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Last Updated: March 6, 2019
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Petroleum Geoscience
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"The best geologist is the one who has seen the most rocks" is a mantra often repeated to student geoscientists. Sadly, not everyone has the opportunity to undertake field trips, and are therefore not benefitting from the learning opportunities and skills development gained from conducting measurements and observations in the field environment.

The Rationale

PetroEDGE provides technical training to the oil and gas industry through taught courses, workshops and field trips, but recently there has been a significant decrease in the number of requests for field trips, primarily due to a reduction in training budgets. Since virtual reality (VR) modules focusing on facilities and equipment were already available, it was decided to extend this to VR geological field trips, presented in a style consistent with physical field trips.

The Hilbre Islands off the north-west coast of England were chosen as a pilot location. They are well visited by field groups, and of particular interest to oil and gas geoscientists as they comprise the Lower Triassic Ormskirk Sandstone Formation of the Sherwood Sandstone Group, which is producing oil and gas from fields 25 km away in the East Irish Sea Basin.

The VR field trips are intended to create an immersive and realistic environment designed to encourage exploration. Users are supplied with a virtual field guide, accessible at all times, and have access to various tools to make appropriate measurements. Guidance at the start of the field trip encourages the user to make the same observations they would in the field and to develop their fieldwork skills. Areas of particular interest have 'hotspots' providing more detail when selected, such as core or log images, photomicrographs, depositional models, illustrations of sedimentary structures, or annotation of the outcrop. The range of information that can be displayed in the hotspots is vast, and can include video footage, seismic imagery, animations and 3D models.

The Challenges

There are numerous VR field trips available, with different strengths and disadvantages. Many exploit the freedom, scale and accessibility that drone image capture can provide; this has certainly excited me as, having spent years assuring field trip attendees of the features that can be seen at the top of outcrops, we can finally fly up and see for ourselves.

Our initial photogrammetric models did not provide high enough resolution when converted into VR, primarily because drones are unable to fly too near to outcrops and acquire close-up imagery. Many VR field trips have a resolution equal to 3 cm per pixel or lower, but to illustrate meaningful sedimentological features higher resolution is needed, and our aim was to resolve to coarse-grain size. Many months of experimentation with a combination of different methods of image capture and processing techniques achieved the required results, but also highlighted technical problems that would be encountered at future localities. 

For example, the presence of deep shadows confuses the processing software as it relies on an algorithm that identifies similarities in adjacent areas. Occasional shadowed areas can be processed manually, but that process is time consuming and is best avoided whenever possible. Virtual field trips to carbonate outcrops in the Middle East are planned, but filming when the sun is high in bright conditions will produce numerous areas of deep shade contrasting with brightly lit areas, creating extensive processing problems.

On a conventional field trip, it is possible to move behind foliage and boulders to access the outcrop, but these can obstruct drone image capture, so can limit the selection of locations. Also, some of the filming requires access to the outcrops on foot and cannot rely on flying drones into less accessible areas if high-resolution imagery is required.

Lengthy filming and processing of large outcrops can be overcome by using a combination of VR with embedded fly-past and 360- degree videos. As the user is provided with a geographical map, different sections of more extensive outcrops can be imaged and the user is transported to each area when selected on the map.

Integration with Other Training Methods

VR field trips cannot replicate all the skills transfer and learning opportunities provided by physical field trips, but we all need to be pragmatic in a changed financial landscape. Conventional field trips are costly in terms of travel, accommodation, downtime and logistics, so it is better to be able to experience many of the benefits of a field trip, albeit virtually, than to never experience them at all. The skills required to make appropriate observations and conclusions can still be taught, and serve as a reminder that the various data we are using elsewhere relates to real rocks and that interpretations should comply with our understanding of geological processes.

Using VR field trips to illustrate various aspects of training courses can be more incidental, allowing trainees to experience field trips as part of classroom courses or workshops, where travel to each locality is impractical or costly. VR modules can be tailored to include information pertinent to the course, or be integrated with other learning resources. However, it is vital that the VR field trips are valuable in their own right, and not just a new technology to play with. Unnecessary graphics and sound effects have been eliminated to help the user forget they are in VR and focus on the geology.

Flexibility

The information in the hotspots and field guides can easily be tailored to different audiences, including non-geoscientists, engineers, administrative staff and geophysicists. Many of these groups might not normally attend conventional field trips, but do attend classroom courses that can be enriched by examining real rocks. 

