Australian Oil Research Articles

CERTAINTY IN UNCERTAIN TIMES: CONSIDERING FORCE MAJEURE

Force majeure clauses are particularly relevant to at least two types of oil and gas agreements: operating agreements and long-term contracts. Each type of contract is characteristically exposed to calamitous events that can take many years to manifest. However, force majeure clauses in each type of contract need to reflect the commercial realities and bargain represented by each type of contract.This paper considers whether the types of force majeure clauses that are used in the Australian oil and gas industry would adequately excuse a party relying on them from performing their obligations under a contract in light of some very real 21st century concerns. The beginning of the 21st century has seen remarkable technological development and the creation of a global village where an isolated event in one part of the world can have a significant effect on the entire world. Therefore, the increased likelihood of a terrorist attack against significant infrastructure (eg. an offshore oil rig or gas pipeline) and the emergence of natural phenomena, particularly widespread viral outbreaks such as the SARS virus can have a devastating effect on industry globally, as is being seen in the airline industry. There is some doubt whether standard contract clauses will automatically treat such circumstances as force majeure events.The paper suggests that certain drafting conventions ought to be adopted to address 21st century concerns, and particularly to provide practical solutions for these issues.

ALTERNATIVE RESERVE REPORTING AND EXPLORATION ACCOUNTING METHODS—THE NEED FOR INTERNATIONAL ACCOUNTING STANDARDS

The objective of this paper is to analyse the different reserve reporting and exploration accounting methods used globally and highlight the key reporting implications for companies that are domiciled in Australia. This has become a critical issue in the oil and gas sector with the impending implementation of International Accounting Standards (IAS), as these standards as they now stand, do not specifically address the oil and gas industry. As a result companies may have the option or may be required to make significant changes to existing accounting and reporting practices.The paper will analyse the issues, potential implications, and opportunities within the following areas:A brief summary of the history of oil and gas accounting standards and the status of existing IAS.The different reserve reporting practices for exploration accounting and reserve reporting practices between the United States (US), United Kingdom (UK), and Australia, including the different interpretations of reserves within the countries.The alternative accounting outcomes for exploration expenditure depending upon whether successful efforts are applied, area of interest, or full cost accounting.The relationship between reserve reporting and exploration accounting, with examples of how multiple accounting outcomes may result from the same exploration program.Discuss the actions required by oil and gas executives to best manage the issues.The paper will be written and presented in a style such that non-accountants or reserve experts will be able to understand the issues. Detailed analysis of technical issues and industry specific references will be avoided e.g. accounting jargon.The paper will be of most value to representatives of Australian independent oil and gas companies, but would also be of interest to international companies.

A CAREER DEVELOPMENT STRATEGY FOR ASUSTAINABLE, SAFE AND COMPETITIVEAUSTRALIAN ENERGY INDUSTRY

The Australian upstream oil and gas industry faces many staffing challenges, including:shortages of skilled personnel to staff new developments and expansion projects;retirement of an aging workforce with consequent loss of experience; andlow enrolments in university courses predicting a diminished pool of geologists, engineers and technical staff.APPEA’s Workplace Competency Initiative has been addressing these challenges by devising and promoting a career development strategy to encourage the recruitment and retention of staff. This career development strategy also addresses the competent workforce provisions and duty of care requirements of APPEA’s safety case guidelines. The principle components of the career development strategies are;competency standards—the development of competency standards for production operators and drilling crews;career guide—a promotional publication to attract new recruits, retain current staff, and to promote life-long learning;coach’s handbook—a manual for team leaders, supervisors and managers to encourage staff coaching, competency-based training and career development;coach the coach courses—practical one day sessions to promote staff coaching, competency formation and career development;group training scheme—an industry sponsored scheme to recruit, place and train production operators; anda competency register—development of a competency register to encourage and record workforce safety certificates, workplace inductions and vocational qualifications.Ultimately this career development strategy will create a sustainable pool of skilled workers, contribute to safer workplaces, and improve the competitiveness of the Australian petroleum industry.

