Elba Island waiver for Shell

Transcription

OFFICIAL SHOW DAILY
LNG 17
Sponsored by
GNL 17
HOUSTON 2013
THURSDAY 18 APRIL 2013
CATAMARAN SWOOP
SBM’s new twin-hull concept
for FLNG expected to cost
close to $2 billion.
Page 4
MOZAMBIQUE ROUND
Country aims to reap benefits
of its natural gas discoveries.
Page 6
WORLD DOMINANCE
Analysts predict industry will
grow more strongly than
currently forecast.
Page 7
ARUN DATE
Pertamina aims for November
2014 to convert north
Sumatra LNG facility into
regasification hub.
Page 8
PASSION FOR OIL AND GAS
Interview with GE chief
executive Jeff Immelt.
Pages 30&31
Get up to speed with the
latest news from the world of
oil and gas. Visit us at Stand
1205 or log on to
www.upstreamonline.com
SHOW DAILY
IN THIS ISSUE
Investing in our future
Conference program and highlights
Theme: Talent development
International Gas Union
Behind the scenes
Welcome reception
Page 13
Page 14
Page 15
Page 16
Page 18
Page 19
Elba Island
waiver
for Shell
SHELL can move ahead
with exports from its
proposed Elba Island
liquefaction project even if
it does not receive
approval from US
regulators to export to
countries that do not
hold free trade
agreements with
the US.
Page 2
2 Show Daily
Global
LNG
demand
GLOBAL liquefied natural gas
demand will reach 400 million
tonnes per annum by 2020 and
500 million tpa by 2025, according to Hans Stinis, Shell’s integrated gas strategy & portfolio
manager.
Population growth, which is
estimated to eclipse 8 billion
by 2030, makes the demand for
the clean-burning fuel almost
inevitable, Stinis told an afternoon audience at LNG 17 in
Houston on Wednesday.
Gas is the “ideal fuel” to satisfy demand, Stinis said. It is
“clean” and “easy to transport”
and will replace coal over the
next 20 years, not only in
Europe but worldwide, he predicted.
However, LNG shipments to
Europe have been on the wane,
displaced by rising coal imports. Stinis wondered whether this was more a result of
cheap coal prices or better LNG
prices elsewhere.
“We may be close to the bottom,” Stinis suggested for European LNG demand. He suspected that an anticipated
overhaul of emissions trading
and the introduction of a CO2
floor price in Europe “are good
signs that we are moving in
the right direction”.
The gas market in China will
probably surpass Europe,
according to Stinis, who predicted that gas demand in
China — mostly for industrial
use — would reach 50 billion
cubic feet per day by 2030.
He also noted that there are
25 LNG importing countries
now, compared to just 11 a decade ago.
Globally, 250 million tpa to
400 million tpa of new LNG
supply projects are on the table, but Stinis suggested some
are highly speculative.
“Credible supply” will be key
to attract more investment in
LNG, Stinis said.
“These are very capitalintensive projects, so you want
to be sure the market is there,”
he said.
North American LNG could
be a material addition to global
supply, he said. But there are
“sufficient challenges left” to
ensure that new plant construction will not be automatic, he added.
Stinis also brushed aside
concerns about LNG oversupply, explaining that “some over
capacity” is only a healthy
buffer.
Woodall in
DENVER-based gas producer
Bill Barrett has named Scot
Woodall its new chief executive and president, solidifying
a position he has held on an interim basis since January.
Woodall, 51, has 28 years’ experience in the oil and gas industry and previously served
as Bill Barrett’s chief operating
officer.
Thursday 18 April 2013
US
Hot debate: an Elba Islnad LNG terminal facility. Inset — Anders Ekvall, Shell’s vice president of LNG Americas
Photo: BLOOMBERG
Shell can move ahead
with Elba Island exports
Exporting from proposed liquefaction project can
take place even without US regulatory approval
NOAH BRENNER
Houston
SHELL can move ahead with
exports from its proposed Elba
Island liquefaction project even if
it does not receive approval from
US regulators to export to countries that do not hold free trade
agreements with the US.
Under US law, liquefied natural
gas exports to countries that have
free trade agreements (FTAs) with
the US are automatically approved,
but gas exports to those countries
that do not have such agreements
have to be shown to be in the best
interests of the public.
The hottest debate in the US
LNG sector has been when the US
Department of Energy might begin to approve export applications
for these countries, and how
much LNG might be allowed to
flow from US shores.
For Shell, this distinction is not
as important as it is for other potential US liquefaction players,
Anders Ekvall, Shell’s vice president of LNG Americas, told
Upstream in an interview.
The Anglo-Dutch supermajor
has a broad enough portfolio of
LNG delivery contracts that it can
replace cargos from international
projects that would normally go to
FTA countries with those from
Elba Island. “Being a large LNG
trader with a multitude of contracts, we can place the volumes
out of Elba to free trade markets
where we can then have LNG that
is going into those markets from
other places now re-directed,” he
said.
“That is an advantage and a
strength that we have, so this will
not stop us from proceeding at
Elba in that sense.”
Shell is teaming with US midstream giant KinderMorgan to
build up to 2.5 million tonnes per
annum of export capacity at Elba
Island, an existing LNG import
and regasification terminal on the
Georgia coast.
The company has already received permission to export up to
4 million tpa to FTA countries, and
has applied to US regulators for
permission to export up to 4 million tpa to non-FTA countries.
So far just one project, Cheniere
Energy’s Sabine Pass terminal,
has received permission to export
to non-FTA countries, and many
in the LNG industry have put
great emphasis on the order of the
queue of non-FTA export applications that are up for consideration.
ExxonMobil refinery blaze leaves 12 injured
New chief
TWELVE workers were injured,
three critically, after a fire
broke out on Wednesday morning at an ExxonMobil refinery
in the east Texas city of Beaumont.
Emergency crews were called
to the ExxonMobil Beaumont
US-based Samson Resources has
named former Rosetta Resources
boss Randy Limbacher as its new
chief executive.
Limbacher had been linked
with Chesapeake Energy as a replacement for former chief executive, Aubrey McClendon.
Refinery around 10.30 after
what appeared to be a flash fire
broke out in a process unit offline for maintenance, , according to the US supermajor and
Beaumont’s fire department.
ExxonMobil personnel were
able to control and extinguish
the fire but local medical crews
treated patients who were
burned extensively and had
various injuries, Beaumont Fire
spokesman Brad Penisson told
Upstream.
Six were transported to local
hospitals for further treatment.
The official LNG 17 show daily is published by Upstream, an NHST Media Group company, Christian Krohgs gate 16, PO Box 1182, Sentrum, N-0107 Oslo and printed by TriStar Web Graphics,
Houston. This edition was printed on 17 April 2013. © All articles appearing in the official LNG 17 show daily are protected by copyright. Any unauthorised reproduction is strictly prohibited.
4 Show Daily
NEW TECHNOLOGY
Innovation: the
new catamaran
FLNG concept
from SBM
Offshore
Photo: SBM
SBM does FLNG double-take
Twin-hull unit now ready to proceed to field specific FEED stage
as floater expert eyes possible delivery in four years
JENNIFER PALLANICH
and ERIK MEANS
Houston
SBM OFFSHORE is ready to move
forward quickly with its eyecatching new concept for developing mid-sized gas fields — a catamaran FLNG unit expected to cost
close to $2 billion.
The new floating liquefied natural gas concept, offering a production capacity of between 1.5 million and 2 million tonnes per
annum, could go from final investment decision to delivery in
as little as three years, according
to Kees Willemse, proposal &
technology development director
for SBM Offshore.
The floater specialist is now
initiating talks with potential clients with a view towards commencing field-specific front-end
engineering and design, which
would likely take about 12 months
prior to a final investment decision.
In theory, the first catamaran
FLNG unit could be in operation
by 2017.
SBM’s new offering, revealed
earlier this year but officially
launched at LNG 17 in Houston,
relies on the company’s tried and
true conversion approach, but
with a twist.
The company discarded its initial idea of converting an LNG
tanker into a mid-scale FLNG solution because it would not have
enough deck space or carrying
capacity.
Connecting two Moss-design
LNG carriers was considered and
developed.
“We think we are opening up a
market with this concept,” Willemse told Upstream.
“They’ve identified as many as
700 gas fields that you cannot exploit with the big floaters.”
Associated gas is another possible market for the concept, he
said.
For the past two years, SBM has
developed the mid-scale FLNG design, and the company has presented the solution to operators
over the last couple of months.
“Early talks have been very encouraging,” he said, noting many
of the operators involved in these
discussions have been looking at
larger designs.
“But even they realize that they
can’t tackle all of their opportunities with those big floaters.”
SBM said it would be willing to
sell or lease the units, which the
company estimates will have capital expenditure of less than $2
billion.
The catamaran-style concept
will require two hulls, and SBM
has identified 107 existing vessels
that could be suitable.
Of those, at least 10 are current-
ly on the market. “We are ready for
five orders from a client before we
run into trouble there,” he said.
SBM has also identified five drydocks in South-East Asia and the
Middle East that are large enough
to carry out the conversion, which
would require mating the two
hulls.
Willemse noted that marine
contractor Allseas carried out a
floating mating operation last December on its giant catamaran
installation vessel Pieter Schelte,
and listed this as a potential
method of joining the two pieces.
SBM estimates using the conversion approach will shave off six
months to a year from delivery
time, and 15% to 20% of the cost of
a newbuild, Willemse said.
The concept involves removing
the front two storage spheres from
each of the two Moss LNG tankers,
leaving six spheres at the rear of
the vessel and leaving the remaining space towards the bow available for placing processing and
liquefaction facilities.
Willemse said this arrangement
is inherently safer than other
FLNG concepts, in which the
processing modules are located
above the storage tanks. In that
layout, a fire “can lead to a major
catastrophe”, he added.
Linde Engineering, which spe-
Concept: SBM Offshore’s Kees Willemse
cialises in building mid-scale LNG
plants, provided the processing
expertise for the design.
SBM’s work to date has been generic. Wind tunnel testing is complete, and wave basin testing is
slated for September at the Marin
test facility in the Netherlands.
“It is proven technology that we
Photo: SBM
are applying in a unique way,” he
said.
SBM is now looking for a customer to work with on a fieldspecific detailed design.
“We’re ready. We’ve got the resources. We’ve got the knowledge.
We’re ready to proceed,” Willemse
said.
Show Daily 5
COMMENT
Crest of a wave:
Woodside and its
boss Peter
Coleman have just
scrapped plans to
develop the
Browse LNG hub
project, but the
company is not
yet ready to
follow the lead of
Shell and more
recently
ExxonMobil in
embracing FLNG
technology
UPSTREAM/
RYTIS DAUKANTAS
Dropping
Browse plan
was brave
decision
I
T IS difficult to pick any
winners in the WoodsideBrowse fiasco in Australia,
but there is one obvious
loser — the indigenous groups in
the remote north-west of the
country.
The indigenous groups from
the area around James Price
Point had negotiated a benefits
package worth more than US$1
billion. This would have been a
steady income stream to help
establish businesses and give a
boost to many communities.
The Greens party and antiproject campaigners have
implied the state government
should fill the gap left by the
project’s cancellation in funding
the indigenous groups.
Other parties apoplectic about
the Browse decision include the
Western Australia Premier, Colin
Barnett, and unions led by the
Australian Workers Union
(AWU).
Barnett pushed hard for James
Price Point because of the
economic benefits that would
flow to the state government and
the area.
The AWU was enraged by the
decision and especially by the
suggestion that the joint venture
will eventually pursue a floating
liquefied natural gas project. The
union called for the retention
leases over the gas fields to be
revoked, but there is no logic in
that.
Even if there were new
owners, there is no guarantee
they would go ahead with a
James Price Point plant.
Other losers include the major
contractors that have been at
Woodside’s beck and call for a
long time.
If there is a winner, it would
be the Browse joint venture
partners which pulled back from
what would have been a very
expensive project with all the
cost uncertainties that
accompany the construction of
onshore LNG facilities in
Australia.
The current LNG construction
boom in Australia is remarkable,
but it has been steamrollered
through by majors determined to
complete their projects despite
the cost.
The decision by the Browse
owners — Woodside, Shell, BP,
Mitsubishi-Mitsui and
PetroChina — was brave and
showed common sense.
Future LNG demand is strong
and buyers will be there when
Browse is revamped and the
project reaches a final
investment decision.
Cameron LNG
Liquefaction Project
under development
Cameron LNG, Sempra LNG’s regasification
terminal and planned liquefaction project
in Hackberry, Louisiana, USA
Sempra LNG is developing a liquefaction project at its Cameron
LNG regasification terminal in Southwest Louisiana. The brownfield
expansion is planned to include three liquefaction trains with a
combined capacity of 13.5 MTPA to export domestically produced
LNG to global markets.
The project is expected to reach FID by year-end 2013 with the
first train planned to commence operations in mid-2017. Trains 2
and 3 are expected to be operational in 2018.
We will be seeking experienced individuals to join our current
management, operations and technical teams for the $7 to
$8 billion expansion of Cameron LNG in the following areas:
Project Management, Engineering, Construction and
Corporate functions at our Houston office
Operations & Maintenance, Plant Engineering and
Construction at the Cameron terminal in Louisiana
If you are interested in learning more about the Cameron
Liquefaction Project and exciting career opportunities that
will be opening later this year and throughout 2014 and 2015,
visit www.CameronLNG.com.
www.LNG.com
6 Show Daily
MOZAMBIQUE
Gearing up for new bid round
Country where the largest natural gas
discoveries in the world this decade have been
made now sets about reaping the benefits
TOM DARIN LISKEY
Houston
MOZAMBIQUE, where the largest
natural gas discoveries in the
world this decade have been
made, will hold a new licensing
round once lawmakers there approve modifications to the African nation’s oil and fiscal framework.
