Category Archives: Oil and Gas

Egbin Power Plant plans to build a liquefied natural gas terminal to solve a severe shortage of gas

Liquefied Natural Gas (LNG) for export is great… However, LNG to power has become imperative for an energy starved Lagos!
Light Up Lagos!

Lagos is reported to have a population of over 20 million people and is still growing, Lagos is said to consume over 40% of the premium motor spirit consumed by Nigeria as a whole on a daily basis. Governor Akinwunmi Ambode has been drumming up support for his light up Lagos plan, this liquefied natural gas terminal might just be the tipping point for him…

Lagos has the opportunity to become the LNG import hub for Nigeria and Africa as a whole.
Egbin to the rescue…

Owners of Nigeria’s largest power plant located at Egbin Power Plant near Lagos are planning to build an LNG import terminal, as it seeks to solve an acute shortage of gas according to Chief Executive Officer Dallas Peavey.

What is LNG?
LNG is gas frozen to liquid reducing its original size by 1/600. LNG is a liquid which can be shipped in, this might give Egbin some respite from the constant attacks on pipelines, which has reduced its gas supply, switching to LNG may also open Egbin up to multiple suppliers of LNG struggling for new markets. It is plausible that Egbin may be able to ensure the stability of gas supply to the market with a floating LNG terminal for importation.

What is an LNG Terminal?
An LNG terminal is a purpose built port used exclusively to export or import LNG.

“LNG import terminals” as a service?
The LNG terminal can be used strictly for Egbin or/and for other players who may also want access to LNG.
Egbin has the opportunity to champion the use of LNG import terminals for its sole use, or the use of LNG import terminals as a service to other gas consumers…

LNG Pricing
Concerns about LNG prices rising are a real concern, it is hoped that the price indexation/decoupling of LNG prices may have ended.
Historically there has been some relationship between the price of crude oil and that of natural gas that is, barring any unforeseen occurrences like natural disasters etc.

Decoupling of prices is usually temporary. However three factors tend to point to a possible permanent decoupling of prices and a possible dip in some areas. They are:
1. The globalization of natural gas
2. Specialization in all parts of oil and gas industry by companies
3. The emergence of Shale Gas.
Quite a number of industry experts agree that LNG prices change with time, thus, Egbin may consider benchmarking its projections on possible higher prices or hedge against a rise in LNG prices.

Egbin may do well, to avoid the mistake some indigenous oil companies made; those oil companies banked on higher crude oil prices, which eventually fell.

Egbin should be wary of banking on low LNG prices, which may eventually rise, when demand rises or supply falls.
Egbin should avoid limiting its LNG supply to “local sources”. Our “local sources” of LNG may be given a right of first refusal, but at no point should Egbin limit itself, as our “local sources” of LNG may be fixated on export of their product…

Buyers Market v Sellers Market
It is now a buyer’s market in the LNG world; sellers are aggressively wooing buyers…

Qatar LNG recently gave a huge discount to India, waived a penalty and has been selling on the “spot market” too.
“The new formula between the two companies is in the interests of a win-win. Where the previous contract meant that Petronet had to buy LNG at $12-13 per mmBtu, the new contract means a price of $6-7 per mmBtu,”.

Iran has started supplying LNG to Kenya, Tanzania and South Africa.
Long Term Contracts v Spot Markets
Egbin should try spot markets and negotiate a long term deal if the price is right, preferably with a major player like Qatar Gas LNG or a player like Iran keen on gaining market share.

Long term LNG contracts have given way to spot markets, it’s no longer a seller’s market, it’s now a buyer’s market. There are quite a few LNG projects on the ground, floating and in the pipeline but consumption is not spiking per se.

