December 31, 2008

Saudi Update

Al-Khobar, Saudi Arabia, October 26, 2008 -- Good evening, ladies and gentlemen. It is both a pleasure and an honor to join you this evening and to speak to this distinguished group, given the criticality of the work that each of you perform—whether in the field, in an E&P operations or technology development center, in the lab, or in the classroom. Early in my Saudi Aramco career, I cut my teeth as a young engineer and as a superintendent in producing operations both in the North and the South, as well as gas operations at ‘Uthmaniyah. In fact as PDPs, Amin Nasser and I shared the same office with Northern Area Production engineering. So I know firsthand just how critical and complex upstream operations are, and understand the significance of your achievements not only to Saudi Aramco and the Kingdom, but to the entire industry and in fact the global economy itself.

As you all know, Saudi Aramco is celebrating its 75th anniversary throughout this year with the theme “Energy for Generations.” Tonight, I would simply note that since next year marks the SPE-Saudi Arabia Section’s 50th anniversary, this organization and the generations of petroleum engineers who have passed through its ranks have had a tremendous impact on our company and its unmatched record of reliability as an energy provider to the world.
Just as is the case with Saudi Aramco, I am confident that the best and brightest days of this SPE organization still lie ahead, and I believe that together we can look forward to a promising future even as we draw strength from our proud past.

To that end, the Society of Petroleum Engineers’ Saudi Arabia Section continues to do tremendous work in developing, disseminating and exchanging technical information, in keeping earth scientists up to speed with the latest developments in their field, and ensuring that the Kingdom’s upstream professionals remain at the very forefront of their chosen fields of endeavor. Let me therefore take just a moment to thank the Section, its leadership and its members not only for the kind invitation to speak tonight, but for all of your efforts to help Saudi Arabia’s petroleum sector fulfill its commitments and to enable our nation and its people to realize an even more prosperous future.

Tonight, I would like to address an issue which is on the minds and the tongues of many people these days, not only here in the Kingdom but elsewhere around the globe: the impact of the present worldwide economic situation on Saudi Aramco, and in particular on its portfolio of major industrial projects.

If you have picked up a newspaper, read a magazine, watched television, listened to the radio or visited the internet at any time during the last six weeks, you will be well aware that the global economy is in the midst of one of its most serious crises in many decades. In rapid succession, we’ve gone from the collapse of a housing bubble in the United States as a result of defaults in the subprime mortgage sector, to the collapse or buyout of some of the world’s most storied financial institutions and the evaporation of inter-bank and consumer credit markets. Stock markets around the world have plummeted as a result, with hundreds of billions of dollars wiped off the value of equity holdings. Unfortunately we are now familiar with a whole new lingo: “CDOs” or collateralized-debt obligations; so-called “ninja” loans made to people with “no income, no job or assets”; and of course the infamous “toxic debt.”
And yet it appears that even though more than a year has passed since the implosion of the US housing market, no one is quite sure to what extent banks, insurers and re-insurers, and indeed the global financial system as a whole are exposed to such bad debts and junk loans. To date, governments around the world have spent an estimated 3.5 trillion dollars to bail out banks and provide additional liquidity but it’s still not clear that either the banking sector or the stock markets have touched bottom.

Even more worrying, at present we are moving from a crisis in the financial markets to a slowdown in what people call the “real economy”: Main Street and the high street as opposed to Wall Street and the City. A number of major global economies appear to be on the edge of a recession, unless they are already in one. Japan is probably already in recession, figures released on Friday indicate third-quarter declines in gross domestic product in both the United Kingdom and the Euro zone, and one White House advisor says parts of the United States are already experiencing a recession.

Even rapidly developing and expanding economies like China and India are experiencing flatter growth rates: China’s GDP grew roughly 10 percent year-on-year for the first three quarters of 2008—two and half percent less than last year, while India’s central bank recently cut its forecast of 2008-2009 GDP growth from eight to 7.5 percent. While those are still astounding rates of growth, consider that analysts estimate China must maintain annual GDP growth of eight percent simply to absorb new job-seekers. Then consider that as a result of the slowing global economy, the United Nations is now predicting that some 20 million people around the world will lose their jobs by the end of next year, and that the total number of unemployed men and women across the globe will top 200 million for the first time in history.
Of course, all of this doom and gloom has had a negative impact on petroleum demand, which is down roughly eight percent from last year. As a result, crude oil inventories have risen by seven percent over the last month, with crude stocks in the US jumping by more than three million barrels just last week. The markets have taken their cues from both the economic slowdown and this rapid stock-build, with light sweet crude prices touching levels last seen in the spring of 2007. At the moment, this summer’s 147-dollar-per-barrel high seems just a distant memory.
Clearly this is a turbulent time for the petroleum industry as a whole, given the widespread economic uncertainty and destruction of demand that we are currently witnessing. But what do these developments mean for Saudi Aramco, and in particular, for the various megaprojects which we are developing?

When it comes to our new crude oil increments and gas expansion projects, the impact of the present economic turmoil will be minimal. By and large, our upstream projects are self-financing, or “corporate financed,” meaning that we are not reliant on the banks or credit institutions to finance our expansion programs.However the need to bring in additional volumes of oil in a contracting market will be examined carefully.
Of course, we already possess substantial spare crude oil production capabilities, in keeping with the Kingdom’s longstanding commitment to maintain 1.5 to two million barrels per day in spare capacity. Coupled with today’s softening demand picture, this capacity gives us an additional cushion when it comes to project timetables and commissioning activities, and contributes to our operational flexibility in the area of crude oil production.

When it comes to our downstream joint ventures, including our export-oriented refineries and our integrated refining and petrochemical projects, I can tell you that our partners are still highly committed and anxious to see these projects move forward. I think it is realistic to say that financing these megaprojects through borrowing in a tight credit market will be a challenge. However, because of the uncertain nature of the global financial crisis, it is really too early to tell what sort of fallout there will be for the funding of these projects. In addition, any such impact will be a function of the generally tight global credit market and the internal lending considerations of banks and financial institutions themselves, rather than a reflection of the long-term economic viability of these projects, which remains positive.
On the bright side, the declining commodity prices that are a byproduct of the global economic slowdown will help to reduce the estimated price tags of these projects, as the cost of materials like steel and copper falls sharply. In addition, equipment like drilling rigs and building cranes as well as the qualified professionals needed to operate them will likely be in greater supply as a result of cancelled or delayed projects elsewhere in the industry, and in other parts of the global economy such as the construction and basic infrastructure sectors. As a result, short-term project economics may actually benefit from the current financial turmoil, and companies with a lot of cash will come ahead.

But I would argue that the whole question of the impact these short-term market gyrations will have on Saudi Aramco and its projects is somewhat misguided because of the very nature of our business and in particular, because of the nature of our business model. Ladies and gentlemen, just as we have for many, many decades, we look to the long-term, so the day-to-day noise generated by the markets doesn’t matter very much when it comes to Saudi Aramco’s project portfolio.

Let’s face it: our facilities are designed and built with 40- or 50-year time horizons in mind. We know without a doubt that the massive hydrocarbon resource base is there thanks to men and women like you and therefore we know for certain that these facilities will still be in our operational portfolio when our sons, our daughters and even our grandchildren are the ones producing and processing our oil and gas. No one today could tell you what the Dow was doing when we began to produce Ghawar or where the FTSE index was when Safaniya was developed, and in the future the world will only remember that Saudi Aramco brought sufficient crude oil, refining and petrochemical capacity on-stream when it was needed, where it was needed just as we have done for 75 years.

