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April 19 2022

The Future of Petrochemicals

k999content Blog fertilizer, oil and gas, petrochemicals, plastic 0

Petrochemicals play a hugely important role in our day to day lives. Plastics, detergents, dyes and fertilizers are made from petrochemicals and the demand for these items is only expected to increase further in coming days. However, there appear to be gradual shifts in the global petrochemicals industry that are changing the way base chemicals capacities are added and utilized. Despite its size, this industry continues to take a back seat in the global energy debate. This blog will explore the petrochemicals sector in the backdrop of tailwinds and underlying recessionary issues.

What are Petrochemicals?

Petrochemicals are the chemical products obtained from petroleum by refining. The two most common petrochemical classes are olefins (including ethylene and propylene) and aromatics (including benzene, toluene and xylene isomers). Oil refineries produce olefins and aromatics by fluid catalytic cracking of petroleum fractions. Chemical plants produce olefins by steam cracking of natural gas liquids like ethane and propane and aromatics are produced by catalytic reforming of naphtha. These are stored in storage tanks and are the building-blocks for a wide range of materials such as solvents, laundry detergents and adhesives.

Growth factors for Petrochemicals Sector

The demand for plastics – the most familiar group of petrochemical products – has outpaced that of all other bulk materials (such as steel, aluminum or cement) and has nearly doubled in the last 20 years. Advanced economies, such as the United States and Europe, currently use up to 20 times as much plastic and up to 10 times as much fertilizer as developing economies such as India and Indonesia, on a per capita basis. Although substantial increase in recycling and efforts to curb single-use plastics are expected, especially in developed economies of Europe, Japan and Korea, these efforts will be far outweighed by developing economies sharply increasing their shares of plastic consumption (as well as its disposal). The growth in demand for petrochemical products means that petrochemicals are set to account for over a third of the growth in oil demand by 2030, and nearly half by 2050, ahead of trucks, aviation and shipping. Also, the United States currently holds around 40% of the global ethane-based petrochemical production capacity. The Middle East is renowned for producing key petrochemicals at low costs.

Sustainability Challenges

It is well known that plastic is not bio-degradable and this is an environmental concern. When plastic waste finds its way into the ocean, it breaks down into small pieces that are commonly ingested by marine life. As the larger debris – including containers, bottles etc. – continue to degrade over time, the quantity of microplastics could increase significantly. This will lead to research into sustainable chemical production, establishing and extending plant-level benchmarking schemes for energy performance and pursuing effective regulatory actions to reduce carbon dioxide emissions. Other headwinds may include construction of new petrochemical plants getting delayed (or even getting scrapped), as companies grapple to maintain margins, cut costs, and rationalize capital allocation.

Closing Comments

Considering the dependence on everyday items like plastic packaging, fertilizers, synthetic rubber and detergents, petrochemical products are here to stay in the foreseeable future. In developing economies, the focus on environmental degradation is not as strong as it is in developed economies and there is a lack of feasible alternatives for petrochemical products in developing economies. The production and matching of supply and demand of petrochemicals is robust and this industry is expected to prosper in coming years with a few challenges to be considered. Hence, as consumer consumption picks up in the post COVID-19 world, expect petrochemicals industries to flourish in the coming days!

April 12 2022

Role of Fabrication in Oil and Gas Industry

k999content Blog equipment, fabrication, infrastructure, oil and gas, pipeline 0

Good quality infrastructure in the oil and gas industry is an absolute necessity for oil to be transported, transformed, processed etc. But how are all these complex machines developed and assembled for use by oil and gas professionals? The answer is “fabrication” where metal fabrication companies are involved in producing pipelines, hollow sections, platforms, beams, girders, custom-fitted metal elements, pressure vessels and heat exchangers. Metal and steel fabrication plays a crucial role in the oil and gas industry and this blog will look to outline its various applications and advantages in this regard.

