New base 733 special 22 november 2015

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NewBase 22 November 2015 - Issue No. 733 Senior Editor Eng. Khaled Al Awadi

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

Masdar research boils up hot idea for water desalination The National

Amid the UAE’s celebration of Innovation Week, which kicks off Sunday, students at the Masdar Institute are working on projects to support the development of the Emirates, including drinking water made from geothermal energy.

However, using this resource as a desalination method, or removing salt from water to make it potable, is under-explored. Savvina Loutatidou, 26, from Greece is trying to change that. “Solar desalination will be implemented in the UAE, but I … thought it would be interesting to know about other [methods],” said the researchr and PhD candidate at the Masdar Institute. The consumption of desalinated water in Abu Dhabi has nearly doubled over the past decade to 1.126 billion cubic metres from

667 million cubic metres, according to Statistics Centre Abu Dhabi. Yet the price associated with desalination is often high because it is an energy intensive project.

And the geothermal resources present in the UAE is of the low temperature kind – up to 150°C compared with up to 300°C for high “enthalpy”, or temperature, resources – which means it would not be viable for power generation but more suited for direct applications such as cooling and desalination.

However, geothermal in the UAE is not yet proven to be cost competitive for desalination even though there are potentially huge fuel savings compared with conventional methods. “If we can get the cost down enough to compete with other sources, then maybe it could be possible,” said Ms Loutatidou.

So far, her research has shown that in the UAE geothermal desalination with low-level temperatures will cost approximately US$2.50 per cubic metre.

Ms Loutatidou is hoping that with more research and development costs can fall. Currently the price for thermal desalination can run from $0.67 to nearly $1.50, according to Saudi Arabia’s King Abdulaziz City for Science and Technology. “It may not be applicable in the UAE now, but maybe in the future,” said Ms Loutatidou. “I think innovation is … about identifying needs for now and for the future.”




Iran Is Seeking to Increase Output Within OPEC’s Existing Ceiling Bloomberg - Anthony Dipaola

OPEC should make room for increased Iranian crude production within its ceiling of 30 million barrels a day, the nation’s oil minister said, adding the group will probably leave that limit unchanged when it meets next month.

Iran has asked OPEC to accommodate its return to previous production levels when international sanctions are lifted, Bijan Namdar Zanganeh told reporters in Tehran. Iran plans to add 1 million barrels a day within five to six months of the curbs being removed and that increase should be within OPEC’s production ceiling, Amir Hossein Zamaninia, deputy minister for commerce & international affairs, said in Tehran on Saturday.

Brent crude tumbled more than 60 percent since the middle of last year as OPEC followed Saudi Arabia’s strategy of defending its share of the global market against competitors such as U.S. shale producers. The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supply, has been pumping above its target level for 17 months. It is scheduled to meet on Dec. 4 to discuss the ceiling. Managed Return

“I don’t expect to receive any new agreement” at the OPEC meeting, Zanganeh said. “OPEC is producing more than its approved ceiling and I asked them to reduce production and to respect the ceiling, but it doesn’t mean we won’t produce more because it is our right to return to the market.”

Iran was OPEC’s second-largest producer before sanctions over its nuclear program were tightened in 2012. The nation, which reached an agreement with world powers in July over the trade restrictions, is currently the group’s fifth-largest supplier, pumping 2.7 million barrels a day last month, according to data compiled by Bloomberg.

“I sent a letter to OPEC to consider our return to the market and to manage it,” Zanganeh said. “We don’t need to receive any permission from any organization for our return to the previous level of production. It is a sovereign right.” Market Balance

Most OPEC members see $70 a barrel as a fair price for oil, Zanganeh said. Brent crude last traded at that level in December, days after OPEC gathered in Vienna and opted to resist calls from members including Venezuela to cut output. Brent settled near $45 a barrel in London on Nov. 20.

