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Monday, 17 November 2008

Energy Security in Russia


Tony McClenaghan
Control Risks

In his book "Reshaping National Intelligence for an Age of Information" Greg Treverton made the distinction between mysteries and puzzles, suggesting that, in the intelligence world, the emphasis in the late twentieth century had been on finding answers to puzzles that could, in principle, have been answered definitively if only the information had been available. Mysteries, on the other hand, could not be answered with certainty even in principle. This is a useful distinction which can be further developed in the security context. Puzzles might be thought of as those issues that have answers and involve facts and data, while mysteries are those issues for which there are no answers and involve judgement, analysis and interpretation.

Alongside traditional threats of, for example, kidnapping, new ones are emerging. Islamist terrorism is a growing and worrying phenomenon, with a four fold increase in attacks in the early part of this decade, driven largely by activity in the Middle East and Pakistan. In Russia Chechen separatists have, in recent years, increasingly adopted the banner of radical Islam and established connections to the global Jihad of Al-Qaeda, and their activities have moved to other regions of the North Caucasus, including Dagestan and Ingushetia. Energy installations face a credible terrorist threat in the North Caucasus while, in the short to medium term, those in the Caspian region, as well as in Siberia and in the Russian Far East, face a less credible terrorist threat. However, in the longer term, with increasing energy shortages and in the event of increased tensions between the west and Russia, 'geopolitical sabotage' against pipelines is possible even in these regions. A credible rise in Islamic fundamentalism in Central Asia could also heighten the risks of terrorist attacks against pipeline infrastructure, owing to the lack of other accessible targets. But the issue needs to be kept in perspective. The US National Counterterrorism Centre (NCTC) statistics suggest that only a very small percentage of terrorist attacks are directed against the energy sector. Far more damage has been done by vapour cloud explosions caused by process failure, pipe corrosion and other maintenance failures. Despite these concerns about the vulnerability of oil and gas infrastructure to terrorism, the threat is broadly manageable with existing technical solutions and management practices. More challenging from an International Oil Company (IOC) perspective are the growing problems associated with insecurity and poor governance in major producing countries.

Studies by IEA World Energy Outlook and others indicate that 73% of the world's gas supply comes from medium to high risk states - be it political or security risk or, indeed, both. By 2020 over half the worlds growing demand for supply will come from developing or transition states. In this medium to high risk context kidnapping of expatriate IOC workers has nearly doubled in the period 2004 - 2006, often driven by new threats such as community issues. We cannot afford to lose sight of the possible connection between the two, however, and low intensity communities issues can be causal to high impact acts of terrorism and kidnapping.

These dynamics are changing the security environment as the traditional focus on catastrophic events needs to shift to dealing with lower impact but higher frequency threats which can be more disruptive to business. Petty crime, inter-ethnic clashes between imported and local labour and endemic corruption are the current most realistic risks. For example, clashes broke out in October 2006 between Kazakh and Turkish workers at a residential settlement at the Tengiz oilfield (Atyrau, western Kazakhstan), injuring around 140 people. Since the early 1990s, thousands of Turks have come to Kazakhstan to work on construction sites in the major cities, such as Astana and Almaty, as well as on the oilfields. Kazakhstan suffers from an unevenly skilled labour force, with few experienced managers, making it difficult for many foreign companies to meet legal requirements of local content employment.

Elsewhere in the region the illegal tapping of pipelines has resulted in shutdowns while repairs have been made. In some cases there have been oil/condensate leaks resulting in ground contamination. In most cases there was a considerable loss in export volume and, therefore, in revenue. Even if an illegal tap has not led to product loss, the pipeline still has to be inspected and repaired, usually involving reducing pressure flow with similar loss of revenue. It would seem obvious that for illegal pipeline tapping to be successful there needs to be a market for the stolen product; criminal elements with the technical ability and equipment to carry out the attacks; an ineffective security environment and a low probability of being detected and prosecuted. The security solutions to the problem reflect a mixture of puzzles and mysteries. For the puzzles it is, of course, relatively straightforward to devise effective physical security measures appropriate to the threat. Block Valve Stations can be protected with a security management system comprising fence with perimeter intruder detection system and monitored by CCTV, all relayed to a central monitoring station. Technology exists to monitor pipelines using fibre optic sensing devices that can detect ground movement or vibrations in the vicinity of the pipe. But no amount of detection or delaying mechanism will be worth the financial outlay unless there is an effective response capability, and this is where we start moving towards the mysteries.

