Articles tagged with "tech talk"
Posted by Heading Out on February 20, 2011 - 5:58am
Tags: eia top world oil producers, kuwaiti oil and gas production, mexican oil and gas production, second tier oil producer states, tech talk, uae oil and gas production [list all tags]
The current series of Tech Talks is aimed at discussing, in gradually increasing detail, where we are, and will be getting our oil and natural gas from over the next two decades. It is relatively easy to do a little hand-waving and say, as for example the BP review did, that Russia and Saudi Arabia are expected to continue to provide 12% each of the world’s oil supply through 2030. It becomes a little more difficult to see that future if one accepts the rest of the BP argument that global supply will rise to over 102 mbd, requiring both Russia and Saudi Arabia to produce at about 12 mbd each through that time frame. It is a little easier to check the validity of the projections if the totals are broken down into smaller pieces, and then examined by looking at both current and projected production from the different countries that supply significant amounts of oil and natural gas, not forgetting the increasing amount that each country is setting aside for its own consumption. We can also check on how that demand is growing. For example gains in the global economy has caused OPEC, in their February 2011 Monthly Oil Market Report (MOMR), to increase their projection of oil demand in 2011, anticipating a rise of 1.4 mbd to average 87.7 mbd.
Posted by Heading Out on February 6, 2011 - 9:01am
Tags: afra, aframax tankers, air draft, average freight weight assessment, cape of good hope, deadweight, dwt, egypt, oil tankers, suez canal, suezmax tankers, tanker routes, tech talk, ulcc, ultra large crude carriers, very large crude carriers, vlcc [list all tags]
While most equity-related assets got battered, a select group of stocks, oil shippers, were corking champagne bottles. Apart from Overseas Shipholding, Frontline Ltd. had a killer day, gaining 7.8% or $1.96 to $27.10.
An analyst for a shipping hedge fund explained that the spike is connected to fears surrounding the continued operations of the Suez Canal, amidst social unrest caused by massive riots against President Hosni Mubarak’s 30 year rule. “While Suez closure is not much of a threat, shippers are refusing to load in the Red Sea and transit the Canal,” explained the trader. “What’s probably going to happen is that they re-rout ships to the Cape [of Good Hope],” he noted.
“[Re-routing] makes voyages longer, which ties up ships and in turn diminishes supply,” said the analyst, “[this] is positive for the tanker market.”
The change involved is not just giving a tanker captain a different map and saying “get on with it.” Because of the relative size of the Suez Canal, there are different sizes of tankers involved, and so I thought it useful to talk about the different sizes of tankers, how fast and where they go, (and what the cost of that re-routing might be) in the post today.
In the last two Tech talks I have been discussing the production of heavy oil from the deposits in the Orinoco Basin in Venezuela. Production of that oil requires, in part, the injection of large quantities of natural gas. In writing about the resources that the country has, it would be remiss not to concurrently note the recent discoveries of additional volumes of natural gas offshore Venezuela, and the volumes that are thus available, not only for the oil fields, but also for a rising domestic consumption.
In November 2009, Repsol announced that the Perla 1X well had found the equivalent of between 1 and 1.4 boe of natural gas, said to be the fifth largest hydrocarbon discovery in 2009. (The other four, in debatable rank are Miran West (Iraq), Poseidon (Australia); Abare West in the Santos Basin (Brazil) and Tamar (Israel). You can argue about the size of some of the others – such as the Keathley Canyon discoveries in the GOM, since it depends on whose list (see slide 11) or other list you use.
Last week I wrote a little about the planned production of heavy oil from the Orinoco Basin in Venezuela and used that as the basis for a discussion on API gravity and refinery gains. What I would like to do today is to revisit this area of Venezuela and discuss a little more of the region and the potential for increased production, and how it might be achieved. But let me start with overall production from Venezuela, for which (as my comment on Chinese imports last week exemplified) data is not always consistent.
Because the world market is increasingly having to accommodate crudes that are heavier and less easy to refine into desirable, profitable products I thought I would revisit my discussion from earlier in the series about the limitation on global oil production, due to the need for suitable refineries to process the oil that is produced, before it can reach and be used by the ultimate customer.
I have covered the operations of refineries in the past, but this time I thought I would dwell a little more on some of the factors that relate to the type of oil that is being refined. It is perhaps timely to do so, given that China is moving forward with plans to construct a refinery that will process the heavy Venezuelan crude that, until now, has largely been sent to specialized refineries in the United States that are designed to handle it. In 2008 Venezuela exported 120 kbd of oil to China (out of a total of 1.89 mbd, of which the USA imported 1.19 mbd). This past year the flow to China is reported to have increased to 362 kbd. It might be noted that the recent diplomatic leaks known as the Wikileaks saga has revealed cables that suggest that China was getting some of this oil for $5 a barrel, and then selling it for more on the open market, including possibly to the USA. This could be quite possible since it is also reported that while Venezuela said it exported 460 kbd to China, Chinese figures put the volume this year at 132 kbd.
Just before the Christmas break the United Kingdom was going through some concerns over natural gas supply. Stored gas levels were falling and the National Grid posted a “Gas Balancing Alert” for only the second time since they were instituted. But there is no more urgent talk of such a problem – what happened?
Well the answer is that rescue, in the form of Liquefied Natural Gas (LNG) tankers came trundling over the horizon. Just this week the UK opened an expansion of the terminal at the Isle of Grain that can now accommodate larger tankers, at the rate of 5 a week. LNG from the tankers to this terminal can now supply up to 20% of the national need for gas. But that is a little late for the past crisis (due to scheduling problems the first tanker won’t dock until next week) so where did the LNG come from, and where did it go ashore?
