New base special 13 april 2014

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NewBase 13 April 2014 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

UAE energy minister hopes Western partners keep oilfields role Source : Reuters

The energy minister of the UAE said on Friday he hoped Western oil companies historically in charge of Abu Dhabi’s biggest oilfields would keep a role, but that no one was assured of keeping their seat when concessions are renewed.

“There is a process... What’s important is that it’s fair to the newcomers as it is to the previous shareholders. This is a lifetime exercise and we have to do it right,” Suhail Bin Mohammad Al Mazroui told reporters on the sidelines of a conference in Paris.

The Opec member country has held a 60 per cent stake in Abu Dhabi Company for Onshore Oil Operations (ADCO) since acquiring an interest in fields that produce over half the UAE’ oil.

Four of the world’s largest stock market-listed energy companies — ExxonMobil, Royal Dutch Shell, Total and BP — have each held 9.5 per cent equity stakes in the Adco concession since the 1970s and would be keen to prolong their involvement.

Bidding

After their deal expired on January 11, Abu Dhabi National Oil Company (Adnoc) took 100 per cent of the Adco concession in what was seen as a temporary measure while political leaders in the UAE decide whether to let Asian oil buyers in for the long haul. “No one is assured to keep a seat, it’s a bidding, we wish everyone good luck, especially our legacy partners, they are the best and understand the fields because they’ve been there for 70 years, we hope they will be among those who are winning,” Al Mazroui said.




“They’ve been with us for a very long time, they understand the fields. I think they will have a good chance,” he added.

Production Capacity

Suhail Bin Mohammad Faraj Faris Al Mazroui, Minister of Energy, said the country’s plans to raise its oil production capacity to about 3.5 million barrels per day by 2017.

In a statement on the sidelines of 15th International Oil Summit, in Paris, the Energy Minister said that the rise in production capacity of crude oil came in response to a boost in both the global and demographic growth which resulted in the increase of demand for energy.

“UAE is set to raise its production capacity to 3.5 million barrels per day aimed at keeping a market balance. We follow-up markets regularly, especially the present as well as future oil demands in coordination with the Organisation of the Petroleum Exporting Countries, Opec, and its member Gulf states.”

Al Mazroui added, “We in the UAE believe that the role of Opec in the past, present and future is to ensure the stabilisation of oil markets to achieve a balance between oil exports and global demand, and we will continue to play our role as we are keen to keep and consolidate this balance in the markets by a regular supply of oil.”




As Iraq sells more crude to Asia, quality issues emerge http://www.gulf-times.com + Reuters

Iraq’s rush to pump more oil to Asia has coincided with complaints from some buyers about the quality of its crude, casting doubt on whether Baghdad can increase the volumes of its key Basra Light grade to the region by a third in 2014.

The Gulf producer has managed to smooth out kinks in its supply chain that curbed Basra Light exports from southern oil terminals last year. The higher output has helped cap oil prices pushed up by recent geopolitical tensions and supply disruptions in Libya, Iraq’s own north and elsewhere.

Since December, however, three buyers in north Asia, including two state oil companies in China, have complained about high water content in Basra Light that could mean more upgrading work is needed on Iraq’s oil infrastructure or that it needs to slow down loading schedules again.

“Production is indeed higher, but the time needed for base sediment and water to settle down is not enough,” said one of the buyers who declined to be named because he was not authorised to speak to the media. “They are just shifting their problems to us.”

The three buyers said water has made up 0.3% to 1% of several 2mn-barrel cargoes, resulting in losses of up to $3mn each assuming crude at $100 a barrel. The buyers have sought compensation on pricing from Iraq’s State Oil Marketing Organisation (SOMO) but said they have not received any response to their requests.

SOMO officials have not responded to e-mail and phone calls seeking comment and further information on the water issue. Two South Korean buyers said they have not encountered high water content in Basra Light cargoes, while sources at Indian refineries could not say if they have received such shipments.

