Power Rangers

For an offshore drilling platform operating at majestic production costs, this moves from being a mere inconvenience to considerably expensive downtime – something even more critical in face of an extensive drop in oil prices and global economic recession.

The importance of engine-generator sets, or gen sets, in remote onshore and offshore drilling and production sites cannot be overstated. Unfortunately, many of the sites in which we delve the Earth’s crust in search of the black gold do not have local utility supply, in which case the only source of power available is from a generator or engine situated on site.

Generators for the oil and gas industry range from the use of small and portable diesel engine powered sets, right to large and permanent engines and turbines that have much higher power outputs. 

More Horses

For the sale of engine-generator solutions, companies like Caterpillar and Cummins lead the way in the industry, while fixed gas and steam turbines are supplied by the likes of General Electric. Then there is the rental side of the business – one company who specialises in such is Aggreko. All four companies may point to one particular trend in the market – the need for more power.

“Caterpillar is the largest manufacturer of diesel and natural gas engine generators in the world. We provide these in different market segments, whether it is in electric power, marine, oil and gas, industrial and locomotive industries,” says Stephen Percy, territory manager Middle East, Caterpillar Global Petroleum.

Percy explains that the general trend in the industry at present is towards greater power output and efficiency for the same weight and size engines.  This requires adaptations and modifications to the engines to acquire the needed output – not always an easy or cheap thing to do.

“The two trends we are seeing are contractors and drill manufacturers demanding increased horse power for deeper drilling and directional drilling. With the 3500C Series of engines we have managed to increase horsepower and at the same time reducing emissions by 90% compared with the 3500A Series. Added to this we have better fuel consumption and usually less maintenance,” explains Percy.

Caterpillar’s main competitor in the generator and engine power segment is Cummins, who specialise in the design and manufacture of diesel and natural gas engines and related technologies. The company has begun to make inroads into the Middle East market, and plans to continue this expansion within the coming years.

“We currently participate in three main segments in the industry: drilling, well serving and gas compression.  In these we provide small diesel or petrol generator sets, deck engines for various pieces of equipment, generators for the workers camps, and mechanical and electric drive engines for drilling,” says Tony Lee, oil and gas and marine territory manager, Middle East, CIS
and Europe.

“The more horsepower you can get out of the same weight package, the more attractive the engine is. For example, if you have to load an engine onto the back of a semi-trailer truck, the one with the most horsepower is the one that wins,” adds Lee.

“We are about to release our latest SCR modules for electric drilling, which are a fully vertically integrated products for the customer. We will also have the T2 range of products which are the latest emissionised products on the market.”

The challenge arises when trying to improve energy output in the same size and weight product. It is here that the engine design and manufacturing teams earn their stripes, by adopting the latest technologies to improve the performances.

In line with this, Caterpillar has just launched the C175 family of generators (front picture) which according to the company offers improved power, efficiency and performance.

“For a typical land drill rig, we will have four 3512C gen sets operating at about 1200-1500 horsepower, while for offshore rigs you will have the 3516Cs which are about 2000-2200 horsepower,” states Percy.

“We now have the brand new C175, a completely new generation of engine. The 3500 series has been around for nearly 25 years with three separate generations. Now we have introduced a completely new model, with one major new feature – the common rail fuel system.”

The common rail fuel systems is essentially a rail providing high pressure fuel injection, which in turn gives a higher power output of 2586 horsepower, as well as improving efficiency and lowering emissions. However, the system requires very clean fuel, something that may not be practical in remote drilling locations.

“For the common rail system we have to make sure that the fuel is very clean, which is a critical factor because of the high pressures. The C175 can go up to 1000 hours before oil change is needed, so for the customer that is an added benefit,” adds Percy.

Greener Energy

As if they didn’t have their work cut it in providing more efficient and powerful engines, the manufacturers also have to contend with the added dilemma of increased pressure to supply lower noxious emissions from their engines. 

Gone are the days when large diesel engines spewed vast amounts of noxious pollutants that would be the equivalent to that created by cross-town traffic. The restrictive legislation placed within the US and Europe, as well as the greener attitude taken by companies such as Saudi Aramco and ADNOC, means that the exhausts of the modern day engine generators must be considerably cleaner.

“We have seen an increasing interest in the highly emissionised engines, which is why we are responding by releasing the latest engines that meet the strictest regulations. However, we still provide the non-emissionised product for those who do not wish to pay the premium or in circumstances where the emissionised product is not practical,” explains Lee.

GE Oil and Gas provides a range of fixed generator solutions to the industry, which come in the form of either gas turbine engines or steam turbine engines. Where heat is a natural by-product in the oil and gas processed or in refineries and petrochemical plants, this can then be uses to generate steam for the steam turbine engine, meaning lessened fuel consumption.

“Power generation in oil and gas is different to utilities, in that a power generation machine gas to be compliant with the API (American Petroleum Institute) standard. This means it has to be equipped with different materials to withstand harsh environments, to provide higher reliability and availability, and usually it is designed differently to meet emission critical fuel requirements,” says Mohammad Ayoub, general manager Middle East, GE Oil and Gas.

“One particular challenge in the sector is the end user pursuing higher efficiency and lower emissions, with a diverse range of fuels that can be burnt, which require technological improvements and continuous investment,” Ayoub continues.

“Buyers in this region are demanding lower prices, on the other hand they understand and are willing to pay for value, and they value technology.”

His thoughts are echoed by Lee, who points out the investments made by Saudi Aramco, who have taken a strong position when it comes to adopting green technologies in many of their production processes.

“Saudi Aramco is promoting itself as a green producer in a high carbon industry, and promoting the use of emissionised engines when there is no legal requirement to do so.  However for these engines we don’t necessarily have better consumption – unfortunately emissions drives up fuel consumption,” he explains.

Challenges ahead

Like most other industries around the world, the impact of the economic downturn is being felt by the engine and generator providers. All three suppliers, Cat, Cummins and GE, predict the market for engines and generators to contract throughout 2009, but at the same time, the Middle East still offers some of the best business opportunities in the world.

“Due to the oil price drop and the economic slump, demand has steadied in recent months. In Asia we have seen a large increase in demand however as it has adopted Cat gen sets for many of the drill rigs manufactured there. We believe there is still a worldwide preference for Caterpillar generator and drilling engine sets,” says Percy.

“It has effected business as we have seen projects being delayed, and there will be fewer engines shipped and fewer orders coming in. However we believe this will only be for the short-term, perhaps one to two years before it recovers. There will be a move to oil and gas reservoirs in more remote and deeper locations, which will demand the latest and most advanced engines available.”

Lee, on the other hand, sees 2009 as a good opportunity for Cummins to spread the brand across the Middle East and achieve market growth.

“We are committed to the oil and gas business and development of our new products. We still see 2009 as being a good period of growth from an oil and gas perspective, primarily as we are starting to engage in the market place in the Middle East,” he says.
 
The future of course is unpredictable, and the full impact moving into 2009 in still unknown. For many of the large projects either in the pipeline or in early development, which will require generator sets, the road ahead is increasingly uncertain.

“We are cautiously optimistic, and we are watching the major projects very closely. We believe 2009 will be a good year, maybe not an outstanding one, and it will be all about understanding the new cycle, having the technology required for the future, and sticking to the fundamentals- this will give you the long term sustainable business,” concludes Ayoub.

It certainly will be an interesting year in the engine and generator sector, and one that should see the introduction of some of the latest and most efficient products and technologies in the industry.