Venezuela President Nicolas Maduro is scheduled to meet Russian President Vladimir Putin in Tehran on Nov. 23 to work together on oil prices, he said on state television last week. Russia, which isn’t a member of OPEC, is facing competition in Europe after Saudi Arabia reduced pricing for buyers in northwest Europe and started selling in established Russian markets such as Poland.

Russia was lobbied last year by Venezuela as it sought to coordinate action with non-OPEC producers to halt the collapse in oil prices. Global supply and demand is best balanced by the market, Russian Energy Minister Alexander Novak said Saturday in Tehran. Any discounts on Russian crude are a matter for the oil companies and not the Energy Ministry, Novak said.




Netherlands: Parkmead announces first gas production from the Diever West gas field Source: Parkmead

Parkmead, the UK and Netherlands focused independent oil and gas group, has announced that first commercial gas production has been achieved at the Diever West gas field in the Netherlands. The field was discovered in September 2014 and, under a fast-track and low-cost development programme, has been tied into existing production facilities through a new

dedicated pipeline with gas extraction via the Garijp treatment system.

Parkmead has worked closely with its joint-venture partners on the fast-track development of the Diever West field, and the partnership has successfully brought the field onstream within just 14 months of discovery. This is an outstanding achievement.

Diever West is located onshore on the western edge of the Lower Saxony Basin, approx. 10km to the east of the producing Weststellingwerf, Noordwolde, Vinkega and Nijensleek fields, on the Drenthe IIIb Production licence, which also contains Parkmead's producing Geesbrug gas field. The Diever-2 well was drilled in September 2014 on behalf of the co-venturers by operator Vermilion Energy, and gas was discovered in a good quality Rotliegendes age sandstone reservoir. A 157 foot gas column was encountered, with both net pay and porosity values exceeding pre-drill

expectations. The well was flow tested after the successful discovery and recorded an excellent flow rate of 29 million cubic feet per day (approx. 5,000 barrels of oil equivalent per day).

The Lower Permian Rotliegend sandstone in this area contains three productive formations, and Diever-2 confirmed the presence of all three reservoir sections. The Slochteren Sandstone formation in the vicinity possesses excellent reservoir properties, typically exhibiting a net-to -gross ratio in excess of 90% and porosities of approx. 20%.

Parkmead's gas assets in the Netherlands continue to provide a robust revenue stream and important net cash flows to the Company. A number of enhanced production opportunities are available across Parkmead's existing Netherlands portfolio, which the Company intends to capitalise on, with the aim of significantly increasing its net gas production.

These include a new low-cost infill well at Geesbrug and a further exploration target at De Mussels. The new production from Diever West and the additional Geesbrug well are forecast to more than treble Parkmead's net gas production in the Netherlands. This will serve as a natural hedge against low and volatile oil prices.




Myanmar: BG Group and Woodside to start exploration offshore Source: Myanmar Times

BG Group and Australia’s Woodside Energy will start offshore exploration next week according to a notice in state media.

BG Group will undertake 3D seismic surveys in Blocks A-4 and AD-2 in the Rakhine basin off the western coast of Myanmar, starting from November 23. The company will conduct seismic campaigns using a Ramform Sovereign ship until the end of April 2016, according to the statement. Woodside Energy also will carry out 3D seismic surveys with a Ramform Titan vessel in deep water Block AD-5 and shallow water A-7, also in the Rakhine offshore basin. The company will begin exploration on November 20 until mid-April 2016. 'The four blocks cover a total area of nearly 30,000 sq kms, which is why the seismic surveys will take around six months,' said an official from Myanma Oil and Gas Enterprise (MOGE). In 2013, the two international oil companies were awarded the right to exploration and production activities in two shallow water and two deepwater blocks in Rakhine basin.

MOGE, BG and Woodside signed a production-sharing contract in March 2015, when the two companies committed to invest more than US$1 billion across the four blocks over a six-to- eight-year exploration period, according to MOGE.




NewBase 22 November - 2015 Khaled Al Awadi

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

Weakening crude spreads put more strain on U.S. oil's $40 support Reuters +Newbase

A surprisingly abrupt breakdown in U.S. crude oil spreads this week has strengthened some traders' conviction of a decisive move below $40 a barrel, extending the early winter price slump.

