November 2008

25/11/2008 14:33:28

The November issue is packed with international reports, including: deepwater pipelay for the Chevron Tahiti subsea project in the Gulf of Mexico; welding at altitude in the Andes; cleaning pigs in Germany; and recruiting and training pipeline engineers in the UK. Alongside these articles, World Pipelines’ correspondent Ng Weng Hoong provides a comprehensive regional review of China’s oil market, while correspondent Gordon Cope examines the race to build the first natural gas pipeline in the Arctic.

Contents

Regulars
Comment
Pipeline news
Pipeline machinery Review
Regional Review

China slowdown?
Ng Weng Hoong examines China’s oil market and the various pressures acting on it, including a decline in energy intensity and growing political risk.

Cleaning pigs

Propelling pigs
Peter Verkiel, Brenntag Oil & Gas, The Netherlands.

Barges

Going to great lengths
Faisal Mahmood and Hassan Dehaini, J. Ray McDermott, USA.

Going deeper
Stefano Bianchi and Roberto Bruschi, Saipem S.p.A., Italy.

Training & standards

Now hiring
David Edwards, Chief Executive of the Engineering Construction Industry Training Board (ECITB), UK.

Managing change
Greg Lamberson, International Construction Consulting, LLC, USA.

Subsea Operation

Deep down and diverless
John Stobbart, Vector International, UK.

Project update

Arctic race
Gord Cope discusses the race between pipeliners to build the first natural gas pipeline in the Arctic.

Protecting against corrosion

Long-term performance
Dr. Shiwei William Guan, Bredero Shaw, Canada and Dr. Dennis Wong, ShawCor, Canada.

Damage detection

The knowledge void?
Pete Barnes, Dynalog, UK.

Welding Accessories

Welding in the Andes
Scott Funderburk, Lincoln Electric, USA.

Editors Comment

Elizabeth Corner
Editor

Recently, I’ve been thinking about what constitutes a good investment. I’m nearing the end of a year-long house renovation project and I hope I’ve put my money (and blood, sweat and tears) into the right property, at the right time. Across the world, many people are worrying about their personal investments and savings, as the global economy experiences a liquidity crisis and governments are forced to rescue ailing banks and financial institutions. In the US, an unprecedented number of citizens have just voted for their 44th President and have invested hope and faith in one man’s ability to lead the nation. And, in the oil and gas industry this week, it has come to light that some companies are postponing investments, or delaying investment decisions, concerning future production in Canada’s oilsands. Shell has announced it is pushing back the decision on whether to expand current output from its oilsands operations, opting to wait until costs fall to boost output on the Athabasca project by 100 000 bpd. Other companies announcing oilsands delays are Suncor Energy, Petro-Canada, and Nexen and OPTU Canada. ConocoPhillips, ExxonMobil and Chevron Corp. are committed to their existing plans.

Oilsands operators work at the sharp edge of the sword, as it generally costs far more to mine and refine sticky bitumen than it does to recover and transport conventional oil and gas reserves. The long-term profitability of the sector is threatened by the high upfront capital costs required to get things moving, and the subsequently high costs of production. In addition, skilled labour is in demand and is therefore expensive.

Investors are expected to spend Cdn$ 150 billion to develop Alberta’s oilsands over the next few years, but with credit markets not responding as they used to and oil prices having more than halved since the July high of US$ 145/bbl, this may be an optimistic figure. Visit www.worldpipelines.com to read last month’s keynote article on the Canadian oilsands industry (Oilsands Speculation, by Ng Weng Hoong).

Timing is everything and many companies are tightening their belts at the moment, putting in place more conservative investment programmes and looking for ways to build in stability to development trajectories. CEO of Total, Christophe de Margerie, has warned that there is a certain oil price threshold below which investment in oilsands ceases to be economically viable. Analysts have set this limit at well over US$ 80/bbl. National Energy Board figures predicted that upgraded crude oil from mining projects would be profitable in 2006 at any world oil price above US$ 40/bbl, but this figure has since been augmented by economic downturn, the falling price of oil, changes in exchange rates, soaring demand for labour and services and lengthy project delays.

Despite all of this, it is imperative that oilsands production continues to grow. The Alberta government envisages that oilsands production could be as high as 5 million bpd by 2030, equivalent to approximately one-fifth of current North American daily oil consumption. The development of the Canadian oilsands will play a critical role in energy security for the US and potentially Asia, and, with the right investment, continuous improvements in science and technology will help overcome the environmental and logistical challenges involved in working with tar. While many of the methods used to extract oilsands are similar to other surface mining and conventional oil and gas operations, these are deployed in large scale, and often unique, ways. New technologies are being developed, including upgrading systems for ease of transport via pipeline; steam-assisted gravity drainage; and vapour extraction.

An investment, financial or otherwise, is a leap of faith, despite our best efforts to evaluate and contain the risk it necessarily entails. But without investments in ideas, people and ventures, our world would be a shadow of its groundbreaking, pioneering self, as would our industry.