Times are tough for the Middle East’s oil and gas industry as crude oil prices, which at the time of writing were trading at around $34 a barrel, continue to plummet with no imminent signs of recovery.
Saudi Aramco, the world’s biggest oil producing company, has reportedly been asking its numerous contractors and suppliers for discounts to reduce operating expenses in this lean period. In a renewed attempt to lower cost, the UAE’s national oil company, ADNOC, has resorted to similar measures itself.
As the region’s major oil producers strive to ‘do more with less’, it would hardly come as a surprise if the NOCs or even the IOCs operating in the region decide to slash spending on Fire Protection Systems (FPS) and other safety aspects of their operations. However, that’s anything but the case, insist industry experts.
“I totally disagree with this. [We have] been working in this discipline of fire safety and suppression for a while now [and] we see the amount of awareness in the projects that are coming up with these (oil and gas) companies,” Rajendran Ekambaram, senior operations manager, fire engineering, NAFFCO tells Oil & Gas Middle East.
“Oil and gas companies in the region never compromise on fire safety, because it is directly related to their operations and their insurance policies,” said Ekambaram, who’s heading the company’s one-year-old oil, gas & power division based in Dubai.
“The oil and gas and fire protection industries go hand-in-hand. In terms of production and exploration, [oil and gas producers] might cut down on costs, but when a decision has been made to build a facility, they have to have fire protection,” says Chris Gill, product manager water for Europe, Middle East and Africa at Viking, provider of FPS.
“So we certainly don’t see much of a downturn in that industry or our business. I would say less projects are being financed but those projects do need fire protection. So we haven’t seen a big impact. 2015 was a fantastic year for us, especially in the Middle East. We did better than we ever did before in terms of sales of valves, nozzles, etc.,” he reveals.
“To use the old saying, “If you think that safety is expensive, try having an accident!” Ramanujan Suresh, sales director, analytical & detection for Rosemount Middle East & Africa, Emerson Process Management, quips.
“The cost of major industrial incidents is usually measured millions of dollars, and the consequent business interruptions are around four times more expensive again, not counting litigation, investigation, and regulatory penalties. Regulatory audits and inspections usually increase following these incidents. Process manufacturing plants need to achieve top quartile safety performance, or be in the top 25% safety performers in the industry.”
Ramanujan elaborates: “We are seeing operators do all they can to reduce costs. But, ‘all they can’ has not meant reducing their focus on ensuring the safety of their personnel.
“We have heard NOC personnel explicitly tell us that the budgets of safety projects are ring-fenced and will not be reduced. Operators understand that they must ensure that cost-cutting does not compromise safety. Statistics from Solomon Associates, amongst others, have shown that best-in-class Operators have significantly reduced their maintenance budgets and improved their process safety by improving reliability.”
The FPS industry experts are unanimous in stating that the GCC oil and gas sector is well-equipped to deal with fire accidents and have the latest fire safety mechanisms in place.
“I would say it (regional oil and gas industry) is extremely equipped. Considering the industries that we deal with, the oil and gas industry is extremely well-prepared. Their specifications are quite detailed. The industry engineers and consultants we talk to are very well educated,” Gill says.
“There is definitely room for improvement, although I wouldn’t say that the industry is not equipped. The latest technology on earth is available in the Middle East,” Ekambaram says.
“You see the standards being followed and very ethically in the Middle East’s energy industry, unlike the commercial sector where there is room for dilution. You see real engineering happening in the oil and gas industry, both in terms of safety and security as well as from the management side. There is general awareness among companies here. The IOCs anyway follow global standards wherever they invest,” he adds.
Ever since the fire accident at the Kuwait National Petroleum Company’s (KNPC) Shuaiba refinery in mid-August last year, no major incidents have been reported in regional oil and gas organisations. Although the GCC oil and gas industry “is fully cognizant of” the risks in its operation, as Suresh puts it, there is always room for improvement.
Suresh explains: “Flame and gas detection systems should be carefully designed with the right combination of measurement instrumentation, data acquisition, and analytical technologies to provide an accurate picture of what is happening in a facility. One of the challenges is properly placing an adequate number of sensors to detect hazards effectively. Inadequate detector coverage due to improper or insufficient sensor placement brings a facility to an unmitigated hazardous state.