“Once we have the legislation
ready and approved (by lawmakers) we plan to hold a round,” Esperanca Bias, the country’s Mineral Resources Minister, told
Upstream on the sidelines of LNG
17 in Houston on Wednesday.
She did not specify when a
round could take place, but said
the council of ministers must review the changes before they go
before the national assembly for a
vote. That means a new round
could take place later this year..
That means a new round could
take place later this year.
“The current law needs some
clarifications and revisions,” Bias
explained.
Mozambique is trying to maximize the benefit from the massive
offshore natural gas trove that
companies such as Anadarko and
Eni have discovered in the
Rovuma basin.
The former Portuguese colony,
which until the last decade was
mainly an agriculture-based
economy, is now looking at gas to
fuel its $14 billion economy.
“The law will provide greater
stability for the country... and in-
vestors,” she said. Bias said another key element to laying new
economic foundations will be revisions and updates to the fiscal
code that helped lure mineral explorers to Mozambique.
“(The reform) will clarify certain aspects of the law passed in
2007,” she said.
While that fiscal code helped
kick-start offshore exploration in
the Rovuma basin, Mozambique’s
outlook has changed drastically
since the law was passed.
Now Eni and Anadarko want to
use major discoveries such as
Prosperidade-Mamba and the
Golfino and Atum complexes for
feedstock in liquefied natural gas
projects. Anadarko and Eni have
Legislation first: Esperanca Bias, Mozambique’s Minister for Mineral Resources
found more than enough gas to
develop a 10-train liquefaction facility. Bias said she believes that
Mozambique can begin liquefying
and exporting parcels by 2018.
The accumulations will provide
the feedstock for liquefaction
trains in Cabo Delgado province.
A decade ago, Mozambique was
one of the world’s poorest economies.
But the discoveries have gained
the attention of major players
such as Shell. The Anglo-Dutch
supermajor is still trying to get its
foot in the door.
“Shell is interested in participating and being part of Rovuma,”
said Bias.
Anadarko is farming down
Photo: BLOOMBERG
some of its equity in the country’s
offshore and Shell is understood to
be interested in this potential
acquisition.
Drilling off the country’s coast
is expected to continue through
companies such as Statoil of Norway. Meanwhile, Anadarko and
Eni are studying plans to monetise their discoveries.
One option on the table for the
current partners is utilising a
floating LNG plant.
The government is not wholly
sold on the idea, but Bias said the
government recognises it has a
learning curve when it comes to
the FLNG concept.
“We need to look at the advantages and disadvantages,” she
said.
“But we must improve our
knowledge of it first of all. The
thing is, everything has an advantage and disadvantage.”
Still, Bias indicated that as of
now, the state is leaning towards
an onshore facility.
“Our idea is to maximise the
benefit for Mozambique and that
comes from having an LNG site on
shore,” she said. “An onshore site
will stimulate the economy more
than an offshore plant.”
With that goal in mind, the
country is taking other steps to
profit from its oil and gas reserves.
One idea is the creation of the
state-run oil company ENH.
The state-run energy player is a
partner with other foreign companies in the Rovuma basin.
Bias said the idea is that, once
ENH acquires more expertise and
operational knowledge in the upstream sector, it will be able to
step out on its own.
“In the future, ENH will be able
to operate alone,” she said. “But for
now the company is working with
other partners.”
She said another area where
Mozambique can maximise its
natural gas bounty is by using the
fuel to industrialise the still
mainly poor and rural nation.
“We are going to have a mix
when it comes to using natural
gas,” she said.
“Part will be for the domestic
market and part for export. The
gas we use domestically will help
us create energy, methanol and
fertilisers.”
But Bias is careful not to offer
any pie-in-the-sky for the African
nation.
“We don’t have the available gas
yet,” she said. “Once we do, then
we can see.”
Shell in landmark US Supreme Court victory on Nigeria case
THE US Supreme Court ruled
on Wednesday that federal
courts do not have jurisdiction
to hear lawsuits against
foreign corporations accused
of aiding in human rights
abuses abroad, reports said.
In one of its biggest human
rights cases in years, the
justices ruled unanimously
that a federal court in New
York could not hear claims
made by 12 Nigerians who
accused Anglo-Dutch
supermajor Shell of complicity
in a violent crackdown on
protesters in Nigeria from
1992 to 1995, Reuters reported.
The ruling is a major win
for multinational
companies, especially those
involved in extractive
industries, that do business
in the developing world and
become embroiled in local
political controversies.
The ruling is likely to affect
other cases, including those
involving similar claims
against Anglo-Australian
mining giant Rio Tinto over
its conduct in Papua New
Guinea, and against
ExxonMobil over its activity
in Indonesia.
Show Daily 7
ENERGY FUTURE
Game changer: Daniel
Yergin speaks at the
Global Outlook for LNG
session at LNG 17
Photo: DAVE ROSSMAN
Gas heads for world dominance
Analyst predicts industry will grow more strongly than is currently
predicted — and that demand, not supply, is the constraint
JENNIFER PALLANICH
Houston
THE gas industry will grow more
strongly than conventional wisdom recognises, leading analyst
Daniel Yergin told LNG 17 attendees
on Wednesday.
Yergin, the vice chairman of IHS
and founder of IHS Cambridge Energy Research Associates, said
demand is now the constraint in
the industry, rather than supply.
“The US was destined to be an
importer but things have really
turned around,” and the US will
play a role as a natural gas exporter, he said.
“The debate is how big of a role,
and how soon, and how much.”
Yergin believes the US will set a
new competitive price benchmark
around the world.
“The nub of the (Henry) Hub
question can be summarised this
way — it will establish a price
benchmark with which other will
have to compete,” Yergin said.
He believes it will be possible to
deliver gas from the US to any
coastal port in the world for $12 per
million British thermal units.
“The US is not going to be the
cheap source of (liquefied natural
gas). The new projects will be in
the mid-range.
“A lot goes back to co-ordination.
Everybody tries to do it at the same
time, and things are going to be
more expensive, as Australia experienced.”
The US shale plays transformed
a region once viewed as a huge
growth opportunity into competition for exporter countries.
“It’s remarkable how, in a few
short years, this has changed markets and assumptions,” he said.
The unexpected has often trans-
formed the LNG industry, he added.
He cited Thatcher’s Law —
named after former UK Prime Minister Margaret Thatcher, whose
funeral took place in the UK on
Wednesday — that the unexpected
happens and one needs to prepare.
One potential development in
the years ahead could be if the US
begins exporting more than projected.
That, he said, could “create challenges and question marks” for
other projects under consideration
around the world.
Another is if shale gas is not just
a US phenomenon, which could
lead to supplies flooding the market and creating a commodity
business.
“One big wild card is China. We
think, as others do, that China has
larger recoverable resources than
even the US,” Yergin said.
“India does not have anywhere
near the same potential. We see a
lot of potential in Europe, but we
also see more restrictive permitting,” he added.
During a subsequent press conference, Yergin noted Mexico has
“substantial” potential for shale gas,
given its proximity to the Eagle
Ford play in neighbour Texas.
“The development of that is not
going to be a result of geology, but
the way Mexico decides to organise
its industry.”
A third factor is demand. Natural
gas is increasingly giving the
world an “electrified future”.
Different regions are embracing
different types of energy sources.
The US, he noted, is increasing its
use of natural gas in its low-cost
energy strategy. “Five years ago,
natural gas was about 20%, 21% of
electric generation. Today it’s over
30%. That shows you how fast it
changes,” he said.
Europe, with its depressed economy and “dangerous level of unemployment” is “pursuing a high-cost
energy strategy.”
Yergin predicts China will substantially change its use of natural
gas, which currently makes up 4%
of the country’s energy mix.
In the short term, he said, the
global energy mix will likely be a
mulit-horse race of natural gas,
coal and oil “all pretty much neck
and neck, nose to nose”.
“But we expect natural gas will
become the world’s dominant fuel.
What a change for what used to be
cursed when it was discovered,”
Yergin said.
Projects must overcome big three — price, permitting and people
COMPANIES looking to deliver an
liquefied natural gas project must
overcome three main challenges
— price, permitting, and people.
“The constraint is no longer the
supply as it was for many years —
it is demand. The question is can
the supply chain deliver?” Daniel
Yergin asked an audience on
Wednesday at LNG 17.
Politics above ground, including the license to operate, will be
important, said Yergin, the vice
chairman of IHS and founder of
IHS Cambridge Energy Research
Associates. “The Achilles heel of
LNG development is cost,” he said.
“Since 2005, to develop a greenfield facility, the costs have doubled or, in many cases, quadrupled.”
There are at least 30 applications for LNG facilities for North
America. “A fraction will get
built,” he said. The US permitting
process itself is lengthy and costly, requiring reviews by the
Department of Energy and Federal
Energy Regulatory Commission
(Ferc).
The natural gas processing
facilities will also draw on the
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same kind of engineering and
labour skills as the oil & gas industry, he said during a press conference.
Despite those challenges,
Yergin called the LNG industry
one of growth and enormous
opportunity.
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8 Show Daily
INDONESIA
Ambitious plan: Pertamina
president and chief executive
Karen Agustiawan
Photo: REUTERS/SCANPIX
Target date for Arun conversion
Pertamina aims for November 2014 to convert
north Sumatra LNG facility into regasification hub
AMANDA BATTERSBY
Houston
PERTAMINA’S ambitious plan to
convert the Arun liquefied natural
gas project in northern Sumatra,
Indonesia into an LNG regasification project is now targeting to
come into operation in November
2014.
Local contractor Rekayasa
Industri won the engineering,
procurement and construction
contract for the conversion job,
said by Pertamina official Daniel
Purba to be the world’s first.
The final investment decision
on Arun’s conversion was made in
February.
Another key part of the LNG regasification hub project is a
340-kilometre gas pipeline that
will run from Arun to Belawan.
There is already some existing
gas pipeline infrastructure along
part of the route, and some areas
already have right of way, but the
exact routing of the new pipeline
sections has yet to be determined.
One source put Pertamina’s investment on this new pipeline in
the region of $400 million. Per-
tamina aims this month to award
the pipeline EPC contract, and the
work itself will be carried out between May 2013 and October next
year.
Operational start-up of the pipeline is being scheduled for the
month before the regasification
facilities, although both should be
up and running by the end of 2014,
Purba told delegates at LNG 17 in
Houston.
Arun regasification will initially receive 1 million tonnes per annum of LNG from BP’s Tangguh
project, which is located in the
remote east of the archipelago.
Purba admitted that an initial
challenge had been getting the
Indonesian government onside for
the revolutionary project, while
the second challenge was, and
still is, getting support from the
local authorities in Aceh — a historically restive province.
“The second challenge is how do
we deal with the local government? As a business entity, Pertamina was really concerned
about this,” he said, adding that
the security situation is much improved today.
Separatist factions such as the
Free Aceh Movement, known by
the local acronym GAM, still have
a strong following in the province, and security problems
resulted in the Arun LNG plant being shut-in for several months in
2000.
Pertamina considered many
options for Arun’s LNG facilities
after determining about 10 years
ago that the project’s liquefaction
days would be numbered unless
significant new feedstock gas
could be discovered.
The many possibilities the national company considered for
Arun included reusing the liquefaction trains — talks were held
with one potential customer in
the US — and it also studied reutilising the trains at another Indonesian LNG project, although
agreement could not be reached
on this, said Purba.
The existing facilities — which
are said to be worth $600 million
to $700 million — include six liquefaction trains with a total output of 12.5 million tonnes per annum, a 1.4 million tpa liquid
petroleum gas extraction facility,
five LNG tanks with combined capacity of 636,000 cubic metres and
two LNG jetties than can handle
tankers of around 80,000 deadweight tonnes, he said.
Arun is also being touted as a
potential future LNG trading hub,
while there are already plans for
an LPG transhipment facility at
Arun.
The current schedule envisages
final investment decision on the
LPG transhipment project being
taken next February.
The EPC work would start in the
same month and continue until
July 2015.
Commissioning work would be
performed in July and August
2015, and the LPG transhipment
facility would also be on stream
that August.
There are around 500 hectares
of free land at the Arun location,
which could possibly see construction of a new oil refinery although the final investment decision has not yet been taken for
this.
Other possible contenders include a school, hospital and even
a golf course, said the Pertamina
official.
Between 1977 and the end of
2012, Arun shipped 4251 standard
LNG cargoes (125,000 cubic metres) and 1880 cargoes of condensate. The project also exports LPG
as propane and butane as well as
sulphur.
The project earlier produced
from all six trains, with peak expanded capacity of 12.5 million
tpa.
However, all but one of these
units has now been mothballed
because of the decline in feedstock
gas from ExxonMobil’s nearby
fields.
The last of Arun’s existing term
LNG contracts is due to expire
next year.
Rosneft and Marubeni sign up for Russian LNG project
RUSSIAN oil giant Rosneft and
Japanese trading firm
Marubeni Corporation have
signed a memorandum of
co-operation on a liquefied
natural gas project in Russia’s
Far East and on exploration and
development of Rosneft
licenses. Rosneft President Igor
Sechin said the addition of a
leading Japanese company to
the explorer’s activities was
aimed “among other things, at
ensuring a sales market in
Japan, which will strengthen
Rosneft positions in the
promising Asia-Pacific market”.
Under the alliance, the two
companies will consider areas
of co-operation on the LNG
project, which involves building
and financing an LNG plant,
LNG tankers and related
equipment, as well as
marketing to Japanese utilities.
