api’s global industry services
TRANSCRIPT
WINTER 2019
Driving safety, environmental protection, and sustainability across the oil and gas industry
API’S GLOBAL INDUSTRY SERVICES
TYPES OF GAS STORAGE SIZE RANGE PRESSURE RANGE DELIVERY MODE
Vertical Vessels (API-620 and ASME) 10,000 - 500,000 Gal. 5 - 2,000 psig A, B, C, & D
Horizontal Vessels (API-620 and ASME) 10,000 - 1MM Gal. 5 - 2,000 psig A, B, C, & D
Spheres (API-620 and ASME) 10,000 - 3MM Gal. 5 - 400 psig C & D
API-620 Steel/Concrete Tank Options 500,000 - 40MM Gal. 2 - 15 psig C & D
API-650 EFR, IFR, Cone & Dome Roofs 20,000 bbl - 750,000 BBL 0 - 2.5 psig D
In the emerging hydrocarbon market, a critical decision
is choosing the best storage solutions to meet a project’s
unique needs. AT&V’s in-house capacity supports the options in
the table below. If you would like more information, call or email for
support or a copy of our guide built to address gas storage options.
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Delivery Modes: A = Truck, B = Rail, C = Water, D = Site Vessels and Spheres can be Single Walled or Double Walled.
AT&V Storage Options
American Tank & Vessel Offers Choices for Hydrocarbon Storage
Request a copy of our decision storage guide or ask us a question at [email protected]
AMERICAN TANK & VESSEL
SIZE RANGE PRESSURE RANGE DELIVERY MODE
10,000 - 500,000 Gal. 5 - 2,000 psig A, B, C, & D
10,000 - 1MM Gal. 5 - 2,000 psig A, B, C, & D
rket, a critical decision
utions to meet a project’s
capacity supports the options in
e more information, call or email for
uilt to address gas storage options.
AT&V Storage Options
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CONTENTS
ONTHE FRONT COVER
Winter 2019 Volume 05 Number 04 ISSN 1468-9340
03 Comment05 World news10 Thrive in strife
Gord Cope, Contributing Editor, looks at the ways in which storage terminal operators in the Middle East and North Africa are seeking to prosper in challenging circumstances.
16 Time for a change?Colin Mandrick, Burns & McDonnell, USA, highlights the complexity of choosing whether to replace in kind or purchase new equipment and the importance of careful analysis before making a decision.
19 A new tank standardJ. Randolph Kissell, Trinity Consultants, USA, reports on the latest edition of API storage tank standard 12R1, and what this means for operators.
23 Tank monitoring: from A to ESam Ternowchek, MISTRAS Group, USA, outlines how operators can assess damage without taking a tank out of service using modern tank fl oor monitoring technology.
27 The future of tank cleaning?Fintan Duffy, Re-Gen Robotics, outlines the benefi ts of robotic tank cleaning through a case study at the Shell Haven Terminal.
31 A useful additionTim A. Rivard, Fuel Right, Canada, looks at the important role additives have to play in corrosion and inventory quality control in fuel storage tanks.
34 Breaking the iceFrancesca Crolley, Synavax Inc., USA, examines how liquid insulation can help solve problems with winterisation and ice formation on storage tanks.
39 When trouble strikesKelly Buza, ALLTEC, USA, looks at the ways in which operators can comprehensively protect their liquid storage tanks from lightning strikes.
43 Odour and outMarco Micelli, Vacono Aluminium Domes, Germany, debates possible solutions to help reduce odour emissions from storage tanks.
47 Remote monitoring of fl oating roofsPerforming manual mandated inspections of fl oating roofs has fl aws. Varshneya Sridharan, Emerson, Singapore, describes the benefi ts achieved by replacing visual inspections with advanced radar level measurement technology.
51 On the right levelAdam Wishall, Varec, USA, outlines the multitude of benefi ts that a complete inventory control system can offer tank terminals.
55 Bridging the data gapAnn Sun, Atomiton, USA, examines how the downstream storage sector is addressing the gap between sensor data and business implementation for impressive results.
57 Under a watchful eyeJesper Olavi, Axis Communications, Sweden, examines the automation of critical industries and how surveillance systems offer big benefi ts as opposed to big brother.
61 A tank moving timelineAlan Watson, A.R. Watson International Ltd, New Zealand, and Mark Baker, Baker Consulting Group, USA, provide a detailed account of the complex planning which goes into the moving of a large oil storage tank.