Flows of LNG were at a total 100 million cu m/d Tuesday after South Hook ramped up 10 million cu m/d to 55 million cu m/d, Dragon was at 15 million cu m/d and Isle of Grain contributed 30 million cu m/d to the system. That is a total increase of 25 million cu m/d on levels Monday. LNG is also going to be backed up by fresh deliveries in the next week, with UK port data showing three fresh LNG cargoes expected to berth at South Hook from Qatar in the next week, including the Umm Al Amad expected sometime Tuesday, the Mozah on December 23 and the Aamira on Boxing Day.
(The UK used 468 million cu.m. on Monday Dec 20th).
I have written about the limitations in the free flow of oil because of the increasingly heavy and sour nature of the reserves that are now being developed, and the need for suitable refineries to process that oil. I then wrote about how it’s not just oil from oilwells, but also the non-gas-liquids (NGLs) that count toward the total volume of oil that is consumed in the world. There are other constraints to production, and the one that I’m going to talk about today is that of transportation. It seemed appropriate at a time when Chevron has just announced a doubling of the size of the pipeline from the Tengiz field in western Kazakhstan to Novorosslysk on the Black Sea. It will now carry some 1.4 mbd of oil to the port, whence it will be transshipped in tankers.
Transportation is, of course, a major problem for many energy forms, as Leanan caught, the Chinese are already facing problems this winter over the distribution of power.
Most of China's resource production bases, including coal and and oil, are either concentrated in the northern or western provinces, away from the key demand areas located in the southern and eastern region, such as Shanghai and Guangdong.
Any supply shortfall could prompt a surge in import demand as utilities and firms seek alternative fuel supplies to feed their power plants.
And it turns out that they are not the only ones. As the new snowfall wraps over the United Kingdom there are concerns over the distribution of fuel oil.
Downing Street was forced to respond to reports that heating oil might need to be rationed over the winter because of rocketing prices and restricted deliveries, admitting there was a problem moving it around the country.
The energy minister, Charles Hendry, sparked alarm yesterday when he warned the House of Commons that the situation could become "very serious" if there was further snow over the Christmas period. Thousands of public buildings and an estimated 660,000 homes rely on oil for heating and Hendry told MPs some had been told supplies would not be available for four weeks.
All of which serve to emphasize a point that I wanted to make today about how the presence of a pipeline can, but not always, help the situation.
There are two figures that keep cropping up when folk write about the production of oil, one number is the daily flow rate for crude oil, and while the EIA report that the peak production year to date was in 2005, when the world produced 73.72 mbd, the IEA have reported that the peak occurred in 2006. Yet just last week the IEA raised their forecast for next year’s oil demand to 88.8 mbd and there is about 15 mbd difference between the two numbers. So you might ask what causes this, where do these additional liquids come from and what is their future, relative to that of crude alone.
Part of the answer comes from what are known as refinery gains, the fact that when you crack a high-carbon crude into lower carbon products in a refinery then there is a gain in volume. In Oil 101 Morgan gives this processing gain in volume to be around 2.2 mbd. In addition there is the rising level of bio-fuel production, about 900,000 bd of ethanol in the US alone, for example. But the largest volume comes from the liquids associated with the production of natural gas.
These are collectively described as Natural Gas Liquids (NGL) and condensate. Simplistically, when natural gas comes out of the reservoir it is not always what is referred to as a dry gas, but rather can often contain a number of other constituents in the fluid flow. The NGLs are normally a combination of ethane, butane, isobutene, propane and natural gasoline and are normally combined with other light hydrocarbons that condense out of the fluid flow at the surface, when pressures and temperatures fall from those in the reservoir. These additional fluids are the ones generally called condensates, as a result. (The NGL's need a little pressure to re-liquefy). NGL total volume is about 8 mbd. Now to make life somewhat more complicated both oil and gas can come out of the same well at the same time in an admix that can include all of the above. And that requires that they be separated, but that is a topic for another day or two. Today I want to give an example of the importance of those liquids that lie between crude and natural gas.
This is the second in a series I am just starting on oil production and consumption around the world. While it is going to focus more on individual nations and oil fields, over time, there are some general remarks that I want to use to preface the series and this is one of those. (OGPSS – Oil and Gas Production Sunday Series).
One of the first things that I was told when I started looking into whether there was a coming crisis in oil supply was that oil is fungible. What that meant was that if, for the sake of discussion, the Saudi Arabian government cut off oil supply to the West, then the West could turn around and buy an equivalent amount from somewhere else (it turned out to be the North Slope and the North Sea) and the world could continue on its merry way. In fact if you go to Merriam Webster oil is cited as an example of a fungible commodity.
being of such a nature that one part or quantity may be replaced by another equal part or quantity in the satisfaction of an obligation:- oil, wheat and lumber are fungible commodities.
But that assumption is not totally true, and in the world where matching production to demand is becoming a somewhat more difficult and expensive operation the limits to the fungibility of oil may soon become more evident.
There is an aspect of coal mining that gets relatively little attention, even though it is growing in popularity, It is with this method that I will conclude this series on mining, and its precursor on oilwell production. Most mining can be divided clearly into either surface mining, where the rock over the coal is removed, and the coal taken away before the land is restored, or underground mining, where some of the coal has to be left in place to hold the roof up. But what happens in the middle?
There is an intermediate between the two main methods of mining, when the surface mine has produced coal from a seam that is steadily getting deeper, it reaches a point where stripping the rock from above it is no longer economical. So what to do? And the answer is what is known as Highwall Mining. When the last economic cut has been made with a surface mining operation, the coal seam is still exposed, lying under the rock and overburden in what is known as the Highwall of the mine. So, before the land is reclaimed and that final cut along the face filled back in, sometimes it is economic to look at using different mining machines to mine into that exposed coal face in the Highwall – hence the name.