Abstracts: 2000
Challenges Part of On-Site Generation
In the past, on-site power generation opportunities for the oil and gas industry were typically limited to refineries and petrochemical plants. These facilities are large users of thermal and electrical energy, and were afforded a number of enhanced opportunities to generate their own power through the Public Utilities Regulatory Policy Act (PURPA) of 1978. This legislation provided a market for excess on-site generated electricity by requiring host electric utilities to interconnect with cogenerators, known as qualifying facilities (QFs), and to purchase their power at the utility's incremental ("avoided") cost.
Today's "DER" electric generation technologies (such as microturbines, fuel
cells, photovoltaics, wind turbines and flywheels) are connected to or injected into the distribution level of the transmission and distribution grid-in other words, below the bulk power transmission system. Because these devices are more modular and flexible than a large central power station, they can be located at either side of the customer meter, or at other points in the distribution system such as a utility local distribution company substation. The DER designation covers a wide range of technologies, and it is not exclusively limited to cogeneration.
While there are, as of yet, only a few projects in operation, on-site generation for oil and gas producers is not a new concept. In fact, small-scale stationary turbine applications have been facilitated for years by the offshore industry. What makes today's applications unique, however, are the opportunities to use self-generated power to reduce on-site electricity costs or even create a new revenue/profit stream that maximizes returns on a Btu basis. However attractive these options may seem, the road is not easy and there are a number of factors that producers should consider before making the jump into power generation.
Distributed Energy Resources: The Next Paradigm Shift in the Electric Power Industry
Twenty years after passing the Public Utility Regulatory Policies Act (PURPA), the industry currently finds itself in the process of unbundling its operations, rates, and institutions in order to provide equal and non-discriminatory access to both wholesale and retail customers of electricity. However, even as the debate on retail competition continues, yet another new paradigm appears on the horizon, one that could potentially challenge the industry's fundamental tenets regarding industry organization. This challenge is commonly referred to as distributed energy resources or DER.
Energy Conservation and Electric Restructuring in Louisiana
The objective of this report is to explore the opportunities and challenges to electricity conservation in Louisiana that may result from electric power industry restructuring. Its goal is to inform and educate citizens and policy makers about the potential changes in electricity efficiency opportunities that may arise in Louisiana's dramatically changing electric power industry.
Electric restructuring has forced utilities and regulators to closely examine these programs. In a competitive market, competitive suppliers of electricity will not be required to provide energy efficiency services. If utilities are required to continue to provide these programs, a competitive disadvantage may arise. As a consequence, many utilities are beginning to reduce their commitments and expenditures to energy efficiency programs.
On the other hand, many competitive providers of electricity are seeing increased opportunities associated with energy efficiency. Competitive providers are bundling energy efficiency services with their sales of electricity. Industrial facilities are seeing renewed opportunities for increased energy efficiency and profits through combined heat and power applications. And, advances in small scale generation and storage technologies are providing a number of opportunities for commercial, and eventually residential self-generation and efficiency opportunities.
Thus, the range of energy efficiency possibilities in a restructured power industry are broad. Our goal is to explain a number of these possibilities and their implications for Louisiana.
An Analysis of the Rate of Crude Oil Reserve Additions in Nigeria's Niger Delta Basin, 1970-1998
In this paper a model of crude oil reserve additions is developed to analyze the impacts of economics, depletion, and technical progress on crude oil reserve additions in the Nigerian Niger Delta Basin from 1970-1998. The model has three components: the effectiveness of drilling at finding reserves (drilling success rate), the effectiveness of drilling at adding new oil reserves (crude oil finding rate), and total drilling effort (the number of oil wells drilled). Each component is specified as a function of several competing factors including cumulative geological knowledge as a proxy for resource depletion, time tend as a proxy for technical progress, posted price as a proxy for economic condition, and reserves production ratio (r-p) as a proxy for changing oil market condition. The gross new oil reserves additions is calculated as a multiplicative product of the three components-success rate, finding rate and number of wells. The relative extent to which each determinant has affected reserve additions in the Niger Delta is determined using the concept of elasticity and impact analysis. The estimation results indicate a significant statistical evidence of diminishing returns on drilling as drilling increases. The marginal impact of resource depletion on wells drilled is minus 33 wells for every additional 1000 wells drilled, the impact of depletion on finding rate is a minus 127 barrels per additional well drilled and a decline in success rate of 2.9 % per 100 additional wells drilled. The results also show that the marginal impact of crude oil posted price on reserve additions per well in the Niger Delta is estimated at 1,067 barrels. Whereas, the marginal impact of posted price on oil wells drilled is two, and the impact on success rate is not significantly different from zero. The marginal impact of changing market condition (r-p ratio) on wells drilled for oil is estimated as minus 12 wells, while the average marginal effect or r-p ratio on success rate is less than one-half percent. The study shows strong statistical evidence to suggest that technical progress has significantly reduced the negative effect of depletion on petroleum reserve additions. Technical progress did not, however, overcome the negative effects of depletion completely in the Niger Delta during the period 1970-1998.
Economic Aspects of Global Petroleum Production Decisions: A Short Course for Petroleum Engineers and Geologists
The purpose of this course is to facilitate the understanding of the changing structure of the upstream petroleum industry by exposing participants to economic theories and tools underlying global petroleum production decisions. This course presents the global outlook for oil supply capacity by regions under different price scenarios emphasizing the role of OPEC, non-OPEC, OECD in global petroleum production and pricing strategy.
