Pei201412 DL

The magazine for the international power industry
RENEWABLES
December 2014
THE NEXT STAGE OF EVOLUTION
THE CHANGING ROLE

OF FAST-TRACK POWER
LATEST INNOVATION
IN TIDAL TECHNOLOGY
LUBRICATION ISSUES
FOR BIOGAS ENGINES
WHAT HINKLEY POINT

MEANS FOR NUCLEAR
www.PowerEngineeringInt.com
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POWER ENGINEERING INTERNATIONAL

DECEMBER 2014/// VOLUME 22/// ISSUE 11
Contents
Industry Highlights
40
Diary
40
Ad Index
Features
4
How fast-track power is changing

across the world. P28
Source: APR Energy
20
A holistic approach to rethinking energy

With renewables now part of the mainstream, new
approaches are needed to electricity systems planning,
market design, policy frameworks and funding to take
the energy transformation to the next level.
Lubrication challenges for the biogas industry

The role of lubricants in optimizing gas engines is vital as the
biogas industry grows in importance.
24
The point about Hinkley

As the EC approves plans for Hinkley Point C, PEi looks at what
the decision means for the UK and the global nuclear market.
Seeing the sea differently

A new take on wave energy called Dynamic Tidal Power is
currently being assessed for a facility off the east coast of
China that would produce power equivalent to six large
coal or gas plants.
14
28
Life in the fast lane

Many of the traditional notions of fast-track power are being
turned on their heads by the demands of power-hungry
nations and developed countries needing greater fexibility.
The power supply of the future?

PEi reviews the progress of the worlds frst grid-integrated
superconducting power cable, which has been connected
to Germanys grid for six months.
36
Still a risky proposition

As the frst steps are taken toward large-scale energy storage,
complex technology and market considerations emerge.
On the cover
Renewables redraw the energy map - P4
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Power Engineering International December 2014
Industry Highlights
he radical change in the European
Energy Agency, writes on p4 that while the
energy market and its effect on the
switch to renewables is well underway, what
sectors major players was highlighted
remains unclear is how long this transition will
this month by the news from German power
take, and how well policymakers will handle
giant E.ON that it is to spin off its fossil fuel
the change.
and nuclear businesses and concentrate on

renewables.
He says that after years of renewables

relying
on
subsidies, private
fnance
is
Chief executive Johannes Teyssen said:
increasingly ready to step in. Institutional
We are convinced that its necessary to
investors are also starting to get interested.
respond
global
They are increasingly taking into account
energy markets, technical innovation, and
the risk attached to fossil fuels, and new long-
more diverse customer expectations with a
term, low-risk instruments are being created to
bold new beginning. He added that E.ONs
encourage them to invest in renewables.
to
dramatically
altered
existing broad business model can no longer
He says these and other trends require a
properly address these new challenges.
different way of thinking about energy, shifting
Therefore, we want to set up our business
from a system dominated by a few centralized
signifcantly different. E.ON will tap the growth
utilities to a diverse, distributed system, where
potential created by the transformation of the
consumers are also producers, with far more
energy world.
control over how and when they use energy.
A key driver of this transformation in Europe
However, Maria van der Hoeven, executive
is the German governments Energiewende, a
director of the International Energy Agency, this
decision to ditch nuclear and focus on a drive
month sounded a warning regarding Europes
for more renewables. This has pushed down
bid to become the global powerhouse of the
wholesale prices, which has damaged profts
renewables sector.
at E.ON and several other German energy

companies.
She said this ambition seems to be a bit
However, Teyssen said that the main factor
more rapidly in emerging and developing

economies.
technology. In the end technology breaks
She said the EU is on a learning curve
the value chain in two pieces, and not
in relation to renewables deployment and, in
fundamentally politics or regulation. The main
some Member States, capacity growth has
driver is technology and customers.
been faster than grid development, which is
He also said the emergence in the market
nowhere on track.
of non-traditional players such as Google,
The IEA, in its annual World Energy Outlook
which has been buying up manufacturers
published last month, also addresses nuclear
of power equipment and has invested over
power and stresses that the technology is one
$1.4bn in wind and solar, is a warning sign to
of the few options available at scale to reduce
established companies in the sector.
carbon dioxide emissions while providing
Just the fact that companies like Google

are looking and investing shows that you
or
competition.
displacing
other
forms
of
baseload
generation.
had better prepare yourself for a new kind of
Nuclear in Europe needs a fagship, ontime-and-on-budget project to restore faith in
Teyssen said that he expected other
the sector, which has taken a hit both from the
energy companies to follow E.ONs example,
Energiewende and from newbuild sites that
and I am sure he will be proved right. The shift
have been dogged by delays. That project
to renewables is not a trend its a business
looks likely to be Hinkley Point C, which EDF
strategy that is sweeping the world and
wants to build in the UK. On p24 I examine the
has gained more traction in Europe than
background to the European Commissions
anywhere else.
recent approval for the plant and also assess
In this issue of PEi, Adnan Z Amin, director-
of
Kelvin Ross, Editor, www.PowerEngineeringInt.com
unrealistic, since renewables are deployed
for the companys decision is not politics but
general
E.ON said that it is

necessary to respond
to dramatically altered
energy markets and
technical innovation
with a bold new
beginning.
the
International
Renewable
what it will mean for the nuclear industry in the

UK, Europe and worldwide.
Follow PEi Magazine on Twitter:

@PEimagzine
Follow me: @kelvinross68
Sanmen Nuclear Power Company Ltd. Used with Permission. All rights reserved.
BUILDING A
NEW GENERATION
OF NUCLEAR ENERGY
Westinghouse AP1000 plant under construction in Sanmen, China
Westinghouse Electric Company LLC
www.westinghousenuclear.com
Westinghouse
Electric Company
@WECNuclear
Opinion: IRENA
Credit: Dreamstime
A holistic approach
to rethinking energy
With renewables now part of the mainstream, new approaches are needed to
electricity systems planning and market design, policy frameworks and funding,
and training and education to take the energy transformation to the next level,
writes Adnan Z Amin
n alignment of economics,
population grew from four billion to seven
mitigation will remain elusive. REmap 2030
demographics,
climate
billion people. An increasing proportion is
shows that under current policies and national
technology
middle class and living in cities. During the
plans, average CO2 emissions will only fall to
same period, electricity generation grew by
498 g/kWh by 2030. That is insuffcient to keep
more than 250 per cent.
atmospheric CO2 levels below 450 parts per
change
has
and
set
in
motion
an
ongoing transformation of
the global energy system.
This growth will continue. In 2030 there
million (ppm), beyond which severe climate
Growing populations, with improved living
will be more than eight billion people, with
change is expected to occur. A doubling in
standards and increasingly concentrated in
fve billion in urban conglomerations. Global
the share of renewables could help mitigate
urban centres, have dramatically raised the
spending by the middle classes is expected to
climate change by reducing the global
demand for energy services.
more than double, from $21 trillion in 2010 to
average emissions of CO2 to 349 g/kWh
roadmap
$56 trillion in 2030. World electricity generation
equivalent to a 40 per cent intensity reduction
developed by the International Renewable
is forecast to grow by 70 per cent, from
compared to 1990 levels.
Energy Agency (IRENA), shows that not only
22,126 TWh in 2011 to 37,000 TWh in 2030.
REmap
2030,
global
Countries are increasingly looking to
can renewable energy meet the worlds rising
But this energy is coming at a cost.
reduce their dependence on imported fossil
demand, but it can do so more cheaply, while
There is growing consensus on the threat of
fuels. By reducing energy imports, countries
contributing to limiting global warming to
climate change brought on by increasing
are striving for greater energy independence;
under 2oC the widely cited tipping point for
atmospheric concentrations of greenhouse
avoiding potential supply disruptions (for
climate change.
gases, prompting worldwide efforts to reduce
example, in case of conficts or disasters), high
A technology once considered as niche is
emissions. If business continues as usual, these
energy prices and price fuctuations.
becoming mainstream. What remains unclear
efforts will not succeed.The average emissions
There is growing pressure, meanwhile,
is how long this transition will take, and how
intensity of electricity production has barely
to bring electricity to the 1.3 billion people
well policymakers will handle the change.
changed over the past 20 years. Gains from
currently without electricity access, many in
As this transformation gets underway, it will
the increasing deployment of renewables,
remote areas, for whom traditional large-scale
affect every aspect of society. At the heart of
and less intensive fossil fuels such as natural
power plants and transmission systems have
the energy transformation lies demand, the
gas, have been offset by less effcient power
not yet provided an answer.
aim to strengthen energy security and the
plants and the rising use of coal.
imperative of a sustainable future.

Over the past 40 years the worlds
Without a substantial increase in the share

of renewables in the mix, climate change
Also, 2.6 billion people rely on traditional

biomass and cook using traditional stoves
that cause severe health impacts.
Opinion: IRENA
These trends have prompted a widespread

conviction that something has to change.
Fossil
fuels
powered
the
frst
industrial
revolution, but even in the new era of shale

oil and gas, questions remain about their
compatibility with sustainable human wellbeing. The stage is set for the era of modern
renewable energy that is cost competitive,
mainstream and sustainable.
Robust and effcient

Large-scale hydro, geothermal and biomass
power have been competitive for some time,
but for many years wind and solar power
struggled to compete with coal, oil and
natural gas. Over the past decade, however,
and in particular over the last fve years, that
picture has changed dramatically.
CO2 emissions intensity per kWh 2030 outlook

Credit: International Energy Agency (2010) and IRENA (2014)
Renewable energy technologies have

grown more robust and more effcient and
are increasingly able to generate power
even in suboptimal conditions such as low
wind speeds and low solar irradiation. Energy
storage technologies are improving fast.
Buoyed by state support in Europe and
the US, and boosted by the rise of new
manufacturing powerhouses such as China,
costs have plummeted. These trends are
illustrated in the graphic below which charts
the levelized cost of electricity for different
forms of utility and off-grid power.
Solar photovoltaic (PV) prices have fallen
by 80 per cent since 2008 and are expected
to keep dropping. In 2013, commercial solar
power reached grid parity in Italy, Germany
and Spain and will do so soon in Mexico and
France. Increasingly, solar PV can compete
without subsidies: power from a new 70 MW
solar farm under construction in Chile, for
example, is anticipated to sell on the national
LCOE for utility and off-grid power OECD countries

Credit: IRENA Costing Alliance (n.d.) and PwC database
spot market, competing directly with fossil fuelbased electricity.

The cost of onshore wind electricity has
higher in non-OECD countries. For example,
Financing renewables
fallen 18 per cent since 2009, with turbine costs
Chinas deployment of solar PV and wind in
Renewable energy is competitive on a cost per
falling nearly 30 per cent since 2008, making
2013 was estimated at 27.4 GW, nearly four
kWh basis. As most renewable technologies
it the cheapest source of new electricity in
times more than the next largest, Japan.
have a relatively high ratio of up-front to
a wide and growing range of markets. More

than 100 countries now use wind power.
Worldwide, renewable power capacity

has grown 85 per cent over the past 10 years,
operating costs, their viability is particularly

sensitive to the cost of capital.
Offshore wind is also expected to grow
reaching 1700 GW in 2013, and renewables
That is why government fnancial support
rapidly as costs fall, with the UK leading the
today constitute 30 per cent of all installed
has traditionally been critical for promoting
market with 4.2 GW of installed capacity as of
power capacity.
renewables. However, as the technology has
mid-2014.
The challenge has moved on from whether
grown more competitive and pressure on
These and other developments have
renewable energy can power modern lifestyles
budgets has increased, governments have
made renewables increasingly attractive in
at a reasonable cost which we now know it
been reducing their support.
many more markets. In 2013, for the frst time,
can to how best to fnance and accelerate
new renewable capacity installations were
its deployment.
The good news is that private fnance is

increasingly ready to step in. Due to growing
Opinion: IRENA
in China. As the share of renewable energy

grows, the structure of the industry and the
nature and role of power producers are
undergoing change.
A sector once dominated by large utilities
is becoming more decentralized, diverse
and distributed. In Germany, almost half of
all renewable energy is now in the hands of
households and farmers, and only 12 per cent
of renewable assets are owned directly by
utilities.
New storage technologies, and smart
technologies to support better demandside management, will grow in importance
creating a whole new ancillary industry of
smart appliances. In many emerging markets,
Investment progression through technology and market development stages
Credit: IRENA
renewables are already the most economic

power source for off-grid and mini-grid systems.
experience, developers are getting better
competitiveness,
can
These and other trends require a different
at forecasting cash fow and fnanciers are
gradually and predictably be scaled back,
way of thinking about energy, shifting from
more able to accurately assess risk. The cost
focusing
improvements,
a system dominated by a few centralized
of capital is falling and products are being
education and industry standards, which
utilities to a diverse, distributed system, where
tailored for a wider range of investors, from
strengthen the market as a whole.
consumers are also producers, with far more
small-scale communities to large institutions.
instead
fnancial
on
grid
support
There is also an opportunity for traditional
control over how and when they use energy.
Institutional investors are also starting to
utilities to do more. Joint projects between
Policymakers can do much to either
get interested. They are increasingly taking
large utilities, small developers and clients
promote or hinder this vision. Renewable
into account the risk attached to fossil fuels
could be a way forward, as business models
energy investors need stable and predictable
and new long-term, low-risk instruments are
adapt to the changing market conditions.
policy
being created to encourage them to invest
frameworks
which
recognize
the
system-level benefts renewable energy can
in renewables. Early-mover private developers
Renewables wider benefts
bring.They need a level playing feld, including
in this space attracted $11 billion in 2013, up
There is growing evidence that renewable
cutting back on the substantial subsidies
200 per cent in 12 months.
energy has a positive ripple effect throughout
currently enjoyed by fossil fuels worldwide.
Large non-energy corporates are also
society, simultaneously advancing economic,
And they need a supportive grid infrastructure,
becoming involved. Ikeas turbines and solar
social and environmental goals. Its costs
including more regional interconnections to
panels now produce 37 per cent of its energy
and benefts are best understood not within
take advantage of synergies between different
consumption, and Google has invested over
traditional policy silos, but as part of a holistic
forms of renewable power.
$1.4 billion in wind and solar.
strategy to promote economic prosperity, well-
But these trends are not yet enough. Total
being and a healthy environment.
Rethinking energy means policymakers

need to consider the benefts of renewable
investment in renewable energy rose from
Renewables are good for a countrys
energy as a whole, linking areas previously
$55 billion in 2004 to $214 billion in 2013
economy. A recent Japanese study, looking at
considered unrelated such as healthcare,
(excluding large hydropower).This falls short of
a 2030 target of 1416 per cent renewables,
rural development and governance. Herein
the $550 billion needed annually until 2030 to
found the benefts were two to three times
lies the biggest change: adopting a truly
double the global share of renewable energy
higher than the costs including savings in
holistic approach, which not only takes into
and avert catastrophic climate change.
fossil fuel imports, CO2 emissions reductions
account the interests of short-term growth,
and economic ripple effects.
but provides the opportunity of sustainable
Policymakers have an important role to

play. If they make it clear that renewable
Spains
use
of
renewables
avoided
prosperity for all.
energy will be a larger part of their national
$2.8
billion of fossil fuel imports in 2010,
The changes at hand offer the potential
energy mix, and commit to long-term, non-
while Germany saved $13.5 billion in 2012.
for a new industrial revolution. The technology
fnancial support mechanisms, they could
For fossil fuel-exporting countries, deploying
is ready to deploy. People, businesses and
reduce uncertainty and attract more investors.
renewables at home makes more resources
governments must now embrace its potential.
In emerging markets, public fnancing will
available for sale overseas.
remain important as domestic structures
The benefts are felt through the value
to support the deployment of renewables
chain
are developed. In this context, international
domestic economic activities and creates
cooperation and fnancial fows play an
employment. In 2013, it supported 6.5 million
increasingly prominent role. With increasing
direct and indirect jobs including 2.6 million
as
renewable
energy
stimulates
Adnan Z Amin is Director-General of the

International Renewable Energy Agency
Visit www.PowerEngineeringInt.com
for more information
Dynamic Tidal Power harnesses the energy in oscillating ocean waves

