Pipeline Oil & Gas Magazine - October 2014 Featuring Thorne & Derrick

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contents Pipeline Oil & Gas Magazine | OCTOBER 2014
EXCLUSIVE INTERVIEW:
20
DYNAMIC PUSH
IN THE UAE
We speak exclusively with Dr. Georg
Wachtel, general manager of OMV
Abu Dhabi about its growth path in
the UAE
NEWS: Regional
Oxy in talks with Mubadala to
sell stake in Dolphin Energy
Mubadala Development Company is
said to be in talks to buy up one-fifth
of the 24.5 per cent stake that US-based
OXY has in Dolphin Energy
NEWS: International
10
QP, GDI sign $1.4bn deal
for 4 new rigs
Qatar Petroleum has contracted Gulf
Drilling International for four new drilling
rigs for deployment in the country
12
Angola discovery could 16
yield 300m barrels for Eni
Kvaerner looking to grow
its business
EPC contractor Kvaerner has decided the
time is right to pursue opportunities to
accelerate the company’s development
16
Eni’s new oil discovery in Block 15/06 is
in the Ochigufu exploration prospect, in
deep water offshore Angola
GEOFOCUS: Saudi Arabia FEATURES:
Kingdom’s oil sector set
to power through
FEATURES:
Valves, Pipes & Fittings
Power generation
Canada’s strengthening
ties with the UAE
Artificial lift
Mexico energy sector open
for business
We hear from Tendeka about the
growing use of software simulation
in valves and Oliver Valves sets out
its growth path in the region
The need for power generation at
onshore oil and gas facilities has
increased considerably, we hear
from an expert on the matter
Canada’s trade ties with the UAE
is going from strength to strength,
according to Canada’s ambassador
to the UAE
ADIPEC PRE-EVENT FOCUS:
Extensive coverage of what 60-75
companies will be showcasing
at ADIPEC 2014
Technip has been awarded a FEED
contract to upgrade BAPCO’s main
refinery in Bahrain
NOV talks about the recent
advancements in the use of plastic
coated tubing in artificial lift applications
Mexico’s ambassador to the UAE
speaks exclusively about the opening
up of his country’s energy sector and
how the Gulf can play a big part
28
42
56
36
53
24
This is a watershed period for oil
powerhouse Saudi Arabia as it faces
many challenges but is intent on turning
them into opportunities
PROJECT EDITORIAL:
Technip in Bahrain refinery FEED 81
Photo credit: Front cover from OMV

4 Pipeline OCTOBER/2014 www.pipelineme.com
[SAUDI ARABIA]
Saudi pipeline
attack sparks
explosion
Part of a Saudi
Aramco pipeline in
Saudi Arabia’s oil-rich eastern province
exploded following an attack by unknown
assailants in early September, according
to various sources. The incident took
place in Awamia, a district of the town
of Qatif following a gunfight between
members of a security patrol near the
pipeline and the assailants. The pipeline
was repaired shortly with sources
saying that oil and gas production was
not impaired. This latest attack on
infrastructure belonging to the world’s
top oil producer harkens back to a foiled
2006 Al-Qaeda attack on the massive
Abqaiq plant which processes oil from the
supergiant Ghawar and Shaybah fields.
[ALGERIA]
GE signs $2.7bn
deal to boost
Algeria power
sector
GE and SPE, an affiliate of Algeria’s
national electricity and gas company
Sonelgaz have signed US$2.7 billion
worth of power generation contracts.
Marking some of GE’s largest power
related deals, the US company will supply
heavy-duty gas turbine combined-cycle
and aeroderivative gas turbine technology
for nine power plants across Algeria. The
addition of nearly 9 gigawatts (GW) of
electricity is expected to help strengthen
Algeria’s power sector to help meet the
growing requirements of the country.
The three agreements include six new
combined-cycle power plants that will
ultimately increase Algeria’s generating
capacity by 70 per cent adding more
than 8 GW of electricity; two fast-track
projects that add 528 megawatts (MW) of
capacity for this summer’s peak demand;
and a new simple-cycle power plant to
add 370 MW to Algeria’s electricity grid.
[EGYPT]
RWE awarded
two new
concessions in
Gulf of Suez
RWE Dea has been awarded operatorship
of two new offshore concessions in
Egypt’s Gulf of Suez where the German
company has already had a presence as
operator of various fields for the last 30
years. The new concessions will increase
the company’s number of operated
licenses in Egypt from six to eight. RWE
won the concessions – which are subject
to presidential approval - as part of Egypt
General Petroleum Corporation’s (EGPC)
2013 International Bid Round, it will hold
a share of 100 per cent of the East Ras
Fanar Offshore and 50 per cent of the
Northwest El Amal concession, with
Edison International SpA holding the
remaining 50 per cent.
NEWS: Regional

www.pipelineme.com
[IRAQ]
Kuwait Energy &
Dragon Oil strike
oil from Block 9,
Iraq
Kuwait Energy and its partner on Block 9
in the Basrah region of Iraq, Dragon Oil,
have made their first oil discovery at the
license area. The successful discovery
was at the consortium’s first target,
the Mishrif formation at 2,700m, in its
exploration well, ‘Faihaa-1’, located in
Northern Basrah. Preliminary tests of the
Faihaa-1 Mishrif formation resulted in a
flow rate of around 2,000 bpd of 20 API
oil on a 32/64” choke. The consortium, in
which Kuwait Energy is the operator with
a 70 per cent stake and Dragon Oil has
30 per cent, will conduct more detailed
testing on Mishrif towards the end of
the year, according to a statement by the
Kuwaiti independent firm.
[KUWAIT]
Oil delivery to
Brazil promises
new era in GCC –
S. America trade
The Kuwait Petroleum Corporation (KPC)
disclosed that it has sold fuel oil to a
Brazilian company specialising in sulfur
production in what heralds a first for
a GCC based company, according to a
company official. The transaction which
happened in April but unreported until
now, is thought to be significant in that
it demonstrates the potential thawing of
protectionist trade policies adopted by
non-OPEC energy heavyweights such as
Brazil and Argentina. Historically, trade
between the GCC and Latin America has
grown very slowly – about 4 per cent a
year, owing to the sheer distance between
the two regions and lack of mutual
diplomatic presence by both blocs.
[QATAR]
QP and Total
celebrate
carbonates
acid stimulation
research
Qatar Petroleum and Total E&P Qatar
marked a milestone in late September on
their joint research project on carbonates
acid stimulation. The two companies
signed the research project agreement in
May 2012. The idea behind the project is
that injecting acid in Qatar’s carbonates
reservoirs dissolves a part of the rocks,
thus improving the permeability of the
reservoirs and, hence, the productivity of
the producing wells.
[OMAN]
GlassPoint
receives $53m
investment from
Oman and Shell
Solar enhanced oil recovery (EOR) provider
GlassPoint Solar has announced a US$53
million equity investment from Oman’s
largest sovereign wealth fund and Shell to
help accelerate deployment of GlassPoint’s
solar steam generators in the country. The
investment in GlassPoint supports Oman’s
goals to diversify the economy. According
to the National Centre of Statistics and
Information (NCSI), total natural gas
consumption in Oman rose to 39,114 million
cubic metres in 2013. Gas used at Oman’s
oil fields accounted for 9,047 million cubic
metres, accounting for more than 23 per
cent of the country’s total gas use.

www.pipelineme.com
ENERGY IN FOCUS
8 Pipeline OCTOBER/2014

NEWS: Regional
Oxy in talks with Mubadala to sell Dolphin Energy stake
Abu Dhabi based Mubadala
Development Company is said to be in
talks to buy up one-fifth of the 24.5 per
cent stake that US based Occidental
Petroleum or Oxy has in Dolphin Energy,
according to the Wall Street Journal.
A person close to the deal said that Oxy,
which bought a US$310 million stake in Abu
Dhabi owned Dolphin Energy in 2002, said
the potential deal could be completed as
early as the end of this year.
Current political tensions between Qatar,
the UAE and Oman have marred a previous
attempt by Oxy to sell off its non-core
Middle East assets.
Abu Dhabi currently has a majority 51
per cent stake in Dolphin Energy with
Oxy and France’s Total each holding 24.5
per cent, with much of the upstream and
downstream assets located in Qatar.
The three-way partnership oversees the
production and transmission of up to 3.2
billion cubic feet of natural gas per day from
Qatar’s offshore North Field to the UAE and
onwards to Oman via a subsea pipeline.
“Mubadala is quite keen to do the
deal… they even want to buy Oxy’s entire
stake [in Dolphin Energy] but Qatar is
unlikely to accept that because of the
political situation with the United Arab
Emirates,” said another person familiar
with the talks.
A library image of the Dolphin pipeline during its construction
“The two parties [Mubadala and Oxy]
are hopeful a smaller stake would get
Qatar to eventually agree on the deal,” the
person also said, although this would still
need Doha’s blessings.
As part of its restructuring programme
which started in 2013, Houston based
Oxy aims to sell off as much as 40
per cent of its Middle East assets to
Fujairah at centre of global energy, says UAE energy chief
On a visit to Fujairah, the UAE’s only
Indian Ocean facing emirate, the
country’s energy minister highlighted its
growing strategic importance to energy
trade especially with Asia.
“The position of Fujairah from the
perspective of the projects that are still
to come is that it’s going to be a centre
of gravity for energy, not only for the UAE
but also for the region. The infrastructure
that Fujairah has today and will have
in the future makes it a major city and
a major destination for the energy
sector,” UAE Minister of Energy Suhail
Mohammed Al Mazrouei said.
Fujairah has spent the last decade
positioning itself as a major bunkering
and storage centre, a position the
emirate is now building on by expanding
along the energy value chain, with
refining, petrochemical and liquefied
natural gas (LNG) regasification facilities
in the pipeline.
The emirate is expected to be a key
economic engine for the UAE alongside the
likes Abu Dhabi and Dubai at a time when
long term energy demand is set to rise.
a previously-announced consortium of
Mubadala, Qatar Petroleum International
and Oman Oil Company.
At an industry conference in New
Orleans earlier this year, Oxy CEO Steven
Chazen spoke in diplomatic terms about
dealing with the consortium.
“The notion that they were going to
somehow cooperate with each other in
an oil investment is difficult at best right
now,” he said.
“At their suggestions, we’ll probably
make separate deals with the three
countries with somewhat different assets
in each one. In some ways, that’s a lot
simpler,” he added.
Credit: Dolphin Energy

