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Energy Related Business Opportunities in India

Energy Related Business Opportunities in India. Jeffrey C. Dawson June 29, 2006. The Energy Industry Today. Oil Prices at All Time High Exceeding $60/bbl Total Proven Reserves ~1.12 Trillion Bbl Natural Gas Regarded as Fuel for 21st Century Total Proven Reserves ~ 183.8 Trillion m 3

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Energy Related Business Opportunities in India

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  1. Energy Related Business Opportunities in India Jeffrey C. Dawson June 29, 2006

  2. The Energy Industry Today • Oil Prices at All Time High • Exceeding $60/bbl • Total Proven Reserves ~1.12 Trillion Bbl • Natural Gas Regarded as Fuel for 21st Century • Total Proven Reserves ~ 183.8 Trillion m3 • India’s Contribution ~10 Billion BOE • 2.1 Billion Bbl Oil Production in 2005 • 32 Billion m3 Production in 2005 • ~0.5% Reserves and 15% of Global Population

  3. Indian Strategies to Meet Demand • Exploration of Conventional Reservoirs • Production from Unconventional Reservoirs • CBM and Gas Hydrates • Enhanced Oil Recovery in Aging Fields • MEOR and CO2 Injection • Alkaline - Polymer - Surfactant Sweeps • Indirect Participant as Product Supplier • Supporting the Global Energy Infrastructure

  4. Infrastructure Support of Energy Industry • Oilfield Chemicals • ~$4 Billion Annual Market • 5.4% Annual Growth • Well Construction Chemicals • Drilling Fluid Chemicals • Cementing Chemicals • Completion • Heavy Brine & Sand Control -Unconsolidated Formations • Stimulation - Fracturing and Acidizing Chemicals • Production Chemicals • Corrosion Control - H2S and CO2 • Inorganic Deposition (Scale) Removal • Organic Deposition (Wax) Removal • Water Management (9 bbl water : 1 bbl oil)

  5. Infrastructure Support of Oil and Gas Industry • Chemicals • Enhanced Oil Recovery -Preparing for the Future • Speciality Polymers • Speciality Surfactant Blends • Equipment • Drilling Rigs • Tubulars and BOP • Speciality Pumps • Compressors • Motors and Generators • Downhole Tools

  6. Case History • Guar Gum • Primary Viscosifier for Hydraulic Fracturing • Hydraulic Fracturing is a Stimulation Process • ~32,000 metric ton per year • ~40% Global Production from western India • Most Domestic Suppliers Import Guar Splits • Convert Splits to Flour in the US Plants • Manufacture Guar Derivatives • Cost Fluctuations for Questionable Reasons • Number of Suppliers Declining

  7. Guar Gum Seed Powder Split Pod

  8. Case History • Connect with Indian Suppliers • Objective: Locate Reputable Indian Guar Suppliers that will Supply Sufficient Quantities of Quality Product at Lower Costs • Initiated in 2000 • Requirements • Low Cost of Product • High Quality Potential • Large Capacity (MM lb/yr)

  9. Case History • Quality Control • Long Term Quality Assurance • Expected deterioration in quality • Expected large variation between shipments • Either would be intolerable • Emphasis on Quality • Placed Burden on “Distributing” Company (PfP) • Product Undergoes Four Levels of QC/QA • Oil Dispersion Viscosity • Water Dissolving Rate • Solution Viscosity • Gel Viscosity • Fracture Damage Potential

  10. Case History • Distributing Company Responsibilities • Communication w/in Both Cultures • Quality Assurance • Scheduling and Inventory Management • Cost Management • Multiple Indian Suppliers • Continuous Improvement

  11. Case History • Advantages • Low Cost Product • Continuous Quality Improvement • Exceeded Expectations • Higher Quality Products • High Consistency • Created “New” Premium Grade of Guar Gum • Lower Concentration of Guar Required • Success Induced Effort to Source Other Products • High Strength Proppants and Other Polymers • Completion Brines and Specialty Surfactants

  12. Case History • Disadvantages • Forecasting Requirements • Excessive Transportation Time • Excessive Quality Control Testing • Emphasis on Scheduling and Planning • Local Inventory Build-Up • Preventing “Out of Spec” Material • Unable to Return • Stress on Pre-shipment Sampling • Performance Verified before Shipment Leaves India • Stress on Scheduling

  13. Questions

  14. Private Research Entities

  15. Private Research Entities • Global Economy and Market Pressures • Stiff Competition • Company Structure to be more Competitive • Research Regarded as Necessary Evil Cost • Research - Minimize Time to Commercialization • Fundamental Understanding of Technology • No Direct Income • Multi-Tasking Responsibilities - No Time Allowed • Expensive - • Answer - Various Forms of Out-Sourcing

  16. Private Research Entities • India’s Contribution • Large Population of Technically Skilled People • 112,000 Engineering Graduates in 2004 • 2001 Census - 2.6 MM Engineers/Scientists • Research Factories??? • Western Company/Customer Indian Technocrats • Managing Company • Provide Skilled People (Temporary Agency) • Provide Physical Assets • Laboratory Space • General Lab Furniture and Basic Equipment • Telecommunications to Support Project Review • Conducts Marketing and Sales for Concept

  17. Private Research Entities • Research Factories??? • Managing Company • Understands Both Cultures • Affiliated to Existing Educational Institutions • Tap into Technical Population • Company Customer • Enter into Contract Agreements (People/Physical Assets) • People become Temporary Employees to Company Customer • Provide Specialty Equipment • Company Customer Owns all IP • Benefit - Low Cost Research • Fundamental Research • New Product Development

  18. Oil and Gas Production Opportunities

  19. Oil and Gas Production • India’s Energy Status • 15% of World Population • 3% of Global Energy Consumption • 6th Largest Consumer • 33 Million ton/yr Oil Production • 40 Million scmd • Energy Deficient

  20. New Discoveries • Current Focus - Exploration and Production • Latest Finds • Reliance - 300 BCM Gas Krishana Godavari • Cairn - 100 BCM Gas Rajasthan • Cairn/Tata/ONGC - 80 MMSCD/5 yr Gas Offshore Gujaret • Cairn - 200 MM BOE Gas and Oil K.G. Basin • GAIL India - 60 MMSCD/20 yr • CBM • Demand Outpacing Domestic Supply

  21. Enhanced Oil Recovery • Recent Agreements w/ China • Develop and Share EOR Technology • Benefits of EOR • Primary Production 10-15% Recovery • Secondary Recovery (Waterfloods) 10-30% Additional • Tertiary Recovery (EOR) 45-80% Additional • Requires Individualized Approach • Formation composition and Lithography • Aqueous Phase Composition • Crude Oil Composition

  22. Current Methods • MEOR • Microbial Enhanced Oil Recovery • Inject Specific Live Bacteria/Food to Produce CO2 • CO2 Injection • Reduces Oil Viscosity and Re-Pressurizes Reservoir • Alkaline - Surfactant - Polymer Flooding • BJ Services Preparing for the Next Phase - EOR • BJ Services Investing in Biosurfactants • Specifically Designed to Match Reservoir Requirements • BJ Services Offers AquaCon Polymer System • Relative Permeability Modifier for Water Control • Core Flow Testing Suggest Excellent Polymer Flood Product

  23. Thank You

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