 1 f
(8)
D 2ika = (z k - v 1i ) T A (z k - v 1i )
(10)
ACDT (k) = F2 (ACDP (k - 1), HPspeed% (k - 1),IGV final (k - 1),

NGV final (k - 1), AT (k - 1), AP (k - 1)
(11)
HPspeed% (k) = F3 HPspeed% (k - 1),FP(k - 1), NGV final (k - 1),IGV final (k - 1))
(12)
LPspeed% (k) = F4 (LPspeed% (k - 1), ACDP(k - 1), FP (k - 1),NGV final (k - 1))

IGV final (k - 1))
(13)
ET (k) = F5 (ET (k - 1), ACDP (k - 1), ACDT (k - 1), IGVfinal (k - 1))
(14)
JK
KK
KK
fitness % = 100 # KKK
KK
KK
K
L
(15)
NO
OO
OO
i=1
OO
N
O
| Q yireal - mean (y real) V2 OOOOO
i=1
P
|Qy
model
Implementing the laws governing

equations of complex operating systems typically requires a model too
complex to implement. This study required the use of modeling techniques
developed from measuring system input and output.
Fuzzy identification and modeling from experimental data are effective tools for approximating industrial
systems. Takagi-Sugeno (TS) is among
the widely used models. Classification
combines with least-square techniques
to build the TS model. In this article,
fuzzy clustering and the different algorithms associated with it will be used
to model the gas turbine based on real
data.
Fuzzy clustering algorithm

(9)
ACDT (k) = F1 (ACDT (k - 1), HPspeed% (k - 1),IGV final (k - 1), AT (k - 1))
160104ogj_85 85
rameters of the gas turbine, allowing

development of a comprehensive model based on fuzzy clustering, using algorithms based on fuzzy inference systems for classification of real data from
the examined turbine. It will then
examine and illustrate the obtained
fuzzy models usability on the SC3 turbine. Results show the effectiveness of
the proposed approach.
- y real V2
i
The fuzzy clustering algorithm is a

benchmark among the different methods of fuzzy clustering based on minimization of the objective function given by Equation 1, and determination
of the required vector by Equation 2.
Equation 3 presents the standard quadratic distance for the space in question, defining the distance between
observation and Zk (center) within the
metric induced by A and m[0,] and
indicating the fuzzy degree of the partition.
In Equation 2, the measurement of
non-similarity expressed by the term
JFCM(Z, U, V) is the sum of the squared
distances between each vector and the
combined Vi and Zk-center of the corresponding
class. The degree of activam
tion, n ik,, corresponding to the vector,
weights the effect of this distance. The
data value of cost function JFCM(Z, U,
85
12/28/15 3:15 PM
TECHNOLOGY
SOLAR TITAN 130 TURBINE

SRV
Fuel gas
FIG. 3
Inlet gas
GCV
Exhaust
Inlet air
NOV
Axial
compressor
IGV
HP shaft
LP shaft
Gas injection
compressor
Combustion
chamber
Injection
wells
Air-bleed valve
form class in the equation of the objective function. The particular choice,
A=I, induces the standard Euclidean
norm given by flowing Equation 9.
When expert knowledge is not
available, data must identify the structure in question. A fuzzy classification
method can then partition the data
into classes. Each of these classes, or
fuzzy regions, is characterized by a
vector called class center. An audit determining degree of similarity groups
the data. An appropriate distance measure, quantifying both the distance between data represented as points in the
feature space and groups of centers,
feeds this audit.
Fuzzy-logic controller
REGROUPED PRESSURE DATA
FIG. 4
535
534
Suction, bar
533
532
531
530
529
392.5
393.0
393.5
394.0
394.5
395.0
395.5
Discharge, bar
V) can be seen as a measure of the total

variance of Zk to the relative centers, Vi.
Equations 3 and 4 minimize the objective function of Equation 1.
To apply the algorithm to data set
Z we chose the class number, 1cN,
the exponent m 1, with stopping tolerance , and the standard matrix, A;
randomly initializing partition matrix U
86
160104ogj_86 86
after repeating the operation for l=0,1,2.

Equation 5 calculated the cluster
centers, and Equation 6 the cluster
centers distances.
Equation 7 updates the partition matrix if Dika00 for 1 i c,1 k N
allowing operation of the proposed algorithm (Equation 8).
The matrix chosen, A, determines
Fuzzy controllers are mainly used

in system control for industries. The
fuzzy-logic controller includes the following main functions:
Fuzzification.
Inference engine.
Rule-based design.
Defuzzification.
Fig. 1 shows a fuzzy controller
block diagram. Fuzzification is the
process of converting real scalar value
into fuzzy classes. This article uses
the Gaussian membership function for
inputs and a triangular membership
function for outputs. The inference engine decides how to process rules using fuzzy input.
Inputs for the fuzzy controller are
error and change in error. The control signals vary according to these
parameters. Once the fuzzy controller
receives input, the rule base is evaluated. The rule base is built using if-then
statements with two input conditions
and one output response. Defuzzification is the process of converting the
degrees-of-membership output linguistic variables into concrete values.
Process description
The SC3 gas compression station is
equipped with a Solar Titan 130 gas
turbine (Fig. 2) and auxiliary equipment. The Solar Titan 130 gas turbine
consists of three main sections: the ax-
12/28/15 3:15 PM
TECHNOLOGY
CLASSIFIED PRESSURE DATA

Clusters
1
534
160104ogj_87 87
2
3
4
533
5
Center
532
531
Application results
530
529
392.5
393.0
393.5
394.0
394.5
395.0
395.5
Discharge, bar
REGROUPED FLOW DATA
FIG. 6
78.10
78.05
78.00
Suction, cu m/hr
Fuzzy clustering provided initial

training of a TakagiSugeno inference
system by extracting a set of rules that
model gas turbine data behavior, using separate sets of input and output
data as arguments in creating a training algorithm. Fig. 4 and 5 show the
data clusters and their centers. Fig. 6
and 7 show these data regrouped and
classified.
An algorithm called fuzzy c-means
collects the data into the fuzzy subsets or clusters based on similarities.
Modelling should not be done across
the entire range of operations data
e.g., startup, shutdown, normal operationbut should instead use a different model for each mode. This article
further divided the turbine into its
subsections, including axial compressor, high-pressure (HP) shaft, lowpressure (LP) shaft, fuel system, and
exhaust system.
Equations 10 and 11 model the axial compressors two main variables:
discharge temperature (ACDT) and
pressure (ACDP). Equation 12 expresses normal HP shaft operations
and Equation 13 normal operations
for the LP shaft. Equation 14 models
normal exhaust system operations. In
all cases Fn,n=1,2...,5 are the fuzzy inference systems trained using real turbine data.
Several hours of turbine data tested
and validated this nonlinear models
accuracy. Fig. 8 shows HP shaft-speed
model fitness of 96.14% and Fig. 9 exhaust system fuzzy model validation of
FIG. 5
535
Suction, bar
ial compressor, the combustion chamber, and the turbine. There is also a
variable inlet guide vane (IGV) in the
axial compressors inlet and a variable
nozzle guide vane (NGV) in its turbine
section.
Two valves at the inlet fuel line of
the combustion chamber are the main
controlling devices of the gas turbine:
one controlling inlet fuel pressure, the
stop ratio valve (SRV), and one governing load-shaft speed, the gas control
valve (GCV).
77.95
77.90
77.85
77.80
77.75
43.6
43.8
44.0
44.2
44.4
44.6
44.8
45.0
45.2
45.4
Discharge, cu m/hr
94%. Equation 15 determined level of

validation.
A fuzzy clustering algorithm has
the essential advantage of automati-
cally generating membership functions, or fuzzy regions, from the data,

using a minimizing cost function. This
technique plays an important role in
87
12/28/15 3:15 PM
TECHNOLOGY
CLASSIFIED FLOW DATA
FIG. 7
78.10
Clusters
1
2
78.05
3
4
Suction, cu m/hr
78.00
Center
77.95
77.90
77.85
77.80
77.75
43.6
43.8
44.0
44.2
44.4
44.6
44.8
45.0
45.2
45.4
Discharge, cu m/hr
HP SHAFT SPEED MODEL
FIG. 8
100
Fitness, %
80
60
40
Real data
Model output
20
0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Time, 10 104 sec
achieving optimal data classification.

Fig. 10 shows performance of the
fuzzy controller.
Bibliography
Abonyi, J., Roubos, J.A., Oosterom,
M., and Szeifert, F., Compact TS-fuzzy
models through clustering and OLS
88
160104ogj_88 88
4.0
4.5
5.0
5.5
plus FIS model reduction, IEEE International Conference on Fuzzy Systems,

Melbourne, Dec. 2-5, 2001.
Abonyi, J., Babuka, R., and Szeifert, F., Modified Gath-Geva fuzzy
clustering for identification of TakagiSugeno fuzzy models, IEEE Transactions on Systems Man and Cybernetics,
Part B: Cybernetics, Vol. 32, No. 5,

October 2002, pp. 612-621.
Babuka, R. and Verbruggen, H.B.,
Identication of composite linear
models via fuzzy clustering, European
Control Conference, Rome, Sept. 5-8,
1995.
Babuka, R., Fuzzy Modeling for
Control, Vol. 12 de International Series
in Intelligent Technologies, Kluwer
Academic Publishers, Norwell, Mass.,
1998.
Bakalis, D.P. and Stamatis, A.G.,
Incorporating available micro gas
turbines and fuel cell: Matching considerations and performance evaluation,
Applied Energy, Vol. 103, March 2013,
pp. 607-617.
Beliakov, G., and King, M. Density
based fuzzy c-means clustering of nonconvex patterns, European Journal of
Operational Research, Vol. 173, No. 3,
Sept. 16, 2006, pp. 717-728.
Bezdek, J.C., Pattern Recognition
with Fuzzy Objective Function Algorithms, Kluwer Academic Publishers,
Norwell, Mass., 1981.
Bezdek, J.C. and Dunn, J.C., Optimal Fuzzy Partitions: A Heuristic for
Estimating the Parameters in a Mixture
of Normal Distributions, IEEE Transactions on Computers, Vol. C-24, No. 8,
August 1975, pp. 835-838.
Buckley, J.J., Universal fuzzy
controllers, Automatica, Vol. 28, No. 6,
November 1992, pp. 1245-1248.
Dunn, J.C., A Fuzzy Relative of
the ISODATA Process and Its Use in
Detecting Compact Well-Separated
Clusters. Journal of Cybernetics and
Systems, Vol. 3, No. 3, January 1973,
pp. 32-57.
Gustafson D.E. and Kessel W.C.,
Fuzzy clustering with a fuzzy covariance matrix, IEEE Conference on
Decision and Control including the 17th
Symposium on Adaptive Processes,
San Diego, Jan. 10-12, 1979.
Hafaifa, A., Guemana, M., and Belhadef, R., Fuzzy Modeling and Control
of Centrifugal Compressor Used in Gas
Pipelines Systems, Multiphysics Modelling and Simulation for Systems Design
and Monitoring, Applied Condition
12/28/15 3:15 PM
TECHNOLOGY
ET MODEL, 94% FITNESS
FIG. 9
750
Temperature, F.
Monitoring, Vol. 2, Springer International,

Cham, Switzerland, pp. 379-389.
Hafaifa, A., Belhadef, R., and
Guemana, M., Modelling of surge
phenomena in a centrifugal compressor: experimental analysis for control,
Systems Science & Control Engineering: An Open Access Journal, Taylor &
Francis, Vol. 2, No.1, Aug. 22, 2014,
pp. 632-641.
Hafaifa, A., Mouloud, G., and Attia
D., Vibration supervision in gas turbine
based on parity space approach to
increasing efficiency, Journal of Vibration and Control, Vol. 21, No. 8, June
2015, pp. 1622-1632.
Hafaifa, A., Mouloud, G., and Attia
D., Fault detection and isolation in
industrial systems based on spectral
analysis diagnosis, Intelligent Control
and Automation Journal, Vol. 4, No. 1,
February 2013, pp. 36-41.
Hafaifa, A., Ahmed, Z.D., and Attia,
D., Fault detection and isolation in industrial control valve based on artificial
neural networks diagnosis, Journal of
Control Engineering and Applied Informatics, Vol. 15, No. 3, March 2013, pp.
61-69.
Hafaifa, A., Attia, D., and Mouloud
G., SCADA for Surge Control: Using
a SCADA Network to Handle Surge
Control in Gas Suppression Systems in
Pipelines, Control Global Journal ISA
Transactions, Vol. 24, No. 3, March
700
Real data
Model output
650
0.0
0.5
1.5
2
Time, 10 104 sec
2011, pp. 69-71.

Hafaifa, A., Ferhat, L., and Kouider,
L., Fuzzy logic approach applied to the
surge detection and isolation in centrifugal compressor, Automatic Control
and Computer Sciences, Vol. 44, No. 1,
January 2010, pp. 53-59.
Halimi, D., Hafaifa, A., and Bouali,
E., Maintenance actions planning in
industrial centrifugal compressor based
on failure analysis, Maintenance and
Reliability, Vol. 16, No. 1, January
2014, pp. 17-21.
Hao, Y., General interval type-2 Mamdani fuzzy systems are universal approxi-
2.5
3.5
mators, Meeting of the North American

Fuzzy Information Processing Society,
New York, NY, May 19-22, 2008.
He, F., Li, Z., Liu, P., Ma, L.W., and
Pistikopoulos, E.N., Operation window
and part-load performance study of
a syngas fired gas turbine, Applied
Energy, Vol. 89, No. 1, January 2012,
pp. 133-141.
Lamfon, N.J., Najjar, Y.S.H., and
Akyurt, M., Modeling and simulation of
combined gas turbine engine and heat
pipe system for waste heat recovery
and utilization, Energy Conversion and
Management, Vol. 39, No. 1-2, January
FUZZY CONTROLLER PERFORMANCE
FIG. 10
HP speed
Exhaust temperature
80
600
70
500
Temperature, F.
Speed, %
60
50
Reference
Measured
40
30
400
Reference
Measured
300
200
20
100
10
0
0
10
12
Time, sec
160104ogj_89 89
14
16
18
20
10
12
14
16
18
20
Time, sec
89
12/28/15 3:15 PM
TECHNOLOGY
TAKE
THE
PLUNGE!
Best-Selling
2nd Edition!
372 Pages/Hardcover/2011
ISBN 978-1-59370-253-3 / $85.00 US
Deepwater Petroleum Exploration

& Production is the most
comprehensive and authoritative
text available on the business,
engineering, science, and technology
of this multibillion-dollar industry.
NEW TO THE SECOND EDITION:

New chapters on geology and
geophysics, rigs, and service vehicles
Greater coverage of engineering and
scientifc schemes used in deepwater
Final chapter presents the latest
technology used in the third wave
of industry evolution
ORDER TODAY!
VISIT WWW.PENNWELLBOOKS.COM
OR CALL 800-752-9764!
1998, pp. 81-86.