Infrastructure

The infrastructure of the oil and gas industry is complex. An oil rig or an oil platform is a large structure with facilities to drill wells, and extract and process oil and natural gas. There are different types of oil platforms such as fixed platforms, compliant towers, semi-submersible platform, jack-up drilling rigs, drill ships, floating production systems, tension-leg platforms, and gravity-based structures and spar platforms. All these structures are built on steel legs and steel jackets are commonly used structural steel sections while constructing oil platforms.

Equipment

Almost all equipment used in the oil and gas industry are made of structural steel. All kinds of critical parts are manufactured by structural steel fabricators. Pipelines, pressure vessels, and oil and gas separators are some of the applications of structural steel in the oil and gas industry.

Pipelines: Structural steel fabricators produce pipelines based on the type of fluid they will carry.

Pressure Vessels: Pressure vessels are used to hold the fluid or natural gas collected at the oil rig. They are fabricated by steel fabricators for oil and gas companies.

Oil and Gas Separators: Oil and Gas separators are pressure vessels used for separating a well stream into gaseous and liquid components. A major part of it is fabricated by fabrication companies.

Advantages of Fabrication

Fabrication, in particular modular fabrication and process skids, allows the oil and gas industry to meet its pipeline and equipment needs by quickly and efficiently delivering the products and services that the industry needs to continue functioning. Among other things modular fabrication techniques provide the following advantages:

Speed of Construction – Time spent waiting for new pipelines to be built and parts and equipment to be delivered is an extremely costly inconvenience to oil and gas companies. Fortunately, modular fabrication allows for a very rapid construction and fast delivery because the process has been finely tuned for maximum speed and efficiency.

Easy Delivery and Installation – Building the new equipment is only half the battle, the rest lies in actually delivering it and getting it setup. Modular fabrication allows pieces to be shipped and stored conveniently, and then installed with a minimum of inconvenience at its final worksite.

High Safety and Quality Standards – Modular fabrication can be done to the highest level of safety and quality standards because the equipment and parts can be tested prior to delivery. This allows any defects to be identified and corrected before the oil or gas company is ever faced with downtimes or safety hazards from faulty equipment.

Closing Thoughts

The myriad applications and benefits of fabrication have been instrumental in supporting the mammoth oil and gas industry. While there is also a cost associated with maintaining heavy machinery and instrumentation, the smooth operations of various aspects of oil mining and production is essential to generating revenues and meeting industry requirements. Fabrication also has uses in other industries like mining, logging etc. – in essence, fabrication is the definition of multi-faceted!

April 5 2022

Processes Involved in Crude Oil Refining

k999content Blog chemicals, cracking, crude oil, distillation, refining 0

Have you ever wondered how crude oil is converted into end-use goods like gasoline, heating oil, cooking gas etc.? It involves a process whereby crude oil is obtained as part of upstream activities, it is refined during midstream activities and finally, it is sold as petroleum products as part of downstream activities. The refining is done in petroleum refineries (with machinery such as pressure vessels) which are large-scale industrial complexes that produce saleable petroleum products from crude oil. This blog will explore further details around the refining process and will look at the various metrics involved in this regard.

Distillation

Distillation involves the separation of materials based on differences in their volatility. This is the first and most basic step in the refining process, and is the precursor to the subsequent steps of cracking and reforming. In this process, crude oil is heated until it boils and is fed into a distillation column. As the temperature of the crude oil in the distillation column rises, the crude oil separates itself into different components, called “fractions.” which are then captured separately. Each fraction corresponds to a different type of petroleum product (e.g., petrol, paraffin, diesel fuel etc.), depending on the temperature at which that fraction boils off the crude oil mixture.