The two companies will also
study potential co-operation in
exploration and development of
oil and gas fields in Rosneft
licence areas. Rosneft and
Marubeni are existing partners
with ExxonMobil in the huge
Sakhalin 1 project off Russia’s
Pacific coast.
Marubeni had previously
been rumoured to be in talks
over joining Rosneft’s
exploration of the Sea of
Okhotsk in the western Pacific,
north west of Japan.
10 Show Daily
Qatar will
use own
gas index
JAPAN
WHILE indexing prices to
Henry Hub seems attractive,
Qatar Gas will continue to use
its own index, Alaa Abujbara,
chief operation officer commercial and shipping at Qatar
Gas, told LNG 17 attendees on
Wednesday.
“With shale gas emerging,
people are looking at the Henry
Hub index to be introduced
everywhere, especially in
Asia,” Abujbara said.
He sees limits in tariffs,
transportation, and the costs of
liquefaction with tying to the
Hub index.
“But if that’s what it takes for
the market to use more gas, then
I am all for it, but we will continue to have our own index.”
Qatar Gas is now producing
42 million tonnes per annum of
LNG. Qatar Gas ships 15% of its
annual volume to Europe and
5% goes to America.
“The vast majority, around
80%, of our LNG has been tied
up by Asian buyers,” he said.
Japan’s demand jumped by 8
Mtpa following the Fukushima
disaster in 2011.
Qatar Gas estimates 39 mtpa
will have to come from as-yet
unsanctioned projects to meet
Asian demand. “The gap remains significant at 39 million
tonnes in 2016,” he said.
Cove Point
deal for GE
INDUSTRIAL giant GE has won
a contract to supply gas compression trains for Dominion’s
Cove Point liquefaction project
in the US state of Maryland.
GE’s oil and gas unit will supply its MS7001 EA industrial
gas turbines, which feature
DLN technology and provide
86-megawatt ISO shaft power,
GE said.
No financial details were
provided on the contract,
which also includes two Frame
7EA DLN1 gas turbine packages
that will power the refrigeration compressors.
Cove Point, located in the
town of Lusby, Maryland, will
have the capacity to produce
about 5.25 million tonnes per
annum of LNG, GE said.
Boxing LNG
GE OIL & Gas plans to install
five of its proprietary LNG In a
Box units in Europe, in a move
that could speed up the use of
the liquefied fuel for transportation.
GE’s energy unit signed a
memorandum of understanding with Luxembourg-based
LNG player Gasfin to install the
units to serve long-haul truckers and small remote energy
centres.
It will mark the first commercial application of GE’s LNG
In a Box technology.
The “plug and play” units
would serve “clusters” of LNG
fuelling stations across the
continent, GE said.
Unsustainable: the high LNG import bill post-Fukushima helped push Japan into a trade deficit in 2011 and 2012
Photo: AP/SCANPIX
High cost of LNG imports
‘cannot be sustained’
World’s number one LNG importer
needs to pay less, warns economist
AMANDA BATTERSBY
Houston
JAPAN, the world’s number one
liquefied natural gas importer,
needs to pay less for its liquefied
natural gas, according to Hiroshi
Hashimoto of Japan’s Institute of
Energy Economics.
“Japan must reduce its LNG
costs,” he told the LNG 17 conference in Houston.
The Japanese public seems to
believe that the utilities do not
strive hard enough to source reasonably priced volumes, said
Hashimoto, adding that it has often been said, even by “energy
experts” that Japanese utilities
will pay any price for LNG, no
matter how high, to ensure security of supply.
He sought to dispel that industry myth, telling delegates that
Japan’s LNG customers are today
suffering.
The combination of high LNG
prices and increased imports following the March 2011 Fukushima
disaster means Japan is paying
around $40 billion annually for
LNG — an amount that the nation
cannot afford.
The recent move by Bank of Japan (BOJ) to effectively print more
money caused the yen to slide,
putting even more pressure on
Japanese importers, that pay for
their LNG cargoes in US dollars.
“I think, depending on the
magnitude of the liquidation of
the currency, the impact will be
huge on LNG importers’ pockets”,
said Hashimoto of the BOJ’s recent move that caused the yen to
weaken towards 100 to the US
dollar.
Japanese customers already pay
around three times as much for
their electricity as in neighbouring China, even though Japan’s
utilities are not able to pass on all
of the increased costs to endusers.
The very high cost of importing LNG means that job losses are
being considered at some utilities, and some are also faced with
having to divest assets, the Institute’s Nobuo Tanaka told Upstream.
The high LNG import bill postFukushima helped push Japan
into a trade deficit in 2011 and
2012, and could erode the nation’s
current account surplus, said
Tanaka.
Show Daily 11
GAS DEMAND
New markets on the horizon
Suppliers should
be looking at new
sources of
demand with
transport being
the new frontier
LUKE JOHNSON
Houston
GAS suppliers must look at new
sources of demand such as transportation amid growing production in the coming decades, Shell’s
executive vice president of integrated gas said on Wednesday.
“We are very much in the middle of a supply revolution of gas as
well as a demand revolution, and
both revolutions together are
driving up the market share of gas
in the energy mix and the market
share of energy in the gas mix,”
Maarten Wetselaar told delegates
at the LNG 17 conference in Houston.
Demand for gas is underpinned
by what Wetselaar referred to as
“the triple-A advantage” — availability due to supply increases,
acceptability because it burns
cleaner and emits less, and affordability, driven largely by increased
supplies.
Global gas supplies are ballooning — advances in unconventional extraction have sparked a
production boom in North America, while explorers have found
massive conventional deposits in
places like East Africa and the
Mediterranean Sea.
As suppliers turn to liquefied
natural gas to get gas to markets,
the fuel is likely to take on an increasing market share.
Global LNG demand has already
doubled to about 200 million
tonnes per annum in the decade
since 2000. Shell expects demand
to at least double again between
now and 2025, and to potentially
grow to as much as 500 million tpa.
All of that projected demand is
based on historical applications of
LNG such as power and heating.
These will continue to be important drivers for LNG demand, Wet-
Supply and demand: Shell’s executive vice president of integrated gas Maarten Wetselaar
selaar said, but it will be crucial to
develop other markets as supplies
continue to grow.
“A new application has
emerged,” he said of the transportation sector.
While transportation is the
“most obvious” next step for gas,
it is not entirely new. Ocean-going
vessels have used LNG for years
and fleet trucks are increasingly
moving towards compressed natural gas for fuel.
Heavy road transport, coastal
marine transport and river inland
marine transport are the next
frontiers for LNG and could together account for nearly triple
the projected market by 2025,
Wetselaar said.
“If you add these markets to-
Chart talks up small scale
liquefaction plant concept
LIQUIFIED natural gas equipment
supplier Chart Industries is testing the waters for a new smallscale liquefaction plant concept it
believes can benefit both transportation markets and locales without
access to natural gas pipeline infrastructure, writes Blake Wright.
Sam Thomas, chairman, chief
executive and president of Chart,
told reporters at the LNG 17 conference in Houston this week that
these standardised, off-the-shelfstyle plants would offer significant cost savings and cycle time
reduction due to a great measure
of pre-assembly and their replicable potential with multiple trains
possible.
Thomas said Chart had identified a trio of ‘sweet spots’ along
the capacity scale - 100,000 gallons per day, 250,000 gpd and
450,000 gpd. The company will
also offer modular ‘bolt-on’ components that can match incoming
gas specifications.
Chart envisages these plants as
having power generation and
transportation potential in inland
China, where Chart has done business for years and the pipeline
infrastructure is still in its infancy, and island nations such as Indonesia, Malaysia and the Philippines.
The company also is targeting
LNG as a cleaner-burning replacement for diesel in markets like
transportation, hydraulic fracturing, mining vehicles and marine
vessels.
gether and you consider the speed
at which they’re growing, then
these markets — expressed in
LNG equivalent terms — would be
about 1300 mtpa by 2025, almost
three times the size of the pro-
jected LNG market,” he said.
While much of the transportation
demand will be met by other technologies like hydrogen electrification and biofuels, even just 10% of
the transport market would add
Photo: LUKE JOHNSON
more than 100 mtpa of demand to
Shell’s base case.
“That is a very nice substantial
increase in the potential application of LNG that we believe is on
the way,” Wetselaar said.
be•yond
1. Outside the limits or scope of
2. Superior to; surpassing; above
3. In addition; more
4. To a degree or amount greater than
CCC is taking the turbomachinery industry beyond.
What does beyond
cccglobal.com/beyond
EXPERTISE BEYOND CONTROLS
12 Show Daily
MEXICO
Shell sticks to LNG agreement
Anglo-Dutch supermajor says it will abide by terms of
original supply deal linked to purchase of Repsol’s assets
TOM DARIN LISKEY
Houston
SHELL is to abide by the terms of
an original liquefied natural gas
supply agreement linked to its
purchase of Repsol’s LNG assets in
South America and the Caribbean.
While Mexico and Peru must
still negotiate the terms of a new
LNG contract, the Anglo-Dutch
supermajor said it will stick to the
agreed terms until told otherwise.
“The best case is that the contract (remains) as it stands and is
respected,” Maarten Wetselaar,
Shell’s executive vice president of
integrated gas, told Upstream on
the sidelines of the LNG 17 conference in Houston.
Shell has said it is not privy to
any bilateral talks, as the deal to
buy the Repsol assets is not fully
completed.
Even so, the news will help
ease some concerns in Mexico on
the fate of the contract after Repsol said it is selling its liquefied
natural gas business in Peru and
Trinidad & Tobago to Shell.
Mexico is relying on LNG
imports to cover shortfalls in
demand until it can build new
pipelines from the US. “Peru and
Trinidad were the only two places in the LNG world where we
didn’t have supply,” said the Shell
executive.
“The hole is neatly plugged
with the Repsol acquisition.”
Neither Mexico nor Peru has
said when they will sit down at
the negotiating table amid the
volatile pricing landscape for
LNG.
In 2007 Repsol signed a 15-year
agreement with the Federal
Electricity Commission (CFE) to
supply the 3.8 million tonne per
annum regasification terminal in
Manzanillo. But the contract,
based on a discount to benchmark
Henry Hub prices, is substantially
lower than global spot prices.
LNG is playing an increasingly
important role in Mexico’s shortto-medium term supply scenario.
Peru’s 4.4 million tpa Peru LNG
project started production in
2010, while the CFE facility at
Manzanillo only got a commis-
sioning cargo of LNG last year.
Meanwhile, Shell has major interest in the Altamira facility in
Mexico, and once the Repsol deal
goes through, Shell will become
an even more critical supplier to
the country’s energy needs.
“Mexico will need a lot more
gas going forward as the economy
LNG 18 set for Down Under
AGAINST the backdrop of a
successful LNG 17, with a
record-breaking exhibition,
LNG 18 is already shaping up
to be a worthy successor at a
time when the global
liquefied natural gas
industry is at its most
exciting.
LNG 18 will be held in
Perth, Australia from 12 to
15 April 2016.
Perth, the state capital of
Western Australia, hosted
LNG 12 in 1998.
“I think we’ve seen a
tenfold, or 1000% increase,
in the size of the exhibition
since that time,” said
Rodney Cox, exhibition
director of Exhibition and
Trade Fairs Pty Ltd.
“Perth is a very exciting
place... it’s got brand new
infrastructure facilities and
a convention centre. It’s
very well integrated
between the exhibition and
conference. It’s the up-andcoming energy city,” he
added. “We look forward to
seeing you in Perth.”
“When we can build on a
fabulous success, it makes
the path a lot easier,” said
Roslyn McLeod, director of
LNG 18 conference organiser,
Arinex pty limited, praising
the American Gas
Association on its hosting of
LNG 17.
The event in Perth is
hoping to attract 2500-plus
delegates, while exhibitors,
trade visitors and media
could boost attendance
numbers to about 5000,
according to McLeod.
Western Australia State
Minister of Mines &
Petroleum, Bill Marmion, is
to address the LNG 17
attendees at Friday’s closing
ceremony, when Houston
officially hands over the
baton to Perth. Marmion
said LNG 18 offers an
unparalleled opportunity to
promote the state’s
petroleum industry and its
role as a global energy
supplier.
“Western Australia is
becoming a world leader in
LNG,” he said.
“By 2016, WA is expected
to have an annual LNG
production capacity of more
than 50 million tonnes - up
from the current level of 20
million tonnes,” Marmion
told local media.
LNG 18 will be hosted by
the Australian Gas Industry
Trust, which is the national
charter member of the
International Gas Union.
Bound for Australia: LNG
18 will be held in Perth,
Western Australia
Photo: AMANDA BATTERSBY
takes off and grows,” said Wetselaar.
Gas demand has been growing
faster than production in Mexico,
prompting the administration of
President Enrique Pena Nieto to
look abroad — both overseas and
onshore — to help fill the Mexican
energy shortfall.
Looking abroad to fill energy
shortfall: Mexican President
Enrique Pena Nieto
Photo: AFP/SCANPIX
LNG 17
GNL 17
HOUSTON 2013
LNG-17.ORG
SHOW SECTION
Sponsored by
THURSDAY 18 APRIL 2013
Investing in our future
During LNG 17, the American Gas Association (AGA)
announced a substantial commitment to developing the
natural gas workforce. These investments, along with those
made in our natural gas infrastructure every day, will help
ensure the legacy of American energy.
The largest global gas event of the year will leave a
legacy for generations.
The American Gas Association (AGA) announced
that a portion of the proceeds from the 17th
International Conference and Exhibition on
Liquefied Natural Gas (LNG 17), taking place this
week, will be directed towards scholarships for
students interested in pursuing a career in the
natural gas industry.
