MOL Scientific Magazine | 2011/3

‘Freshhh’ on-line recruitment competition program of MOL Group Enterprise-wide risk management at MOL Group The role of microbiology in oil industry Downstream projects – In harmony with sustainable development Examination of the relationship between ESCR and the molecular structure of HDPE blow molding grades MOL Scientific Magazine 2011/3 2011/3 MOL Scientific Magazine

Contents MOL SM 2011/3

Challenges Ádám Balogh – Róbert Fehér – Balázs Tatár: 4 Global and regional impacts of the Fukushima nuclear disaster

Ferenc Torma – Artur Thernesz – László Rácz: 14 Downstream renewable energy projects – In harmony with sustainable development

Focus Sándor Galambos – Andrea Kóródi: 26 ‘Freshhh’ on-line recruitment competition program of MOL Group

Máté Gerebenics – Éva Bocsárdiné Geréb – Bálint Kelen – Zsolt Nándori – Attila Szűcs: 34 Enterprise-wide risk management at MOL Group

Edit Keöves: 44 Efficiency improvement (‘Eiffel’) programme at MOL Refining

Gábor Farkas: 50 The changing customer loyalty

Development Hajnalka Füzesi – Ákos Koós – Péter Kesserű, PhD – Ágnes Dergez 58 – Margit Balázs – István Kiss, PhD – Imre Mécs†, DSc – Sándor Puskás, Dr.: The role of microbiology in oil industry, from the laboratory research to the pilot MEOR test

Tamás Krasznavölgyi: 68 Upstream Information Systems developments from the perspective of integration in the last 5 years

László Győry – János Geiger, Dr. – Gergely Kristóf, Dr. – Judit Tóth, Dr.: 78 iCore – Development results and prospects

Zsolt Dudás: 92 Examination of the relationship between ESCR and the molecular structure of HDPE blow molding grades

Imre Balogh: 98 Examination of the effects of different internal electron donors of Ziegler-Natta catalysts on propylene polymerization

Workshop Géza Császár, DSc – Lilit Cota – Zsolt Horváth – Gyula Konrád, CSc 106 – Kresimir Krizmanić – András Nusszer – Davor Pavelić, DSc On the front page: Finalists of the 2011 MOL 'Freshhh' competition – Balázs Szinger – Andrea Szuromi-Korecz, PhD: New results in the Mesozoic stratigraphy of the East Drava Basin

László Pollner, PhD – Marianna Vincze: 120 Editorial Board: ‘Killing two birds with one stone’ – Barlahida 3D second stage: Attila Baráth; Zsolt Csattos; Péter Dudás, Dr.; Gábor Farkas; István Guba; Jenô Hancsók, Dr. Prof.; successful geological and geophysical interpretation Pál Kapusy; Gábor Kis, Dr.; Lajos Kisdeák; Márta Krámer, Dr.; László Lázár; Zsolt Molnár; Andrea Pánczél, Dr.; László Rácz, Dr.; László Rácz, Jr.; Gabriella Szalmás, Dr.; Artur Thernesz Obituary 128 Chairman of the Editorial Board: György Mosonyi Mr. Gábor József (1937-2011) Managing editor: Virág Simon Anniversary 130 Editor-in-chief: László Rácz, Dr. Ernő Rátosi, Dr. is 80 years old ISSN 2060-338X 2 3

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of the nuclear power generation has to be incident may affect the competitiveness of analyzed and described. NPPs due to increased security expenditures.

