Modeling lost production from destroyed platforms in the 2004–2005 Gulf of Mexico hurricane seasons

Hurricanes Ivan, Katrina, and Rita passed through the Gulf of Mexico during 2004 and 2005 and resulted in the largest number of destroyed and damaged offshore oil and gas structures in the history of Gulf operations. In the final official government assessment, a total of 126 platforms were destroyed and over 183 structures were identified as having extensive damage. Production associated with wells and structures that are not redeveloped are classified as lost. The purpose of this paper is to derive functional relations that describe the likely contribution the collection of destroyed assets would have made to future production in the Gulf of Mexico. We estimate that the total remaining reserves from the set of destroyed structures range in value between $1.3 and $4.5 billion depending on the assumptions employed. We summarize the impact of the storms on the Gulf of Mexico oil and gas infrastructure and discuss the main issues involved in redevelopment decision making. A meta-model analytic framework is applied to perform sensitivity analysis and to explore the interactions of assumptions on model output. A discussion of the limitations of the analysis is presented.     

The impact of Hurricanes Gustav and Ike on offshore oil and gas production in the Gulf of Mexico

During August and September 2008, Hurricanes Gustav and Ike passed through the Gulf of Mexico and damaged and destroyed a number of offshore oil and gas structures. In the final official government assessment, a total of 60 platforms were destroyed and 31 structures were identified as having extensive damage. The destroyed platforms were responsible for about 1.6% of the oil and 2.5% of the gas produced daily in the Gulf of Mexico and represented approximately 234 million BOE of reserves valued between $4.6 and $10.9 billion. Although the number of structures destroyed by Hurricanes Gustav and Ike was half the total destruction from the 2004–2005 hurricane seasons, we estimate that the reserves at risk are approximately three times more valuable. Each destroyed structure is unique in its production capacity and damages incurred and are a candidate for redevelopment. We review pre-hurricane production and revenue characteristics for the collection of destroyed structures and estimate production at risk. Gas structures are expected to present better economics and redevelopment potential than oil structures, and we predict that 198 million BOE, or nearly 95% of reserves-in-place, are likely to be redeveloped. Shut-in production statistics are compared against recent hurricane events and general comments on the factors involved in decision making are presented.     

Competitiveness of shallow water hydrocarbon development projects in Mexico after 2015 actualization of fiscal reforms: Economic benchmark of new production sharing agreement versus typical U.S. federal lease terms

Development of Mexican hydrocarbon reservoirs by foreign operators has become possible under Mexico's new Hydrocarbon Law, effective as per January 2015. Our study compares the economic returns of shallow water fields in the Gulf of Mexico applying the royalty and taxes due under the fiscal regimes of the U.S. and Mexico. The net present value (NPV) of the base case scenario is US$1.4 billion, assuming standard development and production cost (opex, capex), 10% discount rate accounting for the cost of capital and revenues computed using a reference oil price of $75/bbl. The impact on NPV of oil price volatility is accounted for in a sensitivity analysis. The split of the NPV of shallow water hydrocarbon assets between the two contractual parties, contractor and government, in Mexico and the U.S. is hugely different. Our base case shows that for similar field assets, Mexico's production sharing agreement allocates about $1,150 million to the government and $191 million to the contractor, while under U.S. license conditions the government take is about $700 million and contractor take is $553 million. The current production sharing agreement leaves some marginal shallow water fields in Mexico undeveloped for reasons detailed and quantified in our study.     

Economic limit of Outer Continental Shelf Gulf of Mexico structure production

The economic limit of an oil and gas asset occurs when income from production is less than the direct cost of operation. Economic limits determine the threshold for profitable operations and are often considered from a conceptual perspective rather than as an object for empirical assessment. The purpose of this paper is to derive empirical estimates of the economic limit of offshore structures in the Outer Continental Shelf Gulf of Mexico. We classify 1962 decommissioned structures between 1986–2009 by structure type, primary production, water depth and year of removal, and compute end-of-life production, adjusted gross revenue, and water cut thresholds according to various levels of categorization. During the last year of production, historic gross revenues averaged $539,000 for oil structures, $955,000 for gas structures, and $1.1 million for dry gas structures. Daily end-of-life production ranged from 50 BOEPD for oil structures to 647 MCFEPD for gas structures and 788 MCFEPD for dry gas structures. The economic limits for oil and gas structures increased to $1 million and $1.7 million over the period 2005–2009.     