Cracking and Reforming

The heaviest fractions obtained as part of distillation, including the gas oils and residual oils, are lower in value than some of the lighter fractions, so refiners go through a process called “cracking” to break apart the molecules in these fractions. This process can produce some higher-value products from heavier fractions. Cracking is most often utilized to produce gasoline and jet fuel from heavy gas oils. Reforming is typically utilized on lower-value light fractions, again to produce more gasoline. The reforming process involves inducing chemical reactions under pressure to change the composition of the hydrocarbon chain.

Chemical Processes

Chemical Processes in pipe

Apart from the above-mentioned processes, some of the major chemical processes involved in the oil refining process are stated as follows: –

Desalter unit – This washes out salt from the crude oil before it enters the atmospheric distillation unit.
Distillate hydrotreater – This desulfurizes distillates (such as diesel) after atmospheric distillation. Uses hydrogen to desulfurize the naphtha fraction from the crude oil distillation or other units within the refinery.
Coking units – These process very heavy residual oils into gasoline and diesel fuel, leaving petroleum coke as a residual product.
Isomerization – This converts linear molecules such as normal pentane to higher-octane branched molecules for blending into gasoline or feed to pipe fabrication. It is also used to convert linear normal butane into isobutane for use in the alkylation unit.
Cooling Towers – These circulate cooling water, boiler plants generate steam for steam generators, and instrument air systems include pneumatically operated control valves and an electrical substation.

Since modern petroleum refineries are highly automated and technically advanced, nearly all processes are contained within engineering controls and represent a decreased risk of exposure compared to earlier times. However, certain situations or work tasks may subvert these safety mechanisms, and expose workers to a number of chemical (see table above) or physical (described below) hazards. Examples of these scenarios include: System failures (leaks, explosions, etc.), Standard inspection, product sampling, process turnaround, or equipment maintenance/cleaning activities.

Closing Thoughts

The complexity of oil refinery processes corresponds to the staggering array of petroleum products in demand throughout the world. Refining is a very precise set of steps and, if not done correctly, will lead to the end products being compromised with regard to functionality and quality. It also requires significant investment in fixed assets and manpower; thus, a lot of effort is required to ensure that the refining is successful. Hence, the process from “crude” to “refined” is a long one and is very relevant considering the oil demands in the current VUCA world!

March 29 2022

Correlation between oil prices and stock markets – Fact or Fiction?

k999content Blog gasoline, oil price, Russiassia, stock market 0

It is a commonly held view that rising oil prices directly and negatively impact the economy and the stock market. This is because it is generally felt that an increase in oil prices will raise input costs for most businesses and force consumers to spend more money on gasoline, thereby reducing the corporate earnings of other ventures. The opposite should be true when oil prices fall. However, does oil really drive stock prices or is the correlation weaker than it is made out to be? In this blog, the likely divergence of oil prices and stock markets will be further explored.

Oil and Cost of doing business

A drop in fuel prices is presumed to directly lead to lower transportation costs which should leave more disposable income in people’s wallets. Also, since many industrial chemicals are refined from oil, lower oil prices benefit the manufacturing sector including lower costs for mining plant and equipment. However, if a country increases its oil production (e.g., the United States), low oil prices can potentially hurt oil companies and affect domestic oil industry workers. High oil prices add to the cost of doing business and these costs are ultimately passed on to the consumers.

Reasons for Oil not driving Stock Prices

It has been theorized that other price factors in the economy—such as wages, interest rates, industrial metals, plastic and computer technology—can offset changes in energy costs. This can lead to a diminished impact of oil price shocks and hence, capital markets remain insulated to an extent. Another possibility is that corporations have become increasingly sophisticated at reading futures markets and are better able to anticipate shifts in factor prices; a firm should be able to switch production processes to compensate for added fuel costs. Some economists suggest that general stock prices often rise on the expectation of an increase in the quantity of money, which occurs independently of oil prices.

It has also been observed that the oil market is much more positive about the economy, both in the U.S. and globally, than are stock traders. History shows that when that kind of dichotomy exists, oil traders are right more often than not, in part due to that enforced short-term outlook in oil. Stocks are being driven lower by fear of what might happen and oil is being pushed higher by what actually is happening.

