Proactive oil and gas leadership: how to become a crisis-ready organization

Modern digital solutions that use data analytics can yield critical value and create innovative use cases, helping c-level management drive a proactive oil and gas business model. How is that possible and what are the outcomes? Let’s explore together. 

A proactive approach to oil and gas business operations: definition, strengths, and traits 

This methodology entails looking for new business opportunities, taking preventive measures against potential disruptions, and planning strategically for the company’s future. Proactive oil and gas leadership works on identifying and solving issues before they expand or even happen. They discover and evaluate risks and then take steps to mitigate them or turn them into business growth. 

Such a business model for oil and gas industry strategy is beneficial because it gives you the freedom to consider several options and decide rather than merely responding out of necessity to a situation that already may be out of control. By doing so, your company will have better chances of addressing challenges with minimal effect on business. 

Top 6 business processes driven by proactive company management 

1. Review the state of each organization’s data 

Making quick repairs or applying run-to-failure programs seems practical and cost-effective until you see a huge bill to urgently fix critical assets that have broken down. Leadership in oil and gas investing time and resources in preventive maintenance can considerably decrease the likelihood of downtime and extend the life of assets. Frequently servicing machinery allows you to run it longer and more proficiently, substantially cutting the cost of operating equipment and increasing the value of assets. 

Advanced remote technology for machinery monitoring and diagnostics support a proactive oil and gas business model and facilitate decision-making. You can perform a remote survey, track all the information on assets around the clock, and effectively deal with any potential problem. 

2. Risk management 

Today’s leadership in the oil and gas industry encounters intensifying challenges: oil price volatility from the Russia-Ukraine crisis, political unrest, and low demand for fossil fuels. Proactive risk management enhances business ability to handle existing and emerging risks and helps you adjust quickly to crises. Being a forward-thinking oil and gas sector leader is difficult and requires a thorough situation analysis, risk likelihood assessment and prioritization, and comprehensive plan development. Mapping out possible scenarios with contingency roadmaps can help you stay in control no matter what. 

3. Safety culture 

Although accidents are usually unpredictable, building a proactive safety culture decreases an accident’s probability and makes dealing with it more seamless. This approach can lower staff turnover and training costs, reduce absenteeism and possible insurance claims, decrease the frequency of workplace accidents, and positively affect your business reputation. By doing so, oil and gas leadership figures will show workers and the public that they put people’s welfare above all. 

Moreover, real-time data at hand would allow you to rapidly analyze risks, mitigate, and automatically monitor them to ensure they are working. This is becoming a reality thanks to connected digital ecosystems that collect risk data and transform it into actionable insights. 

4. Decision-making and problem solving 

Successfully dealing with issues entails developing an emergency action program and crisis management strategy to constantly uncover and solve problems quickly and effectively. Anticipating possible challenges and preventing them is vital to ensure any business continuity. A prudent industry leader in oil and gas should examine data and incident reports to evaluate activities, discover trends and patterns, and make practical decisions. 

Organizations that built a solid foundation in the good times are in an excellent position to weather any challenges or crises. Thus, senior oil and gas leadership can make rapid and informed decisions to minimize disorientation and redirect everyone’s effort in a clearly defined way. 

5. ESG commitments 

A proactive oil and gas business model in ESG strategy means going the extra mile beyond those required by regulation. With a field data capture solution, you can monitor EHS and greenhouse indicators that will help to implement sustainable corporate social responsibility policies and ESG initiatives. ESG-focused investing now exceeds 21.5 billion, increasing the urgency for late adopters to join the ESG movement or risk being left behind. 

oil and gas leadership - ESG proposition

6. Talent acquisition 

Given the fundamental labor market shifts, unprecedented skill gaps, and emerging oil and gas talent trends, more companies are building a talent pipeline. They think ahead to what skills will be needed in the future and interact with candidates who possess those skills. Proactive oil and gas leadership gathers potential talents, including those not actively looking for a new role, and keeps them as reserves for possible future positions. This approach will bring benefits such as good-fit candidates, reduced recruitment time, and improved candidate experience. 

4 tips to create and implement a proactive oil and gas business model 

  1. Analyze internal workflows. You should re-examine your processes to discover those you can improve. Digitalization in oil and gas can decrease the dependence on certain work routines, remove manual tasks, and make operations more efficient. If you can automate a process with some software, do it. The more useless procedures you remove, the more time you’ll have to get back to effective and realistic planning. 
  2. Upgrade corporate culture. The reactive management style is sometimes so much a part of a company culture that it could feel counterintuitive to contradict the established flow. To create a culture filled with proactivity, an oil and gas leader should show that they value employees’ input, hear their ideas, and are willing to pursue them. Doing so will awaken greater enthusiasm to modernize. By showing your support of a creative environment, you’ll encourage employees to be more active in their jobs and problem-solving. 
  3. Use data analytics. The ability of a business to analyze and make meaningful interpretations of data is crucial for creating workable proactive strategies and leadership styles for oil and gas industry. Consider the main areas of concern, information about competitors, regulations, and development trends to accurately assess the current state. Investing in modern tools like data analytics platforms will provide you visibility on assets and empower you to gain better insights from data. With these insights, you will more easily detect opportunities, identify patterns and trends to take the right actions, and achieve desired outcomes. 
  4. eep an eye on the horizon. Today, one of the main traits of business model for oil and gas industry success is strategic thinking about the future and simultaneous focus on running a company profitably. So, make time for planning and looking out for groundbreaking technologies. Consider how these digital solutions will affect your business and how your company will benefit if you incorporate them. Then you’ll be better off when it’s time to leverage those technologies. 

Prepare now and thrive later 

We think that now is the perfect time for companies to increase their focus on running efficient organizations instead of aggressively adjusting the workforce or cutting budgets to keep up with the market. 

Adopting a proactive strategy requires an investment in relevant technologies and involves changes in practices and internal processes. Digital Oil & Gas Solutions can assist with both. Our experience in digital business transformation will help you develop a strategy that encourages growth, while data management tools will enhance field service, collaboration, and record-keeping. Don’t be afraid of changes, be open to new approaches driven by an effective oil and gas business model to emerge as a leader in the future landscape

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Ukraine Latest: Putin Says He’s Ready to Talk; Pope Decries War – Energy News for the Canadian Oil & Gas Industry | EnergyNow.ca

With Russia’s invasion now into its 11th month, President Vladimir Putin said the absence of talks to stop the war is not Moscow’s fault. “It’s not we who refuse negotiations, but they,” Putin said in a TV interview. Russia is prepared to discuss “acceptable outcomes,” he added.Air alerts sounded across Ukraine on Sunday morning after Russian fighter jets, including one capable of carrying hypersonic missiles, took off from two Belarusian air bases, a official with Ukraine’s air force said. The alarms were later cancelled as the jets landed back in Belarus without incident.

On Saturday, the 10-month mark of Russia’s invasion of Ukraine, Kremlin troops killed ten and wounded dozens more in a Grad systems attack on the southern city of Kherson, Ukrainian officials said. Images showed bodies strewn in a shopping area, along with damaged cars and buildings.

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

On the Ground

Russia fired five missiles and conducted an airstrike on Saturday, according to Ukraine’s Military Staff. Kremlin troops carried out more attacks on civilian targets, including in Kherson, where ten people were killed and dozens injured. Russia is focusing its efforts on the offensive in the Lyman, Bakhmut and Avdiivka regions in Donetsk. Ukraine said it hit four command posts and three areas with concentrated Russian manpower, and hit one Russian S-300 anti-aircraft missile system. Russia’s naval grouping in the Black Sea has increased in the past few days and includes surface and underwater missile carriers equipped with Kalibr guided missiles.

(All times CET)

Lukashenko in Russia a Week After Putin’s Visit (1:30 p.m.)

Belarus President Alexander Lukashenko arrived in St. Petersburg for the two-day summit of post-Soviet country leaders within the Commonwealth of Independent States that starts on Monday, according to his press service.

Lukashenko, who provided his country’s territory for Russia’s attack on Ukraine, received Vladimir Putin and other top officials in Minsk for talks last week.

The Belarusian strongman on Saturday visited the Gagarin Cosmonaut Training Center outside Moscow. Six female cosmonauts from Russia’s close ally are being considered for a Russian space mission.

Pope Makes Christmas Plea for End to Ukraine Fighting: AP (1:35 p.m.)

Pope Francis used his Christmas message Sunday to lament the “icy winds of war”and make an impassioned plea for an immediate end to the “senseless” fighting in Ukraine, the Associated Press reported.

“Let us also see the faces of our Ukrainian brothers and sisters, who are experiencing this Christmas in the dark and cold, far from their homes due to the devastation caused by 10 months of war,” the pontiff said.

Russia May Raise Crude Oil Exports if EU Ban Cuts Refining: Tass (1:05 p.m.)

Russia may increase its crude oil exports if the European Union ban on imports of the nation’s fuel results in lower refinery throughput, vice prime-minister Alexander Novak said in an interview to Tass.

“If there are problems with the sale of petroleum products, oil refining to some extent can be replaced by additional volumes of oil exports,” Novak said. There’s still a possibility that the EU ban won’t affect Russian oil refining at all, he said.

Putin Reiterates He’s Ready to Negotiate on ‘Acceptable Outcomes’ (11:01 a.m.)

Vladimir Putin said the absence of negotiations to end the war in Ukraine isn’t Russia’s fault but rather that of Kyiv and its Western allies, whom he said were trying to “tear apart@ Russia. “We are ready to negotiate with all the participants in this process about some acceptable outcomes, but this is their business – it’s not we who refuse negotiations, but they,” Putin said in an interview with Rossiya-1 state TV, according to Tass.

Russia has been trying to resolve the situation in Ukraine peacefully since 2014, but was “forced to stand up for the people who live in these territories,” Putin said in reference to eastern Ukraine, reiterating his reasoning for the invasion launched on Feb. 24 that’s now into its 11th month.

When asked if he thinks that Russia is about to cross a dangerous line against its neighbor, Putin said he doesn’t see it as “that dangerous” and that Russia is merely defending its interests. He vowed that Moscow’s troops would destroy US Patriot missiles being sent to Ukraine.

McDonald’s Reopens in Bucha (11:30 a.m.)

The US fast food giant McDonald’s Corp reopened its branch in Bucha, northwest of Kyiv, on Saturday, Yulia Badritdinova, the company’s Ukraine CEO, said in press release.

“It is extremely important to restore the restaurant as soon as possible in order to support the local community,” she said.

Bucha became synonymous with alleged Russian war crimes by occupying troops in the first months of the Kremlin’s bid to take Ukraine’s capital by force. McDonald’s shut its restaurants in Russia in March.

Kyiv Power Supplies on the Rise (10:50 a.m.)

All districts in Ukraine’s capital should be getting “largely” enough power supplies on Sunday, SCM holding company spokeswoman Natalya Yemchenko said on Facebook.

“Energy workers have accomplished the absolutely impossible, effectively a miracle,” she wrote.

SCM is owned by billionaire Rinat Akhmetov and controls DTEK Energy, Ukraine’s largest private power company.

Air Alert Lifted as Russian Jets Return to Belarus (10 a.m.)