“Natural gas is the foundation fuel for a clean and
secure energy future and an economic revitalization
for our country. We are making an investment in
helping to develop a skilled workforce capable of
maintaining the 21st century technology that
transports and utilizes this clean energy source
serving the needs of more than 177 million
Americans,” said Dave McCurdy, President and CEO
of the American Gas Association.
“Our commitment will help ensure the continued
vitality of the American workforce and solidify the
legacy of this transformation in American energy.”
The AGA Scholarship program, which will provide
$1 million in funding for students focused on fields
related to energy, was unveiled at a press
conference at LNG 17 in Houston, TX where
strategic and commercial leaders and technical
experts are participating in four days of sessions,
workshops and tours of world-leading LNG facilities.
McCurdy was joined by David Carroll, President of
the Gas Technology Institute and David
McClanahan, President and CEO of CenterPoint
Energy.
Students seeking a career in trade jobs that are
in high demand in the natural gas industry such as
HVAC, Welding, Pipefitters, Mechanical/Petroleum/
Chemical Engineering, Engineering Technologies/
Technicians, and specific natural gas programs
such as Gas Utility Construction and Service will be
eligible. It is anticipated that over 200 students
will receive scholarships over the next five years.
The following schools have been selected to
participate:
• Baton Rouge Community College; Baton Rouge,
LA
• Bishop State Community College; Mobile, AL
• Bismarck State College; Bismarck ND
• California State Polytechnic University, Pomona;
Pomona, CA
• Central Piedmont Community College; Charlotte,
NC
• City Colleges of Chicago; Chicago, IL
• Clackamas Community College; Oregon City, OR
• Colorado School of Mines; Golden, CO
• Erie Community College; Buffalo, NY
• Gwinnett Technical College; Lawrenceville, GA
• International School of Hydrocarbon
Measurement; Norman, OK
• Ivy Tech Community College; Terre Haute, IN
• Kilgore College; Kilgore, TX
• Lamar Institute of Technology (LIT); Beaumont, TX
• Los Angeles Trade–Technical College; Los Angeles,
CA
• Marshalltown Community College; Marshalltown,
IA
• Monroe Community College; Rochester, NY
• Northeast Iowa Community College; Calmar, IA
• Northeast Wisconsin Technical College; Green
Bay, WI
• Northern Virginia Community College; Annandale,
VA
• Pennsylvania College of Technology; Williamsport,
PA
• Salt Lake Community College; Salt Lake City, UT
• Stevens Institute of Technology; Hoboken, NJ
• University of Houston, Houston; TX
• West Virginia University; Morgantown, WV
• Westmoreland County Community College;
Youngwood, PA.
AGA will hold the Presidency of the International Gas Union
from 2015 through 2018, and in that role will help to
facilitate an ongoing and global conversation about how we
power our planet, and host the 27th World Gas Conference
(WGC2018) in Washington, DC in June 2018.
Dave McCurdy
14 Show Daily
At the conference
PROGRAM Thursday 18 April 2013 (including latest changes)
TIME
SESSION
08:00 – 08:45
Spotlight Session: The Role of Russia in the Global LNG Industry
Moderator: Jerome Ferrier, IGU
Elena Burmistrova, Deputy Director General for Oil and Gas Products, LNG and New
Markets at Gazprom Export LLC
09:00 – 12:00
Terminals, Tanks and Tankers
LOCATION
General Assembly
Theater, level 3
Ballroom A, level 3
Chair: Jean-Pascal Biaggi, Project Director, Technip
Vice-Chair: Hidefumi Omori, Chief Engineer – Gas Process Engineering Division,
JCG Corporation
Vice-Chair: Hiroshi Hiraga, Manager – LNG Engineering Department, Tokyo Gas Co., Ltd
Integration of Major Liquefaction Units within Existing Import Terminals
Mona Setoodeh, CH-IV International
Next Generation of LNG Regasification Terminal Through TG’s Profound Knowledge
Tsutomu Endo, Tokyo Gas Co.
Dismantling of Aboveground LNG Storage Tanks and their Aging Research
Hiroshi Nishigami, Osaka Gas Co.
The Adriatic LNG Terminal: Industrial Firsts into a Fully Operational Reality
Carlo Mangia, Adriatic LNG
Technical Challenges Associated with Arctic LNG Developments. A Class Society
Approach
Philippe Cambos, Bureau Veritas
Composite Concrete Cryogenic Tank (C3T): A Precast Concrete Alternative for LNG
Storage
Kimberly Hoyle, Chevron Energy Technology Co.
An Innovative Solution for Fixed Offshore LNG Regasification Terminals
Augusto Bulte, Foster Wheeler
09:00 – 12:00
The Globalization of LNG and the Emerging Markets: Drivers and Obstacles
Ballroom B, level 3
Co-Chairs: Enrique Dameno, LNG Supply & Sales Director, Repsol
Ieda Gomes, Director, Energix Strategy Ltd
Keynote Presentations:
India a fast growing LNG market: Outlook for 2015
B. C. Tripathi, GAIL
Key Challenges for the Development of LNG in Emerging Markets: Medium and Long
Term Outlook
Fereidun Fesharaki, FGE
Pre-Panel Presentation:
The Outlook for Importation of LNG in Japan Near/Medium and Impact on Global LNG
Demand
Yuji Kakimi, Chubu Electric
Workshop Panel:
How LNG Suppliers are Managing their Portfolio to Meet Emerging Markets
Requirements
Victor Tuñon Valladares, Gas Natural Fenosa
Conference
highlights
Spotlight session: The role
of Russia in the global
LNG industry
Thursday, 8:00 – 8:45.
General Assembly Theatre,
Level 3
Elena Burmistrova, Deputy
Director General for Oil and
Gas Products, LNG and
New Markets at Gazprom
Export LLC
Russia is the world’s largest
producer of natural gas, with
plans to increase their LNG
production six-fold by 2020
to 60 million tonnes. Rapid
expansion is required on the
country’s only LNG plant,
currently Gazprom-led, and
new projects are also
planned. How will it
Elena Burmistova
internationalize and expand
its capabilities across the
gas value chain? How will
smaller players entering this
market change the dynamics
of future business? Be sure
to get the details at this
session!
Long-Term LNG Supplies, Prices and Competitiveness
Jonathan Shepard , BP
Chile: A Successful Niche Market for LNG
Antonio Bacigalupo, Quintero LNG
Decoupling from Oil Price: Introduction Gas-to-Gas Competition to LNG Pricing in China
Chen Bo, UNIPEC/Sinopec
09:00 – 12:00
Peak-Shaving, Satellite Operations and Small-Scale LNG
Ballroom C, level 3
Chair: John Heer, Director – Gas Control / Peak Shaving, CenterPoint Energy
Vice-Chair: Bill Haukoos, Vice President – Global LNG Products, Chart, Inc.
Vice-Chair: Ted Williams, Director – Codes & Standards, American Gas Association
How to Develop an Economical Small Capacity Floating LNG
Eric Jeanneau, Total Exploration & Production
Small Scale LNG, The Best Suited for Indonesian’s Archipelagos
Taufik Afianto, PT Pertamina (Persero)
Opportunities and Challenges of Using LNG as Fuel in Small to Medium Sized Power
Generation
Gauthier van Marcke, Galway Group LP
Critical Success Factors for Electricity Generation Projects Based on LNG
Pablo Quiroga Lopez, Repsol
Philip Oliver
Design-Build Challenges of the Mt Hayes LNG Peak-Shaving Facility
Matthew Stobart, Chicago Bridge and Iron Company
Not Your Father’s LNG Production Facility
Jeffrey Beale, CH-IV International
Pre-Treatment System Modifications at 3 Utility Peak-Shaving Plants Improving CO2
Removal in the Feed Gas
James Goodchild, Xcel Energy
12:00 – 13:45
Delegate Luncheon
13:45 – 15:00
Spotlight Session: Spotlight on Economic Development and Energy Security – A
Ministerial Panel
Hall A, level 1
General Assembly
Theater, level 3
Robert Lesnick, Oil & Gas Program Manager, The World Bank
Kandeh K. Yumkella, Director-General, UNIDO
Her Excellency Esperança Laurinda Bias, Minister of Mineral Resources, The Republic of
Mozambique
Ambassador Carlos Pascual, Special Envoy and Coordinator for International Energy
Affairs, U.S. Department of State
15:00 – 18:00
Poster Session
Level 3
Rob Byrngelson
Technological innovation and infrastructure in the LNG
industry
Friday, 14:00 – 14:45. General Assembly Theatre, Level 3
Philip Oliver, President GDF SUEZ LNG and Rob
Byrngelson President and CEO, Excelerate Energy take us
into a new frontier with some of the world’s breakthrough
infrastructure projects. From ‘ice class’ vessels that sailed
from Norway to Japan to twin berthing Floating LNG
structures and the mammoth Floating LNG development
work in Australia, the huge emphasis on innovation across
the LNG industry is said to be a game changer. Find out what
more’s in store at this session!
Show Daily 15
Theme: Talent development
As one of the fastest growing gas segments, the
LNG industry can create more job opportunities
where many other industries are shrinking their
workforce. Doing responsible business means
caring for the environment — and ensuring
sustainable economic development across the
ecosystem.
LNG 17 features a host of exhibition,
conference and training sessions that
contribute to workforce development.
ConocoPhillips’ Live LNG Demo session
Robert Lesnik
Spotlight Session: Spotlight on Economic
Development and Energy Security — A Ministerial
Panel
Thursday, 13:45 — 14:45. General Assembly Theatre,
Level 3
Find out more about the role of government policy and
how that affects security of supply, natural gas based
industrial development and how the LNG industry can
stimulate economic growth in developing countries and
other exciting issues in this special ministerial panel.
• Robert Lesnick, Oil & Gas Program Manager, The World
Bank
• Kandeh K. Yumkella, Director-General, UNIDO
• Her Excellency Esperança Laurinda Bias, Minister of
Mineral Resources, The Republic of Mozambique
• Ambassador Carlos Pascual, Special Envoy and
Coordinator for International Energy Affairs, U.S.
Department of State
Great Pavilion: Gas Recruitment, Education &
Training Pavilion and Seminar
Students, technical training providers and researchers
must check this area out. With over 19 targeted
presentations to help you chart your career and sharpen
your industry skills, the exhibitors at the GREAT Pavilion
will feature speakers from the academia, industry and
business will share their thoughts on industry
ConocoPhillips, University of Houston Law Centre, and
the Gas Technology Institute are some of the
organisations that will deliver their presentations on
securing expertise for the industry and what it will take to
get there.
In-depth analysis and new strategies to tackle the
talent crunch will also be shared as the International Gas
Union presents findings from their three-year exercise on
“Nurturing Future Generations”.
Two times on two days
Mark your diary for 10am and 3pm on 17 and 18 April if
you’re up for some whacky science as ConocoPhillips
does a Live LNG Demo session that explain the
properties of LNG using a rose, balloon, beachball and
goldfish.
LNG Basics Training Course
A half-day introduction to LNG course was held on
Monday, 15 April which tackled fundamentals of the LNG
industry — the value chain, technology applications,
shipping, regasification facilities and LNG’s role in world
energy supplies, with an outlook for the future.
The course was run by lead representatives of the LNG
17 Program Committee and industry leaders including
Nirmal Chatterjee, Vice President (retired) of Air Products
and Chemicals; Alain Goy, Head of Technical Department
of Elengy (GDF Suez Group), and Rod Rinhom, Executive
Director, Business Development and Education of the
Gas Technology Institute.
LNG Basics
Moderator: Rod Rinholm, GTI
10:00
ConocoPhillips: The LNG Story
Peter Micciche, Superintendent, Kenai LNG Facility,
ConocoPhillips Alaska
10:30
Energy for the 21st Century: Opportunities and Challenges
for LNG
Susan Sakmar, Visiting Assistant Professor, Andrews Kurth
Energy Law Scholar, University of Houston Law Center
11:00
IGU Presentation from Task Force 1 on Human Resources
11:20
The Changing World of Natural Gas – A New Vision for North
America
Gordon Pickering, Director, Navigant Consulting
11:40
Sharing the Energy of Knowledge
Steven von Eije, Energy Analyst, Energy Delta Institute
Moderator: Rod Rinholm, GTI
15:00
ConocoPhillips: The LNG Story
Peter Micciche, Superintendent, Kenai LNG Facility,
ConocoPhillips Alaska
15:30
Energy for the 21st Century: Opportunities and Challenges
for LNG
Susan Sakmar, Visiting Assistant Professor, Andrews Kurth
Energy Law Scholar, University of Houston Law Center
16:00
Advancing Your Career through training in Business Analytics
Dr Simon Sheather, Department Head and Professor, Texas A&M
University, Dept. of Statistics
16:20
The IIR’s global network of universities and companies and
its tools for researchers and students in all refrigeration and
cryogenics fields
Didier Coulomb, Director, International Institute of
Refrigeration (IIR)
16:40
LNG supply chain and measurement
Tom Quine, President, Northstar Industries, LLC
LNG in figures
16 Show Daily
International Gas Union
In its Strategic Statement 2013 published during the LNG 17 conference in
Houston, USA, the International Gas Union (IGU) addresses the energy community
on the crucial role gas is destined to play in meeting the objectives of a
sustainable energy future and mitigation of climate change.
The Statement emphasizes the main qualities and advantages of gas, making it
a foundation fuel in the future energy mix.
Strategic Statement 2013:
Gas delivers sustainable economic development.
As the voice of the gas industry worldwide, IGU will :
• advocate for the use of gas as an essential part of a sustainable energy future;
and
• promote further gas industry development by wider application of innovative
technologies.