Launder, B.E., Modelling of turbulent
flow in gas-turbine blading: achievements and prospects, International
Journal of Heat and Fluid Flow, Vol. 3,
No. 4, December 1982, pp. 171-184.
Lee, H. and Tomizuka, M., Robust
adaptive control using a universal approximator for SISO nonlinear systems.
IEEE Transactions on Fuzzy Systems,
Vol. 8, No. 1, January 2000, pp. 95106.
Lim, S.C., Park, S.M., and Kim, K.I.,
Vibration control of high-speed rotor
systems using electrorheological fluid,
Journal of Sound and Vibration, Vol.
284, No. 3-5, June 2005, pp. 685703.
Mouloud, G., Hafaifa, A., and Aissani, S., New approach of calibration
in orifice flow meters applied in industrials gas pipeline systems to savings
on maintenance costs, Hydrocarbon
Processing, August 2011, Vol. 90, No.
8, pp. 63-68.
Pedrycz, W. and Rai, P., Collaborative clustering with the use of Fuzzy
C-Means and its quantification, Fuzzy
Sets and Systems, Vol. 159, No. 18,
Sept. 16, 2008, pp. 2399-2427.
Ruspini, E.H., A new approach to
clustering, Information and Control,
Vol. 15, No. 1, July 1969, pp. 22-32.
Takagi, T. and Sugeno, M., Fuzzy
identification of systems and its applications to modelling and control,
IEEE Transactions on Systems Man
and Cybernetics, Vol. SMC-15, No. 1,
January-February 1985, pp. 116-132.
Wang, D.G., Han, B.C, and Huang,
M., Application of Fuzzy C-Means
Clustering Algorithm Based on Particle Swarm Optimization in Computer
Forensics, Physics Procedia, Vol. 24,
Part B, 2012, pp. 1186-1191.
Yang, J., Liu, D.R., Feng, J., and
Zhang, H.G., Controller Design for
a Class of Nonlinear Systems Based
on Fuzzy Hyperbolic Model, World
Congress on Intelligent Control and
Automation, Dalian, China, June 21-23,
2006.
The authors
is a PhD candidate in
the applied automation
and industrial diagnostics laboratory at Djelfa
University, Algeria. He
earned an MS (2011)
in industrial control engineering from
University of MSila, Algeria. Research
interests include fault-tolerant control
using fuzzy logic with decision support in
the supervisory system.
Ahmed Hafaifa (hafaifa@
hotmail.com) is associate
professor in industrial
process, automationdiagnosis, and reliability engineering in the
science and technology
faculty of the University of Djelfa. He is
also director of the universitys applied
automation and industrial diagnostics
laboratory.
Guemana Mouloud is
associate professor at the
University of Boumerdes,
Algeria. He earned
both his PhD (2012) in
industrial maintenance
and his MS (1998) in mechanical engineering at the University of
Boumerdes. Research interests include
industrial maintenance, system reliability, dynamic systems, and diagnostic
optimization.
FIND US:
90
160104ogj_90 90
12/28/15 3:15 PM
SERVICES | SUPPLIERS
FUGRO
Fugro has been awarded a three-year
contract by PGS for the provision of
precise satellite positioning systems for
its entire seismic vessel fleet.
PGS is a leading global provider of
marine seismic and electromagnetic services, data acquisition, imaging, reservoir
services and multi-client library data.
Fugro, a leading provider of precise
satellite positioning to the offshore oil
and gas industry, will supply PGS vessels
with a number of completely independent Global Navigation Satellite Systems
(GNSS). These systems include Fugros
recently launched Starfix.G4 - the first
commercial GNSS service to utilise all
available GNSS systems (GPS, GLONASS,
Galileo and BeiDou), giving sub-decimetre
accuracy - and Starfix.G2+, a global service offering centimetre accuracy in both
position and height.
In addition to precise vessel positioning, PGS will benefit from a new generation of positioning technology for their
seismic sources and tailbuoys. Meeting
the high demand for robustness and
quality in the offshore industry, this proactive technology provides independent
decimetre and centimetre positions and
heights for remote (seismic source and
tailbuoy) operations.
ENSCO
Ensco plc announced that Carey Lowe
has been named chief operating officer.
He is based in London and succeeds
Mark Burns, who is retiring from the
Company. Lowe has held various executive management positions at Ensco
since joining the Company in 2008. His
experience includes operations, engineering, safety and strategy.
OFFSHORE INSTALLATION
SERVICES LTD
Offshore Installation Services Ltd (OIS),
an Acteon company, has named Colin
Shellard as its new managing director.
Based in Aberdeen, Shellard is responsible for setting the strategy at OIS, as
the company continues to focus on new
opportunities in the offshore decommissioning sector. He will also play a
160104ogj_91 91
key role in developing opportunities for

OIS to work together with other Acteon
companies.
Shellard has more than 16 years of
experience in offshore construction and
subsea engineering. He joined OIS as vice
president, operations, in December 2014,
and was instrumental in leading OIS
recent successful well decommissioning
campaign with Centrica Energy and Antrim Energy. Prior to joining OIS, Shellard
was project director at Technip Offshore
Wind Ltd, where he oversaw all projects
and tenders in the companys cables and
marine renewables sector.
Shellard has extensive knowledge of
pipe and umbilical lay, diving operations,
structures installation, remote construction and decommissioning methods and
trenching, gained during his time at Stolt
Offshore and Saipem. He has also worked
in leadership roles within consulting engineering and project management firms JP
Kenny and Prospect, developing a deep
understanding of the management of
small teams and complex problems that
face Operators in the offshore industry.
until March of 1996 he served as Accounting Consultant, Citation Oil and Gas
Corporation. He was Accounting Consultant for Black Stone Oil Company from
April of 1985 until May of 1987. From
June of 1978 until August of 1984 he
was an Audit Manager for Author Young
& Company. He received a Bachelors of
Business Administration in Finance from
the University of Texas in 1975 and a
Masters of Science in Accountancy from
the University of Houston in 1978.
In addition, the Company also
confirms Senior Vice President, General
Counsel and Corporate Secretary Saema
Somalya, Vice President of Corporate
Development Jeffrey Keeler and Chief
Accounting Officer and Controller Brian
Gelman, will be leaving the Company on
or prior to March 31, 2016 in order to
pursue other opportunities in connection
with the closure of the New York office.
As previously disclosed, these officers
are subject to retention agreements in
order to facilitate smooth transition of all
relevant matters under their purview to
the new management team.
WARREN RESOURCES INC
FLOWROX
Warren Resources, Inc. announced an

update on corporate restructuring initiatives following the recent appointments
of James A. Watt as President and Chief
Executive Officer and Frank T. Smith,
Jr. as Senior Vice President and Chief
Financial Officer.
The company announced the appointment of Mr. John R. Powers as Vice
President - Accounting. The appointment
of Mr. Powers completes the finance
management team, which, coupled with
the Companys operating executive personnel in Denver, California and Dallas,
will provide the core management of the
Company on a go forward basis.
John R. Powers, 60, was VicePresident and Chief Accounting Officer
for Dune Energy, Inc. from July of 2007
until September of 2015. From March of
1999 until May of 2005 he was Operation
Manager, Southwest Wholesale. He was
Special Projects Coordinator, Citation Oil
and Gas Corporation from April of 1996
until June of 1998. From April of 1987
Flowrox, a global leader in heavy-duty

industrial valve and pump manufacturing and services, is upgrading services
dedicated to increasing productivity with
Optimization and Online Predictivity
through automation and connectivity to
help its clients to garner the full potential
of Flowrox products as well as those
from other manufacturers.
Flowrox Smart Series products will
be equipped with intelligent solutions,
a transformation currently underway
that will ensure connectivity via the
Internet, allowing the consistent monitoring of Flowrox products and systems to
maximize its customers uptime, reduce
unplanned downtime and help guarantee
spare part availability exactly when the
customer needs them.
Currently, the Flowrox scaling watch already incorporates connectivity to the Internet, including both intelligence and the
ability to be connected to the Industrial
Internet of Things (IIoT)a term coined
to communicate how the interconnectiv-
91
12/28/15 3:15 PM
SERVICES | SUPPLIERS
ity of devices to an Internet network can
bring added versatility and performance.
The embedding of Flowrox products
with electronics, software, sensors and
network connectivity enables the customer to collect and exchange data with
the users and in some cases directly with
Flowrox.
Flowrox will begin marketing its Smart
Series of valves that incorporate a new
series of smart sleeves and intelligent
positioners with enhanced reporting and
wear analysis, which will signal the customer that a valve may be heading toward
failure before it actually fails.
Smart pumps will be available later on
2016 with similar features and innovative
add-ons.
Through a unique Internet-based
interface that allows users to view process
performance, flow rates, pressures and
a variety of variables through an Internet
connection, Flowrox will meet the demand for better data for decision-making,
as well as giving customers more control
over its products.
KCA DEUTAG
Leading global drilling and engineering
contractor, KCA Deutag, today announces that it has been awarded two
contracts with BP Exploration (Caspian
Sea) Limited. These contracts have a
combined value of approximately $360m
for the initial contract or $1bn including
all options.
The first contract has been awarded to
our offshore division and is for the operations and maintenance of seven platforms
operated by BP in the Caspian Sea
pursuant to Product Sharing Agreements.
These are the East, West and Central
Azeri, Deepwater Gunashli, West Chirag,
Chirag and Shah Deniz installations. The
initial term is for three years with two
three-year extension options.
The second contract has been
awarded to RDS, KCA Deutags engineering and design specialist, and is for
engineering support services on all drilling
packages for projects in the Caspian Sea
that are operated by BP from the Azerbaijan, Georgia and the Turkey Region. This
contract is effective from 1st December
92
160104ogj_92 92
2015 to 30th September 2017 with two

extension options of one year each.
KCA Deutag employs approximately
750 people in Azerbaijan, 75 per cent of
who are Azerbaijani nationals. The group
has been operating in the country since
1995 when it was awarded its first drilling
contract and has a twenty year history of
working with BP in Azerbaijan providing
design, construction support, platform
services, commissioning and brownfield
engineering services to BP-operated
platform drilling operations.
MILLER AND LENTS

Miller and Lents, Ltd., announced the
election of Robert J. Oberst as chairman
of the board of directors, succeeding
James C. Pearson who is retiring after 42
years with the firm. Oberst joined Miller
and Lents, Ltd. in 2000 and has held
various positions of increasing responsibilities, including vice president, senior
vice president, and president in December 2013. Replacing Oberst as president
is Roy Lee Comer, who has been with
Miller and Lents, Ltd. for 11 years, previously serving as senior vice president.
Miller and Lents, Ltd. provides a comprehensive range of professional consulting services to the upstream oil and gas
industry.
BAKER HUGHES
Baker Hughes announced the commercial release of its CENesis PHASE
multiphase encapsulated production
solution, which helps operators avoid
production interruptions in unconventional wells. Designed to separate natural
gas from the oil stream before it can
enter an electrical submersible pumping (ESP) system, the solution mitigates
production downtime and potential ESP
performance issues, which can ultimately improve reserve recovery.
During the production phase in
unconventional plays, higher levels of
natural gas are usually released from the
payzone as reservoir pressure depletes.
This gas typically enters the horizontal
wellbore and accumulates in the highside of the lateral, creating large gas slugs
that, as they move up the wellbore, cause
low-flow or no-flow conditions in an ESP

system. The CENesis PHASE solution
mitigates this problem by surrounding the
entire ESP system in a shroud, allowing
lighter natural gas to continue flowing up
the wellbore while heavier production fluid
flows into the shroud and is produced
through the ESP system.
The shroud provides a supply of production fluid so the ESP can continue to
operate during gas slug events when natural gas completely displaces fluid in the
wellbore. Mitigating this gas interference in
the pumping system stabilizes production
and reduces downtime associated with
pump cycling and gas locking conditions.
The CENesis PHASE solution also
improves ESP system longevity by minimizing the likelihood of shut downs due to gas
cycling through the pumps and locking
the system. The shrouded system design
protects the ESP components during
installation as they pass through the deviated sections of a horizontal wellbore. In
addition, an integrated recirculation system
redirects fluid flow past the motor to help
prevent overheating, which can shorten
the life of an ESP. To further enhance
ESP longevity in wells in which scale or
corrosion is a concern, the integrated
recirculation system can be used to deliver
a chemical treatment directly below the
ESP motor to treat the entire ESP. In wells
in which sand production is an issue, the
CENesis PHASE solution incorporates
sand management devices such as the
Baker Hughes EXCLUDER sand screen
to keep sand from entering the ESP or
falling back into the ESP during a shut
down.
Baker Hughes recently deployed the
solution to help an operator in Kansas increase production by 346% compared to
a gas lift system, and improve ESP system
run life by 440% versus a traditional ESP
design. Prior to implementing the CENesis
PHASE solution, the operator had been
using gas lift and traditional ESP systems.
However, the gas lift system could not
efficiently draw down reservoir pressure,
which limited production, and the traditional ESP systems experienced frequent
shutdowns and high motor operating
temperatures due to gas interference.
12/28/15 3:15 PM
JANUARY
2016
VOL
62;
NO.
OGPE.COM
OIL, GAS
&petrochemequipment
W H AT S N E W F O R O N S H O R E & O F F S H O R E : U P S T R E A M , M I D S T R E A M , D O W N S T R E A M O P E R AT I O N S
In this issue: 2015 Products & Services Review & Highlights Plus
New Equipment Advancements for 2016

Stainless conduit systems cited to serve
petrochem applications
Probe, technology, real-time data add

safety measures to oil-by-rail transports
Calbrite stainless steel conduit

systems are described and illustrated in this free four-page brochure as
available in 2,800+ product designs.
Eight conduit system categories
are presented for broad petrochemical applications as easy to install,
durable, and corrosion resistant.
Designs include conduit, fittings
including explosionproof, bodies,
hubs, couplings, use covers, plus channel and strut clamps.
Calbrite Division, Calpipe Industries Incorporated:
Rancho Dominguez CA
New Vent O2 Probe measures and sends real-time data regarding environmental changes in rail cars transporting crude oil or
other hazardous materials. It alerts operators to stability of rail
car environment, changing O2 levels, and explosion potential.
New technology enables easy sensor placement inside rail
cars so real-time data are provided the engineer, network operating center, or other appropriate recipients. It alerts any potential changes in atmosphere that could be detrimental.
Vent O2 Probes cloud-based data analysis is time efficient for
long-term analysis and future planning.
Safety plugs = over-pressurization

protection in pressure pumping, fracing
MarqMetrix: Seattle WA
For FREE Literature, select #250 at ogpe.hotims.com
Oseco Well Casing Safety Plugs

protect wells from over-pressurization and reduce non-productive
well pad time particularly during pressure pumping and fracing.
The plugs new technology allows for much tighter tolerances
than current alternatives, declares
the manufacturer. They help reduce
time spent on a job site and also eliminate maintenance and
replacement costs of nitrogen valve or spring pop-off alternatives.
Well Casing Plugs are available in 2,000 to 15,000 psig
ranges. They require 5 min for rig-up and need no on-going
maintenance.
Complete Well Casing Plugs specifics are yours free.
Oseco A Halma Company: Broken Arrow OK
For FREE Information, select #1 at ogpe.hotims.com
160104OGJ_P1 1
Midstream, downstream multiphase

progressing cavity pumps introduced
NETZSCH Multiphase Progressing Cavity Pumps are
specifically designed for difficult pumping applications.
Built to convey oils with fluctuating high content of other substances, models handle mixtures of oil, water, and gas along with sand content at up to
600-m3/h and move up to 50,000 mPas viscous oils.
NETZSCH Pumps North America LLC: Exton PA
BONUS
DISTRIBUTION
NACE Corrosion: Vancouver BC Canada
12/21/15 2:30 PM
OGPE.com
Products
OG&PE
FROM THE EDITOR

Obviously for you to receive this January
4, 2016 OG&PE section within Oil & Gas
Journal, it is being prepared at 2015s end
which gives me pause to reflect on our industrys unsettling, to say the least, year of events, of course as
related to products and services .
There are times this veteran business-to-business media editor is reassured by the petroleum industrys historically predictable resilience in barrel-of-oil price slides, mergers and acquisitions, shale phenomenon, and profoundly foolish (but not
surprising) Keystone XL rejection .
Since I confess to almost always be thinking products
whether in print, digital, website, or social media the quality, innovation, and applications of developments this year are
imaginative and impressive as always .
Page 5 begins a brief review of representative equipment/
product/service announcements published this year and which
caught the attention of many subscribers and OGPE .com users
The section, as always, offers you the opportunity to request
free information or literature on any and all of interest in
OG&PEs lead-generation service and directing you to manufacturer and/or service provider websites . Its what we do
and have, proudly entering our 62nd year as PennWell Petroleum Groups all-products-and-services brand .
In all the headline-producing oil industry activities and
changes this year, OG&PE too achieves a huge transition in
our merger to become Oil & Gas Journals equipment section
the first Monday of each month .
It has given us the privilege to reacquaint OGJ subscribers
with product news and the ability to ask for information, and
to provide OG&PE subscribers access to the Bible of the Oil
Industry OGJ with its unparalled information heritage and
reputation .
I look forward to another great year of products and striving
to meet your equipment information needs .
We are grateful and humbled by the support of both OG&PE
advertisers and subscribers this year in our transition .
Healthy, Happy, Prosperous 2016 To One and All!
J.B. Avants, Publisher & Editor
jba@pennwell.com / 918 832 9351 / OGPE.com
Publisher
Editor
Production Director
Digital Product Manager
Production Manager
Art Director
Digital Audience Development Manager
Social Media Marketing Analyst
Audience Development Manager
Marketing Manager
JANUARY 2016:
E2S Warning Signals . . . . . . . . . . . . . . .7 Sensonics Ltd . . . . . . . . . . . . . . . . . . .5