India renegotiated a long term LNG contract recently and got a 50% discount. I believe Egbin should negotiate for the best deal it can get, since it’s building an LNG terminal.
Egbin may consider prospecting for a seller, willing to finance the construction of the LNG terminal…

Hydraulic fracturing has increased the supply of natural gas available. It has been reported that, 5 (five) LNG export terminals are being built along the U.S. East Coast alone, making the possibility of an LNG glut more feasible. Egbin LNG import terminal will be very handy for gas exporters from the U.S.A, Qatar and Iran to enter the Nigerian market.
In Africa, it is reported that there are at least 5 (five) planned LNG import terminals , Cotonou LNG Import Terminal, Benin, Ghana FSRU LNG Import Terminal, Ghana, Jorf Lasfar LNG Import Terminal, Morocco, Mombassa LNG Import Terminal, Kenya and Mossel Bay LNG Terminal, South Africa.

The Croatian Paradigm

Land Based LNG terminal v Floating LNG terminal

Croatia has been reported to have opted to go for an FLNG (Floating LNG) terminal to commence LNG import over a land-based LNG terminal.

This FLNG import terminal is expected to reduce the construction costs of an LNG terminal and will require only two years to be fully operational. It will be the world’s first offshore LNG regasification terminal. It is 47-metre (154 ft) high, 88-metre (289 ft) wide, and 180-metre (590 ft) long.

It was reported that, the FLNG terminal will be operated by Qatar Terminal Ltd., a subsidiary of Qatar Petroleum and some other companies.

Conclusion
The benefits of an LNG import terminal may far outweigh its cost, avoiding gas supply disruptions due to ruptured pipes may be the least of such benefits, while the possibilities range from security of gas supply, to the possibility of long term storage tanks, to opening the window for the use of gas for transportation and helping a nation complete its energy circle.

Olufola Wusu is a Commercial, Oil and Gas and I.P. Lawyer based in Lagos
Olufola Wusu Esq. © 2016
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Internationally recognised on Who’s Who Legal as a top business lawyer:

Olufola Wusu is noted for his “dynamic practice” and “commercial acumen”. He is praised for his “first-rate skills” in assisting clients…
http://whoswholegal.com/profiles/65712/0/wusu/olufola-wusu/

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NNPC Reforms-The IP Dimension

President Muhammadu Buhari has stated that the Nigerian National Petroleum Corporation (NNPC), the national oil company will be divided into two successor entities under his administration, one of the successor companies will be an independent regulator, the second would run as an investment vehicle for the country.

The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Dr. Emmanuel Ibe Kachikwu is reported to have stated that “We are doing a lot of work in terms of repositioning, restructuring, getting the right people in key places and setting a culture of accountability and service delivery so that the new NNPC that you are going to see will be a different institution altogether”.

“It’s a three-pronged process that I am pursuing. There’s a people aspect which we are dealing with now; there is a process aspect; after the people at the right places, you are going to get forensic audit done so that we know clearly, proper forensic audit that will cover us all the way to 2014, 2015, that will be able to say to you, this is the state of the company”.

The new NNPC boss said under his watch, processes and control are going to be put in place. He also said the NNPC is going to embark on retraining and repositioning.

Without dwelling on the legal ramification or ethical considerations of the above reforms, this paper will attempt to highlight the possible Intellectual Property (IP) dimensions of the proposed NNPC reforms.

What does IP have to do with Oil and Gas?

Oil and Gas Intellectual Property;

The basic types of Intellectual property prevalent in the oil and gas sector are the following; Patents, Trademarks, Copyrights, Trade Secrets and Others like brands, Know-How, Know – Who and Professional Credentials & Credibility.

In protecting innovation and technology a key benefit of an intellectual property system is that a contractual right is only enforceable against the person who entered into contract with you; while a property right is enforceable against the world! Reports have however shown a strong correlation between the presence of intellectual property in oil and gas companies, especially service companies, and their profitability.

Patents

A patent is a document issued, upon application by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent. Patents cover things like cutting-edge technologies used in refining, gas processing, LNG facilities, instrumentation, production data capture, horizontal drilling, multilateral wells, hydraulic fracturing, or fracking, and deep-water-drilling methods. Technology breeds IP which often gives rise to market dominance or influence.