Credit: Dreamstime
Wave & tidal power
Seeing the sea

differently
A new take on wave energy called Dynamic Tidal Power is currently being
assessed for a facility off the east coast of China that would produce the
equivalent power of six large coal or gas plants. Co-inventor Rob Steijn
explains the technology and its potential
ore
than
renewable source of energy. Developing tidal
the sun or wind as an
predictable
power grows out of Arcadis extensive global
energy source, the tides
experience in hydraulic engineering, water
hold
systems and food protection in the US, the
great
promise
for renewable energy.
Rob Steijn
Netherlands and around the world.
As long as the earth
The consortium has received $2.5 million
turns and the sun and moon exert their pull
in funding from the Dutch government and
on the oceans, the regular, reliable force of
$2.5 million from the Chinese government for
tidal currents offers huge potential for power
tidal power feasibility studies so far. The group
generation.
is currently assessing the viability of building a
Arcadis, a global infrastructure design
tidal power facility off Chinas east coast that
and consulting frm, is part of a consortium
would produce the equivalent of six large coal
working to develop an innovative tidal
or gas power stations and provide energy for
power technology as a dependable and
more than 10 million homes.
WELCOME TO
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SIPOS SEVEN:
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The future requires visionary solutions.
With the SIPOS SEVEN this becomes a reality.
Designers, valve manufacturers and plant

including an easy to read, color graphic user
interface and intuitive operation via
a single control button.
Stay Ahead
With the new SIPOS SEVEN
PROFITRON
STAY AHEAD. STAY SIPOS

info@sipos.de, www.siposseven.com
Wave & tidal power
DTP depends on tidal forces that fow parallel to the coast across a dam of over 28 km
Credit: Arcadis
Called Dynamic Tidal Power, or DTP, this
schematics in which some colleagues and I
Dynamic Tidal Power, on the other hand,
new method of power generation harnesses
asked what would happen if a long dam like
depends on the forces of tides that fow
the energy in oscillating tidal waves that
the Netherlands Delta Protection Project could
parallel to the coast across a very long (over
run parallel along the coasts of continental
capture the energy of passing tides. Soon, a
28 km) dam built out perpendicularly to the
shelves
hydraulic
small group of Dutch hydraulic engineering
coast, ending in the sea without closing off a
currents, such as are found in China, Korea
experts started getting more serious about
tidal basin.The dam blocks the tides horizontal
and the UK. The concept calls for a very long
exploring new ways to use tidal power.
acceleration, creating a force or head. This
and
contain
powerful
dam to be built perpendicular to the coast
This idea differs from other means of
in a way that captures the hydraulic force of
generating
these currents in turbines built into the dam.
some signifcant ways. Existing tidal power
Origins of a new idea

The
DTP
idea
conversations
emerged
and
from
casual
back-of-the-envelope
power
from
tidal
forces
in
head can be converted into power using a

long series of conventional bi-directional lowhead turbines installed in the dam.
programmes depend either on the forces of
The dam may also have a perpendicular
more extreme tides in a natural or artifcial
barrier at the far end, forming a large T or
tidal basin, or free turbines mounted in a
Y shape. The dam changes the long-wave
natural tidal stream.
dynamics of the tide in such a way that the
Break the connection

safely
www.rs-seliger.de
10
Wave & tidal power
head difference created across the dam is much more than the kinetic
energy height of the natural tidal stream. Although the head is relatively
small (13 metres), the discharge (m3/s) is enormous, leading to high
installed power rates.
PRESS THE
RIGHT BUTTON
My colleague and fellow Dutch coastal engineer Kees Hulsbergen and

I invented and patented the concept in 1997. According to the teams
research models and feasibility studies, a typical single dam will deliver on
the order of 5 GW of installed capacity.
As an example, verifed by pump manufacturer Nijhuis Pompen and
by Chinese experts using numerical fow model analysis and scale model
tests, a turbine area of 50 m2 and a typical tidal water level difference of
2.5 metres will create a substantial fow of 210 m3/s through each turbine.
The total potential DTP power in

China is estimated at 80150 GW
In this example, each turbine produces 3.6 MW of power. Since the dams
in these studies can typically accommodate 1500 turbine units, the result
is total installed power per dam of more than 5 GW. With a capacity factor
(or load factor) of 30 per cent, and an availability percentage of 90 per
cent, this leads to an estimated annual energy production of 12 billion kWh
(12 TWh or 43 PJ) per year.
If two dams are installed at the right distance from one another (about
125 miles or 200 km apart) and feed into the same grid, they complement
one another, with one dam at full output when the other is not generating
power. In this way twin dams can be used for virtually continuous power
generation. Because tides are predictable and regular, this technology
With this control,the SIPOS SEVEN valve

actuator makes power plant design and
specication much easier
makes it easier for utilities to manage power generated by the system.

In contrast to existing technologies that close off tidal areas with
strong tidal currents, the DTP dams perpendicular design offers the key
environmental advantage of not interfering with the tidal currents in and
out of a tidal basin. As a result, the DTP design is expected to have less of
an impact on the ecology of the basin and, in some cases such as the
Bohai Sea in China, it may even improve water quality thanks to deliberately
intensifed circulation patterns. In addition, the design, with the dam running
out to sea, does not have the dredging requirements of structures built close
to shore.
We call the Drive Controller, the intelligent control button. It puts

Motor unit and electronics can be installed remotely from each
other (up to 150 meters)

variable speed actuation.
Because Dynamic Tidal Power does not require a very large vertical
range between low and high tide (which limits conventional tidal facilities
to specifc areas like the Bay of Fundy in Canada), DTP has greater potential
Stay Ahead
in areas with modest natural tidal ranges, as long as the tides run parallel to
the shore. The most promising sites are in Korea, China and the UK areas
with great demand for renewable energy sources.
Development in China
China, with its huge and ever-growing power demand, actively explores a
range of renewable energy sources to reduce its dependence on imported
fossil fuels and to help cut air pollution.
Overall, the total amount of theoretically available potential DTP power
in China is estimated at a signifcant 80150 GW. This total DTP potential
capacity in China equals half the total river hydropower installed in China,
PROFITRON
the country with by far the largest installed hydropower capacity of the
world. This includes the worlds largest dam, the Three Gorges Dam in the
Yangtze River, with an installed capacity of 22.5 GW.
STAY AHEAD.
STAY SIPOS
11
Wave & tidal power
DTP BENEFITS
l
High power output. It is estimated

that
some
of
the
largest
dams
could accommodate over 15 GW

of installed capacity. One DTP dam
could supply energy for millions of
households.
l
Stable power. The generation of tidal

power is highly predictable due to
the deterministic nature of tides, and
independent of weather conditions or
climate change.
High availability. DTP doesnt require

a very high natural tidal range, but
instead an open coast where the
tidal propagation is alongshore. The
potential availability of DTP is very high.
Potential for combined functions.

The long dam can be combined
with various other functions: coastal
protection, LNG ports, aquaculture,
land reclamation and connections
Pentair Nijhuis fsh-friendly ultra-low-head turbine has an effciency of 85 per cent

Credit: Arcadis
between islands and mainland.
Early studies show that a large DTP dam along the Chinese coast
has the potential to produce 5000 MW or more of installed capacity,
placing it among the worlds largest hydropower projects.
In August 2012, Chinas National Energy Administration formed
a group of top Chinese power companies, design institutes and
Others simply sell you a product

we offer a solution.
universities to carry out joint studies of Dynamic Tidal Power. The group
signed an agreement with the Dutch consortium including Arcadis in
A control and shut off technique you can rely on.
OHL Gutermuth
Beijing in 2012. The programmes targets have been registered under

the United Nations Sustainable Energy for All initiative. The UN Industrial
Development Organization (UNIDO) is also involved in the initiative.
The three-year development plan for Dynamic Tidal Power in China
started with a feasibility study divided into three phases. Phase 1, proof
of principle, was completed mid-2011. Phase 2 involved selection
and initial feasibility studies of suitable locations in 2012; and phase
3 consisted of a detailed feasibility study of the most suitable location
in 2014, to be continued into 2015. The feasibility studies cover diverse
topics such as design and multiple functions of a tidal energy dam,
economic costs and benefts, social and environmental impacts and
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mitigation measures, power generation and conversion to the grid.

At 30 months into the 36-month study period, the team began
focusing on two locations in China. Since according to Chinas
Second Institute of Oceanography (SIO) a so-called southern dam
experiences the most powerful tides, probably has better seabed
conditions and can contain long arrays of turbine/generator units,
the team built a higher-resolution numerical tidal model to study this
location further. They are now analyzing a geological survey using
ultrasound, which provides information about the sea depth and top
sediment layer. The next step of the geologic survey is to drill bottom
cores at the site of this dam.
12
Wave & tidal power
Based on a preliminary assessment,thesouthern damwill accommodate

10 GW of generating capacity, with 3000 turbine units installed, capable of
producing 3.5 MW each. At the same time, partner company Pentair Nijhuis
has successfully produced and independently tested a physical scale
STICK TO THE
FACTS
model of a fsh-friendly bi-directional ultra-low-head turbine. This design, with

a proven effciency of over 85 per cent, would enable the DTP installation to
capture the power of both incoming and outgoing tides without harming
the local fsh population.
Challenges for DTP development

Now that testing has proven the basic concept that is, a dam that can
generate a signifcant head and ultra-low head turbines that can be
made to operate effciently under such head conditions the partners are
addressing the more specifc challenges underpinning the need for a largescale dam and the costs involved in building this type of development.
Since a DTP dam needs to be built on such a large scale to be
economically viable, local authorities and investors need to see government
support before moving forward with a project. The development team is
optimizing the results of the technical and feasibility studies to provide the
data the government leaders need for evaluation and decision-making.
The Chinese government has committed to the research for this
technology and the partners are now building both the business case and
the technical information needed to support continued investment. The
economic assessment is making good progress. A large technical seminar
took place in April this year in Hangzhou, followed by a smaller meeting to
discuss turbine testing results in July. Progress on the joint development was
presented in November, parallel to a meeting between Chinese and Dutch
The USB stick connectivity of the SIPOS

SEVEN valve actuator means easier site
commissioning and maintenance
researchers at the Tidal Summit in London.
Where next?
Working with Chinese partners, the team will continue the development of
a Chinese DTP in the coming years. Co-operation from Chinese experts has
enabled us to make great strides. The European Commission is investing
heavily in the development of innovative technologies under its new Horizon
2020 programme. The DTP team is in close communication with Europes
leaders to start similar R&D paths like those followed in China.
As the team continues to develop the potential of this innovative source
of tidal power in Korea, the UK and Ireland, we need to keep in mind that
this is a big idea on every level. Dynamic Tidal Power is huge in scale,
electric output, investment and spatial interference and often goes beyond
One small device for the valve manufacturer and contractor,

to several SIPOS SEVEN innovations enhancements which will
simplify power plant projects for both valve manufacturer and

Process control set-up without mains supply via
laptop or USB battery
Non-intrusive commissioning
Easy upload/download of parameters for easy
commissioning or cloning

a persons imagination. But already the research has spun off important
advancements in science (tidal movement and hydraulic head in unsteady
fow), technology (low-head turbines), and socioeconomic benefts (like
Stay Ahead
governance issues). This alone is enormous and already worth the journey.
DTP, based on acceleration in an oscillating tidal fow, harnesses a power
in nature that was not recognized before. More research on its potential is
worth exploring further, to help humankind understand whether this source
can satisfy our energy demand in an environmentally and socioeconomically
acceptable way.
Rob
Steijn is a civil engineer specializing in river and coastal
morphodynamics. He is Director for River, Coast & Sea at Arcadis.

For more information, visit www.arcadis.com and www.powerdtp.nl
PROFITRON
STAY AHEAD.
STAY SIPOS
13
Superconducting cables could revolutionize power transmission

Credit: RWE
Case study: AmpaCity
The power supply

of the future
The worlds frst grid-integrated superconducting power cable has been connected
to Germanys grid for six months. Tildy Bayar reviews its progress
or over half a year, the worlds frst
global energy sector players. One of these
project but is intended to eventually modernize
grid-integrated
superconducting
companies is utility RWE, which said it chose
Essens existing grid, which consists of 110 kV
power cable has been transmitting
to host the AmpaCity demonstration project
underground cables and 10 kV substations
electricity in Essen, Germany as part
as another important step towards the
built on the model of a central power plant
of the AmpaCity grid modernization
Energiewende.
supplying the citys industrial customers. Given
pilot project.
In this light, Nobel Prize-winning physicist
that many of the citys existing power assets
Touted as the power supply of the future,
Dr Johannes Bednorz (who discovered the
are nearing the end of their useful lifetimes,
superconducting cables have the potential to
superconducting properties of the materials
and that the industry and power infrastructure
signifcantly reduce transmission losses, assist
used in the cable in the 1980s) said effciency
in the Ruhr region has evolved, including the
in the grid integration of large amounts of
in
consumption
addition of signifcant amounts of renewable
renewable energy and save valuable urban
has not been suffciently stressed in setting
energy, RWE took the long view in its grid
space.
Europes energy effciency targets. As well
modernization plans.
power
generation
and
On the 180-day anniversary of the cables
as signifcantly decreasing power losses, he
Partnering with RWE in the project are
connection to the grid, I travelled to Essen
said, superconducting cables could help
cable manufacturer Nexans, the Karlsruhe
to see the installation and hear reports from
make renewable power more effcient, for
Institute for Technology (KIT) and project
operator
example by offering around a 35 per cent
management consultancy Jlich. In addition,
power enhancement for hydroelectric plants.
support in the amount of 6.3 million
Situated at the heart of Germanys Rhine-
Bednorz is excited about the huge potential
($7.9 million) was provided by Germanys
Ruhr metropolitan region, Essen has been
for the cables use in hydro refurbishment in
Federal Ministry of Economics and Technology
called the powerhouse of Europe and
Germany alone.
(BMWi). In total, the project cost was around
RWE
and
cable
manufacturer
Nexans on the results of the project to date.
features the headquarters of a number of
14
AmpaCity is not just a demonstration
13.5 million.
The demonstration is based around the superconducting cable, which

adds another 1 km to Essens 6500 km power distribution grid and is the worlds
longest such cable. At 10,000 V, the cable connects two transformer stations in
the city centre, replacing a conventional 110,000 V cable and transmitting up
PLUG N
DISPLAY
to 40 MW. The superconducting cable transports around fve times as much

electricity as a conventional copper cable of the same diameter, with almost
zero loss.
In addition, installing superconducting cables can reduce the need for
transformer stations, enabling utilities to move them to the outskirts of cities
and freeing up much-needed urban space. In the case of AmpaCity, two out
of fve substations were able to be eliminated.
Finally, superconducting cables can offer environmental benefts. Their
heavy insulation means there is zero heat loss and no surrounding magnetic
feld so they can be used in places where traditional cables cannot.
The AmpaCity project has drawn worldwide interest, RWE said, with
delegations visiting from Korea, China, India and the US. Indeed, Nexans
foresees a demand anywhere there are conurbations and industrial networks.
How it works
The cables superconducting ceramic tape is cooled to around -200C inside
a thick cooling jacket flled with 2.5 m3 of liquid nitrogen which evaporates in
air, serving as a heat exchanger. According to Oliver Sauerbach of Westnetz
GmbH, AmpaCitys plant manager, this cryotechnology is very new.
In the system, the cable is combined with a superconducting fault current
limiter (SCFL) which protects the grid and the cable from overloading caused
by short circuit currents, and stops fault currents from propagating throughout
the network by limiting the current to less than 13,000 A.
The SCFL can be integrated into a conventional grid, and in fact RWE has
already done so. According to Jean-Maxime Saugrain, Nexans technical
vice-president, the SCFL is fast, reacting before the frst peak; it is self-triggering,
and has no grid impact during normal operation. It is also able to protect
integrated renewable energy sources.
Operational issues
Of the 8760 hours in a year, the projects offcial target is to be non-operational
for four hours or less. Dr Frank Merschel, project manager for new technologies
at RWE, said his company expects 99.99 per cent reliability based on
operation so far, with only two or three hours per year when the system is not
in operation.
The easy to read display of the SIPOS SEVEN

valve actuator makes power plant operation
and maintenance much easier
Plain and simple - the advanced SIPOS SEVEN actuator has a large,
full color display. This new operator interface enhances system

All important information legible at a glance
Screen orientation can be changed in 90 steps
Animation-based instructions minimize the use of manuals

Stay Ahead
PROFITRON
AmpaCitys superconducting fault current limiter

Credit: RWE
STAY AHEAD.
STAY SIPOS
Power
Engineering
December 2014
For more
information,
enterInternational
9 at pei.hotims.com
15
According to Sauerbach, problems with

the system have so far been minor, with no
challenges arising in connecting to the
conventional network.
In May a hurricane caused a power
supply interruption across the grid, but
Sauerbachs team had switched off the cable
in anticipation due to the sensitivity of the
control system. The system is now protected
against weather events and power failures,
he said, with conventional 10 kV cables
connected between the two substations as
power supply backup. He added that the
team does not yet have specifc plans for
backup power when the system is eventually
The cable features superconducting ceramic tape inside a thick cooling jacket
Credit: Nexans
expanded to cover more of Essens grid.