Global and regional impacts The competitiveness of different power plants Analyzing the cost breakdown of different source can be evaluated by the price of the generated of energies, it can be concluded that NPPs are electricity, as the most important factor. As one of the most CAPEX-intensive production of the Fukushima nuclear Figure 1 shows the LCOE (levelized cost of capacities. Compared to other technologies, electricity [1,2])2, which represents basically operational expenditures represent a the cost of the generated electricity3, differs significantly lower proportion in nuclear energy disaster technology by technology. Currently producing generation. Figure 2 shows this phenomenon in one unit of electricity with a nuclear power case of the different technologies. plant (NPP) is one of the most competitive technologies, in terms of LCOE. Numerous studies and analysis of different companies and institutions are trying to measure and model the cost of which Ádám Balogh (25) ösztönöztek. Még bizonytalan, hogy a generally concentrate on the examined country Business development expert MOL Group, FGSZ- Transmission Ltd., fukushimai baleset trendfordító hatású or region with its own specifications. We have Business Development lesz-e az iparág történetében. Globálisan chosen an IEA-OECD study [1] because it [email protected] tekintve az emelkedő biztonsági költségektől collects data from different countries around Róbert Fehér (25) eltekintve kisebb hatással lehet, ugyanakkor the world. Furthermore the data used for the Former business development expert Európában, különösen Németországban analysis is provided by the responsible bodies MOL Group, FGSZ-Natural Gas Transmission Ltd., Business Development erre az eseményre hivatkozva gyorsították of the different countries, thus presumed as the [email protected] fel a nukleáris technológia kivezetését. most reliable source. Költségalapú számításaink szerint egyedül Balázs Tatár (26) Business development expert ennek 34-49% LCOE (baseload áram termelői According to the already announced and Fig. 2. Cost breakdown of different power sources. MOL Group, FGSZ-Natural Gas Transmission Ltd., ár) felhajtó hatása lehet 2020-ig, amely planned safety measures, the Fukushima Source: Parsons Brinckerhoff [3] - http://www.pbworld.com/pdfs/ Business Development Magyarországot is érintheti a nukleáris regional/uk_europe/pb_ptn_update2010.pdf [email protected] (OCGT – open cycle gas turbine, IGCC – integrated gasification biztonsági költségek emelkedésén túl. combined cycle, CCS – carbon capture and storage, CCGT – combined cycle gas turbine)

Abstract Introduction According to Parsons and Brinckerhoff’s World nuclear industry developed at After the Fukushima nuclear incident, several methodology [3], the CAPEX ratio for a unit a rapid pace until notable disasters countries have expressed their concerns of nuclear capacity is ca. 70%, whereas for a compelled authorities to rethink nuclear about the further use of nuclear energy and CCGT plant it is only ca. 17%. This means that policies. It is uncertain whether the most have envisaged the re-evaluation and also the the competitiveness of the nuclear generation recent Fukushima disaster can be another reverse of their nuclear policies. Most countries, can be hindered if CAPEX costs increase turning point in the industry’s history. which have decided to phase-out their nuclear dramatically with new security measures. In Worldwide, besides stricter standards capacities or abandon their expansion plans, Fig. 1. Levelized cost of different power sources. Source: OECD case of new and unprecedented safety rules – hence increasing costs – it may have are in Europe.1 This means that the Fukushima 2011 (PV - photovoltaic) a slighter impact. In Europe, notably in incident will cause the biggest market turmoil 1Yoshihiko Noda, Japan’s new prime minister has slightly shifted away from his predecessor’s statement to phase out nuclear technology Germany, however, it is a point of reference on the European electricity, gas and energy in Japan, claiming that nuclear energy is indispensible in Japan’s future economic growth. for accelerated technology abandonment. markets. The purpose of this paper is to 2 Based on our cost-based calculations, analyze the potential impacts of the Fukushima we consider that this alone can bear a 34- nuclear incident on the nuclear industry and on 49% upward LCOE (~baseload electricity the global and regional energy markets. production price) risk by 2020 that might affect as well, along with rising safety design costs. Competitiveness Összefoglalás of the nuclear A fukushimai nukleáris katasztrófa globális industry és regionális hatásai In the following, we are examining how the nuclear industry might react on the Fukushima A világ atomipara jelentős ütemben catastrophe from a purely economic point of 3LCOE is treated as a fundament of the base-load price. It can not be used to predict final consumers’ electricity price because that is mostly fejlődött, amíg egyes jelentős katasztrófák view. In order to assess the effects and possible determined by marginal cost factors on the electricity market and also country regulation, but as a cost side estimation of the base-load price it well serves our aims to examine and anticipate certain underlying phenomenon on the electricity production market. a nukleáris politikák újragondolására reactions, the situation and the competitiveness