API’s Global Industry Services (GIS) division sets world-class standards, and administers certification, training, events and safety programmes to drive efficiency, safety and sustainability in the oil and gas sector. API standards are developed under the ANSI accredited process, are incorporated by reference into federal and state regulations and are the most widely cited petroleum industry standards by international regulators.
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APPLICABLE ONLY TO USA & CANADAHydrocarbon Engineering (ISSN No: 1468-9340, USPS No: 020-998) is published monthly by Palladian Publications Ltd GBR and distributed in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing offi ces. POSTMASTER: send address changes to HYDROCARBON ENGINEERING, 701C Ashland Ave, Folcroft PA 19032
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COMMENTCALLUM O'REILLYSENIOR EDITOR
MANAGING EDITOR James [email protected]
SENIOR EDITOR Callum O'[email protected]
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CONTRIBUTING EDITORSNancy Yamaguchi Gordon Cope
For many of us, it is diffi cult to imagine functioning each day without our morning coffee. Indeed, I had to wait for our offi ce tea lady (yes, we still have a tea lady) to bring round my
white coffee this morning before I could even contemplate the thought of starting to write this comment. The Swiss, however, seem to be particularly passionate about their daily caffeine hit.
The Swiss government recently delayed a fi nal decision on its proposal to scrap the country’s 15 000 t supply of coffee – which currently forms part of its strategic reserves – following public outcry. To clarify, the stockpiling of goods deemed ‘essential for life’ is compulsory in Switzerland. These goods include therapeutic products, medicines, fertilizers, fresh water, rice, sugar, fl our, cooking oil and, of course, coffee. The reserves have been kept since the end of the Second World War, following years of severe shortages throughout the country. Producers of goods on the ‘essential’ list are required by law to store a certain quantity of their goods, and the government pays them for the cost of storage.
The Swiss public are also expected to stock private emergency supplies, in case of a catastrophe or emergency. The recommended list includes 9 litres of water per person, a week’s worth of food, a battery-operated radio, fl ashlights, batteries, candles, matches and hygiene articles. However, statistics seem to suggest that just one-third of Swiss citizens still follow the government’s recommendations.1
Petroleum products also feature on the Swiss government’s list of essential goods. There are compulsory stockpiles of motor gasoline, diesel, heating oil and kerosene type jet fuel. According to CARBURA – the Swiss organisation for the compulsory stockpiling of oil products – the compulsory stockpiles are suffi cient for three months of consumption in the case of jet fuel, and four and a half months for all other types. The stockpiling system is fi nanced by contributions on imports.
Switzerland is, of course, not alone when it comes to stockpiling petroleum products. All industrialised nations maintain compulsory petroleum stockpiles, and overall control of this is carried out by the International Energy Agency (IEA), which was established in 1974 to ensure energy security, following the oil crisis in 1973. The disastrous impact of 2017’s Hurricane Harvey on the US oil and gas storage industry is just one example of the importance of such stockpiling measures. But it is not just natural disasters that can devastate food, energy and pharmaceutical supplies. The recent drone and missile attack on Saudi Aramco’s oil facilities serves as a reminder of both the potential impacts of geopolitical tensions, and the potential threat of new technology. Cyber attacks are yet another factor that the energy sector should be increasingly aware of.
This issue of Tanks & Terminals includes articles on how storage operators can protect their assets from Mother Nature (p. 39), as well as from security and cyber threats (p. 57). We also look at tank monitoring, roof inspection, inventory control and, somewhat coincidentally, the issue of ‘coffee ground’ corrosion in storage tanks (p. 31).
1. FOULKES, I., ‘Switzerland’s plan to stop stockpiling coffee proves hard to swallow’, BBC, (14 November 2019).
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WORLD NEWS
Winter 20195
USA | Moda begins delivery of storage capacity ahead of schedule
Moda Midstream has commenced deliveries of storage tanks to
customers from its 10 million bbl expansion at the Moda Ingleside Energy Center (MIEC) in Ingleside, Texas, US. To date, Moda has delivered 2.4 million bbl of new storage capacity ahead of schedule and has combined total storage of approximately 4.4 million bbl at MIEC and the Moda Taft Terminal. Moda expects to deliver half of the 10 million bbl of expansion tankage to customers and will have total capacity of approximately 7 million bbl by the end of 2019.