The
biggest
inconvenience
so
far,
Sauerbach said, has been the installation
will then be assembled on-site. As a frst step
being the most important issue. The pumps
time, which is longer than required for a
in this simplifcation, Nexans is developing
are the most critical point, he said, because
traditional cable. So far, he said, the team
an installation joint to connect two cables
vacuum pumps, for example, have moving
has played it safe: we do it very slowly,
together, to be ready in the near future
parts. At the moment we have redundancy if
with no risk. According to Frank Schmidt,
according to Schmidt.
one pump fails, he added.
head of Nexans superconductor division,
When asked whether any problems are
The cooling system is another new
in future the installation procedure will be
likely to arise in future, Sauerbach said he
challenge that isnt there with traditional
optimized to be easier and faster, with a bit
expects the main problem to be maintaining
cables, said Dr Joachim Schneider, RWE
more prefabrication of components that
the cooling system, with the reliability of pumps
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there have been minor problems, mostly

short interruptions due to the sensitivity of the
cooling equipment protection systems.
In case of damage to the cable, repairs
are more complex than for a traditional cable.
The system must be warmed up before any
repairs take place, and cooled down again
afterwards. The cool-down time for AmpaCitys
cable is about fve days from ambient
temperature to operating condition. However,
Dr Mark Stemmle, Nexans project manager for
superconducting cables, said the repair time
for a medium-voltage superconducting cable
is comparable to that for a conventional
high-voltage cable.
Depending on the damage, the repair
process can range from easy repair of the
cable cryostat from the outside; re-pumping
the vacuum to very complex if part of the
cable is completely destroyed. In the latter
case, that cable section could be replaced,
AmpaCitys cooling system includes sensitive equipment protection

Credit: RWE
or two joints and a short cable section could

be introduced, Stemmle explained.
Nexans plans for this technology
that the maintenance costs for conventional
will have very little effect on the cables
Sauerbach anticipates that hot weather
yet.
include large-scale commercialization, and
10 kV technology are higher. And, he said,
effciency, although maybe a little bit on the
according to Dr Mathias Noe, head of the KIT
if you put everything in the picture for a full
effciency of the cooling system. According to
Institute of Technical Physics, the frm is now
view, then the real estate value makes the
Schmidt, a longer cable say 100 km would
well-positioned to roll it out into the world.
superconducting cables advantage bigger.
need to have intermediate cooling systems.
However,
according
to
Bednorz,
For
long-distance
power
transmission,
While the systems energy balance is still
investors will still need to be risk-friendly to
though, superconducting cable technology
being measured, the frst estimate is that its
support such a pioneering, door-opening
does not offer the same cost beneft. Schmidt
total power consumption is around 6.7 kW or
project. In practical terms, the cost of the
noted that there is a beneft to having
160 kWh per day.
superconducting cable is still a factor of two
underground rather than overhead power
more than copper cable.Additional costs arise
lines,but maybe 10 km rather than 100.
Current status and future plans
when the cooling system, installation and civil
Uwe Beckemeyer, Germanys secretary
Saugrain perhaps put it best in saying: We
works are added but Schmidt emphasized
of state, said Essen chose this project at this
could be considered the market leader
that the money recouped from the lack of
time because the city wanted to support
the only problem is that we have no market
power losses must also be considered, and
something new. The importance of energy

effciency cannot be overemphasized, he
added, and is where we can make the most
gains in the future toward a low-carbon
economy. And, once the technology is
implemented on a large scale, it can facilitate
the transport and sale of electricity, for
example from Germanys northern region to
the power-hungry south.
Essen plans to eventually cover its entire
23 km inner-city ring with superconducting
cables, elminating more substations. But, a city
offcial said, Let us have more experience frst
to make sure the system works in summer, in
storms. The testing phase of the project will
last until 2016.
Components of the AmpaCity system

Credit: Nexans
18
A hydroelectric plant produces
6kg of CO , the primary greenhouse

2
gas, per megawatt hour, thereby of

environmental standpoint.
Recent studies demonstrate that

hydroelectric reservoirs may actually
serve to absorb greenhouse gases.
Hydroelectric units are long-term

numerous generations to come. Clean and
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ELETROBRAS invests in hydroelectric generation

because it is a safe and proven method. And the

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Generating and transmitting the bulk of Brazils daily energy needs is no simple task, and yet it is a source
of enormous pride for ELETROBRAS. Indeed, this very challenge resulted, following years of research and
studies, in the companys strategic decision to prioritize hydroelectric power. In addition to representing one
of the most renewable and cleanest sources available, hydroelectric energy is well suited for safe and reliable
production at large scale; and it is ideal for a country like Brazil that requires substantial energy reserves to
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It is for these reasons that ELETROBRASs work stretches as far and wide as Brazil itself.
B R A Z I L I A N
Ministry of
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eletrobras.com
G O V E R N M E N T
Credit: ExxonMobil
Lubricants
Lubrication
challenges for the
biogas industry
The biogas industry is
growing in importance
as the world continues to
look for alternative, clean
energy sources. However,
running biogas engines
comes with challenges,
not least the need for
a lubricant to contend
with the contaminants
particular to the various
sources of biogas, writes
Kelvin Ross
20
ower plant operators the world
biomethane
over are continually striving to
quadrupled in the last year. There are now 10
capacity
has
more
than
improve the reliability of their
biomethane-to-grid plants generating almost
turbines and engines.
1 TWh up from 0.16 TWh last year.
With renewables forcing their
ADBAs chief executive Charlotte Morton
way into the energy mix of more
says: That this market is fnally taking off is
and more countries, operational fexibility has
great news for climate and energy security.
also become vital.
Biomethane is one of the most effcient forms
Among the expanding areas of renewables
of domestic renewable energy which, at a
is biogas. For some time overshadowed by its
time when we are expected to import 69 per
biomass counterpart, it is now recognized
cent of our gas supply from some of the most
as a burgeoning sector, especially in Europe
volatile parts of the world, could replace over
where waste-to-energy plants are growing in
10 per cent of the UKs domestic gas needs
popularity.
equivalent to 40 TWh while helping to fght
Biogas consists primarily of methane
climate change.
and carbon dioxide. It also may contain
One of the biggest global players in
small amounts of nitrogen or hydrogen, and
the biogas sector is GE and company
contaminants in the gas can include sulphur
spokesperson Susanne Reichelt says that
or siloxanes.
biogas engines account for a signifcant
Biogas can be an important pillar of the
portion of our distributed power business,
European energy policy in terms of safety
which includes aeroderivative gas turbines
and decarbonization, says Dr Jan Stambasky,
and reciprocating engines.
president of the European Biogas Association.
Though segment conditions vary from
Data from the Anaerobic Digestion and
year to year, biogas engines have a signifcant
Bioresources Association in Britain shows that
role in the distributed power business. About
the volume of biomethane injected into the
3500 Jenbacher biogas systems with a total
UK grid will more than quadruple by the end
electrical output of about 2700 MW have
of this year.
been delivered worldwide.
Since 2011, the number of biomethane
But biogas has its own unique challenges
upgrading plants has doubled and the
for engine makers and, in turn, for the lubricant
Lubricants
manufacturers that literally oil the wheels of
up in a situation where there are a variety of
this growing market.
elements. Landfll gases can include siloxanes
The chemical makeup of biogas presents
or sulphur content, so it is these gases that are
the key problem. Biogas contains methane
more challenging from a lubrication point of
and carbon dioxide but in most cases it also
view.
contains traces of other gases, which are
Vihersalo says that a preference for
similar and are mainly harmful. That makes it
different types of biogas plant varies from
complicated for engines and for lubricants,
country to country. In the UK there is a lot of
says Jarmo Vihersalo, Europe, Africa and
landfll gas being used. In Germany, however,
Middle East industrial marketing advisor for
biogas plants use fermented biomass which is
Energy at ExxonMobil Fuels & Lubricants.
burned in a combined heat and power plant
He says that while OEMs tailor engine
to produce power using waste heat.
materials and components such as the
Josef Pellmeyer, president of the German
bearings, cylinder head and crank case to
Biogas Association and operator of a biogas
withstand the corrosion caused by this blend
plant in Munich, says that demand for biogas
of gases, the lubricant must also be modifed
as a renewable source of energy is growing
for biogas use.
continually, worldwide.
Biogas is complicated for lubricants

Credit: ExxonMobil
It is very important that we create
I can testify to this from my own experience:
lubricants that protect engines against the
ever more interested visitors from across the
corrosive substances that are in the fuel
globe are coming to view my biogas plant
which is an exacting task given the variety of
to fnd out how it works. In 2012 alone we
Vihersalo. They [the OEMs] cannot design a
sources from which the biogas can come.
received groups from South Korea, Ethiopia,
new engine if there is no lubricant to meet its
China, Japan, Brazil and Russia, to name but
demands. With OEMs we work closely to fnd a
peoples waste, from other types of waste this
a few.
product that meets their specifcations.
means we never know the true content of the
He
Biogas can come from animals, from
says
these
visitors are
Its
an
ongoing
co-operation,
says
primarily
He adds that it takes between three and
gas: they are all a bit different, says Vihersalo.
interested in generating power using the
fve years to develop a new lubricant into

market, including laboratory and feld tests.
All the chemical additives of the lubricant
residual products of food and animal feed
need to be carefully selected to manage the
production as well as agricultural waste. This is
He also explains that both the lubricant
demands of the different types of fuel.
particularly the case in countries where power
manufacturer and engine makers have the
from renewable sources is poorly remunerated
same aim to increase the time between oil
and substrates need to cost little or nothing.
change intervals.
So is one type of biogas more challenging

than others?
If we think about waste generated by food
In bringing a new biogas lubricant to
The longer the interval, the more operating
manufacturing or what we can call plant
market, Vihersalo explains that ExxonMobil
hours are clocked up in the hundreds for
waste, it is easier to flter out the pollutants
works closely with its OEMs. The manufacturers
biogas engines at the moment, in contrast to
so that, at the end of the day, when they are
do not come looking for a new oil and
thousands for natural gas engine.
clean, they are quite close to natural gas.
ExxonMobil does not design one without
But when it comes to landfll gas, we end
collaboration.
Vihersalo says that the economic benefts

are very clear: the operator has to buy less
lubricant, needs less personnel to carry out the
oil change and has their machines available
for longer periods.
He stresses that there is also a safety
aspect to a lubricant that offers less downtime,
whether planned or unscheduled. We need
to minimize the risks when interacting with the
machines.
However he stresses that there is no
typical interval for biogas engines: It varies
from engine to engine. The way the engine
operates has an effect, as well as the different
gases used in the engines.Therefore, we would
always recommend using an oil analysis
system, such as our Signum Oil Analysis, to
help determine correct oil drain intervals.
Another variant is the make of the engine:
Himark Biogas signed a deal in the summer for three biogas plants in the US
Credit: Himark Biogas
There are quite big differences between

biogas engines. It is not only size: it is also a
21
Lubricants
question of how they are designed; how much

oil is linked to the combustion area. Its about
tolerances that are in the engine.
Why biogas?
Reichelt of GE says that in most situations, the
customer choice is not between biogas and
natural gas, but instead it is a choice to be
more effcient and sustainable.
Weve found that most customers usually
have a synergistic supply of agricultural,
livestock or food waste, and it can be relatively
simple to monetize that supply by producing
biogas. The choice for the customer is then
whether to utilize that gas to generate power
GEs Jenbacher engine in a biogas installation

Credit: GE
and heat, or upgrade the biogas into a biomethane facility.

In addition, government support for the
products which provide a long drain interval
performance due to oil, we can better ensure
generation of renewable energy, along with
in order to reduce unscheduled engine
full operating and economic potential for
the elimination of methane and carbon
shutdowns and, as a consequence, rising
projects.
emissions,
operating costs.
certainly
can
help
project
economics for many customers.
Lastly, Reichelt
says
that within
the
Reichelt explains that there are often
biogas engines segment, there is variation
trade-offs between the amount of ash content
for lubricants. Within GEs Distributed Power
in an oil and successful engine operation
business, Jenbacher
There are several aspects to be considered
these trade-offs do not always allow oil to
differ in oil requirements compared to the
with lubricant, says Reichelt. A lubricant for
be used for extended periods due reduced
requirements of our Waukesha rich burn
biogas application has to fulfl several different
neutralization capability.
engines.
So what does GE look for in a lubricant for

its biogas engines?
requirements simultaneously.
lean
burn
engines
If we used oil past its successful life, we risk
Vihersalo says that biogas is an important
To start, a lubricant must have high
engine performance due to the oils reduced
part of the rise of renewables for ExxonMobil.
capability to neutralize acid components from
ash content and less benefcial properties. In
Its Outlook for Energy 2014 report forecasts the
the fuel, and a challenge can be the variations
the future, longer oil life and higher reserve
demand for oil and natural gas to grow by
of biogas and the impact of the biogas
against acid would help us to improve
60 per cent by 2040.
source. GEs Jenbacher biogas engines run
engine performance and reduce costs for the
on biogas from different sources, like landfll,
customer.
sewage gas, agricultural gas and crop gas.
emissions
if we look at market demand, biogas is an
Our lubricant must be able to accommodate
requirements are resulting in OEMs needing
increasing part of gas engine business. We
these various sources without issue.
to use more and more pre-cleaned biogas.
can see in the product development pipeline
By
that we will have new products for biogas
At the same time, customers need
In
He says: Gas engines have been and will

be an important part of our business. Now
addition,
reducing
the
regulated
troubles
with
engine
engines we are developing new products

with OEMs all the time.
In terms of geographic regions, he says:
Europe is an important market for ExxonMobil
and for biogas, Germany is very important, as
well as Italy, France and the UK.
He says the UK in particular is making
interesting developments in landfll biogas
plants.
GEs Reichelt says that historically, the
largest growth regions have been in Europe
Germany in particular. However, there is now a
shift underway, with Asia and North America
expecting to be larger growth areas in biogas
going forward.
A German biogas plant. Germany is the European leader in the biogas sector
Credit: Schmack
22
Artists impression of the completed Hinkley Point C

Credit: EDF
Nuclear newbuild
The point
about Hinkley
With the EC approving plans for Hinkley Point C power station, Kelvin Ross looks at
what the decision means for the UK and the wider global nuclear market
o say that there is a lot riding on
China National Nuclear Corporation and
guarantee fee which the operator would
the successful building of Hinkley
China General Nuclear Power Corporation,
have paid to the UK Treasury was too low for a
Point C nuclear power plant in the
both hold stakes in Hinkley.
project with this risk profle.
UK is an understatement.
The
EDF-owned
plant
So it was with a huge collective sigh of relief
The plant will require debt fnancing of 17
is
that the nuclear industry worldwide greeted
billion (around $27 billion) and will eventually
intended to help address Britains
the news that after months of will-it-or-wont-it
have a capital cost of 34 billion, with
security of supply concerns. The UK currently
debate, Hinkley has been given approval by
construction costs estimated at 24.5 billion.
has 16 reactors with a total generating
the European Commission.
capacity of 10 GW.
These plants generate around a sixth of the
It will be built alongside the existing Hinkley
The project had been in limbo for months

while
Brussels
England, and it will be the fourth reactor in the
UKs electricity yet all but one will be retired by
decided whether UK government support
world to run on EPR pressurized water reactor
2023. The exception is Sizewell B, the UKs only
for the project was in breach of competition
technology the others are currently being
pressurized water reactor (PWR), which began
regulations.
built in France, Finland and China.
operating in 1995 and was the last nuclear

plant to be built in the country.
Paul Spence, EDFs director of strategy and
corporate affairs, says that energy security has
state
aid
investigators
in
A and B reactors in Somerset, southwest
The EC gave the project the go-ahead
After delivering the Commissions approval
in early October after asking the British
for Hinkley, Almunia said that the decision will
government to alter the terms of the project
not set any precedents for future nuclear
fnancing.
projects. He stressed that the go-ahead did
become high-profle in the last 12 months and
Joaqun
not mean that Brussels was favourable to
that has reminded the public, politicians and
Almunia, in charge of competition policy, said:
nuclear at the expense of renewables, which
the industry how important security of supply
After the Commissions intervention, the UK
it has long backed. The choice to promote
is to our economy. Hinkley Point is intended to
measures in favour of Hinkley Point have been
nuclear is a choice by the UK. There is no
play a part in that security of supply.
signifcantly modifed, limiting any distortions
change of energy policy in the EU.
But successful delivery of Hinkley will also
Commission
vice-president
of competition in the single market.
validate the new energy regime set up by the
These modifcations will also achieve
UK government in its Electricity Market Reform
signifcant savings for UK taxpayers. On this
package; the reactor technology involved
basis and after a thorough investigation, the
Arevas EPR, which has been dogged by
Commission can now conclude that the
delays elsewhere as well as the whole future
support is compatible with EU state aid rules.
of nuclear power in Europe.
The modifcations involved the EC asking
Oh, and then there is the fact that Hinkley
or telling the UK to raise the amount of
would revive and boost a whole domestic
the state guarantee, the sum of which would
nuclear engineering skills base as well as
cover any debt which EDF will seek on fnancial
open the door to technology from overseas,
markets to fund the plants construction.
particularly China, as two engineering frms,
24
The Commission said that the initial
Joaqun Almunia
Credit: EC
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Nuclear newbuild
Credit: DECC
Almunia stressed that he had assessed

