Hui Shan

Job Steward at NrgEdge. If you are an Energy Professional (Oil, Gas, Energy) contact me for opportunities
Last Updated: September 29, 2018
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Career Development
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The Oil and Gas industry is going through ‘the Great Crew Change’ which means the dominant experienced generation will pass on the baton to the millennials over the next few years. Premiums are placed on a newer generation to assume increasing job responsibilities without compromising on the safety and quality. However, the traditional approach of classroom sessions and on-the-job training will not be enough to deliver in-sync to the expectation. The training must be amplified with advanced technologies like Augmented Reality (AR) and Virtual Reality (VR) that enhances the workforce's knowledge and confidence.

Visualization is one of the greatest abilities of humankind, and with the advancement of computing technology, this concept has been translated as Augmented and Virtual Reality. In the high-risk setup like construction, military, aviation or energy, the visualization techniques can combat the future risks and can even save lives.

The oil and gas industry has introduced AR/VR Immersive Training Systems, which is a 3D engineering tool that connects control room operators, maintenance, and field personnel in a single realistic simulated learning environment. The system also allows to capture and retain operational knowledge and technical expertise during the replacement of the experienced operators with the new workforce. It ensures safety and unhindered plant operation and performance.

Augmented Reality (AR) in the oil and gas sector provides a visual view of the system along with the digital information. It provides graphics, real-time data, and feedback. Field engineers can also perform maintenance task by using AR informative graphics, resulting in the better assessment of the issues and reduced downtimes. It can also be used in the monitoring of the critical equipment for preventive and corrective maintenance in rigs, exploration and production units. It is a great tool for on-the-job training and keeping your workforce updated with latest learnings.

Virtual reality (VR) simulation mimics the real-world scenario. The user can interact with the elements and can even perform tasks virtually through sensory experience. This is one of the best learning tools for the upcoming generation. It enables them to learn about the oil reservoir, rigs, and other equipment in a life-like setting, without being physically present in the hazardous environment. They can also learn about the possible hiccups and the ways to combat them. By using 3D immersive technology, one can zoom in and zoom out the viewing model and can compare the expected system with the actual to learn more about the deviation. Even the real-life mock-ups can be created to train the workforce better.

Benefits of training

· Fast commissioning and start-up time

With the real-world plant training of the operators, supervisors, managers, field engineers, and maintenance staff the company can minimize the project risk considerably and prevent delays due to plant commissioning and start-up.

· Save cost on Infrastructure

The cost of training your personnel in real setup means a huge expenditure for the company in providing the facility, training staff, and equipment. However, with simulations, the personnel can easily learn to operate, manage and maintain the equipment without any expenses on infrastructure. The technology can also assist in case-study of oil drilling platforms, processing plants, rigs, refineries, which comprises of the most complex machinery and process.

· Fast and efficient training

The real-time training requires long duration due to a mix of the classroom session, on-the-job training, plant or site visit. However, VR offers the same level of training without much movement and expenditure in considerably less time. Thus the simulated learning system makes the training process highly reliable, sustainable, efficient, effective, and pocket-friendly.

· Compliance with safety parameters

3D models simulate the real work conditions and enhance the understanding level of the workers and equip them to deal with any risks or unsafe situations and ensure adherence to the safety compliances.

· Improve first-time fix rates

The upstream segment is usually located in the remote or offshore location which means the cost of installation and maintenance is high due to accessibility issues. The technicians can be trained about the facilities in advance before reaching to perform periodic maintenance and first-time fixes.

· Conduct primary diagnosis

AR/VR platform aided with the integration from the sensor's operating system can provide historical data about the facilities and help to conduct training that enables the technician to make an informed decision. The engineer learns to conduct a first-level diagnostic and ascertain the extent of the problem before reaching the site.

The future of Augmented and Virtual reality is moving beyond the ‘virtual view’ to a more ‘data-oriented virtual view’. The idea is to obtain relevant historical and real-time data via enterprise system or IoT- based system to deal with any system error or failure. When the personnel is trained using the simulation and 3D models they are better equipped to deal with real-time situations and can help in creating innovative solutions at a fraction of cost.

  •  Fast and efficient training 

The real time training requires long duration due to a mix of classroom session, on-the-job training, plant or site visit. However, VR offers the same level of training without much movement and expenditure in considerably less time. Thus the simulated learning system makes the training process highly reliable, sustainable, efficient, effective, and pocket-friendly.

  • Compliance with safety parameters

3D models simulate the real work conditions and enhances the understanding level of the workers and equips them to deal with any risks or unsafe situations and ensures adherence to the safety compliances.

  • Improve first-time fix rates

The upstream segment is usually located in the remote or offshore location which means the cost of installation and maintenance is high due to accessibility issues.The technicians can be trained about the facilities in advance before reaching to perform periodic maintenance and first-time fixes.

