OCT.

5, 2015 | USD 20

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FCC OPERATIONS DISCUSSED
REVAMP BOOSTS REFINERY CAPACITY
WEST COAST CBR LEGAL RISKS
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 CONTENTS
Oct. 5, 2015 Volume 113.10

WEST SIDE OF SAN JOAQUIN BASIN FIG. 1

Southern
Diablo

GENERAL INTEREST Range

AVT
Producing states SPE ATCE: Decision

Ce Jo
Sa

nt aq
n

ra uin
receive guidance quality key to improving

lT
ro ba
Lost Hills
42

ug sin
on managing induced multicompany projects

An
527 million bbl

h
te
769 bcf

lo
earthquakes Michael T. Slocum
Paula Dittrick 36
28
SPE ATCE: Panel SPECIAL REPORT
Shell exits Arctic draws industry GEOPHYSICS UPDATE
after ‘disappointing roadmap to 2040
exploration outcome’ Michael T. Slocum Near-surface focus of new SEG
Matt Zborowski 38 president has Arctic application
28 Bob Tippee

26
US House passes
Walker calls Alaska bill to streamline
legislature into transportation
special session project reviews Study shows evidence for untested
on gas issues Nick Snow large traps, San Joaquin basin, Calif.
Nick Snow 39 Thomas Davis
30
EPA institutes 42
Forum: N. America fenceline monitoring
should develop in update of refining Resistivity, magnetic data delineate
further as global regulations volcanic tuff in Travis County, Tex.
energy leader Nick Snow Mustafa Saribudak
Matt Zborowski 40 Christopher Caran
32
52

REGULAR FEATURES
NEWSLETTER 8
LETTERS/CALENDAR 18
COVER JOURNALLY SPEAKING 22
The west side of California’s San Joaquin basin EDITORIAL 24
has become the subject of new exploration
efforts (p. 42) to find untested traps result-
SERVICES/SUPPLIERS 97
ing from overthrusting of late Cenozoic-age STATISTICS 101
structures. The cover photo shows northeast- MARKET CONNECTION 105
dipping beds of the Monterey shale that ADVERTISERS INDEX 107
are underlain by southwest-dipping seismic
EDITOR’S PERSPECTIVE/
reflectors belonging to a large subthrust
anticline (inset); data from PacSeis Inc. WATCHING GOVERNMENT 108
OG&PE
P1
EFFECTIVE-STRESS RELATIONSHIPS FIG. 1 CRUDE-BY-RAIL OVERVIEW FIG. 1

P-wave, S-wave velocity

3,000
P-wave
2,500

2,000
Velocity, m/sec

1,500
S-wave
1,000
Loading terminals
Dual-capable terminals
500 Unloading terminals
Rail lines
Shale plays
0 Potential litigation
0 2 4 6 8 10 12
Mean effective stress, MPa
58 Source: EIA, US Census Bureau, authors’ analysis
86

TECHNOLOGY...

EXPLORATION & DEVELOPMENT DRILLING & PRODUCTION PROCESSING TRANSPORTATION

Study shows evidence Modeling ensures AFPM Q&A—3: West Coast CBR-project
for untested large traps, stability of Chinese Discussion turns to legal risks require
San Joaquin basin, Calif. CBM horizontal wells fluid catalytic cracking management
Thomas Davis Jie Zhang 68 Gabriel Collins
42 Hu Liu Matthew Lanahan
Guangjie Yuan Low-cost modifications Alexander Obrecht
Resistivity, magnetic Yan Xia boost capacity, crude 86
data delineate volcanic 58 processing flexibility
tuff in Travis County, Tex. James W. Jones Steady regulations,
Mustafa Saribudak New method predicts Frank Simmons buyer relationships
Christopher Caran bottom-water Tony D. Freeman key successful LNG
52 breakthrough time 76 export projects
Haitao Li Philip Weems
Yahui Li Nelson-Farrar Kathryn Marietta
Ying Li monthly cost indexes 93
Jibin Zhong Gary Farrar
64 82

Nelson-Farrar
Quarterly Costimating:
Indexes strengthen
for nonmetallic
building materials
Gary Farrar
84

68
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 OGJ ®

WIRELINE SERVICES
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GENERAL INTEREST Q U IC K TA K E S
ETE, Williams to merge in $37.7-billion deal
Energy Transfer Equity LP (ETE), Dallas, and Williams Cos.
Inc., Tulsa, have agreed to merge in a deal valued at $37.7 bil-
lion, including the assumption of debt. Williams previously
rejected an unsolicited all-equity acquisition proposal by ETE
valued at $53.1 billion (OGJ Online, Sept. 28, 2015).
ETE says the merger will create the third largest energy fran-
chise in North America and one of the five largest global energy
companies. “As a combined company, we will have enhanced
prospects for growth, be better able to connect our customers
to more diverse markets, and have more stability in an environ-
ment of low commodity prices,” said Alan Armstrong, Williams
president and chief executive officer. “Importantly, Williams
Partners will retain its current name and remain a publicly
traded partnership headquartered in Tulsa, Okla.”
Under the deal’s terms, ETE affiliate Energy Transfer Corp.
LP will acquire Williams at an implied current price of $43.50/
Williams share. The companies believe that all stakeholders
will benefit from the cash flow diversification associated with
ownership in three large investment grade master limited part-
nerships, including Energy Transfer Partners LP and Sunoco
Logistics Partners LP.
House GOP members wary about IRS’s MLP proposal
A May 6 US Internal Revenue Service proposed rulemaking on
qualifying income from oil and gas and other publicly traded
master limited partnerships (MLP) would narrow the definition
from what Congress originally intended, 23 of 24 Republican
House Ways and Means Committee members warned.
“We understand that the proposed regulations articulate
much narrower definitions of processing and refining that, if
adopted without changes, would effectively revoke previously
issued and relied upon [Private Letter Rulings] and result in re-
stricting the activities that could be conducted by MLPs,” they
said in a Sept. 22 letter to US Treasury Sec. Jack Lew and IRS
Commissioner John Koskinen.
“This approach is not consistent with the legislative intent in
providing partnership treatment to MLPs engaged in the many
activities that constitute the processing and refining of min-
erals and natural resources, and must be reconsidered,” Rep.
8 Oil & Gas Journal
Oct. 5, 2015
For up-to-the-minute news,
visit www.ogjonline.com
Kevin Brady (Tex.) and 22 other GOP members of the commit-
tee maintained.
Chairman Paul Ryan’s (Wis.) signature was not on the letter.
“The US needs to spend roughly $30 billion/year on oil and
gas infrastructure to keep pace with the huge leaps in US pro-
duction—that’s three times as much as we’re currently invest-
ing,” Brady said on Sept 24. “The only way that will be possible
is through MLPs—they’re the most efficient vehicles for raising
this sort of capital. The IRS’ proposed rulemaking would se-
verely hamper that.”
The IRS received 40 comments before the proposal’s public
comment period closed on Aug. 4.
Ohio court orders fracing ban vote back on ballot
The Ohio Supreme Court has cleared the way for Youngstown
voters to vote again on a fracturing ban in November even
though such an amendment, if approved, could be deemed un-
constitutional by courts later.
Youngstown voters already have repeatedly rejected a local
fracturing ban, twice in 2014 and twice in 2013.
The state’s high court said local election officials lack au-
thority “to sit as arbiters of the legality or constitutionality” of
a ballot measure.
The ruling came on a motion filed by the city of Youngstown
to order the Mahoning County Board of Elections to put the
amendment issue on the Nov. 3 ballot. The case was about get-
ting amendments on the ballot and was not a ruling about frac-
turing itself.
The Ohio Supreme Court in February ruled in another case
that only the Ohio Department of Natural Resources has au-
thority over oil and gas drilling in the state (OGJ Online, Feb.
17, 2015). That ruling against a municipality came in a case in-
volving the city of Munroe Falls, a suburb of Akron. The state’s
high court said Munroe Falls city officials could not stop Beck
Energy Corp. of Ravenna, Ohio, from drilling a vertical gas well
in sandstone.
Ohio Oil & Gas Association spokesman Mike Chadsey said
in a Sept. 22 blog post referring to the Youngstown case that
the Ohio Chamber of Commerce, Youngstown-Warren Region-
al Chamber of Commerce, and Affiliated Trades of Ohio along
with 17 other labor unions filed briefs to oppose the charter
amendment.
ICE BRENT / NYMEX LIGHT SWEET CRUDE US INDUSTRY SCOREBOARD — 10/5
$/bbl
49.00
48.00
47.00
4 wk. 4 wk. avg. Change, YTD YTD avg. Change,
46.00
Latest week 9/18 average year ago1 % average1 year ago1 %
45.00 Product supplied, 1,000 b/d
44.00
Motor gasoline 9,163 8,895 3.0 9,143 8,786 4.1
43.00
Distillate 3,783 3,733 1.3 3,926 3,868 1.5
42.00 Jet fuel 1,586 1,501 5.7 1,570 1,489 5.4
Sept. 23 Sept. 24 Sept. 25 Sept. 28 Sept. 291
Residual 196 207 (5.3) 206 234 (12.0)
Other products 4,955 5,033 (1.5) 4,870 4,607 5.7
TOTAL PRODUCT SUPPLIED 19,683 19,369 1.6 19,715 18,984 3.9
WTI CUSHING / BRENT SPOT Supply, 1,000 b/d
$/bbl Crude production 9,152 8,731 4.8 9,373 8,373 11.9
49.00 NGL production2 3,257 3,003 8.5 3,152 2,769 13.8
48.00 Crude imports 7,420 7,570 (2.0) 7,313 7,405 (1.2)
47.00 Product imports 1,909 1,687 13.2 2,093 1,797 16.5
46.00 Other supply2 3 2,424 2,480 (2.3) 2,333 2,284 2.1
TOTAL SUPPLY 24,162 23,471 2.9 24,264 22,628 7.2
45.00
Net product imports (1,786) (1,649) — (1,574) (1,594) —
44.00
43.00 Refining, 1,000 b/d
42.00
Sept. 23 Sept. 24 Sept. 25 Sept. 28 Sept. 291 Crude runs to stills 16,304 16,212 0.6 16,124 15,812 2.0
Input to crude stills 16,551 16,475 0.5 16,427 16,105 2.0
% utilization 91.9 92.5 — 91.9 90.1 —

NYMEX NATURAL GAS / SPOT GAS - HENRY HUB Latest Previous Same week Change,
$/MMbtu Latest week 9/18 week week1 Change year ago1 Change %
2.630 Stocks, 1,000 bbl
2.610 Crude oil 453,969 455,894 (1,925) 357,998 95,971 26.8
2.590 Motor gasoline 218,756 217,387 1,369 210,324 8,432 4.0
2.570 Distillate 151,875 153,963 (2,088) 128,595 23,280 18.1
2.550 Jet fuel–kerosine 41,411 41,077 334 40,332 1,079 2.7
2.530 Residual 39,471 38,988 483 36,756 2,715 7.4
2.510 Stock cover (days)4 Change, % Change, %
2.480
Sept. 23 Sept. 24 Sept. 25 Sept. 28 Sept. 291
Crude 27.8 27.8 — 21.9 26.9
Motor gasoline 23.9 23.7 0.8 23.6 1.3
Distillate 40.2 42.7 (5.9) 34.4 16.9
ICE GAS OIL / NYMEX HEATING OIL Propane 86.3 93.5 (7.7) 69.6 24.0
¢/gal Futures prices5 9/25 %
152.00
151.00
Light sweet crude ($/bbl) 45.52 45.46 0.1 93.54 (48.02) (51.3)
150.00
Natural gas, $/MMbtu 2.58 2.68 (0.1) 3.94 (1.36) (34.6)
149.00
148.00 1
Based on revised figures. 2OGJ estimates. 3Includes other liquids, refinery processing gain, and unaccounted for crude oil. 4Stocks
147.00 divided by average daily product supplied for the prior 4 weeks. 5Weekly average of daily closing futures prices.
146.00 Source: Energy Information Administration, Wall Street Journal
145.00
Sept. 231 Sept. 241 Sept. 251 Sept. 281 Sept. 291

BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE
3,900
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU 3,600
¢/gal 3,300
63.00 3,000
62.50 2,700
62.00 2,400 2,226
2,100 1,918
61.50
1,800
48.50 600
308
48.00 300
47.50 0
47.00 Aug. 14 Sept. 14 Oct. 14 Nov. 14 Dec. 14 Jan. 15 Feb. 15 Mar. 15 Apr. 15 May 15 Jun. 15 July 15 Aug. 15
Sept. 23 Sept. 24 Sept. 25 Sept. 28 Sept. 291
Note: Monthly average count

BAKER HUGHES RIG COUNT: US / CANADA

NYMEX GASOLINE (RBOB)2/ NY SPOT GASOLINE3 2,000 1,931
¢/gal
1,700
148.00
146.00 1,400
144.00 1,100
838
142.00 800
140.00 650
138.00 450
429
136.00
250 176
134.00
Sept. 23 Sept. 24 Sept. 25 Sept. 28 Sept. 291 50
1Not 7/18/14 8/1/14 8/15/14 8/29/14 9/12/14 9/26/14 7/17/15 7/31/15 8/14/15 8/28/15 9/11/15 9/25/15
available 2Reformulated gasoline blendstock for oxygen blending
3Nonoxygenated 7/11/14 7/25/14 8/8/14 8/22/14 9/5/14 9/19/14 7/10/15 7/24/15 8/7/15 8/21/15 9/4/15 9/18/15
regular unleaded
Note: End of week average count

10 Oil & Gas Journal | Oct. 5, 2015

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EXPLORATION & DEVELOPMENT Q U IC K TA K E S
Appraisal wells show communication with Alta find
Lundin Norway AS is considering two more appraisal wells af-
ter recent results from wells near the 2014 Alta oil and gas dis-
covery in the Barents Sea (OGJ Online, Oct. 14, 2014).
The company and the Norwegian Petroleum Directorate said
pressure data on the wells in PL 609 indicate communication
with Alta discovery well 7220/11-1.
Lundin said it “will likely drill up to two further appraisal
wells in 2016, in addition to reentering the latest appraisal well”
for a production test.
NPD said well 7220/11-3 encountered a 75-m gas column
and the upper part of an oil column. Lundin said the well en-
countered a 120-m hydrocarbon-bearing interval, of which 45
m is oil. Both said the well was plugged due to “technical chal-
lenges.”
Sidetrack 7220/11-3A was drilled 400 m southeast. It en-
countered a 74-m column—30 m gas and 44 m oil—and was
temporarily plugged.
The 7220/11-3 and 7220/11-3A wells were drilled to mea-
sured depths of 1,926 m and 2,105 m, respectively, and re-
spective vertical depths of 1,925 m and 1,962 m subsea. Water
depth is 397 m.
They were drilled about 4 km south of the Alta discovery
well and 3 km northeast of appraisal wells 7220/11-2 and
7220/11-2A (OGJ Online, June 12, 2015).
The Island Innovator drilled the wells and will now drill
wildcat 7220/6-2 in the northern part of PL 609.
Partnership interests are Lundin 40%, DEA Norge AS 30%,
and Idemitsu Petroleum Norge AS 30%.
Guendalina well off Italy to be completed as producer
Rockhopper Exploration PLC reported that the sidetrack well
drilled at Guendalina gas field in the Adriatic Sea has success-
fully reached its target depth of 3,276 m.
Wireline logging confirmed that all target levels are natu-
ral gas-bearing, and have been encountered slightly higher to
prognosis in an updip position with good reservoir characteris-
tics and an additional deeper gas level.
The well is now being completed as a producer with out-
put expected in late October. Eni SPA, which operates the well
offshore eastern Italy with 80% interest, started production
from the field in 2011 (OGJ Online, Oct. 27, 2011). Rockhopper
holds the remaining 20% interest in the well.
San Leon discovers gas onshore Morocco
San Leon Energy PLC, Dublin, found gas shows within a 23-m-
thick reservoir section of sandstone and conglomerate with its
Laayoune-4 well drilled on the Tarfaya conventional license of
Morocco’s Sahara region.
Formerly known as El Aaiun-4, the well was drilled by En-
trepose Drilling’s Cabot 750 rig, targeting Tertiary channel sand-
stones and with an expected TD of 2,000 m below rotary table.
12
San Leon says the reservoir thickness is 10 m more than
expected, encountered some 100 m more shallow to prognosis,
and confirmed the geological concept of a thick sand channel
system. Elevated mud gas readings, including measurements
up to C3 in the shallowest sands, coincided with the logged
reservoir section. The company says a gas-and-liquid kick was
taken while drilling below the reservoir interval, leading to TD
being called early on the well at 1,814 m below rotary table.
The mud weight used was relatively heavy at 14 ppg, and no
measurable mud losses were observed while drilling the target
interval, providing good evidence for the overpressured nature
of the formation.
Laayoune-4 has now been suspended, pending further stud-
ies and to allow future reentry. San Leon and Morocco’s Office
National des Hydrocarbures et des Mines plan to jointly apply
for an 8-year exploration license. Blocks were awarded to the
company in 2009 and 2012 (OGJ Online, Aug. 28, 2012).
During the first period of the new license, San Leon intends
to acquire a 3D seismic survey across the multiple channels of
the Tertiary play, one channel of which was drilled by the Laay-
oune-4 well. Based upon the results of the seismic, San Leon
would consider the option of reentering the Laayoune-4 well—
including testing—drilling an additional well, or both.
DRILLING & PRODUCTION Q U IC K TA K E S
Deepwater gulf well to start flow in 2017
Freeport-McMoRan Oil & Gas expects to start oil production
in 2017 from its Horn Mountain Deep well, which will be tied
back to the Horn Mountain truss spar in 5,500 ft of water off-
shore Louisiana.
The well, drilled to 16,925 ft TD, logged while drilling 142
net ft of Middle Miocene oil pay with excellent reservoir char-
acteristics. Tests indicated the presence of sand sections deeper
than known pay sections in Horn Mountain field.
Freeport-McMoRan expects the well and two follow-on
Horn Mountain Deep development wells to be able to produce
at a combined rate of 30,000 boe/d.
The production unit, on Mississippi Canyon Block 127, has
capacity for 75,000 b/d.
According to the operator, which holds a 100% interest in
the block, the new results and geophysical data indicate “pro-
lific Miocene reservoir potential for several additional oppor-
tunities in the area, including the 100%-owned Sugar, Rose,
Fiesta, Platinum, and Peach prospects.”
The company expects production to start in mid-2016 from
wells drilled earlier on Horn Mountain tieback prospects—
Quebec-Victory, Kilo-Oscar, and Horn Mountain Updip. It said
the wells have potential to produce more than 27,000 boe/d.
North of Horn Mountain in Mississippi Canyon, Freeport
McMoRan drilled a second successful development well in King
oil field, which is south of the firm’s Marlin tension-leg platform
in 5,200 ft of water on Viosca Knoll Block 915. With another
development well now in progress, the three wells will have
Oil & Gas Journal | Oct. 5, 2015
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combined production potential of 20,000 boe/d. Marlin capac-
ity is 60,000 boe/d.
In the Green Canyon area southwest of Horn Mountain,
Freeport McMoRan is completing three subsalt Miocene devel-
opment wells in Holstein Deep oil field, in which it holds 100%
interest. It expects production to begin in mid-2016 at an initial
combined rate of 24,000 boe/d. The wells will be tied back to
the Holstein spar in 4,340 ft of water on Green Canyon Block
645. The operator plans to drill a fourth well to start a second
phase of Holstein Deep development.
ND regulators give Bakken producers extension
The North Dakota Industrial Commission (NDIC) gave the oil
and gas industry 10 extra months to reduce the amount of asso-
ciated natural gas flared at oil wells, citing industry’s comments
that pipeline construction delays have made it all but impos-
sible to meet existing targets.
The three-member NDIC voted unanimously Sept. 24 to
change the date when companies must capture 85% of gas pro-
duced from their wells to Nov. 1, 2016.
The extension also pushed back potential penalties for com-
panies, including forced reductions in oil production and gave
contractors more time to expand gas-gathering systems.
Gov. Jack Dalrymple said, “The industry’s presentation has
some very real reasons why the goal has become more difficult.
Many of these items they’ve mentioned realistically could not
have been expected.”
Industry representatives said some problems stemmed from
regulatory delays to construct Hess Corp. and Oneok pipelines.
In June 2014, NDIC imposed a series of four increasingly
tighter requirements for how much gas can be flared. The state’s
oil firms had met those goals, collecting 80% of produced gas in
July, which was higher than the 77% requirement.
Stone Energy shutters output from Mary field
Stone Energy Corp., Lafayette, La., shut-in production from
Mary field in Appalachia on Sept. 1, citing “unacceptable” op-
erating margins caused by low commodity pricing—including
negative differentials in the region—along with fees for trans-
portation, processing, and gathering.
The shut-in results in production curtailment of 100-110
MMcfd of gas equivalent, leaving 25 MMcfed producing from
Heather and Buddy fields in Appalachia.
Despite being above production guidance for the first 2
months of the third quarter, company production for the quar-
ter is now expected to be below the previously stated guidance
range of 39-41,000 boe/d, or 234-246 MMcfed, and is being
revised to 37.5-38,500 boe/d, or 225-231 MMcfed.
If Mary field remains shut-in, the annual guidance of 42-
44,000 million boe/d, or 252-264 MMcfed, will need to be ad-
justed to account for the curtailed volumes, Stone says.
14
PROCESSING Q U IC K TA K E S
Badlands advances proposed ND processing plant
Continental Resources Inc., Oklahoma City, has entered a deal
with Badlands NGLs LLC, Denver, for the long-term supply of
ethane to Badlands’ proposed polyethylene (PE) production
plant to be built in North Dakota.
Badlands, which announced the deal on Sept. 25, disclosed
neither a value of the contract nor the contractual volume of
ethane that Continental has committed to supply from its pro-
duction operations in North Dakota’s Williston basin.
Details regarding the duration of the supply contract also
remained unavailable.
Badlands did confirm, however, that it has decided to ex-
pand the nameplate production capacity of the PE plant to a
proposed 2 million tonnes/year from its originally planned
1.53 million-tpy capacity as a result of ongoing discussion with
North Dakota and Western Canadian NGL-sourced ethane
feedstock suppliers.
William Jeffry Gilliam, Badlands’ chief executive officer,
said the company has signed licensing agreements with key
technology partners over the last several weeks, but a precise
timeline for the project’s completion has yet to be revealed.
First announced last year, the PE plant is intended to pro-
cess abundant supplies of ethane available from the Williston
basin, Badlands said in an Oct. 13, 2014, release.
At the time, the company already had made agreements
with two strategic partners for the plant’s development.
Spain’s Tecnicas Reunidas SA, Madrid, and Vinmar Projects
LLC, a subsidiary of Vinmar International Ltd., Houston, were
due to complete a preliminary engineering analysis for the pro-
posed plant, which was to include technology evaluations as
well as ethane-to-ethylene and ethylene-to-PE licensor selec-
tion, ethane aggregation engineering and planning, and final
site selection, by yearend 2014, Badlands said.
Badlands also signed a mutually binding, product offtake
memorandum of understanding with Vinmar, which agreed to
take 100% of PE output produced by the proposed project for
15 years, the company said.
As of October 2014, the project required a capital investment
of about $4 billion to complete, Badlands said.
Total lets contract for proposed Texas steam cracker
Total Petrochemicals & Refining USA Inc., a subsidiary of Total
SA, has let a contract to CB&I, Houston, to provide front-end
engineering and design services and technology licensing for
its previously announced proposal to build a steam cracker to
be tied in with its existing operations at the US Gulf Coast.
In addition to FEED services for the planned 1 million
tonne/year ethane steam cracker, which is to be built near To-
tal’s current production platform in Port Arthur, Tex., CB&I
will deliver process licensing for its latest proprietary ethylene
production technology, including seven highly selective Short
Residence Time cracking heaters, the service provider said.
Oil & Gas Journal | Oct. 5, 2015
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 A value of the contract was not disclosed.
The contract award follows a timeline for the FEED phase of
the project Total disclosed to OGJ in June. The proposed steam
cracker, which will cover the company’s ethylene needs for its
US derivatives business, likely is to take place sometime in late
2019, Total said previously.
The steam cracker would add a second ethylene production
plant to Total’s Port Arthur operations alongside the more than
1 million-tpy existing cracker operated by BASF Total Petro-
chemicals LCC, a 60-40 joint venture of BASF Corp. and Total
Petrochemicals & Refining USA.
A final investment decision on the planned Port Arthur
cracker, which will be integrated with the French operator’s
174,000-b/d Port Arthur refinery and BTP plant, is due in 2016.
The grassroots cracker project at Port Arthur follows Total’s
plan to take advantage of lower-cost feedstock (including eth-
ane, propane, and butane) supplies that have resulted from in-
creased US shale production.
PBF restarts FCC, advances Delaware maintenance
PBF Energy Inc., Parsippany, NJ, has restarted the fluid catalyt-
ic cracker at its 190,000-b/sd refinery in Delaware City, Del., af-
ter an Aug. 21 fire at the unit resulted in its complete shutdown
(OGJ Online, Aug. 21, 2015). The FCC, as well as all remaining
units at the refinery that have been running at reduced rates
since the incident, are now operating at planned rates.
As a result of the unplanned outage, however, the company
said it decided to bring forward previously scheduled planned
maintenance work on the refinery’s sole crude unit, as well as
its 43,000-b/sd catalytic reformer.
Planned maintenance activities are due to be completed by
end-September, PBF Energy said. The Delaware City refinery
originally was scheduled to enter 3 weeks of planned main-
tenance early in the fourth quarter, Erik Young, PBF Energy’s
chief financial officer, said during the company’s most recent
quarterly earnings call.
As a result of the August fire and subsequent cut to production
rates at Delaware City, the company said its expects throughputs
at its US East Coast refineries—which includes the 180,000-b/sd
Paulsboro, NJ, refinery—will average 300,000-320,000 b/d dur-
ing the third quarter, and with average throughputs of 320,000-
340,000 b/d during the fourth quarter.
TRANSPORTATION Q U IC K TA K E S
Santos-led Gladstone LNG project on stream
The Santos Ltd.-operated Gladstone coal seam gas-LNG project
on Curtis Island, Queensland, has been brought on stream on
schedule and on budget.
Train 1 will ship its first cargo of LNG next month, while
Train 2 is expected to be ready for start-up by yearend.
Santos said the project’s upstream facilities in the Surat-
Bowen basin coal seam gas fields 420 km inland are fully op-
erational and performing well.
16
The project revenue is backed by binding long-term LNG
sales contracts for in excess of 90% of the Curtis Island plant’s
capacity. Nameplate total production is 7.8 million tonnes of
LNG from the two trains.
Santos has 30% interest. Petronas of Malaysia holds 27.5%,
Total of France 27.5%, and Kogas of South Korea 15%.
Santos is still considering the sale of at least some of its inter-
est in the project to reduce the company’s $8.87 billion (Aus.)
debt. This will be part of a larger sale of the firm’s assets.
In related news, gas from Senex Energy Ltd.’s wholly-owned
Western Surat Gas Project (WSGP) in Queensland will supply
as much as 50 terajoules/day of gas over a 20-year period to
the Gladstone LNG plant in a deal signed with the Santos joint
venture. The gas price will be linked to the Japanese oil price.
The arrangement underpins a planned final investment de-
cision for the WSGP expected in 2016. In addition, Senex is
hoping to share the use of GLNG’s water treatment and gas pro-
cessing infrastructure, thus reducing development costs.
Ichthys development moves ahead with CPF launch
The central processing facility (CPF) for the Inpex-Total joint
venture’s Ichthys gas-condensate field in the Browse basin off-
shore Western Australia has been successfully launched from
its dry dock construction site in South Korea. In April, contrac-
tors completed the first topside module lifts onto the CPF and
the floating production, storage, and offloading facility (OGJ
Online, Apr. 24, 2015).
The CPF was launched from the offshore floating dock
at Samsung Heavy Industries’ shipyard in Geoje and is now
berthed at the shipyard’s quayside where work is continuing
to lift and install the living quarters. This will be followed by
integration and commissioning of all the onboard equipment in
preparation for the tow to the Ichthys location.
The column-stabilized CPF is a major component of the Ich-
thys gas, condensate, and LNG project as it will support the
processing systems and utilities and provide accommodation
for about 200 personnel.
When construction is complete the CPF will be towed
5,600 km to the field, about 225 km offshore Western Austra-
lia. It will be permanently moored using 28 mooring lines and
25,000 tonnes of anchor chain. It will remain on location for
the projected 40-year life of the field.
Gas and condensate will undergo initial processing on the
facility to separate condensate, water, and other impurities
from the gas stream. The treated gas will then be transported
by subsea pipeline some 890 km to the Darwin LNG plant in
the Northern Territory.
The bulk of the condensate will be transferred to a nearby
FPSO for direct export, but some condensate will be left in the
gas for the transfer to Darwin.
The project is expected to produce 8.4 million tonnes/year
of LNG, 1.6 million tpy of LPG, and 100,000 b/d of condensate.
The project now is expected to come on stream during
third-quarter 2017.
Oil & Gas Journal | Oct. 5, 2015
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2015-2016 EVENT CALENDAR
Denotes new listing or site: www.kioge.kz/ PIRA New York Annual Offshore Energy Exhi- spe.org/events/ 2015, Istanbul, web
a change in previously en/ 6-9. Conference, New York bition & Conference, apogce/2015/ 20-22. site: www.cwcbasraoil-
published information. City, web site: www. Amsterdam, web site: gas.com 2-3.
International Confer- pira.com 8-9. www.offshore-energy. PETROTECH Interna-
ence on Theoretical & biz 13-14. tional Oil & Gas Confer- OPITO Safety & Com-
Experimental Studies of SPE Kuwait Oil & Gas ence, New Delhi, web petence Conference,
Hydrocarbons (ICTESH), Show & Conference, Deep Offshore Tech- site: www.zapaday. Abu Dhabi, web site:
OCTOBER 2015 Athens, web site: www. Mishref, web site: nology International, com/event/67326/5/ www.opito-oscc.com 3.
ictesh.org 6-9. kogs2015.com 11-14. The Woodlands, Tex., Petrotech.html 25-28.
American Fuel & Petro- web site: www.deepoff- Deepwater Operations
chemical Manufactur- 3P Arctic Polar Petro- Gas-to-Liquids, Lon- shoretechnology.com/ SPE Russian Petroleum Conference & Exhibi-
ers Q&A & Technology leum Potential Confer- don, web site: www. index 13-15. Technical Conference, tion, Galveston, Tex.,
Forum, New Orleans, ence & Exhibition, St. gas-to-liquids.co.uk/ogj Moscow, web site: web site: www.deep-
web site: www2.afpm. Petersburg, web site: 12-13. SPE Eastern Regional www.spe.org/events/ wateroperations.com/
org/forms/meeting/Mi- www.3parctic.com 6-9. Meeting, Morgan- rpc/2015/ 26-28. index 3-5.
crosite/QA15 4-7. Enterprise Mobility— town, WVa., web site:
Equatorial Guinea Oil Nigeria Oil & Gas 2015, nwvspe.org/regional- API Tank, Valves, Pip- SPE Annual Caspian
OGIS San Francisco, & Gas Conference & Lagos, web site: nog. meeting.html?_ga=1.8 ing & Pumps Confer- Technical Conference
San Francisco, www. Exhibition, Malabo, cwcenterprisemobility. 4416921.107275622.1 ence & Expo, Las Ve- & Exhibition, Baku,
ipaa.org/meetings- Equatorial Guinea, web com 12-14. 429302557 13-15. gas, web site: api.org/ web site: www.spe.org/
events/ 5-7. site: www.cwceg.com events-andtraining/cal- events/ctce/2015/ 4-6.
7-9. IADC Advanced Rig CEE & Turkey Refining endar-ofevents/2015/
KIOGE 2015 Kazakh- Technology Conference & Petrochemicals, tvp 26-29. IADC Annual General
stan International Oil International Oil & Gas & Exhibition, Amster- Budapest, web site: Meeting, San Antonio,
& Gas Conference & Expo, Jakarta, web site: dam, web site: www. www.wraconferences. Pennsylvania Inde- web site: www.iadc.org/
Exhibition, Almaty, www.pamerindo.com/ iadc.org/event/rig-tech- com/event/cee-and- pendent Oil & Gas event/2015-iadc-annu-
Kazakhstan, web events/6 7-10. nology-2015 13-14. turkey-refining-and- Association (PIOGA) al-general-meeting 4-6.
petrochemicals 13-15. Eastern Oil & Gas
Conference & Trade International Oil & Gas
International LNG Show, Monroeville, Pa., Exploration, Produc-
in BC Conference, web site: www.pioga. tion & Refining Expo,
Vancouver, BC, web org/ 27-28. Jakarta, web site:
site: Ingconference.ca/ oilgasindonesia.com/
14-16. LAGCOE Louisiana about/about-oil-gasin-
State of Israel Gulf Coast Oil Exposi- donesia/ 4-7.
SEG International Expo- tion, Lafayette, web
Tender No. 10/15 sition & Annual Meet- site: www.lagcoe.com Gas Processors
ing, New Orleans, web 27-29. Association North
The Israel Ministry of National Infrastructure, site: www.seg.org/web/ Texas Annual Meeting,
Energy and Water Resources is calling for seg-new-orleans-2015/ Offshore Technology Dallas, web site: www.
provision of Oil and Gas Fields Exploration and 18-23. Conference Brazil, gpaglobal.org 5.
Rio de Janeiro, web
Development Planning Studies, Process Audit API Fall Committee on site: www.otcbrasil.org NAPE International
and Regulatory Monitoring Services Petroleum Measure- 27-29. Conference & Exhibi-
The deadline for submission of the bids is ment Standards tions, Lagos, web site:
Meeting, Atlanta, web Gastech Conference www.nape.org.ng/
1st of November 2015
site: www.api.org/ & Exhibition, Singa- news/int-l-conferences/
Qualified, specialist consulting firms that are eventsand-training/cal- pore, web site: www. item/165-2015-
interested in the tender should refer to the endarof-events/2015/ gastechsingapore.com/ nape-33 8-12.
terms and conditions of the tender on the fallcopm 19-23. 27-30.
AIChE Annual Meeting,
Ministry website at the following address: SPE Unconventional Asian Downstream Salt Lake City, web site:
http://energy.gov.il/English/PublicInfo/ Resource Conference, Week, Singapore, web www.aiche.org/confer-
Tenders/Pages/GxmsMniTender10_15.aspx Calgary, web site: site: www.downstream- ences/aiche-annual-
www.spe.org/events/ asia.com 28-29. meeting/2015 8-12.
urc/2015/ 20-22.
NAPE, Denver, web site:
Ministry of National Infrastructure, SPE/IATMI Asia Pacific NOVEMBER 2015 napeexpo.com/ 9-10.
Energy and Water Resources Oil & Gas Conference &
Exhibition (APOGCE), Basra Oil, Gas & Infra- SPE Asia Pacific
Bali, web site: www. structure Conference Unconventional Re-