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NEWS: Regional
QP, GDI sign $1.4bn deal for new rigs NEWS IN BRIEF
Qatar Petroleum (QP) has contracted
Gulf Drilling International (GDI),
a subsidiary of locally based Gulf
International Services (GIS), the largest
oilfield service company in Qatar for
four new drilling rigs for deployment in
the country.
The deal for the two new offshore rigs
(“Dukhan and “Halul”) and two onshore
rigs (GDI-7 and GDI-8) also included four
contract extensions with state-owned QP
for drilling rig services, each for a term of
five years.
The combined value of the new contracts
and contract extensions, which were
announced earlier by GDI, total QR5.2
billion or US$1.4 billion. They represent the
largest single GDI client commitment since
it was established 10 years ago.
GDI said that it is also in the process
of recruiting additional personnel
and providing the necessary training,
certification and orientation so that they
can man and operate these new rigs.
The contract extensions allow the
continuation of services performed by four
land rigs: GDI-1, GDI-2, GDI-3 and GDI-4.
GDI said that Halul and Dukhan, the new
offshore rigs, will go into service in Q4
2014 and Q2 2016 respectively. The two
new onshore rigs currently being built in
the US, are expected to be received and
enter service in the second half of 2015.
The deal is for four new rigs
By mid-2016, GDI will have a total
of 18 drilling rigs. In addition to one
accommodation jackup and two Liftboats.
The offshore rigs will be the newest rigs
in GDI’s fleet. Each rig will come complete
with a centrifuge system for solids control,
extra bulk hoppers on deck, 7,500 psi mud
pumps, a 15,000 psi choke manifold, 150-
man accommodation, 10,000 HP power
packages, off-line building stands, and a 75
foot cantilever outreach.
GDI-7 will be a 1500HP rig while GDI-8
will be a 3000HP rig, making it the biggest
land rig in GDI’s fleet. The bigger rig will
provide GDI with the capability of drilling
deeper wells and executing extended reach
wells to a much greater depth.
Honeywell’s UOP chosen to
accelerate Basrah gas production
Honeywell subsidiary UOP has been
selected by independent explorer Kuwait
Energy Company and its partners to help
speed up gas production at Iraq’s SIBA
gas field in southern Iraq.
The US process technology supplier will
provide modular equipment at the field
which lies in the Basrah Governorate in
order to meet pipeline specifications and to
recover valuable natural gas liquids (NGLs)
in the process.
The equipment will allow Kuwait Energy
to process 110 million standard cubic feet
per day (mmscfd) of natural gas from the
field in two parallel processing trains which
will begin production in 2015.
“This project demonstrates that UOP’s
pre-fabricated modular equipment is
a solution for monetising gas quickly,
particularly in challenging conditions,” said
Rebecca Liebert, senior vice president and
general manager of UOP’s Gas Processing
and Hydrogen business unit. “UOP
modular equipment is designed to allow
Kuwait Energy Company to reduce field
construction time, enabling the company
to begin processing gas and earning
revenue faster than with traditional field-built
units while also lowering its capital
and operating costs.”
Global Pipe wins Saudi
Aramco NGL pipeline order
Jubail based Global Pipe Company
has received its direct order from
Saudi Aramco to supply piping for
a 150-km-long gas pipeline in the
kingdom. The deal will see Global Pipe
produce up to 84,000 tonnes of steel
pipe for the East West Gas and Natural
Gas Liquids NGL Pipeline, according
Ahmed Hamad Al-Khonaini, the
company’s managing director. In order
to meet the tight delivery schedule for
this project, Global Pipe said it will start
manufacturing activities in the fourth
quarter. Global Pipe Company is a JV
company between German specialised
LSAW pipes manufacturer EEW, Saudi
Steel Pipes, Ahmed Hamad Al-Khonaini
and Pan Gulf Holding.
Afren says production halt
at Barda Rash won’t hurt
cash flow
London listed independent explorer
Afren has said that the relatively low
production from its operated Barda
Rash field in the Kurdistan Region of
Iraq will not have a significant impact
on its cash flow. The company scaled
back its operations on the field which
lies 55 km north of the regional capital
Erbil, due to the ongoing tensions in the
region between Islamic State fighters
and Kurdish Peshmerga forces. “It is
expected that Afren will return to field
operations as soon as it is prudent to
do so,” the company said in its half year
results statement. Production at the
field in the period averaged 536 bpd.
Jacobs expands Mideast
presence with new office
Jacobs Engineering is expanding its
presence with a new office in Al Khobar,
Saudi Arabia, to strengthen its support
for Saudi Aramco and other key clients
and partners in the kingdom. Jacobs
has steadily increased its presence and
scope in the Middle East, and recently
moved 1,200 local employees and client
personnel into a new office building in
downtown Al Khobar.

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INTERNATIONAL NEWSMAP
[US]
Shell begins production at “high-value”
Cardamom field
Shell said that production is now
underway from the Cardamom
development in the Gulf of Mexico,
the second major deepwater facility
Shell has brought online in the region
this year. The startup follows an
earlier startup of the Mars B platform
in February. Oil from the Cardamom
subsea development which is fully
owned by the Anglo-Dutch major is
piped through Shell’s Auger platform.
When at full production of 50,000
boepd, Auger’s total production capacity
will increase to 130,000 boepd.
[MEXICO]
Samsung Engineering awarded
PEMEX refinery revamp job
Samsung Engineering has officially
announced that it received a contract
from Mexican state-owned oil producer
PEMEX for the PEMEX Salamanca ULSD
(Ultra-Low Sulfur Diesel) Project. The
project will be executed in two phases.
Phase I will include detailed engineering
and procurement of long-lead items and
Phase II will comprise the rest of detailed
engineering, procurement, construction
and commissioning. The US$80 million
contract awarded to the South Korean
engineering giant is for Phase I which will
be executed on an OBCE (Open Book Cost
Estimation) basis. The project site is located
in Salamanca 250 km northwest of the
Mexican capital, Mexico City.
[ECUADOR]
Eni makes major
new discovery in
Ecuador
Eni has made a
significant oil discovery in
Ecuador at the Oglan-2 exploration well
located in Block 10, approximately 260
km southeast of the capital Quito. Early
estimates suggest that the Oglan discovery
potentially contains about 300 million
barrels of oil in place.Eni will immediately
begin the studies for the commercial
exploitation of the Oglan discovery, located
just 7 km from the processing facilities of
the Villano field, also inside Block 10, which
currently produces approximately 12,500
bpd, entirely owned by the Italian oil major.
[BRAZIL]
PTTEP buys 20% of Shell’s
Brazilian deepwater field
Thailand’s state-run oil and gas producer
PTT Exploration and Production or PTTEP
has entered an agreement with Shell to
acquire 20 per cent of the Anglo-Dutch
major’s BM-ES-23 concession offshore
Brazil.The participation in BM-ES-23 for
PTTEP sets another important milestone
in its expansion into South America, a
region with high petroleum potential. Upon
approval from the ANP, PTTEP BL will hold
20 per cent participating interest in the
concession, with Petrobras (the operator)
holding 65 per cent and Japan’s INPEX 15
per cent. The joint venture partners plan to
conduct exploration and appraisal drilling
during 2014-2015.
NEWS: International