Air raid alerts that sounded across Ukraine early Sunday followed the launch of Russian fighter jets from two Belarusian airfields, said Yuri Ignat, spokesman for the air force branch of Ukraine’s armed forces. The alarms were lifted after almost two hours as the jets returned to base.

At least one MiG-31K, which can carry Kinzhal hypersonic missiles, took off from Machulishchi air base south of Minsk, along with an AWACS Il-76 A-50U “Sergey Atayants” early warning aircraft, according to the monitoring group Belarusian Hajun. At least one other fighter jet and an escort jet launched from the Baranovichi air base further to the southwest.

The jet activity by Russia in Belarus comes days after President Vladimir Putin and other senior Russian officials visited Minsk for talks with President Alexander Lukashenko.

Russia May Seek ‘Tactical or Operational Pause’ in Bakhmut Area: ISW (9:47 a.m.)

Kremlin troops are likely to struggle to keep up the pace of their offensive operations in the Bakhmut area of Donetsk and may seek to initiate a tactical or operational pause, said US military analysts the Institute for the Study of War.

The Ukrainian Joint Forces Task Force released an interview Saturday with a Ukrainian service member detailing that Russian forces have been conducting an extremely high pace of assaults with little corresponding progress. Wagner Group’s mercenaries have reportedly suffered heavy losses in recent weeks, ISW said.

On Saturday, the UK defense ministry said Russia’s lengthy front line “requires a significant daily expenditure of shells and rockets,” and that Moscow is rationing long-range missile launches.

Zelenskiy Marks ‘Difficult’ Christmas (8 a.m.)

On Christmas Eve, Volodymyr Zelenskiy gave greetings to Western Rite Orthodox Christians in his address to the nation focused on Ukraine’s “difficult circumstances.”

“The main act of courage is endurance and completion of one’s work to the end, despite everything,” Ukraine’s president said. “Our truth is a struggle for freedom. Freedom comes at a high price. But slavery has an even higher price.”

Toll in Russian ‘Pleasure’ Attack on Kherson Now Ten (12:30 p.m.)

Ukraine President Volodymyr Zelenskiy called Saturday’s Russian rocket attack on residential areas of the recently-liberated city of Kherson “killing for the sake of intimidation and pleasure.”

Ten people were killed and dozens wounded, including 18 in critical condition, after Russian troops shelled Kherson with Grad (multiple rocket launcher) systems, local governor Yaroslav Yanushevych said on TV. Eyewitnesses told AFP that a department store and a market were among the locations struck.

Saturday marks the 10-month mark in Russia’s invasion, which Moscow conceived as a “special military operation” that would depose the government in Kyiv within days or weeks.

Zelenskiy Says Ukraine Bracing for ‘Different Variants’ by Russia (8:30 a.m.)

Ukraine’s president said the country’s armed forces are preparing for “different variants of actions” by Russia, following a meeting with top military staff on Friday. The comments, in Zelenskiy’s nightly video address, came amid growing concerns that Kremlin may renew its offensive from the north, including another push toward Kyiv.

The US military has said it doesn’t see an indication of a coming offensive by Kremlin troops, thousands of whom are training in Belarus.  Even so, it’s a possibility that must be taken seriously, said analysts at the Institute for the Study of War.

“Moscow has been setting conditions for a new ‘most dangerous course of action,’ a renewed invasion of northern Ukraine possibly aimed at Kyiv,” since at least October,” the US-based analysts said. “This MDCOA could be a Russian info op or could reflect Putin’s real intentions.”

Pink Floyd Says Its Single Raised £500,000 for Ukraine (8:20 a.m.)

The British rock band said its single “Hey, Hey, Rise Up” had raised £500,000 ($602,650) “to help alleviate the suffering of the Ukrainian people,” including £50,000 kicked in by band members, since its release in April.

Featuring vocals by the Ukrainian singer Andriy Khlyvnyuk from the band Boombox, it was the first original music released by Pink Floyd as a group since 1994.

The funds will be donated to five Ukrainian charities including Hospitallers, a voluntary paramedic organization; and Livyj Bereh, which provides supplies and the reconstruction of houses and schools, the band said on Twitter.



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Interview: APPEA Chief Executive Samantha McCulloch talks investment risk with Sky News host Tom Connell

Interview with Tom Connell on Sky News Afternoon Agenda

Parliament House, Canberra

Topics: Investment risk of Federal Government’s gas market intervention

Tom Connell: Future gas and liquid natural gas projects could be in danger of having their investment removed as the government cracks down on gas companies. Up to 12 projects worth $32 billion are facing “major uncertainty”. Rinehart-backed energy company Senex has already stopped work on its coal seam expansion effecting the resources industry in Queensland. There are growing industry concerns about what the price cap might do. The government’s coal price cap also comes into effect from day. Let’s get more on this. I’m joined by Samantha McCulloch, the Chief Executive of APPEA, the gas peak industry body. Thanks very much for your time. So this figure – I’m just trying to sort of figure out how many actual projects at this point have stopped, have paused, are not going ahead or are going to actually be delayed. Can you put a figure on that in terms of the projects or the dollar value?

Samantha McCulloch: So, Tom, thanks so much for having me. There is considerable uncertainty in the market and what we have is around $20.7 billion of oil and gas investments planned on the east coast of Australia that are now facing considerable uncertainty because of the government’s reforms introduced last week. With the announcement of the Senex project being paused, we’re seeing the very immediate and very real consequences of this intervention only a week after it was introduced.

Connell: Is that the only one though? Senex have said they are pausing it and they are mulling over what the ramifications will be. The others are just “we’ll see”, it’s uncertainty?

McCulloch: Well… all of these projects will be under assessment now to understand what the impacts of these interventions will be on individual projects. And we should clarify the extent of these market interventions are unprecedented and far reaching. There is, of course, the $12 price cap that is proposed to be introduced for one year. The order was released yesterday. It comes into effect today. The second part of the reforms is a mandatory code of conduct that will allow the government to essentially regulate a rate of return on these investments. So, of course, as we work with the government through the detail of this code of conduct, these projects will be facing considerable uncertainty in terms of what that will mean for their future investments.

Connell: But as we are right now, Senex is paused. That’s the one concrete action, for want of a better word. The others we will wait to see. They are looking at things, they’re seeing how beyond 12 months will stack up. Because future projects aren’t affected by the 12-month cap…

McCulloch: Well, Tom, just to clarify, though, in terms of the price cap, it applies to any existing production licence. So there will be projects that have a production licence but are yet to start producing, are yet to bring that new supply into the market…

Connell: But are any of them going to happen in the next 12 months anyway?

McCulloch: Well, that’s a question for individual projects. Our concern as an industry is we take our obligations to our customers seriously. We want to ensure that we continue to keep the gas in the pipelines, to keep that supply to Australian households and industry. And what we are seeing is the government’s intervention is already having the opposite effect of what was intended and of course of what is needed in bringing new supply on to the market to reduce those prices.

Connell: It’s one pause in terms of concrete action. But just to clarify – you’d have oversight of this, I’m not asking you to necessarily name companies or projects – but are any of them going to actually be producing gas domestically in the next 12 months?

McCulloch: There are projects that are looking at start producing in the near term…

Connell: In 12 months?

McCulloch: Many of these projects might be looking at what the pace of bringing that new supply onto market because of the uncertainty. Of course, there is the price cap that comes into effect today but the mandatory code of conduct will be in effect from the first quarter next year.

Connell: In the next 12-month period, is there anything that realistically could produce gas in that period.

McCulloch: There are well developed projects in the pipeline that could be producing gas… but I couldn’t give you a figure in terms of what that would look like…

Connell: In the 12-months… but in that 12 months?

McCulloch: Well, potentially, yes.

Connell: Potentially, OK… And beyond that 12 months is the other thing the government is still working on. What are you looking for there? Clearly, the government is saying gas prices, they’re not being reliably provided to Australians at a reasonable price. So what would you push back and counter with? What would be acceptable intervention?

McCulloch: Let me make two points on the price cap. The ACCC itself has highlighted that wholesale gas contracts have been struck at an average of $12.34/GJ of gas in recent months. So what we were seeing was the market working. Deals were being struck at competitive rates between suppliers and producers. What we’ve now seen though is unprecedented intervention and in some ways it’s not so much about the price of the cap. It’s actually the nature of the intervention, how it was introduced, and this ongoing regulation of the rate of return that these investments can earn. We need to recognise these companies can spend tens even hundreds of millions of dollars before they earn a cent. It’s a high risk, it’s a capital intensive business and we need certainty for that investment. What we’ve seen in the last week, in the last couple of weeks, is the government intervening with no notice and no consultation and, frankly, that’s making investors very nervous.

Connell: When we talk about production costs, though, it’s important to note, from my understanding, production costs will factor in an annualised amount for that initial investment. So whilst you say companies spend a lot of money – and they do, getting things up – once we get to a production cost which might be $9 or $10, that’s not for that year, that takes into account the life of that extraction, and the annualised amount. So whilst you are pointing out there’s a cost there, as long as that production cost is still well below $12, they are recouping the money from that initial extraction and exploration.

McCulloch: Lets’ be clear. In terms of the rate of return that’s going to be imposed through a mandatory code of coduct, we’re yet to see the detail of that. We will work with the government in the course of the next month or two to iron out what that would look like. But, frankly, it is not conducive to investment for the government to be stepping in and saying this a regulated rate of return, here is what we think a particular project should be able to learn based on investments of billions of dollars.

Connell: I’m just trying to clarify that point. It is a complex thing for non-experts to understand. When we talk about rate of return on a gigajoule, that does factor in all those up front costs you were talking about, doesn’t it?

McCulloch: Well, we don’t know yet. So we are still looking at the details of this…

Connell: No, no. But I’m talking about when a gas company says, here’s our cost of production. That does factor in their initial outlay and then spread that out over the time of the extraction.

McCulloch: I think some of the concern is the rate of return that the government will impose on the industry. This is an unprecedented and far-reaching intervention into the market. It is dismantling the market entirely. What we are seeing, Tom, is the costs of production are increasing. We’re seeing higher costs of capital. We’re also looking to develop fields that will be of higher cost.

Connell: That’s a fair enough argument to mount once we get to those costs. I’m just trying to clarify. You’re the peak body. When we hear about, here’s the cost of production. You’re keen to mention the initial outlay. That is factored into the cost of production, isn’t it?

McCulloch: Well, yes. But this is actually not what the new code of conduct is driving at. It’s driving at what is the rate of return that can be earned on what is a high risk and capital intensive industry. Our concern, as an industry, we want to ensure that there is supply coming to the market. One of the reasons we are seeing higher costs in the domestic market is because we are seeing diminished supply. And we need to ensure that we’ve got the gas in the pipelines delivering to households, delivering to industry.

Connell: If there’s less supply, that doesn’t mean it’s costing more to produce. That just means you can charge more for it?

McCulloch: What I’m saying, Tom, actually is that the new fields coming online will be higher cost and it’s the tightness in the market because we still have that strong demand there. In fact, the role of gas is growing, particularly in power generation.

Connell: But the cost of production is actually nothing to do with demand. It’s whatever production is. It’s the area, it’s the development, it’s the initial exploration costs.

