I never gamble but I do know people who do. Seldom does an outside prospect upset a dead certain winner but they can get in the way and occasionally they steal the day.
While we look at Brent prices and investment is being squeezed some small corners are nothing but gung ho. The Ivory Coast, an African nation of about 23 million people, is more stable than many in the area and looks to oil and gas development to secure its future.
Russian firm Lukoil withdrew interest early this year but with established resources and increasing production of both oil and gas other parties are interested. Total, Exxon Mobil, Anadarko and Tullow are all either there or seriously thinking about it. Already producing are Canadian Natural Resources and Ivory Coast’s own Foxtrot International who have been responsible for raising production to 53,000 barrels of oil and 250 million cubic sq feet of gas per day.
Encouraging possible investment in offshore drilling in the Gulf of Guinea is the nation’s dedication to improving its domestic energy efficiency and there may well be contracts awarded to build gas fired power stations. Already the area is pretty well placed with a reliable grid and increased domestic consumption.
To counterbalance the otherwise rosy outlook is a recent history of internal strife and human rights question marks. Although stable now there are significant historical factors that will take some careful risk assessment before jumping in with both feet. In addition there is long standing animosity between Ivory Coast and its eastern neighbour Ghana over offshore and border rights. This has now been settled, I only mention it because often as we know old disputes can return with a vengeance.
NB. Believe me or believe me not, I just went to check on the dispute and low and behold it is simmering again. I hope it is resolved soon but I’ll not hold my breath.
The last thing we need in the industry is more complications at the moment. Several sources are reporting that shipping etc in and out of Turkey is normal despite the coup attempt.
A lot of the world was shocked, but some not even surprised when dissident members of the Turkish military attempted to seize power on Friday. Within 24 hours the government were stating that all was being brought back to order. I was sceptical mainly because every time there is a coup the next bit of news is that all will be well. How many times have we seen it turn out to be the exact opposite?
With neighbour Syria in a mess, a chaotic and war split Turkey would have been awful for its people and terrible news for commerce in the Middle East and Europe.
Here Bloomberg confirm that as of yesterday, Sunday 17th July 2016, all appears calm. Click here
Obviously I have a bias here. Well the North Sea is the closest and busiest oil and gas field for me and also where my own transition from a world away from the industry began. Here I will briefly describe the major oil and gas fields, not for old hands but for those that are considering their next move in life.
Onshore exploration in The Netherlands following from the Second World War led to offshore discoveries. The theory was on the geological evidence that the gas and oil that was found on land was a good indicator that more was to be found under the water.
In 1965 the Sea Gem (BP) made the first offshore gas discovery. This was obviously a novice design. Sea Gem was a steel barge adapted for the purpose and though it had living quarters and a helideck it was a far cry from what is used today.
Tragically on December 27th 1965, as it was being prepared for a tow from the site of its historical find, it capsized with 13 crew losing their lives. This led to several changes in safety operations, including the requirement for an Installation Operations Manager (IOM) to be assigned to any British rig or other installation operating offshore.
The IOM is the master of safety on any installation and has to be registered with the British Health and Safety Executive. This same policy has been adopted by many nations who drill offshore.
The Sea Gem had found gas 42 miles off the British coast in the West Sole Field in September but there was much more to find. In December prior to the disaster, Conoco hit the Viking Gas Field for the first time and in 1966 more promising areas were drilled.
So far there is no mention of oil. The rich resource of black gold lay quietly waiting until it gave itself up in December 1969. What took place was an organised, highly mechanised version of the Klondike gold rush. Field after field was established first in Norwegian waters and then in British waters.
Names that are now almost household familiar came into existence, Piper, Ekofisk, Brent and Montrose.
The discovered areas extended at regular intervals almost to the present day and although there are increasing challenges technology moves onward. It has been a mark of the struggle to harness oil and gas from under the North Sea from the start.
As of 2015 there were 184 off shore rigs working the North Sea. Production of oil and gas has actually increased in recent years as new fields come online. There is estimated to be 22 bn barrels of oil still to be brought up and that is best seen as an encouraging figure when you look at the 42 billion barrels that have been recovered since oil was found in the late 1960s.
The problem is as global prices fall so does the investment in technology and in developing new finds. There is said to be 300+ recognised reserves that are not being pursued at this time.