Distinction based on Definition

Oil prices are determined by the supply and demand for petroleum-based products. During an economic expansion, prices might rise as a result of increased consumption; they might also fall as a result of increased production. For instance, front end oil futures contracts look no further than a month out. Because of that, crude is being less influenced than stocks by what the Fed may or may not do later this year and, right now, the economy is strong.

On the other hand, stock prices rise and fall based on future corporate earnings reports, intrinsic values, investor risk tolerances and a large number of other factors. Even though stock prices are commonly aggregated and lumped together, it is possible that oil prices affect certain sectors much more dramatically than they affect others.

The Final Word

It stands to reason that oil prices impact stock prices in some sectors, e.g., transportation is strongly correlated with oil prices as the dominant input cost for transportation firms is fuel. However, for other sectors, oil is not likely to have a dominant impact partly because the stock markets function differently compared to the oil market. In light of the Russian invasion of Ukraine, the oil market is more volatile than however – however this may be a golden opportunity to invest in some stocks which are trading low now and which have great potential (irrespective of whether they are dependent on oil prices or not!).

March 22 2022

Paraffin deposition and its prevention and removal

k999content Blog alkanes, crude oil, oil and gas, paraffin, paraffin deposits 0

The crude oil production industry has its own share of complications and challenges. One of the most common issues is the formation of organic deposits in and around the boring regions which can severely impact the flow of oil and thereby, slow down the entire mining process. These organic deposits can be either paraffins or asphaltenes and they can occur in tubing or in the pores of the reservoir rock. So how are paraffin deposits formed and what are the ways to eradicate them or mitigate their impact? Let’s take a closer look at this topic.

Paraffin deposition – the what and the how

Paraffin deposition

Paraffins are high-molecular-weight alkanes that can build up as deposits in the wellbore, in feed lines, etc. These organic deposits can act as chokes within the wellbore, resulting in a gradual decrease in production with time as the deposits increase in thickness. Deposits vary in consistency from soft accumulations to hard, brittle deposits. Usually, the deposits are firmer and harder as the molecular weight of the paraffin deposits increases.

The primary cause of wax or paraffin deposition is simply a loss in solubility in the crude oil. This loss of solubility is usually a result of changes in temperature, pressure, or composition of the crude oil as a result of loss of dissolved gases. paraffins that have the highest melting point and molecular weight are usually the first to separate from solution, with lower-molecular-weight paraffins separating as the temperature decreases further.

How to remove paraffin deposition

Paraffin accumulations are removed by methods that can be broadly placed into three categories:

Mechanical removal of paraffin deposits – Mechanical methods such as scrapers, knives, and other tools are most commonly used to remove paraffin deposits in wellbores. They can be very effective and are relatively inexpensive.

Use of solvents to remove paraffin deposits – The most common solvent used to remove paraffin from tubulars and the near-wellbore region is crude oil. Hot oiling is the least expensive method, where the oil is heated to temperatures of 300°F or more and this heated oil is then injected or gravity fed into the tubing or annulus. The high temperature ensures that the paraffin deposits are soluble in the injected crude, which is then produced back to the surface.

Use of heat to melt and remove the wax – Steam has been used in a number of cases in which severe paraffin problems have resulted in plugged tubulars. The lack of solubility of paraffin in hot water necessitates the use of surfactants with steam or hot water so that melted paraffin can be removed.

Preventing paraffin deposition

While the methods for removing paraffin accumulation are tried and tested, it would be even better if deposits are not allowed to form in the first place. In this regard, several mechanical adjustments can be made in the production string that can minimize the likelihood of paraffin deposition. In general, these steps are designed to minimize the cooling of the crude oil as it is produced to the surface. This can be accomplished by designing pumping wells or tubing sizes and gas lift systems that maximize the flow of oil to the surface and minimize the heat lost to the surrounding formations. The use of more expensive methods such as plastic coatings on tubulars and electrical heaters is severely limited by cost considerations.