Trends in the Effectiveness of Petroleum Exploration and Development Drilling in the U.S. Gulf of Mexico OCS Region, 1977-1998.
As the large and easy-to-find petroleum reservoirs are discovered, petroleum discovery rates are expected to decline over time. Consequently, the unit cost of reserves additions will tend to increase because of resource depletion effects. However, the more recent declining trend in finding costs of petroleum reserves and recent sharp increase in finding rates in the U.S. Gulf of Mexico Outer Continental Shelf (OCS) have provoked debates on the role of technical progress on the OCS as an emerging offshore oil producing frontier. This paper reviews trends in the effectiveness of exploration and development drilling in the Gulf OCS region. An analytical model of exploration and development drilling effectiveness is developed, estimated, and applied. The empirical results suggest strong statistical evidence of overall diminishing returns on exploration and development drilling on the OCS. The results also show that the positive impact of technical progress and economic incentives is significantly mitigating the depletion effects on the finding rates and the finding costs of petroleum reserves during our sample period. These results are, however, conjectural.
Inventory of Greenhouse Gases in Louisiana
The purposes of this report were to accomplish the following:
- Develop a quantitative inventory of emissions and sinks of greenhouse gases in the State of Louisiana,
- Forecast emissions in the near future, and
- Analyze how emissions might change under alternative assumptions about the growth and composition of the State's economy.
When greenhouse gases, of which the most important are water vapor, carbon dioxide, methane, nitrous oxide and some man-made chemicals such as hydrofluorocarbons, are released into the atmosphere, they absorb the low-energy terrestrial radiation (i.e., radiation reflected by the earth's surface) thereby heating up the atmosphere and contributing to a global warming, which could have serious global human and economic effects. Only a share of greenhouse gas emissions comes from anthropogenic (man-made) sources such as combustion of fossil fuels and various industrial and agricultural processes. Therefore, an accurate inventory of emissions and sinks is the necessary first step in the formulation of the climate change policies and actions. The U.S. Environmental Protection Agency has completed an inventory of greenhouse gas emissions and sinks on the national level and actively encourages states to develop state-level inventories. EPA wants inventories that are based as much as possible on original primary information collected by state agencies or obtained directly from emitters. Louisiana Department of Natural Resources has responded to this initiative and provided funding for this study.
Distributed Generation to the Rescue?
Crude oil prices are at a twenty-year high, and natural gas supplies in North America are expected to be tight this winter. Meanwhile, fuel price protests in Europe only underscore remarks made by an official of Deutsche Banc, Alex Brown, to CNBC this week.
While commenting on recent and impressive price gains in energy stocks, the investment official stated that the global energy situation is far more serious than most people realize and is likely to remain so for at least the next five years.
So, while politicians in Europe and North America wrestle with what is shaping up to be one of the most difficult and protracted policy issues of the 21st Century, EVWorld decided to see what part, if any, distributed generation might play in helping not only clean up emissions but also bring greater efficiency to the business of electricity generation.
Offshore Rig Disposal
In this article Allan Pulsipher asks whether onshore-only disposition of offshore oil and gas platforms is the correct goal. To date, onshore disposition has been the fate of most retired platforms - because it was the cost effective course of action. As platforms move further from shore toward deeper waters, onshore disposition is more frequently inferior - from both economic and environmental points of view - to other disposition alternatives. If onshore-only disposition were to become an international standard, some offshore producing areas would incur significantly higher disposition costs and lose opportunities to better utilize and protect their marine resources.
Onshore Disposition of Offshore Oil and Gas Platforms: Western Politics and International Standards
Onshore-only disposition of retired offshore oil and gas platforms has become a core strategic objective for ocean/environmental advocates and policy-makers. Although international oil companies oppose an onshore-only requirement, its rejection is no longer a high priority for them. The ascendancy of onshore-only disposition reflects a rational and predictable response to political attitudes, values, and expectations in Western Europe by both governmental policymakers and petroleum industry strategists. Repercussions from the fight over the disposition of the obsolete Brent Spar offshore oil storage and transfer facility are the proximate cause of the shift. Onshore disposition has been the least expensive option for most platforms, but as platforms move further from shore toward deeper waters onshore disposition is more frequently inferior to other disposition alternativesBfrom both an environmental and economic point of view. If onshore-only disposition were to become an international standard, either de facto or de jure, some offshore producing areas would incur significantly higher disposition costs and lose opportunities to better utilize and protect their marine resources.
Modeling Greenhouse Gas Emission in Louisiana
As carbon dioxide and other "greenhouse gases" accumulate in the atmosphere they act like a blanket to insulate and warm the planet. Monitoring has established a build up of six core greenhouse gases-carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexaflouride-which is expected to increase the degree of global warming. The consequences of the build up are controversial as are policy alternatives to deal with it. The focus of this report is to model Louisiana's contribution to the greenhouse gas build up over the next fifteen years. Four different scenarios are used to model the magnitude and pattern of emissions and emission-producing activities. The forecasts are heuristic and illustrative. The model results presented are not forecasts in the usual sense of the term since more data and analysis are required to select one forecast over another.