As traders rushed to dump expiring December West Texas Intermediate (WTI) futures on Friday, rather than take delivery in Cushing, Oklahoma, where storage space is dwindling, the spread versus the second month widened to as much as $2.90 a barrel, the most since 2011.

The second-third month spread has tumbled more than 30 cents to -$1.35 a barrel, its lowest since April.

"The contango will probably provide the fuel for us to get well and below $40," said John McLane, chief investment officer at Mobius Asset Management in Scottsdale, Arizona. He has sold short prompt WTI prices while buying longer-dated oil.

"The way these spreads are acting is giving you every indication that lower prices are yet to come," McLane said. "Just three to four months ago, we were looking at a difference of 30 to 40 cents on nearby WTI spreads."

The cheapening of the spot oil contract versus forward, a market structure known as contango, comes as U.S. crude stocks resume rising toward record highs, with demand tempered by unusually mild winter weather.

U.S. stocks rose for an eighth week last week to more than 487 million barrels, near April's record highs. In Cushing, where the WTI contract is delivered, inventories rose by 2.14 million barrels in the week to Tuesday, according to energy monitoring service Genscape. [EIA/S]

Traders believe that widening crude spreads will accelerate WTI's descent to below the $37.75 low set on Aug 27, putting it on track to a new bottom since 2009. WTI's December futures hit a $38.99 low on Friday before expiring as the spot-month.

Spot WTI will have an opportunity to trade above $40 again on Monday as the January contract, which settled on Friday

at nearly $42, becomes its front-month. "The question is how long the support will hold as there's going to be a new battle to get below $40 after this," said Tariq Zahir, who trades mostly in crude spreads at Tyche Capital Advisors at Syosset, New York.

John Kilduff, partner at New York energy new hedge fund Again Capital, concurred. "The cash market for oil is so weak it looks inevitable that the contango will widen."

Oil price special

coverage




Russia playing down threat of low-priced Saudi oil to Europe

Bloomberg

Russian officials said Saudi Arabia won’t be able to maintain the discounted crude prices offered to refiners in Eastern Europe as the nation toned down its criticism of oil shipments from the biggest Opec producer.

Saudi Arabia has priced its oil at a six-year low for Europe after starting to ship crude to traditional Russian markets such as Poland.

The discounted crude “is a temporary situation and it won’t work for a long period,” Nikolay Tokarev, chief executive officer of Russia’s state-run oil pipeline operator, Transneft, said in an interview on Friday.

Oil executives in Russia, which ships almost 70% of its crude to Europe, last month criticised Saudi Arabia’s strategy even before it dropped its December price for the northwest of the continent to lowest since February 2009. Still, while the Russian central bank warned last week




that increased competition from the Middle East may create economic risks, Energy Minister Alexander Novak was more sanguine on Friday.

“If more or less one oil cargo is added or drops off, there’s no need to turn it into a sensation,” Novak told reporters in Moscow.

Russia is increasing crude exports to the European Union, including through Transneft’s Druzhba pipeline that feeds Eastern Europe, Germany and the Baltic states, Tokarev said. Eastern European refineries, mainly designed with Soviet technology, would need investment to process Saudi crude, he said.

“There is no reason, from an economic point of view, to change technology for the benefit of some sort of political ambition,” Tokarev said.

Saudi crude is heavier and more sour than the Russian Urals oil traditionally processed in Eastern Europe, said Michael Nayebi-Oskoui, senior energy analyst for Middle East and South Asia at Texas-based Stratfor.

The discounts being offered by the Saudis aren’t big enough to offset the extra costs of a large-scale and long-term switch from Russian crude, he said.

“It does not mean that the regional refineries cannot use Saudi volumes,” Nayebi-Oskoui said. “They’ll just be less profitable and over time require longer periods of maintenance.”