and was comfortable with the safety risks
the ball rolling for the UKs nuclear newbuild
Energy
programme.
Committee, says: Nuclear power needs cross-
and
Climate
Change
Select
associated with nuclear.I can assure you that
He is also keen that British businesses play
party support. It would be extremely unhelpful
I care about the risks involved in this kind of
a pivotal role in the construction of Hinkley
if any aspect of nuclear power became a
energy. I have paid attention to all the risks in
and subsequent plants. EDFs Paul Spence
political football.
this project.
says that the company is aiming to use UK
The government has earmarked eight
The chairman of the UKs Nuclear Industry
frms for 57 per cent of the construction value
nuclear newbuild sites in England and Wales.
Association, Lord Hutton of Furness, said that
of Hinkley. He adds: Hinkley Point will help to
Five Hinkley Point, Sizewell, Oldbury, Wylfa
once EDF undertakes its fnal investment
build skills that will be transferable to the other
and Sellafeld have been acquired for
decision,this will set in train an important time
UK projects and projects elsewhere in the
development, and three Bradwell, Heysham
for the nuclear sector in the UK as newbuild
world. We want Hinkley Point to be a catalyst
and Hartlepool remain nominated sites.
projects get underway to replace the current
for UK frms to win global contracts once they
aging generation.
have a seat at the nuclear table.
Three companies plan to build at the fve

acquitted sites: EDF at Hinkley and Sizewell;
It also gives certainty to other European
Horizon, owned by Hitachi, at Oldbury in
countries looking at the UK system of contracts
Domino effect
England and Wylfa on the island of Anglesey
for difference as a mechanism to secure their
As soon as EDF confrms its fnal investment
in Wales; and NuGeneration, a joint venture
own supply.
decision and breaks ground at the site in
between Toshiba and GDF Suez, at Moorside
Somerset, it will set off a domino effect for other
in Sellafeld in Cumbria, England.
Mark Stewart, partner at UK infrastructure

consultancy
EC
Harris,
says
the
EC
newbuild projects in the UK.
The three companies will utilize third-
announcement is a major boost to the UK
That frst shovelful of earth will signal that
nuclear industry and a step towards security
the UK governments new electricity regime
use Arevas European Pressurized Reactor;
of supply.
and in particular its contract-for-difference
Horizon would employ Hitachi-GEs Advanced
payment
Boiing Water Reactor, while NuGen will utilize
This will be the key that unlocks the UK

nuclear industry and the wider watching
measures
work
for
energy
companies and their investors.
European newbuild arena, he adds.
And there is consensus in both government
generation
reactor
technology: EDF
Westinghouses AP1000
pressurized
will
water
reactor.
He said it would bring more jobs, more
and the industry that whatever the outcome
For Areva, Hinkley presents a fresh chance
secure energy and a long-term replacement
of next Mays general election in Britain, there
to deliver a newbuild project without (too
for aging energy assets.
will be no attempt to derail the UKs nuclear
many) hitches and glitches after EDFs other
John Cridland, director general of the
ambitions, which were after all started by a
European sites utilizing the EPR Flammanville
Confederation of British Industry, said the
Labour government and have been pushed
in France and Olkiluoto, in Finland have
European
through by a Conservative-Liberal Democrat
been dogged by delays.
Commissions
green
light
for
Hinkley is a signifcant milestone in the United
coalition.
Kingdoms energy future. Hinkley should set
26
Tim Yeo, chairman of the governments
Work started on Flammanville in 2007 and

was due to be completed by 2013. This date
Nuclear newbuild
was later revised to 2016 and last month it was
Germanys decision to turn its back on
again put back by another year.
nuclear power is neither helpful nor rational
programme comes at a time when much of
Development
of
the
UKs
newbuild
EDF said the delay was because of
adds that we should be mindful of the
the rest of world has pressed the pause button
diffculties encountered by Areva in the
possibility that Chinese technology could
on nuclear development.
delivery of certain pieces of equipment and
scale up faster than other technologies, which
the implementation of the regulation on
could be benefcial for the UK.
equipment under nuclear pressure.
Just
In the week that the latest delay was

announced, Areva UK chief executive Robert
Davies said that Hinkley Point must and will
how
many
Investment anaylst Moodys has released a

report on nuclear power and its conclusions
different
reactor
are fairly bleak. Despite government support
technologies end up in play across the UK is
for
also causing some concern.
economies, low prices for natural gas have
Sandy
Rupprecht, chief
executive
nuclear
generation
in
most
major
of
put nuclear power in a less competitive
beneft from the experience of other projects.
NuGeneration, says that by the time the
position, says Micheal G Haggarty, a Moodys
Hinkley Point has to built to time and cost
company breaks ground on Moorside which
associate managing director and co-author
and Sizewell B is going to have to be cheaper.
is expected to be operational by 2026 there
of the report.
will be 16 other AP1000 reactors operational
As a result, nuclear generation is growing
The China syndrome
around the world: So we will have a wealth of
only in a few major markets, notably China
Chinas interest in Hinkley has caused both
experience to draw on by then.
and South Korea.
optimism and concern. Optimism that a
But on the introduction to the UK of more
country that is almost certain to produce the
reactor designs, he warns that there is a law
concludes: For EDF, whose UK nuclear feet
fourth generation of reactors is interested in
of diminishing returns involved and said he
contributed just over 11 per cent of group
entering a European market, and concern
would be concerned if further designs were
EBITDA in 2013, any gap between the closing
that, well a country that is almost certain to
introduced.
of existing plants and the commissioning
produce the fourth generation of reactors is
The
report
examines
Hinkley
and
Mark Foy, director of the Civil Nuclear
of Hinkley Point C will present challenges,
Reactor Programme at the Offce for Nuclear
because earnings will decline at the same
Arevas Robert Davies says: China will
Regulation, says: There will be a limit for the
time net debt is increasing.
bring experience and they will bring valuable
number of technologies. We need to avoid
For the other utilities in the UK, nuclear
lessons. But they will need our companies to
what we have done in the past, that is, that
power in the feet is credit negative because
help them operate in the UK.
every reactor is different.
it directly reduces the operating hours of their
interested in entering a European market.
Tim Yeo says: The Chinese would like
Arevas Davies says that having several
fossil fuel-based generation.Therefore, if further
to deploy their technology in the UK and I
designs across different sites gives us a
life extensions are granted to the existing
welcome their interest. And he adds: I dont
competitive, frst-class market. How many new
feet, power prices would be lower than they
think the government would link investment
designs we will see.
otherwise would have been.
here with Hinkley with any future commitment

to use Chinese technology in the future.
However
Yeo
who
believes
that
And EDFs Spence says: At some stage
Conversely, if there were delays in the
we will get to the point that we will say, Lets
construction of Hinkley Point C, this could result
replicate the designs that we have got.
in higher power prices than otherwise would

have been the case as a result of a tighter
reserve margin.
What is certain is that the world is watching
the progress of Britains nuclear programme.
Jay
Brister, vice-president
of
business
development at URS, said that the UK will have

the largest concentration of nuclear newbuild
26TWh (terrawatt hours) per year
in the western hemisphere in the next
This is estimated to be equal

to around 7% of UK electricity
consumption in 2025 and
enough to power nearly 6
million homes.
decade.
As John McNamara, head of corporate
communications at NuGen, told an event last
month organized by the International Atomic
Energy Agency: The world is watching how
the UK approaches a programme of new
nuclear build.
Developers in the UK have a great
responsibility to our communities, and our
stakeholders but also to the wider global
*The footprint will depend on the location and
turbine technology deployed. DECC estimates the
footprint could be between 160,000 and 490,000
acres.
Credit: DECC
nuclear industry.
27
Fast-track power
Fast-track installations are flling a gap in growing economies power markets

Credit: APR Energy
Life in the fast lane

Many of the traditional
notions of fast-track
power are being turned
on their heads by the
demands of power-hungry
nations and developed
countries needing greater
energy fexibility, writes
Kelvin Ross
he
is
and it picked up 520 MW of existing contracts
currently at the centre of a perfect
fast-track
power
sector
in Canada, the US, Bangladesh and Australia.
storm of opportunities.
and Africa, APR also last year opened its frst
nations are hungry for power and
Asian offce in Singapore and the business
they need that power delivered
has boomed.
fast. At the same time, developed nations
The region has grown like crazy, says Clive
are beginning to pause when thinking about
Turton,APRs head of business development for
building large-scale permanent power plants
the Asia Pacifc region.Weve got four projects
and instead are looking to the benefts of
up and running in Indonesia, a project in
distributed energy.
Myanmar, a large industrial application in the
Its a business black cheque and those

companies leading the market are cashing in.
28
Already well-established in the Middle East
More and more developing
South Pacifc and a medium-term contract in

Port Headland in Australia.
One such is US frm APR Energy. Founded
So weve gone from zero to around
in 2004 and headquartered in Florida, it last
500 MW in less than 18 months. Its been a
year bought GEs rental business in a deal
great growth phase for us.
described by APR chief executive John
The 100 MW plant in Myanmar is notable,
Campion as transformational, and you can
not least for the fact that it is there at all
see why: suddenly APR became the worlds
Myanmar is regularly listed as one of the
leading mobile gas turbine power provider
hardest countries with which to do business.
Fast-track power
However, APRs own road to Mandalay

was smooth, no doubt driven by Myanmars
desperate need to electrify great swathes
of its country more than 70 per cent of its
population of around 60 million has no access
to the grid.
And Turton is upbeat about more business
there: All the sanctions have been lifted so
theres a lot of need for new infrastructure.They
have a lot of indigenous gas and they have
a government that is keen on supporting the
development of the infrastructure.There is a lot
of opportunity there, so that market has grown
very quickly.
He believes APRs fast-track offering with
GEs TM2500+ machine at its heart is flling a
gap in the market.
We have those machines in Libya, Angola,
Australia, Japan the model works across the
The market is expected to grow by 1015 per cent per year for the next fve years
Credit: Aggreko
board and its a model that allows us to go for

very large scale: the project in Libya is 450 MW.
What we are fnding is that, as we roll this
If you are a utility or a large customer and
Another company riding the wave of
out, everybody is fascinated because this is
you want gas-fred, turbine-based power, you
electricity demand in Asia is Aggreko. Debajit
something in between the emergency rental/
can have it up and running in two and half
Das is its regional director for Asia Pacifc and
short-term power market and the large-scale
months theres no reason for you to build a
he says the region presents signifcant growth
IPP its a large-scale, fast-track IPP, if you like.
great big three- to fve-year project.
opportunities and is a key focus for Aggreko.
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29
Fast-track power
APRs 100 MW Myanmar plant is one of four in the Asia Pacifc region
Credit: APR Energy
Our power projects business, in particular,
Where youve got a fast-developing grid and
comes in. We do not claim to offer a
is focused on these emerging markets,
you need power quickly and you dont have
replacement for permanent power, and are
with our own growth in this space driven by
an enormous amount of space nor a lot of
very up-front about the circumstances where
structural challenges. Demand for electricity in
time, this is an ideal solution.
permanent solutions may be more suitable
these markets is growing faster than GDP, with
And he sees the stagnating large-scale
few countries able to fnance the additional
thermal market in Europe as ripe for semi-
permanent
permanent fast-track solutions.
generating
and
transmission
capacity needed to keep up.
than temporary, rental solutions.

However, we bridge the power gap until
those permanent solutions can be brought on
In Europe, people are looking more and
board. Every day, our customers count on us to
These structural challenges are likely to
more at the concept of distributed power
overcome business roadblocks by eliminating
remain in place for the foreseeable future,
the idea of, instead of having enormous
the power limitations they face, and we do this
and we therefore expect to see an increase
power plants and enormous distribution
by addressing signifcant power problems and
in market demand for temporary power by
infrastructure,
smaller
shortages in markets where economic growth
1015 per cent per year over the next fve
stations locally generating. So instead of
has overtaken infrastructure development
years.
having 1000 MW and an enormous amount
speeds.
having
disparate,
of transmission infrastructure, you can have
Fundamental shift
two or more 200 MW plants.
We help companies and governments

augment inconsistent power supply and
APRs Turton believes there is a fundamental
Aggrekos Das is also aware of a shift in the
inadequate grid capacity, helping to keep
shift going on in the fast-track power market
adoption of fast-track technology in the Asia
the lights on in entire cities when their existing
and the way it is viewed by utilities.
Pacifcs developing countries.
grid cannot cope with demand by delivering
The role of fast-track power provider is
Emerging markets face a key challenge in
hundreds of megawatts of additional power,
changing. Theres no reason any more to
coping with power demand that far exceeds
producing cost-effective power during season
decide between a large-scale open cycle
their
gas plant versus fast-track its the same thing.
governments
generating
are
capacity. The
taking
the
regions
temperature
extremes
necessary
emergency
and
downtime.
and
eliminating
maintenance-induced
Most grids arent planning fve years in
measures to implement permanent solutions,
advance theyre planning what theyre going
increasing power generation effciency and
He says this is primarily illustrated by
to do next year, so fast-track is the only solution.
distribution infrastructures by modernizing
Aggrekos work with national utility companies
When a utility looks at its options for gas-fred
power plants and employing smart grid
in
generation, knowing that a plant doesnt
technologies all vital frst steps.
require signifcant support in supplementing
have to take fve years, doesnt have to involve
However,
permanent
infrastructure-
rapidly-emerging
inadequate
grid
economies,
capacity,
who
overcoming
project fnance and big institutional investors
driven solutions take time and depend on
aging power infrastructure and addressing
that changes the game completely.
the interplay of multiple factors, including
geographic diffculties such as in Indonesia,
This change of mindset is fuelling optimism
substantial fnancial investment and the
which is made up of over 17,000 islands.
for Turton. Asked which Asian countries he is
overcoming of regulatory frameworks that
targeting, he says: All of them. Im not being
impede energy effciency and access.
fippant this solution is applicable everywhere.
30
This, he says, is where temporary power
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Te 13th annual POWER-GEN Middle East Conference and Exhibition returns to Abu Dhabi, UAE from 4-6 October 2015
at the Abu Dhabi National Exhibition Centre (ADNEC) along with the WaterWorld Middle East conference and exhibition.
POWER-GEN Middle East is part of the globally respected POWER-GEN brand which has been successfully serving the
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With its reputation for delivering an unrivalled conference programme, we invite you to join the roster of expert regional and
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new technological developments, joining the global dialogue on the evolving energy system and engaging infuential players in
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MENA GROWTH
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With energy expansion covering gas, renewables, coal

and nuclear generating capabilities, the market will
remain highly attractive to international developers.
Under the Dubai Integrated Energy Strategy 2030, the

emirate is planning energy-efcient initiatives including
a solar PV park. By 2030, Dubai aims to supply at least 5
per cent of its energy from renewables, 12 per cent from
clean coal and 12 per cent from nuclear power.
Abu Dhabi also has ambitious plans for growth with

industrial power and water contracts valued at $6 billion
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with infrastructure projects, including an emphasis on
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With the wave of ongoing development in the

MENA (diversifcation, industrialisation, social and
infrastructure development), electricity demand is
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Te largest share of total power investments will be directed
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forecast at a CAGR of 9-10 per cent for the period
2013 2018.
Te share of renewable energy within the total energy

mix is also forecast to grow within the MENA region
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Energy efciency will also be critical to meeting peak

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curtailing demand through social awareness and active
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Submission Deadline: Friday 23 January 2015
Te Advisory Board is now accepting abstracts for the POWER-GEN Middle East 2015 Conference.
We invite you to submit an abstract for POWER-GEN Middle East 2015 and share your knowledge, experience and solutions with
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To have your presentation considered for the conference programme, please submit your 150 - 300 word abstract on one or more of
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Gas can be stored in underground salt caverns for fast-cycle delivery