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the CAPEX of NPPs can increase to an coal, natural gas or offshore wind, etc. can and as it can be seen on Figure 4, almost Japan and France, which represent more than unexpectedly great extent. Currently, the be more competitive than nuclear power. This 75% of the total built in generation capacities half of the world’s nuclear capacity. Although global average LCOE of coal-fired power implies that factors from capital costs through are concentrated in the 6 largest producer France is the 2nd largest generator in the world, plants is approx. 30% higher and the LCOE O&M cost (which might be different due to countries. The 5 largest, namely the USA, its role is special, as the share of nuclear power of gas-fired power plants is approx. 50% labour cost or taxation, etc.) or cost of the France, Japan, and South Korea are in the country is outstandingly high being more higher, than that of the nuclear ones.4 To cycle, etc. significantly vary. Nuclear power is also present in the value chain as technology than 75%. match the competitiveness margin between highly competitive in general but each project producers and exporters, which also conserve these three types of generation considering has to be examined on a case-by-case basis. their leading position on the market.6 Regarding Japan, currently only 11 reactors are only the CAPEX as variable, the CAPEX of operating out of 54 available. This paper has the nuclear power plants should increase by not quantified any possible effect of a possible 40% and 68.5%, respectively, on average. The world after Japan phase-out, since no policy or road map has been laid out so far. It also should be realized that the LCOEs Fukushima of the fossil technologies are calculated PROJECTED CHANGES IN THE

with assumptions of current CO2 allowance NUCLEAR POWER GENERATION IN WORLD AFTER FUKUSHIMA prices. According to IEA and EU projections THE WORLD Before the Fukushima disaster, numerous

the CO2 allowance prices are to increase Nuclear power generation represents a nuclear accidents occurred throughout the in the forthcoming decades. If NPP CAPEX significant share in the world’s electricity world. By analyzing the nature and the impact increases due to new safety measures and generation with its 13.4%, as it can be seen on of these, it can be concluded that the Three nuclear technology starts to lose its relative Figure 3. As the 4th biggest source of electricity, Miles Island (TMI) (1979) and Chernobyl competiveness to other conventional it is quite important to analyze the possible (1986) disasters had a major impact on the Fig. 4. Nuclear power generation capacities by countries. technologies, it can be offset by increasing effects of the Fukushima disaster on this sector, Source: World Nuclear Association, 2011 global nuclear landscape. Figures 6 and 7

CO2 prices on the other hand. as the possible future changes in the policies show the impact of the individual incidents on can highly affect the world’s energy mix in the Besides the above mentioned ranking, the development of nuclear capacities. Furthermore, the relatively low ratio of mid- and long-term. countries with generation capacities can be maintenance and fuel costs in the LCOE grouped along several other factors, such as during the lifespan of a nuclear power the share of nuclear power in the specified plant (ca. 25-35%) [1,3] means that the country, the amount of produced electricity. competitiveness of nuclear generation reacts less elastic to a marginal change of the fuel price. The uranium price elasticity of the nuclear fuel cost is approx.: Fuel 5 EU price = 0,22 [4].

This means, that – despite the potentially rising safety-related OPEX – the low ratio of OPEX in the total cost makes the nuclear power plants resistant to increases Fig. 6. Turning points in the global reactor construction trend. Source: World Nuclear Association, 2011 in O&M (operation and maintenance) and fuel costs, whereas the competitiveness of conventional technologies are highly Typically, there is a 50-100 months lead time Fig. 5. Nuclear power generation in the world and its share in the exposed to the volatile and increasing fuel energy mix. between a reactor’s FID (final investment prices. Source: World Nuclear Association, 2011 decision) and going online. The TMI disaster did not immediately affect the industry due to On Figure 1 we can see that the LCOEs Currently the countries with low production and this fact, the apparent sunken costs and the of the different methods disperse. This low share of nuclear power in the first group are . Newly starting constructions Fig. 3. Electricity production in the world. dispersion can be mostly explained by the Source: IEA Electricity Information 2010, in: World Nuclear less exposed to the possible future changes in after TMI show, however, a sharp drop. If the location and the technology applied. Based Association, 2011 their nuclear power generation capacities, as previous trend had continued, there would be on the given sample, the dispersion of we can see on Figure 5. The second group above 600 GW nuclear capacities in the world the nuclear technologies are the smallest As we have seen above, nuclear power includes the countries with bigger capacities today, instead of the current 375 GW. Similarly, compared to the other solutions, and nuclear generation is a highly cost (especially and medium share of nuclear energy in their the Chernobyl disaster further decelerated technologies show the smallest average CAPEX) intensive industry, thus NPPs are energy mix, such as Russia and Germany. the trend; new NPPs mainly replaced older LCOE among the different technologies. concentrated only in several countries that Typically the countries with high share of ones.7 This process could be amplified by the can afford the technology. Currently 440 nuclear power in their energy mix are part of relatively low price of coal and oil prices, as well Depending on individual projects, however, reactors are operating around the world, the third group of countries, such as Hungary as the increasing global availability of natural or Ukraine. There are three countries: the USA, gas. At the global take-off of the civilian nuclear