Moda also announced that it has commenced new marine enhancements. MIEC will be one of the fi rst destinations to benefi t from the Port of Corpus Christi Channel Improvement Project to increase the depth of the channel from -47 ft to -54 ft mean lower low water (MLLW). Moda has begun structural enhancements and dredging to Berth 5. These enhancements will allow for the docking of Suezmax class vessels. They have also begun improvements to Berth 4. These enhancements will allow for the docking of VLCCs.
Finland | Gasum acquires gas businesses from Linde AG
Energy company Gasum is acquiring AGA’s Clean Energy business and
Nauticor’s Marine Bunkering business from Linde AG.
The acquisition will enhance the development of the Nordic gas market and create a platform for Gasum to provide a broader offering to meet the increasing demand for low-emission energy solutions from customers in industry, maritime and road transport. The transaction will improve access to competitive natural gas and biogas, multiply the available LNG logistics capacity and expand Gasum’s Nordic gas fi lling station network.
Together, the businesses employ 35 people and generate annual revenues of more than €100 million.
In the acquisition, several assets will be transferred to Gasum. These include an LNG liquefaction plant, two LNG terminals, two LNG bunkering vessels, and 48 gas fi lling stations in Sweden and Norway. The acquisition was signed on 13 November 2019. It is subject to relevant approvals from competition authorities and is anticipated to be completed during 2020.
USA | Harvest Midstream starts storage terminal construction
Harvest Midstream Company, an affi liate of Hilcorp Energy Co.,
has announced the start of construction for the Ingleside Pipeline and the Harvest Midway Terminal.
The Ingleside Pipeline is a new 24 mile, 24 in. oil pipeline that will originate from the Harvest Midway Terminal and connect to multiple oil export terminals in the Ingleside area, including the Flint Hills Resources Ingleside Terminal and the
South Texas Gateway Terminal being developed by Buckeye Partners. The Ingleside Pipeline will also connect to multiple terminals in the Midway and Taft area.
Additionally, the Ingleside Pipeline will have a fi nal capacity of 600 000 bpd with up to 380 000 bpd supplied by the existing Harvest Eagle Ford Pipeline Systems. As a result, the Ingleside Pipeline will provide Harvest customers direct access to Ingleside terminals.
The Harvest Midway Terminal covers 160 acres and has the capacity to store over 10 million bbl. The initial buildout will include 200 000 bbl of crude oil storage, as well as measurement and pumping infrastructure capable of 25 000 bbl/hr.
The Ingleside Pipeline is expected to begin service at the end of 1Q20 and the Harvest Midway Terminal is projected to be in-service at the beginning of 4Q20.
USA | Milestone for Dominion’s Cove Point LNG terminal
Dominion Energy’s Cove Point LNG Terminal loaded its 100th
commercial LNG ship on 11 November, 19 months after the facility entered commercial service for natural gas liquefaction and export.
Located in Lusby, Maryland, US, the Cove Point LNG Terminal became the second largest LNG export facility in the continental US – and the fi rst on the East Coast – when it entered
commercial operation on 9 April 2018. Cove Point produces LNG under 20-year contracts for ST Cove Point, a joint venture of Sumitomo Corp. and Tokyo Gas, and for Gail Global (USA) LNG, the US affi liate of GAIL (India) Ltd.
To date, the facility has produced more than 4 billion gal. of LNG, with export ships reaching more than 20 countries across the globe.
WORLD NEWSIN BRIEF
6Winter 2019 6
Vopak has concluded discussions with the minority shareholder in Vopak Terminal Algeciras and has acquired 20% of the shares held by Vilma Oil. Vopak has an agreement with First State Investments for the sale of 100% of the shares in Vopak Terminal Algeciras. The completion of this transaction is subject to customary closing conditions.
IFM Investors Pty Ltd and Buckeye Partners, L.P. have announced the completion of the acquisition of Buckeye by entities affiliated with IFM. Buckeye’s assets include 6000 miles of pipeline, with over 100 delivery locations and 115 liquid petroleum products terminals with aggregate tank capacity of over 118 million bbl, and a network of marine terminals located primarily in the East and Gulf Coast regions of the US, as well as in the Caribbean.
Australian Industrial Energy (AIE) has lodged a modification to its existing development consent for its Port Kembla Gas Terminal in order to meet higher demand for natural gas during peak periods. The modification request seeks to increase the number of annual LNG cargoes received at the terminal from 26 shipments of standard-sized vessels (170 000 m3) to up to 46 shipments of variable sized vessels.
