Observers: Petronas can boost revenue and recovery with optimisation
SINGAPORE (6 April 2011) – With Petronas’ recovery factor for main oilfields currently standing at close to 26 percent, more can be done to increase recovery rates and boost production. An observer commented, “Not that they can’t have a higher recovery rate, but expertise and technology do play an important role in the recovery of marginal fields.” Lower recovery means less revenue for the same financial outlay, damaging profitability and company health for both the near-term and the long-term.
Malaysia’s oil and gas industry comprises a full one-fifth (20%) of the country’s gross domestic product, so damage to its oil business is damage to the entire economy. Last year, the country’s O&G exports amounted to RM101.2 billion, up 24 per cent from 2009. The annual average rate of growth is 13.5 per cent for the past 10 years, and exports are set to rise with increasing volatility of global oil prices as a result of unrest in Arab countries. At least, there’s a silver lining in the short term. “Currently, Malaysia is a net oil exporter so we gain more than we lose,” says Dr Wong Lai Sum, Malaysia External Trade Development Corp (Matrade) deputy chief executive officer of trade and services promotion.
_Complacency the Hidden Hindrance to Production Level Increases_
Increased recovery can help sustain oil revenues and increase profitability of exports. However, minimisation of startup costs often-practiced is hardly sufficient to encourage and enable optimised production. “People should not think about how expensive technology is, but rather how much value it can bring,” comments a technical expert from world-leading services provider Schlumberger. What’s more, recent major oil and gas discoveries which temporarily arrest production declines may have lulled the industry into complacency, overlooking extra production income from optimised well operations. Depending on the final product, every 100,000 barrels of lost daily production corresponds to almost $12,000,000 per day in lost revenue.
Alignment between the technical and strategic functions and breaking down silos in oil companies like Petronas are key, as well as alignment from planning to execution. “A lot of good efforts die if the field is not aligned with engineering,” continues the same Schlumberger expert.
_Technical-Strategic Alignment is Key_
Daily production can be increased by 30 to 300 per cent with an informed and integrated technical and strategic approach. According to Greg Borovsky, Chief Marketing Officer of US-based Plutus Inc, Slow Optimization Solutions maintain crude production levels without shutting down wells. Extra revenues are earned from no downtime and paraffin is refined and returned to the original good crude oil phase. He adds, “wells do not need to be shut down for days for traditional hot oil monthly treatments, so companies do not have to sacrifice the production income for those days.”
For revved exports, higher profitability and greater environmental compatibility, it is imperative for the O&G sector as a whole to leverage on optimising solutions, methods and techniques as well as shore up peer operating practices now with more than 50 wells expected to be drilled offshore Malaysia in the next three years.
Some fundamental questions need to be asked/answered:
• Is my commercial team on the same page as my engineering team when it comes to production optimisation needs?
• If the whole management team is on board to increase production and increase revenue, how can we motivate our technical personnel on the field to do the extra work and take the extra stress for the same pay?
• What is the total cost savings and extra revenue we can achieve with the array of optimisation approaches available?
• What are the optimisation approaches available currently, and what support does each need from the management, the CFO and the commercial side of the business?
• Which options are compatible with our overall business model and strategy?
• Once we’ve raised our production levels and increased our revenue, where should we re-invest the additional profits?
_Production Optimisation Week Asia Welcomes Deputy Minister_
The Center for Energy Sustainability and Economics is convening Production Optimisation Week Asia (POWA) 2011 from 25th to 29th July 2011 in Kuala Lumpur Malaysia to help oil companies such as state-owned oil companies from as far as the Africa, South America and the Middle East to generate alignment to boost recovery and revenue and come together for informed and integrated approaches to a diverse variety of conditions. The meeting will involve senior company executives as well as functional heads in charge of reservoir engineering, production engineering, drilling and completions engineering, particularly those involved with each company’s mature, marginal, deepwater and other technically and commercially challenging fields.
# # #
If you’d like more information about this topic, or to schedule an interview with the speakers at
POWA 2011, please call Eunice Wee at (+65) 6844 2080 or email Eunice at firstname.lastname@example.org
Keywords: Petronas, recovery, marginal fields, recovery, oil exports, Matrade, Schlumberger, Plutus, Slow Optimization Solutions
The Center for Energy Sustainability and Economics (Center for Energy) is an industry research centre (IRC) that works to bring top executives together in communities of learning and practice to act as a catalyst for generating high-value energy business insight and channel top expertise to where the world needs it most. Meetings by the Center for Energy are managed by Arc Media Global, the world’s first B2B/G2B integrated marketing specialist headquartered in Singapore.
Contact: Eunice Wee
Arc Media Global
(+65) 6844 2080
PO Box 176 Robinson Road, Singapore 900326
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