NEWS: International
[GERMANY]
Siemens buys out
Dresser-Rand in
$7.6bn deal
German electrical engineering giant
Siemens has agreed to buy out Houston
based rotating equipment manufacturer,
Dresser-Rand for US$7.6 billion. All
transactions related to the friendly takeover
which was unanimously welcomed by
Dresser-Rand’s board, are expected to
close by summer 2015. Siemens intends
to operate Dresser-Rand as the company’s
oil and gas business retaining the Dresser-
Rand brand name and its executive
leadership team. In addition, Siemens will
maintain a significant presence in Houston,
which will be the headquarters of its oil and
gas business.
[KENYA]
Tullow Oil finds success
onshore Kenya
Tullow Oil has announced the successful
results from a series of exploration,
appraisal and testing activities conducted
in Blocks 10BB and 13T onshore Kenya.
The Etom-1 well in Block 13T, the most
northerly well drilled to date in the South
Lokichar basin, 6.5 km encountered
approximately 10m of net oil pay. The
Amosing-2 well in Block 10BB encountered
up to 30m net oil pay. As planned, the
well was then sidetracked back to about
400m from the discovery well resulting in
the encounter of 90m of net oil in several
pools. The Ngamia-3 well in Block 10BB
continued the appraisal of the Ngamia field.
The well was successfully drilled 1.6 km
north of the Ngamia-1 discovery well and
encountered 150m of net oil pay in both
Auwerwer and Lokone reservoirs.
[INDIA]
Technip wins EPCM for south
Indian industrial gas complex
Technip has been awarded a project
management contract along with
engineering, procurement and construction
management (EPCM) for a new industrial
gas complex in the state of Kerala in
southern India. Contracted by Air Products,
the French engineering major will
provide the services to Bharat Petroleum
Corporation’s Kochi Refinery (BPCL-KR).
It will oversee the BPCL-KR Integrated
Refinery Expansion Project (IREP), which
will increase BPCL-KR’s crude refining
capacity from 190,000 bpd to 310,000 bpd
and produce clean transportation fuels to
meet Euro IV/V specifications.
[MALAYSIA]
SapuraKencana
finds gas off
Malaysia
SapuraKencana Energy (SKE) has made a
big gas discovery at a block off Malaysia.
Bakong-1 well is the fifth and final well
in its 2014 drilling campaign within the
SK408 Production Sharing Contract (PSC)
area, offshore Sarawak, Malaysia. The
discovery is significant with a gross gas
column in excess of 600 meters in the
primary target reservoir located within
Late Miocene Carbonates.
www.pipelineme.com Pipeline OCTOBER/2014 15

NEWS: International
Angola discovery could yield
300m barrels for Eni
Ochigufu is the tenth discovery in
Block 15/06
Eni has made a new oil discovery in
Block 15/06 said to hold some 300
million barrels of oil in place, in the
Ochigufu exploration prospect, in deep
water offshore Angola.
Ochigufu is the tenth commercial oil
discovery made in Block 15/06. Tests show
that the new discovery is currently capable
of producing upwards of 5,000 bpd.
The Ochigufu 1 NFW well, which led to
the discovery, will be brought into production
in record time, Eni said in a statement.
Claudio Descalzi, Eni’s newly-appointed
CEO said: “This important discovery, which
will be brought into production in record
time, adds even more value to Block 15/06.
Like the recent discoveries in Congo and
Gabon, this new find exemplifies the
results we can achieve by applying leading
edge technologies to exploration, and
substantiates the decision to refocus Eni on
key oil and gas competences”.
The well is located at approximately
150 km off the coast and 9.8 km from
the Ngoma FPSO (West Hub) and the
closeness to Ngoma FPSO allows the
increase of the resource base of the West
Hub project, currently underway. The well
was drilled by the Ocean Rig Poseidon
Drilling Unit in a water depth of 1,337m
and reached a total depth of 4,470m.
The data acquired in Ochigufu 1 well
indicate a production capacity equal to
more than 5,000 barrels of oil per day.
Studies are underway in order to
evaluate an early tie-in to the Ngoma
FPSO, already in location in the West Hub
and designed to handle 100,000 barrels of
oil production per day.
Time is right to grow business, says
Kvaerner board
The board of Norwegian upstream EPC
contractor Kvaerner has decided that
following a successful first half where
it has won new key contracts as well
as reduced costs, the time is right to
pursue opportunities to accelerate the
company’s development.
“While we succeeded in building a
record high order backlog up to 2013, we
also received valuable feedback from the oil
companies after the bidding rounds in the
winter a year and a half ago. This spurred
us to accelerate a range of activities to
increase productivity and reduce our own
cost level,” said Jan Arve Haugan, president
and CEO of Kvaerner.
“The award in June for two steel jacket
substructures to the Johan Sverdrup field
confirmed that we are moving in the right
direction, and the combination of established
expertise and reliability, together with
renewed cost competitiveness, once more
positions us well for the future. Now, we
will use this momentum to consider step
changes to further strengthen our business
and competitiveness.”
The 50-year-old company has, over the
last three years managed a considerable
strategic development. In 2012 and 2013,
the North American Downstream
Industrials businesses were sold. These
changes enabled Kvaerner to fully focus on
serving customers in the upstream oil and
gas segment.
NEWS IN BRIEF
Technip awarded contract
to develop Kodiak field in
GoM
Technip has been awarded a lump
sum contract to develop the Kodiak
field located in the Mississippi Canyon
Blocks 727 and 771 in the Gulf of
Mexico by Houston, Texas based Deep
Gulf Energy II LLC. The project will be
undertaken at water depths ranging
from 1,472m to 1,710m, will consist
of a subsea tie-back to the Devils
Tower Truss Spar located in Mississippi
Canyon Block 773. To withstand
Kodiak field’s high temperature
and pressure as well as extremely
corrosive production fluids, the pipeline
will be of a bi-metallic construction,
lined with corrosion resistant alloy.
Atkins wins structural
integrity contract with
Talisman
Atkins has been awarded a five-year
contract to provide structural integrity
management services to Talisman
Sinopec Energy UK (TSEUK). The
new framework agreement is in line
with TSEUK operational strategy
to drive greater efficiency, the five-year
contract elevates the previous
contracts to a Tier One supplier,
building on the previous 10-year
multidiscipline working relationship
between the companies. Under the
contract Atkins is providing a dedicated
core operational integrity team to
support all elements of the Structural
Integrity Management (SIM) process.
Siccar Point secures
$500m investment
Aberdeen-based new oil and gas
explorer Siccar Point Energy Limited
has received US$500 million in
investment from equity players,
including Blackstone, to create a
new North Sea-focused exploration,
development and production company.
The investment, will be used by the
new firm to pursue opportunities on
the UK Continental Shelf, with a strong
North Sea exploration focus.

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INTERVIEW: OMV
DYNAMIC PUSH IN THE UAE
Austria’s largest integrated oil and gas company,
OMV, has made a real push on the EP front in
recent years and the UAE has been a major focal
point. Dr. Georg Wachtel, general manager of
OMV Abu Dhabi talks about its EP growth in
Abu Dhabi, writes Julian Walker
The upstream exploration and
production business sector has
been targeted by OMV as the main
driver of its profitable growth strategy set
out in 2011, that is expected to deliver an
immediate improvement in performance
and lay the foundations for sustainable
growth in the long term.
The Middle East region is going to play
a major part in helping to deliver on this
policy and OMV has a pipeline of projects
coming on stream after 2016.
OMV established a representative
office in Abu Dhabi in 2007. Following
the initial screening of upstream
opportunities, it registered an EP
branch office in January 2011 with a team
consisting of all EP core functions,
exploration, engineering and commercial/
legal. The office also serves as an EP
subsidiary for fostering the relationship
within the UAE and the Middle East
region.
“The team swiftly matured two
projects together with ADNOC, the
Shuwaihat appraisal project with
Wintershall as 50 per cent partner and
operator, and an exploration project in the
Eastern region of Abu Dhabi, with OMV
as the operator and ADNOC as our sole
partner,” says Wachtel.
In June 2012 OMV signed its first
upstream agreement with ADNOC and
partner Wintershall for the appraisal
of the Shuwaihat sour gas field. This
was followed by the East Abu Dhabi
Exploration Agreement being inked some
12 months later, in June 2013.
The UAE is seen as a new growth
area for OMV and Wachtel explains the
significance of these two agreements:
“It was a very important first step to get
OMV engaged with EP activities in Abu
Dhabi. Especially as it is part of ADNOC’s
strategy to develop the remaining sour
gas accumulations in the western and
middle offshore part of Abu Dhabi in
order to increase ADNOC’s domestic gas
The
Shuwaihat
agreement is seen
by OMV as a perfect
stepping stone to
increase its
upstream presence
in the UAE
Line Crew planning way forward

INTERVIEW: OMV
production and decrease the dependence
on imports.”
OMV and operator Wintershall are now
drilling the first appraisal well, Shuwaihat
5, which was spudded in May 2014.
“This represents OMV’s first major
EP investment to date in Abu Dhabi. The
operation is well under way with the first
well spudded and it is currently progressing
to the target horizons,” says Wachtel.
One of the main challenges is that
Shuwaihat is a sour gas project. But
Wachtel notes that OMV has extensive
experience in sour gas operations
in Austria, as well as in its Pakistan
operation.
“We have a proven record with
operating these kinds of complex fields
in a safe and environmentally protective
manner,” he points out.
In Shuwaihat, to further delineate
subsurface uncertainties, the
Shuwaihat JV is applying state of the
art technologies such as horizontal well
drilling, running the most modern and
sophisticated logging tools for formation
evaluation and acquiring 3D seismic for
improved subsurface imaging. Wachtel
explains that OMV has its own seismic
processing centre and team experienced
in optimising processing steps.
The Shuwaihat agreement is seen
by OMV as a perfect stepping stone to
increase its upstream presence in the UAE.
The general manager explains that with
the successful appraisal of the Shuwaihat
sour gas field, OMV and Wintershall
will further their technical competence
and know-how in sour gas operations.
Dr. Georg Wachtel, general manager OMV Abu Dhabi