Furthermore, short-term market volatility is nothing new to our industry; as the well-known energy analyst and historian Dan Yergin has said, “Cycles of shortage and surplus characterize the entire history of oil.” Over the last decade, for example, we’ve seen WTI prices as low as twelve and as high as 147 dollars. It’s a similar picture in refining, where refiners made a killing between 2004 and 2006 after having hemorrhaged money for years. These chronic boom-and-bust cycles are why successful petroleum enterprises view their activities as a marathon rather than a sprint, and why the oil business is not for the faint of heart or the short of breath. In fact, given the long lead-times involved in petroleum industry projects, we may actually be poised to catch the bounce as the global economy recovers, energy demand picks up, and our new facilities come on-stream.

But even if the global economic recovery proves to be some way off, the only way these investments don’t make good business and economic sense over their useful life spans is if you believe that rising economies like China and India will cease to grow; that the billions of people living in those markets will no longer want to enjoy a more prosperous and affluent lifestyle; that they are not interested in providing greater economic and social opportunities for their children; and that overall energy demand will somehow decrease even as the total population of the planet increases.

I for one don’t see any of those scenarios coming to pass, and therefore I remain bullish on Saudi Aramco’s plans for the future and our business portfolio of tomorrow. Our ship may have encountered choppy seas as a result of the current economic crisis, and we may be in for a bumpy few months. But at Saudi Aramco, we set our course as the world’s foremost supplier of energy a long time ago, and are both committed to and capable of reaching our chosen destination, no matter how hard the storm around us may blow or how dark and gloomy the skies above us may seem.

Ladies and gentlemen, let me close tonight by sharing a recent experience I had, which brought home to me the measures to which people will go in order to produce even a few barrels of oil. As they say, seeing is believing.

A few weeks ago I was in Canada, visiting one of the oil sands production facilities there in Alberta. It was a vast open-pit mining operation incorporating powerful earth moving equipment, huge dump trucks, vast amounts of heated water used to create slurry, and massive bitumen extraction and upgrading units to process it. It was truly an incredible operation from both a logistical and a technological perspective. But while petroleum production from Canada’s oil sands has doubled over the last ten years, it still totals only about 1.2 million barrels per day roughly equivalent to the production of our upcoming Khurais increment alone, and just one-tenth of what Saudi Aramco’s total crude oil production capacity will be at the end of next year. If the folks I met at that facility are willing to go to such extremes to tap even a small fraction of the crude oil we produce, think about the significance of what the Kingdom and its petroleum sector contribute to global energy markets.

My friends, at Saudi Aramco we have been entrusted with the world’s largest reserves of crude oil and its fourth-largest natural gas reserves. We are charged with operating, maintaining and further developing the planet’s largest petroleum production network; processing that hydrocarbon energy; and supplying oil, refined products and natural gas to domestic and international markets in a timely and reliable fashion. And that is why as the world’s economy continues to grow—as it will billions of our fellow men and women will increasingly look to us to meet their energy needs, so that they might realize the promise of prosperity for themselves and for generations to come.

Ladies and gentlemen, let me express my appreciation for your attention this evening, and thank you again for your continued efforts and considerable contributions to the vital work that we perform as energy providers to the world.

Enery Cirsis at KL

Al Naim Discusses Future Demand

KUALA LUMPUR, December 31, 2008 --

The third annual International Petroleum Technology Conference, under the theme “Meeting the Energy Needs of a Growing World Economy,” concluded after three days at the Kuala Lumpur Convention Center on Dec. 5. Industry leaders, gas and oil companies and more than 6,000 participants discussed the need for innovative technology — and people — to meet the world’s future energy demands.

Malaysian performers kick off the International Petroleum Technology Conference in Kuala Lumpur. More than 6,000 industry leaders and professionals were in attendance. (Photos: Salah A. Al-Alwan)
“The environment for the oil and gas industry is set to become more challenging in the coming years,” said Dato’ Seri Abdullah Ahmad Badawi, Prime Minister of Malaysia, at the conference’s opening ceremony. “The long-term sustainability of the oil and gas industry depends on the willingness of industry players to push the boundaries of technology and innovation.”

And that is what Saudi Aramco works toward, said Abdulla A. Al Naim, Saudi Aramco vice president of Petroleum Engineering and Development, in his presentation at a plenary discussion titled “Sustaining Production Rates to Meet Future Demand.”

“The massive crude oil production increments we’re now bringing online will still be in our operational portfolio a generation from now,” he said. “And our research and development initiatives are focused on creating the next wave of upstream technologies, which will enhance our exploration and production operations for many years to come.”

More than 300 technical papers — 18 from Saudi Aramco researchers and engineers — covering that technology were presented at the conference, ranging from acid systems and plant performance tests to cementing high-pressure formations and permeability simulation models.

Abdulla A. Al Naim
“Technology cannot be an afterthought or an add-on,” said Muhammad M. Al-Saggaf, manager of the Exploration and Petroleum Engineering (EXPEC) Advanced Research Center and co-chairman of the conference’s Exploration and Production Technologies panel session. “It is a necessary part of any successful oil and gas strategy — both now and in the future.”

Part of the company’s strategy is to access the Kingdom’s more than 720 billion barrels of discovered oil resources, almost half of which are not part of the current reserves.

However, it is also part of the company’s strategy to change that, with the help of technology.

“We work to keep our currently recoverable reserves at 260 billion barrels,” said Al Naim. “The rest of the discovered resources are not part of our current reserves, and they are considered probable, possible and contingent.” The company, he said, plans to convert those to reserves.

NOCs, IOCs Make Most of Each Other's Strengths
While the technology doesn’t yet exist to access those resources, the company has been expanding its maximum sustainable production capacity from 10 million barrels of oil per day (bpd) in 2004 to 12 million bpd next year. Several oil field increments are due to be completed soon, and each has a unique technological accomplishment.

“The Khurais area development is the largest increment in the company’s history and probably the whole world,” Al Naim said. “The typical producing well will be a single horizontal lateral, with a 1.5 to 2 kilometer open-hole section, equipped with inflow control devices for water production management.” Smart electrical submersible pumps also will be installed.

Cutting-edge technology also will be used at the Shaybah field expansion, which will produce an additional 250,000 bpd when completed early next year. Maximum reservoir contact (MRC) wells, defined as single or multilateral wells with a total reservoir contact of 5 kilometers or more, reduce development costs and help improve performance.

“Shaybah witnessed the first application of the MRC concept in Saudi Arabia on a large scale,” Al Naim said. “As we increase the reservoir contact, we increase the well’s productivity.”

Technology also maximizes reservoir output by managing the processes that occur in the reservoir itself, such as inflow, control devices and intelligent fields, or I-fields. The inflow control devices act as “equalizers,” balancing the flow in the reservoir in order to impede the production of gas and water with the oil, and therefore improve recovery.

Al Naim said the inflow control devices have substantially improved production in Saudi Aramco wells and improved their longevity. I-fields, he continued, use remote information capturing and real-time data from the wells to make real-time production and reservoir management decisions. That also improves oil recovery and reduces long-term operating costs.

In monitoring reservoirs, the company is on the cutting edge, having developed its own reservoir simulator. “Industry records were achieved last month by completing a billion-cell simulation using GigaPOWERS, the next-generation Parallel Reservoir Simulator,” he said.

Among such stories of achievement, there is one key: “For this technology to be successful, developed and deployed, a world-class work force is needed,” Al Naim said. “It is Saudi Aramco’s strategic imperative to prepare our work force for the future.”