The ironic thing is production had been falling and the death of the North Sea fields had long seemed likely. Just as production increases the price drops. In addition to the lower profit from all the effort to get the resources up to the surface there is another nasty cost looming. As fields tap out what do you do with all the platforms left behind?
Now here is a bit of sunlight for the otherwise overcast offshore worker. It takes people to fulfil environmental obligations. Platforms and pipelines and even onshore installations do not dissolve. So maybe it is worth a touch of silver lining thinking when deciding what sort of oil and gas industry job you are after.
I’ll leave the present with a nice shot of hope. Much of the investment when times were good is now online and doing very nicely particularly when you look at gas production. Recently the Laggan-Toremore field began running a 2 million home supply into Shetland and out to where it was needed. Total , one of the largest oil companies in the world, made much of adapting to the current volatile markets but there was no hesitation about the years ahead.
Total’s boss, Patrick Pouyanne, said, ‘There is a future for the North Sea, no doubt about it.’
He went to say that the industry had to be smarter in getting profit , but then the history of the North Sea fields has always been about being smarter, the weather and geography have seen to that.
At the time of writing many financial pressures threaten any certain prediction for the future of the North Sea offshore industry.
The drop in global oil prices that began in 2014 and what was seen as a blip has now become a deep depression. For quite some time $100 per barrel was the norm, currently prices struggle to get to $50. The reasons for this are many fold and I might do a specific article on it, however, the main thing to consider in the industry is the future for investment.
Forecasts show that the price per barrel may well fall lower. In addition, the North Sea has dwindling stocks that can be recovered easily. Technology might well mean the North Sea oil fields have many more years left, but only if increasingly efficient ways of getting it out of the seabed are developed. Already 1000s of jobs have been lost. So watch this space.
You might this find article useful if you are looking at a medium to long term commitment to a North Sea energy career. Click Here
This is just a quick mention of the ongoing warnings about skill shortages that might affect oil and gas production of the future. In addition we have US operators pointing out that idle equipment can easily go from standing ready to not fit for purpose.
With booming oil and gas prices there is never enough skilled people or specialist machines. Cautious estimates are saying prices will rise in the next 12 months, but will the lag in ready people and machinery then increase costs?
One of the things that you can find out is what types of platforms operate world wide, but it can be time consuming. Also when I started in the industry the descriptions of each one quickly went into the paddling pool of tech speak. I thought I would put together a newbie guide to offshore platforms. Wikipedia does a good job, but I decided I would take their list and put some video of each type to go along with a description.
Which is the Safest Design of Platform?
There is no single design because there are no single set of challenges for any given type. It entirely depends on where the platform is to be placed, what it is to be used for and what facilities are within striking distance of the oil and gas field.
Until relatively recently one of the many ways of testing a design has been to place a model in a large tank of water then simulate the way the sea pushes it around.
More recently companies like Technip have developed advanced computerised versions of these. One advantage is that it cuts the experimental time down to a matter of weeks. Data is fed into a computer program that runs the concept through all the known variations of the area such as wind force, currents and other geographical considerations.
Common Designs Used in the Oil and Gas Industry
These were the pioneer designs and the basic principle is still used today. In short, and very basically, you do the research and then build a framework with fixed legs, tow it out and tip it up so that it rights itself in the water. Then you secure the legs down into the sea bed so it doesn’t move. After that you bring in the decking, the machinery the pipes and the accommodation for the personnel. All that, like the frame, can be built onshore then brought out and bolted on.
In amongst the variations of these is the Complaint Tower. These are, as the name suggests, less table shaped, narrower and can be sunk in deeper water. The slender profile and flexible design of the structure mean they can take more force from the locality while remaining stable.
These are ships in that they float rather than being giant tables upended into the sea. The ridged platforms are clever, very clever but here the cleverness scale starts to climb even higher.
Semi Submersibles can go anywhere and even use their own systems to go it alone. Ballast is used to either raise them or lower them at sea as they anchor over the intended site. They can also use automatic systems and their engines to float in exactly the same position no matter the current and wind.
MODUs (Mobile Offshore Drilling Units)
Jack up rigs, in other words. They do what it says in the description. Early ones were converted barges, some ex-WW2 military ones were used in early Gulf exploration. MODUs are taken onsite, the legs lowered and the platform is jacked up to the required height.
