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The Energy Industry Today
Oil Prices at All Time High– Exceeding $60/bbl– Total Proven Reserves ~1.12 Trillion Bbl
Natural Gas Regarded as Fuel for 21st Century– Total Proven Reserves ~ 183.8 Trillion m3
India’s Contribution ~10 Billion BOE– 2.1 Billion Bbl Oil Production in 2005– 32 Billion m3 Production in 2005– ~0.5% Reserves and 15% of Global Population
Indian Strategies to Meet Demand
Exploration of Conventional Reservoirs Production from Unconventional Reservoirs
– CBM and Gas Hydrates
Enhanced Oil Recovery in Aging Fields– MEOR and CO2 Injection
– Alkaline - Polymer - Surfactant Sweeps
Indirect Participant as Product Supplier– Supporting the Global Energy Infrastructure
Infrastructure Support of Energy Industry Oilfield Chemicals
• ~$4 Billion Annual Market• 5.4% Annual Growth
– Well Construction Chemicals– Drilling Fluid Chemicals– Cementing Chemicals
– Completion– Heavy Brine & Sand Control -Unconsolidated Formations– Stimulation - Fracturing and Acidizing Chemicals
– Production Chemicals– Corrosion Control - H2S and CO2
– Inorganic Deposition (Scale) Removal– Organic Deposition (Wax) Removal– Water Management (9 bbl water : 1 bbl oil)
Infrastructure Support of Oil and Gas Industry Chemicals
• Enhanced Oil Recovery -Preparing for the Future – Speciality Polymers– Speciality Surfactant Blends
Equipment• Drilling Rigs• Tubulars and BOP• Speciality Pumps• Compressors• Motors and Generators• Downhole Tools
Case History Guar Gum
– Primary Viscosifier for Hydraulic Fracturing• Hydraulic Fracturing is a Stimulation Process
• ~32,000 metric ton per year
– ~40% Global Production from western India– Most Domestic Suppliers Import Guar Splits
• Convert Splits to Flour in the US Plants
• Manufacture Guar Derivatives
• Cost Fluctuations for Questionable Reasons
• Number of Suppliers Declining
Case History
Connect with Indian Suppliers – Objective: Locate Reputable Indian Guar Suppliers that
will Supply Sufficient Quantities of Quality Product at Lower Costs
– Initiated in 2000 – Requirements
• Low Cost of Product
• High Quality Potential
• Large Capacity (MM lb/yr)
Case History– Quality Control
• Long Term Quality Assurance– Expected deterioration in quality – Expected large variation between shipments– Either would be intolerable
• Emphasis on Quality – Placed Burden on “Distributing” Company (PfP)
• Product Undergoes Four Levels of QC/QA– Oil Dispersion Viscosity– Water Dissolving Rate– Solution Viscosity– Gel Viscosity– Fracture Damage Potential
Case History
Distributing Company Responsibilities– Communication w/in Both Cultures– Quality Assurance– Scheduling and Inventory Management– Cost Management
• Multiple Indian Suppliers
– Continuous Improvement
Case History Advantages
– Low Cost Product– Continuous Quality Improvement
• Exceeded Expectations– Higher Quality Products
– High Consistency
• Created “New” Premium Grade of Guar Gum– Lower Concentration of Guar Required
• Success Induced Effort to Source Other Products– High Strength Proppants and Other Polymers
– Completion Brines and Specialty Surfactants
Case History
Disadvantages– Forecasting Requirements
• Excessive Transportation Time• Excessive Quality Control Testing • Emphasis on Scheduling and Planning • Local Inventory Build-Up
– Preventing “Out of Spec” Material• Unable to Return• Stress on Pre-shipment Sampling
– Performance Verified before Shipment Leaves India
• Stress on Scheduling
Private Research Entities
Global Economy and Market Pressures– Stiff Competition– Company Structure to be more Competitive – Research Regarded as Necessary Evil Cost– Research - Minimize Time to Commercialization
Fundamental Understanding of Technology– No Direct Income– Multi-Tasking Responsibilities - No Time Allowed – Expensive -
Answer - Various Forms of Out-Sourcing
Private Research Entities
India’s Contribution– Large Population of Technically Skilled People
• 112,000 Engineering Graduates in 2004
• 2001 Census - 2.6 MM Engineers/Scientists
Research Factories???– Western Company/Customer Indian Technocrats– Managing Company
• Provide Skilled People (Temporary Agency)
• Provide Physical Assets– Laboratory Space
– General Lab Furniture and Basic Equipment
– Telecommunications to Support Project Review
• Conducts Marketing and Sales for Concept
Private Research Entities
Research Factories???– Managing Company
• Understands Both Cultures
• Affiliated to Existing Educational Institutions– Tap into Technical Population
– Company Customer • Enter into Contract Agreements (People/Physical Assets)
• People become Temporary Employees to Company Customer
• Provide Specialty Equipment
• Company Customer Owns all IP
• Benefit - Low Cost Research– Fundamental Research– New Product Development
Oil and Gas Production
India’s Energy Status– 15% of World Population– 3% of Global Energy Consumption
• 6th Largest Consumer
– 33 Million ton/yr Oil Production– 40 Million scmd– Energy Deficient
New Discoveries
Current Focus - Exploration and Production Latest Finds
– Reliance - 300 BCM Gas Krishana Godavari
– Cairn - 100 BCM Gas Rajasthan
– Cairn/Tata/ONGC - 80 MMSCD/5 yr Gas Offshore Gujaret
– Cairn - 200 MM BOE Gas and Oil K.G. Basin
– GAIL India - 60 MMSCD/20 yr
– CBM
Demand Outpacing Domestic Supply
Enhanced Oil Recovery
Recent Agreements w/ China– Develop and Share EOR Technology
Benefits of EOR– Primary Production 10-15% Recovery– Secondary Recovery (Waterfloods) 10-30% Additional– Tertiary Recovery (EOR) 45-80% Additional
Requires Individualized Approach– Formation composition and Lithography – Aqueous Phase Composition– Crude Oil Composition
Current Methods MEOR
– Microbial Enhanced Oil Recovery
– Inject Specific Live Bacteria/Food to Produce CO2
CO2 Injection– Reduces Oil Viscosity and Re-Pressurizes Reservoir
Alkaline - Surfactant - Polymer Flooding– BJ Services Preparing for the Next Phase - EOR– BJ Services Investing in Biosurfactants
• Specifically Designed to Match Reservoir Requirements
– BJ Services Offers AquaCon Polymer System• Relative Permeability Modifier for Water Control
• Core Flow Testing Suggest Excellent Polymer Flood Product