18 Oil & Gas Journal | Oct. 5, 2015

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 2015-2016 EVENT CALENDAR

sources Conference & Geneva, web site: www. Petroleum, Refining &
Exhibition, Brisbane, theeagc.com/ 17-19. Environmental Moni-
web site: www.spe.org/ toring Technologies
State of Israel events/urce/2015/ 9-11. Carbon Management Conference Exhibition
Technology Confer- & Seminars (PEFTEC),
Tender No. 7/15 Abu Dhabi Interna- ence, Sugar Land, Tex., Antwerp, web site:
tional Petroleum Ex- web site: fscarbonman- www.peftec.com
The Israel Ministry of National Infrastructure, hibition & Conference agement.org/events/ 18-19.
Energy and Water Resources is calling for the (ADIPEC), Abu Dhabi, carbon-management-
provision of Auditing, Inspection web site: www.adipec. technology-confer- IADC Critical Issues
com 9-12. ence-2015-cmtc-2015 Asia Pacific Confer-
and HSE consulting services related to oil
17-19. ence & Exhibition, Sin-
and gas E&P in Israel. API Cybersecurity gapore, web site: www.
The deadline for submission of bids is Conference & Expo, Turkmenistan Inter- iadc.org/event/asia-
1st November 2015 Houston, web site: national Oil & Gas pacific-2015 18-19.
www.api.org/events- Conference (OGT),
Qualified, specialist consulting firms that are and-training/calendar- Ashgabat, web site: SPE Latin America &
interested in the tender should refer to the of-events/2015/cyber- www.oilgas-events. Caribbean Petroleum
terms and conditions of the tender on the security 10-11. com/OGT 17-19. Engineering Confer-
ence (LACPEC), Quito,
Ministry website at the following address: Mangystau Regional Petrochemical Op- Ecuador, web site:
http://energy.gov.il/English/PublicInfo/ Oil, Gas & Infrastruc- erations, Maintenance www.spe.org/events/
Tenders/Pages/GxmsMniTender7_15.aspx ture Exhibition, Aktau, & Safety Conference lacpec/2015/en/ 18-20.
Kazakhstan, web site: & Exhibition USA,
mangystau.oil-gas.kz/ Houston, web site: Gas Processors Asso-
en/ 10-12. www.petchem-update. ciation Rocky Mountain
Ministry of National Infrastructure, com/petrochemicals- Annual Meeting,
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Project Financing in Oil The AMI International www.arcweb.com/ web site: https://www. NAPE Summit, Hous- CERAWeek, Houston,
& Gas, London, web Conference on Oil & events/arc-industry- energyinst.org/events/ ton, web site: napeexpo. web site: ceraweek.
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nance-oilgas.com/ogi 2015, London, web show/summit 9-12.
23-24. site: www.amiplas- Topsides, Platforms & SPE Hydraulic Frac- Pipe Line Contrac-
tics.com/events/ Hulls, Galveston, Tex., turing Technology IADC Drilling Africa tors Association
Saudi Arabia Inter- event?Code=C681 web site: www.topside- Conference & Exhibi- Conference & Exhibi- (PLCA) Convention,
national Oil & Gas 8-10. sevent.com 9-11. tion, The Woodlands, tion, Cape Town, web Scottsdale, Ariz.,
Exhibition (SAOGE), Tex., web site: www. site: www.iadc.org/ web site: www.plca.
Dammam, web site: Anniversary Chem International Petroleum spe.org/events/ event/drilling-afri- org/ 23-27.
www.saoge.org/23-25. Show 2015, New York (IP) Week, London, hftc/2016/ 9-11. ca-2016 15-16.
City, web site: www.
SPE Thermal Well chemshow.com 8-10.
Integrity & Design Sym-
posium, Banff, Alta.,
web site: www.spe. JANUARY 2016
org/events/twid/2015/
23-25. North Africa Down-
stream Summit,
SPE Oil & Gas India Cairo, web site: www.
Conference & Exhibi- northafricadown-
tion (OGIC), Mumbai, stream.com/ 17-19.
web site: www.spe.
org/events/ogic/2014/ World Future Energy
24-26. Summit, Abu Dhabi,
web site: www.world-
Intergas-VII Oil, Gas futureenergysummit.
& Petrochemicals, com/ 18-21.
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24-26. Africa Conference &
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cwckiog.com/ Nov. Drilling Technology
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JOURNALLY SPEAKING
Educational drones
Rice Center for Engineering Leadership (RCEL)
partnered with BP PLC and Trumbull Unmanned
this past summer on a 3-day drone camp to help
Houston-area middle-school and high-school stu-
dents understand better the technology and so-
cial issues surrounding unmanned aerial vehicles.
Rice University hosted the Aug. 11-13 camp free of
charge with students attending from three Hous-
ton Independent School District (HISD) middle
schools, two HISD high schools, and Timberwood
Middle School in nearby Humble ISD.
Rice and HISD jointly developed the curricu-
lum, ensuring it aligned with Texas’ state educa-
tional standards and addressed core science, tech-
CHRISTOPHER E.
nology, engineering, and mathematics (STEM)
SMITH needs. Care also was taken to make the program
Managing Editor- reach the two hardest places to get to in the regu-
Technology lar classroom: group problem solving and experi-
ential learning.
A group of 20 sixth-grade to ninth-grade stu-
dents attended. RCEL opened the application pro-
cess in the summer. Concerned that it might not
be able to reach kids with school out, the program
directly contacted campuses with which it had
prior experience to gauge interest. Response was
immediate.
The registration process
The registration link RCEL put up didn’t ask for any
demographic information, just that each prospec-
tive student submit a brief statement of interest.
More than 200 applicants signed up in 2 days. The
statement of interest was the sole criterion used in
narrowing the field down to 40. RCEL then asked
these 40 to write an essay regarding how they had
overcome a technical problem at home. Just in case
this wouldn’t be enough to narrow the field suf-
ficiently, prospective students also were asked to
provide a list of any awards or honors they’d re-
ceived.
The statement of interest had allowed RCEL to
gauge enthusiasm. The follow-up essay, in addi-
tion to opening a window onto problem-solving
skills, allowed assessment of the amount of energy
each applicant was willing to apply to a particular
task. The essay request did not include a minimum
22
word count. Some applicants came back with one
well-written paragraph. Others, however, offered
3 pages of detailed description and analysis.
The process still did not include demographic
information of any sort. The results?
Of the final 20 students, 50% were female. Six
different countries were represented, as was every
domestic ethnicity. Some students were first-gen-
eration children of immigrants. Others came from
backgrounds of established wealth.
Participants learned about drone design, safe-
ty, aerodynamics, and teamwork. BP employees
volunteered as instructors, leading discussion
about applying unmanned aerial technology to
the energy industry. Students piloted drones to
specific landmarks around the Rice campus us-
ing coordinates and learning about navigation
and global positioning technology. They also
learned about social and ethical implications of
the technology.
At the end of camp, teams gave presentations
addressing how drone technology could be used
to solve real-world problems. The presentations
were done “Shark Tank”-style to a panel of Rice
faculty, retired Air Force pilots, and BP personnel.
The students had to sell both their solution’s tech-
nical merits and its social ramifications.
This balance between technology and society
was emphasized throughout the camp. In one
track students divided into teams to role-play as
technology developers, military customers, and
concerned citizen activists. RCEL also had camp-
ers trace the evolution of technology as not neces-
sarily good or evil, but as a social tool.
The future, now
Trumbull, which counts BP among its clients,
works with RCEL to place Rice students as interns
in the energy industry. The camp itself provided
RCEL students with the opportunity to instruct
others in a real-world setting.
Projects like these are essential to ensuring not
just that the oil and gas industry has the labor force
it needs in the future, but that students from all
backgrounds in the US with an interest in STEM
topics are empowered to pursue their goals.
Oil & Gas Journal | Oct. 5, 2015
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EDITORIAL
The option to wait
While the oil and gas industry can trust currently
cruel conditions of the oil market not to last forever,
it must adapt to a fundamental change certain to
reshape decision-making.
Industry professionals have adopted the phrase
“low for longer” to express disappointment that
the price of crude oil didn’t rebound quickly af-
ter its reduction by half since the middle of 2014.
But some seem to think that means “low from now
on.” For at least two reasons, that interpretation is
faulty.
The market adjusts
The future is never a simple extension of the pres-
ent. Many mistakes begin with that assumption.
The oil market always adjusts. It’s adjusting now.
Global demand growth will reach a 5-year high this
year, according to the International Energy Agency,
even with China’s slowdown. And production has
been falling month-over-month since midyear from
the shale and other tight oil plays blamed for price-
crushing surplus. That decline of roughly 500,000
b/d from the peak has been overwhelmed by a leap
in total production from members of the Organi-
zation of Petroleum Exporting Countries of nearly
1.5 million b/d since early this year—mostly from
Saudi Arabia and Iraq.
The other reason the oil price can’t stay at cur-
rent levels forever is that $50/bbl oil is unsustain-
able. A plunge to that level inaugurated an un-
precedented industry contraction still painfully in
progress. This week IEA Executive Director Fatih
Birol pointed out to an Austrian newspaper that oil
companies have slashed investment by one-fifth.
“Never in the history of these companies has there
been an annual reduction as strong as this year,”
he said. Although costs have fallen, cuts continue,
as they will until the price rises to a tolerable level.
Pain isn’t confined to oil companies. Saudi Ara-
bia and other Persian Gulf producers can’t produce
oil and meet rising national expenses indefinitely
with $50/bbl oil. The Saudi Arabian Monetary
Authority (SAMA), the kingdom’s central bank, is
reported to have withdrawn as much as $70 bil-
lion from foreign holdings this year to cover the
government’s budget deficit. SAMA also is selling
bonds. Saudi Arabia still has enormous financial
24
reserves, of course. But it can hardly welcome this
new reliance on them.
Some analysts think cost reductions and pro-
ductivity gains in tight oil plays will sustain the
surplus. While important, those improvements
apply to less than 8% of global supply. If tight oil
production managed to stabilize with the crude
price no higher than $50/bbl—which seems un-
likely—supply would fall in other, more-vulner-
able categories.
Still, tight-oil production has importance be-
yond its share of the global total. It represents a
new source of price-responsive supply—produc-
tion that can be brought on stream nearly as fast
as wells can be drilled and completed. In tight-oil
plays, operators know where the hydrocarbons
are; they don’t have to find them.
Availability of non-OPEC supply promptly
available at the first sign of price strength is new to
the market. Supply management by OPEC worked
as long as production everywhere else flowed at
near-term capacity rates. Because that condition
no longer applies, OPEC supply management is
self-defeating. That’s why the group abandoned
the role last November.
Supply management has become the responsi-
bility of individual producers. That burden falls
most heavily on producers in the short-cycle
tight-oil plays. They’re marginal suppliers now. In
place of exploratory risk they face a new hazard:
oversupply and consequent price weakness result-
ing from herd-like response to any hint of price
strength.
Incremental caution
A market no longer stabilized by coordinated sup-
ply management forces individual producers to re-
spond to incremental demand, signaled by price el-
evation, with incremental caution. Producers can’t
collude, of course. They can, however, pay attention
to what their competitors do—and, more impor-
tantly, study in advance what they can do. They can
base production decisions on competitive assess-
ments they never before would have bothered to
conduct. And, when cost advantages appear to re-
side elsewhere, they can exercise the option to wait.
They’ll have to.
Oil & Gas Journal | Oct. 5, 2015
 GENERAL INTEREST
Near-surface focus of new SEG
president has Arctic application
Bob Tippee
Editor
Having moved from seismic exploration into other areas
of geophysical research, the new president of the Society
of Exploration Geophysics still helps to find oil. But the oil
John H. Bradford detects now isn’t deep in the earth. It’s
oil released by accident in frozen seas and trapped beneath
ice—a possibility for which the oil and gas industry must
be prepared as exploration and development expand in the
Arctic.
Bradford, a professor in the Department of Geosciences
at Boise State University, describes his primary research
interest as “quantitative analysis of wave propagation
based geophysical data, specifically seismic reflection and
ground-penetrating radar (GPR).” Concentrating on earth
systems no deeper than 20 m, Bradford by necessity makes
greater use of GPR than of seismic methods.
“Pretty much our entire zone of application is the weath-
ering zone,” Bradford says, referring to the poorly compact-
ed near-surface layer not conducive to propagation of the
sonic energy central to seismic work. A seismic processing
step called statics, in fact, essentially processes the weath-
ering zone out of exploration seismic data by setting a ref-
erence plane for timing measurements below it. GPR thus
provides a supplemental way to study the shallow subsur-
face.
Widely used to map underground objects such as pipes
and cables, GPR has become an important tool of environ-
mental remediation. And the method’s ability to sense con-
taminants in water makes it increasingly useful in tracking
oil releases below ice. But acceptance hasn’t come easily.
Radar and ice
In the late 1970s and early 1980s, Bradford says, tests of
GPR for detecting oil beneath sea ice weren’t encouraging.
Later, however, the former Minerals Management Service
became interested in interpreting GPR signal attributes for
the detection of oil beneath ice.
Boise State joined the effort in the early 2000s and be-
came part of a consortium that conducted important re-
search at the US Army’s Cold Regions Research and
Engineering Laboratory (CRREL) in Hanover, NH. An ex-
26
SPECIAL
REPORT
periment involving CRREL’s first controlled oil spill tested
expectations that amplitude anomalies would indicate the
presence of oil below ice.
“We were met with a lot of skepticism,” Bradford notes.
But results went beyond expectations: “We saw anoma-
lies that we thought were outside containment cells.” After
the experiment, researchers discovered that oil indeed had
leaked.
“Our funders were happy, and we were happy,” Bradford
says.
A reason GPR performance has improved since it was
first considered for detecting oil beneath ice is improve-
ment of survey equipment.
“The hardware has now advanced to the point that the
fidelity of the signal is consistent and accurate enough to
pull out the somewhat subtle attributes required for the oil
detection problem,” Bradford says.
Experiments at CRREL recently have tested ground-
coupled, airborne, and under-ice survey techniques.
“Ideally, you’d like to apply multiple methods to the
same problem in order to get to the best answer,” Bradford
says.
Another active area of research is the use of full-wave-
form inversion of radar data, which essentially integrates
all the attributes and represents what the new SEG presi-
dent calls “a pretty robust tool in targeted applications.”
And “a research target” is adapting GPR methods to nat-
ural ice, which is more heterogeneous than the lab-grown
ice sheets used in experiments.
Although the primary way to find oil beneath ice re-
mains crews with augurs drilling holes, Bradford notes,
“radar is out there as a tool now.” Emergency equipment of
Alaska Clean Seas, a spill-response consortium of opera-
tors on Alaska’s North Slope, includes a GPR system.
Seismic analogs
Like many techniques used in the interpretation of GPR
data, the attribute analyses tested at CRREL have seismic
analogs. In addition to attribute analysis, GPR methods in-
clude prestack depth migration, amplitude variation with
Oil & Gas Journal | Oct. 5, 2015
offset (AVO), and spectral decomposition—all common
terms in seismic work.
“We can use many of the same tools and concepts to
analyze radar waves and seismic waves,” Bradford says.
But GPR isn’t seismic. In a seismic survey, the acquired
data are arrival times and locations of reflected sound.
With GPR, reflections are of high-frequency electromag-
netic waves transmitted from a radar antenna and recorded
by a separate antenna.
Reflecting interfaces in seismic work are boundaries be-
tween rock layers of contrasting acoustic impedance, which
depends on density and sound propagation speed. In GPR
surveys, reflections are from materials of contrasting di-
electric properties, which relate to tendencies to store and
transmit electric energy. Reflecting interfaces can be soil
horizons, the groundwater surface, boundaries between
soil and rock, and objects placed underground by humans.
The high frequencies of radar pulses allow high reso-
lution—the ability to distinguish between subsurface re-
flectors—but limit the depth of the tool’s effectiveness. In
CRREL experiments, GPR with a 500 Mhz antenna was
able to detect a 1-2 cm oil layer in most scenarios and re-
solve a 4-5 cm oil layer.
Much of Bradford’s GPR research concerns detection of
nonaqueous phase liquids (NAPLs), which don’t dissolve in
water and are characterized as light or dense. Light NAPLs
rise in water; dense NAPLS (DNAPLs) sink.
NAPLs can be distinguished in water because of their
nonpolar molecular structure. Hydrocarbons, for example,
are nonpolar. Water is strongly polar.
Because “radar waves are sensitive to the difference,”
Bradford says, GPR can detect DNAPLs that sometimes con-
taminate water, such as chlorinated solvents and degreas-
ing fluids, as well as light NAPLs such as oil.
Slow acceptance
That the environmental clean-up industry has been slow to
adopt GPR, Bradford says, is a source of “frustration among
people who do this kind of work.”
Geophysical analysis can help site wells drilled to find
sources of contamination in water wells and wells drilled
later for remediation. Bradford suggests a reason is that the
background of environmental clean-up professionals tends
to be civil engineering.
“They’re not familiar with geophysical tools,” he says.
Another difference in perspective is important not only
to acceptance of the technology but also to availability of
research funds: Oil and gas exploration is driven by profit;
environmental clean-up is driven by penalties.
Although geophysical results tend to be seen as “soft
data,” Bradford notes, “You can do a lot of small-scale geo-
physics for $5,000-15,000.”
He describes a clean-up project involving a 7-acre site
that had been used for firefighter training at a US Air Force
Oil & Gas Journal | Oct. 5, 2015
“We can use
many of the
same tools
and concepts
to analyze
radar waves
and seismic
waves.”
—John H.
Bradford
base and contaminated by NAPLs and DNAPLs. The clean-
up effort included the drilling of 1,200 boreholes.
“You would think it would be well-characterized,” Brad-
ford says.
But the hydrology company performing the work still
didn’t understand the site and commissioned a GPR as-
sessment, which conducted a pseudo-3D survey over the
site and mapped a clay layer accurate to within 1-2 ft. The
survey showed the previous clay map, used for the ground-
water flow model, was incorrect. The pre-GPR remediation
work, which cost “several tens of millions of dollars,” Brad-
ford says, missed the clay layer altogether in many loca-
tions.
“For fifteen thousand bucks and a couple of weeks we
could dramatically improve on the result,” he says.
Route ‘not common’
Bradford describes his route into GPR and the study of
shallow-earth systems as “not common” because he began
his career in seismic research.
The holder of BS degrees in physics and engineering
physics from the University of Kansas and a PhD in geo-
physics from Rice University, he worked during 1995-99
as a research scientist at the Houston Advanced Research
Center in subjects ranging from spectral decomposition
for seismic exploration to utility detection with GPR. He
joined the Center for Geophysical Investigation of the Shal-
low Subsurface at Boise State in 2001 and served as direc-
tor during 2006-09. His publication topics include hydro-
carbon detection, hydrogeophysics, glaciology, and polar
ecology.
Notwithstanding his focus on the near-surface, his
broad research interests, and his focus on GPR, Bradford
stays close to seismic methods.
“The state of the art in exploration seismology pretty
much becomes the state of the art in GPR, so it’s pretty im-
portant to keep those ties,” he says.
27
GENERAL INTEREST
Producing states receive guidance
on managing induced earthquakes
Paula Dittrick
Special Projects Editor*
Officials from oil and natural gas producing states worked
with scientists and industry advisors to compile a primer in-
tended as a policy-guiding document to help states develop
strategies to manage induced seismicity.
The 150-page document was released during a Sept. 28
news conference in Oklahoma City. Thirteen states part-
nered through a StatesFirst initiative to issue the document,
which stopped short of suggesting model regulations or leg-
islation.
Instead, the primer summarized knowledge about earth-
quakes potentially caused by human activity. StatesFirst
partnered with the Interstate Oil & Gas Compact Com-
mission (IOGCC) and Ground Water Protection Council
(GWPC) to prepare the primer, which was discussed during
IOGCC’s midyear meeting.
“Overall the risk of induced seismicity for oil and gas op-
eration is still low,” said Rick Simmers, induced seismicity
working group co-chair and chief of the Ohio Department of
Natural Resources, Division of Oil and Gas Resources Man-
agement.
He acknowledged more earthquakes have been reported
per year in Oklahoma, Texas, Colorado, and Ohio within
the last several years than were reported per year in previ-
ous decades.
“Induced seismicity is a complex issue where the base of
knowledge is changing rapidly,” said Rex Buchanan, work-
ing group co-chair and interim director of the Kansas Geo-
logical Survey. “State regulatory agencies that deal with po-
tential injection-induced seismicity should be prepared to
use tools, knowledge, and expertise, many of which are of-
fered in this primer.”
Leslie Savage, Texas Railroad Commission chief geolo-
gist, said that there was no “one-size-fits-all regulatory ap-
proach” for responding to induced seismicity.
“States may determine different response strategies fit for
purpose,” Savage said. Jurisdiction for managing risks asso-
ciated with induced seismicity related to oil and gas activi-
ties typically rests with a state oil and gas division, board, or
commission, she said.
The induced seismicity working group relied on assis-
tance from representatives of the US Geological Survey and
other federal agencies who helped act as a peer review for
the primer.
The primer primarily focused on potential induced seis-
micity associated with Class II disposal wells, which are
regulated under the Safe Drinking Water Act through the
28
Underground Injection Control Program.
The working group emphasized most US disposal wells
do not pose a hazard for induced seismicity. But injection-
induced earthquake activity often has been associated with
direct injection into basement rocks or injection into overly-
ing formations having permeable avenues of communication
with basement rocks and in proximity to faults.
Scientists noted that faults differ, and they are working to
identify and map what they call faults of concern, which are
those most apt to transmit seismic activity.
“It is clear that local factors in different parts of the coun-
try present different levels of risk,” Simmers said. “Risk man-
agement, mitigation, and response strategies are most effec-
tive when developed considering specific local geology…as
well as other local situations.”
He said induced earthquakes are far more likely to be
triggered by disposal wells than by hydraulic fracturing.
More research is needed, Simmers and Buchanan told re-
porters during a webcast briefing on the primer.
IOGCC is a multistate government organization focused
on states with oil and gas reserves. GWPC is a national as-
sociation of state officials dealing with water protection.
The 13 states involved in the StatesFirst initiative were
Alaska, Arkansas, California, Colorado, Illinois, Indiana,
Kansas, Ohio, Oklahoma, Texas, Utah, West Virginia, and
Wyoming. Not all those states have experienced induced
earthquakes, researchers noted.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas
Report.
Shell exits Arctic
after ‘disappointing
exploration outcome’
Matt Zborowski
Staff Writer
Royal Dutch Shell PLC encountered oil and gas shows in its
Burger J exploration well in Alaska’s Chukchi Sea, but the re-
sults weren’t “sufficient to warrant further exploration,” the
company reported on Sept. 28.
Shell says it will now halt further exploration activity off-
shore Alaska for the foreseeable future, a decision reflecting
“the Burger J well result, the high costs associated with the
Oil & Gas Journal | Oct. 5, 2015
GENERAL INTEREST
Walker calls Alaska legislature into special session on gas issues
NIck Snow
Washington Editor
Alaska Gov. Bill Walker (I) called the state legislature into
special session starting Oct. 24 to discuss natural gas pipe-
line issues. He asked lawmakers in his Sept. 24 proclama-
tion to consider reinstating a tax on undeveloped Alaska
North Slope gas reserves, and exercising the state’s option
to acquire TransCanada Corp.’s interest in the Alaska LNG
Project.
“With a $3.5-billion budget deficit, this [gas pipeline]
project has gone from a wish-list item to a must-have,”
Walker said. “Under the negotiation process I inherited, very
little has been accomplished on the commercial agree-
ments. It is time to make the necessary legislative changes
so a single party cannot delay the production of Alaska’s
gas resources and sway our destiny.”
Acquiring TransCanada’s stake is critical to assure Alaska
a seat at the negotiating table, Walker stated, adding that he
wants a tax on unproduced ANS reserves similar to a law
his predecessor William A. Egan (D) signed in 1975 allowing
the state to collect crude oil revenue while the Trans-Alaska
Pipeline System was being built.
“For far too long, Alaska’s gas has been treated like
milk with no expiration date, and it never gets to the front
project, and the challenging and unpredictable federal regu-
latory environment in offshore Alaska.”
Operations will continue to demobilize people and equip-
ment from the Chukchi Sea, Shell says.
The company, which had allotted $7 billion for the mul-
tiyear program, expects to take financial charges as a result
of the decision. The balance sheet carrying value of Shell’s
Alaska position is $3 billion, with an additional $1.1 billion
of future contractual commitments.
“Shell continues to see important exploration potential
in the basin, and the area is likely to ultimately be of stra-
tegic importance to Alaska and the US,” explained Marvin
Odum, director of Shell Upstream Americas. “However, this
is a clearly disappointing exploration outcome for this part
of the basin.”
The company noted in a news release, “For an area equiv-
alent to half the size of the Gulf of Mexico, this basin re-
mains substantially underexplored,” and “demonstrates
many of the key attributes of a major petroleum basin.”
The Burger J well is 150 miles from Barrow, Alas., in
150 ft of water. A sequence of regulatory hurdles finally
concluded in August when the company received permis-
sion from the US Bureau of Safety and Environment En-
forcement to drill the well to total depth (OGJ Online,
30
of the cooler,” Walker said. “Without this insurance policy,
Alaska runs the significant risk of never monetizing our gas
resources for the benefit of all Alaskans and future genera-
tions.”
Walker also released his administration’s review of the
Alaska LNG project, which provides a brief history of the
state’s prior efforts to produce ANS gas, and outlines rea-
sons why Alaska must take a more aggressive role in future
gas pipeline negotiations.
He said he was releasing the report, which highlights
challenges the project faces under the negotiating frame-
work established by SB 138, a month before the special
session begins so state lawmakers can consider its findings.
“This legislation will vastly improve the probability of an
Alaska [gas pipeline] being built,” Walker said. “It ensures
that, if one or more producers delay [its] construction,
Alaska still receives critical tax revenue from our natural gas
resources—but only if we have the political will and courage
to do so.”
A recent American Council for Capital Formation report
concluded that declining crude production and growing
economic challenges make it urgent for Alaska business
and government leaders to move more quickly on getting a
major LNG export project up and running in the state (OGJ
Online, Aug. 12, 2015).
Aug. 17, 2015). It was drilled to 6,800 ft.
Shell has held 100% working interest in 275 Outer Con-
tinental Shelf blocks in the Chukchi Sea since submitting
$2.12 billion in high bids during the 2008 Chukchi Sea lease
sale (OGJ Online, Feb. 7, 2008).
During the company’s 2012 Chukchi drilling campaign,
the Kulluk conical drilling unit was driven aground by vio-
lent weather on Alaska’s uninhabited Sitkalidak Island while
under tow to Seattle (OGJ Online, Feb. 13, 2013).
Many ‘underlying reasons’
“The exit today of Royal Dutch Shell from the US Arctic and
Alaska is deep with a lot of underlying reasons,” noted said
Carl Larry, oil and gas director at consulting firm Frost &
Sullivan. “We may only hear the standard line that ‘they
couldn’t find enough oil and gas,’ but there’s more to this if
we look inside the move.”
He first mentioned that the move “reinforces the idea that
conventional drilling is fading fast and nonconventional is
not going to fall by the wayside.” Investment in conventional
drilling is waning in not only the US but around the world,
Larry said, and Shell’s projects “in other areas of the world
may also be dragging down their capital.
“In areas such as the North Sea and Nigeria, we have pro-
Oil & Gas Journal | Oct. 5, 2015
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duction that remains viable, but at a loss to find consumers.”
Larry attributes the drop in consumers to a decline in oil
exports to the US, where the country has seen a dramatic
upward shift in its own oil output.
“America was once the largest consumer of said areas, but
has since dropped Nigerian crude imports to about [50,000]
b/d this year,” he said. “That alone is a significant decline
from 2012 when Nigeria was supplying the US with over 1
[million] b/d.”
Another shift in the import-export picture comes by way
of US refinery utilization and production, which have hit
record levels this year. “America once was a major gasoline
importer, mainly from Europe, and now has cut that number
in half from peaks seen prior to 2011,” Larry explained.
“The business about production in Alaska and the Arctic
has always been a political hotbed,” he added. “As we head
into the 2016 presidential elections, Keystone may not be the
only oil-related argument on the table.”
Larry said, “We can also see more US producers an-
gling for support of more restrictions in the Arctic as well
as against Keystone [XL]. Shale producers want to keep the
shale oil as the viable choice for investment and growth,”
he asserted. “The idea that Shell is leaving America’s Arctic
lands may be only one of the first that will have to look else-
where to find profitable oil drilling.”
Forum: N. America
should develop further
as global energy leader
Matt Zborowski
Staff Writer
North America has become a “global energy powerhouse”
in the 20 years since the North American Free Trade Agree-
ment (NAFTA) was implemented, and the continent now
has a “tremendous opportunity” to further leverage its po-
sition globally by improving efficiency, collaboration, and
connectivity, a speaker noted at a Sept. 24 event hosted by
the James A. Baker III Institute for Public Policy at Rice Uni-
versity in Houston.
“Our challenge is to try to identify economies of scale and
find comparative advantages,” said Robert Mosbacher Jr.,
chairman of Mosbacher Energy Co. and son of the former
US Sec. of Commerce under President George H.W. Bush.
The event, entitled “North America in Global Energy
Markets: Infrastructure and Integration,” touched on every-
thing from “lower-for-longer” oil and natural gas prices to
crossborder politics amongst Mexico, US, and Canada, each
of which is undergoing its own, unique energy transition.
32
Mosbacher echoed what author Daniel Yergin stated in
the past that “the ‘axis of influence’ in terms of global energy
policy has shifted from the Persian Gulf to North America.”
It’s a change the Persian Gulf hasn’t taken lightly, Mosbacher
said, and now members of the Organization of Petroleum
Exporting Countries and US producers are battling for mar-
ket share and price influence. The Saudis have gone from a
“swing producer” to an “overproducer,” he said.
Current oil market ‘unsustainable’
Walker Moody, managing director and chief operating offi-
cer of energy investment firm Tudor, Pickering, Holt & Co.
LLC, explained during a discussion of panelists from the US,
Canada, and Mexico that he believes the current oil market
environment is unsustainable.
“If we stay at this [sub-$50/bbl crude oil] price longer,
then a third to a quarter of the [US] industry will go bank-
rupt,” he said. When it comes to oil production, “there
[aren’t] enough high-grading and better wells to offset an oil
rig count falling by 60%,” he said.
Moody continued, “More activity could drive production,
but that takes money and the US industry doesn’t have it
anymore,” explaining that companies don’t want to take on
more debt and can’t get equity. “We don’t believe that US
production can grow at $50, $60, or even $70/bbl. It will
likely take $80/bbl cash flows to return the US from decline
to growth.”
Reinvestment levels in the US are currently being slashed
as cash flow is down 50-60%, hedges are expiring—many at
yearend—and access to capital markets is limited by the cost
of capital and unwilling investors, he said.
Moody stated that, globally, 2015 reinvestment will not
offset a non-OPEC production decline curve of 5-8%. How-
ever, demand “has to rise,” he added, noting that in the past
20 years demand has only fallen during the global financial
crisis of 2008-09.
National oil companies also have to deal with the real-
ity that the “cash-flow drain from social spending does not
abate,” leaving less money to invest in energy. Moody high-
lighted the variance in oil prices needed by different coun-
tries to balance their budgets, specifically mentioning $54/
bbl in Kuwait, $55/bbl in the UAE, $105/bbl in Russia, $109/
bbl in Saudi Arabia, $122/bbl in Nigeria, $131/bbl in Iran,
and $160/bbl in Venezuela.
When prices were at $90/bbl, production from only the
US and a few OPEC countries was growing, while output
was already declining from the UK, Mexico, and Venezuela.
Non-OPEC production simply didn’t grow. “It is very hard
to grow supply away from OPEC and shale,” Moody stressed.
Despite its recent struggles, Moody believes that North
America has “the best non-OPEC opportunity in the world”
given its technology, existing infrastructure, generally in-
dustry-friendly regulations, and availability of capital.
Oil & Gas Journal | Oct. 5, 2015
 When a global energy WITH STAKES THIS HIGH, RISK AND
FAILURE SIMPLY AREN’T AN OPTION.
leader embarked on a
When 8.9MM tons of LNG needed transporting from
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GENERAL INTEREST
Changing US, world gas market
A separate speaker, Zin Smati, presi-
dent and chief executive officer of GDF
Suez Energy North America Inc., not-
ed shale gas has transformed the en-
ergy industry in not only the US and
North America, but the entire world.
He said that investment of more than
34
$300 billion is going toward shale de-
velopment in the coming years to ac-
commodate growing output.
Smati said there has been a mas-
sive shift in gas supplied by GDF Suez
from large markets in the northeast-
ern US through Massachusetts, where
GDF used to import large amounts of
gas from Trinidad and Tobago, to LNG
facilities along the Gulf Coast—if any-
where at all.
“After 2008, we moved all of our gas
to Asia, especially to Japan and Korea,”
Smati said. “And now, we really don’t
move gas anymore because prices are
down everywhere.”
Factoring in liquefaction and ship-
ping costs with low gas prices, which
are linked to the price of crude, Smati
remarked that, with the exception of
countries like Qatar, “nobody is really
making money with LNG.” He added
that it’s going to be “a dire situation
for anyone thinking about building
a liquefaction facility,” each of which
requires billions of dollars in invest-
ments.
Smati explained that GDF Suez is
compensating by entering emerging
markets where demand is growing and
taking advantage of a “huge market”
in the US for LNG trucks and ships,
which are much less expensive to
build and use than larger liquefaction
facilities. In the meantime, demand in
China and India will need to rebound
and grow dramatically to take care of
the US-created gas glut, he said.
US energy politics ‘shallow’
While Smati doesn’t believe public
policy in the US has a large impact on
gas markets, Gaeton Caron, executive
fellow at the University of Calgary’s
School of Public Policy, expressed con-
cern about the “shallow conversations”
taking place regarding energy and the
environment.
“I am always amazed as to how
much more politics there is in energy
in the US than there is in Canada,”
Caron opined, citing the Keystone XL
crude pipeline debate at an example, as
it has been directly linked by some US
politicians with increased oil produc-
tion and thus contributing to climate
change. He asserted that it’s merely
one pipeline of many.
Caron believes the US should mim-
ic how Canada deals with energy mar-
kets and let those markets work out
their own issues without less knowl-
Oil & Gas Journal | Oct. 5, 2015
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GENERAL INTEREST
edgeable, less-efficient bureaucratic intervention.
Amid the policy and infrastructure challenges North
American collectively faces, he emphasized that coordina-
tion of environmental policies on carbon is the “elephant in
the room” and “missing link to energy prosperity” for the
entire world.
Caron said a carbon price range of $30-40/tonne is
enough to change behaviors and not harm the economy, but
qualified his estimate by noting the price is difficult to mod-
el because of so many “moving parts.”
Mexican pipelines need ‘massive investment’
As for opportunities in Mexico, where GDF Suez has long had
a presence, Smati mentioned that his company is facing in-
creased competition from international firms looking to take
advantage of cheap gas and cheap labor, each of which give
the country a competitive advantage compared with its peers.
Tania Ortiz Mena, chief development officer of IEnova, a
unit of Sempra Energy Co. that develops, builds, and oper-
ates energy infrastructure in Mexico, added that while Mex-
ico’s geographic location is a big advantage—with access to
the Gulf Coast, Pacific Coast, and a border with the US—the
country lacks efficient energy supply, which can be achieved
with integration with the North American market.
Smati said Mexico needs “massive investment” in pipeline
systems, which will intertwine the country and neighboring
Texas in the coming years. Mena noted that private invest-
ment in Mexico’s gas systems has been allowed for about 20
years, and in the near term, import capacity will rise to 3
bcfd from 1 bcfd in the next couple years, and then to 5 bcfd
in the next 5-6 years, enabling the country to import cheap
gas from the US, she said.
SPE ATCE: Decision
quality key to improving
multicompany projects
Michael T. Slocum
Upstream Technology Editor
Highlights of a draft technical report on the importance of
decision quality in multicompany upstream projects was
presented to the Society of Petroleum Engineers’ Annual
Technology Conference & Expo (ATCE) in Houston. The
goal of the report was to help operators work more seam-
lessly with joint-venture partners to mitigate cost overruns
and schedule slippage by making better, quicker decisions
that add more value.
Recent large-scale upstream projects underperformed
80% of the time relative to expected results when the proj-
36
ects were sanctioned, according to the report. About 30%
ran overtime or over budget, while 64% had trouble reach-
ing production goals after start of oil production. Most of
these projects are multicompany JVs, and a lack of quality
decision making between co-owners has been cited as a key
contributor to underperforming projects.
Technical reports
SPE technical reports are published when there is a clear
need to evaluate the state of the oil and gas industry’s tech-
nology or to give guidance on issues important to the indus-
try. The issue of decision quality was deemed to have risen
to this level.
Unlike technical papers, technical reports are written by
an anonymous committee that collects information from
multiple companies, functions, and stakeholders, creating
guidelines to address the issue or technical problem.
This is then given to SPE members for review and their
input is considered in the final version of the report. The
draft of “Decision Quality for Upstream Projects” is available
for review now on SPE’s web site.
At ATCE, an overview of the report’s findings was offered
as well as comment from industry leaders.
Decision-quality guidelines
The report proposed guidelines to improve decision align-
ment between multiple partners on large projects. Critical to
these projects’ success is decision quality, speed, effort, and
effectiveness. Failure to gain timely alignment on pivotal de-
cisions can negatively affect project delivery.
The problems the report’s guidelines attempt to solve
stem from misalignment on projects. There is huge value in
aligning and making the right decisions early in the process,
but the oil and gas industry presents unique problems.
Generally, there is “operator dominance” in the JV deci-
sion-making structure and underrepresentation from non-
operating co-owners. This “operator-centric” perspective is
limited by one company’s experience and there is a loss of
diversity of perspective.
Projects and ownership structures are complex. There are
multiple functions, from multiple partners, often from mul-
tiple countries and cultures. This creates barriers to making
quality decisions.
There can also be general disagreement between techni-
cal experts from each partner company. And there are on
sharing information based on legal and competitive barriers.
These challenges were recognized by SPE contributors
about 2 years ago and the seeds of the current technical re-
port were sown. The goal was to come to a common under-
standing or expectation for a decision-quality process that
brought to bear expertise of subject-matter experts across
the spectrum of the industry.
Oil & Gas Journal | Oct. 5, 2015
 GENERAL INTEREST

Bill of rights
The process, available in full on SPE’s web site, is based on
a foundational idea: to give decision makers what they need
for the clarity of thought that leads to clarity of action. At the
core of this idea was what the report writers call a “decision
makers’ bill of rights.”
In short, decision makers have a right to a decision frame,
creative alternatives, and relevant and reliable information.
They also should be able to understand all potential conse-
quences. They have a right to logical analysis from which
to draw meaningful conclusions, and effective facilitation
to gain alignment and a commitment to action. By setting
these expectations to underpin decision quality, there will
be a consistent approach to evaluating specific project op-
portunities and an opportunity to improve multicompany
decision making.
With these “rights” in mind, a process was developed and
is now available for SPE-member review. At ATCE, a panel
of industry leaders was given a chance to comment publicly
about both the problems and solutions pertaining to deci-
sion quality.

Complex JOVs
Janeen Judah, general manager, Chevron Southern Africa
business unit, and 2017 SPE president-elect, said there can
be disconnects that effect decision making at many levels
of a JV.
International oil companies (IOC) are not as monolithic
as they seem and can have different perspectives and ob-
jectives that they bring to the table, Judah said. Smaller oil
companies with different economic imperatives may have
equally different goals for production and financial targets.
And national oil companies (NOC) often take a longer term
view and have responsibilities to their country first as guard-
ians of a national resource. These are very different views of
the world, Judah said.
Making an already complex situation more difficult is
when there is a material change, like the recent drop in oil
prices, that affects each partner differently, skews the dy-
namics of a partnership, and makes alignment and agree- Flow Assurance.
ment that much tougher, Judah said.
For her, the proposed process in SPE’s decision quality It’s what we do.
technical report is that it tries to account for these disparate
views and find a “sweet spot where we can all live.” She said,
“Recognizing differences, facilitating collaboration, but be-
ing ready to leave a deal when a project just isn’t right.”
John P. Chaplin, vice-president, ExxonMobil Production
Co. and UK lead country manager, echoed Judah’s com-
ments on the complexity of JVs, adding that NOCs are often
also regulators on a project and there can be a disconnect
between clear commercial objectives and a country’s needs.
This complexity means that JVs are often “less than the sum
PRODUCTION CHEMISTRY FLUID FLOW OPERATIONS SUPPORT
of their parts” and partnerships are not harnessing the col-
lective ability of a JV.
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GENERAL INTEREST
Bias vs. trust
Jacek Jaminski, exploration manager, BP Brazil South Mar-
gin, said what gets in the way of decision quality is that op-
erators often default to biased views that are strongly held.
He said the industry needs to make an attempt to include
stakeholders in the decision-making process earlier. We are
trying to solve the problem together, he said, early engage-
ment and trust are important.
The proposed decision-quality process provides a more
systematic approach to decision making, using standardized
tools that help recognize bias and rise above it by brining
contrarian views to the table, said Jaminski.
Keith Henderson, vice-president, Nexen USA, said the
need for a decision quality process is very clear. What gets in
the way is the time required to do it. It can seem to take too
long and deliver unclear results. The new process will take
time, he said, but it will be well worth it because decisions
will be better, ultimately saving money.
What is stopping this from being universally adopted, he
added, is misalignment and mistrust. Operators need to give
nonoperators a seat at the decision-making table, but nonop-
erators need to earn their seat as well by providing valuable
ideas to a framing session. “Once you show that it’s easier to
get invited back,” Henderson said.
SPE ATCE: Panel draws
industry roadmap to 2040
Michael T. Slocum
Upstream Technology Editor
Panelists at the opening general session of the Society of Pe-
troleum Engineers’ Annual Technology Conference & Expo
(ATCE) were asked to discuss how the oil and gas industry
will meet energy demand that is expected to rise 32% by
2040.
How will the industry adapt in the face of the current
commodity price environment that has led to decreased in-
vestment? In 25 years, what will the energy mix look like
and what kind of companies will be providing that mix?
SPE Pres. Helge Hove Haldorsen compared the very ques-
tion of a 25-year roadmap as a journey into the unknown. As
he welcomed attendees and panelists, he suggested the in-
dustry should navigate this time of urgency and uncertainty
by maintaining an optimistic tone, having a grand vision,
working together, and remaining tenacious.
Panelist Scott Tinker, director of the Bureau of Economic
Geology, suggested that such a roadmap has been difficult
for the oil and gas industry to draw in the past. “Our ability
to forecast is off,” he said humorously. “We never get it right.”
38
Energy mix
Tinker said, however, that one thing has not changed sig-
nificantly in the last 35 years of the industry: the energy mix
has stayed remarkably the same. Hydrocarbons make up the
majority and that should hold true 25 years into the future.
This holding pattern in energy mix is driven by energy
security or, more succinctly, insecurity. Hydrocarbons are
dense and relatively cheap. As other fuels or energy sources
enter the market they will have to compete on that level: are
they readily available, reliable, and sustainable?
Panelist Bernard Looney, chief operating officer, produc-
tion, for BP LLC, agreed with Tinker’s assessment of the
near-term continued dominance of fossil fuels. More impor-
tant to Looney was discussing how operators can navigate
the short-term market realities to reach 2040.
“What we are seeing [today] is the confluence of two fac-
tors: costs that were out of control and a 50% price drop,” he
said. Looney’s answer is to control what you can control by
simplifying processes and standardizing solutions and de-
signs. He cited the fact that BP has brought down the cost
of its Gulf of Mexico Mad Dog II project to less than $14 bil-
lion from $20 billion. “Can we do a project [that size] for less
than $10 billion? Can we do more with less,” he asked.
Demand savior
When asked if demand could be the savior that bridges the
divide to 2040, panelists disagreed. Jorge Leis, director of
Bain & Co., said, “We should not look to demand as a sal-
vation.” This is because, even though the US offers a flicker
of hope in terms of demand, there has not been a hoped-for
recovery in Europe and China has decelerated growth.
Adif Zulkifli, senior vice-president of corporate strategy
and risk for Petronas, said there will be growth. India and
Indonesia are burgeoning markets and despite deceleration,
China’s gross domestic product continues to grow at 5%/
year.
Panelist Jarand Rystad, managing director Rystad Energy,
said that with or without demand, the industry can’t afford
to continue a dangerous course of layoffs and cuts in invest-
ments. So far this year we have seen the biggest drop in in-
vestment in the industry’s history. This will go on through
next year as prices continue to fall. But at some point, said
Rystad, you can’t continue to lose expertise as people go find
jobs in other markets. “It’s easy to lay them off but not bring
them back. There could be cost inflation again as a result,”
he said.
Looney agreed in part but said there is a distinction be-
tween activity cutting and doing the same activity at lower
cost 30-50% lower cost. Layoffs have happened, he said, but
many companies like BP have committed to their recruit-
ment and retention programs. “Tough actions are necessary,
but efficiency is the key. Don’t create an even bigger problem
down the road.”
Oil & Gas Journal | Oct. 5, 2015
 GENERAL INTEREST

Industry profile
Panelists were asked what will happen if demand continues
to increase and the oil and gas industry is unable to fill that
demand by 2040. What will the industry look like should it
change to meet a changing market?
“We are probably entering an era where we will see a little
structural change due to legislation around climate change,”
said Leis. “On the power-generation side, there are new tech-
nologies that will impact fuel choices. It’s happening and
Flow Assurance.
will continue to happen.” It’s what we do.
Leis cautioned oil and gas companies, however, to stick
to their guns and do what they do best. Just be cognizant
of how new technologies and fuels can upset the paradigm.
Tinker said the sun and wind are resources just as any
fossil fuel and should be added to the mix, but tend to bump
into problems of scale. Costs tend to increase and this will
slow alternative sources ability to answer demand.
Leis agreed saying renewables will have to obey funda-
mental economics. Just because you add something new
doesn’t mean an old resource goes away. As natural gas re-
placed coal in power generation in US, it found a market in
Europe because it was high quality low cost, he said.
Zulkfili echoed this sentiment. “In Asia, we don’t have the
luxury to switch to these alternatives. For emerging coun-
tries, it’s about affordability and availability which equal se-
curity. For now that is oil, gas and coal.”

US House passes bill to streamline

transportation project reviews
Nick Snow
Washington Editor

The US House has passed, by a 233 to 170 vote, HR 348,

which aims to streamline federal reviews of proposed oil
and gas, highway, and other transportation projects. Repub-
licans generally supported the bill, while Democrats largely
opposed it. The House approved similar bills in the 112th
and 113th Congresses. The White House has said President
Barack Obama would veto the measure if it reaches his desk.
Judiciary Committee Chairman Bob Goodlatte (R-Va.),
who led debate in support of the bill, said the White House
should be supporting it because it fulfills calls by the Presi-
dent’s Council on Jobs and Competitiveness to streamline
the review of federal permit applications.
“It creates shovel-ready projects, which even President
Obama claims would create jobs,” Goodlatte said. “In fact,
it would generate millions of high-paying, good jobs for
our nation’s workers and families, who so desperately need
them. It would raise the standard of living of Americans.”
PRODUCTION CHEMISTRY FLUID FLOW OPERATIONS SUPPORT
But Rep. John Conyers Jr. (D-Mich.), the committee’s
ranking minority member who led the opposition in the de-
Houston +1.832.500.3456 Denver +1.303.228.9484
www.assuredflowsolutionsllc.com
GENERAL INTEREST
bate, said HR 348 would jeopardize public safety and health
by giving project approval a higher priority over meaningful
analysis that is currently required under the National Envi-
ronmental Policy Act.
“Under the guise of streamlining the approval process,
[it] forecloses potentially critical input from federal, state,
and local agencies, as well as from members of the public,
to comment on environmentally sensitive construction proj-
ects that are federally funded or that require federal approv-
al,” Conyers said.
The congressman also said the bill imposes hard and
fast deadlines that may be unrealistic under certain circum-
stances. “Moreover, if an agency fails to meet these unreal-
istic deadlines, the bill simply declares that a project must
be deemed approved regardless of whether the agency has
thoroughly assessed the task. This is an embarrassment,”
Conyers said.
HR 348’s purpose
But Regulatory Reform, Commercial and Antitrust Law Sub-
committee Chairman Tom Marino (R-Pa.), who introduced
the bill on Jan. 14, said it tries to streamline the process by
establishing deadlines for environmental reviews and short-
ening the judicial review window.
“Although recent studies have shown that, on average, an
environmental impact study will take 3-4 years, the permit-
ting process for many projects takes years more or, sadly,
even decades,” Marino said. “Even more disappointing are
indications that average environmental review times are in-
creasing by more than a month per year.”
Marino said final federal decision-making also has been
driven by political whims instead of a particular project’s
merits of any particular project that would be borne through
economic growth and job creation.
“Political pressure should never impede projects of worth
that would get Americans back to work,” Marino said. “One
recent study found that 7 years of delay on the Keystone XL
pipeline have kept us from realizing nearly $175 billion in
potential economic activity. At a time when true economic
recovery lags and more Americans become disheartened and
leave the workforce, such delays are unacceptable.”
But Rep. Hank Johnson (D-Ga.), who is that subcommittee’s
ranking minority member, said the bill would up-end the proj-
ect review process under NEPA by carving out a separate cate-
gory for construction projects; by allowing a project’s sponsor to
prepare an environmental document in lieu of such an analysis
by a lead federal agency; and declare a federal construction per-
mit approved if an agency does not meet deadlines.
“For more than 40 years, the approval process for projects
under NEPA has saved time, money, and protected the en-
vironment,” Johnson said. “In fact, since NEPA was enacted,
the US economy has not contracted. It has actually tripled in
size from just over $5 trillion to more than $16 trillion.”
40
EPA institutes fenceline
monitoring in update of
refining regulations
Nick Snow
Washington Editor
The US Environmental Protection Agency required fence-
line monitoring for the first time as it issued a final rule
updating refinery emissions control requirements. Refiners
will be required to install the monitors to measure benzene
at the edges of their plant sites to better protect and inform
nearby communities, EPA said.
The fenceline monitors must encircle the facility to de-
tect benzene at very low levels, and the monitoring data
will be posted on EPA’s web site, the agency said. In re-
sponse to public feedback, the rule also provides room for
alternative monitoring methods in the future as technology
advances, EPA said.
“The Clean Air Act requires a healthy environment for
all communities,” EPA Administrator Gina McCarthy said.
“This rule delivers on EPA’s commitment to environmental
justice by reducing toxic air pollutants that impact families
living near refineries by requiring, for the first time ever in
an EPA air rule, monitoring of emissions at the fenceline,
and corrective action if standards are exceeded.”
The rule also strengthens emission controls for flares,
pressure-relief devices, storage tanks, and delayed cok-
ing units. EPA said the rule specifically would virtually
eliminate visible flare emissions and releases by pressure-
release devices by requiring a comprehensive program of
process changes and pollution prevention measures for
these sources. The rule also will require additional emis-
sion reductions from storage tanks and delayed cokers,
some of which had no previous required controls, it noted.
EPA said all of this will reduce thousands of tons of
hazardous air pollutants. Specifically, it estimated that the
rule, when fully implemented, will cut 5,200 tons/year of
toxic air pollutants and 50,000 tons/year of volatile organic
compounds (VOC).
As a co-benefit, EPA projected that the limits will elimi-
nate greenhouse gas emissions equivalent to 660,000 tons/
year of carbon dioxide. “These cost-effective steps will have
no noticeable impact on the cost of petroleum products at
the approximately 150 petroleum refineries around the
country,” the agency said.
AFPM, API responses
Two national oil industry trade associations were imme-
diately critical. American Fuel & Petrochemical Manufac-
turers Pres. Chet Thompson said EPA’s new rule conclud-
Oil & Gas Journal | Oct. 5, 2015
 GENERAL INTEREST

ed that refinery emissions fall well under the significance

level for chronic risk and are not a source of harm to sur-
rounding communities.
“This conclusion demonstrates that the refinery haz-
ardous air pollutant reductions have proven effective,” he
said. “We therefore are disappointed by EPA’s decision to
require additional expensive new emissions controls that
provide little incremental health benefits.” AFPM will re-
view the rule, “and our next move will be dictated by our
findings,” Thompson said.
American Petroleum Institute Downstream Group Di-
rector Bob Greco said EPA’s final refining rule showed
substantial improvements over the agency’s proposal. But
the new regulations still could cost US refiners up to $1
billion, he warned.
Refineries have been reducing emissions for decades
under voluntary programs and in compliance with ex-
Flow Assurance.
isting regulations, Greco said. Through comments made It’s what we do.
during the rulemaking process, API identified and sup-
ported practical, cost-effective opportunities to reduce
emissions even further in a manner that recognizes the
complexity of the industry, which EPA took into account,
he added.
“Despite these improvements, regulators need to be
thoughtful about the additional impacts of new regula-
tions and added costs to delivering affordable energy to
US consumers,” said Greco. “Companies have already
spent billions of dollars to reduce emissions by install-
ing flare gas recovery and flare minimization systems to AFS is proud to
reduce GHG emissions, and air quality continues to im-
announce the opening of our
prove as a result of these voluntary programs and existing
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TECHNOLOGY

Study shows evidence for untested

large traps, San Joaquin basin, Calif.
Thomas Davis
Geologist
Ventura, Calif.

