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Fri 19 Feb 2010 04:00 AM

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Power house

Power generation companies in the Middle East are seeing oil and gas as an increasingly important sector.

Power house
Phil Burns, managing director, Aggreko Middle East.
Power house
Dr Mostafa Al Guezeri GM of ABB’s Power systems division.

Power generation companies in the Middle East are seeing oil and gas as an increasingly important sector.

Supplying power to the oil and gas industry can be fraught with difficulties, remote locations and difficult access offer challenges that perhaps no other sector can. However with the market currently performing admirably, it's a challenge they are more than willing to take up.

Aggreko provides temporary power and temperature control solutions to both the upstream and downstream sectors in the Gulf. "The services that we offer are not just about power generation; they are to do with a total power supply solution for every stage of oil and gas production," states Phil Burns, managing director of Aggreko Middle East.

The first of the applications which Burns mentions is power rental during the construction phase of oil and gas facilities, which can power anything from the cranes on site to the work camps.

"Early production is another application of rental power due to the enormous commercial pressure to produce oil as early as possible to maximize cash flow for projects. To facilitate this, the conversion of existing vessels and refurbishment of production facilities is a practice which is common," adds Burns.

"Temporary power systems are well suited to power these applications, both during the fabrication and refurbishment phases as well as providing power for the facility when it is fully operational."

The firm also offers rental power on an emergency basis, providing support to oil and gas companies which experience unexpected power shortages. "One such case occurred at a large oil refinery, when torrential rain and flash floods caused severe damage to much of the power infrastructure at the facility. Within a matter of days Aggreko was able to provide a 12 MW power package which enabled the refinery to continue operations during the clean-up operations," explains Burns.

The Middle East now offers power generation firms a fertile, if differing, market. "The last six years the GCC has enjoyed tremendous growth with the enormous volume of construction underway," comments Michael Sagermann, regional manager, portable division, Atlas Copco.

"Very few sites operated without a generator. Our expectation for the GCC is very positive despite the economy not fully recovered from the crisis effect. Country to country there are wide gaps in expectations, however specific markets (like Saudi Arabia and Iraq) show enormous potential. The current demand for power still overshadows supply, feeding the need for temporary portable power solutions," he adds.

Dr Mostafa Al Guezeri GM of ABB's Power systems division also believes the market is looking positive. "If you look at the new ambitious oil and gas projects rolled out in the UAE, the market is going to be buoyant and plenty of tenders are expected. The basic drivers do not change much."We have seen some movement in the direction of the grid providing power to oil and gas plants. This means there won't be large captive power plants in oil and gas industries. Stability of grid and having enough reserve capacity of production is going to be the focus. This means the quality of power produced by the IWPPs is going to be under the scanner."

The challenges presented to these firms in supplying power are clear. "Logistics, transportation and sometimes, security are a great challenge in remote locations. Each country, province and district has different rules, terrain, weather and security conditions," reveals Robert Bagatsing, sales and marketing manager of RSS.

"That is why RSS thoroughly assess the project and plan its installations to avoid mistakes. A proactive approach has been an integral part of our process. So no matter how difficult the challenges are, we always find a way, or make one," he adds.

When supplying a power generation service to the oil and gas sector, there are a number of factors which can make one company's services stand out from the rest.

"Customers should request their own tailored power package to ensure that it is right for the situation.  Being able to work in remote and difficult environments is key, as is the flexibility to have power supplied quickly and for the time period necessary," Burns explains.

"At Aggreko, we do not simply rent out the power package and expect our customers to know how to do the rest. Providing an optimum power supply can be a very complex task, so we ensure that our teams are highly skilled and trained to install, commission and run the equipment to optimum efficiency," he adds.

"There are a number of important aspects in portable generators, since oil and gas is a very specific and demanding market sector. Is the scope of supply suitable for oil and gas applications? Is the product safe?  What are the lifecycle costs, such as fuel use, service costs, residual value? There are plenty of low cost generators in the market, but is that low price then offset by much higher operational costs?" questions Sagermann.

The oil and gas division is the main driver of business in the region. Steady and sustainable growth of this industry is essential not only for the region, but also for other parts of the world, where it supplies much needed fuel. When we talk about this field, what comes first to my mind is the reliability," reveals Al Guezeri.

"There are many interlinked processes, which cannot be shutdown without going through a pre-defined step or procedure. An interruption of power can cause major safety risks and damage of equipments in addition to the obvious loss of production," he adds.

With the market performing well, certain regions within the Middle East are showing huge potential. "Thus far our biggest growth market has been Saudi Arabia, Qatar and Iraq. Saudi and Qatar are very active in upstream activity in oil and gas. There's any number of applications where a generator needs to be used, whether in providing power in remote locations, supplying temporary maintenance power, or supplementing any activities needing portable electricity," says Saggermann.

With the market performing well, the power generation sector, is looking at oil and gas as one if it's prime sectors and hopes for the year ahead are high. "Despite some market instability in 2009, the oil and gas industry has been one that has continued to grow for us, as a result of upgrades and rig maintenance as well as new investment," concludes Burns.