Who are Getting Oil and Gas Patents?

Nearly everyone in the oil and gas industry is getting patents.

Schlumberger is one of them. Schlumberger’s technological dominance in the oil field servicing landscape is reflected in its formidable patent portfolio. A search on Espacenet, an international database operated by the European Patent Office, for Schlumberger reveals more than 36,000 patents linked to the firm. A search for Halliburton yields 25,000, while Baker Hughes, the third-largest in the sector has 20,000 patents.

ExxonMobil had over 10,000 active patents at the end of 2011.  Shell had over 20,000 patents at the end of 2012.

Over the past 35 years of GTL development Shell has filed some 3,500 patents, the company’s world-scale undertaking in Qatar is bringing new discoveries and challenges

Why Nigerian Oil and Gas companies are yet to fall in love with Patents …

They are so busy making money selling oil and gas (i.e. commodity trade) that no one thinks that there is a need to innovate; there is enough money to go around so why bother with R&D that leads to technology which breeds IP that gives rise to increased profitability.

Interestingly, oil prices have fallen and with IP, companies will be able to make more profits. For example the sands project method described in (U.S. Patent No. 6,158,510) was patented by ExxonMobil in 2000.  ExxonMobil licensed it to Baker Hughes in 2012.  ExxonMobil collected more than $129 million in 2011 from licensing its intellectual property to third parties, and this number is increasing every year.

Trade secrets

A “trade secret” is any product, operating formula, pattern, device or other compilation of information which is used in a business, which gets its economic value from being kept secret, and gives the business a competitive advantage.  The upstream oil and gas industry depends heavily on trade secret protection.  The duration of trade secret protection is potentially perpetual, as it continues as long as you can keep your “trade secret” secret! Hydraulic fracturing is also heavily protected by trade secret protection. Despite regulatory pressure to show the contents of hydraulic fracturing fluids, companies that ‘frack’ have failed to show the full content of hydraulic fracturing fluids.

Copyrights

Copyright exists in a work on the basis of originality and fixation. Copyright protection is particularly important to the oil and gas industry in the protection of software, databases and maps, the results of a 3-D seismic survey which would include aspects of each.

Trademarks

The first barrel in any great oil and gas company is a good name. It should be registered as a trademark.  The oil and gas industry seems to have overlooked the power and value of branding as many executives may not appreciate how brands work to create economic value.A brand is a collection of trademarks, trade names, logos, signs, symbols, domain names, copyright and creative material which stand for values and character in the minds of stakeholders which positively influences their behaviour towards the subject company. According towww.brandfinance.com Shell is described as having the most valuable brand in the oil and gas industry.

Interestingly host community hostility has driven some oil majors from onshore operations offshore, perhaps due to negative branding with regard to environmental issues. In addition not all IP-branding endeavours are successful as BP recently lost its battle to trademark the colour green in Australia.

Economic Benefits of IP in Oil and Gas

The oil and gas industry has become aware of the benefits of IP in Oil and Gas and the dangers of its neglect. This awareness has been accelerated, by the sudden growth in the extraction of difficult oil and gas reserves (leading to increased profitability for some oil and gas companies) as made possible by technological innovation such as hydraulic fracturing, or fracking, and deep-water-drilling methods in the oil and gas industry as well as a changing competitive landscape, characterised by low prices and increasing supply that seems to have changed the oil and gas industry’s dynamics. The good thing is that technology breeds very valuable IP.

QatarGas engaged in intensive research and development leading to technology innovation backed by patents that enabled it to build Liquefied Natural Gas plants on a very large-scale. QatarGas has 20 trains thus it processes more gas at a cheaper rate and is able to sell at lower rate, thus selling more gas and making more profit despite the seeming downturn.

Oil and gas companies have recently boosted their research and development (R&D) spending and innovation to stay relevant. From 2002 through 2011 the top ten oil and gas companies increased their spending on R&D by nearly 10 percent annually yielding favourable results. In the Boston Consulting Group’s recently released list of the world’s most-innovative companies, three oil and gas companies ranked in the top 50: Shell at 26, Exxon Mobil at 40, and BP at 44.