McCulloch: Tom, this is not an industry that’s akin to a pipeline or a road. This is a high risk capital intensive investment. And for the government to say this is the rate of return you can earn, and we won’t tell you that, and this is going to apply retrospectively to existing fields, that is creating a considerable amount of uncertainty and nervousness.

Connell: Good point, fair enough. But the cost of production isn’t actually effected by tightness. The cost of production is the cost. It’s what the exploration costs. It’s salaries… It’s all those things.

McCulloch: Prices are factor of supply and demand.

Connell: Price is different. I am saying cost of production. That’s not effected by tightness of production. Cost of production is what it costs to produce.

McCulloch: Cost of production varies across the industry. And what I am saying is that cost of production is increasing and actually because different fields are being developed, the cost of capital is increasing…

Connell: Absolutely, you got to the lowest cost first and you’re gone. That makes sense. But it’s not effected by tightness. The cost of production is not affected by the tightness of market.

McCulloch: The cost of production is actually not what is being driven at in terms of the mandatory code of conduct. The concern of the industry is that the government will step in with very little consultation and no notice to say that we are going to regulate the rate of return that you can make on investments. This is not just a concern for our industry but it’s a concern for all industries, frankly, Tom, because what we have done now is send a very strong signal to our international investors, to domestic investors, that Australia is not a safe and secure destination for that investment because at any given moment the government can step in and retrospectively determine what rate of return you can make for those investments.

Connell: On the rate of return, one of the big things that got attention from the government, was industry saying they have been charged $30, $35, $40 a gigajoule, in some cases. Is that too high a price? Is that gouging?

McCulloch: Tom, as I just indicated, the ACCC itself keeps a record and publishes the average price which is $12.

Connell: Average price. We know that. I’m talking about individual contracts that have been that high. Is that gouging?

McCulloch: If there are individual contracts that high, I would suggest to you that is in the retail market – which is not the subject of the price cap. The wholesale market – the deals are being struck at around $12/GJ.

Connell: Right but they have had to do those deals and it’s (inaudible). Is that price gouging – $35, $40? Is that gouging?

McCulloch: These gas contracts can be quite complex so it depends on what are the transport costs, where are you getting the gas from, how much, the interruptability?

Connell: You are never going to get near the costs… Come on, $35-$40. That is a massive…

McCulloch: I would suggest to you again they are not deals being struck in the wholesale market. They might be for smaller quantities, under different conditions, potentially in the retail market. But where the gas producers are selling gas into is the wholesale market and the ACCC itself regulates this, keeps an eye on prices and has published that the latest prices that those agreements being struck at is $12.34.

Connell: Which is the average. But anyway…

McCulloch: Which is the average.

Connell: Alright, we know it’s a busy time for you. Hope you get some sort of break. Samantha McCulloch, from APPEA, thanks for your time.

McCulloch: Thank you.



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Drilling Subs Types & Applications

Subs are short pieces of tubular material used to increase the versatility of the main component of the drilling string. The simplest is a crossover sub, which connects two items with different threads. Others used in the drill string are:

  • float sub
  • dart sub
  • circulating sub
  • bent sub
  • Bit sub
  • Orientating sub
  • Totco ring
  • Side entry sub
  • Bumper sub (Check the previous article)
  • Shock sub (Check the previous article)

Crossover Drilling Sub

These are short sections of drill collar material 0.6 m (2 ft) or longer, which provide crossovers between different diameters and types of the threaded connection.

They are configured with the following connections; box/box, pin/pin, pin/box, and box/pin subs.

Figure 2.1.20: Cross-sections through a selection of subs

It may not be evident that due to the way the thread is cut onto connections, a box/pin cannot be used upside down to form a pin/box!

Because subs have two connections close to each other, the string is locally weakened compared to the rest. This is particularly significant when heavy bending stresses are acting on the subs. We should pay particular attention to rig floor inspection of subs, which should be thoroughly inspected regularly.

A kelly saver sub
Figure 2.1.21: A kelly saver sub

Float Sub In Drilling String

A float sub is a non-return valve run just above the bit. One of its functions is to prevent the back-flow of drilling fluid into the drill string & Bottom Hole Assembly. This can occur when cuttings increase the effective density of the drilling fluid in the annulus and may result in the bit nozzles being plugged by cuttings. This problem is prevalent when drilling top hole sections because of the large cuttings produced at high penetration rates.

Another reason for running a float sub is to prevent the possibility of a blowout through the string. In the top hole, high-volume swabbing can rapidly lower the fluid level in the string due to the significant difference between the string and hole capacities.

When tripping in a string with a float sub installed, We must fill up the string while running in. If an empty pipe is suddenly filled by the annulus (failure of the valve), this could cause a significant drop of the head in the open hole and possibly cause a kick. A float sub in the string increases the surge pressures created while running in.

float sub
Figure 2.1.22: A float sub

Drilling Dart Sub

The dart sub (You might be interested in: Inside BOP (IBOP), Kelly Valves Full Guide) is a landing sub for a drop-in and pump-down back pressure valve. Its function is to prevent a wells kick through the drill string in the same way as a float sub. The landing sub is installed near the drill collars. This gives the driller a means to land the valve before pulling out. The valve is pumped into the sub and will latch in place automatically. Dart subs of various types are often referred to HDIS as one of the leading manufacturers of darts subs. HDIS stands for Hydril Drop In Sub.

dart sub plus the dart
Figure 2.1.23: A dart sub plus the dart

Circulating Sub

If required, the circulating sub can be incorporated into the drill string and operated while drilling to provide a large opening to circulate through. When drilling with a directional BHA Types, it is run directly above the Measurement While Drilling sub or down-hole motor; rotary drilling runs directly above the bit sub.

A circulating sub
Figure 2.1.24: A circulating sub

There are two principal reasons for using a circulating sub.

  • When lost circulation material is pumped through the string, it could plug up the small nozzles in the bit or jam the inside of a turbine. We could use a circulating sub in the string to circulate the coarse material.
  •  To allow increased circulation rates for hole cleaning before pulling out of the hole.

To operate the sub, a ball is dropped down the drill string. The ball will sit on the sleeve and seal off the fluid flow. The shear bolt will break when the fluid pressure increases to approximately 20,000 kPa (3,000 psi). The ball and sleeve will then be forced downwards and uncover the fluid ports. The drilling fluid flow will then effectively bypass everything below the circulating sub.

After using a conventional circulation sub will have to be pulled to recover the ball and re-set the sleeve. A different type of circulating sub is now available to avoid this problem. One ball is dropped to open the sub, and a second is dropped to close it. This cycle can be repeated a few times until the ball catcher, installed below the sub, is full.

Drilling Bent Sub

A bent sub is made to have one tool joint set at a pre-determined offset angle, thereby creating a bend in the drill string, allowing the deflection tool to be faced in a certain direction for directional wells and sidetracking applications. Oil and Gas Manufacturers can supply bent subs with angles of 1° – 3º in 1/2º increments. The angle (1º – 3º ) can be positioned in a pre-determined direction, thus giving a directional BHA (a BHA designed to drill in a particular direction).

Generally, the bent sub is part of a non-rotating drilling assembly (Check also: Steerable Assembly, RSS In Drilling & Downhole Mud Motors). We will carefully consider the effects of fatigue before the string is rotated while it contains a bent sub.

The bent sub includes a mule shoe sleeve with an alignment key to orient the mule shoe of a survey tool barrel. The mule shoe sleeve is installed inside the bent sub and is lined up with the tool face using the orienting wrench before being secured in the sub by Allen screws.

When the survey tools are run in the hole, the mule shoe assembly will lock inside the sleeve, creating a positive positioning of the survey equipment. Alternatively, a UBHO (Orienting Sub) can be used.

Orienting Sub In Drilling

This sub is used in a directional drilling assembly to align the survey equipment with the deflection tool, as described in the previous paragraphs. This is done so that the path of the well can be recorded and observed.

The orienting sub is usually straight and often called a UBHO, “universal bottom hole orienting” sub.

In some cases, the orienting sub is combined with a bent sub. NOTE: All special-purpose BHA components above the UBHO sub with a restricted inside diameter (e.g., jars) should be replaced with ones with an appropriate inside diameter or removed to allow passage of the instrument barrel.

TOTCO Ring

A Totco ring is not a sub but is included here for convenience. A small insert is placed inside the drill string between a pin and a box connection. It does not interfere with the connection. It does not significantly restrict the fluid flow down the string, but it acts as a trap for survey tools that are dropped from the surface and retrieved later when the string is removed from the hole.

Totco Ring

Side Entry Sub

Sometimes when we cannot log in using the traditional wireline unit, we may need assistance from the side entry sub. Its main application is to allow the passage of the wireline inside the drill pipes or tubing we are using while logging or even while fishing operations. This will provide a firm grip for the cable, which is subsequently pumped down and connected to the logging tool string.

Side Entry Sub

Kelly Saver Sub

The major application of the Kelly saver subs is to protect the lower kelly connection from wear. This wear results from making and breaking the drill pipe connection while drilling. In addition, they will protect the top casing joint against excessive wear if fitted with a rubber protector and provide an area to tong on when working with the kelly.

Kelly Saver Sub

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10 Safety Tips for Oil and Gas Industry Workers

Guidelines and Best Practices to Follow on Energy Jobsites

The oil and gas industry is one of our nation’s most crucial because it supplies such a large portion of our energy needs. Unfortunately, it has historically been one of our nation’s most dangerous industries as well. The difference between a safe day on the job and an accident often comes down to you. Keep these 10 essential safety tips in mind to avoid becoming a statistic.

1. Maintain and Utilize Property Safety Apparel

Visibility is a major factor in workplace safety. That is why your high visibility clothing includes high-visibility coloring and striping. It is rare that employees fail to wear this gear, but what supervisors do see from time to time is poor maintenance of the clothing.

Drilling is messy work, and worker uniforms can become stained with mud, grease, soot, and of course the oil itself. Over time, even the best reflective and high-visibility fabrics will become too dirty to perform properly. Make sure that each item of your work clothing is as clean as possible, and make good use of your uniform allowance to replace items that are too soiled to clean. Replace work footwear that may not provide adequate traction.

2. Support Good Communications

A drilling operation is a complex workplace, with workers involved in various processes at different locations that must all be coordinated for efficient production. This requires extensive communication through a variety of means, including radio conversation, direct verbal contact, hand signals, horns, and other methods.

The first step is to make sure you understand all the signals and codes. Practice them to keep yourself proficient. If you carry a radio, check its performance and battery at the start of each shift. Know emergency procedures regarding how to contact help and who is responsible for doing so. Finally, use your hearing protection so that your ears are not ringing when you need to communicate.

3. Keep Track of Lock-Out Areas

The various stages of the extraction process leave some areas dormant during equipment movement, repairs, testing, and other procedures. Stay on top of which areas are locked out and which equipment is tagged out. If you see safety signs, tape, or tags that are not properly posted, notify the appropriate parties.

If you are in charge of tagging certain areas, frequently review your work to make sure that all warning indicators are intact, visible, and accurately labeled so that other personnel have the correct information about the status of those areas and equipment.