INTERVIEW: OMV
“This, together with OMV’s state of the
art exploration campaign, will confirm to
ADNOC that we are perfectly positioned to
provide support as a strategic partner for
their ambitious plan to increase production
and reserves in Abu Dhabi, he explains.”
Eastern promise
OMV followed up its first upstream
agreement with ADNOC by signing a
more far reaching exploration agreement
in June 2013 to look at onshore
opportunities in the Eastern region of the
UAE’s largest emirate.
Wachtel is optimistic: “As an
explorationist you always have to be
optimistic,” he says, “This exploration
agreement is the first pure exploration
agreement since the sixties and it serves
to evaluate the still underexplored
Eastern onshore regions of Abu Dhabi.
We are seeking to follow successful
oil trends which are productive on the
Omani side.
“Thanks to the excellent cooperation
with all stakeholders, ADNOC, ADCO,
EAD etc; We were able to start with
seismic acquisition activities earlier than
anticipated, in July 2014, only one year
after signing the agreement,” he says.
The acquisition of 3D seismic data is
now under way and the first exploration
well is planned for 2016.
Wachtel touches on what OMV has
done in terms of investment so far. “In
our OMV operated exploration project
with ADNOC we have already established
an expert team, reviewed technical
data and planned the next steps in our
technical work programme.”
He also emphasises that OMV is
very experienced in exploring in desert
environments citing its record in Tunisia,
Libya and Pakistan.
“We do not see really big challenges in
terms of operations, however stakeholder
management is very important in order to
run a successful campaign. Here I mean
mainly to obtain the understanding and
support of the community in and around
the areas of operation.”
In conclusion Wachtel says that: “Cooperation
with ADNOC has been excellent in developing
the agreements we are in, as well as
supporting our day to day operations. We are
excited to have ADNOC as our partner in our
exploration campaign.”
The WesternGeco vibrator-trucks in the region of East Abu Dhabi

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GEO FOCUS: Saudi Arabia
KINGDOM’SOILSECTORSETTO
POWER THROUGH HEADWINDS
This is a watershed period for oil
powerhouse Saudi Arabia as it
faces many challenges but is intent
on turning them into opportunities.
Saudi Arabia is the largest exporter
and the second-largest producer of total
petroleum liquids on the planet. But total
petroleum liquids production declined in
2013, the first decline since 2009, due to a
decrease in crude oil production.
Saudi Arabia has the fifth-largest natural
gas reserves, yet natural gas production
remains limited. The country has plans to
not only increase natural gas production in
the future but to also diversify its power
generation sources.
Although Saudi Arabia has about 100
major oil and gas fields, more than half of its
oil reserves are contained in eight fields in
the northeast portion of the country.
The giant Ghawar field is the world’s
largest oil field in terms of production and
total remaining reserves. The Ghawar field
has estimated remaining proved oil reserves
of 75 billion barrels, more than all but seven
other countries.
The kingdom’s oil exports reached 1.84
billion barrels in the first eight months
of this year with proceeds amounting to
SR747 billion ($200 billion), according to
local media.
Meanwhile, domestic consumption
during the same period reached nearly 553
million barrels, or 23 per cent of the total
output, leading consultant Fahad bin Jumaa
was quoted by Al-Riyadh daily.
The above figures follow statements by
Saudi Aramco CEO Khalid Al-Falih that his
company intends investing SR150 billion
($40 billion) in the next 10 years to maintain
stability in oil production and double gas
production.
As the country’s national oil company
Saudi Aramco is and the world’s largest
oil company, in terms of production.
Saudi Arabia’s Ministry of Petroleum and
Mineral Resources and the Supreme
Council for Petroleum and Minerals have
oversight of the oil and natural gas sector
and Saudi Aramco.
Saudi Arabia has 16 per cent of the
world’s proved oil reserves, is the largest
exporter of total petroleum liquids in the
world, and maintains the world’s largest

GEO FOCUS: Saudi Arabia
crude oil production capacity.
Recently there has been a substantial
drop in oil prices at global level in light of
geopolitical developments and economic
sanctions imposed by the US and the
European Union (EU) countries on Russia.
Global oil supplies are still abundant and,
therefore, demand tends to be weak.
Oil supplies of the Organization of Oil
Exporting Countries (OPEC), however, are
stronger than ever before with a record of
30.44 million barrels per day (mbpd) in July
supported by the increased production, said
Saudi Aramco CEO Khalid Al-Falih recently.
We told a forum in Norway: “Many
observers point to a cloudy outlook for our
industry and predict even more stormy
weather. While I am as confident as
ever of our long term future, I certainly
acknowledge that our sector faces
significant hurdles.
“Rising costs and cost overruns are
dragging many projects with project price
tags in the tens of billions of dollars, and
with significant financial and technical risks.
“Even at Saudi Aramco, project costs
have roughly doubled over the last
decade despite deploying cutting edge
technologies and applying our robust
project management systems to mitigate
cost escalation.
“Of course, larger investments and a
shrinking number of easier and cheaper
fields mean more expensive production,
and so industry profitability is plateauing
after a banner decade.”
Petroleum exports accounted for 85
per cent of total Saudi export revenues in
2013, according OPEC’s Annual Statistical
Bulletin 2014.
With the largest oil projects nearing
completion, Saudi Arabia is expanding its
natural gas, refining, petrochemicals, and
electric power industries. Saudi Arabia’s oil
and natural gas operations are dominated
by Saudi Aramco.
The King Abdullah City for Atomic and
Major oilfields in Saudi Arabia
Renewable Energy (K.A. CARE) programme
seeks to ensure that half of the electricity
generated in Saudi Arabia comes from
renewable sources by 2032.
“Yet even as alternative energy sources
make inroads, energy efficiency improves,
and with today’s moderate oil demand
growth, the longer-term oil outlook is fairly
healthy,” said Al-Falih.
“Despite some marvelous advancement
by various hybrids and pure electrics,
petroleum-based liquids will remain the
fuels of choice, holding between 80 and 90
per cent of transport market share in 2050
depending on the scenario considered.
“Our research agenda is targeting
a leadership position in about a dozen
technology domains. They include multiple
technologies that will help us achieve our
goal of increasing our oil recovery to 70
per cent and allow us to add more than a
hundred billion barrels of oil resources to
our already large portfolio.”
But there will be no resting on laurels,
according to Al-Falih.
“At the end of the day, I believe we
must put our money where our mouth
is, by making prudent and timely
investments; balancing long-term
objectives and short-term interests;
and meeting the energy needs of
the future while providing attractive
investment options and delivering value
to shareholders.
“I remain confident that our best days are
yet to come, the CEO concluded.”
Khalid Al-Falih, CEO, Saudi Aramco
FIELD LOCATION CAPACITY AS OF 2012
Ghawar onshore 5.8 million bbl/d of Arab Light crude
Safaniya offshore 1.2 million bbl/d of Arab Heavy crude
Khurais onshore 1.2 million bbl/d of Arab Light crude. Plans to expand capacity by 0.30 million bbl/d by 2017.
Manifa offshore 0.90 million bbl/d of Arab Heavy crude oil after completion at end of 2014. Production will be used
to offset declines in mature fields.
Shaybah onshore 0.75 million bbl/d of Arab Extra Light. Plans to expand capacity by 0.25 million bbl/d by 2017.
Qatif onshore 0.50 bbl/d of Arab Light crude
Khursaniyah onshore 0.50 bbl/d Arab Light crude
Zuluf offshore 0.50 bbl/d of Arab Medium crude
Abqaiq onshore 0.40 bbl/d Arab Extra Light crude
Source: Saudi Aramco

ALMANSOORI
SPECIALIZED
ENGINEERING

FEATURE: Pipes, Valves Fittings
Software simulation can help optimise the application of
autonomous inflow control technologies, explains Ismarullizam
Mohd Ismail and Chris Rodger from Tendeka
With an ever-growing
competitive marketplace in
today’s industry, oil and gas
operators are continually searching
to find new and improved means of
working in a smarter manner and
reducing costs
Horizontal and multilateral wells are
now increasingly more common in the
industry, due to the advancement of drilling
technology over the last few decades.
With these wells comes a greater reservoir
penetration and consistence drawdown
pressure along the wellbore.
One North Sea operator had difficultly
maintaining a consistent flow within
its well due to sand and water control
issues. Tendeka, the provider of
completions systems and services to the
upstream oil and gas industry, designed
a solution with 100 autonomous inflow
control devices in the operator’s medium
heavy oil (50cp), 1,200 metre lateral well.
The FloSure Autonomous Inflow Control
Device (AICD) is an improvement on
traditional passive ICDs.
It can enhance phase filtering where
phases have higher mobility than the
desired fluids and can be designed so that
the undesired low viscosity water and/or
gas phase is held back whilst the higher
viscosity oil is favoured. An AICD valve,
calibrated to the well’s characteristics,
responds to the fluid velocity and adjusts
flow accordingly.
AICDs behave like passive ICDs
before water/gas breakthrough, giving a
predetermined pressure drop between
the reservoir and the completion liner. This
choking effect creates a back pressure on
higher quality sections of the reservoir
allowing tighter sections to contribute
evening out the inflow profile from the
well. This results in better coning control,
FloSure “TR7” Flow Characteristic - All sizes - Oil
0 10 20 30 40 50 60 70 80
Reservoir Flow Rate (Rm3/d)
Pressure Drop (bar)
20
18
16
14
12
10
8
6
4
2
0
© Tendeka 2014. All rights reserved. 2.5mm
3.5mm 5.0mm 7.5mm 10mm
delaying water or gas breakthrough:
increasing efficiency for crude production
and improving water cut.
Based on multi-phase testing at various
water cut (WC) ratios, the downhole rate
per AICD valve can be designed to 10
-100 Rm3/d/aicd. Reservoir simulations
and optimisation with NETool were run,
confirming water control with the Tendeka
FloSure AICD to be two to three times
better than a passive system.
Various AICD nozzle sizes (AICD strength)
are available to optimise the wellbore hydraulics
by simply adjusting the AICD parameter in the
reservoir simulator (see figure1).
Software optimisation, simulation
and testing
Improved understanding of AICDs
through testing has allowed for creation of
mathematical models making it possible to
adapt these devices for changing conditions.
THE GROWING USE OF
SOFTWARE SIMULATION
Figure 1: Flow performance characteristics of AICD nozzle sizes
Oil (0.900g/cc, 50cp)