A view of West Qurna oilfield is seen in Basra, southeast of Baghdad, on Saturday. Production

from Iraq's giant West Qurna-2 oilfield will lift national output to 4 million barrels per day by

the end of the year




Most refineries can tolerate up to 0.1% water content. Refiners would usually let crude with a higher water content settle in a tank to give time for the two fluids to separate, and then dispose of the water. It was not immediately clear why higher water content has turned up in some Basra Light cargoes since December, although Iraq has been bringing on new oilfields to boost its output.

An official at state-run South Oil Company (SOC), which oversees Basra Light output, said there would have to be further upgrades of oil treatment facilities to resolve the issue. Current treatment stations for crude produced from Iraq’s southern oilfields were designed to process dry oil, not wet, the SOC official said.

The water issue emerged just before Iraq’s exports from the south started hitting new peaks after years of struggling to meet supply commitments despite aging terminals and insufficient storage. Volumes, though, remain erratic. Basra Light exports hit a 35-year high of 2.5mn bpd in February - up about a quarter from the previous month - before dropping back slightly in March.

In April, exports from the southern terminals are expected to rebound to more than 2.5mn bpd. Russia’s Lukoil began commercial output from one of the world’s largest untapped oilfields at the end of March as Baghdad moves closer to this year’s production target of 4mn bpd. Output from the giant West Qurna-2 field - a Basra Light producer - is expected to reach 1.2mn bpd eventually, up from an initial 120,000 bpd.

Upgrades at southern oil terminals to be completed later this year and other new output coming online will allow Iraq to ship more crude, potentially meeting contractual commitments of up to 2.8mn bpd of Basra Light in the second half of 2014.

Asian buyers led by China and India signed annual contracts to buy nearly 60% of Basra Light exports this year, or almost all of Iraq’s increase in production in 2014, lured by SOMO’s competitive pricing on the crude. Still, with the water problem cropping up and with loading still slow sometimes, Iraq is having trouble shaking the reputation built up over the past few years.

“Port conditions are terrible, it’s often they make us wait a week (for loading),” said an executive at a Japanese refinery who declined to be named due to company policy. SOMO’s terminal upgrades shortened some loading times to as little as five days in March, down from as long as two weeks earlier, traders said, although it is not certain how consistent that will be.

“Iraq is saying that they are doing a lot more improvements, more production and less delays,” an analyst with an Asian oil company said. “They will still maintain a discount (to Arab Medium price) but it will not be as cheap as before.” SOMO has already narrowed Basra Light’s discount against rival Arab Medium from Saudi Arabia this year on growing confidence it will be able to meet contract obligations with fewer delays.

But buyers still worry that political instability in Iraq and disputes between Baghdad and Kurdistan over oil could continue to disrupt supply of its other crude grade Kirkuk. Opec’s overall oil output fell in March to its lowest since December, according to a Reuters survey, mainly due to lower shipments of Kirkuk crude because of pipeline sabotage.




Iraq: LUKOIL begins seismic survey at Block 10 in Iraq Source: LUKOIL

LUKOIL Overseas (operator of LUKOIL Group's overseas upstream projects) has started a 2D

seismic survey at Block 10 in the south of Iraq. 2000 linear kilometers of seismic surveys will be

completed by the BGP Inc. geophysical company within 16 months. The Mandatory Geologic

Exploration Program at Block 10 is scheduled to take five years with a potential 2-year extension

and includes drilling one exploration well in addition to the 2D seismic survey.

LUKOIL Overseas was granted the right to exploration, development and production operations at

Block 10 during the field’s licensing round in June 2012. The Service Contract, which has a

duration of 25 years with potential five year extension, was signed on November 7, 2012. Shares

in the project are distributed as follows: LUKOIL Overseas (the Operator) – 60% and Japanese

INPEX Corp. – 40%. The Contract holder from the Iraqi side is the state-run South Oil Company.

Block 10, with a total area of 5.6 thousand square kilometers, is located in the territory of Dhi Qar

and Mutanna provinces, 120 km to the west of Basra.