The field trip leader can be in the classroom with attendees, or can join them remotely, guiding the trainees in the same way as on a physical field trip. However, the VR field trips are designed as stand-alone modules that can also be accessed by an individual without any need for a leader or instructor. Undertaking a particular module can be used as a refresher for staff, to acquaint themselves with a new environment of deposition, or as part of their personal development programme. VR field trips may also be used to equip students with field skills or to familiarise them with the locations prior to a real field trip. This serves to build their confidence and maximise their time in the field. They can be reviewed many times and help to refresh understanding, or provide easy comparison between different localities.

There is also interest from various organisations anxious to preserve educational outcrops that are threatened by weathering, quarrying or development. Putting these outcrops into VR ensures access for future students and field trippers, and provides consistency for any teaching modules that utilise these localities.

Inclusivity

When planning a physical field trip, it can be difficult to include access to a number of good outcrops that tell a coherent story, while restricting the amount of travelling between localities. With VR field trips, a wide range of geographical locations can be combined to provide a comprehensive understanding, or for comparison of different localities.

The cost of creating VR field trips is mitigated by the unlimited number of users able to access each trip, the absence of travel and logistical costs, and the variety of roles the VR field trips can fulfil.

It must be stressed that VR field trips are not intended to replace physical field trips, but do provide additional features, such as aerial and panoramic views, and the ability to overlay data, interpretation and models onto the outcrop. They also provide inclusive access to less mobile users, or those unable to travel. Inclusivity also extends to non-geoscientists, junior staff and others who may not normally get an opportunity to visit the field. Remote localities, outcrops with restricted accessibility or ones that present particular health and safety risks can still be experienced, providing the filming team can overcome these issues safely.

However, virtual reality field trips should not just be considered a cost-effective, risk-free alternative to real field work. They offer unique opportunities to incorporate activities and features unavailable in the field, and deliver a more integrated and flexible learning resource.

Carol Hopkins is the Geosciences Technical Director for PetroEdge (Oil & Gas Training Provider). Carol's article was first published in GEO ExPro Magazine, the upstream oil and gas industry’s favourite magazine, and a PetroEdge (Oil & Gas Training Provider) industry partner. Visit GEO ExPro at https://www.geoexpro.com


#PetroEdge #virtualfieldtrips #VR #thebestofVR #CarolHopkins
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Iran drives unplanned OPEC crude oil production outage to highest levels since late 2015

Unplanned crude oil production outages for the Organization of the Petroleum Exporting Countries (OPEC) averaged 2.5 million barrels per day (b/d) in the first half of 2019, the highest six-month average since the end of 2015. EIA estimates that in June, Iran alone accounted for more than 60% (1.7 million b/d) of all OPEC unplanned outages.

EIA differentiates among declines in production resulting from unplanned production outages, permanent losses of production capacity, and voluntary production cutbacks for OPEC members. Only the first of those categories is included in the historical unplanned production outage estimates that EIA publishes in its monthly Short-Term Energy Outlook (STEO).

Unplanned production outages include, but are not limited to, sanctions, armed conflicts, political disputes, labor actions, natural disasters, and unplanned maintenance. Unplanned outages can be short-lived or last for a number of years, but as long as the production capacity is not lost, EIA tracks these disruptions as outages rather than lost capacity.

Loss of production capacity includes natural capacity declines and declines resulting from irreparable damage that are unlikely to return within one year. This lost capacity cannot contribute to global supply without significant investment and lead time.

Voluntary cutbacks are associated with OPEC production agreements and only apply to OPEC members. Voluntary cutbacks count toward the country’s spare capacity but are not counted as unplanned production outages.

EIA defines spare crude oil production capacity—which only applies to OPEC members adhering to OPEC production agreements—as potential oil production that could be brought online within 30 days and sustained for at least 90 days, consistent with sound business practices. EIA does not include unplanned crude oil production outages in its assessment of spare production capacity.

As an example, EIA considers Iranian production declines that result from U.S. sanctions to be unplanned production outages, making Iran a significant contributor to the total OPEC unplanned crude oil production outages. During the fourth quarter of 2015, before the Joint Comprehensive Plan of Action became effective in January 2016, EIA estimated that an average 800,000 b/d of Iranian production was disrupted. In the first quarter of 2019, the first full quarter since U.S. sanctions on Iran were re-imposed in November 2018, Iranian disruptions averaged 1.2 million b/d.

Another long-term contributor to EIA’s estimate of OPEC unplanned crude oil production outages is the Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia. Production halted there in 2014 because of a political dispute between the two countries. EIA attributes half of the PNZ’s estimated 500,000 b/d production capacity to each country.