The Elba Liquefaction Company (ELC), a joint venture between Kinder Morgan Inc. and EIG Global Energy Partners (EIG), has announced the commercial in-service of the first of 10 liquefaction units of the approximately US$2 billion Elba Liquefaction project. Previously only an LNG import terminal, the facility is now also able to produce LNG for export purposes. With the first unit in service, the company is now earning approximately 70% of the expected total daily revenue of the liquefaction units.
South Korea | Companies form collaboration over chemical storage terminal
Singapore-based MOL Chemical Tankers Pte. Ltd (MOLCT) has
agreed to enter into a collaboration with Korea National Oil Corp. (KNOC) and SK Gas Co. Ltd (SK Gas) to develop a chemical terminal in the Port of Ulsan, South Korea.
Based on the agreement, MOLCT and SK Gas will invest in Korea Energy Terminal Co. Ltd (KET), a joint venture company for developing tank terminals.
With a strategy to be a multi-modal chemical logistics company, last year MOLCT announced its participation in a chemical tank
storage terminal joint venture in the Port of Antwerp, one of the most important chemical clusters in the world. MOLCT also announced a strategic alliance with the Netherlands based ISO tank container global operator, Den Hartogh Logistics, early this year.
Starting with the Port of Antwerp and followed by the Port of Ulsan, MOLCT is on track to signifi cantly develop its tank terminal business, improving its service range and fl exibility to better meet customer demands.
USA | Sempra Energy and Mitsui enter LNG MoU
Sempra Energy has entered into a memorandum of understanding
(MoU) with Mitsui & Co. Ltd refl ecting the parties’ preliminary agreement for Mitsui’s participation in the Cameron LNG Phase 2 project in Louisiana, US, and a future expansion of the Energía Costa Azul (ECA) LNG project in Baja California, Mexico.
The MoU is non-binding and contemplates the continued mutual support for the development of Cameron LNG Phase 2, including Mitsui’s purchase of up to one third of
the available capacity of the project, as well as the potential offtake of approximately 1 million tpy of LNG and equity participation in a future expansion of ECA LNG.
ECA LNG is being developed with IEnova, Sempra’s subsidiary in Mexico. Phase 1 of the project includes one liquefaction train with an export capacity of approximately 2.4 million tpy. Future expansion of ECA LNG would include additional trains with an expected export capacity of approximately 12 million tpy.
Germany | Oiltanking Deutschland sells Deggendorf tank terminal
Oiltanking Deutschland GmbH & Co. KG has agreed to sell the tank
terminal in Deggendorf, Germany, to SAILER Mineralölhandel GmbH, a wholly-owned subsidiary of Friedrich Scharr KG, effective 1 December 2019.
In a statement, Oiltanking Deutschland announced that it has decided to no longer operate the
tank terminal it acquired in 2013 “for strategic reasons.” Oiltanking Deutschalnd continued: “The sale to the Scharr Group, which has a strong market presence in Bavaria, secures the future of the site.”
Both sides have agreed not to disclose the details of the contract recently signed in Stuttgart.
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WORLD NEWS
8Winter 2019 8
DIARY DATES11 - 12 December 201912th Annual National Aboveground Storage Tank Conference & Trade ShowThe Woodlands, Texas, USAwww.nistm.org
10 - 12 March 2020StocExpo EuropeRotterdam, the Netherlandswww.stocexpo.com
22 - 24 March 2020AFPM Annual MeetingAustin, Texas, USAwww.afpm.org/conferences
15 - 17 April 202022nd Annual International Aboveground Storage Tank Conference & Trade ShowOrlando, Florida, USAwww.nistm.org
8 - 10 June 2020ILTA 2020 International Operating Conference & Trade ShowHouston, Texas, USAwww.ilta.org
9 - 11 June 2020Global Petroleum ShowCalgary, Canadawww.globalpetroleumshow.com
25 - 27 August 2020AFPM SummitSan Antonio, Texas, USAwww.afpm.org/conferences
8 - 10 September 2020Gastech 2020Singaporewww.gastechevent.com
15 - 17 September 2020Turbomachinery & Pump SymposiaHouston, Texas, USAtps.tamu.edu
25 - 26 September 2020Tank Storage AsiaSingaporewww.tankstorageasia.com
Paraguay | Puma Energy Paraguay sold
Puma Energy Holdings Pte Ltd has announced the sale of its business
operations in Paraguay to Impala Terminals Group, a joint venture between Trafi gura and IFM Global Infrastructure Fund for a purchase price of US$200 million.
