February 2015 IFP School - SPE Student Chapter THE ROLL N’ BARREL Brent (CO): 60.05 USD/bbl WTI (CO): 50.00 USD/bbl TOCOM (CO): 45,590.00 JPY/kl Nº14 - Feb. 2015 NYMEX (NG): 2.90 USD/MMBtu Hydrocarbon prices updated 24 February 2015 (Source: Bloomberg) Interview with Matthias Meister By Arthur Papouin & Pierrick Casanova Matthias Meister, SPE Regional Director for South, Central and East Europe and Senior Product Development Manager for logging - while drilling and wireline tools at Baker Hughes’ Technology Celle Center in Germany. 1982: Graduated in Mechanical Engineering from the University of Hannover. 1982-1986: Worked for Christensen Diamond Products Celle in Germany as a mechanical engineer on down hole tools and as a project engineer and manager. 1986-1999: Worked for Christensen Diamond Products (which later became Hughes Christensen) in Germany and the USA as a drill bit design engineer and as a manufacturing engineer. 1999: Active board member of the German section of the SPE. 1999-Now: Worked for Baker Hughes in Celle, Germany as a project manager initially for formation pressure testing while drilling and sampling while drilling, later as a senior product development manager for other logging tools for the drilling process and also for wireline tools. October 2014: SPE Regional Director for South, Central and East Europe. Why did you join E&P? It happened by accident. After finishing my Mechanical Engineering degree I did an interview tour through Southern Germany to find a job. Once back from my tour, I looked in the local newspaper and found a job ad for Christensen Diamond Products. I applied for it by sending my resume and I was surprisingly successful. I joined a small group which had money to develop new products. The interesting part was to search for solutions at the cutting-edge of technology. This field is difficult but totally challenging and this is what drives me. What does your current job consist of? My current job consists of being the product development manager for multiple While Drilling Tools. It includes formation testingand sampling while drilling, as well as some resistivity, magnetic resonance nad seismic while drilling technologies. These are part of the projects I am overlooking and I’m just changing my position a little due to the work I also do for SPE. My supervisor has now changed me to a technical advisor which gives me a little more time to spend on the SPE. Why are you investing yourself in the SPE? I became a member of the SPE and I was inactive back then. All I did was read papers and learn. When I came back from Houston, in 1999, I took over the treasurer function of the SPE section in Germany. They asked me to do it and I thought “Why not?” And the reason why I did it was due to the fact that I had to go to each lecture to collect the money for the dinner. I have never regretted doing it because I learned so much from each lecture even if it was not my topic. And it is for that reason I can only encourage people joining the SPE to learn and expand on their expertise, know where technology is at and where it is heading, learn in broader depth what the industry is about and start networking. I have been on the board of the German section since then. I have also been the membership chairman, program chairman and section chairman. We have had an active team. It was so much fun to organize things and the networking was just amazing. After all this I finally got asked the question: “Would you be interested to take over the regional director position in the SPE?”. The more you do in the long run the more rewarding it will be for you. This is why I encourage all students to join as early as possible. From my perpsective today, I did it too late. The second point is, be active in it. The SPE allows you to do a lot. What does SPE Regional Director for South, Central and East Europe consist of? On one part I am now responsible for overseeing these different sections. We have 13 sections and 23 to 25 Student Chapters. They are increasing all the time. We are currently talking about creating another one in Paris at “Ecole Centrale”. The other part is learning about what the students are doing because I want to spread that information in the regions and to the board in order to have a lively SPE organization. This is what SPE is all about: conferencing, networking and technology dissemination. Of course, the SPE is helping members to be able to do all that. The final part is to define the general strategy for the SPE during the board of directors meeting. There are 28 board members composed of Regional Directors, Technical Directors for Technology and the three Presidents. We try to form the SPE, to give guidance: where do we want to be heading in the next few years How can we further increase membership? How do we keep high quality SPE papers? We want our OnePetro Database to be superior and very well accepted in the industry, which today it is. How do you manage your time between this position and your job? That’s not easy, because whatever responsibilities you take in the SPE, it puts some weight on your shoulders. Very early on my career I didn’t look at the clock to tell me when to go home. I had the luxury that my way from company to home was short so I could spend a lot of time in the company. The same happens today and of course you have to spend some weekends in it as well. This is another thing where I have to encourage you guys. When you will be married later on, you will get into conflict with your spouse and they will ask ” Do you need to do that now or can we spend the weekend together?” And sometimes you have to say: “No, this is more important”. But one of these