One of the refreshing things about this topic is that most of the titles tell you about half of what each platform does. Here we have surface vessels with the capacity to drill. Simple sounding,however, a ship traditionally moves a lot more than a platform. Here is a nice video ( music is a bit suspect) that explains how it it can be done today.
TLP (Tension Leg Platform)
I know that engineers will probably find fault with my simplistic description but TLP are to my mind balloons. You get a balloon at the fair and it bobs around as you walk about. The shorter the string the less it can move. Here the correct lengths of ‘strings’ called tendons are attached to the sea bed. A platform is towed to the location. They match the buoyancy of the platform with the correct length of the tendons so that it cannot bob about like your balloon.
Have look at this brief video. It goes into detail about how TLPs are placed. For a quick view of how they stay where they are meant to, with the minimum of bobbing, check out the last minute or so.
Gravity Based Structure (GBS)
It takes a fair amount of fascination to ignore the sunshine that is rarely seen in the UK and instead spend an hour watching a video about the massive Troll platform. Sad or just obsessed, you decide which I am. A GBS (like the Troll) is a structure built, towed and sunk into the required location and anchored partly due to it’s weight but mostly by increasingly ingenious methods. The Troll for example is held in place by vacuum to the sea bed. Principally a GBS is not tipped into place, it is lowered. The Troll is supported by reinforced concrete legs that are water tight and so huge they have lifts going down them. Think of a building in the sea and you will get the drift.
Spar platforms are like pencil fishing floats. The platform remains stable because of the weight that is suspended under them and the anchor system that keeps them precisely in place. These are mobile in that they can be redeployed relatively easily and are good in deep water. The spar that is under the platform can be 100s of feet in length and their enduring use in the Gulf of Mexico, for example, is tried and true.
Here is a video by Technip. Now the lady presenting might give you the impression she is trying to sell you one… if you have $1.5 billion give her a call.
There are other platforms, specialist support designs and all manner of other vessels but the above covers the major types in use today. I hope that helps sort out which is which. As always I welcome any suggestions or comments.
A piece of paper, a wrench, some rubber matting and weak walls were all that stood between a normal night on a rig and an infamous disaster. With respect we should learn from Piper Alpha.
That at least was the bog basic findings of the Cullen Report into the Piper Alpha disaster. On 6th July 1988, 167 men lost their lives because of a series of small mistakes made on a North Sea rig,120 miles north east of Aberdeen. No-one knows for sure what was said and done and any narrative of the moments that led up to the first explosion will not be exact. Too many of those on the rig never got to tell the tale.
Though health and safety in offshore operations was there prior to that night, what is now known of the events kickstarted the modern safety orientated approach of today.
An hour long documentary about the disaster which concentrates on the human aspect rather then the technical.
In Brief, Why?
On the morning of the disaster two work permits were filled out.
One for routine maintenance of a gas (LPG) pump and the other for maintenance of the safety valve for the pump. Both of these were vital parts of regulating gas flow. It is important to note that the permits were filed separately as the pump and the valve were located in different areas of the rig.
Another similar set up was left to operate throughout and if that had worked through the night almost certainly nothing untoward would have happened.
Late in the afternoon the safety valve work was not finished. The last man on it placed a cap on the pipe and it is believed he tightened the nuts around it finger tight.
The night shift came on and everything went well until the operating pump and valve developed a fault, which despite serious effort could not be rectified.
It was essential for the gas to continue being pumped otherwise all electrical power to the platform would be lost. The worst consequence of that would be a shut down of operation and the huge cost that entailed.
Of course there was another pump which was idle. The permit was checked and on the face of it the work had been carried out so naturally it was primed with a small amount of gas ready to go online. In a different box, because it was in a different area, the unfinished work permit for the safety valve lay unread.
A gas alarm sounded in the control room, this was reported and crew asked to check. Unfortunately as they went to do so several more alarms went off. At around 22.00 hrs a violent explosion shook the rig.
When he recovered, the operator in the control room shut down all key valves but as smoke filled the room that was all he could do. The external alarm system had been destroyed and within minutes most of the key personnel who could have directed a response were also out of action. Two other control staff donned breathing apparatus and went back to try and start the fire control, neither was seen again.
Gas had escaped from the poorly secured cap on the unfinished safety valve and it ignited. It was seen by a boat crew emitting a blue flame from underneath the rig. A short time later a bigger explosion followed. The gas explosion had ripped through the walls between two of the operation modules. The walls were only designed to take heat not the pressure of the blast. This was because originally Piper Alpha had only been intended to carry oil. The walls were fine for normal safety in an oil fire, less so for gas. Pieces of the wall ignited another gas line which in turn ignited oil which spilled due to back pressure.
