Inventory Stockpiling of Crude Oil

An intervention towards

Energy Security Resilience

Dr. Ranjit Rath

Corporate Strategy, EIL;

MoP&NG, INDIA

Presentation

on

Sectoral Cooperation

Indian Ocean Rim Association

Indian Ocean Rim Association

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India

Development cooperation partner

Technical Assistance;

Economic Collaboration &

Advisory functions related to aid and trade.

Outline of the Presentation

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4

80 %

Setting the Context : Indian perspective

80 %

% of Total Crude Oil Demand

being imported by India

% of Crude Oil being imported

from MENA region

Saudi Arabia18%

Iran16%

Kuwait10%Iraq

9%

UAE8%

Nigeria8%

Angola8%

Venezuela4%

Others19%

India's crude oil import Crude Oil,

the 2nd largest component in

country’s energy basket.

Risk of supply disruption and

Resilience to cope entails

one facet of the

Energy Security of India

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Setting the Context : Indian perspective

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Setting the Context : Indian perspective

Oil consuming Indian economy is increasingly vulnerable to oil /

gas supply disruptions, necessitating emergency preparedness

and response measures towards energy security mandate.

Long-term measures

Diversification of oil import sources

Augmented Exploration & Production Efforts

Enhanced Oil Recovery

Improving oil efficiency

Removing market impediments

Investing in alternative energy technologies

Maintaining dialogue with oil producers

Emergency Response (Short-term) measures

Emergency stock-piling / Strategic storage of crude oil

Storage Inventory : A Global Perspective

USA

Canada

UK

Japan

France

Germany

South Korea

Sweden

Finland

Norway

South Africa

Zimbabwe

China

Singapore

Vietnam

Saudi Arabia

India

1919 : Germany

1938 : Britain

1966 : South Africa

1968 : France

1972 : Japan

1975 : USA

1980 onwards

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Storage Inventory : A Global Perspective

Adoption of technology for storage is mostly driven by the product to be stored

and the geological setting of the site coupled with available infrastructure.

USA federal stocks are stored mostly in underground salt caverns;

Scandinavian countries have underground unlined rock caverns;

Germany, France and UK have extensive salt caverns as storage alternative;

Far-east countries have stock piling in underground unlined rock caverns;

South Africa have in-ground concrete tanks for crude oil stock piling;

Energy security interventions ensure and reinforce inter-dependence

between supply and demand sides.

Petroleum economics govern the world trade relations between the oil

producers and consumer nations.

One significant approach towards energy security is to have increased inter-

dependence in terms of cross investments.

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Storage Inventory : A Global Perspective

Type of Stock Owner Remarks / Countries

a. Industry stocks Stocks held by Industry, for

commercial intent or otherwise.

b. Government stocks Typically financed through budget

allocation of respective Governments

and held exclusively for emergency

purpose.

Czech Republic, Ireland,

Japan, Korea, New Zealand,

Poland and the USA.

c. Agency stocks The stock holding arrangement

involves establishing a separate

agency endowed with the

responsibility of holding all or part of

the stock obligation. These are

government sponsored schemes and

held under co-operative cost sharing

arrangement of the industry.

Belgium, Finland, Hungary, the

Netherlands, Portugal, Spain,

Austria, Denmark, France,

Germany and Switzerland.

International Energy Agency (IEA), Paris established in 1974; is mandated to promote

energy security amongst its 29 member countries through collective response to physical

disruption of oil supply primarily through inventory stockpiling of crude oil.

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International Transhipment of Crude Oil Route

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Hydrocarbon Value chain across the entire spectrum

The mid stream segment needs more focused attention for energy security

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Hydrocarbon Infrastructure of India

Legend:

Refineries

Major Ports

Energy Gateway

A

B

Storage Program of Govt. Of India

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Legend:

Refineries

Phase I Storage Locations

Phase II Storage Locations

Phase I Storage Installations

Vishakhapatnam U/G Rock Caverns 1.33 MMT

Mangalore U/G Rock Caverns 1.5 MMT

Padur (Udupi) U/G Rock Caverns 2.5 MMT

All Underground works are complete.