Sabic planning to lift steel capacity to 10mn tonnes Source : Reuters

Saudi Iron and Steel Co (Hadeed), the metals affiliate of Saudi Basic Industries Corp (Sabic), plans to add 4mn tonnes of annual steel output capacity to reach 10mn tonnes by 2025, an executive said. “Sabic’s total steel production now is 6mn tonnes per year ... Now, our ambition for 2025 is around 10mn tonnes. We have to be reasonable - steel is a very tough market,” said Abdulaziz al-Humaid, Sabic executive vice-president for metals.

Hadeed, the largest steel producer in the kingdom, has in recent months raised billet production, which helped to replace imports. Around the end of last year it also launched a plant at Jubail making 500,000 tonnes per year of reinforcing bar (rebar), bringing its total rebar output to 4mn tonnes, eliminating the need to import billets for conversion.

“We used to import billets. Now we stopped importing because we have a new furnace; we are now self-sufficient in billet production,” al-Humaid said on Wednesday. However, Hadeed still imports 8mn tonnes per year of iron ore from Sweden and

Brazil, and is studying a proposal for a joint venture in Mauritania to produce iron ore.

The feasibility study is expected to take two to three years, and if the project goes ahead, will come on line around 2019-2020, al-Humaid said. It would ultimately provide between 7 and 10mn tonnes of iron ore annually. Asked if this would reduce Hadeed’s imports of iron ore from other sources, al-Humaid said Mauritanian supply might simply cover future expansion in Hadeed’s consumption, so imports of ore from elsewhere would remain roughly the same.

Sabic, one of the world’s largest petrochemicals companies, said last year that Hadeed planned to build two new plants in Saudi Arabia at a cost of $4.26bn. The plants, in Rabigh on the west coast and Jubail on the Gulf coast, are still the subject of feasibility studies, al-Humaid said, declining to give further details.

Hadeed now has a domestic market share of 50%-52%. “Because of heavy imports, our market share dropped to 40 percent, but in the last three months we are in the range of 50%-52%,” al-Humaid said.

Saudi Arabia has banned rebar exports since a period of high prices in 2008, which has hurt the profit margins of steel makers in the kingdom. Al-Humaid noted the ban was still in place but declined to comment further. Sabic can still export flat products, and al-Humaid predicted strong steel demand in the Gulf, though tough competition from producers in Turkey and China has caused prices to drop by 10-15% in the last six to eight months.

“We expect demand to be strong in the region, and we expect that there will be new capacity on line, either from Sabic or from other local producers.” One major issue for construction companies and manufacturers in Saudi Arabia is labour reforms that make it more expensive to hire foreign workers. Al-Humaid said the reforms had slowed the Saudi construction industry, but expected the effect to be temporary.

“We don’t think the labour impact is decisive, even today if you ask me, because today our sales are very good,” he said. “The key thing is that we think there will be demand in the next two to three years because of construction in the kingdom, and maybe in Qatar, maybe in the UAE. We don’t think demand will be growing, but at least it will be as good as it’s been in the past two to three years.”




Shell and Petronas gear up in Iraq Majnoon Full Field Field Development http://www.2b1stconsulting.com

The international oil company (IOC) Royal Dutch-Shell (Shell) and its partners, the Malaysia national oil company (NOC) Petronas and the local South Oil Company (SOC or South Oil)) are making major decision to gear up from the previous start-up phase to the full field development (FFD) of the giant Majnoon oil and gas field in the south of Iraq.

Located 70 kilometers north of Basra and covering a surface of 60 kilometers long by 15 kilometers wide, Majnoon is listed among the largest oil and gas fields in the world with estimated in-place reserves of 38 billion barrels.

Although Majnoon had been discovered in 1975 by the Brazilian company Braspetro, today Petrobras International.

Since that time the Majnoon oil and gas field has never got a chance to be developed according to its potential because of it geographical position along the Iran boarder.

Number of companies attempted to invest in Majnoon and the succession of wars prevented sustainable exploration and production program.

Transformed in battle field with explosives and land mines all over, Majnoon oil and gas reserves remained nearly untouched until it was awarded to the joint venture of Shell, Petronas and South Oil in 2009 as the result of the second licence round.