4. Observe Basic Safety

Sometimes in the complexity of a workplace, it can be easy to miss minor issues by staying too busy watching major ones. It does no good to keep a drilling area properly secured if there are trip hazards, slick surfaces, or walking areas in poor repair.

Keep your eyes constantly on alert for those simple things. Watch for the same kinds of hazards on the job that you might watch for at home, such as wet or greasy walkways, missing light bulbs, or uneven steps. If you discover an issue, make the proper notifications and make sure that the responsible personnel correct the problem right away— especially if the responsible person is you.

oil and gas worker

5. Keep Your Training Current

When you first hired on, you were trained in the full range of tasks that you would be required to do. Over time, you probably moved into a specialized area of work and became very good at it. At the same time, you may have also become less sharp in the areas of work that you were not doing.

Let learning be a full-career commitment for you. Never write off training opportunities as a waste of time. You just might learn something that could save your life or that of a coworker. Remember to train beyond your area of specialty as well because the entire well site is a dangerous area.

6. Stay Aware of Your Location

Unlike a factory or many other workplaces, a drilling rig is a changing work environment. Stockpiles of equipment, work areas, and drill sites may be in constant change, rewriting the map of the job on a regular basis. If you are assigned to a specific area for weeks at a time, you may be surprised at how the rest of the site is evolving.

Simply put, learn your way around. Move through different areas of the job site to make sure you understand escape routes, access points for emergency personnel, locations of safety equipment, and so forth. You may be able to save precious seconds or moments when someone’s life is in danger.

7. Pay Attention to Your Mental Condition

If your arms or back can no longer do the work, you seek treatment. You visit a doctor, see what’s necessary to get you back to work, and follow that course of care. The same is true for your mental health. Your focus and alertness are just as critical to workplace safety as the strength and skill of your hands.

Maintain your physical health so that your mental health follows. If you are dealing with difficult emotional issues such as family stress or PTSD from a workplace incident, follow your employer’s procedures for seeking help. The more distracted you are by what’s going on in your mind, the greater the risk to your physical safety.

oil and gas worker

8. Follow Good Driving Habits

Relocation of equipment requires transportation of heavy equipment by heavy vehicles. The massive amount of weight of rig gear and the presence of works to load and secure it calls for extra attention to safety.

Whichever phase of transporting equipment you are involved in, be alert. Make sure the driving portion is in normal working order. Complete pre-trip inspections before movement on the job site just as you would before traveling on the highway. Maintain proper speeds, use approved driving surfaces, and remain alert to hazards around you.

9. Be Alert to Your Surroundings

One of the most common causes of workplace injuries and deaths is the “caught under/between” category. These incidents can be a result of a variety of factors, including bad footing, poor lighting, driver error, and simply being somewhere that you should not be.

Many of these accidents can be prevented with some common-sense steps. Be alert to who is working around your equipment or vehicle. When in doubt, do not move it. If you are on foot yourself, maintain a 360-degree view of the area to ensure that you are not in the path or blind spot of trucks or equipment in motion.

10. Follow Maintenance Procedures

Poor maintenance of anything, whether it be equipment, tools, vehicles, or anything else, is a recipe for an accident. Your company and each item’s manufacturer will have maintenance schedules for everything that is used on the job. Closely adhering to these schedules and procedures is critical to keeping everything in top condition.

Be careful not to let complacency creep into your routine. Do your preventive maintenance as conscientiously the hundredth time as you did the first time so that your risk of an accident is as low as possible.

Extractive industries will always be dangerous, but when you take responsibility for your own safety, you can do a lot to make sure that you make it home safely after each shift.

Nick Warrick is the sales manager at All Seasons Uniforms, a professional workwear company based outside of Chicago that has been in business since 1991.


Tags: November December 2022 Print Issue

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TOP FUND MANAGER IN 2022 TALKS STRATEGY FOR 2023

This guy has my vote for Fund Manager of the Year.

2022 is one of the worst years in history for stocks—yet Rob Mullin continued his winning ways for investors in his Marathon Advisors hedge fund.

Mullin’s fund–it’s called the RAEIF, which stands for Real Asset Equity Income Fund—had a phenomenal year (3rd year in a row) and is one of the top performing strategies in the world over the last 1, 3 and 5 year periods. (due to quirky US securities laws,  I cannot provide Mullin’s specific–and impressive—performance data for his hedge fund unless everyone of you readers were accredited investors!)

But trust me, his market savvy and performance make him worth listening to–and below, he shares some of his best ideas for 2023.

His mandate at RAEIF is to find yield through dividend paying stocks in the resource sector.    

Mullin uses a broad combination of long and short trades, with option trading of both puts and calls, plus all those dividends to create a portfolio that has given remarkably consistent returns through 2022, increasing the fund’s value roughly 20-25% each quarter.

Considering that commodities and resources is one of the most volatile sectors of the market, that’s impressive.

Mullin says that resource producers have been “demonized” by mainstream investors, and that means they are trading at some of their lowest valuations in history.  That makes for very high yields—high single digit often double digits—despite low payout ratios.

In 2021, fund managers just needed to buy oil stocks to have a good year.  They went from pricing in bankruptcy to being the single largest cash cows in the S&P 500.  But oil producers’ stocks have been flat since March.

In fact, much of the resource sector stalled out at the end of Q1, and Mullin said he had to get nimble, and quickly—weighting his RAEIF LP to the short side in a hurry.

I’ve known Rob for 15 years, visiting him in his San Francisco head office whenever I was in town, and hearing his thought process on the Market at the time. 

But he really came back on my radar in early 2020, when he pulled off an incredible trade—buying “put insurance” for the Market just in advance of the COVID meltdown.  Every other fund manager (except Bill Ackman; same trade) lost huge, but Mullin’s well-placed insurance markers made his year.

His fund has been open only to American accredited investors, but in November 2022 he set up a fund that TROW—The Rest Of the World—can now invest in, to take advantage of his expertise.  You still have to be an accredited investor though.

I’ve convinced him to speak to our paying subscribers once a quarter through 2023.  But he agreed to share his strategy and some stock picks for 2023 with us today:

 

1

Keith: Rob, you had a great year, congratulations.  But let’s look forward now.  How are you positioning yourself for 2023:

Mullin: Well, a lot of the stuff that I’m buying is actually a heck of a lot closer to its 52-week lows, than it’s 52-week highs.
 
Where I’m looking, there’s still a lot of opportunities that aren’t pressing high valuations, not up 50, 150% year to date. So that’s really where I’m focusing.
 
Keith: Do energy stocks fit into that at all?
 
Mullin:  Yes. So in the energy patch, I think the global integrated oil energy companies are really interesting. You look at things like a Petrobras, (Brazil’s NOC—national oil company) which trades a US ADR (symbol PBR-NYSE).
 
Or an Ecopetrol, (Colombia’s NOC, national oil company) which trades a US ADR (symbol EC-NYSE). These are global $20 to $60 billion market cap companies, trading at two and a half times earnings, with 20 plus percent dividend yields. And yes, I understand that there are some political things that happened in both Colombia and Brazil, respectively.

1

 
Ecopetrol was an $18 stock in March. It’s a $9 stock today, and it’s $18 billion in market cap, earning $2 billion a quarter. You look at Petrobras, a $65 billion market cap, it’s paid off almost $80 billion worth in debt. It may be the greatest pay down of debt in the history of any company in the world. I mean, we’ve never seen anything like it
 
And again, this is a $65 billion market gap company, that made $9 billion in earnings last quarter. So it produces more oil than Exxon does. Exxon’s got a $450 billion market cap, this is a $65 billion market cap.
So to me, those are really interesting opportunities that offer a lot of asymmetry.
 
Keith: There’s so many different—and big—macro currents right now in the Market.  Will the US Fed pivot or not pivot, COVID in China, the Ukraine-Russia war, COVID supply chain issues etc. When you look at 2023, what would be one of the top two factors that’s guiding your macro thinking.

Mullin: What I’m trying to do is kind of strip out the noise, and really listen to, what are resource inventories telling us? What are inventories telling us about the global economy, on the margin?

And to me, what that is telling me is that demand remains fairly firm. You look at what has happened to oil inventories in the last three or four months. They’ve been fairly steady, they’re not really building, they’re not really coming down. Oil prices have come down a lot, but oil inventories have been pretty flat.

That said, you strip out the impact of the SPR releases, which have added about 350 million barrels to global inventories, global inventories continue to fall really rapidly.

So that backdrop to me, on energy, just seems really robust.

To me, a big part of the reason why oil prices have come down, is because of the massive financial liquidation of oil. You look at the speculative traders positions, the CSTTC reports, and areas where you look at where managed money…you’ve had a selling of financial barrels, but the underlying inventories, which is what I think we should be really listening to, tell you that the underlying demand story is pretty good.
 
And a related sector is oil tankers, though I call it tanker and infrastructure sectors. I think there may be a case here to pivot back to the bulk shippers, the ones who do iron ore and grains, and things like that. Those stocks have been beaten up pretty good. They’re sort of back again, back a lot closer to their lows than highs. Some companies in there have some pretty substantial dividend yields.

Keith: Any favorite stocks there?

Mullin: So, my favorite in the bulk guys is Star Bulk, SBLK-NYSE. That’s, in all likelihood, call it a $20-ish stock that’s going to pay something close to $4 in dividends, in 2023. So that’s right up my alley. It’s reasonably large, it’s liquid.

2

Keith: As I read your quarterly letters, you talk about all ELEVEN sub-sectors of resources that you follow.  What are two of those 11 you like in 2023.

Mullin: Sure. The Ag space—agriculture—is one. I would say that even before Ukraine, the higher fertilizer prices were causing farmers to cut back on fertilizer applications.

That’s going to start showing up in yields over the next three to six months. I think inventories are going to tighten up considerably, and I think the big risk that we run is going into a 2023 where we’re seeing a lot more in the way of resource nationalism, which I’ve written about a little bit.

That’s where those countries that typically have surpluses, and the ability to export those surpluses, may be less inclined to make those surpluses available to importing countries.

If we continue to tighten up on inventories, like we have been over the last year or two, I think there’s going to be even less of an inclination to share, which when you tighten up the marginal bushel, or marginal barrel, whatever it is. That’s when prices tend to sort of surprise, to the upside.
 
And then, one other sector for 2023–I actually like the gold space. I think we are seeing, as the Fed marginally moves towards a more flattish outlook, they’re still going to raise, maybe they don’t cut aggressively. But the pace of tightening is going to go down.

It seems like this relentless dollar rally has sort of lost its steam. I’m not saying that highs have been made for USD, but I think we’re kind of in the ballpark. For that reason, I think gold’s performance this year has actually been pretty darn good.

Particularly if you look at it outside of the US dollar, in most other currencies around the world, it’s actually up this year. In some currencies, like the Japanese yen, it’s up a decent chunk.

The fact that gold has held in, despite again heavy financial liquidations, is impressive. Gold ETFs suffered 22 straight weeks of outflows, up until last week. Late November saw the first inflow in 23 weeks.

So you’re starting to see some of this financial demand sort of reverse. I think the physical markets are going to remain relatively tight. Gold stocks have started to rally a little bit, the bigger caps have come up a little bit more.