Santalum spicatum (R. Br.) A. DC. (Santalaceae)—nor-Helifolenal and Acorenol Isomers: Isolation and Biogenetic Considerations

Six stereoisomers of nor-helifolen-12-al and four isomers of acoren-11-ol (α-acorenol, epi-α-acorenol, β-acorenol, epi-β-acorenol) were identified for the first time in Australian sandalwood oil.

Interactive Use of Linear Retention Indices on Polar and Apolar Columns with an MS-Library for Reliable Characterization of Australian Tea Tree and Other Melaleuca sp. Oils

Australian tea tree oil from Melaleuca alternifolia and M. linariifolia is well known for exhibiting antibacterial, antifungal, and general antiseptic properties. Hence characterization of tea tree oil is important, as this leads to a better understanding of the important components contributing to the observed properties of the oil. GC/MS is widely used for this task. However, reliable identification of oil components is not always possible using mass spectral data only. Retention times or retention indices are often used to support the MS data. The present study investigated a number of different tea tree and other Melaleuca sp. oil samples, and reports qualitative and quantitative data for each sample. Characterization of the individual oil components was performed using a private MS library, which incorporates an interactive linear retention index filter. The method described in this report increases the ease of characterization of individual oil components, and allows a greater number to be reliably assigned. More than 80% of the components in the samples studied are now reliably identified.

The Australian Oil Spill Response Atlas Project

ABSTRACT Australia is among the top five shipping nations of the world based upon cargo and kilometres travelled. Australia also has vast, remote and environmentally sensitive coastlines ranging from tropical to subantarctic. Unfortunately shipping accidents and illegal discharges of oil and chemical pollutants into our marine environment do occur. To support spill response management in Australia, over the past four years the Australian Maritime Safety Authority (AMSA) has coordinated the development of a uniform and integrated national Oil Spill Response Atlas (OSRA) based upon an ArcView® geographic information system (GIS). The main aims of the OSRA project were to:Develop a mutually agreed national GIS specification for the development of the digital atlas to assure consistency and compatibility Australia wide;Fast track the collation, capture and conversion of all relevant geographical and textual data into a standard digital GIS format for the majority of Australia's marine and coastal environments (particularly for highly sensitive environments such as, world heritage areas, and marine parks and reserves); andCreate a user-friendly series of GIS system tools specially designed for the particular needs of spill response managers, operational staff and environmental agencies. This paper highlights some of the advantages of GIS based systems for spill response management, the OSRA system development and features, as well as the GIS automation tools that assist spill response managers and operational personnel.

Quantifying above- and below-ground growth responses of the western Australian oil mallee, Eucalyptus kochii subsp. plenissima, to contrasting decapitation regimes.

Resprouting in the oil mallee, Eucalyptus kochii Maiden & Blakely subsp. plenissima Gardner (Brooker), involves generation of new shoots from preformed meristematic foci on the lignotuber. Numbers of such foci escalated from 200 per lignotuber in trees aged 1 year to 3,000 on 4- to 5-year-old trees. Removal of shoot biomass by decapitation 5 cm above ground in summer (February) or spring (October) resulted in initiation of 140-170 new shoots, but approx. 400 shoots were induced to form if crops of new shoots were successively removed until sprouting ceased and rootstocks senesced. Initially, the new shoot biomass of regenerating coppices increased slowly and the root biomass failed to increase appreciably until 1.7-2.5 years after cutting. Newly cut trees showed loss of fine root biomass, and structural roots failed to secondarily thicken to the extent shown by uncut trees. After 2 years, the biomass of shoots of coppiced plants was only one-third that of uncut control trees and shoot:root dry mass ratios of coppiced plants were still low (1.5-2.0) compared with those of the controls (average ratio of 3.1). Spring cutting promoted quicker and greater biomass recovery than summer cutting. Starch in below-ground biomass fell quickly following decapitation and remained low for a 12-18 month period. Utilization of starch reserves in naturally regenerating coppices was estimated to provide only a small proportion of the dry matter accumulated in new shoots. Results are discussed in relation to their impact on coppicing ability of the species under natural conditions or when successively coppiced for shoot biomass production.