 

Global IP in Oil and Gas Competition is increasing

Efforts to protect IP in oil and gas through patents, trade secrets, and other means have clearly increased.  Globally, patent activity in upstream oil and gas rose by about 20 percent per year from 2009 through 2012. However, the downstream sector which comprises of IP-intensive businesses such as refineries has had steady patent activity.

Innovation has the potential to drive oil and gas companies’ profitability and influence their relationships with national oil companies and oil-field-service companies. This may be the reason the Chinese government is encouraging “home-grown” innovation and facilitating “patenting” in oil and gas through tax incentives.

From 2006 through 2010, Chinese oil and gas companies have increased R&D spending by 29 percent and upstream patenting activity by 66 percent. In downstream, the Chinese energy conglomerate Sinopec is amassing a large patent portfolio, at home and abroad (excluding Nigeria I guess).

Nigeria may consider encouraging innovation in oil and gas backed by IP in its oil and gas companies. The NNPC may very well lead the way in this regard by laying the regulatory framework for IP in oil and gas to thrive in Nigeria.

The Need for IP reforms in NNPC

There is a need for Nigeria, the NNPC and Indigenous Oil and Gas companies to pay attention to IP which is catalysing growth in the Oil and Gas industry. The Oil and Gas industry is intensely innovative and technology driven and this technology is protected by patents and other IP owned by companies who either directly take part in Oil and Gas projects or license out their IP including patents to others to use for a hefty fee.

National Oil Companies are driven by IP-The Petronas Paradigm

Malaysia’s national petroleum corporation is called Petroleum Nasional Berhad (PETRONAS). It was incorporated in 1974 under the Companies Act (1965) and is owned by the Malaysian government. Just like it is in Nigeria, the entire ownership and control of petroleum resources in Malaysia rests with PETRONAS through the Petroleum Development Act (1974).

Clear IP Centred Research and Development Policy

PETRONAS uses sound technology to run world-class plants to create new products or improve existing products.  PETRONAS receives grants for commercialization of research and development (R&D), and for developing prototypes or pilot plants leading to valuable patents and IP. Its R&D partners include universities, institutions of higher learning, government research institutes, private consultants, and other companies.

NNPC’s research and development policy is a bit unclear, the number of patents or IP it owns are not easily ascertainable.

 

Intellectual Property Management

IP increases the profitability, growth and business development of PETRONAS. The need to protect PETRONAS’ intangible assets/IP motivated it to set up a separate IP division within its legal department consisting of lawyers who understand the IP implications of oil and gas. The IP division has the function of protecting PETRONAS IP rights (IPR) against the competition, preventing infringement, and commercialization of IP asset by sales or licensing.

The IP Division is also in charge of everything about corporate IP matters like the development of IP guidelines and IP process flow. Conducting IP awareness programs on the value of IP/intangibles and the registration of PETRONAS trademarks and patents, for the units within PETRONAS.

Patents

Owning a patent (and other IPR) makes it easier to attract investment. Venture capitalists often seek entities that own IP to invest in. Strategic patenting by NNPC can help raise funding, increase profitability, help avoid prosecution for patent infringement, also IP portrays  a company as innovative.

Trademarks and Branding

PETRONAS has more than 200 trademarks spread out over 65 countries. PETRONAS has registered 110 trademark applications in 45 classes with the Malaysia Intellectual Property Office. PETRONAS brand promotional activities have made customer loyalty the most important target.

Domain Names

PETRONAS has invested a significant amount of money and time in creating and promoting its brand name, both nationally and internationally. A number of internet websites are operated by the company and its subsidiaries. Petronas has successfully challenged cyber squatters at least three times.

