"Natural Gas Value Chain, Opportunity, and Challenges"
By Ihab Ouaida at the "Pioneer Development Project, Experience, and Lessons" Workshop organized by the Order of Engineers, Tripoli, Lebanon.
May 20, 2017.
INFLUENCE OF NANOSILICA ON THE PROPERTIES OF CONCRETE
Natural Gas Value Chain, Opportunities, and Challenges - Lebanon
1. NATURAL GAS VALUE CHAIN,
OPPORTUNITIES, AND CHALLENGES
Pioneer Development Project: Experiences and Lessons
Order of Engineer – Tripoli, Lebanon
Ihab Ouaida – May 20, 2017
2. IHAB OUAIDA
2009/ Lebanon:
Graduated as an Electrical Engineer
2009/ UAE:
Joined Petrofac International
2010/ Kazakhstan:
Executed “Kashagan Experimental Field Development Project”
The World’s 3rd Biggest Oil and Gas Project
2013/ Italy:
GE Oil and Gas University
Oil and Gas Leadership Program – Batch 2013
2013/ Nigeria:
Executed “Forcados Yokri Integrated Project”
Offshore, Shallow Water
2015/ Germany/ UAE:
Executed “Borwin 3 Project”
The World’s Biggest Offshore HVDC Platform Ever Built
“Renewable Energy – Wind”
2016/ Kuwait:
Executed “Lower Fars Heavy Oil Project”
The Biggest Heavy Oil Project In the Middle East
Ihab Ouaida – May 20, 2017
3. • Preamble
• What is Natural Gas
• Oil Vs Natural Gas
• Natural Gas Value Chain
• Exploration & Seismic
• Drilling
• Processing
• Transportation
• Case Studies: Offshore Field Development
• Girasol – Angola
• Leviathan – Occupied Territory of Palestine
• Natural Gas Opportunities
• Natural Gas Challenges
Ihab Ouaida – May 20, 2017
AGENDA
4. PREAMBLE WHAT IS NATURAL GAS?
A Naturally Occurring Hydrocarbon
Primarily Methane (CH4) & Commonly including higher alkanes
Schematic Geology of Natural Gas Resources
Ihab Ouaida – May 20, 2017
5. PREAMBLE WHAT IS NATURAL GAS?
A Naturally Occurring Hydrocarbon
Primarily Methane (CH4) & Commonly including higher alkanes
A Non-Renewable Source of Energy
Proven Conventional Reserves: 208,400 GM3 = 188 Gtoe
Marketed Production: 3,276 Gm3 = 2.9 Gtoe
Natural Gas Around the World
Ihab Ouaida – May 20, 2017
6. PREAMBLE WHAT IS NATURAL GAS?
A Naturally Occurring Hydrocarbon
Primarily Methane (CH4) & Commonly including higher alkanes
A Non-Renewable Source of Energy
Fossil Fuel used as:
A Source for Heating/ Cooking/ Electricity Generation
Gasoline/ Diesel or Jet Fuel
Through Gas to Liquid Processing “GTL”
Chemical Feedstock
Natural Gas Uses
Gas Pipeline
Liquefied Natural Gas “LNG”
Gas to Liquid “GTL”
Fertilizer
Petrochemicals Ihab Ouaida – May 20, 2017
7. Oil Vs. Natural Gas
- Short and Flexible Chain - Long and Rigid (Pipelines) Chain
… But Things are Changing
PREAMBLE OIL VS. NATURAL GAS
1000 times less
Energy than Oil
per cubic
meter!
Oil is “Liquid”!
Easy to Handle through interruptible and flexible chain
Gas is “Gaseous”!