Information gathered from among the local communities may help to thwart intended attacks, as well as identify what happens to the product after an incident, but to be successful it requires an effective community relations plan and close cooperation between the community relations and security teams. Guard, patrol and response forces tend to be recruited from the same local communities so they will undoubtedly be known to criminal elements that may exert pressure to be involved in corrupt practices, whether by direct involvement in tapping or being persuaded not to report suspicious activities. Guards therefore need to be effectively managed and well motivated. They must be adequately recompensed financially and made to feel they are appreciated for the essential contribution they make to the overall success of the operation. They must be equipped with state of the art equipment, including adequate response vehicles that can reach the scene of a potential tap before it has been completed. And finally, there needs to be an effective back up from local law enforcement agencies to ensure a proper investigation of incidents, and prosecution of suspected offenders. The criminal law code in Russia has recently been amended to create specific offences relating to pipeline tapping.

Clearly not all of this rests with security departments, but we have seen a period of rapid change in the corporate security function within IOC's as it evolves to respond to a broader range of threats, increasingly serving core business needs, even though its room for manoeuvre becomes more constrained by regulation, host government sensitivity and stakeholder scrutiny. We have seen concerned governments introduce legislation, codes or regulation, or setting standards for Critical National Infrastructure, all leading to a tightening of physical security standards at a cost which often has to be borne by the business.

We have seen legal and ethical concerns about whether business is complicit in human rights abuses which can be the root cause of security threats, with increasing NGO scrutiny leading to “no where to hide” and driving the need to manage these softer risks. And the number of companies participating in the UN Voluntary Principles on Security and Human Rights continues to grow. Duty of care to employees operating in the complex global environment is an increasing issue with growing links to morale and retention. 'Perception' of risks causes difficulty in recruitment or retention of expatriates working in difficult environments.

Some of these issues can be seen as 'puzzles'; for example, how to protect a physical asset from attack by criminals or terrorists; how to protect travelling executives; how to protect intellectual property - there is an answer out there somewhere, it may be simple or complex to work out, others may have done so before. Mysteries, on the one hand, are intractable risks rooted in complex situations such as how to pre-empt community issues from interrupting business. They occur mostly when the host government cannot or will not protect businesses to emerging industry standards and focus the emphasis for corporate security professionals on early planning and integrated solutions. What we need to be aware of, however, is that the answer to some puzzles might in themselves contribute to the existence of mysteries. For example, IOC's are often forced by crime rates and local conditions to build well protected life camps which by their very nature erect barriers between them and their host communities, driving a wedge between them and creating a "them" and "us" attitude. How to resolve that is indeed a Mystery but it has been successful in Yemen, Papua New Guinea and Indonesia

Emerging challenges resemble "mysteries" more than "puzzles"; the security function is more proactive, but more constrained and an early involvement of the corporate security function increases opportunities for risk reduction at the most effective and cost efficient time. Security is converging with other functions but how mature or sophisticated are large companies; is it still a "mystery"? And while Puzzles might be resolved, some answers may contribute to the existence of Mysteries and these could rebound with a much fiercer bite - reputation, media attention, stock market reaction and possible damage to the environment.

Tony McClenaghan is a Senior Consultant in the Crisis and Security Consulting division of Control Risks in London. He provides Business Protection solutions to a wide range of clients in the oil and gas sector and manufacturing industries.

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posted by The Rogtec Team @ 12:09  0 Comments

Deloitte on the Benefits of ERP Software for the Oil and Gas Industry

Elena Moiseeva, Deloitte Manager
Ekaterina Pavlushkina, Deloitte Manager
Elena Lazko, Deloitte Partner



In searching for methods to improve the operating efficiency of an oil and gas asset, management sooner or later comes to the conclusion that the quality of the solutions employed by various levels of operational personnel must be improved. In addition to a company's corporate culture and the qualification level of the personnel, the other essential element is the availability of up-to-date high-quality process data. How can efficient data collection and storage be provided to meet each of the challenges facing the upstream business?

Why not ERP?
The current practice in Russia is to try to consolidate all the challenges being addressed under ERP systems with the real-time process control tasks, such as: equipment lifetime management, production monitoring, loss management, drilling management, and various service operations (process transport management, power facility servicing, etc.). The practical and methodological dissonance inherent is such an approach is obvious.

The reasons that these types of mistakes continue to be made are usually the same. Under the banner of minimizing the number of process platforms, additional functional modules are developed on the basis of either a current ERP system or one under development. The results obtained by a company are almost always counter to the original goal. Firstly, the total cost of ownership of the Information System is increased. Secondly, employees continue to use old tools while at the same time inputting data into yet another new system.