Conclusion

The upstream oil and gas industry has been described as a “knowledge industry” because of new technologies such as three-dimensional acoustical sounding, horizontal drilling, and deep offshore drilling. Cutting edge technologies coupled with Supercomputers have taken their place with the industry developing a big interest in IP. Commercialisation of IP needs careful analysis of a number of factors to pick the best strategy. IP may be licensed, sold or even exploited in a joint venture. Perhaps the inclusion of IP in the NNPC reforms would pave the way for “the IP in Oil and Gas” revolution to begin in Nigeria which should help nudge the indigenous oil and gas companies and the Industry in the right direction IP wise.

Olufola Wusu Esq. © 2015

I work with companies seeking to invest in Nigeria. I solve legal problems and help monetize I.P. & Oil and Gas.

fola@megathoslaw.com

Please connect with me on LinkedIn http://www.linkedin.com/pub/olufola-wusu/22/317/587

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ALTERNATIVE FUNDING ARRANGEMENTS FOR OIL AND GAS COMPANIES

 

ALTERNATIVE FUNDING ARRANGEMENTS FOR OIL AND GAS COMPANIES: A-Z OF REVIEWING PRODUCTION SHARING CONTRACTS (PSC) IN NIGERIA

The nature of the Oil and Gas industry in Nigeria makes it unattractive for commercial lenders to agree to finance such projects when they are embarked upon by smaller companies.

Even when such financing is available, it comes with high interest rate for loan servicing such that default is not particularly uncommon.

Lending is even more uncommon when the project is purely exploration or import based because of the inherent risks involved in participating in such activities.

On the 17th of September 2012 the Central Bank through a circular BSD/DIR/GEN/AMC/05/048 dated September 17, 2012 barred Nigerian Banks from further giving loans to 113 companies and their directors. Amongst this companies are oil and gas companies. This has ostensibly closed the window of future credit facilities to these companies at least for now.

Regardless of the difficulty in securing loans oil and gas exploration projects have developed alternative means of finance through the use of Drilling Funds, Illustrative Agreements, Royalty Purchase, Sale Purchase Agreements, Farm Out Agreements and Production Sharing Contracts.

Production Sharing Contracts have been extensively used in the oil and gas industry as an alternative means of financing exploration activities and it will become more popular due to the recent ban by the apex bank on further lending to specified companies.

 

Production Sharing Contract (PSC)

In a PSC, the NNPC engages a competent contractor usually an International Oil Company (IOC) to carry out petroleum operations on NNPC’s wholly held acreage.

Primary Legal Regime regulating Production Sharing Contracts

DEEP OFFSHORE AND INLAND BASIN PRODCUTION SHARING CONTRACTS DECREE NO 9 1999 ACT. CAP. D3. LFN 2004.

This is in addition to the individual contracts signed with the individual companies.

History of production sharing contracts

Indonesia led the way in 1966 through Permina, the state oil company.

Reviewing a PSC

Our analysis is based on publicly available information such as model PSC terms published in Nigeria and other countries petroleum legislation, websites and in Barrow’s world petroleum Agreements 2004. It might be wise to use a basic checklist that covers issues like; who are the Parties to the contract? What exactly, is the subject of the PSC? What is the preferred Choice of Law?

Are the essential safety clause properly worded? What are the provisions for risk allocation and indemnity clauses?

CONTRACT REVIEW AND ENVIRONMENTAL PROTECTION

Contract terms determine how much Nigeria as a producing country earns from it natural resources; and they can strengthen the regulatory power of government to enforce environmental, health and other standards, where they are not well established…

Basic contract review and negotiation can help stem the tide of pollution and environmental degradation…by making sure we negotiate and include clauses that enact stringent conditions for environmental protection.

Agreed damages clause for pollution

Insert a clause stipulating the minimum fine for every barrel spilled, especially after a certain period of grace.

 

Examples of Key Provisions in a PSC:

Parties to the contract: The parties are usually the International Oil Company (IOC) and the national oil company (NOC).

 

Description of contract area: The contract area has to be delineated into blocks and authorised for Exploration and Production by the Federal Government.