Tendeka has developed a proprietary
software suite for the creation of
performance curves for any downhole fluid
properties. Further endurance testing under
erosive environment conditions has helped
create an acceptable product life function
model with a variety of material alternatives
to operate in challenging well environments.
The development of a regression engine
to port the mathematical model data into
static and dynamic reservoir simulators
allows for a robust simulation for field
optimisation and lifetime modelling.
Tendeka advocates a five-step approach for
design and optimisation of AICD completions.
Step one: Reservoir data
requirements
Types of customer reservoir data required
to create an optimised AICD design are:
temperature and pressure, stock tank
densities (oil/gas/water), PVT tables, live
oil/gas/water densities and viscosities,
production rates (oil/gas/water) without ICD
completion (initial/mid-life/late-life), initial
expected drawdown, and well length.
Step two: Design of AICD
Tendeka’s FloSure AICD is based on a
levitator disk type design; offering superior
performance to passive and tortuous path
inflow control devices and allowing for ream
or wash down and spotting breaker fluids. It
is self-cleaning, offers no protrusion to the
base pipe that could act as a restriction for
intervention or intelligent well completions
and has no diameter increase over
conventional ICD screens.
Low viscosity gas reduces friction pressure
and causes very high velocity, thereby
“sucking” the levitation disc against the seat
and restricting gas flow. Whereas high viscosity
oil increases friction pressure, pushing the disc
away from the seat and increasing oil flow.
Step three: Generation of fluid flow
performance curves
The software firstly determines the optimum
size of the AICD valve to control the inflow
from the reservoir. The mixture viscosity
and density of oil, water and gas is analysed
to obtain the optimum production fluid,
subsequently chocking the unwanted fluid.
Step four: Generation of AICD
performance coefficients
The second part generates the AICD
user input constant (x,y,a-aicd) based on
analytic function of fluid property and local
volumetric mixture flow rate for static and
dynamic reservoir simulators. The models
also determine the optimum material of
the AICD valve based on fluid property,
flow rate and erosion parameter to ensure
the integrity and durability of the valve for
expected lifetime of the well.
Linear and rigorous multivariable non-linear
regression (MVNL) for NETool and
Eclipse simulators is used to quality check
the Tendeka software.
FloSure “TR7” Performance versus passive ICD
30
25
20
15
10
5
0
Water (1.050 g/cc, 0.65 cp)
Oil (0.900 g/cc, 50 cp)
Gas (0.085 g/cc, 0.0127 cp)
AICD Size: TR7 (5x25)
Nozzle Size: 1x3.4mm
0 5 10 15 20 25 30 35 40
© Tendeka 2014. All rights reserved.
Flow rate (Rm3/day) - reservoir conditions
Water Oil Gas
Step five: Quality check of
regression coefficients
Regression coefficients for use in
reservoir simulators such as Eclipse or
steady-state programs like NETool are part
of the program output. Both linear and non-linear
regression is used to compare with
the physical model ensuring no coefficient
divergence. Statoil’s licensed LINEST
method is used as well as DATAFIT from
Oakdale Engineering.
Empirical testing has demonstrated
that the FloSure AICD design controls gas
far better than a passive ICD due to the
choked flow effect during multiphase flow.
For heavy oil flow, the valve remains open
while choking upon arrival of water/gas.
Conclusion
AICDs have been shown to enhance
phase filtering where phases have a
higher mobility than the desired fluids.
Using suitable software modelling
tools they can be designed so that the
undesired low viscosity water and/or
gas phase is held back whilst the higher
viscosity oil is favoured.
The Tendeka FloSure AICD valve has
undergone a series of incremental design
improvements based on the experience
gained during development, testing and
production of more than 6,500 AICD screens.
The AICD technology is now field proven and
is giving significant returns as the industry
seeks to exploit ever more difficult reserves.
Figure 2: Initial AICD fluid flow performance curves versus passive ICD
Solid lines - TR7 AICD
Extended dotted line - Nozzle ICD

Mott MacDonald
Oil, gas and petrochemicals
In the last 50 years we have been helping our clients
realise the full potential of their projects. By applying
our ingenuity, we deliver long-lasting value. Our services
and solutions cover the entire oil and gas value chain;
from initial concept to commissioning, from exploration
to downstream and beyond.
Ŷ Advisory services
Ŷ Engineering (concept, FEED and detail design)
Ŷ Project management
Ŷ Commercial management
Ŷ Procurement services
OILANDGAS@MOTTMAC.COM WWW.MOTTMAC.COM/OIL-AND-GAS

OLIVER VALVESSETFOR
GROWTH INTHE MIDDLE EAST
Oliver Valves is a British-based
Engineering firm with over
35-years of experience in the
international valve industry. Operating
through three companies, Oliver Valves,
Oliver Valvetek and Oliver Twinsafe, they
employ over 600 people internationally
and specialise in the manufacturing of
valves for fluid control.
Covering all of the MENA region,
including Saudi Arabia, Oman, Qatar, UAE,
Kuwait and Libya, Oliver Valves have noticed
exponential growth in the region.
“The MENA region has always been
a significant market for Oliver Valves.
2014 has proven to be a successful year
for us as we continue to manufacture
high-quality valves for the oil, gas and
Petrochemical sectors,” says David
Cornwell, managing director.
“So much so, that we have only recently
expanded our team in our Dubai office with
a further two external sales professionals
to leverage the great opportunity presented
in the MENA region.”
“Thirty-five years ago, Michael Oliver,
founding chairman of Oliver Valves,
created a unique valve solution that
prevented both seat and stem leakage
– something which was missing from
the oil and gas market. To this day,
we are continuing to invest heavily in
See you at the ADIPEC, 10. - 13.11.2014
Booth No.13310, Hall 13
Pumps Flow Measurement Fluid Handling Solutions Services
A Reliable Partner for Global Players.
KRAL is the innovation leader in the specialized industrial sector including pumps
and fl owmeters. KRAL offers high quality, quick response and short lead times for
our screw pumps, positive displacement fl owmeters and fl uid handling solutions.
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research and development to ensure that
innovation is at the forefront of Oliver
Valves,” continues Cornwell.
Valve Maintenance
One of the common problems companies
face on their projects is the on-going
maintenance of valves. It is not uncommon
for oil rigs to be shut down for days due to
valves needing repairs – often resulting in
downtime of oil extraction.
For Oliver Valves, quality and reliability has
always been their number one priority.
“We adhere to strict quality guidelines on
all of our valve solutions – whether that’s
our instrumentation, pipeline or subsea

Continuous growth and outstanding innovations on
highest technical level will be presented at VALVE
WORLD EXPO 2014 in Düsseldorf. Valves, the whole
range of equipment as well as up- and downstream
technologies will take center stage. The VALVE WORLD
CONFERENCE as major event of the valve industry
analyses the markets· future, considering scientiÀ c
evaluations. Düsseldorf turns it on!
9th Biennial Valve World Conference Exhibition
Düsseldorf, Germany, 2 – 4 December 2014
Supported by: Sponsored by:
www.valveworldexpo.com
Düsseldorf GmbH
P.O. Box 10 10 06
40001 Düsseldorf _ Germany
Tel. +49 (0)2 11/45 60-01
Fax +49 (0)2 11/45 60-6 68
www.messe-duesseldorf.de
Oliver Valves’ Double Block Bleed Valves in action
valves. A few years back, one of our clients returned a subsea
valve to us that had been sitting in the ocean for over a decade.
Upon arrival, we put the valve through rigorous testing. Testing
showed that this particular valve was still completely operational,
with no defects preventing its operational use,” explains Cornwell.
“It is the quality of our valves that reduce overheads and
improve overall efficiency.
Engineering high quality valve solutions directly reduces the
need for ongoing maintenance, which can help to bolster the
overall profits of any oil or gas project.”
MENA Industrial Valve Market Growth
Research on Global Markets estimates that the industrial valve
market in the MENA region is forecasted to grow at a CAGR of
5.41 per cent over 2013 to 2018.
Distributing to well-known vendors in the region, Oliver Valves
continues to remain optimistic for future growth, forecasting
in excess of 25 per cent growth for the MENA region during
2014/2015.
“While there continues to be service and supply disruptions
in the region due to ongoing conflict, there will always be a
significant demand for innovative valve solutions in any oil and gas
project,” stresses Cornwell.
Some of the world’s largest oil and gas companies are
continuing to invest heavily in the MENA region. Iraq has
announced a drive to increase crude oil production to more than 7
million barrels per day, and Saudi Arabia announced plans for Red
Sea gas development, among other key announcements.
“For a lot of our MENA customers, it is our technical
consultations that are appealing. We look at our customer’s
project plans, and use innovation to create bespoke valve
solutions that directly integrate with our customers’ requirements
and specifications,” concludes Cornwell.
As one of the strongest oil and gas regions in the world, the
MENA region continues to be a key player in the worldwide
energy sector. Oliver Valves remains optimistic for the year ahead,
and expects to see growth year-on-year.