Flomatic Valves . . . . . . . . . . . . . . . . . .3 Advertiser Product/Service Followup . . . . . 11
For Print / Online Advertising Information, Assistance:
http://www.ogpe.com/index/advertise.html
P2
160104OGJ_P2 2
Jim Klingele
J.B. Avants
Charlie Cole
Kristine Duran
Shirley Gamboa
Clark Bell
Jennifer Van Burkleo
Anna Alaback
Linda Thomas
Daniel Bell
EDITORIAL OFFICES
Oil, Gas & Petrochem Equipment
1421 S. Sheridan Road, Tulsa OK 74112 PO Box 1260, Tulsa OK 74101-1260
p 918.832.9351 f 918.832.9201 www.OGPE.com
SALES OFFICES
North America
1421 South Sheridan Road, Tulsa OK 74112

201-374-1911
Ed Tiscornia
EdT@PennWell.com
United Kingdom, Scandinavia, The Netherlands
and The Middle East
Graham Hoyle
+ 44 1934 733871
GrahamH@PennWell.com
Germany, Switzerland, Russia, Austria, and
Eastern Europe
Wilhelm Sicking
49 0 2903-3385-70
WilhelmS@PennWell.com
Singapore
Michael Yee
+65 9616 8080
Yfyee@singnet.com.sg
Italy
Ferruccio Silvera
Tel. 39 02 28 46716
info@silvera.it
PennWell do Brasil
Deny Tenenblat
55 21 3932 5557
DenyT@PennWell.com
France, Spain, Portugal, Belgium
and Southern Switzerland
Daniel Bernard
33 (0) 1 30 71 11 19
DanielB@PennWell.com
Stefania Piciotti Thompson
33 4 94 70 82 63
StefaniaT@PennWell.com
For assistance with marketing strategy or ad creation,

please contact PennWell Marketing Solutions
Vice President Paul Andrews (240) 595-2352; pandrews@pennwell.com
CORPORATE OFFICERS
Chairman
Robert F. Biolchini
Vice Chairman
Frank T. Lauinger
President and Chief Executive Officer
Mark C. Wilmoth
Executive Vice President,

Corporate Development and Strategy
Jayne A. Gilsinger
Senior Vice President,

Finance and Chief Financial Officer
AD IN DEX
Brian Conway
Need Reprints of your ad or recent editorial?

Contact Foster Printing for a quote:
866 879 9144 / pennwellreprints@fosterprinting.com
Oil, Gas & Petrochem Equipment makes every reasonable effort to verify its content.
However, neither Oil, Gas & Petrochem Equipment nor our parent firm,
PennWell Corporation, assume responsibility for validity of manufacturer
claims or statements made in published items.
January 2016
12/21/15 2:30 PM
OGPE.com
New Products & Services
Div. 2 / Zone 2 rugged panel PC unveiled

The Vulcan Panel PC is introduced as rugged for onshore or offshore.
This heavy-duty yet slimprofile-constructed PC is certified for Div. 2 and Zone 2
hazardous environments over
-35 to +60C.
Constructed of all corrosion-resistant materials and
highly durable UV resilient
powder coated finish, The Vulcans precision cast assemblies
and shatterproof touchscreen allow it to withstand demanding
applications. Its offered in 15 or 19-in. display, ac or dc.
Strongarm Designs Incorporated: Horsham PA
New display options extend machinery

protection to API 670
Sentry G3 Machinery Protection
Monitors are now available with
advanced display options to
API 670 standard.
Now offered is an intuitive color LCD display in each module so plant engineers rapidly identify abnormal machinery
conditions and better manage dynamic behavior of their rotating plant. G3 gives excellent channel density with up to 24
measurement channels in 3U format.
Advanced features include vibration, position, and speed
parameter trending facilities including log and view of up to
60 days of data. Also offered is look back at trends and alarms
plus download data for further analysis in Excel.
Sensonics Ltd.: Berkhamsted, Hertfordshire UK
Free Info or Literature Click the link Request Get Response!

30% less frac chemical costs in
unbundling program announced
OptiFluids system is on the market to save producers up to
30% on the cost of chemicals used in hydraulic fracturing. It
also allows producers to choose the best chemicals for each
job rather than accepting a predetermined package from the
horsepower provider.
OptiFluids, in use for the last 5 years, reduces costs by connecting producers directly with chemical manufacturers. This
eliminates price markups incurred as chemicals pass through
resellers, service companies, and pumping firms. Many large
service companies include a predetermined chemical mix in
their completion package, regardless of a wells downhole dynamics. The new system helps avoid these circumstances.
Bosque Systems LLC: Fort Worth TX
SIL 2 explosionproof alarm horn sounders

and strobe beacons
BEx explosionproof alarm
horn sounders and Xenon
strobe beacons are now available in SIL 2 versions.
New IECEx and ATEX-certified designs ensure 99.9%
reliability rate. To comply
with SIL 2, a combination of software and hardware accurately
monitors and interprets horn sound output or strobe light output to check for correct signalling device function. Fault
monitoring reports back to the control panel.
E2S Warning Signals: London and Houston
Check Valves with Teflon Seals

The patented Model 816 check valves are the most effective
and reliable check valves on the market
today. All 316SS check
valves feature an angled

disk totally
encapsulated
in Teflon.
The
valves
have a
maximum temperature rating of 450o and a
pressure rating of 600 PSI. Available 1/4 thru 2 NPT,
socket-welded and butt-welded ends. Also in 1 thru 2
flanged.
Flomatic Valves
High Quality Valves Built to Last...

Tel. 1-800-833-2040
Fax. 1-800-314-3155
www.flomatic.com
January 2016
160104OGJ_P3 3
P3
12/21/15 2:30 PM
OGPE.com
New Products & Services
Frac wellhead skids pressure protection

Skid-Safe Unit Pressure Protection Systems are newly
developed for use on wellhead
skids in fracturing operations.
They are designed to reduce
the number of possible premature failures and unsafe operations. Skid-Safe helps avoid
damage to pressure relief devices with the rupture disc failure well below rated pressure
or producing an ineffective burst whereby the vent area is seriously reduced by the malfunction, declares the maker.
It incorporates pre-torque RAH disc holder, RA-type rupture
disc, ZW non-intrusive proximity switch, plus Z-Alert magnetic actuator all preassembled for direct installation between
pipework flanges. Full operation specifics are yours free.
ZOOK: Killamarsh, Sheffield United Kingdom
Gateways integrate large numbers of

serial-based Modbus devices, equipment
New MGate MB3660 redundant Modbus gateways help address management of multiple devices in control rooms and
data centers.
Available in 8 and 16-ports, models allow administrators to
establish communications with large numbers of new or existing RTU and ASCII series devices across an Ethernet network.
This provides optimized production, efficiency, and operational costs enabling devices to communicate between protocols.
MGate MB3660 is declared to offer a stand-alone solution for
such deployments as power or environmental monitoring and
data center infrastructure management that need to integrate
large numbers of devices.
MOXA: Brea CA
Mobile computer, software aid fire

protection inspection, testing, upkeep
XM5 mobile computers are currently
in use to improve fire protection inspection, testing, and maintenance services for ExxonMobil.
Total Safety, an integrated safety services and compliance provider works
closely with ExxonMobil to manage its
fire protection processes. Using XM5
running OnSite Softwares Life Safety
Inspection application, Total Safetys team is able to deploy a
mobile solution. It performs, tracks, and manages safety equipment inspections. Additionally XM5 helps deliver paperless,
high-efficiency, simplified inspection processes.
Janam Technologies LLC: Woodbury NY
P4
160104OGJ_P4 4
Analyzer determines potential gas,

fluid migration in oil well cementing
Model 5265MG Mechanical Gel
Strength Analyzers directly measure
gel strength development of well cement slurries under downhole conditions.
They provide highly accurate simulation of dynamic slurry conditioning
during placement phase as well as static
gel phase of an operation. This allows
oil service companies, operators, or
their testing labs to optimize cement
slurries and to accurately determine potential for annular gas and fluid migration.
Model 5265NGs design includes a precision motor coupled
with a reaction force transducer to allow the instrument to precisely measure phase changes.
Chandler Engineering, AMETEK: Broken Arrow OK
ATEX-certified pumps, motors, valves

serve oil and gas drilling
A number of this manufacturers
pumps, control valves, and motors
have been certified to meet European
Union (EU) ATEX directive. They are
applicable in explosive atmospheres
including oil and gas drilling.
Eaton PVM, X20, and Vane pumps as well as X series directional control valves, and Char-Lynn Gerotor or Geroler
motors are among the ATEX-certified range. Models are typically used on oil and gas-employed cranes, winches, and drills.
Eaton Hydraulics Group: Eden Prairie MN
Contaminated groundwater remediation

substrate prevents plumes spread
PlumeStop Liquid Activated Carbon quickly and effectively treats
contaminated groundwater and prevents the spread of contaminated
plumes.
The environmentally friendly, patented in situ substrate is highly dispersible, fast acting, and sorptionbased technology. It captures and
concentrates contaminants within
its structure as it pulls contaminants directly from groundwater and stimulates biodegradation.
PlumeStop helps eliminate environmental risks and liabilities in applications including petroleum clean-up projects.
REGENESIS: San Clemente CA
January 2016
12/21/15 2:30 PM
OGPE.com
2015 Products & Services: Highlights
Some of the Newest Equipment, Products & Services Presented in 2015

Produced water inducted gas flotation
104-page downhole oil tools catalog
Induced Gas Flotation Technology achieves hydrocarbon

reclamation in produced water and clarifies water with high
total suspended solids.
IGFs core functionality is cited
to be effective removal of 97%
TSS in input streams including
oil and condensate to safely and
cost effectively assist disposal and
reuse.
The technology and system are
designed to address 14-billion barrels of water produced annually from oil and gas operations. One vertical single cell IGF
processes 0 to 75-gpm of production water, delivering below1-ppm effluent TSS and floatable hydrocarbon levels.
Purestream Technology: Salt Lake City UT
More than 70 downhole oil tools in five application categories

highlight this free 104-page catalog.
Mechanical set packers, hydraulic set packers, permanent packers, service tools, and accessories
are shown, described, and specified.
Twenty five mechanical set packers are showcased to include ASI-X
and VSI-X models along with snapset, thermal designs, and retrievable
seal bore types. Four hydraulic set
packers are specified to include DLH,
hydroset, plus permanent hydraulics isolation designs. In the 27
downhole services tools presented are retrievable packers and
bridge plugs. Eleven downhole tool accessories include on/off
tool, profile nipple, bit release joint, and safety joint.
D&L Oil Tools: Tulsa OK
Integrated asset performance management

for all-in-one equipment health view
Automatic downhole torque management

NeoTork downhole torque management technology mitigates
slip-stick and vibrations plus cuts down drilling time and cost.
The tool automatically manages
torque generated from a drill bit
and mitigates axial and torsional
vibrations. It brings down drilling
time, reduces drilling costs, and
improves drilling performance
while limiting the number of
trips that always remain a safety
exposure. Tools ensure once downhole torque exceeds preset
limit a system of disc springs and steel cables automatically
contracts to reduce bit depth of cut.
Neo Oiltools: Troisvierges Luxembourg
w
ne
PAR: Production Asset Reliability Integrated Asset Perfomance Management delivers an all-in-one view of equipment health.
PAR combines GEs System
1 condition monitoring and
diagnostics
applications
with Meridiums enterprise
performance management
and asset strategy solutions
suite. This provides a holistic and quantifiable view of operations, maintenance, availability, and overall operating performance for production assets.
GE Measurement and Control & Meridium Incorporated:
Minden NV
SEISMIC
SAFETY
SWITCH
Sensonics SA-3 Seismic Switch
High integrity, low-noise Piezoelectric seismometers

with unique self-testing
Seismically qualifed,Robust and weatherproof steel enclosure
For safety applications up to SIL-2 Explosion-proof versions

for hazardous areas
Ideal for Oil & Gas applications
AB14-823
Tel: +44 (0) 1442 876833 sales@sensonics.co.uk
www.sensonics.co.uk
January 2016
160104OGJ_P5 5
P5
12/21/15 2:30 PM
OGPE.com
Multi-node, all-electric intelligent well system

MultiNode All-Electric Intelligent Well Systems combat
water and gas breakthrough to improve ultimate recovery.
They allow you to monitor and
adjust production across zones
with an electric, affordable, intelligent configuration. The remotecontrolled system operates over an
extended number of production
zones without intervention.
Besides balancing production along the lateral, systems also
enable real-time remote monitoring and control for proactive
production optimization.
Baker Hughes Incorporated: Houston
Solids control, hydrocarbon recovery technology

Pentair Hydrocarbon Recovery Technology dramatically
improves solids control and hydrocarbon recovery from process water and produced water streams.
HRT removes solids as fine
as 1/2-micron to 99.98% efficiency if needed. It intercepts and recovers even stable
emulsified hydrocarbons to
allow essentially zero free hydrocarbons to pass through. The technology and system also
broadly serve frac fluid clean up, glycol dehydration, LNG,
sour water, salt water disposal, and amine systems.
Pentair OIl & Gas Separation: Conroe TX
Touchscreen panel PCs

EXPC-1519 touchscreen panel
PC is designed for easy indoor or
outdoor use even while wearing rigger gloves.
These 19-in. PCs are equipped
with critical features and certifications required for Class 1, Div.
2; ATEX Zone 2, and IECEx-rated hazardous environments in
-40 to +70C. They feature multiple connectivity options and
are fanless with no moving parts.
EXPC-1519 comprises Intel 3rd generation Core i7-3555LE
2.5-GHz or Celeron 1047UE 1.4-GHz processor with up to
16 GB memory for outstanding high-performance processing.
MOXA: Brea CA
Industrial enclosures, climate control, power

distribution for next-gen high tech oil, gas
How this leading industrial enclosures manufacturer will
support next-generation high-tech oil and gas is illustrated
and described in its free brochure.
Its portfolio of petroleum-applicable enclosures are cited to serve rapidly evolving oil and gas applicatdions with strength and durability.
304 or 316 stainless steel construction, foamed-in-place gaskets,
four-point latching systems, and a
large assortment of mounting accessories and features are presented
and specified throughout 12 pages.
Rittal Corporation: Urbana OH
Compressor / pump package configurable safety

shutdown and control
DE-3000+ Advanced Engine-Process Control Systems deliver gasengine-driven compressor / pump
package shutdown and management.
Theyre designed to deliver standard DE-3000 system reliability
along with convenient and cost-effective graphical data access plus
simple Terminal-Program-based system configuration.
DE-3000+ offers MIDAS human-machine interface for
graphical access to operating data including full setpoint and
control adjustment in parallel with simple Terminal Programbased system you can manage.
Altronic LLC: Girard OH and Garland TX
Coming in February:
MIDSTREAM Products & Services Report

Whats New for Refining, Petrochemical,
Gas Processing
Bonus Distribution at 9 Industry Events
OG&PE and OGPE.com