This IGU vision recognises the unique role that gas plays in satisfying rising
energy demand and in mitigating climate change.
More than 1 billion people have no access to electricity and around 2.5 billion
use traditional biomass for cooking and heating.
To improve their health and living standards people need access to safe,
reliable, affordable, clean energy.
No single fuel or technology can provide a comprehensive solution for this
increasing need for energy.
The world needs a range of options, and gas has a crucial role to play.
Gas is a foundation fuel for the world’s current and future energy needs.
It is, and will remain, the best option with renewable energies.
IGU is a worldwide non-profit and non-governmental institution
assembling more than 120 members from 81 countries. Its primary
goal is to advocate for the use of gas and to promote the progress of
the gas industry worldwide.
A message from
the president
The global context has changed
dramatically over the past few years.
The economic crisis that has affected
us since the end of 2008 was followed
by an exceptionally eventful last two
years.
The Arab Spring saw political
repercussions across North Africa and
the Middle East, the financial and
economic crisis created a shockwave
that exacerbated unemployment and
intensified social problems, while the
economic climate and the accident in
Japan, which revived the debate over
nuclear power, caused an energy crisis.
At the same time, global energy
needs nurtured by the industrial
development and booming population,
have soared.
Everyone has to be provided with
access to modern sustainable energy
and benefit from better living
standards and healthy habitat.
This enormous challenge can only be
tackled by thorough analysis of the
contribution of all energy sources
available and by then creating an
energy portfolio where all of those
sources are used in an integrated and
optimized way.
IGU has a global history of over 80
years in all areas of the gas business
and over the whole gas value chain.
In our new Strategic Statement 2013
we would like to share our strong and
sincere belief that gas has a unique
role to play in making the sustainable
energy future reality.
Jérôme Ferrier
President of IGU
Jérôme Ferrier
Exhibition highlights
Mozambique LNG: An emerging leader in the global LNG industry
Mozambique LNG (stand 1210) is emerging as a leader in the global LNG industry, with up
to 65-plus trillion cubic feet of estimated recoverable natural gas (approaching 100 Tcf or
original gas in place) discovered to date in Mozambique’s Offshore Area 1, where it is joined
by ENH, Anadarko (operator), Bharat, Videocon, Mitsui and PTTEP.
China Pavilion
A record 15 companies make
up the China Pavilion in
Houston — the largest
contingent in any LNG
exhibition series. In the past
decade, China has built six
LNG terminals, more than 60
LNG plants, and hundreds of
LNG filling stations. With
higher energy demand on the
back of its growing population,
there are still many
opportunities for midstream
and downstream activities in
China.
Seminars are held
throughout the conference, so
be sure to go over to network
with leading LNG companies
in China.
@LNG 17
Pirsanupop C. @Accordadiez
#LNG17 day two morning
session begin early @ George
R. Brown Convention Center
http://instagram.com/p/
YNQ30DiUnM/
Zain Shauk @ZainShauk
“IHS’ Daniel Yergin on natural
gas: “We expect global gas
demand to double by 2040
from where it is today”
#LNG17”
“Shell exec says if 10% of new
transportation demand goes
to LNG it would add 100
million tons of annual LNG
demand #lng17
NeosCreative @NeosCreative
I’m at @LNG17 project
managing stands for our lovely
clients #MozambiqueLNG & @
FWUSA http://ow.ly/k8Vpl
http://ow.ly/k8Vqn #DrMo
LNG Global @LNGGlobal
#lng17 Welcome ceremony
sponsored by @Shell at Minute
Maid Park with field tours. pic.
twitter.com/SyZz5aOzao
AGA @AGA_naturalgas
Our tweet just made the @
astros jumbo tron at #LNG17
reception. Fun! pic.twitter.
com/r9jbGVQqUe
Shell Australia @Shell_
Australia
Shell’s Andy Brown believes
LNG for transport (shipping &
trucking) is gaining
momentum in Canada, US,
Europe & Aus –Ann Pickard
#LNG17 #LNG
Lyndon Ward @MarineCNG
Don’t miss the Key Speakers
at the opportunities for LNG to
Stimulate Economic
Development Conference this
afternoon #LNG17
Joe McMonigle
@JoeMcMonigle
One of the big topics
discussed in the corridors and
at receptions at @LNG17event:
floating LNG and how it will be
another game changer.
Keith Stewart — Director at
Herose Limited
Hot competition on the Herose
putting green for LNG 17
So we’re gearing up for Day 2 at
LNG 17. If you join us on Stand
131, you can put your putting
skills to the test in our Great Golf
Giveaway. We’ve got the finest
TaylorMade golf clubs up for
grabs.
Susan Sakmar — Visiting
Assistant Professor, Andrews
Kurth Energy Law Scholar at
University of Houston Law Center
LNG 17 Book Launch
Please stop by the University of
Houston stand #2345 and say
hello and see my LNG book
which is finally out! A special
thanks goes out to my many LNG
friends and colleagues who
helped with the book.
Show Daily 17
From the floor....
Name: Hichem Senoussaoui
Organization: Head of Special Events Department Internationally.
Experience: Masters in Communication with 5 years of experience in media,
Television and Algerian radio.
Looking forward to: Creating contacts and expanding networks while here at
LNG 17. Sonatrach is celebrating its 50th aniversay this year, and with $80
billion dollars projected to be spent between 2012-2014, with 80% of that
allocated to Upstream activity, I am sure they would have no problems doing
just that. They have a 30 delegate party here at the conference, and their VP
will be presenting additional information on their Investing initiative at Algeria
day on April 18th at the Westin.
Social programs: Hichem is looking forward to attend the opening ceremony,
but has not yet had the chance to look into the other Social programs the
conference has to offer.
Name: Rafael A. González Rodríguez
From: Spain
Organisation: Enagas
Experience: International LNG Manager
Looking forward to… Understanding the new updates for LNG Worldwide
and networking with the different international companies that are attending
the convention.
Social programs?
I hope to attend as many social events as possible over the next couple of
days. So far I have really enjoyed the opening ceremony as well as the
roundtables.
Name: Hitoshi Furuya
From: Japan
Organisation: Nippon Steel & Sumitomo Metal
Experience: Senior Researcher
Looking forward to… I am here for the whole convention. I am especially
looking forward to the lectures and presentations.
Social programs?
I really enjoyed last night’s welcome reception at Minute Maid Park. I had a
great time.
Name: Sinan Özcan
From: Turkey
Organisation: enerco enerji
Experience: Supply, Sales and Origination Manager
Looking forward to… I will be looking to attend some of the sessions and
listen to some very important presentations. There are also some great
opportunities to network and build relationships with other businesses.
Social programs?
I have yet to attend any of the social events but I will be looking to attend
some later in the week. I think the LNG17 crew have been very welcoming to
their visitors here in Houston.
Name: Cecily Barnes
From: Honolulu, Hawaii
Organisation: Hawaiian Electric Company
Experience: Manager
Looking forward to… I have a lot of meetings whilst I’m here with some very
influential people. I am also looking forward to having access to all areas of
the event and attending some sessions.
Social programs? I attended the welcome reception last night and I thought
it was incredible; the way LNG17 took over the whole of the Minute Maid
Baseball Stadium was simply brilliant.
Name: Nada M Aman
From: Yemen
Organisation: Republic of Yemen, Ministry of Oil & Minerals
Experience: Assistant Deputy for Gas Affairs
Looking forward to… I will be spending most my time at the conference
sessions, I am particularly looking forward to the Commercial Trends session
later on today.
Social programs? I am thoroughly enjoying all aspects of the event and I
think it has been organized really well. Hopefully I will get the chance later in
the week to take part in some social activities.
Name: Dr Tony Acton
From: Hampshire, UK
Organisation: ActOn LNG
Experience: Principal
Looking forward to… I will go to see everything I can, I think the sessions are
well arranged and so I can really experience every aspect of the convention. I
have been to every event since LNG8.
Social programs?
I thought it was really enjoyable and truly American.
Name: Christine Harding
From: Hampshire, UK
Organisation: Schlumberger
Experience: Sales Manager
Looking forward to… I am looking forward to getting the chance to look
around the exhibition and I am mainly interested in learning about the new
market developments.
Social programs?
I’m looking forward to being slightly less jet lagged and attending some of the
social events later on in the week.
18 Show Daily
Poster session
Thursday, 18 April, 15:00 – 18:00. Level 3
Posters will be displayed throughout the duration of
the conference. During a three-hour exclusive poster
session on, get the opportunity to meet the poster
authors.
The format will provide an informal forum for
delegates and authors to discuss their posters, with
topics covering pioneering developments within the
entire LNG chain. The full list of all posters is on the
LNG 17 website.
Over 60 posters have been selected from around
the world, covering on a range of topics such as
• Instrumentation, controls and optimisation
• Materials and equipment development
• Machinery development
• Safety and environmental management
• Operational excellence
• Process and plant design and optimisation
• LNG storage ships, transportation and distribution.
China Pavilion Program Thursday 18th April
09:30 – 10:15 LNG Technology and Its Industry
Application
Presented by Mrs. Bai GaiLing – Top Class Engineer
of China Huanqiu Contracting & Engineering Corp.
Presentation description:
• Brief introduction of China Huanqiu Contracting &
Engineering Corp, then focus on the company’s LNG
process and its industry application. Also provide
some project reference.
10:30 – 11:15 LNG Purification Technology
Presented by Mr. Wang JunChang – President of
Chengdu Wuhuan Xinrui Chemical Engineering Co., Ltd
• Technology advantages and project performances
in high-purity hydrogen field
• Technology advantages and project performances
in high-purity carbon dioxide
• Unconventional natural gas purification technology
• On-off valves for PSA
15:00 – 15:45 LNG Application Technology
Development in China
Presented by Mr. Yin JingSong – General Engineer &
Vice General Manager
• LNG application technology development in China
• LNG industry advantage and downstream
development\
• LNG equipment development and solution
Behind the scenes...
Speakers preparing for the session
VIP reception
From left: Dave McCurdy, President and
CEO, American Gas Association; James A.
Baker, III, Former U.S. Secretary of State,
Senior Partner at Baker Botts L.L.P.;
Spencer Abraham, U.S. Energy Secretary
2001-2005, Chairman and CEO of The
Abraham Group LLC at the Baker Botts VIP
Reception
LNG basics training
A Texan wave
Full concentration at the media center
A good spread of industry literature
Music for the masses
Show Daily 19
Welcome reception: Blast of a time!
We had great feedback about the Welcome Reception, hosted by Shell and LNG 17 and some of our guests agree that it was an “out of this
world” experience.
20 Show Daily
The oldest haunt in Houston, La Carafe wine bar is less a ghost than a piece of living history, a timeless challenge to the contemporary nightclub scene.
Photo: SHANNON O’HARA
Around Houston
15 iconic Houston meals
When it comes to great food, these
plates can’t be beat. We’ve
spotlighted 15 local eateries that
offer an iconic taste of Houston, each
representing unique flavors found in
our big urban stew.
The Breakfast Klub: Wings and
Waffles
Nothing screams Southern quite like
chicken and waffles. The signature
six pieces surrounding a fluffy
Belgian waffle draws a crowd, so be
prepared to wait in line before you
can get your hands on this soulful
staple.
Tony’s: Pansoti
Young Executive Chef Grant Gordon
is keeping Tony Vallone’s namesake
restaurant on top with classics such
as hand-made pansoti -- a decadent
squash-filled pasta topped with an
airy parmesan puff.
Tacos a Go Go AND Shipley’s:
Breakfast Tacos AND Kolaches
Can’t make up your mind? Neither
could we. Choosing between the
chorizo, egg and cheese breakfast
taco at Tacos a Go Go or Shipley’s
sausage and cheese kolache
seemed nearly impossible, which is
why we’re leaving the difficult
decision up to you.
Goode Company Seafood:
Campechana Extra
Start your meal off right with this
Cajun riff on ceviche. Served in a
cocktail glass with a mix of shrimp,
crab, avocado, salsa and jalapeños
(we ask for extra) paired with a ton of
fresh tortilla chips.
Churrascos: Parillada
In the beginning (of the Cordua
restaurant empire, that is), there was
grilled meat. Stop by the family’s
namesake Churrascos restaurant
and try the parrillada—a mixed-grill
plate highlighting the restaurant’s
most-loved meats.
Frenchy’s Chicken: Fried Chicken
Long lines and the calorie count do
nothing to dissuade fans of this
hometown favorite. The local gem
sends out peppery, hot pans of crispy
fried chicken that draws loyal
crowds. Plan to take out.
Crawfish and Noodles: Crawfish
Every January, Houstonians start
pinching tails and sucking heads.
Grab a cold beer and order a couple
of pounds for a Vietnamese spin on a
Cajun classic. We like our bugs
“regular spicy” for all the garlic and
buttery goodness with a kick of
heat.
Fung’s Kitchen: Dim Sum
Weekend crowds don’t lie: This Hong
Kong-style dim sum menu has
everything from steamed shrimp
dumplings for the uninitiated to more
esoteric selections for seasoned dim
sum enthusiasts.
Gatlin’s BBQ: Ribs
This Heights hideaway is ranking
supreme amongst contenders in the
Texas BBQ arena. Grab a seat on the
patio, roll up your sleeves and
prepare to get messy as you treat
yourself to a down home favourite.
Lankford Grocery: Cheeseburger
A thick, juicy, delightfully non-round
(read: hand-rolled and smashed)
patty and plentiful toppings are
served up at this red-and-white
shack with saggy floors. Go early to
avoid the lines and bring cash.
Pho Binh: Pho
The pho-nomenal Vietnamese-style
soup has worked its way into our
hearts (and stomachs). Get there
before lunch or you’re likely to leave
empty handed. Our favorite: pho with
rare steak.
