Latest Oil Prices Given in the JPT for Brent and Wti Crude - Paper Example

North Sea Brent and West Texas Intermediate (WTI) crude oil, which are the worlds two key benchmark prices, averaged around USD 108/bbl and USD 97/bbl in 2013. A year later, the price averaged at USD 106/bbl for 2014 for Brent Crude while that of WTI was at USD 97/bbl. Currently, JPT averages the price of oil for both West Texas Intermediate and Brent crude to be still around USD100/bbl [1].

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Economic Aspects of the Article Technology Applications [1]

Since the commencement years of petroleum production, one of the chief keys to increasing oil and petroleum production has been the use of new technologies through research and, development. There are so many technological innovations and inventions which have increased petroleum exploration and oil recovery levels from the initial volume in place (in other cases less than ten percent), to an excess of sixty percent.

Many companies are motivated to invest in the best and, most current technological innovations because of basic economies. Companies compete with one another in offering the best services as this is going to increase their market share size. Another reason for investing in technology is to develop patents and rights, which later become products and goods or licensing possibilities. All these become additional streams of revenue and increase the profit margin. Large independent and multinational petroleum companies do invest in technological innovations as well. The motivation and driving force for this is primarily economic. However, their main emphasis lays on the near-term reward of strengthening and boosting the value of the shareholders while maintaining the long-term sustainability of their reserves.

Economic Evaluation

Adopting new technology can at times be seen as an economic risk. This is because the cost incurred on invention may be very high and the outcome less profitable than the current technology. That notwithstanding, the returns from a new technology could be enormous, not only for the petroleum company itself but the national energy security of that particular state. It is common knowledge that in oil and petroleum industries, technology has played a very crucial role in reducing the risks and imperils of exploration, transportation and deep water operations. They also reduce time needed to drill and dig new wells. All these merits are crucial factors in the decision to adopt technology. Even at the primary national level, a primary merit of new technology has been the conservation of natural resources (water and environment) through increasing the volume of oil and petroleum products extracted from existing products. These fuller resource developments are economic motivators as they result in increased revenue for all the parties involved.

Other technologies have helped in cost reduction through reducing the number of crew needed while improving and enhancing the safety of these workers. In addition to cost reduction, some new technologies have led to better and improved relations with surface owners. This is a very important improvement although it is not easy to quantify it. In as much as new technologies need steeper and higher investments, they lead in faster, more effective resource recovery and a net economic gain for the economy [1]. One of the best examples Ekofisk filed in Norway. One customer was in need of a centralizer package which was meant for close tolerance operation in deepwater well. The well had a total depth of about 9778 TVD RKB ft and 16,614 MD RKB ft. The operation required a reduced insertion force with low running force. In addition to that, it had to contain a high axial stop collar load capacity. All the costs incurred had to be low and they had to meet close tolerance capabilities. In this particular well, the client wanted to run a 17 linear through a wear bushing restriction with an ID of 17.76 to 3,295 ft TVD. The traditional tolerance applications needed for this kind of work would be very costly centralizer sub.

Centek, Halliburton and Oil Tools came up with the solution that was needed to solve the problem. The solution came in form of UROS-CT centralizer and the Ace Ratchet Collar [1]. This close tolerance centralizer is designed for use in tight annulus applications. It is crucial for the margins between the pore pressure and the fracture gradient to be narrow. The UROS-CT, which is a new technological innovation, has the ability to compress virtually flat for purposes of allowing travel through a series of tight casing strings in deepwater operations. The UROS-CT has the ability of expanding and contracting with regards to the size of the size of the open hole. The UROS-CT was used together with Ace Ratchet Collar, sourced from Ace Oil Tools. The Ace Ratchet Collar has two parts which are pushed together then locked together through the use of a ratchet mechanism. Its installation is very easy and fast, providing an axial holding force of 103,000 lbs.

Through the use of the Centek UROS-CT centralizer together with the Ace Ratchet Collar, all the stipulations of the client were met. In addition to that, the 17 liner was able to pass through the tight restriction easily without any hindrances [1].