INTERNETTECHNOLOGY TO AID
PIPELINE OPERATIONS
GE and Accenture announce a new internet based packages that
offers access to critical data, helping firm’s make better decisions
to prevent failures and costly downtime
GE and Accenture have launched
an Intelligent Pipeline Solution,
the first-ever Industrial Internet
offering to help pipeline operators make
better decisions concerning the condition
of their critical machines and assets in
the oil and gas pipeline industry.
It combines Pipeline Management, a GE
Predictivity software solution powered by
the PredixTM platform, with Accenture’s
digital technology and systems integration
capabilities, to help customers make better,
faster decisions on their pipeline operations
to improve safety and prevent costly
downtime. Columbia Pipeline Group (CPG),
strategically located within the Marcellus
and Utica shale plays, will be the first
customer to implement this breakthrough
technology across its network of 15,000
miles of interstate natural gas pipelines.
“We need an agile and comprehensive
pipeline solution that could be delivered
quickly and allows for a more real-time
view of pipeline integrity across our
interstate natural gas pipelines,” says
Shawn Patterson, president, operations
and project delivery, Columbia Pipeline
Group. “GE’s industrial Internet software
platform and extensive pipeline equipment
and inspection capabilities combined with
Accenture’s strong industry knowledge,
digital capabilities and experience with
business process and systems integration
made them the clear choice for CPG.”
Operators can leverage the Intelligent
Pipeline Solution to explore a global view
of all their assets to make more proactive,
data-driven decisions. Combined with the
power of the Predix platform, customers
can consolidate and integrate pipeline data
in an easy to understand format that helps
them assess risks, identify threats and
make better decisions when planning and
executing. The Intelligent Pipeline Solution
marks a fundamental shift in the way
pipeline operators conduct their business.
“Pipeline Management helps customers
proactively make the right decisions at
the right time to keep their assets safe,”
explains Brian Palmer, president and CEO,
GE Measurement Control. “We’ve
delivered a comprehensive software
solution that helps operators prioritise
where valuable resources are needed most
and respond to potential events with a
higher level of confidence. We anticipate
transportation pipeline companies using
the solution will see operational efficiency
improvements in integrity, maintenance,
safety and regulatory compliance.”
GE and Accenture are uniquely positioned
to combine both historical and internal
and external big data streams and analysis
with sensors and monitoring technology.
The system is designed to harvest data
from sensors installed along the pipeline
and equipment, sync it with external data
sources and deliver to customers detailed
analytics and risk assessment from key
points of the network. GE’s company’s
domain knowledge in oil and gas and pipeline
management, along with Accenture’s
knowledge of business operations, brings
their customers the intelligence needed to
better manage and protect their assets.
Current transmission pipeline
infrastructure stretches across nearly two
million miles globally (Source: PII Pipeline
Database - Summary of Infield Systems,
Global Data DOT and CIA world fact book
databases). Considerable amounts of
natural gas transported in the United States
are coming from the Marcellus and Utica
shale plays, and operators like Columbia
are looking for ways to keep up with
current demand. Much of the US pipeline
infrastructure has been in place for at least
20 years, and operators are taking added
precautions to ensure safety remains at
the forefront when transporting increased
production volumes from shale formations.
Pipeline companies are investing up to
US$40 billion a year to expand, maintain
and modernise existing infrastructure.
The growth in the industry – because of
increase in gas production volumes– places
a new requirement on operators to build
out an infrastructure that didn’t exist before.
To help make the most of these significant
investments, operators increasingly require
more robust data, real-time workforce
planning and information to optimise the
safe performance of these networks and
relevant systems.
“Accenture and GE have unveiled a
breakthrough solution with a global standard
for pipeline safety and productivity,” said
Peggy Kostial, senior managing director
for Accenture’s North America resources
operating group. “We are excited about
complementing GE’s industrial software
experience with Accenture’s deep
industry experience in system integration
and change management services that
are needed to unlock the true value of
Intelligent Pipeline Solution. This is a
tremendous opportunity to use advanced
analytics and digital technologies to help
Columbia Pipeline Group address its key
industry challenges.”
Pipeline operators continue to look for
ways to increase customer satisfaction
through proactive improvements in systems
reliability and availability. By connecting
disparate systems and integrating
information data from machines and assets
into operational improvements, they can
begin to realise the full potential of the
industrial internet.

FEATURE: Artificial Lift
USE OF PLASTIC COATED TUBING
IN ARTIFICIAL LIFT APPLICATIONS
Ryan Christopher and Robert Lauer of NOV Tuboscope look at the recent
advancements in technology and where the use of abrasion resistant coatings
have been successfully utilised in artificial lift applications, including rod
pumping wells and plunger lift wells
High costs associated with tubing
and sucker rod replacement
include workover costs,
replacement costs and lost production
which can become significant for highly
corrosive artificial lift applications.
The reliability of the tubing and sucker
rods in an artificial lift production well can be
greatly dependent upon the effectiveness
of a tubular and sucker rod integrity
programme. This process can include
inspection services to verify the quality
of the material, proper care and handling
practices during transportation, storage and
running operations, appropriate well design
and optimisation practices and proper
selection of corrosion control methods.
An important concern with corrosion
in artificial lift applications, such
as rod pumping and plunger lift, is
the synergistic effects of erosion-corrosion.
Erosion-corrosion is defined
as acceleration in the rate of corrosion
attack in metal due to the relative motion
of a corrosive fluid and a metal surface.
This acceleration can be exacerbated
by the additional mechanical interaction
associated with artificial lift applications.
Erosion-corrosion can create significant
metal loss within a short period of time
due to the mechanical wear exposing
fresh metal which is more susceptible to
the effects of the corrosive fluids.
The high level of mechanical interaction
from sucker rods and plungers can
create concerns regarding the use of
IPC tubing as a viable corrosion control
solution in artificial lift applications.
Historic IPC materials were not developed

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with intentions of use in artificial lift
applications. That mindset is changing with
recent field successes of newly developed
abrasion resistant coatings.
Rod pumping applications
Rod wear interactions between sucker
rods and tubing can be detrimental to
the integrity of both the tubing as well as
to the sucker rods themselves. Recent
advancements in abrasion resistant IPC
technology has allowed the coating to
become a viable corrosion control option to
consider for tubing and rod life extension in
highly corrosive environments. Historically
nylon based IPCs had limited success in
rod pumping applications due in part to the
extreme flexibility and natural lubricity from
the nylon resin. In spite of their success
there is a greater need for even more
abrasion resistant materials.
In addition to the tubing losses
due to corrosion, erosion-corrosion,
and mechanical wear in rod pumping
applications, the sucker rod string is
susceptible to the same losses as it is
exposed to the identical elements. Spray
Metal Plastic Coated (SPMPC) sucker rods
have proven to provide life extension in
sucker rods for severe service applications
including highly deviated, high side-load,
heavy solid and even sour service
wells in certain applications. The spray
metal material utilised is a 316 stainless
steel that is applied 1 ½ - 2 mils (0.0015-
0.002 in.) thick. Like other thermal spray
materials, this type of application is known
to produce a porous structure that can
potentially provide pathways for corrosive
fluids. The use of a 10 – 20 mil thick (0.001-
0.002 in.) thermoset epoxy topcoat, applied
over the spray metal, provides the most
robust system by eliminating any potential
corrosion pathways.
The use of rod guides can significantly
assist in reducing rod and tubing wear in
many applications where high deviations
and high side-loads are experienced. Rod
guides can also be beneficial along with the
use of IPC tubing and SPMPC sucker rods
by centralising the rod string and reducing
the contact area. Historically non-glass filled
rod guide material were recommended
to be used in the nylon based IPC tubing.
Newly developed abrasion resistant epoxy
coatings now allow for the standard glass-filled
rod guide material to be used which
can greatly increase the guide life.
TK-70XT coated product tubing
Blast joints are commonly used in West
Texas rod pumping wells to protect the
tubing string from the abrasive blasting
action from the discharge just above the
downhole pump. The practice of internally
coating these blast joints have proven to
extend the life of this vulnerable area and the
use of IPC tubing is present in a significant
number of wells in the Permian Basin. The
IPC helps to reduce the erosion-corrosion
which can occur from pump movement/
vibration, recirculating solids or high fluid
velocities which proves difficult for effective
chemical corrosion inhibitor treatments.
The latest abrasion resistant coatings have
proven to be effective in extending the life of
the blast joints, thus reducing workover and
lost production costs.
Plunger lift applications
The use of plunger lift as an economical
artificial lift method that can sometimes
present a challenge in regards to corrosion
treatment methods. The continuous
mechanical interaction between the plunger
and the metal surface can be difficult for
an effective chemical inhibitor program
in certain applications. IPCs eliminate
the concern of continuously replenishing
the passive film formed by the chemical
inhibitors. The use of IPC tubulars in plunger
lift applications is becoming more common
with the introduction of more abrasion
resistance IPC materials.
There are many configurations of
plungers which will provide a variety
of wear interactions with potential IPC
tubing use. Typically parameters of
the well dictate which configuration of
plunger is best suited for each individual
application. When IPC tubing is considered
proper plunger selection should also be
considered in regards to compatibility
with the IPC. Non-metallic brush style
plungers are the preferred configuration
eliminating any metal to coating contact
during plunger cycles. A variety of padded,
brush, solid and two-part (ball and cylinder)
are currently being utilised in trial wells
with no reported issues to date. The use
of plungers with paraffin/scale scraper
sections should be avoided.
Advancements in technology
Over the past 10 years there have been
advancements in IPC technology which are
making the coating material more robust
through proprietary advancements in filler
material packages as well as increased resin
abrasion resistance properties. There are
many characteristics that must be balanced
in the design of abrasion resistant coatings.
For instance, it is also important to retain
a high level of flexibility in coating systems
designed for artificial lift applications in order
to provide a more robust corrosion control
solution. Having flexibility gives a coating
more resistance to impact during handling
as well as potential mechanical interactions
in service, such as rod slap from cyclical
tension/compression of a sucker rod string
or impact from a plunger to the pin nose of
an API eight round connection.
There are several laboratory tests used
to determine the abrasion resistance of
polymeric coating systems. For the purpose
of this article we will focus on the test
ASTM D 4060 “Standard Test Method for
Abrasion Resistance of Organic Coatings by
Taber Abraser”. This test uses a flat coated
An important
concern with
corrosion in artificial
lift applications, such
as rod pumping and
plunger lift, is the
synergistic effects of
erosion-corrosion