days, there will be a social event where you bring your spouse with you. It is very important because then your spouse will appreciate what you are doing. They will get the feeling of what kind of society you are working for and then they figure out that it is like another family, which it really is to me. How is the current barrel price affecting service companies like Baker Hughes? It affects Baker Hughes as well as the other service companies. Since operators will drill fewer wells, service providers have to react to the reduction in business. As you have seen already, all companies unfortunately need to lay off people and consequently are not hiring students right now which is a pity. I have already talked to the board of the French section to try at least provide internships for students as much as we can. I know that the industry cuts down on this as well but I want to emphasize the fact that we need you guys. We need to train you. We have a lot of people leaving this industry in the next 5 to 10 years. So we need well trained students and young professionals. I hope that they have listened and that they will provide you all the opportunities to get internships, because it is very important for the future of this industry. Is starting a career in a service company the best option in the O&G industry? I started in a service company and the beauty for me was that I was able to do very exciting things as developing tools on the cutting edge of technology. This is what kept me in the job. If you are in the operator office you are not the developer. I am a mechanical engineer so of course I like to develop things. My path was in my opinion the best I could follow. I did not want to design the 115th version of a door lock for a car. In the oil field service company I had to design totally different tools and technologies for each project dealing with completely new challenges. I had to learn from scratch, succeed and build something new. This was very inspiring and self fulfilling. But I also have to say, each development is a team effort. It is never a one man show! Does it close some doors? It may look like it. Could I start in an operator office today? Maybe after what I have done with the SPE. Maybe this reopens doors. But if you are in the tool development and have fun with that maybe you are initially not the person to work for an operator company, who are dealing with the overall picture of the oil industry. But I do not see the disadvantages today because I had so much fun working on the cutting edge of technology. Interview with Matthias Meister, SPE Regional Director INTERVIEW | Page 1 The Keystone Pipeline System ARTICLE | Page 2 The future of fracking: Dry Gas? ARTICLE | Page 3 The story of a great Monopoly ARTICLE | Page 4 The Rollin’ Barrel team Nicolas Sobecki (DEG) Onyekachi Ugochukwu (RGE) Marion Neyrat (DEG) Pierrick Casanova (RGE) Arthur Papouin (DEG) Zubin Arora (PEM) Jorge Cubelos (DEG) Mia (The Language Hub) How is the SPE helping young professionals in seeking their first job? You need to show off what you are doing. This is why I am emphasizing on being part of the SPE as early as possible and being active. It is driving your resume. I can tell you if I am looking at a resume and I see that people were active beside their study then there is a clear plus sign. SPE cannot influence the industry in helping individuals get jobs. The SPE provides further professional training, certification and networking opportunities. What you can do is be active and that will open doors easier for you. Of course SPE has an interest in petroleum engineers getting jobs and this industry needs people. But what we have right now is a cycle. It is going up and down. Unfortunately we are currently on the down turn. I hope it will bottom out quickly and the industry will hire experienced and fresh people again. I remember in my early days a similar but even harsher situation in which we had cut the company in half and three months after we had let go the last people we rehired them at a higher salary. My advice is hang in. I have seen it so many times, after every down time we get an up time with lots of opportunities. What advice would you give to IFP Students to succeed in their career? Firstly join the SPE as early as possible; I did it too late. Secondly be active in the society because in the end it will be rewarding. It does not pay off the next day, it pays off in the long run. I The Rollin’ Barrel - Number 14 - February 2015 Where do we draw the line between the economical value of a project and its environmental impact? The Keystone pipeline system serves as an appropriate case study to answer this question The Keystone Pipeline System By Marion Neyrat & Onyekachi Ugochukwu The Keystone Pipeline System is an oil pipeline system in Canada and the United States, commissioned in 2010. It runs from the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas, and also to the oil tank farms and the oil pipeline distribution center in Cushing, Oklahoma. The project consists of three (3) phases which are in operation, and the fourth is awaiting U.S. government approval. They are: Phase I (Completed in June 2010) The Keystone Pipeline for delivering oil from Hardisty, Alberta 3,456 kilometres to the junction at Steele City, Nebraska and on to Wood River Refinery in Roxana, Illinois and Patoka Oil Terminal Hub/tank farm north of Patoka, Illinois. Phase II (Completed in February 2011) The Keystone-Cushing extension, running 480-kilometres from Steele City to storage and distribution facilities/tank farm at Cushing, Oklahoma. Phase III (To be completed in mid-2015) The terminal lateral pipeline running to refineries