Burning oil ran from underneath the module and should have dropped into the sea. This meant it going through some steel grating which divers had covered with rubber matting. An ordinary enough thing to do as they were working from the area. It was one of those things, it was the timing that was vital rather than the action. In fairness to those divers the grating was not designed to ever see burning oil in the first place. Granted we know now, hindsight is a beautiful thing.
The oil hit and burned, slowed by the matting and above it was another pipe. This one was high pressure gas carrying a supply from another rig, Tartan. The pipe exploded and essentially that was the end of Piper Alpha.
From then on the design of the rig was its downfall. Piper Alpha carried the oil and gas produced by not only Tartan but also by the Claymore. These continued the routine pumping of fuel into the Piper Alpha because initially they knew no better. In normal circumstances this would have been sent onward to be processed. As it was both sources fuelled the fires which at times shot hundreds of feet into the air.
Within the space of a murderous two hours the platform and all still on it fell into the sea. Only a single part, Module A, remained, burnt out and with no survivors.
From start to finish pretty much everything that could go wrong had. The external alarm system had been destroyed and though workers followed procedure – what they could have never known was that the helideck, the main hope of rescue, was obscured by smoke and flames. No helicopter was going to get anywhere near it. Many remained in the accommodation block or the galley awaiting a rescue that could not make it.
Individuals and groups made their decisions to stay or chance escape. Some made it, some didn’t. All those who remained, largely in the galley, were killed.
Six who got to an escape boat were then killed by the Tartan gas explosion. Their craft having been stranded by debris two crew of the rescue launch also died.
For many the choice was to leap into the water, some from as high as 175 ft up. The explosions had destroyed the lifeboats, parts of which had fallen into the sea. One survivor tells of being trapped in a store only to be freed by a blast that opened the floor and the far wall. Three of his companions he never saw again.
Great help was given by several vessels and helicopters that made it to the scene and if they had not been on hand and willing to risk their lives far more souls would have been lost.
Another of the many tragic ironies was that one vessel, Tharos, a semi submersible support vessel with powerful seawater hoses that could be used to cool the structure also risked killing those attempting to get off the rig.
The Cullen Report
The Cullen Report pieced evidence together from eye witness accounts, photographic evidence taken from ships in the area and later what was raised from the sea. Incredibly even after being underwater for months the work permit was still intact.
The operator, Occidental, came in for a lot of criticism but no prosecution. Many changes were made to future safety policies not least of which was the transferring of responsibility for safety from the Department for Energy to the Health and Safety Executive.
I write it here with the greatest of respect for those who were lost and those that survived. I don’t criticise with 20/20 vision, because of the lessons learned from their suffering many of us have not had to face what they did.
There is a saying that is very applicable to such situations and even though safety policies can be frustrating when they stand in the way of profit and the need to ‘get things done’ it sums up what happened that night.
For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the message was lost. For want of a message the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.
Maybe it is the idea of the sun rather than the cold edged wind that has me so interested in oil production in the Gulf of Mexico. Possibly, as a safety adviser, it was the tragedy of 2010 when the Deepwater Horizon exploded and sank claiming eleven lives. Whatever it is I find the decades of oil exploration starting with wooden platforms and iron will compelling. So who started paddling out into ever deeper waters in the first place? I wonder when they first started did they realise that Gulf oil was going to be over 70 years’ of hard work.
Image shows the Gulf to the north west. Looks like a tiny lagoon but at 600,000 square miles it is no blip on the map.The author of the work GLOBE and ETOPO1
Two of the big names were Dean A McGee and a robust Oklahoma politician called Robert S Kerr. In 1946 they formed Kerr-McGee and in 1947 they operated the first platform out of sight of land. However as early as 1936 Louisiana had granted licences to explore offshore and by 1938 the Creole Field had been discovered and a rig was constructed by Brown and Root of Texas.
That gives a good idea of how shallow the drop off is around the coast of the Southern States of America. The real boom came after WW2.
In some ways the Gulf was slow to catch on to the potential of offshore oil and gas. Piers of up to 300 feet from land had pushed early California’s development and lakes had hosted some pretty impressive production since as early as 1891.
