Adrin Shafil

Petrofac Drilling and Completions Manager
Last Updated: August 25, 2017
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Drilling & Completions
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I used to be a pure red blooded driller. Red, the colour of fire and blood, associated with energy, war, danger, strength, power, determination as well as passion, desire, and love. And all of that hot emotions was for my passion to drill. I did not care about anything else other than well length, cost, time, and how great I was at selecting the right tool, using it and of course telling people about my accomplishments. And in Feb 2004, I reached the very pinnacle of being a drilling engineer. I drilled, single handedly (that shall go in my future memoirs), the longest well in Malaysia. At 6313mMD, I, the lead drilling engineer, held the Malaysian record for longest well ever drilled.

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Unfortunately that intense self admiration and jubilation was short lived, when in a few weeks that record was broken by another operator. My ego deflated, my self worth diminishing by every mention of the other well's length, I banged my forehead whenever I thought of them who beat my record by a measly 50m. And of course, being a red blooded driller, the only lesson I learned was to just to drill longer next time. If I ever drilled another record breaking well, I will make sure I just put in some contingency shale drilling of about ~60m, so that I never get beaten again -_-

Sadly, I have never had a chance again, because since 2004, there have only been a handful of ultra ERD wells drilled. To put this into perspective, the longest well currently in Malaysia was drilled in 2014 to ~6700m, which is a laudable achievement, but exemplifies a slow progression over 10 years. As a driller, I feel that it is my responsibility to revive the interest in ERD and invigorate the passion for world class records which has since waned in the Malay Basin.

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But now I've since gone to the Dark Side (Star Wars trademark), the side that bleeds hydrocarbon, I realise that my previous infatuation with drilling KPIs just seems so irrelevant in the grand scheme of things, when the oil business bottom line are production and profits, and doesn't really give a hoot on how long a well is. To stay profitable, and as reserves become even smaller and difficult to access, it has becomes an ever-more important to focus on looking at several concepts with enabling techniques, to be able to select the right solution to exploit hydrocarbons. As a driller, nothing is sexier and more elegant than suggesting extended reach drilling. While its the most straightforward option which allows the ability to explore and produce further and deeper, and minimise facilities installation, it does come with added risk and possibility of failure.

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Any solution proposed requires capital expenditure. And capital expenditure proposals must be sufficiently specific to permit their technical and commercial justification, with sufficient risk assessment, for exploration and production operations, not just for the immediate fiscal year, but the life of the production sharing contract or field. In the economic phase of evaluation, oil management may find that it has more investment opportunities than capital to invest, or more capital to invest than investment opportunities. Whichever situation exists, oil management needs to resort to some economic criteria for selecting or rejecting investment proposals. Management’s decision in either case is likely to be based largely on the measures of financial return on the investment. In the current depressed oil price climate, how do we make extended reach drilling a viable option?

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I won’t pretend that I’m an expert at economics like Wally in the Dilbert strip above, but let’s try to simplify the concept for the purpose of this article. Lets just say, all of the KPIs of a well, production, cost, schedule, IRR, ROI, terms of PSC, can all be rolled into a variable limit, the economic threshold of the project.

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This chart represents the likelihood of costs in a normal Monte Carlo S-curve spread, where the cost of a project is typically quoted as the P50, with a range given for sensitivities. In layman's terms, the mid case is the P50 (50% chance having costs below that threshold) and P10 and P90 is the low and high side respectively. The range of costs are given so that the project can be carefully evaluated against the returns for any given scenario.

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However, most projects focus on the most straightforward approach, which is trying to reduce base cost ('What we plan for' curve), in an attempt to get closer to the low side, and hope that nothing goes wrong to upset the cart and skew to the upside. To shift the whole S-curve downwards, the team will negotiate contracts, purchase cheaper tangibles/consumables, reduce the technology, and try to get the work done with a lean operation. However, as we lower down our price point, we will inevitably be introducing creep, compromising quality and safety. Post experiencing a trainwreck, the looming result is cost inadvertently passing the economic threshold ('What will actually happen' curve).