in Houston, Texas is undergoing construction. The first part of this phase, The Gulf Coast Extension, running 784 kilometers from Cushing to refineries at Port Arthur, Texas was completed in January 2014. Phase IV (Proposed Keystone XL Pipeline) Planned to duplicate the Phase I pipeline between Hardisty, Alberta, and Steele City, Nebraska, with a shorter route and a larger-diameter pipe. It would run through Baker, Montana, where American-produced light crude oil from the Williston Basin (Bakken formation) of Montana and North Dakota would be added to the Keystone's current throughput of synthetic crude oil and diluted bitumen from the oil sands of Canada. What environmental risks are associated with the construction of the XL Keystone pipeline? Different environmental groups, citizens, and politicians have raised concerns about the potential negative impacts of the Keystone XL project. The main issue is the risk of oil spills along the pipeline, which would traverse highly sensitive terrain. The opponents remind of the dozen of spills during the first year of exploitation of the initial pipeline, Keystone, which corresponded to 80 000 liters of oil discharged in the north of Dakota. This was recognized and led Barack Obama to rejecting the building permit in 2013 and asking for a study on the ecological impact. Another argument is in regards to the increase of 17% higher greenhouse gas emissions from the extraction of oil sands compared to the extraction of conventional oil. Indeed the extraction of the tar sands needs more energy and more water than traditional hydrocarbons. What are the resulting economic spin-offs? With the 830 000 barrels per day, the proponents for Keystone XL pipeline argue that it would allow the US to increase its energy security and reduce its dependence on foreign oil, in particular from Venezuela and the Middle East. Russ Girling, president and CEO of TransCanada, touted the positive impact of the project by "putting 20,000 US workers to work and spending $7 billion stimulating the US economy". According to Barack Obama, it is far less and above all, it is temporary. Even if the construction could create jobs, it will not be a long-term situation and the project could in the end create just a hundred permanent jobs. What are the different protests related to this project? On March 2, 2014, approximately 1000-1200 protesters marched from Georgetown University to the White House to stage a protest against the Keystone Pipeline. They are concerned by the pollution of air, the possible water contamination and the harm on wildlife in general. More than ecologist American, many Native Americans and Indigenous Canadians are opposed to the Keystone XL project because of the potential disturbance, demolition or removal of prehistoric and historic archaeological sites. What is happening at the moment? At least right now, the United States do not need the oil. Improved technology, chiefly hydraulic fracturing and horizontal drilling, has opened up vast new deposits of not only natural gas but crude oil too. And the drop in oil price reinforces the reason to stop the project. But even if Barack Obama has threatened to use his veto of power, the Republicans in the Congress affixed their signature on the contract on 13th February 2015, and they are pushing the American president to follow. With years of controversies, Barack Obama’s decision is consequently commanding worldwide attention and Rolling Barrel’s will follow the story very closely! Phases I and II have the capacity to deliver up to 590,000 barrels per day of oil into the Mid-West refineries while the Phase III has the capacity to deliver up to 700,000 barrels per day to the Texas refineries. In order to better comprehend the challenges facing the Keystone XL project, the following questions must be answered: 2 Ƥ the case for shale On 10th February, a group of French companies have joined forces to change perceptions of the shale energy sector in the face of the country’s long-standing ban on hydraulic fracking despite France having to import nearly all its oil and gas. France is estimated by the U.S. Energy Information Administration to hold the biggest reserves of shale gas in Western Europe. A new Paris-based think-tank, the Centre for Unconventional Hydrocarbons, has as an objective to inform the public about experiences outside France and also to show the experience of Total and pipe maker Vallourec from the U.S. shale gas revolution. Source: Rigzone 10 February 2015 Ƥ counter falling out Last year, big oil companies had a poor record of finding and producing oil and gas and big cuts in spending in response to falling crude prices could undermine their failure. On average, the biggest oil companies replaced only two-thirds of the hydrocarbons they extracted in 2014 with new reserves. Also, their production decreased by 3.25%. With the latest oil price collapse, the biggest oil firms have announced sharp cuts in capital expenditures as far as 2017, as they seek to preserve cash to maintain dividends. Nevertheless, Shell CEO Ben van Buerden recently announced “Many of the things that you may do out of excessive prudence basically means that you lose them (the opportunities). They won’t come back anymore”. The new challenge of the oil companies is to balance cash flow and the growth of their companies. Source: Rigzone 5 February 2015 JOIN US !!! JOIN THE SPE AND HELP TO PLAY AN ACTIVE PART IN THE IFP SCHOOL STUDENT CHAPTER Contact us for more information: 7 January 2015 [email protected] Ǧ Ǥ Williams Partners announced with DCP Midstream Partners, LP that the new extended natural gas gathering pipeline system is now flowing natural