In the July 2019 STEO, EIA only considered about 100,000 b/d of Venezuela’s 130,000 b/d production decline from January to February as an unplanned crude oil production outage. After a series of ongoing nationwide power outages in Venezuela that began on March 7 and cut electricity to the country's oil-producing areas, EIA estimates that PdVSA, Venezuela’s national oil company, could not restart the disrupted production because of deteriorating infrastructure, and the previously disrupted 100,000 b/d became lost capacity.

July, 18 2019
The Strait of Hormuz and Oil Prices

The UK has just designated the Persian Gulf as a level 3 risk for its ships – the highest level possible threat for British vessel traffic – as the confrontation between Iran with the US and its allies escalated. The strategically-important bit of water - and in particular the narrow Strait of Hormuz – is boiling over, and it seems as if full-blown military confrontation is inevitable.

The risk assessment comes as the British warship HMS Montrose had to escort the BP oil tanker British Heritage out of the Persian Gulf into the Indian Ocean from being blocked by Iranian vessels. The risk is particularly acute as Iran is spoiling for a fight after the Royal Marines seized the Iranian crude supertanker Grace-1 in Gibraltar on suspicions that it was violating sanctions by sending crude to war-torn Syria. Tensions over the Gibraltar seizure kept the British Heritage tanker in ‘safe’ Saudi Arabian waters for almost a week after making a U-turn from the Basrah oil terminal in Iraq on fears of Iranian reprisals, until the HMW Montrose came to its rescue. Iran’s Revolutionary Guard Corps have warned of further ‘reciprocation’ even as it denied the British Heritage incident ever occurred.

This is just the latest in a series of events around Iran that is rattling the oil world. Since the waivers on exports of Iranian crude by the USA expired in early May, there were four sabotage attacks on oil tankers in the region and two additional attacks in June, all near the major bunkering hub of Fujairah. Increased US military presence resulted in Iran downing an American drone, which almost led to a full-blown conflict were it not for a last-minute U-turn by President Donald Trump. Reports suggest that Iran’s Revolutionary Guard Corps have moved military equipment to its southern coast surrounding the narrow Strait of Hormuz, which is 39km at its narrowest. Up to a third of all seaborne petroleum trade passes through this chokepoint and while Iran would most likely overrun by US-led forces eventually if war breaks out, it could cause a major amount of damage in a little amount of time.

The risk has already driven up oil prices. While a risk premium has already been applied to current oil prices, some analysts are suggesting that further major spikes in crude oil prices could be incoming if Iran manages to close the Strait of Hormuz for an extended period of time. While international crude oil stocks will buffer any short-term impediment, if the Strait is closed for more than two weeks, crude oil prices could jump above US$100/b. If the Strait is closed for an extended period of time – and if the world has run down on its spare crude capacity – then prices could jump as high as US$325/b, according to a study conducted by the King Abdullah Petroleum Studies and Research Centre in Riyadh. This hasn’t happened yet, but the impact is already being felt beyond crude prices: insurance premiums for ships sailing to and fro the Persian Gulf rose tenfold in June, while the insurance-advice group Joint War Committee has designated the waters as a ‘Listed Area’, the highest risk classification on the scale. VLCC rates for trips in the Persian Gulf have also slipped, with traders cagey about sending ships into the potential conflict zone.

This will continue, as there is no end-game in sight for the Iranian issue. With the USA vague on what its eventual goals are and Iran in an aggressive mood at perceived injustice, the situation could explode in war or stay on steady heat for a longer while. Either way, this will have a major impact on the global crude markets. The boiling point has not been reached yet, but the waters of the Strait of Hormuz are certainly simmering.

The Strait of Hormuz:

  • Connects the Persian Gulf to the Gulf of Oman/Indian Ocean
  • Length: 167km
  • Width: 96km (widest) to 39km (narrowest)
  • Controlled by Iran, the UAE and Musandam (Oman)
  • The conduit for 33% of all LNG trade and 20% of total crude oil demand
July, 16 2019
Your Weekly Update: 8 - 12 July 2019

Market Watch 

Headline crude prices for the week beginning 8 July 2019 – Brent: US$64/b; WTI: US$57/b