A prudent project manager should try to visualise, manage and contain all of the outcomes, trying to put a cap on the risk and exposure of the upside, while making the likelihood of meeting the P50 expectation more likely, even if it means increasing the mid-case, and forgoing a more aggressive P10 ('What we actually need' Green curve). To put it simply, don't lose the farm while trying to save every single dollar.

If you are planning to justify a new technology, a new technique, or a risky proposition such as extended reach drilling, there are 5 key elements that you need in your proposal, to emulate the 'What we actually need' green curve:

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Key 1: Collaborate and Build the knowledge of your team: Collaborate as much as possible internally, and externally with partners, host government, increase data trade transactions, and engage professional networks in order to learn as much as you can on the venture you are undertaking. In this environment, you will be pleasantly surprised that others might actually be interested to learn from you to. In my previous life, I was part of an assurance team, called upon by our partner in Western Australia to look at their concept work. They were down to two options, where they were weighing a 10km ERD well versus a subsea development, where the costs of subsea were 50% higher. The upside costs presented by the drilling team for the ERD looked reasonable, with their P90 costs about a wash with the subsea well. So on paper, ERD looked to be the right selection. However, the Drilling Manager confessed that despite the economics and his attempt to show the risks, he believes that his team does not have the capability to carry out the work, in other words the drillability due to the capability was questionable. The ERD well was dropped in favor of the subsea well, and everybody agreed that was the right call, because regardless what the evaluation on paper shows, there was no confidence in the team that was to carry the work out. Pity.

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Key 2: Cap your upside costs: Gone are the days when people say, "A well is going to cost what its going to cost". Have savvier contracts, such as with lump sum capped, performance incentivised, meterage measured or even turnkeyed contract. We should no longer be dependent on time based contracts, just because the supplier says so. Determine the cost structure which fits your project and design your contracts to meet what is required

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Key 3: Increase your execution reliability: This doesn't mean not having problems. What it means is being able to deliver what you promised. So if the design is complex, and on average non productive time is high, design the lower complexity aspects of the project to absorb the possible problems that you will eventually have. Sometimes you have to accept that your planned costs would have to be higher to increase reliability. Justify the increase and plan for success, but be ready for failure.

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Key 4: Have contingency plans for everything, even failure of your base plan: It goes without saying that risk assessments are the support system for a project, but without closing out and implementing any of the mitigation plans, the risk assessment are just a waste of time. An always think of what would happen if the primary plan fails? Do you have a fall back plan to still retain value or limit exposure? An alternative target, perhaps? A ready for deployment sidetrack assembly?

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Key 5: Increase the value statement of your design: During detailed design, a D&C team often gets carried away on focusing too much on 'getting the job' done versus remembering why the job was done in the first place. Reaching an objective is just the means to extract the value from the project. Design the well in order to increase the returns on the project, and increase the economic threshold. Drill better wells, which doesn't necessarily mean drilling longer or more wells.

Hopefully the keys above will assist the reader in creating more palatable ERD proposals. Every single project, every single team, and every single company will have a different approach in creating value, but I do hope that maybe in some minute way, I managed to jog some life back into excitement about drilling and ERD in Malaysia. Stay savvy, people.

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This Week in Petroleum: 2018 OPEC net oil export revenues highest since 2013, but likely to decline

The U.S. Energy Information Administration (EIA) estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned almost $711 billion in net oil export revenues in 2018 (Figure 1). The estimate is up 29% from 2017, but about 40% lower than the record high of almost $1,200 billion in 2012. The 2018 earnings increase is mainly a result of higher crude oil prices. The Brent spot price rose from an annual average of $54 per barrel (b) in 2017 to $71/b in 2018. However, EIA forecasts annual OPEC net oil export revenues will decline to $593 billion in 2019 and to $556 billion in 2020. Decreasing OPEC revenues are primarily a result of decreasing production among a number of OPEC producers.