Antifungal effect of Australian tea tree oil on Malassezia pachydermatis isolated from canines suffering from cutaneous skin disease.

The lipophilic yeast Malassezia pachydermatis is part of the normal skin flora of most warm-blooded organisms. In a number of surveys it could be demonstrated that this yeast species might be involved in different skin diseases like seborrhoeic dermatitis, especially in dogs and cats. In order to look for an alternative therapeutic agent to the commonly used antimycotic and antiseptic synthetic substances the in vitro activity of Australian tea tree oil, the essential oil of Melaleuca alternifolia, against several strains of Malassezia pachydermatis was examined. All tested strains showed remarkably high susceptibility to tea tree oil. With these results the excellent antibacterial activity of tea tree oil is extended to a new group of fungal pathogens colonizing mainly mammals' skin. During the last ten years there was an increasing popularity of tea tree oil containing human health care products. The presented data open up new horizons for this essential oil as a promising alternative agent for topical use in veterinary medicine as well.

A Study on the Implementation of an Activity‐Based Costing (ABC) System in an Australian Oil and Gas Company

This paper reports the results of a study on the implementation of an activity‐based costing (ABC) system in an Australian oil and gas company. The findings suggest that the three most important objectives of implementing an ABC system were: (1) more effective cost management, (2) better cost control, and (3) more accurate costing information. The results reveal that lack of understanding of the ABC methodology was the most important factor that impeded the implementation of the ABC system. The results further suggest that the three most important factors that contributed to the success of the ABC implementation process were: (1) project team were well organized and advised, (2) there were good information flows between users and preparers, and (3) there were sufficient resources provided. Overall, the results of this study are similar to those studies conducted in the manufacturing sectors.

ADDING VALUE THROUGH MERGERS AND ACQUISITIONS

Many market commentators are forecasting increased corporate merger and acquisition activity in the Australian oil and gas sector. This activity presents industry participants with significant opportunities to increase shareholder value.An effectively designed acquisition approach (business process) assists in establishing strategic objectives to maximise value and returns to a company. Steps in a structured process include assessing the acquirer’s strengths and weaknesses, defining the strategy, identifying the range of possible targets and evaluating the preferred target prior to negotiating and completing the acquisition.Observed market evidence supports the theoretical notion that market participants determine the value of E&P companies with primary reference to the NAV (DCF) methodology. The benefits of this valuation methodology are that it attempts to rigorously capture the effect of large changes in production over time and the irregular nature of E&P companies’ capital expenditure programs.Effective due diligence supports the decision-making process by identifying the risk factors that can make or break a deal and assists to clarify the transaction whilst effective structuring of the acquisition will minimise value-loss through tax leakages etc.

THE HUMAN FACTOR: A BENCHMARK OF WORKER ATTITUDE TO HEALTH, SAFETY AND ENVIRONMENT IN THE AUSTRALIAN OIL AND GAS INDUSTRY 1999–2001

This paper presents a benchmark of workers perceptions about Health, Safety and Environment (HSE) in the Australian oil and gas industry, particularly those areas covered by the Commonwealth Safety Case Regime. Between 1999 and 2001, the National Institute of Labour Studies conducted surveys of workers attitudes to—and opinions of—Health, Safety and Environment (HSE) in seven oil and gas companies. The broad objectives of this exercise were:To provide each participating company with feedback on its HSE climate from a worker’s perspective; andTo produce an industry benchmark of HSE climate, allowing each company to measure itself in comparison with the rest of the industry.It is hoped that the benchmark will stimulate HSE awareness within participating companies and encourage them to share information and learn from each other. This will lead to improvements in HSE within the industry as a whole.

