Producing Oil and Gas in the Asia Pacific Region - Essay Example

OIL AND GAS IN ASIA Name Course Tutor Module Institution Date Introduction Crude oil is one of the most sought after commodity in the current fast moving environment. According to Kang et al. (2015), its exploration gives forth a wide range of petroleum products that are used for various tasks including powering automobiles, cooking, lighting and generation of electricity among others. Ideally, even amid the current calls to reduce global warming, the world still cannot do without the energy from oil and natural gas. This is exhibited in the way concerns about the security of this energy affect economic performance and political stability across the world. This paper hereby presents an investigation of the availability and exploration of oil and natural gas in Asia. Apparently, according to Farah and Cima (2013), these natural resources are at the center of the region’s economy, judged by the way they influence almost every critical decision taken by both sovereign states and dependent territories in Asia and the Pacific. Part 1: An investigation on oil and gas resource and reserves in Asia Asia is one of the biggest producers of oil in the world. According to International Energy Agency, the region produced close to 9.2% of the world’s oil in 2014. Saudi Arabia and China are among the leading countries with the biggest oil reserves. Ideally, this is because they jointly produce more than 16,172,000 barrels of oil per day (Kang et al. 2015). This accounts for close to 53% of the regions total output. Following in at a distance is India, which produces close to 978,000 barrels per day. Even though it has never reached the one million barrel mark in the last five years, the United States Energy Information Administration (EIA) notes that the country has consistently neared that target, thus suggesting it has somehow flattened in recent years. Perhaps this is partly due to the fact that its oil consumption continues to grow every other day (Owen, Inderwildi & King 2010). The graph below shows the leading oil producers from the region in the last two decades as compiled by US Energy Information Administration. When petroleum is considered together with other liquids, the table below shows how the region performed in 2014 on an international scale (source: Kang et al. 2015). Other liquids in this context include those derived from coal and oil shale, biofuels as well as refinery gain. Asian countries are highlighted in blue font. Country Production (bbl/day) 1  United States 13,973,000 2  Saudi Arabia (OPEC) 11,624,000 3  Russia 10,853,000 4  China 4,572,000 5  Canada 4,383,000 6  United Arab Emirates (OPEC) 3,471,000 7  Iran (OPEC) 3,375,000 8  Iraq (OPEC) 3,371,000 9  Brazil 2,950,000 10  Mexico 2,812,000 11  Kuwait (OPEC 2,767,000 12  Venezuela (OPEC) 2,689,000 13  Nigeria (OPEC) 2,427,000 14  Qatar (OPEC) 2,055,000 15  Norway 1,904,000 16  Angola (OPEC) 1,756,000 17  Algeria (OPEC) 1,721,000 18  Kazakhstan 1,719,000 19  Colombia 1,016,000 20  India 978,000 From the table above, it is evident that much of the oil reserves are in Asia. This is because the region is home to ten out of twenty countries that are leading in the production of the commodity. The graph below shows the top five Asia-Pacific proven natural gas reserve holders (trillion cubic feet). Part 2: Current and possible strategies of Enhanced oil and gas recovery in Asia The alarming rate at which oil fields are drying up has made the method of extraction a very critical aspect as far as oil exploration is concerned. Apparently, as Owen, Inderwildi and King (2010) note, even though it might seem abundant in some regions, there are growing demands to minimize waste because oil is not a readily renewable resource. As such, most producers under the Organization of the Petroleum Exporting Countries (OPEC) emphasize on enhanced oil recovery (EOR) which is ideally the implementation of various techniques aimed at increasing the amount of crude oil that can be extracted from an oil field. Throughout Asia, there are generally four techniques used for enhanced oil recovery. These include:- Gas injection (miscible flooding) technique – this is the most commonly used technique in the region with countries such as Kuwait, United Arab Emirates, Saudi Arabia and China largely depends on it. It entails introducing miscible gases into the reservoir which help to maintain the pressure within it as well as reduce the interfacial tension between water and oil (Falwell et al. 2014). This greatly improves oil displacement hence making its extraction simple. Among the gases used in this technique include natural gas, carbon dioxide (CO2) and nitrogen. CO2 is perhaps more common because it is not only less expensive when compared to other liquefied petroleum gases but also helps reduce oil viscosity. Thermal injection technique – as the name suggests, this EOR technique entails introducing heat into the oil reservoir during extraction. The heat heats the crude oil, thus reducing its viscosity, making it easily extractible. The science behind the technique is that heat generally increases the permeability of oil because it reduces its surface tension (Falwell et al. 2014). As such, improve oil is often formed when the vaporized crude oil is condensed. The most common thermal injection methods include cyclic steam injection, combustion and steam flooding. The figure below shows a typical steam flooding technique. Figure 1: steam flooding technique Starting 2011, some Asian countries such as Saudi Arabia, Oman and Qatar started taking advantage of the hot sun in the region by building giant solar plants to produce steam pumped into the reservoirs (Falwell et al. 2014). It is entirely a new technique that is fast growing in popularity. The picture below shows one of the solar thermal enhanced oil recovery projects in Oman. Figure 2: Solar thermal enhanced oil recovery project in Oman Chemical injection technique – the third strategy entails introducing a wide variety of chemicals into the reservoir that serve the same purpose of aiding mobility and reducing surface tension of the crude oil. Soaps such as alkaline react with organic acids that occur naturally in the oil to lower its interfacial tension. This generally increases production, thus helping achieve the main objective of EOR. Among the most common chemicals used include dilute solutions of surfactants (e.g. Petroleum sulfonates) and biosurfactants (e.g. Rhamnolipids). Despite being very effective, Falwell et al. (2014) note that the application of this method in Asia is often limited by the high costs of the chemicals. Plasma-pulse technology – this is a new EOR technique that was first introduced in the Russia in 2013. It uses low energy emissions