Les Givral’s: Vietnamese
Sandwich
Those in the know stop at Les Givral’s
for fabulous banh mi (Vietnamese
baguette sandwiches) at freakishly
low prices. Vegetarians love the tofu
(add a dash of sriracha), but the
barbecue pork is also a standout.
Ninfa’s on Navigation: Fajitas
Sure, there are plenty of great places
to get fajitas in town, but only Ninfa’s
can take credit for inventing the
original Tex-Mex favorite back in
1973. Go for the steak variety, paired
with a frozen Ninfarita.
Underbelly: Braised Goat
Dumplings
Any dish at Underbelly is sure to
delight. But it’s the delicious, Koreanbraised goat meat (yes, goat meat),
gnocci-style dumplings and spicy chili
sauce that brings people back.
Pappas Bros. Steakhouse: Ribeye
Bone-in or bone-out, you can’t go
wrong. The perfectly seasoned,
in-house dry aged ribeye is available
in portions fit for a cowboy. Call
ahead for reservations.
•• Credits: Greater Houston
Convention and Visitors Bureau
22 Show Daily
North in
deal with
Lime
NORTH Energy is set to pocket
Nkr28.2 million ($4.8 million)
from the sale of interests in six
Norwegian licences to Lime Petroleum in a farm-down deal to
take advantage of the latter’s
technology for exploration,
writes Steve Marshall.
The Norwegian independent
is shedding stakes in production licences 498 (5%), 503
(12.5%), 503B (12.5%), 526 (33.3%),
562 (5%) and 616 (5%) under the
transaction, which has been
revised due to the company’s
relinquishment of PLs 518 and
530 that were originally part of
the deal.
The pact now signed with
Lime’s Norway unit has an effective date of 1 January this
year but remains subject to
government approval.
UK-based Lime, a partly
owned subsidiary of Rex Oil &
Gas, has hitherto mainly focused on the Middle East but
was pre-qualified for work off
Norway earlier this year.
North Energy, whose balance
sheet has been hit by a costly
run of dusters in both the mature North Sea and frontier
Barents Sea, aims to raise its
exploration game through the
deal by harnessing new seismic technology developed by
Rex to tap resources in the licences.
Under the deal, the company
will gain a Nkr27.5 million loan
from Lime that will be netted
as sale proceeds once the licence interests are formally
transferred to the latter.
Cosco work
for Wartsila
FINLAND’S Wartsila has won a
contract from China’s Cosco to
supply an integrated power,
propulsion and positioning
system for a semi-submersible
accommodation support vessel
(ASV) being built for Axis Offshore, writes Bill Lehane.
The order is for the DP3 unit
being built by Cosco’s Qidong
yard for Axis, a joint venture of
Danish shipping company Lauritzen Offshore and private equity investor HitecVision of
Norway.
To be owned and operated by
the joint venture, Axis is
thought to have ordered the
unit on a speculative basis for
putative work in the UK and
Norwegian sectors of the North
Sea.
NORWAY
Reshuffled: Statoil had to change its drilling schedule following rig delays
Photo: Statoil
Statoil given green light
for Skrugard drilling
Norwegian state player can launch nine-well Arctic campaign
following delays to rig upgrade
STEVE MARSHALL
Oslo
STATOIL is a step closer to starting
a stalled frontier drilling campaign in the Barents Sea after
gaining a permit for the first
probe in the vicinity of its Skrugard discovery.
The Norwegian Petroleum Directorate has given the green
light to drill well 7220/5-2 at the
Nunatak prospect in Statoil-operated production licence 532,
where the state-owned explorer
has subsequent probes lined up at
the Skavl, Iskrystall and Kramsno prospects.
The wildcat will be drilled to a
planned total vertical depth of
1672 metres in a water depth of 399
metres at a location about 205 kilometres off northern Norway,
with an estimated duration of 63
days.
Statoil is looking to kick off the
total nine-well Arctic campaign
later this month or next using the
Seadrill-owned semi-submersible
West Hercules after being forced
to postpone it from November due
to delays related to the upgrade
and winterisation of the rig at
Norway’s Westcon yard.
The unit was recently pulled up
again by Norway’s Petroleum
Safety Authority for further technical issues and Seadrill subsidiary North Atlantic Drilling had a
15 April deadline by which to respond to the agency’s findings.
The delay has forced Statoil to
reshuffle its drilling schedule by
pushing back two planned probes
on the Apollo and Atlantis prospects in the extreme northern
Hoop area from this year to the
second half of 2014.
Following Nunatak, Statoil is
planning back-to-back wells at the
remaining prospects in PL532,
with Skavl tentatively lined up for
the end of June at the earliest and
with an estimated duration of 42
days.
Statoil holds a 50% stake as operator of the licence with partners
Eni and state holding company
Petoro on respective interests of
30% and 20%.
Meanwhile, Statoil is looking to
drill another wildcat farther
south at the Klara prospect in
PL159C in the Norwegian Sea using semisub Songa Trym, with a
spud date of July at the earliest,
Petro Media News reported.
The 6507/3-10 probe will be
drilled to a total vertical depth of
3786 metres in a water depth of 375
metres about 180 kilometres offshore.
Drilling is expected to take 52
days, plus another 14 days with an
optional sidetrack.
Eni prepares for summer seismic work in Rosneft pact
Wartsila: Cosco contract
Photo: Wartsila
ENI is gearing up to start shooting
seismic in the Russian waters of
the Barents Sea under its exploration tie-up with state-owned Rosneft, according to reports.
The Italian oil company is targeting potential resources at the
Fedynsky and Tsentralno-Barentsevsky structures in an area near
the maritime border formerly dis-
puted with Norway. Eni committed to financing seismic mapping
and exploration of the two structures in the joint-venture pact
with Rosneft agreed last year in
which it holds a 33% stake.
The company’s deputy president Guiseppe Valenti confirmed
at a recent oil and gas conference
in Moscow that seismic work
would kick off this summer, according to Russian news reports.
Preliminary 2D seismic data
from Rosneft has indicated nine
promising structures at Fedynsky
that could hold as much as 18.7 billion barrels of oil equivalent.
Eni is required to shoot 6500
line kilometres of 2D seismic over
the overall structure by 2017 and
another 1000 square kilometres of
3D data by 2018, with the first well
to be drilled by 2020.
The Tsentralno-Barentsevsky
structure is believed to hold
about 7 billion boe of resources,
with a requirement for 3200 kilometres of 2D seismic by 2016 and
1000 square kilometres of 3D
by 2018.
Show Daily 23
GLOBAL OUTLOOK
Weak economic data to
hold back oil price rises
Global gas
outlook more
promising for
quarter, according
to new report by
Ernst & Young
BILL LEHANE
London
OIL prices will not achieve any
significant growth in the coming
quarter and will likely continue to
fluctuate based on the latest economic data, a new analysis has
suggested.
In its quarterly oil and gas outlook, Ernst & Young said downward pressure was being exerted
on oil prices because of the uncertainty over demand and strong
growth in non-Opec supply.
“The release of some weaker
than expected economic indicators
is also negatively impacting sentiment and eroding some of the
investor confidence that we saw
earlier this year,” the report said.
Ernst & Young global oil & gas
leader Dale Nijoka predicted that
“in the absence of any supply or
geo-political shocks, oil prices will
continue to rise and fall in response to the release of new economic data”.
He said that “the lack of strong
economic signals means that
Brent oil prices will likely fluctuate within a $105 to $115 per barrel
range in the second quarter”.
Nijoka also suggested that if the
current downward pressure were
to become a sustained trend,
“Opec would likely respond by reducing output in an attempt to
hold prices above $100 per barrel”.
The report said that industry investment could be impacted in the
short term by recent oil price falls,
though Nijoka commented that, in
general, “relatively strong commodity prices are supporting industry
investment for the time being”.
Generally higher oil prices have
seen previously written off plays
like the Falkland Islands become
commercially viable plays, he
said, adding that deep-water
projects in Brazil and Angola are
less susceptible to short-term oil
price fluctuations.
While higher oil prices have
accelerated US shale oil exploration
in the past year, “investment and
output levels in these plays can be
modified in response to price
shifts”, the analyst said.
Flat energy demand in Europe is
not likely to improve before 2015
amid record unemployment and
constrained household incomes,
the report said.
While Asian markets are
stronger, slower economic growth
in export markets could see Asian
oil & gas demand growth ease, the
analysis said.
The outlook for global gas is
more promising in terms of longterm supply and investment due
Sinoangol
hope off
Sao Tome
EXPLORATION and production
company Sinoangol is angling
to acquire Block 2 in Sao Tome
& Principe’s exclusive economic zone off the West African island state - but could face competition from other players.
The Chinese-Angolan joint
venture has submitted a letter
of application to the National
Petroleum Agency (ANP) seeking direct negotiations for the
block, the agency said on
Wednesday.
Sao Tome is able to award a
petroleum contract for the
tract through direct talks,
rather than through a formal
bidding round, under its legislative regime.
However, the ANP is also required to publicly declare such
an expression of interest for
other parties that may be interested in the acreage.
CNOOC job
for DMAR
On the floor: crude oil options traders at the New York Mercantile Exchange Photo: AP/SCANPIX
to recent discoveries, Ernst &
Young said.
Nijoka pointed out that, while
low US gas prices had increased
the international competitiveness
of gas-intensive industries in
North America, the same shale
revolution could not be rapidly
replicated anywhere else and
would be “a quick fix to industrial
competitiveness and energy import dependency”.
Nijoka predicted current talks
on US gas exports would see restrictions on any export volumes
to minimise upward pressure on
domestic gas prices.
He added that, while Canadian
developers were already moving
ahead with gas export projects on
the Pacific coast, US projects to
reconfigure existing facilities
would take less time to complete
and come at a lower cost.
Nijoka predicted that smaller independents in East Africa that
made giant gas finds would continue to look to deliver shareholder
value by farming out stakes or
through company sales to bring in
partners capable of funding large
developments.
He suggested any departing
managers of such explorers could
become the source of the next giant finds if they go on to form new
companies in other areas.
“These new independents could
be instrumental in making future
discoveries of similar scale to
those in East Africa and opening
up new frontiers,” Nijoka said.
HOUSTON’S DMAR Engineering has won a front-end engineering and design contract
from China National Oil Corporation (CNOOC) for development options on the Liuhua
11-1 and Liuhua 16-2 oilfields.
CNOOC’s internal research
institute is currently evaluating how to develop the eastern
South China Sea pair, which lie
in water depths of 340 metres
and 404 metres.
A tension-leg platform with
full drilling capacity is under
study as one option, with a
semi-submersible being the
other.
TABLET
GIVEAWAY
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DELEGATES CAN ENTER DAILY
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» Visit the TIME booth (#1508, Hall D)
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Daily drawings at the Chevron booth (#1020, Hall C)
» Tuesday: 3:30 PM
» Wednesday–Friday: 3:00 PM
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COVER OF TIME!
Visit the TIME booth (#1508, Hall D) for your
personalized, commemorative LNG17 edition
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24 Show Daily
DRILLING STATISTICS
Harsh winter hits UK activity
Drilling down 18% in first quarter but last year’s
growth momentum is set to return say analysts
BILL LEHANE
London
THE prolonged winter in the UK
sent drilling activity down 18%
year-on-year in the first quarter,
but the second quarter is set to see
a return to last year’s growth momentum, a new report has found.
Only nine UK wells were drilled
during the first quarter of 2013
compared to 11 this time last year
and 19 in the final three months of
2012, the report by business advisory firm Deloitte’s Petroleum
Services Group said.
Deloitte senior partner Derek
Henderson said confidence in the
North Sea was nonetheless still
high, thanks to tax incentives and
favourable oil prices, and he predicted drilling and deals would
pick up throughout the rest of this
year.
“Generally, activity eases during
the first quarter each year and,
based on the second half of last
year, we would certainly expect
later spring and summer to demonstrate a return to the kind of momentum we saw then,” Henderson
said.
Deals activity also dropped by
17% year-on-year during the first
three months of 2013 off the UK,
with 19 deals completed.
At the same time, UK onshore
deals rose significantly, with five
deals compared to four in all of
2012.
Most of the deals made so far
this year around north-west
Europe were in the form of farmins and asset deals, which
Big freeze: the harsh winter in the UK sent drilling activity down 18% year-on-year
Photo: AP/SCANPIX
accounted for 71% and 20% of
transactions respectively.
Ithaca Energy’s $309 million acquisition of Valiant Petroleum was
the only corporate takeover, compared to seven such deals in the
year-ago period.
Deloitte Petroleum Services
Group managing director Graham
Sadler said there was “every reason
to expect the North Sea to continue
the growth it achieved last year” for
the remainder of the year.
“Deal volume may be down but it
is still relatively strong, and the increasing proportion of farm-ins
would suggest the need for smaller
companies to seek funding partnerships for future drilling,” he said.
Active buyers included Trap Oil,
Faroe Petroleum and Maersk,
Deloitte said, while sellers includ-
ed international players such as
Total and Talisman Sinopec, and
smaller companies such as Egdon
Resources, Valiant Petroleum and
Lochard Energy.
Sadler also pointed out that drilling rigs were “at a premium” in the
UK offshore, with 96% rig utilisation in the first quarter despite the
drop in drilling activity. The report
said rig availability constraints
were being particularly felt in
harsh-environment areas requiring heavy-duty drill ships such as
the West of Shetland, Norwegian
Sea, Barents Sea and the North Atlantic.
Two field developments gained
regulatory approval over the quarter in the UK and three new fields
came on stream, compared to four
approvals and no new fields this
time last year.