In addition to its numerous university scholarships, professional development programs and training courses, the company is also building a training facility, the Upstream Professional Development Center, equipped with state-of-the-art classrooms, 3D visual rooms and simulation rooms that will train tomorrow’s engineers.

“Saudi Aramco has an optimistic view of the future in the long run, and we are confident in our ability to reap the fruits of our long-term exploration and production program,” Al Naim said. “This confidence stems from our faith in investing in people and technology.”

(Article by Sara T. Al-Bassam)

December 26, 2008


There is indeed a growing awareness of just how precious the Great Lakes are — and will be — in a century in which many are predicting fresh water will become more coveted than oil.

The significance of this can’t be underestimated for a system of linked lakes that hold 20 percent of the world’s fresh surface water and 90 percent of the nation’s.Recognizing the lakes’ ecological and economic value, President George W. Bush this fall signed the Great Lakes Compact, which prohibits most water diversions outside the Great Lakes basin. Bush signed the measure after the compact received overwhelming bipartisan support from the eight Great Lakes state legislatures, as well as the U.S. House and Senate.

Its passage is the latest example of the region becoming increasingly protective of the lakes.
President-elect Barack Obama promised in his campaign to push for $5 billion to help restore the lakes — money he said would be generated by increased taxes on oil and gas companies.
And it was probably no coincidence he pitted the health of the Great Lakes against Big Oil.

The BP fightIn summer 2007, Great Lakes advocates launched a ferocious fight over BP’s plans to increase its daily pollution discharges into Lake Michigan as part of its $3.8 billion Indiana refinery retrofit.

Democratic U.S. Rep. Rahm Emanuel, Obama’s incoming chief of staff, wrote a resolution decrying the company’s plans to increase discharges of ammonia and suspended solids, saying, “Congress simply will not stand by while our lakes are treated as a dumping zone.”
Picketers popped up at BP filling stations. Conservationists mocked the company’s “Beyond Petroleum” slogan; Illinois Republican Congressman Mark Kirk took to the House floor and proclaimed that BP actually stood for “Bad Polluter.”Yet the outrage at BP probably overstated the threat.

Headlines said the permit allowed 54 percent more ammonia discharges. That’s about 100 gallons per day. Scientists call that an insignificant amount for a water body the size of Lake Michigan.

The company also was given the green light to increase its discharge of suspended solids from about 3,600 pounds per day to 5,000 pounds. That material, which escapes filtration, can contain everything from organic waste to flecks of dangerous metals. The Milwaukee Metropolitan Sewerage District is allowed to discharge more than 11,000 pounds of suspended solids per day into Lake Michigan.

None of that mattered to refinery opponents. What mattered was the idea the Great Lakes were headed in the wrong direction by allowing a company to dump more pollution. It didn’t matter that the refinery was adding capacity, or processing the dirtier bitumen.
BP ultimately backed off and agreed to pursue an expansion that would not lead to increased discharges into the lake. Whether it succeeds remains to be seen, but the victory emboldened Great Lakes advocates.

Addressing a group of conservationists in Chicago after BP backpedaled, Emanuel said 10 years ago things would have gone BP’s way.
“That’s our Grand Canyon. That’s our Yellowstone National Park,” Emanuel shouted, stabbing his finger toward Lake Michigan. “You touch it, you’d better know what the hell you are doing!”
The tough talk was echoed in a letter from a coalition of Great Lakes mayors to the Indiana regulators who had approved the higher BP discharges.

“We are gravely concerned the quality and environmental protection of the entire Great Lakes system has been placed in serious jeopardy by this decision,” the mayors wrote.
The mayors drew a hard line — a line that some might want to cross in the future.
One of the signatories was Superior Mayor Dave Ross.
Flowers and oil “We expect controversy from this,” Jauch said of Murphy’s plans. “There are some very important issues that the company acknowledges.”

Perhaps the biggest is the fact that the area planned for expansion lies in wetlands that drain into Lake Superior. The wetlands have been designated as low quality by the state, Jauch said, and their loss can be compensated by restoring wetlands somewhere else.
“This entire community is all wetlands,” he said of Superior. “If you don’t mow it, cattails will grow.” Retired DNR wetland expert Duane Lahti said he has walked the wetlands and they are far from pristine. “They have been altered throughout history through logging, agriculture and construction of street and utility corridors,” he said. “They do, however, have functions and values.”

The DNR reports the wetlands in this area, despite their degradation, harbor populations of rare plants and are habitat for many native animals. Conservationists say an environmental survey of the land should be done before anyone can say the area is expendable.
“Naturally, we’re concerned about the proposed destruction of more than a half square mile of biologically significant wetlands,” said Erin O’Brien of the Wisconsin Wetlands Association. “But the precedent that would be set if the permits are granted is an even greater concern.”
Murphy’s Kowitz calls the Superior refinery site a “wonderful spot” to process the tar sands bitumen.

“We have an existing refinery. We have access to electricity through Minnesota Power, access to water, access to crude,” he said. “We’re going to put in state-of-the-art equipment, and we’re going to do everything we can to safeguard the environment while providing jobs and petroleum products that people need.” Jauch said his support for the expansion is contingent upon it being done in an environmentally friendly way.

“If the public outcry is too great, well, those things happen,” Kowitz said. “Someone will run the bitumen crude somewhere.” Jauch predicts little opposition from those who live in the area.
“The local people aren’t fighting it,” agreed 81-year-old Everett Schaefer, who grumbled about the fuss people are making over the need to protect “swamp ground.”
The owner of a second-hand store and restaurant in Superior, Schaefer said his town is so desperate for the economic bump a new refinery would bring that he’s willing to pitch in to get it built. “Heck,” he said, “I’d go out there and work for free.”

Flower shop owner Laura Laberdie sees only an upside to Murphy’s plans.
“If my customers are working full time, they’re more likely to buy flowers,” she said. “If the restaurants are busier, then they can afford to buy more flowers.”
Standing behind a counter in an outfitters’ store that sells $700 fishing rods, drinking from a Starbucks mug and sporting a baseball hat with a KUMD public radio logo on it, 61-year-old retired railroad engineer Larry Markley is a self-described liberal with a keen interest in the health of the 350-mile-long lake across the street.

He said he doesn’t like that the region is becoming inextricably hitched to the Alberta tar sands, but he isn’t sure what to do about it. Tar sands oil production is becoming increasingly controversial because of the amount of energy it takes to bring the stuff to the surface and the effect mining is having on Canada’s boreal forests.

“The process of procuring oil from that tar, I have a lot of problems with that, but what are my choices as a citizen?” he said. “Drill more around the U.S.? Or import from other countries besides Canada? Neither of those are very attractive.” Markley said too many jobs in town don’t pay a wage high enough for a family to buy a house and send their kids to college, and he’s willing to put up with a well-regulated refinery if it will help.
“It’s an American dilemma,” he said of the oil. “We’ve got to keep using this stuff. We can’t deny that.

— Copyright © 2008, Milwaukee Journal Sentinel/Distributed by McClatchy-Tribune Information Services
IRAQ. Iraq, holder of the world’s third largest crude reserves, will start selling oil to SK Energy Co, South Korea’s largest refiner, from January after a one-year suspension.
Iraq’s State Oil Marketing Organization will sell SK Energy 65,000 barrels a day of oil under the terms of a new contract, an Iraqi Oil Ministry official, who declined to be identified for security reasons, said.