全球深水油气资源勘探开发现状及面临的挑战

全球海洋油气资源非常丰富,其中大陆架占据主要部分,约为60%左右;深水、超深水的资源量也不容小觑,约占全部海洋资源量的30%。但分布十分不均,主要分布在巴西、墨西哥湾、西非三大热点地区。截至2007年,海上油气探明储量约1526×108t,占全部探明储量的27%左右,深水已成为未来油气生产的重要基地。21世纪以来,各大石油公司纷纷加快进军深水区域的步伐,不断加强勘探开发投资力度,海上油气产量稳步上升。西非、北美和拉丁美洲依然是未来深水油气生产的重要区域,亚洲也将成为一个十分重要的深水油气生产基地。但深水油气勘探开发也面临着两个挑战:一是深水油气勘探开发难度不断增加;二是深水油气勘探开发投资回报率不断下降。如果未来不能很好地解决深水技术难题,将会降低深水油气资源项目的吸引力。     

An integrated systems framework for service vessel forecasting in the Gulf of Mexico

Throughout the world wherever oil and gas is discovered, a support industry will develop and evolve with the needs of industry and government regulation. In the Gulf of Mexico, a large variety of marine vessels transport goods and provide services to exploration, development and production activity, and play an important role in the economic and ecological impacts across communities. The spatial and temporal dynamics of the logistics network is complex and dynamic and closely related to the magnitude, duration, type, and sequence of offshore workflows and activities. The purpose of this paper is to develop a methodological framework to quantify the number of offshore supply vessel and crew boat departures by activity across the Gulf’s coastal regions in support of the oil and gas industry. The logistics network is modeled as a linear time-invariant deterministic system and implemented using an input-output model. We provide a methodological framework to quantify the magnitude and distribution of service vessel trips to forecast port activity. This is the first integrated modeling study on service vessel trips in the Gulf of Mexico and special attention is paid to the analytic framework, model assumptions, and limitations of the analysis. Generic examples illustrate the model implementation.     

Forecasting short-run crude oil price using high- and low-inventory variables

Since inventories have a lower bound or a minimum operating level, economic literature suggests a nonlinear relationship between inventory level and commodity prices. This was found to be the case in the short-run crude oil market. In order to explore this inventory–price relationship, two nonlinear inventory variables are defined and derived from the monthly normal level and relative level of OECD crude oil inventories from post 1991 Gulf War to October 2003: one for the low inventory state and another for the high inventory state of the crude oil market. Incorporation of low- and high-inventory variables in a single equation model to forecast short-run WTI crude oil prices enhances the model fit and forecast ability.     

Bio-fuels production and the environmental indicators

The paper evaluates the role of the bio-fuels production in the transportation sector in the world, for programs of greenhouse gases emissions reductions and sustainable environmental performance. Depending on the methodology used to account for the local pollutant emissions and the global greenhouse gases emissions during the production and consumption of both the fossil and bio-fuels, the results can show huge differences. If it is taken into account a life cycle inventory approach to compare the different fuel sources, these results can present controversies. A comparison study involving the American oil diesel and soybean diesel developed by the National Renewable Energy Laboratory presents CO₂ emissions for the bio-diesel which are almost 20% of the emissions for the oil diesel: 136 g CO₂/bhp-h for the bio-diesel from soybean and 633 g CO₂/bhp-h for the oil diesel [National Renewable Energy Laboratory—NREL/SR-580-24089]. Besides that, important local environmental impacts can also make a big difference. The water consumption in the soybean production is much larger in comparison with the water consumption for the diesel production [National Renewable Energy Laboratory—NREL/SR-580-24089]. Brazil has an important role to play in this scenario because of its large experience in bio-fuels production since the seventies, and the country has conditions to produce bio-fuels for attending great part of the world demand in a sustainable pathway.     

The impact of weather and ocean forecasting on hydrocarbon production and pollution management in the Gulf of Mexico

Over the past 2 years, the vulnerability of offshore production in the Gulf of Mexico (GOM) has been brought to light by extensive damage to oil and gas facilities and pipelines resulting from Hurricanes Ivan, Katrina, and Rita. The occurrences of extreme weather regularly force operators to shut-down production, cease drilling and construction activities, and evacuate personnel. Loop currents and eddies can also impact offshore operations and delay installation and drilling activities and reduce the effectiveness of oil spill response strategies. The purpose of this paper is to describe how weather and ocean forecasting impact production activities and pollution management in the GOM. Physical outcome and decision models in support of production and development activities and oil spill response management are presented, and the expected economic benefits that may result from the implementation of an integrated ocean observation network in the region are summarized. Improved ocean observation systems are expected to reduce the uncertainty of forecasting and to enhance the value of ocean/weather information throughout the Gulf region. The source of benefits and the size of activity from which improved ocean observation benefits may be derived are estimated for energy development and production activities and oil spill response management.     