to achieve the same effects as other methods such as lowering viscosity of crude oil and increasing its permeability. One of its biggest advantages is that it is clean, safe (has no negative ecological impact) and does not harm the cement column or underground equipment. Part 3: Development of sustainable oil and gas construction in Asia and internationally The sensitivity of the energy industry is exhibited in the way the sector makes headlines in almost all fronts. A lot of concerns have been raised regarding carbon management and how the entire sector impacts on the environment. Apparently, besides the air and sound pollution associated with oil exploration, there are a bunch of other critical issues that trigger debates as far as sustainability of the industry is concerned. According to Farah and Cima (2013), for instance, extraction of oil has had a profound impact on ecological resources in the entire Asian region. These resources include wildlife, vegetation, aquatic biota, special status species and their habitats. Researches indicate that in countries such as Saudi Arabia, Qatar and Russia these resources are continuously becoming minimal and localized because of the limited nature of the activities (Kang et al. 2015). Establishment of exploratory wells has evidently destroyed vegetation and adversely impacted wildlife. Another major environmental issue associated with oil exploration in the region is challenges posed by hazardous materials and waste management. Asia has one of the most hostile climates. As such, the hazardous waste like muds, spilled fuels scrap metal, drilling fluid and solid waste that is produced during drilling and operation of production wells poses a major waste management challenge to most governments in the region. In addition, it is directly responsible for the numerous human health and safety issues reported almost on a daily basis (Kang et al. 2015). Mark you these wastes are produced on a large scale because oil exploration is among the leading economic activities in the region. In spite of the above challenges, there are a number ways through countries in Asia can work together to address the above concerns. Below are some of the recommendations for development of sustainable oil and gas construction national, regionally and internationally. Building plants for recycling used oil – much of the used oil is often wasted. However, countries such as Ukraine have devised ways through which they can recycle it and pump it back into the system. According to Kang et al. (2015), this is can be a major milestone towards an environment friendly industry. Eco-friendly sanitation solutions for the industry – there are proven sanitation solutions that are designed to replace hazardous solvents and materials used to clean equipment in the oil and gas industry. Adopting such solutions can be a major boost for Asia as far as the sustainability of its industry is concerned. Companies showing corporate responsibility – however many measures are put in place, Farah and Cima (2013) note that the real mantle of ensuring sustainability of the industry lies with the actual players. With the support of the government, these companies should show corporate responsibility to the environment by implementing effective and long-lasting CSR programs. Part 4: Current and futures markets for oil and gas production in Asia Asia’s oil markets have been upending in the current years. This has largely been attributed to the change of events in the way the region is not only producing the commodity but also consuming it. According to a research by Kang et al. (2015) for instance, China and India’s refiners have overtaken the once dominant buyers such as Japan. In fact, the same findings are projecting that these two players are challenging the US as the world’s leading oil consumer. These new developments are creating new trade routes as well as rewriting oil price books in throughout the entire region. China and India have specifically become main centers of global demand growth with their joint consumption share almost tripling to over 16%. As it stands now, major OPEC member both from within the region and beyond are competing for market share in these two key countries. The graph below illustrates this new development. In terms of production cost, Asia Pacific region has always been cheaper when compared to other regions. Perhaps this explains why it is relatively attractive to most leading oil producers in the world. According to an Evaluate Energy Study carried out in 2013, the region’s prices have relatively been stagnant in the last couple of years. The graphs below project these findings (source: Evaluate Energy 2013). Part 5: Development plans in the region Exploration of oil is the main income earner for most countries in Asia. As such, a lot of efforts and resources have been invested in the industry to see that it is as sustainable as possible. This commitment has been made by both the state governments and private parties associated and is exhibited in the way they are collectively working towards a common agenda. Among the development plans noted include:- Setting frameworks for the potential of best practice to reduce impacts from oil and gas projects in the region. For instance, there is a push for new best practice framework that combines technical engineering criteria with social and ecological concerns (Kang et al. 2015). This plan helps eliminate negative environmental impacts associated with oil and gas exploration. The region has also formulated rules and regulations designed to work as the guiding principles for both present and future oil and gas exploration. Unlike previous principles, these ones are sensitive to both the economic as well as environment aspect of this activity. There is more increased environmental awareness. References Evaluate Energy. (2013) The Cost of Producing Oil in the Asia Pacific Region: Break Even Cost Analysis for Oil Producing Companies and the Challenges Ahead, viewed 29 February 2016, http://www.oilandgascouncil.com/sites/default/files/files/asia-pac-report.pdf Falwell, H. et al. (2014) Understanding the Enhanced Oil Recovery Initiative, viewed 29 February 2016, http://cornerstonemag.net/understanding-the-national-enhanced-oil-recovery-initiative/ Farah, P.D. & Cima, E. (2013) ‘Energy Trade and the WTO: Implications for Renewable Energy and the OPEC Cartel’, Journal of International Economic Law, vol. 16, no. 3, pp. 707–740. Kang, W. et al. (2015) ‘Oil in Asia and the Pacific: Production, Consumption, Imports, and Policy Options’, AsiaPacific Issues, vol. 5 no. 85, pp. 1-12. Owen, N.A., Inderwildi, O.R. & King, D.A. (2010) ‘The status of conventional world oil reserves: Hype or cause for concern?’ Energy Policy, vol. 38, no. 8, pp. 4743–4749 Read More