Recent exploration and renewed inter-

est in the San Joaquin basin, and other EXPLORATION & SPECIAL
California oil basins, has focused on DEVELOPMENT REPORT
unconventional shale plays, especial-
ly in the Monterey formation. Results
have been disappointing. Drilling in WEST SIDE OF SAN JOAQUIN BASIN FIG. 1
the deeper portions of the San Joaquin
basin, where the source units are ther-
mally mature, has not overcome these Southern
disappointing results.1 2 3 Diablo
Range
Questions remain about the com-
mercial viability of the Monterey for-
mation as a resource play, and prob-
AVT
Ce Jo
ably about the basin’s other shale units Sa

nt aq
n

ra uin
as well. Unconventional shale’s lack
lT
ro ba
Lost Hills
of success does not diminish the im-
ug sin
An

527 million bbl

h
portance of these rich source rocks
te

769 bcf
lo
pe

and their prolific petroleum systems

Sa

South Belridge
up
lif

2,047 million bbl

n

for other play types. Traps containing

t
An

659 bcf
migrated hydrocarbons (conventional
dr
ea

plays) have been the most successful Cymric

sf

for the basin and for now provide the 594 million bbl
au

McKittrick
184 bcf
l

lowest risk and least expensive untest- 325 million bbl

t

Sacramento 247 bcf

ed prospects. basin
The west side (WS) of the San Joa- TCT
quin basin has one such newer con-
ventional play that is the result of Midway-Sunset
overthrusting associated with the late Sacramento 3,479 million bbl
Elk Hills
584 bcf
Cenozoic age fold-and-thrust struc- 1,392 million bbl
San Francisco 3,074 bcf
tural style common to many of Cali-
So

Coalinga anticline
ut R
he an

fornia’s oil basins. Overthrusting in-

rn ge

San Joaquin basin Buena Vista

creases prospective “running room” by
Te

675 million bbl

m

Area 1,146 bcf

bl

repeating proven reservoir and source

o

shown
r

rock units, increases source rock buri-

al and hydrocarbon maturity, and in-
creases the number of untested sub- Wedge tip
thrust anticlines and other concealed Thrust fault
structural traps available to capture 0 Miles 15 Oil field
TCT = Temblor Creek thrust
the migrated hydrocarbons.4 5 0 Km 24 AVT = Antelope Valley thrust
This article presents a structural

42 Oil & Gas Journal | Oct. 5, 2015

model and conventional play concept WEDGE-SHAPED FOLD, THRUST BELTS
for a portion of the WS that, if prov-
en, raises its hydrocarbon potential by
adding area containing untested large
traps with known reservoir and source
rock units.
WS is a folded and faulted belt that
has produced and proven reserves to-
taling 11.7 billion bbl of oil as of 2005.6
It lies between the San Andreas fault
and the relatively undeformed central
trough of the basin and includes the
Temblor Range and the southern Di-
ablo Range (Fig. 1). Despite the great
number of exploration wells along the
WS, additional conventional oil dis-
coveries are likely, due to rich source-
rock units such as the Monterey, Tu- WS San Joaquin basin
mey, and Kreyenhagen shales, and the
structural and stratigraphic complex- Temblor Range
ity of the area, offering a variety of
trapping situations. An active and very
prolific petroleum system helps this
potential.7
Structural complexity and other
seismic acquisition issues prevent cap-
turing a clear image of much of the
WS, but ironically it’s the poor imag-
ing that has allowed traps, even large
ones, to remain untested. The conventional structural play
in the San Joaquin, despite its years of success, has had less
recent interest due to geologic perceptions that fewer pros-
pects hold moderate to large traps. Mapping such prospects
depends on using a realistic structural model to overcome
the poor seismic imaging. Structural studies show a fold-
and-thrust belt style involving a northeast-directed wedge
model that better explains the late Cenozoic structural ge-
ometry and kinematic evolution of the WS than previous
models.8 9 10
Wedge model interpretation
Geologists exploring in highly deformed areas such as the
WS commonly rely on structural models to map, assist poor
seismic reflection imaging, and develop prospects. The con-
vergent wrench-fault model has dominated explanation of
the the WS’s large oil-trapping folds and their relationship
to the nearby San Andreas transform fault for the past 50
years.11 12 Convergent wrench faulting is characterized by
structural elements such as oblique-slip reverse faults that
steepen with depth into a master strike-slip fault, positive
flower structures, and a limited footwall area available for
exploration (Fig. 2a).
A more realistic and data-based model of the WS’s struc-
ture, and that of other areas of southern and central Califor-
Oil & Gas Journal | Oct. 5, 2015
FIG. 2
Positive flower FIG. 2a
FIG. 2b
Triangle zone Undeformed San Joaquin
basin central trough
Roof thrust of
triangle zone
Floor thrust of triangle zone
nia with late Cenozoic convergent deformation, is a strain-
partitioned transpressional belt, characterized by pure
strike-slip along the San Andreas fault and small fold-and-
thrust belts subject to pure shear on either side of the San
Andreas fault.8 13 14 15 The fold-and-thrust belt interpretation
also provides a more optimistic view of California’s future
petroleum potential. As the larger thrust sheets do not steep-
en, but flatten with depth and consequently conceal exten-
sive footwall area with untested subbasins and structures.
Most fold and thrust belts, including the San Joaquin ba-
sin’s WS, have a wedge-shaped, cross-sectional profile with a
taper thinning towards the undeformed basin (Fig. 2b). The
wedge grows basinward by internal thrust faulting and fold-
ing, and deformational progression is similar to the material
being moved by a bulldozer or snowplow.16
Thrust faults within the wedge need not have the same
direction of movement (vergence), and the resulting geom-
etry is commonly characterized by a master backthrust (roof
thrust) and a sole thrust with opposing vergence that creates
a distinctive triangle zone (Fig. 2b). At the south end of the
Diablo Range the northeast-dipping Antelope Valley thrust
presents an excellent surface exposure of a backthrust locat-
ed along the top of the basinward-directed wedge forming
the WS (Fig. 3). Mapping shows that other large backthrusts
are present along other portions of the WS; for instance,
the Temblor Creek thrust in the Temblor Range, and the
43
TECHNOLOGY

BACKTHRUST EXPOSURE, ANTELOPE VALLEY FIG. 3

Pyramid

SDR
oil field
CCC1
AV
San Andreas

T S

KSD
An
NTR

Devil’s Den
tel
fault

oil field
pe
Va

Tulare formation Panoche formation

ll

Paso Robles formation Sand-dominated member

ey

Etchegoin formation Gravelly Flat formation

Reef Ridge shale Serpentinite
Blackwell’s Corner Monterey formation AVTS = Antelope Valley thrust system
Devilwater shale CCC1 = Conoco Cholame
oil field Temblor formation Cattle Co. No. 1 well
Kreyenhagen formation KSD = Kettleman South dome
Point of Rocks sandstone NTR = Northern Temblor Range

NORTHERN TEMBLOR RANGE FIG. 4 Waltham Canyon fault, west of Coal-

Tulare formation
inga anticline in the Diablo Range (Fig.
0 4,000 ft
Monterey shale
Temblor formation
1).8
-3,000

Lower Tertiary strata -17

,00
The wedge model was first pro-
Ce

Welcome Valley Cretaceous, Jurassic rocks

-3, 0
posed in 1988 to explain the structur-
-4,0

00 Wedge tip
nt

0
00

ra

-2, Oil field -4,0

00
al development of the northern por-
lt

SHT = Shale Hills thrust 0

0 Blackwell’s Corner -5,0 0
ro
-5,

-1, TRT = Temblor Range thrust 00

-7,0

00
00

ug

tion of the WS, and the 1983 Coalinga

0

0
0
-1,00

00

00
-9,0
00

-3,0 0
earthquake (moment magnitude = 6.5)
00
-11

,00
-9,0

-10 00
,00

,0 A’
0

-11
A- and its relationship to the Coalinga an-
-13

0
,00
,00
Line B

-12
ion
0
-65,0

t ticline (Fig. 1).8 9 In the Coalinga area

-1,

00

ec
00

-5,0
North s
0

-2, 00
00 -
Antelope 0 3,000 -4,00 o ss the wedge creates a triangle-zone ge-
Cr
Hills A
0 -8,
-65, -7,0 000
ometry with a subthrust anticline that
00 00
nt 0
elo involves mostly Cretaceous and Juras-
0 pe 0
up -8,000
Lost Hills
sic rocks with little oil potential. This
lif
t article applies the wedge model to
-4,
00 North Belridge
0 Antelope Hills 0
the Antelope uplift portion of the WS
TR eC -1,
T Lin 00
0 0
-7,0
-8
present between the northern Temblor
McDonald Anticline
-7,0

00
SH Range and North Belridge oil field (Fig.
00

-9,0
T 00
E
No ne 4). At the Antelope uplift the wedge
rth Li
er
n South Belridge involves Tertiary rocks with known
Te source and reservoir units, making the
-11

m
-1,

Chico-
-12
,000

Carneros Creek
000

bl
,00
00

or Martinez uplift more prospective than the Coal-

0
-4, -3

Ra
Sa

0 0 ,00
0 0

ng inga area.
n

-2,
e -7,000
An

00 -8,
0
-7,000
dr

Cymric
ea

Cross section B-B’

Antelope uplift structure
sf
au

The Antelope uplift is an area of lower

lt

44 Oil & Gas Journal | Oct. 5, 2015

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TECHNOLOGY

ANTELOPE UPLIFT REGIONAL CROSS-SECTION FIG. 5

Cross-section A-A’ Northern Temblor FIG. 5a

Range

Pin line
Tulare formation Tt
Antelope North Belridge Lost Hills Central
San Joaquin formation Tl uplift anticline anticline trough
Etchegoin formation
Reef Ridge shale 0
Monterey shale
–5,000 SHT
Temblor formation = Tt

SA
F
Lower Tertiary strata = Tl –10,000 Regional structural
Subthrust
relief at top, Tt
Upper Cretaceous strata = Ku Depth, ft anticline
–15,000 Regional structural relief at top, Tl
Lower Cretaceous,

F
Regional structural

LH
–20,000 relief at top, Ku
Upper Jurassic rocks
–25,000 WT
LHT = Lost Hills thrust
SAF = San Andreas fault Undeformed area between Undeformed area in
–30,000 Belridge and Lost Hills
SHT = Shale Hills thrust central trough
TRT = Temblor Range thrust –35,000
WT = Wedge tip

Cross-section restoration FIG. 5b

F
Top, Tt SA
Top, Tl
T
TR
Top, Ku SHT
WT

Undeformed area between Undeformed area (central

F
Belridge and Lost Hills trough); Slip removed

LH
from Lost Hills fault

Tertiary strata exposed at the surface SEISMIC LINE B, ANTELOPE UPLIFT FIG. 6
or present in the shallow subsurface, Antelope uplift Northeast dipping panel
as shown by numerous shallow oil and
gas wells and seismic reflection sur-
veys (Fig. 4). The structural geometry
and origin of the uplift has rarely been
questioned despite its great size, struc-
tural relief, and dissimilarity to the
nearby large oil-trapping anticlines.
This article presents a regional cross
section that uses fault-ramp folding
such as fault-bend and fault-propaga-
tion folds, and cross-section balancing
constraints to make an interpretation QTt = Tulare formation Tk = Kreyenhagen formation Tm = Monterey formation
of the Antelope uplift and the WS (Fig. Trr-Tu = undifferentiated Reef Ridge, Etchegoin, San Joaquin formations Tt = Temblor formation
5a).17 18 19 20 Source: Seismic data owned by Seismic Exchange Inc. (SEI). Permission to show granted by SEI and Badlands Energy Inc. Reprocessing: Tricon
Geophysical Inc. Interpretation by Thom Davis and permission to show granted by Badlands Energy Inc.
The cross-section interpretation,
while not unique and untested by
drilling, is valid as it can be retrode- toration of the cross-section and matching the hanging wall
formed, and shows the possible structural geometry beneath and footwall ramps and flats test the validity of this interpre-
the uplift and its untested hydrocarbon potential (Fig. 5b). tation. The cross-section integrates several reprocessed 2D
There is no evidence of strike-slip faults intersecting the seismic lines, well data, and surface geology (Fig. 4). Con-
cross-section line lying east of the San Andreas fault, which touring the top of the Temblor formation shows the broad
allows 2D restoration of the strata to their undeformed ge- crest of the uplift and its northern, eastern and southern
ometry in the direction of convergent strain (along the cross limbs. The west limb of the uplift is a regional synform,
section line) as shown by fold axes and thrust faults. Res- cored with Monterey formation and lying along the foothills

46 Oil & Gas Journal | Oct. 5, 2015

TECHNOLOGY
SEISMIC LINE C, TEMBLOR RANGE
NTR, mostly east dip Regional syncline, Monterey Fm
Tt = Temblor formation Tm = Monterey formation
Tk = Kreyenhagen formation NTR = Northern Temblor Range
Source: Seismic data owned by PacSeis Inc. Permission to show granted by PacSeis and Badlands Energy Inc. Reprocessing: Tricon
Geophysical Inc. Interpretation by Thom Davis and permission to show granted by Badlands Energy Inc.
SEISMIC LINE E, SHOWING TRT, SHT
NTR, mostly east dip
QTt = Tulare formation Tk = Kreyenhagen formation
Tt = Temblor formation Tm = Monterey formation
Source: Seismic data owned by PacSeis Inc. Permission to show granted by PacSeis and Badlands Energy Inc. Reprocessing: Tricon
Geophysical Inc. Interpretation by Thom Davis and permission to show granted by Badlands Energy Inc.
of the northern Temblor Range.
Upper Tertiary and Quaternary strata are absent or thin
across the Antelope uplift as a result of late Cenozoic folding
and erosion, and the uplift lies within an earlier and broader
uplifted block—i.e., the Antelope Valley peninsula—whose
Oligocene to early Miocene history is recorded by nondepo-
sition, erosion, and stratal onlap.21
Seismic Line B shows detail of the northeast-dipping limb
of the Antelope uplift and its large amount of structural re-
lief. Regional mapping of the limb show it is a part of a large
structure that involves much of the upper crust, and is more
important to the development of the WS than the small
faults that cross the uplift’s crest and toe.
Line B also shows that the folding and uplift involves stra-
ta as young as late Miocene, and folding and uplift occurred
during the latest Miocene and Pliocene time and before de-
position of the relatively unfolded Quaternary-age Tulare
48
TRT = Temblor Range thrust
SHT = Shale Hills thrust
Exploration well, TD = 11,011 ft
NTR = Northern Temblor Range
TRT = Temblor Range thrust
FIG. 7 formation. The northeast-dipping limb
Antelope uplift
formed a deformational front that de-
veloped before both the Quaternary-
age anticlines at Lost Hills and North
and South Belridge, which have a dif-
ferent geometry and smaller size than
the older Antelope uplift (Figs. 4 and
5a). The leading edge of the pre-Qua-
ternary deformational front, which
lies along the base of the limb, is in-
terpreted to lie above the wedge tip
(WT) as shown in the generalized
model (Fig. 2b). The absence of sig-
nificant pre-Quaternary deformation
to the northeast of the uplift limits the
possible fault-ramp fold and fault-slip
configurations that could make the
uplift, which in the cross-section is in-
terpreted to be the back of a fault-bend
FIG. 8 fold developed in the hanging wall of a
roof thrust called the Shale Hill thrust
(SHT).
Line C crosses the northern Tem-
blor Range where the surface geology
is dominated by a northeast-dipping
panel of strata of Cretaceous through
Miocene age (Fig. 4). Seismic Line C
reveals a large panel of southwest-dip-
ping strata directly below the north-
east-surface dip (Fig. 7). This abrupt
change in dip is interpreted to be a
large southwest-dipping convergent
SHT = Shale Hills thrust
fault referred to as the Temblor Range
thrust (TRT). The surface and subsur-
face geology constrain the shallow part
of the TRT to the trough of the regional
synform that is located along the foot-
hills of the Temblor Range. Similarly the northeast-dipping
SHT is restricted from reaching the surface along the syncli-
nal trough, and the opposing thrusts form an untested trian-
gle zone capped by Monterey formation. Field examinations
of the syncline show its trough is complexly faulted with
no bedding continuity between opposing limbs, and likely a
zone for TRT and SHT to “daylight” and juxtapose the Mon-
terey formation, originally deposited miles apart.
The western portion of Line E also shows the northeast-
dipping panel of strata that dominates the northern Tem-
blor Range, and southwest-dipping reflectors at depth are
separated by the TRT (Fig. 8). The line lies south of the por-
tion of the Antelope uplift dominated by shallow, lower Ter-
tiary strata (Fig. 4). Along the eastern portion of Line E the
surface and shallow subsurface geology consist of a thick
section of folded and faulted Monterey formation. The line
reveals the triangle zone formed beneath the TRT and SHT
Oil & Gas Journal | Oct. 5, 2015
 TECHNOLOGY

CROSS-SECTION B-B’1 FIG. 9

Cymric oil field Exploration Antelope Hills

Salt Creek area Sheep Springs area wells2 oil field

21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1
2,000
1,000
0
–1,000
–2,000
–3,000
–4,000
Depth, ft

–5,000
–6,000 Lat
era
–7,000 La l ra
ter mp
–8,000 al
–9,000 ram
p SHT
–10,000
–11,000 Tulare formation
–12,000 Etchegoin formation
–13,000 Reef Ridge shale
Monterey shale
Temblor formation
Lower Tertiary strata
Upper Cretaceous strata
1Wells are numbered and vertical purple lines are intersections of reprocessed 2D seismic lines. See table for detailed information. 20.5 miles west of Chico-Martinez oil field.

and the opposing dips of a large sub-

thrust anticline. A nearby exploration CROSS SECTION B-B’, SAMPLE WELLS
well drilled in 1946 to nearly 11,000 ft No. Operator Well Section Total depth, ft

and projected into the line reached the 1 Shell Oil Co. Hopkins A 48X 31-27s-20e 2,600
2 Natural Resources Corp. Voight 784-6 6-28s-20e 3,117
very top of Temblor formation and had 3 E&B Natural Resources Corp. Voight 781 6-28s-20e 3,117
4 Shell Williams 87-6 6-28s-20e 3,600
numerous oil shows. Well core dips are 5 Texaco Inc. Phippen 10 8-28s-20e 4,773
consistent with the wells drilled into 6 Conoco Inc. Continental-Texas F1 8-28s-20e 5,144
7 Superior Oil Co. Theta 82 17-28s-20e 7,847
the northeast limb of the anticline. 8 Ferguson & Bosworth Toco 53X 16-28s-20e 9,769
9 Exxon Corp. TP Bacon 1 27-28s-20e 10,674
10 Laymac Corp. Bacon Hills 1-27 27-28s-20e 10,130
Source, reservior 11
12
Atlantic Richfield Co.
Shell
Shaw A1
Shaw 1
34-28s-20e
2-29s-20e
10,038
4,125
rock indication 13
14
Coastal Oil & Gas Corp.
Transco Oil & Gas Co.
Chico Martinez 1
USL 1-2
2-29s-20e
2-29s-20e
4,010
4,888
The stratigraphy of the triangle zone 15 Transco Oil Richardson 46 7-29s-21e 9,643
16 Los Nietos Co. Richardson 77X 7-29s-21e 10,129
below the SHT and TRT can be pos- 17 Los Nietos Co. Richardson 81 18-29s-21e 7,810
tulated by two methods showing the 18 Chevron USA Inc. CWOD 633 17-29s-21e 6,540
19 Chevron USA Inc. Anderson 55 17-29s-21e 4,250
zone should involve known source 20 Rothschild Oil Co. Sheep Springs 1 17-29s-21s 4,921
21 Robert Lytle Co. Sheep Springs 4 20-29s-21e 5,277
and reservoir rocks of late Cretaceous
through Miocene age:
• Geologic units within the foot-
wall block have about the same struc-
tural relief as the undeformed units to ing the southern edge of the Ante- reprocessed 2D seismic lines (most
the east in the central trough once slip lope uplift, and into the triangle zone. not shown here). For comparison, Elk
is removed along the Quaternary age Other seismic lines plus a few explo- Hills oil field—an anticlinal trap—has
Lost Hills thrust (Fig. 5b). ration wells show the triangle zone a maximum area of about 21,170 acres
• The stratigraphy, including the and subthrust areas beneath the An- with production and reserves totaling
producing oil reservoirs, of the Cymric telope uplift are folded into anticlines 1,392 million bbl of oil.
oil field can be mapped northward us- and synclines as would be expected The subthrust area presented here
ing deep-well data and strike seismic in this convergence area (Fig. 8). Un- adds about 18% to that portion of the
lines (Fig. 9 and accompanying table). tested subthrust anticlines could have WS capable of holding large traps (the
These geologic units plunge north- 1,000-10,000 acres of closure based on footwall area of the uplift is approxi-
ward, beneath the lateral ramps form- structural modeling of the numerous mately 80,000 acres while the WS

Oil & Gas Journal | Oct. 5, 2015 49

TECHNOLOGY
trend of large oil fields is about 440,000 acres).
The exploration potential of the footwall block is further
enhanced by deep thrust burial of known source rock units
that should provide sufficient hydrocarbon maturity from
below the uplift and a short migration pathway from kitchen
to traps. The wedge model can be applied to other portions
of the WS, given the presence of back thrusting in the Tem-
blor Range and other areas of the west side, and such an ap-
proach should provide even more prospective area for large
untested traps along the WS of San Joaquin basin.
Acknowledgments
The author would like to recognize and thank Seismic Ex-
change Inc., Pacific Seismic Inc., and Badlands Energy Inc.
for granting permission to show data and interpretations.
Reprocessing of the 2D seismic was done by Tricon Geo-
physical, Inc.
References
1. Hughes, J.D., “Drilling California: A reality check on the
Monterey shale,” Post Carbon Institute, Dec. 2, 2013, p. 58.
2. Burzlaff, A.A. and Brewster, D.P., “Unconventional oil
from California’s Monterey Formation-exploration results,”
#SPE-169508-MS, presented at Society of Petroleum En-
gineers Western North America and Rocky Mountain Joint
Conference and Exhibition, Denver, Apr. 15-18, 2014.
3. Schwartz, D., “Recent characterization of the Monterey
Formation in the San Joaquin basin (abstract),” Pacific Sec-
tion AAPG Convention, Oxnard, Calif., May 4, 2015.
4. Davis, T.L., Lagoe, M.B., Bazeley, W.J.M., Gordon, S.,
McIntosh, K., and Namson J.S., “Structure of the Cuyama
Valley, Caliente Range, and Carrizo Plain and its significance
to the structural style of the southern Coast Ranges and
western Transverse Ranges,” in W.J.M. Bazeley, ed., “Tertiary
tectonics and sedimentation in the Cuyama basin, San Luis
Obispo, Santa Barbara, and Ventura Counties, California:
Pacific Section,” Society of Economic Paleontologists and
Mineralogists, Book 59, 1988, pp. 141-158.
5. Davis, T.L., Namson, J.S., and Gordon, S.A., “Ventura
Basin Oil Fields: Structural Setting and Petroleum System:
Field guidebook for Trip #5,” Pacific Section AAPG Meeting,
Oxnard, Calif., May 2-8, 2015.
6. Tennyson, M.E., “California Division of Oil, Gas, and
Geothermal Resources online data,” US Geological Survey,
2015.
7. Scheirer, A.H., ed. “Petroleum systems and geological
assessment of oil and gas in the San Joaquin basin province,
California,” Professional paper No. 1713, US Geological Sur-
vey, San Joaquin Basin Province Assessment Team, 2007.
8. Namson, J.S. and Davis, T.L., “Seismically active fold
and thrust belt in the San Joaquin Valley, California,” Geologi-
cal Society of America Bulletin, Vol. 100, February 1988, pp.
257-273.
9. Namson, J.S., Davis, T.L., and Lagoe, M.B., “Tectonic
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history and thrust-fold deformation style of seismically active
structures near Coalinga,” in Rymer, M.J., and Ellsworth,
W.L., eds., “The Coalinga California earthquake of May 2,
1983: U.S.Geological Survey Professional Paper 1487,” 1990,
pp. 79-96.
10. Davis, T.L., Namson, J.S., and Gordon, S.A., “Struc-
ture and hydrocarbon exploration in the Transpressive basins
of southern California,” in Abbott, P.L., and Cooper, J.D., eds.,
“Field conference guide 1996, Pacific Section, Society of
Economic Paleontologists and Mineralogists,” Pacific Section,
American Association of Petroleum Geologists Guidebook,
Vol. 73, 1996.
11. Wilcox, R.E., Harding, T.P., and Seely, D.R., “Basic
Wrench Tectonics,” American Association of Petroleum Ge-
ologists Bulletin, Vol. 57, No. 1, 1973, pp. 74-96.
12. Harding, T.P., “Tectonic significance and hydrocarbon
trapping consequences of sequential folding synchronous
with San Andreas faulting, San Joaquin Valley, California,”
American Association of Petroleum Geologists Bulletin, Vol.
60, No. 1, 1976, pp. 356-378.
13. Mount, V.S. and Suppe, J., “State of stress near
the San Andreas fault: implications for wrench tectonics”
Geology,Vol. 15, No. 12, December 1987, pp. 1143-1146.
14. Zoback, M. D., “New evidence for the state of stress
on the San Andreas fault system,” Science, Vol. 238, No.
4830, Nov. 20, 1987, pp. 1105-1111.
15. Namson, J.S. and Davis, T.L., “Structural transect of
the western Transverse Ranges, California: implications for
lithospheric kinematics and seismic risk evaluation,” Geology,
Vol. 16, August 1988, pp. 675-679.
16. Fossen, H., “Structural Geology,” Cambridge Univer-
sity Press, Cambridge, UK, August 2010, pp. 463.
17. Suppe, J. “Geometry and kinematics of fault-bend
folding,” American Journal of Science, Vol. 283, Sep. 1,
1983, pp. 684-721.
18. Mitra, S., “Fault-Propagation Folds: Geometry, Kine-
matic Evolution, and Hydrocarbon Traps,” American Asso-
ciation of Petroleum Geologists Bulletin, Vol. 74, 1990, pgs.
921-945.
19. Marshak, S., and Woodward, N., “Introduction to
cross-section balancing,” in Marshak, S., Mitra, G., eds.,
“Basic Methods of Structural Geology: Englewood Cliffs, New
Jersey,” 1988, pp. 303–302.
20. Mitra, S., “Balanced structural interpretations in fold
and thrust belts, in S. Mitra, and G.W. Fisher, eds., “Structural
Geology of Fold and Thrust Belts,” Johns Hopkins University
Press, Sep. 1, 1992, pp. 53–77.
21. Pence, J.J., “Sedimentology of the Temblor Formation
in the northern Temblor Range, California,” in Graham, S.A.,
ed., “Geology of the Temblor Formation, Western San Joaquin
Basin, California” Pacific Section Society of Economic Paleon-
tologists and Minerologists, Vol. 44, pp.19-34, 1985.
Oil & Gas Journal | Oct. 5, 2015

The author
Thomas L. Davis (tldavisgeo@gmail.com) is a
geologist in Ventura, Calif. Davis has also served
as an exploration and new ventures geologist for
ARCO Exploration and International Co., and Da-
vis & Namson Consulting Geologists. Davis holds
a BS and PhD in geology from the University of
California.
Oil & Gas Journal | Oct. 5, 2015
TECHNOLOGY
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51
TECHNOLOGY

EXPLORATION & SPECIAL

DEVELOPMENT REPORT

Resistivity, magnetic data delineate

volcanic tuff in Travis County, Tex.
Mustafa Saribudak and solid basaltic rocks in the Austin area and throughout
Environmental Geophysics Associates Texas.
Austin, Tex. Pilot Knob is the eroded core of an extinct volcano 8 miles
(13 km) south of central Austin, Tex., near Austin-Bergstrom
Christopher Caran International Airport and McKinney Falls State Park (Fig. 1).
Texas Water Development Board This area is 2 miles in diameter and encompasses four small,
Austin, Tex. rounded hills including Pilot Knob proper.
The hills are composed of relatively fine-grained tuff with
A combination of resistivity and magnetic data provided isolated outcrops and subcrops of erosion-resistant, fine-
valuable information for delineating volcanic vents and grained, mafic volcanic rock, specifically basanite.1 Fig. 2
dikes, further defining geological contacts of volcanic tuff shows the most recent geological map of Pilot Knob, includ-
ing geophysical profiles.2 Note that Profiles 1 and 2 cover
volcanic tuff and solid basalt outcrops.
Uniform deposition of the Upper
PILOT KNOB, NEAR AUSTIN, TEXAS FIG. 1 Cretaceous Austin Chalk was inter-
98°00’ W 97°45’ W 97°30’ W 97°15’ W
rupted by volcanic activity in the an-
cient Gulf of Mexico. As a product of
30°30’ N
eruption, tuff mounds, formed by hy-
dration of basaltic glass over eruption
Texas centers, controlled placement of shoal-
water carbonates on topographic highs
Elgin
formed by volcanic processes.3 4
Area Creedmoor
shown Palagonitization, the hydration
Texas
ne

of basaltic glass, altered the mounds

zo

Austin of pyroclastic material accumulated

t
ul

around and over the volcanic centers

fa

30°15’ N
Pilot Knob
es

after eruption. The topographic highs

on

Massive
formed by the tuff mounds subse-
lc

igneous rock
Ba

quently controlled localized deposi-

Volcanic outcrop
tion of shoal water carbonates. Isolated
Fault tuff mounds and associated shoal-wa-
Oil field ter carbonates often suggest petroleum
Kimbro production is possible.
0 5 miles Geophysical work on Pilot Knob,
30°00’ N 0 8 km which included the application of
magnetic and gravity methods, was

52 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

published as early as 1954.5 Grav- NEAR SURFACE GEOLOGY, PILOT KNOB FIG. 2
ity and magnetic data were collected
along several traverses with station 97°45’ W 97°42’ W
spacing of 0.5-1 mile. Results revealed
strong gravity and magnetic anoma-
30°12’ N
lies over the central basalt mass and
weaker anomalies caused by flows
and dikes. They also concluded that
serpentined pyroclastics show weak,
negative anomalies.

Resistivity, magnetic surveys Onion Creek

Resistivity and magnetic data were col-
lected along two profiles across the Pi-
McKinney
lot Knob extinct volcano in southeast Falls State
Austin. Profile 1 was in the eastern part Park 500
’
of Pilot Knob. Resistivity data show
a series of anomalies, which could be Pilot Knob
due to a combination of a dike and a
volcanic caldera. Magnetic data along 600’

the same profile show significant high

and low magnetic anomalies, ranging 2 1
between -3,500 and +4,500 nanoTesla
(nT). The magnetic data also display
significant fault anomalies, the sources
30°9’ N Alluvium
of which are likely solid basalt masses
Lower Colorado River deposits
and highly weathered volcanic rocks Tributary terrace deposits
(palagonized). High terrace gravels
This study measured the earth’s Taylor formation
magnetic field using a 10-Hz collec- Austin chalk
tion rate. A base station allowed the Pilot Knob tuff
Pilot Knob basalt
equipment to record daily variations Fault
and corrected the raw magnetic obser- Inferred fault 0 Mile .62
vations for data drift. This approach Geophysical profiles
0 Km 1
yielded high-resolution ground-based
magnetic and resistivity surveys at the
outcrops of Pilot Knob.
The 2D-resistivity method images the subsurface by ap- one of the hills of Pilot Knob (Fig. 6).
plying a constant current to the ground through two elec- Profile 2 is about 1,000 ft west of Profile 1. Resistivity data
trodes and measuring the resulting voltage differences at show a sequence of layered volcanic rock, but they also show
two potential electrodes at a different site. Apparent resistiv- a well-defined low-resistivity unit in the center of the profile.
ity is the product of the measured resistance and a geometric This anomaly could be one of the volcanic cores of Pilot Knob.
correction for a given electrode array. Resistivity values (Ω-
m) are affected by several variables, including the presence Interpretation
of water or moisture, the amount and distribution of pore Figs. 3a and 3b show resistivity and magnetic data along
space in the material, and temperature. This array is sen- Profile 1. Exploration depth of the resistivity data is about
sitive to horizontal and vertical changes in the subsurface 131 ft in the middle of the profile. Resistivity values are 10-
(compared to other arrays) and, when the data is inverted, 50 Ω-m, indicating a low-resistivity (high-conductivity) geo-
provides a 2D electrical image of the near-surface geology. electric section. Resistivity data show a dike-like anomaly
Electrode spacing was 10 and 15 ft along Profiles 1 and 2, between stations at 140 and 240 ft, displayed as a combina-
respectively (Fig. 2). tion of low (blue) and high (red) resistivity values. A uni-
Profile 1 has a bearing of N40°E and crosses over a well- form, high-magnetic anomaly corresponds to the location
exposed tuff and volcanic lava contact (Fig. 5). Profile 2 of the resistivity anomaly (Fig. 3b). The magnitude of the
trends north-south and extends over a basaltic outcrop on magnetic anomaly is highest (4,000 nT) at the 180-ft station.

Oil & Gas Journal | Oct. 5, 2015 53

TECHNOLOGY

PROFILE 1 INTERPRETATION FIG. 3

Resistivity* FIG. 3a
Lava and tuff outcrop Stations, ft
SW NE
0.0 0 60 120 180 240 300 360 420 480 540
50.0

32.7 Volcanic crater?

Depth, ft

33.4

Ohm-m
Dike
65.3 22.4

98.0 A 15.0

130.7 10.0
*Iteration = 4, root mean square (RMS) = 2.62%, L2 = 0.54, electrode spacing = 10 ft.

SW Magnetic data FIG. 3b

NE
4,000
B
3,000
2,000 omaly
High an Low anomaly Fault
1,000
nT

0
–1,000
–2,000
–3,000
0 100 200 300 400 500 555
Distance, ft

PROFILE 2 INTERPRETATION FIG. 4

Resistivity*
Thin soil covered with basaltic rock fragments Weathered basaltic outcrop FIG. 4a
Pipeline
S Stations, ft N
0 90 179 269 359 449 539 628 718 807
14 50.0
Weathered basalt
Weathered basalt
Elevation, ft

-40 33.4

Ohm-m
-95 Contact Contact 22.4

Pilot Knob volcanic A 15.0

-149 core (mound)
10.0
-203
*Iteration = 4, root mean square (RMS) = 2.86%, L2 = 0.67, electrode spacing = 15 ft.

S Magnetic data Series of high and low magnetic anomalies FIG. 4b

N
8,000
B
6,000
4,000
Geological contact
nT

2,000
0
–2,000
0 100 200 300 400 500 600 700 825
Distance, ft

This correlation suggests a solid basaltic mass for the origin
of the resistivity and magnetic anomalies.
Resistivity data also show a crater-like anomaly between
stations at 240 and 440 ft, 200 ft from the surface (red).
This anomaly narrows to 80 ft at the bottom of the resistivity
section. Its contact is sharply defined by the adjacent, low-
er-resistivity (blue and green) values. This high-resistivity
anomaly is overlain by a low-resistivity layer as deep as 65
ft. Magnetic values over this anomaly drop as low as -1,000
nT (Figs. 3a and 3b). The source for these low magnetic and
high-low resistivity values may be weakly magnetized, such
as volcanic tuff, or palagonized volcanic rocks.

54 Oil & Gas Journal | Oct. 5, 2015

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TECHNOLOGY
The volcanic tuff and basalt contact along Profile 1 are visible in
this image (Fig. 5).
Magnetic data also display a fault-like anomaly on the sta-
tion at 420 ft. Magnetic values drop to -3,000 from 500 nT
across the fault and stay stable at 2,000 nT in the northeast
direction for the rest of the profile (Fig. 3b). Resistivity data
also show sharp contact between low and high-resistivity
values.
Figs. 4a and 4b show resistivity and magnetic data along
Profile 2. This profile is mostly within the Pilot Knob basalt
shown on the geological map (Fig. 2). A topographic cor-
rection is applied to the resistivity data and minimum and
maximum values are fixed as with Profile 1, which vary be-
tween 10 and 50 Ω-m. Resistivity data near the surface show
a low-resistivity layer underlain by a high-resistivity layer,
which thickens in the southern and northern sections of the
profile (Fig. 4a). In the center of the profile, however, there is
a significant low resistivity anomaly, sharply defined by all
directions: top, north, and south. This anomaly is between
stations at 280 and 600 ft and extends to a depth of 203
ft and more. The northern section of this anomaly is much
steeper than the southern section (Fig. 4a). This anomaly is
circular and its southern and northern boundaries dip steep-
ly to the south the north, respectively.
A series of significant high and low-magnetic anomalies
are observed along Profile 2. These anomalies range between
8,000 and -3,000 nT and correlate well with the location of
the low-resistivity anomaly. This range suggests an origin of
solid basalt masses and highly weathered volcanic material.
Survey results
One significant result from both profiles, especially Profile
2, is that the core of Pilot Knob, geologically mapped as solid
basalt, consists of both strong and weak magnetic values.
This separates the solid basalt from the weathered basalt,
providing valuable information for oil and gas exploration.
The magnetic method has long helped detect buried vol-
56
Profile 2 runs north-south and crosses a weathered outcrop
(Fig. 6).
canic rocks. Since resistivity surveys can be deployed to map
subsurface as deep as 1,000-1,500 ft, additional resistivity
surveys could offer useful information on the structure of
volcanic and adjacent sedimentary rocks.
Acknowledgment
The authors would like to thank Brian Gieselman, Jeffrey
Pender, Alfred Hawkins, and Alan Cherepon for their help
in the field. Special thanks are due to Dr. Mark Helper for
his permission to use the geological map of the Pilot Knob
(Fig. 2) and Alan Cherepon for his reviewing the paper. This
work was primarily funded by Environmental Geophysics
Associates with additional support from the Barton Springs/
Edwards Aquifer Conservation District in Austin. We also
thank Exploration Instrument LLC, Austin, Tex., for provid-
ing the magnetometer.
References
1. Young K.P., Caran S.C., and Ewing T.E., “Cretaceous
Volcanism in the Austin area, Texas,” Austin Geological Society
Guidebook No. 4, p. 66, 1982.
2. Caran C.S., Housh T., and Cherepon, A., “Volcanic Fea-
tures of the Austin Area, Texas,” Austin Geological Society Field
Trip Guidebook 26, Spring 2006, p. 110.
3. Simmons, K., “A Primer on Serpentine Plugs in South
Texas,” South Texas Geological Bulletin, Vol. 7, No. 2, February
1967.
4. Matthews, T.F., “The Petroleum Potential of Serpentine
Plugs and Associated Rocks, Central and South Texas,” Baylor
Geological Studies, Bull. 44, Fall 1986.
5. Romberg, F. and Barnes, V.E., “A Geological and Geo-
physical Study of Pilot Knob (South), Travis County, Texas,”
Geophysics, Vol. 19, No. 3, July 1954, pp. 38-454.
Oil & Gas Journal | Oct. 5, 2015
 TECHNOLOGY

The authors Christopher Caran (chris.caran@twdb.texas.gov)

Mustafa Saribudak (ega@pdq.net) is principal
geophysicist-geologist at Environmental Geo-
physics Associates, Austin, Tex. He has also
served as field manager at Tierra Environmental,
Inc. He holds an MS in geological engineering
from Istanbul University, Turkey, where he also
earned his PhD in geophysics. He is a member
of the Environmental Engineering Geophysical Society, the Aus-
tin Geological Society, and the South Texas Geological Society.
is a geologist with the Texas Water Development
Board, Austin, Tex. He has also served as a
geologist and lecturer at the University of Texas
at Austin, Jackson School of Geosciences. He
holds BS and MA degrees from the University of
Texas at Austin. He is a member of the Geologi-
cal Society of America and the Austin Geological Society.

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Oil & Gas Journal | Oct. 5, 2015 57

TECHNOLOGY

Modeling ensures stability of

Chinese CBM horizontal wells
Jie Zhang
Hu Liu
State Key Laboratory, Chengdu, China

Guangjie Yuan
Yan Xia DRILLING &
Chinese National Petroleum Co. PRODUCTION

Beijing

Successfully drilling horizontal coal-

COAL DENSITY, POROSITY Table 1
bed methane wells depends on well-
Sample Diameter, mm Length, mm Weight, g Density, cu m Porosity, %
bore stability, which in turn depends
1 25.18 55.41 39.1600 1.420 9.6
on coal-seam thickness, seam depth, 2 25.11 55.57 39.1927 1.425 11.3
coal cohesion, overburden stress, well- 3 25.16 48.64 34.4725 1.426 5.4

bore length, reservoir pressure, and

the drilling fluid used.
It is important to understand the RAPID WATER ABSORPTION, SEAM 3 Table 2
sensitivity of the wellbore and the po- Sample Time, sec Dry weight, g Wet weight, g Water absorption, g
tential yield under different horizontal 4 10 47.6317 47.6928 0.0611
in-situ stresses, bottomhole pressures, 5 10 26.7668 26.8232 0.0564
and formation pressures when drill-
ing.
Where there are numerous thin-
ner coal seams with reasonable per-
meability (5-10 md), vertical drilling
SEAM 3 ABSORPTION DETAILS Table 3
Sample Time, min Dry weight, g Wet weight, g Water absorption, g
is preferred. When only one or two
4 0 — — —
thick seams with high-gas content but 4 10 — 47.7341 0.1024
low permeability (< 2 md) are pres- 4 20 47.6317 47.7844 0.1527
4 30 — 47.8104 0.1787
ent, horizontal drilling should be con- 4 90 — 47.8495 0.2178
5 0 — — —
sidered and, often, is the only option 5 10 — 26.8310 0.0642
available to economically produce the 5 20 26.7668 26.8331 0.0663
5 30 — 26.8502 0.0834
gas. 5 90 — 26.8726 0.1058
This article analyzes wellbore sta-
bility for a horizontal coalbed meth-
ane well in Qinshui basin, China. It
STATIC MECHANICAL PROPERTIES Table 4
looks at the coal rock, it’s water ab- Peak
sorption rates, stresses, and mechani- Bulk density, Confining compressive Young’s
Sample g/cu m pressure, MPa pressure, MPa modulus, GPa Poisson’s ratio
cal properties to determine how best
to ensure wellbore stability when drill- 1 1.420 0.2 17.35 2.22 0.26
2 1.425 2.8 20.53 2.93 0.37
ing Qinshui wells and others with sim- 3 1.426 5.9 28.91 3.67 0.33
4* 1.428 0.2 11.54 2.19 0.27
ilar properties. 5* 1.435 5.9 20.20 3.12 0.38
*Samples 4 and 5 absorbed water.

58 Oil & Gas Journal | Oct. 5, 2015

Rock properties EFFECTIVE-STRESS RELATIONSHIPS FIG. 1
The southern Qinshui basin has the
most coalbed methane in China. The P-wave, S-wave velocity
most abundant coal-bearing strata are 3,000
P-wave
the Taiyuan formation of carbonifer-
ous upper trunk (C3t) and the Shanxi 2,500
formation of Permian lower trunk
(P1s). 2,000

Velocity, m/sec
The average thickness of the coal is
163.02 m. There are 17 seams with a 1,500
coal-bearing coefficient of 9.1%. These S-wave
include two minable coal seams that 1,000
are about 10.70-m thick at a depth of
350-1,300 m, and characterized by 500
interbedded, fine-grained sandstone,
mudstone, silty mudstone, and thick
0
coal seams. 0 2 4 6 8 10 12
There are two large geological folds Mean effective stress, MPa
in the Qinshui area studied in this ar-
ticle: syncline f1 and anticline f2. The Dynamic Young’s modulus, Poisson’s ratio
overall geological structure is simple. 6 0.6
The cores analyzed in this arti-
cle came from coalbed Seam 3 in the 5 DYM 0.5
southern part of the basin from an av-
erage depth of 560 m. Analysis includ-
4 0.4
ed tests to determine density, porosity,
DYM, GPa

water absorption, acoustic time, and DPR

DPR
3 0.3
uniaxial and triaxial rock strengths.
Table 1 shows test data.
2 0.2
Water absorption
Compared with sandstone, coal’s den- 1 0.1
sity is low and its porosity is devel-
oped. The core samples contained lit- 0 0.0
tle or no clay minerals and hydration 0 2 4 6 8 10 12
Mean effective stress, MPa
capacity was quite low. Their microfis-
sures, however, developed with a large
surface area containing more hydro- Static, dynamic Young’s modulus
philic and lipophilic surfaces than in 4.5
sandstone. Confining pressure
Instantaneous and accumulated- 4.0 0.2 MPa
water absorption rates show that, un-
der capillary pressure, water quickly 2.0 MPa
Static, GPa

entered the coal cracks and voids (Ta- 3.5 5.0 MPa
bles 2 and 3). As the water absorption
time improved and the absorption rate
3.0
dropped dramatically, water spread
out and adsorbed into the rock sample.
2.5
Vertical, horizontal stresses
To calculate vertical stress or stress
2.0
gradient at a given depth one would 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5
generally use a bulk-density log to first Dynamic, GPa
calculate lithostatic gradient. No den-

Oil & Gas Journal | Oct. 5, 2015 59

TECHNOLOGY
EQUATIONS
vv = c ) h
Where v v is the overburden stress,MPa; c is
rock density, g/cum;and h is the depth,m.
v e = !Q v 1 - Pp V + Q v 3 - Pp V$ /3
Where v e is the effective stress,MPa;v 1 is
axial stress,MPa;v 3 is the confining pressure,
MPa;andPp ispore pressure,MPa.
v a
v 1 = v 3 + v ci #m b v 3 + S &
ci
Where v 1 and v 3 are the maximum and
minimumeffective stress rates of the
rock mass whendestroyed;v ci is the
uniaxialcompressive strengthof the
intact rock (UCS);mbis theHB
parameter;and s and a are the
characteristicparameters of rock mass.
GSI - 100
m b = m i exp S 28 - 14D X
WhereDis the disturbance factor.
GSI - 100
s = exp S 9 - 3D X
WhereDis the disturbance factor.
1 1
a = 2 + 6 Q e -GSI/15 - e -20/3 V
sity log data were available for this study. We instead used
the formula demonstrated in Equation 1. Our in-situ stress
test used the acoustic-emission Kaiser experiment under the
condition of confining pressure. Applied confining pressure
was meant to improve the sample’s compressive strength
and the exact measured value of the sample at the acoustic-
emission Kaiser stress points.
60
The average coal-pore pressure of
the study area was 5.9 MPa, setting the
(1) confining pressure in this experiment
at 5 MPa. Based on the experiment’s
results, the maximum and minimum
horizontal main stresses were 12.82
and 8.76 MPa respectively, and the
maximum and minimum horizontal
(2) main stress gradients were 2.289 and
1.564 MPa/100 m, respectively.
Properties, effective stress
Table 4 shows the static mechanical
properties of three samples. In the tri-
axial test, all three showed character-
istics of brittle rock that retained some
degree of residual strength after dam-
(3)
age.
As confining pressure increased,
both the maximum compressive
strength and residual strength of the
rock increased as well. The samples’
water absorption led to reduced com-
pressive strength within a margin of
30%.
The slope of the linear portions of
the axial-stress difference and axial-
strain curves determined the static
Young’s modulus values, the ratio of
the longitudinal tensile stress, and the
tensile strain.
(4) The static Young’s modulus of dry-
rock samples ranged from 2.22 GPa to
3.67 GPa. That of rock after absorbing
water was 2.08-3.12 GPa.
The slope of the linear portions
of the average radial strain and axial
(5) radial strain curves determined the
static Poison’s ratio values. The static
Poison’s ratio of the dry sample in this
article was 0.26-0.37, with an average
of 0.32. The ratio after absorbing water
(6) was 0.27-0.38.
Equation 2 calculated effective
stress under the triaxial test.
Table 5 shows the dynamic param-
eters of the dry rock and the acoustic
test data. Fig. 1 illustrates the stress dependency of the P-
wave and S-wave velocities and of the dynamic elastic pa-
rameters. As effective stress increases, the P-wave and S-wave
velocities increase, as do the dynamic elastic parameters.
Coal-rock strength
Orthogonal cleats in the coal bed cause high discontinuity
Oil & Gas Journal | Oct. 5, 2015
 TECHNOLOGY

DYNAMIC PROPERTIES* Table 5

Sample A-S CP PP MES B-D PV SV D-PR D-YM D-BM D-SM S-YM S-PR

1 1.7 0.2 0 0.70 1.420 2,027 1,005 0.34 3.84 3.08 1.43 2.22 0.26
3.0 0.2 0 1.13 1.421 2,161 1,013 0.36 3.96 3.68 1.46 2.22 0.26
5.9 0.2 0 2.10 1.421 2,109 1,031 0.34 4.06 3.38 1.51 2.22 0.26
7.9 0.2 0 2.77 1.420 2,218 1,034 0.36 4.13 3.89 1.52 2.22 0.26

2 0.0 2.8 0 1.33 1.425 2,009 1,017 0.33 3.91 2.97 1.47 2.93 0.37
2.9 2.8 0 2.30 1.425 2,232 1,051 0.36 4.27 3.93 1.57 2.93 0.37
5.8 2.8 0 3.27 1.426 2,253 1,051 0.36 4.29 4.03 1.58 2.93 0.37
7.8 2.8 0 3.93 1.426 2,281 1,058 0.36 4.35 4.15 1.60 2.93 0.37
10.3 2.8 0 4.77 1.424 2,309 1,058 0.37 4.36 4.29 1.59 2.93 0.37
15.1 2.8 0 6.37 1.423 2,357 1,059 0.37 4.38 4.54 1.60 2.93 0.37

3 0.0 5.6 0 3.33 1.426 2,493 1,061 0.39 4.46 5.28 1.61 3.67 0.33
2.9 5.6 0 4.30 1.426 2,547 1,070 0.39 4.55 5.55 1.63 3.67 0.33
6.0 5.0 0 5.33 1.425 2,591 1,072 0.40 4.57 5.80 1.64 3.67 0.33
8.0 5.6 0 6.00 1.426 2,627 1,075 0.40 4.61 6.00 1.65 3.67 0.33
12.1 5.6 0 7.37 1.426 2,642 1,080 0.40 4.66 6.07 1.66 3.67 0.33
17.6 5.6 0 9.20 1.427 2,659 1,081 0.40 4.67 6.17 1.67 3.67 0.33
21.8 5.6 0 10.60 1.427 2,684 1,082 0.40 4.69 6.32 1.67 3.67 0.33

*A-S = axial stress, MPa. CP = confining pressure, MPa. PP = pore pressure, MPa. MES = mean effective stress, MPa. B-D = bulk density, g/cu m. PV = P-wave
velocity, m/sec. SV = S-wave velocity, m/sec. D-PR = dynamic Poisson’s ratio. D-YM = dynamic Young’s modulus, GPa. D-BM = dynamic bulk modulus, GPa.
D-SM = dynamic shear modulus, GPa. S-YM = static Young’s modulus, GPa. S-PR = static Poisson’s ratio.

in coal rock, making the rocks’ me-

CRUDE YIELD, ANHYDROUS PRODUCTION TIME FIG. 2

chanical properties non-continuous 4,500

and non-linear. 4,000
The Hoek-Brown strength criterion
assumes that rock mass is isotropic 3,500
and is applied to rock-mass formations
3,000
that have been discontinuously and
Days

intensively developed. These discon- 2,500

tinuities have similar surface features,
which can be considered isotropic 2,000

damages along the discontinuous sur- 1,500

face. These similarities allow analysis
of the stability of a coalbed well wall 1,000
using this criterion.
500
Equation 3 expresses the Hoek- 10 15 20 25 30 35 40 45 50
Brown formula. cu m/day

To get more accurate rock mass pa-

rameters, Hoek et al. introduced the WELL BASE-CASE PARAMETERS Table 6
parameter of geological strength index (GSI). GSI’s value is True vertical depth 560 m
Horizontal-well azimuth 0°
related to the integrity, joint count, number of cracks, and Initial reservoir pressure 5.6 MPa
surface condition of the coal rock. Vertical stress 15.12 MPa
Minimum horizontal-stress azimuth 0
If the coal-rock surface is in good condition and has a Minimum horizontal stress 8.76 MPa
Maximum horizontal stress 12.82 MPa
mosaic shape, GSI would be 55-100. If the coal-rock struc- Static Young’s modulus 3.67
ture is affected by multiple sets of discontinuities cutting one Static Poisson’s ratio 0.33

other, GSI would be 45-55.