Difficult to Handle and requires practically
Non-interruptible and rigid Chain
Ihab Ouaida – May 20, 2017
8. Oil Vs. Natural Gas
- Short and Flexible - Long and Rigid (Pipelines)
… But Things are Changing
- Geopolitically Independent - Geopolitically Dependent
… But Things are Changing
PREAMBLE OIL VS. NATURAL GAS
Ihab Ouaida – May 20, 2017
9. Oil Vs. Natural Gas
- Short and Flexible - Long and Rigid (Pipelines)
… But Things are Changing
- Geopolitically Independent - Geopolitically Dependent
… But Things are Changing
- International Market - Local/ Regional Market
(Fixed Price) (Indexation)
… But Things are Changing
PREAMBLE OIL VS. NATURAL GAS
Crude Oil Vs. Natural Gas (BTU Equivalent)
Ihab Ouaida – May 20, 2017
Significantly Cheaper than Oil on an Energy Equivalent Basis
10. Oil Vs. Natural Gas
- Short and Flexible - Long and Rigid (Pipelines)
… But Things are Changing
- Geopolitically Independent - Geopolitically Dependent
… But Things are Changing
- International Market - Local/ Regional Market
(Fixed Price) (Indexation)
… But Things are Changing
- High Environmental Impact - The Cleanest Burning Fossil Fuel
“60% Less Emission of CO2”
PREAMBLE OIL VS. NATURAL GAS
Is Natural Gas the Bridge Fuel?
Ihab Ouaida – May 20, 2017
14. NATURAL GAS VALUE CHAIN PROCESSING
Ihab Ouaida – May 20, 2017
Separate Liquid and Gases for
efficient transportation and
distribution
Remove Unwanted Materials such as
Hydrogen Sulfide (H2S) and Water
Meet Specification set by buyers
More LPG Better Economics
More H2S/ CO2/ Nitrogen More Processing
Costs More Production Costs
15. NATURAL GAS VALUE CHAIN TRANSPORTATION
Ihab Ouaida – May 20, 2017
Gas Pipeline
16. NATURAL GAS VALUE CHAIN TRANSPORTATION
Ihab Ouaida – May 20, 2017
Gas Pipeline
Liquefied Natural Gas
“LNG”
17. NATURAL GAS VALUE CHAIN TRANSPORTATION
Ihab Ouaida – May 20, 2017
“Oil Vs. Gas”
Transportation Costs
19. NATURAL GAS VALUE CHAIN CASE STUDY
Ihab Ouaida – May 20, 2017
FPSO
$900M
UFL
$500M
SPS
$300M
Drilling
$600M
Total Field Development Costs:
$2.3 Billions
Apr 1996: Well Discovery
Apr 1997: Drilling of Appraisal Well
Jun 1997: Conceptual Studies
Jul 1998: Project Sanction
Dec 2001: First Oil
2 Millions: Barrel of Oil Storage
200,000: BOPD Oil Treatment
25,000: Tons Topside Weight
75: MW Electric Power
Girassol Field – Total
Angola
20. NATURAL GAS VALUE CHAIN CASE STUDY
Ihab Ouaida – May 20, 2017
Total Field Development Costs:
$3.75 Billions
Apr 2010: Well Discovery
Jan 2011: Drilling of Appraisal Well
Jun 2017: Drill of Production Well
Dec 2019: First Gas
Project Pay-back in 10 Years!
1.2M: BCF/d
04: Wells
600: MMcf/d Subsea Tie-back
113: KM of Pipeline, connected
to a Fixed Platform
Leviathan Field – Noble
Occupied Territory, Palestine
21. NATURAL GAS OPPORTUNITIES
A Sizable Regional/ International Gas Deficit.
Ihab Ouaida – May 20, 2017
Does Europe Need more Gas? YES More Gas Project, Predominantly LNG, are needed.
22. NATURAL GAS OPPORTUNITIES
A Sizable Regional Gas Deficit.
Chose your Scheme:
Production Sharing Agreement
Vs.
Concession Agreement
Vs.
Risk Service Contract
Concession Contract:
State assigns its mining rights to explore and exploit underground
resources to IOC
IOC Undertakes and finances the exploration at its own risk.
If the exploration is successful, it decides on the development
and Production Scheme:
Owns the Production
Owns the Facility Finances
Pays Royalties and Taxes to the State
Production Sharing Contract:
State Keeps its mining rights or delegate its right to NOC that contracts
an IOC to exploit its reserves.
IOC Undertakes and finances the exploration at its own risk.
After FID is made, it undertakes and finances development
Is reimbursed for its expenses by a share of production “Cost Oil”
NOC Owns the facilities and may take part in the development
Risk Service Contract:
IOC Carries out Exploration at its own risk and on behalf of NOC
Refunded and remunerated in the event of production
Carries out the operation “Under NOC Control”
NOC Owns the Production
Owns the Facility Financed
FUNDEMENTAL DIFFERENCE between PSC and RSC is that remuneration is
paid in CASH and not in KIND.