Cavern Acceptance Test has been successful.

Commissioning is scheduled in 2015 / 2016

Phase II Storage Installations (Planned)

Chandikhol, Odisha U/G Rock Caverns 3.75 MMT

Bikaner, Rajasthan U/G Salt Caverns 3.75 MMT

Padur, Karnatak U/G Rock Caverns 2.5 MMT

Rajkot, Gujarat U/G Concrete Tanks 2.5 MMT

Strategic Storage Projects of Govt. of India are being implemented by

Ministry of Petroleum & Natural Gas (MoP&NG) through a SPV,

M/s Indian Strategic Petroleum Reserves Ltd. (ISPRL)

Energy Gateway

Advantages of Underground Storages

Used as buffer / strategic storage alternative

Safe from sabotage, natural calamity etc.

Environment friendly

Minimal surface land requirement

Natural landscape : located underground.

No risk of leakage

Economical

Minimal maintenance

Longer life as compared to conventional storage

• Storage requirements;

• Storage product loading and unloading facilities;

• Safety and environment conditions;

• Geological setting of the site;

• Subsurface rock mass quality;

• Hydro-geological regime of the site;

Site Selection Criteria and Design Manifests

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Inventory Stockpiling of Crude Oil

Storage Installation Technologies

Advantages of underground storages are essentially based on aspects such as

Space Saving, Economical, Environmental Friendly and Strategically Safe.

Selection of a storage installation for underground storage of crude oil &

natural gas is made according to following factors .

• Storage requirements; (supply chain imperative)

• Geological setting of the site; ( site specific)

• Subsurface rock mass quality; (site specific)

• Hydro-geological regime of the site; ( site specific)

• Storage product loading and unloading facilities; (supply chain imperative)

• Safety and environment conditions; (regulatory compliance)

Storage Alternatives

Underground Rock Caverns

Solution Mined u/g Salt Caverns

In-ground Concrete Tanks

Conventional Large Steel Tanks

Storage Alternatives : Comparative Analysis

Storage

Technology

Siting Requirement Security Safety CAPEX OPEX

Salt Caverns Salt Formations E E E E

Unlined Rock

Caverns

Hard rock formation &

stable ground water

condition

E E G E

In Ground

Concrete Tanks

Dry Land Area

(hard soil / rock and low

water table)

G G E E

Conventional

Steel Tanks

No Restriction A A A A

Note E = Excellent, G = Good, A=Average

Underground Rock Cavern : Technology

Water Curtain Gallery

Water Curtain Boreholes

Shaft

Inert Gas

Water Table

Crude Oil

Water

Ground Level

Inert Gas

Crude Oil

Water

Casings

Underground Rock Caverns : 3 D Model

VISHAKHAPATNAM MANGALORE

PADUR (UDUPI)

Ten story

Building

30 M

20 M

Top

Heading

Benches

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Implementation of the Projects

Summary : Quantum of Work Vizag Mangalore Padur

Access tunnel- length in m 669 970 3099

Connection Tunnels- length in m 963 492 516

Water Curtain Tunnel- length in m 1804 3618 3848

Main storage Cavern – length in m 3250 3572 5572

Total Tunneling in m (at location) 6686 8652 13035

Total Shaft length in m 405 252 667

Total Excavation in lakh tonnes 52 59 104

Total Safe Manhours (LTA free) 8 Million 12 Million 16 Million

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Capacity Building Process

Description Vizag

(1.33 MMT)

Mangalore

(1.5MMT)

Padur

(2.5MMT)

Foreign Back up Consultant /

Project Management Consultant

SWECO (Sweden)

EIL(India)

Geostock (Paris)

EIL (India)

EIL (India)

DFR Skanska / EIL Skanska / EIL EIL / Geostock

Overall layout SWECO / EIL Geostock / EIL EIL

Basic Design SWECO / EIL Geostock / EIL EIL

Tech Bid & SOR SWECO / EIL Geostock / EIL EIL

Cost Estimate SWECO / EIL Geostock /EIL EIL

BQC SWECO / EIL Geostock/EIL EIL

Bid Evaluation SWECO /EIL Geostock /EIL EIL

Design of Critical Items SWECO Geostock EIL (SWECO*)

third party review

On the Go Design interventions

during execution

SWECO Rep.