Determining GSI, allows calculating Hoek-Brown rock
mass parameters using the formulas expressed in Equations
4, 5, and 6 The disturbance factor, D, used in these equa-
tions reflects the degree of rock blasting damage and stress
release using a 0 to 1 range; the D of undisturbed rock = 0,
and that of the strongly disturbed rock = 1.
We adjusted our analysis to fit the data of previous stud
ies where lower values were obtained. This discrepancy in
data required only 70% of the experimental data be ana-
lyzed (Tables 6 and 7). The nonlinear Hoek-Brown rock-
strength criterion envelope, which corresponded to different
circumstances, was also derived (Fig. 2).
Borehole stability
When the stress around the well exceeds the compressive
strength of the rock around the well wall, the compressive
strength is reduced and the well wall plastically deformed,
followed by partial or total collapse. Debris will converge
at the well bottom, and sticking will occur if the rock-car-

Oil & Gas Journal | Oct. 5, 2015 61

TECHNOLOGY

ANISTROPY FACTOR, ANHYDROUS PRODUCTION TIME FIG. 3

allowed simulation of overbalanced, near
balanced, and underbalanced drilling.
3,300
The maximum BHP was 130% of
reservoir pressure, and the minimum
3,200
BHP was 0.5 MPa. When overbal-
anced, the rock strength parameters
3,100
demonstrated conditions similar to
those from the water-absorbing rock
Days

3,000 samples. When near-balanced and un-

derbalanced, conditions adopted the
2,900 parameters from the dry rock samples.
Hoek-Brown analysis used 100%,
2,800 70%, and 50% lab peak-strength val-
ues. Analysis using 100% lab peak-
2,700 strength values predicted no yielding
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
(Table 8). Applying 70% peak-strength
Kv/Kh
values didn’t predict yielding until
BHP was reduced to 2 MPa. When
HOEK-BROWN PARAMETERS Table 7 50% peak-strength values were used,
–––––––– Dry rock –––––––– –––––––– Absorbed rock –––––––– the predicted yield-zone radius was
100% 70% 50% 100% 70% 50% largest at the same 2 MPa.
Peak
strength UCS,* MPa 16.72 11.7 8.36 10.39 7.27 5.16
Distance, m 8.5 5.60 Acknowledgments
Time, sec 1.0 0.60
Residual The authors would like to acknowledge
strength UCS, MPa 4.00 2.8 2.00 2.80 1.96 1.40 the financial support of the Natural
Distance, m 5.9 3.60
Time, sec 0.0 0.00 Science Foundation of China (NSFC)
*Uniaxial compressive strength (No. 51274168).

Bibliography
Connell, L.D. and Jeffery, R.G., “His-
HOEK-BROWN RESULTS Table 8 tory matching for optimization of gas
Sample BHP, MPa Drilling condition Peak strength R/rw drainage from horizontal wells contain-
1 0.50 Underbalanced 100% 1.00 ing sand propped hydraulic fractures,”
2 5.90 Balanced 100% 1.00
3 7.67 Overbalanced 100%, water 1.00 presented to the International Coalbed
4 0.50 Underbalanced 70% 1.37 Methane Symposium, Tuscaloosa,
5 2.00 Underbalanced 70% 1.25
6 5.90 Balanced 70% 1.00 Alabama, May 16-20, 2005.
7 6.73 Overbalanced 70%, water 1.10
8 7.67 Overbalanced 70%, water 1.08 Dexter, D., “Investigative CBM
9 0.50 Underbalanced 50% 1.47 modeling for horizontal and other well
10 2.00 Underbalanced 50% 1.39
11 5.90 Balanced 50% 1.26 types,” presented to the Conference
12 6.73 Overbalanced 50%, water 1.18
13 7.67 Overbalanced 50%, water 1.13 Board of Canada Meeting, Calgary, Feb.
14–15, 2006.
Fan Shengli, “Exploration results
and geological analysis of coal-bed gas
rying capacity of the drilling liquid is insufficient to clean in the south part of Qinshui basin,” Natural Gas Industry, Vol.
up the debris from the wellhead. 21, No. 4, July-August 2001 (in Chinese), pp. 35-38.
The size, R, of the wellbore’s plastic zone under in-situ Gentzis, T. and Bolen, D., “The use of numerical simula-
stress requires consideration, as does drilling fluid pres- tion in predicting coalbed methane producibility from the
sure. Software simulation predicts the range of plastic de- Gates coals, Alberta Inner Foothills, Canada: comparison
formation of rock around the wellbore. with Mannville coal CBM production in the Alberta Syncline,”
When vertical stress is the maximum principal stress, International Journal of Coal Geology, Vol. 74, No. 3-4, May
the trajectory of the horizontal well along the minimum 2008, pp. 215-236.
horizontal principal stress direction is the least prone to Hoek, E. and Brown, E. T., “Underground excavation in
collapse. Table 7 shows the rock-strength parameters and rock,” The Institute of Mining and Metallurgy, London, 1980.
in-situ stress. Setting different bottomhole pressures (BHP) Hoek, E. and Brown, E.T., “Practical estimates of rock

62 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

mass strength,” International Journal of Rock Mechanics

and Mining Sciences, Vol. 34, No. 8, December 1997, pp.
1165–1186.
Hoek, E., Carranze-Torres, C., and Corkum, B. “Hoek-
Brown failure criterion–2002 edition,” presented to the North
American Rock Mechanics Society Meeting, Toronto, July
Don’t miss another
7-10, 2002. CAREER OPPORTUNITY
Jiang Da-yuan, “Advances on research of coalbed meth-
ane geology in Qinshui Basin,” Journal of Chongqing Univer-
sity of Science and Technology, Natural Sciences Edition, Vol.
15, No. 6, 2013, pp. 70-74.
Lin Xiao-yin, “Reservoiring mechanism of coalbed meth-
ane in Southern Qinshui Basin,” Natural Gas Industry, Vol. 27,
No. 8, August 2007 (in Chinese), pp. 8-11.
Meng Zhao-ping, “Characteristics of in-situ stress field
in Southern Qinshui Basin and its research significance,”
Journal of China Coal Society, Vol. 35, No. 6, June 2010, pp. Top Oil & Gas Industry Employers are
975-981.
Moschovidis, Z.A., Cameron, J.R., and Palmer, I.D.,
“Methodology and examples of wellbore stability in coalbed RECRUITING
NOW!
methane wells,” International Coalbed Methane Symposium,
Tuscaloosa, Alabama, May 16–20, 2005.

The authors with PennEnergy Jobs

Jie Zhang (jiezhang@swpu.edu.cn) is an as-
sociate professor and researcher at Southwest
Petroleum University, Chengdu, China. His
research include wellbore stability, well drilling
and coalbed methane development. He holds a
PhD in petroleum engineering from Southwest
Petroleum University.

Hu Liu (happyliuhu@stu.swpu.edu.cn) is a
postgraduate student at Southwest Petroleum
University, Chengdu, China. He studies oil & gas
engineering with an emphasis on wellbore stabil-
ity and well control.

Guanhjie Yuan is a professor-

ate senior engineer an researcher at the Drilling
Engineering Institute of the China National Petro-
leum Corporation. His research interests include
reservoirs and coalbed methane development.
He holds a PhD engineering from Jiaotong Uni- Visit PennEnergyJobs.com to
versity, Shanghai, China.
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TECHNOLOGY

DRILLING &
PRODUCTION

New method predicts bottom-water breakthrough time

Haitao Li Extensive research exists regarding how output is af-
Yahui Li fected, the law of bottom-water breakthrough, the con-
Ying Li ing mechanism, and other aspects of bottom-water reser-
Southwest Petroleum University voirs.1-6
Chengdu, China Less attention has been given to the time it takes for
bottom water to break through in reservoirs with a bar-
Jibin Zhong rier. The studies that do exist assume that the water-coning
Changquing Oil Field Co. profile under the barrier is shaped like an isosceles trap-
Xi’an, China ezoid.7 8
This article challenges that assumption. It looks at the
Anhydrous production time increases with growing res- rising OWC as having a curved conical shape to develop a
ervoir porosity. The relationship between porosity and the new predictive model. The article combines the pressure-
anhydrous time is linear. Coning reduces oil production as drop superposition principle, Darcy’s law, and seepage
water enters the perforation zone in the near-wellbore area. models of plane and spherical-radial flow, to accurately
Pressure forces fluids toward the wellbore, overcoming the predetermine breakthrough time in a bottom-water reser-
natural separation of the oil-water contact (OWC). voir with a barrier.

Mathematical analysis
The following five parameters de-
BOTTOM-WATER CONING PROFILE FIG. 1
scribe a well that can benefit from the
new model:
• The reservoir is homogeneous
and anisotropic.
hp
h • The oil-water transition zone’s
affect has not been studied.
A B • Influence of gravity and capil-
rb lary forces has been ignored.5
• Flow obeys Darcy’s law.
Oil hb • The barrier is at bottomhole.
Based on the distribution of pres-
OWC sure drop at bottomhole and the su-
perposition principle of pressure
D drop, the oil well divides into two
Water re virtual wells (A and B) at the barrier’s
edge (Fig.1).10

64 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

EQUATIONS
Qn re NOMENCLATURE
DPB = 2rKh 1n S r X (1)
p b
h = Reservoir thickness, m
DPB = DP *A + DP B* (2)
Q B -S n
hp = Open thickness of the reservoir, m
DPB = 2rKa Q r -1w + r -1AB V (3)
hb = Height away from the original oil-water contact to
2rKa
Q B - S = n r -1 + 2r -1 DPB (4) barrier, m
Q w Q bV V
aQ re re = Radius of drainage, m
Q B - S = h r -1 + 2r -1 1n S r X (5)
pQ w Q bV V b
rb = Radius of barrier, m
QB - S
v = 2rz h - z 2 (6) Swi = Original irreducible water saturation
Q b V
Q Sor = Residual oil saturation
Dh = rzr 2 1 - S - S t (7)
eQ wi V
or
α = Anisotropy factor, Reservoirs vertical and
dz = Q v + b V dt (8)
Q horizontal permeability ratio
Where:b = rzr 2 1 - S - S (8a)
eQ or wi V tbt = Water breakthrough time, d
QB-S
dz = T 2rz h - z 2 + b Y dt (9) tv = Time needed by water rising from the oil water
Q b V
Q a re contact to barrier edge, d
dz = T 2rz h - z 2 h r -1 + 2r -1 1n S r X + b Y dt (10)
Q b V p Q w Q bV V b
th = Time needed by water flowing from the barrier
H
dz = S h - z 2 + b X dt (11) edge to the bottom hole, d
b

Q a re Q = Oil production underground, m³/d

Where:H = 2rz h r -1 + (2r ) -1 1n S r X (11a)
pQ w V μ
b b
= Oil viscosity, mPa∙s
Q hb - z V
2

dt = T H + b h - z 2 Y dz (12)
Q b V K = Reservoir permeability, D
Q h b - z V2
t v = y H + b h - z 2 dz
h
b

(13) ∆PB = Pressure drop at the barrier edge position B

0 Q b V
produced by oil well, MPa
b
hb H arctan T H h b Y
tv = b - 3 (14) ∆P*B = Pressure drop at position B produced by virtual
2
b
well A, MPa
rzr 2b h p
th = Q (15) ∆P*A = Pressure drop at position B produced by virtual
t bt = t v + t h (16) well B, MPa

Under pressure at the edge, the

bottom water rises from its original CRUDE YIELD, ANHYDROUS PRODUCTION TIME FIG. 2
position to the bottom of the virtual
4,500
wells. The seepage model of plane
radial flow,can determine the time 4,000
needed for water to flow from the bar-
3,500
rier edge. The combined time of these
two stages is the bottom-water break- 3,000
through time.
Days

The flow pattern above the barri- 2,500

er is the plane radial flow. According 2,000

to the principle of seepage, when the
well is producing the pressure drops 1,500
at the position of Virtual Well A or B
1,000
(Equation 1).
According to the pressure-drop su- 500
10 15 20 25 30 35 40 45 50
perposition principle, pressure drop,
cu m/day
ΔPB, can be divided into two parts:

Oil & Gas Journal | Oct. 5, 2015 65

TECHNOLOGY

ANISTROPY FACTOR, ANHYDROUS PRODUCTION TIME FIG. 3

sition z away from the original OWC.
With oil recovery, the original OWC
3,300
will grow.6 Equation 7 shows this in-
crease’s amplitude.
3,200
Equation 8 describes the move-
ment height of the water at position z.
3,100 Using Equation 8 in place of Equation
6 and Equation 8a in place of Equa-
Days

3,000 tion 5 calculates movement height

(Equation 9).
2,900 The time needed for bottom wa-
ter to flow from the original OWC to
2,800 the barrier is determined by convert-
ing Equation 9 into Equation 10 and
2,700 Equation 10 into Equation 11 to find
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Equation 12. Solving Equation 13 us-
Kv/Kh
ing Matlab yields a new analytical ex-
pression.
POROSITY, ANHYDROUS PRODUCTION TIME FIG. 4
The time needed for bottom-water
coning from a point on the original
7,000
OWC (identified as D in Fig. 1) to the
barrier can be found using Equation
6,000
14. After the bottom water arrives at
the edge of the barrier, plane radial-
5,000 flow model (regarded as the seepage
model of water flowing from barrier
Days

4,000 edge to bottomhole) combines with

the material flow balance principle
3,000 to find the time needed by the wa-
ter flowing from the barrier’s edge to
2,000 bottomhole (Equation 15). Equation
16 calculates breakthrough time in a
1,000 bottom-water reservoir. Equations 14-
0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 16 establish a predictive model.
ϕ

Model testing
Model testing in the Ordos basin in
China used the new method as well as those for which
PREDICTION RESULTS, ORDOS results are shown in the accompanying table.4 7
BASIN BREAKTHROUGH TIMES The Zhu method predicted a breakthrough time of
Method Break through time, days Relative error, %
2,970 days with a relative error of 1.72%. The Li method
Li 2,258 –22.67 predicted 2, 258 days with a relative error of -22.67%.
Zhu 2,970 1.72
Authors 2,912 –0.27 This article’s model determined a time of 2,912 days with
a relative error of only -0.27%.
The difference between the Zhu method and this paper’s
ΔP*A from Virtual Well A, and ΔP*B from Virtual Well B is not great. Zhu, however, exceeded the actual time of wa-
(Equation 2). ter breakthrough in Ordos basin wells, potentially causing
The seepage model under the barrier, QB-S, is a spheri- operators to miss opportunities for optimization and pre-
cal radial flow for both virtual wells. Equation 3 describes vent bottom-water coning in these wells.
the resulting pressure drop and Equation 4 calculates The Zhu prediction model is based on the hypothesis
spherical radial flow. A combination of Equations 1 and 4 that the rising water under the barrier roughly forms an
determines a new flow relationship taking into account the isosceles trapezoid. The shape is actually curved conical.
two virtual wells (Equation 5). The height of a curved conical is higher than an isos-
Equation 6 calculates the seepage speed of water at po- celes trapezoid. The trapezoid model presupposes a uni-

66 Oil & Gas Journal | Oct. 5, 2015


form water rise while the conical model predicts sharp
spikes in the amount of water. This discrepancy leads to
trapezoid models generating prediction times longer than
the actual breakthrough times. The prediction model pro-
posed in this article is closer to the field results in the
Ordos basin.
Ordos basin
Anhydrous production time shrinks as oil yield increases.
A sharp decrease in anhydrous time means bottom water
will rise rapidly to bottomhole. As oil yield increases, the
magnitude of the anhydrous production time decrease will
stabilize gradually (Fig. 2).
Anhydrous time-of-production also shortens with in-
creasing reservoir anisotropy. The rate of decrease in an-
hydrous production time accelerated in Ordos wells with a
reservoir anisotropy coefficient < 0.5, but was linear in wells
with a coefficient > 0.5 (Fig. 3).Porosity rises evenly as anhy-
drous production time increases (Fig. 4).
Acknowledgment
The authors would like to acknowledge the support Chi-
na’s National Science and Technology Infrastructure
Program(Grant Nos. 2016ZX05021005, 2016ZX05009003-
011-002, 2016ZX05017005-003).
References
1. Sobocinski, D.P. and Cornelius, A., “Correlation for Pre-
dicting Water Coning Time,” Journal of Petroleum Technology,
Vol. 17, No. 5, May 1965, pp. 594-596.
2. Zhang, X.G., and Sun, W., “A study on the elimination of
barrier to bottom water coning,” Journal of Northwest Univer-
sity: Natural Science Edition, Vol. 29, No. 2, February 1999,
pp. 149-152.
3. Yu, G. Ling, J., Jiang, M., Liu, D., “Production mecha-
nism and development tactics on sandstone reservoirs with
bottom water,” Acta Petrolei Sinica, Vol. 18, No. 2, Apr. 25,
1997, pp. 61-65.
4. Li, C.L., “Prediction formula for water breakthrough time
of partition bottom water reservoir,” Petroleum Geology & Oil-
field Development in Daqing, Vol. 16, No. 4, July 1997, p. 50.
5. Tang, R.X., “Simulation of Water Coning Performance
and Prediction of Water Breakthrough Time in Bottom-Water
Reservoir,” Xinjiang Petroleum Geology, Vol. 24, No. 6,
November-December 2003, pp. 572-573.
6. Wheatley, M. J., “An Approximate Theory of Oil-Water
Coning,” SPE Annual Technical Conference and Exhibition,
Las Vegas, Sept. 22-25, 1985.
7. Zhu, S.J., “Improvement of forecasting formula for water
breakthrough time in baffle based bottom-water reservoir
well,” Petroleum Geology & Oilfield Development in Daqing,
Vol. 18, No. 3, March 1999, pp. 36-37.
8. Zhao, X.Z. and Zhu, S.J., “Prediction of water break-
through time for oil wells in low-permeability bottom water
Oil & Gas Journal | Oct. 5, 2015
TECHNOLOGY
reservoirs with barrier,” Petroleum Exploration and Develop-
ment, Vol. 39, No. 4, April 2012, pp. 472-473.
9. Li, X.P., “Seepage Mechanics of Underground Oil and
Gas,” Petroleum Industry Press, Beijing, 2008.
10. Li, C.L., “Fundamentals of Reservoir Engineering,”
Petroleum Industry Press, Beijing, 2005.
The authors
Haitao Li is a professor at the Oil and Natural
Gas Engineering Institute of Southwest Petro-
leum University (SWPU). His research interests
include horizontal wells with water-control
completion, perforation completion, and sand-
control completion. He holds a BS, MS, and
PhD from SWPU.
Yahui Li (liyahui723@126.com) is a doctoral
degree candidate at the Oil and Natural Gas
Engineering Institute at SWPU. He has stud-
ied EOR theory and technology, water-control
completion, and has written and published
several papers related to petroleum engineering.
Li holds a BS from Xihua University and an MS
degree from SWPU.
Jibin Zhong, is an engineer for the Explora-
tion and Development Institute of Petrochina
Changqing Oilfield Co. He is engaged in ultra-
low permeability reservoir log interpretation and
comprehensive evaluation. He holds an MS in
engineering from China University of Petroleum,
East China..
Ying Li is a PhD candidate at SWPU. Her area
of interest is enhanced oil recovery. She holds a
MS in engineering from SWPU.
Shiyan Zhu is a doctoral degree
candidate at SWPU’s School
of Petroleum and Natural Gas Engineering.
She has studied water-control completion and
multifracturing completion of horizontal wells.
She holds an MS in petroleum engineering from
SWPU.
67
TECHNOLOGY
AFPM Q&A—3
Discussion turns to
fluid catalytic cracking
This is the final of three articles that
present selections from the 2014 Ameri-
can Fuel and Petrochemical Manufactur-
ers Q&A and Technology Forum (Oct.
6-8; Denver). It highlights fluid catalytic
cracking (FCC) processes, including is-
PROCESSING
sues related to feed and profitability.
The first installment, based on edited
transcripts from the 2014 event (OGJ,
Aug. 3, 2015, p. 52), addressed gasoline processing opera-
tions, with a focus on safety, blending, and reforming issues.
The second (OGJ, Sept. 7, 2015, p. 88) continued the discus-
sion of safety and added discussions of mechanical integrity
and profitability related to hydroprocessing.
The session included four panelists comprised of indus-
try experts from refining companies and other technology
specialists responding to selected questions and then engag-
ing attendees (see accompanying box) in discussion of the
relevant issues.
The only disclaimer for panelists and attendees was that
they discuss their own experiences, their own views, and
the views of their companies. What has worked for them in
their plants or refineries might not be applicable to every sit-
uation, but it can provide sound guidelines for what would
work to address specific issues.
Process
What are the options for removing catalyst fines from the
main fractionator-bottoms product? Which, if any, can re-
duce ash content to 50 ppm or less?
Wojtowicz There are four main methods to reduce the ash
content of slurry oil:
• Hydrocyclones (also known as slurry settlers).
• Tank settling.
• Mechanical filters.
• Electrostatic filtration.
Slurry settlers are less efficient. They are a safety hazard
and being phased out of the industry. These are not recom-
mended by UOP. Tank settling, mechanical filtration, and
electrostatic precipitation can all achieve the 50-ppm tar-
get. Tank settling uses additives. It could be a maintenance
headache as the sludge that collects at the bottom of the tank
has be to removed and disposed.
68
The panelists
Tyner Devine, process engineering lead, Flint Hills
Resources LLC (FHR)
Dan Elling, technology service manager,
Marathon Petroleum Corp.
Stuart Foskett, global technical services manager,
BASF Corp. (Refining Catalysts)
Geraldo Santos, technical manager for FCC, alkylation, and
isomerization, Petroleo Brasileiro SA (Petrobras)
Matt Wojtowicz, FCC technical service specialist, UOP LLC
The respondents
Brad Mason, NALCO Energy Services LP
Whitney Nikitczuk, Phillips 66
Paul Diddams, Johnson Matthey Process Technologies Inc.
Michael Wardinsky, Phillips 66
Robert Ludolph, Shell Global Solutions (US) Inc.
Dennis Haynes, NALCO Energy Services LP
Greg Savage, NALCO Energy Services LP
Elbert “Bart” De Graaf, Johnson Matthey Process
Technologies Inc.
Warren Letzsch, Technip Stone & Webster Process
Technology Inc.
Brian Devlin, NALCO Energy Services LP
Kenneth Bryden, W.R. Grace & Co. (Catalyst Technologies)
Mechanical filtration uses sintered metal cartridges with
very fine pore size. Filter cake builds up on the filter ele-
ments to filter the slurry oil. After the pressure drop reaches
a certain value, they must be backflushed. Usually light-cy-
cle oil (LCO) or heavy-cycle oil (HCO) is used. These are
sensitive to temperature and composition, especially as-
phaltenes. UOP only recommends mechanical filtration for
units processing vacuum gas oil (VGO). One vendor, Filtrex,
has a rotating mechanical filter that uses a fine-mesh screen.
This is relatively new to the FCC industry, although it has
been used in hydroprocessing quite a bit. We have only one
unit that utilizes this filter.
Electrostatic filtration uses beads and an electrical cur-
rent to filter the slurry product. This type of filter has a larg-
er backflush requirement, so raw oil is typically used. Any
of the options that have backflush will increase the fines
in the circulating slurry, typically, two to three times. The
backflush will also increase your stack emissions out of the
regenerator, which needs to be considered.
Oil & Gas Journal | Oct. 5, 2015
Brazil’s Petroleo Brasileiro SA (Petrobras) completed an expansion and modernization project in 2014 at its 415,000-b/d Replan
refinery in Paulinia, Sao Paulo (OGJ Online, Aug. 4, 2014). The $5 billion overhaul included the addition of installations designed to
produce cleaner derivaties as well as integration of processing units to help boost output of diesel and gasoline from the refinery,
which is the country’s largest. Photograph from Petrobras.

Mason I am glad to hear that the settling aids are allowed
and used. With regard to the tank configuration, it plays a
big part in getting the levels down and reducing your chemi-
cal usage. Cascading tanks in series help a lot, rather than
just having a live tank. One way to address the real issue,
if the product works, is to settle out cat fines, solids, ash,
and sludge that will build up over time. What have we done
when it was time for a tank turnaround? In the past, we
worked with a refiner to ensure that there was upgrade value
when taking that decant oil to a #6 fuel oil, for example. The
refiner took a portion of that benefit that we gave up. They
put it in a fund, like a rainy day fund. When that tank did
come up for turnaround, they were prepared.
Nikitczuk In Phillips 66, we actually have three refineries
with sintered-element filtration systems. All of those consis-
tently filter to less than 50 ppm. The filtration system, how-
ever, has created operational headaches, particularly with
the programmable logic controller during backwash.
Diddams Another consideration: We do not like fines in the
first place, right? Operationally, many of the fines that end
up in your slurry are formed in the feed-injection zone of the
riser. So you want to be looking at your superficial velocity at
your feed nozzles. Feed nozzles will come with some design
criteria. What is the maximum superficial velocity? Some
people say 107 m/sec; some say 120 m/sec. Just respect your
licensor’s value for the feed nozzle tips with superficial ve-
locity to avoid excessive catalyst attrition.
Wardinsky If you choose to recycle a backwash stream
from one of these systems back to your riser, you will need
to develop some type of monitoring tool to look at erosion
of your reactor overhead line. We eroded through a reactor

Oil & Gas Journal | Oct. 5, 2015 69

TECHNOLOGY
overhead line on a unit that backwashes a fines-rich stream
to the riser when an attrition source developed from a dam-
aged steam distributor in the reactor stripper. The increased
catalyst losses from the attrition, along with normal fines
-load across the overhead line due to the backwash, accel-
erated erosion in the overhead line and caused a leak that
forced the unit down for repairs.
Going back to a comment I made earlier about prepar-
ing for turnarounds and cyclone life, you can also develop
a simple monitoring tool that combines catalyst loading to
your reactor overhead line, along with line velocity, to esti-
mate the erosion rate of the overhead line.
Ludolph To add to Mike’s comments, I suggest that you re-
view the nozzle design for the return material to the riser. If
the design does not atomize or distribute the material well,
then coke deposition in your riser could occur. This would
create a source of backpressure and maldistribution in the
riser, which would lead to problems over the course of your
run.
Haynes Slurry oil catalyst fines settling-aid chemistries
have been used for many years in this type of application.
Electrostatic precipitators and filtration equipment are also
available for minimization of ash content in slurry oil. These
technologies have demonstrated cases of reduction to below
50-ppm ash for FCC slurry oil product.
Savage Ash is a particular problem for slurry oils, espe-
cially those that are heavy and viscous and which need long
residence times to allow for catalyst settling. The source of
ash in the slurry oil stream is composed of catalyst fines car-
ried over into the fractionator from the reactor section of the
FCC. The reactor cyclones are the first point where catalyst
fines are removed from the reactor vapors going to the frac-
tionator. Although highly efficient at separation of the vapors
and catalyst, a certain level of fines is always present in the
slurry oil stream. FCC hardware manufacturers are continu-
ing to make improvements in cyclone design to remove a
greater fraction of the fines.
To obtain low ash, special techniques (such as heating,
chemical additives, filters, electrostatic precipitators, centri-
fuges, and cyclones) might be used. Catalyst selection may
help reduce attrition to a great extent.
Many refiners make use of slurry filtration devices to re-
move as much of the fines as possible and recycle the fines
back to the FCC reactor by backwashing the filters. These
devices can reduce ash in slurry but may require frequent
maintenance and a significant capital investment for the
equipment and installation.
Tank settling is the most common means of reducing the
ash content of slurry oil. Often, limited tank capacity reduc-
es the residence time available for settling of the ash. Many
refiners “de-ash” with chemical settling aids which speed up
70
ash settling in storage. These chemicals are polymeric com-
pounds that adhere to the catalyst surface, causing agglom-
eration of the fine particles in order to accelerate separation.
In order to consistently meet very low ash content, a com-
bination of the options described above may be required.
How do nitrogen compounds distribute in the product
streams of FCC units? What effect do riser severity and
feed properties have on this distribution?
Devine The way I approached this was that I did a little
literature review and then checked that against some of our
operating data from our units. In terms of the last part, we
have to deal with nitrogen compounds. Obviously, the dis-
tribution is a function of crude selection and operations. Re-
ally, hydrotreating is the best method for reducing your ni-
trogen in the feed.
Feed nitrogen is basic and nonbasic. The basic nitrogen
accounts for 30-50% of the feed. Almost all of that feed ends
up on your coke in the catalyst, and then it goes to the regen-
erator. Increasing conversion will directionally put more of
the nitrogen on the coke. In the regenerator, of the nitrogen
that goes over the coke, 90-95% goes to nitrogen and the rest
goes to nitrogen oxide (NOx) or intermediates, ammonias,
or hydrogen cyanides, depending on if you are in partial or
full-burn.
On the product streams, the literature suggests that about
50% ends up in your slurry of either HCO and LCO and 10-
20% goes into your LCO. I do not have sample data for the
slurry in the HCO; but on our LCO, I will stick with 13-16%.
So that was consistent. Increasing conversion should reduce
the amount of nitrogen in the LCO. And then on the gasoline
cut, it is usually less than 5%, which is consistent with our
lab data. You also get a certain amount going in as ammonia
or hydrogen cyanide into your dry gas streams, and that will
increase your conversion.
Wojtowicz I do not have much to add. The nitrogen mainly
concentrates in the coke and the cycle oils, especially the
heavy portion. We did some reaction mix sampling on a
unit, and it did not seem to change much with operating
conditions. Changing your cut points, such as increasing
LCO ASTM 90%-point, will have a much larger impact on
the nitrogen in the various products.
De Graaf I fully agree with the comments by Matt and
Tyner. Nitrogen from the feed ends up with about 10% as
cyanide ammonia in the gases, about 2% in the gasoline,
about 50% in the LCO, and about one third in the slurry.
The remainder, the basic nitrogen, ends up with coke. If you
increase conversion, you will have a higher amount of ni-
trogen going to coke and a higher amount of nitrogen going
to cyanide. Basic nitrogen is the main source for nitrogen
coke. It is obvious because you have a lot of acid sites on
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TECHNOLOGY
your catalyst that will be titrated with basic nitrogen. So if
you have high-nitrogen feeds, you will suffer in conversion.
About 100 ppm of nitrogen build gives you about a 1 vol%
conversion loss. So there is a lot of nitrogen just clinging to
the acid sites. Basic nitrogen is also typically an aromatic
type of nitrogen, so it has a higher tendency to form a sort of
“chicken-wire”-type coke on the catalyst.
Letzsch I also want to point out that nitrogen burns slowly
off of the catalyst. It is left on the catalyst if you do not do
a complete combustion. So some of it, then, is carried over.
For instance, if you have a 10% coke, that material carries
over to the reactor. Some of that nitrogen can come off in the
reactor, say cyanides or ammonia; so some of it is reduced.
You may actually see that. Nitrogen also really slows down
the coke burning process, as far as the regenerator is con-
cerned.
Profitability
What are the most profitable dispositions for slurry oil and
what issues do you consider for each option?
Santos The most profitable applications for FCC slurry oil
are, in decreasing order:
• Carbon fiber feedstock.
• Carbon black feedstock.
• Delayed coker feedstock.
• Fuel oil diluent.
• FCC recycle.
Petrobras has three refineries that have dedicated pipe-
lines from them to customers’ carbon black feedstock stor-
age tanks. What is most important to us is the quality of
slurry. For those three refineries, you have a specific crude
that gives us a correct specification of Bureau of Mines Cor-
relation Index.
For ash content in those refineries, we have used antifoul-
ing additives to control the ash. We make a lot of money in
this refinery, and we are trying to do the same for the other
two refineries. On the other hand, we are trying to find a
solution, such as a filter or other technology, to minimize
ash content.
Savage There are several possible uses for slurry oil. It can
be recycled to the FCCU feed for destruction. It is, however,
quite resistant to cracking and does not give good gasoline
yields.
Today, some major uses for FCC slurry oil are:
• Blending stock for heavy fuel oil.
• Carbon black oil (CBO).
• Feedstock for production of needle coke.
• Feedstock for the delayed coker to reduce furnace foul-
ing.
• Feedstock for fixed-bed hydrocracker or ebullating-
bed (H-oil) conversion processes.
72
Heavy fuel oil is normally the lowest value disposition for
slurry oil. Depending on the ash content and the viscosity,
significant quantities of low-viscosity blending stock must
often be used to meet fuel oil specifications.
If the quantity of catalyst fines in the slurry oil can be
reduced to 0.05 wt% and other specifications met, the slurry
oil can be upgraded to CBO. FCC slurry oil is an important
source for CBO. The upgrade value of slurry oil from heavy
fuel oil to CBO can be significant.
For the production of needle-grade coke, slurry oils can
be used to increase the aromatics content of the feed. Again,
however, the ash must be reduced to avoid adversely affect-
ing the coke quality. Decant oil can reduce fouling at the
coker furnace; however, it can reduce overall coker liquid
yield.
When used as hydrocracker feedstock, the ash contained
in the slurry oil often causes plugging of the catalyst pores
in fixed-bed processes and reduces the degree of conversion
achieved. In ebullating-bed processes, the ash contained
in the slurry can cause erosion problems in the ebullating
pumps used in the process.
Devlin Slurry oil is typically sold into the fuel oil and car-
bon black feedstock markets. Both fuel oil and carbon black
purchasers will impose a high percentage-ash maximum.
Exceeding the maximum will reduce the value of the slurry
and, in some contracts, will trigger a price penalty. Reducing
ash is accomplished by allowing the ash to settle in tankage
before sale. If the process is too time-consuming or does not
achieve the desired ash reduction, an ash-settling chemical
may be recommended.
The increase in light tight oil as a percentage of the North
American crude slate has resulted in lower FCC feed pro-
duction and, consequently, a reduced FCC feed rate at sev-
eral refineries. To address these issues, what strategies
have you implemented operationally and catalytically? Are
you considering sending new streams to the FCC or in-
creasing the proportion of existing streams, such as resid?
If so, what steps do you take to evaluate these potential new
feedstocks, and what steps do you take to minimize uncer-
tainty and reduce risk?
Foskett According to several reports, tight oil will dis-
place basically all of the light crude imports; some say
already, and others think within the next 12 months.
We expect light and medium crude supply to increase by
3-4.5 million b/d by 2020. The blends of light and heavy
crude are possibly limited by dumbbell crude and asphal-
tene precipitation issues. Given the current restrictions
on crude exports, medium crudes will be increasingly
displaced as we move forward. So the amount of spare
FCC capacity is likely to continue to increase. This situa-
tion may be at least partly offset by the installation of new
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TECHNOLOGY
topping units and subsequent export of the products.
We do see a lot of refiners looking to increase the amount
of resid in the feed, and it is fortunate that tight-oil residue
feed quality is quite good. One of the problems with pro-
cessing resid from tight oil is that in many refinery configu-
rations, it is difficult to segregate the good quality resid from
a heavy resid that would be less suitable to put into the FCC.
Another issue is that the availability of imported FCC feeds
is limited.
Many refiners are using spare capacity in their cat units to
increase the reactor severity and run higher catalyst activity
in the unit to maximize conversion. Also, a lot of refineries
have access to low-cost isobutane coming from the recent
surge in natural gas liquids production. Many of these are
using Zeolite Socony Mobil (ZSM-5) to maximize butylenes
to fill out the alkylation unit as another profitable way to
use the spare capacity that is coming as a result of tight oil.
There is currently no trend of refiners sending new or differ-
ent streams to the FCC unit, although this is something that
may change in the future as the production of light tight oils
continues to grow.
Devine I do not have a lot of data. I will say that there is a
Principles & Practices (P&P) topic tomorrow that will touch
on this a little. So I just have a couple of comments regard-
ing the second part of the question about the evaluation. You
start evaluating feeds that are way outside of your normal
window. You may need to do some recalibration of your sta-
tistical or kinetic models to get some different results, but
typically that would be your first pass.
Well, let me back up. I guess you should first validate
and define your base case, verify with your linear programs
to understand what makes sense, define what you are go-
ing to benchmark everything against, and then start doing
your evaluations. If you get to the point of doing a test run,
follow your change management processes and keep good
communication with operations and your exploration and
production group for the post-evaluation to make sure that
the change matched what you expected out of your model
when you are hitting the same constraints. Catalyst vendors
are usually up to speed on all this, so keep them in the loop,
too, on all phases of the evaluation.
Diddams I will just reiterate what Tyner said. There is
a P&P session in the morning. I am going to be giving a
brief presentation which covers some of the aspects that we
touched on here. I do not really want to go into all of the an-
swers right now; but if anyone wants to follow up, tomorrow
morning we will be going through some of these questions
in a bit more detail.
Bryden The increase in the quantity of tight oil as a per-
centage of the North American crude slate has resulted in
numerous changes at refineries. Tight oils, like other light
74
sweet crudes, have a much higher ratio of 650° F.:650° F+
material when compared with conventional crudes. Bak-
ken tight oil has a nearly 2:1 ratio while typical crudes, such
as Arabian Light, have ratios near 1:1. A refinery running
high percentages of tight oil could become overloaded with
light cuts, including reformer feed and isomerization feed
while being, at the same time, short on feed for the FCC unit
and the coker. Some refiners have balanced the use of larger
amounts of tight oil with increased use of heavier crudes
such as Canadian Syncrude. Others have charged a portion
of whole tight oil to the FCC to keep the FCC full.
As new feedstocks are considered, testing is a valuable
tool to reduce risk. Testing provides an understanding of
feed properties and potential yield changes.
Testing of feed metals levels is especially important since
tight oil-derived feeds often contain varying levels of conven-
tional contaminants such as sodium, nickel, and vanadium,
and unconventional contaminants such as iron and calcium.
Understanding the expected metals levels of a new feed al-
lows refiners to work with their catalyst vendor to choose
catalyst options that mitigate the challenges of these metals.
Grace’s newest catalyst family, Achieve catalyst, is designed
to address the unique challenges associated with tight oils.
Achieve catalyst formulations are flexible, enabling Grace to
design a custom solution for refiners proactively increasing
the amount of tight oil in their crude diet.
Feed properties such as API, Concarbon wt%, and hydro-
carbon types can provide insight into the expected crack-
ability of a feed but may not tell the whole story. A fuller
understanding of how a feed will crack in a unit can be ob-
tained through testing. Either bench-scale testing [advanced
cracking evaluation (ACE) or microactivity test (MAT)] or
pilot-scale testing, such as Grace’s Davison circulating riser
(DCR) pilot plant, can be done. MAT and ACE testing have
the advantages that they are easy to set up and require small
amounts of material. These units, however, cannot provide
the detailed product analysis or feedback on extended oper-
ation that pilot-scale units can. Larger-scale test equipment,
such as a pilot unit, can deliver sufficient liquid product for
distillation and detailed analysis (i.e., API gravity and ani-
line point of LCO produced, viscosity of bottoms, octane
engine testing of gasoline, etc.) and can give information on
continuous operation. Compared to bench-scale units, the
DCR pilot plant also can mimic all of the processes present
in commercial operation, and it can operate at the same hy-
drocarbon partial pressure as a full-scale commercial unit.
Grace’s technical service and research-development
teams help refiners assess potential challenges from feed-
stock shifts before they occur via feed characterization, feed-
component modeling, and pilot-plant studies. Understand-
ing feed impacts earlier provides an opportunity to optimize
the operating parameters and catalyst management strate-
gies, enabling a more stable and profitable operation.
Oil & Gas Journal | Oct. 5, 2015
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TECHNOLOGY

PROCESSING

Low-cost modifications boost

capacity, crude processing flexibility
James W. Jones son & Co. (TM&C) and KP Engineering LP (KPE), recently
Turner, Mason & Co. completed a project to expand crude oil processing capacity
Dallas by 20% at its refinery in Tyler, Tex. (OGJ Online, Mar. 26,
2015).
Frank Simmons Leading up to and throughout its February-March 2015
Delek Refining Inc. refinery turnaround (T/A), Delek made major modifications
Tyler, Tex. to several process units at the refinery to increase capacity to
75,000 b/d from 60,000 b/d.
Tony D. Freeman The Tyler refinery, which processes primarily low-sulfur
KP Engineering LP Permian basin crude oil, now can run an additional 12,000-
Tyler, Tex. 14,000 b/d of crude,with two-thirds of the incremental pro-
duction volume ultralow-sulfur diesel (ULSD).
A project design that maximizes use of existing equipment In addition to correcting other bottlenecks and deficien-
in expanding a refinery’s crude oil processing capacity, and cies throughout the plant, the extra volumes of light tight
limits equipment additions to only those necessary, im- Permian basin oil processed have increased the American
proves timelines and yields while reducing costs. Petroleum Institute (API) gravity of feedstock historically
Delek Refining Inc., a subsidiary of Delek US Holdings handled at the site.
Inc., Brentwood, Tenn., with the assistance of Turner, Ma- This article, the second of two, elaborates on the specific

CRUDE UNIT, SIMPLE PROCESS FLOW FIG. 1

Offgas to compressors

New
preflash
tower
Naphtha

Crude
Naphtha
Charge Desalter
Crude Kerosine
Preheat Preheat
tower
Diesel

AGO

ATBs

76 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

Earlier this year, Delek US Holdings Inc. completed an expansion project at its Tyler, Tex., refinery that increased the plant’s name-
plate processing capacity to 75,000 b/d from 60,000 b/d (OGJ Online, Mar. 26, 2015). Completion of the 15,000-b/d expansion
came as part of a large-scale 2014 capital investment program in the company’s refining segment to boost crude flexibility and
overall processing capacity of Delek’s two US refineries to 155,000 b/d. Photograph from Delek.

modifications made to simultaneously increase the refinery’s
overall capacity by 20%, improve recovery of distillate prod-
ucts, and enable processing of lighter crude.
The first article (OGJ, Sept. 7, 2015, p. 104) discussed
how a decision by Delek’s management to embrace a nontra-
ditional approach to project development and execution that
involved collaboration with its refining consultant, TM&C,
and a preselected engineering, procurement, and construc-
tion (EPC) contractor, KPE, ensured the refinery revamp’s
success.
Project description
The Tyler expansion project, which included major modifi-
cations to the refinery’s crude distillation and distillate hy-
drotreating (DHT) units, also involved modifications to the
vacuum unit tower, naphtha hydrotreating unit, and satu-
rate gas plant, as well as installation of additional cooling for
the delayed coking unit’s fractionator.
Infrastructure additions were minor and consisted of
the following:
• A dozen interconnecting pipes.
• A DHT feed booster pump in the tank farm.
• Associated electrical modifications.
• Two new truck lanes for diesel loading at the refinery’s
product terminal.
Crude unit
The crude unit received a new preflash tower and its associ-
ated overhead system, increasing throughput to 75,000 b/d.
Fig. 1 shows modifications made to the crude unit as part
of the revamp.
The capacity expansion further required a series of modi-
fications to the existing crude oil preheat train and the addi-
tion of several new heat exchangers.