Paraffin inhibitors are a class of compounds that consist of crystal modifiers that prevent the deposition of paraffin onto pipe surfaces and pipe fabrication. These surface-active materials retard paraffin deposition by inhibiting the adhesion of paraffin to sites on the tubing walls. Surfactants used in these applications include wetting agents, dispersants, and crystal modifiers. Each of these chemicals needs to be tested for a specific crude oil to evaluate its effectiveness.

The Last Word

In the Oil and Gas industry, continuous and uninhibited production of crude and other energy producing hydrocarbons are necessary to ensure the stability of global demand and supply dynamics. In this regard, paraffin deposits have the potential to impede oil production to a great extent and hence, there has been considerable research into how it can be tackled efficiently so that any adverse impact is minimal. The flip side is the fact that paraffin deposits have other uses in our daily lives, so there may be additional benefits if these deposits are harnessed correctly!

March 15 2022

Advanced techniques to excavate unconventional petroleum resources

k999content Blog in situ, mining, oil and gas, petroleum, steam, unconventional 0

The drilling and excavation of petroleum, oil and gas where such reservoirs are located has been an essential part of energy production over generations. The price of these resources due to resulting supply and demand forces have the potential to impact financial markets on a daily basis, thus energy and utilities is a major influencer on the economy. However, like any other natural resource, conventional sources of oil are declining which has led to increased interest in alternative (or unconventional) oil and gas. But how can this be obtained and is it profitable in the long run? This blog will discuss some advanced methods which can be game-changers in the process of unconventional oil exploration and extraction.

Surface Mining

surface mining

Oil recovery in the oil sands uses two main methods: mining or in situ, depending on how deep the oil sands deposits are. Surface mining is used when oil sands deposits lie within 70 meters (200 feet) of the earth’s surface. Twenty per cent of oil sands reserves are close enough to the surface to be mined. Large shovels scoop oil sand into haul trucks that transport it to crushers and pressure vessels where large clumps are broken down. This oil sand is then mixed with hot water and pumped by pipeline to a plant called an upgrader, where the bitumen (oil) is separated from the other components such as sand, clay and water.

In Situ Recovery

situ recovery

Deeper bitumen must be recovered using in situ technology. “In situ” means “in place,” because bitumen is separated from the sand below ground, right in the deposit itself. This is accomplished by heating the bitumen so it becomes fluid enough that it can be pumped to the surface. There are several ways to heat bitumen below ground. Both of the commonly used methods – SAGD and CSS – use large volumes of water and burn natural gas to create steam that is injected into the oil sands deposit. New research is leading to technologies that reduce or eliminate the need for water and natural gas.

Steam-Assisted Gravity Drainage

Currently, most in situ operations use steam-assisted gravity drainage (SAGD), which uses well pairs (two wells, an injection well and a production well, drilled one above the other) to recover bitumen. The injection well is drilled vertically into the deposit, then turned 90 degrees and drilled horizontally. A second well, known as the production well, is drilled deeper than the first, paralleling the horizontal portion of the first well. Steam is injected into the deposit through the upper well. Heated bitumen begins to move by gravity down toward the second well. Pumps in the second well draw the bitumen into the well and up to the surface. Multiple wells (sometimes more than 20) can be drilled from a single surface location, further reducing surface disturbance.

Conclusion

Obtaining unconventional petroleum products can be a cumbersome process at times, however it is a necessary part of exploring alternative resources. Since unconventional petroleum is more difficult to bring to the surface, it requires precision and patience to extract the raw product so as not to damage the oil source or cause any other environmental disturbance. As a result, oil and gas giants are investing majorly into advanced equipment and training the necessary personnel in this regard; after all, the machine is only as good as the individual who wields it!