The smaller caps are still lagging, but they’re sort of coming off their lows. They’re inexpensive stocks, lots of them with kind of reasonable dividend yields, high free cash flow generation.

If you look at them as I do, compared to the valuations over the last 25 or 30 years since I’ve been doing this, I’m not sure I’ve ever seen the gold stocks, in aggregate, at a cheaper price to cash flow, price to free cash flow, price to NAV on strip, than I see them right now.

And so I think it’s sort when everyone has given up on them for being dead, is exactly the time where I want to be sort of kicking around, and looking to position myself in them. So that’s another area.
 
Keith: that’s great color, thank  you.  So what’s a stock in that sector you like?
 
Mullin: Well, I like Sprott—SII-NYSE and SII-TSX. So here you get the benefits of the gold play, but you also have uranium funds, you also have others.

3

Sprott has traded around this $30 level, when it had $6 billion in AUM (Assets Under Mgmt), when it had $16 billion in AUM. Now it has north of $20 billion in AUM. It’s still right around $30 per share. And so, again, I love places where you’re building convexity and not paying for it
 
And there’s actually good precedent for that. The same thing happened back in the 2002 to 2007 gold bull market, one of the best performing stocks from 2004 to 2006 US Global Investors (GROW-NYSE), which was the Sprott of its day, in an environment where the GDX went up 50 or 60%, US Global went up tenfold over those two years. So there’s precedent for this, and I think we could see something like that again.
 
Keith: Rob, any final words of wisdom you have for resource investors in 2023?
 
So over the top of all of this, investors need to be cognizant, that this is not going to be a straight run. I think that if 2022 taught us anything, none of this is going to come easy.

We as resource investors do not get to have the great technology, healthcare, sort of up and to the right, where you can just lever along and ride it for four or five or seven or 10 years. It just doesn’t happen in our sector.

The nature of resource bull markets, which I’ve said a number of times, is that the fact that commodity prices are rising and inflation expectations are rising, that causes a lot of instability in the broader markets.
 
The resource cycle doesn’t end until the capital is spent to bring on enough supply, to make it end. If all the politicians and bankers and management teams were able to raise the capital required to produce more oil, more copper, more nickel and more lithium–we would still be five to seven years away from really seeing a meaningful uptick in that supply.

That money to create that extra capacity was not spent in 2016 to 2022 and it’s not being spent now.

So I think it’s really early. The real resource cycle doesn’t end until late this decade, if not even later. We can have volatility and phases within the cycle, but we have years to go here I think.  So that’s where I think we are.
 
Keith: Wow, that’s powerful! Rob thanks for sharing your thoughts and congrats again on an amazing 2022, and look forward to catching up in early 2023.
 
Mullin: I appreciate your interest Keith.  Merry Christmas.

EDITORS NOTE–you can connect with Mullin on LinkedIn at https://www.linkedin.com/in/robert-mullin-58422b84/

Keith

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Oil Rig Hazards & Safety Awareness

Working on oil and gas rigs has several hazards drilling engineers should know. In this article, we shall divide any drilling rig type into specific zones, and we will explain the dangers & safety tips at each zone.

We will introduce the following five zones below:

  1. On rig floor (Drilling Rig Components)
  2.  Around pipe racks
  3.  Around drilling fluid tanks
  4.  In the cellar
  5.  Around the location

HAZARDS ON THE OIL DRILLING RIG FLOOR

Setting back drill-pipe

Similarly, you may find yourself helping to stack drill pipe by pushing a stand across the rig floor (Rig Floor Inspection Procedure) while hanging from the hook in the derrick. As the pipe moves away from you, don’t take such long steps that your foot gets underneath it.

Remember that suspended loads have a habit of dropping, sometimes without warning. This is one of the most common themes which run through safety awareness training.

Stabbing drill pipe

You will probably not be asked to help run drill string into the hole, but if you should find yourself acting as a floorman, remember that a golden rule is never to put a hand on the pipe already in the hole. The driller may lower the additional pipe when you don’t expect it.

In earlier generations, roughnecks were very well paid but were not given much safety training. Most of them finished with more gold rings than their fingers left to put on.

Trip hazards in oil rigs

The derrick floor (or any other working area) should be clean and tidy, but occasionally it may become cluttered with equipment and tools. Watch where you walk – if you trip, there are not too many things on a rig floor that you can safely get hold of to steady yourself.

Tripping pipe
CANADA – AUGUST 22: Student Deniye Okoko, left, clamps tongs to a section of drill pips as instructor Cody Huseby, right, provides instruction on a training rig outside the EnForm training center in Nisku, Alberta, Canada, Tuesday, August 22, 2006. EnForm, the training, certification and health and safety services arm of the upstream petroleum industry, offers weekly hands-on training to workers seeking employment in the oil industry. This class was part of the pre-employment floorhand program. (Photo by Norm Betts/Bloomberg via Getty Images)

Trips on stairs can be a hazard in oil rigs. Always have one hand available for the railing – especially on a floating unit. It follows that we should move anything too heavy or bulky to be carried in one hand between different levels by winch.

High pressures

Hoses and pipe connections occasionally fail when high pressures are used, either during pressure testing or pumping operations such as cementing or formation stimulation. A small leak may result in a fine jet of high-pressure liquid that can cut and penetrate soft material.

If a hose or pipe fails during a high-pressure operation, the broken connection will flail around violently until the pump operator has had time to react. You will notice that during a high-pressure operation, the lines and hoses will be chained to a fixed part of the rig structure or to a stake hammered into the ground. This is to restrain movement in case of failure, but it is not always 100% effective.

Avoid these two oil rig hazards by keeping your distance from high-pressure lines, especially while pumping or testing.

Core recovery

Coring is always interesting, and you may be impatient to see whether a good core has been recovered. Avoid putting your fingers into the bottom of the core barrel while hanging an inch above the floor.

Not only is the core barrel itself a suspended load, but the core inside it may be supported only by friction and may slide out at the wrong moment.

Wire rope to backup tongs

When the drilling crew is running pipe in or out of the hole, they tighten or loosen the connections utilizing tongs operated by pairs of wire ropes. One wire goes to the draw-works and does the pulling; the other goes from the so-called backup tongs to a fixed point on the rig floor to stop the other half of the connection from turning. When the driller tightens the pulling cable, the backup tong will suddenly rotate a quarter of a turn around the pipe, and the wireline which was lying loose will snap tight. Anyone standing too close to this cable could then be seriously hurt.

If you go on the rig floor during tripping pipe or while running casing, approach it from the driller’s side and stand behind him until you are sure you know how everything there is moving.

Rotary table

It may seem obvious, but the rotary table can rotate and is a special trip hazard in oil rigs. If you walk across the derrick floor, walk around the rotary table, even if it is not moving as you approach it.

Rotary Table

Drilling fluid sprays

The tongs are not the only hazard when pulling the drill pipe out. Remember that there may be a column of drilling fluid types almost 30 meters high inside the pipe. As the connection has unscrewed, this liquid (commonly with a pH of 10 or 11) may spurt out into the eyes of the unwary spectator.

Tubulars hazards are being lifted through the V-door in oil rigs.

When drilling, running casing, or running production tubing, single pipe joints will be lifted from the pipe racks, through the V-door, and into the derrick. If the driller lifts one just a little too quickly, the end will come up the ramp, over the edge of the floor, and the whole pipe will swing violently across the floor. Don’t put yourself in a position where it could hit you.

Wireline being run into the hole.

From time to time, tools run into the hole in the wireline. If a tool is being run quickly and meets the resistance of some sort in the hole, the winch operator may not be able to stop quickly enough. In that case, the wire will continue spooling off the drum and fall onto the derrick floor in loops. When the tool in the hole then falls free an instant later, the loose wire will be dragged very quickly into the hole, and the loops will snap tight with enough force to sever a limb. Keep a safe distance away during this operation.

HAZARDS IN THE OIL RIGS CELLAR

A well is rarely drilled without any gas indications at all; there is, thus, always the possibility of gas coming out of the solution from the drilling fluid. Most hydrocarbon gases are heavier than air and therefore tend to gather at the lowest point in a location, generally in the cellar. Do not be tempted to climb alone into a deep cellar on a land location to look at the equipment or check the gauges – there may not be enough oxygen there to support life. If there also happens to be H2S present, you may not stay alive for long enough for someone to get a line around you and lift you out, even if they see you collapse!

When enclosed and unventilated spaces, including the cellar, are entered for operational reasons, a gas test will be made. The “buddy” system will be used with one crew member remaining outside the space.

HAZARDS ON AND AROUND THE PIPE RACKS IN OIL RIGS

Singles are being laid down.

The hazard of lifting single joints into the oil rig derrick has been mentioned. The opposite operation – laying down pipe – involves allowing a joint of pipe to slide freely down the ramp and along the catwalk. In doing so, it acquires a large amount of kinetic energy, which a sprung barrier at the end of the catwalk should absorb. Occasionally a joint will jump over the barrier or slide down the ramp off-center and go sideways off the catwalk. Don’t put yourself into a position where one of these could hit you.

Standing on tubulars

One of the jobs that oil and gas companies may give you as a trainee is to measure the casing while it is laid out on the pipe racks. Before you walk on the casing, which you will have to do, make sure that the joints are tightly packed and that the first and last are firmly wedged in place so that they do not roll as you step on them.

HAZARDS AROUND THE OIL DRILLING RIG FLUID TANKS

The low-pressure drilling fluid system has its share of hazards for the unwary. Derrickmen shall take care of a lot as they work with drilling fluid systems (including the shale shakers, circulating system, etc.) more than others.

Drilling fluid has, by design, lubricating qualities. Any minor spills, drips, etc., or spray blown by a strong wind, may cause stairs and walkways to become slippery. This is especially the case near the drilling fluid mixing area, where the wind may pick up powder as sacks are emptied into the mixing hopper.

Dust around the mixing area in oil rigs is also unpleasant for the eyes, but this is an obvious hazard. With one exception, drilling fluid products are fairly innocuous – they have been designed to be environmentally friendly – but cement dust is not. If sacks of cement are being cut open and emptied, either into the bulk tanks or while mixing cement slurry, the dust which may be blown around has a high pH and is bad for the eyes and lungs.

The one exception mentioned in the previous paragraph is caustic soda, delivered as beads or crystals in metal drums. These solids will go through leather gloves and leather boots in no time!

Caustic soda is used because many water-based drilling fluid systems require a high pH of 10 or 11. Even though it may not cause immediate caustic burns, a high-pH liquid is still bad for the skin. Don’t put your hands into the drilling fluid; if you are splashed, wash it off, and if your clothes become wet with drilling fluid, change them.

There will be eye-wash stations at various locations on the drilling unit but specifically in the vicinity of the drilling fluid mixing area. It is probably a good idea to try it to see how it works while you can still see what you are doing clearly, but check with someone in authority first, as some systems are designed for one-time use only.

HAZARDS AROUND THE OIL DRILLING RIG LOCATION

Cranes

Cranes lift relatively distant heavy loads high into the air and swing around to move them over intervening obstructions. The resulting hazard is that a load may pass over people in the oil rig without them being aware. If a crane is working on location, ensure that you remain aware of what it is doing.