Predictive heat model for Australian oil shale drying and retorting

Predictive heat model for Australian oil shale drying and retorting

Death Kinetics of Staphylococcus aureus Exposed to Commercial Tea Tree Oils s.l.

Staphylococcus aureus cells were exposed to increasing concentrations of Australian tea tree oil, cajuput oil, niaouli oil, Lema oil, kanuka oil and manuka oil as well as of a β-triketone complex isolated from manuka oil. The death kinetics were determined by calculation of log10 reduction factors after increasing exposure periods. Niaouli oil turned out to be highly active, followed by Lema (this is a registered trademark), tea tree and cajuput oils. Kill rate data indicated that 1.0% (v/v) were lethal to stationary phase cells in the assay conditions used. At 2.0% (v/v), niaouli oil and Lema oil yielded a complete 6.8 log10 reduction of cell numbers in suspensions within 60 min, whereas cells treated with tea tree and cajuput oils were inactivated more slowly within 120 min and 240 min, respectively. Kanuka oil and manuka oil as well as the β-triketone complex, the active principle of manuka oil, lacked any bactericidal properties. Their high effectiveness against Gram-positive bacteria can be explained by bacteriostatic effects. The results obtained with Lema oil, a blend of tea tree oil and a polar fraction of manuka oil (mainly β-triketones), gave cause to discuss synergistic effects.

Australia's Fixed-Wing Aerial Dispersant Capability

ABSTRACT Since January 1997, Australia has had in place a fixed-wing aerial dispersant capability (FWADC) designed to provide the country with a cost-effective aerial dispersant delivery system. The FWADC is managed by the Australian Maritime Safety Authority (AMSA) and is funded jointly by AMSA and the Australian Institute of Petroleum (AIP) through its subsidiary, the Australian Marine Oil Spill Centre (AMOSC). The FWADC is based on the concept of using single-engine turbine-powered agricultural aircraft with a payload capacity of between 1,850 and 3,100 Liters of dispersant, depending on aircraft type. At a cost of AUD$400,000 per annum, Australia has access to a minimum of two primary aircraft, 24 hours every day of the year. Additional aircraft complement the two primary aircraft on an “aircraft of opportunity” basis. This paper addresses the background to the development and implementation of Australia's fixed-wing aerial dispersant capability and its integration into Australia's national oil spill response contingency arrangements. It also provides an overview of AMSA's role in managing the capability and providing training for aircraft operators and support crews in aerial dispersant-related operations.

RECENT DEVELOPMENTS IN OCEAN ENGINEERING EDUCATION

Ocean engineering is a broad branch of engineering covering all aspects of engineering associated with the design, construction and operation of fixed and floating structures in the marine environment. It differs from naval architecture which traditionally focusses on ships and related ocean vehicles, and is of relevance to engineers in the offshore oil and gas industry.The Australian Maritime College (AMC) commenced running Australia’s first Bachelor of Engineering (Ocean Engineering) degree in 1997, with the first students graduating in 2000. The program was designed to meet the growing need of the Australian offshore oil and gas industry for graduate engineers skilled in the analysis and design of structures and facilities capable of operating in ever-increasing water depths. It builds on the already successful naval architecture degree offered by AMC, and has the first year completely in common.AMC makes use of its uniquely maritime focus and its wide variety of specialist facilities to produce graduates with a strong hands-on approach to complement their theoretical studies. The program features a unique blend of traditional marine and ocean-related subjects with a thorough grounding in hydrodynamics, wave theories, reservoir engineering, drilling technology, well design, offshore operations, oil and gas production technology and sub-sea engineering. As such, it is believed that the syllabus has a composition that is basically unique in the world.To support this new degree, AMC has commissioned the construction of a new Model Test Basin to complement its existing towing tank. This will have a plan form of 35 x 12 m and will be equipped with multi-directional wavemakers, making it ideal for student use, as well as consulting and staff research.The aim of the program is to produce engineering graduates with a broad theoretical background and a practical approach to problem solving. The ocean engineering graduates from AMC will be exceptionally well equipped to pursue successful careers within the international oil and gas industry.This paper describes briefly the various subjects that are unique to the ocean engineering degree and shows how the subject syllabi come together into a coherent program which will produce systems engineers rather than specialists. The course has just recently received Full Accreditation from The Institution of Engineers, Australia (IEAust).

