17
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 1 NewBase 04 August 2015 - Issue No. 657 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE Solar powered palm trees boost Dubai's smart plans Solar panel powered-palm tree inspired Wi-Fi stations have become the latest addition to the smart city technology of Dubai. Umm Suqeim Beach and Za’abeel Park are the first two locations for the Smart Palms which provide free wireless internet access. They also give information on the weather, local attractions and have facilities for charging up mobile devices. Around six meters tall the plan is for 103 to be in place across the city at popular outdoor locations. The initiative - part of the UAE Cabinet Year of Innovation project - has been jointly put together by Dubai Municipality, Smart Palm creators D Idea Media, Du, Sun Tab Solar Energy and Promo Tech Gulf Industry. Hussain Lootah, the director general of Dubai Municipality, said: "Under the guidance of our leaders, Dubai has developed an international reputation as a place for technology and innovation. Through Smart Palm, the public will be able to benefit from free direct access to the Internet while providing valuable public information covering a range of topics including weather forecasts and orientation guides.” He added "most importantly, these structures are entirely self-sufficient thanks to their mono crystal solar panels, which provide up to 21 percent efficiency." The Smart Palm’s fronds are topped with photovoltaic panels which take in and store energy from the sun during the day. As well as powering its facilities each palm lights up at night

New base 657 special 04 august 2015

Embed Size (px)

Citation preview

Page 1: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 1

NewBase 04 August 2015 - Issue No. 657 Senior Editor Eng. Khaled Al Awadi

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

Solar powered palm trees boost Dubai's smart plans

Solar panel powered-palm tree inspired Wi-Fi stations have become the latest addition to the smart city technology of Dubai. Umm Suqeim Beach and Za’abeel Park are the first two locations for the Smart Palms which provide free wireless internet access. They also give information on the weather, local attractions and have facilities for charging up mobile devices.

Around six meters tall the plan is for 103 to be in place across the city at popular outdoor locations. The initiative - part of the UAE Cabinet Year of Innovation project - has been jointly put together by Dubai Municipality, Smart Palm creators D Idea Media, Du, Sun Tab Solar Energy and Promo Tech Gulf Industry. Hussain Lootah, the director general of Dubai Municipality, said: "Under the guidance of our leaders, Dubai has developed an international reputation as a place for technology and innovation. Through Smart Palm, the public will be able to benefit from free direct access to the Internet while providing valuable public information covering a range of topics including weather forecasts and orientation guides.” He added "most importantly, these structures are entirely self-sufficient thanks to their mono crystal solar panels, which provide up to 21 percent efficiency."

The Smart Palm’s fronds are topped with photovoltaic panels which take in and store

energy from the sun during the day. As well as powering its facilities each palm lights

up at night

Page 2: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 2

The Smart Palm’s fronds are topped with photovoltaic panels which take in and store energy from the sun during the day. As well as powering its facilities each palm lights up at night. The stations runs entirely on solar power and offers high-speed Wi-Fi up to a range of 53 meters, supporting up to 50 users at a time. It also has phone and tablet charging points offering two-and-a-half times faster charging speeds than a regular plug.

Two screens on each palm offer weather details, local news, a navigation application, general Dubai information — and even a selfie camera. Other venues soon be included in the scheme include Dubai Creek Park, Al Mamzar Park and Al Barsha Pond Park. D Idea Media said: “The Smart Palm Project is an iconic fusion of easy access information, accessible Wi-Fi and green technology. “In order to achieve the idea behind the project, we designed and developed a product that couldn’t be realized without a unique invention process which brought together multiple disciplines including industrial design, custom built hardware solutions, software engineering and precise construction work.” Tourists said using the “trunk” of the Smart Palm to access information was an “only in Dubai” experience. “Palm trees with info-screens, that’s really cool” said Jason Hurst who is visiting the city from Boston USA. “And you can take a selfie and send it home.” Other cities have also ventured into the realm of public solar-energy charging stations. In 2013, New York City collaborated with AT&T to install 25 free, solar-powered charging poles around the city, while San Francisco now has its own solar energy stations. By: News Agencies

Page 3: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 3

Masdar Institute and MIT collaborate on energy storage system The National + NewBase

Abu Dhabi’s Masdar Institute is working with the Massachusetts Institute of Technology to develop an advanced energy storage system with plans to demonstrate the technology by early 2017.

