Offshore oil bidding underway in Brazil
With Brazil’s first exclusive pre-salt bidding round underway this month for a single block containing the Libra field, and massive potential identified within the country’s offshore pre-salt layer, bidding between several consortia is expected to push the state’s take significantly higher than that which would result from a Concession Contract, says research and consulting firm GlobalData.
According to the company’s latest report*, Brazilian authorities consider the exploratory risk in pre-salt areas to be relatively low, and legislation was passed to govern upstream oil and gas activities within an area designated as the ‘pre-salt polygon’ using Production Sharing Contracts (PSCs), instead of the traditional Concession Contract regime.
This form of contract ensures a higher government take from production projects and is being offered in the first bidding round for Libra, which is estimated to hold reserves of between eight and 10 bbl (billion barrels). State take from this and other fields within the area is now expected to be near 75 percent, which would represent a base state profit oil share of around 50 percent.
As well as the government receiving a share of production, higher royalties equal to the value of 15 percent of gross oil and tax production are payable, compared to a maximum of 10 percent under Concession Contracts. Meanwhile, a signature bonus for Libra, set at BRL15 ($6.3 billion), is also payable, but the Special Participation tax is not applicable.
“While the effective production-sharing terms for the Libra block will not be known until the conclusion of the first pre-salt bidding round, the nature and caliber of companies taking part suggests to us that the competition will occur between three or four bidding consortia, despite the conspicuous absence of U.S. oil giants,” says Adrian Lara, GlobalData’s lead analyst covering Upstream Oil & Gas.
“However, beyond the initial pre-salt licensing rounds and into the medium-term, we are expecting further pre-salt licensing to progress at a relatively slow pace, with blocks only being offered once discoveries or prospects have been identified by Petrobras,” Lara says. “By clearly identifying potential before offering acreage, the risk for prospective investors will be lowered and the state will be able to secure a higher stake.”
In addition to the pre-salt bidding round taking place this month, November will also see the start of Brazil’s 12th Concession round, which will offer blocks in frontier and mature onshore basins. While some of these are estimated to hold significant shale gas potential, no major amendments have been made to the fiscal terms governing this round.
Why Transmission & Distribution Utilities Need Digital Twins
As with any new technology, Digital twins can create as many questions as answers. There can be a natural resistance, especially among senior utility executives who are used to the old ways and need a compelling case to invest in new ones.
So is digital twin just a fancy name for modelling? And why do many senior leaders and engineers at power transmission & distribution (T&D) companies have a gnawing feeling they should have one? Ultimately it comes down to one key question: is this a trend worth our time and money?
The short answer is yes, if approached intelligently and accounting for utilities’ specific needs. This is no case of runaway hype or an overwrought name for an underwhelming development – digital twin technology can be genuinely transformational if done right. So here are six reasons why in five years no T&D utility will want to be without a digital twin.
1. Smarter Asset Planning
A digital twin is a real-time digital counterpart of a utility’s real-world grid. A proper digital twin – and not just a static 3D model of some adjacent assets – represents the grid in as much detail as possible, is updated in real-time and can be used to model ‘what if’ scenarios to gauge the effects in real life. It is the repository in which to collect and index all network data, from images, to 3D pointclouds, to past reports and analyses.
With that in mind, an obvious use-case for a digital twin is planning upgrades and expansions. For example, if a developer wants to connect a major solar generation asset, what effect might that have on the grid assets, and will they need upgrading or reinforcement? A seasoned engineer can offer an educated prediction if they are familiar with the local assets, their age and their condition – but with a digital twin they can simply model the scenario on the digital twin and find out.
The decision is more likely to be the right one, the utility is less likely to be blindsided by unforeseen complications, and less time and money need be spent visiting the site and validating information.
As the energy transition accelerates, both transmission and distribution (T&D) utilities will receive more connection requests for anything from solar parks to electric vehicle charging infrastructure, to heat pumps and batteries – and all this on top of normal grid upgrade programs. A well-constructed digital twin may come to be an essential tool to keep up with the pace of change.