Cost-intensive ERP systems are primarily intended to support accounting, logistics, controlling, and personnel management. Attempting to modify an ERP system to the level of specialized management tools of specific oilfield processes leads to high-risk projects, sprawling budgets, and longer schedules. Any solution developed by a company remains unique to that company, generally has none of the permanency that is characteristic of industrial products, and requires serious expenses to maintain. We have identified several clear arguments against such an approach:

  1. An ERP system is a tool for supporting traditional operations and is not intended for management of operations.
  2. ERP systems are not sufficiently flexible in terms of customizing the user interface for ensuring adequate support of operations.
  3. Modifying functionality is in itself a cost-intensive undertaking and additionally leads to the loss of standard support.
  4. Even if a company has overcome all obstacles, customization and modification do not make it possible to fully automate specific operations, settings become less clear and flexible, and the user interface is complicated many times over.

For many years, dividing the tasks performed by an asset into governmental and corporate reporting tasks and business unit tasks has been a standard approach worldwide for engineering and automating oil and gas asset operations.

The approach that year after year demonstrates its validity involves operational personnel using specialized automation systems and tools designed to specifically solve their unique problems. At the current time, each oilfield process has specialized support solutions that are best in their class, have a solid history of successful implementations, and positive references from companies, which, including through the use of respective systems, annually achieve high performance and save millions of dollars.

Example 1: Oilfield equipment management
For this example, we will look at the oilfield equipment lifetime management process. At a minimum, the process involves the management of a large number of contracts with suppliers and contractors that perform equipment maintenance and repairs, manage the equipment stock, and plan operations.

Automation specialists are tempted to handle the entire scope of equipment lifetime operations exclusively from the standpoint of contract management since this functionality is generally already incorporated in an ERP system. In the first stage, they usually perform segment-based customization of their ERP system for any type of equipment maintenance and repair operations, such as maintenance planning, for example. Then, a failure cause registration module may be added as an expansion of the system. Naturally, standard ERP system configurations do not include the functionality of storing real-time operations data. A situation develops in which engineers continue to analyze failure causes using the statistics recorded in Excel, i.e., they do not have centralized information storage, and continue using the same methods that were available to them before the process was automated in the ERP system. At the same time, terabytes of data build up unnaturally in the ERP database, which nevertheless do not support either operational or analytical recordkeeping in the needed sections.

The next step in the expansion of this system is the modification of the ERP system to the level required for operational personnel to completely switch to the use of this solution.

Often the data received from the Process Control System (PCS) via certain gateways go directly to the ERP system, thereby creating monstrosities automating the operations from the PCS level up to procurement planning. Such systems are always "roads under repair", and unfortunately do not provide operational personnel with full process data or all means for analysis.

Returning to equipment lifetime management, we would like to note that, in addition to managing the interaction with suppliers and contractors, the system must also support the following tasks: record failure causes; analyze the causes of equipment failures in order to prevent emergencies; analyze times between failures; plan measures to increase equipment availability, etc. Using an ERP-based tool to resolve these problems requires more data than can be initially accumulated and then adequately presented for the required analytical purposes.

For a comparison, we present a sample list of tasks that can be carried out by specialized systems that have been on the market for quite a long time:

  1. Plan equipment maintenance and repair operations.
  2. Track the status of repairs, from the repair ticket to its completion, and monitor the repair results.
  3. Approve repair tickets, requisitions for repair materials, or equipment decommissioning.
  4. Plan maintenance operations down to an individual operation, which makes it possible to precisely describe all actions required for completion of a work order.
  5. Plan human and material resources, and reserve and record the actual use of these resources per individual work order. Compare planned/actual use in real time.
  6. Plan and record tool usage. Track tool expenditures down to an individual work order.
  7. Review the availability of materials and tools directly from the work order. Create procurement requisition for required materials directly from the work order. Create third-party service requisitions directly from the work order.
  8. Perform equipment inspections in conjunction with other operations.
  9. Track serviceable spares. Track the process from removal of the part through arrival for in-house repairs up to arrival at warehouse from in-house repairs. That is, after a part has been repaired, it becomes available at the material warehouse.
  10. Track alternate spares, i.e., spares that may be used on the fly in place of the sought-after ones.
  11. Track pieces of equipment as materials, which makes it possible to implement the complete equipment procurement cycle from requisition through delivery to the onsite warehouse up to installation.
  12. Link any work to a project.
  13. Track project safety requirements.
  14. Track schedules and costs against project budgets.
  15. Manage the remaining balances of project budgets in real time.
  16. Implement an on-condition maintenance (OCM) system that uses monitoring checkpoints to take regular readings (for example, temperature or pressure) and generates maintenance work orders when the values go beyond the set limits.
  17. Manage instrumentation calibrations. The system uses the required calibration data to generate regular calibration work orders and stores calibration results.

