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Janbul05 PDF
JURUTERA
THE MONTHLY BULLETIN OF THE INSTITUTION OF ENGINEERS, MALAYSIA
KDN PP 1050/02/2005 ISSN 0126-9909 BIL.2005 N0.01 JANUARY 2005
UNIVERSITY-INDUSTRY
INTERACTION : A Forgone Conclusion?
By : Ir. Prof. Abang Abdullah bin Abang Ali, IEM President
Introduction retains ownership and management sources all funds for all petroleum
The Oil & Gas (O&G) industry has control in exploration, development operations. The Contractor receives
seen no small amount of attention and production of oil resources. an entitlement through production.
during recent months. One item Expenditure and profits are Each PSC may have different
attracting attention is crude prices managed under instruments called terms and conditions. For example,
rising above USD50 per barrel Production Sharing Contracts different time periods are allowed
(0.159m3) and the simultaneous rise (PSCs). The Production Sharing for exploration of acreage, deve-
of petrol prices due to reduction in Contractor assumes all risks and loping and installing infrastructure
government subsidies. News of
discoveries of new potentially
producing fields has increased
interest in O&G related stocks,
whether in suppliers to the industry
or oil refineries. To encourage and
maintain this level of interest, IEM
held a symposium in July 2004,
attempting to put forward a forum
where people outside the O&G
industry could be exposed to issues
within the industry. As a follow-up,
this article attempts to present a
basic picture of the oil and gas
industry in Malaysia.
History of Production
Sharing Contracts Figure 1 : Production Sharing Contractor Entitlement
Petroleum exploration in Malaysia
started at the beginning of the 20th
century in Sarawak, where oil was
first discovered in 1909 and
first produced in 1910. Prior to
1975, petroleum concessions were
granted by state governments,
where oil companies have exclusive
rights to explore and produce
resources. The companies then
paid royalties and taxes to the
government. This state of affairs
ceased on April 1, 1975 as a result of
the Petroleum Development Act,
whereby PETRONAS became the
custodian of petroleum resources
with rights to explore and produce Figure 2 : Historical Crude Oil Production (bbls : barrels per day. SB : Sabah contribution.
resources. The national oil company SK : Sarawak Contribution, PM : Peninsular contribution.)
300m.) To produce the hydrocarbon more than 50% of Malaysian assets companies present in Malaysia
resources found in these areas, have been producing for longer are JP Kenny, ERM, Trident, DNV
technology new to Malaysia are than 15 years. There are definite and IGL.
required. This technology would opportunities to debottleneck Engineers play an important
cover aspects such as the ability to facilities, looking at design and role in the construction of O&G
drill wells in deep waters, and the current operating conditions, and facilities. OSFAM (Offshore
ability to analyse and install sea maximising the use of existing Structure Fabricators Association
bottom facilities to deliver the equipment. New technologies may of Malaysia) is an organisation
hydrocarbon to the topside facilities be retrofitted into existing dedicated to the advancement of
at sea level. On the operational side, equipment, increasing capacity at an Malaysian fabrication facilities.
Malaysia would need to develop a acceptable cost. Its members, compromising of
support base that can handle the Brooke Dockyard and Engineering
challenges of maintaining deep Engineering Contributions Works Corporation, Penang
water facilities at a competitive In all of the above, engineers play an
Shipbuilding and Construction Sdn.
cost within reasonable turnaround important role in the development
Bhd., H. L. Engineering, Ramunia
times. An example of a recent of O&G resources. They are
Fabricators, Malaysia Shipyard and
development is Kikeh, which has a involved in a whole slew of areas,
Engineering, and Sime Sembcorp
water depth of 1,300m (4,000 ft), from conceptual or front end
Engineering Sdn. Bhd., aspire
whereas reservoirs developed to engineering design (FEED), to
to make OSFAM a fabrication
date have been in waters typically detailed engineering, procurement
60m (200 ft) deep. services, construction management hub, and establish themselves as
One example of change in the services, and special studies. The Engineering, Procurement and
Malaysian production strategy is main bodies of engineers involved Construction (EPC) contractors.
looking towards producing gas in O&G upstream work reside OSFAM members plan a step
fields that have contaminant gases in five engineering companies change in their fabrication yard
that would affect the metallurgy of licensed by Petronas as Umbrella capacity, but this is dependent on a
the production facilities. Among Design Contractors (UDCs): number of factors. More jobs are
these gases are carbon dioxide (CO2) Technip, Ranhill Worley, MMC, required to support and justify
and hydrogen sulfide (H2S). As Kvaener Petrominco and Sime the investment and the need to
these gases are unsaleable, and may Engineering. When required, increase the members’ ability and
cause corrosion in piping, specialist companies are enlisted expertise to undertake Engineering,
fields with a high percentage of to participate in special studies, Procurement, Construction and
these gases were originally not for example subsea facilities, Commission (EPCC) and technically
deemed commercially attractive, as blast analysis, dynamic simulation advanced projects. To achieve and
infrastructure has to be put in place and flow assurance. Among such maintain these aims, there is a need
to remove the gases from the
hydrocarbons before being sent to
onshore terminals. Currently, with a
larger demand for gas and new
technologies, these fields have
become financially attractive.
