Avoiding Disaster for Energy Independence

Latin Americas’ goal for energy independence is tied to its offshore oil and gas reserves. Experts from the illustrious O&G LA 20 committee believe that the offshore sector will become even more important in the future as the industry shifts to deeper waters.

A spokesperson for the committee set to meet in Rio de Janeiro, early next year chaired by Juan Carlos Zepeda, President CNH, Tomas Vargas, Vice President BPZ and Guimar Vaca Coca, MD Americas Petrogas stated this week “There is an apparent need to expand on the offshore services available. Whether it’s deploying workers on and off rigs, improving offshore safety, or making sure subsea construction is done as efficient as possible, marine servicing has expanded thoroughly throughout the Americas.”

But rapid expansion in offshore developments comes with tremendous risk. The recent oil spill in the Gulf of Mexico highlighted how susceptible deep-water drilling has become, and how difficult a leak is to suppress at such depths. But oil extractors are left with no choice but to drill to such depths, as the global demand for crude increases, whilst shallow wells become exhausted.

Drilling deeper – to lengths greater than a mile – requires technically demanding drilling and complex equipment and seriously reduces the room for error. And as those who witnessed the spread of crude throughout the Gulf of Mexico, it also makes stemming the flow and repairing crippled riser pipes and underwater wells that much more challenging.

The catastrophe in the Gulf of Mexico bares stark comparisons with the Lusi mud volcano in Indonesia, which many commentators have suggested was triggered by deep exploratory drilling in an environment with little-to-no room for error. In the Lusi case, those drilling failed to seal the well, which eventually led to the blow-out of catastrophic proportions. Like the Gulf of Mexico spill, both deep drilling adventures have caused a catastrophic impact on the environment.

With demand increasing, and supply dwindling, simple math dictates that more catastrophic spills and blow-outs are likely on the horizon. More drilling will take place in environmental hot-spots and difficult areas, where accidents like the Gulf of Mexico spill - major, hard to stem leaks - are likely to happen with more frequency. Safety regulations should be evolving to adjust to this new reality, resulting in better legislation for equipment like blow-out valves and shut-off triggers, and the necessary equipment in place to tackle a sprung leak.

And it is with this in mind, Latin America must tread carefully whilst securing energy independence. It will be imperative for those attending the O&G LA 20 in Rio de Janeiro to outline the safest practices whilst expanding its energy quotas.

U.S. Gas prices rise by 8 cents in two weeks

Lord Digby famously quoted that “Demand for oil is going to increase because of the massive expansion of the Chinese and Indian economies,” and he could not have been more accurate with his prediction. Such global demand for a finite fossil fuel is being felt across the US this week as gas prices have grown exponentially by $0.8 in two weeks bringing costs to $2.77 per gallon. But with the recent BP disaster within the Gulf of Mexico, the county knows firsthand the dangers of trying to relieve demand by mining in more obscure places.

To combat this issue, O&G20 committee the world leading authority on Oil and Gas technology solutions have selected to meet at this years Next Generation Oil and Gas summit in Austin Texas this November.

Greg Smith Head of US business for Repsol and Ronald Cramer Senior adviser from Shell are amongst the attendees of this locked down meeting. Petrobas (one of the most active deepwater companies in the world) are expected to announce investments in new fields within PreSalt regions of Brazil.

The announcement of the meeting has been anticipated by the US Oil and Gas industry for some time as potential exports to India and China are moving to the untapped coasts of east Africa and the Middle East.

Juggling the Current Oil and Gas Issues

While the Gulf of Mexico well is capped and the relief wells are nearing completion to secure the BP disaster, the oil and gas industry is looking at how to move forward with deepwater drilling projects in the future and the importance of safer mining of Marcellus Shale.

But can safety and environmental protection be guaranteed when working in some of the most risky places on the plant? It is questions like this that are important to the continued success of the oil and gas industry and are being answered by leading industry executives, like those who are a part of the NG Oil & Gas committee.

Based on the U.S. Department of Interior, the Obama Administration’s OCS strategy recognizes that the Gulf of Mexico holds 70 percent of the nation’s economically recoverable oil and 82 percent of the economically recoverable gas reserves.

With the region being such a source of energy for the US, the economic impact and the effect of job loss are all major opposition sticking points for the continued ban on deepwater drilling that is expected to expire at the end of November. To support the earlier over turn of this ban, and rally behind the Louisiana-based judge Martin Feldman, four major oil companies are working together on a new joint venture that will develop a rapid response program that can contain almost double the amount of gallons lost in the BP spill at about double the depth.