In signing a technical services contract (TSC) with Baghdad Government, Shell and its partners

accepted only $1.39 per barrel as remuneration fees on the production with a targeted plateau production of 1 million barrels per day (b/d) by 2017.

This technical services contract is signed for 20 years during which Shell and its partners have planned to spend $50 billion capital expenditure with the working interests distributed as following:

- Shell 45% is the operator - Petronas 30% - South Oil 25% Until 2012, Shell and its partners invested more than $2 billion capital expenditure to secure and clean up Majnoon and convert it into a safe exploration and production area.




Majnoon Oil Field Commercial Production project to go In 2013, Shell, Petronas and SOC managed to ramp-up the production that reached 200,000 b/d of crude oil on last December with the support of:

- Petrofac in charge of the engineering, procurement and construction (EPC) contract

- Wood and CCC consortium to provide start-up services

Through this start-up phase, Shell, Petronas and SOC acquired a deep knowledge of the reservoir and have decided to gear up their program in launching the Majnoon Full Field Development project.

In that perspective the Swiss-based Foster Wheeler and the Irish engineering company Kentz formed the joint venture Foster Wheeler Kentz Energy Services DMMC to win the Majnoon Oil Field Commercial Production Project engineering contract.

According to the terms of the contract, Foster Wheeler and Kentz will provide engineering services for the:

- Conceptual study - Front end engineering and design (FEED) - Detailed design - Engineering, procurement and construction (EPC) This engineering services contract covers the: - Revamping and upgrade of the existing facilities - Construction of the new facilities Shell, Petronas and South Oil sanctioned the Majnoon FEED and EPC services contract to Foster Wheeler and Kentz for a two years period with the option for a third year extension.

In doing so, Shell, Petronas and South Oil confirm their investment program in the Majnoon Oil Field Commercial Production project in the perspective of 2017 with the support of the Foster Wheeler and Kentz joint venture.




Total to develop Angola’s Kaombo Block Reuters .

French oil giant Total will proceed with the development of the deepwater Kaombo block, offshore Angola. According to Reuters, the company’s CEO Christophe de Margerie said that the company has managed to cut the project investment cost from $20 billion to $16 billion, and was near the final investment decision.

The final investment decision could be made as early as Monday morning, Reuters has reported citing a source familiar with the matter.

The Kaombo development is located in the Block 32 where Total is the operator with a 30% share. The other partners are Sonangol (20%), China Sonangol Petroleum (20%), Exxon (15%), Marathon Oil (10%) and Galp (5%).

Plans call for the production of several oil deposits dispersed among the

Gindungo, Gengibre, Canela, Mostarda, Louro, Salsa and Caril fields in the central and southeastern sections of the block, in water depths of 1,500 m.

According to information on Total’s website, the reservoirs will be linked to two Floating Production, Storage and Offloading (FPSO) vessels. Each FPSO will have a capacity of 100,000 barrels per day.




GE Angola JV Delivers Subsea Equipment Press Release, GE

GE Oil & Gas announced the first major equipment delivery by its Subsea Systems business, for a major operator, under a contract established by its Angolan joint venture, GE-GLS Oil & Gas Angola Limited.

A primarily localized workforce assembled the first of 16 subsea production trees, destined for a development in the Atlantic Ocean, located in one of the first tranches of deepwater acreage offered by the Angolan government. The base scope of work includes a further 15 subsea production trees, 12 water injection trees, two water injection manifolds, four production manifolds, topside upgrades and associated equipment.

The delivery brought together a talented team from across GE Oil & Gas’ facilities in the UK, Norway, Angola and USA. The technology was designed and manufactured across various global subsea locations before being assembled locally in Angola, with the combination of proven, innovative technology—coupled with a skilled local workforce—facilitating the prompt delivery of quality products.

“This initial achievement is evidence of the

successful partnership enabled by GE-GLS Oil &

Gas Angola Limited,” said Eugenio Neto,

president and CEO of GLS Holding, S.A. and

vice president of the JV. “We announced our intentions to further support the development of Angola’s

growing oil and gas industry and, after only a year, are proving our commitment to the country’s ‘Made in

Angola’ pledge. Setting up in-country has significantly improved our speed-to-market, allowing us to

execute on critical project deliverables in a timely fashion.”

