I P WE EK
is built on joint ventures and that good people can make any system work. An active question and answer session then followed. The final panel session of the after-
noon was entitled ‘Managing risk: Legal risk,operational risk, financial risk’. Chris McHugh,Managing Director,Global Head,Energy Solutions Group,HSBC, explained the nature of the risks taken in financing the energy industry and how they are controlled,mitigated and the various ways they can be addressed. He was followed by Martin Ball MEI,EI Process Safety Survey/Bossiney,who stressed the importance of senior execu- tive accountability and noted the increasing involvement of government and regulators and the increased investor concern in the area of process safety. Given the size of the reputational impact of safety lapses,he stressed that absence of incidents does not mean all is well; although it was true that flawless operations were invariably profitable operations. Dr John Mumford OBE FEI,Managing
Director,Reputation Risk Consultants, went on to say that the energy industry thought it was good at managing risks, but noted that there were risks that were understood and then there were the unanticipated risks,the ‘Black Swans’. The challenge is that good risk management techniques risk overconfi- dence,while reducing small risks does not manage large ones,he explained. A further challenge is that of public expec- tations,while the biggest challenge of all is systemic risk,where the intercon- nectedness of companies,contractors and sub-contractors means they have the potential to bring everything down. Peter Roberts,Partner, Ashurst LLP,
ended the day’s proceedings by taking a closer look at legal risks. He stressed the danger of over-identifying risks,pro- ducing risk registers and believing the challenge has been addressed. There are a range of legal risks that have to be managed,he said, including the risk of the rules changing. A flexible adaptive response is the key to success,he stressed. He concluded by noting that regulation improves after accidents,but regulation that produces checklists ‘misses the point’.
Russian reserves Events on the morning of Tuesday 22 February began with an update on E&P operations in Russia. After noting the scale and importance of Russian produc- tion, Gerald Rohan FEI,CEO,Rohan Global Consulting,pointed to the increasing involvement of western oil companies in developing some of Russia’s more challenging resources. He then welcomed the first speaker,
Stephen Terni,President, ExxonMobil Russia. Terni began his presentation by
explaining that ExxonMobil has been involved in Russia for the past 20 years, largely through its 30% holding in the Sakhalin project. The company opened a Moscow office in 1993 and now has 800 staff in Russia. In addition to the Sakhalin project,ExxonMobil is also involved in the Caspian Pipeline Consortium (CPC) and the recently sanc- tioned plans to expand the pipeline’s capacity from 800,000 b/d to 1.4mn b/d. The Sakhalin 1 fields – Chayvo,Odoptu
and Arkutun-Dagi – were originally dis- covered in the 1970s,but commercial development of the 2.3bn barrels of oil and 17.1tn cf of gas only got underway in 2000,noted Terni. First oil from Chayvo was achieved in 2005,with peak production of 250,000 b/d reached in 2007. The second field – Odoptu – entered production in 2010. Both fields have been developed by a combination of extended reach drilling of up to 11 km from the shore and field platforms. The last of the three fields – Arkutun-Dagi – is due onstream in 2014,with a capacity of 90,000 b/d, he reported. Severe environmental conditions,lack
of infrastructure,environmental chal- lenges and lack of safety culture and large project experience are all chal- lenges that have been met and overcome,according to Terni. He also noted that the regulatory regime is slow and complex,with 30 people involved in this aspect alone. The building of the De- Kastri loading terminal on the mainland and its pipeline link was another major achievement,with over 400 tankers safely loaded and dispatched since 2006, he reported,an achievement recognised with several international awards. Terni also proudly reported that
Sakhalin 1 is the ‘safest of ExxonMobil operations’ and has achieved the lowest gas flaring rate in Russia. Meanwhile,the Yastreb rig used for the extended reach drilling,currently holds the world record for the longest extended reach well on the Odoptu field,at 12,345 metres. The onshore processing facilities have a capacity of 250,000 b/d of oil and 800mn cf/d of gas,which is used for reinjection and sales. It is connected by a 226-km pipeline to the De-Kastri SPM (single point mooring) loading terminal. The Sokol crude exported from the terminal goes to a wide variety of destinations, with Japan taking around 45% and South Korea another 30%,he reported. ExxonMobil is continuing to increase
its involvement in Russia. On 27 January 2011 the company signed an agreement with Rosneft for the joint development of oil and gas resources in the Black Sea. Initial exploration will be in the 11,200
Darrell Cordry, President and General Manager, Chevron Neftegaz, said there was a ‘new and welcoming climate for IOCs’ in Russia
sq km deepwater Tuapsinsky Trough off- shore Russia’s Black Sea coast. The next speaker was Darrell Cordry, President and General Manager, Chevron Neftegaz,speaking to the title ‘Openess to collaboration’. He started by explaining that Chevron’s vision is ‘to be the global energy company most admired for its people,partnership and performance’. In terms of safety,the company now has the lowest ‘days away from work rate’ among its competitors, claimed Cordry. He went to say the com- pany has a ‘real commitment’ to global partnerships,starting with Venezuela in the 1920s and Saudi Arabia in the 1930s, right up to its commitments in Kazakhstan from 1993 onwards. In the case of Russia,there is clearly a
new and welcoming climate for IOCs, said Cordry. Recent foreign participa- tions include BP with Rosneft in the Kara Sea,Total with Novatek in the Yamal, Shell with Gazprom in the Far East and, most recently,exploration agreements for the Black Sea with both ExxonMobil and Chevron. The agreements are mutu- ally beneficial – Russia needs foreign capital and expertise to expand produc- tion,and the IOCs have the technology and experience to open up the difficult offshore and Arctic environments. For companies such as Rosneft,foreign part- nerships offer the ability to manage portfolio risk,he explained. Turning to Chevron’s current opera-
tions in Russia,Cordry noted the recently sanctioned CPC pipeline expansion and the success of Chevron Lummus in licensing refinery process technologies. The planned expansion of the 1,500-km Caspian pipeline from Tengiz to Novorossiysk is a $5.4bn project that will raise capacity from 700,000 b/d to 1.45mn b/d,with completion scheduled for early 2015. Chevron will be respon- sible for the onshore tank farm expansion and the marine terminal.
Round-up
26
PETROLEUMREVIEW APRIL
2011
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