P6
160104OGJ_P6 6
January 2016
12/21/15 2:30 PM
Oil & Gas process instruments

Sixteen lines of process instruments
are showcased for every production
process, in this free brochure.
Its 24 pages present broad ranges of
differential pressure transmitters,
thermometers,
thermocouples,
temperature switches, pressure
switches, pressure transmitters and
gauges.
Instruments are cited to serve onshore and offshore drilling, production, secondary recovery,
well servicing, refining, transportation, storage, and waste
treatment. All are based on Bourdon measuring technology
under which only this company produces.
Baumer Management Services AG:
Fraunenfeld Switzerland
OGPE.com
Anti-crevice corrosion pipe

clamps for stainless pipework
ACT (anti-corrosion) Pipe Clamps
are thoroughly presented in this free
literature. They are cited as designed
and engineered for efficient prevention of crevice corrosion under pipe
clamps on stainless steel pipework.
Full specs, dimensional data, schematics, and photos emphasize ACT
applications especially in offshore
oil and gas exploration/processing.
Availabilities are for DIN 3015, Part 1 (standard series) and
DIN 3015, Part 3 (twin series) to cover the most commonly
used metric and imperial pipe diameters from 1/4 to 1 1/2 and
6 to 42 mm.
STAUFF Corporation: Waldwick NJ
.com/audible
As you would expect from the world's leading independent

signalling manufacturer, we oer the widest range of products
and the fastest delivery anywhere in the world.
Screw reciprocating and
centrifugal compressors data
This free eight-page brochure describes
and illustrates how Kobelco designs,
manufactures, and packages compressors for virtually any process gas
application.
A complete range of oil-free and oilinjected screw gas compressors are presented with information on their realtime applications in petroleum. These
include fuel gas boosting, LNG, BOG
compressor uses, as well as advanced
dry screw for flare gas recovery in refining. Full illustrated information pages
on reciprocating and centrifugal designs
are provided.
Kobelco Compressors America Inc.:
Houston
For FREE Literature,
select #259 at ogpe.hotims.com
Visit us at
CIPPE
23-25 Mar
Beijing
January 2016
160104OGJ_P7 7
P7
12/21/15 2:30 PM
OGPE.com
2015 Products & Services Highlights
Lighter, smaller high power density AC drilling

motors are top drive, mud pump purpose-built
High power density AC induction motors are purpose-built
for top drives, mud pumps, drawworks, and rotary tables.
In 450 to 2,000 hp ranges,
models deliver up to 50% more
power and torque with the
same frame size that is standard
for each application, declares
the manufacturer.
Among key induction motor benefits are ability to drill
deeper, faster, and more efficiently, making longer horizontal
runs, plus to increase pump pressure.
Ward Leonard: Thomaston CT
Rental vessels optimize liquid process systems

JRS Rental Vessels highlight this
free brochure to help optimize the
performance and reliability of our
clients process systems.
Designed for liquid applications
with high flow rates, vessels most
commonly remove solid and semisolid contaminants from produced
water, wastewater, pipeline fuels,
cooling water, or utility water that
require particulate removal from
liquids and heavy dirt loading. This
includes rental vessel usage in refining, petrochemical, terminals, pipelines, or oil production.
Jonell Rental Services: Houston
Hydraulic casing gas compressors

With a new compression element designed specifically for lowvolume solution gas applications are Hydraulic Casing Gas
Compressors.
Simple-designed models process liquids so there is no possibility of liquid lock. The dont
have penumatic control valves,
scrubber, float switches, or a
liquid pump that can fail, declares the manufacturer. HCGs are
also independent of the pump back.
Compact Compression Incorporated: Calgary
Moisture analyzers get

firmware, interface upgrade
DF-700 ultra-trace moisture analyzers are upgraded with new firmware and improved user interface.
Optimized for specialty gas applications that depend on ultra high purity gas quality, the instruments are designed to offer exceptional and repeatable performance and ease of use.
DF-700 employs its makers Hummingbird Tunable Laser
Diode sensing technology for outstanding sensitivity to analyze
moisture at ultra-trace levels.
The new firmware ensures very low-end stability. It also
eliminates spurious background noise effects at very low partsper-billion levels. The new graphical menu interface gives
additional confidence the system is functioning to exact standards and at peak performance.
Servomex: Houston
XRF spectrometers deliver fast lab-quality at-line

elemental composition analysis
Portable SPECTROSCOUT X-ray fluorescence spectrometers are designed to
bring laboratory-quality elemental composition monitoring and quality control
testing to at-line analysis.
Durable and compact, the easily transported instrument is designed to significantly enhance QC productivity in
at-line analysis. It eliminates time spent transporting samples
from plant floor to lab then to wait-in-queue for testing and
audit-traceable results directly from the floor.
Accuracy and sensitivity over wide detection levels provide
precise at-line analysis from high-percentage concentrations to
trace elements. This includes sulfur in fuels per ASTM D4294.
SPECTRO Analytical Instruments, AMETEK:
Kleve Germany and Mahwah NJ
API 610 vertical sulfur pumps

Specifically designed for oil and gas
operations are VS4 API 610 vertical sulfur pumps.
To meet the challenges of pumping molten sulfur, models feature a
jacket that maintains molten sulfur
temperature and viscosity, an arrangement of shaft bearings and lubrication film, as well as
optimized and efficient impeller design.
Amarinth Limited: Woodbridge UK
Check Out Redesigned OGPE.com For Expanded Products Intelligence

P8
160104OGJ_P8 8
January 2016
12/21/15 2:31 PM
OGPE.com
Sand-tolerant production-optimizing pumps

Sand-Tolerant Pumps extend
pump runtime, reduce workover
costs, and optimize production in
sandy, rod-pumped wells.
Based on field results, STP works
four-times longer in sand conditions
than conventional designs. It does
so by lubricating the plunger/barrel
interface without letting sand enter this critical area.
At 9,000 ft, models operate in up
to 360F. with reported 450% increase in runtime.
Weatherford: Houston
Avoid flaring convert wells natural gas into

clean energy
Power + Generator converts
waste heat into clean energy.
The design captures a wells
natural gas otherwise
flared to generate electricity plus reduce or eliminate
onsite flaring.
It applies Organic Rankine Cycle (ORC) and proprietary
technologies to generate power from 170 to 252F.
At one site, natural gas otherwise flared, is instead used to
fuel an industrial boiler via clean energy as low as 9 ppm NOx.
ElectraTherm: Reno NV
Double block and bleed valves handle 15,000 psi
Intelligent, safe motor management, protection
HiP trunnion style double block and bleed ball valves are
designed for up to 15,000 psi calibration applications.
The full port, quarter-turn designs
deliver double positive isolation to
block and bleed high-pressure hydraulic and pneumatic systems employed for pressure monitoring and
testing, chemical injection, or drain
line isolation.
Models comprise 316 stainless
steel construction, Viton O-rings,
and PEEK ball seats for environmental and chemical resistance.
Trunnion styling handles severe service applications in .203,
.250, .313, and .375 in. orifices and will accommodate 3/8,
9/16, 3/4, 1/4 in. NPT, 3/8-in. NPT, and 1/2 in. NPT tube sizes.
The vent port is 1/4-in. FNPT.
High Pressure Equipment Company: Erie PA
Power Xpert C445 intelligent motor management and protection relay helps improve energy awareness over traditional
controls, improve operator
safety, and support reliable
operations through enhanced
diagnostics.
This motor management
relay addresses complexities
of continuous downstream oil and gas start-up or shutdown
procedures to protect personnel and minimize downtime.
Eaton Electrical Sector: Pittsburgh PA
Alarm horns, speakers, integrated warning units

D1x alarm horns, loudspeakers, and integrated alarm horn/
Xenon strobe warning units are designed to serve broad petroleum industry applications.
They employ the latest electronic technology and acoustic
engineering in marine-grade, LM6
aluminum enclosures for both
compactness and corrosion resistance, reports the manufacturer.
D1x creates effective warning
signals for Class I/II Division 1, Zone 1 & Zone 20 environments. The UL/cULs-approved alarm horns and combined
units are available with traditional directional flare horns or
omnidirectional radial 360 sound dispersing horns.
E2S Warning Signals: London and Houston
Filtration & Separation

products & services data
Sixteen pages of filtration and
separation products and services
highlight this free brochure for offshore exploration and production,
gas processing and transmission, refining and petrochemical, or power
generation.
Air, gas, and liquid filter designs are described and illustrated
along with filtration support services, as well as vessel parts
and internals.
Thirteen filtration styles/designs are presented in more than
50 series for broad applications. These include two-phase separation, various liquid filtration, as well as JonAIR air filter elements for power generators, gas turbines, and air compressors.
Jonell Incorporated: Houston
Coming in Feb: Midstream Products

January 2016
160104OGJ_P9 9
P9
12/21/15 2:31 PM
OGPE.com
2015 Products & Services Highlights
Ultra-light FR clothing line

Workrite FR GlenGuard 5.3 FR
clothing is announced as one of
the lightest weight Category 2 fabrics currently available on the FR
clothing market.
Produced by Glen Raven, the
GlenGuard fabric offers an arc thermal performance value of 9.5 cal/
cm2 and is UL certified to NFPA
2112. In coveralls, shirts, and pants, the new line is designed
to deliver comfort that also maximizes worker flame resistance.
Workrite Uniform Company Incorporated: Oxnard CA
Six new air impact wrenches deliver 2,500-ft-lb

breakaway torque
Six new Proto pneumatic impact wrenches are on the market
to deliver 2,500-ft-lb breakaway
torque.
This line includes 1-in. and #5
Spline with two different handle
configurations and three anvil
options: Flush 1-in. anvil, 6-in.
extended 1-in. anvil, and 6-in.
extended #5 Spline.
These new air tools weigh between 16 and 19.6 lb for outstanding power-to-weight ratio plus forward/reverse location
on the back of each unit rather than underneath.
Proto Industrial Tools: Conyers GA
Advanced fire protection-specific control valves

BERMAD 400Y Fire Protection Torrent Valves are designed
to comply with the most demanding standards.
Designed specifically for
flow control of all advanced
fire protection systems, 400Y
accommodates fire-water supplies, foam solution, seawater,
foam concentrate, or other
corrosive liquids.
Models are applicable over
a wide range of specs and
hazardous locations. They are
certified and approved to the latest fire protection standards.
The control valves hydrodynamic Y-shape provides very
high flow capabilities with minimal head loss. Models comprise straight through Y-body with an unobstructed flow path
free of any support cage, in-line ribs, or shafts. Quick in-line
inspection and service are accomplished via detachable cover.
BERMAD UK Ltd.: Berkshire UK
P10
160104OGJ_P10 10
Electron capture detector with contact-free

technology for GC tests
ECD-2010 Exceed electron
capture detector features a
newly designed capillary ECD
cell that uses its makers contact-free technology.
That technology reduces effect that a dirty sample matrix
can have on the detectors radioactive source. This especially
suits ECD-2010 to perform gas chromatography testing on
such environmental samples as polychlorinated biphenyl analysis in soil or when analyzing other difficult matrices.
The new electron capture detectors sensitivity is 4fg per second with a dynamic range of 1x105 for gamma-BHC.
Shimadzu Scientific Instruments: Columbia MD
Camo-style FR shirts
A new Realtree partnership is
announced by Bulwark to make
Xtra Camo flame-resistant
shirts available.
The hazardous-use FR designs
provide extra effectiveness in the
field, blending year round into a
variety of habitats.
Xtra camos printing technology layers sharp foreground elements over a progressively ghosted midground and soft background.
Shirts comprise 88% cotton and 12% nylon blend for comfort and durability. Gusset side seam provides easy movement
along with a banded topstitched collar, two chest pockets button flap closers, and a sewn-in pencil stall.
Bulwark: Nashville TN
Free data: Wrenches open / close any manual

multi-turn valve
NETHERLOCKS Power Wrench
is illustrated and described to safely open or close any type manual
multi-turn valve within minutes
and with less physical effort.
Testimonials cite the tools convenience and safety which include
variable speed control at the back of
the handle for smooth operation at
your chosen comfort level. Rotation
is easily changed between clockwise
and counter-clockwise. Power Wrench specs are provided.
Netherlocks Safety Systems:
Alphen aan de Rijn The Netherlands
January 2016
12/21/15 2:31 PM
OGPE.com
Advertiser Product & Service Followup:
December 2015 Advertiser Product & Service Followup

Companies featured here advertised their equipment, products, systems, or services in December 7 OG&PE section within
Oil & Gas Journal. These summaries give you an opportunity to receive free information or literature on leading manufacturers and service providers oil and gas specialties. Go to OGPE.com and use the Click Here Product Info Box at top. You
will receive prompt, complete response from these valued OG&PE clients.
Single-source & solution: Electric motors,

adjustable speed drives, motor starters
Field-installed-and-proven centralizers / paraffin

scrapers provide full-circle wiping of tubing ID
Toshiba International Corporation is proud to be your singlesource solution for application demands with its complete
product lineup of electric motors, adjustable speed drives,
and motor starters.
By pairing the P9 adjustable speed drive with the EQP Global motor, Toshiba International has set new pump control standards in technology, efficiency, and ease-of-use that go beyond
the competitive demands of the evolving pump industry.
Toshiba International: Houston
Toshiba.com/tic/industries-served/oil-gas
ULTRA-FLOW field-installed centralizers / paraffin scrapers deliver full-circle wiping of tubing inside diameters.
Among ULTRA-FLOW benefits: More gripping force on
sucker rods, more fluid flow-by volume, longer useful life from
longer vanes and bearing surfaces, plus positive wear indicators. A centralizers placement guide is available on this manufacturers website.
Oilfield Improvements Incorporated: Broken Arrow OK
RodGuides.com
Smarter wireless remote field devices

monitoring and management in real-time
Specialized cellular remote I/O modules like MOXAs ioLogik
2542-HSPA-T help you monitor and manage remote field devices in real-time.
They help easily establish reliable and cost-effective data
communication with field devices to automate operations and
make them smarter. The I/O modules are engineered to enter
the Industrial Internet of Things which requires a robust and
flexible communications infrastructure.
MOXA: Brea CA
MOXA.com
Widest range of audible and visual signals

plus fastest delivery anywhere in the world
e2S is the worlds leading independent manufacturer of high
performance audible and visual signals for onshore and offshore, commercial, industrial, or marine hazardous locations.
Hazardous area, fire and industrial, or wide area signalling products are designed to save lives as they also satisfy the
toughest global standards. These include Ex, IECEx, UL, cULus, FM, EAC, , VdS, and Inmetro.
E2S Warning Signals: London & Houston
e2S.com
Hassle free, no calibration or service

combustible hydrocarbon detectors
GD10P Infrared Point Combustible Hydrocarbon Detectors deliver reliable, fast response with no hassles and no calibration or servicing.
The sophisticated IR design monitors a wide range of combustible hydrocarbon gases or carbon dioxide. Advanced design includes two solid-state IR sources that require no calibration or servicing during their lifetime. Stable opto-mechanics
provide T90 < 2 sec ultra-fast speed of response.
Simtronics Fire & Gas: The Woodlands TX
Simtronics.eu
Appear in this advertisers only section

Schedule any size ad in OG&PE.
The following month we publish a free Advertiser Product & Service Followup summary as editorial complement
like the ones on these pages, and drive additional traffic to
your website.
Your product and literature press releases receive optimum editorial consideration for future editions as our media
partner.
OG&PE & OGPE.com

January 2016
160104OGJ_P11 11
P11
12/21/15 2:31 PM
OGPE.com:
Brand New Look & Feel
NEW DESIGN
Check out OG&PEs newly redesigned, more user
friendly, easier-to-navigate OGPE.com. Our redesign
makes it easier than ever to learn about and stay
current on the newest oil and gas equipment,
products, systems, and services. OGPE.com is the
petroleum industrys only all-oil-and-gas products &
services website. Use it to stay continuously updated
on products and oil industry news, market trends and
all things oil and gas equipment.
What Youll Notice:
Sleek, Contemporary Design, Easy Navigation
Responsive Formatting
Multiple Entry Points for Easy Access to Resources:
monthly magazines, archives, videos, webcasts, news,
social media
And Most Importantly: Free Information & Literature
on every announcement plus direct links to
manufacturer & service provider websites
160104OGJ_P12 12
12/21/15 2:31 PM
STATISTICS
IMPORTS OF CRUDE AND PRODUCTS
Districts 1-4
District 5
12-18
12-11
12-18
12-11
2015
2015
2015
2015
1,000 b/d
Total US
12-18
12-11
12-19*
2015
2015
2014
Total motor gasoline .............