Figure 1. OPEC net oil export revenues

EIA estimates net oil export revenues based on oil production—including crude oil, condensate, and natural gas plant liquids—and total petroleum consumption estimates, as well as crude oil prices forecast in the August 2019 Short-Term Energy Outlook (STEO). EIA’s net oil export revenues estimate assumes that exports are sold at prevailing spot prices and adjusts the prices for benchmark crude oils forecast in STEO (Brent, West Texas Intermediate, and the average imported refiner crude oil acquisition cost) with historical price differentials among spot prices for the different OPEC crude oil types. For countries that export several different varieties of oil, EIA assumes that the proportion of total net oil exports represented by each variety is the same as the proportion of the total domestic production represented by that variety. For example, if Arab Medium represents 20% of total oil production in Saudi Arabia, the estimate assumes that Arab Medium also represents 20% of total net oil exports from Saudi Arabia.

Although OPEC net export earnings include estimated Iranian revenues, they are not adjusted for possible price discounts that trade press reports indicatedIran may have offered its customers after the United States announced its withdrawal from the Joint Comprehensive Plan of Action in May 2018. The United States reinstated sanctions targeting Iranian oil exports in November 2018. Similarly, EIA does not adjust for Venezuelan crude oil exports to China or India for volumes that are sent for debt repayments to China and Russian energy company Rosneft, respectively, and thus do not generate cash revenue for Venezuela.

If the $711 billion in net oil export revenues by all of OPEC is divided by total population of its member countries and adjusted for inflation, then per capita net oil export revenues across OPEC totaled $1,416 in 2018, up 26% from 2017 (Figure 2). The increase in per capita revenues likely benefited member countries that rely heavily on oil sales to import goods, fund social programs, and otherwise support public services.

Figure 2. OPEC real net and per capita oil export revenues

In addition to benefiting from higher prices, some OPEC member countries have increased export revenues by reducing domestic consumption and consequently exporting more. For example, Saudi Arabia has significantly reduced the amount of crude oil burned for power generation. Limiting crude oil burn allowed Saudi Arabia to export more crude oil and to maximize revenues.

Others have been able to charge higher premiums based on the quality of their crude oil streams. As the global slate of crude oil has changed with more light crude oil production (with higher API gravity), OPEC members have benefited from a narrowing price discount for their heavy crude oils, which are typically priced lower than lighter crude oils because of quality differences. Smaller discounts for OPEC members’ heavier crude streams contributed to higher spot prices for the OPEC crude oil basket price, which incorporates spot prices for the major crude oil streams from all OPEC members (Figure 3).

Figure 3. Gasoline crack spreads (250-day moving average)

Despite the increase in annual average crude oil prices in 2018, OPEC revenues fell during the second half of 2018, mainly because of lower production and export volumes from Iran and Venezuela (Figure 4). EIA estimates that OPEC total petroleum liquids production decreased slightly in 2018 when increased production in Saudi Arabia, Iraq, and Libya could not offset significant declines in Iranian and Venezuelan production. Combined crude oil production in Iran and Venezuela fell by almost 800,000 barrels per day (b/d), or 14%, in 2018 and again by over 1.0 million b/d in the first seven months of 2019. Although Iranian net oil export revenues increased by 18% from 2017 to 2018, a year-to-date comparison indicates a significant decrease in revenues in 2019 (Figure 4). EIA estimates that from January to July 2018, Iran received about $40 billion in export revenues, compared with an estimated $17 billion from January to July 2019. Further decreases in OPEC members’ production beyond current EIA assumptions would further reduce EIA’s OPEC revenue estimates for 2019 and 2020.

Figure 4. Number of days Singapore had the highest and lowest gasoline crack spread among global refining centers

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell nearly 3 cents from the previous week to $2.60 per gallon on August 19, 22 cents lower than the same time last year. The Gulf Coast price fell nearly 6 cents to $2.27 per gallon, the East Coast price fell nearly 4 cents to $2.52 per gallon, the West Coast and Rocky Mountain prices each fell nearly 2 cents to $3.24 per gallon and $2.67 per gallon, respectively, and the Midwest price fell nearly 1 cent, remaining at $2.52 per gallon.