  • Conduct primary diagnosis

AR/VR platform aided with the integration from operational system can provide historical data of the facilties and help to conduct training that enable the technician to make informed decision. The engineer learns to conduct a first-level diagnostic and ascertain the extent of problem before reaching the site.

The future of Augmented and Virtual reality is moving beyond the ‘virtual view’ to a more ‘data-oriented virtual view’. The idea is to obtain relevant historical and real-time data via enterprise system or IoT- based system to deal with any system error or failure. When the personnel are trained using the simulation and 3D models they are better equipped to deal with real-time situations and can help in creating innovative solutions at a fraction of cost.

Augmented Reality Virtual Reality Simulations Next-gen training
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The Impact of COVID 19 In The Downstream Oil & Gas Sector

Recent headlines on the oil industry have focused squarely on the upstream side: the amount of crude oil that is being produced and the resulting effect on oil prices, against a backdrop of the Covid-19 pandemic. But that is just one part of the supply chain. To be sold as final products, crude oil needs to be refined into its constituent fuels, each of which is facing its own crisis because of the overall demand destruction caused by the virus. And once the dust settles, the global refining industry will look very different.

Because even before the pandemic broke out, there was a surplus of refining capacity worldwide. According to the BP Statistical Review of World Energy 2019, global oil demand was some 99.85 mmb/d. However, this consumption figure includes substitute fuels – ethanol blended into US gasoline and biodiesel in Europe and parts of Asia – as well as chemical additives added on to fuels. While by no means an exact science, extrapolating oil demand to exclude this results in a global oil demand figure of some 95.44 mmb/d. In comparison, global refining capacity was just over 100 mmb/d. This overcapacity is intentional; since most refineries do not run at 100% utilisation all the time and many will shut down for scheduled maintenance periodically, global refining utilisation rates stand at about 85%.

Based on this, even accounting for differences in definitions and calculations, global oil demand and global oil refining supply is relatively evenly matched. However, demand is a fluid beast, while refineries are static. With the Covid-19 pandemic entering into its sixth month, the impact on fuels demand has been dramatic. Estimates suggest that global oil demand fell by as much as 20 mmb/d at its peak. In the early days of the crisis, refiners responded by slashing the production of jet fuel towards gasoline and diesel, as international air travel was one of the first victims of the virus. As national and sub-national lockdowns were introduced, demand destruction extended to transport fuels (gasoline, diesel, fuel oil), petrochemicals (naphtha, LPG) and  power generation (gasoil, fuel oil). Just as shutting down an oil rig can take weeks to complete, shutting down an entire oil refinery can take a similar timeframe – while still producing fuels that there is no demand for.

Refineries responded by slashing utilisation rates, and prioritising certain fuel types. In China, state oil refiners moved from running their sites at 90% to 40-50% at the peak of the Chinese outbreak; similar moves were made by key refiners in South Korea and Japan. With the lockdowns easing across most of Asia, refining runs have now increased, stimulating demand for crude oil. In Europe, where the virus hit hard and fast, refinery utilisation rates dropped as low as 10% in some cases, with some countries (Portugal, Italy) halting refining activities altogether. In the USA, now the hardest-hit country in the world, several refineries have been shuttered, with no timeline on if and when production will resume. But with lockdowns easing, and the summer driving season up ahead, refinery production is gradually increasing.

But even if the end of the Covid-19 crisis is near, it still doesn’t change the fundamental issue facing the refining industry – there is still too much capacity. The supply/demand balance shows that most regions are quite even in terms of consumption and refining capacity, with the exception of overcapacity in Europe and the former Soviet Union bloc. The regional balances do hide some interesting stories; Chinese refining capacity exceeds its consumption by over 2 mmb/d, and with the addition of 3 new mega-refineries in 2019, that gap increases even further. The only reason why the balance in Asia looks relatively even is because of oil demand ‘sinks’ such as Indonesia, Vietnam and Pakistan. Even in the US, the wealth of refining capacity on the Gulf Coast makes smaller refineries on the East and West coasts increasingly redundant.

Given this, the aftermath of the Covid-19 crisis will be the inevitable hastening of the current trend in the refining industry, the closure of small, simpler refineries in favour of large, complex and more modern refineries. On the chopping block will be many of the sub-50 kb/d refineries in Europe; because why run a loss-making refinery when the product can be imported for cheaper, even accounting for shipping costs from the Middle East or Asia? Smaller US refineries are at risk as well, along with legacy sites in the Middle East and Russia. Based on current trends, Europe alone could lose some 2 mmb/d of refining capacity by 2025. Rising oil prices and improvements in refining margins could ensure the continued survival of some vulnerable refineries, but that will only be a temporary measure. The trend is clear; out with the small, in with the big. Covid-19 will only amplify that. It may be a painful process, but in the grand scheme of things, it is also a necessary one.