Iraq suspended crude oil exports to SK Energy in January this year, objecting to an SK Energy-led South Korean group’s agreement with Kurdistan to export oil from disputed fields. The group signed a production-sharing contract with Kurdistan for the Bazian block in northeastern Iraq, Korea National Oil Corp said on 12 November.
The Kurdish Regional Government, also known as KRG, has pursued an independent energy policy since the US invasion of Iraq in 2003. Iraq’s Oil Minister Hussain al-Shahristani has warned that Kurdish contracts will be reviewed when a federal energy law is passed and talks to date have slowly brought the two sides closer.

SK Energy was set to resume imports from Iraq as the KRG and authorities in Baghdad come closer to resolving their differences, the Seoul Economic Daily reported in June, citing an unidentified government official. The Iraqi and KRG governments have made progress in agreeing an energy law that will determine how income from oil fields is divided, the Korean-language newspaper said.

December 23, 2008

Blending Plastic with Bitumen

Blending Plastic with Bitumen

Double the durability. The offer that comes with plastic-blended roads is welcome in a city increasingly identified by its battered roads. But the cost of technical upgrades and low customer patronage are also leaving holders of this patented technology struggling to keep afloat.

K K Plastic Waste Management (KKPWM), that pioneered the model of plastic-blended bitumen on Bangalore's roads, now plans to upgrade the technology to reach out to more. After discussions with venture capitalists failed to make headway, the proprietors are finalizing plans to start out on their own.

Under partnership with the Bruhat Bangalore Mahanagara Palike (BBMP), about 600 km of Bangalore's roads have been laid with the plastic-bitumen blend that, experts say, ensures almost double the durability of normal roads. Ahmed Khan, MD of KKPWM, says the plan is to upgrade from the present dry mix model to a wet mix model. KKPWM has bought five acres of land near Kunigal to construct a wet mix unit at an estimated cost of about Rs 5 crore.
"In the dry mix model, our staff have to monitor the entire process of mixing bitumen with plastic on the construction sites. With the wet mix, we'll be able to mix this blend with tar and supply it as a complete product. It has immense potential as an industry,'' says Khan.
Rasool Khan, director of the company, says the extra cost (see box) involved is balanced out by the extra durability. The plastic model has been used on M G Road, Cunningham Road, K H Road, J C Nagar Road, Shankar Mutt Road, Miller's Road, Cubbon Road and old roads like one in Dollars Colony.


The technology involves blending of bitumen and plastic, both non-biodegradable. According to sources, more MoUs between the BBMP and KKPWM are in the pipeline but the company is also looking at partnering Bangalore Development Authority (BDA) and the public works department.

"The BBMP is our only end-user. There's a need for more civic agencies to join in,'' says Khan. Under the dry mix model, waste is segregated and powdered at the KKPWM unit and blended in equal measure with bitumen at the construction site.


Ahmed Khan, an entrepreneur from Krishnarajapet in Mandya, used to deal in plastic products. After the call against plastic became shriller during the mid-1990s, Khan thought of a creative way to deal with the issue and hit upon the idea of plastic-blended bitumen on roads. In partnership with researchers in road engineering, the technology was custom-made and experiments were done on roads in Maddur in 2001. The technology has found favour but is banking on bigger investment and better patronage to make the next level.

Bangalore generates 35 tonnes of plastic per day
KKPWM collects 4 tonnes, pays rag-pickers Rs 6-12 per kg
BBMP purchases waste from KKPWM at Rs 27 per kg
Plastic road costs Rs 40,000 extra per km
2 tonne plastic needed for every km of road (3.5 m wide)

Mix of metal aggregate, asphalt as binder
Cost: Rs 1.5-Rs 2 cr
Mix of metal aggregate, cement as binder
Cost: Rs 4.5 cr*
Plastic waste is cleaned, segregated and powdered. Mixed with bitumen, blended with other aggregates, then laid
Cost: Rs 1.5-Rs 2 cr
Making an accurate comparison between a tar and concrete road could be a tough ask because the performance of roads depends on many factors, including the volume of traffic.
-- Krishnareddy, chief engineer (major roads), BBMP
* Cost comparative for 3.5-m wide road of 1 km, with medium volume of traffic
* While initial investment is higher on concrete road, recurring maintenance cost is low
An interesting and education website for bitumen.

December 1, 2008

PWD In Bitumen Scandal

Yet another bitumen scandal , this time from the PWD ( Public Works Department)

Some glaring ‘loopholes’ in the functioning of the Public Works Department have come to light during the investigation into the multi crore bitumen supply scam of 2007-08 in the PWD.
The scam pertains to supply of thousands of litres of bitumen from Panipat refineries, which was inordinately delayed or never received physically, but was shown to have been received in official files.

Investigators have pointed at ‘major faults’ in the stock-keeping process of various sub-divisions of the PWD, which were never checked by the executive engineers or other senior officials for years, making things easy for the perpetrators of the scam.

Though the PWD gets its annual supply of bitumen through a PSU — Him Agro Industries Corporation —, interestingly, the department did not bother to report delay or non-delivery of stock to the PSU. It is stipulated that bitumen has to be delivered within five days of the placement of order, but at some places, the supply reached late by up to six months. Also, the rates quoted by Him Agro to transporters were found to be 60 per cent lower than the prevailing market rates

In many cases, junior engineers, who are supposed to be in charge of stock at all PWD divisions did not mention the date of receipt of the bitumen drums on the goods receipt (GR) of the truck, which made it easy for the transporter to forge the GRs. It has also been discovered that in some cases, the same vehicle has been shown in records reaching two separate destinations in different districts on the same day.

There is also no standard stock taking process being followed in all PWD divisions, which also helps in camouflaging major irregularities, revealed the probe.
Besides transporters who were engaged for transporting bitumen drums from Panipat to various destinations in Himachal and PWD officials, role of excise and taxation officials has also come under the scanner.

A senior official said the connivance of excise and taxation officials cannot be ruled out because, in many cases, the vehicle number and quantity of goods mentioned on the GRs does not match with the VAT declarations, which are checked by these officials at barriers. The fault was overlooked not once but hundreds of times in various districts as there are over 5,000 truck trips shown on paper for supplying bitumen.
As the Vigilance prepares to register the fourth FIR in the scam, more skeletons are expected to tumble out of the closet, sources said.

October 9, 2008

Shell learn the lesson Quick- Wax Cartel Exposed

Shell , who was the ring leader in fixing the price of bitumen and was fined by the European commission earlier learnt the lesson quickly and acted like the informer and got the way out. May be Shell could not make much out of paraffin wax and has decided to expose the cartel , himself to the EU Commission.

Hungarian oil and gas company MOL was among nine companies fined a total of EUR 676 million last week for forming a cartel to fix prices of paraffin wax. The French oil giant Total was fined EUR 128 million and US company ExxonMobil was hit for EUR 83.5 million by the European Commission.

Other firms given fines were Repsol of Spain, Italy’s ENI, Tudapetrol, Hansen and Rosenthaland, German RWE. For its part in the market-distorting racket, MOL was fined EUR 23.7 million.

Shell was granted immunity from any penalty for being the first member of the cartel to snitch on its co-conspirators to the European Commission. The South African oil company Sasol got the largest fine, EUR 318 million, for acting as ringleader. This whopping penalty came was even after the sum was reduced considerably following the company’s cooperation with the Commission.

The price fixing in the paraffin wax sector is alleged to have taken place between 1992 and 2005. Paraffin waxes, a by-product of the petrochemical industry, are used in everything from candles, paper cups and packaging to ski lubricants and the coating of cheeses such as Edam.