The U.S. average diesel fuel price fell nearly 2 cents to $2.99 per gallon on August 19, 21 cents lower than a year ago. The Midwest price fell over 2 cents to $2.90 per gallon, the West Coast and East Coast prices each fell nearly 2 cents to $3.56 per gallon and $3.02 per gallon, respectively, the Gulf Coast price fell more than 1 cent to $2.75 per gallon, and the Rocky Mountain price fell less than 1 cent, remaining at $2.94 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 4.0 million barrels last week to 90.5 million barrels as of August 16, 2019, 10.2 million barrels (12.7%) greater than the five-year (2014-18) average inventory levels for this same time of year. Gulf Coast, East Coast, Midwest, and Rocky Mountain/West Coast inventories increased by 2.0 million barrels, 1.0 million barrels, 0.7 million barrels, and 0.4 million barrels, respectively. Propylene non-fuel-use inventories represented 4.4% of total propane/propylene inventories.

August, 22 2019
The Australian 590 Student Guardian Visa Process In A Nutshell

Student guardian visa subclass 590 allows you to stay in Australia as a guardian or custodian or relative of an overseas student who is pursuing an education course in Australia. With 590 student guardian visa, You can stay with your child to take care of him/her in Australia until the course complete. Your child age must below then 18th years old before applying for a student guardian visa 590. If you're a relative then you can stay with the child by submitting written permission of a child’s caretakers like a guardian or grandparents. If your child is older then eighteen years then to apply for visa subclass 590 you need to show that you have special emergency circumstances. You can apply for a 590 student guardian visa outside from Australia and acquire enrollment in alternative courses up to three months with a 590 visa. You will be authorized to take care more then one child if you have. You can do the other study or coach just for 3 months with this Student Guardian Visa Subclass 590

Step By Step Process About 590 Visa

1.Before Applying for Visa

Meet Eligibility Criteria

    • You must be a parent or grandparents or relative of a non-Australian child who is below 18th of age.

    • If you want to apply from inside of Australia then you need to hold a substantive visa except for domestic worker, temporary work visa, transit visa, visitor visa, etc.

    • If your another child who is below 18th and not coming to Australia with you then you need to give evidence that you have made welfare arrangement for the child.

    • You have to account for your all healthcare expenses so make sure that medical insurance can only reduce your expenses.

    • Your past immigration history must be credible like you must not have any visa cancellation history.

    • Your intention should be genuine at the time of applying for student guardian visa 590 and it should be not against Australian culture and policies.

    • If your family members are also applying with you then they also need to meet health policies of the Australian government

    • Only a parent or grandparents or custodian or step parents of an overseas student visa 500 holder can apply for this student guardian visa subclass 590.

    • If parents are not present due to any reason for looking after the visa subclass 500 holder student then any relative can apply for this 590 student guardian visa. 

    • You must be a guardian of an international student who must be below 18th of age except for exceptional circumstances.

    • You have to give assurance to immigration authorities that you will be able to provide welfare.

    • Your age must be above 21 years old before going to apply for a student guardian visa 590.

    • You have to pay back any type of debt to the Australian government if you have.

    • If you have another child aged 6 years old then you can bring him/her to Australia but if your child if older then 6           years then you need to show emergency condition to bring him/her to Australia.

  Collect Documents

    •Provide character certificate and other national identities.

    •Submit bank documents and salary slips to prove that you will be enough capable to give welfare to the student.

    •Provide guardianship documents to prove your credibility to that child.

    •Translate your non-English documents into English.

    •Submit legal student guardianship form.

    •Provide dependent under 6 documents if you bring your child who is under 6 years of age.

2. Processing Time And Cost Of This Visa

Visa subclass 590 cost starts from AUD 560. This visa 590 may proceed in 2 to 4 months. But in case you forget to submit any documents then you processing time of visa can be increased. Your visa application processing time can be increased if you provide incomplete information.

3. Apply For The Visa

You need to apply online for the 590 student guardian visa 6 weeks before the student’s course starts. At the time applying for the visa, you have to prove that you are genuine and legal applicant by submitting legal documents. If you submit illegal information to immigration authorities then they have the authority to cancel your visa application immediately. You and your relative which is listed in visa application will not able to get a visa for the next 10 years in case of any fraud by you. You should contact an experienced Immigration Agent Adelaide.