You will know by now that you should not be under a suspended load; you might not realize that you should not be close to the crane or under the jib. Cranes occasionally fall over, and jibs occasionally fail. In theory, there are automatic safeguards to prevent safe working loads from being exceeded; in practice, it still happens.

Even if you are not underneath the load, keep clear of the area where loads are being picked up or set down, as they can swing unexpectedly – especially offshore.

Moving vehicles, including forklifts

Trucks, cranes, and forklifts are fitted with reversing alarms. This is done for a good reason. If you can hear a rapid beeping above all the other noises in a location, a vehicle is very close to you going backward, which in turn means that the driver may not be able to see you. Look around to check where it is and what it is doing.

Welding

The easiest method for anyone, including visitors, to injure themselves at a drilling location without actually doing anything is to be within sight of an arc welder. If you see a welder about to “strike an arc,” look away, as the high intensity of ultra-violet light can permanently damage the eye at surprising distances.

References:

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i3 Energy PLC announces 2023 capital budget, production guidance, increased dividend and investor presentation | BOE Report

EASTLEIGH, UK – i3 Energy plc (AIM:I3E)(TSX:ITE), an independent oil and gas company with assets and operations in the UK and Canada, is pleased to announce the following operational update along with the Company’s 2023 guidance and increased dividend for 2023. i3 will hold an investor presentation on 9 January at 4:00pm GMT via Investor Meet Company; to register for the call, details are below.

Highlights:

  • Record Corporate Production in 2022

Record corporate peak production achieved in December exceeding 24,000 barrels of oil equivalent per day (“boepd”) on strong operational results across the Company’s extensive asset portfolio, in line with previously forecasted peak 2022 production estimates

2023 Capital Budget of USD 64.05 million, forecasted to deliver 23 gross wells (15.2 net, 70% net i3-operated) to be drilled across the Company’s diversified portfolio in Central Alberta, Simonette, Wapiti and its northern Clearwater acreage

Forecast 2023 annual average production of 22,250 – 23,000 boepd, representing a year-over-year increase of approximately 10% – 13%, with an expected 2023 peak production rate of approximately 26,000 boepd

USD 159.6 – 166.7 million of 2023 Net Operating Income (“NOI”) and USD 144.0 – 150.5 million of EBITDA, based on our budget price assumption of USD 80/barrel (“bbl”) for WTI and CAD 4.50/Gigajoules (“GJ”) for AECO natural gas

As part of the i3’s commitment to its total return model, the Company is increasing its 2023 minimum dividend by 59.4% above the total dividends paid during 2022 to £24.475 million (USD 30.095 million), through an increased monthly dividend of 0.171 share – equating to an annual dividend of 2.052 share or a 9.7% yield (1)

Majid Shafiq, CEO of i3 Energy plc, commented:

“2022 was a year of exceptional performance for i3 Energy. We entered the year with corporate production of circa 18,000 boepd and will exit having achieved our target of 24,000 boepd having successfully implemented a USD 97 million capital program on time and on budget in Canada and the UK. The success of our 2022 drilling program in Canada has continued to de-risk our growth strategy in certain key development assets within our portfolio and we are confident that our 2023 capital program will be equally successful and should result in production growth of up to 13% in 2023. We are also pleased to offer year-on-year dividend growth from £3.4 million in 2021, to £15.4 million this year and a minimum pay-out of £24.5 million in 2023.”

Production Update
i3 has successfully delivered record corporate production, exceeding 24,000 boepd (based on field estimates) as forecast by the Company on May 2022 when it announced an expanded capital budget for 2022, as new wells were brought on stream, cleaned-up and optimized. This achievement is a testament to the expertise, attention to detail and unwavering dedication of all our staff combined with the Company’s stable, low-decline base production and the predictable nature of its extensive inventory of development drilling opportunities.

2023 Capital Programme Highlights
Building on the successful execution of the Company’s USD 97 million 2022 capital programme, the strong performance of the Company’s asset base and the current commodity price outlook, i3 is pleased to provide its 2023 operational and financial guidance, balancing growth and a sustainable long term dividend. The Board has approved a USD 64.05 million capital programme for 2023, which will be fully funded from existing Company resources and forecast internally generated cash flow, focused on delivering estimated year-over-year average production growth of 13% despite the impact of planned facility turnarounds in Central Alberta which have been incorporated into the annual 2023 forecast and are expected to impact total annual production by approximately 415 boepd, or 2% on the year.

The 2023 budget currently reflects an estimated total capital investment of USD 64.05 million, of which approximately USD 54.2 million is allocated to drilling and development with the balance apportioned to maintenance capital, facilities, land, ESG and seismic. The 2023 budget reflects inflationary pressures experienced in 2022 and accounts for expected increases across the industry, including but not limited to, materials, labour and service costs.

i3’s 2023 capital programme will be 67% weighted to the second half of the year with wells expected to be brought on production ahead of historically stronger winter pricing and further enabling the Company to manage certain near-term infrastructure constraints associated with the strong drilling results realized in 2022, seasonal restrictions and regularly scheduled facility turnarounds in Central Alberta. Corporate guidance incorporates the drilling of 23 (15.2 net) wells with locations split between i3’s key operating areas, comprising 8 gross (5.0 net) wells in Central Alberta, 3 gross (2.9 net) wells in Simonette, 7 gross (3.7 net) wells in Wapiti and 5 gross (3.5 net) wells across the Clearwater fairway.

The 2023 capital programme is forecasted to deliver total average production of between 22,250 and 23,000 boepd (natural gas, oil & condensate, natural gas liquids and royalty interest production expected to average approximately 50%, 25, 24% and 1%, respectively), with estimated peak production, achieved in the second half of the year of approximately 26,000 boepd. Despite inflationary pressures, these production gains are expected to be delivered with a capital efficiency(2) similar to that achieved in 2022 of USD 13,500/boepd. For its planning case, i3 has used commodity price assumptions of USD 80.00/bbl for WTI crude oil and CAD 4.50/GJ for AECO natural gas and expects to generate NOI of approximately USD 159.6 – 166.7 million and EBITDA of USD 144.0 – 150.5 million for 2023.

2023 Guidance and Commodity Price Assumptions

2023 guidance and assumptions (3)

Annual Average Production (4)

22,250 – 23,000 boepd

Average Expenses ($/boe)

Royalty

Operation & Transport

15.2%

11.70 – 11.50 / boe

Net Operating Income (5)

USD 159.6 million – 166.7 million

EBITDA (6)

USD 144.0 million – 150.5 million

Capital Expenditures

USD 64.074 million

Dividends (7)

USD 30.095 million

Net Debt (8)

USD 8.8 million – 3.0 million

2023 Commodity Assumptions (9)

WTI (USD/bbl)

$80.00/bbl

MSW Oil Differential (USD/bbl)

$3.85/bbl

AECO Natural Gas (CAD/GJ)

$4.50/GJ

USD / CAD Foreign Exchange

1.35

GBP / CAD Foreign Exchange

1.66

Next Twelve-Month Net Operating Income Sensitivity (10)

Next twelve months’ sensitivity

Estimated change to net operating income

Change in WTI USD 1.00/bbl

USD 2.48 million

Change in AECO CAD 0.10/GJ

USD 2.49 million

Change in CDN/US exchange rate CAD 0.01

USD 2.51 million

  1. Based on i3’s closing share price of £0.2115 (AIM) on 21 December 2022
  2. As used here, capital efficiency is the capex required to add production capacity which will flow at an average of one boepd over the course of the first year of production
  3. i3’s 2023 guidance for its Net Operating Income, EBITDA and year-end Net Debt is based on an annual average production range of 22,250 – 23,000 boepd.
  4. Total annual average production (boepd) is comprised of approximately 49% Oil, Condensate & NGLs, 50% Natural Gas and 1% Gross Overriding Royalty Production
  5. Net Operating Income is a non-GAAP financial measure and is defined as gross profit before depreciation and depletion and gains or losses on risk management contracts, which equals revenue net of royalty expenses, less production costs
  6. EBITDA is a non-GAAP financial measure and is defined as earnings before depreciation depletion, financial costs, and tax
  7. Based on i3’s annual common share dividend of £24.475 million (US$30.095 million assuming 1.23 GBP:USD) paid in 2023. The declaration of dividends is subject to the approval of i3’s board of directors and is subject to change
  8. Net Debt is a non-GAAP financial measure and is defined as borrowings and leases and trade and other payables, less cash and cash equivalents and trade and other receivables
  9. Commodity prices and foreign exchange reflect full year average realized prices or rates
  10. Illustrates the expected impact of changes in commodity prices and the CAD:USD exchange rate on i3’s estimate of Net Operating Income for 2023 of USD 159.6 million to $166.7 million, holding all other variables constant. The sensitivity is based on the commodity price and exchange rate assumptions set forth in the table above. Calculations are performed independently and may not be indicative of actual results. Actual results may vary materially when multiple variables change at the same time and/or when the magnitude of the change increases.

Hedging
i3 continues to employ a defensive risk management strategy with current hedges in place to cover 41.6% and 13.3% of the Company’s projected Q1 and Q2 2023 production volumes respectively. i3’s hedges, by quarter, are as follows:

Swaps

Costless Collars

Participation Swaps(10)

GAS

Volume (GJ)

Price (C$/GJ)

Volume (GJ)

Avg Floor Price (C$/GJ)

Avg Ceiling Price (C$/GJ)

Q1 2023

2,397,500

4.41

1,125,000

5.80

10.09

OIL

Volume (bbl)

Price (C$/bbl)

Volume (bbl)

Avg Floor Price (C$/bbl)

Avg Ceiling Price (C$/bbl)

Volume (bbl)

Avg Floor Price (C$/bbl)

Q1 2023

58,500

106.85

162,000

100.00

124.44

Q2 2023

36,400

112.83

113,650

100.00

127.39

91,000

90.00

PROPANE

Volume (bbl)

Price (C$/bbl)

Volume (bbl)

Avg Floor Price (C$/bbl)

Avg Ceiling Price (C$/bbl)

Q1 2023

45,000

42.00

51.61

(10) i3 receives the average floor price plus 50% of difference between the average floor price and the realised price if higher

UK Operations
The Company’s UK operations are focussed on advancing a Field Development Plan (“FDP”) for the Serenity field as a one well development, tied in to existing third party infrastructure. Costs for the UK operation have been optimised accordingly and total capital allocation for the Serenity development is less than USD 0.6 million for 2023.

Environmental, Social and Governance (“ESG”)
i3 Energy is committed to conducting its operations responsibly and in accordance with industry best practices. The Company’s commitment to high ESG standards is central to maintaining our social licence to operate, creating value for all stakeholders, and ensuring long-term commercial success. i3 recognises the safety and well-being of our employees, local communities, and other key stakeholders as a priority, and considers climate change as having a material impact on our business.

In 2022 i3 abandoned a total of 69 wells and decommissioned 37 well sites, representing approximately 14% of its operated non-producing well stock. In 2023, and in accordance with the Alberta Energy Regulator’s decommissioning guidance, i3 expects to deliver result in a similar number of abandonment operations as achieved in 2022.