Masdar said the Redox Flow Batteries (RFBs) would bolster renewable energy projects in the UAE, and the technology would be significantly cheaper than the types of batteries in use currently.

The RFBs would better store electrical energy as chemical energy and convert it back into electrical energy when needed.

“Currently, flow batteries have certain voltage and temperature limitations. So the project is to innovate [certain components] for the system to achieve

higher efficiency of energy transfer,” said Dr Steve Griffiths, Masdar’s executive director of institute initiatives.

The energy storage project is in its two-year research and development phase, and is expected to advance to its demonstration phase in 18 months’ time, which would likely begin with a simulation at Masdar City.

“There are a few solutions in the market today, but they tend to be expensive and cannot be used in all the operating environments that require renewable energy uptake,” said Saif Al Mheiri, an assistant professor of engineering at Masdar.

One of the main challenges facing the renewable energy sector is storing wind and solar energy. Both energy forms are intermittent, or only available at certain times. Presently, expensive fuel cells are mainly used for storage and are uneconomical for many projects.

Should its energy storage system be a success, it would advance the UAE’s standing in the global energy storage market, which is expected to reach US$113.5 billion in the next two years.

Vanadium Redox (VRB) Flow Batteries http://energystorage.org/energy-storage/technologies/vanadium-redox-vrb-flow-batteries

The Vanadium Redox Battery (VRB®)1 is a true RFB, which stores energy by employing vanadium redox couples (V2+/V3+ in the negative and V4+/V5+ in the positive half-cells). These active chemical species are fully dissolved at all times in sulfuric acid electrolyte solutions. Like other true RFB’s, the power and energy ratings of Vanadium Redox Batteries are independent of each other and each may be optimized separately for a specific application. All the other benefits and distinctions of true RFB’s compared to other energy storage systems are realized by VRB®’s. The first operational vanadium redox battery was successfully demonstrated at the University of New South Wales in the late 1980’s and commercial versions have been operating on scale for over 8 years.

Page 4: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 4

Discussion During the discharge cycle, V2+ is oxidized to V3+ in the negative half-cell and an electron is released to do work in the external circuit (either DC or, for AC systems, through an AC/DC converter). In the positive half-cell, V5+ in the form of VO2+ accepts an electron from the external circuit and ism reduced to V4+ in the form of VO2+. Hydrogen (H+) ions are exchanged between the two half-cells to maintain charge neutrality. The hydrogen ions diffuse through the anion or cation-ion permeable polymer membrane that separates the half cells. Charged

vanadium species and water can also diffuse across the membrane. The cross-diffusion results in direct energy loss for that cycle. However, when vanadium is the only element present on both sides of the cell, this cross diffusion mechanism does not result in permanent capacity loss, as long as the the total vanadium in the system remains constant (i.e., there is no loss due to precipitation). In a V-only system there is no need to maintain balance between positive and negative sides of the system. In the positive half-cell, the vanadium is present in solution as oxy-cations. temperature exceeds ~50-60oC. However, when precipitation occurs, it does so typically in the form of benign compounds, not V2O5. The normal operating temperature of a VRB® is approximately between 10-40oC. Active cooling sub-systems are employed if ambient temperatures exceed 40-45oC. Being able to cool the system actively is an advantage since the

system can remain operating without risking any damage to it. By contrast, if integrated cell architectures overheat, the best option is to stop using them until they cool down. The cell voltage is 1.4-1.6 volts and cell power densities are 100’s mW/cm2 (although Prudent Energy reports their power densities are higher). The DC-DC efficiency of this battery has been reported in the range of 60-80%. According to EPRI, the vanadium redox battery is suitable for power systems in the range of 100 kW to 10 MW, with storage durations in the 2-8 hour range.

Conclusions The vanadium redox battery offers a relatively high cell voltage, which is favorable for higher power and energy density compared with other true RFB’s, like the ironchromium system. However, the higher voltage and highly oxidative V5+ electrolyte puts more chemical stress on the materials used in the cell electrodes, membranes, and fluid handling components. Cross-transport of vanadium ions across the membrane is also reported as a challenge, and fairly expensive ionexchange membranes must be used to minimize losses due to cross-membrane transport. These membranes can be vulnerable to fouling, wherein vanadium ions become irreversibly trapped in the membrane and increase resistive losses in the cell. On the other hand, lower cost membranes are under development and will soon be available for use. Vanadium is a readily available material, used in steel manufacturing and as a chemical catalyst, which is found naturally and can also be recovered from various waste streams.