It is the development of new technologies for exploration and deepwater drilling mining that will ultimately be a major focus of attention at the NG Oil and Gas Committee meeting in Texas during the 3-5 November. The group of senior level industry experts, including Don Wolf, Vice Chairman of Aspect Energy, Edgard Habib, Chief Economist of Chevron, Bill Drennen, SVP Global Exploration of Hess Corporation, and - Tom Halbouty, CTO & CIO of Pioneer Natural Resources is looking at how these technologies can dispel concerns that local and Federal legislators have when regulating the industry.

The environmental impact of this incident is only part of the picture and with the ban idling some 33 rigs off the coast, up to 20,000 jobs could be lost should the ban lives its full life.

With new technologies also being developed over the last five years for horizontal and vertical drilling of Marcellus Shale, can the new shale slabs continue to be mined without scrutiny after seeing a rise incidents being reported on both an environment and administration/safety level?

The Secret of Libya’s Liquid Gold

An infinite wealth of treasure lies in The Elephant Field, 800km south of Tripoli, which was discovered by the Italian company ‘Eni’ in 2006. The Elephant Field drew a renewed focus upon MENA oil and gas, and showed that there are new possibilities waiting to be found in the face of a global oil crisis.

Booming investment within China and India has created a vast amount of pressure on MENA oil reserves, but Libya could hold the solution. There are doubts over Libyan official records regarding their oil and gas reserves; oil and gas experts insist Libya has much higher amount than they are currently prepared to say. Although Libya hopes to reach a target of three million bpd by 2013, this is impossible without foreign investment. Therefore Libya might be a key port of call for the struggling oil and gas industry, which is set to be one of the items up for discussion at the illustrious NGO&G MENA Summit being held this week in Doha.

The heads of oil companies, and important industry players such as Farouk Al Zanki MD and Chairman of Kuwait National Petroleum Company, Randy Clark CEO of Energistics and Hamed Ibrahim Karim, GM Exploration and PICO Petroleum have united once again at the NGO&G MENA summit to discuss the volatile future of the oil and gas industry. Behind the closed doors of this union the various difficulties faced by erratic regulatory compliance laws, and the ever-important topic of finding more efficient ways to recover oil are up for discussion. Khalid Al-Faleh CFO of Aramco called for oil companies to financially share the burden of the investment required to meet expected demand for oil.

Libya is a magnet for oil discovery, and offers not only better routes to Europe and America than The Gulf, but it also could become the final frontier for the entire oil and gas industry. Industry leaders hope that the collaboration at the NGO&G Mena Summit (run by GDS International) will encourage Libya to be more transparent about their natural resources, and whether the technology solutions discussed increase efficiencies in established oil fields.

MENA versus APAC in the Battle for Limited Commodities

The MENA region has lead the way in the global oil and gas industry for some time now, but has this level of dominance made them complacent? Are they still in a position to compete with the emerging APAC region?
Well this week leading oil and gas executives from the APAC region met at the illustrious NG O&G APAC summit at Sentosa to discuss new technology and innovation which will allow them to close the gap on the Middle East supply.
2009 saw the biggest pullback in oil demand in history and the economic downturn saw oil consumption drop by 3 million barrels per day (bpd). 2010 has seen the global market splutter back towards relative normality, offering investment opportunities across the industry, which has been capitalized on by the attendees at the recent NG O&G APAC summit hosted by GDS International.
Industrialization and population growth in developing countries drive demand in the oil and gas industry, but a stable economy is a necessity for development, something that is finally beginning to appear on the horizon.
Growth also needs support, a good infrastructure and the harnessing of new and emerging technologies, a debate which will be key at the NG O&G MENA summit set in April.
The consortium looking to maintain the Middle East's hold on the market is chaired by Ali Singab, GM Exploration & Production at Emirates National Oil Company; Farouk Hussein Al Zanki, Chairman, Kuwait National Petroleum; Yousef Al Taher, Board Members, Operations; Dr. Mirza, Minister of Oil & Gas for Bahrain and Nabi Mukhtar, Head of Drilling at BAPCO. They are all looking at how we can improve business and operational performance while transforming data into actionable intelligence.
Business and operational leaders face a number of challenges related to diverse and non-integrated technologies and informational systems. Quite often they are overwhelmed by data overload and technology obsolescence issues. Such scenarios can lead to low ROI and missed business opportunities. In addition, emerging technologies and enhanced regulatory and safety compliance are adding to the complexity at a time of dwindling skilled resource bases.
“Consolidation in the sector is inevitable as larger companies take advantage of strategic opportunities. The positive trends that we have seen in recent months are likely to continue this year and the outlook for oil and gas transactions is healthy in upstream and oilfield services. This is a pattern which emerges globally by the Middle East, Africa and Asia – Pacific” Summit Director
Economically, more cooperation between the oils and gas sector's ‘big businesses’ would reduce the economic costs for the Asia–Pacific region thus reducing their reliance on the Middle East.