4 Including carbon costs, but not including other extern costs of power plant operation 6 The 6th largest producer, Germany does not have the whole nuclear complex. 5 %ΔCost Fuel / %ΔCostUran 7 If pre-TMI trend had persisted, 21-22% of global energy output would come from NPPs instead of current 13-14%. Growing total NPP capacities after Chernobyl are mainly due to the larger size of new blocks that accounts for an average 1% annual capacity increase. 6 7

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industry, however, competing fuel prices did not nuclear power capacities. The projected plan around 2030. The most notable new entrant As Figure 11 shows, EEX electricity prices play a significant role (see relatively stable fuel of the new commissioning of new power plants will be Turkey and significant developments sharply increased after Germany announced prices before the oil crises). will continue and will grow in the future. are forecasted around the Baltic Sea area the forthcoming closure of its nuclear (Lithuania, Finland and Russian Kaliningrad). capacities. Since April 2011 European power The most important changes are planned markets seem to have stabilized again, yet at in China, where the capacities will grow by a higher price level. 30,000 MW, which represents more than half of the projected future new power plant The effects of significantly higher electricity capacity in the world. As a result of these new prices resulted in the announcement of major power plants, China will play a major role in German companies such as BASF, Siemens, the world’s nuclear power industry. Despite E.ON and RWE that they may consider to increasing capacities, the exposure of China to relocate parts of their businesses outside the nuclear power will not grow in a great extent Germany in the near future. due to its rapidly growing energy consumption fuelled by other sources.

Fig. 7. Newly built reactors and connections to grid globally and yearly coal and oil prices The projected commissioning in South Korea Source: World Nuclear Association, 2011; IEA, 2011; EIA, 2011 will significantly increase the share of nuclear power in the energy mix of the country.

In the 2000s, a new nuclear upswing took place, Fig. 9. Nuclear power generation capacities in Europe, 2010-2060. which can be slowed down by Fukushima’s Source: World Nuclear Association, 2011 aftermath. Nuclear incidents can have a notable Europe after effect on energy mixes, as it was e.g. in The regional electricity and gas demand will after Chernobyl.8 Fukushima mostly be affected by the German divestment Despite the Fukushima disaster, only a few as at least 20% (or 140 TWh) of the produced After the Fukushima disaster in Japan, many countries decided to reverse their nuclear electricity in Germany has to be replaced in the countries and international organisations policy, and these countries are mainly in country. The 20.5 GW total German nuclear started to rethink and reassess the role of Europe. This does not seem, however, pivotal capacity can be offset in short-term by fossil