 

Duration of contract: The PSC stipulates the validity period of the contract. The International Oil Company (IOC) must ensure that all commercial discoveries are exploited within the contract period.

 

Management and Supervision of the operations: The Model PSC provides for a Management Committee to provide the direction in respect of all matters pertaining to the petroleum operations.

 

Funding of the operations:

The (IOC)/contractor in a PSC is responsible for funding the exploration work and bears exploration risk if no oil or gas is discovered.

National Interest Provisions/ local content:

A PSC usually contains clauses relating to the transfer of technology, training of local employees and the exercise of a preference for local contractors.

 

Production Sharing: The PSC provides for how the (IOC)/contractor will recover his costs, the allowable percentage of recovery and how production will be shared.

 

Tax: The PSC states the taxes that the International Oil Company (IOC)/contractor would be subjected to.

 

Stabilisation Clause:

Modern stabilisation clauses tend towards mutual agreement before legislative changes that affect the contract are carried into effect. Where a state acts contrary to its stability guarantee in the PSC, such acts tend to justify the award of damages for contractual breaches.

 

Settlement of Disputes:

Disputes between the parties arising from the PSC are settled by arbitration by an independent expert or, in the event there is no reconciliation, by arbitration.

Choice of Law:

Parties are allowed to choose the law that would govern the contracts and any disputes that may arise.

The umbrella clause might also be useful

This means that the contracting state is under interstate obligation to observe investment commitments, allowing the International Oil Companies (IOC’S) the right to resolve breaches of state contracts under international law by an international arbitration.

 

ABANDONMENT/DECOMMISSIONING

Under this clause IOC is under obligation to properly clean up after operations.

 

 

Benefits of Production Sharing Contracts

Control

PSC’S give the host government and its National Oil Company a high degree of control and participation, (well this is in comparison to the limited control given to a non-operator under a JOA).

Frees up cash flow

Even after production begins and the NOC is required to finance the project payments are made from crude oil production rather than cash.

Reliance on the technical expertise of IOC’S and perhaps Tech Transfer

However the Nigerian experience is that we have been unable to achieve technology transfer through the use of technology transfer clauses.

Government profits…

Government shares potential profits without having to make a direct investment

Demerits of PSC’S; the Nigerian Experience

Artificial Expenses

The IOC may decide to slow down the pace of production, be wasteful or extravagant in its exploitation especially when the operator knows his expenses would be fully met by the crude produced.

Mild Sanctions

PSC’S are contracts, thus violating contractual provisions is less costly than violation of a regulation.

 

 

Minefield of Exceptional Situations

Making contracts into law creates a legal infrastructure of exceptional situations.

Less Exposure for Government

Government generally has less knowledge about potential of the oil field than the oil company.

 

Governmental Conflict Of Interest

Government has to balance the desire for higher profits with the enforcement of environmental and other regulations, and most times it succumbs to the desire for more profit at the expense of proper enforcement of the law.

 

Emergence of Social Normative Norms in Oil Pollution?

Lax enforcement of the law in the area of environmental degradation results in host community hostility targeted at the International Oil Company.

Conclusion

Negotiating a Production Sharing Contract requires legal knowledge, foresight and common sense. The information contained in this piece should help inform the Government and International Oil Company (IOC)/contractor as to some possible alternatives, and possibly foster frank discussion between the Government and the Oil Company prior to signing any agreements.


Olufola Wusu Esq. © 2012

Megathos Law Practice

https://megathoslawpractice.wordpress.com

Olufola Wusu is a Legal Practitioner, Contracts Specialist and Intellectual Property consultant

He can be reached at folawusu@hotmail.com

Legal Disclaimer

by Olufola Wusu Esq

(1) No advice

This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such.

(2) No warranties

The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website.

Without prejudice to the generality of the foregoing paragraph, we do not warrant that:

(a) the legal information on this article will be constantly available, or available at all; or

(b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading.