“There is probably not a household or company in Europe that has not bought products affected by this paraffin mafia cartel, with all that implies in terms of paying over the odds, higher costs and economic damage,” said the EU Competition Commissioner Neelie Kroes when the Commission announced its penalty last Wednesday.

The companies involved controlled some 75% of the European market for paraffin wax for 13 years. The fines were the fourth largest ever imposed by the commission. In February this year the Commission fined Microsoft a record EUR 899 million for defying a 2004 antitrust ruling.

“MOL has yet to study the final decision and has a period of two months in which to reflect on the findings of the decision and in order to determine whether to lodge an appeal with the Court of First Instance in Luxembourg,” ran the company’s quickly drafted press release.

Exxon was slightly more self critical, though far from penitent, saying it “deeply regrets its involvement, although limited, in the infringement of competition laws through the participation of a few of the company’s former employees”.

October 4, 2008

Bitumen Production

Connacher Oil and Gas limited reports that bitumen production at its Great Divide Pod One steam-assisted gravity drainage (SAGD) oilsands plant continues to ramp up following a recently-completed mandated turnaround and recently reached 9,750 bbls per day.

This production level is within 250 bbls per day of the original design capacity of the plant and was achieved with 14 of 15 well pairs contributing to recorded volumes.

Steam is presently being injected into the 15th well pair and it is anticipated this well will also be placed onstream once critical down hole temperature conditions have been established in the related wellbores.

When combined with current conventional production of approximately 3,600 bbls of oil equivalent per day, Connacher said its total production has now surpassed 13,350 BOE a day, a record for the company.

Connacher also noted that an electrical submersible pump has also been installed in one of the 14 well pairs and following a monitoring period, additional pumping equipment may be installed in other well pairs. It is anticipated these installations will allow wells to produce with greater consistency at lower pressures and therefore lower steam/oil ratios. Lower SORS would contribute to the continued lowering of unit operating costs over time.

Thus far in the third quarter 2008, Connacher said it is experiencing strong cash flow from operations before changes in working capital as a result of the significant and growing contribution of its conventional production and its bitumen production at Pod One.

The impact of these volume increases in recent months has been reinforced by continuing reductions in related unit operating costs, especially for bitumen production. In August 2008, for example, these unit operating costs were estimated to have been reduced to under $20 per bbl, which were well below levels recorded during the earlier stages of the ramp-up at Pod One. Further unit operating cost improvements are anticipated as 2008 progresses, as recent volume ramp-up will spread associated fixed costs over a larger production base.

Unit operating costs for Connacher’s total production base, including conventional and bitumen production, were estimated to have been even lower at approximately $16 per BOE in August 2008. These lowering of costs, together with strong second half 2008 selling prices, have provided the basis for much improved wellhead or plant gate netbacks for bitumen and overall production and for resultant corporate cash flow from operations before working capital changes.

Connacher noted statements made last week by the ruling Conservative Party of Canada during the election campaign suggesting that a "re-elected Harper government will prohibit the exportation of bitumen outside of Canada for upgrading in order to take advantage of lower pollution or greenhouse gas emissions standards elsewhere."

While this is not yet official policy as the outcome of the election remains to be determined and is seemingly focused on bitumen sales to markets outside North America, Connacher said it anticipates selling little, if any, raw bitumen anywhere and that virtually all of its current sales, which primarily consist of diluted bitumen, have been made and are being made in Canada, primarily to Canadian purchasers which are also operators of integrated upgrading facilities in the general vicinity of Connacher's Pod One operations.

Furthermore, Connacher currently purchases Bow River heavy crude oil produced in southern Canada for its refinery at Great Falls, Montana. The refinery operates effectively and safely within the framework of very strict environmental standards as established by U.S. federal and Montana state agencies.

Connacher is conducting front-end engineering and design studies relating to a potential expansion over several years of the daily throughput capacity of its Montana refinery from approximately 9,500 bbls a day to approximately 35,000 bbls per day. This study is now scheduled to be completed sometime in 2009, at which time Connacher's management will assess the merits of such an expansion in the context of anticipated costs, anticipated investment returns, together with prevailing and anticipated conditions for both financial markets and product markets.

If warranted, the matter would then be brought forward for consideration by the company's board of directors. A final decision whether or not to proceed will depend upon these and other factors, which will be assessed at the appropriate time, which remains solely within Connacher's determination as it owns 100% of the refinery as well as most of its upstream operations.

Connacher said it also continues to examine various pipeline alternatives as a longer-term solution to the requirement of transporting growing Great Divide dilbit production to available markets. Presently Connacher trucks its dilbit to available markets.

A decision on which alternative to pursue will likely be arrived at after construction is initiated at the company's second 10,000 bbl per day Great Divide project at Algar, for which regulatory approval is believed to be imminent. Once the regulatory approval is issued by Alberta's Energy Resources Conservation Board, further formal approval by the Alberta Cabinet through the issuance of an Order-in-Council is required. It is anticipated this should happen as quickly as the item can reach the cabinet's agenda, following which Connacher will be authorized to proceed with field construction.

© 2008 Nickle’s Energy Group.

October 2, 2008

Canadian Bitumen- NO to USA

The Canadian government, with co-operation from the province, should heavily restrict the export of raw bitumen to the United States, the federal and provincial NDP said today.

Huge 400-tonne trucks haul bitumen at Syncrude's North Mine about 40 kilometres north of Fort McMurray.

"We should say we're no longer going to ship bitumen to the United States and with it the high-priced, value-added jobs," said Ray Martin, the federal NDP candidate in Edmonton East.
Martin was joined at the press conference by Brian Mason, the leader of the provincial NDP. Mason said building trades unions are telling him there will be unemployment this winter if more upgrader projects are mothballed.

Last week, construction on a $5-billion BA Energy Heartland bitumen upgrader was cancelled.
"Both (Prime Minister Stephen) Harper and Stelmach are complicit in the export of these jobs," Mason said.

Harper last week pledged to limit the export of bitumen to countries with lower environmental standards than Canada. Martin called that commitment a "red herring," since Canada's greenhouse gas legislation is so weak. Martin added that Harper's pledge shows the federal government does have the ability to regulate the country's exports.

Courtesy - Archie McLean- Edmont Journal

Bitumen Supply Scam in India

Bitumen supply scam may run into crores
The total damages the state government is expected to suffer as a result of the bitumen supply scam of 2007-08 might run into crores of rupees.

The state PWD is under the scanner of the State Anti-Corruption and Vigilance Bureau in the scam in which supply of thousands of litres of bitumen from the Panipat refineries was delayed, later resulting in shortage of stock.

Besides the investigation into the extent of the involvement of officials and staff of the PWD in the scam and the role of Him Agro Industries Corporation that was the nodal agency for procuring supplies, the role of the transporter companies would also be assessed.
The four transporter companies involved were awarded tender for transportation of bitumen from refineries of Indian Oil Corporation Limited and Hindustan Petroleum Limited at Panipat to several destinations in the state. Preliminary inquiries reveal that though the condition on the tender called for transporting all supplies within five days after which a fine of Rs 10 per day was to be imposed on the transporters, the nodal agency appointed by the PWD did not take any action for the delay, even as in many cases the delay is of over six months.

The State Vigilance and Anti-Corruption Bureau has called in records of 25 PWD divisions for detailed scrutiny on the basis of which a preliminary report would be prepared and sent to the state government to decide the further course of action. During the previous months, the Vigilance had conducted raids at 22 PWD divisions to check the stock registers in the stores, in which gross violations were found, signalling largescale bungling in the supply of bitumen.
Sources in the Vigilance say the later stages of the detailed investigation would involve questioning of many officials, right from junior engineers to the engineer-in-chief.