Mo. gas. blending comp.....
Distillate...............................
Residual ..............................
Jet fuel-kerosine ..................
Propane-propylene ..............
Other ...................................
324
305
167
207
20
111
534
593
546
74
172
105
84
782
10
10
0
117
45
38
10
67
56
10
68
93
29
43
334
315
167
324
65
149
545
660
602
84
240
198
113
822
877
859
376
237
143
104
689
Total products ......................
1,363
1,810
220
310
1,584
2,117
2,426
Total crude ...........................
6,480
7,199
846
1,113
7,326
8,312
8,292
Total imports ........................
7,843
9,009
1,066
1,423
8,909
10,432
10,718
*Revised.
Data available at PennEnergy Research Center.
EXPORTS OF CRUDE AND PRODUCTS

Finished motor gasoline
Jet fuel-kerosine
Distillate
Residual
Propane/propylene
Other oils
Total products
Total crude
Total exports
NET IMPORTS
Total
Products
Crude
Total US
12-18-15
12-11-15
*12-19-14
1,000 b/d
472
616
363
142
145
150
1,205
1,304
979
296
315
373
711
729
538
1,017
1,044
968
3,843
4,153
3,371
500
445
388
4,343
4,598
3,759
4,567
(2,259)
6,826
5,831
(2,036)
7,867
Additional analysis of market trends is available

through OGJ Online, Oil & Gas Journals electronic
information source, at http://www.ogj.com.
OGJ CRACK SPREAD
12-25-15*12-26-14* Change Change,

$/bbl %
SPOT PRICES
Product value
Brent crude
Crack spread
46.50
35.34
11.16
FUTURES MARKET PRICES

One month
Product value
49.32
Light sweet crude
36.62
Crack spread
12.70
Six month
Product value
58.07
Light sweet crude
40.39
Crack spread
17.68
71.11 (24.61) (34.6)

59.22 (23.88) (40.3)
11.89 (0.73) (6.1)
71.25 (21.93) (30.8)

55.22 (18.60) (33.7)
16.03 (3.32) (20.7)
76.88 (18.81) (24.5)
57.88 (17.49) (30.2)
19.01 (1.32) (7.0)
*Average for week ending.

Source: Oil & Gas Journal
6,959
(945)
7,904
*Revised.
Source: Oil & Gas Journal
CRUDE AND PRODUCT STOCKS

Motor gasoline
Blending
Jet fuel,
Fuel oils
PropaneCrude oil
Total
comp.
kerosine
Distillate
Residual
propylene
1,000 bbl
District
PADD 1 .....................................
PADD 2 .....................................
PADD 3 .....................................
PADD 4 .....................................
PADD 5 .....................................
15,831
147,374
243,188
22,949
55,439
56,908
52,090
76,896
7,435
27,166
51,540
45,439
66,842
5,222
25,332
8,650
6,269
14,640
668
9,224
63,154
28,402
43,109
3,883
12,768
11,192
1,001
25,649
208
5,429
6,478
26,985
60,468
1
3,707
Dec. 18, 2015 ..........................

Dec. 11, 2015 ...........................
Dec. 19, 20142 ..........................
484,781
490,657
387,210
220,495
219,384
226,098
194,375
191,219
196,254
39,451
38,273
35,873
151,316
151,976
123,846
43,479
42,758
35,006
97,638
98,975
77,841
Includes PADD 5. 2Revised.

REFINERY REPORTDEC. 18, 2015

REFINERY
OPERATIONS
Gross
Crude oil
inputs
inputs
1,000 b/d
District
REFINERY OUTPUT
Total
motor
Jet fuel,
Fuel oils
Propanegasoline
kerosine
Distillate
Residual
propylene
1,000 b/d
PADD 1 ..............................................
PADD 2 ..............................................
PADD 3 ..............................................
PADD 4 ..............................................
PADD 5 ..............................................
1,084
3,571
8,834
619
2,433
1,092
3,572
8,862
620
2,323
3,098
2,476
2,214
302
1,511
88
261
926
36
440
334
1,029
2,818
195
561
45
72
167
13
89
158
375
994
1
170
Dec. 18, 2015 .....................................

Dec. 11, 2015 .....................................
Dec. 19, 20142 ....................................
16,541
16,662
16,660
16,469
16,611
16,341
9,601
9,970
9,991
1,751
1,705
1,687
4,937
5,107
5,236
386
347
368
1,697
1,701
1,620
18,125 Operable capacity

1
91.3 utilization rate
Includes PADD 5. Revised.

160104ogj_93 93
93
12/28/15 4:42 PM
STATISTICS
OGJ GASOLINE PRICES
OGJ PRODUCTION REPORT
BAKER HUGHES RIG COUNT
Price
Pump
Pump
ex tax
price*
price
12-23-15 12-23-15
12-24-14
/gal
(Approx. prices for self-service unleaded gasoline)
Atlanta ..........................
140.1
186.0
Baltimore ......................
149.2
195.0
Boston ...........................
146.1
191.0
Buffalo ..........................
142.1
211.0
Miami ............................
144.6
199.0
Newark ..........................
143.1
176.0
New York........................
157.1
226.0
Norfolk...........................
225.4
261.1
Philadelphia ..................
139.8
200.0
Pittsburgh .....................
155.8
216.0
Wash., DC......................
167.1
209.0
PAD I avg ..................
155.5
206.4
267.4
257.5
277.5
281.7
271.9
233.6
238.3
241.6
261.6
270.5
267.5
260.8
Chicago .........................
Cleveland ......................
Des Moines ....................
Detroit ...........................
Indianapolis ..................
Kansas City ...................
Louisville .......................
Memphis .......................
Milwaukee .....................
Minn.-St. Paul ...............
Oklahoma City ...............
Omaha ..........................
St. Louis ........................
Tulsa .............................
Wichita ..........................
PAD II avg .................
172.5
133.6
169.6
140.6
105.8
142.3
139.1
169.1
138.7
153.0
124.6
142.3
144.2
128.6
132.6
142.4
230.0
180.0
210.0
201.0
166.0
178.0
190.0
208.9
190.0
200.0
160.0
188.0
179.9
164.0
175.0
188.0
308.2
257.9
235.5
262.5
247.9
216.5
253.4
237.9
248.1
243.5
204.8
230.0
217.5
202.9
219.1
239.0
Albuquerque ..................
Birmingham ..................
Dallas-Fort Worth ..........
Houston .........................
Little Rock .....................
New Orleans ..................
San Antonio ...................
PAD III avg ................
152.7
138.7
141.5
142.5
147.7
144.5
142.5
144.3
189.9
177.9
179.9
180.9
187.9
182.9
180.9
182.9
223.5
241.4
223.0
218.3
235.9
232.1
227.0
228.7
Cheyenne.......................
Denver ...........................
Salt Lake City ................
PAD IV avg ................
148.4
145.3
167.1
153.6
190.8
185.7
210.0
195.5
249.2
243.3
257.4
249.9
Los Angeles ...................

Phoenix..........................
Portland ........................
San Diego ......................
San Francisco................
Seattle...........................
PAD V avg .................
Weeks avg. ..................
Nov. avg... .....................
Oct. avg.. ......................
2015 to date .................
2014 to date .................
221.8
167.1
175.5
215.8
217.8
191.1
198.2
154.9
169.4
182.2
195.1
289.9
290.0
204.5
225.0
283.9
286.0
247.0
256.1
202.2
216.8
229.5
242.4
337.1
294.2
237.8
289.1
296.4
295.8
289.4
283.8
250.2
294.2
320.2
2
12-25-15
12-26-14
1,000 b/d
12-25-15 12-26-14
Alabama............................................
Alaska ...............................................
Arkansas ...........................................
California ..........................................
Land................................................
Offshore ..........................................
Colorado ............................................
Florida ...............................................
Illinois ...............................................
Indiana..............................................
Kansas ..............................................
Kentucky............................................
Louisiana ..........................................
N. Land ...........................................
S. Inland waters ..............................
S. Land............................................
Offshore ..........................................
Maryland ...........................................
Michigan ...........................................
Mississippi ........................................
Montana ............................................
Nebraska ...........................................
New Mexico........................................
New York............................................
North Dakota .....................................
Ohio...................................................
Oklahoma ..........................................
Pennsylvania .....................................
South Dakota.....................................
Texas .................................................
Offshore ..........................................
Inland waters ..................................
Dist. 1 .............................................
Dist. 2 .............................................
Dist. 3 .............................................
Dist. 4 .............................................
Dist. 5 .............................................
Dist. 6 .............................................
Dist. 7B ...........................................
Dist. 7C ...........................................
Dist. 8 .............................................
Dist. 8A ...........................................
Dist. 9 .............................................
Dist. 10 ...........................................
Utah ..................................................
West Virginia .....................................
Wyoming............................................
Others ID-1........................................
1
11
1
9
9
24
12
56
27
1
8
20
1
38
55
15
88
26
319
3
36
36
19
11
3
16
2
27
138
13
3
12
3
16
17
1
6
10
12
28
26
2
69
2
1
2
29
3
111
28
12
18
53
14
10
2
102
169
47
209
54
852
1
121
86
63
19
9
32
6
96
317
28
16
58
23
28
57
Total US ........................................
Total Canada ................................
700
126
1,840
256
Grand total ...................................

US oil rigs..........................................
US gas rigs........................................
Total US offshore ...............................
Total US cum. avg. YTD .....................
826
538
162
24
983
2,096
1,499
340
58
1,862
(Crude oil and lease condensate)

Alabama .................................
25
Alaska ....................................
526
California ...............................
579
Colorado .................................
309
Florida ....................................
6
Illinois ....................................
24
Kansas ...................................
120
Louisiana ...............................
1,283
Michigan ................................
17
Mississippi .............................
66
Montana .................................
78
New Mexico.............................
403
North Dakota ..........................
1,180
Ohio ........................................
66
Oklahoma ...............................
335
Pennsylvania ..........................
19
Texas ......................................
3,707
Utah .......................................
98
West Virginia ..........................
29
Wyoming .................................
242
Other states ...........................
50
Total
9,162
1
OGJ estimate. 2Revised. Source: Oil & Gas Journal.

US CRUDE PRICES
Alaska-North Slope 27 .........................................
Light Louisiana Sweet ...........................................
California-Midway Sunset 13 ..............................
California Buena Vista Hills 26 ...........................
Wyoming Sweet .....................................................
East Texas Sweet ...................................................
West Texas Sour 34 ..............................................
West Texas Intermediate........................................
Oklahoma Sweet....................................................
Texas Upper Gulf Coast .........................................
Michigan Sour .......................................................
Kansas Common ...................................................
North Dakota Sweet ...............................................
WORLD CRUDE PRICES

OPEC reference basket
Rotary rigs from spudding in to total depth.

Definitions, see OGJ Sept. 18, 2006, p. 46.
Source: Baker Hughes Inc.
IHS PETRODATA RIG COUNT
12-18-15
/gal
Spot market product prices

No. 2 Distillate
Motor gasoline
Low sulfur diesel fuel
(Conventional-regular)
New York Harbor ......... 128.70 New York Harbor .........
Gulf Coast .................. 119.00 Gulf Coast ..................
Los Angeles ................
Motor gasoline
Kerosine
jet fuel
(RBOB-regular)
New York Harbor ......... 172.20 Gulf Coast ..................
106.80
100.00
113.80
102.30
Propane
No. 2 heating oil
New York Harbor ......... 95.50 Mont Belvieu .............. 35.80
US Gulf of
Mexico. . . . . .
South
America
Northwest
Europe. . . . .
West
Africa. . . . . .
Middle
East. . . . . . .
Southeast
Asia. . . . . . .
Worldwide. . . .
45.02
45.37
43.50
49.16
47.56
48.45
44.55
43.61
45.89
35.48
49.48
39.91
49.51
40.50
40.64
38.70
44.81
43.30
44.74
38.92
38.39
41.66
31.87
45.99
36.40
45.30
42.13
45.84
46.90
48.56
47.49
40.79
41.79
43.29
44.30
43.05
(2.30)
2.72
(1.63)
2.51
Source: OPEC Monthly Oil Market Report.

DEC. 25, 2015

Total
supply
of rigs
$/bbl
Wkly. avg. 12-25-15
31.32
Mo. avg., $/bbl
Oct. -15
Nov. -15
OPEC reference basket.......................

Arab light-Saudi Arabia .......................
Basrah light-Iraq .................................
Bonny light 37o-Nigeria........................
Es Sider-Libya ......................................
Girassol-Angola....................................
Iran heavy-Iran.....................................
Kuwait export-Kuwait ...........................
Marine-Qatar........................................
Merey-Venezuela ..................................
Murban-UAE .........................................
Oriente-Ecuador ...................................
Saharan blend 44o-Algeria ...................
Other crudes
Minas 34o-Indonesia ............................
Fateh 32o-Dubai ...................................
Isthmus 33o-Mexico .............................
Brent 38o-UK ........................................
Urals-Russia ........................................
Differentials
WTI/Brent .............................................
Brent/Dubai..........................................
Includes state and federal motor fuel taxes and state

sales tax. Local governments may impose additional taxes.
Source: Oil & Gas Journal.
12-18-15
/gal
12-25-15
$/bbl*
41.78
33.47
30.65
37.10
31.75
32.00
29.00
34.00
34.00
27.75
26.00
33.50
27.50
*Current major refiners posted prices except N. Slope lags 2 months.

40 gravity crude unless differing gravity is shown. Source: Oil & Gas
Journal. Data available at PennEnergy Research Center.
REFINED PRODUCT PRICES
29
520
610
304
6
28
136
1,349
20
73
71
380
1,227
61
353
18
3,800
114
37
234
52
9,422
US NATURAL GAS STORAGE1
Marketed
Marketed
supply
Marketed utilization
of rigs contracted rate (%)
122
74
55
74.3
64
60
56
93.3
104
94
80
85.1
74
69
45
65.2
161
154
125
81.2
98
848
89
749
50
581
56.2
77.6
12-18-15
East....................................
Midwest..............................
Mountain ............................
Pacific ................................
South Central
Salt ................................
Nonsalt...........................
Total US .............................
Total US2 ............................
12-11-15
12-18-14 Change,
bcf
894
894
778
1,051
1,066
905
198
203
166
346
361
333
1,325
1,322 1,070
378
376
327
947
946
744
3,814
3,846
Sept.-15
Sept.-14
3,252
Change,
%
3,626
3,187
13.8
%
14.9
16.1
19.3
3.9
23.8
15.6
27.3
17.3
Source: EIA Weekly Petroleum Status Report.

94
160104ogj_94 94
Source: IHS Petrodata

Data available in PennEnergy Research Center
Working gas. 2At end of period.

Source: Energy Information Administration
12/28/15 4:42 PM
STATISTICS
PACE REFINING MARGINS
WORLDWIDE NGL PRODUCTION
Oct.
Nov. Dec.
Dec.
2015 2015 2015
2014
Change
$/bbl
US Gulf Coast
Composite US Gulf Refinery..............
Mars (Coking) ..................................
Mars (Cracking) ...............................
Bonny Light ......................................
US PADD II
Chicago (WTI)...................................
US East Coast
Brass River ......................................
East Coast Comp .............................
US West Coast
Los Angeles (ANS) ............................
NW Europe
Rotterdam (Brent) ............................
Mediterranean
Italy (Urals) ......................................
Far East
Singapore (Dubai) ............................
9.08
11.13
7.87
3.13
9.25
10.58
7.27
5.08
8.72
9.63
6.27
5.04
4.01
4.47
1.46
(2.07)
4.71
5.16
4.81
7.11
117.3
115.6
328.8
(343.6)
19.61
10.00
8.02
6.61
1.40
9.07 8.87
9.83 10.08
9.29
10.82
(0.42)
(0.73)
21.2
0.0
(4.5)
(6.8)
5.54
7.03
14.45
13.00 15.54
2.14
1.15
4.31
2.61
(0.05)
3.09
6.15
3.73
1.20
5.32
7.25
7.76
4.44
13.39
9 month
Change vs.
average
previous
Sept.
Aug.
production year
2015
2015
2015
2014
Volume
1,000 b/d %
Change,
%
Brazil ...................................
Canada................................
Mexico .................................
United States ......................
Venezuela ............................
Other Western
Hemisphere .......................
Western
Hemisphere..................
116
680
329
3,343
204
202
203
5,076
4,846
279
42
323
42
333
56
209.8
Norway.................................
United Kingdom ...................
Other Western
Europe ...............................
74.9
Western Europe .............
330
374
Russia .................................
Other FSU ............................
Other Eastern
Europe ...............................
733
157
738
157
13
624.5
2.67 (5,030.3)
2.52
3.32
Source: Jacobs Consultancy Inc.