(3) Professional assistance

You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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HYDRAULIC FRACTURING IN NIGERIA: PROS AND CONS

 

HYDRAULIC FRACTURING IN NIGERIA: PROS AND CONS

It has been reported in the news that out of the 388 acreages in the country, 173 had been allocated to 85 companies that are involved in the upstream business, while 215 were yet to be allocated to investors. It was also disclosed that 70 per cent of the 315 oil fields in these 173 acreages are producing oil and gas, while about 30 per cent of the fields are still going through exploration and appraisal stages.

Concerns about Hydraulic Fracturing Hydraulic fracturing is highly variable and unpredictable, and because drinking water supplies are extremely precious resources, numerous concerns have been raised.

Possible Legal Regime regulating Hydraulic fracturing…

Economic Pressure: Natural Gas Development

In Nigeria natural gas has become an important and extremely valuable fuel, Nigeria has approximately 184 trillion cubic feet (tcf) of gas reserves. Fracturing and the Environment Allegations of water quality impacts associated with hydraulic fracturing date back to at least the early 1990s, but hard evidence has gradually began to surface.

Regulating Hydraulic Fracturing… In this writer’s opinion, both Federal and State Environmental Protection Agencies should carry out comprehensive research in conjunction with civil society groups to ascertain and obtain credible evidence of environmental risks and possible economic benefits obtainable from fracking.  

Air Quality Protection

Concerns also have been raised over potential air impacts. Generally, natural gas contains significantly lower levels of greenhouse gases than coal and other fossil fuels, and therefore increased energy production with natural gas has the potential to significantly reduce GHG emissions. Air controls would be used to address the greenhouse gas (GHG) impacts of natural gas produced by fracking.

Hydraulic Fracturing Best Practices

It is common to use diesel in hydraulic fracturing fluids. This should be avoided, since diesel contains the carcinogen benzene, as well as other harmful chemicals such as naphthalene, toluene, ethyl benzene and xylene. It is technologically feasible to replace diesel with non-toxic additives such as plain water.

Possibility of Bans and Moratoriums

Despite movement toward reasonable regulation to address concerns related to hydraulic fracturing, there is still a strong movement, especially in the mid-Atlantic, toward banning all hydraulic fracturing. New York is the only U.S. state that has actually instituted any sort of ban or moratorium on fracking. Bulgaria and France have banned Hydraulic fracturing while in South Africa there is a moratorium on same.

Conclusion

The debate over hydraulic fracturing should commence sometime soon and should not be silenced, but it should remain based on fact, it should be focused on the protection that is already in place and what actually is being done to increase that protection or it will have failed to serve the public interest. In this writer’s opinion shedding light on the current status of facts should assist in that endeavour.

  Olufola Wusu Esq. © 2012

Counsel with Megathos Law Practice

Olufola Wusu is a Contract Review Specialist and Intellectual Property consultant

He can be reached at folawusu@yahoo.com for legal advice and more.

Legal Disclaimer by Olufola Wusu Esq

(1) No advice This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such. (2) No warranties The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website. Without prejudice to the generality of the foregoing paragraph, we do not warrant that: (a) the legal information on this article will be constantly available, or available at all; or (b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading. (3) Professional assistance You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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Oil and Gas Industry:Innovation/Intellectual Property based or a Commodity Market?

Introduction

The Occupy Nigeria demonstrations of the 1st of January 2012, the oil subsidy probe and the ensuing “entrapment gone awry” gives credence to the fact that the oil and gas industry is risky, political and very expensive. Furthermore, the industry is constantly being scrutinised by governments, numerous regulatory bodies, investors and ordinary citizens.

It’s also important because it energises every other industry in the world.

I guess you are thinking, there is enough money to go around in Oil and Gas Industry, so why bother with “innovation” i.e. Intellectual Property?

For starters, Oil and gas companies are expected to comply with the mantra, “cheaper, better and faster” i.e. more productivity, less cost to consumers, but it must still manage international politics and not mess up our environment.