Courtesy - Express India

July 23, 2008

Recycling Bitumen

Recycling Asphalt for Economic Advantage
Recycling is becoming part of the production process in many industries and the asphalt sector is no exception. The advantages of reprocessing reclaimed asphalt are not just economic in an increasingly price sensitive market, the process also preserves a valuable natural resource.

Prior to the asphalt planings being used in the recycling process, they have to be broken down to an acceptable size without reducing the original stone content. Benninghoven has developed recycling granulator to break asphalt blocks and plannings to a recyclable size without reducing the original stone content thereby creating minimum fines, all at the most economic production level. The planings are fed into a single shaft granulator where they are broken down and fed up to a single deck screen.

Materials go into the feed hopper and are forced in the single shaft granulator by oscillating hydraulic rams. The granulated material is then conveyed to the single deck screens after passing a magnetic belt detector, which removes any metal in the feed. The single deck screen separates the ready to size material for stockpiling, the oversize material is passed through the secondary double shafted granulator. This double shaft granulator is equipped with an adjustable setting to enable final product grading. The final material is produced to meet acceptable gradings that enables further processing to give maximum economical results.

Cold recycling

Reclaimed asphalt planings can be added in quantities of up to 25% direct into the asphalt plant paddle mixer, where it is mixed homogenously with virgin aggregates. This method is in common use throughout the UK and Ireland for processing small percentages of RAP.

A further innovative add on system, which can result in up to 35% asphalt planings being processed, is by using the existing plant dryer. Here the planings are introduced into the discharge end of the dryer via a slinger conveyor to mix with new material in the drum. Heat transfer continues during the materials movement to the plant mixing section, where it bypasses the screen and is introduced to the mixer through the weigh section.

Hot recycling

Although hot asphalt recycling has become an accepted practice throughout Europe, it is only now that operators are striving to keep down costs, maximising their operating efficiency together with projecting a more sustainable image, that they have started to embrace this new technology. Where larger quantities of reclaimed asphalt planings need to be processed - above 35% and up to 100% - then hot recycling is the only option. For many years Benninghoven have been developing new and improved methods of processing these waste asphalt materials. Their designs have made possible this high percentage of RAP recovery and provided operators with equipment, which helps preserving valuable natural resources.

A feature of the hot recycling plant is that the drum is mounted at high level to facilitate the movement of reclaimed materials into the existing asphalt plant process. At the heart of the system is a separate 11 m long large volume uniflow drum, which both dries and heats the recycled asphalt. The design of the drum internals ensures the burner flame makes no contact with the moving reclaimed material inside the drum. In the heat exchange zone, material travels smoothly through the cross section of the drum, which results in optimum heating combined with economic use of the burner and low exhaust gas temperatures.

In the next hot gas zone the materials are agitated, so protecting the drum skin from thermal overheating. The combustion zone of the hot RAP drum is fitted with special finger lifters, which vibrate during the production process to prevent clogging of the material during the heating process. The drum is fully lagged to minimise radiation loss and insulated with special zinc coated steel. Drive is by four 22 kW geared motors with friction drive.

A special compact, multi-fuel burner, which can burn a variety of fuels, including oil, natural gas, liquefied gas and coal, is used and is fitted with its own internal axial fan which provides the total air required for the combustion process. Frequency inverter control of the main blower fan provides the benefits of a perfect air/fuel ratio throughout the burner's operating range, thereby obtaining optimum running efficiency.

Hot recycled materials are discharged from the drum through an enclosed conveyor then by chute into a holding buffer silo. This is fully insulated and clad to maintain the temperature of the materials. From here it is batch weighed to the plant mixer as required. A feature of hot recycling systems is that the drum is mounted at a high level to facilitate the movement of the reclaimed materials into an existing plant process.

In recent months, Benninghoven have secured a major order for a state-of-the-art, high level, hot recycling plant for a site at West Drayton, with installation to start in May 2008. This will be the first plant of its type in the UK.

Mobile Bitumen Plants

Mobile Asphalt Plants ready to take off
Demand for more productive methods of reconstructing runways is increasing the need for high capacity, mobile asphalt plants.

Engineers at Colas are preparing to take the firm's Ermont asphalt plant out on the road again, for supplying a programme of runway resurfacing projects at UK airports. The paving materials and contracting company is anticipating a busy 2008 in the airfields sector, following project successes over the past two years using innovative paving materials and its Ermont plant. Demand for similar work is gaining momentum.
Runways and taxiways at a number of UK airports are likely to be resurfaced by Colas this year, using airfield paving technology the company has introduced from France. The materials allow higher levels of asphalt laying productivity compared to traditional UK techniques and so have raised the need for high output plants such as the company's Ermont TSM225.

Over the past two years, the mobile plant has been used on the Shetland Isles and Tiree in the Inner Hebrides; projects which have shown materials developed to the French BBA (Beton Bitumeux Aeronautique) standard can be laid quicker than the Marshall Asphalt traditionally used in the UK. Airport operators are under pressure to maximise the availability of their runways and the demand is for greater durability, which brings a long term benefit for operators tghrough reduced frequency of maintenance.

"There has been a surge in interest from UK airport operators, in European materials, due to the now proven possibilities for reducing project time and extending the life of their runways," says Colas's airfields division business manager Carl Fergusson. "The mobile Ermont plant is just as suitable for producing large quantities of conventional asphalt for airfield and road surfacing projects, but the BBA materials have made very high outputs possible over a given time. This makes it economically viable to use the Ermont plant on airfield paving projects."
Colas's mobile plant, comprising material silos, mixing drum and generators, is transported on 11 trailers and, according to Fergusson, is the only one of its kind in the UK with a production capacity of 225 tph. It is also available for hire and further in its favour, the plant is connected up still standing on its trailers and very rarely requires construction of foundations before it is set up. "This takes only two weeks, from arrival to commissioning, so the plant is a huge help in planning terms and for getting to sites and starting work quickly," Fergusson says.

Colas first introduced BBA asphalt to the UK with the aid of its Ermont plant for the extension and resurfacing of Sumburgh Airport's main runway for operator HIAL (Highland & Islands Airports Ltd). This was no mean feat because Colas first had to demonstrate that the BBA asphalt mix would work when produced with the particular aggregates and bitumen to be used.

The BBA specification is more flexible than the Marshall Asphalt mix recipe approach; instead specifying materials to their required end performance. The French specification, however, requires aggregates and bitumen with particular high spec characteristics. Every BBA mix has to be designed to its specific constituents and then tested to prove the mix of ingredients will provide the necessary performance.

"We carried out the mix development work with help and advice from our CST (Campus for Science & Techniques) technical centre in France, with aggregates won on site at Sumburgh and bitumen from Nynas' refinery in Dundee," Fergusson says. "Mix design tests proved the required stiffness and other important performance parameters and the surfacing, once under way, demonstrated how much easier the BBA material was to manufacture and lay.

"We needed the Ermont plant because with the BBA mix, we could produce 200 tph and lay 200 m of surface course over the full 45m width of the runway in one shift. This was without cause for concern over correct compaction and air voids which can be the case with Marshall Asphalt."

That was in 2006 and was followed by HIAL asking Colas for a near repeat for resurfacing Tiree Airport's main runway last year. The Tiree work was similar, although this time with high spec aggregate from southern Ireland and an even greater test of planning and logistics to get materials and the Ermont plant to site on chartered and scheduled ferries.