“The regional oil and gas industry continues to find new ways to make flame and gas detection full-proof. Many producers are now adopting a comprehensive line of defence including point detectors, xenon flash lamp-based detection, and multi-sensor acoustic gas leak detectors designed for the harsh conditions of the region.”
“But more than using advanced technologies, what’s important is for the industry to build a strong process safety culture where everyone understands hazards, helps to manage risk, and observes safe working practices,” he states.
Seethi Padiyath, general manager, operations, Safety Services Group, says: “Our suggestion would be to increase the level of safety awareness by providing HSE training (theory and practical tests) by competitive/ multilingual persons for the entire oil and gas workforce.”
“In the oil and gas industry, you can’t prevent every fire accident. These will happen,” Gill admits. “However, the industry is well equipped; it understands the typical risks and the need for fire protection. So I don’t think we can preach any more. We can help them do it (fire protection) better and faster and with less water and things like that. Also, more dialogue with the end-user (NOCs that are Viking’s clients) and the guys (workers) who are on the site, using and maintaining the system, can be helpful and improve standards,” he suggests.
Innovative products and services, coupled with the latest technological advancements, play a major role in efficiently detecting and preventing fire incidents. For instance, it is now possible to detect deadly gas leaks at the speed of sound without being affected by inclement weather, wind or leak direction, or any potential gas dilution.
Unlike traditional gas detection equipment, today’s gas leak detection technologies do not have to wait until a gas concentration has accumulated, and the detection response is instantaneous for all gas types. The adoption of such innovations in the field of safety is gaining momentum in the GCC, experts opine.
One such system is Emerson’s ultrasonic gas detector. Suresh explains: “[It’s] a meter that ‘listens’ to sound at frequencies above human hearing, specifically the sound generated by a pressurised gas phase or gas leak. The gas does not have to reach the detector’s sensor to be detected.”
The so called, GDU Incus, goes a long way in improving gas detection system effectiveness, Suresh adds. “This innovation utilises ultra-sensitive acoustic sensors to constantly monitor for the release of pressurised gas. It is designed to provide reliable, wide-area gas detection for toxic and/or combustible coverage in any hazardous-area application where pressurized gas is present, regardless of the environmental conditions. It does not require calibration and its sensors never expire for the life of the instrument.”
“Many oil and gas producers in the GCC have worked with Emerson to install the GDU Incus in their facilities,” he adds.
Simple protective gear also plays a crucial role in ensuring staff’s safety in hazardous conditions.
“Since oil and gas companies are willing to reduce their cost without compromising their standards, they are now looking at a safe glove not being necessarily an impact protection glove. Most of them have now decided to use impact protection gloves only on the rigs and are now using general cut resistant gloves for their other applications. While using our MaxiCut Ultra, our ultra-thin palm thickness cut level 5 glove, they noticed a much better dexterity and better comfort for a lower cost,” Sofian Hamila, country manager for the Middle East and India, ATG Lanka, said.
Industry players perceive the fire protection industry to be a conservative one in general, in terms of product development and innovation.
“In most cases you won’t see massive leaps forward, because in such cases you need to prove that, which takes long,” Gill believes.
“Having said that, yes there are new things coming up,” he adds, referring to a special technology Viking has launched in the market.
“For example there is this water mist equipment. This is a relatively new technology. It is still water-based; water still really is the best firefighting equipment. Two main benefits there: It helps users cut down on their water usage. You need to store less water, or if you have less, like here in the Middle East, it is a great benefit.”
Tech Navio, a London-based research firm predicts the global FPS market in the oil and gas industry to grow steadily at a Compounded Annual Growth Rate (CAGR) of close to 4% during the 2016-20 period. One of the primary drivers for the growth of this market is the stringent regulatory framework set up by the government, the report suggests. These regulatory frameworks and standards state that every direct oil and gas operators should allocate a certain share of their overall investments in fire safety. As per these standards, the establishment of a health and safety department in every oil and gas facility is mandatory to analyse and prevent fires during onshore and offshore activities, according to Tech Navio.