Page 5: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 5

OMAN BOOSTS OIL PRODUCTION TO RECORD HIGH IN JUNE Gulf News + NewBase

Dubai: Oman ramped up its oil production to a record high in June, adding to a global supply glut that has hit oil prices, as the Gulf Arab country compensates for the drop in its oil revenue.

June production reached 992,700 barrels per day of crude oil and light oil condensate, the highest ever according to official records going back to 2002. It produced an average of 975,000 bpd in May.

The sultanate is under pressure to pump more oil to make up for the drop in the price. It hopes to boost its crude oil production by 5 per cent to 1 million barrels per day in 2015. Brent crude oil was trading around $51 (Dh187) a barrel on Monday, down from $115 a barrel in June last year.

The drop in crude prices has hit hard. Oman posted a budget deficit of 1.50 billion rials ($3.90 billion) in the first five months of this year, swinging from a 232.9 million rial surplus a year earlier, finance ministry data showed on Sunday.

Oman is a small independent producer, not in Opec, but its crude forms part of the benchmark price for millions of barrels per day of exports from Middle East producers to Asia. In 2013, Oman exported an estimated 833,400 bpd of crude oil and condensate, of which nearly 60 per cent went to China, according to the US Energy Information Administration.

Page 6: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 6

Egypt awards five oil and gas concessions worth $100 mln Reuters + NewBase Egypt has awarded five oil and gas concessions that are expected to bring in minimum total investments of about $100 million, the oil ministry said in a statement on Monday, as the country seeks to boost investment in the key energy sector.

Egypt has gone from exporting energy to being a net energy importer and wants to boost local production to help the country cope with its worst energy crisis in decades. A consortium of the Emirati firm Pacific and Malaysia's Hibiscus Petroleum will explore in the 68 square kilometre (26 square mile) Southeast Ras el-Ush concession in the Gulf of Suez, with a minimum investment of $68 million, the statement said. Elsewhere Kieron Megawish will explore in the 194 square kilometre North Megawish concession in the Gulf of Suez, with a minimum investment of $23 million, the oil ministry statement said. Three other concessions were awarded with minimum investments of $7 million, the statement said. State-owned Ganoub El Wadi Petroleum Holding Co (Ganope) had opened bidding at the end of 2014 on 10 concessions in the Gulf of Suez, Eastern Desert and west and east of the Nile in the areas of al-Naqra and Kom Ombo.

Page 7: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 7

Morocco: Circle Oil's NFA-1 well in the Lalla Mimouna Permit disappoints. Source: Circle Oil

AIM-listed Circle Oil, the North African focused oil and gas exploration, development and production company, has provided the following information on the progress of the NFA-1 exploration well on the Lalla Mimouna permit, onshore Morocco. NFA-1 was the third well drilled by Circle Oil on the Lalla Mimouna permit and targeted the Miocene sands. TD of the well, at 1,077 metres MD, was reached on 26 July 2015. The well encountered gas shows whilst drilling at the targeted depth but the reservoir quality encountered in the well has not met the Company's pre-drill estimates. Therefore the well will be plugged and abandoned.

The rig will now be mobilised to drill the Ksiri South (KSS-A) exploration well in the Sebou permit in the Rharb Basin. This well is targeting two objectives in the Miocene Gaddari sands. One of the key objectives of this well is to prove up the potential of targets with a significant stratigraphic trapping component. If successful, this will open a new play type for the Sebou permit with several analogue targets. The selected location lies approx. 2 km from the existing Circle Oil owned 8" gas production pipeline to Kenitra and is ideally positioned for potential production tieback. Depending on drilling progress rates, initial results of the well could be available in approximately 30-40 days.

Commenting on the results of the NFA-1 well Mitch Flegg, CEO, said:

'The NFA-1 exploration well brings to a close the first phase of drilling on the Lalla Mimouna permit. The drilling performance has been good and this phase has been finished ahead of schedule. As planned we will now return to the Sebou permit to continue our drilling operations there while we interpret the valuable data gained from the first three Lalla Mimouna wells. We will incorporate the results of these wells into our in-house subsurface models in order to identify future drilling targets in Lalla Mimouna. In the meantime we look forward to drilling the Ksiri South (KSS-A) exploration well which has the potential to open up a new play type for the Sebou permit.'