Effective use of hydrogen sulfide and natural gas resources available in the Black Sea for hydrogen economy

In this article, we propose a novel system to effectively deploy an integrated fuel processing system for hydrogen sulfide and natural gas resources available in the Black Sea to be used for a quick transition to the hydrogen economy. In this regard, the proposed system utilizes offshore wind and offshore photovoltaic power plants to meet the electricity demand of the electrolyzer. A PEM electrolyzer unit generates hydrogen from hydrogen sulfide that is available in the Black Sea deep water. The generated hydrogen and sulfur gas from hydrogen sulfide are stored in high-pressure tanks for later use. Hydrogen is blended with natural gas, and the blend is utilized for industrial and residential applications. The investigated system is modeled with the Aspen Plus software, and hydrogen production, blending, and combustion processes are analyzed accordingly. With the hydrogen addition up to 20% in the blend, the carbon dioxide emissions of combustion decrease from 14.7 kmol/h to 11.7 kmol/h, when the annual cost of natural gas is reduced from 9 billion $ to 8.3 billion $. The energy and exergy efficiencies for the combustion process are increased from 84% to 97% and from 62% to 72%, respectively by a 20% by volume hydrogen addition into natural gas.     

Forward curves,scarcity and price volatility in oil and natural gas markets

The role of inventory in explaining the shape of the forward curve and spot price volatility in commodity markets is central in the theory of storage developed by Kaldor [Kaldor, N. (1939) "Speculation and Economic Stability", The Review of Economic Studies 7, 1–27] and Working [Working, H. (1949) “The theory of the price of storage”, American Economic Review, 39, 1254–1262] and has since been documented in a vast body of financial literature, including the reference paper by Fama and French [Fama, E.F. and K.R. French (1987) “Commodity futures prices: some evidence on forecast power, premiums and the theory of storage”, Journal of Business 60, 55–73] on metals. The goal of this paper is twofold: i) validate in the case of oil and natural gas the use of the slope of the forward curve as a proxy for inventory (the slope being defined in a way that filters out seasonality); ii) analyze directly for these two major commodities the relationship between inventory and price volatility. In agreement with the theory of storage, we find that: i) the negative correlation between price volatility and inventory is globally significant for crude oil; ii) this negative correlation prevails only during those periods of scarcity when the inventory is below the historical average and increases importantly during the winter periods for natural gas. Our results are illustrated by the analysis of a 15 year-database of US oil and natural gas prices and inventory.     

Large-scale storage of hydrogen in salt caverns for carbon footprint reduction

This article presents a geomechanical appraisal of green hydrogen (H₂) storage in salt caverns opened by solution mining as a technical contribution to carbon footprint reduction. The location of the salt cavern is speculative, within possible limits to be found in the salt deposits in the Gulf of Mexico of the USA, as the aim is to demonstrate the technical feasibility of the concept. It presents the conceptual design of the wells used for the solution mining of the caverns and the operation cycle of injection and withdrawal of hydrogen. The contribution of the study presented stems from the methodology adopted in the simulation of the geomechanical structural behavior of the salt cavern and in its design for storing hydrogen, which has thermomechanical properties more complex than natural gas. The numerical simulation considers the nonlinear physical viscoelastic and elastoplastic phenomena, with different constitutive laws for representing the geomechanical behavior of geomaterials. The constitutive laws based on deformation mechanisms are used (multi-mechanisms of deformation – M.D.) to simulate the creep of the salt rock. The article also presents a protocol for sizing the caverns, considering more than 40 years of experience in the design of conventional and solution mining of rock salt. It presents the concept of admissible halite creep strain and safety factors necessary to establish a stress belt that avoids hydrogen leaks at all stages of cavern construction and hydrogen storage. Using this methodology, the authors found that the cavern studied (220 m in height and 95 m in diameter) can hold 11,968,000 kg of working hydrogen.     

European energy security: The future of Norwegian natural gas production

The European Union (EU) is expected to meet its future growing demand for natural gas by increased imports. In 2006, Norway had a 21% share of EU gas imports. The Norwegian government has communicated that Norwegian gas production will increase by 25–40% from today's level of about 99 billion cubic meters (bcm)/year. This article shows that only a 20–25% growth of Norwegian gas production is possible due to production from currently existing recoverable reserves and contingent resources. A high and a low production forecast for Norwegian gas production is presented. Norwegian gas production exported by pipeline peaks between 2015 and 2016, with minimum peak production in 2015 at 118 bcm/year and maximum peak production at 127 bcm/year in 2016. By 2030 the pipeline export levels are 94–78 bcm. Total Norwegian gas production peaks between 2015 and 2020, with peak production at 124–135 bcm/year. By 2030 the production is 96–115 bcm/year. The results show that there is a limited potential for increased gas exports from Norway to the EU and that Norwegian gas production is declining by 2030 in all scenarios. Annual Norwegian pipeline gas exports to the EU, by 2030, may even be 20 bcm lower than today's level.     