All went well, according to Fergusson. With good planning and the Ermont plant's large bitumen and fuel storage sufficient to keep it running continuously through a 12 hour shift, Colas was able to lay more than 300 m of the 100 mm deep asphalt overlay between scheduled flights. The surfacing was finished during 21 working days in September 2007 and since then, representatives from UK airport operators including BAA have visited Tiree to inspect the results. There could be a lot of work in future for high output plants at UK airports.

Hot Asphalt Storage

BG Europa of Wickhambrook has recently installed an FMA Ullrich Hot Asphalt storage extension to existing Sherwin silos at the Lafarge Ashbury Depot in Manchester.

A two compartment SE120/2 with a total storage capacity of 120 tons split equally between the two bins has been installed to the end of the three existing silos. A 37Kw frequency controlled winch along with a complete track replacement completed the installation.

The speed of the skip is controlled through an invertor to ensure rapid transit along the track and gentle arrival at the charging and discharge points with rope stretch accounted for by the continual reset of the skip reference point on each journey. A tacho -generator ensures that skip positioning during operation is accurate to 10mm; as this system does not require limit switches at the skip charging and discharging points, maintenance issues are therefore reduced.

The new bottom discharge skip has a capacity of 2000kg and is lined with stainless steel to promote clean operation. The skip system can operate at 140 tph with a 52 second cycle time to the furthest bin which represents a significant improvement in skip performance.

The FMA Ullrich UCC5 skip controls feature an energy saving mode which matches skip performance to batch plant output. The speed of the skip is automatically controlled to ensure that it returns to the mixer at the time required for batch discharge, eliminating excessive power usage by unnecessarily accelerating the skip.

As the low level Parker Batch Tower at Ashbury does not allow vehicles to be loaded directly it was imperative that the project was completed during the programmed shutdown period. BG Europa successfully ensured full plant production was achieved on the programmed date with minimal disruption to the established Lafarge customer base.

Joan Hughes, Manager of the Ashbury depot, commented, "We were very pleased at how safe the work was completed onsite. During and after commissioning we had very few teething problems. The new skip system has improved our production rate, and reduced down time. The Hot Storage has given us more flexibility so that we meet our customer needs better."

The Ashbury project represents the first BG Europa - Ullrich hot storage installation for Lafarge in 2008. A second installation is planned for the Lafarge Ackworth depot where an S200/4 II will provide 200 tons of storage in a total of four bins; two at 53 tons and two at 47 tons. The S200/4 II parallel storage silo offers a versatile compact storage solution where space and site layout can prelude alternative arrangements. The Ackworth S200/4 will be the third such system operated by Lafarge with the others at Mountsorrel and Hafod Quarries. BG Europa of Wickhambrook has recently installed an extension to existing Sherwin silos at the Lafarge Ashbury Depot in Manchester.

A two compartment SE120/2 with a total storage capacity of 120 tons split equally between the two bins has been installed to the end of the three existing silos. A 37Kw frequency controlled winch along with a complete track replacement completed the installation.

The speed of the skip is controlled through an invertor to ensure rapid transit along the track and gentle arrival at the charging and discharge points with rope stretch accounted for by the continual reset of the skip reference point on each journey. A tacho -generator ensures that skip positioning during operation is accurate to 10mm; as this system does not require limit switches at the skip charging and discharging points, maintenance issues are therefore reduced.

The new bottom discharge skip has a capacity of 2000kg and is lined with stainless steel to promote clean operation. The skip system can operate at 140 tph with a 52 second cycle time to the furthest bin which represents a significant improvement in skip performance.

The FMA Ullrich UCC5 skip controls feature an energy saving mode which matches skip performance to batch plant output. The speed of the skip is automatically controlled to ensure that it returns to the mixer at the time required for batch discharge, eliminating excessive power usage by unnecessarily accelerating the skip.

As the low level Parker Batch Tower at Ashbury does not allow vehicles to be loaded directly it was imperative that the project was completed during the programmed shutdown period. BG Europa successfully ensured full plant production was achieved on the programmed date with minimal disruption to the established Lafarge customer base.

Joan Hughes, Manager of the Ashbury depot, commented, "We were very pleased at how safe the work was completed onsite. During and after commissioning we had very few teething problems. The new skip system has improved our production rate, and reduced down time. The Hot Storage has given us more flexibility so that we meet our customer needs better."

The Ashbury project represents the first BG Europa - Ullrich hot storage installation for Lafarge in 2008. A second installation is planned for the Lafarge Ackworth depot where an S200/4 II will provide 200 tons of storage in a total of four bins; two at 53 tons and two at 47 tons. The S200/4 II parallel storage silo offers a versatile compact storage solution where space and site layout can prelude alternative arrangements. The Ackworth S200/4 will be the third such system operated by Lafarge with the others at Mountsorrel and Hafod Quarries.

July 11, 2008

Total to Tap Indian Bitumen Market

International oil and gas giant Total of France on Wednesday announced the setting up of a joint venture with Vinergy International for manufacturing and marketing world-class value added bitumen products for India. The joint venture will witness an investment of Rs. 100 crore during the next three years.

Making this announcement here, Total’s India Country Chairman, Christian Chammas, told newsmen that the 50:50 joint venture, Total Vinergy Bitumen India, had already commissioned a plant at Jodhpur in Rajasthan with an investment of about Rs. 25 crore and was in the process of selecting sites for setting up units in East, South and West of the country.

Vinergy Managing Director, Mukul Agarwal, said the four plants would have a bitumen manufacturing capacity of three lakh tonnes a year. Bitumen is used in the construction of roads and highways.

“The quality of bitumen being produced at these plants would be much higher than what was available. We are going to introduce the latest technology that would ensure that the life of roads would increase by 3-4 years,” Mr. Chammas said.

The joint venture will provide high quality bitumen and modified bituminous products to the road construction industry, something that is now not available. Mr. Aggarwal said they planned to commission one plant a year adding that the country had a demand of 4.1 million tonnes of bitumen as against a supply of 3.7 million tonnes. The joint venture is targeting $50 million in sales in the first year of operation.

July 6, 2008

Safety in handling bitumen

This arricle was reporduced from BBC for the sake of safety in handling bitumen

15-year-old boy was engulfed in flames and suffered a serious ankle injury when a metal drum exploded.

The teenager was using a grinder to cut the top off the 45 gallon drum, which contained a residue of bitumen, when a spark set off an explosion.

He suffered burns to his face and right hand and the blade from the grinder sliced into his ankle.

The boy was helping out at his father's fencing business in Brentwood, Essex, when the accident happened.

When Essex Fire and Rescue Service arrived, workers at the site had already stripped off the boy's burning clothes and put out the flames.

One of the first fire fighters on the scene, sub officer Neil Young said: "When we arrived, the boy was in a very bad way.

"Every exposed part of his body had been burnt. We put dressing on his burns and bandaged his ankle while waiting for paramedics to arrive."

The teenager was taken to the burns unit at Broomfield Hospital, Chelmsford. His injuries are not thought to be life-threatening.

Bitumen Standards

This article attempts to have a re-look at a comparitive study of bitumen standards acorss Asia and the key differences in evaluation to suit the local needs.

Most of the bitumen producing nations including Saudi Arabia, Thailand, Singapore, Iran, Malaysia and Newzeland in Asia uses the penetration test (ASTM D-5) ( as specified by TNZ/M/1 in Newzeland's standards) as against their Australian counterparts who uses the viscosity of the bitumen to define the grades of bitumen. This has given rise to difference in manufacturing standards between the rest of it's neighbors.