Credit: GeoStock
Energy storage
Still a risky
proposition
As developers and utilities take their frst steps toward implementing large-scale
energy storage, a complex landscape of technologies and market
considerations emerges, reports Tildy Bayar
he energy storage sector has
cavern gas storage facility, but its planning
supplies (as opposed to 87 days for France,
a lot to decide about its future,
application was turned down on the frst try by
69 for Germany and 50 for Italy) but good
including
former UK energy minister Greg Barker. The frm
connections to longer-term sources of supply,
won a judicial review and has now submitted
deliverability is crucial, Budinger said. If built,
a revised plan.
Halites project could extend the UKs gas
will
which
eventually
technologies
dominate
and
how storage will participate in

national markets. For an insight
The future is fast-cycle storage (FCS),
into how these issues are playing out in one
said Budinger, which can be thought of as a
Indeed, Budinger believes that Britains
such market, I attended the recent Future of
rapid charge-and-release gas battery. While
growing dependence on fuel imports and its
Gas & Electricity Storage UK seminar given by
conventional gas storage cycles twice a year,
increasing amounts of intermittent renewable
consultancy Future Energy Strategies.
injecting gas in summer for withdrawal in
power on the grid create a need for growth
winter, because FCS takes ten days to fll a salt
in the area of short-term gas deliverability (vs
Fast-cycle gas storage
cavern and ten days to empty it, cycling can
longer-term seasonal fexibility). Rather than
First on the programme was Keith Budinger,
be performed 12 times per year (factoring
measuring UK storage [projects] based on
CEO of project developer Halite.The company
in delays due to cooling time). In the UK, a
working gas volume, it is more important to
aims to build a large underground salt
nation with just 14 days worth of stored gas
focus on deliverability, he said.
36
storage capacity by three days.
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Energy storage
Will Halites salt cavern storage facility be

built? According to Budinger, in the past fve
years all new-build gas storage facilities in
the UK have been fast-cycle, so a trend exists.
Budinger is hopeful that Ed Davey, the current
energy secretary, will approve Halites plan,
which has been revised to show the extent of
its environmental impact.
Sodium sulfur battery installation
Credit: SSE Power Distribution
SSEs battery pilot projects

Moving to electricity storage, utility SSE is
destined for this site are still in the research
Patten noted that the cost of storage is
looking to the future by testing a number
and development stage. Another 2 MW/
currently high compared to other fexible
of storage applications for different project
500 MWh li-ion battery was used in 2011s
technologies such as OCGTs, but in future
locations and types, from kW to multi-MW
Orkney Storage Park, a key objective of which
signifcant cost economies are expected
scale. The frms Alistair Steele presented a
was to develop a commercial model for
for storage as the technology develops and
walk-through of a number of these projects,
energy storage.
large-scale deployment accelerates.
for which the bidding process was cost-based

and technology-neutral.
Going forward, Steele told PEi that SSE
In the UK, she added, storage could be
plans to continue its battery storage projects
useful in a number of scenarios including
The utility frst installed a fow battery in
and is accepting proposals for demand
displacing higher-carbon power generation
2008 in Nairn, Scotland. At 100 kW/150 kWh,
response and storage facilities as long as the
capacity, optimizing network reinforcement,
the zinc bromine battery provides backup
cost is lower than an overhead [transmission]
providing ancillary services and, on the
power. Next came a 1 MW/6 MWh sodium
line. When asked which battery technology
supply side, wholesale hedging requirements.
sulfur battery, installed in Shetland in 2010.
the company might eventually prefer for
For storage to be of effective use in these
The battery is integrated with diesel generator
large-scale development, he reiterated that
areas, she said, it should be recognized by
sets as short-term operating reserve, and the
cost and site suitability trump technology.
the market as its own asset class.
Steele commented that the sodium sulfur
Storages role in the power market
of potential business models for storage
battery had been decommissioned after
Ayesha
including
the news that a similar installation in Japan
consultancy Poyry next took the foor to
by supplier/generator/PPA providers and
had caught fre. SSE decided to sideline the
discuss the UKs energy storage market. She
aggregators as well as third-party storage
battery as it was sited next to a residential
emphasized storages diverse forms and
operators/developers.These business models
area; otherwise, Steele said, it would still be
capabilities,arguing for a new market category
aim to allow storage to access multiple
operating as the company deemed the risk
rather than storage being categorized by
revenue streams. However, Patten warned that
fairly low.
default as power generation. She said larger-
this possibility depends on UK policy, and that
low-voltage
scale storage is most suited to managing
revenues attributable to wider system benefts
in
Slough,
projects on a national scale, e.g., large-scale
are currently not accessible to storage system
England. A 25 kW/25 kWh lithium-ion (li-ion)
renewable energy installations, while smaller-
owners. In addition, policies currently being
battery was integrated into a model eco-
scale storage is best for addressing local
developed, including capacity payments,
homes development and is used to smooth
needs, e.g., solar photovoltaics (PV) and
could adversely affect the development
demand peaks. Steele said another 25 units
electric vehicles.
of the storage feld depending on their
installation also features a lead-acid battery.
In
2011,
connected
SSE
began
battery
project
Within this class, she suggested a number

Patten
of
energy
management
ownership
and/or
operation
outcomes.
In summary, the seminar would seem to
indicate that energy storage has a part to
play in the UK power market, but the sector
is still beset with uncertainty in the form of
both technology and policy risk. As energy
storage is gradually deployed in more
power projects and scenarios, one or several
dominant technologies will likely emerge as
operators choose the best storage solutions
for their needs, while governments will need
to decide how storage will function and be
supported in their energy markets.
SSEs low voltage connected battery project is part of a model eco-homes development
Credit: SSE Power Distribution
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WINTER 2014
A Perfect Storm:
Energy Retails
Winter of Discontent
Certification Do You
Get What You Pay For?
TRAINING INSIGHTS:
Five Steps to Find the Best Employees

Before the Big Shift Change
Hiring the Next Generation of
Hourly Oil and Gas Talent
A supplement to PennWell public ations
w w w.P ennEnerg yJOB S .c om
WINTER 2014
A P E N N W E L L P U B L I C AT I O N
EDITORS LETTER
The Phoenix Issue Hilton Price, PennWell
3 The Perfect Storm: Energy Retails Winter of Discontent

By Michael Hinton
6 Certification Do You Get What You Pay For???

By Michael Powell
TRAINING INSIGHTS
Five Steps to Find the Best Employees Before

the Big Shift Change By Jean Martin
11 Hiring the Next Generation of Hourly Oil and Gas Talent

By Jean Martin and Mark Strong
13
INDUSTRY INSIGHTS
Georgia Power Solves Long-standing problem

of Hardware Failures By Tasha Hardegree
15 5 Top Offshore Oil Companies and Their Future Outlook

17 A Career in Downstream What Do People in
Downstream Businesses Do? By Cheryl McKinney
19 Evidence-Based Management:
a Practical Management Approach
Dorothy Davis Ballard, Content Director

dorothyd@pennwell.com
Hilton Price, Editor
hiltonp@pennwell.com
Kelli Mylchreest, Art Director
kellim@pennwell.com
Daniel Greene, Production Manager
danielg@Pennwell.com
Tommie Grigg,
Audience Development Manager
tommieg@pennwell.com
By Eric Scheller
23
ORGANIZATIONAL INSIGHTS
What the Heck Happened to SEMS? By Dr. Scott Shemwell
www.PennEnergyJOBS.com
Adver tisers
Index
Chevron C2
PennEnergy Jobs 10
PennEnergy Jobs 12
PennEnergy Research Services 14
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Editor s
Letter
Like the Legend of

the Phoenix
HERE was a
moment when I thought we werent going to do this anymore. The

energy industry is increasingly moving to the digital sphere, and thats no more
exemplary than in the media that covers it. Magazines are being replaced by websites,
and for a moment we thought PennEnergy Jobs Energy Workforce would be making
that same transition. Its worked for other brands in the PennWell family, and although
we were sad to say goodbye to this tried and true format, we were excited for what would
come next.
But not so fast! Just as we were ready to leap fully into an on-demand digital format,
we realized we had too much good content to deny it a place in physical perpetuity.
So, like the Phoenix of legend, the
issue you are reading now rose from
the proverbial ashes and prepared to
take flight again. This may be the
last magazine formatted edition of
PEJEW, but it may not. Were going
to let our audience, not the trends,
dictate whats best.
Speaking of the best, the industry
is constantly searching for the best;
the best talent, the brightest minds, the hardest workers. We look at how to find the best
employees for the big crew change on page 9.
The weather of 2014 wasnt the best, and it played havoc on the energy industry,
especially on the retail side. We look at the effects of this perfect storm on page 3.
How do you become the best? Is there a single path, and can it really be quantified?
We look at the good and bad of certification on page 6.
Whos the best offshore? From the companies ruling the waters today to those who
will be floating above the rest tomorrow, we look at some of the biggest names offshore
on page 15.
How do we do better? Hardware failures can be frustrating, but one company is
solving the problem. We look at how they did it on page 13.
We have to be ready for whats next, while still throwing our best effort at what we do
today. Thats how we can strive to be the best.
Lets get to work!
We have to be ready for whats

next, while still throwing our best
effort at what we do today. Thats
how we can strive to be the best.
Hilton Price
Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
Cover STORY
The Perfect Storm: Energy

Retails Winter of Discontent
By Michael Hinton
N January
31st, Maryland-based
Clean Currents shut its doors
for good.
The renewable energy supplier sent
a minor shockwave through the industry by abruptly announcing it could no
longer serve its 8,000 residential and
business customers. Speaking to journalists about the closure, the company
president said the financials were fine.
None of us suspected that we would be
out of business in a week.
Clean Currents was a casualty of
wholesale price volatility during the Polar Vortex cold snap, which sent temperatures plummeting overnight in early January and massively disrupted life on the
East Coast and Mid-Western states.
Essential infrastructure simply seized
up: flights were cancelled, trains stalled,
schools were closed and white-outs were
common on icy, snow covered highways.
For energy retailers, it was the ultimate
black swan. Already dealing with colder-than-normal fall and winter temperatures, they quickly found themselves in
MICHAEL HINTON is Chief Customer
Officer and Senior Vice President, Products
and Solutions for Allegro Development
Corporation.
a vice-grip of spiking demand, diminished supply and a rapidly degrading operational capability.
PJM Interconnection, the largest US
grid operator, hit a record winter peak use
of 141,500 megawatts just as 20 percent
of its generators went offline due to the
freezing temperatures.
Coal-fired power plants accounted
for roughly half the outages, while diesel generators made up the other half.
There were instances of coal stacks being frozen solid and many diesel generators just wouldnt work in extreme cold.
Pipeline constraints also caused generation problems by driving up natural gas prices east of the Rockies. As the
most popular American heating fuel, utilities relying on gas for generation had to
compete with standard natural gas needs
when the vortex landed.
The wholesale energy market responded accordingly:
PJMs average on-peak power price
jumped from $50 to $278
Henry Hub spot prices spiked from
$3.95 to $8.15 MMBtu
Propane jumped from $2.08 to $4.20 gal.
North Sea Brent Crude spot price averaged $110 bbl for 8 consecutive months
Source: EIA
Out in the cold
On the surface, surging demand for electricity should have meant increased revenues and profits for all. But peak power
isnt always preferred. For electricity retailers with customers on fixed-rate contracts, demand and price volatility bring
risks that can obliterate margins.
Overextended electricity systems
can spell disaster. At the depths of
deep freeze, our customer South Carolina utility SCE&G was forced to implement rolling 15-minute blackouts
to manage demand. Many others were
openly calling on customers to turn
down thermostats or even leave the curtains on South-facing windows open so
sunlight could heat their homes. Most
grid operators in the affected states
were compelled to draw on expensive
demand response resources from other
suppliers, putting further upward pressure on wholesale pricing.
Inadequate hedging against such extreme variability in wholesale pricing left
many retailers financially exposed and
scrambling to pay their bills. When it announced its closure, Clean Currents said
spot market prices during the Polar Vortex went up not by 20 or even 50 percent
some jumped by 500 percent. When
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014
Winters of Discontent
Is chaos the new normal? Extreme weather events can
wreak havoc on energy retailers. Black Swan Events
are unanticipated and impossible to plan for
and recent history shows they are
2014
JAN 2014
The Polar Vortex

descends on much
of the US east of
the Rockies
The Ice Storm Cometh

In early 2014, the Polar Vortex descended,
creating the coldest winter in decades
ensnaring many retail energy providers,
whose margins were hammered by flat rate
pricing and inadequate hedging in the face
of weather-related black swan events.
2010
on the rise.
2011
A second
continent-wide
heatwave
strikes most of
North America
JANUARY 20 04
Cold snap hits

Northeast US.
Boston's coldest
day in 114 years
20 0 0
SPRING 2014
Record gas demand leaves huge storage

deficit compared to historical levels
FEBRUARY
Gas & electricity retailer

Clean Currents shuts its doors
20 09
Heatwave hits the

Pacific Northwest
1990
FEB 10
Spurred by spiking gas prices, FERC

raises the cap on power charges that
PJM passes on to third-party suppliers
20 06
A continent-wide heatwave
strikes most of North America
WINTER 1996
The great Midwest cold break.

Temperatures of -60 F in
Minnesota.
JANUARY
NYMEX natural gas futures reach

5-year high
20 01
JAN 31
Heatwave affects
most of Eastern
North America
SUMMER 1995
750+ people die from

heat-related illnesses
during the Chicago
heat wave
Virginia-based Dominion Resources

abruptly exits retail electricity market
JAN 07
20 0 0
On peak power prices spike to nearly

$1000 MWh as Polar Vortex takes hold
Heatwave in the
Southern US
South Carolina utility, SCE&G

implements rolling blackouts after
remote transmitters freeze
AUGUST 1998
JUNE 1998
Power Company of America is forced

into bankruptcy due to unpaid bills
100 F temps drive wholesale

electricity prices in the Midwest
& South to record highs
PJM, the largest grid operator in the

US, sets a new winter peak record at
139,069 megawatts.
JUNE 1998
Polar Vortex descends. temps in

Boston & New York between 11 & 17 F
Peak prices approach $600 per

MWh, more than 10 times normal
JAN 06
Temps in Boston & New York

avg. 37-43 F
JAN 01
New Year's Day. Average on-peak

power prices at PJM stable at CA
$50 MWh
Hedged Against
the Storm
Extreme weather events are now a fact
of life. How can energy retailers predict
future demand and react quickly when
unforeseen events do happen?
Black Swans
& Blackouts
Unprecedented
Heatwaves
By Mid-century
Trade and usage information need to be

aggregated on a single CTRM system
Extreme cold can cause serious

operational degradation, including issues
with natural gas pipelines and mechanical
problems with power generators.
Data models from 21 climate

centers worldwide show
cascading heatwaves in the
US starting as early as 2020.
Big Freeze = Supply Squeeze

Measure usage against past weather
parameters like daily minimum and
maximum temperatures
Propane jumps
from $2.08 to
$4.20 gal.
Solid analytics will turn historical data
into load forecasts for expected monthly,
long-term, short-term hourly and even
sub-hourly demand
Heating oil
inventories in
the Northeast
drop by 6.9
million barrels
October - February
Understand history repeats itself and a
long-term view is needed to react in
real-time
Rise in US average heating days

higher than last year.
SOURCES: BP Energy Outlook 2030, January 2013. The Outlook for Energy, A View to 2040, 2013.
North Sea
Brent Crude
spot price
averages
$110 bbl for
8 consecutive
months
Henry Hub
spot prices
spike from
$3.95 to $8.15
MMBtu
PJM issued its collateral call the company simply couldnt afford to pay.
And Clean Currents wasnt the only
casualty. Virginia-based Dominion Resources abruptly exited the retail electricity market in January, while Illinois retailer FirstEnergySolutions announced
a coming June surcharge of $5 to $15 for
220,000 of its customers, to pay for spikes
in wholesale power costs during the deep
freeze. Its worth noting that New Jerseys
Systrum Energy lost 5,000 customers in
February when it tried a similar move and
passed on higher energy costs to its nonfixed-rate customers.
In the retail energy sector, unexpected weather and a dynamic book of customers means that the science behind insuring supply can meet demand has to be
nimble, sophisticated and reliable. While
grid operators and large utilities tend to
have robust energy trading and risk management (ETRM) tools in place to mitigate the impact of adverse weather, the
winter of 2014 caught many on the retail
side. With disruptive weather events becoming more frequent and intense, retail
providers need to take immediate steps to
prepare for the next one, and soon.
Extreme & unprecedented.
Welcome to the new normal
Extreme weather didnt start with the Polar Vortex. The eastern seaboard has endured a series of harsh winters and extreme
snowstorms from 2009-2011, including the
February 2010 snowmageddon in Washington that shut down the federal government for the better part of a week.
At the other end of the thermometer, storms mixed with high temperature
blacked out more than 250,000 homes

in the Midwest in early July. A 1998 heat
wave in the mid-west and south drove the
wholesale price of electricity in those states
to record highs, from averages of between
$25 and $40 per megawatt-hour (mwh)
to thousands of dollars per mwh at times
of peak demand. Commonwealth Edison
Chicago at one point paid nearly $4 million for $100,000 worth of power. A 2013
study based on models from 21 climate
centers worldwide says more unprecedented heat waves are expected to hit the US
as early as 2020, according to Nature.
The common feature of these events
is their unpredictability. Weve now had
nearly a decade of news coverage describing cold snaps, heat waves, extreme snowfall and hurricanes as once in a generation and unprecedented. If January
caught you by surprise, you were in good
company. The Climate Prediction Center
(CPC) had actually forecast higher-thannormal temperatures for much of the lower 48 from November to January 2014.
Climatology clearly has its limits. In
energy markets however, information
can literally be power. Better insight into
past and future events holds the promise
of helping energy retailers be more proactive, and build informed strategies to
mitigate the impact of Polar Vortex-level price volatility.
Here are recommendations to help energy retailers prepare for more weather-related market volatility.
To forecast future demand and react quickly when the unforeseeable happens, trade and usage information need to
be aggregated on a single energy trading
and risk management (ETRM) system.
With a solid analytics component, historical data can then be turned quickly
into load forecasts for expected monthly, long-term, short-term, hourly and even
sub-hourly demand.
Once your ETRM system in place,
measuring usage against past weather parameters like daily minimum and maximum temperatures becomes much easier.
Forecasted demand, actual demand and
hourly weather can be displayed or charted in a single view.
These can then be applied to individual trades. By allowing multiple meters to
be assigned to a single retail power contract point, and including counterparty
information associated with each meter,
multiple meter-level demand forecasts can
be aggregated to form the contract-level
demand forecast for a trade.
Finally, you can run various scenarios
to stress demand versus supply and determine if you are within acceptable risk tolerances if not layer in hedges to offset unwanted risk.
Energy retailers will continue to face
events that force them to change their
hedging strategy. In a market where price
hikes can bankrupt you or send customers
fleeing for their incumbent utilities; and
in a regulatory environment where shaky
financial health could mean having your
operating licence pulled by a state monitoring agency, improving the trading and
risk management capability for energy retailers has become mission critical.
The retail sector needs to prepare
for more once in a generation extreme
weather conditions. The winter of 2014
provides a cautionary tale for all of us, despite the lights somehow staying on.
Certification Do You Get