WESTERN AUSTRALIA—A TECHNOLOGY BASE FOR THE OIL AND GAS INDUSTRY

Oil and gas production is characterised by a truly international industry, and yet a unique local environment. Solutions developed elsewhere cannot always be imported directly for Australian use. For this reason alone, a strong local technology base is of value to the Australian oil and gas industry. Other benefits include the ability to provide high quality education and training for people entering, and already in, the industry.A case study is described where the Western Australian technology base is facilitating solutions to a specific challenge faced on the North West Shelf (NWS); namely, that the criteria for reliable development and operation of its offshore infrastructure for oil and gas production are more severe than other petroleum provinces, requiring new analytical tools to be developed.

HOW COMPETITIVE IS THE AUSTRALIAN INCOME TAX REGIME FOR EXPLORATION AND PRODUCTION?

‘Australia must have a taxation system which equips it for the coming decades, not for those that have passed. If we do not achieve this, Australians will not enjoy the standard of living this nation has the potential to deliver’ (Ralph et al, 1999).One of the outcomes of the increasingly global nature of the resource industry is countries, especially those in close proximity to each other, are now competing for investment in resource projects. A key factor for investors assessing competing resource projects is the host country’s fiscal regime, including income tax, as this can significantly affect a project’s profitability and cash flow.The purpose of this paper is to give an overview of the income tax regime and issues currently facing the upstream Australian oil and gas industry (Sarich, 20001 ). In particular, this paper will:examine the Federal Government’s Review of Business Taxation and identify how the announcements impact on exploration and production activities;compare the Australian income tax regime on exploration and production to other countries in the region with whom Australia competes for investment and capital; andcomment on income tax issues facing Australian resource companies when conducting foreign activities.