“The prediction is fairly consistent. The fire protection industry always grows quite steadily,” Gill said, commenting on the report’s findings.
“We still see a lot of potential to grow in the region. We have strong sales in the GCC countries and ensure we have new products coming out.”
Suresh concluded: “With the current oil price situation, the oil and gas industry in general will slowdown and this will impact the FPS market as well. In the near term, growth could be in the range of 2 to 3% and can pick up towards the end of 2016 as infrastructure investments in Iran open up.”
The crucial role of camera systems
We live in a world where Information and Communication Technology (ICT) is an inseparable component of every aspect of our lives and work. And so is the growing role of IT in the oil and gas industry, particularly when it comes to fire safety. Responding to evolving market needs for visual security technology, the FPS segment catering to the oil and gas industry in the region is rapidly adapting camera systems for improved fire management.
“In the GCC region, all major oil and gas majors are our clients – existing and potential. We supply camera systems to them,” said Aydin Tolan, business head of visual presentation solutions at Sony Professional Solutions MEA.
“However, we are not trying to limit our relationship with them to just that. Obviously, what I can consider as an opportunity for companies like us is creating more awareness of technologies and development and then to implement them. [Implementation] is where I believe the opportunity lies,” Tolan adds.
Global camera manufacturer Canon has just begun exploring the regional oil and gas industry, and sees ample potential for its products, a senior representative said.
“All this while, were looking at SMEs to provide camera solutions. But now we are looking to reach out to the oil and gas industry, where we are looking closely at how we can pitch our products, not just in terms of camera products but overall solutions,” Sam Oommen, product manager, network visual solution and projector imaging products group at Canon Middle East, says.
Speaking of Sony’s camera equipment for the oil and gas industry, Tolan says: “This year, we are concentrating on 4K camera systems. 4K is not just high-resolution; it is better detail, better capture, better analytics. If you are able to manage 4K on an optimum level then that is an advancement that could be increasing the fire security aspect of the oil and gas industry. We started investing in the 4K systems and all its aspects, such as capture and detailing, from around 7-8 years back. We have a long legacy for 4K.”
“We believe that in the oil and gas industry it has a certain place for use,” Tolan continues. “In the oil and gas industry, the area of coverage is wide, which require detailed capture. We have our Xi camera systems that offer such detailed capture and wide and panoramic area of coverage, long zoom range capacity, of up to 15km for detection and identification. Such products do have relevance for installations like oil rigs. The Xi range is part of our full-HD offerings.”
Oommen says Canon has improved the heat resistance of its outdoor camera systems, which can now function in temperatures of up to 55°C.
“[Heat resistance] becomes very critical in outdoor installations. This is something new that we have launched with the VB-R11 series, which can take up to 55°C. For operating in weather conditions like those in Saudi and Qatar, clients are asking for systems that can work in temperatures above 50°C. This is clearly targeting the oil and gas segment,” he says.
Another one of Canon’s products, the VB-R 11VE, offers equally impressive capabilities, according to Oommen.
“In times as these when companies are looking at cost reduction and trying to install cameras at a single point that will offers 360d views, this product works. We also have an IR (infrared) model which also becomes critical in oil and gas installations. It can go up to 0.002 lux, which is useful to monitor such facilities at night when it is dark.”
Commenting on the current downturn in the oil and gas industry, and whether it will impact FPS providers like Sony, Tolan comments: “The oil and gas industry is not immune from any financial cycles. So there will be ups and downs depending upon the demand-supply situation, geopolitical changes, etc. From that perspective, we will always be a part of this significant industry which in the foreseeable future be dominant with regards to energy requirements.
“For Sony, it is important to recognise how to be engaged with the key players of this industry,” he adds. “We shouldn’t be perceived only as a camera manufacturer, but as a solutions provider. We understand that we need to realise the needs of this industry or we will be out of the game or be like any other player.”
On the question whether entering the sector was a good idea at a time when oil prices trade at below $30 a barrel, Oommen says: “I think there is a lot of scope in the oil and gas industry, even in this scenario. I think it is just a matter of time before things get better. I don’t want to sound sceptical, yes we are also looking at other verticals. But the oil and gas sector is one which we are looking at more closely.”