The Sebou permit is a partnership between Circle Oil Maroc (75%) and ONHYM (Office National des

Hydrocarbures et des Mines) (25%).

Page 8: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 8

Philippines: Otto Energy spuds Hawkeye-1 exploration well, Source: Otto Energy

Otto Energy has provided an update on the drilling of the Hawkeye-1 exploration well, in Service Contract

55 (SC55), offshore Palawan Basin in the Philippines. The Hawkeye-1 exploration well was spud at 1610 hours (AWST) on 31 July 2015. The 36” conductor was run to 1,906 metres and the 26” hole subsequently drilled to 2,449 metres. Current operations are to cement the 20” casing string.

The forward plan is to connect the blow-out preventer to the wellhead and pressure test before commencing to drill the 17 ½” hole to just above the primary target reservoir. The next update will be provided once the 12 ?” section is drilled into the primary target reservoir, anticipated to occur about two weeks from now. The Hawkeye-1 exploration well will be plugged and abandoned upon completion of drilling and logging. All measurements are from the rig rotary table. Hawkeye Prospect

Service Contract 55 (SC55), offshore Palawan Basin in the Philippines, contains a number of distinct exploration play types that provide material opportunities, including: the carbonate gas/condensate trend that has the potential for an oil charge; and turbidite clastic prospects. The Hawkeye prospect was identified on 2D seismic originally acquired by Otto in 2007 and further defined with the 600 km2 3D seismic acquisition in late 2009. Hawkeye contains:

• ‘Best Estimate’ STOIIP of ~ 480 MMbbl of oil; and

• ‘Best Estimate’ Net Prospective Resource of 65 MMbbl of oil.

Hawkeye is planned as a vertical exploration well to test the clastic late Miocene Pagasa formation. Hawkeye is a thrusted, four way closure with direct amplitude support evidenced on high quality 3D seismic acquired in 2010. Otto plans an exploration well to target the crest of the Hawkeye structure and evaluate results. The well will be plugged and abandoned upon completion of drilling.

Page 9: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 9

Nigeria to Lose Billions Without Oil Sales Reforms, Report Says Bloomberg + NewBase

Nigeria must urgently reform the way it sells oil to prevent Africa’s biggest crude producer losing billions of dollars of revenue, according to a new report.

The approach of the national oil company, Nigerian National Petroleum Corp., “suffers from high corruption risks and fails to maximize returns for the nation,” the New York-based National Resource Governance Institute said in a 73-page report published on Tuesday.

The NNPC should end the practice of allocating about 445,000 barrels of oil a day to Nigeria’s four domestic refineries, which process less than a quarter of that total. The allocation has become the “main nexus of waste and revenue loss from NNPC oil sales,” according to the report.

Nigeria’s President Muhammadu Buhari said last month the U.S. will help trace and recover funds from the sale of about 250,000 barrels of oil that are stolen each day in the country. The oil industry, which contributes about two-thirds of government revenue, has come under pressure as the price of crude slumped 50 percent over the past year.

The National Resource Governance Institute said it sent couriered letters, faxes and e-mails to the NNPC and several of its subsidiaries, informing them of the report and asking detailed questions. The NNPC and its units didn’t respond, according to the non-governmental organization, which co-authored a report last year on the scale of African crude purchases by Swiss oil traders.

Page 10: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 10

Revenue System

Calls to the mobile phone of NNPC spokesman Ohi Alegbe didn’t connect, and he didn’t immediately respond to an e-mail seeking comment.

The NNPC should be bound by a revenue-collection system that allows predictable financing for oil projects and reins in discretionary spending from sales, the report said. Nigeria’s former central bank governor Lamido Sanusi said in 2014 that as much as $20 billion in NNPC oil revenue had gone missing.

The report calls for changes to the practice of swapping refined products for crude oil, including the elimination of complex offshore processing agreements that are “open to abuse.” Nigeria may have lost as much as $381 million, or $16.09 a barrel, from one such agreement in a single year, the report said.

Buhari, who pledged during his election campaign to clamp down on graft, dissolved the board of the NNPC in June.

Nigeria is one of the world’s only major oil producers that sells most of its crude to traders rather than end users, according to the report, which recommends the NNPC stops selling to small, unqualified “briefcase companies.” These firms “pose especially high governance risks” as they could help oil buyers avoid taxes and channel payments through politically exposed persons, the report said.