Oil & Gas Journal | Oct. 5, 2015 77

TECHNOLOGY

DELEK CRUDE PREHEAT TRAIN, PREEXPANSION FIG. 2

AGO HVGO
pumparound pumparound
Crude-tower
Diesel
overhead Vacuum-bottoms
Kerosine Diesel pumparound
liquids quench
Desalter
Crude flash-drum
booster
pumps
To crude
tower
Hot reflux Crude heater
drum HVGO
pumparound

DELEK CRUDE PREHEAT TRAIN REVAMP FIG. 3

Kerosine Diesel
AGO HVGO
pumparound pumparound

Crude-tower
overhead Preflash Diesel
liquids overhead pumparound

Crude
Desalter
Repurposed
exchanger
Diesel
Hot reflux
drum Vacuum-bottoms HVGO
quench pumparound

Preflash
tower
To crude
tower

Preheat train modifications improved overall heat recov-
ery and addressed the hydraulic issues associated with in-
creased capacity, and also corrected several existing product
cooling issues within the unit.
Fig. 2 shows the Tyler refinery’s preexpansion preheat
train configuration.
Installation of new preflash tower overhead crude ex-
changers and a new diesel-crude exchanger occurred down-
stream of the existing crude tower overhead-crude exchang-
ers and upstream of the desalter. The existing kerosine-crude
and diesel-crude exchangers were moved from downstream
of the desalter (the “hot train”) to upstream of the existing
crude tower overhead exchangers (the “cold train”). The ex-
isting diesel pumparound (P/A) exchanger was placed in gas
oil service, with new diesel P/A exchangers and another die-
sel product exchanger added to the hot train.
Fig. 3 shows the new preheat train configuration follow-
ing the expansion project.
While the preheat train revisions moved this unit from
below-average to above-average heat recovery, the existing
equipment and piping layout heavily influenced the new
configuration and generally excluded a best-in-class design.
But large improvements in hydraulic capacity and heat re-
covery were still achieved for a reasonable cost, consistent

78 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

with TM&C’s design philosophy for DELEK VACUUM TOWER UPPER SECTION, PREEXAPANSION FIG. 4
the project.
The new preflash tower was in- To vacuum system
stalled downstream of the heavy vac-
uum gas oil (HVGO) P/A exchangers.
Modifying the crude flow to these ex-
changers from two-pass to three-pass LVGO
allowed crude oil vaporization and
minimized the resulting increase in
pressure drop, removing the need to 14' 0''
modify the existing crude oil charge
pumps.
The existing flash drum, which for-
merly received oil directly from the 8' 0''
desalter, became the preflash tower-
bottoms surge drum. As a result, no
modifications were needed to the
high-pressure desalted crude charge
pumps, which continue to feed the
furnace from this drum. DELEK VACUUM TOWER UPPER-SECTION REVAMP FIG. 5

Several crude unit product pumps

received new impellers and, in a few To vacuum system
cases, larger motors; however, only one
new pump was added. The new pre-
flash overhead reflux-product pump Vacuum diesel
that was required commonly is spared
by the existing spare crude tower over-
head product pump. TM&C’s design
plan for the unit revamp, which fo-
cused on limiting additional new mo-
tors, allowed Delek to avoid expensive
modifications to the unit’s electrical 25' 0'' New diesel
substation. pumparound

Vacuum unit
Modifications to the refinery’s vacuum
unit were limited to the upper section
of the tower. LVGO (as needed)
Fig. 4 shows the vacuum unit tower
top before the revamp project. Repurposed LVGO
The existing 8-ft diameter top was pumps
replaced with a new 10-ft diameter 10' 0''
section that measures about 25 ft high
so that a diesel fractionation section
could be incorporated in the new tow-
er. This allowed the top product to be-
come heavy diesel instead of LVGO. Although the modifica- more economic to fully maximize distillate recovery.
tion required new upper P/A pumps, the existing upper P/A Repurposing the existing unit’s upper-P/A pumps allowed
cooling system remains unchanged. LVGO to be sent from this new draw to the FCC.
Adding an LVGO draw at the bottom of the new up- Fig. 5 shows the Tyler refinery’s newly reconfigured vac-
per section minimized light gas oil falling down the tower, uum unit tower top.
which might have led to unwanted cooling of the HVGO sec- As a result of the revamp, atmospheric gas oil (AGO) from
tion. Provisions were made, however, to recycle this stream the crude unit now runs to the HVGO P/A return, along with
back to the HVGO P/A return line for periods when it is any recycled LVGO, to introduce this diesel-rich stream into

Oil & Gas Journal | Oct. 5, 2015 79

TECHNOLOGY

DELEK DIESEL HYDROTREATER, PREEXAPANSION FIG. 6

Makeup hydrogen
Makeup
Hydrogen
Recycle compressor
Cracked Recycle Purge
stocks
Cold high-pressure, Sour offgas to fuel
Feed, low-pressure
Reactor
preheat, hydrogen separators
Straight-run loop Hot
surge
stocks high-pressure
separator
Hot
low-pressure Product
separator stripper

ULSD

DELEK DIESEL HYDROTREATER REVAMP FIG. 7

Makeup hydrogen
Makeup
Hydrogen
Recycle compressor

Recycle Purge

Straight-run Cold high-pressure, Sour offgas to fuel

stocks Feed, low-pressure
Reactor
preheat, Hot hydrogen separators
loop
surge high-pressure
separator
Hot
low-pressure
separator Product stripper
(with new trays)

Cracked
stocks Feed, New New hot
preheat, reactor high-pressure
surge loop separator

ULSD

the vacuum tower for additional distillate recovery. Diesel hydrotreater

Alongside reducing additional duty for the vacuum unit
furnace, this approach prevents extra vapor traffic in the
flash zone. The result is a high degree of diesel recovery
from the AGO and LVGO streams previously sent directly
to the FCC.
Separate from the modifications described above, Delek
elected to make other changes to the vacuum unit that also
became part of the overall scope of work. While unrelated to
the expansion effort, these changes resulted in pump, heat
exchange, and tower modifications that were included in the
overall project cost.
The largest changes made to the refinery as part of the proj-
ect occurred at the DHT, which before the revamp, was a
single-train unit (Fig. 6). These modifications represent
more than half of the project’s process unit, or inside battery
limits (ISBL), costs.
The project called for modifications that would create a
hybrid dual-train unit with a capacity of 36,000 b/d.
While Delek had previously charged as much as 25,000
b/d to its single-train DHT to make ULSD, this practice came
at a steep price. The existing reactors were originally sized to
produce 14,000 b/d of low-sulfur diesel. Operating at higher

80 Oil & Gas Journal | Oct. 5, 2015


DELEK NAPHTHA HYDROTREATER REVAMP
Naphtha
feed
Feed Feed Recycle
surge pumps Loop #1
Convert existing
common heater to 2-pass
New feed Recycle
pumps Loop #2
charge rates to produce ULSD sharply reduced catalyst life.
This was partly due to considerably higher hydraulic rates,
which both lowered liquid hourly space velocity (LHSV) and
created a large pressure drop across the reactor. This pres-
sure drop, in turn, lowered reactor-outlet partial pressure
below levels that encourage the degree of aromatic satura-
tion necessary for desulfurizing tough-to-reach sulfur mol-
ecules.
Modifications made to the unit as part of the revamp im-
proved its performance by:
• Doubling catalyst volume to improve LHSV.
• Restoring the ability of the preexisting reaction train
(Train 1) to operate at a reasonable pressure.
• Creating a second reaction train (Train 2) more suited to
desulfurizing cracked feedstock.
Fig. 7 shows the Tyler refinery’s new hybrid dual-train
DHT.
Given some flexibility by Delek in how Train 2 could be
configured, TM&C designed the new train with a somewhat
higher pressure and larger reactors so that as much as 100%
of cracked distillate feed could be directed to it.
The design approach led to large improvements in Train
1’s ability to desulfurize by removing most of the tough sul-
fur in its new feed.
Since Delek previously installed refurbished hydrogen
compressors that were oversized for DHT service, the re-
vamp did not require costly upgrades to the hydrogen com-
pression section. The higher-pressure (and higher-purity)
makeup hydrogen stream, however, ran to Train 2 to en-
able a higher hydrogen partial pressure and system operat-
ing pressure in the train receiving most of the cracked feed.
Lower-pressure recycle hydrogen supplements Train 2’s
treat-gas needs by entering the system downstream of the
furnace and as quench hydrogen. All remaining recycle hy-
drogen serves as treat gas for Train 1.
Oil & Gas Journal | Oct. 5, 2015
TECHNOLOGY
FIG. 8
Diesel hydrotreater purge hydrogen (new)
Makeup hydrogen
Hydrogen
compressor
Recycle
Hot Cold
separator separator
To saturated-gas stripper
To saturated-gas stripper
Excess hydrogen leaves Train 2 via the back-pressure
controller on the new hot separator and joins the Train 1
hydrogen stream from its hot separator.
At this point, the hydrogen circuit becomes a common
system using the existing DHT’s heat exchange, cooling,
and amine treating equipment, but with one important ex-
ception. The revamp project included the addition of a new
common air cooler for the effluent hydrogen stream from
both hot separators.
Along with providing the additional effluent hydrogen
cooling necessary to improve the performance of the re-
finery’s preexisting exchangers and trim coolers, this new
air cooler replaced a preexisting air cooler that, before the
revamp, had an insufficient maximum operating pressure
and limited both the maximum recycle compressor suction
pressure and the maximum operating pressure of Train 1.
Replacement of the air cooler fully restored Train 1’s maxi-
mum operating pressure and desulfurizing capability. The
preexisting air cooler was repurposed providing additional
Train 1 ULSD-product cooling.
Hot separator liquid from Train 2 now travels directly to
the existing product stripper. Retraying the tower’s lower
section accommodated the large increase in liquid load. The
tower’s upper section and overhead system remained un-
changed.
A parallel stripper-bottoms line with a new product-Train
2 feed exchanger and product air cooler accommodated 50%
of the total 36,000-b/d ULSD product flow. This stream re-
joins the existing stripper-bottoms stream entering the ex-
isting trim coolers. A new ULSD product filter and coalescer
replaced undersized preexisting equipment, which was re-
used to condition incoming cracked-distillate feed. Before
the expansion project, Delek already had replaced a small
salt dryer with a much larger vessel that has ample ability to
handle the increased ULSD production.
81
TECHNOLOGY

Dismantling an idle light-naphtha ing the isom separator into a cracked- of the stream to go to Train 1 when nec-
isomerization (isom) unit immediately distillate surge drum, with two new essary. Should Train 2 be down while
adjacent to the DHT created the plot cracked-distillate booster pumps also Train 1 operates, all cracked distillate
space for the new reaction train. added to inject this feedstock into the can go to Train 1 via the new cracked-
The new Train 2 reaction system in- new Train 2 feed-ULSD product ex- feed system, or the two cracked steams
cludes a third charge pump, common- changer, where it is preheated with a can be blended, as before, with the
ly spared by the preexisting Train 1 portion of the straight-run distillate straight-run distillate feed in the tank
spare charge pump; a feed drum (pre- from the existing feed system. This farm.
viously the isom product stripper); a combined stream enters the Train 2
new three-shell feed-effluent exchang- feed drum. NHT, saturate gas plant
er; and a new furnace, in addition to While feeding the cracked-distillate The naphtha hydrotreater (NHT) and
the previously mentioned new reactors stream exclusively to Train 2 helps saturate gas units required only mi-
and hot separator. maximize overall catalyst life, the new nor modifications to accommodate in-
Project scope included convert- configuration also allows for a portion creased naphtha production from the
higher crude runs.
The NHT, which was previous-
ly modified to its hybrid dual-train
configuration to increase capacity to
22,000 b/d from 14,000 b/d, was mod-
ified further to 28,000 b/d. A third
NELSON-FARRAR COST INDEXES1 charge pump and another NHT-feed
Refinery construction (1946 basis) debutanizer-bottoms exchanger also
Explained in OGJ, Dec. 30, 1985, p. 145. were added (Fig. 8).
June May June Converting the NHT’s furnace from
1962 1980 2012 2013 2014 2014 2015 2015
single-pass to two-pass created a truly
Pumps, compressors, etc. dual-train unit up to the hot separator.
222.5 777.3 2,170.6 2,221.1 2,271.9 2,272.7 2,313.3 2,316.2
Electrical machinery The purge-hydrogen stream from
189.5 394.7 514.8 516.7 515.8 515.5 517.7 517.3
Internal-comb. engines the DHT was routed to the NHT to in-
183.4 512.6 1,047.0 1,046.8 1,052.9 1,050.8 1,062.2 1,061.5 crease the available makeup-hydrogen
Instruments
214.8 587.3 1,477.0 1,509.9 1,533.6 1,528.3 1,565.9 1,554.3 volume.
Heat exchangers
183.6 618.7 1,220.9 1,293.3 1,305.0 1,305.0 1,305.0 1,305.0 Before the revamp several bottle-
Misc. equip. average
198.8 578.1 1,286.1 1,317.5 1,335.8 1,334.5 1,352.8 1,350.9 necks limited the Tyler refinery’s NHT,
Materials component while the saturate gas stripper, at its
205.9 629.2 1,579.7 1,538.7 1,571.8 1,573.5 1,448.6 1,454.5
Labor component prior charge rate, operated flooded.
258.8 951.9 3,055.6 3,123.4 3,210.7 3,210.5 3,267.6 3,290.0
Refinery (inflation) index The addition of a new, parallel strip-
237.6 822.8 2,465.2 2,489.5 2,555.2 2,555.7 2,540.0 2,555.8 per (albeit not operated identically) as
part of the project accommodated the
Refinery operating (1956 basis) higher charge rate as well as unloading
Explained in OGJ, Dec. 30, 1985, p. 145.
June May June the preeexisting stripper.
1962 1980 2012 2013 2014 2014 2015 2015
Unlike the preexisting stripper,
Fuel cost
100.9 810.5 968.1 1,123.7 1,264.8 1,300.5 885.3 943.4 which received only cool feed, the new
Labor cost stripper primarily feeds hot separator
93.9 200.5 287.9 308.3 312.8 312.5 307.8 308.1
Wages liquid along with a small volume of
123.9 439.9 1,407.5 1,506.4 1,541.3 1,505.3 1,560.8 1,568.4
Productivity cool feed for top reflux.A new steam
131.8 226.3 489.4 489.1 493.1 481.7 507.0 509.1
Invest., maint., etc. reboiler accompanies the new stripper,
121.7 324.8 896.5 905.3 939.4 939.6 944.2 950.1 but both strippers share the preexist-
Chemical costs
96.7 229.2 517.2 502.6 472.3 468.3 430.3 435.7 ing overhead system, which became
Operating indexes2
Refinery possible once the preexisting stripper
103.7 312.7 637.5 661.8 688.5 691.4 650.9 659.2 stopped operating in a flooded state.
Process units
103.6 457.5 739.0 802.6 865.3 877.8 732.7 755.2 The saturate gas unit, which is in-
tegrated with the NHT, required other
1
These indexes are published in the first of each month and are compiled by Gary Farrar, OGJ Contributing Editor.
2
Add separate index(es) for chemicals, if any are used. Indexes of selected individual items of equipment and materials are modifications to handle the increased
also published on the Quarterly Costimating page in first issues for January, April, July, and October.
3
For correct values to March 2013 refinery construction and refinery operating indexes, see OGJ, Dec. 1, 2014, p. 87.
volume of desulfurized full-range
naphtha.

82 Oil & Gas Journal | Oct. 5, 2015


DELEK SATURATED GAS PLANT REVAMP
Cold flash liquids
Contact
accumulator
Hot flash liquids and absorbers Stripper
Debutanizer
(new trays)
New
secondary
stripper
The lower section of the debutanizer was retrayed with
high-capacity trays.
Fig. 9 shows the Tyler refinery’s modified saturate gas
unit.
The refinery’s original naphtha splitter, which was idled
when Delek installed its more sophisticated Mobil Source
Air Toxics (MSAT) splitter to keep benzene precursors out of
the reformer feed, was returned to service. This tower oper-
ates as a depentanizer to maintain the MSAT splitter charge
rate below its maximum capacity. Using this configuration
Delek also increased gasoline-blending flexibility during the
summer when producing low-RVP finished gasoline.
The pentane-rich stream from the old splitter now goes to
the current light-naphtha pressurized storage system, while
the much lower RVP-MSAT splitter overhead stream can be
blended easily into low-RVP summer gasoline. This produc-
tion path reduces the volume of light naphtha Delek needs
to sell or store during the volatile organic compound (VOC)
control period. It may also help eliminate potential octane
giveaway associated with producing regular gasoline for
10%-ethanol addition, since the new MSAT overhead stream
represents a low vapor pressure-low octane blend stock ideal
for subgrade blending.
Coker
While TM&C typically tries to avoid expensive modifica-
tions to delayed coking units, increasing the distillate recov-
ery from the heavy-coker gas oil stream at the Tyler refiner
was a priority. The modification, however, was easily accom-
plished by adding an air cooler to the distillate P/A circuit.
Oil & Gas Journal | Oct. 5, 2015
TECHNOLOGY
FIG. 9
Sour offgas to fuel
To depropanizer and deisobutanizer
Rough-cut pentane
Depentanizer Light naphtha
(repurposed
idle tower)
MSAT
naphtha
splitter
Heavy naphtha to reformer
A new, low-cost air cooler replaced an idled, preexisting
gas oil air cooler in the coking unit. Because the preexisting
air cooler was much larger than the refinery’s required distil-
late P/A exchanger duty, the project team chose to split the
new tube bundle to also add air cooling to the fractionator
overhead condensing system. This modification increased
overall coker capacity since the total cooling available at the
fractionator was the primary unit bottleneck. Delek com-
pleted this modification during an earlier coker outage and
verified its new ability to fully recover coker distillate.
The additional overhead cooling also reduced the heat
load on the unit’s cooling tower, lowering summer-cooling
water supply temperatures by 10° F. and greatly reducing
water-side fouling on the preexisting fractionator overhead
condenser.
Delek’s Tyler crude unit is now processing 75,000 b/d of
42-43° API gravity crude oil, with the NHT and DHT able to
operate at their new respective charge rates.
The refinery also improved its recovery of distillates, as
evidenced by the near absence (<5%) of distillate (e.g., ma-
terial lighter than 650° F.) remaining in the FCC feed com-
pared with 25-30% when the expansion project was pro-
posed.
The project benefited from the using existing equipment
throughout the Tyler plant that was either oversized for its
service or underused due to bottlenecks in other parts of the
refinery. The project team’s approach of maximizing the use
of existing installations and keeping new additions limited
to reasonable investments was an important factor in devel-
oping the project
83
NelsoN-Farrar Quarterly
Indexes strengthen for nonmetallic building materials
Gary Farrar VARIATION OF NELSON-FARRAR MISCELLANEOUS EQUIPMENT INDEX
Contributing Editor Year, Non Building Fireclay Iron Clay Concrete Concrete
Quarter metallic brick brick castings products ingred. products
The accompanying table shows 2012
changes in the Nelson-Farrar indexes 1st 1,128.8 1,330.8 2,019.1 1,712.0 932.3 1,265.7 1,015.2
2nd 1,134.2 1,337.4 2,018.2 1,713.7 936.1 1,274.2 1,010.0
over the 2012-14 period for selected, 3rd 1,141.8 1,345.4 2,018.2 1,722.0 936.1 1,270.5 1,018.1
4th 1,142.3 1,340.3 2,027.5 1,725.3 935.5 1,271.5 1,023.3
basically nonmetallic building mate-
rials. Year 1,136.8 1,338.5 2,020.7 1,718.2 935.0 1,270.5 1,016.7
Data are included for the overall 2013
nonmetallic group, five nonmetallic 1st 1,160.1 1,333.0 2,065.5 1,726.9 946.3 1,297.7 1,036.6
2nd 1,169.8 1,330.8 2,063.8 1,728.6 950.6 1,303.0 1,046.0
materials, and iron castings. 3rd 1,174.7 1,346.9 2,069.7 1,727.8 953.3 1,304.6 1,050.3
4th 1,174.7 1,359.3 2,091.6 1,729.4 959.8 1,316.3 1,053.1
Concrete ingredients and concrete
products indexes showed the greatest Year 1,169.8 1,342.5 2,072.6 1,728.2 952.5 1,305.4 1,046.5
changes during the period. 2014
Concrete ingredients, showing the 1st 1,192.0 1,370.3 2,059.6 1,733.6 960.4 1,339.2 1,073.0
2nd 1,202.2 1,377.6 2,079.8 1,738.5 958.2 1,367.0 1,080.1
greatest gains of the two, changed to 3rd 1,209.2 1,376.9 2,087.4 1,757.6 962.5 1,367.5 1,093.9
4th 1,215.7 1,377.6 2,084.9 1,742.7 971.7 1,369.1 1,100.5
1,369.1 in fourth-quarter 2014 from
1,265.7 in first-quarter 2012. Con- Year 1,204.8 1,375.6 2,077.9 1,743.1 963.2 1,360.7 1,086.9
crete products changed to 1,100.5
in the last quarter of 2014 from
1,015.2 in first-quarter 2012. same period, fireclay brick changed Iron castings rose to 1,742.7 for the
Building brick and fireclay brick to 2,084.9 from 2,019.1. last quarter of 2014 from 1,712.0 in
showed more moderate changes, Two small index changes occurred first-quarter 2012. The final category,
though none of the index changes in the categories of clay products and the overall nonmetallic index, rose to
were drastic. The building brick iron castings. Clay products increased a high of 1,215.7 during fourth-quar-
index rose to 1,377.6 from 1,330.8 to 971.7 by fourth-quarter 2014 from ter 2014 from 1,128.8 in first-quarter
over the 3-year period. During the 932.3 in the first quarter of 2012. 2012.

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.

Index for earlier year in

Operating cost May Costimating and Questions
(based on 1956 = 100.) 1954 1972 2012 2013 2014 2015 *References on Technology issues

Power, industrial electrical 98.5 131.2 1,042.4 1,008.5 1,077.8 1,072.3 Code 0543 No. 13, May 19, 1958, p. 181
Fuel, refinery price 85.5 152.0 923.8 1,064.2 1,211.5 842.6 OGJ No. 4, Mar. 17, 1958, p. 190
Gulf cargoes 85.0 130.4 3,403.2 3,403.2 3,403.2 3,403.2 OGJ No. 4, Mar. 17, 1958, p. 190
NY barges 82.6 169.6 3,460.4 3,460.4 3,460.4 3,460.4 OGJ No. 4, Mar. 17, 1958, p. 190
Chicago low sulfur — — 3,238.2 3,238.2 3,238.2 3,238.2 OGJ July 7, 1975, p. 72
Western US 84.3 168.1 4,176.7 4,176.7 4,176.7 4,176.7 OGJ No. 4, Mar. 17, 1958, p. 190
Central US 60.2 128.1 3,368.3 3,368.3 3,368.3 3,368.3 OGJ No. 4, Mar. 17, 1958, p. 190
Natural gas at wellhead 83.5 190.3 2,499.5 3,189.3 3,912.8 2,100.6 Code 531-10-1 No. 4, Mar. 17, 1958, p. 190
Inorganic chemicals 96.0 123.1 1,215.3 1,138.7 1,083.7 1,097.2 Code 613 Oct. 5, 1964, p. 149
Acid, hydrofluoric 95.5 144.4 414.9 414.9 414.9 414.9 Code 613-0222 Apr. 1, 1963, p. 119
Acid, sulfuric 100.0 140.7 439.1 439.1 439.1 439.1 Code 613-0281 No. 94, May 15, 1961, p. 138
Platinum 92.9 121.1 1,224.5 1,153.0 1,098.4 1,039.7 Code 1022-02-73 July 5, 1965, p. 117
Sodium carbonate 90.9 119.4 800.8 750.3 714.0 722.9 Code 613-01-03 No. 58, Oct. 12, 1959, p. 186
Sodium hydroxide 95.5 136.2 1,097.6 1,028.4 978.6 990.6 Code 613-01-04 No. 94, May 15, 1961, p. 138
Sodium phosphate 97.4 107.0 844.2 844.2 844.2 844.2 Code 613-0267 No. 58, Oct. 12, 1959, p. 186
Organic chemicals 100.0 87.4 1,048.9 1,037.0 1,002.4 780.9 Code 614 Oct. 5, 1964, p. 149
Furfural 94.5 137.5 1,513.7 1,496.5 1,446.5 1,127.0 Chemical Marketing No. 58, Oct. 12, 1959, p. 186
Reporter
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 No. 58, Oct. 12, 1959, p. 186

84 Oil & Gas Journal | Oct. 5, 2015

C o s t i m a t i N g
I TEMIZED REFINING COST INDEXES
Index for earlier year in
Operating cost May Costimating and Questions
(based on 1956 = 100.) 1954 1972 2012 2013 2014 2015 *References on Technology issues

Operating labor cost (1956 = 100)

Wages and benefits 88.7 210.0 1,407.5 1,506.4 1,541.3 1,560.8 Employ & Earn No. 41, Feb. 16, 1969
Productivity 97.2 197.0 489.4 489.1 493.1 507.0 Employ & Earn No. 41, Feb. 16, 1969

Construction labor cost (1946 = 100)

Skilled const. 174.6 499.9 2,746.0 2,796.5 2,866.3 2,921.1 Eng. News Record No. 55, Nov. 3, 1949
Common labor 192.1 630.6 3,636.7 3,732.8 3,848.5 3,910.9 Eng. News Record No. 55, Nov. 3, 1949
Refinery cost 183.3 545.9 3,055.6 3,123.4 3,210.7 3,267.6 OGJ May 15, 1967, p. 97

Equipment or materials (1946 = 100)

Bubble tray 161.4 324.4 1,804.9 1,780.7 1,827.1 1,769.2 Computed July 8, 1962, p. 113
Building materials (nonmetallic) 143.6 212.4 1,136.8 1,169.8 1,204.8 1,232.9 Code 13 No. 61, Dec. 15, 1949
Brick—building 144.7 252.5 1,338.5 1,342.5 1,375.6 1,401.8 Code 1342 No. 20, Mar. 3, 1949
Brick—fireclay 193.1 322.8 2,020.7 2,072.6 2,077.9 2,112.7 Code 135 May 30, 1955, p. 104
Castings, iron 188.1 274.9 1,718.2 1,728.2 1,743.1 1,722.8 Code 1015 Apr. 1, 1963, p. 119
Clay products (structural, etc.) 159.1 342.0 935.0 952.5 963.2 984.6 Code 134 No. 20, Mar. 3, 1949
Concrete ingredients 141.1 218.4 1,270.5 1,305.4 1,360.7 1,417.6 Code 132 No. 22, Mar. 17, 1949
Concrete products 138.5 199.6 1,016.7 1,046.5 1,086.9 1,134.6 Code 133 Oct. 2, 1967, p. 112
Electrical machinery 159.9 216.3 514.8 516.7 515.8 517.8 Code 117 May 2, 1955, p. 104
Motors and generators 157.7 211.0 1,098.6 1,107.4 1,125.3 1,124.8 Code 1173 May 2, 1955, p. 104
Switchgear 171.2 271.0 1,368.3 1,395.8 1,400.6 1,406.0 Code 1175 May 2, 1955, p. 104
Transformers 161.9 149.3 815.7 798.0 798.2 763.9 Code 1174 No. 31, May 19, 1949
Engines (combustion) 150.5 233.3 1,047.0 1,046.8 1,052.9 1,062.2 Code 1194 No. 36, June 23, 1949
Exchangers (composite) 171.7 274.3 1,220.9 1,293.3 1,305.0 1,305.0 Manufacturer Mar. 16, 1964, p. 154
Copper base 190.7 266.7 1,133.7 1,171.5 1,178.5 1,178.5 Manufacturer Mar. 16, 1964, p. 154
Carbon steel 156.8 281.9 1,229.3 1,310.4 1,320.9 1,320.9 Manufacturer Mar. 16, 1964, p. 154
Stainless steel (304) — — 1,199.2 1,294.2 1,312.7 1,312.7 Manufacturer July 1, 1991, p. 58
Fractionating towers 151.0 278.5 1,424.4 1,421.5 1,457.9 1,447.7 Computed June 8, 1963, p. 133
Hand tools 173.8 346.5 2,027.4 2,080.4 2,099.7 2,100.1 Code 1042 June 27, 1955
Instruments (composite) 154.6 328.4 1,477.0 1,509.9 1,533.6 1,565.9 Computed No. 34, June 9, 1949
Insulation (composite) 198.5 272.4 1,960.4 1,951.1 2,014.9 2,061.1 Manufacturer July 4, 1988, p. 193
Lumber (composite) 197.8 353.4 1,210.0 1,379.9 1,489.7 1,369.7 Code 81 No. 7, Dec. 2, 1948
Southern pine 181.2 303.9 870.6 999.5 1,025.0 945.5 Code 81102 No. 7, Dec. 2, 1948
Redwood, all heart 238.0 310.6 1,793.9 2,059.5 2,112.1 1,948.4 Code 811-0332 July 5, 1965, p. 117
Machinery
General purpose 159.9 278.5 1,480.2 1,510.6 1,540.5 1,558.9 Code 114 Feb. 17, 1949
Construction 165.9 324.4 1,824.2 1,871.3 1,899.9 1,924.3 Code 112 Apr. 1, 1968, p. 184
Oil field 161.9 269.1 1,956.2 1,983.2 2,017.8 2,031.7 Code 1191 Oct. 10, 1955, p. 267
Paints—prepared 159.0 231.8 1,399.3 1,410.4 1,424.6 1,410.1 Code 621 May 16, 1955, p. 117
Pipe
Gray iron pressure 195.0 346.9 3,343.8 3,363.2 3,392.1 3,352.7 Code 1015-0239 Jan. 3, 1983, p. 76
Standard carbon 182.7 319.9 3,227.7 2,907.9 2,895.4 2,635.5 Code 1017-0611 Jan. 3, 1983, p. 76
Pumps, compressors, etc. 166.5 337.5 2,170.6 2,221.1 2,271.9 2,313.3 Code 1141 No. 29, May 5, 1949
Steel-mill products 187.1 330.6 1,837.6 1,727.8 1,775.9 1,577.8 Code 1017 Jan. 3, 1983, p. 73
Alloy bars 198.7 349.4 1,387.7 1,356.2 1,419.2 1,413.5 Code 1017-0831 Apr. 1, 1963, p. 119
Cold-rolled sheets 187.0 365.5 1,984.2 1,889.0 1,969.8 1,698.8 Code 1017-0711 Jan. 3, 1983, p. 73
Alloy sheets 177.0 225.9 1,031.9 982.5 1,024.5 883.4 Code 1017-0733 Jan. 3, 1983, p. 73
Stainless strip 169.0 221.2 1,101.8 1,049.0 1,093.8 943.5 Code 1017-0755 Jan. 3, 1983, p. 73
Structural carbon, plates 193.4 386.7 2,211.1 2,073.8 2,153.6 1,951.8 Code 1017-0400 Jan. 3, 1983, p. 73
Welded carbon tubing. 180.0 265.5 3,270.2 2,946.5 2,933.8 2,669.8 Code 1017-0622 Jan. 3, 1983, p. 73
Tanks and pressure vessels 147.3 246.4 1,154.5 1,152.3 1,181.8 1,181.9 Code 1072 No. 5, Nov. 18, 1949
Tube stills 123.0 125.3 699.2 674.4 692.8 644.6 Computed Oct. 1, 1962, p. 85
Valves and fittings 197.0 350.9 2,331.4 2,384.3 2,445.5 2,465.6 Code 1149 No. 46, Sept. 1, 1940

Nelson-Farrar Refinery (Inflation Index)

(1946) 179.8 438.5 2,465.2 2,489.5 2,555.2 2,540.0 OGJ May 15, 1969

Nelson-Farrar Refinery Operation

(1956) 88.7 118.5 637.5 661.8 688.5 650.9 OGJ No. 2, Mar. 3, 1958, p. 167

Nelson-Farrar Refinery Process Operation

(1956) 88.4 147.0 739.0 802.6 865.3 732.7 OGJ No. 2, Mar. 3, 1958, p. 167

*Code refers to the index number of the Bureau of Statistics, US Department of Labor, “Wholesale Prices” Itemized Cost Indexes, Oil & Gas Journal.

Oil & Gas Journal | Oct. 5, 2015 85

TECHNOLOGY
West Coast CBR-project legal
risks require management
Gabriel Collins
Baker & Hostetler LLP
Houston
Matthew Lanahan
Arnold & Porter LLP
TRANSPORTATION
Washington
Alexander Obrecht
Baker & Hostetler LLP
Denver
Siting crude-by-rail (CBR) terminals in areas that already
have high volatile organic compound (VOC) emissions is
among the steps companies can take to reduce the risk of
legal action against their construction and operation.
Opposition groups are honing their legal strategies for de-
laying CBR projects and are beginning to effectively apply
these strategies to stop or delay projects in key markets such
as California. InterState Oil Co., for example, was pressured
into halting operations at its crude offloading terminal near
Sacramento in November 2014 after the Sacramento Met-
ropolitan Air Quality District said it had mistakenly side-
stepped California environmental rules by issuing a permit
without conducting a full environmental impact review.1
Similar legal hurdles confront CBR projects in other West
Coast states. Skagit County (Wash.) Planning and Devel-
opment Services in 2014 concluded that a proposed CBR
offloading terminal at Shell’s Puget Sound refinery did not
require full environmental review under the Washington
State Environmental Policy Act.2 But the county reversed
course in the face of environmental protests and ruled that
the terminal must undergo full environmental review. A
Washington state judge in May 2015 affirmed the county’s
decision to undertake full environmental review.
Political opposition and oil price volatility, meanwhile,
are likely to sharply reduce companies’ ability and willing-
ness to invest in pipelines, meaning California and the East
The opinions and assessments expressed in this article are
the authors’ personal views, are not legal advice, and do not
reflect the official positions of Arnold & Porter LLP or Baker &
Hostetler LLP.
86
Coast will remain heavily reliant on railborne and water-
borne crude oil. Among major midstream operators the de-
bate is increasingly not about pipe vs. rail, but rather how to
best integrate the two delivery modes to maximize efficiency
and optionality of crude supplies to end users.
CBR activity is likely to increase nationwide, particularly
if there are no reforms made to the Jones Act to lower the
costs of coastal shipping between US ports. Rail transport
will remain crucial to the crude oil supply chain, creating
business opportunities while also inflaming opposition.
This article outlines the emerging legal and regulatory risks
CBR projects face and outlines strategies to help industry
better shield against them. Our analysis and suggestions
are particularly tailored to California, Washington, and Or-
egon, which present large market opportunities for railborne
crudes and are also among the jurisdictions with the highest
levels of opposition to CBR project development.
CBR outlook
Despite a slowdown caused in part by low oil prices, two
core factors will support continued use and growth of crude-
by-rail in the US:
• Light sweet, mid-Continent crude oils will remain at a
competitive disadvantage in the US Gulf Coast market due
to strong production growth of local light sweet grades from
the Eagle Ford and Permian, and widely available water-
borne light sweet crudes from abroad.
• Canadian producers will continue to face severe politi-
cal obstacles to building pipelines such as the Keystone XL,
the Energy East project, or a pipeline through British Co-
lumbia to the Pacific Ocean.
Anti-oil sands and anti-emissions activism actually stand
to drive more Canadian heavy sour onto the rails and to-
ward the one marketplace where it is welcome: the US Gulf
Coast. Canadian heavy sour barrels help Gulf Coast refiners
balance plant operations in the face of light sweet supplies
flooding in from domestic shale plays. The US Gulf Coast
also offers opportunities for exporting Canadian crude to
a variety of foreign markets, possibly even Asia, via the ex-
panded Panama Canal.
Rising rail shipment of Canadian crude to the US Gulf
Coast will substantially increase demand for railroad
throughput. Moving oil from Central Alberta to key US de-
mand centers can require 30% or more rail capacity than
Oil & Gas Journal | Oct. 5, 2015
 CRUDE-BY-RAIL OVERVIEW
Loading terminals
Dual-capable terminals
Unloading terminals
Rail lines
Shale plays
Potential litigation
Source: EIA, US Census Bureau, authors’ analysis
traditional Bakken crude movements from North Dakota
because the longer transit distances require more cars to
maintain a set level of crude deliveries. Rail shipments of
Canadian crude to the Gulf Coast totalled 69,000 b/d as of
June 2015, according to US Energy Information Administra-
tion (EIA) data. By 2018, regional rail terminals will likely
be able to accommodate more than 400,000 b/d of diluted
bitumen and bitumen unloaded with steam heating.
Continued delays of cross-border pipelines will support
higher rail shipments and additional investments in termi-
nal capacity on the Gulf Coast and likely in California as
well. A terminal capable of unloading 140,000 b/d (two unit
trains) costs about $150 million and can be built in 18-24
months.3 CBR is an attractive option for quickly and flexibly
getting Canadian crude to US markets. But additional litiga-
tion is likely, particularly in California, Oregon, and Wash-
ington, states with the capacity to take additional railborne
volumes, both for local use and, potentially, for export. Fig.
1 highlights potential litigation hotspots in yellow.
Legal vulnerabilities
Since the Lac-Megantic, Que., derailment (OGJ Online, July
8, 2013), environmental and community groups have inten-
sified their opposition to CBR. This opposition increasingly
has been finding its way into the courtroom.
Companies must first understand which federal or state
Oil & Gas Journal | Oct. 5, 2015
FIG. 1
agencies have jurisdiction over CBR projects. Where juris-
diction falls decides where an opponent may challenge a
CBR project. Under the Federal Railroad Safety Act of 1970
and the Hazardous Materials Transportation Act, and oth-
er statutory schemes, Congress has preempted most state
control over railroads and hazardous materials. In doing
so, Congress established regulatory authority in these areas
with the Federal Railroad Administration (FRA), the Pipe-
lines and Hazardous Materials Safety Administration (PHM-
SA), and the Surface Transportation Board (STB).
State and local governments, however, generally have reg-
ulatory authority over land-use issues, state environmen-
tal laws, and federal environmental laws that grant states
authority to implement federal programs. States and locali-
ties have effective control over zoning, environmental laws
of purely state concern, and state implementation programs
under the Clean Air and Clean Water Acts.
Companies must be wary of federal issues opposition
groups may raise before state authorities. In October 2014,
for example, environmental groups petitioned the New York
State Department of Environmental Conservation (NYS-
DEC), requesting a prohibition on the “receipt and storage
of Bakken crude oil in DOT-111 tank cars” throughout the
State of New York.4 The groups attempted to invoke NYS-
DEC’s regulatory power over CBR transloading sites, essen-
tially a land-use issue.4 But by seeking a blanket prohibition
87
TECHNOLOGY

VOC EMISSIONS* FIG. 2

sition groups to cause companies, and
state agencies, delay.
1,000,000 Our analysis focuses on Califor-
Kern County, Calif., nia for two primary reasons. Based
2013 crude production on low use of current capacity and
100,000
the existence of several prospective
Clatskanie Marine
CBR terminal high-volume CBR sites, the state has
crude terminal
10,000 upside for boosting crude oil rail de-
liveries. California has about 1.5 times
Throughput, b/d

as much refinery capacity as the East

1,000 Coast, which depends heavily on CBR.
Gasoline bulk terminal,
submerged filling California’s in-state crude oil produc-
tion also has steadily declined and
100 will likely continue falling even as the
Service station,
Service station, splash filling demand for refined fuels remains ro-
submerged filling
bust. These factors suggest that the
10
California market has room for at least
350,000-400,000 b/d in additional
1 CBR deliveries. Neighboring states
1 10 100 1,000 10,000 will likely take cues from the decisions
VOC, lb/thousand bbl made by California’s sophisticated—
*Logarithmic scale, Base 10.
Source: EPA, Oregon Department of Environmental Quality and frequently anti-industry—regula-
tory and judicial apparatus.
Table 2 highlights the potential
CALIFORNIA CBR PERMITTING Table 1 pressure points for legal action at vari-
Agency, political body Requirement Project area Legal risk ous stages of the CBR terminal permit-
City Land-use permit Required for new sites managing Medium ting process in California.
listed hazardous substances and
construction of projects above The National Environmental Policy
city thresholds
Permitting approval California Environmental Varying levels of environmental High
Act (NEPA) and its state equivalents
lead agency Quality Act review review conducted based on the require environmental review for any
project’s environmental impacts
Air quality manage- Authority to construct-permit Required to build or modify High government decision that will have
ment district to operate, Title V permit and to operate certain stationary a significant environmental impact.
amendment emissions sources
Regional water quality General construction permit, Required to control surface runoff Medium CBR projects can avoid the NEPA pro-
control board storm water issues during construction cess if the government does not have
Ministerial permits Building, electrical, etc. Pursuant to local codes Low
to make a decision at all. Or the de-
cision in question can be categorically
excluded as having a significant envi-
on crude oil receipt and storage in DOT-111s, the petition ronmental impact.
effectively asked the state to regulate tank cars allowed by But if the proposed project is subject to NEPA, varying
federal regulations to transport crude oil.5 levels of review apply, corresponding to the significance of
The environmental groups’ petition requested that a state the environmental impact. The permitting agency first pre-
take action contrary to the federal supremacy over the regu- pares an environmental assessment. If the agency concludes
lation of railroads and hazardous materials. Because federal that there is no significant impact, it issues a finding of no
law preempts state regulation over railroads—specifically significant impact. If a significant impact is found, the agen-
here as to the type of tank car that may be used to trans- cy must prepare an environmental impact statement.
port crude—states lack the power to decide otherwise. Even NEPA requires an informed decision-making process.
though the petition rested on untenable legal grounds and But NEPA does not mandate an outcome, meaning that the
the NYS-DEC took no action on it, it demonstrated envi- government must gather all relevant information but the in-
ronmental groups’ willingness to increasingly stretch the formation does not dictate whether a project is approved.
boundaries of states’ regulatory powers to stop CBR projects. Faulty NEPA analysis, however, opens the door to environ-
CBR companies also must be wary of the considerable mental challenges and serious delays to CBR projects.
ammunition environmental groups have under state law. Environmental groups’ concerted effort in early 2014
Many relevant state laws and permitting regimes—particu- against CBR projects began with challenges under Califor-
larly in California—provide ample opportunities for oppo- nia’s NEPA equivalent, the California Environmental Quality

88 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

Act (CEQA). The first suit challenged EMISSIONS, TANK ROOF TYPE FIG. 3
the Bay Area Air Quality Management
District’s decision to forgo CEQA anal- External
ysis in permitting a site Kinder Morgan floating-roof 8.9
wished to retrofit as a CBR terminal. tank
A San Francisco Superior Court judge
dismissed the lawsuit, however, on Aluminum bolted-panel
internal floating roof, 6.5
timeliness grounds.6 adjustable legs
Environmental groups have contin-
ued challenging CBR project permits Aluminum skin, pontoon
classified as “ministerial” that avoid- internal floating roof, 5.8
ed CEQA review. The movement has adjustable legs
gained momentum. Shortly after los-
ing in San Francisco County, environ- Steel internal
floating roof, cone roof, 3.6
mental groups filed another lawsuit in adjustable legs
Sacramento County, accusing a local
agency of illegally permitting a CBR Welded-panel aluminum
transloading terminal. internal floating roof, 0.7
The lawsuit targeted a permit is- dome roof, suspended
sued to InterState Oil by the Sacra-
mento Metropolitan Air Quality Man- 1 2 3 4 5 6 7 8 9
agement District to transfer crude oil Source: HMT Tank
Ground VOC emissions, tpy
from trains to trucks.7 The environ-
mental groups alleged in the suit that
the district illegally authorized the permit without the req- ten allege that local air quality boards’ decisions bypassed
uisite public notice and comment in violation of CEQA. The the EIR process in issuing operating permits.9 If approached
groups asked the court to revoke the permit and declare that correctly, however, the EIR process presents a significant op-
the district violated CEQA. Without waiting for the court’s portunity to both frame and potentially forestall lawsuits.
ruling, the district admitted that it erroneously issued the The EIR process can form the central part of a holistic strat-
permit without the requisite “full CEQA review.”1 InterState egy focusing on community relations and transparency to
Oil voluntarily returned the permit and stopped using the address general political opposition, which, if left unad-
site for CBR transloading.8 dressed, is likely to fuel legal challenges. EIRs are meant to
California lawsuits will likely accompany each proposed address significant environmental impacts, ways they can be
new or repurposed transloading site (Table 2).8 One pending mitigated, and alternative courses of action.10 They are also
suit in Kern County, however, goes past merely requiring meant to provide information to guide future decisions.11
CEQA review for CBR projects, and requests the invalidation Once courts begin ruling on CBR terminal siting and op-
of the Kern County Board of Supervisor’s environmental im- erations cases, the precedents set could embolden CBR op-
pact review (EIR)—the highest state level of environmental ponents and prompt further challenges. Effective use of the
review—for the project. The lawsuit targets the Alon Bakers- EIR process, however, can instead build a foundation that
field refinery flexibility project, which seeks to revamp and will both avoid litigation and provide stepping stones for fu-
restart the refinery by increasing CBR capacity from 40 to ture projects.
200 tank cars/day. The Alon refinery, however, has not re- Currently, the strongest opposition to CBR development
fined crude oil since 2008. lies in major metropolitan areas along the California coast.
The lawsuit attempts to invalidate the EIR by obfuscating Kinder Morgan has already picked the low-hanging fruit
the baseline for environmental analysis. The environmen- with its Richmond terminal, repurposed from handling
tal groups asked the court to base it on current shut-down railborne ethanol shipments. Anti-CBR officials and private
conditions, not the conditions that existed when the refin- groups will fight future CBR projects in these areas, as Vale-
ery was operating and properly permitted in 2007. This law- ro discovered via multiple delays to its proposed CBR termi-
suit signals environmental groups’ willingness to challenge nal at the Benecia refinery.
not only the procedural requirements of CEQA but the sub- Proposals for new CBR terminals and operational expan-
stance of the CEQA review as well. sions at existing sites will almost certainly spark lawsuits.
The best legal strategy is to defang the plaintiffs. Three con-
Practical strategies crete actions can seriously weaken the majority of terminal-
Lawsuits to stall proposed CBR terminals in California of- specific claims:

Oil & Gas Journal | Oct. 5, 2015 89

TECHNOLOGY
VAPOR PRESSURES, LIKELY RAILBORNE CRUDES
Kearl diluted
3.70
bitumen
Bonny
4.0
Light
Louisiana
4.52
Light Sweet
Arabian
5.39
Extra Light
Brent
Caspian Pipeline
Consortium blend
Akpo
blend
West Texas
Intermediate
Western Canadian
Select
ND Bakken,
average
rvp, psi
Source: Capline, ExxonMobil, North Dakota Petroleum Council
• Terminal builders should immediately launch an EIR,
as this preempts attacks based on improper issuance of air
permits. As shown by the InterState Oil Sacramento case in
November 2014, legal attacks based on air quality boards’
ministerial issuance of a permit without an EIR are sufficient
to cause agencies to withdraw their approvals.
It is better to preempt injunction suits by conducting an
EIR upfront, since courts are increasingly likely to force re-
view anyway. Avoiding the EIR fight also reduces the risk
of future operational disruptions and streamlines the litiga-
tion process by many months. This in turn helps accelerate
terminal permitting and will likely help get CBR terminals
online more quickly than would trying to initially obtain an
air permit without an EIR.
Engaging the EIR process head-on while planning CBR
projects also allows industry to frame the conversation. Over
time, greater information transparency by terminal opera-
tors will help improve the industry’s public perception and
the public’s trust by giving terminal neighbors, voters, and
policymakers an alternative—and more accurate—perspec-
tive.
It sounds ominous, for example, that a unit-train class
CBR terminal such as Global Partners’ in Clatskanie, Ore.,
can emit approximately 70 tons/year of volatile organic com-
pounds (VOC).12 But according to US Environmental Pro-
tection Agency (EPA) data, this is the same amount of VOC
emitted by just 25 gasoline service stations.13
This is just one example of how facts can be used to in-
form an EIR report. An EIR must include basic required el-
ements, but the format allows substantial freedom in how
90
FIG. 4
they are addressed, allowing indus-
try to highlight the true nature of the
project and to place it in an accurate
context. Relative to other crude oil and
refined product infrastructure, CBR
terminals are high-throughput, low-
VOC emissions sites (Fig. 2).
• CBR developers should also use
cost-effective steps to reduce VOC
5.61 emissions and incorporate these into
project plans reviewed during the EIR
6.18 process. Installing geodesic domes on
the terminal’s storage tanks, for in-
6.67 stance, and building overhead cover
for car unloading racks to reduce solar
7.24
heating can significantly reduce VOC
8.40
emissions. Industry data suggests
these reductions can be as large as 80-
90% for volatile, high vapor-pressure
11.50
crudes stored in floating-roof tanks,14
slashing the project’s overall VOC
emissions rate.15
Changing the design of a 120-ft di-
ameter tank capable of storing 88,600
bbl of gasoline can reduce VOC emissions by more than 90%
(Fig. 3). This calculation is for storage of gasoline with a 10
psi Reid vapor pressure (RVP), which closely approximates
the volatility of Bakken crude oil. It is more expensive to
install restrictive roofing, but the decision makes financial
sense over time because operational disruptions caused by
emission-related litigation can cost more than $100,000/day
in lost revenues for a unit train-class terminal. The same
logic applies to installing overhead shade cover for tank car
unloading racks.
• Developers should stabilize Bakken crude slated for
rail shipment to the West Coast, particularly in California,
where extremely tight VOC-emissions standards would oth-
erwise risk unduly constraining the volumes a terminal can
receive. Because the lightest ends of the barrel are among
the lowest in value for crudes entering complex refineries
in California, stabilization should not materially affect the
netbacks producers get for their crude.
Stabilizers for field crude typically cost $0.50-$1.00/bbl.16
Producers could tolerate these costs even at today’s prices if
the procedure significantly increased their ability to access
more of the large, and still relatively untapped, West Coast
and California refining markets.
Stabilization would also create surplus NGL in the Bak-
ken area. The challenges of dealing with a new NGL stream
in the area illustrate that stabilization of Bakken crude is a
least-worst option for making CBR terminals viable in the
west-coast Petroleum Administration for Defense District
(PADD) 5 regulatory environment. Ongoing infrastructure
improvements for moving NGLs to external markets, how-
Oil & Gas Journal | Oct. 5, 2015
 TECHNOLOGY

CALIFORNIA CBR LITIGATION AS OF JULY 2015 Table 2

Name Court Primary cause of action Date filed Date resolved Disposition
Communities for a Better California Superior Petition for Writ of Mandate; plaintiffs seek Mar. 27, 2014 Sept. 5, 2014 Suit dismissed because
Environment, et al. v. Court, San to void Bay Area Air Quality Management plaintiffs filed suit after a
BAAQMD, et al. Francisco County District’s ministerial approval of Kinder 180-day statute of limitations
Morgan’s CBR transloading project without had expired.
CEQA review.
Sierra Club v. California Superior Failure to comply with CEQA based on Sept. 23, 2014 Nov. 25, 2014 Case settled as Sacramento
Sacramento Court, issuance of permit to expand crude Metropolitan Air Quality
Metropolitan Air Quality Sacramento transloading without public comment and Management District admitted
Management District County review. it did not comply with CEQA.
(InterState Oil Co.) InterState voluntarily gave
back permit.
Association of Irritated California Superior Petition for Writ of Mandate; plaintiffs seek Oct. 9, 2014 Pending Pending
Residents, et al. v. Kern Court, Kern to void Kern County’s approval of project
County Board of County and certification of its environmental impact
Supervisors, et al. review.
CBE et al. v. San Joaquin California Superior Petition for Writ of Mandate; plaintiffs Jan. 28, 2015 Pending Preliminary injunction denied
Valley Air Pollution Court, Kern allege the air pollution control district June 5, 2015.
Control District, et al. County improperly issued the permit to construct
the sites’s oily water sewer system.

ever, could help accommodate greater use of stabilization.
For instance, Oneok Partners finished expanding its Bak-
ken NGL Pipeline in October 2014, adding 75,000 b/d of
outbound capacity and bringing the line’s total potential
throughput to 135,000 b/d.17
Assuming a 5% light-ends removal rate/bbl, stabilizing
each 110-car unit train (70,000 bbl) bound for PADD 5 re-
fineries would create 3,500 bbl of NGL, roughly 5 railcars’
worth.
Stabilization could also allow existing terminals to ramp
up throughput while remaining within their permitted
emissions limits. A crude oil’s vapor pressure often corre-
lates strongly with its VOC emissions.18 If Bakken crude can
be stabilized from its typical 11.5 psi vapor pressure down
to West Texas Intermediate’s 7.24 psi (Fig. 4), this could, in
theory, allow a CBR terminal to increase throughput with-
out exceeding its permitted VOC emissions threshold. De-
termining the exact throughput increase would require a
detailed chemical and engineering calculation, but it could
exceed 20%.
Reducing VOC emissions of inbound crudes could expe-
dite the process of amending terminals’ operating permits to
increase throughput. Developers could plausibly argue that
using less volatile crudes to increase terminal throughput
while keeping VOC emissions within previously permitted
parameters was ministerial and would not require new en-
vironmental impact reviews. A ministerial action involves
little or no judgment by the public official regarding “the
wisdom or manner of carrying out the project.” A discretion-
ary project, by contrast, requires officials to use “judgment
or deliberation” as they consider whether to issue a permit.
High-VOC sites’ solution
Sites with high recent historical VOC emissions are strong
candidates for CBR terminal siting because CBR operations
emit relatively little VOC per barrel of throughput. Such sites
come with a high baseline for determining emissions thresh-
olds. This concept succeeds in legal terms because the fun-
damental goal of the EIR process is to “inform decision mak-
ers and the public of any significant adverse effects a project
is likely to have on the physical environment.”19 To do this,
the EIR must define a baseline against which the project’s
anticipated effects can be described and quantified.19 This
requirement and the California judicial decisions address-
ing it potentially offer a unique solution for CBR operators
regarding siting projects near idle oil refineries and declin-
ing oilfields
Terminal opponents claim that the EIR process for a CBR
terminal proposed at the site should use the refinery’s “cur-
rently non-operational conditions as the baseline for mea-
suring impacts.”20 If this approach were followed, the CBR
terminal would likely not be able to receive an operating
permit due to tight emissions restrictions driven by existing
ozone and particulate pollution problems in the San Joaquin
Valley. But opposition groups’ legal position on what consti-
tutes a proper EIR baseline is likely incorrect.
A number of California courts clearly state that a prop-
erty’s recent historical use can provide a “realistic measure
of existing conditions” for the purposes of an EIR impact as-
sessment.”19 Their position remains true even when the his-
torical use occurred many years earlier or was intermittent.
California courts make liberal time allowances for historical
use analysis of mining and natural resource projects because
they recognize that such endeavors are subject to macro-lev-
el fluctuations in supply, demand, and price that are unpre-
dictable and beyond project operators’ control.21 Alon USA’s
70,000-b/d Bakersfield refinery—mothballed due to global
oil price swings and declining local crude supplies—is a
prime example of a site that under this caselaw could ac-
commodate much larger crude-by-rail deliveries.
References
1. Bizjack, T. and Tate, C., “Sacramento crude oil trans-
fers halted; air quality official says permit was granted in

Oil & Gas Journal | Oct. 5, 2015 91

TECHNOLOGY

error,” Sacramento Bee, Oct. 22, 2014. 20. California Superior Court, “Verified Petition for Writ
2. Skagit County Planning & Development Services, of Mandate: Association of Irritated Residents, Center for
“SEPA Staff Findings No. 6,” Apr. 22, 2014. Biological Diversity, and Sierra Club v. Kern County Board
3. George-Cosh, D., “Enbridge Plans US Rail Loading of Supervisors and Kern County Planning and Development
Facility for Crude,” Wall Street Journal, Aug. 1, 2014. Department, Oct. 8, 2014, p. 3.
4. Earthjustice, “Petition for Summary Abatement Order: 21. California Court of Appeals, “Fairview Neighbors v.
Receipt and Storage of Bakken Crude Oil in DOT-111 Tank County of Ventura,” 70 Cal. App. 4th 238, 243, Jan. 28,
Cars at Albany Terminals Operated by Global Companies 1999.
LLC,” Oct. 20, 2014.
5. Federal Register, “Hazardous Materials: Enhanced
Tank Car Standards and Operational Controls for High-Hazard
Flammable Trains,” Aug. 1, 2014.
6. Carroll, R. and Chaussee, J., “California Judge Throws
Out Lawsuit Targeting Crude by Rail Facility,” Reuters, Sept.
5, 2014.
7. California Superior Court, No. 34-2014-80001945,
“Verified First Amended Petition for Writ of Mandate and
Complaint for Declaratory and Injunctive Relief: Sierra Club v.
Sacramento Metropolitan Air Quality Management District,”
Sept. 23, 2014.
8. Mulkern, A.C., “California: Lawsuit Filed to Block Ex- The authors
pansion of Crude-by-Rail Terminal,” E&E Publishing, Jan. 30, Gabriel Collins (gcollins@bakerlaw.com) is a
2015. litigation associate in the Houston office of Baker
9. California Superior Court, “Verified Petition for Writ of & Hostetler LLP. He worked previously as a com-
Mandate: Communities for a Better Environment, Sierra Club, modity investment analyst. Collins is a graduate
ForestEthics, Center for Biological Diversity, and Association of Princeton University, New Jersey, and the
of Irritated Residents v. San Joaquin Valley Air Pollution Con- University of Michigan Law School.
trol District (Bakersfield Crude Terminal LLC, Plains Marketing
LP, Plains LPG Services LP, and Plains All American Pipeline Matthew Lanahan (writteninwater@gmail.com)
LP), Jan. 28, 2015. is an attorney at Arnold & Porter LLP. He is a
10. California Public Resources Code § 21002.1(a), 1996. graduate of Virginia Tech University and the
11. California Public Resources Code § 21003(d), 1996. University of Michigan Law School.
12. Oregon Department of Environmental Quality, North-
west Region, “Response to Comments – Proposed Air Alexander K. Obrecht (ao-
Contaminant Discharge Permit (05-0023-ST-01) for Cascade brecht@bakerlaw.com) is an
Kelly Holdings LLC, dba Columbia Pacific Bio-Refinery,” Aug. energy attorney in the Denver office of Baker
19, 2014. & Hostetler LLP, focusing on regulatory and
13. US Environmental Protections Agency, http://www. litigation matters. He is a graduate of Harvard
epa.gov/ttnchie1/le/benzene_pt2.pdf University, Cambridge, Mass., and the University
14. Vacono Dome, http://www.easyfairs.com/uploads/ of Wyoming College of Law.
tx_ef/VACONODOME_2014.pdf
15. Vancouver Energy USA, “Preliminary Draft Environ-
mental Impact Statement (EIS),” Dec. 17, 2014.
16. Platts, “US condensate splitter plans move forward,
but uncertainty remains,” Aug. 11, 2015.
17. Oneok Partners, “Oneok Partners Announces Comple-
tion of More Than $500 Million in Capital-Growth Projects,”
press release, Oct. 30, 2014.
18. Fox, P., “Air Quality Impacts of the Keystone XL
Project at Refineries in PADD 3,” prepared for the Natural
Resources Defense Council, Apr. 22, 2013.
19. Supreme Court of California, No. S202828, “Neigh-
bors for Smart Rail v. Exposition Metro Line Construction
Authority,” 304 P.3d 499, 505, Aug. 5, 2013.

92 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

Steady regulations, buyer relationships

key successful LNG export projects
Philip Weems The Angola LNG project, for example, started construction
Kathryn Marietta in 2008 and began exporting in 2013, only to be shut down
King & Spalding LLP soon thereafter due to reported design flaws and corrosion
Houston of nearly-new equipment.

A clear regulatory foundation and close relationships with Keys to success

buyers are among the key aspects to successful development Every LNG export project must aggregate sufficient advance
of an LNG liquefaction plant. LNG supply has surpassed de- LNG sales to allow an affirmative final investment decision
mand, at least temporarily, and 13 new LNG export projects (FID). FID kicks off construction and the beginning of large
are either soon to come on line or will start LNG production capital expenditures. Development will not proceed until
in the next 4 years (Table 1). Competition between projects target sales quantities are secured.
is fierce, the basis of future LNG prices uncertain, and capi- LNG sales contracts are typically 20-year commitments.
tal costs steep. Not all proposed projects will realize success. Advance sales from a 5-million tonne/year (tpy) LNG plant
This article examines a number of characteristics successful (one train) are worth tens of billions of dollars. LNG buy-
LNG export projects have shared. ers have numerous options in today’s markets. One
recent change in the North American market has
Looking back allowed some projects to reach FID without secur-
Of the 13 leading LNG export projects under de- ing advance sales. Tolling projects advance when
velopment in 2000, only three are operating as capacity in an LNG train is contracted under long-
originally planned (Table 2). Almost half of the term agreements. In some instances customers who
projects (in Australia, Iran, Alaska, and Venezuela) will not consume the LNG commit to tolling even
were cancelled or postponed indefinitely and sev- without having executed resale contracts with an
eral (in Angola, Egypt, and Yemen) are experienc- TRANSPORTATION end-user.
ing major setbacks. The North American tolling structure intro-
Predictions of industry experts, the signing of duced a new methodology, creating different pric-
foundational agreements, and overall buzz in the ing dynamics for LNG produced in third-party
press are often not good predictors of whether a project will tolling plants. The first LNG sales agreements using gas in-
be successful. Several major proposed LNG export projects dices for determining price were also executed from a North
once considered viable were, in the end, cancelled or post- American plant, Cheniere Energy’s Sabine Pass.
poned indefinitely for a variety of reasons (Table 3). LNG is still sold, to a great extent, on oil-based indices.
LNG export projects have numerous stakeholders and are But some buyers are pressuring sellers to index at least a por-
complex technically, contractually, and structurally. A suc- tion of the sales to gas.
cessful LNG export project receives host government sup- Project costs must meet economic requirements for both
port; is developed, marketed, financed,
and built; and delivers LNG to markets
on a continuing basis. Even successful LNG EXPORT PROJECTS UNDER CONSTRUCTION Table 1
LNG export projects, however, can: Project Lead developers Location Expected Start-Up
• Be delayed for many years; even Gladstone Santos Australia 2015
Australia Pacific ConocoPhillips Australia 2015
decades (e.g., Nigeria). Sabine Pass Cheniere Energy Louisiana 2015
• Result in a company that origi- Petronas FLNG 1, floating Petronas Malaysia 2015
Gorgon Chevron Australia 2016
nally discovered gas not being the one Prelude, floating Shell Australia 2017
Wheatstone LNG Chevron Australia 2017
to benefit from LNG sales (Qatar). Ichthys LNG Inpex Corp. Australia 2017
• Have major issues over their life- Freeport LNG Michael Smith Texas 2018
Petronas FLNG 2, floating Petronas Malaysia 2018
time, including gas reserves (Egypt) Cameron LNG Sempra, Engie, Mitsui,
Mitsubishi Louisiana 2018
and technical issues (Norway). Cove Point Dominion Maryland 2018
Corpus Christi LNG Cheniere Energy Texas 2019
Funding and construction do not
equal success if the project is unable
to deliver LNG on a continuing basis.

Oil & Gas Journal | Oct. 5, 2015 93

TECHNOLOGY

STATUS OF GREENFIELD LNG PLANTS UNDER DEVELOPMENT IN 2000 Table 2 Regulatory foundation
Country Project Lead developers, 2000 Status, mid-2015
The operator’s relationship with the
Angola Angolan LNG Texaco Started operations in 2013 but host government is critical to project
now suspended due to plant
operational issues success and timing. Failure to obtain
Australia Gorgon Shell, ExxonMobil, Under construction, with 2016 host government support will cause
Texaco, Chevron startup expected
Australia Darwin Sunrise Shell, Woodside Postponed. Separate
delay or cancellation (e.g., the decades-
ConocoPhillip’s Bayu-Undan long battle between East Timor and
LNG in Darwin operational since
2006 Australia over sharing revenue from
Egypt Egyptian LNG BG International, Edison Idku LNG started operations in the Greater Sunrise fields). The opera-
2005, but gas shortages have
reduced production tor must examine and understand the
Egypt Egyptian LNG 2 BP Amoco, Snam BP Amoco project did not proceed. general legal, regulatory, contractual,
Replacement project Segas LNG
in Damietta started in 2005, but and fiscal framework, as well as the
production suspended due to gas
shortage interplay among these and the man-
Indonesia Tangguh BP Amoco, Arco, Operating since 2009 ner in which the project will be imple-
Pertamina
Iran Iranian LNG (e.g.
Petronas, Reliance, Cancelled mented.
Pars) National Iranian Oil Co. LNG export projects also often re-
Norway Snohvit LNG Statoil Operating since 2007
Russia Sakhalin Shell, Mitsui Operating since 2009 quire a separately negotiated legal and
US Alaska North Slope
BP Amoco, Arco, Postponed fiscal framework, established in some
Phillips Petroleum,
Marubeni regions as an LNG Project Agreement
Venezuela Venezuela LNG Enron Cancelled and implemented through related leg-
Venezuela Mariscal Sucre Shell, ExxonMobil, Cancelled
Mitsubishi, PDVSA islation. Peru, for instance, enacted
Yemen Yemen LNG ExxonMobil, Operating since 2009, but “The Law for the Promotion of Invest-
TotalFinaElf, Hunt production suspended due
to civil unrest ments in Gas Processing Plants” and
Source: Updated from table contained in Weems, P., “Overview of Issues Common to Structuring, Ne- its regulations in 2004, followed by a
gotiating, and Documenting LNG Projects,” International Energy Law and Taxation Review, No. 8, 2000. Jan. 12, 2006, investment agreement
between Peru LNG and Peru’s govern-
ment (OGJ Online, Jan. 13, 2006).
Investors will not risk exposure to
the liquefaction developer and the LNG buyer. The project changes in laws or tax systems which could adversely im-
ideally will be attractive to credit-worthy premium buyers pact an LNG project’s economics. The “Nigeria LNG (Fiscal
with long-term gas demand. LNG prices in Asia historically Incentives, Guarantees, and Assurances) Act of 1990” pro-
have been twice as high as prices paid by long-term buy- vides certainty, as does Mozambique’s December 2014 de-
ers in other regions. Japan, South Korea, and China com- cree law on the Area 1 and Area 4 LNG projects and the
bined to purchase over 60% of all LNG imported in 2014, project development agreement for Pacific Northwest LNG
according to the International Group of Liquefied Natural signed June 19, 2015, between Petronas and the Province of
Gas Importers. Current projects sell into multiple markets in British Columbia, Canada. The more stable the agreement
an effort to secure as many contracts with premium Asian with the host government, the higher the likelihood of proj-
buyers as possible. ect success. Success also depends on agreeing with the host
Buyers at the same time look for reliable supply and are government to international arbitration of disputes, provid-
attracted to large reserves given the long-term nature of LNG ing lenders, sponsors, and other stakeholders a higher de-
sale and purchase agreements. Some fields experience steep gree of certainty should a dispute arise.
declines, in some instances while local gas demand escalates A successful LNG export project needs a competitive en-
(e.g., Egypt, Oman, and Bontang and Arun in Indonesia), gineering, procurement, and construction (EPC) contract.
compromising the seller’s ability to supply agreed quantities. Labor constraints are common when staffing during con-
Force majeure and other contractual consequences may oc- struction. Construction costs, including labor, for a typical
cur as resources are depleted. LNG export project have roughly doubled in the last decade,
Projects with a high percentage of liquids have typically growing even more in some cases and prompting project
been attractive, the sale of higher-priced condensates lever- cancellation (e.g., Browse onshore liquefaction; OGJ, May 5,
aging project profits. Gas supply quality is a consideration 2014, pp. 116-121).
when attracting premium buyers. Coal seam gas and shale The first two trains of the proposed Mozambique LNG
gas typically have lower gross heating values and are less at- project are estimated to cost $8-10 billion, with offshore
tractive to many Japanese buyers. wells and equipment another $5 billion. Additional costs,
such as finance, push the potential total beyond $24 billion.
Buy-sell models, tolling models, and integrated project

94 Oil & Gas Journal | Oct. 5, 2015

 TECHNOLOGY

EXAMPLES OF MAJOR POSTPONED-CANCELLED LNG PLANTS Table 3

Country Project Timing Original Developers Cancellation, postponement factors

Australia Browse 2006-2014 Woodside, Shell, BP, Japan Australia LNG, Onshore plant’s high construction costs
BHP Billiton
Australia Arrow LNG 2009-2015 Shell, Petrochina High costs, alleged government overregulation
Australia Bonaparte LNG 2011-2014 GDF Suez, Santos Floating project costs producing poor expected
returns
Australia Pilbara-Scarborough 2004-2014 BHP, ExxonMobil High costs
LNG
Bolivia Pacific LNG 2000-2005 BG, BP, Repsol YPF 2006 nationalization decree granted state-owned
YPFB control over all natural gas production
Canada Dome LNG 1980-1986 Dome Petroleum, Nissho Iwai Corp. Change in market conditions, loss of government
support, poor economics
East Timor Sunrise LNG 2000-2013 Woodside, ConocoPhillips, Shell, Osaka Dispute between government and sponsors on
Gas commercial approach, land-based vs. floating
liquefaction
Indonesia Natuna LNG 1993-1998 Pertamina, Exxon Cost and technical issues related to high CO2,
insufficient Indonesian government incentives
Iran Pars LNG 2004-2008 Shell, Total, Petronas, Repsol, CNPC, etc. Political risk, lack of LNG technology provider
Nigeria OK LNG 2005-2013 NNPC, Chevron, BG, Shell Gas supplies, commercial structuring issues,
political instability
Nigeria Brass LNG 2004-2012 NNPC, ENI, ConocoPhillips,TotalFinaElf Gas supplies, commercial structuring issues,
political instability
Russia Shtokman 2005-2011 Gazprom, Total, Statoil Costs, due to technical challenges in Artic;
changing market trends, due to North American
unconventional gas development
Russia Baltic 2004-2008 Gazprom Arctic technology risks, limited gas supply
US Alaska North Slope — BP Amoco, Arco, Phillips Petroleum, Market conditions, prior preference for pipeline
Marubeni transportation
Venezuela Venezuela LNG 1999-2001 Enron Enron’s collapse
Venezuela Mariscal Sucre 2001-2011 Shell, ExxonMobil, Mitsubishi, PDVSA Political issues, including decision to dedicate gas
reserves to local markets

models are all viable at the start of a project. Unique charac-
teristics will dictate the final structure and will tailor exist-
ing models to a given project. Lenders and buyers will care-
fully evaluate the commercial structure and the strength of
the entire LNG value chain.
Inpex expects its $37-billion Ichthys LNG project in
northern Australia to start up in 2017 (OGJ Online, Sept.
14, 2015). A project this costly is more likely to be financed
if there is a predictable, clear, and coherent legal framework
in place. A commercial structure that attracts financing en-
sures both a predictable long-term cash flow and take-or-
pay contracts with credit-worthy buyers, and has survived
risk analysis across the entire LNG value chain. A construc-
tion contract limiting construction phase risk, incorporating
a well-managed fee structure with certainty as to schedule,
and led by an experienced contractor or contractor group
with a sound delivery history invites investment.
An experienced operator and a limited scope for operat-
ing-cost increases also inspire financiers. Although no LNG
export project has so far defaulted on repayment of its proj-
ect-financed loans, the recent inability of project-financed
Egyptian projects to export (due to gas shortages) at the vol-
umes needed to support debt service may lessen lenders’ en-
thusiasm for the sector.
Buyers, partners
Premium buyers may insist on taking equity in the export
project. Involving key buyers has become the norm in LNG
export projects, the sense of partnership between seller and
buyer aiding overall project success. For Freeport LNG’s first
liquefaction train, tolling customers Osaka Gas Co. Ltd. and
Chubu Electric Power Co. Inc. had sufficient confidence in
the project to invest about $1.24 billion in equity. This in-
vestment helped the project secure roughly $4.4 billion in
debt financing for the first train from the Japan Bank for In-
ternational Cooperation and six Japanese commercial banks,
with the loans financed by the commercial banks insured by
Nippon Export and Investment Insurance.
Early in project development, planners should carefully
consider the percentage of participation in equity each buyer
might have. It is not uncommon for premium buyers to have
a greater equity interest than non-premium buyers. If the
project’s LNG is jointly marketed or marketed on a coordi-
nated basis, the various buyers (who are also equity holders)
may not want pricing disclosed to competitors.
Conflicts among partners can arise when different LNG
portfolio priorities exist; i.e., competing projects or supply
sources. Disagreement can affect project schedule and per-
haps even success. The arbitration between Total and Oil
Search over development of Papua New Guinea’s Elk and
Antelope gas fields is an example (OGJ Online, Mar. 2,
2015). Disagreement can also weaken the project’s relation-
ship with the host government. The host ideally is not both
partner and regulator. If it plays both roles, contracts must
carefully document where each begins and ends.
Differences in the timing of market demand and supply

Oil & Gas Journal | Oct. 5, 2015 95

 TECHNOLOGY

Expand Your
infrastructure can hamper an other-
wise viable LNG export project. De-
mand comes in waves. Drivers of in-

Knowledge
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creased demand include:
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• Buyers seeking to diversify sup-
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reliable supply.
• Buyers in new markets looking
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96 Oil & Gas Journal | Oct. 5, 2015

OCTOBER 2015 VOL. 61; NO.11
OGPE.COM

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OG&PE
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FROM THE EDITOR

This October OG&PE concludes 61

consecutive years of oil and gas new
equipment, products, systems, and
services — and onto Year 61! Copyright 2015 by PennWell Corporation. Established: November 1954.

This year was marked with the significant move of

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As you reach Page 19, would you ‘turn one more page’ Social Media Marketing Analyst Anna Alaback
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From GREEN Access & Fall Protection (Page 8) on op- Executive Vice President, Jayne A. Gilsinger
timizing petrochemical loading-platform construc- Corporate Development and Strategy
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API (anvil piston instrument) hydrocarbon sam- Finance and Chief Financial Officer

pling suite on Page 14. Publisher Jim Klingele

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E2S Warning Signals . . . . . . . . . . . . 11 Sensonics Ltd. . . . . . . . . . . . . . . . 13 PennWell Corporation, assume responsibility for validity of manufacturer claims or state-
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For FREE Information, select #401at ogpe.hotims.com
 P4 New Products & Services
8 new high-visibility FR & non-FR
work wear styles
360° reflective striping visibil-
ity is announced for eight new
safety work wear styles.
Six flame-resistant and two
non-flame-resistant garments
are constructed with trims from
Davey Textiles Solutions with
3M Scotchlite Reflective Materi-
als. This delivers enhanced vis-
ibility and compliance to ANSI or CSA standards. The
new FR versions meet U.S. performance requirements
of NFPA 70E and are UL classified to NFPA 2112.
Carhartt: Dearborn MI
For FREE Information, select #6 at ogpe.hotims.com
Easy-to-install continuous cleaning
filters in skid design for oilfield water
TEQUATIC PLUS F-75 & F-150 Filters are now on the
marketing for such continuous uses as oilfield water clean-
ing — and are available in convenient skid design.
Filters and skids are self-cleaning to remove very high
and variable solids from fluid streams, even in the pres-
ence of fats, oils, and grease. They are designed to oper-
ate where traditional types typically fail. Configurations
also reduce maintenance and consumables costs plus
facilitate high uptime.
With the B-Series Skid, water treatment can save
months of design with added convenience of fast “out
of the box” installation and startup. Full details are free.
The Dow Chemical Company: Edina MN
For FREE Information, select #7 at ogpe.hotims.com
Re-designed rotary lobe pump for
intermittent, continuous or metering
TORNADO T2 rotary
lobe pumps are newly
redesigned to handle any
kind of liquid including
media containing gas, sol-
ids, or fibrous matter.
The self-priming, valve-
less, positive displacement
redesigns are for intermittent, continuous, or metering
applications.
Unlike conventional rotary lobe pumps that use stan-
dard elastomer lobes — T2 employs two hardened steel
lobes that rotate in a geometrically adapted elastomer
insert. This bi-lobe creates a considerably longer hous-
ing sealing line for more wear padding. A specially de-
veloped pulsation reduction system is also incorporated.
NETZSCH Pumps North America LLC: Exton PA
For FREE Information, select #8 at ogpe.hotims.com
OGPE.com October 2015
Midstream ‘Catalyst Cooling’ for
maintenance turnaround now patented
‘Catalyst Cooling’ process is now patented to reduce
initial planned or unplanned maintenance turnaround
for hydroprocessing and reformer units in petrochemi-
cal and refining.
The process focuses on last-phase catalyst cooling.
It uses a combination of heat exchangers, chillers and
pumps. Based on a correlation model specific to a re-
finer’s turnaround operations and timeline for cooling,
the process cools reactor catalyst between 12 to 24 hr
faster than liquid nitrogen.
With it refiners can move catalyst cooling off the criti-
cal path and permit more work to be done while the
unit is down. Refiners also avoid cost of nitrogen and
potential safety issues associated with extra logistical
and human activity required to transport, handle, and
dispose of it.
It’s reported, “all combined, Aggreko’s process can
produce savings from $250,000 to more than $5-mil-
lion, depending if catalyst is on the critical path and the
number of refinery units affected.”
AGGREKO: Houston
For FREE Information, select #9 at ogpe.hotims.com
New tools split offshore, onshore
flange joint nuts
NS NutSplitter were launched at
Offshore Europe to more effec-
tively split nuts on offshore or on-
shore flange joints.
Offered with benefits over cur-
rent designs, the tools feature op-
timized cutting head geometry for
use on a wide flange joints range,
many of which were previously
too tight for conventional nut split-
ters. The new tools are specifically
designed for pipe-line bolted flange joints.
Equalizer International: Aberdeen
For FREE Information, select #10 at ogpe.hotims.com
OGPE.COM
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If it has to do with Petroleum Products &
Services, it’s in here and/or at OGPE.com
 New Products & Servicesz P5

Management products cut oilfield Handling frame transports, lifts,

operating costs, optimize production stores drill pipe, casing, tubulars
E&P or chemical service compa- TubeLock New Genera-
nies are declared to reduce operat- tion Tubular Handling
ing costs, minimize pump and well System is new to transport,
downtime, plus optimize produc- lift, and store drill pipe, cas-
tion via WellAware Chemical Man- ing, and tubulars.
agement & Optimization prod- It’s designed to be more
ucts. efficient, cost effective,
Announced to help more effici- and safer than conven-
iently manage production chemi- tional wire bundling, having successfully completed a
cal programs, the two offerings 3-year North Sea operational debut.
streamline chemical management TubeLock is developed specifically for OCTG. It en-
processes so operators and chemi- cases batches of tubulars in a fixed frame. Once they are
cal service companies can spend less and implement securely locked in place, ‘packs’ of tubulars are trans-
more effective programs, notes the developer. ported from source to quayside where they are safely
They enable users to monitor and control assets both and efficiently lifted for onward transportation to off-
by web and via mobile iOS and Android apps. This shore installations where they are offloaded, stacked,
helps ensure technicians take appropriate actions no and stored.
matter where they are in the field. Further data are free. Complete TubeLock specifics are free upon request.
WellAware: San Antonio TX Global Gravity: Esbjerg Denmark
For FREE Information, select #11 at ogpe.hotims.com For FREE Information, select #12 at ogpe.hotims.com

ADIPEC 2015
11
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October 2015 OGPE.com

 P6 New Products & Services
Ultra-light FR clothing line introduced
Workrite FR GlenGuard 5.3
FR clothing is unveiled 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 offer comfort that also maxi-
mizes worker flame resistance.
Workrite Uniform Company Incorporated: Oxnard CA
For FREE Information, select #14 at ogpe.hotims.com
“Whisker valves” function as limit
switches in control duties
Where low actuation forces and high-
flow rates are required — employ lever-
actuated Series 3 sensor valves.
The mechanically-operated designs
also known as “whisker valves” are
designed to be used as limit switches
in control applications.
Actuation force of Series 3’s me-
chanical lever is less than 0.5 lb (2N) at 90 psi. Actuation
sensitivity may be increased by adding a 3-mm-diameter
“whisker rod” to the predrilled hole at the end of the
lever. When the mechanical lever is actuated, it releases
an internal pilot signal to atmosphere. Depressurization
of the spool plunger allows the internal mechanical
spring to shift the valve spool.
Camozzi Pneumatics: McKinney TX
For FREE Information, select #15 at ogpe.hotims.com
ROV deployed deepwater phased
array inspection
This system is announced
as the “world’s first ROV de-
ployed deepwater Phased
Array ultrasonic inspection
capability for applications
down to 3000m / 10,000 ft.”
It’s designed to speed
subsea asset integrity assessment on rigid or flexible
pipeline and riser systems to “significantly reduce op-
erator costs in diver, ROV, and vessel hire.” High resolu-
tion wall thickness and corrosion mapping are quickly
performed using 64 element ‘Paint Brush’ transducers.
Oceaneering International Services Limited:
Stockton on Tees UK
For FREE Information, select #16 at ogpe.hotims.com
OGPE.com October 2015
Environmentally-hardened Ethernet
switch for IoT
Unveiled “to help unlock the
value of the Industrial Inter-
net of Things” is new EDS-
518E Ethernet switch.
The new environmentally-
hardened, high port density,
intelligent managing, and advanced security design of-
fers high bandwidth and uptime to enable today and to-
morrow’s most challenging industrial IoT applications,
declares the manufacturer.
This switch features 18 ports (14+4G) in a compact
DIN-rail form factor. Four combo Gigabit ports with
built-in RJ45 or SFP (small form pluggable) slots enable
network administrators to meet increased bandwidth
requirements involving big data and/or video over IP.
MOXA: Brea CA
For FREE Information, select #17 at ogpe.hotims.com
Distributed temperature & acoustic
sensing products, services partnership
WellDog announces its partnership with United Kingdom
fiber optic distributed sensing company Silixa to deliver
distributed temperature and distributed acoustic sens-
ing products and services.
Using WellDog’s business model, it will combine Sil-
ixa’s technology platform with WellDog’s Raman chemi-
cal sensing technology platform to increase operator
visibility to the complex geochemical and geophysical
downhole environment. Additional details are free.
WellDog: Denver
For FREE Information, select #18 at ogpe.hotims.com
Deep-sea oil pipelines offered new
flexible microporous insulation
Porextherm WDS Flexible
Pipe microporous insula-
tion is on the market for
deep-sea oil pipelines.
With flexibility and “supe-
rior insulating properties,”
the new products are designed to enable construction
of smaller, lighter, and more cost-effective double-wall
offshore pipelines (pipe in pipe systems), declares the
manufacturer.
Porextherm WDS is engineered to deliver flexibility
needed in underwater pipelines due to extreme forces
at play. It addresses underwater pipeline temperature
and insulation concerns, since oil exiting a deep-sea
well tends to be far higher in temperature than sur-
round water at depths of up to 6,900 ft.
Morgan Advanced Materials, Thermal Ceramics:
Windsor UK For FREE Information, select #19 at ogpe.hotims.com
 Products P7

Fanless box computers for oilfield Workplace offering helps enterprises

FPC-7800 fanless box computers are unveiled to func- be digital ready for next-gen end-users
tion as oil rig controller or as control box on an assembly Wipro LiVE Workspace powered by VMware business
line — especially in cold conditions. mobility solutions “enables enterprises to be digital ready
With updated, more efficient Intel chipset, models of- for next-generation end-users, helping them create agile,
fer a variety of configura- intelligent, collaborative, and mobile workspace.”
tions catering to different The end-to-end standardized and integrated workplace
expansion requirements. offering comprises pre-defined tools, technologies, and
They’re also applicable processes to access business applications and data —
in various environmental anywhere, any time, and through your choice of de-
conditions and provide multiple storage options. Hous- vice. It also offers predictive and prescriptive analytics
ing a powerful i7 processor, FPC-7800 enhances man- to proactively identify, diagnose, resolve, and manage
ageability and security. critical applications and infrastructure problems before
Arbor Solution: San Jose CA end-users experience issues.
For FREE Information, select #20 at ogpe.hotims.com Wipro Limited: Bangalore India
For FREE Information, select #22 at ogpe.hotims.com
Cage designs help prevent injuries
during compressor valve service Transfer devices hold 4, 6, 10 workers
ZVI Valve Cage-Internal and ZVI Valve FROG-XT transfer devices were recently introduced at
Cage-Removable help reduce injuries Offshore Europe with “advanced de-
during compressor valve servicing. sign and cutting edge technology.”
The valve cage’s assembly is light In a choice of four, six, or 10-per-
for safe, easy installation and re- son capacities, the range is de-
moval especially for larger dis- signed to offer operators a flexible
charge valves. They offer a ‘bet- solution to personnel transfer, notes
ter flow path for gas” with larger the manufacturer. FROG-XT can be
rounded ports which can be converted to MedEvac mode in emergencies — to trans-
directly fastened to the manu- fer a casualty and accompanying passenger, it’s noted.
facturer’s valve. Models comprise The transfer models are designed to protect from all
stainless steel similar to the valve body itself. key risks associated with crane transfer.
Zahroof Valves Incorporated: Houston Reflex Marine: Aberdeen
For FREE Information, select #21 at ogpe.hotims.com For FREE Information, select #23 at ogpe.hotims.com

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October 2015 OGPE.com
 P8 Media Partner Feature:
Optimizing Petrochemical Plant
Loading-Platform Construction
Front-End Coordination and Modularization Provide Major Time and Cost Savings
By David Yearicks, GREEN Access & Fall Protection
T he declining price of crude oil may have cooled
oil exploration, but its bargain price has fueled
huge growth in the petrochemical industry. As
the demand for petrochemicals expands due to lower
oil prices and an improving economy, the need for new
petrochemical plants (oil, gas, chemicals, plastics, etc.)
is also growing at an increasing rate. While the petro-
chemical-plant construction industry strives to meet the
demands for new facilities, it is facing a challenging
situation that can be divided into the good, the bad and
the ugly.
The Good is that petrochemical-plant construction is
booming, particularly in Texas and Louisiana. Planned
construction totals more than $100 billion in capital in-
vestments and will provide high employment rates for
skilled trades.
The Bad is that construction of many of these plants
will be delayed for years, greatly overrun their cost es-
timates and schedules, or will never be built at all. The
industry estimates that construction is currently back-
logged for at least 10 years.
The Ugly is why they will be delayed, go over budget
or go unbuilt — inadequate planning on the front end
and/or a severe shortage of skilled labor.
Dealing with these issues may seem daunting, but ev-
er-evolving advancements being adopted by the plant-
construction industry are providing practical, innovative
solutions that are addressing many of these challenges.
Inadequate Front-End Project Planning
In petrochemical-plant construction, planning and co-
ordination are key factors in meeting scheduling and
budget goals. For each project, a host of diverse contrac-
tors and workers must utilize plans and specifications
to construct a complex factory with critical integral sec-
tions and parts that must function together precisely
and efficiently.
Unfortunately, engineering, procurement and con-
struction companies (EPCs) that design and oversee
petrochemical-plant construction often do not collabo-
rate or work closely with subcontractors or suppliers
in the early planning and design stages of the projects.
This is especially evident when talking about the load-
ing platforms a plant will require. This critical section
of the plant must precisely integrate with the other sec-
tions, which requires extensive planning and coordina-
OGPE.com October 2015
tion at project onset among all of the various entities in-
volved in design, construction and delivery of the plant.
“Early planning and collaboration with contractors
and equipment suppliers can be critical in helping EPCs
avoid project cost overruns and delays,” said Doug In-
gram, General Manager for Green Access & Fall Protec-
tion (a product line of Benko Products, Inc.), Sheffield
Village, OH, a leader in the design and manufacture of
access and fall protection equipment. “GREEN Products
has worked with numerous EPCs to construct truck and
rail loading platforms for all sizes of petrochemical proj-
ects, and the most successful in terms of meeting bud-
gets and timetables for loading platforms are the ones
where we collaborated on the plant design at the onset.
Doing so allowed us to assure that the loading equip-
ment and fixtures would seamlessly integrate with the
other sections of the plant.”
“On projects where the loading platform was de-
signed with little or no consultation with us, the project
typically experienced budget and time overruns due to
numerous revisions, costs associated with field prob-
lems during and after installation, and reduced through-
put due to inefficient design,” continued Ingram. “Col-
laboration during the design phase can make a major
difference in efficiency during and after construction.
With the challenges faced by the construction industry
in today’s tight labor environment, working closely with
subject-matter experts can go a long way in assuring a
project comes in on time and on budget.”
Shortage of Skilled Labor
Based on the large number of plants currently planned
for construction, upwards of 100,000 skilled construc-
tion workers, including pipefitters, welders, carpenters,
CONSTRUCTION LABOR SHORTAGE
1200000
1000000
800000
600000
400000
200000
0
Required
d Skill
Skilled
dLLaborers Available Skill
Skilled
d Laborers
L
Pipefitters, welders, carpenters, scaffold builders, electricians, etc.
Source: http://analysis.petchem-update.com/workforce-development/plant-modularization-used-keep-projects-schedule

scaffold builders, electricians, etc., are needed. Unfortu-
nately, the labor pool can only currently supply some-
where between 40,000 and 60,000 workers.1 This huge
gap will have a significant effect if the industry cannot
hire enough qualified skilled workers to complete proj-
ects on time and budget.
A National Public Radio report in May 2014 found
that the housing crash and the Great Recession that
followed in 2008 cost 1.3 million skilled construction
workers their jobs, and fewer than half a million have
returned, opting instead for career changes or retire-
ment.2
In addition, in recent years young people entering the
workforce have avoided these professions because many
of the jobs requiring these skills have been moved over-
seas. To make matters worse, predictions are that many
of the remaining skilled workers will be retiring in the
next few years, further reducing the available labor pool.
This dilemma severely limits construction timetables
and budgets, with no end in sight.
Modularization to the Rescue
To solve the current situation of labor shortages and
growing construction backlogs, EPCs are increasingly
adopting a more efficient modular approach to petro-
chemical-plant construction. Much like the residential-
housing industry that utilizes prefabbed trusses, cabi-
nets, doors/door frames, etc., rather than building them
individually for each house like in previous generations,
petrochemical plant modularization entails building en-
tire plant sections offsite and then transporting and in-
Media Partner Feature: P9
tegrating them with the other pre-constructed modules
at the factory’s construction site.
Advantages of modularization over onsite construction
include reduction of labor procurement issues, faster
completion rates, lower costs, greater quality-control abil-
ity, better security of construction materials and greatly
reduced plant-site disruptions. Module suppliers have the
required skilled labor and equipment needed to build
their modules at their jobsites, as well as the technicians
to assure quality control throughout every step of con-
struction in their controlled assembly environments.
In recognizing the numerous benefits of modular-
ization in petrochemical-plant construction, EPC giant
WorleyParsons created a Director of Modules position
to determine which portions of a plant should be mod-
ularized to maximize construction efficiency. Modular-
ization is a practice now considered standard in the
industry and seen as the primary way to solve the chal-
lenges being faced.
Loading-Platform Modularization
Although modularization is applied extensively, EPCs
many times do not utilize the practice for every oppor-
tunity in plant construction. Unfortunately, these missed
applications often result in predictable and unnecessary
construction delays and higher costs. A major example
where modularization is seldom used but can be highly
effective is in the construction of the loading platform,
which typically continues to be built onsite. Contrary
to this traditional practice, experience has shown that
significant labor, cost and time savings can be realized
October 2015 OGPE.com
 Media Partner Feature:

if loading-platform construction
is modularized like the numerous
other sections of the plant.
The loading platform includes
the platform structure, canopies,
loading arms, access gangways,
fall-protection equipment and
pumping skids—the complete
turnkey function for the plant’s
truck and rail loading operations.
“Typically, the EPC will create
drawings or a 3D model of what
that platform will consist of and
the loading-equipment supplier
must design their equipment to
work within those parameters,”
said Eric Luckett, Sales Manager for
Green Access. “Unfortunately, the
EPC often does not have extensive
experience in designing loading platforms, so they do not set the most ideal
or efficient parameters in the design.”
“In addition, when the equipment provider works to match their engineer-
ing with the EPC’s engineering, delays and errors can occur which lead to
unexpected time and cost overruns,” continued Luckett. “If the engineering
designs of the EPC and the platform-equipment provider are not perfectly
synchronized, the equipment provider has to treat the equipment installa-
tion as a retrofit in the field. Modularization solves these issues and invari-
ably benefits a project in meeting time and cost targets. It also removes that
entire portion of the project from EPC’s plate. Early EPC planning with the
platform-equipment provider allows it to be built as a plug-and-play mod-
ule with all loading-spot functions optimized for maximum efficiency and
workflow.”

