Generation Game

Fixed & mobile power generation specialists discuss market trends

UAE oil storage facilities at Fujairah require upstream rated power generators during maintenance.
UAE oil storage facilities at Fujairah require upstream rated power generators during maintenance.

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Fixed and mobile power generation specialists talk about the trends dominating upstream project power provision in the oil and gas projects in the Middle East

Manufacturers and service providers for temporary power generation for upstream exploration and production activities say that most oil and gas companies remained focused on updating and retaining existing products in their fleet rather than procure new equipment throughout 2012, a trend expected to continue through this year.

For upstream clients the continuous supply of power is absolutely vital. In a way, the specific nature of supplying power to upstream or offshore plants means firms have to ensure products are top spec, as the alternative – a major power outage – simply isn’t an option.

“The major point to be considered is the reliability and uninterrupted supply of power,’ said Mostafa Al-Guezeri, president, ABB Transmission & Distribution.

“A failure of power can’t be afforded, because it could lead to stoppage of offshore oil or gas exploration process and result at least in significant decrease of industrial productivity and major loss in revenue. Additionally the space constraints are a challenge for power generation in an offshore facility for example.”

Al-Guezeri explains ABB employs a resolute approach in the power generation segment to optimise customised solutions, which have been developed on the basis of experience and know-how developed over decades.

“In power and water production and distribution processes, we are capable of providing everything related to the electrical (at all voltage levels), control, instrumentation, communication aspect of the generation process, plant management and optimization solutions either as a turnkey solution or stand-alone packages.

“Selectively, we also provide mechanical balance of plant including civil scope for the power generation plant,” he added.

Terry McGuire, general manager of power and industrial, FAMCO (Al-Futtaim Auto & Machinery and Co) explains how the last few years have witnessed a paradigmatic shift in behaviour within the power transmission field: “The market is becoming more challenging due to the current economic situation – the influx of low-cost product and the fact that contracting companies are maintaining instead of replacing existing stock.

The trend previously was to replace generator sets after three years, whereas now, maintenance programmes are becoming more prevalent,” he said.

Another trend according to Al-Guezeri is utilising hybrid power to ensure consistent power supply, in the event of maintenance to the plant.

“Temporary power is practically only for smaller production capacity. Smaller engines are less efficient than larger machines. Unless it is in a remote area far away from a grid/network, temporary power generation solutions may not be a viable solution.

“Considering the efficiency and OPEX of such plants we foresee more usage of hybrid power plants using solar. Currently ABB is one of the world leaders in providing turnkey solutions for such power plants.”

As a result, McGuire identifies rental companies, contracting companies and then exports as the strongest sector within the power generation and transmission market.

There has still been some encouraging signs in the market over in 2012, and in the second-half in particular.

Most recently, Malaysia’s Petronas issued a tender for the construction of a major gas-fired power plant at the Gharraf oil field in southern Iraq. The 120MW captive power plant will provide power to upstream activities by the end of 2014.

In September, the state operator, Kuwait Oil Company (KOC) awarded a $200 million lump-sum engineering procurement and construction (EPC) to Petrofac for a new power distribution network in the north of Kuwait.

Petrofac will build three substation buildings and lay around 900 kilometres of cables to connect the substations to the electrical distribution system (ESPS) network.

An ESPS network efficates the flow of crude oil from a reservoir or wellhead when natural pressure is insufficient to force oil to the surface. Upon completion in 2015, the new project will provide a more robust power supply in support of the development of the onshore oil fields in the north of the emirate.

Such examples of supplying power generating equipment to energy installations bring with it inherent safety concerns.

Al-Guezeri clarifies how ABB approaches this: “ABB takes safety very seriously, we continue to be a technology driven company so our research and development are focused on developing the equipment and systems without compromising on safety.

Our products go through numerous tests for fitness and suitability for the application. ABB has developed specific applications for this and it is a default feature in Distributed Control Systems (DCS) and Programmable Logic Controllers (PLC) system and solutions.”

But it is not just safety that presents a challenge to companies in the power transmission sector. A significant amount of the electricity generated in power stations never reaches its intended destination because of losses that occur during its transmission and distribution.

ABB as a result has developed technology to ‘increase the efficiency of the power supply system, optimising power generation, facilitating the reliable transmission of large amounts of power with minimal losses, and working to monitor, regulated and improve distribution networks.’

Even more so, there are less tangible challenges facing the sector, which have less to do with the energy efficiency, and everything to do with adapting to changing customer habits, as has been noted with the shift to maintenance programmes as opposed to procuring new stock.

This hasn’t prevented McGuire looking at wider markets outside the UAE. ‘We have an authorised distribution ship for Himoinsa in Qatar with plans to expand across the Gulf region. Also we have authorised a distribution ship for Yanmar in Qatar, Oman and the African region.

ABB is pursuing a similar GCC-wide policy and is also looking further afield even. “ABB is committed to developing and deploying the latest technologies to make customers more competitive by enhancing power capacity, increasing reliability, improving energy efficiency and lowering environmental impact.

“We are actively present in all Middle East countries and we expect major power projects coming up there. And we do work with major developers and EPC companies in the Iraq market. We have done EPC projects in the northern part of Iraq,’ said Al-Guezeri.

‘We have the technology to provide the electrical infrastructure and we have a long-term vision to serve the region with increasing localisation. We have an amazing heritage of development and innovation in power technologies and at the same time we are leaders in industrial automation and electrical grid software applications.

This combination is very valuable for our customers to provide complete solution,’ he added.

Employing such solutions for the upstream sector often requires operating in remote and isolated locations. To that end, ABB utilise off-grid solutions; based on the power requirement round the clock on such locations, where customised solutions need to be developed. Such solutions in the company’s portfolio include solar, wind, diesel generation and wave power.

The allure of oil & gas, be it from a political or financial driver means there will be no end of upstream oil & gas projects launched in the region over the coming years – the issue of the third round of licenses in Iraq was announced in early October is a case in point.

As was the announcement by KOC in November that it planned to invest $56 billion on domestic oil and gas projects over the next five years to meet rising global demand.

It said that oil production capacity will rise to 3.65 million barrels per day by 2020, up from 3 million currently. In a note to investors, Reuters reported that Brent oil price was to average $121/bl in 2013, and forecast an average of $120/bl in 2014. No doubt social and political unrest as seen in 2012 and its threat for 2013 will keep upward pressure on prices.

Lastly, with these rising oil and gas prices, not to mention an ever increasing population, however, the question will inevitably rise of renewable or other alternative sources of energy as those in the market look to secure energy sources for the plethora of major projects underway in the region – it is understood that Saudi Arabia itself needs 31,000 MW of additional power generating capacity by 2020.

Going forward, new approaches to power generation, be it solar or combined-cycle technology could be asking the next big questions, and firms such as ABB, Siemens and GE Oil & Gas will have to provide the answers.

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