Deloitte pointed out that all five
fields approved or brought on
stream in the past three months
had gained tax incentives, four of
them as small fields and one as an
ultra-heavy oilfield.
By contrast to the UK, Norwegian drilling rose 20% during the
first quarter from 10 exploration
and appraisal probes to 12.
Norwegian deals activity also
rose 17%, Deloitte said, with an
even split between farm-ins and
asset acquisitions.
Three new Norwegian fields
came on stream over the threemonth period, with no new approvals compared to two approvals
this time last year.
In north-west Europe as a whole,
23 exploration and appraisal wells
were drilled in the first quarter,
down 8% on the 25 seen in the first
quarter of 2012.
About 91% of the wells were
drilled in either the UK or Norway,
with no wells spudded in Ireland,
Denmark or the Faroe Islands and
only two in the Netherlands.
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Show Daily 25
Beach in
boost at
Cooper
SOUTH AMERICA
In demand: the drillship Stena Drillmax
Shell aims
deeper at
Zaedyus
discovery
Supermajor to drill to 6438 metres
off French Guiana to penetrate full
post-Atlantic rift sequence
STEVE MARSHALL
Oslo
SHELL and its partners have
decided to go deeper with the
latest well being drilled at the
Zaedyus discovery in the Guyane
Maritime block off French Guiana
after its primary target came up
dry.
The GM-ES-3 probe targeting
the Priodontes prospect is the
second of a four-well exploration
campaign to further appraise the
Zaedyus-1 discovery in 2011, after
the Zaedyus-2 well failed to yield
commercial pay.
The latest well, also called
Priodontes-1, failed to deliver
hydrocarbon shows after hitting
a 325-metre sand interval at the
prospect, although it hit
50 metres of oil-stained sands in
the secondary Bradypus fan that
is part of the main Cingulata fan
system hosting the original discovery.
Minor partner Wessex Petroleum said the co-venturers now
have decided to drill deeper to a
final depth of 6438 metres at the
present location “in a plan to penetrate the full post-Atlantic rift
sequence” at the prospect. It said
the duration of this additional
drilling will depend on results,
adding it would mean a small
delay for further wells planned at
the play.
Wessex chairman Malcolm
Butler said the partners are hopeful of finding more hydrocarbons
at Zaedyus in a deeper sand at the
existing well, ahead of drilling
the next probe, GM-ES-4, using
drillship Stena Drillmax.
Partner Tullow Oil said that the
failure to find hydrocarbons so
far at Priodontes “is due to a trapspecific issue and has no follow-on
consequences for prospectivity
elsewhere in the block”, adding
the Bradypus oil shows indicate a
working oil system.
The partners are now also working to identify new prospects in
the play based on previous drilling results and 3D seismic data
acquired last year.
Shell operates the permit with
a 45% stake with partners Tullow
Oil on 27.5% and Total on 25%, with
Northpet Investments, a 50:50
joint venture of Wessex and
Northern Petroleum, on 2.5%.
Photo: GARETH CHETWYND
AUSTRALIA’S Beach Energy
will case and suspend the Rincon North-1 exploration well as
a future producer in PEL 92, on
the western flank of the South
Australian Cooper basin, after
hitting oil.
The well was drilled to a total
depth of 1899 metres and hit oil
shows in the McKinlay, Namur
and Murta intervals, with
wireline logs confirming up to
two metres of oil pay in the
Namurand McKinlay sandstone.
Well partner Cooper Energy
said on Wednesday that a drillstem test had confirmed the
presence of further pay in the
McKinlay sandstone, above the
oil column defined by the wireline logs.
The drillstem test was carried out over 180 minutes and,
while no flow rates were
recorded, Cooper said 10.5 barrels of oil were recovered during the testing period.
26 Show Daily
Lakach is
on track
— Austin
BRAZIL
Claims: OGX
owner and
chief executive
of EBX Eike
Batista
THE director of Mexico’s staterun oil company Pemex said
that the Lakach deep-water
natural gas field is on track to
start production in 2015.
Emilio Lozoya Austin made
the comments on his Twitter
account from an event in Mexico, but did not provide more
details on the project.
Pemex has been buying
hardware for the project that
has until recently centred on a
field development concept calling for vertical and horizontal
wells and two pipelines running to the beach and an onshore processing plant.
Pemex has not said if it has
modified the development plan.
Lakach has taken on greater
importance for Mexico where
gas demand is growing faster
than production.
Recently, Pemex awarded
the project management contract to Petrofac of the UK and
France’s Doris Engineering to
oversee its development.
The contract covers project
oversight on construction, installation, commissioning,
testing and start-up of the
wells and infrastructure.
The Lakach development is
expected to reach a peak handling capacity of 600 million
cubic feet per day.
Photo: REUTERS/
SCANPIX
Petronas denies move to
take OGX stake in block
Tweet: Pemex chief
executive Emilio Lozoya
Austin
Photo: AFP/SCANPIX
Drop in OGX
March output
BRAZILIAN oil company OGX
saw output at its offshore oil
wells fall in March, as equipment problems added to investor concerns about missed production targets.
Offshore production at the
Tubarao Azul field in the Campos basin averaged about 8300
barrels of oil equivalent per day
in March, according to a securities filing, down from 11,300
boepd in February and 13,200
boepd in January.
The continued slide could
put more pressure on the company after its stock lost 90%
over the past 12 months due to
weak output and mounting
financial stress on Batista’s
EBX industrial group.
Slipping offshore output contrasted with an increase in onshore natural gas production to
6800 boepd in March from 5500
boepd in February and 3200
boepd in January.
Malaysian player distances itself from reports that it is in talks over
buy-up of 40% interest in Tubarao Martelo in Campos basin
JOSH LEWIS
Perth
MALAYSIAN state-run oil company Petronas has distanced
itself from reports that it is looking to take OGX’s stake in the
Tubarao Martelo block in Brazil’s
offshore Campos basin in a $1
billion deal.
Bloomberg reported that OGX
was in advanced talks with Petronas over the sale of its 40% interest in the block, citing an unnamed source with “direct
knowledge of the matter”. How-
ever, Petronas released a statement on Wednesday denying the
report.
“Petronas has not entered into
any agreement with OGX or any
other party with regards to any oil
blocks in Brazil,” the company
said.
Bloomberg reported that OGX
owner Eike Batista was looking to
sell assets to pay off debt.
The Brazilian billionaire has
seen more than $27 billion wiped
off his personal fortune since
March last year.
However, the news agency also
cited a statement from Batista’s
EBX Group as saying it was under
no pressure from creditors to
settle its loans.
“All EBX Group’s companies
have the necessary funding established for the coming years, and
their debt profile is largely long
term,” the statement read.
“There is no pressure from cred-
itors to execute the companies’
guarantees.”
Tubarao Martelo, which means
Hammerhead Shark, lies about 94
kilometres off the coast of Rio de
Janeiro in a water depth of 105 metres.
OGX estimates the field to hold
recoverable reserves of 285 million
barrels of oil.
Output is scheduled to beginduring the second half of the
year.
Technip and Techint win Petrobras P-76 FPSO contract
A 50:50 JOINT venture between
France’s Technip and Italy’s
Techint has been awarded a
contract related to the P-76
floating production, storage and
offloading vessel which is to be
stationed in Brazil’s offshore
Santos basin.
The contract, which was
awarded by state-run Petrobras,
covers the topsides construction
and integration, as well as the
commissioning and start-up
assistance of the FPSO.
Technip said its operating
centre in Rio de Janeiro will carry
out the project management,
engineering and procurement for
the contract while the
24,000-tonne module fabrication,
integration and commissioning
will be carried out at Techint’s
yard in the south of Brazil.
“This contract strengthens
furthermore our presence in the
burgeoning Brazilian offshore
pre-salt market, where our
leading-edge position enables us
to meet its high standards and
requirements,” said Technip’s
senior vice president onshore
Latin America and offshore
Brazil, Jose Jorge. “This project
will contribute to the local
economy as it will require
approximately 70% of Brazilian
local content.”
The project is scheduled to be
completed in 2017.
Once completed, the P-76
FPSO will be able to produce
180,000 barrels of oil and 7
million cubic metres of gas per
day.
ECUADOR COURT BATTLE
Chevron ‘bad faith’ claim
US supermajor claims lawyer representing villagers who won a $19
billion environmental damages award is withholding documents
CHEVRON has sought to persuade
a New York federal judge to punish
a US lawyer representing Ecuadorean villagers who won a $19
billion environmental damages
award, saying the lawyer is withholding documents from the oil
company.
In an unusual court proceeding,
a Chevron lawyer sharply questioned Steven Donziger, who represents residents of the Lago Agrio
region, who claim the company is
responsible for contamination
that affected people in the Ecuadorean Amazon area.
At issue is the extent to which
Donziger and others acted in alleged bad faith by failing to turn
over files and documents that
Chevron claimed it needed for its
case, Reuters reported.
US District Judge Lewis Kaplan
in Manhattan is holding the hearing as part of a 2011 lawsuit, in
which Chevron accused Donziger
and other defendants of racketeering and extortion.
That case is scheduled to go to
trial in October.
The two-decade fight between
Chevron and Lago Agrio residents
has included aggressive litigation
tactics and accusations of coercion
and bribery that each side has denied.
Under questioning from Chevron lawyer Randy Mastro on Tuesday, Donziger denied having directed his Ecuadorean counterpart
Pablo Fajardo to keep documents
from Chevron, Reuters reported.
“Mr Fajardo’s view is that
responding to your document
request would violate Ecuador
law,” the news agency quoted
Donziger as telling Mastro.
Donziger admitted that he lacks
access to many documents, including documents stored on Fajardo’s
computers, and thus could not
speak of their importance.
Meanwhile Mastro sought to
discredit Donziger’s contention
that he worked for Fajardo, not the
other way around.
Donziger stands to earn more
than $1 billion if the $19 billion
judgement were upheld, while
Fajardo would make just under
one-third that amount, Mastro
said.
In 2011, the Lago Agrio plaintiffs
won an $18.2 billion judgment in
Ecuador, which has since grown
to $19 billion, on claims that
Chevron is responsible for contamination of their water and soil.
Pollution: a waste pit filled with crude left by Texaco drilling operations years earlier lies in a
jungle clearing near the Amazonian town of Sacha in Ecuador
The environmental damage was
supposedly caused by Texaco,
which operated in Ecuador from
1964 to 1992.
Chevron took on Texaco’s liabilities when it bought the company
in 2001. Chevron says the Ecuador
ruling is unenforceable.
The Ecuadorean residents have
yet to collect on the award and are
trying to enforce the judgement
in countries where Chevron operates.
Last month, the Lago Agrio
plaintiffs urged a federal appeals
court to replace Kaplan with a
different judge, citing his alleged “contempt” for Ecuador
and its courts and “ill-will” for
Donziger.
Chevron won a victory on Monday when US Magistrate Judge
James Francis recommended the
dismissal of counter-claims by
Donziger accusing the company of
harassment and trying to block
enforcement of the judgement.
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Over 85% of our subscribers say that Upstream “helped them or their company
identify leads or business opportunities”1. For these oil and gas professionals
Upstream isn’t just entertaining reading, it’s an investment. It saves them time
trawling through numerous sites and publications to gain the knowledge they
need. And it gives them a return through business advantage. Make your
investment today. Just go to www.upstreamonline.com/subscribe.
Give yourself an advantage. Give yourself Upstream.
1) Upstream readership survey 2010, Ipsos MORI.
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THE INTERNATIONAL OIL & GAS NEWSPAPER
Show Daily 29
Reliance
record
profit
MIDDLE EAST
Global markets: Kurdistan Regional Government Minister for Natural Resources Ashti Hawrami
Kurdistan oil pipeline to
Turkey near completion
KRG could be exporting crude to world markets
later this year if new line is built on schedule
STEVE MARSHALL
Oslo
IRAQI Kurdistan will soon be able
to export its oil directly to world
markets via a new pipeline being
built to Turkey that is reportedly
set for completion later this year.
However, the controversial
route, backed by major Kurdistan
producer Genel Energy, looks set
to further inflame an ongoing oil
sovereignty dispute with the
Baghdad government, which sees
independent exports from the
semi-autonomous northern region as illegal.
The Kurdistan Regional Government (KRG) is on track to finish construction of the pipeline,
linking Genel’s major Taq Taq oilfield with an existing Iraq-Turkey crude pipeline, in the third
quarter, four Turkey-based industry sources told Reuters.
The pipeline has been laid up to
Dohuk and is currently 80% complete, the sources said.
It will be able to carry up to
300,000 barrels per day and is be-
ing built by a Turkish contractor.
Turkey has now given the green
light to the plan, under which oil
from Taq Taq will enter the existing Kirkuk-Ceyhan pipeline at
Fishkhabur pumping station
near the Turkish border, from
where it will flow directly to Turkey’s southern port of Ceyhan for
shipping to international markets, the sources said.
Turkey was earlier reported
to have objected to an extension of Iraq’s pipeline network
into its territory without approval from the latter’s federal
government.
Exports from Kurdistan via the
official Kirkuk-Ceyhan pipeline
have been halted since December
amid a dispute over a shortfall in
federal payments to foreign producers operating in the region.
The Kurds have claimed the
companies are owed 4.2 trillion
dinars ($3.6 billion), while the
central government’s accounting
bureau has said the amount is
$1.5 billion.
Baghdad refuses to recognise
production sharing agreements
signed by the KRG with international companies , such as AngloTurkish Genel and Norway’s DNO
International, that it claims are
unlawful under Iraq’s constitution.