US NATURAL GAS BALANCE

DEMAND/SUPPLY SCOREBOARD
Sept.
Total
YTD
Sept.
Aug. Sept. 2015-2014 YTD 2015-2014
2015
2015 2014 change
2015-2014
change
bcf
DEMAND
Consumption ...................
Addition to storage ..........
Exports ............................
Canada .........................
Mexico ..........................
LNG ...............................
Total demand ..................
1,921
435
163
60
100
3
2,519
2,073
394
145
41
101
3
2,612
1,818
469
120
52
65
3
2,407
103
(34)
43
8
35
112
20,616 19,721
2,898 3,043
1,297 1,324
513
765
765
546
19
13
24,811 24,088
895
(145)
(27)
(252)
219
6
723
SUPPLY
Production (dry gas) ........
Supplemental gas............
Storage withdrawal..........
Imports ............................
Canada..........................
Mexico ...........................
LNG................................
Total supply .....................
2,288
5
63
209
203
6
2,565
2,352
4
85
214
203
11
2,655
2,162
5
47
202
196
6
2,416
126
0
16
7
7
0
149
20,374 19,009
43
44
2,414 2,743
2,047 1,993
1,976 1,948
1
1
70
44
24,878 23,789
1,365
(329)
54
28
26
1,090
4,365
3,626
7,991
4,363
3,252
7,615
4,371
2,935
7,306
4,369
3,187
7,556
109
682
331
3,225
209
89
657
362
2,915
213
20
26
(30)
311
(4)
22.3
3.9
(8.4)
10.7
(1.7)
223
235
(12)
(5.3)
4,780
4,470
310
6.9
307
57
26
(1)
8.5
(1.1)
10
(1)
(10.0)
399
374
25
6.6
716
157
718
166
(2)
(10)
(0.3)
(5.8)
13
13
13
(1)
(3.8)
Eastern Europe ..............
903
908
885
897
(12)
(1.3)
Algeria .................................
Egypt ...................................
Libya....................................
Other Africa .........................
Africa..............................
340
201
50
83
756
340
202
50
83
675
340
201
50
83
674
340
190
46
82
658
12
4
-16
6.1
8.4
0.2
2.4
Saudi Arabia........................
United Arab Emirates ..........
Other Middle East ................
Middle East.....................
1,810
641
690
3,141
1,810
641
690
3,141
1,810
641
689
3,140
1,800
641
676
3,117
10
13
23
0.6
1.9
0.7
Australia..............................
China...................................
India ....................................
Other AsiaPacific ...............
AsiaPacific ...................
TOTAL WORLD .................
55
105
331
491
10,697
56
105
331
492
10,435
52
104
332
488
10,366
82
106
330
518
10,035
(30)
(2)
1
(30)
332
(36.3)
(1.5)
0.4
(5.8)
3.3
Totals may not add due to rounding.

Source: Oil & Gas Journal.
OXYGENATES
Sept.
Aug.
YTD
YTD
2015
2015 Change
2015
2014
Change
1,000 bbl
NATURAL GAS IN UNDERGROUND STORAGE

Sept.
Aug.
July.
Sept.
2015
2015
2015
2014
Change
bcf
Base gas
Working gas
Total gas
112
683
329
3,319
200
2,477
439
2,916
Source: DOE Monthly Energy Review.

Data available at PennEnergy Research Center. NOTE: No new data at press time.
Fuel ethanol
Production ..................
Stocks .........................
28,543
18,904
MTBE
Production ..................
Stocks .........................
1,378
714
29,621 (1,078)
19,259 (355)
1,313
883
65
(169)
261,712 253,151
18,904 18,660
11,152
714
10,313
561
8,561
244
839
153
Source: DOE Petroleum Supply Monthly.

Data available at PennEnergy Research Center. NOTE: No new data at press time.
US COOLING DEGREEDAYS
New England ................................................................
Middle Atlantic .............................................................
East North Central........................................................
West North Central .......................................................
South Atlantic ..............................................................
East South Central .......................................................
West South Central.......................................................
Mountain ......................................................................
Pacific ..........................................................................
Sept.
2015
86
135
127
168
293
235
425
233
194
Aug.
2015
206
227
169
202
408
340
560
365
282
Sept,
2014
33
65
46
78
279
237
381
206
189
% change
1.6
1.1
1.8
1.2
0.1
0.1
0.1
US average*............................................................
223
314
292
(0.2)
Total degree days YTD

2015
2014
556
418
794
590
717
606
929
800
2,050
1,807
1,619
1,435
2,476
2,254
1,409
1,341
956
957
1,352
1,202
% change
0.3
0.3
0.2
0.2
0.1
0.1
0.1
0.1
0.1
*Excludes Alaska and Hawaii.

Source: DOE Monthly Energy Review.
160104ogj_95 95
95
12/28/15 4:42 PM
MARKET
CONNECTION
WHERE THE INDUSTRY GOES TO CLASSIFY
The Oil & Gas Journal has a circulation of over 100,000 readers and has been the worlds most widely read petroleum publication for over 100 years
PR OD UCT S & E QU IP ME NT
REFRIGERATION
PLANTS
Gas Corporation of America

800-762-6015 /gascorp@wf.net
www.gas-corp.com
100 MCF 20 MMCF

JT PLANTS: 1 MMCF 20 MMCF
AMINE PLANTS: 0.5 GPM 6 GPM

PRODUCT STORAGE TANKS:
12,000 30,000 GALLON
WE WANT YOUR
PROPANE/
BUTANE TANKS
318-425-2533, 318-458-1874
regardres@aol.com
We Buy, Sell & Rent

Natural Gas Plants

LB 40-60 EXP
Electric Steam Generators for
Cleaning/Degassing
Operations Prior
toHot Work
CONTACT:
sales@electrosteam.com
Toll-Free: 1/866-617-0764
B US I N E S S O P P OR TU NI TI ES
FOR SALE
Leading Casing Plunger Co.

Used to deliquify gas wells including

Low operating cost - Multiple sizes
325-624-5460
For more
PRODUCTS, SERVICES, AND

BUSINESS OPPORTUNITIES:
visit
ogj.com/market-connection.html
96
160104OGJ_96 96
12/29/15 1:43 PM
MARKET
CONNECTION
WHERE THE INDUSTRY GOES TO CLASSIFY
Employment? HIRE
Services Offered? ACQUIRE
Equipment/Products/Land? SELL
SEE RESULTSAsk me how!
GRACE JORDAN
713-963-6291
GraceJ@PennWell.com
Twitter: @ogjmarket
The Oil & Gas Journal has a circulation of over 100,000 readers and has been the worlds most widely read petroleum publication for over 100 years
PR OD UCT S & E QU IP ME NT
E MPL OY ME NT OP POR T UN IT IE S
NOW HI
HIRING!
IRIN
NG!
PHMSA is looking for
Engineers & Transportation Specialists

with pipeline and inspection experience.
2.6 million miles of pipeline need your attention!
Veterans are encouraged to apply.
Visit our Careers page for a list of vacancies:
http://www.phmsa.dot.gov/careers
FOR MORE
Employment
Opportunities
VISIT
ogj.com/marketconnection.html
Atwood Oceanics seeks ambitious, safetyfocused people who are passionate about
offshore drilling. We have needs to fill the
following offshore vacancies on our deepwater drillship in the U.S. Gulf of Mexico.
Please apply at http://www.atwd.com/careers, click on the All Openings. Refer to the
below job code:
Senior DPO (Job Code 456)
Electrician II (Job Code 358)
Atwood is committed to providing career
opportunities that are both challenging and
interesting in a supportive work environment. We emphasize on-the-job training
and career development to further personal
advancement, and we offer competitive compensation and benefits packages for our employees!
Devon Energy Corporation has an opening for

Lead Business Analyst in Oklahoma City, OK
to develop & maintain systems that facilitate
storage and sharing of technical information
within the company. Interested applicants mail
resumes to Attn: Christie McKeown/DE25,
Devon Energy Corporation, 333 W. Sheridan
Ave, Oklahoma City, OK 73102.
Atwood Oceanics is an Equal Opportunity

Employer.
160104OGJ_97 97
97
12/29/15 1:43 PM
1144 TTHH ANNUAL

ANNUAL NNOV.
OV. 8 110,
0, 2016
2016
SUSTAINABILITY THROUGH THE CYCLE

MOODY
M
O O DY GARDENS
G A R D E N S HHOTEL
OT E L & CCONVENTION
O N V E N T I O N CCENTER
E N T E R GGALVESTON,
A LV E S TO N , TTXX
SAVE THE DATE
Thee De
Th
Deep
Deepwater
epwa
ep
wate
wa
terr Op
te
Oper
Operations
erat
er
atio
at
ions
io
ns C
Con
Conference
onfe
on
fere
fe
renc
re
ncee an
nc
andd Ex
Exhi
Exhibition
hibi
hi
biti
bi
tiion w
wil
will
ililll co
cont
continue
ntin
nt
inue
in
ue
thee tr
th
trad
tradition
adit
ad
itio
it
ionn of eexc
io
excellence
xcel
xc
elle
el
lenc
le
ncee in aadd
nc
addressing
ddre
dd
ress
re
ssin
ss
ingg op
in
oper
operational
erat
er
atio
at
iona
io
n l ch
na
chal
challenges
alle
al
leng
le
nges
ng
es
invo
in
volv
vo
lved
lv
ed iinn de
deve
velo
ve
lopi
lo
ping
pi
ng ddee
eepw
ee
pwat
pw
ater
at
er rres
esou
es
ourc
ou
rces
rc
es.. We w
es
wil
ililll re
retu
turn
tu
rn ttoo th
thee
involved
developing
deepwater
resources.
will
return
Mood
Mo
odyy Ga
od
Gard
rden
rd
enss Ho
en
Hote
tell an
te
andd Co
Conv
nven
nv
enti
en
t on C
ti
Cen
ente
en
terr on N
te
Nov
ovem
ov
embe
em
berr 8
be
810
10,, 20
10
2016
16
Moody
Gardens
Hotel
Convention
Center
November
810,
in G
Gal
alve
al
vest
ve
ston
st
on, Te
on
Texa
x s.
xa
Galveston,
Texas.
Challenges
Chal
Ch
alle
al
leng
le
nges
ng
es iin
n de
deep
deepwater
epwa
ep
wate
wa
terr pr
te
prod
production
oduc
od
ucti
uc
tion
ti
on aare
re ccom
complex
ompl
om
plex
pl
ex aand
nd ccom
command
omma
om
mand
ma
nd oour
ur
attention
atte
at
tent
te
ntio
nt
ionn to ddev
io
develop
evel
ev
e op ssol
el
solutions
olut
ol
utio
ut
ions
io
ns ttha
that
hatt ar
ha
aree ec
econ
economical
onom
on
omic
om
ical
ic
al aand
nd llong-term.
ongon
g-te
gterm
te
rm.. Th
rm
Thee
Deepwater
Deep
De
epwa
ep
wate
wa
terr Op
te
Oper
Operations
errat
atio
ions
io
ns C
Con
Conference
onfe
on
fere
fe
renc
re
ncee an
nc
andd Ex
Exhi
Exhibition
hibi
hi
biti
bi
tion
ti
on ppro
provides
ro
ovi
vide
dess a un
de
uniq
unique
ique
iq
ue
experience
expe
ex
peri
pe
rien
ri
ence
en
ce ffor
or aattendees
tten
tt
ennde
dees
es aand
nd eexh
exhibitors
xhib
xh
ibit
ib
itor
it
orss to ssha
or
share,
hare
ha
re,, le
re
lear
learn
arnn an
ar
andd co
conn
connect
nnec
nn
ectt
ec
i a ffor
in
orum
or
um dded
edic
ed
icat
ic
ated
at
ed ttoo ad
addr
dres
dr
essi
es
sing
si
ng tthese
hese
he
se ccha
hallllllen
ha
enge
en
ges.
ge
s.
forum
dedicated
addressing
challenges.
www.deepwateroperations.com
w
ww.deepwateroperations.ccom
Photo Courtes
rtesyy of Hess Corp
Corpoorat
ration
io
ionn
HHOSTED
HOST
O STED
ED BBY:
Y:
160104OGJ_98 98
OWNED
OWN
ED &
PRODUCED
PRODUC
PRO
DUCED
ED BY:
PRESEN
PRE
SENTED
TED BY:
BY:
PRESENTED
SUPPOR
SUP
PORTED
TED BY:
BY:
SUPPORTED
12/29/15 1:43 PM
ADVERTISING SALES
US Sales
ADVERTISERS INDEX
Mike Moss, (713) 963-6221, mikem@pennwell.com.

Mark Gates, (713) 963-6237, markg@pennwell.com.
Stan Terry, (713) 963-6208, stant@pennwell.com.
Grace Jordan, (713) 963-6291, gracej@pennwell.com
Courtney Ferguson, (918) 831-9558, courtneyf@pennwell.com
COMPANY NAME
Australia / New Zealand
www.afpm.org
Mike Twiss, Miklin Business Services, Unit 15,

3 Benjamin Way, Rockingham, Western Australia 6168;
Tel +61 8 9529 4466, Fax +61 8 9529 4488
Email: miklinbusiness@bigpond.com
Brazil / South America
AFPM
PAGE
C2
Ariel Corporation
ASME
19
Canada
www.cippe.com.cn
Beijing Zhenwei Exhibition Co., Ltd.
51
Pipeline Week
63
www.pipelineweek.com
17
www.go.asme.org/fracturing
Pipeline Contractors Association
PAGE
www.plca.org
www.arielcorp.com
Jim Klingele, (713) 963-6214, jimk@PennWell.com

1455 West Loop South, Suite 400, Houston, TX 77027
COMPANY NAME
PNEC Conferences
C3
www.pnecconferences.com
15
Power-Gen Natural Gas
59
www.power-gennaturalgas.com
Stan Terry, (713) 963-6208, stant@pennwell.com
France / Belgium / Spain / Portugal /

Southern Switzerland / Monaco
Stefy Picoitti Thompson, Tel: +33(0)4 94 70 82 63; Cell:
+33(0)6 21 23 67 02, stefaniat@pennwell.com.
Daniel Bernard, 8 allee des Herons, 78400 Chatou,
France; Tel: 33(0)1.3071.1119, Fax: 33(0)1.3071.1119;
E-mail: danielb@pennwell.com
Clarion Technical Conferences

E2S Warning Signals LLC
Energy Institute
Flomatic Valves
Greatwall Drilling Company
Ferruccio Silvera, Viale Monza, 24 20127 Milano Italy;

Tel:+02.28.46 716; E-mail: info@silvera.it
Japan
e.x.press sales division, ICS Convention Design Inc.
6F, Chiyoda Bldg., 1-5-18 Sarugakucho, Chiyoda-ku,
Tokyo 101-8449, Japan, Tel: +81.3.3219.3641, Fax:
81.3.3219.3628, Masaki Mori, E-mail: Masaki.Mori@
ex-press.jp
P7
58
P3
3
Sensonics Ltd
P5
Sierra Hamilton
17
Newpark Drilling Fluids
www.newpark.com
21
Tyco-Scott Safety
11
www.GasandFlameDetection.com
www.ceraweek.com/2016
www.nov.com/Aftermarket
www.Sierra-Hamilton.com
www.gwdc.com.cn
National Oilwell Varco
Senior Aerospace Metal Bellows
www.sensonics.co.uk
www.flomatic.com
IHS
www.metalbellows.com
www.energyinst.org/ip-week
Sicking Industrial Marketing, Kurt-Schumacher-Str. 16,

