Towards sustainable chemical use through chemical leasing
- Ylva Maria Gilbert (Gaia Consulting) | John David Downs (Cabot Specialty Fluids)
- Document ID
- Society of Petroleum Engineers
- Middle East Health, Safety, Security, and Environment Conference and Exhibition, 4-6 October, Manama, Bahrain
- Publication Date
- Document Type
- Conference Paper
- 2010. Society of Petroleum Engineers
- 4.2 Pipelines, Flowlines and Risers, 4.1.2 Separation and Treating, 4.1.3 Dehydration, 2.7.1 Completion Fluids, 1.6 Drilling Operations, 1.6.9 Coring, Fishing, 6.6 Sustainability/Social Responsibility, 6.3.6 Chemical Storage and Use, 3.2.2 Downhole intervention and remediation (including wireline and coiled tubing), 4.5 Offshore Facilities and Subsea Systems, 2 Well Completion, 3 Production and Well Operations, 4.3.4 Scale, 6.1.2 HSSE Reporting, 6.5.3 Waste Management, 4.1.5 Processing Equipment, 4.2.3 Materials and Corrosion
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Reducing the environmental, health and safety impact of chemical operations is a recognised target for upstream Oil & Gas operations. Approaches include use of less hazardous products, optimisation of waste management and minimisation of discharges. This paper discusses a novel business model, Chemical Leasing (ChL) that promotes sustainable use of chemicals through linking the supplier's sales income to chemical performance. In this model chemical consumption becomes a cost instead of a revenue factor for the supplier. This in turn leads to:
• Operational impact: Concentrated efforts on behalf of the supplier to reduce losses to the environment and increase recycling and reuse leads to lower environmental impact and associated costs through reduced emissions, discharges and chemical waste. This also lowers the exposure of employees, communities and consumers.
• Life-cycle impact reduction: raw material, energy etc. invested in the chemical decreases as chemical use decreases
• Innovation: linking revenue to life-cycle performance stimulates the suppliers R&D process towards products and process modifications that reduce overall HSE impact.
For the operator, ChL therefore provides a clear potential for a win-win situation with four key chemical management targets:
better environmental performance, better operational cost efficiency, minimisation of chemical waste created and reduced exposure. For the supplier, there is a potential to increase profits and competitive edge.
ChL has been successfully used in a number of applications, including cooling, heating; cleaning, purification and biocides. The United Nations Industrial Development Organisation (UNIDO) promotes the use of ChL as a tool for sustainable chemical management. In 2010, UNIDO recognised two oilfield players for outstanding ChL performance: Ecopetrol SA, for oil dehydration and water clarification applications and Cabot Specialty Fluids for leasing formate brines as well construction fluids. The ChL model is reviewed through these two applications. Further potential product groups and applications for the oilfield where ChL could be a viable option are discussed.
The traditional approach to oilfield chemical sales is to charge per volume or mass of chemicals sold. This can drive the supplier to de facto promote inefficient use of chemicals, as it leads to increased sales. Adopting alternative business models in which both the vendor and the consumer have incentives to eliminate the inefficient use of oilfield chemicals would therefore seem highly attractive. The concept of Chemical Leasing (ChL) was developed to find such alternative business logic, where efficient use of chemicals is the target for both the supplier and the user.
ChL is a service orientated business model, in which the chemical supplier effectively takes the responsibility for running a particular process. Optimisation of chemical use within this model can increase the supplier's profit margins. Charges are based on benefits the customer achieves. By breaking the link between the supplier's profits and the amount of chemicals sold, losses become a cost item instead of a revenue source. This gives the supplier every motive to minimise the amount of chemicals used. At the same time, a key concept of ChL is environmental performance. The benefit definition is linked to key performance indicators (KPI), which should include environmental as well as health and safety performance indicators.
In the oil & gas upstream industry, chemicals are largely bought from service companies that also often provide technology, knowhow and dedicated personnel to carry out the particular operation. There are many variations on the theme of providing service as well as chemicals and selling overall solutions in use in the industry already, some of which incorporate at least some of the elements of ChL. This tradition of outsourcing at least partially the running of chemicals makes the leap to using full scale ChL contracts relatively easy and wider introduction of this business model an attractive possibility.
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