Such technological innovations help in the development of engineering solutions and solving difficult casing running environments. They help in the mitigation of imperils and reduce time that is needed to set up, prepare and make a drill dig ready just before the drilling of a borehole. Using the case example given above, another technological innovation from the Centek group is the bow string centralizers [1]. These spring centralizers offer groundbreaking and exceptional standoff. They offer maximum pipe centralization, helping in the rotation of pipes while enhancing the string to total depth and, eliminating all differences.

The Demand and Supply Market

The demand for bow string centralizers is massive in the petroleum energy sector, bearing in mind that they are need in deepwater, cemented completions, use in under reamed sections, vertical and simple wells, tight tolerance applications, high pressure wells, OH completions and extended reach drilling together with high pressure geothermal wells. Additionally, they are also used in reducing the running operations. This is achieved through the reduction of the casing drag in the wellbore. Spring Centralizers mitigate differential stroking of the casing. They assist in moving the filter cake from the wellbore through enhancing the turbulence of the fluid present in the tool. As can be noted, close tolerance centralizers helped in increasing well productivity through making sure that the cementation process in Deepwater wells is efficient and effective. Centek have the biggest capacity to produce centralizers globally and have enough stock inventories able to satisfy their enormous customer base. Other than having several productions and manufacturing facilities in the United Kingdom and the United States, their products are available through their global networks and, there is always additional stock reserved to meet the demand of clients [1].

It is important to note that the biggest increase in demand is from nations which mine petroleum products and those which depend on oil and petroleum to sustain the enormous economic growth. Some of these countries, for example China and India, the demand for oil and petroleum imports are increasing astronomically.

Capital Investments being affected by the time value of money

All market industries are subject to the laws of demand and supply, as such, the petroleum industry is no exception. There is a relationship between capital investments for the development of oil and gas production and petroleum prices [2]. This relationship results in production booms and busts resulting in an over and under-investment cycles. These over and under-investment cycles lead in counter-doctrinal market reactions and they require unreasonable massive price swings to restore the balance in the market. Geopolitical factors are immaterial when it comes to the natural economic order; they however have some influence over the market supply. All digital technologies, with the inclusion of seismic imaging have the capabilities of revolutionizing the energy sector through efficient and effective extraction and ease in the analysis of data.

Sensor technologies in equipment, for example, pumps, wells and appliances are now being used more than ever. All these are digital technologies and when incorporated and integrated in mechanisms of data collection, they are able to offer real time information with regards to all field activities. Intelligent wells which offer updates on well condition from top to bottom are slowly becoming common technologies [2]. The main advantage of intelligent walls is that they lower costs incurred and non-productive time. With the growing innovation and inventions in data analytics and management techniques, the petroleum industry is now bale to extract oil and gas resources in shorter spans of time and in a cost effective manner, and operate refineries and manufacturing plants more efficiently. Digital technologies also provide a route to faster and better decision making boosting safety, productivity and efficiency.

References

[1]JPT: Tight-Casing Centralizer. C. A. R. Reserved, "CASE STUDY UROS-CT proves to be best

solution for tight tolerances in the north sea," in http://www.centekgroup.com/case-studies/uros-ct-proves-to-be-best-solution-for-tight-tolerances-in-the-north-sea, 2014. [Online]. Available: http://www.centekgroup.com/case-studies/uros-ct-proves-to-be-best-solution-for-tight-tolerances-in-the-north-sea. Accessed: Feb. 22, 2017.

[2]primus, "Drilling for value, Pt 4: The economics of petroleum exploration and production," in

http://the-world-is.com/blog/2017/01/drilling-for-value-pt-4-the-economics-of-petroleum-exploration-and-production/, the world is, 2017. [Online]. Available: http://the-world-is.com/blog/2017/01/drilling-for-value-pt-4-the-economics-of-petroleum-exploration-and-production/. Accessed: Feb. 22, 2017.