panel rotating under CS-17 abrasive wheels,
with a 1 kilogram load for between 5000
to 10,000 cycles. The recorded data is the
weight (mg) and thickness (mil) of coating
material lost for every 1,000 cycles as per
the Tabor Abraser results listed (Table 1), the
advancements in the abrasion resistance of
the modified epoxy based system (0.02 mils
lost) over the epoxy based system (0.70
mils lost) results in a coating system thirty-five
times more abrasion resistant.
Previous advancements in abrasion
resistant IPC materials based off of
increases in Tabor Abraser values have had
proven field success. Since 1999, abrasion
resistant IPC material applied to drill pipe
have been used in aggressive completion
operations demonstrating notable resiliency
against high velocity, high pressure
proppant. These types of successes are
documented in SPE 77687 “Case History:
Internally Coated Completion Workstring
Successes” (R. Pourciau, SPE 2002).
More recent advancements in abrasion
resistant IPC materials have continuing
field trials which have more than doubled
the life of tubing in several artificial lift
applications including rod pumping wells
and plunger lift wells
Field performance
Rod pumping or beam pumping wells
offer a unique challenge to providing
adequate corrosion protection due to the
dynamics of the system. The abrasive wear
coupled with the impact that can take place
from the interaction of the sucker rods and
the pipe internal surface can make many
standard corrosion treatment methods
ineffective. For an internal coating to
withstand both the abrasive action as well
as the possible impacts, it must possess a
unique blend of characteristics.
A highly deviated rod pumping well
was experiencing premature tubing
failures due to excessive rod wear on the
tubing through the deviations. This was a
Christmas well producing approximately
30 to 35 barrels of oil per day (BOPD)
and 820 to 840 barrels of water per day
(BWPD) on a pumping unit with a 288 inch
stoke at 3.4 strokes per minute. There was
approximately 1,900 feet of 1 inch rods
and approximately ,2900 feet of 7/8 inch
rods below them with an on/off tool above
the 3 ¼ inch (82.6 mm) pump. Rod guides
were not employed to minimise wear, but
the rod boxes used in the area of deviation
were spray metal. A variety of alternative
coating systems (including ceramic filled
coatings, nano-coatings, nylon coating, and
penetrants) had been field trialed in this
well resulting in a maximum tubing life of
less than 6 months.
A modified epoxy coated tubing string
was installed in November of 2009 and has
been successful in dramatically extending
TK-70XT coated sucker rods
for corrosion protection and
wear resistance

FEATURE: Power Generation
OPERATING IN ISLAND MODE:
POWER GENERATION INOIL AND GAS
In the past the oil and gas industry, and power generation industry had little
need to interact, however when power generation is required exclusively for
an oil and gas facility a clash of cultures is inevitable, writes LNG and power
industry veteran, Peter Meek
The increase in oil and gas mega
projects at remote locations during
the 21st century has created a
need for power generation at onshore
oil and gas facilities. In the past the oil
and gas, and power generation industries
had little need to interact, however when
power generation is required exclusively
for an oil and gas facility a clash of
cultures is inevitable.
As would be expected, liquid natural gas
(LNG) processing and export plants typically
rely on gas turbine generators as the primary
source of power generation. Such dedicated
power generation often operates in
isolation from the national or local electricity
distribution network, this isolation is known
as ‘island mode’ operation. The following
recent world-scale LNG facilities are perfect
examples where integrated and dedicated
island mode power generation is deployed:
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installations and how is power generation
for oil and gas different from standard
power generation for utility companies?
Here we will examine three key areas
which highlight the differences and need
to be addressed when generating power
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Cost
To engineer, procure and construct
a power plant for oil and gas industry
standards greatly increases the cost
from that of a traditional utilities power
plant. When conducting the engineering
procurement and construction for a power
station, as part of an oil and gas facility,
it is highly likely that the power station
will need to follow the more rigorous
standards used for the oil and gas facility.
This creates additional costs that need to

A power plant for the oil and gas industry is more costly than in the utilities section due to differing industry standards
be considered including the following:
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hydrocarbon processing facility
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staff will work on the entire facility –
including the power generation area,
therefore consistency is required. This,
coupled with the increased reliability
requirements can increase costs by up
to 50 per cent for an island mode power
generation facility.
Reliability
Reliability requirements are a key
difference between a typical power
installation and an oil and gas power
installation. A typical power generation
facility will supply electricity into a grid
with multiple base and peak load power
plants therefore a single failure will not
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they operate in island mode, many oil and
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load shedding will be initiated for the oil and
gas facility, potentially resulting in millions
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power generation for oil and gas needs
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installed capacity can be double the largest
power requirement of the oil and gas facility
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difference – cost.
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generation industry and the oil and gas
industry. Thus when the two industries
need to work together, both sets of
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procedures and standards, particularly in
areas where they differ.
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they know where the standards come
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many cases protocols are applied as
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generally to flange all pressure relief
Credit: Altaaqa Global

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and high-pressure steam systems the
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reasoning behind each approach so
they can make an informed decision as
to which standard suits the particular
application. This sounds basic, but when
procedures and standards are entrenched
in an industry they can be hard to
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Sub-Synchronous Torsional Interaction
Torsional Vibrations can be a hard
enough concept for most to understand,
so it is no surprise that Sub Synchronous
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understood phenomena within both
power generation and oil and gas
industries. Without going into too
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shaft natural frequencies. Such resonant
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damage resulting in reduced component
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heavily on a single dedicated power plant
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between turbine generator shaft natural
frequencies and certain electrical
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not a common problem for utility power
generation, since such plants are generally

As the global demand for mega projects
increases, the requirement for island mode
for power supply makes a lot of sense. There are a
number of technical and cultural challenges to
overcome when designing such a power station,
however it can and has been done successfully
Peter Meek, founder, engineeringcircle.com
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connected to a power distribution grid
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between electricity generator and
electricity consumer.
A typical solution applied by the power
industry to this infrequently-encountered
problem, is to use torsional stress relay’s
which shut down the turbine when
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turbine generator from catastrophic
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gas facility reliant on its gas turbine
generators.
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don’t fix the problem – they simply
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sufficient damping between the electrical
generator and electrical consumer, rather
than introducing damage mitigating
techniques once the plant is up and
running. Understanding and mitigating
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faced in power generation for oil and
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of cooperation between the turbine-
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often competitors) across the entire oil
and gas facility.
As the global demand for mega
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island mode for power supply makes a lot
of sense. There are a number of technical
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when designing such a power station,
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successfully. Taking into consideration
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start off on the right foot.
Peter Meek is a mechanical engineer
with over 10 years’ experience in
both LNG and power projects. He has
applied his skills and experience in both
areas to his startup company
engineeringcircle.com, which offers
global business-to-business marketing for
equipment manufacturers and suppliers
in both sectors.

