Guide to Understanding Drilling Contracts: What Is A Day Work Contract?
Estimated reading time: 7 minutes The upstream or E&P segment of the international oil and gas industry, is in all probability, the riskiest in terms of capital intensity, long payback periods, technological dependence and a host of legal and environmental compliance requirements. It is commonplace for entities seeking hydrocarbon reserves to offset this risk exposure through collective entities such as Joint Ventures (JV) and Joint Operating Agreement (JOA). However, the most important contracts for an operator is the drilling contract as it allocates all risks between the 2 parties. Other related contracts, such as vessel charters and service…
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Understanding Petrophysics and Application to Carbonate and Fractured Reservoirs
Estimated reading time: 6 minutes What is petrophysics? Petrophysics is defined as the study of the physical and chemical properties of rocks and their interactions with contained fluids. Petrophysics are used in studying reservoirs for the hydrobcarbon industry. More specifically, petrophysicists work with reservoir engineers and geoscientists to understand the rock properties of the reservoir. They work together to derive how pores in the subsurface are interconnected, controlling the accumulation and migration of hydrocarbons. Some of the key properties studied in petrophysics are lithology, porosity, water saturation, permeability and density. A key aspect of petrophysics is measuring and evaluating…
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6 Features of Production Sharing Contracts
A PSC (Production Sharing Contract), or PSA (Production Sharing Agreement) was first introduced in Indonesia in 1960 for the agriculture sector before it was adopted for the petroleum industry. The success of the PSC was later picked up by other countries in the region such as Malaysia, Philippines, Libya, Egypt and more. Prior to the introduction of PSC contracts in Malaysia, the government passed the Petroleum Development Act of 1974 (PDA). This removed the concession system in the oil and gas industry – where oil and gas companies had the rights to explore and extract resources and the Malaysian…
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Understanding Subsurface Pressures
Estimated reading time: 3 minutes Understanding subsurface pressures and their effects on the hydrocarbon system is a key input into developing successful exploration strategies, efficient well planning and ensuring the safe and effective exploration and exploitation of petroleum reservoirs. Pressure data is needed in well planning and to define exploration risk and new opportunities identified through lateral drainage and hydrodynamic traps. Therefore, understanding the various mechanisms and processes that create high pressure provides a good understanding for accurate pressure prediction. It uses all available data including drilling data and seismic data to provide optimal well location prediction as well.…
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API 936 Refractory: Definitions Guide
Estimated reading time: 4 minutes The API 936 Refractory Personnel certification is an industry-recognised certification for inspectors in the industry. It sets the standard for inspectors who are trained in refractory systems, as they hold the knowledge of API STD 936 Refractory Installation Quality Control Guidelines. Qualified refractory inspections have a strong knowledge and understanding of installation, inspection, testing and repair of refractory linings. API is the only national trade association representing all facets of the natural gas and oil industry. API Refractory Certification Program provides the industry with a means for central, independent, unbiased and defensible certification and ensures…
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Understanding Costings in EPC Contracts
Estimated reading time: 4 minutes As global demand for power generation continues to grow, there is a growing shift in both the pricing and costing methodologies employed by turnkey contractors. This is largely due to the client or owner wishing to ensure that all (or most) of the risk exposure is to be borne by the main contractor. In response to this, EPC contractors have adjusted the costings of their offerings in an attempt to have project budget to deal with these risks should they manifest. The shift in bargaining power in the parties involved allows Contractors to…
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The 4 Most Common Risk Mitigation Strategies
Estimated reading time: 5 minutes Project risk management is defined as the process of identifying, analyzing and then responding to any risk that arises over the life cycle of a project to help the project remain on track and meet its goal. Managing project risks is a process that includes risk identification and assessment, to prepare for a risk mitigation strategy. Risk assessment includes both the identification of potential risks with the evaluation of the potential impact of the risk. After which, it is just as crucial to prepare a risk mitigation plan to reduce the likelihood that a…
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4 Tips to Improve Well Integrity Management
Estimated reading time: 4 minutes Since 2009 to 2015, it has been estimated that poor well integrity has cost operators around the world more than US$75 billion. Factors such as the drop in oil prices and low margins are making operators sensitive to such risks. As a result, more emphasis is being placed on safety well integrity and regular maintenance. Well integrity management plays a key role in ensuring the safety levels of wells. Well integrity is widely defined in the industry by Norsok D-010: “Application of technical, operational and organizational solutions to reduce the risk of uncontrolled release…
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Abundance of oil discoveries in east and west Africa
Estimated reading time: 5 minutes Currently, deepwater areas have become the hotspot of global oil and gas exploration. They contribute to the increase in oil and gas reserves and production. With Africa producing about 7% of the world’s oil and gas supply, the east and west Africa regions presents a huge potential for international E&P companies to expand into region. The petroleum geology of the region consists of a range of basins that include intra-cratonic sags, epicratonic embayments and basins that form part of the rift-drift sequence caused by the post-Triassic break up of Pangaea. Given political stability, African petroleum…
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The Haze Crisis and Implications on the Industry
Estimated reading time: 6 minutes Large burning of forests in Indonesia has contributed to the haze currently happening in South East Asia. The forest fires that are occurring on carbon-rich peat soil contributes to the rise of harmful particles in the air, affecting the air quality in the region. Fires and the resulting haze have caused the region significant economic, social and environmental costs. What’s Causing the Haze? According to the National Disaster Mitigation Agency (BNPB) in Indonesia, 328,724 hectares of land was burnt from January to August 2019 alone. The affected areas in Indonesia include South Sumatra,…
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