By John Derbyshire, President, KBR Technology & Consulting
This article was originally published in KBR’s TECHKNOW Newsletter
Low oil prices have shifted the dynamics of the upstream industry. Some high cost producers are being forced to discontinue operations, as they are no longer able to remain profitable. At the same time, recent technology advancements have brought down the cost of production of shale oil, so shale producers can continue to operate even at $40-50/barrel oil prices. Investments in offshore production assets, which normally carry higher cost of production, have been put on hold. Countries and companies are preparing for oil prices around $ 50/barrel in the foreseeable future.
Uncertainty in oil prices results in delays in investment decisions. Although refiners and petrochemical producers have benefitted from low raw material costs, they are not certain that prices will remain low for an extended period of time to allow them to realize return on their investments. So they continue to operate at high asset utilization and hold off on making any major capital investment decisions.
Investment can be delayed, but it cannot be avoided indefinitely. Countries are still moving forward with regulations for cleaner fuels, and developing countries continue to demand energy. Conventional oil resources continue to become scarcer, so there's still the need to explore new frontiers where oil production is more difficult and costly. Industry players need help in taking the right decisions, and KBR is here to help.
Through our subsidiary Granherne, we can help oil & gas producers develop and compare options for coping with the different oil price scenarios. We can evaluate existing assets, suggest brownfield asset modifications and guide technology selection for optimal investment based on client's risk tolerance, budget constraints, etc. For refiners, we offer advantaged technologies to help them meet the new fuel specifications. We have expanded our portfolio by adding innovative technologies.
Our new solid acid alkylation technology, K-SAAT™, is a safe, revolutionary technology to produce alkylates, an ultra-clean gasoline blendstock. Unlike traditional refinery alkylation technologies that utilize strong acids such as sulfuric acid (H2SO4) or hydrofluoric acid (HF), K-SAAT produces alkylates by combining light olefins and isobutane using a solid catalyst that is intrinsically safe and environmentally benign. We continue to offer hydro processing solutions through our partnership with Shell.
For petrochemicals producers looking to capitalize on low naphtha prices and ever growing demand for consumer products, KBR offers an array of petrochemical technologies. In addition to our offerings in ethylene and propylene production, we expanded our portfolio to offer specialty chemicals technologies for the production of acetic acid, vinyl acetate and ethyl benzene / styrene monomer.
Through our recent acquisition of Weatherly, PLINKE, and Ecoplanning, we now offer proprietary technologies for the production of nitric acid and ammonium nitrate, technologies for the purification and concentration of inorganic acids and proprietary evaporation and crystallization technologies for weak acid and base solutions.
Whatever be the challenge, KBR continues to provide clients with the support and solutions they need to remain competitive and thrive above competition.