Due largely to its offshore energy resources, Angola has undergone rapid transformation and economic growth in recent years, experiencing increased exploration and development activity over the last decade, making it one of the largest producers of crude oil in Africa.

The JV was set up to better support the country’s rapidly growing oil and gas sector, bringing new manufacturing and industrial technologies to Angola, while creating hundreds of direct and indirect jobs. GE Oil & Gas also has invested significantly in developing local expertise and capability, with Angolan nationals trained at GE’s UK-based Centres of Excellence (CoEs) for subsea systems, controls and systems engineering.

Originally announced in January 2013, the JV includes an initial investment of US$175 million to build a new manufacturing facility in Soyo, in the province of Zaire, which will supply subsea equipment to the oil and gas industry in Angola. This first subsea production tree to be delivered under the JV was assembled at

GE has been active in Angola since the late 1950s, supporting the development of the national oil industry. Earlier in 2012, GE Oil & Gas also signed an agreement with Angola LNG, operator of one of the world’s most modern LNG and processing facilities, for processing liquefied natural gas (LNG). GE also is a major supplier of gas turbines and compressors for the Angolan offshore energy sector.




Asia overtakes U.S. as top destination for Venezuela oil – PDVSA Source: Reuters

Asia overtook North America last year as the main destination for Venezuelan exports of crude oil and processed fuels, according to preliminary data submitted to parliament by state oil company PDVSA. Asia received an average of 1.04 million barrels per day (bpd) from Venezuela in 2013, up a fifth compared with the previous year. Meanwhile, exports to the United States, Canada and Mexico fell 11 percent to 879,000 bpd.

In its report to the National Assembly, PDVSA said it was increasing shipments to Asia, while maintaining those to South and Central America and the Caribbean, as part of a long-held strategy of market diversification. Asia accounted for 41 percent of Venezuela's oil exports last year, PDVSA said, with the majority being received by China at 563,000 bpd, and India at 396,000 bpd.

The company's preliminary figures show the same tendency as reported by the official U.S. Energy Information Administration, which says U.S. purchases of Venezuelan oil fell to 797,000 bpd in 2013, a 17 percent decline on the previous year and their lowest level for 25 years. Historically, the United States has been the main buyer of Venezuelan oil. Europe also received less from PDVSA last year: an average of 118,000 bpd, versus 152,000 the year before.

Overall, OPEC nation Venezuela exported an average of 2.04 million bpd of crude last year, the same volume as in 2012, while exports of processed fuels rose slightly to 480,000 bpd. PDVSA and its joint venture partners produced 2.79 million bpd of crude, slightly more than the 2.67 million bpd pumped in 2012, but down from a peak of 2.99 million bpd in 2006.

The decline in Venezuelan oil shipments to the United States has affected PDVSA's Houston-based refining subsidiary, Citgo Petroleum Corp, which no longer receives processed fuels, condensate or light sweet crude from Venezuela.




Japan to keep using nuclear energy Written by Oman Observer

Japan said nuclear power would remain an important source of energy as the government

approved a new Basic Energy Plan, the first policy of its kind since the 2011 Fukushima disaster.

The government of conservative Prime Minister Shinzo Abe said atomic generation would resume

once regulators were sure of the safety of each reactor, all of which were switched off after the

tsunami-sparked catastrophe at the Fukushima plant. The move comes despite widespread public

unease over a technology once almost unquestioningly accepted as necessary in resource-poor

Japan. Polls suggest more than

half of the population is against

restarting the reactors.

The last Basic Energy Plan,

approved in June 2010, was

more focused on cutting CO2

emissions, saying Japan would

aim to increase the use of nuclear

and renewable energy to more

than 50 per cent by 2020 and

about 70 per cent over the

following decade. The new plan

says the country will “reduce” the

use of nuclear power to a level

“as low as possible” by increasing

the percentage of renewable

energy, but it did not give any

numerical targets or dates. “The

government is starting over,

withdrawing the energy strategy

drawn up before the disaster.