gas. The Keathley Canton ConnectorTM deepwater gas gathering pipeline system and the South Timbalier Blowk 283 junction platform are serving producers in the central ultra-deepwater Gulf of Mexico. The 20-inch, 209 mile Keathley Canyon Connector, which is capable of gathering more than 400 million cubic feet per day (MMcf/d) of natural gas, originates in the southeast portion of the Keathley Canyon protraction area and terminates into Discovery’s 30-inch diameter mainline at Discovery’s new junction platform. The pipeline was constructed in depths of up to 7,200 feet of water approximately 300 miles south-southwest of New Orleans. With this start-up, the joint venture discovery is now ready to serve the growing production needs of our deepwater producers. As partners in the project, Williams and DPM are now positioned to significantly benefit from its world class deepwater gathering system. Moreover to this offshore gathering system, this systems includes the 600MMcf/d Larose natural gas processing plant providing market outlets to six interstate gas pipelines and the 35.000 BBL/d Paradis fractionation facility. Source: Your Oil and Gas News 10 February 2015 !"#$ The Rollin’ Barrel - Number 14 - February 2015 ơ Platform In Brazil The future of fracking: Dry Fracking? On 11th February at 12:50 a floating production storage and offloading vessel (FPSO) suffered an explosion when 74 workers were on board. This FPSO vessel was operating on the Camarupim and Camarupim Norte fields which are situated 60 miles from the coast of Espirito Santo state. Six workers died: five Brazilians and an Indian. In addition, four others went missing and ten were injured and flown to a hospital based in Rio de Janeiro. The unit and production has therefore been stopped. This explosion does not seem to have had any real financial impact on the state-controlled oil giant Petrobras. The vessel operated 3% of Brazil’s total gas production. By Nicolas Sobecki Introduction Millions of gallons of water could be saved at each fracking well site. The solution is to use liquefied petroleum gas (LPG) gel for hydraulic fracturing also called dry fracking. A gel made of LPG and sand is injected directly into a formation, under pressure and heat gel reverts to vapor and crack the rock, instead of using water. A solution to water waste Hydraulic fracturing requires as much as 4 million gallons of water per well. The total water ones for fracking in the United States in 2010 was between 70 billion and 140 billion gallons, according to the Environmental Protection Agency (EPA) . The amount of water consumed in fracking a well typically ranges from 0.6 to 1.8 gallons of water per million BTUs of energy produced, according to the Energy Collective. (One BTU: british thermal unit is approximately 1.054 to 1.060 kJ). The amount of water used for fracking is less than other uses like residential use but it can not be tolerated in agriculture areas where water is already scarce. This problem is also getting worse, with the Texas Water Development Board and the University of Texas’ Bureau of Economic Geology estimating that this amount of water will double in the next decade. A new way to frack Dry fracking was developed in Calgary, Alberta by Gasfrac Energy Services a few years ago. They use propane, butane, pentane or mixtures of those gases as a substitute for water. This technique has some advantages compared to water: - There is no need for treating and transporting water afterwards. - Low viscosity and low surface tension, compared with the surface tension of water. - The vapor can be reused or sold because it contains no salt and radioactivity. - It can allow more gas to escape from shales. But an obvious drawback of the LPG technology is that the fluid used is more expensive. Source: Forbes 11 February 2015 Ǧ͖͂͝ Project Actual utilisation of this technique Dry fracking can be a good alternative in areas such as in California where the agricultural community, vineyard owners included, use a large amount of water. The formation of the Monterey shale in California holds 15 billions of untapped oil according to the US Energy Department which is more than in North Dakota’s Bakken oil region. But some institutions like the San Francisco-based Center for Biological Diversity criticize this new technology because of its lack of extensive scientific research into the possible risks. Nowadays about 2,100 fractured wells using this technique are in the ground, with test wells under way in Texas. Norway's Statoil plans to develop a giant $29 billion oil field. It will be the Europe's costliest offshore energy project and they expect to produce some of the world's cheapest oil that will be profitable even after the recent price crash. This field named Johan Sverdrup will start by 2019 and the production expectations are 3 billion barrels of oil equivalents (boe) over 50 years. Once the project is running, operating costs are projected under $5 per barrel. This field was discovered in 2010 by Lundin Petroleum and Statoil. Until the government’s decision, Statoil will hold 40.0267 percent, Lundin 22.12 percent, the state owned firm Petoro 17.84 percent, Det norske 11.8933 and Denmark's Maersk 8.12 percent. Source: Rigzone Support our Student Chapter 13 February 2015 Ƥ ǡ The IFP SPE student chapter exists and functions thanks to the generous donations of our corporate sponsors. Please let us know if you are interested in supporting us. Platinum Golden Silver Bronze A section of an Exxon Mobil corporation refinery in Torance, California exploded on 18th February and injured four people. The refinery is about 20 miles south of downtown Los Angeles. This refinery covers 