The transaction is expected to close by January 2020.
Puma Energy expects to use the proceeds of the sale to pay down debt, in line with the company’s capital management policy.
Puma Energy is a leading global energy business which supplies, stores and distributes petroleum products in 47 countries across six continents.
Malaysia | Phase 3A of Pengerang Deepwater Terminals launched
DIALOG Group Berhad has offi cially launched Phase 3A of its 1200 acre
Pengerang Deepwater Terminals (PDT) development, following its entry into a long-term storage agreement (LTSA) with BP Singapore Pte Ltd.
The LTSA will see the construction of storage tanks and the provision of storage and handling services to BP by DIALOG in Phase 3A. This will consist of storage tanks with a capacity of 430 000 m3 for clean petroleum products, and is set to complete in mid-2021.
Phase 3A is the fi rst parcel of PDT’s Phase 3, where the construction of
common tankage facilities (including shared infrastructure) and deepwater marine facilities (Jetty 3) are already underway. The launch of Phase 3A was offi ciated by the Menteri Besar of Johor Dr Sahruddin bin Haji Jamal, with Sharon Weintraub, CEO Eastern Hemisphere, BP Supply Trading, and Dr Ngau Boon Keat, Executive Chairman of DIALOG, in attendance.
This marks the continued expansion of PDT in Pengerang, Johor, where Phase 3 is currently being developed on approximately 300 acres of land within PDT with an indicative initial investment cost of RM2.5 billion.
USA | Calumet closes sale of refinery and terminal
Calumet Specialty Products Partners LP has announced that it
has closed on the sale of its San Antonio, Texas refi nery and related assets including a crude oil terminal and pipeline to Starlight Relativity Acquisition Co. LLC. Starlight agreed to pay US$63 million in cash for the plant, property and equipment, plus adjustments for net working capital, inventories and post-closing amounts. In a related transaction, Calumet entered into a settlement and release agreement with TexStar Midstream Logistics LP, settling all outstanding litigation between the two parties
which will result in the release of a US$38 million balance sheet liability.
The San Antonio refi nery has permitted capacity of 21 000 bpd, processing crude oil and condensate primarily from the Eagle Ford basin. The refi nery currently produces LPG, naphtha, regular and premium gasoline, commercial and military jet fuel, ultra-low sulfur diesel and atmospheric tower bottoms. There are approximately 250 000 bbl of storage capacity at the refi nery and 200 000 bbl of additional crude oil storage capacity at a crude oil terminal located in Elmendorf, Texas.
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Winter 2019 10
THRIVE IN STRIFE
W hen it comes to all the challenges that are roiling the global oil and gas sector, the Middle East and North Africa (MENA) should be marked with a bullseye.
North American shale oil and LNG are threatening traditional MENA markets and Russia is landing major gas and oil contracts with China.
Geopolitical risk is also at crisis point. In addition to internal strife in MENA countries, US-led sanctions against Iran have led to attacks against oil infrastructure and the potential for open war.
Some countries are taking heed and adjusting accordingly. Opportunities for storage and terminals abound as new refineries, petrochemical plants, ports and LNG trains are being built.
Gord Cope, Contributing Editor, looks at the ways in which storage terminal operators in the Middle East and North Africa are seeking to prosper in challenging circumstances.
Winter 2019111
Middle East
Saudi ArabiaIn September 2019, armed drones and cruise missiles attacked Saudi Aramco’s 5.7 million bpd Khurais field and the Abqaiq oil processing facility in Saudi Arabia, the largest petroleum complex in the world. The assault crippled 5% of the world’s production, sending crude markets into turmoil for several days. Within two weeks, Saudi Aramco announced that it had restored production to the pre-attack level of 11.3 million bpd.
The news temporarily overshadowed Saudi Aramco’s long-term plans to maintain high output levels and to diversify its economy away from crude exports.
In its 2Q19 financial report, Saudi Aramco posted a net profit of US$46.9 billion, making it the world’s richest company and signalling to the international oil and gas sector that it is flush with investment cash. In July 2019, the company awarded US$18 billion in contracts to increase capacity at the offshore Marjan and Berri oil fields. McDermott International, Saipem, Reunidas and others will add a total of 550 000 bpd of light crude and 2.5 billion ft3/d of gas to the two fields.