Grades as per D-5, carried out under laboratory conditions at 25 deg C to determine the depth that a weighted needle skins into bitumen specimen over 5 seconds. Thus the higher the grade, the softer the bitumen. It is measured in tenths of a millimeter. 60/70 grade has a depth of penetration between 6 & 7 millimeters.

This test, although look crude, is still internationally used as it serves as a reference point to compare the property of the bitumen at higher temperatures and it’s consistency with regards to Softening point and viscosity.

with reference to it’s physical characteristics, simply at the ambient temperature, are graded as

180/200 Softer Sealing
130/150 Soft Sealing
80/100 Hard Hot mix Asphalt binder, sealing
60/70 Harder Hot mix Asphalt binder

Most of the nations like Newzeland has one or more than one refinery , which cannot cater to their local demand, the additional requirements for the road construction are being imported.

Australian Bitumen

Australia uses the viscosity of the bitumen to define the grades of bitumen. This is in total contrast with the simple and internationally followed standard of Penetration test per ASTM D-5 .

To comply with AS 2008, the viscosity of the bitumen is tested at 60 deg C to define the four grade of bitumen used for pavement construction.

Grade Viscosity International Character Application
Class 50 40-60 No Equivalent Softer Sealing
Class 170 140-200 80/100 Soft Sealing
Class 320 260-380 60/70 Hard Hot mix Asphalt , sealing
Class 600 500-700 40/50 Harder Hot mix Asphalt

Viscosity is basically a measure of consistency and higher the viscosity , the harder the bitumen gets.

The advantages of using Viscosity over the Penetration tests are

• Viscosity is independent of the test system and the sample size.
• At 60 deg C, the testing range is close the pavement temperature
• Comparative studies of viscosity over a range from 60-150 deg C yields the bitumen’s temperature susceptibility.


June 30, 2008

Bitumen Supply & Demand

The Soaring Oil prices although justifies the fluctuation in the pricing of bitumen, there is not an established mechanism to derive the bitumen price till date. The bitumen market is getting mature and liquid. The majority of the exporting nations include Singapore, Iran, Saudi Arabia, Egypt, Thailand in this region has different inputs and the range varies significantly.

Recently the Cartel led by Shell was exposed by the European regulators and the was fined to the tune of price fixing on various petroleum products.

For Bitumen, there are no posted prices except for some compiled prices from some paid subscription services ; marketers rely on a number of pricing formulas that reference various posted crude qualities.

Market pricing is seasonal with higher prices during peak season like summer being the norm due to higher demand for bitumen and other bitumen derived products.

Saudi arabia has almost banned the export of Bitumen 60/70 , which considered as the raw material, obtained from the fractional distillation process, from Saudi Aramco . The penetration grade bitumen 80/100, prepared from the aforesaid raw material by adding additives, is the value added , before being exported. The price sensitive Saudi bitumen industry, an unorganized industry, commands the most market value among the third world countries including India, Pakistan and Bagladesh.

On the Other hand, Iran is trying to sell the bitumen through Iran Mercantile Exchange, as a commodity and the pricing currency is being slowly shifting in favrour of Euro.

Singapore, Malaysia, Thailand, although except for Singapore, the rest of the regional economies , being net importer, the pricing is closely followed with each other, and which is not affordable for re-export for the developing nations.

June 25, 2008

Saudi Aramco in Total

The Saudi Arabian Oil Company (Saudi Aramco) and Total today signed the Shareholders Agreement and other core agreements for the establishment of their joint venture, the Jubail Refining and Petrochemical Company. The signing of these agreements in Jiddah by Mr. Abdallah S. Jum‘ah, President and CEO of Saudi Aramco, and Mr. Christophe de Margerie, CEO of Total, marks an important step for the planned construction of this 400,000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia.

The Jubail refinery project is a brilliant example of a strong strategic partnership with a major oil-producing country. Together, Saudi Aramco and Total will contribute to supply growing demand for transportation fuels and petrochemicals, especially in Asia and the Middle-East, but also in Europe where the demand for diesel and jet fuels continues to grow,” Mr. de Margerie said at the signing ceremony.As a full-conversion refinery, Jubail will maximize the production of diesel and jet fuels. In addition, the project will produce 700,000 tons per year (t/y) of paraxylene, 140,000 t/y of benzene and 200,000 t/y of polymer-grade propylene.

Saudi Aramco and Total have just released invitations-to-bid for the project’s construction, with a view to awarding all packages during the first quarter of 2009. The first orders for long-lead items will be placed in July 2008, and the project will be introduced to the lending community in the second part of 2008, with a targeted financial close in early 2009.

June 24, 2008

Tax Structure for import of Bitumen

The hike in oil prices, indirectly brings in revenue to various government entities and below is the table of various slab of tax levied at Tamil Nadu, India.


Recoverable Tax Irrecoverable Tax Effective Purchase Tax

Sales Tax Surcharge on Sales Tax Addl Tax on GST/Turnover Tax. Purchase Tax Surcharge on Purchase Tax Addi. Tax on Pur. Turnover.
CST # Addl Tax on CST to Unregd. dealers Purchase Tax (Chennai)
Crude Oil


4.00 0.00

4.00 0.00
SKO Domestic 4.00
3.00 4.00 5.00 3.00 0.00 4.00 2.50
LPG Domestic 4.00

4.00 2.50
16.00 5.00 3.00 5.00 5.00 3.00 0.00 4.00 2.50
0.00 5.00 5.00 0.00 0.00 4.00 0.00
16.00 5.00 3.00 5.00 5.00 3.00 0.00 4.00 2.50
16.00 5.00 3.00 5.00 5.00 3.00 0.00 4.00 2.50
ATF Domestic 29.00
0.00 5.00 5.00 0.00 0.00 4.00 0.00
ATF Int.Airlines 0.00
0.00 5.00 5.00 0.00 0.00 4.00 0.00
SKO Non-Domestic 25.00 5.00 3.00 4.00 5.00 3.00 0.00 4.00 2.50
LPG 8.00
3.00 5.00 5.00 3.00 0.00 4.00 2.50
3.00 5.00 5.00 3.00 0.00 4.00 2.50

# CST to Unregistered dealers is levied at 10% or regular GST rate whichever is higher. Additional tax on CST sale to unregd. dealers is irrecoverable.

The commodities covered includes

Bitumen, bitumen 80/100, bitumen 60/70, bitumen 40/50, Saudi Bitumen, Singapore Bitumen, Iran Bitumen, Cutback Bitumen, MC30 , MC70, MC250 MC800, RC30, RC70,RC250, RC800, RC3000 Blown Bitumen R90/15, R85/25, R115/15, Bitumen Emulsion, CSS-1, CSS-2 , Asphalt, Oxidiszed bitumen, Bitumen Price, Asian Bitumen, Aramco Bitumen, Shell bitumen, Russia Bitumen Caltex bitumen, Exxon-mobil bitumen, BP bitumen, Korea Bitumen,

Bitumen Drum, Drummed Bitumen, Bitumen Bulk, Bitumen Vessel, , Bitumenexporter, Bitumen Exporter, Bitumen Supplier

Sulphur, Paraffin, Wax , Slack, LDPE, HDPE Granules, Petroleoum, Derivatives, Minerals, Lubrication Oil, Base Oil, Base oil 100 SN, 150SN, 450SN, 500SN, 150BS