“Nigeria can no longer afford to leave the NNPC’s dysfunctional and costly oil sales system as it is,” the report said, as the status quo is “characterized by convoluted, under-policed deals with weak commercial justifications.”

Page 11: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 11

Oil Price Drop Special Coverage

As oil falls below $50, analysts eye 'mid-price' era Reuters + NewBase

A slump in oil below $50 a barrel - a level it has held above for most of the past decade - has raised the prospect of a new era of lower prices, although a return to super-cheap oil seems unlikely.

Prices below $50 for the two crude oil benchmarks, North Sea Brent LCOc1 and U.S. West Texas Intermediate (WTI) CLc1, were the norm prior to 2005. Brent averaged just $18.37 a barrel in the 1990s, WTI $19.70 a barrel, and both only broke above $50 for the first time in late 2004.

China's explosive economic growth over the past decade, coupled with flatlining global output, saw Brent soar above $140 in 2008 and it has spent more than 90 percent of the past decade above the $50 mark.

But producers globally, in particular U.S. shale drillers, are now pumping record amounts of oil just as China's growth looks set to steady at lower levels, while alternative energy sources and better efficiency are denting demand in the developed world.

Suggestions that cheap oil will cure itself by spurring demand may fail to play out as consumers look to save rather than spend. And a likely deal to lift sanctions on Iran and allow its huge oil reserves to return to markets, has led many analysts to trim their oil price forecasts to reflect deepening oversupply.

BMI Research, a subsidiary of Fitch Ratings, said on Tuesday that a strong U.S. dollar, China's weakening economy and the prospect of rising Iranian oil exports would keep downward pressure on prices in the coming months.

"A retest of Brent crude's 2015 low around $45 per barrel looks inevitable given current ample market supply and intensifying bearish market sentiment toward prices," the firm said in a note to clients.

Page 12: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 12

But while analysts say a return to extremely high prices of $100 a barrel or more is unlikely any time soon, barring a sudden production crash, they also don't expect a return to super-cheap oil, effectively opening up a third, mid-priced era of prices.

A Reuters poll of oil price forecasts by brokerages and banks shows that the majority of analysts expect Brent prices to average $60 to $70 a barrel in 2016, with only a small minority forecasting significantly higher or lower levels than that.

"In the longer-term, it's not really a question of oversupply. Oil is still a scarce resource," said Richard Gorry, managing director of JBC Energy Asia.

"Outside the U.S., we haven't seen supply rising by much, so in the longer term the Iranian oil will actually be needed to keep the market balanced."

BMI research said it expected modestly higher prices in 2016 as prices above $60 a barrel were needed for most U.S. shale oil drillers to be profitable.

Page 13: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 13

Venezuela’s Giant Lake of Endless Oil Is a Filthy, Lawless Mess By BloomBerg- Pietro Pitts

From the moment the diver in red nylon coveralls and blue Chuck Taylor sneakers resurfaces after replacing rusted

pipeline on the bed of South America’s largest lake, it’s a race against time. Coated head to toe in dark-black oil, he

clambers aboard the service boat, rips off his makeshift uniform and scrambles to hose himself down with a special

compound to wash away the contaminants.

For nearly a century, the petroleum deposits beneath giant Lake Maracaibo served as a cash cow for successive

Venezuelan governments. In return, especially in the years since the company’s energy industry was nationalized by

former President Hugo Chavez, it has received little back but neglect.

The Maracaibo basin is where Venezuela’s enormous energy bounty, including oil reserves that dwarf even those of

Saudi Arabia, smacks up against the diminished capacity of the state-owned monopoly producer, Petroleos de

Venezuela SA, to manage the twin demands of increased production and environmental protection.

Today, the 13,200 square kilometer (5,097 square mile) body of water, a graveyard for everything from abandoned

pipeline and tires to dreams of Venezuelan prosperity, stands as an emblem of a richly endowed resource nation

descending into disarray.

Economic Slowdown

The economy began slowing well before the oil price rout of the past year. Growth now is solidly in negative territory, inflation is running above 80 percent a year, the highest in the world, according to Bloomberg News consensus forecasts, and the country’s benchmark bonds trade at about 41 cents on the dollar -- giving them a yield over 20 percent -- compared with a peak price of 129 cents on the dollar back in 2006. Venezuela is more reliant than ever on petroleum revenues, which account for 95 percent of export earnings and nearly half of government revenues, according to the country’s foreign ministry.