2. Improved Inspection and Maintenance
Utilities spend enormous amounts of time and money on asset inspection and maintenance – they have to in order to meet their operational and safety responsibilities. In order to make the task more manageable, most utilities try to prioritise the most critical or fragile parts of the network for inspection, based on past inspection data and engineers’ experience. Many are investigating how to better collect, store and analyze data in order to hone this process, with the ultimate goal of predicting where inspections and maintenance are going to be needed before problems arise.
The digital twin is the platform that contextualises this information. Data is tagged to assets in the model, analytics and AI algorithms are applied and suggested interventions are automatically flagged to the human user, who can understand what and where the problem is thanks to the twin. As new data is collected over time, the process only becomes more effective.
3. More Efficient Vegetation Management
Utilities – especially transmission utilities in areas of high wildfire-risk – are in a constant struggle with nature to keep vegetation in-check that surrounds power lines and other assets. Failure risks outages, damage to assets and even a fire threat. A comprehensive digital twin won’t just incorporate the grid assets – a network of powerlines and pylons isolated on an otherwise blank screen – but the immediate surroundings too. This means local houses, roads, waterways and trees.
If the twin is enriched with vegetation data on factors such as the species, growth rate and health of a tree, then the utility can use it to assess the risk from any given twig or branch neighbouring one of its assets, and prioritise and dispatch vegetation management crews accordingly.
And with expansion planning, inspection and maintenance, the value here is less labor-intensive and more cost-effective decision making and planning – essential in an industry of tight margins and constrained resources. What’s more, the value only rises over time as feedback allows the utility to finesse the program.
4. Automated powerline inspection
Remember though, that to be maximally useful, a digital twin must be kept up to date. A larger utility might blanche at the resources required to not just to map and inspect the network once in order to build the twin, but update that twin at regular intervals.
However, digital twins are also an enabling technology for another technological step-change – automated powerline inspection.
Imagine a fleet of sensor-equipped drones empowered to fly the lines almost constantly, returning (automatically) only to recharge their batteries. Not only would such a set-up be far cheaper to operate than a comparable fleet of human inspectors, it could provide far more detail at far more regular intervals, facilitating all the above benefits of better planning, inspection, maintenance and vegetation management. Human inspectors could be reserved for non-routine interventions that really require their hard-earned expertise.
In this scenario, the digital twin provides he ‘map’ by which the drone can plan a route and navigate itself, in conjunction with its sensors.
5. Improved Emergency Modelling and Faster Response
If the worst happens and emergency strikes, such as a wildfire or natural disaster, digital twins can again prove invaluable. The intricate, detailed understanding of the grid, assets and its surroundings that a digital twin gives is an element of order in a chaotic situation, and can guide the utility and emergency services alike in mounting an informed response.
And once again, the digital twin’s facility for ‘what-if’ scenario testing is especially useful for emergency preparedness. If a hurricane strikes at point X, what will be the effect on assets at point Y? If a downed pylon sparks a fire at point A, what residences are nearby and what does an evacuation plan look like?
6. Easier accommodation of external stakeholders
Finally, a digital twin can make lighter work of engaging with external stakeholders. The world doesn’t stand still, and a once blissfully-isolated powerline may suddenly find itself adjacent to a building site for a new building or road.
As well as planning for connection (see point 1), a digital twin takes the pain out of those processes that require interfacing with external stakeholders, such as maintenance contractors, arborists, trimming crews or local government agencies – the digital twin breaks down the silos between these groups and allows them to work from a single version of the truth – in future it could even be used as part of the bid process for contractors.
These six reasons for why digital twins will be indispensable to power T&D utilities are only the tip of the iceberg; the possibilities are endless given the constant advancement of data collection an analysis technology. No doubt these will invite even more questions – and we relish the challenge of answering them.