Conclusion
With few other options to complete the backlog of projects, the petro-
chemical-plant construction industry is moving to embrace these solutions,
particularly modularization, out of necessity.
While modularization in the petrochemical-plant construction industry is
still in its infancy, EPCs are becoming increasingly aware of the numer-
ous benefits of collaborating with loading-platform equipment providers at
project onset. Experience has shown numerous project inefficiencies can
be prevented when the EPC places the loading-platform equipment design
function in the hands of the equipment provider in its entirety. Using their
expertise, the loading-platform equipment provider can mitigate the risk of
budget and time overruns and assist in building in throughput optimization.
It’s a win-win situation, but this model must become the norm if the indus-
try is to have any chance of coming close to meeting construction goals.
For complete information on how this manufacturer’s safety equipment
helps optimize petrochemical plant loading-platform construction and in
tank trucks and railcars:

GREEN Access & Fall Protection, Benko Products:

Village of Sheffield OH — Green-Mfg.com
For FREE Information, select #300 at ogpe.hotims.com

For FREE Information, select #404 at ogpe.hotims.com

OGPE.com October 2015

 P11

Single
g board computers
p introduced Custom Manifolds Reduce Installation
to function in harsh environments Time and Minimize Space Requirements
SBC328 GE Rugged 3U VPX High Pressure Equipment
single board computers are Company custom mani-
announced for high perfor- folds provide an excellent
mance embedded computing option to reduce installa-
applications in harsh energy tion time and space require-
exploration environments. ments to plumb a pressure
Based on 6th Generation Intel Core technology (“Sky- system, and to lessen the
lake”), they feature the latest Intel Xeon E3-1200 v5 number of potential system
family processor operating at 2.8GHz. This is said to leak points.
“deliver substantially higher performance than previ- HiP custom manifolds
ous-generation processors.” are available in a wide
The SBC also comprises integrated graphics and range of connection sizes,
memory controller all in one device. It’s coupled with accommodating pressures from 5,000 to 60,000 psi.
the CM236 chipset to provide an upgraded level of I/O They are an excellent method to facilitate transitions in
bandwidth for on-board and off-board functions. line sizes and tubing pressures.
GE Energy Management, Intelligent Platforms: HiP: High Pressure Equipment Company: Erie PA
Huntsville AL www.HighPressure.com
g
For FREE Information, select #25 at ogpe.hotims.com For FREE Information, select #27 at ogpe.hotims.com

Chemical flowback
aid for fracturing is new
HOSTAFRAC SF 13213 chemical
flowback aid is announced for hy-
draulic fracturing.
The sugar-based surfactant is de-
clared to “dramatically lower the flu-
id’s surface and interface tension to
.com/audible
significantly increase the flowback As you would expect from the world's leading independent
of the hydraulic fracturing fluid.” signalling manufacturer, we offer the widest range of products
It effectively lowers the formation and the fastest delivery anywhere in the world.
damage caused by emulsification of
the frac fluids in the reservoir.
While as little as 13% of the fluid
used during the frac process can
be recovered without flowback aid
additives, HOSTAFRAC SF 13213 is
declared to increase fluid recovery
levels to as high as 87%.
The new product also offers
sustainability advantages and has
earned its manufacturer’s Eco-
Tain label. With this designation, Visit us at
HOSTAFRAC SF 13213 has under- ADIPEC
gone a systematic, in-depth screen- 9-12 Nov
ing process using 36 criteria in
three sustainability dimensions: so- Abu Dhabi
cial, environmental, and economic.
Additional chemical flowback aid
specifics are yours free on request.
Clariant Oil Services: Houston
For FREE Information,
select #26 at ogpe.hotims.com For FREE Information, select #411 at ogpe.hotims.com
gp

OGPE.com
 P12 New Products & Services

Flowline insulation covers withstand Mass spectrometry for targeted,

subsea cold and hydrocarbon heat non-targeted compound analysis
Extreme cold and heat are AxION iQT GC/MS/MS mass spectrometry instrument
withstood by new insulation facilitates targeted and non-targeted compound analysis in
covers which comprise a com- petrochemicals and fuels for properties.
bination of silicone Vikotherm With Cold El source technology it’s announced to of-
S1 and polyurethane Viko- fer “non-traditional approach results in more confident
therm P7. molecular identification and optimal quantitation for
The new designs utilize more complete characterization of complex samples.”
properties of cast systems which are poured in a liquid The self-optimizing and self-diagnosing instruments
form and solidify to create the finished ‘jacket’. They seamlessly integrate with leading Clarus 680 gas chro-
withstand very cold temperatures at subsea depths but matographs. They are engineered around a series of
likewise extreme hot hydrocarbon temperatures. smart modules that automatically synchronize. Each
The new insulation covers manufacturer declares: module is quickly and easily accessed for fast mainte-
“We’ve taken our proven knowledge in designing be- nance and maximum uptime, the maker declares.
spoke insulation systems and combined a silicone in- AxION iQT is engineered to enable detection of all
ner layer to withstand the high temperatures of hot hy- MS/MS fragment ions — all the time — for outstanding
drocarbons. The polyurethane outer layer is lighter in specificity and confidence in results, it’s said.
weight than traditional steel.” Complete mass spectrometer specifics are yours free.
Trelleborg Offshore: Houston PerkinElmer Incorporated: Waltham MA
For FREE Information, select #29 at ogpe.hotims.com For FREE Information, select #30 at ogpe.hotims.com

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OGPE.com October 2015

 New Products & Services P13

NIR analysis expands offerings to serve Self-extinguishing flexible hose

in-line measurements and laboratory developed to meet/exceed UL94V-0
Petrolab expands its product offerings by adding near in- Flexaust UL94V-O-rated flexible
frared analysis from Light Technology Industries. hose is a standard fire-retardant
They have sold and serviced Grabner vapor pressure line for a broad range of applica-
testing for more than 25 years. Now they will market, tions.
sell, and support along with Grabner Instruments LTI Fifteen standard products
NIR process analyzers worldwide. comprise neoprene, polyester,
LTI products include both in-line process and bench- PVC polyester, acrylic polyester,
top analyzers which complement Petrolab in-line and PVC, polyurethane, and thermo-
laboratory instrumentation for petroleum testing. plastic rubber to function where
LTI instruments are applicable throughout the refin- worker safety is critical. They are
ing process from crude oil to refined fuels. They offer especially suited for dust collec-
rapid, nondestructive chemical properties measurement tion and fume extraction duties, declares their maker.
and help reduce lab costs. At the same time they are de- In a selection of highly flexible and abrasion-resistant
signed to improve refinery and chemical plant process constructions, the extruded hoses come in various wall
controls. thicknesses. The fabric hoses come in single or double-
Further Petrolab, LTI, and NIR analysis data are free. plies and several weights. Sizes: 1 to 48 in. and depend-
Petrolab Company, AMETEK Oil & Gas: ing upon type, in lengths to 50 ft.
Broken Arrow OK Flexaust: Warsaw IN
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October 2015 OGPE.com

 P14 ProductsIntroduction:
Product
Sentry Equipment Presents API
Suite for Hydrocarbon Sampling:
T oday alone, the world will use more than 93 mil-
lion barrels of oil and liquid fuels. That’s a lot of
fuel that needs to undergo quality control at one
or more points during refining.
Automatic sampling provides a representative sam-
ple of hydrocarbon liquids – oils and liquid gas – so
properties such as water content, weight and compo-
sition can be determined. Representative samples are
needed for quality control and for fiscal calculations,
allocations and loss control.
In addition to complying with custody transfer stan-
dards such as API8.2 and ASTM D 4177, the advan-
tages of representative sampling include: Higher re-
turn on investment, Better loss control, and Lower
operating costs.
Previously, to conduct this sampling, key players in
the oil custody and transfer stream had to settle for the
status quo – expensive, non-durable, often awkwardly
and inconsistently performing samplers that didn’t meet
all their needs and application conditions.
Upstream crude oil suppliers, refiners and traders
needed a more reliable, robust and easy-to-maintain
automatic sampler for custody transfer that would cost
less and provide
consistent perfor-
mance over a wid-
er range of process
conditions.
System integra-
tors needed easy-
to-implement au-
tomatic samplers
with a wide per-
formance range at
competitive prices
that could be chosen based on whether it would need
to operate with pneumatic or electric actuation. And
chemical and petrochemical end users needed a highly
accurate, fixed volume sampler that could operate in-
line or in the center of a pipe or tank.
A new anvil piston instrument (API) automatic
sampler suite meets all these needs. It offers four dis-
tinct solutions to optimize sampling accuracy and re-
peatability for hydrocarbon liquids such as crude oil,
condensates, and oil and water mixtures. Plus, it pro-
vides consistent performance over a wide range of ap-
plications and conditions.
While other samplers use simple linear motion with
limited mechanical advantage, these new samplers
OGPE.com October 2015
uniquely apply a scotch yoke mechanism
to create linear movement – similar to a
car engine. With few application limits,
they can be used in nearly any temperature or environ-
mental conditions, offering electrical actuation choices
for applications where there is no air line available, and
pneumatic actuation choice for where there is.
These samplers are ide-
al for: Custody transfer
of crude oil and conden-
sate, upstream produc-
tion, trading, transport
and refining of crude oil
and condensate, as well
as Chemical and petro-
chemical applications.
The new Sentry®
ISOLOK® API sampling
suite offers superior per-
formance and a long life, minimizing maintenance, ac-
cessories and service time needed. All provide a consis-
tent fixed volume, employ a scotch yoke design, feature
next generation seal design – and are easy and less
costly to maintain than other solutions.
Sentry ISOLOK API-CA cell samplers are for bypass
or fast loop sampling systems / pneumatic actuator.
Sentry ISOLOK API-CE cell samplers serve bypass
or fast loop sampling systems / electric actuator. Both
are ideal for energized mixing and blending applica-
tions.
Sentry ISOLOK API-PA probe samplers are used in-
line / pneumatic actuator.
Sentry ISOLOK API-PE probe samplers are used in-
line / electric actuator. Both ideal for installing where
product is or can be mechanically well mixed.
With consistent performance over a wide range of
process applications, environmental conditions and
temperatures, Sentry API samplers offer a highly ac-
curate, fixed volume automatic sampling solution that is
reliable, robust and easy to maintain.
Complete Sentry ISOLOK API sampling suite informa-
tion is free upon request.
Sentry Equipment Corporation: Oconomowoc WI
Sentry-Equip.com
For FREE Information, select #302 at ogpe.hotims.com
 Turbomachinery & Pump Symposia Followup P15

OG&PE recently exhibited at and was media spon- Gas turbines line improved, upgraded
sor for Texas A&M Engineering’s 44th Turbomachin- Launched at Turbomachinery &
ery & 31st Pump Symposia & Exhibition in Houston. Pump Symposia, NovaLT16 gas
Here are highlights representing some of the equip- turbines have been improved
ment manufacturers and service providers. and showcased at the 2015
To request free information or literature on prod- event.
ucts and services of interest: Go to OGPE.com, right NovaLT5 is an improved
hand side of homepage — click “Product Informa- GE5 version built on No-
tion” — the yellow button. Or you can click the items vaLT16’s technology for small-
right here on the pages if you receive OG&PE digitally er power generation ranges in
as a section of Oil & Gas Journal. oil and gas applications. The newest gas turbines are
announced to deliver 37% mechanical efficiency, up to
Multi-configurable centrifugal 99% availability, and 35,000-hr between maintenance.
compressors unveiled at Turbo & Pump GE Oil & Gas: Florence Italy
TURBO-AIR NX 8000 com- For FREE Information, select #35 at ogpe.hotims.com
pressors are new and con-
figurable for a variety of uses. Subsea turbocompressors for Åsgard
Updated design brings key presented in free data
system components closer This free Technology Update
to the edge of the package presents “the world’s first of its
for easier access. Control, kind turbocompressors for the
lubrication, and cooling sys- Åsgard subsea compressor sta-
tems of the integrally geared tion.”
designs optimize flow and It showcases a 2003 to 2014
operational efficiency for low total lifecycle cost. timeline of developments and
TURBO-AIR NX 8000 is rated from 1,000 to 2,250 hp / qualifications for the project
750 to 1,700 kW with flows from 5,000 to 10,000 cfm / including extensive experi-
142 to 283 m3/min, and 50 to 210 psig / 3.5 to 14.5 barg. ence with HOFIM technology
Models can be packaged to comply with API 614, and focus of the subsea con-
670, 671, and 672 for oil and gas duties. cept and design being robust-
Ingersoll Rand: Davidson NC ness and longevity. On-site Ås-
For FREE Information, select #34 at ogpe.hotims.com gard illustrations complement project summaries offered.
MAN Diesel & Turbo: Zurich and Houston
Oil, gas, chemical liquid ring vacuum For FREE Literature, select #256 at ogpe.hotims.com
pumps, compressors, systems literature
Declared “the best vacuum/com- On-line turbomachinery monitoring
pression solutions for chemical, Complete turboelectric gen-
petrochemical, and refining appli- erator online monitoring so-
cations” are a line of liquid ring lutions highlight this free four-
vacuum pumps, compressors page brochure.
and systems” presented in this Tailored to avoid machin-
free brochure. ery downtime and to extend
Compression from 250 to equipment longevity, this firm
5,000 cfm up to 80 psi is offered provides ZOOM users with
by models for vapor recovery, autonomous data analysis and
flare gas recovery, waste gas first level diagnostics that are
compression, and gas boosting. both predictive and preventive.
Vacuum distillation, evaporation, drying, stripping, or This is compared to traditional
reactor-applicable designs deliver 5 to 39,000 cfm down standardized protection offerings, notes the literature.
to 25 Torr. Vacuum and distillation features, advantages, ZOOM (Zero Outage Online Monitoring) Software
and benefits are charted and illustrated. Suite is shown and described to integrate and correlate
DEKKER Vacuum Technologies Incorporated: all machine parameters in the same software.
Michigan City IN VibroSystM: Longueuil Quebec Canada
For FREE Literature, select #255 at ogpe.hotims.com For FREE Literature, select #257 at ogpe.hotims.com

October 2015 OGPE.com

 P16 Turbomachinery & Pump Symposia Followup
Upstream, midstream reciprocating
compressors and packages literature
This OEM customizes recipro-
cating compressors and pack-
ages with over 180 year of manu-
facturing experience, declares its
free six-page brochure.
For fuel gas booster, gas pro-
cessing, or CO2 injection for
EOR duties, the firm works as
engineering team, manufactur-
er, packager, and service pro-
vider for the entire compression
system, it’s noted. This includes
customized compressor, oil systems, drive trains and
coupling optimization, plus controls.
Neuman & Esser USA Incorporated: Houston
For FREE Literature, select #259 at ogpe.hotims.com
Rotating oil & gas equipment services
Upstream, midstream, and down-
stream oil and gas rotating
equipment services are show-
cased in this free brochure.
Its eight pages emphasize “cus-
tomized and innovative service
solutions” to reduce maintenance
time and cost plus to improve
equipment efficiency and reli-
ability for pumps, turbines, com-
pressors, generators, or electric
motors used offshore, onshore, as
well as in tar sands or refining and petrochemical duties.
Sulzer Rotating Equipment Services:
Winterhur Switzerland
For FREE Literature, select #260 at ogpe.hotims.com
Process-applicable refrigeration and gas
compression systems
A global track record of more than
10,000 customized refrigeration
and gas compression systems
is cited in this free brochure on
designs for broad applications in-
cluding petroleum.
Its 16 pages include a spread
illustration on 18 typical refrig-
eration and compression appli-
cations which include offshore
platforms, onshore wells, refineries, LPG storage tanks
LNG plants, and petrochemical or chemical plants.
York Process Systems by Johnson Controls:
Waynesboro PA
For FREE Literature, select #261 at ogpe.hotims.com
OGPE.com October 2015
Free canned motor pumps brochure
Emission-free, 100% leakproof
canned motor pumps are de-
scribed, specified, and illustrated in
this free 16-page brochure.
Hydrocarbon and chemical
process designs are cited to de-
liver safe, redundant control for
total fluid containment with long
MTBM intervals.
Canned motor pump features
are emphasized to include air-
tight, no shaft seal, no external
lubrication, vacuum to high system pressure, explosion-
proof and quiet operation.
Teikoku USA Incorporated: Warminster PA
For FREE Literature, select #262 at ogpe.hotims.com
Centralized cybersecurity
SecurityST centralized security management is a key
part of a defense-in-depth system for turbine, plant, and
generator controls environments.
It employs modular defensive services and technolo-
gies to provide a single vantage point to see cybersecu-
rity posture, plus to implement proactive strategies and
policies to protect critical control system and related
networks. It also provides centralized reporting capa-
bility to manage cyber risk. This helps mitigate cyber
vulnerabilities at the network, endpoint, and controller
levels.
SecurityST Mark Vle Solution and Commissioning Ser-
vice is Achilles Practice Certified-Bronze.
GE Energy: Longmont CO
For FREE Information, select #37 at ogpe.hotims.com
Submerged cryogenic pumps,
expanders literature
EIC Cryo submerged cryogenic
electric pumps and expanders
are presented in this brochure for
marine-based, floating, and small-
scale applications.
Suction vessel mounted pumps,
retractable units, and expand-
ers are designed to function in
liquefied gases over ambient to
cryogenic. Expanders are cited
to have become standard equip-
ment in most new liquefaction
plants for the pressure let-down section of the process
in place of a conventional Joule-Thomson valve.
EBARA International Corporation,
Cryodynamics Division: Sparks NV
For FREE Literature, select #263 at ogpe.hotims.com

How to recover pressure energy,
increase pumping system reliability
IsoBoost System is described and
illustrated in this free brochure to
recover pressure energy and in-
crease pumping system reliability.
The hydraulic design serves
ammonia production and is used
in CO2 removal. In gas processing
it’s employed in acid gas removal.
IsoBoost’s core is a proprietary
liquid-to-liquid turbocharger with
three times the reliability of a traditional pump. It recov-
ers energy from the letdown of a high-pressure fluid
and transfers it to a low-pressure fluid to reduce energy
required for pumping.
Energy Recovery: San Leandro CA
For FREE Literature, select #264 at ogpe.hotims.com
Condition monitoring, diagnostics
Re-engineered System 1 condition
monitoring and diagnostics soft-
ware offers simplified user interac-
tion, embedded expertise, increased
capabilities, plus improved accessi-
bility.
It comes in three packages:
“fundamental” for offline data col-
lection, “premium” for online data collection, and “ulti-
mate” for condition monitoring at the enterprise level
through the Fleet Management Web Portal.
Complete specifics on the turbomachinery, essential
equipment, and general-purpose equipment software is
yours free upon request.
GE Oil & Gas Measurement & Control: Minden NV
For FREE Information, select #38 at ogpe.hotims.com
High-level anti-wear protections from
hardfacing specialist
High-performance anti-wear pro-
tections are presented in this free
brochure from a leading hardfacing
specialist.
For broad applications including
drilling, the firms high level anti-
wear protections specialties are
based on the production of tung-
sten carbide. Since 1986, the com-
pany is producing its own spheri-
cal cast tungsten carbide: The Sphérotène using the
patented Cold Crucible process. Complete hardfacing
and anti-wear protections data are provided.
TECHNOGENIA: Saint-Jorioz France
For FREE Literature, select #265 at ogpe.hotims.com
Turbomachinery & Pump Symposia Followup P17
Field-erected mechanical draft cooling
towers design, supply
Design, engineering, project man-
agement, and construction of field-
erected mechanical draft cooling
towers is this firm’s specialty and
subject of its free 24-page brochure.
Illustrated and described are fi-
berglass, wood, or concrete new
tower designs as well as existing
tower repair or replacement plus
thermal upgrades, inspection, or disaster recovery.
Cooling towers are presented for broad applications in-
cluding ethanol, seawater, or refining.
Cooling Tower Depot: Golden CO
For FREE Literature, select #266 at ogpe.hotims.com
Multi-petroleum-usable screw pumps
Nine series of screw pumps are
showcased in this free 24-page bro-
chure for broad applications.
Offering 1.5 to 940 gpm ranges,
models are compact, low in pulsa-
tion, and quiet operating.
In oil and gas, they are cited for
transfer of separated crude oil,
tank system support, compressor
lubrication, and to pump bitumen,
crude oil, diesel, and HFO. Special screw pump heat
treatment of the housing minimizes friction and wear.
KRAL - USA Incorporated: Matthews NC
For FREE Literature, select #267 at ogpe.hotims.com
Three-phase induction motors data
Nine designs of medium and high
voltage indication motors are illus-
trated and described in this free eight-
page brochure.
The 2 to 14 kV, 50/60Hz designs
come in a variety of totally enclosed
fan cooled, totally enclosed air to
air cooled, totally enclosed air to
air cooled (vertical), and totally en-
closed water to air cooled versions.
Flameproof, pressurized enclosure,
and non-sparking versions are also offered for hazard-
ous area applications.
Low voltage induction motors are highlighted and
summarized in nine versions to include TEFC cast iron
frame as well as aluminum frame
Illustrations of the manfacturer’s facilities emphasize
its modern rotating machinery factory.
HYUNDAI Heavy Industries: Seoul Korea
For FREE Literature, select #268 at ogpe.hotims.com
October 2015 OGPE.com
 P18 Products
Turbomachinery & Pump Symposia Followup
Flare knock-out, gas-tolerant pumps
information is free
Flare knock-out pumps highlight
this free datasheet as gas-tolerant twin
screw designs.
The timed configurations comprise
replaceable liner, integral shafts, and
external bearings to handle wide
viscosities. They perform over 10 to
8,000 gpm, up to 1,200 psi in 5° to
600° F., over 0.20 to 1-million cSt.
With outstanding NPSH, they offer few moving parts,
simple design, and will not vapor lock.
Leistritz Corporation: Allendale NJ
For FREE Literature, select #270 at ogpe.hotims.com
API Plan 12 seal filtration system data
MP12 Highflow Series API Plan
12 Seal Filtration Systems are cited
in this datasheet for continuous flow
during transfer to the new filter.
The duplex design features 316 SS
filter core capable of 75 psig differ-
ential pressure. Two closure designs
are available and filter bodies are
per ASME Sect. VIII, Div. 1.
MP12 uses borosilicate glass microfiber filter media
“because no other element works as efficiently or gath-
ers as many particles,” it’s noted.
Momentum Engineered Systems Incorporated: Houston
For FREE Literature, select #271 at ogpe.hotims.com
Free automation technology for
hazardous areas
“Automation Systems and Com-
ponents,” this free 28-page bro-
chure, highlights safety barriers,
isolators, remote I/O, and wire-
less solutions.
Described and illustrated are
offshore, plant surveillance,
camera process control, and
fieldbus control applications to
depict broad usage range.
Safety barriers are robust and
flexible to interface Ex i field devices to control sys-
tems. ISpace isolators deliver point-to-point connec-
tions while IS1 Remote I/O operates in hazardous areas
including Zone 1 and Division 1.
Wireless solutions include WirelessHART gateway,
GSM/GPRS modem, RFID localization systems, power-
less switching, and WLAN access point.
R. STAHL: Waldenburg Germany
For FREE Literature, select #272 at ogpe.hotims.com
OGPE.com October 2015
Pump minimum flow protection auto
recirculation valves
DLPM Automatic Recirculation
Valves are cited and diagrammed in
this free brochure to deliver centrifugal
pump protection.
With one moving part, models are
presented as multi-function designs
that operate without air or electric
power. They are easily installed with
three connections. Refining, petrochemical, and chemi-
cal DLPMs typically are employed on centrifugal pumps
of ANSI/API configuration, vertical turbine, or canned
motor designs.
HBE Engineering Incorporated: Three Rivers MI
For FREE Literature, select #273 at ogpe.hotims.com
API 618 reciprocating compressors
Oil-free or lubricated low and high-
speed piston compressors are pre-
sented in this free brochure.
They are illustrated and described
with water or air-cooled cylinders
and complete with electric motors,
engines or turbines, air or water heat
exchangers, instrumentation, electri-
cal panels, and filters — mounted on
skids or directly on foundations. This manufacturer can
supply an integrated compression package according
to Machine Directive, PED and ATEX regulations and in
compliance with API 618 standard.
SIAD Macchine Impianti: Bergamo Italy
For FREE Literature, select #274 at ogpe.hotims.com
Gas compression
specialists
“The Complete Compressor
Company,” this free brochure,
highlights gas compression
specialists to deliver industrial
or process compressors.
They offer a wide range of
compressors including How-
den BC and other world-class
manufacturers.
Both lubricated and oil-free
designs are offered as packages with high-pressure
breathing air and industrial designs also available. They
incorporate such features as inter-stage and discharge
relief valves as well as efficient, integral cooling sys-
tems, plus protection switches.
Representative compressor designs are illustrated.
Gas & Air Systems Incorporated: Hellertown PA
For FREE Literature, select #275 at ogpe.hotims.com

September “Advertiser Product & Service Followup”
Companies featured here advertised their equipment, products, systems, or services in September 7 OG&PE
within Oil & Gas Journal. These summaries give you an opportunity to receive free information on them and
their oil and gas specialties. Go to OGPE.com and use the Click Here for Product Information button on the
right. You will receive prompt, complete response from these valued OG&PE clients.
One source: Electric motors,
adjustable speed drives, motor starters
Toshiba International Corporation is proud to be a sin-
gle-source solution for your applications demands, of-
fering a complete product lineup of electric motors,
adjustable speed drives, and motor starters.
By pairing the P9 adjustable speed drive with the EQP
Global motor, we have set new pump control standards
in technology, efficiency, and ease-of-use that go be-
yond the competitive demands of the evolving pump
industry.
Toshiba International Corporation: Houston
Toshiba.com/tic
For FREE Information, select #40 at ogpe.hotims.com
Nylacast: Engineering plastic solutions
Nylacast engineering plastic solutions increase your
operations’ performance and efficiency.
Versatility of its components such as casing central-
izers and nylon sheaves sees them used in oil and gas,
construction, rail, and water treatment. Nylacast Engi-
neering Polymers are stable, corrosion resistant, tough,
self lubricating, and wear resistant — as replacements
for traditional steel, cast iron, bronze, or ceramics.
Nylacast: Leicester UK — Nylacast.com
For FREE Information, select #41 at ogpe.hotims.com
Easier device connections for smarter
production monitoring from MOXA
We are entering a world where you need to monitor all as-
pects of production in real-time over the network or cloud.
This is the Industrial Internet of Things that requires new
communications infrastructure solutions. A single special-
ized gateway like MGate W5208 can simplify installa-
tions by combining serial, Modbus RTU/ASCII/TCP, DNP3,
and Ethernet communication over a Wi-Fi network.
MOXA: Brea CA — Moxa.com
For FREE Information, select #42 at ogpe.hotims.com
Wheeled Rod Guide Couplings
Used successfully for more than 40 years by 90% of ma-
jor oil and gas companies — Wheeled Rod Guide Cou-
plings serve deviated, directional, and horizontal wells.
They reduce wear and prolong sucker rod and tubing
service life as they centralize the rod string in tubing.
Oilfield Improvements Incorporated: Broken Arrow OK
RodGuides.com
For FREE Information, select #43 at ogpe.hotims.com
September Advertiser Product & Service Follow-up P19
We know downhole oil tools:
packers, service tools, accessories
D & L Oil Tools packs a quarter century of know-how
into every tool it makes. These include mechanical set
packers, hydraulic set packers, permanent packers, ser-
vice tools and accessories, as well as multi-stage com-
pletion equipment.
Learn how D & L sets the standard for innovation,
quality, and unsurpassed value.
D & L Oil Tools: Tulsa OK — dloiltools.com
For FREE Information, select #44 at ogpe.hotims.com
By any measure, AMETEK knows your
petroleum process product needs
AMETEK Chandler Engineering Model 292B port-
able natural gas chromatographs are compact and
lightweight yet include fully integrated sample handling
and onboard storage for up to 1,000 sample runs.
Drexelbrook Universal IV CM water cut monitors
make high-accuracy water-in-oil measurements.
AMETEK Process Instruments Model 5100 Gas
Analyzers measure moisture in bulk gas or hydrocar-
bon streams via Tunable Diode Laser Absorption Spec-
troscopy.
Drexelbrook Impulse wave-guided radar level sys-
tems generate total level, distance or volumetric outputs
— unaffected by variations in process material electrical
characteristics.
AMETEK PMT IDT intrinsically safe pressure
transmitters deliver ±0.2% full-scale accuracy for criti-
cal applications plus meet FM, ATEX, and IECEx.
AMETEK Thermox WDG-V Combustion Analyzers
offer improved control and process safety as they mea-
sure excess oxygen, hydrocarbon, and combustibles in
flue gas.
AMETEK U.S. Gauge all-welded process gauges
comprise integrated seal for lower cost than gauges and
seals purchased separately.
Grabner MINIVAP ON-LINE process analyzers au-
tomatically monitor vapor pressure of gasoline, crude
oil, and liquefied or natural petroleum gas.
Model 888 Tail Gas Analyzers mount directly in
pipe. They comprise improved thermal managment,
smart diagnostics, and a flange temperature alarm to
warn of bad steam quality or failed steam trap.
AMETEK: Berwyn PA AMETEK.com
For FREE Information, select #45 at ogpe.hotims.com
October 2015 OGPE.com
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WEATHERFORD
Weatherford International plc announced
the addition of the sand-tolerant pump
(STP) to the company’s artificial-lift solu-
tions offering. Aimed to optimize the life
of wells, slow production declines and
reduce workovers, the STP is an alterna-
tive to standard rod pumps in wells with
high sand production. The STP prevents
abrasion caused by sand accumulation
in the barrel/plunger that results in de-
creased pump efficiency or total failure.
The STP is designed to operate at
depths reaching 9,000 ft (2,743 m).
A unique wiper assembly and filter
coupling reduce sand damage by moving
sand upward through the pump and
away from the barrel/plunger interface.
Based on field trial results, the STP has
demonstrated up to 5.5 times longer
run life than conventional rod pumps in
sandy conditions.
The STP is available in most Ameri-
can Petroleum Institute (API) pump sizes
and can perform in temperatures up
to 360 degrees F (182 degrees C). By
lubricating the plunger/ barrel interface
and keeping sand out of this critical area
of the plunger system, the STP provides
efficient and reliable performance and
extended run times.
With the addition of the STP, Weath-
erford continues to offer the most
comprehensive artificial-lift portfolio and
training program in the industry.
ARIEL
Less than a year shy of its 50th anni-
versary, Ariel Corporation has shipped
its 50,000th compressor. The company
produced and shipped its first com-
pressor in 1968 after establishing the
corporation in 1966. In June of 1978
compressor #1,000 was shipped. Com-
pressor #5,000 shipped in 1985, and
#10,000 was shipped in 1994. Compres-
sor #40,000 was shipped on November
30, 2012, with #50,000 shipping in
July of 2015. Producing nearly 40,000
compressors since the mid-1990’s dem-
onstrates how Ariel has positioned itself
to become the world standard in natural
gas compression.
Ariel compressors are utilized all over
Oil & Gas Journal | Oct. 5, 2015
SERVICES | SUPPLIERS
the world, but #50,000 isn’t leaving the
state of Ohio. The KBB-6 is headed to PENNWELL CORP.
Wayne County where it will be installed PennWell Corp.,
along with 4 other Ariel units at “Mainline owner of Oil & Gas
Compressor Station 2” as part of the Journal, has elected
800-mile Rover Pipeline, a gas transpor- Robert F. “Bob”
tation network designated to transport Biolchini chairman of
Marcellus shale gas from Pennsylvania the board of directors
and West Virginia across Ohio into after his retirement Biolchini
Michigan and Canada. The Rover project as president and
will utilize 39 other Ariel compressor chief executive officer. Frank T. Lau-
configurations. inger, formerly chairman, becomes
It is estimated that 6,500 construc- vice-chairman.
tion jobs will be created by the Rover Biolchini has worked with
Pipeline project. Almost $100 million PennWell in various capacities for 45
dollars will be paid to Ohioans for land years. Before becoming president
easements, and about $135 million and CEO in Apr. 1, 2000, he served
dollars annually will be paid in property on the executive committee of the
taxes when the Rover Pipeline is put into board of directors and as legal coun-
operation. sel for the company.
Replacing Biol-
HALLIBURTON chini as president
Halliburton’s Wireline & Perforating busi- and CEO is Mark C.
ness (NYSE: HAL) has introduced the Wilmoth, who has
XaminerSM Sonic Service, an evolution been PennWell’s se-
in acoustic formation evaluation that nior vice-president,
provides operators with high-fidelity data finance, and chief Wilmoth
and advanced processing capabilities financial officer since
to more accurately characterize a wide January 2004.
range of reservoirs, including those in
deep water, mature fields and uncon-
ventionals. The service debuted at the
Society of Petroleum Engineers Annual ville, Texas and has 31
Technical Conference and Exhibition, years of Industrial Manu-
Houston TX. facturing, Distribution
This technology works by recording and Field Services ex-
acoustic waveforms that travel from a perience within the Oil &
transmitter through the formation to a Gas, Petrochemical, and
receiver. As a result, operators can mea- Refining business. Mr. Myklebust
sure seismic properties and analyze res- Myklebust was formerly
ervoir characteristics and geomechanical the Senior VP for Leader
properties. These acoustic applications Gasket Technologies and prior Presi-
provide information to help customers dent of International Gasket and Supply
optimize completion and stimulation where his team successfully expanded
design and reduce drilling and comple- the brand presence and manufacturing
tion risks. operations to become a global supplier
to Shell Global Solutions, Valero Energy,
LOADMASTER Dow Chemical, Celanese Chemical, and
Loadmaster Derrick & Equipment an- Occidental. Mr. Myklebust’s career
nounced that Ogden “Jeff” Myklebust, includes a broad spectrum of engineered
II has been named President and CEO, equipment and manufacturing technol-
effective, September 1, 2015. ogy solutions in the process equipment,
Mr. Myklebust earned his BA from valves, automation, and flow control
Sam Houston State University in Hunts- industries.
97
SERVICES | SUPPLIERS
FUGLESANGS SUBSEA
Norway’s Fuglesangs Subsea (FSub-
sea) and the German pump company
RuhRPumpen have announced a collab-
orative agreement to develop advanced
subsea centrifugal pump solutions. The
two firms have joined forces to serve
oil & gas customers with a range of
innovative, cost-effective, and flexible
seabed boosting and injection systems.
The subsea equipment will be designed
to provide enhanced performance,
exceptional durability, and significantly
reduced costs.
RuhRPumpen and FSubsea initiated
the move to anticipate the changing
priorities of customers, as subsea field
developers are seeking more profitable
brownfield and greenfield subsea oil &
gas fields by increasing standardization
efforts.
The partnership leverages FSubsea’s
subsea pump system expertise (their
“Seal-Less” and “Topside-Less” technol-
ogy portfolio) with RuhRPumpen’s more
than 65 years of experience in oil & gas
pump development and manufacturing.
Initially the two companies will focus on
“Seal-Less” and “Topside-Less” subsea
pumps for injection and boosting ap-
plications. The “Seal-Less” technology
removes dynamic shaft seals in subsea
pumps. This move reduces equipment
costs as customers no longer need
expensive hydraulic umbilicals or subsea
barrier fluid systems, both commonly
found in subsea boosting systems. Re-
moving the seals also adds the benefit of
improved reliability as seals and barrier
fluid systems are costly and traditionally
a cause of pump failures. The “Topside-
Less” technology removes the require-
ment for a topside hydraulic power unit
(HPU) and topside variable frequency
drive (VFD). A key part of this technol-
ogy is a subsea variable speed control
integrated into the pump itself.
WELLDOG
WellDog launched its new fiber optic-
based Distributed Temperature Sensing
(DTS) installations and services offering
at the SPE ATCE as part of its WatchDog
business unit, which encompasses a
98
comprehensive range of electrical and fi-
ber optic solutions that monitor fracture/
stimulations, production and reservoir
conditions in real-time.
The product stems from a newly
formed partnership with Silixa, an
industry leader in distributed sensing
solutions. Silixa’s distributed fiber optic
systems, in conjunction with WellDog’s
existing downhole technologies and long
established service record, will provide
high-quality, reliable monitoring solutions
in oil and gas wells around the world.
Distributed sensing provides a greater
understanding of the unconventional res-
ervoir and its production performance.
WatchDog provides a suite of fiber optic
based permanent and semi-permanent
monitoring systems. These systems com-
bine the expertise of WellDog’s system
design, installation and support services
with Silixa’s distributed fiber optic sens-
ing technology and expertise to ensure
safe and reliable permanent downhole
monitoring.
BAKER HUGHES
Baker Hughes announced today the
commercial release of its SPECTRE™
frac plug, the first in the industry to
completely disintegrate downhole after
fracturing. The plug eliminates coiled
tubing (CT) interventions, accelerates
completion times and leaves behind an
unobstructed production inside diameter
(ID) for maximum flow area and easy
future access.
As with a traditional frac plug, the
SPECTRE plug enables flexible stage
placement. But unlike traditional plugs
and even other disappearing downhole
plugs, the entire SPECTRE plug—includ-
ing the plug body, anchoring grip and
packing element—disintegrates fully
at predictable rates when exposed to
wellbore fluids. Complete disintegra-
tion ensures that no plug debris are left
downhole, thereby protecting the well
infrastructure from undissolved compo-
nents, which can compromise wellbore
integrity, restrict access and complicate
operations such as future well rejuvena-
tions.
The SPECTRE plug’s innovative
design leverages a high-strength,
controlled electrolytic metallic (CEM)
nanoconstructed material developed by
Baker Hughes. Much of the plug body
is formed from the same CEM material
used in the company’s IN-Tallic™ disin-
tegrating frac balls, which inaugurated
an era of higher efficiency for multistage
hydraulic fracturing by eliminating the
time, cost and health, safety, and envi-
ronmental risks associated with milling
out frac balls.
Development locations and plug
setting depths are not constrained by
the availability and/or finite horizontal
reach of CT, allowing operators to access
more feet of pay zone, in more locations.
The SPECTRE plug’s virtually unlimited
treatment depths also enable operators
to achieve more reservoir contact per
wellbore to reduce surface infrastructure
and costs, while creating a more environ-
mentally responsible operating footprint.
TECH ALLIES CONSULTING, LLC
Tech Allies Consulting has developed
with partner American Business Ser-
vices, an SAP HANA Certified, bolt-
on solution for the Oil and Gas / bulk
commodity industries that reduces the
rack, bulk and crude transaction billing
process from days to real-time.
The solution is called Transac-
tion Management Workbench (TMW).
TMW is a one of a kind solution that
provides real-time, two-way communica-
tion between terminals and your ERP /
back-office systems. It is a “bolt-on” to
your existing terminal automation system
(TAS) and is compatible with most any
ERP / back-office software.
TMW covers 80-90% of the Bill of
Lading processes and eliminates many
of the bottlenecks and discrepancies.
The ability to process in real-time signifi-
cantly reduces Days Sales Outstanding,
enables tighter contractual compliance,
and allows marketing/traders to exploit
trading opportunities based on actual
inventory positions.
In a typical Oil and Gas / bulk load
transaction, the process can take
anywhere between 24-36 hours. The
terminal generates a Bill of Lading at the
Oil & Gas Journal | Oct. 5, 2015

time the product is loaded on the carrier,
this data is then stored at the terminal
system for up to 36 hours before it is
transmitted to the ERP / back-office for
validation and invoicing.
VALLOUREC
Vallourec, a world leader in premium
tubular solutions, delivers 14,000 tons
of premium tubes in the scope of a
contract with Hess Corporation for the
Stampede project in the US Gulf of
Mexico. Stampede is a deepwater sub-
sea development which is located in the
Green Canyon Block area, approximately
115 miles south of Fourchon, Louisiana.
Vallourec is providing over 5,000 tons
in various sizes of oil country tubular
goods (OCTG) for the critical deepwa-
ter development wells, including high
performance premium grades from
Europe and Ohio. Over the life of project
the majority of the pipes will be threaded
at VAM USA, Houston, TX, with VAM®
SLIJII™ and VAM® HP™ for a total of over
12,000 premium connections.
Vallourec’s contract also covers 9,000
tons of seamless steel line pipe for
flowlines and steel catenary riser (SCR).
They will be installed in water depth
of approximately 3,500 ft (over 1,000
meters). Amongst the scope of products
and services, Vallourec will provide SCR
pipes with very tight pipe end tolerances
and optimal welding characteristics, key
features to reduce both the cost and risk
of project execution.
EXXONMOBIL
ExxonMobil Upstream Research Com-
pany has awarded Schlumberger an
international license for ExxonMobil’s
patented Internal Shunt Alternate Path
(ISAPTTM) sand screens to improve
gravel packing of cased and openhole
completion wells.
ISAPT screens dramatically increase
the reliability of wells completed in sand-
prone reservoirs. The technology pro-
vides internal alternate flow paths, called
shunt tubes, in the downhole tool to ef-
fectively gravel pack the producing sec-
tions of a well. The shunt tubes enable
the ISAPT gravel packing operation to
Oil & Gas Journal | Oct. 5, 2015
proceed even if sand prematurely blocks
the well annulus, which would force a
conventional packing operation to shut
down. ISAPT shunt tubes divert gravel
slurry around sand blockages to fill voids
in the annulus until a complete pack is in
place. The unique design of the ISAPT
screen technology allows gravel packing
lengths exceeding 5,000 feet.
KNIGHT OIL TOOLS
Earl Blackwell, President and Chief
Executive Officer of Knight Oil Tools,
announced that Paul Breaux has been
named General Man-
ager of Tri*Drill Ser-
vices. Tri*Drill Services
provides non-destructive
inspection and hard-
banding of drill pipe and
bottomhole assembly
components. Breaux
Breaux has more
than 30 years of experi-
ence in oilfield inspections. He has been
with Knight Oil Tools since 2012. His
previous positions include Special Proj-
ect Manager, Rocky Mountain Interim
Regional Manager and, most recently,
U.S. Technical Support Specialist for
Tri*Drill Services.
Breaux held Level II Inspection Certi-
fications in Magnetic Particle, Ultrasonic
Wall, Liquid Penetrant, Visual/Dimen-
sional Examination and Electromagnetic
Inspection.
Focused on providing “zero-failure”
equipment and service for more than
40 years, Knight Oil Tools has grown to
be the largest privately held rental and
fishing tools business in the oil and gas
industry. Operating from more than 50
locations across 11 oil-producing states
and internationally, Knight Oil Tools
serves all phases of a well’s lifecycle
from exploration to abandonment.
MOBLIZE
Moblize, a leader in cloud-based real
time data solutions for the energy
industry, announced that the company
has won a complete victory in a patent
infringement lawsuit filed by TDE Petro-
leum Data Solutions. The United States
SERVICES | SUPPLIERS
District Court for the Southern District of
Texas in Houston ruled that U.S. Patent
No. 6,892,812, which TDE bought from
another company and then asserted
against Moblize, was invalid. The Court
additionally dismissed all of TDE’s claims
with prejudice. Moblize was represented
by Vinson & Elkins LLP, a global energy
and technology law firm.
BUTECH
BuTech, a brand of Accudyne Industries,
announced that it has achieved ABS cer-
tification for its line of medium pressure
valves and fittings. The Product Design
Assessment (PDA) certificate, number
15-HS1373638-PDA, issued through the
American Bureau of Shipping’s (ABS)
along with Type Approval certificate,
number LA2948597-X, demonstrates
that BuTech valves are safe to use in
offshore applications on a variety of
ABS-classed vessels and offshore equip-
ment and systems.
One of the world’s leading ship
classification societies, ABS is commit-
ted to setting standards for safety and
excellence, leading pioneering efforts to
maximize efficiency and environmental
sustainability in offshore fleet operations.
Shipbuilders choose ABS classification
services for new builds in order to com-
ply with the latest standards and interna-
tional codes and to increase operational
efficiencies and meet energy efficiency
standards measured and mandated by
the IMO.
BuTech medium pressure valves are
used in a multitude of offshore vessels
and applications, from topside FPSO’s
to subsea templates, operating under
pressures as high as 20,000 psi (1380
bar) and extreme temperature condi-
tions, often with erosive or corrosive
solids, liquids or gases. The certifica-
tion gives confidence to the mission of
BuTech customers in the shipbuilding
and offshore industry that BuTech valves
and equipment will meet strict ABS stan-
dards and help safeguard life, floating
assets and the natural environment.
99
 26-28
JANUARY
2016
THE EKO
HOTEL &
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LAGOS
NIGERIA

POSITIONING FOR A SUSTAINABLE FUTURE

INVITATION TO JOIN OUR ANNIVERSARY CELEBRATIONS
BE PART OF WEST AFRICA’S PREMIER TECHNICAL OIL & GAS EVENT
The 20th Anniversary edition of Offshore West Africa will return to Lagos, For information on Exhibit Sales & Sponsorship at Offshore West Africa,
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Owned & Produced by: Presented by: Supporting Publication:

 STATISTICS
Additional analysis of market trends is available
IMPORTS OF CRUDE AND PRODUCTS through OGJ Online, Oil & Gas Journal’s electronic
information source, at http://www.ogj.com.
— Districts 1-4 — — District 5 — ———— Total US ————
9-18 9-11 9-18 9-11 9-18 9-11 9-19*
2015 2015 2015 2015 2015 2015 2014
––––––––––––––––––––––––— 1,000 b/d ––––––––––––––––––––––––—
Total motor gasoline ............. 461 611 42 111 503 722 509
Mo. gas. blending comp..... 381 569 42 111 423 680 475
Distillate...............................
Residual ..............................
121
228
61
160
43
4
5
7
164
232
66
167
192
186 OGJ CRACK SPREAD
Jet fuel-kerosine .................. 51 23 0 22 51 45 103 9-25-15* 9-26-14* Change Change,
Propane-propylene .............. 61 67 16 15 77 82 53 ———–—$/bbl ——–—— %
Other ................................... 924 554 (5) 22 920 576 591
SPOT PRICES
Total products ...................... 1,846 1,476 100 182 1,947 1,658 1,634 Product value 60.23 113.14 (52.91) (46.8)
Brent crude 47.33 95.40 (48.07) (50.4)
Total crude ........................... 6,104 6,037 1,071 1,152 7,175 7,189 6,869 Crack spread 12.90 17.74 (4.84) (27.3)
Total imports ........................ 7,950 7,513 1,171 1,334 9,121 8,847 8,503
FUTURES MARKET PRICES
*Revised. One month
Source: US Energy Information Administration Product value 60.62 112.03 (51.41) (45.9)
Data available at PennEnergy Research Center. Light sweet crude 45.52 92.39 (46.87) (50.7)
Crack spread 15.10 19.64 (4.54) (23.1)
Six month
EXPORTS OF CRUDE AND PRODUCTS Product value
Light sweet crude
62.00 107.70 (45.70) (42.4)
48.52 90.33 (41.81) (46.3)
–––––––––––––––– Total US –––––––––––––––– Crack spread 13.48 17.37 (3.88) (22.4)
9-18-15 9-11-15 *9-19-14
––––––––––––––– 1,000 b/d ––––––––––––––– *Average for week ending.
Finished motor gasoline 419 419 362 Source: Oil & Gas Journal
Jet fuel-kerosine 133 133 136 Data available at PennEnergy Research Center.
Distillate 1,223 1,223 1,200
Residual 414 414 379
Propane/propylene 505 505 375
Other oils 1,001 1,001 884
Total products 3,695 3,695 3,336
Total crude 477 477 385
Total exports 4,172 4,172 3,721
NET IMPORTS
Total 4,951 4,675 4,783
Products (1,748) (2,037) (1,702)
Crude 6,699 6,712 6,485

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

CRUDE AND PRODUCT STOCKS

—–– Motor gasoline —––
Blending Jet fuel, ————— Fuel oils ————— Propane-
Crude oil Total comp. kerosine Distillate Residual propylene
District ———————————————————————————— 1,000 bbl —————————————————————————
PADD 1 ..................................... 15,658 58,232 52,884 9,357 58,991 9,308 5,647
PADD 2 ..................................... 135,397 47,528 41,144 6,970 32,484 1,215 26,435
PADD 3 ..................................... 230,528 76,968 67,018 15,204 44,059 23,700 60,535
1
PADD 4 ..................................... 21,752 6,904 4,807 595 3,539 242 4,459
PADD 5 ..................................... 50,634 29,124 26,187 9,285 12,804 5,007 —

Sept. 18, 2015 ......................... 453,969 218,756 192,040 41,411 151,877 39,472 97,076
Sept. 11, 2015 .......................... 455,894 217,387 190,614 41,077 153,963 38,989 97,693
Sept. 19, 20142 ......................... 357,997 210,325 181,572 40,332 128,594 36,757 79,118
1
Includes PADD 5. 2Revised.
Source: US Energy Information Administration
Data available at PennEnergy Research Center.