  • Bolstered by the renewed OPEC+ supply pact but rattled by increasing tensions between Iran and the US, oil prices started the week steady after gaining over the previous week
  • With the OPEC+ supply deal extended to March 2020, focus will now shift to adherence and in particular, Russian commitments to the agreement that previously wavered over 1H19
  • More critical to the market is the escalating standoff between the US and Iran around the Straits of Hormuz and even beyond; British forces seized an oil tanker off Gibraltar that was suspected to carrying Iranian crude to Syria, drawing share criticism from Iran
  • Iran itself confirmed that it was raising its level of nuclear enrichment above levels agreed to in the 2015 deal that ended sanctions, and accused European signatories to the deal of ‘not doing enough’
  • Iranian forces also confronted a British tanker escorted by a warship in the Persian Gulf, with the narrow channel now a flashpoint for action
  • As a recipient of Middle Eastern crude, China has also raised security levels for its vessel passing through the Straits of Malacca after doing the same for the Straits of Hormuz, raising some eyebrows
  • While the confrontation – or lack of – between the US and Iran will be the main driver behind oil prices movement in the second half of 2019, the trade policies of the Trump administration that may now hit secondary Asian manufacturing nations such as Vietnam is also leaving the global economy increasingly fragile
  • Against this backdrop, the US active oil and gas rig count fell again, dropping five oil sites and gaining one gas site for a net loss of four rigs
  • As the Iranian situation deteriorates, the market will be pricing more risk premiums into traded prices, which should inch up towards the US$65-67/b range for Brent and US$59-61/b for WTI

Headlines of the week

Upstream

  • Marathon Oil has completed the sale of its UK businesses to RockRose Energy, handing over the Brae and Foinaven area fields for US$345 million
  • Despite pulling out from the UK North Sea, ConocoPhillips is still active in Norway, recently submitting a new plan to re-develop the Tor field in Great Ekofisk, which was shut down in 2015 despite only 20% of resources extracted
  • In a bit to boost national production, Nigerian independent Aiteo Eastern E&P has announced plans to spend up to US$15 billion over the next five years to drill new wells and re-visit existing assets
  • Eni and Vitol have been awarded rights to Block WB03 in the offshore Tano basin in Ghana, with Eni holding 70% and expanding its presence in the country
  • Total has approved Phase 3 development at the onshore Dunga field in Kazakhstan that will increase capacity by 10% to some 20,000 b/d by 2022
  • Eni has launched production from the Mizton field in Mexico’s Bay of Campeche Area 1 – the first new offshore new field development by an international firm since reforms in 2008
  • Halliburton and Kuwait Oil have signed an agreement to explore for oil offshore Kuwait which makes Kuwait’s first foray in offshore upstream services
  • Energean Oil & Gas has purchased Electricite de France’s Italian unit for US$850 million, gaining assets in Egypt, Italy, Algeria, Croatia and the North Sea to complement its existing fields in Israel and Greece

Midstream/Downstream

  • China will be launching a new low-sulfur bunker fuel oil contract on the Shanghai Futures Exchange by the end of 2019, just as new IMO regulations on marine fuel oil sulfur content caps kick into effect in 2020
  • Just as American crude production hits new highs, American refining capacity has also reached a new record high of 18.8 million b/d
  • China has issued a new round of crude oil import quotas for private oil refiners, allowing them to bring in an additional 56.85 million tonnes (~1 mmb/d) over the remainder of 2019
  • In the fallout over the contaminated crude scandal at the Druzhba pipeline, Russian pipeline operator Transneft has capped volumes of Rosneft crude that can be transported to Germany and Poland on the pipeline
  • The US Environmental Protection Agency (EPA) has proposed an increased biodiesel mandate to 20.04 billion gallons in 2020 up from 19.92 billion gallons in 2019, but may not extend the hardship waiver program which drew criticism
  • Iraq and Oman have signed a new MoU to cooperate in the oil and gas sector which includes plans for a shared Omani refinery processing Iraqi crude

Natural Gas/LNG

  • Kosmos Energy has struck new gas at the Greater Tortue Ahmeyim-1 well in the Albian reservoir offshore Mauritania and Senegal, which will support the Greater Tortue Ahmeyim LNG project that is on track for a 2022 start
  • Kenya and Tanzania have entered into talks to explore cross-border natural gas trading, aimed at delivering Tanzanian natural gas to Kenya to bypass requiring and building facilities for LNG imports
  • Energean Oil & Gas is reportedly looking to sell its stake in the major Glengorn gas discovery in the UK once its acquisition of Edison E&P is completed
  • Saudi Aramco has started work on the Jafurah gas terminal that will take unconventional gas from the Ghawar oil field to the coast for processing
July, 12 2019