MILESTONES FOR THE MIDDLE EAST
OIL AND GAS INDUSTRY
The Gulf countries remain the indispensable suppliers of oil and gas to the
world. Sustaining these contributions in uncertain times requires continuing
investment in world-class assets and the best technologies and people,
writes Robin Mills
The first ADIPEC conference,
in 1984, was held at a time of
uncertainty in oil markets, not
unlike today. Oil prices were strong
but OPEC members were increasingly
worried about oversupply. Abu Dhabi
may have changed dramatically
since then, but many staff in its oil
companies, as young professionals,
experienced those times – which hold
lessons for today.
Today, the region’s oil and gas producers
fall into two groups, each with its own
challenges. Some are passing through
political upheaval or even civil war, such
as Iraq, Libya, Yemen, Syria and Egypt. In
many cases, this has interrupted oil and
gas supplies, damaged facilities, or at least
deterred investment. Iranian oil exports have
been severely hit by sanctions. Oil workers
in these countries face the challenge of
sustaining production in very difficult and
often dangerous circumstances.
Yet Iraq’s megaprojects continue in
partnership with international oil companies
such as Shell, BP, Lukoil, CNPC and
Petronas, while the autonomous Kurdish
region is also expanding export capacity.
Development of these giant, immature
and prolific reservoirs requires managing
logistics, bureaucracy, politics and insecurity
in a volatile, unpredictable situation.
The second group includes the GCC oil
exporters, who have enjoyed secure oil
industries and solid economic growth. Oil
prices have been strong and remarkably
stable over the past three years, despite
such conflicts and political disputes.
GCC producers, having invested in spare
production facilities over the years, have
been able to use this to replace outages
elsewhere.
Abu Dhabi and Kuwait have ambitious
plans to continue boosting production
capacity up to 2020, with Abu Dhabi’s
target of 3.5 million barrels per day largely
coming from its major onshore concession
ADCO, and offshore ZADCO and ADMA-OPCO.
This involves expansion of giant
fields such as Upper Zakum, along with
new developments including Nasr, Umm
Lulu and Satah Al Razboot. Meanwhile
Saudi Arabia plans to keep production
capacity constant around 12.5 million
barrels per day for now.
It is very unclear how much oil Iraq,
Iran and Libya will supply over the next
decade. There could be a strong recovery,
or continuing severe problems. So the
GCC petroleum producers have some
tricky decisions ahead when planning
future output. They also have to consider
continuing concerns over the world
economy, and the continuing rapid
expansion of North American oil production
with the boom in shale and oil sands. Qatar
has to take into account new liquefied
natural gas (LNG) competition from North
American shale, Australia and East Africa.
FEATURE: Oil Gas Outlook
Credit: ADMA-OPCO

This uncertainty means that the winners
will be those companies that are fast,
flexible and keep costs down, at a time
of rampant industry inflation and skills
shortages. New commercial models are
needed to help international and national
oil companies, engineering contractors
and service providers to work together
efficiently, more smoothly and to advance
projects quicker.
New potential investors such as Asian
national oil companies have entered the
region, with a value proposition distinctly
different from that of traditional Western
partners. But there should also be more of
a role for specialist, smaller oil and service
companies, including ones rooted in the
Middle East itself.
The first ADIPEC was intended to point
the way towards technical excellence in
the region. Even though the later 1980s
and 1990s were a difficult time for the
industry, with low oil prices, they saw
dramatic advances in technology. 3D
seismic, horizontal drilling, hydraulic
fracturing for tight gas, computer reservoir
simulation and deep-water developments
all moved into the mainstream.
The march of technology continues.
Although conventional Gulf fields are still
giant producers, costs have risen sharply
since 2000, putting efficiency at a premium.
Small increases in recovery factor equate
to billions of barrels of additional reserves,
often cheaper and less risky than new field
developments. And the region is dealing
with more challenging resources – mature
fields, sour gas, tight gas, heavy oil, ultra-deep
pre-Khuff formations – and taking its
first steps on shale reservoirs, deep-water
and sub-salt exploration.
Sharing best technologies and
deployment practices to common
challenges across the Gulf, and working
together through platforms such as the
Industry Technology Facilitator (ITF), can
save costs and develop solutions uniquely
tailored to Gulf challenges. It is essential to
put proper value on the best technology, not
simply choosing the lowest-cost option.
Asset integrity in older installations,
improved 3D and 4D seismic imaging,
complex well design, automation and
digital oil-fields, carbonate reservoir
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management, including more precise
management of secondary recovery, are of
growing importance. Various methods of
enhanced oil recovery, using steam, carbon
dioxide, nitrogen, miscible hydrocarbon
gases and chemicals, are widespread in
Oman and increasingly being deployed in
the other GCC states.
Qatar, for example, is planning the costly
redevelopment of mature offshore fields
such as Idd El Shargi and Bul Hanine.
Environmental goals are becoming ever
more important, with Kuwait and Oman
deploying solar steam generation for heavy
oil production, and ADNOC and Masdar
moving ahead on carbon dioxide injection
to enhance oil production while reducing
greenhouse gas emissions. Low-cost
carbon capture systems such as Maersk’s
TriGen could reduce the region’s climate
change footprint while saving on valuable
hydrocarbon gas for reinjection.
High oil revenues have helped Gulf
economies to boom, and this has led to
growing demand for gas and electricity.
They have poured tens of billions of dollars
into energy-intensive industrial complexes
in refining, petrochemicals and aluminium.
Although gas production has risen fast, it has
not kept up with demand, leading to growing
use of expensive oil for fuel, and to imports
of costly LNG into Kuwait and the UAE.
The next generation of more difficult
gas fields often feature partnerships with
international companies as in Oman’s
Khazzan project with BP, or Abu Dhabi’s sour
gas-focussed joint ventures with Occidental
at Shah, Wintershall and OMV at Shuweihat,
and Shell at Bab. The technical challenges
are significant – for example, obtaining fresh
water or finding alternatives for hydraulic
fracturing in an arid climate. Saudi Arabia too
has ambitious plans for shale, while outside
the Gulf, all the North African countries are
looking at shale and tight gas resources.
On the commercial side, gas prices
have to rise closer to world market levels
to encourage production and avoid waste.
Egypt has begun to take difficult decisions by
increasing gas prices to industry and paying
more for expensive deep offshore gas.
Security – physical and cyber – has also
gained importance in the wake of much-publicised
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sabotage in countries such as
Iraq, Yemen and Egypt, and cyber-attacks
in the GCC. Predictive security integrates
and makes sense of a flood of data from
legacy systems, modern sensors, drones,
on-the-ground human intelligence and social
media monitoring. It is becoming essential
for protecting oil-field assets and people in
hostile or volatile surroundings.
The Gulf countries remain the
indispensable suppliers of oil – and, from
Qatar, gas – to the world. At the same
time, they need gas and other energy
sources to fuel their own economic
growth and diversification. Government
and society requires ever-better
environment performance. Sustaining
those contributions in uncertain times
requires continuing investment in world-class
assets and the best technologies
and people. The world and region are very
different from how they were at ADIPEC’s
inauguration in 1984, but these principles
have not changed.
Robin M. Mills is Head of Consulting at
Manaar Energy, and author of The Myth of
the Oil Crisis and Capturing Carbon

INTERVIEW: Mexican Ambassador
We speak exclusively with the Mexican Ambassador to the UAE,
Francisco Alonso, about the country’s new energy reform that opens
up its hydrocarbon sector for investment and how the Gulf is seen as
a potential major partner, writes Julian Walker
For the first time in nearly 75 years,
Mexico is taking steps to reform
its state-run energy sector with
the aim of enabling it to maximise its
global potential in terms of oil and gas
exploration and production.
Under the stewardship of President
Enrique Peña Nieto, Mexico has pushed
ahead with dramatic reforms in different
economic areas, including the energy
sector. In August this year, Mexico’s
Congress approved the Constitutional
Energy Reform Bill that ends the
monopoly of state-owned oil company
Pemex and aims to bring in billions of
dollars in investment.
Alonso says: “We are not going back to
the past. We changed the constitution to
give opportunities for companies to invest
in Mexico. The government has freed the
market. We have opened our energy sector
as it is the only way to remain competitive.”
He points out that the reform bill
does not mean Pemex has been sold or
privatised. Mexico is not giving away its
hydrocarbon wealth.
“There has been no change to the
structure of the company, which is still
part of the state of Mexico. It is part of our
national identity.”
One of the key reasons for opening up
the important energy sector was to make
Pemex stronger and this will be achieved by
giving it greater freedom.
“One of the main motives behind the
reform was the need to strengthen Pemex,
in order that it became more competitive.
Competition will make Pemex more
transparent and much more efficient,” the
ambassador says.
The reform is designed to promote
greater transparency and accountability in
the country’s oil sector through the creation
of the decentralised agencies, the National
Hydrocarbons Commission (CNH) and the
Energy Regulatory Commission.
“The idea of all these bodies involved
in the energy make-up of Mexico is to
establish clearly transparent bodies to
ensure everything that is invested is above
board,” says Alonso.
Objectives
The ambassador touched on a number of
key objectives that the government hopes
to achieve by reforming the energy sector.
Right at the top is the need to improve
the economic situation of families in
Mexico. This will be achieved by cuts in
electricity and gas bills that will result
in direct savings for Mexican citizens.
Cheaper, more abundant gas will make it
possible to reduce the price charged for
domestic electricity.
As the ambassador notes: “Gas and
electricity prices are high in Mexico and
what we want to offer is cheaper prices
for the whole population. The reform
programme will allow Mexicans feel the
benefits of oil.”
Another objective is to attract increased
MEXICO ENERGY SECTOR
OPEN FOR BUSINESS
Francisco Alonso, Mexican ambassador to the UAE

Pipeline Oil & Gas Magazine - October 2014 Featuring Thorne & Derrick

Pipeline Oil & Gas Magazine - October 2014 Featuring Thorne & Derrick

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Pipeline Oil & Gas Magazine - October 2014 Featuring Thorne & Derrick