Site Missions

Geostock Rep.

Site Missions

EIL

Site Missions

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Storage Locations : Factor Data Synthesis & Analysis

Ranking of Storage Locations w.r.t. factors for selection of sites

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Energy Security & Sectoral Cooperation

Energy security interventions across the globe ensure and reinforce the

interdependence of both supply and demand sides, the IEA mandate.

Being the most sought after commodity, petroleum economics govern

the world trade relations and there has always been a tendency to

balance out between the oil producers and consumer nations.

Therefore, one significant approach towards energy security is to have

an increased interdependence in terms of cross investments.

While the oil consuming companies/nations take up investment in

upstream sectors of oil economies, the oil producing companies/ nations

tend to make investment in downstream assets in oil consuming

countries such as crude oil storage inventory.

These cross investments and mutual dependence throughout the

hydrocarbon value chain go a long way for international harmony both in

terms of supply side revenue generation and demand side consumer

assurance.

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India with its downstream value chain of hydrocarbon, has emerged as a

refining hub supported by a vast coast line and port infrastructure.

India’s geographic vantage position along the trade route between oil

producing countries of the Middle East and oil importing countries of Asia

Pacific provides a significant opportunity to be developed as a regional

storage hub in the IOR region.

In order to ensure energy security mandate, through it’s strategic storage

program; Government of India has initiated creations of strategic petroleum

reserves through underground storage alternatives.

Existing infrastructure of offshore oil terminals located across the coast line

and pipeline connectivity offers a unique advantage for receipt and dispatch

of crude oils through VLCCs, which further reduces the freight cost.

Adoption of the technology for underground storage installations is driven by

the product to be stored and the geological setting of the country coupled

with the location advantages.

Energy Security & Sectoral Cooperation

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The phase I storage facility at Padur (Udupi) located on the western

coast of India could be offered as a comfort envelop towards energy

security for IORA member countries, with a dedicated offshore oil

terminal.

With the existing offshore oil terminal off Paradeep, the Phase II storage

facility planned at Chandikhol, Odisha could be offered as a comfort

envelop for IORA member countries specifically Bangladesh. Part of the

energy gateway to eastern and north eastern India, the inventory will

also refineries of this region and the PCPIR Odisha.

Transshipment of crude oil and natural gas could be planned with

trans-national pipeline between India-Bangladesh-India (IBI) Pipeline

such that the resources base of natural gas in the southern states of

Bangladesh and the land locked gas find of Tripura could also be

brought to the main land and be used as feedstock for the sectors

namely; a) Gas based power plant, b) Fertilizer plant and c) Integrated

petrochemical complex .

Energy Security & Sectoral Cooperation

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As of the Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline, the

planned salt cavern storage facilities at Bikaner, India under the Phase II

storage program, would offer the supply assurance to the downstream

customers beyond the touch point at India. This inventory stockpiling

would facilitate realization of this trans-national pipeline project.

The technological knowhow acquired by India during implementation of

Phase I storage program ( MoP&NG / ISPRL / EIL ) could be utilized to

create such facilities in other IOR countries which are also characterized

by similar import profile of crude oil and geological setting say Sri Lanka,

South Africa etc.

Further in the midstream and downstream value chain of hydrocarbon,

India’s Oil & Gas organisations could impart technical training to partner

countries towards capacity building through soft power collaboration.

Energy Security & Sectoral Cooperation

A Photographic Coverage

Thank You