That said, as we know, when the wind is howling and the sea is rising modern platforms and service vessels can be a little distressing to the new worker. Imagine trying to build strong and safe with treated pine pylons in an area of famous hurricanes.
Such was the fate of the Superior-Pure State No. 1, the first platform in the Gulf of Mexico. It was a true pioneer platform of 320ft in length by 180ft wide. Workers spent several hours a day taking small boats out from the nearest settlement and in rough weather there was no production at all. It might have been in only 14 ft of water and a mile offshore but it was taken out by a hurricane in 1940. Granted the stout hearts rebuilt it and it continued to produce despite all that.
Kerr-McGee was the first to break the taboo of losing the view of the shore. They were after oil from salt domes, high quality that could not be easily found unexplored on land. The technology was by and large none existent what needed to be learned, what needed to be adapted, came as always from the grit of the people out there. Kermac No 16 was 10 miles offshore in about 20 ft of water and was another effort by Brown and Root.
A week after it started production a huge hurricane with winds up to 140 mph caused the platform to be evacuated, however, unlike previous attempts to withstand the weather of the region there was not much damage. The first solid foothold had been established and the oil and gas industry was going nowhere.
The Kermac would produce 1.4 million barrels of oil and 307 million cubic feet of natural gas over the next 47 years.
Oil and Gas in the Gulf Since
In the last 70 years the oil production has topped 600,000,000 barrels per year and provides 25% of the massive amount used by the USA. Natural gas production provides 5% of the the nation’s needs and all along the coast almost half of the countries refining takes place.
Taking one platform at random, Mad Dog is a BP platform (Chevron and BHP Bilton) 150 miles south of Louisiana’s coast and can turn out 60 million cubic feet of gas and over 80,000 barrels of oil daily. It floats in almost a mile deep water with a 550 ft spa.
The size of the platform is the same as a cluster of 44 houses. That is a long way from the wooden deck of the pioneer platforms that were 34 times smaller.
No matter how much the technology, capacity and sheer size of the operation might have changed, one thing that those of today have in common with the people of years ago is the spirit to work day to day in anything the Gulf can throw at them.
April 20th 2010, 50 miles off the Louisiana coast the future of deep water drilling was called into serious question when the Deepwater Horizon exploded killing 11 workers. The environmental effects of 100 million gallons of oil spewing into the Gulf of Mexico after safety features failed has been felt in the area ever since.
People died and many more of the 126 crew were injured, the significance of which was almost forgotten in the scramble to decide who was to blame and who should pay to clear up the sea.
It presented the world with the reality that as exploration was pushing into deeper and deeper water so increased the challenge to ensure safety. This of course is in addition to the inherent technical problems of ultra deep, mile plus drilling.
Compounding the issue is the downturn in the market. Safety measures are never cheap after all. With fields near shore becoming crowded every effort in the area to drive down cost is welcome.
According to the article below there might be light coming from the gloom of the near future. Technology is the cornerstone of the oil and gas industry and from adversity come some of the best solutions.
If the profit is falling the ideal answer is to operate for less. Have a look at a few US suggestions for improving deep water efficiency.
Undersecretary Khalifa Hamada announced to the press that the Kuwaiti government were considering privatising oil service operations and currently a study is being carried out to decide what can and cannot be offered.
Kuwait is the home of the massive Burgan field which has an estimated production life of another 30 years. Though the amount of oil still under the sand of the country is a little vague there is small doubt that investment at the right price would yield a comfortable profit.
Hamada stressed that production facilities were not part of the deal and so there will be no loosening of the grip held by the Kuwait Oil Company.
Kuwait, which is the 10th largest producer of oil also possesses considerable gas production capacity, however, the drop in oil prices has given rise to concerns about the budget deficit. It is believed that the selling of operations not central to oil production will create revenue to offset a disappointing year.
It is quite possible that a recent similar move by Saudi Arabia has prompted this latest announcement from Kuwait.
Speculating on oil is a rich man’s horserace but one that so many think they can predict more easily than today.
The price per barrel spiked at almost 5% higher by close despite expected reports by the US that would indicate a further downward trend in prices.
Brent closed in New York at $48.75 a rise of $2.22. The markets had been looking at a long fall towards $40 but speculation is that demand in the US will increase next year and official figures back that up.
Not an end, not maybe the beginning of the end but reason for a touch of optimism nevertheless.