nuclear power generation and the level of risk to the global nuclear landscape. So far three (i.e. coal and gas) and by additional Fig. 11. EEX future contract electricity prices. that it means. Countries launched stress tests European countries: Germany, Switzerland imported electricity (mostly from France and Source: EEX and programmes to assess risks and define the and Italy announced major changes. Northern Europe), while renewables can play a future role of nuclear power in their countries’ higher role in longer term.9 Using the basic assumptions for capacity long-term energy policy. Germany phases out its capacities at an development scenarios of the base study for the increased pace until 2022, Switzerland neither German energy strategy [6], we have created Figure 8 shows the projected changes in the builds new facilities nor prolongs the lifetime a model to forecast the possible weighted built in capacities in the world by 2025, including of its already existing NPPs. Italy has again average German LCOE of electricity generating the already announced future commissioning refused the usage of nuclear power. Although capacities and prices. As input, we have used and decommissioning of power plants. these changes are relatively important the German LCOEs of [1]. This means that our regionally, they will not have major effect on model inherited the assumptions and barriers the world’s current nuclear power supply, as we of the above study. have seen before. On the other hand, as input we have used the France, the UK, Germany and Sweden are the installed capacity and the German gas demand major players in the European nuclear supply from [6]. By taking the installed capacity and structure – as we can see on Figure 9 –, since the gas scenarios of the above study as they represent approx. 75% of the total installed constant, we had to create assumptions for capacities in Europe. Fig. 10. The role of nuclear power in Germany [5] the future load factor of the German power The missing nuclear capacities will be replaced, plants, since this factor was the only variable.10 Germany’s capacity divestment represents although it causes a widening electricity supply Regarding the merit order of the German a 15% decrease in Europe’s current nuclear decline until 2020 that will have an upward capacities, we assume compulsory takeover capacities. On one hand this is a remarkable effect on electricity prices in Germany and in of the renewable energy, meaning that the Fig. 8. Projected changes in the world’s nuclear capacities. capacity decrease; on the other hand the effects the CEE region as electricity prices are strongly conventional, base load technologies are to Source: World Nuclear Association, 2011 are not so dramatic, if we have a look on the influenced by the German electricity exchange be less loaded, whereas renewable electricity While in Europe significant changes will occur planned new capacities across the continent. (EEX). is always taken over, resulting in an ‘upside- in the nuclear industry, the Fukushima disaster With current NPPs, and the planned projects, down’ merit order. will not have major effects on the world’s European capacities are expected to peak 8 In Italy, the 30 bcm annual gas consumption in 1985 grew by further 50 bcm by 2010. 9 According to the German government, 10 GW capacities will be replaced by fossil fuels which roughly correspond to the total capacity phased out in 2011. 10 Produced Electricity = installed capacity * load factor

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The basic assumptions and the barriers of the Limitations of the model: model are as follows. 1. Assuming the certainty of production costs and stability of electricity prices throughout Merit order assumptions: the time horizon, until 2022 1. Wind PPs are loaded when technically / based 2. Cost based evaluation instead of marginal on weather possible - as in LCOE model analysis. Marginal analysis determines more 2. Biomass produces in baseload with 85% load the competitive side of the electricity markets factor - as in LCOE model 3. Where possible, same load factors used 3. Pumped-storage power plants load increases in our model, as in the LCOE model of [6], with renewable (wind) share however the load factors of coal, oil and gas 4. Natural Gas power plants are responsible for had to be modified to achieve the constant covering peakloads gross production values of [6]. Fig. 13. Ratio of the different technologies in the produced electricity 5. Other conventional power plants are loaded less in different scenarios (own model based on the data of [6]) as renewable production increases The results and outcomes of the model can be 6. Technological phenomenon of power plant load seen on Figure 12, at 2010 and 2022. The chart shows that 7% to 15% of the energy factors is not included. If decreased load factor demand shall be saved according to different Figure 14. Weighted average of the LCOEs and cost growth rate is not possible economically / technologically scenarios. This fact assumes a robust energy (CGR) in 2022. Source: own calculations and [6] for oil/coal/gas power plants, capacities will efficiency program throughout the German stop operating until reaching the economically household sector and economy. expensive because of the higher ratio of the / technologically optimal levels, thus average wind production (~36% in C, compared to ~24% load factors for conventional might increase, According to the development scenarios, in B). The B unit cost is cheaper because of the but the sum of produced electricity stays stable, the most impressive increase shall happen relatively higher ratio of the natural gas based according to [6]. in the offshore wind sector, where 56 to 90 electricity production (~12% in C compared to times installed capacity and 160 to 250 times ~19% in B). Due to the LCOE model of [6]: produced electricity growth is anticipated. This 1. Assuming the certainty of production costs gigantic growth is due to the current minimal Scenario A is the cheapest in terms of unit and stability of electricity prices through out share of offshore wind, however calculated price because the ratio of the conventional the horizon (until 2022). All output is sold at together with the onshore wind energy growth technologies (coal, natural gas, oil) is the the stable price right away a 300% to 570% growth pattern might develop highest among the three scenarios. It lies 2. Return of capital with no market or technology in total wind energy. If this will be realized, the approx. at 58%, compared to 53% and 43%, risks wind output will be capable of offsetting the respectively. a., Closer to regulated markets with disappearing nuclear energy generation. monopolistic electricity markets, loan Fig. 12. Installed net capacities of different technologies. Figure 15 shows the sum LCOE for the total guarantees Source: [6] Currently, the LCOE of producing one unit amount of electricity produced in the alternative b., Then to the real costs of investments in a of electricity in Germany with an onshore or scenarios. competitive market, with variable prices According to the different scenarios, the offshore wind power plant is approx. 210% to 3. Discount rate stable and equals 5% net installed power generating capacity in 275% more expensive than that of an average 4. Variables are net of inflation - costs and cash Germany will increase by 16% to 44%. Since German PWR (pressurized water reactor) [1]. flows are discounted with the discount rate nuclear capacities are to be replaced (with 5. Baseload like production because of fix load an average plant load of ca. 80% in 2010) by Considering the LCOEs of the different technologies factors for the entire horizon renewable generating capacities in long-term, as a fixed value until 2022, we calculated the sum a., Nuclear, coal, gas, biomass load factor is the net installed renewable capacities have to LCOE for the total amount of electricity produced 85% in the LCOE model, however variable be increased.11 in 2022 in the different scenarios. We have also in our model calculated the weighted average LCOE of the b., Wind onshore / offshore, biomass, The different scenarios also differ in the whole electricity mix in 2022.13 photovoltaic, etc. load factors are acquired assumed net German annual electricity through national data supply and reflect demand.12 Figure 13 highlights the different The results of the calculations are highlighted technical and weather related potentials German electricity demand scenarios, and on Figure 14, with the weighted average LCOE c., No system costs - Effect of a single power also presents how the electricity mix will in the different scenarios, compared to the plant on the whole system is not calculated modify the supply-demand balance in the Reference scenario.