750 acres, employs over a thousand people and processes an average of 155,000 barrels of crude oil per day. It produces 1.8 billion gallons of gasoline per year, which accounts for about 8.3 percent of the state's total refining capacity. The other parts of the facility continue to operate. It was not clear what caused the explosion. Source: Washington Post 18 February 2015 3 %&' ()*++, - ('. (/0123/ 4*56/27 The Rollin’ Barrel - Number 14 - February 2015 The story of a great monopoly By Zubin Arora Born in 1839, John D. Rockefeller was the co-founder of the Standard Oil Company, an iconic company in American history that amassed enormous amounts of wealth and power in the late 19th century. The single most important figure in shaping the oil industry, he embodied the American dream - born of humble beginnings and rose to the wealthy elite. Intent on achieving something big, he started his first company several months before his 20th birthday with his neighbor Maurice Clark. They did business trading commodities like meat and produce. The firm prospered from the demand generated by the Civil War and by the opening of the West. But in 1863 he saw a new business opportunity in Pennsylvania. Due to the oil boom there was a new demand for refined kerosene that could be used for lamps and lubricants. Hence, in 1870 he founded the Standard Oil Company of Ohio, which would refine oil coming from Pennsylvania and sell kerosene to a national market. While the market for oil was growing at an extraordinary rate, the amount of oil seeking markets was growing even more rapidly, resulting in wild price fluctuations and frequent collapses. As overproduction caused prices to plummet, the new industry went into a depression. Rockefeller wanted to replace the cut-throat competition with co-operation. His meaning of co-operation was consolidation under his control that included vertical integration producing, transporting and refining. It would do what an association could not: eliminate excess capacity, suppress wild fluctuations of price, and save the business. One of the ways he set about doing this was making the transportation aspects of that economy a partner. The size, efficiency, and economics of scale of Rockefeller’s organization enabled it to extract rebates - discounts - on railway freight rates, which lowered its transportation costs, providing it with a potent advantage in terms of pricing and profit. Standard, however, did not stop with rebates. It also used its prowess to win “drawbacks.” A competing shipper might pay a dollar a barrel to send his oil by rail. The railroad would turn around and pay 25 cents of that dollar back, not to the shipper, but to the shipper’s rival, Standard Oil! That, of course, gave Standard an enormous financial advantage. It aroused colossal public antipathy towards Standard when it became known. Overtime, he reduced the price of Kerosene by 80%. When his competitors could not compete, his strategy was to buy them out and further consolidate his control over the refining business. By 1879, he successfully assumed control over ninety percent of the refining capacity in America. Standard also controlled the pipelines and gathering system of the Oil Regions and dominated transportation. In the next decade he developed an even more shrewd method of consolidating his control over the oil industry through the The Standard Oil Trust. The way in which this operated was that Standard Oil would take company money and become the largest shareholder of its competitors. Around the country there were companies that were ostensibly competing with Standard Oil, but their largest shareholders were actually Standard Oil executives. Standard Oil was secretly running these companies and negating their competition. This strategy was both brilliant and devious. It made Rockefeller the wealthiest man in America, it made Standard Oil Company the wealthiest company in America, and it also demonstrated the degree to which Standard Oil and Rockefeller personally were willing to do unethical things in order to win in the market and to do business secretly and from beyond the public eye. The Oil&Gas Crossword Across 4 Down Standard Oil, as it got wealthier and wealthier, used its leverage to destroy its competitors and essentially become the only game in town. That enormous wealth also began spreading into politics. When governments on the state and national level would threaten Standard Oil’s interests, they mobilized an army of lobbyists and would bribe politicians.. In Pennsylvania they hired farmers to pretend to be in favor of Standard Oil when they were lobbying for a certain pipeline legislation. Standard Oil was really willing to win by any means necessary. It was a monopoly of the worst kind that leveraged its enormous resources to create an uneven playing field, destroying its competitors, and wielding an enormous, inordinate influence over American politics. Despite being the wealthiest man in America, Rockefeller practiced frugality. During a stressful period in the 1890s, he developed alopecia, a condition that causes the loss of body hair. By 1901, he did not have a single hair on his body and he started wearing wigs. After this many of his activities became philanthropic. In total Rockefeller donated about $550 million. A ruthless businessmen with an acumen for management and organization, Rockefeller is ranked as the most hated American businessmen in part because he was successful and partly because he was merciless. His lasting legacy is continuously felt, in terms of his profound influence on the petroleum industry and on capitalism itself.
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