59872, Freienohl, Germany. Tel: 49(0)2903.3385.70,
Fax: 49(0)2903.3385.82; E-mail: wilhelms@pennwell.
com; www.sicking.de <http://www.sicking.de> Andreas
Sicking
Saxon Financial Group

www.raymondjames.com/saxonfinancial/events
www.e2s.com/audible
Germany / Austria / Northern Switzerland /

Eastern Europe / Russia / Former Soviet Union
Italy
www.clarion.org
Weatherford
C4
www.weatherford.com
China / Korea / Singapore / Asia-Pacific

Michael Yee, 19 Tanglin Road #05-20, Tanglin Shopping
Center, Singapore 247909, Republic of Singapore; Tel: 65
9616.8080, Fax: 65.6734.0655; E-mail: yfyee@singnet.
com.sg
United Kingdom / Scandinavia / Denmark /

The Netherlands
Graham Hoyle, 10 Springfield Close, Cross, Axbridge,
Somerset BS26 2FE, Phone: +44 1934 733871 Mobile:
+44 7927 889916, grahamh@pennwell.com or ghms@
btinternet.com
West Africa
Dele Olaoye, Flat 8, 3rd Floor, Oluwatobi House, 71
Allen Ave., Ikeja Lagos, Nigeria; Tel: +234 805 687 2630;
Tel: +234 802 223 2864; E-mail: dele.olaoye@q-she.com
OGJ Reprints
Rhonda Brown, Foster Printing Co., Reprint Marketing
Manager; 866.879.9144 ext 194, Fax: 219.561.2023;
4295 Ohio Street, Michigan City, IN 46360;
rhondab@fosterprinting.com. www.fosterprinting.com
Custom Publishing
Roy Markum, Vice-President/Custom Publishing, roym@
pennwell.com, Phone: 713-963-6220, Fax: 713-963-6228
Marketing Solutions
Should you need assistance with creating your ad,
please contact Paul Andrews, Vice President
pandrews@pennwell.com, 240.595.2352
This index is provided as a service. The publisher does not assume any liability for errors or omission.
PennWell
1455 West Loop South, Suite 400, Houston, TX 77027
www.ogj.com
160104OGJ_99 99
99
12/29/15 3:30 PM
THE EDITORS PERSPECTIVE
Opposition persists
to vital agreement on
gas work off Israel
by Bob Tippee, Editor
In Israel, does the fat lady ever sing?
Its not over, the saying goes, until she
does.
So is stalemate over for deepwater gas
development now that Israeli Prime Minister
Benjamin Netanyahu has taken a crucial legal
step? After nearly a year, has the fat lady sung?
Giant Leviathan and Tamar fields, discoveries of groups led by Noble Energy Inc., can
produce far more gas than Israel needs. But
exporting the gas is controversial. Geopolitical
sensitivity around any export scheme requiring a cross-border pipeline is only part of the
reason.
Within Israel itself, political bickering over
gas exports is feverish. The basic question is
how much gas Israel should reserve for itself
and how much it should allocate for export.
But a secondary question is domination by
Noble, Israels Delek Group, and Delek subsidiaries of the production fairway taking shape in
the Mediterranean between Israel and Cyprus.
In December 2014, David Gilo, the antitrust
commissioner, suggested the Noble-Delek alliance restricted competition.
In August, the Israeli cabinet approved a
gas-development framework that addressed
Gilos concern by trimming Noble and Delek
holdings in Israels offshore gas fields but allowed development to proceed. Gilo responded
by resigning. His successor doesnt support the
agreement.
The economy minister, however, can circumvent the antitrust commissioner by invoking
national security or foreign policy. Although
that official, Arye Deri, wasnt inclined to do so,
his resignation last month allowed Netanyahu
to claim the authority, consult with a legislative committee, and win support from a narrow
majority of members.
Deepwater gas reserves potentially
transform us not just into an energy power but
certainly into an important international force
with very great capability, the prime minister
said after invoking the clause that activated the
gas framework.
Administrative formalities end there; political impediments do not.
Isaac Herzog, leader of the opposition Zionist Union, called Netanyahus move a cynical
exploitation of security needs and promised to
challenge it in court.
The fat lady might only have cleared her
throat.
(From the subscription area of www.ogj.com,
posted Dec. 18, 2015; authors e-mail: bobt@
ogjonline.com)
100
160104OGJ_100 100
WATCHING GOVERNMENT
Nick Snow
Washington Editor
Looking back, looking ahead

An otherwise frustrating 2015 ended triumphantly when the 40-yearold ban on exports of US-produced
crude oil ended as part of fiscal
2016 omnibus budget bill. But it still
was possible to wonder if the US oil
and gas industry was becoming a
victim of its own success.
The US oil and gas supply
outlook still remained favorable,
and the export bans removal meant
domestic tight oil producers finally
could start to pursue overseas customers. With their crude no longer
stranded, they could begin to get
higher prices.
But it still wasnt certain how
deep their hoped-for recovery would
be with global markets flooded with
crude from Organization of Petroleum Exporting Countries and other
producers. Motor fuel prices were at
their lowest point in years as 2015
wound down, and it was clear that
the public and most policymakers
had grown complacent.
It also was apparent that the
Obama administration, which was
happy to take credit for all that
domestic oil and gas production
growth since 2008, believes that
combating climate change impacts
is a higher priority than addressing
underlying energy problems.
The president made that clear
when he rejected the Keystone XL
crude oil pipeline projects crossborder permit on Nov. 6. Energy
political dynamics in Canada, from
where the crude was to come,
changed during the year with
elections of liberal leaders, first in
Alberta and later in Ottawa.
Obamas action emboldened
environmental activists, who intensified their keep it in the ground

campaigns against any kind of fossil
fuel. Within weeks, two US Bureau
of Land Management oil and gas
lease sales were postponed due to
stronger than anticipated public
interest. The few tracts that would
have been offered now will be part
of sales in 2016.
Pipelines vs. rail

Resistance to new pipeline construction intensified. Opponents
also bemoaned the growth of transporting crude by rail and its greater
potential problems. There were
signs that its overall crude transport
share has peaked.
Hearings also will begin on Jan.
5 in Vancouver, Wash., for Tesoro
Corp. and Savage Cos.s proposed
terminal that would receive as much
as 346,000 b/d of crude by rail. It
then would be loaded onto USflagged marine vessels bound for
Alaska, California, and Washington
refineries.
US Environmental Protection
Agency enforcement initiatives from
ground-level ozone to requirements
for refiners beyond their plants
fence lines also pose problems. One
of 2015s few other victories came
when an unprecedented habitat
conservation effort by state wildlife
agencies, local governments, landowners, recreation groups, and oil
and gas producers kept the greater
sage grouse from being listed as a
threatened or endangered species.
Goodbye to 2015, then. This
year wont be dull either.
12/29/15 1:43 PM
INTEGRATION + INFORMATION + MANAGEMENT
MAY 17-19, 2016

th
20 International Conference on Petroleum Data

Integration, Information and Data Management
HOUSTON, TEXAS
MARRIOTT HOUSTON WESTCHASE

WWW.PNECCONFERENCES.COM
REGISTER EARLY AND SAVE!

Save $150 (USD) on Full Conference Registration when you register by April 29, 2016.
For its 20th year, PNEC continues to deliver a power-packed, technical program surrounding changes
in key technologies and practical solutions to implement quality, data-driven decisions that meet
enterprise-wide technical and financial interests when millions of invested dollars are at risk.
Network with your peers and exhibitors from leading technology companies at this one-of-a-kind
global event targeting:
Case Studies and Solutions
Data Standards
Industry Standards
Master and Reference Data
Management
Enterprise Architecture and
Integration
Owned &
Produced by:
Presented by:
Professionalizing Data and

Information Management
Best Practices
Technical Trends and Innovation
Vision and Strategy; Looking
Forward
Spatial Data
Subsurface Data and Application

Management
Field, Facility and Production
Documents and Records
Management
Looking Outside the Petroleum
Industry
Supported by:
Follow
us on:
160104ogj_C3 3
12/28/15 3:15 PM
PERFORMANCE DRILLING TOOLS
UNLOCK THE
POTENTIAL

RFID

)++ +)
))
+ + ++

)+)+
)

+
)*

)+

))+

) +)+
+

)+

) +

++
)
++)
+ )) ) )+ +
+ +
)++

!"(#)
#
$
%&)#)
)

++++
2015 Weatherford. All rights reserved.
%

)+
)'*+++
weatherford.com/jetstream
Drilling & Formation Evaluation
160104ogj_C4 4
Well Construction
Completion & Stimulation
Production
12/28/15 3:15 PM
This advertisement has been produced by Star Communications for distribution with OIL & GAS JOURNAL
[energyreview]
NIGERIA
2016
[ ARTICLES ] [ ANALYSIS ] [ INVESTMENTS] [ INTERVIEWS ]
Opportunity for sectoral reform

and return to growth
LOCAL PLAYERS STRIVE FOR
GREATER PARTICIPATION
The year ahead in Nigerias oil

and gas industry
160104OGJ_NigeriaSTARCOMM_1 1
12/18/15 1:22 PM
Sustaining Subsea Asset

Integrity and Investment.
Marine Platforms is focused on providing
diverse sustainable services to the upstream
sector of the oil & gas industry in Nigeria
and the West African Sub region.
By continuous innovation, we strive to
employ cutting edge technology and
resources to ensure optimal returns of
your subsea investment.
Our dedication to quality and safe
service delivery makes it even better,
consequently enabling us to always
exceed our clients expectation.
...inspired to do it better
Well Services
Subsea Solutions
Vessel Chartering
Head Ofce
Construction House
18, Adeyemo Alakija St
Victoria Island, Lagos
UK Ofce
South Fornet, Westhill
Aberdeenshire
AB32 7BX
Operations Base
17A, Federal Ocean Terminal (FOT)
Onne Oil & Gas Free Zone
Port harcourt
enquiries@marineplatforms.com
www.marineplatforms.com
Tel: +234-1-2121542
Tel +44 1330 860045
+234-8-4796565
12/18/15 1:23 PM
Challenging oil market offers

real opportunity for reform
The combination of low crude prices, a weak currency, and fiscal and investment concerns
leaves the Buhari government and the NNPC with little choice but to rethink the way the oil
and gas business works in Nigeria, with the goal of stimulating growth and prosperity
n April 2015, Muhammadu Buhari won a historic presidential

election victory, becoming the first leader to defeat an incumbent
of the highest office and marking the first time an opposition party
has democratically and peacefully taken power since independence in
1960. Nigeria is Africas most populous country, its largest economy,
and leading oil producer, making Buharis job perhaps the toughest
on the continent.
Twelve months earlier, Nigeria performed a GDP-rebasing exercise
that translated into an economy worth $568.5 billion by the end of
2014. Growth over the last five years has been patchy, however, since
a high of more than 8% at the close of 2010. Despite solid 6%-plus
expansion in 2014, this slowed to 2.8% in the third quarter of 2015,
year-on-year. The World
We lost momentum
Banks latest data forecasts
from past practices and,
a rebound to around 5%
coupled with the difficult
in 2016.
international environment,
The countrys finances
now need to map out clear are founded on its rich
deliverables.
hydrocarbons deposits.
Emmanuel Ibe Kachikwu, Minister According to OPEC,
Nigeria has proven reserves
of State for Petroleum and Group
of 37 billion barrels of oil
Managing Director of NNPC
and over 180 trillion cubic
feet of natural gas. In Q3 2015, crude production reached an average
of 2.17 million bpd, a 5% jump over the previous quarter. But, with
oil prices plunging to just 40% of their value when Buhari took office
in June 2014 by last December, Nigeria is now being forced to revise
its calculations to ensure it meets this years budgetary goals.
While the oil and gas sector accounts for 10% of Nigerias GDP, it
provides as much as 90% of foreign-exchange earnings. The naira,
the national currency, has been losing ground against the US dollar
for months, the investment climate has cooled in 2015 due, in large
part, to low commodity prices, and the state is struggling to pay bills
and meet other obligations. This June, Nigerias 36 states confessed to
being $3.3 billion in debt, with many having borrowed against high
oil prices, giving rise to the spectre of a fiscal abyss.
After years of unsuccessful E&P work, the NNPC announced last
November that the Lake Chad area now appears to contain significant
new deposits of oil, which could come onstream as early as next
year and account for a large share of the Corporations projected
$20-billion revenues for 2016.
Emmanuel Ibe Kachikwu, Nigerias new Minister of State for
Petroleum and the Group Managing Director of the Nigerian National
Petroleum Corporation, since last August, is the man in charge of
efforts to turn around the national hydrocarbons industry. Talking to
Bloomberg Business in December, he said Nigeria is targeting output
to hit 2.5 million barrels, will issue cash calls in collaboration with
the NNPCs IOC joint-venture partners, and aims to cut costs and
streamline bureaucracy to help the sector perform more efficiently
and profitably.
As regards specific plans to clean its own house, the NNPC
aims to privatize its more than 3,000 miles of pipelines to enhance
management over the next few years. It will also revise inefficient
refineries, to not only meet Nigerias burgeoning needs but also
develop potential to sell to West African peers, within 24 months.
Nigerias best bet to return to positive growth and generate lasting
dividends for local people and businesses depends on the same
resources that have left it vulnerable. Relying on outdated models
and business as usual will not work in todays marginal marketplace.
While the short-term consequences may be painful, if the Buhari
government succeeds in pushing through ambitious reforms in the
way the NNPC, and the industry as a whole, have worked to date,
there is a genuine opportunity for the nation, and savvy investors, to
benefit in the medium to long term.
There is a lot to be done, the Minister and NNPC head admitted
in a Ministry meeting last November. We have lost momentum from
practices in the past and, coupled with the difficult international
environment, now need to sit down and map out clear deliverables.
12/18/15 1:23 PM
Public and private sectors unite

to boost Nigerian participation
The passage of the Nigerias Local Content Act in 2010 ensures homegrown businesses
stand to earn a fair share of the sectors profits, working in partnership with IOCs
his year marks six decades since the first commercial

discovery in Nigeria by Shell-BP. The countrys pioneer
oilfield came onstream in 1958 and, over the next
decade, IOCs headed south in the rush for black gold. By the
1970s, Nigeria had joined OPEC, was pumping over two million
barrels a day, and, in 1977, set up NNPC to look after the nations
hydrocarbons interests.
But, says Denzel Kentebe, Executive Secretary of the Nigerian
Content Development and Monitoring Board (NCDMB), during the
next quarter century, homegrown involvement in the industry, was
non-existent. It was only in the last 10 to 15 years that people began
to try to get through the door, in terms of Nigerian participation.
The lack of legislation obliging IOCs to work with local partners
led to little benefit trickling down to Nigerians. Although the
Constitution and 1969 Petroleum Act grant ownership and
control of oil and gas resources to the Federal Government to
benefit Nigerias people, and other laws regulated operational and
fiscal aspects, it was not until 2010 that the Nigerian Oil and Gas
Industry Content Development Act enshrined real changes in the
way business was done.
The Local Content Act aims to ensure indigenous participation
at every level of the industry, with a target of 70% of projects
using Nigerian labor, materials, and resources. According to the
NCDMB, by the end of 2014, the law had increased the Nigerian
share of the industry from under 5% to more than 15%, creating
thousands of jobs for nationals, and fostering domestic investment
worth over $5 billion by
We had businesses that
Nigerian service providers.
made investments, had
Local business leaders,
equipment, and could
like Dahiru Mohammed,
provide services, but
the Chairman and CEO
oil companies were not
of Damagix Group, were
using them.
the founding fathers of
increased
indigenous
Dahiru Mohammed, Chairman
participation in the nations
and CEO of the Damagix Group
biggest industry. A hydrogeologist and ex-NNPC senior executive, he heads up a team of
seasoned oil and gas industry professionals. Created in 1993, his
Group comprises Damagix Nigeria, the premier Nigerian-owned
casing, pipeline, and tubing supplier, and Damagix Engineering,
which provides consultancy services.
OFFSHORE DIMENSIONS:
ENGINEERING THE FUTURE
Offshore Dimensions is a Nigerian engineering, procurement,
and construction company that is committed to expanding the
frontiers of innovation and engineering in Nigerias oil and gas
industry. The company is young, vibrant, and has a dynamic,
talented workforce that is focused and driven to achieve its
ambitious vision and goals.
Despite the challenging times facing the oil industry, the
company has already succeeded in doing some exciting
projects, such as the FrontEnd Engineering Design for an Early
Production Facility for one of Nigerias largest independent
oil and gas producers and the construction and installation of
offshore flowlines in water depths of over 30 meters.
Offshore Dimensions has also won a number of awards for
its innovation and promotion of engineering development in
Nigeria and is at the forefront of the development of national
codes and standards for mechanical engineering in the domestic
oil and gas industry.
The company is proud of its cutting-edge approach to
motivating and managing talent and has been particularly
targeting and recruiting millenials, who are the workforce of
tomorrow. Offshore Dimensions has come a long way in the
short time since it began doing business and is looking forward
to even more thrilling accomplishments in the future.
Im proud of my contribution, Mohammed admits. As a
manager [at NNPC], when I started to look not only at materials,
but also at the role of Nigerian companies in the sector, I found it
amazing that we had businesses that had made investments, had
equipment, and could provide services, but the oil companies were
not using them. I said, Theres something wrong with that.
Mohammed revised agreements with IOCs, identified advantages
for those working with domestic partners, and helped organize a
forum in Houston that brought together Nigerian companies with
foreign counterparts to promote joint ventures for mutual benefit.
Closing the virtuous circle, he paved the way for the Local Content
Act and opened up opportunities for Damagix to develop its own
niche in the industry.
12/18/15 1:23 PM
Chicason Group: diversified