In 2022, i3 has taken significant steps to reduce greenhouse gas emissions through electrification projects and the replacement of high emission pneumatic controllers and pumps with low bleed controller and solar powered pumps. i3 has aggressively pursued a three-phase programme to reduce and eliminate methane sources, whereby the combination of these programmes will result in a reduction of 71,450 tonnes of CO2e annually – the equivalent of removing 15,530 cars off the road each year. Similar initiatives will continue in 2023 as we continue to reduce the carbon intensity of our production base. These CO2e emissions reductions qualify for carbon credits which can be sold or used to offset future carbon tax obligations.

Continuing with historical practices, i3 is very pleased to have donated, this Holiday Season, CAD 24,394 (coinciding with its peak daily barrel of oil equivalent production rate) to local foodbanks in which the Company has core operations and ongoing dealings with vendors, residents, and lessors.

Return of Capital
As part of its total return model, the Company remains committed to delivering a sustainable monthly dividend to complement its organic growth profile. In 2022 i3 has paid total dividends of £15.35 million. Based on the successful 2022 development program and its forecasted 2023 guidance, i3 will increase its current monthly dividend of 0.1425 pence per share by 20% to 0.171 pence per share, resulting in minimum total 2023 dividends of £24.475 million (USD 30.095 million), representing an incremental year-over-year increase of approximately 59%. The Company’s dividend is designed to grow with the underlying profitability of the business and be sustainable despite fluctuations of the commodity cycle.

Investor Presentation
I3 Energy Plc is pleased to announce that Majid Shafiq and Ryan Heath will provide a live presentation relating to i3 Energy’s 2023 Capital Budget via the Investor Meet Company platform on 9 January 2023 at 4:00pm GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9:00am the day before the meeting or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet I3 Energy Plc via:

https://www.investormeetcompany.com/i3-energy-plc/register-investor

Investors who already follow I3 Energy Plc on the Investor Meet Company platform will automatically be invited.

 

Advisories & Contact

END

Qualified Person’s Statement
In accordance with the AIM Note for Mining and Oil and Gas Companies, i3 discloses that Majid Shafiq is the qualified person who has reviewed the technical information contained in this document. He has a Master’s Degree in Petroleum Engineering from Heriot-Watt University and is a member of the Society of Petroleum Engineers. Majid Shafiq consents to the inclusion of the information in the form and context in which it appears.

Enquiries:

i3 Energy plc

Majid Shafiq (CEO)

c/o Camarco

Tel: +44 (0) 203 781 8331

WH Ireland Limited (Nomad and Joint Broker)

James Joyce,Darshan Patel

Tel: +44 (0) 207 220 1666
Tennyson Securities (Joint Broker)

Peter Krens

Tel: +44 (0) 207 186 9030

Stifel Nicolaus Europe Limited (Joint Broker)

Ashton Clanfield, Callum Stewart

Tel: +44 (0) 20 7710 7600

Camarco

Georgia Edmonds, Violet Wilson

Tel: +44 (0) 203 781 8331

Notes to Editors:

i3 Energy is an oil and gas Company with a low cost, diversified, growing production base in Canada’s most prolific hydrocarbon region, the Western Canadian Sedimentary Basin and appraisal assets in the North Sea with significant upside.

The Company is well positioned to deliver future growth through the optimisation of its existing 100% owned asset base and the acquisition of long life, low decline conventional production assets.

i3 is dedicated to responsible corporate practices and the environment, and places high value on adhering to strong Environmental, Social and Governance (“ESG”) practices. i3 is proud of its performance to date as a responsible steward of the environment, people,and capital management. The Company is committed to maintaining an ESG strategy, which has broader implications to long-term value creation, as these benefits extend beyond regulatory requirements.

i3 Energy is listed on the AIM market of the London Stock Exchange under the symbol I3E and on the Toronto Stock Exchange under the symbol ITE.For further information on i3 Energy please visit https://i3.energy

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended (“MAR”). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

 

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Balance and VUCA 2.0: Leadership in the Energy Transition

Energy Transition — the new concept in the energy market. As energy industry professionals are keenly aware, the Energy Transition is a hot topic with significant economic, political and engineering aspects. I recently moderated a webinar with industry professionals discussing “Pipeline Solutions in the Energy Transition.” Through that discussion, and the research I undertook to prepare for the conversation, two main themes developed:

  • The energy industry and transition are wildly “VUCA” (volatile, uncertain, complex and ambiguous) in nature with both significant business risk and tremendous opportunities; and
  • While the developed world is keen on decarbonization — attempting to reduce the human influence in climate change, the developing world is undergoing a transformational period of economic growth driven by affordable energy.

These themes are important for leaders and our society to bear in mind as we navigate the present and prepare for the future.

Planning During Disruption

Originally conceived by the U.S. military, the concept of planning to operate and succeed in VUCA business environments is now used pervasively in management and planning exercises.

While most economic and business processes involve some degree of VUCA, it is certainly the case that the energy industry and energy transition evoke VUCA in spades. Energy industry owner companies, contractors, consultants, manufacturers, policy advocates and others with vested interest in the energy economy are faced with significant planning challenges in the current political and business environment.

Endeavoring to understand the Energy Transition landscape, even from a very coarse, high-level perspective, is challenging. Current disruptive conditions include geopolitical turmoil and price and resource fluctuations relating to the current recessionary/inflationary economic environment; the Russia-Ukraine war; the U.S. relationship with Saudi Arabia and other oil and gas producers both foreign and domestic; global supply chain challenges; the effects of the global pandemic; and the fraught state of domestic U.S. and global politics.

Setting aside primary economic drivers and focusing on policy goals, another way of looking at the global energy transition landscape is that it is dominated by two dominating priorities that companies need to understand and navigate.

  • First, much of the developed world has embraced the transition to renewable, lower carbon, non-fossil fuel-based energy sources, driven by a desire to reduce the man-made aspects of climate change, although the appropriate rate of transition, given economic and other considerations, is still a matter of contention.
  • Second, continued global economic development and the reduction of energy poverty, which has resulted in dramatic improvement of standards of living and productivity in the developing world brought about largely by lower cost, reliable and predominately fossil fuel sources.
energy transition

Progress in a VUCA Market

These priorities could be considered biologic-centric (combating climate change) and economic-centric (reducing global poverty) with significant aspects of overlap between.

For instance, an economic benefit is expected from current and prospective high levels of investment in new technologies; wind and solar generation; and pipeline and other infrastructure, which will be required to facilitate the transition away from carbon-intensive energy sources. On the other hand, significant environmental and health benefits are realized as the developing world transitions from wood and dung to cleaner burning fossil fuel and renewables.

A relatively under-reported fact, worthy of celebration by the energy industry, is that in the last 20 years roughly 1 billion people gained access to reliable energy and have been lifted out of poverty. The magnitude and rate of this eradication of poverty is staggering and unprecedented. Affordable energy provides a labor multiplier, driving productivity and economic growth, while also significantly reducing indoor air pollution, improving health and productivity. The figure below, based on World Health Organization reporting, illustrates the process of quality-of-life improvement with energy access.

energy transition

Decarbonization: Three Gas Future

In the developed world, we have experienced and expect continued transition from coal to natural gas to produce electric power along with increasing amounts of solar and wind power.

The coal to natural gas transition has been facilitated in the United States by the significant increases of natural gas production and associated reduction in cost made possible by the hydraulic fracturing of tight shale formations.

In the future, natural gas supplies will increasingly contain renewable gas from waste sources and be supplemented by hydrogen. Capturing and deriving energy from waste gas will help decarbonize the energy supply. And, provided hydrogen is produced using renewable energy inputs, it will also increasingly decarbonize our gas energy supply. The future buildout of hydrogen infrastructure represents a tremendous opportunity for businesses that provide engineering and construction services.

Decarbonization is an aspect of energy policy that gets a significant amount of attention in our current political climate, with the reduction of carbon dioxide in the atmosphere an understood and widely shared goal to attempt to reduce the rate of global temperature rise. There are many strategies being considered and attempted by governments and energy companies to pursue the goal of decarbonization.
In addition to reducing carbon emissions and intensity in energy sources, carbon capture technologies — both at point sources and in the atmosphere in general — are being developed and implemented. After the carbon is captured, typically as carbon dioxide gas, it must be gathered, transported and sequestered. Currently, several large (and small) pipeline and other infrastructure projects, with underlying financial incentives from government entities, are underway to build out this gathering and transportation system.

Nuclear power is perhaps the best option to provide clean, reliable energy without significant carbon impact. However, concerns over the safety of nuclear power and the disposal of nuclear waste are significant, and at present the political will to permit and support new nuclear power generation is lacking.

The Energy Ladder

Reference: Max Roser (2021) – “Energy Poverty and Indoor Air Pollution: A Problem as Old as Humanity That We Can End Within Our Lifetime.” Published online at OurWorldinData.org. Retrieved from https://ourworldindata.org/energy-poverty-air-pollution.

A Mindset Shift to VUCA 2.0

How do we balance priorities and thrive through the VUCA energy transition? Effective leaders should consider their actions across a multitude of dimensions: personal, their families, their business/organization, their country and globally.

In his Feb. 17, 2017, article for Forbes, “VUCA 2.0: A Strategy for Steady Leadership in an Unsteady World,” author Bill George, senior fellow of the Harvard Business School, offers a different perspective on VUCA for leaders, giving a description of leadership qualities necessary to navigate VUCA challenges: Instead of volatile, uncertain, complex and ambiguous, George describes “VUCA 2.0” as vision, understanding, courage and adaptability.

Leaders who strive to inculcate these principles in themselves, their management teams, and organizations, and are possessed of an outlook of opportunity (forward looking) rather than fear (longing for the “good old days”) will be able to position their organizations to thrive.

Jon Robison, P.E., is pipelines discipline leader and principal at GeoEngineers Inc.


Tags: Energy Transition, GeoEngineers, November December 2022 Print Issue

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North American Pipeline Project Roundup: November/December 2022

The North American Pipeline Project Roundup is a monthly feature that documents recent contracts awarded within the energy pipeline construction sector.

Pe Ben USA Inc. was awarded a contract for the hauling and load out of approximately 22.7 miles of 24-in. pipe in Ector County, Texas. Headquarters is Odessa, Texas. The superintendent is Greg Michel. Approximate start date: Oct. 26.

Pe Ben USA Inc. was awarded a contract for the loading, hauling and stockpiling of approximately 19.4 miles 16-in. pipe in Utah and Duchesne counties, Utah. Headquarters is Vineyard, Utah. The superintendent is Robert Cooley. Approximate start date: Oct. 24.

Otis Minnesota Services was awarded a contract for recoating on approximately 300 ft of 20-in. pipeline in Allegheny and Butler counties, Pennsylvania. Headquarters is to be determined. The superintendent is Joe Carter. Approximate start date: Oct. 17.

Pe Ben USA Inc. was awarded a contract to load, haul and stockpile approximately 68,000 ft of 36-in. pipe in Harnett and Washington counties, North Carolina. Headquarters is Fuquay Varina, North Carolina.
Approximate start date: Oct. 17.