What You Pay For???
By Michael Powell
N looking
over job descriptions and

requirements in online job boards
or in the print media, we all have
seen the requirement for certification
Six Sigma, Lean Manufacturing, Auditor, Quality Engineer, Purchasing,
Etc... Companies and their hiring
managers have the mindset that certification is the guarantee of the ability
that they are looking for. If you are not
certified in the area of their need, you
are not even considered for the position that they are trying to fill.
Especially in the quest for improving quality and efficiency, reducing
manufacturing costs and waste, the
quality and manufacturing technics
such as six sigma, lean manufacturing,
and other problem solving methodologies, certification seems to be mandatory. But what do you really get when
a piece of paper (certification) is your
benchmark for evaluating a prospective employee.
Unfortunately, experience and performance in past jobs does not seem
to mean much anymore. Certification,
like a college degree, is your learners

permit that must be tempered and built
upon with experience. Without practical hands-on experience, certification
in a methodology does not necessarily
produce substantial positive results.
At a company that I was employed
as a quality engineer at, a corporate level quality manager that had obtained
his six sigma green belt came to my
plant to do a six sigma project to earn
MICHAEL POWELL - Graduate of the University of Houstons School of Technology and

Stephen F Austins School of Business, has been employed by various oil tool manufacturing
companies in Houston, Texas as a manufacturing engineer and a quality engineer over the
past 30+ years.
his black belt. Although I am not

certified in six sigma, I was put on his
six sigma team. The task of his six sigma project was to cut the cost of quality
(scrap & rework). He focused on welding. The six sigma green belt manager would come out from his corporate
office to the plant ever couple of weeks
to lead the team in solving the problem of scrap and rework due to welding. He went over past nonconformity
reports (NCRs) by part number, product line and type of welding trying to
derive the cause for the NCRs. He was
told early on that the welding problems
were systemic. That if the reason for
the scrap and rework was found for one

part, product line, or type of welding,
the reason for the problem with other
parts, product lines, and types of welding would be found as well. That he
should look at the overall process. This
advice meant nothing to him. Meeting
after meeting he went through his number crunching of all of the elements of
the parts with the highest number of
NCRs by the book that he learned in
his six sigma class.
We were getting nowhere fast. Nothing concrete was coming out of the
meetings. Some team members started
not showing up for his meetings. Some
of us communicated our concern about
the waste of time and no results to the
plant quality director. He was able to get
the plug pulled on the six sigma project and that was the last we saw of the
corporate quality manager.
In spite of his six sigma certification,
this guy had no practical hands-on
experience and no knowledge of welding
processes. He could not see the forest
for the trees so to speak. His six sigma
training and certification had no positive impact on trying to solve the problems with welding. Sometimes to get to
the root cause of a problem, there is no
substitute for getting out in the trenches and putting your ear to the ground.
In my daily walks through the shops
checking on this and that, I would talk
to people, listen, and observe. I am not
a welder, but in my years of being first
a manufacturing engineer and then a
quality engineer, I have watched various welding processes, talked to people who knew more than me, and had
to deal with welding problems.
I had been told that you could tell
the change in the seasons by the fluctuation in NCRs. Welding processes are
sensitive to the environment in which
they are performed in. You can have a
perfect welding procedure, but changes
in humidity will have an adverse effect
on your weld.
One day I was talking to the lead
welding inspector and asked what did
he think was the cause of our problems.
He said that there are some welding
processes that are dirtier than others.

The process that was being used was
not as clean as another that could be
used but it was FASTER. So when the
weld was ultrasonically inspected afterwards, unacceptable indications were
found that rejected the weld. Although
the indications were not found in every
case, and they came in varying degree,
this occurred more often than not. In
which case the weld had to be cut out
and rewelded. Sometimes the cut out

was so extensive that the large components had to be cut completely apart and
the weld preps remachined. The parts
were so large and bulky that it would
take up to 3 or 4 hours just to sit up and
indicate them in on the large vertical
turning lathes. Unfortunately, the faster
welding process could and in many cases did add addition hours for bad weld
removal, remachining, and rewelding to
an already overloaded shop schedule.
The management mindset was by
push and shove. Each operation in the
manufacturing process was to be done
as fast as possible. Although the faster
welding procedure saved time for the
welding operation of the manufacturing process, it could cost more time
than it gained in rework time.
Both of the real causes for bad welds
(environment and weld process) were
not touched on in the quality managers
six sigma evaluation. He was looking
at every element of the operation as he
learn in the certification training. He
did not have a clue!! He was looking for
band aids to fix the resulting problem.
If going by the numbers (in this case
the six sigma methodology) could get
the job done, then anybody could sit
through the training in the methodology and come up with all of the answers.
Unfortunately, this is not the case in the
real world.
In todays world of dumbed-down
immediate gratification, it seems that
businesses rely more and more on a
cookie-cutter fit out of a text book.
The candidate for a position that has all
of the right certifications is considered
the best candidate. Candidates without

certification are not considered. Managers do not have to think and/or evaluate .. just put the square peg into the
square hole and the desired results will
be obtained .. improved productivity
and profit margins .. or so they think.
Over the past 20 years, quality has
been a growth industry. Careers and fortunes have been made in training and
consulting . ISO 9000 for companies
and six sigma and other methodology
training for individuals. So many times
a company will get their people trained
and certified in a quality/productivity
methodology to show that it is an efficient quality operation . at least on
paper. But the mindset of upper management is often not changed. It has
been papered over with certifications.
The assorted problem solving methodologies originated from the Toyota Quality Team in the auto industry.
They were developed to deliver uniform
results through a standardized process.

But like the old saying about computers,
garbage in garbage out, if experience and a little common sense is not
applied to the uniform process, results
can be somewhat less than desired. Certification does not equate to good effective solutions to problems.
Please do not misunderstand me.
Certification in a problem solving
methodology or job function can be a
handy tool in a persons skills tool box.
But it is not a stand-alone qualification.
A person with experience, an inquisitive
mind, and a desire to accomplish something positive can often out preform a
person with just the certification.
Oh yea . there is another important element that is necessary for any
quality/problem solving methodology
to work. Top management has to understand, believe in, and actively support
the improvement program for it to work
effectively!!!
TRAINING
Insights
Five Steps to Find the

Best Employees Before
the Big Shift Change
By Jean Martin
oil and gas industry is facing a bigger workforce challenge than ever before. The
recent boom has resulted in a widespread labor shortage, the baby boomer generation is near retirement, and
studies have found that the oil and
gas industry is struggling with effective leadership with just one in 20
professionals fitting the profile of an
effective leader today.
The so-called Big Shift Change,
when baby boomers will retire in
droves and leave 500,000 openings
in the oil and gas industry over the
next five years, presents a major risk
for companies as they lose decades of
institutional and industry knowledge.
Compounding the issue further is
the reduced number of students applying for and completing STEM university courses, the complex nature of the
industry, rapid changes in technology and unique safety concerns, which
means that were at a critical point in
time for companies to have robust talent programs to identify and train
high-potential (HiPo) employees.
HE
HiPos are identified by their leadership characteristics, and they are twice
as valuable as their non-HiPo peers
because they save their companies
millions through efficiency, leadership
and longer tenures.
Major U.S. corporations spend
an average of $3 million every year
on leadership and development programs for HiPo employees, often struggle with keeping them with the company -- more than half of will leave
within five years. Our research shows
companies can reduce flight risk and
improve the success of their HiPo pro-
JEAN MARTIN is an executive director and Eugene Burke is the chief scientist and
analytics officer at CEB, the leading member-based research and advisory firm.
grams more than tenfold if they offer

the right kind of training that develops leaders ability to motivate others,
effectively communicate and support
others through change.
Here are five actions consistently taken by successful companies that
result in strong HiPo programs, low
turnover and increased savings that
the oil and gas industry should institute now:
Recognize that employees need
more than strong performance in
their current role to succeed in future
roles. The shortage of leaders in oil
and gas could be explained by the
lack of support and training provided
to those managers who worked their
way up through the ranks from technical roles. While identifying employees with a record of high performance
is an important step in identifying them
as HiPos, it isnt enough by itself. CEB
research shows that assuming high performance equals high potential puts
the odds at six-to-one that the employee will fail in a development program.
Define potential clearly. While
attributes may vary slightly based on
company culture and practices, there
are three important aspects all companies should look for when defining
potential: employees need to have the
aspiration to rise to a more senior role,
the ability to manage and lead effectively, and commitment to the organization.
Measure potential objectively. Only
one-in-three organizations use assess-
ment data to identify employees for

HiPo programs, and nearly half lack a
methodical process for identifying and
developing HiPos, according to CEB
research. Rather than relying on subjective assessments, nominations or evaluations, successful organizations ensure
fair and valid identification of HiPo talent through scientific assessment.
Ask for commitment in return for
career opportunities. HiPo employees
are highly marketable they are strong
performers and are often confident
they can find work elsewhere. Therefore, organizations that see the highest
returns on their HiPo investments proactively mitigate flight risk among by
asking for future commitment even
career contracts -- in return for development opportunities.
Create differentiated development

experiences. Typical HiPo programs
fail to prepare participants for future
roles. Giving HiPos stretch assignments
goes part of the way -- they not only
learn new skills but also apply existing
skills to different roles but even more,
new learning technologies enable the
most efficient extraction of knowledge
from experience. Getting this blend
exactly right is even more important
as baby boomers retire and oil and gas
companies fill positions from the biggest pool for potential hires today millennials (ages 18-29 years). As many as
23 percent of millennials say they value
diverse experiences more than advancement and they place particular emphasis on development opportunities when
looking for jobs.
Books, Books
So Many Books
PennEnergy.com is your best source
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compilation of books related to the
energy industry.
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Business Management
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Check out over 50,000 energy industry titles at
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10
TRAINING
Insights
Hiring the Next Generation

of Hourly Oil and Gas Talent
By Jean Martin and Mark Strong, CEB
everyone is aware that

surging North American production coupled with a wave of
retirements is causing an unprecedented
shortage of talent across oil and gas companies. Increased production in North
America is expected to create 500,000
to 1 million new energy-related jobs in
the next 10 years. Yet, with an improving economy and rebounding 401k accounts, hourly employees of retirementage are more confident about retiring
than they were a few years ago. These
employees have been operating and repairing equipment and machinery for
decades, and will take their institutional
knowledge with them when they go.
CEB has analyzed operations and
maintenance jobs in the worlds leading oil and gas companies and finds
that to replace experienced, successful workers, companies must find candidates with a set of fundamental skills
and abilities:
Dependability and reliability
Safety orientation
Teamwork orientation
Learning ability
Troubleshooting and problem
solving
Mechanical aptitude
Online, pre-employment assessments
EARLY
allow companies to identify candidates

with these characteristics during the
application stage with greater accuracy than a resume or interview will
elicit. As oil and gas companies compete for talent, using assessments can
help them broaden their talent pool,
reduce safety concerns and hire the
right people.
Reach into unconventional
areas for talent
Hiring a refinery operator from a competitor or an instrument technician

from a contractor is fairly easy, and
most of these individuals already have
the necessary skills. However, when
bringing in candidates from unconventional sources, companies must determine if they have the fundamental
skills and abilities suited for these roles.
For instance, a hospital lab techni-
cian follows procedures, is dependable

and may have experience with shift
work. Online assessments can test for
the compatible characteristics before
a recruiter reviews a resume or schedules an interview. Once those characteristics are assured, companies need to
design compelling employment offers
for non-traditional talent pools. Without that, it will be harder to pull top talent from other industries.
Emphasize safety
The drive to fill vacancies quickly can

put peoples lives and businesses at risk.
The energy industry has some of the
most extensive safety training in the
world, but the best companies start
focusing on safety at the hiring stage.
Our research shows that a small group
of high-risk employees account for a
large share of accidents and injuries,
11
even after undergoing safety training.

An oil and gas services company we
work with implemented a safety assessment in their hiring process and realized a 28 percent reduction in at-fault
accidents and incidents after screening
out candidates with the lowest safety orientation scores. In addition to improvements in employee safety and wellbeing, the cost savings associated with
accident reduction was over five times
the cost of implementing assessments as
part of the hiring process. Also, as safe
individuals tend to be more dependable, the company found that the rate of
failures in their drug screens and background checks was reduced as well.
Selectively hire the right people
Hiring mistakes happen such as those

who do not show up to work after their
first paycheck, tend to cause conflicts
with others in the workplace, or simply cannot learn the procedures and
requirements of the role. These hires
greatly affect productivity and usually
have short tenure.
By using online assessments, individuals suitability for roles can be measured and determined these types of
hires can be screened out of the interview process, allowing recruiters and
hiring managers to focus their time
and effort on the candidates most likely to be successful. In fact, organizations
that use assessments early in the hiring

process see a 30 percent reduction in
unqualified candidates in the interview,
an 89 percent reduction in overall time
in the selection process and a 55 percent
reduction in cost per applicant.
Almost all companies will feel pressure to hire new employees as rapidly
as possible. Although it seems counterintuitive to utilize assessments to screen
out candidates during a talent shortage,
valid and appropriate selection assessments can speed the hiring process by
focusing time and effort on only qualified candidates, rather than wasting time
on those who have little chance to be
successful.
Got jobs?
Weve got people.
PennEnergy JOBS is the key to attracting the energy industry professionals you need to hire
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Call: 1-800-738-0134
12
INDUSTRY
Insights
Transmission Staff Specialist