Infographic: Global oil consumption and refining capacity (BP Statistical Review of World Energy 2019)

Region
Consumption (mmb/d)*
Refining Capacity (mmb/d)
North America

22.71

22.33

Latin America

6.5

5.98

Europe

14.27

15.68

CIS

4.0

8.16

Middle East

9.0

9.7

Africa

3.96

3.4

Asia-Pacific

35

34.75

Total

95.44

100.05

*Extrapolated to exclude additives and substitute fuels (ethanol, biodiesel)

Market Outlook:

  • Crude price trading range: Brent – US$33-37/b, WTI – US$30-33/b
  • Crude oil prices hold their recent gains, staying rangebound with demand gradually improving as lockdown slowly ease
  • Worries that global oil supply would increase after June - when the OPEC+ supply deal eases and higher prices bring back some free-market production - kept prices in check
  • Russia has signalled that it intends to ease back immediately in line with the supply deal, but Saudi Arabia and its allies are pushing for the 9.7 mmb/d cut to be extended to end-2020, putting the two oil producers on another collision course that previously resulted in a price war
  • Morgan Stanley expects Brent prices to rise to US$40/b by 4Q 2020, but cautioned that a full recovery was only likely to materialise in 2021

End of Article

In this time of COVID-19, we have had to relook at the way we approach workplace learning. We understand that businesses can’t afford to push the pause button on capability building, as employee safety comes in first and mistakes can be very costly. That’s why we have put together a series of Virtual Instructor Led Training or VILT to ensure that there is no disruption to your workplace learning and progression.

Find courses available for Virtual Instructor Led Training through latest video conferencing technology.

May, 31 2020
North American crude oil prices are closely, but not perfectly, connected

selected North American crude oil prices

Source: U.S. Energy Information Administration, based on Bloomberg L.P. data
Note: All prices except West Texas Intermediate (Cushing) are spot prices.

The New York Mercantile Exchange (NYMEX) front-month futures contract for West Texas Intermediate (WTI), the most heavily used crude oil price benchmark in North America, saw its largest and swiftest decline ever on April 20, 2020, dropping as low as -$40.32 per barrel (b) during intraday trading before closing at -$37.63/b. Prices have since recovered, and even though the market event proved short-lived, the incident is useful for highlighting the interconnectedness of the wider North American crude oil market.

Changes in the NYMEX WTI price can affect other price markers across North America because of physical market linkages such as pipelines—as with the WTI Midland price—or because a specific price is based on a formula—as with the Maya crude oil price. This interconnectedness led other North American crude oil spot price markers to also fall below zero on April 20, including WTI Midland, Mars, West Texas Sour (WTS), and Bakken Clearbrook. However, the usefulness of the NYMEX WTI to crude oil market participants as a reference price is limited by several factors.

pricing locations of selected North American crudes

Source: U.S. Energy Information Administration

First, NYMEX WTI is geographically specific because it is physically redeemed (or settled) at storage facilities located in Cushing, Oklahoma, and so it is influenced by events that may not reflect the wider market. The April 20 WTI price decline was driven in part by a local deficit of uncommitted crude oil storage capacity in Cushing. Similarly, while the price of the Bakken Guernsey marker declined to -$38.63/b, the price of Louisiana Light Sweet—a chemically comparable crude oil—decreased to $13.37/b.

Second, NYMEX WTI is chemically specific, meaning to be graded as WTI by NYMEX, a crude oil must fall within the acceptable ranges of 12 different physical characteristics such as density, sulfur content, acidity, and purity. NYMEX WTI can therefore be unsuitable as a price for crude oils with characteristics outside these specific ranges.

Finally, NYMEX WTI is time specific. As a futures contract, the price of a NYMEX WTI contract is the price to deliver 1,000 barrels of crude oil within a specific month in the future (typically at least 10 days). The last day of trading for the May 2020 contract, for instance, was April 21, with physical delivery occurring between May 1 and May 31. Some market participants, however, may prefer more immediate delivery than a NYMEX WTI futures contract provides. Consequently, these market participants will instead turn to shorter-term spot price alternatives.

Taken together, these attributes help to explain the variety of prices used in the North American crude oil market. These markers price most of the crude oils commonly used by U.S. buyers and cover a wide geographic area.

Principal contributor: Jesse Barnett

May, 28 2020
Financial Review: 2019

Key findings

  • Brent crude oil daily average prices were $64.16 per barrel in 2019—11% lower than 2018 levels
  • The 102 companies analyzed in this study increased their combined liquids and natural gas production 2% from 2018 to 2019
  • Proved reserves additions in 2019 were about the same as the 2010–18 annual average
  • Finding plus lifting costs increased 13% from 2018 to 2019
  • Occidental Petroleum’s acquisition of Anadarko Petroleum contributed to the largest reserve acquisition costs incurred for the group of companies since 2016
  • Refiners’ earnings per barrel declined slightly from 2018 to 2019

See entire annual review

May, 26 2020