Example 2: Drilling management
We present yet another example of an asset-level operation - exploration and production drilling management. This process involves contractor relations, investment planning, processing of geological data, drilling operations planning, and procurement. Obviously, an ERP system cannot fully support these operations or maintain the well file, which is a key element of the process.

At the same time, existing specialized systems have the following capabilities:

  1. Process well status data during planning, drilling, completion, testing, and workover.
  2. Visualize wellbore arrangement, from spud-in to abandonment.
  3. Significantly facilitate accounting, analysis, and concurrent usage of data under a single system due to the comparing of databases on completed projects, problems, equipment failures, and plans with actual and unforeseen events.
  4. Manage drilling rig progress.
  5. Display real-time key operations data, including priority, location, and current status.
  6. Manage drilling downtime.
  7. Display data on drill rig leasing (for the Client) or on drill rig availability (for the Contractor), including dates, rates, and attachable documents.
  8. Identify important dates in operations (deadlines, stages, and conditions).
  9. Estimate wellsite resources, such as personnel, equipment, or services.
  10. Create individual reports for presenting data on operations and drilling rigs.
  11. Inform corporate users, partners, or service providers on changes in the drilling rig progress schedule.
  12. Group together operations for a single drilling rig so that when the first operation dates are changed, the dates of subsequent operations are automatically changed accordingly.
  13. Use a unified database to plan, distribute, and measure performance for construction and land remediation.
  14. Use financial data snapshots for efficient monitoring of operating expenses.
  15. Clear presentation of lease obligations makes it possible to improve the decision-making process with regard to obtaining or assigning property.

We could present numerous examples of how the functionality of specialized systems meets the current oilfield needs as opposed to ERP solutions. We would like to emphasize that the main advantages of such systems are simple implementation, integration capability, and effective support in solving day-to-day problems. These systems can provide oilfield specialists with complete, high-quality, and timely data required to make efficient operations-related decisions.

The shifting of priorities in selecting oilfield information systems toward specialized tools is only a matter of time. This approach has proven itself in many successful companies and may serve as a point of reference for the IT personnel of oil and gas assets.

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posted by The Rogtec Team @ 11:33  1 Comments

Thursday, 13 November 2008

Salym Petroleum, SPD's, Environmental Compliance


Salym Petroleum Development (SPD) explores and develops the Salym group of oil fields in West Siberia. As its production grows, so do the potential threats that it may cause to the environment. Therefore, protecting the environment is one of the main principles underlying the operations of SPD.

Common Goal
SPD is one of the most dynamically developing companies in the oil and gas sector of West Siberia. Today, only three years after it started developing the Salym fields, it has reached production of over a million tons per year. Now that the main construction activity has been completed and production is growing, Salym Petroleum has entered a new operational phase in its development. At this stage SPD sets new ambitious goals expressed in a new slogan, Best Team - Best Operator.

Being the best operator means more than just extracting millions of tons of oil from the ground, but doing it safely. SPD tries to do that without causing any harm to the people or the environment. Its other slogan, Goal Zero, means precisely this: operations should result in no harm. "Goal Zero is about changing the mindset and the behavior considering health, safety, security and environment in our daily working lives", says Robert Smith, Head of field HSSE.

Goal Zero is not a one-off campaign. Attention to the environment should become the norm and a performance target. Reaching the zero target is not simple, but SPD has all the prerequisites to achieve it. "Our company has developed an HSSE system that includes the use of advanced technologies that have proven their worth in the area of environmental and labor safety," says Elena Kompasenko, SPD's HSSE Manager. All environmental programs and projects of the company are based on the requirements of the Russian law and environmental standards of Shell.

In a major environmental project, SPD has built and is commissioning a RUR 1.2 billion 45 MW gas turbine power plant at West Salym. The power plant will address the issue of flared associated gas that will now be used to generate electricity. The plant will operate three Solar gas turbines that meet all Russian and international emission standards. The power plant will allow the company to reduce reliance on Tyumenenergo electricity supplier, improve the energy efficiency of its operations and reduce emissions of carbon dioxide into the atmosphere. Every day of the power plant operating at full capacity results in the reduction of CO2 emissions by about 350 tons. "The construction of the power plant is an important step of SPD to address utilization of associated gas, one of the main challenges facing the oil and gas sector of Russia, and reduce harmful emissions into the air", says SPD's Technical Manager Koos Koole. "When in operation, the power plant has allowed to achieve associated gas utilization at Salym fields up to 35%". To achieve another target, associated gas utilization factor of 95% by the mid of 2010, SPD has jointly with RussNeft and Monolith companies started implementing a project to build a gas processing plant at West Salym.