Invents Bushing
Georgia Power solves the long-standing
problem of hardware failures.
By Tasha Hardegree, Georgia Power
transmission lines have

had hardware failures due
to wind-induced vibrations.
Over extended periods of time, the
wind-driven rubbing between line insulator hardware and the associated
cross arm attachment points can cause
total failure of the cross arm at the
point of attachment. These vibrations
cause wear between the metal components on the transmission line hardware. In some cases, this could result
in line failure or multiple arm replacements, which can be very expensive.
In many cases, over time, the clevis pin can completely erode through
the attachment of the arm. If the hole
is not repaired after it becomes worn, it
may deteriorate to the point that it may
no longer be able to support the weight
of a conductor. In these situations, conventional methods may require replacing the entire arm.
In the past, some transmission crews
used a helicopter with stabilizers and
ANY
other specialized equipment to inspect

the hardware, and to focus in on the
attachment points. This task was complex, time consuming, expensive and
labor intensive and diverted crews from
doing other work when the arm attachments needed to be replaced due to
these types of failures.
To solve this problem; Georgia
Power was challenged to find a solution to eliminate the wear due to
wind-driven sawing action. With this
concept in mind, Buddy Phillips, a
maintenance and reliability staff specialist took the challenge given, and
went straight to work. Over his career
with Georgia Power, Phillips had recognized other business solutions and
within a matter of weeks, and several
prototypes later, he built a prototype
that was stronger than then his other
designs. What Phillips developed was
a cost-effective repair process that was
easy, simple and fast and a solution for
a longstanding problem Georgia Pow-
BUDDY PHILLIPS is a line specialist for Georgia Power, in the Maintenance & Reliability
Department, has been with the company for 42 years, and is responsible for line maintenance
including: inspection of new line construction, steel structure repairs, evaluation of hardware
failures, helicopter inspections. He is also responsible for Transmission lines in Georgia and
live line training.
er was having with their transmission

line hardware failures.
Installing the device
Linemen use this device by inserting the stainless steel bushing into the
attachment hole in the arm. Because
the attachment is made of a corrosion-resistant stainless steel, the workers no longer need to replace the entire
arm. As a result, it improves reliability and extends hardware life and has
also saved a significant amount of money in transmission and distribution
line repairs, and because of its success,
Georgia Power plans on installing the
13
bushings to prevent the wear on new

construction and to eliminate the failure due to wind induced vibrations.
The stainless steel bushing can not
only be used for electric power transmission and distribution systems, but
can also be used anywhere a hole or
aperture needs to be repaired or reinforced. The new bushing was tested,
and not only solved the wear problem,
but also increased the strength of the
clevis attachment significantly.
Providing key benefits
The attachment bushing also provides

several key business benefits such as
safety, overall cost reduction, improved

operational efficiency, enhanced reliability, and risk mitigation.
Georgia Powers field workforce has
installed a number of these bushings on
230kv lines throughout its service territory to prevent arm replacements due to
failures from wind induced vibrations
on hundreds of worn cross arms. There
is minimal training required and the
savings on this one project alone were
calculated and shown to be significant
in labor, equipment and materials.
Due to the successful benefits of this
innovative solution, Georgia Power was
granted a patent from the United States
Patent and Trademark Office, and in

honor of its inventor, Georgia Power
employees have informally nicknamed
the product The Buddy Bushing. The
trademarked product is also being sold
and distributed by Diversified Products, which has worked with linemen to
bring their inventions to market for the
past 15 years.
Companies Mentioned:
Diversified Products
www.diversifiedproducts.com
Georgia Power
www.georgiapower.com
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GIS Data for the Energy Industry
INDUSTRY
Insights
5 Top Offshore Oil Companies

and their Future Outlook
LUNGING into the deepest depths

of the sea, energy companies are
constantly searching for new oil
and gas resources to meet the global
populations growing demand for energy. New technologies for deep water
drilling are allowing companies to push
the limits of oil exploration and give operators the power to unlock reserves 500
feet or more below the surface. Some of
the biggest discoveries in the world are
located in offshore fields like the Libra
oil field off the coast of Brazilestimated
to contain up to 12 billion barrels of oil.
Here are five companies that could
continue their dominance in offshore
development now and in the future:
1. Shell
Shell has been a pioneer in offshore

oil development with the company
announcing it would stay on target to
create the deepest offshore oil and gas
production project in the world last
year. The Dutch firm said it would
make an offshore oil platform in the
Gulf of Mexico that would produce
almost 2 miles down the surface.
The Gulf of Mexico is becoming
a hotbed of offshore oil and gas development after the Mexican government opened up its energy sector to foreign investors. The region is already
equipped with an extensive pipeline
infrastructure system with companies

such as Shell contemplating adding
pipe to account for growth in offshore
oil. Shell produced 3.2 million barrels
of oil equivalent per day in 2013 with
sales of liquefied natural gas sales reaching 19.6 million tons. However, the
company reported a drop in revenue
from the previous year with net cash
flow decreasing to $40 billion from $46
billion in 2012.
Shell said it aims to work on delivering new projects, highlighting its projects off the coast of Mexico and Brazil. Looking to the future, Shell said its
Mars fielddiscovered by the firm in
1989in the Gulf of Mexico started production in February this year and will
reach a peak production of 100,000 barrels of oil equivalent per day in 2050.
The company also signed a productionsharing contract for the Libra oil field.
2. Statoil AS
Based in Norway, Statoil is a major energy producer with 40 years of oil and gas
production experience on Norwegian
waters. Statoilsaid it had more than $26
billion in adjusted earnings and $25 billion in net operating income for 2013.
The company previously announced it
added 1.25 billion barrels of oil equivalent from exploration, recently achieving its highest organic reserve replace-
ment ratio with 1.47 last year.

Statoil projects include the Oseberg
East field, an offshore oil field in the
North Sea, which has 41.5 million barrels of recoverable oil, according to Norwegian Petroleum Directorate. Recently, ExxonMobil and Statoil announced
a major offshore discovery in the Piri
prospect in offshore Tanzaniawhere
Statoil has been operating since 2007.
The company is banking on the profitability of emerging technologies, saying new innovations will be critical in
keeping the companys costs low. Statoil
said it is considering producing a subsea
compressor that could increase its natural gas production and reduce the impact
of its operations on the environment.
3. Chevron
In Chevrons 2013 annual report, the

company headquartered in California said it earned $21.4 billion in sales,
increasing its annual dividend payout to
stockholders for the 26th-straight year.
The company said it added an estimated 800 million barrels of net oil equivalent proved reserves with projects last
year. Chevron aims to increase production with a capital and exploratory budget of almost $40 billion in 2014, focusing on core areas as well as building new
legacy positions in the upstream market.
This year, the company has several
15
big-budget projects. Chevron boasts 15

projects that will receive more than $1
billion each in investment, such as the
deepwater projects Jack/St. Malo and Big
Foot in the Gulf of Mexico. The Jack/St.
Malo project is expected to yield 170,000
barrels per day of oil and 42.5 million
cubic feet per day of natural gas from 43
subsea wells once it is fully operational.
4. ExxonMobil
As a truly international firm, ExxonMobil

has oil and natural gas operations in six
continents. The Houston-based company
earned $32.6 billion for 2013, ending the
year with a peak of $42.5 billion in capital and exploration expenditures. While
the company said its capital spending will
decrease to $39.8 billion in 2014, ExxonMobil plans on diversifying its portfolio with 10 new projects this year that are
forecasted to add about 300,000 net oil
equivalent barrels per day.
In 2013, the company listed proved
reserves at 25.2 billion oil equivalent barrels and has more than 120 projects that
are expected to develop 24 billion oil
equivalent barrels of oil and natural gas.
ExxonMobils long-term investments
include the Cravo, Lirio, Orquidea and
Violeta (CLOV) offshore fields in Angola, which are located between 3,600 feet
or 4,593 feet below the sea. The project
is projected to have a production capacity
of 160,000 barrels of oil per day after the
company confirmed the CLOV project is
on schedule. ExxonMobil has also started
work on a $4 billion project to develop the
Julia oilfield in the Gulf of Mexico.
5. ConocoPhillips
As the worlds largest independent exploration and production company, Cono-
16
coPhillips is quickly making a name for

itself outside of Texas with operations
and activities in 27 countries. The company reported $9.2 billion in earnings for
2013 and has made breakthroughs in its
exploration program, predicting it will
grow its exploration operations in 2014.
Since the company began drilling
in the deep waters of the Gulf of Mexico starting in the 1980s, the company
has interest in 454 deepwaterblocks in
the region, which span about 2.2 million
net acres. The company has tested out
emerging drilling technologies in Magnolia, formerly the worlds deepest tension-leg platform in the Gulf of Mexico and is expected to make an impact
in the region. In an auction fordrilling
rights in the western Gulf of Mexico last
year, the company submitted the highest
bid.ConocoPhillipshad the largest total
of bids with $50.3 million, topping Chevrons $32.8 million. In addition to winning the bid for drilling rights, thecompany alsorevealed its fourth deepwater
discovery in the Gulf of Mexico in the
same year. The Gila discovery was made
under approximately 4,900 feet of water.
Outside of the Gulf of Mexico, the
company said it has exploration activities
in Australia and Senegal. ConocoPhillips said it plans on expanding its asset
portfolio and deliver 3 to 5 percent compound annual production growth.
Sources
http://online.wsj.com/news/articles/SB10001
424052702303442004579123560225082786
http://www.bloomberg.com/news/2013-1011/brazil-sweetens-libra-oil-field-sale-termsto-lure-bids.html
Shell
http://reports.shell.com/annualreport/2013/servicepages/downloads/files/
entire_shell_ar13.pdf
http://www.reuters.com/article/2013/05/08/
shell-gom-stones-idUSL2N0DP1I420130508
http://www.shell.com/global/aboutshell/
major-projects-2/mars-b.html
Statoil
http://www.statoil.com/en/investorcentre/annualreport/annualreport2013/pages/
default.aspx?redirectShortUrl=http%3a%2f%
2fwww.statoil.com%2f2013
http://www.statoil.com/en/NewsAndMedia/
News/2014/Pages/IORJune2014.aspx
statoil-oil-idUSWEB00P7E20140703
http://www.statoil.com/en/InvestorCentre/
AnnualReport/AnnualReport2013/Pages/
CEOletter2013.aspx
http://www.statoil.com/en/InvestorCentre/
QuarterlyResults/2013/Downloads/Financial%20statements%20and%20review%20
4Q%202013.pdf
Chevron
http://www.chevron.com/annualreport/2013/
documents/pdf/Chevron2013AnnualReport.pdf
ExxonMobil
http://news.exxonmobil.com/press-release/
exxon-mobil-corporation-announces-estimated-fourth-quarter-2013-results
http://news.exxonmobil.com/press-release/
exxonmobil-oil-production-increase-timestartup-clov-project
http://www.offshoreenergytoday.com/exxonmobil-10-new-projects-to-come-in-production-in-2014/
ConocoPhillips
us-usa-oil-offshore-idUSBRE97R0ZT20130828
http://www.conocophillips.com/
investor-relations/Company%20
Reports/2013_Annual_Report_CR.pdf
http://www.businesswire.com/news/
home/20131218005644/en/ConocoPhillipsAnnounces-Fourth-Oil-Discovery-Deepwater-Gulf#.U8mOooBdXXE
http://www.conocophillips.com/what-we-do/
producing-energy/oil-and-gas/offshore/Pages/going-deep-in-the-gulf-of-mexico.aspx
INDUSTRY
Insights
A Career in Downstream
What do People in
Downstream Businesses do?
By Cheryl McKinney, EOR Strategy and Commercial Business Leader, BP
downstream oil and gas industry is leading the way in providing exciting career opportunities for talented engineers around the
globe. Our industry is critical to the oil
and gas value chain. We refine, manufacture and market fuels, lubricants
and petrochemicals for both industrial
and retail consumers. This is our fundamental purpose.
HE
How the industry is developing
The downstream industry has certainly developed since I joined in the

mid-1980s. Nowadays, careers in this
segment of the industry offer exciting
opportunities to produce leading products via revolutionary technology and
processes. The downstream industry
is investing across the world, pushing
the use of technology to produce fuels
and lubricants more efficiently, despite
the ever more difficult feedstocks now
being produced from todays oil and
gas fields.
In the US Midwest, we at BP have
redeveloped the Whiting Refinery, to
supply fuel to the North American markets. The multi-billion dollar upgrade
of the facility has just been complet-
ed to ensure that it can

process growing supplies of North American crude oil, including
heavy oil from Canada.
At Whiting we will now
process up to 413,000
barrels per day and produce enough fuel every
day to run 430,000
cars, 22,000 commercial trucks, 2,000 commercial aircraft, 10,000 tractors and fill
350,000 propane tanks. This upgrade
work has required industry leading talent and ingenuity of process, to ensure
that the refinery can work with the
more challenging feedstock, while having a minimal environmental impact.
Pushing the boundaries
Many misconceptions exist about what

a job in downstream actually entails.
I believe that we offer a wide range of
roles, in a variety of exciting operating
environments. It is not all oily overalls
and heavy machinery; technical and
business staff in downstream have the
opportunity to work with industry-leading refining technology and experts
within the field.

At Whiting, we have
recently engineered a
way to run the refinerys gasoline-making
units even during the
planned maintenance of
other parts of the refinery. This first for BP has
ensured that production
can be maintained during downtime and is a
great example of our engineers collaborative workingtaking an initial idea
all the way through to its implementation. It required rigorous analysis and
thinking to ensure that consequences were fully thought through and all
possible outcomes were taken into
consideration.
At our Hull petrochemicals plant in
the UK, we are leading the way in the
research of new product streams that
will help to form the fuels of the future.
We also manufacture acetic acid and
acetic anhydride, which are used in
textile and plastic manufacturing, as
well as in the pharmaceutical industry and to create bleaches. We produce
half a million tonnes of acetic acid per
17
year, making the facility the

only large scale producer in
Europe. Hull is also home
to one of BPs main global
research and technology centres at which we have created a range of technologies for
BPs global businesses.
To meet these global challenges, we increasingly rely
on a diverse workforce of men
and women from around the
globe. The varying perspectives of the people in our
downstream business allow
us to examine issues from
multiple angles and develop
ideas and technologies that
ensure products are available
to deliver energy to the world in safe and
environmentally sound ways.
The downstream lifestyle
I often hear from our downstream engineers that they enjoy working in the
office environment, while still appreciating the opportunity to work with the
operational teams in the facilities. The
teams are made up of highly skilled
engineers and technicians, responsible for designing and developing plant
in a complex environment. Being located at a refinery or petrochemicals plant
allows employees to identify issues,
implement changes and examine ideas
and outcomes in a real world environment. These teams take things from the
hypothetical to reality and get to see the
tangible outcomes of their efforts.
While some roles may offer the
potential for significant international travel, the majority of roles are loca-
18
tion specific, with facilities often located near major consumption areas close
to major cities, which in turn provides a
stable work/ life balance.
What can recruits expect?
Downstream facilities are complex manufacturing sites with numerous functions all operating in unison. Therefore
roles in downstream are often suited to
inquisitive candidates, who tend to push
the boundaries in their thinking and
approach. Collaborative team players
suit this environment and can expect to
find an inclusive culture that encourages innovative thinking.
Downstream engineers are responsible for delivering often large-scale engineering projects and ensuring the safe
operation of the companys plants. BP,
in turn, provides compelling packages
and extensive learning opportunities in
the classroom and on the job. Through
these offerings and the diversity of roles

on offer, recruits can expect significant
career development opportunities.
I believe the sector to be extremely
flexible and adaptable to personal priorities and needs. At BP I have found that
our employees priorities change as they
move through their careers. The scale
of the industrys major downstream sites
allow for progression and development
within a single site or location, while the
reach of the sector means that the global
opportunities are there as and when the
time is right.
In summary, recruits can expect an
industry with numerous career options
and the flexibility to meet their short
and long term goals. This is an industry sector that challenges you and the
way you think, that is inclusive and
that delivers vital products to keep the
worlds light on, homes warm, businesses running and vehicles moving.
INDUSTRY
Insights
Evidence-Based Management:
a Practical Management
Approach for the Energy Industry
By Eric Scheller, Director at Sapient Global Markets
HE rapid growth over the last five
years of natural gas, gas liquids

and crude oil activity in shale
basins has single-handedly changed
the global nature of energy production. The impact on companies in the
upstream, midstream and downstream
sectors is seen in increased competition for supply and markets as well as
human and financial capital. Complicating ongoing business management
is the large amount of data from sprawling assets that needs to be analyzed and
acted upon in a narrow real-time window through a compelling format. In
this article, Eric Scheller discusses the
challenges and options facing business
directors as they try to fully disseminate
and leverage data in the management
and growth of their businesses.
Trends Driving Increased Complexity
When Mitchell Energy completed its

first economic shale fracture in 1998,
no one thought it would lead to the
Photo by Rachel Seeley, UOGR
unprecedented shifts in energy markets that we are experiencing today.