Even by the standards of a country as blessed with resource wealth as Venezuela, the Maracaibo basin is a marvel. It

has been producing oil for a century, ponying up nearly 43 billion barrels so far. With 19 billion barrels of proven

reserves remaining -- more than the total proven reserves for either Brazil or Mexico -- the lake could be providing

greater relief if troubled Venezuela was more receptive to outside capital and expertise beyond China and Russia,

Antero Alvardo and Carlos Rossi, analysts from Gas Energy Latin America and EnergyNomics, said in separate

interviews.

Lost Revenue

In 2006, three years after Chavez proclaimed the oil sector securely back under state control, 1.2 million barrels a day was pumped from the Maracaibo basin. But with a large share of proceeds diverted from maintenance and reinvestment to populist social programs -- gasoline is priced at just 6 cents a gallon, costing PDVSA $15 billion a year -- output from the Maracaibo basin had slumped to 745,164 barrels a day by 2014, according to oil ministry figures. That amounts to $8 billion in foregone revenue.

At the same time, the lake has degenerated into a stew of contaminants that include sulphide, fluoride, kjeldahl

nitrogen, detergents, residential chlorine and fecal coliform, according to the website of the Institute for the Control

and Conservation of Lake Maracaibo, or ICLAM, a Venezuela government entity created in 1981 and charged with

care of the lake.

Page 14: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 14

Government Failings

“There is great governmental irresponsibility, not just from this government but from those from more than 20 to 30 years ago,” said Gustavo Carrasquel, general director of Fundacion Azul Ambientalistas, an environmental and conservation non-profit founded in 1986. “The transnationals destroyed the lake and PDVSA doesn’t have the operational capacity to control the constant oil and gas leaks.”

Officials with PDVSA and Venezuela’s oil ministry didn’t reply to e-mails or phone calls seeking comment about the

contamination in Lake Maracaibo and declining production from the basin.

Brent oil, the global benchmark grade, added 17 cents to $49.69 a barrel on the London-based ICE Futures Europe

exchange at 12:09 p.m. Singapore time. The contract on Monday closed below $50 for the first time since January.

From the deck of a PDVSA service boat, hundreds of rigs dot the horizon, some idle and others extracting their

bounty at a leisurely pace. Oil saturated tree limbs float by. The water is speckled in duckweed, which can choke both

the ecosystem and small motorboats.

Twenty-five thousand kilometers of oil and gas pipeline criss-crosses the lake bottom, much of it corroded and leaky.

Oil leaching from this underwater labyrinth settles on the surface, looking like vast puddles of motor oil in a driveway

after a rainfall.

Leaking Gas

Whirlpools of gurgling water testify to the permeability of the natural gas lines as well, An estimated 50 percent of natural gas transported in Lake Maracaibo is lost due to pipeline breaks or leaks, Gas Energy’s Alvarado said in a phone interview.

Venezuela retains the ability to reverse the production slide and stop the environmental rot, said EnergyNomics

President Rossi, but a depleted treasury and the outflow of engineers, technicians and other oil industry veterans are

deterring efforts. Despite its vast production potential, Lake Maracaibo is also losing its pride of place, Rossi said, as

PDVSA increasingly “is putting all its eggs in one basket” -- the newer Orinoco heavy oil belt on the opposite side of

the country.

Downward Spiral

For now, the lake’s downward spiral knows no bounds.

As the sun sets and their boat heads back to shore, the oil services workers smoke cigarettes and play poker. The

stench coming off the water and the trash floating by elicits no notice. Then they suddenly tense up as a boat

approaches in the distance.

At night, it turns out, the lake is controlled by gun-toting pirates who maraud at will from small boats fitted with

outboard motors. They rob crews still on the water of mobile phones and cash and often strip the PDVSA vessels of

valuable cables, motors and spare parts.

As the approaching vessel gets closer, allowing the crewmen to see they are not in harm’s way, the tension dissipates.

The poker game resumes. This time around, at least, Lake Maracaibo poses no risk.

Page 15: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 15

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

Your partner in Energy Services

NewBase energy news is produced daily (Sunday to Thursday) and sponsored by Hawk Energy Service – Dubai, UAE.

For additional free subscription emails please contact Hawk Energy

Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile: +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as 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 spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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

NewBase 04 August 2015 K. Al Awadi

Page 16: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 16

Page 17: New base 657 special  04 august 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 17