Ihab Ouaida – May 20, 2017
23. NATURAL GAS OPPORTUNITIES
A Sizable Regional Gas Deficit.
Chose your Scheme:
Production Sharing Agreement
Vs.
Concession Agreement
Vs.
Risk Service Contract
State Revenue
Ihab Ouaida – May 20, 2017
Signing
Bonus
• Bonus Provided at the Contract Signature
• Exploration Permits awarded through Auctions (Competitive Bidding)
Surface
Rental
• Rent proportional to the Exploration Permit Surface
• Rent proportional to the Concession Area Surface
Royalties
• Percentage of the Value paid in Cash or in Kind
• Like a Turnover Tax Independent of Profits
Income
Tax
•The Contractor pays a tax determined according to Applicable Law
• The Tax is included in the State Share of Profit Oil
Tax on
Oil Profit
•Similar to the Income Tax, but Directly linked to Profits
24. NATURAL GAS OPPORTUNITIES
A Sizable Regional Gas Deficit.
Chose your Scheme:
Production Sharing Agreement
Vs.
Concession Agreement
Vs.
Risk Service Contract
State Revenue
New Technologies… Maximizing Returns
“FLNG” – Floating Liquefied Natural Gas
Ihab Ouaida – May 20, 2017
25. NATURAL GAS OPPORTUNITIES
A Sizable Regional Gas Deficit.
Chose your Scheme:
Production Sharing Agreement
Vs.
Concession Agreement
Vs.
Risk Service Contract
State Revenue
New Technologies… Maximizing Returns
“FLNG” – Floating Liquefied Natural Gas
“GTL” – Gas to Liquid
Ihab Ouaida – May 20, 2017
Shell: Converting Gas to a Liquid Fuel for a $19bn Investment in Qatar
26. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
State Interest
• Maximize Income
while Allowing
Investors to Draw a
Return
• Maximize Local
Content/ Economy
Development
• Acquire Expertise by
Know-how and
Technology Transfer
IOC’s Interest
• Make Profit and
Remunerate a Risk
Capital
• Maximize Profit by
accessing
International Market
• Valorize its Research
Programs and Know-
how by Providing its
Best Techniques
Ihab Ouaida – May 20, 2017
27. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
Maintaining a MARKET SHARE to Sustain Business
Ihab Ouaida – May 20, 2017
28. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
Maintaining a MARKET SHARE to Guarantee Business
TIME is of Essence
Ihab Ouaida – May 20, 2017
29. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
Maintaining a MARKET SHARE to Guarantee Business
TIME is of Essence
Global Environmental Policies
Kyoto Protocol “Carbon Tax”
Some Haven’t Even Started!
Ihab Ouaida – May 20, 2017
30. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
Maintaining a MARKET SHARE to Guarantee Business
TIME is of Essence
Global Environmental Policies
Kyoto Protocol “Carbon Tax”
Safety First
Ihab Ouaida – May 20, 2017
Natural Gas Disasters
31. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
Maintaining a MARKET SHARE to Guarantee Business
TIME is of Essence
Global Environmental Policies
Kyoto Protocol “Carbon Tax”
Safety First
Technical Difficulties
Deep/ Ultra Deep Water Development
Ihab Ouaida – May 20, 2017
Gas Discoveries in Lebanon are in Deep/ Ultra Deep Water
32. NATURAL GAS CHALLENGES
State Interest Vs International Oil Companies’ Interest
An OFTEN Conflicting Interest!!
Maintaining a MARKET SHARE to Guarantee Business
TIME is of Essence
Global Environmental Policies
Kyoto Protocol “Carbon Tax”
Safety First
Technical Difficulties
Deep/ Ultra Deep Water Development
Gas Processing and Handling
Ihab Ouaida – May 20, 2017
33. NATURAL GAS VALUE CHAIN,
OPPORTUNITIES, AND CHALLENGES
Ihab Ouaida – May 20, 2017
THANK YOU!
Notes prepared in Coordination with Mr. Hussein Ruhayel
Pioneer Development Project: Experiences and Lessons
Order of Engineer – Tripoli, Lebanon