In early 2019, Saudi Aramco announced plans to boost unconventional gas production by more than an order of magnitude. The company currently produces 150 million ft3/d from its northern region, but plans to tap immense shale reserves in its eastern crude production region to increase output to at least 3 billion ft3/d. The unconventional push is part of the kingdom’s plan to double total gas production to 23 billion ft3/d over the next decade. The company also intends to raise its refining capacity – inside Saudi Arabia and abroad – to 8 – 10 million bpd, from around 5 million bpd now. The announcements will require massive infrastructure investments, including storage and terminal expansions, over the next 10 years.
UAEAbu Dhabi’s ADNOC produces 3 million bpd and 10.5 billion ft3/d of raw gas. Since 2016, it has undergone a major transformation, privatising resources and expanding partnerships and strategic investors in order to monetise assets under its control and to increase output to 5 million bpd by 2030.
In June 2019, ADNOC partnered with fertilizer company OCI to create the largest fertilizer producer in MENA. The entity will have the capacity to convert natural gas into up to 5 million tpy of urea and 1.5 million tpy of ammonia. ADNOC sees the move as a way to leverage its production and exports from facilities located in its Persian Gulf port of Ruwais.
In August 2019, ADNOC agreed to purchase a 10% stake in VTTI, a global energy storage company. VTTI owns 15 terminals in Europe, North America, Africa and Asia capable of holding 60 million bbl. ADNOC has 8 million bbl of storage in the port of Fujairah and is
currently constructing the world’s largest underground oil storage facility, with a capacity of 42 million bbl.
KuwaitKuwait Oil Co. (KOC) had originally envisioned increasing current production of 2.7 million bpd to 4 million bpd by 2020. It has since revised its estimate downwards, to 3.2 million bpd. The increased production will be mostly heavy oil from the South Ratqa field, which will produce 60 000 bpd when production wells are completed.
Kuwait recently signed a US$597 million contract with Halliburton to explore the nation’s offshore region. The agreement is expected to add an estimated 100 000 bpd to the country’s production. Halliburton will assist KOC in deploying two rigs to drill six wells in its first venture into offshore domestic waters.
The long-delayed Al-Zour refinery, located in Kuwait’s Al-Zour industrial complex south of Kuwait City, is expected to enter service in 2020. Initially planned over a decade ago, the 615 000 bpd facility has been repeatedly postponed by bureaucratic and political issues. In July 2019, Kuwait Integrated Petroleum Industries Co. (KIPIC) contracted Honeywell International to provide the necessary technology and production systems to push the project over the finish line. When it enters operation, the US$10 billion facility will increase the country’s overall refining capacity to over 1.5 million bpd.
BahrainThe Kingdom of Bahrain, an island nation in the Persian Gulf, is seeking out partners to help develop a massive unconventional reservoir in shallow waters off the coast that is said to contain approximately 82 billion bbl. Bahrain Petroleum expects that advanced hydraulic fracturing technologies typically employed in US shale basins will aid in commercial production.
In late 2018, Saudi Aramco and Bahrain Petroleum opened the new AB-4 pipeline, a 300 000 bpd, 12 in. line that runs from Saudi Aramco’s Abqaiq field to the BAPCO Refinery in Bahrain. The 112 km line was unaffected by the drone attack on Abqaiq production facilities in September 2019, and allowed the BAPCO Refinery to operate unabated.
QatarQatar Petroleum has decided to expand its LNG production from the current level of 77 million tpy to around 110 million tpy over the next five years by building four new mega production trains.
The majority of the tanks and terminals that service the giant North Field gas reserve are located in the Ras Laffan Industrial City, situated on the northeast shore of the Qatari peninsula. The port is the largest artificial harbour in the world, and contains the world’s largest LNG export facilities.
In September 2019, Qatar Petroleum issued an invitation to tender for the engineering, procurement and construction (EPC) of new storage and loading
12Winter 2019
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facilities at Ras Laffan to handle the liquids associated with the expansion, including new propane, condensate and glycol storage, as well as a new liquids products export berth.
IraqIraq reached production of 4.97 million bpd in August 2019, and is aiming its sights even higher. It intends to exceed 6 million bpd in 2020, and 9 million bpd by 2023. In order to meet its export needs, it is in discussion with Turkey to reopen the Iraq-Turkey pipeline (ITP) which would allow it to ship up to 1.1 million bpd to Turkey’s Mediterranean port of Ceyhan.