Designing cost-effective seawater reverse osmosis system under optimal energy options

Today, three billion people around the world have no access to clean drinking water and about 1.76 billion people live in areas already facing a high degree of water stress. This paper analyzes the cost-effectiveness of a stand alone small-scale renewable energy-powered seawater reverse osmosis (SWRO) system for developing countries. In this paper, we have introduced a new methodology; an energy optimization model which simulates hourly power production from renewable energy sources. Applying the model using the wind and solar radiation conditions for Eritrea, East Africa, we have computed hourly water production for a two-stage SWRO system with a capacity of 35 m³/day. According to our results, specific energy consumption is about 2.33 kW h/m³, which is a lower value than that achieved in most of the previous designs. The use of a booster pump, energy recovery turbine and an appropriate membrane, allows the specific energy consumption to be decreased by about 70% compared to less efficient design without these features. The energy recovery turbine results in a reduction in the water cost of about 41%. Our results show that a wind-powered system is the least cost and a PV-powered system the most expensive, with finished water costs of about 0.50 and 1.00$/m³, respectively. By international standards, for example, in China, these values are considered economically feasible. Detailed simulations of the RO system design, energy options, and power, water, and life-cycle costs are presented.     

Numerical studies on power generation from co-produced geothermal resources in oil fields and change in reservoir temperature

The effects of injection rate and the temperature of injected (or re-injected) water on reservoir temperature during power generation by utilizing hot fluids co-produced from oil and gas field were studied using a numerical simulation approach. The chosen target reservoir was LB oil reservoir from Huabei oil field. The reservoir temperature was about 120 °C. It has been found that there was significant temperature decline if the water injection rate was greater than a specific value and the temperature of injected water was less than a specific value. Also studied were the effect of water injection rate on oil production and water cut in LB oil reservoir. The results demonstrated that the oil production increased with the water injection rate, which is reasonable and would be helpful to conduct the power generation project in LB oil reservoir from the economic point of view.     

The natural gas potential of Saudi Arabia

Kingdom of Saudi Arabia (KSA) has the fourth largest natural gas (NG) reserves in the world. One third of these reserves are located in the Ghawar region of Eastern Province. NG production is controlled tightly due to close conjunction with oil production until recently. KSA’s NG production of 85 billion cubic meters in 2015 from 70 billion cubic meters in 2008 sets an average annual increase of 2.7%. More than half of the annual KSA’s NG production has been accompanied by gas. The Saudi Gas Initiative (SGI) aims to increase foreign investment in the NG development sector through petrochemicals, power generation, and gas development while integrating with salt water desalination. The barriers in the success of motor fuel policies include high initial capital costs, lack of information or skills, less market acceptance, technology limitations, and financing risks. This article aims to review the potential of NG as an alternative to oil and coal in KSA in meeting the country’s high energy requirements.     

The economical and environmental performance of miscanthus and switchgrass production and supply chains in a European setting

The purpose of this study is to analyse the economical and environmental performance of switchgrass and miscanthus production and supply chains in the European Union (EU25), for the years 2004 and 2030. The environmental performance refers to the greenhouse gas (GHG) emissions, the primary fossil energy use and to the impact on fresh water reserves, soil erosion and biodiversity. Analyses are carried out for regions in five countries. The lowest costs of producing (including storing and transporting across 100 km) in the year 2004 are calculated for Poland, Hungary and Lithuania at 43–64 € per oven dry tonne (odt) or 2.4–3.6 € GJ^?1 higher heating value. This cost level is roughly equivalent to the price of natural gas (3.1 € GJ^?1) and lower than the price of crude oil (4.6 € GJ^?1) in 2004, but higher than the price of coal (1.7 € GJ^?1) in 2004. The costs of biomass in Italy and the United Kingdom are somewhat higher (65–105 € odt^?1 or 3.6–5.8 € GJ^?1). The doubling of the price of crude oil and natural gas that is projected for the period 2004–2030, combined with nearly stable biomass production costs, makes the production of perennial grasses competitive with natural gas and fossil oil. The results also show that the substitution of fossil fuels by biomass from perennial grasses is a robust strategy to reduce fossil energy use and curb GHG emissions, provided that perennial grasses are grown on agricultural land (cropland or pastures). However, in such case deep percolation and runoff of water are reduced, which can lead to overexploitation of fresh water reservoirs. This can be avoided by selecting suitable locations (away from direct accessible fresh water reservoirs) and by limiting the size of the plantations. The impacts on biodiversity are generally favourable compared to conventional crops, but the location of the plantation compared to other vegetation types and the size and harvesting regime of the plantation are important variables.