NewBase Special Coverage

News Agencies News Release 22 Nov. 2015

Africa boom fades as $50 crude shuts door on high-cost deals Bloomberg

The banner was “On the brink of a boom,” on Pricewaterhouse Coopers’ review of Africa’s oil industry 16 months ago. Now, oil below $50 has made more than two out of three investment projects on the continent non-viable.

“Capital markets are effectively closed to the oil and gas industry” in Africa, Tony Hayward, former head of BP and now chairman of Genel Energy, said at a conference in Cape Town last month. “A decade of exploration, with billions of dollars invested and only limited commercial success.”

When six of the 10 biggest global oil discoveries in 2013 were made in Africa, it underlined the potential of the energy riches that had lured companies from Royal Dutch Shell to Exxon Mobil Corp. Governments have been slow to react as the slump in crude makes the royalties charged from Libya to Angola look punitive. African production, already 19% below its 2008 peak of 10.2mn bpd, is set to drop for a third year.

While final investment decisions have been made on less than 10% of the 48bn barrels of oil equivalent discovered in the past decade, governments haven’t adapted to the new environment, Martin Kelly, director for sub-Saharan Africa research at

consultancy Wood Mackenzie, said in an interview at the Africa Oil Week conference. That means some nations including Nigeria, the continent’s biggest producer, are proposing increasing royalties at a moment the industry can least bear it.

“There is a raft of changes working their way through various parliaments around Africa at the moment and they’ve been primarily based on prices that were $100,” Kelly said. “The world has changed since then.”




African governments’ profit share from deepwater oil projects off the continent ranges from 91.1% in Libya to about 60.7% in Gambia, according to data from Wood Mackenzie. That’s higher than elsewhere in the world, with the continent’s average onshore take of 66.1% being 8.5 percentage points above the global one, the consultants said.

Persuading governments to cut their share of the spoils won’t be easy with the end of the oil boom destabilising economies as revenue slumps and currencies tank. Nigeria, Africa’s biggest producer, has imposed foreign-exchange restrictions to stabilise the naira, while second-ranked Angola has been forced to devalue its currency twice since June and slashed its budget by a quarter.

Nigeria has proposed increasing the government’s share of profits and plans to review offshore contracts signed with oil companies two decades ago. The last draft of a proposed petroleum law, stalled in parliament for the past seven years, seeks to raise offshore taxes to 73% and those for onshore to 87% from 50% and 83% respectively.

Exploration drilling in Nigeria is close to the lowest in more than a decade because of shelved investment plans, according to the Petroleum Ministry.

With oil below $50 a barrel, only a third of $270bn of potential investment projects in Africa make economic sense, according to Obo Idornigie, principal analyst at Wood Mackenzie.

Tullow Oil, responsible for some of the biggest discoveries on the continent, is concentrating on safer projects in Ghana and Kenya after cutting jobs and trimming its annual exploration budget to about $200mn from $1bn.

“We need a higher oil price” to meet future production requirements, Tullow chief executive officer Aidan Heavey said in an interview, adding that companies need to react quickly to the current environment. “Do it quick, do whatever needs to be done and maximise the value of the core assets that you have.”

Kenya is among the African nations that tried to respond after the slide in crude prompted companies to start withdrawing drilling rigs.

“The government has to look for ways of bailing them out,” said Hudson Andambi, senior petroleum geologist at Kenya’s Ministry of Energy. “Some have been given extensions just as an incentive to make them stay.”




There are exceptions to the continent’s woes, including the Rovuma basin, where Mozambique last month awarded exploration licences to applicants including Exxon and partner, Rosneft, said Chris Bredenhann, a partner at PwC in Cape Town. The programmes proposed in Rovuma for the next four years may see investment of $700mn, the nation’s exploration regulator said.

That optimism must be balanced against the need for further clarity on how a framework Mozambican law passed last year will be implemented, Bredenhann said. The absence of legislative and regulatory certainty has also halted investment of as much as $5bn by explorers including Shell in South Africa.

With PwC’s 2015 review of Africa’s oil industry showing that many oil explorers assumed prices higher than $80 per barrel when modelling projects, additional risks are weighing on investment.