This is where we started,” said Chief Cabinet Secretary Yoshihide Suga. When the huge tsunami

of March 2011 smashed into Japan, it swamped cooling systems at the Fukushima Dai Ichi

nuclear plant, sending reactors into meltdown and spewing radiation over a large area, forcing the

evacuation of hundreds of thousands of people.

More than 18,000 people were killed in the tsunami-quake disaster. Three years on, around

140,000 are still unable to return to their homes around the Fukushima plant. The nuclear facility

remains crippled, with a clean-up operation there expected to last decades. Environmentalists on

Friday lashed out at the new energy plan, which they said was “a product of compromise”

intended to give succour to the nuclear industry. “Japan’s new Basic Energy Plan which the

Cabinet agreed on today is a product of compromise between the government and politicians, and

it is as close as ‘basic business support plan’ for the utilities and nuclear industry,” said Hisayo

Takada, Greenpeace Japan’s climate and energy campaigner.




Yemen: Calvalley Petroleum provides Yemen Block 9 operations update Source: Calvalley Petroleum

Calvalley Petroleum reports that the Company has been restoring production activities as crude oil storage capacity is made available. From mid-February, when the facilities at Block 18 were refurbished, to March 31, 2014 the Company has shipped over 170,000 barrels of crude oil (gross) to Block 18. The Company continues to monitor the accessibility of the truck route to Block 51 in order to resume shipments via this route as soon as it is possible to do so.

Production activity restarted in mid-February with average gross production for February of approx. 530 barrels per day. Gross production levels increased significantly in March and are currently in the 3,800-4,000 barrels per day range. Gross production for the first quarter of 2014 is approx. 1,100 barrels per day with average gross production in March reaching over 3,700 barrels per day.

Currently the Hiswah field is producing approx. 2,600 barrels per day from 20 producing wells with production of approx. 400 barrels per day available from 4 shut-in wells. The Ras Nowmah 2 well was restarted in early March 2014 and is producing approx. 1,300 barrels per day and the Ras Nowmah South well was restarted in mid-March contributing approx. 90 barrels per day. The Al Roidhat field remains shut-in due to marketing constraints and local issues.The Company’s inventory of crude oil (net of royalties and taxes) grew to 65,000 barrels at the end of the quarter.

The first lifting of crude oil from Block 18 via the Ras Isa Terminal on the Red Sea occurred on April 1, 2014, and consequently the Company will not be recording crude oil sales for the first quarter of 2014. The Company recently completed the Ras Nowmah South 2 well as a successful oil well and the well is being placed on production. The planned drilling of the Ras Nowmah 7 appraisal well remains suspended due to constraints on service companies in mobilizing equipment in the area.

Calvalley is an international oil and gas company, with offices in Calgary, Alberta, Canada, that operates its 50% working interest in Block 9 of the Masila Basin, in The Republic of Yemen.




Clean enough for California? The promise of steam-assisted gravity drainage in the oil sands , http://business.financialpost.com

On a barren patch of land carved from boreal forest south of Fort McMurray, Tobias Betz watches

carefully as the drill bit he’s steering bores deep into the earth. The company is seeking up to

$200-million to finance a novel “upgrader-in-a-

box” it says could cut pollution and boost

returns for oil sands producers — at a fraction

of the cost of the traditional plants. His eyes are

fixed on a console that relays a series of

underground co-ordinates. The bit can chew

through up to 70 metres of rock an hour, he

says. On this day, however, Mr. Betz is

negotiating a delicate, subterranean turn.

Here at Phase D of Cenovus Energy Inc.’s Christina Lake oil sands project, the Akita Wood Buffalo 26 rig is corkscrewing about 600

metres underground in search of crude. Next it will slice sideways through about two kilometres of rock, aiming for what Josh Baranowski calls, simply, “the money zone.”

“They want to be right where the mud meets the oil sands,” the drilling coordinator shouts, over the din of whirring engines.