4. Conditions After You Have Applied For The Visa

    • You are not allowed to do any type of work in Australia.

    • You can study only for 3 months.

    • With visa subclass 590 you can’t apply for another visa

    • At the time of leaving Australia, you must have brought the student to your country.

    • If you have another child who is below 6th years of age then you can bring him/her to Australia.

Get The Direction To Migration Agent Adelaide - ISA Migrations and Education Consultants.



August, 21 2019
TODAY IN ENERGY: The U.S. leads global petroleum and natural gas production with record growth in 2018

U.S. petroleum and natural gas production increased by 16% and by 12%, respectively, in 2018, and these totals combined established a new production record. The United States surpassed Russia in 2011 to become the world's largest producer of natural gas and surpassed Saudi Arabia in 2018 to become the world's largest producer of petroleum. Last year’s increase in the United States was one of the largest absolute petroleum and natural gas production increases from a single country in history.

For the United States and Russia, petroleum and natural gas production is almost evenly split; Saudi Arabia's production heavily favors petroleum. Petroleum production is composed of several types of liquid fuels, including crude oil and lease condensate, natural gas plant liquids (NGPLs), and bitumen. The United States produced 28.7 quadrillion British thermal units (quads) of petroleum in 2018, which was composed of 80% crude oil and condensate and 20% NGPLs.

estimated petroleum and natural gas production in selected countries

Source: U.S. Energy Information Administration, based on International Energy Statistics
Note: Petroleum includes crude oil, condensate, and natural gas plant liquids.

U.S. crude oil production increased by 17% in 2018, setting a new record of nearly 11.0 million barrels per day (b/d), equivalent to 22.8 quadrillion British thermal units (Btu) in energy terms. Production in the Permian region of western Texas and eastern New Mexico contributed to most of the growth in U.S. crude oil production. The United States also produced 4.3 million b/d of NGPLs in 2018, equivalent to 5.8 quadrillion Btu. U.S. NGPL production has more than doubled since 2008, when the market for NGPLs began to expand.

U.S. dry natural gas production increased by 12% in 2018 to 28.5 billion cubic feet per day (Bcf/d), or 31.5 quadrillion Btu, reaching a new record high for the second year in a row. Ongoing growth in liquefied natural gas export capacity and the expanded ability to reach new markets have supported increases in U.S. natural gas production.

Russia’s crude oil and natural gas production also reached record levels in 2018, encouraged by increasing global demand. Russia exports most of the crude oil that it produces to European countries and to China. Since 2016, nearly 60% of Russia’s crude oil exports have gone to European member countries in the Organization for Economic Cooperation and Development (OECD). Russia’s crude oil is also an important source of supply to China and neighboring countries.

Russia’s natural gas production increased by 7% in 2018, which exceeded the growth in exports. The Yamal liquefied natural gas (LNG) export facility, which loaded its first cargo in December 2017, can liquefy more than 16 million tons of natural gas annually and accounts for almost all of the recent growth in Russia’s LNG exports. Since 2000, more than 80% of Russia’s natural gas exports have been sent to Europe.

Saudi Arabia’s annual average crude oil production increased slightly in 2018, but it remained lower than in 2016, when Saudi Arabia’s crude oil output reached a record high. Saudi Arabia’s crude oil production reached an all-time monthly high in November 2018 before the December 2018 agreement by the Organization of the Petroleum Exporting Countries (OPEC) to extend production cuts.

In addition to exporting and refining crude oil, Saudi Arabia consumes crude oil directly for electricity generation, which makes Saudi Arabian crude oil consumption highest in the summer when electricity demand for space cooling is relatively high. Since 2016, Saudi Arabia’s direct crude oil burn for electric power generation has decreased for a number of reasons, including demand reductions from a partial withdraw of power subsidies, greater use of residual fuel oil, and increased availability of domestic natural gas.

Crude oil exports account for about 60% of Saudi Arabia’s total economic output. China, along with Japan, South Korea, Taiwan, and the United States remain critical markets for Saudi Arabia’s petroleum exports.

August, 21 2019