“Even without the oil price collapse, it was time for the industry and governments to take stock,” Genel’s Hayward said. “I’m afraid the next six to 12 months will be very challenging to many industry participants and survival will become the name of the game.”




The use of competing solar technologies hinges on economics The national - LeAnne Graves

There’s no denying the trend that is solar power. It seems as though it’s everywhere and the UAE wants to lead the way in the region. But the bottom line is, and will always be, money.

Many studies show consumers across the globe saying how they care about the environment. But when it comes to being greener – the price tag is what truly wins support, even with so-called eco-friendly products.

US-based Retailmenot.com conducted a survey that showed three in five people would buy green items only if the costs were the same or less than non-eco-friendly products. It also found that 81 per cent of consumers surveyed thought greener means more expensive.

The same is true for the power sector, with many believing that cleaner, greener models will drive up bills. If electricity from solar costs more to produce than traditional sources such as natural gas, utilities and consumers alike will be less inclined to support clean energy.

So it was significant that when Dubai unveiled the winning bid for the 200-megawatt second phase of the Mohammed bin Rashid Al Maktoum solar photovoltaic (PV) park at the same rates as natural gas, the utility and country showed that solar energy was on a financial par with conventional sources.

The consortium won the contract at 5.84 US cents per kilowatt hour. It was the cheapest rate in the solar industry and has been undercut only recently in the US. So now that the UAE has proven that PV can present a major economical solution to power generation, the country is looking to expand another type of solar technology.

Concentrated solar power (CSP) offers something that PV doesn’t: energy storage. This means that electricity generated can be fed into the grid even when the sun isn’t shining. This is leverage that PV doesn’t have because any electricity generated in a PV system must be immediately put into the grid or else the power is lost. However, this also means that CSP typically runs at twice the price of PV.

Gus Schellekens, a partner at the clean energy division of the consultancy EY, said that even when discussing which technology would be better suited, the question of cost always arises. “Even when I’ve received request for proposals, there’s always a one-line [input] and the consultants will recommend the most cost-effective technology,” he said.

And although Dewa may be studying new CSP techniques, the utility seems to agree that PV currently outranks CSP. Looking back at the solar park that garnered so much attention, it was originally planned to have a mixture of solar applications spanning from PV to CSP.

The tender was open to the best technology, and PV came out of the gates and finished the race first. So much so that Dewa doubled down and made the entire park PV. “That’s a sign of where the smart money is – they see it as economically and technically impactful on their grid,” said Matthew Merfert, a technical director at First Solar.

Mr Schellekens noted that CSP is still in its early days. “Whether it gets support from big investment will depend on the awareness and comfort investors have with the technology,” he said.




The UAE has another problem that drives up costs. CSP technology has many moving parts, unlike its competitor. With that comes the job of cleaning – a task that requires water, which isn’t readily available in desert areas.

The technology also needs direct sunlight to have maximum effect. However, the UAE has not only a significant amount of dust in the air, but also humidity that results in hazy conditions.

On top of this, building a 100-megawatt CSP plant takes about two to three years, as opposed to PV’s build time of less than a year.

Mr Schellekens, a self-proclaimed “big CSP fan”, believes the industry went wrong about seven years ago. “They didn’t do enough to reduce their costs to remain competitive and viable in the competing market,” he said. “It’s a great technology, but the costs remain stubbornly high and in a cost-conscious world you’re not going to win.”

Hadi Tahboub, a vice president of the Middle East Solar Industry Association, described how CSP is finding industrial applications in Oman, where it is used in enhanced oil recovery. “But the UAE isn’t looking into that at this stage and the economics of scale of implementing PV-based projects is going to far outweigh CSP,” he said.

But the question remains: how much are you willing to pay?

“The big break for CSP will come either when governments and utilities realise that they have a need for storage,” said Mr Schellekens. “Or costs come down substantially and it gets to grid parity.”




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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

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New base 733 special 22 november 2015