Always Under Control
Preventing and eliminating oil spills is another important component of SPD environmental efforts. Salym Petroleum maintains its own emergency response team that has all technical resources required to perform its mission. In addition to that, the company has a contract in place with specialized emergency and rescue company the Siberian Rescue Center that will assist SPD in case of need. There are regular drills to achieve smooth co-operation of all teams concerned in the event of an oil spill.

Protecting pipelines and monitoring the environment along the right-of-way has always been a challenging task for oil companies, considering that the pipelines run a long way from the areas of main operations. There is an Integrated Safety System that is implemented for the SPD's 90-km long export pipeline. To protect the pipeline's most vulnerable areas, there is a system of fences and video surveillance, some valves are put inside enclosures with access control systems. All incoming information goes into the monitors of the central security control room 24 hours a day and allows for quick response if there is a risk of damaging the environment or other emergencies.

Corrosion inhibitors are extensively used to protect the integrity and seal of tanks, separators, oil gathering lines from well pads, infield pipelines and the export pipeline. To achieve the best results, the inhibitor is put into the system as soon as a well becomes operational. Cathodic protection control stations have also been installed to provide additional protection for oil pipelines.

Air, soil, surface water and sediments are monitored on a regular basis on the territory of the Salym fields and along the export pipeline's right-of-way. The readings are compared against the natural background levels. The main purpose of this activity is to make sure production operations do not impair the condition of the environment.

Future Plans
Preventing the contamination of the environment with industrial and household waste is another important focus of SPD natural conservation efforts. In 2006, SPD started the construction of a waste polygon for industrial and domestic waste. Among other things, the polygon will be used to store and later process oil cuttings and contaminated soil, and compost and bury household waste.

Environmental engineers have designed a system for the collection, temporary storage and utilization of various types of waste. "Drilling teams, production people and infrastructure divisions have implemented the system of separate collection of solid household and industrial waste. These different types are brought separately to the polygon and stored in different areas", explains Field Environmental Engineer Ekaterina Lapenkova.

The construction of a unit for thermal utilization of oil waste called Tourmaline will start in August 2008 in the second phase of the polygon development. The unit will become operational in the middle of 2009. It will process more than 12 thousand tons of oil and household waste per year.

Salym Petroleum is maintaining close relations with environmental organizations. It implements Shell standards for biodiversity, and as part of that program cooperates with the Surgut University in a comprehensive study of flora and fauna of the Salym field that started in 2006. SPD is also a permanent sponsor of the Save and Preserve international environmental event. The company intends to retain its leadership role in environmental protection in the future.

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posted by The Rogtec Team @ 14:40  0 Comments

Monday, 10 November 2008

Welltec job recruitment in Russia

Welltec is the world's leading provider of robotic intervention solutions for oil and gas wells and are experiencing a rapid, continued growth. To date, they have opened 35 offices in 20 countries across the world in order to respond to the demand for services.

They recently opened a new office in Moscow and are looking for dynamic people to help establish the office and sustain development in the region. You will be given a unique chance to strengthening Welltec's footprint in a new business area while joining a highly innovative company.

General Manager
You will be responsible for all of the strategic sales and marketing, including operational management and associated administrative functions. Thus, solid experience in CRM and business negotiation is an essential prerequisite.

Business Development Manager
The BDM will support the sales and marketing efforts and assist in strategic planning including competitive response, target client seminars, trade shows, client visits to HQ, new tool demos, advertising, etc.

Field Engineer
As a Field Engineer, you will have the responsibility to carry out our services all over Western Siberia, but you must also be willing to travel to the rest of Russia. Welltec expect you to have a degree or HND/HNC in electrical/mechanical engineering, science or equivalent experience.

Qualifications for all positions
Ideally, you have experience from a service company, preferably with a wireline and/or completions background, or will have a technical background enabling quick comprehension of our area of business. Welltec expect you to be self-driven, ambitious and fluent in English and Russian, both spoken and in writing.

You must expect some travelling to other parts of Russia, but you must also expect occasional overseas travelling.

Compensation
Welltec is offering an attractive compensation package. For further information regarding Welltec and to apply online, please see their website www.welltec.com If you would like to know more about your possibilities in one of these rewarding positions, please contact HR Consultant Lars Holm at telephone +45 48 14 35 14.
posted by The Rogtec Team @ 15:43  0 Comments

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