Read More North American Pipeline Project Roundup at napipelines.com/category/project-roundup/

Q&D Construction was awarded a contract for small diameter station work in Fresno County, California. Headquarters is Helm. California. The superintendent is Tim Oney. Approximate start date: Oct. 17.

The HDD Co. was awarded a contract to install approximately 4,000 ft of 6-in. pipeline via horizontal directional drilling in Essex County, Massachusetts. Headquarters is on the jobsite. The superintendent is Chris Odwyer. Approximate start date: Oct. 13.

Pe Ben USA Inc. was awarded a contract for the hauling of approximately 54 miles of 36-in. pipe in Liberty and Jefferson counties, Texas. Headquarters are Dayton, Texas and Nome, Texas. The superintendent is Trey Stokes. Approximate start date: Oct. 12.

Ace Pipeline Inc. was awarded a contract to install approximately 6,000 ft of triple lay 2- to 24-in. pipelines in Wetzel County, West Virginia. Headquarters is New Martinsville, West Virginia. The superintendent is Travis Jarvis. Approximate start date: Oct. 10.

United Piping Inc. was awarded a contract for fire gate valve replacement in Wayne County, Michigan. Headquarters is Northville, Michigan. The superintendent is Jim Bailer. Approximate start date: Oct. 7.

Right of Way Clearing & Maintenance Inc. was awarded a contract for clearing on approximately 5.82 miles of 12-in. pipeline right-of-way in Marion County, West Virginia. Headquarters is Idamay, West Virginia. The superintendent is Mark Nedrow. Approximate start date: Oct. 5.

Aaron Enterprises Inc. was awarded a contract to install 450 ft of 24-in. pipeline in Price Georges County, Maryland. Headquarters is Landover, Maryland. The project superintendent is Glenn Grove. Approximate start date: Oct. 3.

BluRoc LLC was awarded a contract for the clearing and matting of approximately 13.1 miles of 16-in. pipeline right-of-way in Forsyth, Dawson and Hall counties, Georgia. Headquarters is Dawsonville, Georgia. The superintendent is Jay Pelley. Approximate start date: Oct. 3.

Dun Transportation & Stringing Inc. was awarded a contract for the whitewash of approximately 25 miles of 30-in. pipe in Monroe County, Pennsylvania. Headquarters is Mt. Effort, Pennsylvania. The superintendent is Dane Hilsabeck. Approximate start date: Oct. 3.

The Hillis Group was awarded a contract for anomaly digs in Gloucester, Camden and Bergen counties, New Jersey. Headquarters is to be determined. The superintendent is Brett Ehasz. Approximate start date: Oct. 3.

Maxx HDD LLC was awarded a contract to install approximately 950 ft of 20-in. pipeline via horizontal directional drilling in Tarrant County, Texas. Headquarters is Fort Worth, Texas. The superintendent is James Bond. Approximate start date: Oct. 3.

Pe Ben USA Inc. was awarded a contract for pipe yard construction in McKenzie County, North Dakota. Headquarters is McKenzie, North Dakota. The superintendent is Jimmy Gregory. Approximate start date: Oct. 3.

Apex Pipeline Services Inc. was awarded a contract to install approximately 2 miles of 24-in. pipeline in Wetzel County, West Virginia. Project headquarters is Sistersville, West Virginia. The superintendent is Eric Creel. Approximate start date: Sept. 26.

United Piping Inc. was awarded a contract for replacement of a meter including fabrication of 12- and 16-in. pipeline fittings in Lee County, Illinois. Headquarters is Rock Falls, Illinois. The superintendent is Chris Daluga. Approximate start date: Sept. 23.

United Piping Inc. was awarded a contract for three 12-in. pipeline meter replacements in Will and Rock Island counties, Illinois. Headquarters is to be determined. The superintendent is Tim Darif. Approximate start date: Sept. 23.

United Piping Inc. was awarded a contract to replace liquid drain headers, slug catchers and piping modifications in Champaign County, Illinois. Headquarters is Fisher, Illinois. The superintendent is Chris Daluga. Approximate start date: Sept. 23.

Henkels & McCoy Inc. was awarded a contract the replacement of a 24-in. pipeline launcher barrel, replacement of a 20-in. pipeline header in Washtenaw County, Michigan. Headquarters is Manchester, Michigan. The superintendent is Ben Pace. Approximate start date: Sept. 19.

Maxx HDD LLC was awarded a contract to install approximately 695 ft of 6-in. pipeline in Calcasieu Parish, Louisiana. Headquarters is Lake Charles, Louisiana. The superintendent is James Bond. Approximate start date: Sept. 19.

Right of Way Clearing & Maintenance Inc. was awarded a contract for the clearing of approximately 1.6 miles of 20- and 24-in. pipeline right-of-way in Wetzel County, West Virginia. Headquarters is New Martinsville, West Virginia. Approximate start date: Sept. 19.

U.S. Pipeline Inc. was awarded a contract to install approximately 1.3 miles of 24-in. pipeline in Prince Georges County, Maryland. Headquarters is Landover, Maryland. The superintendent is Jerry Bash. Approximate start date: Sept. 19.

The HDD Co. was awarded a contract to install approximately 385 ft of 8-in. pipeline in Oswego County, New York. Headquarters is on the jobsite. The superintendent is Ricky Humphries. Approximate start date: Sept. 14.

Ellingson Trenchless LLC was awarded a contract to install approximately 890 ft of 8-in. pipeline via horizontal directional drilling in Buena Vista County, Iowa. Headquarters is on the jobsite. The superintendent is Derek Vogel. Approximate start date: Sept. 12.

InfraSource LLC was awarded a contract to install approximately 3,000 ft of 16-in. pipeline and two spherical fittings in Hampden County, Massachusetts. Headquarters is Ludlow, Massachusetts. The superintendent is Jason Nash. Approximate start date: Sept. 12.

R.L. Coolsaet Construction Co. was awarded a contract to install one 24-in. pipeline mainline valve and one 24-in. pipeline bypass valve in Wayne County, Michigan. Headquarters is Romulus, Michigan. The superintendent is Bart Jeannette. Approximate start date: Sept. 12.

United Piping Inc. was awarded a contract for the demolition of an existing 16-in. pipeline meter station and the replacement of valve and temperature transmitters in Clare County, Michigan. Headquarters in Lake, Michigan. The superintendent is to be determined. Approximate start date: Sept. 9.

Ellingson Trenchless LLC was awarded a contract to install approximately 2,400 ft of 8-in. pipeline in Pottawattamie and Fremont counties, Iowa. Headquarters is on the jobsite. The superintendent is Derek Vogel. Approximate start date: Sept. 8.

Laney Directional Drilling was awarded a contract to install approximately 2,052 ft of 6-in. pipeline in Union County, Iowa. Headquarters is Douglas Township, Iowa. The superintendent is Jerry Cordova. Approximate start date: Sept. 7, 2022.

Right-of-Way Clearing & Maintenance Inc. was awarded a contract for clearing on a 20-in. pipeline in Mingo County, West Virginia. Headquarters is to be determined. The superintendent is Mark Nedrow. Approximate start date: Sept. 6.

Snelson Companies Inc. was awarded a contract for 10-in. pipeline valve replacement in Santa Clara County, California. Headquarters is San Jose, California. The superintendent is Jack Symonds. Approximate start date: Sept. 6.

United Piping Inc. was awarded a contract for 17 anomaly digs in St. Clair County, Michigan. Headquarters is Marysville, Michigan. The superintendent is Jim Bailer. Approximate start date: Sept. 6.

United piping Inc. was awarded a contract for the removal and re-installation of three burner tubes in Champaign County, Illinois. Project headquarters is Fischer, Illinois. The superintendent is Mack Santikko. Approximate start date: Sept. 6.

United Piping Inc. was awarded a contract for 111 30-in. pipeline integrity digs in Porter, La Porte, Starke, Pulaski and Cass counties, Indiana. Headquarters is Valparaiso, Indiana. The superintendent is Mack Santikko. Approximate start date: Sept. 6.

Penn Line Service Inc. was awarded a contract for restoration on approximately 24,200 ft of 8-in. pipeline in McKean County, Pennsylvania. Headquarters is to be determined. The superintendent is Jim Pratt. Approximate start date: Aug. 31.

Right-of-Way Clearing & Maintenance Inc. was awarded a contract for clearing on approximately 8413 ft of 20- and 18-in. pipeline in Tyler County, Pennsylvania. Headquarters is Middlebourne, West Virginia. The superintendent is Orvil Davis. Approximate start date: Aug. 31.

United Piping Inc. was awarded a contract to install approximately 350 ft of 2- to 6-in. piping in Allegan County, Michigan. Headquarters is Salem Township, Michigan. The superintendent is Bob Humphrey. Approximate start date: Aug. 30.

U.S. Pipeline Inc. was awarded a contract for a 24-in. pipeline anomaly cut out of Luzerne County, Pennsylvania. Project headquarters is White Haven, Pennsylvania. The superintendent is Glenn Barwicki. Approximate start date: Aug. 30.

Ace Pipeline Inc. was awarded a contract to install 1.66 miles of 20-in. pipeline and 18-in. pipeline in Tyler County, West Virginia. Headquarters is Pennsboro, West Virginia. The superintendent is Jeremy Phillips. Approximate start date: Aug. 29.

Apex Pipeline Services was awarded a contract to install approximately 11,000 ft of 12-in. pipeline in Wyoming County, West Virginia. Headquarters is Mullens, West Virginia. The superintendent is Dana Keaton. Approximate start date: Aug. 29.

Apex Pipeline Services was awarded a contract for a project to install approximately 2,200 ft of 20-in. pipeline in Mingo County, West Virginia. Headquarters is Thacker, West Virginia. The superintendent is Roman McKown. Approximate start date: Aug. 29.

Otis Minnesota Services was awarded a contract to install approximately 2,500 ft of 6” steel and 2,000 ft of 2” plastic pipeline in Tioga County, Pennsylvania. Headquarters is Union Center, Pennsylvania. The superintendent is Sam Kissick. Approximate start date: Aug. 29.

Otis Minnesota Services was awarded a contract to replace approximately 892 ft of 8-in. pipeline via horizontal direction drilling in Buena Vista County, Iowa. Headquarters is Big Lake, Minnesota. The superintendent is Greg Merschman. Approximate start date: Aug. 29.

Otis Minnesota Services was awarded a contract to replace two 16-in. pipeline drips in Potter County, Pennsylvania. Headquarters is Coudersport, Pennsylvania. The superintendent is Tony Niedermaier. Approximate start date: Aug. 29.

U.S. Pipeline Inc. was awarded a contract for 14-in. pipeline anomaly investigations and pipe change outs in Delaware County, Pennsylvania. Headquarters is Aston, Pennsylvania. The superintendent is Jason West. Approximate start date: Aug. 29.

United Piping Inc. was awarded a contract for a project involving four total horizontal directional drills totaling 3,930 ft in Pottawattamie County, Iowa, Fremont County, Iowa and Putnam County, Missouri. Headquarters is to be determined. The superintendent is Tim Darrif. Approximate start date: Aug. 26.


Tags: heavy haul, November December 2022 Print Issue, Project Roundup

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