UNDERSTANDING SOURCE, DISTRIBUTION AND PRESERVATION OF AUSTRALIAN NATURAL GAS: A GEOCHEMICAL PERSPECTIVE

Natural gases from all of Australia’s major gas provinces in the Adavale, Amadeus, Bass, Bonaparte, Bowen/ Surat, Browse, Canning, Carnarvon, Cooper/Eromanga, Duntroon, Gippsland, Otway and Perth basins have been examined using molecular and carbon isotopic compositions in order to define their source, maturity and secondary alteration processes.The molecular compositions of the gaseous hydrocarbons range from highly wet to extremely dry. On average, reservoired gases predominantly derived from land plants are slightly wetter than those derived from marine sources. The non-hydrocarbon gases CO2 and N2 were sourced from both inorganic and organic materials. A mantle and/or igneous origin is likely in the majority of gases with CO2 contents >5%. For gases with lower CO2 contents, an additional organic input, associated with hydrocarbon generation, is recognised where δ13C CO2 is A strong inter-dependency between source and maturity has been recognised from the carbon isotopic composition of individual gaseous hydrocarbons. This relationship has highlighted some shortcomings of common graphical tools for interpretation of carbon isotopic data. The combination of the carbon isotopic composition of gaseous hydrocarbons and the low molecular weight nalkanes in the accompanying oil allows our knowledge of oil-source correlations and oil families to be used to correlate gases with their sources. This approach has identified source rocks for gas ranging in age from the Ordovician in the Amadeus Basin to Late Cretaceous- Early Tertiary sources in the Bass and Gippsland basins. The carbon isotopic composition of organic matter, approximated using the δ13C of iso-butane, shows a progressive enrichment in 13C with decreasing source age, together with marine source rocks for gas being isotopically lighter than those from land plant sources. The Permian was a time when organic matter was enriched in 13C and isotopically uniform on a regional scale.Secondary, in-reservoir alteration has played a major role in the modification of Australian gas accumulations. Thus, biodegradation, prominent in the Bowen/Surat, Browse, Carnarvon and Gippsland basins, is found in both hydrocarbon and non-hydrocarbon gases. This is recognised by an increase in gas dryness, elevated isoalkane to n-alkane ratio, differential increase in δ13C of the individual wet gas components, a decrease in δ13C of methane and a reduction in CO2 content concomitant with enrichment in 13C. Evidence of water-washing has been identified in accumulations in the Bonaparte and Cooper/Eromanga basins, resulting in an increase in the wet gas content. Seal integrity is also a major risk for the preservation of natural gas accumulations, although its effect on gas composition is only evident in extreme cases, such as the Amadeus Basin, where preferential leakage of methane in the Palm Valley field has resulted in the residual methane becoming enriched in 13C.The greater mobility of gas within subsurface rocks can have a detrimental effect on oil composition whereby gas-stripping of light hydrocarbons is common amongst Australian oil accumulations. Alternatively, the availability of gas, derived from a source rock common to or different from oil, was likely to have been a prime factor controlling the regional distribution of oil, whereby mixing of both results in increased oil mobility and can lead to a greater access to the number and types of traps in the subsurface.

Heat capacities and enthalpies for some Australian oil shales from non-isothermal modulated DSC

The application of thermal analysis to Australian oil shales has been quite common, however, the results have been somewhat limited by experimental technique and advances in thermal analysis instrumentation. In this paper we present a novel approach to the thermal characterisation of Australian oil shale. This approach involves separation of the unique components of oil shale, the kerogen (organic component) and the clay minerals (inorganic components), using chemical and physical techniques. The heat capacity and enthalpy changes for the kerogen and clay minerals were measured using non-isothermal modulated DSC from 25 to 500°C. Heat capacity data was obtained over a temperature range spanning several hundred degrees in a single experiment. Heat capacity was also estimated by incorporating TG data during regions where thermal reactions involving mass loss occurred. Enthalpy data for dehydration and pyrolysis of kerogen were also determined.

Air Injection into Light and Medium Heavy Oil Reservoirs: Combustion Tube Studies on West of Shetlands Clair Oil and Light Australian Oil

Four combustion tube tests were performed at a high initial water saturation using Bath University's High Pressure Combustion Tube Facility. Two tests were conducted on Clair medium heavy oil (19.8°API) at 75 and 100 bar pressure, with initial oil saturations of 48% and 60%, at 80°C initial bed temperature. Maximum combustion temperatures exceeded 600°C during the early period, settling down to around 400°C. The combusted zone extended over about 30% of the sandpack length. Oil recovery was mainly affected by the large steam flood generated ahead of the combustion front, due to in situ vapourization of the original water in place, reducing the oil residual down to 21%. The thermal cracking reactions taking place ahead of combustion front converted part of the residual oil to lighter components, which were displaced with the gas flow, at the same time producing about 10% coke (fuel) for the combustion process. Two tests were carried out on a light Australian oil (38.8°API), starting at low initial oil residuals of So = 41 and 45%, at an operating pressure of 70 bar and initial bed temperature of 63°C. The combustion temperature was about 250°C in both tests. The axial temperature profile in the sand pack was similar to that normally associated with a moving combustion front, but at a relatively low temperature. Also, there was no steam plateau condition, which was very observable in the Clair oil tests. High combustion front velocities were achieved in all four tests, varying from 0.15 to 0.31m h–1. Fuel consumption, air requirement and oxygen utilization were generally favourable as regards improved oil recovery.