REFINERY REPORT—SEPT. 18, 2015

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

PADD 1 .............................................. 1,043 1,042 3,101 90 307 42 174

PADD 2 .............................................. 3,540 3,536 2,614 209 1,055 50 328
PADD 3 .............................................. 8,561 8,466 2,274 705 2,960 160 902
1
PADD 4 .............................................. 608 617 310 31 193 16 180
PADD 5 .............................................. 2,630 2,541 1,664 469 569 110 —
Sept. 18, 2015 .................................... 16,382 16,202 9,963 1,504 5,084 378 1,584
Sept. 11, 2015 .................................... 16,780 16,512 9,708 1,655 5,076 431 1,560
Sept. 19, 20142 ................................... 16,633 16,214 9,717 1,679 4,874 399 1,638

18,017 Operable capacity 90.9 utilization rate

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

Oil & Gas Journal | Oct. 5, 2015 101

STATISTICS
OGJ GASOLINE PRICES BAKER HUGHES RIG COUNT OGJ PRODUCTION REPORT 1 2
9-25-15 9-26-14
Price Pump Pump 9-25-15 9-26-14 –—— 1,000 b/d —–—
ex tax price* price
9-23-15 9-23-15 9-24-14 (Crude oil and lease condensate)
Alabama............................................ 3 4 Alabama ................................. 25 27
————— ¢/gal ————— Alaska ............................................... 13 11 Alaska .................................... 483 478
Arkansas ........................................... 3 12 California ............................... 583 618
(Approx. prices for self-service unleaded gasoline) California .......................................... 14 45 Colorado ................................. 310 273
Atlanta .......................... 168.8 214.7 327.7 Land................................................ 13 43 Florida .................................... 6 6
Baltimore ...................... 172.8 218.6 329.7 Offshore .......................................... 1 2 Illinois .................................... 23 27
Boston ........................... 172.6 217.5 342.7 Colorado ............................................ 33 77 Kansas ................................... 122 140
Buffalo .......................... 155.5 224.4 332.8 Florida ............................................... 0 2 Louisiana ............................... 1,253 1,327
Miami ............................ 171.7 226.1 342.8 Michigan ................................ 17 19
Illinois ............................................... 3 1 Mississippi ............................. 65 69
Newark .......................... 178.8 211.7 329.4 Indiana.............................................. 0 3 Montana ................................. 76 84
New York........................ 161.5 230.4 339.4 Kansas .............................................. 9 25 New Mexico............................. 408 335
Norfolk........................... 172.0 207.7 334.7 Kentucky............................................ 0 3 North Dakota .......................... 1,174 1,186
Philadelphia .................. 169.1 229.3 346.7 Louisiana .......................................... 70 113 Ohio ........................................ 65 41
Pittsburgh ..................... 168.1 228.3 332.8 N. Land ........................................... 28 30 Oklahoma ............................... 341 349
Wash., DC...................... 185.0 226.9 338.7 S. Inland waters .............................. 4 11 Pennsylvania .......................... 18 19
PAD I avg .................. 170.5 221.4 336.1 S. Land............................................ 8 17 Texas ...................................... 3,761 3,539
Utah ....................................... 101 116
Offshore .......................................... 30 55 West Virginia .......................... 36 33
Chicago ......................... 228.1 285.6 381.6 Maryland ........................................... 0 0 Wyoming ................................. 237 222
Cleveland ...................... 160.8 207.2 341.2 Michigan ........................................... 0 0 Other states ........................... 50 52
Des Moines .................... 217.0 257.4 334.1 Mississippi ........................................ 5 14
Detroit ........................... 168.2 228.6 333.0 Montana ............................................ 1 8 Total 9,154 8,960
Indianapolis .................. 147.0 207.2 324.1 Nebraska ........................................... 1 3 1
OGJ estimate. 2Revised. Source: Oil & Gas Journal.
Kansas City ................... 179.5 215.2 316.5 New Mexico........................................ 50 101 Data available at PennEnergy Research Center.
Louisville ....................... 197.0 247.9 335.0 New York............................................ 0 0
Memphis ....................... 174.3 214.1 337.6 North Dakota ..................................... 66 189
Milwaukee ..................... 206.5 257.8 338.9 Ohio................................................... 19 42 US CRUDE PRICES
Minn.-St. Paul ............... 180.6 227.6 338.6 Oklahoma .......................................... 105 213 9-25-15
Oklahoma City ............... 165.5 200.9 312.2 Pennsylvania ..................................... 33 57 $/bbl*
Omaha .......................... 178.0 223.7 313.2 South Dakota..................................... 0 1 Alaska-North Slope 27° ......................................... 57.76
St. Louis ........................ 166.8 202.5 314.1 Texas ................................................. 363 897 Light Louisiana Sweet ........................................... 41.07
Tulsa ............................. 167.4 202.8 310.2 Offshore .......................................... 1 2 California-Midway Sunset 13° .............................. 38.70
Wichita .......................... 165.7 208.2 324.4 Inland waters .................................. 1 0 California Buena Vista Hills 26° ........................... 45.95
PAD II avg ................. 180.2 225.8 330.3 Dist. 1 ............................................. 41 119 Wyoming Sweet ..................................................... 39.95
Dist. 2 ............................................. 39 83 East Texas Sweet ................................................... 39.25
Albuquerque .................. 171.4 208.7 314.5 Dist. 3 ............................................. 24 72 West Texas Sour 34° .............................................. 37.25
Birmingham .................. 164.1 203.3 329.0 Dist. 4 ............................................. 14 31 West Texas Intermediate........................................ 42.25
Dallas-Fort Worth .......... 162.1 200.5 307.2 Oklahoma Sweet.................................................... 42.25
Dist. 5 ............................................. 7 11 Texas Upper Gulf Coast ......................................... 36.00
Houston ......................... 162.2 200.6 309.5 Dist. 6 ............................................. 17 34 Michigan Sour ....................................................... 34.25
Little Rock ..................... 167.8 208.0 312.9 Dist. 7B ........................................... 4 10 Kansas Common ................................................... 41.25
New Orleans .................. 166.7 205.1 319.9 Dist. 7C ........................................... 32 94 North Dakota Sweet ............................................... 31.50
San Antonio ................... 167.9 206.3 317.8 Dist. 8 ............................................. 153 330
PAD III avg ................ 166.0 204.6 315.8 *Current major refiner’s posted prices except N. Slope lags 2
Dist. 8A ........................................... 15 34 months. 40° gravity crude unless differing gravity is shown.
Dist. 9 ............................................. 3 13 Source: Oil & Gas Journal. Data available at PennEnergy
Cheyenne....................... 211.9 254.3 345.5 Dist. 10 ........................................... 12 64
Denver ........................... 221.4 261.8 361.3 Research Center.
Utah .................................................. 5 23
Salt Lake City ................ 216.9 259.8 347.8
PAD IV avg ................ 216.7 258.6 351.5
West Virginia .....................................
Wyoming............................................
17
24
27
60
WORLD CRUDE PRICES
$/bbl
Others—NV-1 ................................... 1 0 OPEC reference basket Wkly. avg. 9-25-15 44.12
Los Angeles ................... 256.2 324.4 384.3
Phoenix.......................... 191.3 228.7 354.3 Total US ........................................ 838 1,931 –– Mo. avg., $/bbl ––
Portland ........................ 218.6 268.1 364.3 Total Canada ................................ 176 429 July-15 Aug.-15
San Diego ...................... 251.9 320.1 369.3 Grand total ................................... 1,014 2,360
San Francisco................ 242.8 311.0 388.3 OPEC reference basket....................... 54.19 45.46
US oil rigs.......................................... 640 1,592 Arab light-Saudi Arabia ....................... 54.95 46.52
Seattle........................... 231.2 287.1 353.3 US gas rigs........................................ 197 338
PAD V avg ................. 232.0 289.9 368.9 Basrah light-Iraq ................................. 53.10 44.32
Total US offshore ............................... 33 62 Bonny light 37o-Nigeria........................ 56.77 47.07
Week’s avg. .................. 185.3 232.6 336.5 Total US cum. avg. YTD ..................... 1,059 1,845 Es Sider-Libya ...................................... 55.54 45.82
Aug. avg... ..................... 217.4 264.7 342.9 Girassol-Angola.................................... 56.46 47.42
July avg.. ....................... 231.4 278.7 350.3 Rotary rigs from spudding in to total depth. Iran heavy-Iran..................................... 54.86 46.25
2015 to date ................. 203.5 250.8 — Definitions, see OGJ Sept. 18, 2006, p. 46. Kuwait export-Kuwait ........................... 53.85 45.28
2014 to date ................. 304.1 351.4 — Source: Baker Hughes Inc. Marine-Qatar........................................ 55.36 46.98
Data available at PennEnergy Research Center. Merey-Venezuela .................................. 44.43 35.26
*
Includes state and federal motor fuel taxes and state Murban-UAE ......................................... 57.58 48.83
sales tax. Local governments may impose additional taxes. Oriente-Ecuador ................................... 47.78 39.75
Source: Oil & Gas Journal. Saharan blend 44o-Algeria ................... 56.34 47.17
Data available at PennEnergy Research Center. Other crudes
Minas 34o-Indonesia ............................ 51.86 42.46
Fateh 32o-Dubai ................................... 56.15 47.87
Isthmus 33o-Mexico ............................. 55.62 46.56
Brent 38o-UK ........................................ 56.54 46.72
REFINED PRODUCT PRICES IHS PETRODATA RIG COUNT Urals-Russia ........................................
Differentials
55.84 46.22
WTI/Brent ............................................. (5.37) (3.95)
9-18-15 9-18-15 SEPT. 25, 2015 Brent/Dubai.......................................... 0.39 (1.15)
¢/gal ¢/gal Total Marketed Marketed Source: OPEC Monthly Oil Market Report.
supply supply Marketed utilization Data available at PennEnergy Research Center.
Spot market product prices of rigs of rigs contracted rate (%)
No. 2 Distillate US Gulf of
Motor gasoline
(Conventional-regular) Low sulfur diesel fuel Mexico. . . . . . 118 75 54 72.0 US NATURAL GAS STORAGE1
New York Harbor ......... 142.30 New York Harbor ......... 146.50 South
America 69 65 59 90.8 9-18-14 9-11-14 9-18-14 Change,
Gulf Coast .................. 132.30 Gulf Coast .................. 138.20 –——––—— bcf —––——– %
Los Angeles ................ 142.70 Northwest
Europe. . . . . 103 96 79 82.3 Producing region ................ 1,202 1,165 893 34.6
Motor gasoline West Consuming region east ...... 1,742 1,680 1,637 6.4
(RBOB-regular) Kerosine jet fuel
Africa. . . . . . 74 69 49 71.0 Consuming region west ...... 496 489 445 11.5
New York Harbor ......... 165.30 Gulf Coast .................. 131.70
Middle Total US ............................. 3,440 3,334 2,975 15.6
East. . . . . . . 161 155 136 87.7 Change,
No. 2 heating oil Propane Southeast
New York Harbor ......... 139.00 Mont Belvieu .............. 45.80 June-15 June-14 %
Asia. . . . . . . 98 90 53 58.9
Worldwide. . . . 852 764 606 79.3 Total US2 ............................ 2,647 2,005 32.0
1
Working gas. 2At end of period.
Source: EIA Weekly Petroleum Status Report. Source: IHS Petrodata Source: Energy Information Administration
Data available at PennEnergy Research Center. Data available in PennEnergy Research Center Data available at PennEnergy Research Center.

102 Oil & Gas Journal | Oct. 5, 2015

 STATISTICS
PACE REFINING MARGINS WORLDWIDE NGL PRODUCTION
July Aug. Sept. Sept. 6 month Change vs.
2015 2015 2015 2014 Change Change, average previous
——––—––––— $/bbl –––––––––—— % June May –– production –– –––— year —–
2015 2015 2015 2014 Volume
US Gulf Coast ————–—–––— 1,000 b/d ———––———— %
Composite US Gulf Refinery.............. 16.50 15.80 8.67 14.10 (5.43) (38.52)
Mars (Coking) .................................. 18.66 16.83 10.16 14.35 (4.19) (29.22) Brazil ................................... 90 90 92 85 7 8.5
Mars (Cracking) ............................... 15.10 12.86 6.75 11.53 (4.78) (41.46) Canada................................ 651 653 689 668 21 3.2
Bonny Light ...................................... 8.81 11.52 5.35 9.38 (4.02) (42.91) Mexico ................................. 325 323 333 364 (31) (8.5)
US PADD II United States ...................... 3,259 3,249 3,180 2,827 354 12.5
Chicago (WTI)................................... 23.51 30.64 19.16 19.82 (0.66) (3.34) Venezuela ............................ 213 213 213 213 — —
US East Coast Other Western
Brass River ...................................... 10.58 13.47 9.89 10.46 (0.57) (5.47) Hemisphere ....................... 218 212 232 238 (6) (2.5)
East Coast Comp ............................. 12.74 14.54 10.78 11.05 (0.26) (2.39) Western
US West Coast Hemisphere.................. 4,756 4,740 4,740 4,394 346 7.9
Los Angeles (ANS) ............................ 33.40 22.98 15.03 11.86 3.17 26.78
NW Europe Norway................................. 353 325 343 308 35 11.3
Rotterdam (Brent) ............................ 5.79 6.68 4.15 3.02 1.13 37.23 United Kingdom ................... 68 68 61 64 (3) (4.9)
Mediterranean Other Western
Italy (Urals) ...................................... 6.02 7.78 5.16 1.96 3.20 162.85 Europe ............................... 9 9 9 10 (1) (10.0)
Western Europe ............. 430
372

402
372

412
373

382
435

31
–61

8.0
–14.1

Far East
Singapore (Dubai) ............................ 2.69 2.90 5.66 2.89 2.77 95.60
Russia ................................. 753 753 755 719 36 5.0
Source: Jacobs Consultancy Inc. Other FSU ............................ 157 157 156 169 (13) (7.5)
Data available at PennEnergy Research Center. Other Eastern
Europe ............................... 13 13 13 14 (1) (5.6)
Eastern Europe .............. 923
640

923
638

924
640

902
643

22
(3)

2.5
(0.4)

Algeria ................................. 340 340 340 340 — —

Egypt ................................... 202 202 201 190 12 6.2
US NATURAL GAS BALANCE Libya....................................
Other Africa .........................
50
83
50
83
50
83
44
82 —
6 13.2
0.3
DEMAND/SUPPLY SCOREBOARD Africa.............................. 675 675 674 656 18 2.7

June Total YTD Saudi Arabia........................ 1,810 1,810 1,810 1,800 10 0.6
June May June 2015-2014 ––– YTD ––– 2015-2014 United Arab Emirates .......... 641 641 641 641 — —
2015 2015 2014 change 2015 2014 change Other Middle East ................ 690 690 688 668 20 3.0
——————————— bcf ——————––————— Middle East..................... 3,141 3,141 3,139 3,109 30 1.0
DEMAND Australia.............................. 80 80 68 77 (9) (12.1)
Consumption ................... 1,927 1,879 1,765 162 14,586 14,131 455 China................................... — — — — — —
Addition to storage .......... 427 541 506 (79) 1,686 1,664 22 India .................................... 105 105 104 104 (0) (0.2)
Exports ............................ 139 135 120 19 845 779 66 Other Asia–Pacific ............... 314 314 314 336 (22) (6.5)
Canada ......................... 45 45 55 (10) 372 428 (56) Asia–Pacific ................... 499 499 486 517 (31) (6.1)
Mexico .......................... 91 87 65 26 462 346 116
LNG ............................... 3 3 — 3 11 5 6 TOTAL WORLD ................. 10,423 10,378 10,376 9,961 415 4.2
Total demand .................. 2,493 2,555 2,391 102 17,117 16,574 543
Totals may not add due to rounding.
SUPPLY Source: Oil & Gas Journal.
Production (dry gas) ........ 2,236 2,289 2,095 141 13,396 12,415 981 Data available at PennEnergy Research Center.
Supplemental gas............ 4 5 5 -- 28 29 (1)
Storage withdrawal.......... 69 45 44 25 2,171 2,550 (379)
Imports ............................
Canada..........................
206
203
204
202
201
192 11
5 1,406 1,384
1,360 1,352
22
8 OXYGENATES
Mexico ........................... — — — — — 1 (1) June May YTD YTD
LNG................................ 3 2 9 (6) 46 31 15
Total supply ..................... 2,515 2,543 2,345 171 17,001 16,378 623 2015 2015 Change 2015 20144 Change
———————––—––– 1,000 bbl –––—————————
NATURAL GAS IN UNDERGROUND STORAGE
June May Apr. June Fuel ethanol
2015 2015 2015 2014 Change Production .................. 29,684 29,666 18 173,292 167,496 5,796
—————————— bcf ——————————
Stocks ......................... 20,029 20,120 (91) 20,029 18,664 1,365
Base gas 4,370 4,362 4,364 4,358 2,477
Working gas 2,647 2,295 1,804 2,005 642 MTBE
Total gas 7,017 6,657 6,168 6,363 3,119
Production .................. 1,549 1,634 (85) 6,891 7,121 (230)
Source: DOE Monthly Energy Review. Stocks ......................... 983 1,101 (118) 983 883 100
Data available at PennEnergy Research Center. NOTE: No new data at press time.
Source: DOE Petroleum Supply Monthly.
Data available at PennEnergy Research Center. NOTE: No new data at press time.

US COOLING DEGREE–DAYS
June May June — Total degree days YTD —
2015 2015 2014 % change 2015 2014 % change
New England ................................................................ 39 32 68 (0.4) 71 75 (0.1)
Middle Atlantic ............................................................. 113 71 131 (0.1) 184 158 0.2
East North Central........................................................ 137 81 175 (0.2) 219 230 —
West North Central ....................................................... 203 56 194 — 270 262 —
South Atlantic .............................................................. 393 239 351 0.1 899 751 0.2
East South Central ....................................................... 354 175 331 0.1 604 512 0.2
West South Central....................................................... 454 259 457 — 908 815 0.1
Mountain ...................................................................... 316 77 272 0.2 480 469 —
Pacific .......................................................................... 183 27 127 0.4 287 268 0.1
US average*............................................................ 256 125 243 0.1 481 428 0.1

*Excludes Alaska and Hawaii.

Source: DOE Monthly Energy Review. NOTE: Data has been revised to conform to modified data format provided by source.
Data available at PennEnergy Research Center.

Oil & Gas Journal | Oct. 5, 2015 103

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Oil & Gas Journal | Oct. 5, 2015 105

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and reach +100,000
subscribers. Job Opportunities at Ensco PLC
Ensco PLC is seeking individuals for the follow-
For more information: ing positions within the US:
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gree in Geophysics, Geology or related and five
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job code GMShou2015 on resume.
CGG Services (U.S.) Inc. in Houston,
Texas seeks Geophysical Data Processor.
Qualified applicants will possess a Master’s
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cifically geomatics engineering. Qualified ap-
plicants should send resumes to ATTN: Eve
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106 Oil & Gas Journal | Oct. 5, 2015

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Oil & Gas Journal | Oct. 5, 2015 107

THE EDITOR’S PERSPECTIVE
Label obsession
degrades coverage
of climate change
by Bob Tippee, Editor
If the politics of climate change must begin
and end with name-calling, a squabble about
labels can seem serious.
The Center for Skeptical Inquiry wants to
brand hard opponents of aggressive precaution
“deniers.”
In an open letter last December, the group
asked journalists to favor the D-word for “those
who deny reality but do not engage in scientific
research or consider evidence that their deeply
held opinions are wrong.” This summer, Clima-
teTruth.org sent a petition supporting the letter
to editors of the AP Stylebook.
“Proper skepticism promotes scientific
inquiry, critical investigation, and the use of
reason in examining controversial and extraor-
dinary claims,” the letter said. “Denial, on the
other hand, is the a priori rejection of ideas
without objective consideration.”
Acknowledging “not all individuals who
call themselves climate change skeptics are
deniers,” the letter regretted that “virtually all
deniers have falsely branded themselves as
skeptics.”
It said Sen. James Inhofe (R-Okla.), who
has called global warming a hoax, can’t call
himself a skeptic.
Between Inhofe’s stance and equally ex-
treme positions at the opposite political pole,
legitimate questions await answers.
How sensitive is global average tempera-
ture to a doubling of carbon dioxide in the
atmosphere? How and in what net direction do
feedbacks work? Why isn’t observed warming
intensifying in accordance with model predic-
tions?
Signers of the letter and petition probably
offer certain answers. Many climate scien-
tists, however, have contrary, equally certain
thoughts that receive little press.
Part of the reason for the attention skew is
resort by made-up minds to propaganda.
Insistence on the term “denier,” for exam-
ple, obviously attempts to associate dissenters
with substance abusers “in denial” about their
problems.
The AP wasn’t fooled. On Sept. 22, it an-
nounced a preference for the word “doubters”
over either “deniers” or “skeptics.”
Yet this enshrines the phrase “climate
change doubters?” Who doubts climate
change?
Reporters would write more usefully about
climate change if they paid more attention to
what people said on the subject and less about
what to call them.
(From the subscription area of www.ogj.com,
posted Sept. 25, 2015; author’s e-mail: bobt@
ogjonline.com)
108
WATCHING GOVERNMENT
Nick Snow
Washington Editor
States weigh in on ozone rule
State air quality agencies apparently
would appreciate better imple-
mentation direction from the US
Environmental Protection Agency
if it reduces allowable ground-level
ozone limits from 75 ppb to a pro-
posed 65-70 ppb range.
That was what the Association
of Air Pollution Control Agencies
in Lexington, Ky., found when it
examined 44 state air regulators’
comments submitted to EPA on
the proposal, which could become
final in early October. Oil and gas
and other business groups have
said the rules potentially could be
the most expensive in US history.
State regulators’ concerns matter
because EPA usually hands off the
problem of actually making its new
rules work to them.
“There’s been a drumbeat on
this and other national ambient air
quality issues,” AAPCA Executive
Director Clint Woods said on Sept.
28. “States, regardless of their
political stripes, have frequently and
increasingly called for more robust
implementation direction from
EPA.”
In the ozone context, states
did not have a final implementa-
tion plan from EPA for the 2008
standards until early in 2015, he
told OGJ. “That’s a very long time-
frame,” Woods observed. “States
across the country have made clear
that they need that information
sooner rather than later.”
Of the 44 responses, roughly
three-quarters said they were con-
cerned about timely implementation
rules from EPA under a revised
standard. Referring to delays for
2008 rules’ implementation instruc-
tions and truncated requirements
for state and local agencies, many
states also recommended a timeline
for EPA implementation rules and
guidance.
Among states commenting on
when the agency should issue
proposed implementation rules and
guidance for a revised ozone Na-
tional Ambient Air Quality Standard,
more than 90% recommended
that EPA do so at the time the final
NAAQS is promulgated.
Finalizing instructions
When it came to the time imple-
mentation rules and guidance
under a revised NAAQS should
be finalized, more than half the
state air regulators said it should
be within a year. Roughly a quarter
recommended finalizing with final
area designations, AAPCA said.
It has not taken a position on
where the primary or second ozone
NAAQS should be set. AAPCA
noted, however, that E&E News
reported on Apr. 23 that EPA Act-
ing Assistant Administrator for Air
and Radiation Janet McCabe said
at a Clean Air Act Advisory Com-
mittee meeting, “I’m not sure that
we can meet everybody’s, or some
people’s, expectations that we have
an implementation rule ready when
the final rule goes out.
“There’s just a lot of reasons why
that just is very, very difficult, and
may not even be appropriate to do,”
she said. “We are trying to provide
guidance and rules in as timely a
way as possible.”
Oil & Gas Journal | Oct. 5, 2015
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 Special advertising section produced by Elite Reports

ABU DHABI
Rises to the challenge and aims to boost production from 2.82 to 3.5 million bpd

I nnovative partnerships, exchange of expertise, workforce development

and a drive towards sustainability are the pillars guiding Abu Dhabi as
its oil industry settles into the next chapter and sets new goals.
A good example is Statoil which is a
new contender to the concessions. The
Norwegian Ambassador Anders Berge
To reach the target of 3.5 million bpd by 2017 more than US$25 explains, “Statoil brings the experience
billion will be invested in Abu Dhabi National Oil Company (ADNOC) of working in extreme conditions.
and Abu Dhabi Company for Onshore Oil Operations (ADCO) over This has sharpened our technological
the next five years. edge and has been a catalyst to spin-
Concerns that UAE would change the structure of its partnerships off technology.” Another international
have passed. Instead, ADNOC is harnessing the experience of IOCs company Maersk, also operates
to create dynamic partnerships that can handle future production as a lead technical player in the
challenges. “It’s up to us to choose who is best and who can add region thanks to its experience with
value,” said HE Suhail Mohamed Faraj Al Mazrouei, the UAE’s “Part of our strategy is carbonates. This is a valuable asset for
to be more open which
Minister for Energy. “What matters for this government is the is making UAE a hub for Abu Dhabi.
positive opportunities we create for the next generation,” he added. energy.” As niche expertise remains a
The family of oilfields, which include Bab, Asab and Bu Hasa, are H.E. Suhail Al Mazrouei priority, Abu Dhabi is focused on
together responsible for half of the emirate’s almost 3 million bpd UAE Minister of Energy the continued development of its
output and hold more than 100 billion barrels of oil in one of the research centers which include the
most politically stable parts of the world. ADNOC also aims to boost Glenelg School, the Petroleum Institute and the Masdar Institute. These
the capacity of the Lower Zakum offshore field to 425,000 bpd in institutions, along with the support of the IOCs and service companies,
2016, by adding 100,000 bpd. create an environment that enables innovation and continuously
Flexibility is key for any partner in Abu Dhabi. Since concessions regenerates the industry. As Minister Al Mazrouei explains, “we are not
expired in January 2014 the industry recognizes the value of just targeting production, but also how to achieve sustainability and
niche technical expertise and is building partnerships accordingly. maximize resources for future generations.”

Explore. Develop. Mubadala Petroleum is an Abu Dhabi-based international,

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incorporating and building on the success and materiality of
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strong partnerships, the passion and capability of our people,
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For more information please visit

mubadalapetroleum.com
2,000,000,000
barrels of oil with recovery rates up to 70%

Statoil has through management focus and innovative use of technology

recovered an additional 2 billion barrels of oil from five mature fields in Norway,
with recovery rates up to 70 percent.
Statoil Abu Dhabi B.V. – Abu Dhabi
3, Mireekh Street
Al Nahyan Commercial Bldg , Al Nahyan District
P.O. Box: 127376
www.statoil.com

Tel.: +971 26572222

Business as usual for the UAE’s oil industry
UAE’s partnerships continue but will interest in Asia transform the market?
A bu Dhabi has come a long way since its original concessions
were first agreed in 1939. Today, as its oil fields mature and
concession agreements are revised, shifts are taking place such as the
move towards gas development and the entry of Asian international oil
companies (IOCs) into the UAE marketplace. The terms for the new
bids were challenging when they were issued in 2013. Bidders were
asked to present plans to attain a 70% recovery rate, almost double the
previous quota of 40%, over a 40-year concession in return for a 5%
to 10% stake.
The first of the traditional partners to sign a new concession
was Total. The French company won the bid due to the scope of its
technical and commercial offer. As well as receiving a 10% stake, Total
was appointed asset leader for the South East, including the fields
Sahil, Asab, Shah, Qusahwira and Mender, described as “technically
challenging,” by Total and Bu Hasa, which is Abu Dhabi Company
for Onshore Oil Operation’s (ADCO) largest field. Hatem Nuseibeh,
President of Total UAE, attributes Total’s selection to the company’s
long history in the UAE along with its “large footprint” in the region,
its geology expertise and its interest in developing local talent. “It is
truly a partnership and not a concession agreement,” Nuseibeh said.
While no one was surprised to see the renewal of Total’s
concession or the increased collaboration between the partners,
the contracts signed with Korea and Japan represent an unexpected
turn for Abu Dhabi. On March 4th 2015, Abu Dhabi National Oil
Company (ADNOC) signed a Memorandum of Understanding
with Korea National Oil Corporation (KNOC) and Korea Institute
of Geoscience and Mineral Resources (KIGAM). The memorandum
provides for cooperation in research and development activities for
oil field development in UAE. In April JODCO, a group company
of Japan’s Inpex was awarded a 5% stake in ADCO’s onshore oil
concession for the next forty years.
The principals of safety and quality continue to drive growth at NPCC
E stablished in 1973, NPCC is an Abu Dhabi engineering,
procurement and construction (EPC) company with
operations in the Arabian Gulf, South and South East Asia and
plans to expand its activities to Africa and the Caspian region.
Despite the fall in oil prices, the company is keeping pace with
the current trend towards consolidation in the global oilfield
sector by pursuing a policy of “premium acquisitions and
collaborations,” according to company CEO, Aqeel Madhi.
“NPCC has grown to a large, fully integrated EPC solutions
provider, acquiring assets, talent and capabilities over four
decades of executing challenging work in the region,” Madhi
said. “We are proud of maintaining one of the best safety
statistics in the industry and our project performance records
are impressive, irrespective of working in collaborations or as a
single entity.”
NPCC’s current offshore projects in Abu Dhabi include the
Umm Lulu, Umm Shaif and Al-Nasr oil fields where it operates
Similar to the deal with Total, the agreements with KNOC, KIGAM
and JODCO will be collaborative in nature. As well as sharing technical
expertise ADNOC, KNOC and KIGAM plan to promote joint research,
implement expert exchange programs and host seminars. What was
most surprising about the announcement of JODCO as partner was
that it came before other contenders such as BP, Shell, Occidental
Petroleum, Statoil and Rosneft. This
is an important collaboration for a
Japanese company in the Middle East,
where it can secure shipments without
having to pass the Strait of Hormuz.
With Japan relying on around 83%
of its total crude imports from the
Middle East, this can only enhance
the country’s energy security.
Abu Dhabi’s relationship with Asia
is mutually beneficial. “Most of our oil
goes to the Asian market,” explained
“The development HE Suhail Al Mazrouei, Abu Dhabi’s
of local talent is at
the heart of all our Minister for Energy. “They are more
programs.” than consumers because they are
Aqeel Madhi growing and building companies.
CEO NPCC We are taking risks together and they
help us in other sectors. For example,
the Japanese are our partners in
Mubadala,” he said. The Minister is confident that Abu Dhabi’s
“excellent partnerships” between IOCs and NOCs will be as successful
as the old ones, which enabled UAE to lead one of the most efficient
exploration programs in the industry and to become one of the world’s
major oil producers. In short, despite the changes, it is business as usual
for Abu Dhabi’s oil and gas industry.
as a strategic partner. Because of the scale and capabilities of the
company’s services, it acts as a one-stop solutions provider for oil
and gas projects both in the upstream and downstream sectors.
NPCC continuously works to develop strategic partnerships with
local contractors, vendors, manufacturers and service providers
to ensure it can provide “in-country value” wherever it operates.
The company owns 22 vessels and has yard capabilities that span
more than one million square meters of seafront. It boasts a loyal
workforce, most of whom have been with the company for two
decades.
Looking to the future, Madhi is optimistic. “We are expanding
our client base offering quality services driven by cost efficiencies.
There are plans to acquire technology through collaborations,
mergers and acquisitions, so that we service niche markets such
as EOR and Deepwater. At the same time we continue to exceed
the expectations of our existing customers through the time-
tested principles of safety, quality and timely delivery.”
Statoil’s
experience with
mature fields
offers value to
Abu Dhabi
L ast year Statoil opened
an improved oil recovery
(IOR) center in Trondheim,
Norway, one of the largest of its
kind in the world. For countries
working with mature fields,
improved oil recovery (IOR)
and enhanced oil recovery
(EOR) are vital. “In Norway,
Statoil has achieved over 70%
recovery rate in some of the
country’s oldest producing
reservoirs,” said Mr. Neri
Askland, Statoil’s Middle East
VP and Abu Dhabi Country
Manager. “This is achieved
through systemically working
closely with contractors and
production data, applying
new technologies, and imple-
menting and monitoring EOR
techniques,” he said.
Because of this experience
with processes and technology,
Statoil is in a strategic position
vis-à-vis Abu Dhabi where oil
and gas fields are mature and
demand EOR expertise. “In
addition, Statoil has much
experience with CO2 capture
and storage, which is relevant
“IOR and EOR are key
for countries and
companies working with
mature resources.”
Neri Askland, Statoil’s VP
Middle East & Country
Manager Abu Dhabi
if a CO2 for EOR strategy is
applied in the Middle East,”
Askland said, adding that
the company also has a track
record in biologically sensitive
areas. Now that the Mongstad
project in Norway has been
completed, Statoil is in a
position to offer that expertise
to Abu Dhabi and is keen to
work in the region. As Askland
explained, “ADNOC is already
deploying CO2 for EOR,
which is an important project
to follow. Statoil has extensive
experience dealing with the
CO2 value chain and we are
ready to share any relevant
learning with Abu Dhabi.”
Maersk Oil, keen to export its
technical know-how to Abu Dhabi
M aersk Oil produces oil
from the Danish and
UK sectors of the North Sea,
Algeria, Kazakhstan and the
US Gulf of Mexico. The Middle
East is a key region for Maersk
Oil, with Qatar contributing an
important part of the company’s
global production. Exploration
and development projects are
also underway in Kurdistan.
To build on this, Maersk Oil
is interested in extending its
offshore activities in Abu Dhabi.
“Qatar represents close to
half of our global production,
so the fact that there are
potential opportunities for us
to secure field development
and production projects in Abu
Dhabi, where we could deploy
our core competencies in
developing these difficult and
complex carbonate reservoirs,
would be a compelling reason to
focus on business development
here,” said Richard Doidge,
who heads Maersk Oil’s
business development activities
in Abu Dhabi.
Maersk Oil could potentially
fit into the Abu Dhabi joint
operating model, since IOC
partners with niche expertise
are being asked by ADNOC to
serve as lead technical advisors
on specific assets. “Traditionally,
we are a company that has
been very technically focused,”
Doidge said. “We are good at
identifying the right technology
for the best technical challenge in
terms of reservoir development,
deploying and optimization.”
He is confident that Maersk
Oil’s experience from the Al
Shaheen Field in Qatar is
exportable to Abu Dhabi which
lies in the same geological
basin with similar reservoirs.
“We have pushed the limits of
horizontal well technology, not
just to maximize recovery and
production, but to drive down
corresponding per-barrel costs,”
Doidge explained. To show its
long-term commitment to the
region, Maersk Oil established
an office in Abu Dhabi in
2011 and has been developing
its relationship with ADNOC.
“We believe that the potential
opportunities arising from the
eventual offshore relicensing
could be a good match to our
core competencies. We hope
that ADNOC understands this,”
said Doidge.
NPCC, a world class EPC company provides total EPC solutions to
both Offshore and Onshore in the Oil & Gas sector.
With headquarters in Abu Dhabi, NPCC operates in the Arabian
Gulf, South Asia and South East Asia, and has plans to expand its
operations to Africa and the Caspian region.
NPCC with its state-of-the-art fabrication facilities in Mussafah,
Abu Dhabi spreads over an area of 1.3 million sq. meters. NPCC has the
capacity to fabricate up to 100,000 MT of structural steel every year.
UAE’s newest export is local expertise
UAE’s oil companies harness years of experience to develop new market opportunities

T he key word for Abu Dhabi’s oil and gas industry today is
sustainability. As the historical period of concessions ends and
new partnerships begin to emerge, Abu Dhabi remains focused on a
visionary goal, creating opportunities for its next generation. This goal
means creating the ideal environment for growth and ensuring that
technology and talent are available to overcome challenges. To achieve
this, Abu Dhabi takes the dual approach of educating domestic talent
in a research community focused on
developing cutting edge solutions
whilst also deepening its markets
abroad by expanding the range of
services offered to clients in foreign Abu Dhabi’s technical students are amongst the industry’s finest
countries.
Falling oil prices may have an MIT counterpart. To develop ties with local industry, the Institute
slowed the industry but they haven’t has put an innovative program in place, signing Abu Dhabi-based
depleted Abu Dhabi’s reserves. Abu companies up to sponsorship contracts. To date, Masdar has signed
Dhabi holds 95% of the UAE’s crude contracts with 40 companies.
oil reserves and 92% of gas reserves. Though this is a new program for Masdar, the culture of
It has proven reserves of 1.3 trillion knowledge sharing to improve local expertise in Abu Dhabi has been
“Abu Dhabi has barrels of conventional oil with part of the partnership programs for decades but its importance has
invested in education possible resources of 2.7 trillion been heightened with the government’s new focus on sustainability.
so the industry has the
right resources.”
barrels. However, 60% of the regions’ For example, Mubadala Petroleum was established in 2012 as a
fields are carbonates, which demands subsidiary of Mubadala, incorporating and building on the success of
Musabbeh Al Kaabi
CEO Mubadala both enhanced oil recovery (EOR) Mubadala’s Oil & Gas business unit. The company is active in three
Petroleum technology and skilled technical core geographical areas, the Middle East, Africa and Southeast Asia.
teams to safeguard efficient recovery. Its goal is to create a footprint of skilled Emirati people in the oil
To ensure Abu Dhabi can and gas community on a worldwide level. “As Mubadala Petroleum we
provide skilled technicians and engineers, the Masdar Institute was want to create and develop strong leaders,” said Mussabeh Al Kaabi,
established in 2009 as a research-driven graduate-level university CEO of Mubadala Petroluem, “not just for the UAE, but also in the
focusing on advanced energy and sustainable technologies. “Our countries where we operate. In Abu Dhabi, we think it is an excellent
concern is to develop human capital by giving them an education that opportunity for UAE nationals to be exposed to the international oil
is on par with the best in the world. That is why we work very closely and gas industry.” Al Kaabi also credited the 10-year-old Petroleum
with MIT,” said Dr. Fred Moavenzadeh, the Institute’s President. To Institute for providing the industry with qualified graduates who are
emulate MIT standards, all of the Institute’s faculty members have primed to handle the challenging conditions of fields in both the
spent at least one year on a MIT research project or working with UAE and abroad.
B ecause of its long history and the many challenges presented by its
fields, Abu Dhabi has an established research and development
community that is producing some of the finest engineers and techni-
term mutual value and in the process offering genuine “In Country
Value” in the areas of operations,” explained Ageel A. Madhi,
CEO of NPCC.
cians in the industry. The IOCs oper- Demand for quality talent is high. As well as the various NOCs
ating in Abu Dhabi also play a role in and IOCs operating there, Abu Dhabi’s service industry is growing at
the culture of technology and talent a fast pace. Established in 1977, AlMansoori Specialized Engineering
transfer. “It goes hand-in-hand with a is a pioneer as a local provider in the Abu Dhabi service sector. It has
proper NOC-IOC partnership,” said grown in that time to become an international provider with more
Richard Doidge who heads Maersk than 2,000 employees in 24 countries and branches in 15 countries.
Oil’s business development activities “When I started in the industry there was a lot of nationalism in the
in Abu Dhabi. He believes Maersk’s oil companies,” said Ibrahim Alalawi, deputy CEO of AlMansoori
reputation as “a long-term partner Specialized Engineering. “I have seen a full 180 degree turn. Now,
and a responsible corporate citizen,” the NOCs are partnering with the IOCs to get the benefits. I have
is an asset that the company can bring seen that the IOCs do not have all the answers and they are learning
to the UAE. from the NOCs. In the oil company-service company relationship, I
“Total has made a big effort of “In 2011 we opened am seeing it move towards a more collaborative environment. That
an Abu Dhabi office
‘Emiratizing’ its workforce in this to show our long-term is where I see the future heading: more collaboration between NOCs
country,” said Hatem Nuseibeh, commitment.” and IOCs and more collaboration between oil companies and service
President of Total UAE. The IOC Richard Doidge companies,” he added.
set up the Total Abu Al Bukhoosh Managing Director Big Data technology is driving the push towards collaboration for
Academy (Total ABK) in 1974 to Maersk Oil many companies including AlMansoori. The engineering specialist
train the mechanics, electricians, has recently launched a new technology, the multiphase flow meter,
engineers and higher management needed to run the country’s fields. which is designed to cause less disruption to the flow of the oil by
“Many people working today in key postings have gone through offering real-time data. “As the fields in the region are aging, we are
Total ABK,” said Nuseibeh. Meanwhile companies such as NPCC are seeing more demand for data. Many of our services are related to
increasing market share abroad by harnessing its UAE experience. capturing data, whether it is well testing, logging or running gauges.
“We continuously work to develop strategic partnerships with local We expect that trend to increase in the future,” said Alalawi.
contractors, vendors, fabricators and service providers to derive long Mubadala Petroleum is an example of another Abu Dhabi company
that is using its technical expertise to grow foreign markets. As well
as having strong operations in Oman,
Qatar and Bahrain, the company is
active in Africa and has signed an
agreement with Somalia. Al Kaabi
believes that Mubadala has developed
assets, which can be leveraged to
develop the company’s operations
abroad. “We have developed very
strong capabilities in the exploration
side and in the mid to small field oil
and gas operations. We have a strong
alliance with companies who are
strong in EOR and have experience “As the regions’ fields
age, we are seeing an
in terms of execution, technical
increased demand for
resources and capital investment data.”
required in these projects. In Abu Ibrahim Al-Alawi
Making the most of natural resources Dhabi we have many complex and Deputy CEO AlMansoori
challenging projects starting from Petroleum Services
Delivering on shared goals is the cornerstone of our
ultra sour gas development all the
long lasting relationships.
way to very exotic chemical EOR
Our record of finding, developing and operating
projects in offshore. We want to build on the strong relationship
conventional and complex projects is built on the with ADNOC and try to export some part of that knowledge through
commitment to maximise value for all parties. Mubadala Petroleum elsewhere in the world.” Al Kaabi sees an oil and
gas industry that shares knowledge from region to region as viable
and expects the industry to follow that trend in the future. With
a planned investment of $25 billion in the industry over the next
five years and a growing number of bases in foreign countries, Abu
Dhabi is harnessing the expertise developed from that investment and
creating a valuable exportable commodity.
Petrochemical sector buoys UAE oil industry
Low oil prices put pressure on the industry to grow petrochemical sector

T hanks to its location, which gives the UAE access to the Middle
East, Africa and Asia, its established ties to Europe and East
Asia, and its substantial reserves of oil and gas, the petrochemi-
creation to continue despite of
the gas crunch,” Vezvaei said.
Because of Linde’s experience in
cals industry is the manufacturing segment in which Abu Dhabi Europe, the company offers the
has the most apparent competitive advantages. It is not surprising region key expertise to sustain
then that it has become one of the most important drivers of eco- profitability and efficiency. “Linde
nomic diversification for the country. The availability of expertise has had decades of experience
and advanced technology means that the country’s petrochemical not only in design and execution
company, Borouge, continues to be a key player despite the region’s of technologies but also in
changing landscape. enhancement and optimization
Established in 1998, Borouge grew its capacity by 700% in of the process around it so
the period from 2010 to 2014 and is expanding its markets for “We are focused on clients have a better return on
polyolefin products, particularly in the Middle East, where there is a developing much needed investment and an optimized
demand for infrastructure materials such as industrial piping, wire regional growth despite product slate. Linde’s innovative
the gas crunch.”
and cable systems. To meet growing demand in the Middle East solution, “Value-Cracking,” is
and Asia, Borouge has expanded its plant to create an additional Ali Vezvaei focused on the streams and the
President Middle East &
350,000 tons per year of low-density polyethylene. Working with North Africa, Linde process, to optimize the value
Borealis in Sweden, the company produces highly specialized and chain from molecules to money.”
super clean products for the wire and cable industry in order to Moving forward Vezvaei believes
retain its market leader position. “With Borstar® and the Borlink™ that the sector’s competitiveness depends on how technology
Supercure technology, the product range of both companies is able is used. Linde is innovating to meet the challenges of the new
to meet the industry’s most stringent needs,” said Abdulaziz Alhajri, petrochemical landscape by implementing a target of “operational
CEO of Abu Dhabi Polymers Company, a subsidiary of Borouge. excellence” along with a “different level of performance indicators
Ali Vezvaei, President of Linde AG Engineering for the MENA such as energy efficiency and sustainability,” Vezvaei said.
region, agrees that Borouge’s plant offers key advantages to the Along with decreasing feedstock, the region faces another
sector due to its economies of scale and progressive technology. challenge as more global petrochemical production moves to the
Abu Dhabi’s Borouge 3, the world’s largest gas-based ethylene US in the wake of the trend towards shale gas where the “shale
cracker, is a solid pillar within Linde’s engineering portfolio, one revolution” has stimulated a tremendous production of oil and
that has become a benchmark in the industry for safety thanks natural gas. Advances in oil and natural gas production technology,
to Linde’s in-house technologies. As the world’s biggest industrial such as hydraulic fracturing, are fueling this revolution. Alhajri
gas company with a history that goes back almost 140 years and is confident that Borouge’s three world-scale ethane crackers in
a dedicated technology arm, Linde Engineering is a key player in Ruwais, which can “process ethane and turn it into ethylene in
Abu Dhabi’s petrochemical sector. “In the petrochemical sector, our a very competitive and cost effective way,” will allow the region
story goes beyond building complex plants. We are also focused to retain its market leader share. There is no question that the
on developing innovative solutions in view of regional super petrochemical landscape is changing, but Abu Dhabi is meeting
trends like natural gas availability and feed stock flexibility. Our those challenges head-on with a proactive policy of technological
efforts in Borouge have been focused on developing commercially innovation, efficiency and sustainability, policies that will not only
viable solutions to allow the much needed regional growth and job benefit the UAE but are setting standards worldwide.