To the south, Iraq has announced plans to expand export capacity in its Basra region. The Al-Fao storage and blending facility will see the addition of up to 8 million bbl of new storage. New subsea pipelines are being built to the offshore loading facility of Khor al-Amaya. Iraq has contracted with Royal Boskalis to build a new artificial island with loading capacity to handle four VLCCs.
North Africa
EgyptThe discovery in Egypt’s offshore waters of the massive 30 trillion ft3 Zohr field by Eni has invigorated the Nile country’s oil and gas sector. In early 2018, gas began flowing ashore via pipeline and reached 2 billion ft3/d by the end of 2018. Operator Eni is aiming to plateau production at 2.7 billion ft3/d. Plans are also being finalised to export US$15 billion of Israeli gas to Egypt via the EMG subsea pipeline. Egypt is on track to produce up to 7.5 billion ft3/d of gas by 2020; both domestic production and Israeli gas will allow the country to restart its Damietta LNG plant.
AlgeriaIn Algeria, oil production and exports, the major source of foreign currency, have been slowly decreasing, and now stand at approximately 1 million bpd and 500 000 bpd, respectively.
Gas production, the mainstay of the economy, remains high at 91 billion m3/yr, but domestic gas demand is growing; the Algerian Electricity and Gas Regulation Commission estimates that domestic gas consumption will reach 50 billion m3 by 2020.
Onerous investment rules have resulted in a decrease in international investment, with foreign participation dropping from 33% to 25% over the last decade. Sonatrach called upon the government to ‘urgently’ promulgate a new hydrocarbon law that would boost its partnership activities. The updated law would, according to Sonatrach, allow the company to share risks relating to exploration activity and allow technological contributions necessary to revive hydrocarbon activity.
Sonatrach is also developing STEP, a 565 000 tpy propylene plant in Arzew, Algeria. The JV between the state-owned company and Total of France will convert domestically produced propane into the primary
component for a wide range of plastics products. Recently, STEP contracted with Honeywell to supply technology, as well as engineering design, catalysts and adsorbents.
Challenges The Middle East has long been a hot-bed of strife. Over the last year, tensions have heightened after the Trump administration backed out of a 2015 nuclear deal with Iran. The US subsequently imposed sanctions that force states to boycott Iranian oil or face sanctions of their own. In turn, oil tankers have been seized, processing facilities attacked, and passage through the Strait of Hormuz compromised.
The latter is especially crucial. Around 20 million bpd passes through the narrow body of water that separates the Arab Peninsula from Iran. Blueprints exist for a canal that would cross the UAE and shortcut the Strait, but the US$200 billion cost is prohibitive. Saudi Aramco operates a 750 mile line capable of moving up to 5 million bpd to the Red Sea; while the drone strikes proved it was not impervious to attack, the line remains the major immediate option should the Strait be closed to traffic.
Abu Dhabi has a 300 km pipeline running from its major production region to the Port of Fujairah, capable of transporting up to 1.5 million bpd. Although more protected than the Strait of Hormuz, tankers near the port have also come under attack.
Other tactics can be pursued. MENA countries, and the Middle East especially, are seeking out opportunities to buy and build assets internationally in less contentious regions. In mid-2019, Kuwait Petroleum Corp. (KPC) announced plans to increase its investment in Canada, where the state-controlled company intends to boost its Kaybob Duvernay shale gas production from 12 000 boed to 20 000 by the end of 2019. Qatar Petroleum and ExxonMobil recently announced a deal to jointly invest US$10 billion in the Golden Pass LNG project on the US Gulf Coast. Qatar Petroleum also owns joint investments in Brazil and Mexico with Royal Dutch Shell. ADNOC is in partnership with Saudi Aramco and Indian firms to build a US$44 billion refinery and petrochemical facility south of Mumbai. The project has a capacity of 1.4 million bpd and 18 million tpy of petrochemicals.
In conclusion, many of the countries located in MENA are taking the initiative to deal with the challenges they face. Egypt is moving forward to monetise its immense gas reserves in order to improve the country’s economy. The UAE, Saudi Arabia, Qatar and Kuwait are funding infrastructure improvements, production expansion and international investment. At time of press, Saudi Arabia had agreed to a partial ceasefire with Houthi rebels. But the potential for open war and internal strife remains in this volatile region, and will require proactive input and sage counsel throughout 2020 in order to maintain the world’s largest concentration of oil and gas production.
14Winter 2019
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WINTER 2019 ISSUE