In fact, there were many experts who
did not see the development of these
unconventional plays and now believe
that North American shale development is still in its early stages. Consider
how much shale plays have moved the
ERIC SCHELLER is subject matter expert within Sapient Global Markets Midstream
practice. He has over 25 years of experience in oil, gas, NGLs and chemicals. His practice
areas include business and asset operations strategy, development and business in distress
and corporate restructurings as well as commodity marketing and trading. He has served in
a variety of business development, consulting, commercial, operations and technical roles for
several major companies.
North American energy landscape over

the last five years:
Record production increases in natural gas and oil
Prolific NGL production from liquidrich gas processing
Historical build out of midstream
infrastructure
Revitalized North American petrochemical industry
Its clear that upstream producers,
midstream and downstream companies
have had their share of growing pains
in dealing with the increase in inter-
19
connected assets to handle the technological advances and growing production volumes. This growth has spurred
business management complexity as
well as the amount of data to be analyzed to assess performance, which ultimately reduced available time to examine and seize opportunities. Throughout
this growth, companies recognized the
need to collect, validate, compartmentalize and digitize data into electronic data
Safety and environment

Regulatory
Commercial
Business
Operating assets
Supply chain
management systems, asset management

data warehouses and commercial systems to assess and monitor their investments. In spite of these investments and
efforts, companies found themselves with
portfolios of assets generating marginal
returns. Performance reviews by business
managers found that one of the underlying contributors of poor performance was
that market signals went unidentified as a
result of marginal data analytics.
Control
Operate
Extend
Optimize
Ongoing operations
Turnarounds
Customers
Assets
Capacity
Portfolio
Control - Activities tied to the control aspect for the base drivers of the business.
Focus: Safety and environment compliance, regulatory standards and compliance,

commercial and legal agreement management
Goal : All the processes necessary to operate the business assets are in place and
are valid to invoice and report against
Operate - Activities related to the physical operation of assets under management.
Focus: Ongoing operations, business-in-distress turnarounds, customer management

Goal : Business assets are operated safely, prudently and effciently
Optimize - Portfolios of assets are optimized to realize the highest returns.
Focus: Assets, capacity and portfolio management

Goal : Achieve the highest returns possible at the commensurate level of risk
Extend - Lever aging strategies and positions to grow business results Into new areas.
Focus: Organic business growth, business and operating asset acquisition,

supply chain extension
Goal : Achieve business development and growth goals to achieve a competitive advantage
FIGURE 1: Parsing the Business into its Core Functional Activities Focuses Attention
on Key Business Elements.
20
Base Data Requirements To

Capture Opportunities
The struggle for many companies is

determining how to fully disseminate
and leverage data and analytics in support of corporate goals tied to safety,
environment, health, customer, service
and profit and expense targets. Energy
firms share many of the same goals, for
example:
Be recognized by the public and
industry as a safe and responsible operator of assets as demonstrated through
a track record supported by audit history of a reliabilitycentered asset management practice that fully complies
with industry regulations
Minimize the total cost of asset ownership through the efficient use of personnel and a shared services support
model
Maximize the utilization of assets
under management to increase topline and bottom-line growth
Maximize optionality and flexibility
through asset interconnectivity
Maximize earnings from integration
of newly acquired assets or flexibility
in operating the asset
Capitalize on low-risk market opportunities by leveraging assets to flow
hydrocarbon to premium markets
Leverage returns through volatility in
commodity differentials supporting
arbitrage strategy development
Companies trying to achieve wideranging goals as shown above will have
to create a data and workflow framework
with the following characteristics:
Accurate and TimelyData sourced
across the organization is the driver of
solid analytics. Without accurate, up-to-
the-minute data, companies are unable

to discern and communicate possible
market signals to decision makers. Data
must be error free, undisputed and freely
available before any meaningful insights
can be gleaned through analytics.
Cross Functionally AvailableCompanies that extend quality data and analytics to remote locations and employees
across functional silos create an open,
collaborative working environment that
encourages data cross-flows. These new
flow-paths improve the quality of informationdriven analytics and systems.
Organizationally ActionableDecision makers receive a continuous position of actions to improve asset performance and enhance business expansion
investments from the rollup of organizationally available data and analytics,
including up-to-date information on
customers, products, product availability
and operations status.
An Evidence-based Approach
Business directors in the energy space

have long faced the challenge of direct-
ing complex systems with

limited resources and
disparate data systems
to achieve a laundry list
of goals and objectives.
Many ambitious overarching initiatives to fully
disseminate and leverage
data fall short of achieving
any meaningful, actionable output because they
fail to make managing the
business faster, more efficient and more profitable.
Any plan that fails to take
into account these three
drivers hampers its chances of success
from the moment it is proposed.
In order to maximize their chances for success, business directors are
embracing Evidence-based Management (EBM) to employ actual evidence in management and decisionmaking. Leveraging well-developed
methods long used in the medical field,
directors in the energy sector are apply-
Goal, Control Pipeline

Integrity Management
Requirement: Asset management,
integrity and compliance reporting
Actionable Output:
Assetleakdetectionoccurrencesandnon-destructiveinspection
dataanalysis
Managementofpredictive/preventativemaintenanceanalysis.
planningandassetperformance/
integrityreporting
FIGURE 2:PipelineIntegrityManagement
ComplianceandActionableActivities
Goal: Operate Multi-Mode

Transport Services and Terminals
Requirement: Capacity
management tracking
and reporting
Actionable Output:
Summarizelogisticssolutionsandsystemsforcurrent
customers
Forecastrail,truckandbargesavailabilityforopportunistic
redeployment
FIGURE 3:Rail,TruckandBargeSchedulingandManagement
ing scientific methods to managerial

decisions and organizational practices
informed by the best available business
environment evidence. EBM practices are unique and organization specific
and include the systematic accumulation and analysis of data and problembased research and discussion by managers and staff. This leads to decisions
informed by both best available research
and organizational information.
A practical approach to EBM begins
with the reality that a business can
be parsed into four unique functional activities, namely Control, Operate,
Optimize and Extend, as shown in Figure 1, and further described as follows:
Having timely, accurately aligned
data in each parsed function, combined with a focus on faster, more efficient and more profitable results, is the
key to achieving the goals of a business
director at each level. Ultimately, inefficiency and waste is minimized and limited resource utilization and productivity is maximized. Using this approach,
firms can:
21
Goal, Optimize Return On Assets

Requirement: Grow revenue in
multi-mode services supported by
trading activities
Actionable Output:
Improve forward visibility on
asset balances. in-transit inventory and s hipper destination
terminal rundown
Maximize revenue and volumes
related to multi-mode transporting (truck, ra il and pipe]
and blending under bundled tra
nsport agreements
Capture trading and logistics
solutions to enable storage
optimizat ion and grad e/location
differentialbased transact ions
FIGURE 4: Optimization Interactions
from Asset and Commodity Data Sets
Streamline data management and

workflow processes
Focus line staff on research and analysis within their functional area
Disseminate data throughout the
organization
Generate new insights into previously
unidentified signals
Trigger decision-making response and
new actions by business directors
Scorecards
The framework described above is

designed to move a company toward an
evidence-based mindset within each
functional activity. Business managers that take the initiative to drive organizational decisions based on the best
available information need an intuitive
22
tool that:
Provides immediate and clear feedback
Ties performance to goals and objectives
Aligns operational activity with strategic activity
Summarizes the right set of metrics
decision makers can control
Allows for problem identification within the business
Shows how decisions affect business
success
Compels decision making based on
analytics, not instinct
One of the most effective tools to
achieve these results is the visualized
scorecard. Central to the success of
scorecard use is its design rationale and
an actionable purpose that furthers the
insights into the business. A user-centered
design for the scorecard will maximize
the value of the user experience (UX).1 A
well-designed scorecard with an appealing user experience will enhance the
Requirement, Market
And Customer Insight In
Business Expansion
Requirement: Capacity
management tracking and
reporting
Actionable Output:
Asset efficiency
Fuel management
Supply management
EBITOA performance
KPI tracking
Asset risk factors
FIGURES 5: Overarching Decision Management Portal
overall quality of decisions through the

deliberative use of relevant and best available analytics. Figures 2 and 3 are examples of energy company scorecards by
functional activity. They are shown with
a corresponding example visualization.
Success Factors
To successfully build a culture of evidence-based management, firms must:

Demand that all data be validated and
that a process is in place to ensure continuous validation
Demand that an open, data-sharing
environment exists for all employees
Create and enforce appropriate workflows that underpin the culture
Resist the urge to take an ad hoc
approach to scorecard design as it
invariably results in views that are
nice to have and may have little
redeeming value
Scrupulously monitor and manage
the use of visual scorecards to achieve
actionable, decision-based views Companies employing visual scorecards
supported with accurate analytics and
timely information dissemination are
already gaining an advantage against
their competitors through decisionmaking responses and actions that
achieve faster, more efficient and profitable results.
ORGANIZATIONAL
Insights
What the Heck

Happened to SEMS?
original Workplace Safety

Rule aka, SEMS was effective
on November 15, 2010 and
compliance of its provisions required
by November 15, 2013. This included
the 13 elements of API RP 75.1
In 2013 the Bureau of Safety and
Environmental Enforcement (BSEE)
issued 30 CFR Part 250, Oil and Gas
and Sulphur Operation in the Outer
Continental ShelfRevisions to Safety
and Environmental Management Systems; Final Rule, aka SEMS II.2 This
final rule revised and added additional
requirements to the SEMS regulations.
The rule became effective on June 4,
2013 and most of the provisions required
compliance not later than June 4, 2014.
Only the auditing requirements still
have a future compliance (by) date of
June 5, 2015.3
HE
SEMS Implementation
In the study, The State of SEMS

The Industry Transformation to a Culture of Safety first released in January
2013 and updated in November of that
year a detailed review and assessment
of industry SEMS implementation processes revealed that as might be expected SEMS regulations were incorporat-
ed into field operations management.4

Moreover, the industry reviewed and
continues to explore the good operations safety practices of other sectors.
The major organizations (operators and energy service providers) have
incorporated the SEMS requirements
into their Operations Management Systems (OMS). For example, the Chevron
Operational Excellence Management
System (OEMS) establishes managerial guidelines and process management
to assure incident reduction, improved
performance, compliance and preparation for emergency management.5
Increasingly, the industry is also in-
corporating High Reliability Management (HRM) processes into operations.6 There is a growing body of work
on HRM and those organizations that
embody these principles into operations. Those sectors where the cost of
failure can be very high, i.e., nuclear,
aviation and medicine are candidates
for HRM.
These traits include sensitivity to
operations by organizational leadership,
reluctance to accept simplistic explanation of issues, preoccupation with the
possibility of failures, deference to those
with expertise and knowledge regarding
an issue and organizational resilience.7
23
Moreover, the relationship between organizational culture and High Reliability

has been known for some time.
Humans are now managing systems
that are more complex than they are
able to sense and anticipate problems
generated by those systems. Known as
requisite variety, is can be defined as,
the variety that exists in the system to
be managed exceeds the variety in the
people who must regulate it. 8
Collective requisite variety is a function of the level of trust and interaction
a group has with each other. It is maximized when, each person so behaves
as to be in his turn a valid dependable
model for the others. Each acts both a
model and observer.9 As subsequently
developed, this meets the test of organizational culture.
Culture of Safety
In May 2013, BSEE issued its Final Safety Culture Policy Statement that contained nine characteristics of a robust
safety culture.
Leadership Commitment to Safety

Values and Actions
Hazard Identification and Risk
Management
Personal Accountability
Work Processes
Continuous Improvement
Environment for Raising Concerns
Effective Safety and Environmental Communication
Respectful Work Environment
Inquiring Attitude
Processes
Preoccupation
with failure
Mindful infrastucture for high reliability
Reluctance to
simplify
interpretations
Mindfulness
Sensitivity to
operations
Capability to
discover and manage
unexpected
events
reliability
Commitment
to resilience
Underspecifcation
of structures
24
Copyright 2013 The Rapid Response Institure. All Rights Reserved.

Adapted from Weicket al. (2008). Organizing for High Reliability Sage.
Source: Holland and Shemwell (2014) provided with permission.
BSEE defines a characteristic as

a pattern of thinking, feeling, and
behaving that emphasizes safety, particularly in situations that may have
conflicting goals.10 Moreover, according to former BSEE Director James A.
Watson, these characteristics are rooted in the Nuclear Regulatory Commission (NRC) policy changes following the 1979 Three Mile Island partial
meltdown.11
The challenge many still face is developing an understanding and implementation plan for a Culture of Safety for
MY company. Organizational culture
is a critical component of competitive
advantage and is in fact who the company is and the way it behaves.
Therefore, each is different and the
industry will not develop a Culture of
Safety but thousands of Cultures of Safety, each unique yet under the umbrella
of the tenets set forth by BSEE. Additional tools are available to assess management transform their organization
as necessary to meet these new realities.
One example is a self-assessment guideline available online.12
edge, Skills and Abilities (KSA) for a

According to the Petroleum Equipment number jobs. For example, the InternaSuppliers Association (PESA), as part tional Association of Drilling Contracof the new Workplace Safety Rule, all tors (IADC) has released new KSA comoperators will be required to develop, petencies for drilling, production and
implement and maintain a SEMS plan. marine personnel.14
Many major operators are implementMoreover, supervisors must now cering their SEMS systems supply chain- tify that employees have demonstrated
wide, which means
Nine values of a culture of safety
the requirements will
reach many service
companies and manuProblem
Personal
Safe work
identifcation
facturers as well.13
accountability
processes
and resolution
One method of
assuring SEMS compliance and auditability is by extending use
Leadership
Continuous
Foster an
of API Bulletin 97,
learning
environment
for raising
Well
Construction
concerns
Interface Document
(WCID) guidelines.
This bridging docuInquiring
Trust and
Effective
ment incorporates the
attitude
respect
communication
API 75 SEMS requirements and aligns the
operator work processes with those of the contractor. Orig- an acceptable level of competency for a
inally designed as the relationship given task. Therefore, the level of workbetween operators and drilling contrac- force fitness is greater.
tors it now encompasses other types of
suppliers as well.
So Where the Heck is SEMS?
Robbie Katanga stated, Culture is how
Training
organizations do things.15 Logically,
As with any set of change processes, industry culture is the way the industry
training is a Critical Success Factor does business.
(CSF). This includes individuals at all
While the industry transformation
levels in the organization from top lead- to a Culture of Safety is relatively new,
ership to entry-level employees.
expect this new culture to grow stronFirms are adopting simulation and ger and more ingrained into the fabric
other sophisticated training tools simi- of the sector. Sometime in the not too
lar to those used in aerospace as well as distant future, industry speak may not
completely redefining certain Knowl- use the word SEMS except for regulaDont Forget the Supply Chain
tory verbiage.
Just like today, no one thinks it is
appropriate to drive home at the end of
the day while drinking a beer, behavioral modification driven by SEMS will
truly be part of how we do business.
Endnotes
1
http://www.bsee.gov/Regulations-andGuidance/Safety-and-Environmental-Management-Systems-SEMS/
Fact-Sheet/
http://www.gpo.gov/fds ys/pkg/FR-201304-05/pdf/2013-07738.pdf
Ibid.
http://ogjresearch.stores.yahoo.net/thestate-of-sems.html
http://www.chevron.com/
about/operationalexcellence/
managementsystem/
Holland, Winford Dutch E. and Shemwell, Scott M. (2014). Implementing a

Culture of Safety: A Roadmap to Performance-Based Compliance. New York:
Xlibris.
http://www.beckershospitalreview.com/hospital-management-administration/5-traitsof-high-reliability-organizations-how-tohardwire-each-in-your-organization.html
http://www.aml-safety.com.au/AMLstores/_images/pdf-files/Weick1987.pdf
Ibid.
10
http://www.bsee.gov/uploadedFiles/
BSEE/Final%20Safety%20Culture%20
Statement.pdf
11
http://www.bsee.gov/BSEENewsroom/Speeches/2013/
COS-Speech-04_25_13-final-website-(4)/
12
http://www.therrinstitute.com/assets/cosmaturity-model-2d-edition-adobeonline.pdf
13
http://www.pesa.org/index.php/news/c/
pesa-news/legal-2013/
14
http://www.iadc.org/
knowledge-skill-and-ability/
15
http://blogs.hbr.org/2013/05/
what-is-organizational-culture/
25
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The magazine for the international power industry

THE NEXT STAGE OF EVOLUTION

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The power supply of the future?

Still a risky proposition

Free Product Info

Power Engineering International December 2014

Energy Agency, writes on p4 that while the

energy market and its effect on the

switch to renewables is well underway, what

sectors major players was highlighted

remains unclear is how long this transition will

this month by the news from German power

take, and how well policymakers will handle

giant E.ON that it is to spin off its fossil fuel

and nuclear businesses and concentrate on

He says that after years of renewables

Chief executive Johannes Teyssen said:

increasingly ready to step in. Institutional

We are convinced that its necessary to

investors are also starting to get interested.

They are increasingly taking into account

energy markets, technical innovation, and

the risk attached to fossil fuels, and new long-

more diverse customer expectations with a

term, low-risk instruments are being created to

bold new beginning. He added that E.ONs

encourage them to invest in renewables.

existing broad business model can no longer

He says these and other trends require a

properly address these new challenges.

different way of thinking about energy, shifting

Therefore, we want to set up our business

from a system dominated by a few centralized

signifcantly different. E.ON will tap the growth

utilities to a diverse, distributed system, where

potential created by the transformation of the

consumers are also producers, with far more

control over how and when they use energy.

A key driver of this transformation in Europe

However, Maria van der Hoeven, executive

is the German governments Energiewende, a

director of the International Energy Agency, this

decision to ditch nuclear and focus on a drive

month sounded a warning regarding Europes

for more renewables. This has pushed down

bid to become the global powerhouse of the

wholesale prices, which has damaged profts

at E.ON and several other German energy

She said this ambition seems to be a bit