giant eyes upstream potential
Multifaceted, homegrown group of companies has been active in the downstream fuels
and lubricants business for decades, but is now aiming to use its market experience and
seismic-data expertise to begin exploring its own assets in West and East Africa
ounded in 1978, Chicason Group incorporated its first

member company in 1981 and, since then, has grown to
become one of Nigerias leading conglomerates. Today, it is
made up of 13 subsidiaries, with a presence in a growing number of
African markets beyond the nations borders as well as at home, and
is active in everything from manufacturing to mining, construction
to haulage, and logistics to project management.
In 2015, Chicason, in partnership with a Dubai- and Europe-based
consortium of real-estate developers, plans to commence work on
the first phase of a $3.5-billion deal to develop a massive, mixed-use
project, known as Abuja City Centre, in the Federal Capital Territory.
Once completed, it will feature a new National Mall, five-star hotels,
condominium residences, office suites, and retail outlets, as well as a
park and recreational facilities.
Over the past two decades, the Group has also developed
downstream interests in Nigeria and upstream hydrocarbons assets
in the new frontiers of West and East Africa, via two companies:
A-Z Petroleum Products, set up in 1994, produces and supplies a
wide range of petroleum products in Nigeria and overseas, while
A-Z Petroleum operates the onshore and offshore exploration assets
of the group across Africa.
A-Z Petroleum Products blends and manufactures lubricants
and other solvents for automotive, industrial, marine, and fuel
applications, and then markets them, via its own network of depots
and gas stations located in more than 30 Nigerian cities and other
West African nations. The companys commercial arm, A-Z (Trading),
is one of Nigerias largest importers of petrol and diesel fuels oil and
dual- purpose kerosene, which, together, account for an annual
volume of more than 550,000 tons.
Certified to ISO 9001:2000 quality standards, A-Z Petroleum
Products already has an annual production capacity of over 50
million liters at its blending and manufacturing plants in Anambra
State, backed up by two tank farms with a combined capacity of 45
million liters.
The most important
Chicason Group is
thing is to remain
now forging ahead with
focused. If you are
plans to replicate its
experiencing a recession,
production and storage
a recovery has to come.
facilities in Ghana and is
exploring opportunities
Chief (Dr.) Alexander Chika
in East Africa, as part of
Okafor, Executive Chairman and
a major drive to boost
founder of Chicason Group
international sales. In
September 2014, it secured an $80-million credit deal from African
Export- Import Bank (Afreximbank) to finance its expansion in
neighboring Ghana.
Scheduled for disbursement

in two tranches, the initial $30
million has been structured
as a five- year loan to set up
a new lubricant-blending
plant, plastic-manufacturing
facilities, and a 40-ton tank
farm. The remaining $50
million is a standby trade
facility that will help fund
the importation of petroleum
products to serve supply
contracts with pre-approved
Chief (Dr.) Alexander Chika Okafor
Executive Chairman and founder of
distributors.
Chicason Group
In recent years, the Groups
upstream player, A-Z Petroleum, has also begun to operate the
exploration prospects that it has acquired elsewhere in Africa: We
have some upstream assets in Kenya, says Chief (Dr.) Alexander
Chika Okafor, the Executive Chairman and founder of Chicason
Group. We [also] have one in Burundi, offshore in Lake Tanganyika;
two in Sierra Leone that are
also offshore; one onshore A-Z Petroleum
in Senegal; and another in Products blends
Ghana, with partners, in the and manufactures
Cape Three Points area.
lubricants and
Leveraging
its
sizable other solvents for
reserves
and
profitable automotive, industrial,
track record, Chief Okafor marine, and fuel
believes that the Nigerian applications, and then
hydrocarbons industry has markets them.
to do business in a more
efficient, cost-effective, and accountable manner in the future, in
order to better compete with its global rivals. In terms of Chicasons
own operations in the oil and gas sector, he insists that investment in
new technology, particularly in downstream activities, will be key to
reducing its overheads and improving productivity.
The Groups Executive Chairman, nevertheless, remains sanguine
about the consequences for Nigeria of the current global market for
crude We have seen it before, its a cycle. After previous crashes
in the sector in 1984, the mid- nineties, and most recently in 2008,
fueled in part by the financial crisis, oil prices have always bounced
back, he notes.
The most important thing is to remain focused, Chief Okafor
smiles. Once you [do], you see opportunities. No business is good
all the time. We have ups and downs. If you are experiencing a
recession, a recovery has to come.
12/18/15 1:23 PM
Marine Platforms: innovative

approach brings subsea success
Advocate for, and beneficiary of, Nigerias local content laws, lean and smart offshore oil
services leader is leveraging its home advantage to concentrate on providing solutions that
satisfy the cost, quality and safety demands of its growing global clientele
arine Platforms is a Nigerian-owned and operated oil service company that serves West African upstream players
in the exploration and production sector. With a firm focus on delivering sustainable solutions, adhering to a strict culture of
risk management, and upholding the most exacting standards, the
company has made a name for itself across the continent since its
establishment in 2001.
Headquartered in Lagos and with operational bases in Port Harcourt,
the heartland of Nigerias oil and gas business, and Aberdeenshire in
Scotland, Marine Platforms provides a comprehensive portfolio of
world-class subsea solutions, well, and vessel-chartering services.
To stay ahead of its competition and keep its costs to a minimum,
the company relies on state-of-the-art technology, custom-built
equipment, and the expertise and experience possessed by its
professional teams, to satisfy and surpass client expectations.
Holding ISO 9001, 14001, and OHSAS 18001 certifications,
Marine Platforms takes its quality, health, safety, and environmental
responsibilities very seriously, as a trusted partner for some of the
biggest players in the industry and as a valued corporate citizen. The
company and its CEO have long been leaders in the efforts Nigeria
has made to implement local content regulations in the oil industry,
contributing to the countrys economic and social goals. And it has
continued to prosper, even in the current challenging marketplace.
AFRICAN INSPIRATION SETS

COURSE FOR GROWTH
n March 2013, Marine Platforms signed the first-ever contract

between a Nigerian company and a Norwegian shipbuilder,
Havyard Group, for a new subsea support vessel. Last February,
flying the Nigerian flag, the $100-million African Inspiration
sailed into the nations waters, after a stopover in Scotland to
install ROV systems and equipment.
Based on Havyards 857 Subsea IMR design, the African
Inspiration measures 370 feet from bow to stern with a 70foot beam, boasts a cargo deck covering 12,900 square feet
complete with a 275-ton crane for offshore work, and has
capacity for a crew of 120. It takes pride of place as the flagship
of the companys fleet, alongside its other subsea vessel, African
Vision, and 12 work-class ROV systems.
Whats interesting about the Inspiration was that we chose
to build for the future, CEO Adegbite says, knowing full well
a 100-ton crane would be sufficient for the waters we were
working in. But we anticipated deepwater operations would get
beyond 5,000 meters (16,400 feet). Operational efficiency is
all important.
Weve been lean and smart

from way back, explains
Taofik
Adegbite,
Marine
Platforms CEO, thats always
been our attitude. We moved
quickly from local content to
become a solutions provider
that is client-centric, customerfocused, and price-competitive.
Weve not carried excessive
baggage, so when low oil prices
[led] operators to come calling
for price reductions, they were
Taofik Adegbite
CEO and founder, Marine Platforms
just cutting to where we were.
The companys exhaustive
catalog of offshore solutions includes: subsea umbilicals, risers,
and flowlines (SURF); remotely operated vehicles (ROVs) and
tooling; project design, engineering, logistics, and management;
subsea construction and intervention; inspection, maintenance,
and repair (IMR); surveys and positioning; and the provision
of personnel and integrity management for all kinds of offshore
ventures. Please consult www.marineplatforms.com/capabilities for
a full breakdown of services.
Its well services arm grew out of a partnership with Well-Flow
International that provided wellbore cleanout chemicals and tools
to oil fields across Nigeria, serving the likes of Afren, Exxon-Mobil,
NAE, SNEPCo, and Total. Marine Platforms is now developing coil
tubing installations for acid-injection operations, while offering
wireline, slickline, tophole and rigless drilling, and survey services, in
collaboration with specialized partners.
Drawing on its own fleet, including the newly commissioned
African Inspiration (see box), and chartered vessels, Marine Platforms
also supplies maritime hardware to meet the exploration and
production needs of Africas demanding offshore market. Its services
encompass anchor handling tug supply (AHTS), platform supply,
and heavy-lift vessels, in addition to naval architecture, integrated sea
fastening design and installation, and multi-purpose support for all
kinds of marine applications.
Buoyed by its success, to date, Marine Platforms is far from content
to rest on its laurels: Weve started looking to the future, Adegbite
affirms, what does it hold and what should we do? Thats our next
strategy period, from 2017 to 2022. Weve begun to realize that we
need to consolidate service provision; how to do more with our
vessels. How to help clients spend less and achieve the same results?
Were looking at how to perform some operations they used to do
using a rig, which would have cost them millions, on our vessels.
12/18/15 1:23 PM
What to look forward to in

the oil and gas industry in 2016
Nigeria hosts a busy calendar of oil and gas events year-round, drawing local and overseas
players to Lagos and Abuja to talk about todays challenges and tomorrows opportunities
his year looks like being a challenging one for Nigerias oil and
gas industry. With the price of a barrel of Brent hitting a sevenyear low of $39.50 at the time of writing (early December
2015), the Federal Government faces the prospect of a funding
shortfall. Having calculated how to pay for the countrys biggest
ever budget in 2016, worth over $30 billion, based on previously
pessimistic prices of $38/bbl, it is now planning to issue cash calls via
the NNPC and its six IOC joint-venture partners in 2016.
That should provide plenty of food for thought, and discussion, at
the first major industry gathering of the year, Offshore West Africa.
The conference and exhibition is celebrating its 20th anniversary
in 2016, after reaching all-time-high attendance figures last year.
Showcasing the latest deepwater E&P solutions and technology at
the regions only dedicated offshore event, Offshore West Africa will
be held at Eko Hotels and Suites in Lagos from January 26-28.
Eko Hotels and Suites is located on upscale Victoria Island,
conveniently close to downtown Lagos and IOC corporate
headquarters: The majority of our clients are business travelers,
its General Manager, Danny Kioupouroglou, confirms. With 448
rooms and suites, restaurants, leisure facilities, a business center,

and Nigerias largest conference and exhibition venue, the Eko
Convention Centre, it can cater
You have to be in
for 6,000 people. It also hosts the
a location thats
annual conferences of the Society
conducive to business. of Petroleum Engineers in August
The majority of IOCs
and the Nigerian Association
have headquarters
of Petroleum Explorationists in
close to our hotel
November.
Before then, however, the
Danny Kioupouroglou,
biggest event on the hydrocarbons
General Manager, Eko
calendar the Nigeria Oil and Gas
Hotels and Suites, Lagos
Conference and Exhibition will
take place in the national capital, at the Abuja International Conference
Centre, from June 13-16. Attracting over 250 companies and more
than 6,500 industry professionals, 85% of whom are Nigerian, NOG
Week will bring together public and private-sector players to define
the strategies and actions that must be taken to restore the energy
sectors competitive edge, according to its organizers.
12/18/15 1:23 PM
THE DOWNSTREAM GIANT IS
MOVING UP!
AZ PETROLEUM LTD. IS ONE OF THE FASTEST GROWING INDIGENOUS OIL AND GAS COMPANIES IN NIGERIA.
We are rmly and strategically positioned in the Downstream sector and presently, we are the second largest
producer of lubricants in Nigeria. We are currently spreading the tentacles of our operations all over Africa,
both in the Up and Downstream sectors, providing quality products and innovative solutions for the energy
needs of the continent. We are constantly playing the trailblazing role across Sub-Saharan Africa.
Our vision to be the biggest indigenous Oil and Gas company in Africa is the drive behind our huge investment
in the Upstream sector in both East and West Africa.
#21 Bourdilon Road, Ikoyi, Lagos, Nigeria www.chicasongroup.com
12/18/15 1:23 PM

Ogjournal20160104 DL

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Ogjournal20160104 DL

Hochgeladen von

Copyright:

Verfügbare Formate

JAN.

International Petroleum News and Technology | www.ogj.com

SICHUAN BASIN ANALYSIS

Two days. Latest insights.

AFPM Annual Meeting

WORLD OIL MARKET AT A GLANCE

Global oil demand, supply

World oil demand growth, y-o-y change

Non-OECD excl. China

House, Senate pass

Venezuela should disband,

Local firms dominate

EIA: US crude oil

OPEC world oil outlook

Business groups legally

Legislative vote due on

IHS examines oil sands

Study calls for stronger

US judge rejects bid for

Pemex allocates $23

Oil market, still oversupplied,

Deloitte study affirms

SYNCRUDE EXTRACTION PLANT, UPGRADER CONFIGURATION

GUYANA-SURINAME, FRENCH GUIANA BASINS

Gravity vertical-density gradient lineaments

Sweet gas to utilities

Light gas oil

Heavy gas oil

EXPLORATION & DEVELOPMENT

DRILLING & PRODUCTION

New study expands

China tight reservoirs

FRP crude pipeline

New analysis unifies

ESP pump selection,

Fuzzy logic addresses

THRESHOLD PRESSURE EXPERIMENT

Visit us at WWW.CLARION.ORG or call us at +1 713 449 3222

A. Advanced Pipeline Risk

The industrys only forum

A key feature of the conference is

Technical papers will cover: ILI

ALL NEW FOR 2016!

Editor Bob Tippee, bobt@ogjonline.com

Washington Editor Nick Snow,

Subsea Junction Box

For Engineered Solutions to

Andrew J. Slaughter Deloitte Services LP,

Pat Dennler Motiva Enterprises LLC, Port

More than 100 locations in 21 countries means

Israel approves development of giant offshore gas fields

For up-to-the-minute news,

work, resolving and providing exemption from claims of the

DEA completes acquisition of E.On E&P Norge

Wintershall to keep assets; Tellus deal wont close

Oil & Gas Journal

ARE YOUR INVESTMENTS

will be in Houston on February 24th

Jeffrey Saut is the Chief Investment Strategist

a regular and popular contributor to Bloomberg TV,

at Raymond James Financial Services. A market

Fox News, CNBC, NPR and PBS, and he is regularly

observer and analyst for more than 40 years,