Examples of fields with high CO2
content are Bunga Raya (Peninsular
Malaysia), and Chakerawala
(Joint Development Area between
Thailand and Malaysia.)
There is also an opportunity to
increase production by rejuvenation
(see Figure 4) of existing production
facilities. This concept can be
applied both to topside and Figure 4: Increased production through rejuvenation
subsurface facilities. As an example,
sss
MINING AND QUARRYING IN
MALAYSIA : The Industry and Education
By : Ir. Dr Mior Termizi bin Mohd. Yusof, School of Materials and Mineral Resources Engineering,
Universiti Sains Malaysia
better pay. n
Mineral Resources Engineering an air-conditioned factory with a
Penjom Gold Mine, Pahang Programme at USM is on par with
any mining engineering degree in
a gold mine in Pahang are assigned other universities. However there is
as metallurgists or mineral still room for improvement. Thus
processing engineers. the USM graduates when they Reference:
So in effect, the then USM have attained their professional Chen Shick Pei (2000). Malaysia’s
graduates can attain their status in mineral resources
professional status in the discipline Mineral Resources: Opportunities
engineering, can practice in the
of mineral processing engineering. For Development. In Proceedings
same way as the “old” mining
The prospect of jobs as a of National Seminar on the
professional mineral processing engineering graduates.
Graduates working with mining Malaysian Minerals Industry held
engineer in the industry is not that
wide as compared to a professional or petroleum companies are well off at Kota Kinabalu in June 22–24,
mining engineer. That is one of and employee turnover is low. 2000. Kuala Lumpur: Malaysian
the reasons, until now, none of However for those working with Chamber of Mines.
them has attained professional the quarries, the salary offered is
engineer status. usually lower than the salaries of
SYNOPSIS
When hard rock is encountered in
civil engineering work, it must be
removed mechanically through the
use of machines or it must be
blasted using explosives. However,
fear of damage claims, accidents
and limited knowledge of blasting
work and also difficulty in getting
a license to blast has caused more
and more contractors to opt
for mechanical rock excavation
methods. In most cases mechanical
excavation is much slower and
Blasting of outcrops and boulders
more costly than using controlled
blasting methods.
This article discusses the project owners and their design breakers to break the granite
concerns and issues that affect this consultants. The general public’s outcrop and boulders, and also
method of excavation and offers a perception on blasting is negative, chemicals to fragment these
practical approach for developing having been forced by events in rocks. The residents will then be
controlled blasting programs. Iraq, Palestine and also by subjected to months of continuous
Current public perceptions about bombings in Kenya, Oklahoma and hammering of rocks by breakers
blasting and risk analysis issues are the recent suicide bombing in Egypt instead of weeks if blasting weeks
also explored. where more than 30 Israelis were carried out properly. The cost
holidaying in Sinai were killed. This of breaking rock will therefore
INTRODUCTION creates great fear among the public increase enormously and the nearby
To blast or not to blast. This is a about using explosives near their residents will have to suffer noise,
common question that engineers homes and has great impact on the dust and other disturbances for
and contractors ask themselves
choice of excavation method. months. At the end of the day the
when faced with a hard rock
A recent newspaper report house buyers have to pay a
excavation in urban areas.
indicated that a municipal council in premium price for the houses they
Increasingly, they opt for the
Selangor has rejected an application buy there.
mechanical excavation method or
to do blasting work at a construction While litigation for alleged
sometimes chemical means that
site because of fear by the blasting damage is common in the
are more costly than drilling
neighbours that the blasting work United States, it is not yet a culture
and blasting in nearly every case.
in Malaysia. While contractors have
Why is this? may endanger them. The public is
been threatened with lawsuits in
Often there is pressure from fearful that the blasting work may
Malaysia by many quarters, many
government agencies to avoid damage their homes and result in have not materialised because of the
blasting, wherever possible, in flyrocks, ground vibration and also lack of knowledge on the effect of
urban construction work. Blasting noise. This may force the contractor blasting on various structures and
creates public relation problems for to use mechanical means such as the failure of the litigant to prove
that he is in fact the victim, blasters. Currently there is no However, there is definitely a
especially if the blasting contractor institution in Malaysia that offers need for proper training for blasters
is backed by competent consultants. training for blasting in urban and and engineers in blasting work in
Many house owners are sincere other sensitive areas and there is no urban areas as such requirements
in their belief that blasting causes requirement that a blaster who want will improve technical expertise
new damage to their properties, to do blasting work must attend and this will lead to fewer
despite blasting having vibration such a course. The Institute of accidents. This will also increase
magnitudes well below the limit Quarrying, Malaysia and the Police the confidence of the public in
imposed by the authorities, conduct a Shotfiring Course that is professional engineers and result in
normally below 10 mm/s. This limit more tailored for quarrying work. less anxiety.