The scene is a snapshot of work under way across a growing expanse of northern Alberta. For decades, strip mining has been the dominant extraction method in the oil sands. Increasingly, however, the giant trucks and hydraulic shovels pioneered by Suncor Energy Inc. and Syncrude Canada Ltd. are giving way to a more fragmented means of tapping the province’s trove of extra-thick crude.

Commercial variations of steam-assisted gravity drainage, or SAGD, date to the 1970s. But in recent years, the technique, in which pressurized injections of super-hot steam are used to melt seams of bitumen buried too deep to mine, has emerged as the fastest-growing source of new oil sands expansion.

Today, the production complex around Fort McMurray pumps just shy of two million barrels of oil a day. By 2022, steam-driven extraction alone may yield 2.2 million barrels daily, according to provincial estimates, far outpacing mining operations that have contributed the bulk of the industry’s growth to date.

The sector’s production profile is shifting at a critical juncture. For companies long beset by the high production costs of mining, the less-centralized and staged development of SAGD projects promise a comparatively cheaper way to wring crude from Alberta’s sands. The projects also aren’t subject to federal environmental assessments, a process that has delayed larger mines. But the growing reliance on in situ development, which consumes large volumes of natural gas to make steam, stands to increase emissions of greenhouse gases — at a time when the industry is under pressure to show environmental gains as companies seek approval for a series of contentious pipeline expansions.




“From a climate change perspective, in situ is more troubling than mining, simply because of the amount of energy required to extract a barrel from that deep underground,” said Erin Flanagan, analyst at the Pembina Institute, an environmental and policy think tank in Calgary. “You’re looking at about two-and-a-half times more greenhouse gas emissions than with open-pit mining.”

The production method is drawing increased scrutiny from regulators after a series of underground ruptures last year at a Canadian Natural Resources Ltd. project near Cold Lake, Alta. The project, called Primrose, uses a production technique called cyclic steam stimulation, where high-pressure steam is injected underground through one well over several weeks. More than 7,000 barrels of bitumen “emulsion” has spilled at the site as a result of several ongoing leaks, which remain under investigation for possible causes.

In January, regulators in Alberta issued a bulletin saying they would defer decisions on applications for new steam-driven developments at shallower depths pending a technical review of “factors that affect reservoir containment.” The move led junior oil sands developer Ivanhoe Energy Inc. to suspend work on its $1.37-billion Tamarack project in northern Alberta pending regulatory clarity.

The review could have “big ramifications not just for the small piece of the pie the bulletin currently applies to but perhaps also for other operators who are grappling with very similar questions,” Ms. Flanagan says. She added: “The ball has shifted when it comes to oil sands development.”

Big companies operating at greater depths don’t appear to have noticed.




Imperial Oil Ltd. chief executive Rich Kruger recently told investors his company, majority owned by ExxonMobil Corp., “could be a million barrel a day operation” around 2030. Much of the growth, after its recently commissioned Kearl mine, would come from a series of steam-driven projects developed in 35,000- to 40,000-barrel phases starting around 2020, executives said.

Calgary-based Cenovus says Christina Lake, a joint venture with Houston-based ConocoPhillips Co., could eventually yield 310,000 barrels of crude a day, from a design capacity of about 130,000 barrels today. The project is a backbone to Cenovus’ plan to pump 500,000 barrels daily by 2021.

Cenovus plans to reach that target in increments. The company will add 180,000 barrels daily over time from Grand Rapids, a thermal project that recently received regulatory approval from the Alberta government. Another development under construction called Narrows Lake will produce 45,000 barrels of oil a day in its first phase, with start-up targeted for later this decade.

How and where all that crude will be sold is, for now, an open question. The new wave of growth will bring massive new supply onto a market already grappling with tight pipeline capacity. Environmentalists and local groups have expressed deep concerns over new projects from

TransCanada Corp.’s Keystone XL to Enbridge Inc.’s Northern Gateway.

“Market access is still an issue. That’s not solved,” said Shane Fildes, managing director, investment and corporate banking and global head of the energy group at BMO Capital Markets.