More recent deals agreed with
players including ExxonMobil,
Chevron, Total and Gazprom Neft
have further angered the federal
regime, which has threatened reprisals by barring such companies from Iraqi projects.
Genel has been exporting Taq
Taq crude by truck over Iraq’s
northern border to Turkey to bypass the federal pipeline system
— which has also been hit by
sabotage attacks — despite Iraqi
threats to take legal action to halt
the move.
“The new pipeline will be
linked to the Kirkuk-Ceyhan line,
said one Ankara-based industry
source. “Naturally, once they can
export via a pipeline and no longer have to truck their oil to the
border, the volumes will rise.”
The new route was originally
designed as a gas pipeline, but
KRG Energy Minister Ashti
Hawrami said it was to be converted to carry oil, a move that
had helped Genel to bring its
plans of pipeline exports by 2014
forward, sources said.
Genel declined to comment on
the issue.
The Iraqi government has said
it alone has the authority to control exports and sign contracts,
while the Kurds say their right to
do so is enshrined in Iraq’s federal constitution.
Before the latest payments
stand-off, the KRG had targeted
raising exports from almost
200,000 barrels per day of oil in
the final months of 2012 to 250,000
bpd this year.
INDIA’S Reliance Industries
posted a record net profit for
the financial year ended 31
March, despite a fall in oil
and gas revenues.
The company posted a net
profit of 210 billion rupees
($3.9 billion) for the 12
months to 31 March, up 4.8%
on the 200.4 billion rupee
profit booked the previous
year.
The rise in profit came as
revenues hit a record high of
more than 3.7 trillion rupees,
an increase of 9.2% compared
to the nearly 3.4 trillion
rupees generated a year
earlier.
This came despite a 35.2%
drop in oil and gas revenue,
which amounted to 82.8
billion rupees, on the back of a
fall in output.
Contributing to the
majority of the decline was
output from Reliance’s D6
Block, off India, which
produced 2.9 million barrels
of oil, 400,000 barrels of
condensate and 336 billion
cubic feet of gas, a reduction
of 41%, 43% and 39%
respectively on a year-on-year
basis.
Reliance attributed the
decline in output to geological
complexity, natural decline,
higher water ingress and the
effect of a seven-day
shutdown at the MA field
while the floating production,
storage and offloading vessel
underwent maintenance.
The company also saw a 19%
decline in oil output at the
Panna-Mukta fields, to 8.2
million barrels. However, gas
production was on par with
the previous year at 71.3 Bcf.
Reliance also noted that
production at the Tapti field
had dropped off, producing
about 540,000 barrels of
condensate and 43.9 Bcf, a
decline of 40% and 41%
respectively.
Helping offset the decline
in production and lift the
company’s profits was an
increase in revenue from
Reliance’s refining and
marketing business which
generated more than 3.3
trillion rupees, up 13.2% on a
year earlier, helped by higher
prices.
Revenues from the
company’s petrochemical
business were also up 9.3% at
nearly 881.1 billion rupees.
Profit: Reliance managing
director Mukesh Ambani
30 Show Daily
POWER PLAY
Immelt’s
passion
for oil
and gas
in focus
Shortly before GE expanded its oil and gas unit with the
$3.3 billion buyout of US artificial lift player Lufkin
Industries, and revealing plans for a $110 million research
centre in Oklahoma to investigate new techniques for
producing tight oil and gas, the US conglomorate’s chief
executive Jeff Immelt spoke to Upstream.
In a wide-ranging interview, he tells why the company
decided more than a decade ago to seek growth in oil, why
that green light is still flashing and why, despite believing
climate change needs to be addressed, he feels that the
whole debate over it had got ‘too precious’
MARK HILLIER
Florence, Italy
J
EFF Immelt likes oil and
gas. Speaking in Florence,
Italy, where GE Oil & Gas is
headquartered, Immelt says
that when he became chief executive of GE in 2001, oil and gas was
already a $1 billion business for the
company.
He says: “We’ve always, as a
company, had this big sense that
one of the big economic drivers
was going to be about a billion
new consumers in the emerging
markets... there are multiple
beneficieries, if you believe in that
trend, and one is clearly the need
for more energy.”
Given that backdrop, “we made
a specific decision more than
10 years ago to increase investment both organically and non
organically” in oil and gas.
Since then, expansion has been
rapid and last year turnover for GE
Oil & Gas was $15.2 billion, and it
brought in more than $18 billion.
One of the most significant steps
in GE’s initial expansion into oil
and gas came with the acquisition
of Nuovo Pignone in 1994, which
gave exposure to business areas
such as compression and liquefied
natural gas, as well as the eventual
home for GE Oil & Gas in Florence.
The company expanded into
five main business areas, including LNG, enhanced oil recovery,
wellheads, subsea, and controls
and systems. “Our intention has
always been to pick an area where
we could bring technology, invest
either organically or inorganically
and then stick with it,” says
Immelt.
Opportunities He acknowledges
there are areas that could provide
additional opportunities for GE but
says there is work to be done to
make the most of what it already
has.
“There are always gaps and our
aspiration is always to grow but
our even bigger focus right now is
to catch up on what we’ve already
done,” he says.
“So at least in the near term we
kind of like where we are and an
even bigger focus is on execution.”
That being said, when asked if
cash is available for new opportunities Immelt is clear and concise.
“Sure,” he says, adding, “and I’d
say oil and gas is close to the top
of the list”, when it comes to pos-
Fascination with industry and technology fuels progress
JEFF Immelt loves his job at the helm of
GE and says that he is more than happy
to keep on doing it as long as the
company will have him, writes Mark
Hillier.
“I have a massive passion for the
company and for what I do,” he says. “I
have a real thirst for it.”
Asked if there is a time when a chief
executive might be ready to bow out, he
responds: “I’d say, by and large, at a big
company you don’t necessarily change
leaders based on running out of steam or
anything like that.
“There will be a right time when it will
be good to have somebody else’s
perspective on where to take GE next.”
However, “it’s not right now”, he adds
quickly.
Questioned about how to keep on top
of things when running a company with
the breadth of GE, Immelt explains: “We
don’t run it like a holding company. We
run it like an operating company.
“You have to have really good people,
You’ve got to have really good processes
so that news travels fast and you’re
always on the same page in things like
compliance and quality and so on.”
More personally, he adds: “You’ve got
to have a real interest. And I have a
personal fascination with oil and gas and
technology and customers and things
like that. I think the combination of good
people, good processes and a massive
amount of curiosity about what’s going
on” is what’s needed, he says.
Immelt adds that oil and gas certainly
ticks the boxes when it comes to interest.
“What’s fun about oil and gas
intellectually is it’s big stakes, it’s big
bets, it’s a fast-moving industry and the
people are inherently interesting.
“So if you go to Brazil you know that
what Petrobras does is important to
every citizen in that country.
“You’re not just playing in a little
sandbox somewhere. You’re really
working in an industry that’s important
to every citizen.”
He also cites the shale gas boom,
acknowledging that like the rest of the
industry he did not see it coming.
“Anybody that says that they saw shale
gas or could see (natural) gas at $70 (per
million British thermal units) or $2 or
$2.50, their nose is growing and they are
telling you a fib,” he laughs.
“But it’s a game changer,” he adds. “It’s
quite profound if you think about North
America — Canada, the US and Mexico.
“The world a decade from now in the
energy sector is going to look
dramatically different than it looks
today.
“I have to say I don’t know how it’s
going to all play out but that is an
amazing occurrence,” he adds.
Show Daily 31
JEFF IMMELT
Ninth chairman and chief executive of GE.
Born: Cincinatti, Ohio in 1956.
Education: BA in applied mathematics from Dartmouth College in 1978;
MBA from Harvard University in 1982.
Joined GE in 1989 and held positions in plastics, appliances and healthcare
businesses.
Having been appointed a year before to replace Jack Welch, took over as
chairman and chief executive of GE on 7 September 2001, just four days
before 9/11 terror attacks on the US.
Chairman of US President Barack Obama’s Council on Jobs &
Competitiveness
Member of The American Academy of Arts & Sciences.
Married for 27 years with one daughter.
New stand results in
lighter shade of green
TONING DOWN
OF VIEWPOINT
But GE boss says climate
science still has key role
Outlook: GE chief executive Jeff Immelt
Photo: BLOOMBERG
sible acquisitions by GE. We try to
pick the industries we want to be
in and then we try to grow them
quickly.
“I would say that oil and gas, in
the GE context anyhow, is a complete green light business.”
He says the more GE has gained
exposure to the sector the more it
has felt that it can be a successful
player in it.
Immelt describes the industry
as still being highly fragmented
on the technology side.
“You can look at any one of the
segments that we’re in and probably go pick 50 companies that are
in the $50 million to a couple of
hundred million dollar range that
are more or less playing in the
same space.”
That gives “ample opportunity
for consolidation and for innovation and for things like that, and
that’s what makes it so exciting”,
he says.
GE is also in the position where
it has cash available for more
acquisitions. “We target between
$1 billion and $4 billion on mergers
and acquisitions,” he says, adding
execution rather than size matters.
“We like to buy single techno-
logies and we like to execute them
well.
“It’s not to say that we wouldn’t
do a smaller one or a bigger one
but we kind of have a sweet spot
that we like to stay focused on,”
says Immelt.
He says GE’s track record on oil
and gas acquisitions has been
“very satisfying”.
He cites examples such as the
Wood Group ESPS and pumps
business, which was acquired for
$2.8 billion in early 2011 at a price
that was seen by analysts at the
time as pretty high, and Wellstream’s flexible risers business,
which was bought for $1.3 billion
in 2010.
Benefits of scale Other major
acquisitions included paying
$3 billion in 2010 for equipment
provider Dresser and $1.12 billion
in 2008 for pressure control player
Hydril.
On the subsea side, he acknowledges that with Vetco Gray, which
was bought for $1.9 billion in 2007,
“it’s probably taken us a while to
get it where we want it to be” but
he talks with excitement about
growth prospects for the subsea
sector. “I remember tracking Vetco
Gray a decade ago no one built
the models for where subsea has
ended up going. So the industry
(growth) has been phenomenal,”
he says.
Immelt does not pretend GE has
all the answers on acquisitions
but highlights the benefits its
scale can bring as well as services
and technology innovation from
other GE businesses such are aero
engines and medical science.
“It’s not that we’re perfect, but
I think the industry is generally
growing. It’s fairly fragmented
and if you knock on the door of
an integrated oil company or a
national oil company and you’re
carrying a GE business card, noone ever shuts the door in your
face,” he says.
“We have big research and
materials science services that
can benefit whoever we acquire,”
he adds.
“Any of the companies we
might acquire might have a
couple of hundred engineers — as
a company we have 45,000 engineers.
“It’s the sheer scale of what’s
backing up these acquisitions. If
we get it right it’s quite meaningful,” he concludes.
GE CHIEF executive Jeff Immelt
developed something of a reputation for being on the green side of
the energy and climate science
debate over the last decade when
he was associated with the company’s “Ecomagination” drive into
clean energy investment, writes
Mark Hillier.
More recently Immelt has
distanced himself from that
reputation and in the middle of
last year was widely quoted as
saying that he wished he had
never got so closely identified
with green issues.
However, he does say he continues to believe global warming
is an issue that needs to be
addressed.
“I believe in climate science,
I believe in clean energy,” says
Immelt, but he adds: “I think to a
certain extent people let it get too
precious versus being hard-nosed
problem-solving about jobs, about
the economy, about productivity,
because I think that’s what ultimately drives real progress no
matter what the problem is.”
Immelt says the Ecomagination
programme is still big for GE and
the company believes that technology and innovation are key to
dealing with the challenges of
climate change.
However, in words that will find
more favour with oil company
chiefs than with those environmentalists who may have detected
a fellow traveller, Immelt says:
“We also kind of believe that
everything that exists in the world
is going to get used.
“Every barrel of oil, every cubic
foot of gas, probably all the coal
that exists in the world today, is
going to get used over time.”
He says that means that what
is needed, therefore, are creative
and innovative solutions on how
to make their use possible in
an environmentally acceptable
manner.
“That’s what we’re really all
about,” he says. “We still believe
in clean energy. We still invest in
it but I view oil and gas as being
really consistent with that.”
Immelt cites the example of the
oil sands in Canada and says that
the kind of challenge the industry
should be looking at is how do you
produce it and get 100% of the
water recycled and do it economically.
“Meeting those kinds of challenges, that’s what GE does,” he
argues. He says that while some
people think it is a question of
either/or when it comes to the
economy and the environment, he
sees things differently.
“My view is offshore in Brazil,
oilsands in Canada, shale gas in
the US - this is all going to become
part of the economies where
people live,” and the role of companies such as GE is to develop
them in an environmentally
acceptable and innovative way.
“We look at it as a very technologically driven enterprise around
climate and clean energy.
“Can we do all that without
destroying the planet?” Immelt
asks, and prefers to take an optimistic stance.
“If you look at the US, even
without any kind of cap and trade
or any other kind of law, carbon is
down by a net effective basis by
17%,” he says, referring to the
downturn in emissions that has
come in recent years amid the
shale gas explosion.
Conversion to gas, conservation
and other factors have been the
cause of that, he says.
Immelt insists it is “markets,
innovation and technology” that
will drive success.
Of GE’s own Ecomagination programme he says: “We said this
was going to be about markets, it’s
going to be about cost, it’s going to
be about solving problems.
“We never kind of cloaked it in
a pure green cloak, that’s never
really what our thrust was.”
What’s fun about oil and gas
intellectually is it’s big stakes, it’s
a fast-moving industry and the
people are inherently interesting.
We still believe in clean energy.
We still invest in it but I view oil
and gas as being really
consistent with that.
GE chief executive Jeff Immelt

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