is actually well below the threshold However, due to security reasons
limit of possible cosmetic damage as only those on a need to know basis Blasting Approach
recommended by USBM at 50 are allowed to attend such a course. Before a project owner considers a
mm/sec. Regardless of the validity Blasters are only required to proposal for blasting, he must
of the claims, these claims can be possess a Shotfirer’s Certificate consider several factors. Blasting
costly to the contractor who needs issued by the Police or the work in urban or sensitive areas is
to hire consultants to investigate Department of Mineral and definitely much more costly than
such claims and lawyers to defend Geoscience. However the certificate blasting work at quarries and mines.
them, and who also need to address is more suited to those who want to He has to consider that the risk of
the threat of a stop work order – the work in quarries where the blasting accident is higher and he has to take
"stop first and investigate later techniques are different and the better precautionary control to
mentality" from the authorities risks involved are of a different ensure that the neighbours next
when there are complaints. Since the magnitude. The blasters and the door are safe. The volume per blast
cost can be high, the blasting engineers can only learn through is very low, measured in hundreds
contractors must plan their work trial and error, and through reading of cubic metres compared to several
carefully. The blasting work must be of journals if they are members of a ten thousands of cubic metres per
carefully chosen and monitored and society such as the International blast at a quarry.
controlled to prevent damage Society of Explosive Engineers. It is Quite often civil consultants
complaints and possible litigations. very difficult for blasting engineers simply copies specifications for
to gain proper experience in blasting at quarries or other blasting
Blasting Perception Versus blasting at close quarters since there sites that are inappropriate for the
Reality is no requirement for a blasting location. Many simply choose
People are primarily concerned contractor to hire them. initiation methods that are not
about blasting in urban areas Generally, the blasting contractor correct, for example, safety fuse and
because they believe that it is do not want to hire professional detonating cord for blasting near a
dangerous or it may cause property engineers to oversee blasting work residential area or an electrical
damage. When a blasting accident on the pretext that the blasters do system near areas where there are
occurs, it is well publicised in not need their services, because in underground power lines for the
newspapers and as such local many instances the engineers rely sake of reducing cost.
people have a negative attitude on the blaster to make decisions. In Some choose explosives that are
towards rock blasting. Many of fact, many blasting contractors non-existent in the country showing
these accidents have been caused by argue that the hiring of such clearly that the specifications are
human error or by lack of expert engineers only increase their cost. simply copied from foreign books
knowledge from the contractor such There is therefore a clear need for that are outdated.
as poor decision making, incorrect training for blasting engineers to At present there are no blasting
blast design, unsuitable loading and improve their competence and standards for vibration and airblast
improperly controlled measures. It prove their worth. The other is control in our country. Different
can also be due to lack of consistent the lack of interest in engineers to consultants tend to copy standards
regulations from the authorities. learn and do blasting work because from different countries such as
Human error can be reduced the work is hard and also most Australia, United Kingdom and the
dramatically by improved training of the time it involves working in USA. Some consultants tend to
and experience requirements for all the hot sun. choose the lowest possible limit to
So, you could soon expect to be as a matter of routine at various least until the country – well the
invited (together with fellow local, regional and international taxpayers (a.k.a. you and I) – can
stakeholders) to jointly man various scenes. Wow! very well afford it. In any case,
IWRM committees, work groups, Closer home, you should learn should you ‘prove your real worth’
think tanks, boards, councils, and the art of working – as coveted convincingly enough – when you
whatever-have-you, where you partners – with regulators and get to become the most critical part
could sit pretty, walk tall, and make authorities to enforce their rules and of the whole process – you could
smart contribution as you should in regulations, and in the monitoring actually ‘compensate yourselves
the name of ‘Public Empowerment’. of their enforcement. The best part appropriately’ in ways that you
In anticipation of that, you yet is that you get to participate in deem fair; no enlightened taxpayers
should now brush up on your paper the drafting of the desired should ever complain, should they?
writing and presentation skills; you regulations, not to mention in the After all, you do represent them too,
could soon be recognised as governance of the entities too. Now, remember? And this empowerment
important discussants of IWRM- whoever said that democracy is thing is supposed to eliminate the
related topics, or as able managers only about going to the ballot communication gap between the
of public discussions such as box every five years (to kick participating public – who are
facilitators, moderators and out the deadwood or corrupt now the driver of actions – and
organisers. Your hitherto dull representatives, and/or to elect their partnering regulators and
intellectual life could soon light up; fresh new faces in their places)! authorities – whose staff are well-
you could help electrify IWRM Don’t expect to be amply oiled competent executives!
workshops, seminars, forums, rewarded for the participation Sounds too good to be true? Well,
and conferences etc., which are held though (that’s the essential spirit); at just try it. n