Safety…

Innovation Management

Paradoxically the oil and gas industry probably has the best tools and capabilities covering operational efficiency and decision making.

 

Exploiting innovation

Innovative Contract Review and Environmental Protection

There is a possibility that contract review and negotiation can help stem the tide of pollution and environmental degradation…

The laws enumerated below make up the legal regime for the protection of Intellectual Property Rights in Nigeria.

Copy Right Act, Cap. C 28 Laws of the Federation of Nigeria 2004

Patents and Designs Act, Cap P2, Laws of the Federation of Nigeria 2004; and

Trade Marks Act, Cap. T13 laws of the Federation of Nigeria 2004

 

Oily Intellectual Property;

Patents

A patent is a document issued, upon application by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent

Why Oil and Gas companies are yet to fall in love with Patents …

Is Innovation necessary?

How important is our competition?

What does IP have to do with Oil and Gas?

Trade secrets

A “trade secret” is defined as any product, operating formula, pattern, device or other compilation of information which is used in a business, which gets its economic value from being kept secret, and gives the business a competitive advantage.

 

Contractual Protection for Trade Secrets

Trade secrets are more appropriately protected by contract.

Commercialisation of Patents and Trade Secret

Patents are public documents which disclose information about the invention (technology) in exchange for state protection.

Copyrights

A copyright gives the holder of such copyright the exclusive right to control exploitation, production and adaptation of such a work for a certain period of time.

TRADEMARKS

The first barrel in any great oil and gas company is a good name. It should be registered as a trademark.

 

Oily IP Transactions

Formal accounting procedures for IP assets are fast evolving, but they are generally not on the balance sheet of the average companies that own them, and they are sometimes ignored by financial analysts.

            Conclusion

The upstream oil and gas industry has been described as a “knowledge industry” because of new technologies such as three-dimensional acoustical sounding, horizontal drilling, and deep offshore drilling.

Perhaps the National assembly should do well by including provisions on Intellectual Property and Hydraulic Fracturing in the long awaited Petroleum Industry Bill, which should help nudge the Industry in the right direction IP wise.

Olufola Wusu Esq. © 2012

Counsel with Megathos Law Practice

Olufola Wusu is a Contract Review Specialist and Intellectual Property consultant

He can be reached at folawusu@yahoo.com

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http://www.punchng.com/business/energy/saraki-seeks-amendment-to-nosdra-act/

Saraki seeks amendment to NOSDRA Act

 

Saraki seeks amendment to NOSDRA Act

MAY 17, 2012 BY SUCCESS NWOGU, ILORIN
The Chairman, Senate Committee on Ecology and Environment, Dr. Bukola Saraki, has said that there is the need to amend the National Oil Spill Detection and Response Agency (Establishment) Act 2006.

According to a statement on Wednesday from Saraki’s Special Assistant, Advocacy and Media, Mr. Bamikole Omishore, the Senator is seeking re-designation of the agency as ‘National Oil Pollution Management Agency.’

Saraki said the bill, which he was sponsoring in the Senate, sought to create a more proactive oil spill management and regulation system. He added that it also sought to punish severely irresponsible environmental degradation caused by oil and gas exploitation.

According to Saraki, the bill, if passed, will set out a firm penalty and elaborate compensation regime to compensate people, whose livelihoods and lives are adversely impacted by these spills.

He said, “When this amendment passes through and becomes law, it will equip the agency to hold polluters to internationally acceptable standards.”

Part of the bill reads, “There is established an agency to be known as the National Oil Pollution Management Agency (in this Act referred to as the agency)” with the responsibility to prevent, detect, minimise and respond to all oil spillages and pollution as well as gas flaring and leakages and other hazardous and obnoxious substances in the petroleum sector, coordinate private sector participation in oil pollution management, have access to the ‘Oil Spillage Liability Trust Fund’ as set up by law.”

 

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New technology companies need an intellectual property strategy – Oil & Gas Financial Journal

New technology companies need an intellectual property strategy – Oil & Gas Financial Journal.

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