As such, most producers under the Organization of the Petroleum Exporting Countries (OPEC) emphasize on enhanced oil recovery (EOR) which is ideally the implementation of various techniques aimed at increasing the amount of crude oil that can be extracted from an oil field. Throughout Asia, there are generally four techniques used for enhanced oil recovery. These include:- Gas injection (miscible flooding) technique – this is the most commonly used technique in the region with countries such as Kuwait, United Arab Emirates, Saudi Arabia and China largely depends on it.

It entails introducing miscible gases into the reservoir which help to maintain the pressure within it as well as reduce the interfacial tension between water and oil (Falwell et al. 2014). This greatly improves oil displacement hence making its extraction simple. Among the gases used in this technique include natural gas, carbon dioxide (CO2) and nitrogen. CO2 is perhaps more common because it is not only less expensive when compared to other liquefied petroleum gases but also helps reduce oil viscosity.

Thermal injection technique – as the name suggests, this EOR technique entails introducing heat into the oil reservoir during extraction. The heat heats the crude oil, thus reducing its viscosity, making it easily extractible. The science behind the technique is that heat generally increases the permeability of oil because it reduces its surface tension (Falwell et al. 2014). As such, improve oil is often formed when the vaporized crude oil is condensed. The most common thermal injection methods include cyclic steam injection, combustion and steam flooding.

The figure below shows a typical steam flooding technique. Figure 1: steam flooding technique Starting 2011, some Asian countries such as Saudi Arabia, Oman and Qatar started taking advantage of the hot sun in the region by building giant solar plants to produce steam pumped into the reservoirs (Falwell et al. 2014). It is entirely a new technique that is fast growing in popularity. The picture below shows one of the solar thermal enhanced oil recovery projects in Oman. Figure 2: Solar thermal enhanced oil recovery project in Oman Chemical injection technique – the third strategy entails introducing a wide variety of chemicals into the reservoir that serve the same purpose of aiding mobility and reducing surface tension of the crude oil.

Soaps such as alkaline react with organic acids that occur naturally in the oil to lower its interfacial tension. This generally increases production, thus helping achieve the main objective of EOR. Among the most common chemicals used include dilute solutions of surfactants (e.g. Petroleum sulfonates) and biosurfactants (e.g. Rhamnolipids). Despite being very effective, Falwell et al. (2014) note that the application of this method in Asia is often limited by the high costs of the chemicals.

Plasma-pulse technology – this is a new EOR technique that was first introduced in the Russia in 2013. It uses low energy emissions to achieve the same effects as other methods such as lowering viscosity of crude oil and increasing its permeability. One of its biggest advantages is that it is clean, safe (has no negative ecological impact) and does not harm the cement column or underground equipment. Part 3: Development of sustainable oil and gas construction in Asia and internationally The sensitivity of the energy industry is exhibited in the way the sector makes headlines in almost all fronts.

A lot of concerns have been raised regarding carbon management and how the entire sector impacts on the environment. Apparently, besides the air and sound pollution associated with oil exploration, there are a bunch of other critical issues that trigger debates as far as sustainability of the industry is concerned. According to Farah and Cima (2013), for instance, extraction of oil has had a profound impact on ecological resources in the entire Asian region. These resources include wildlife, vegetation, aquatic biota, special status species and their habitats.

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