With export pipelines backed up, producers have turned to rail to get fast-growing output

to market. That has contributed to a more favorable outlook for the sector, Mr. Fildes said, allaying some concern over seesawing crude prices and infrastructure constraints. “But there’s still bottlenecks,” he said.

Cenovus’ response has been to throw its support behind several projects in hopes some of them are built to coincide with planned production increases.

In 2013 alone, the company signed transportation agreements in support of new pipelines worth more than $11-billion, according to securities filings. That includes support for a $5.4-billion expansion to Kinder Morgan Inc.’s Trans Mountain system to Canada’s West Coast.

Brent Lewin/BloombergA well pad stands at Christina Lake,

a situ oil production facility half owned by Cenovus Energy

Inc. and ConocoPhillips, in Conklin, Alberta




Cenovus currently ships about 11,500 barrels per day on the Pacific-bound pipeline, attracting global prices from refiners in Asia and California. The company says its crude meets the state’s low-carbon fuel standard, which requires a 10% reduction in the carbon intensity of transportation fuels by 2020. California got about 5% of its imports from Canada in 2012.

“The refiners down there really have gotten to like the various streams of Cenovus crude,” chief executive Brian Ferguson said in a recent interview.

The company’s ability to meet the threshold hinges on its steam-to-oil ratio, a measure of how much energy it takes to produce a single barrel of crude. At Christina Lake, Cenovus last year used an average 1.8 barrels of steam to make a barrel of crude, down from 1.9 in 2012.

The flagship oil sands project serves as a living laboratory for devising ways to keep the key metric low. Technology trials include a program to mix butane with steam to cut energy use. In some areas, the company is drilling wells closer together to bring new production on at a faster clip. Efforts are also underway to use less diluent to move the thick crude through the plant, a potential cost savings.

The company is “trying to see how dense we can run it without any processing problems,” process operator Sean Andrews says, standing beneath a tangle of vessels and pipes. In his hand, he holds a cup brimming with jet-black crude. “This is the money,” he offers, inviting a closer look. “This is why we’re here.”

Brent Lewin/BloombergCalgary-based Cenovus says Christina Lake, a joint venture with

Houston-based ConocoPhillips Co., could eventually yield 310,000 barrels of crude a day,

from a design capacity of about 130,000 barrels today.




NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Your partner in Energy Services

Khaled Malallah Al Awadi, MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990

Energy Services & Consultants Mobile : +97150-4822502

[email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 years of experience in theof experience in theof experience in theof experience in the Oil &Oil &Oil &Oil & Gas sector. Currently working as Gas sector. Currently working as Gas sector. Currently working as Gas sector. Currently working as

Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for

the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were sthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were sthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were sthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations pent as the Gas Operations pent as the Gas Operations pent as the Gas Operations

Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , heManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , heManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , heManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed has developed has developed has developed

great experiences in the designing & constructinggreat experiences in the designing & constructinggreat experiences in the designing & constructinggreat experiences in the designing & constructing of gas pipelines, gas metering & regulof gas pipelines, gas metering & regulof gas pipelines, gas metering & regulof gas pipelines, gas metering & regulating stations and in the engineering of supply ating stations and in the engineering of supply ating stations and in the engineering of supply ating stations and in the engineering of supply

routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many Mroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many Mroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many Mroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for OUs for OUs for OUs for

the local authorities. He has become a reference for many of the Oil & Gasthe local authorities. He has become a reference for many of the Oil & Gasthe local authorities. He has become a reference for many of the Oil & Gasthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andConferences held in the UAE andConferences held in the UAE andConferences held in the UAE and Energy program broadcasted Energy program broadcasted Energy program broadcasted Energy program broadcasted

internationally , via GCC leading satelliteinternationally , via GCC leading satelliteinternationally , via GCC leading satelliteinternationally , via GCC leading satellite ChannelsChannelsChannelsChannels . . . .

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 13 April 2014 K. Al Awadi

Economy & Finance

New base special 13 april 2014