6. Renewables are input with a constant extra future. These scenarios are consistent with Fig. 15. Sum LCOE for the total amount of electricity produced and system cost - not researched yet enough the German National Renewable Energy Scenario C represents the most expensive cost growth rate (CGR) in 2022 in the different scenarios. 7. Variables are net of all governmental Action Plan’s goals that set the renewable scenario, with the highest ratio of alternative Source: own calculations and [6] interventions. Thus model highlights only path until 2020 in order to achieve the legally energy sources. The amount of the produced Scenario C is the most expensive one, because social resources necessary for the operation binding 20-20-20 target [7]. electricity is the same, but the unit price of of the high ratio of renewable capacities. The of a power plant. the electricity produced by the C mix is more price increase in absolute terms is smaller than

11 The weighted average plant load of renewables was around 30% in 2010. 13 Economies of scale and technological developments are not taken into consideration, which could further decrease the LCOE of the 12 From the net values available we have created gross values, with the 2010 system loss ratio, which lies at around 5.31%. technologies.

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in case of the weighted average of the LCOEs. The phenomenon is salient: with the decrease The CE/SEE region’s own nuclear schedule Reviewed by István Zsoldos and Péter The reason for that is the different plant load of the load factor, the LCOE of the conventional itself (besides the development of the German Simon Vargha assumptions in the different scenarios, due to power plants are growing. Without predicting market) is another source of upward electricity the different net installed capacities, with fix any numerical data (how much this effect price factor due to high frontload CAPEX and Balázs Tatár has been working electricity consumptions in scenarios B and C would influence the actual cost of generating unpredictable economic growth. In case CE/ at FGSZ since 2010. His main and decreasing consumption in scenario A. electricity) we note that this phenomenon SEE projects are not realized, the regional focus is European and regional also has a fundamental price pressure on the electricity prices could remain higher in the level business, peer group and Nevertheless what we can state is that there baseload electricity product. long-term and security of supply may weaken industry analysis as well as is a fundamental cost-side pressure, on the while economic competiveness could decrease project management assistance. baseload German electricity price during the From a strategic point of view, it is not surprising beyond the energy sector.17 Previously, he volunteered at an time horizon. However, the above model has that Germany exits the nuclear industry. The NGO while taking internships at its limitations to predict the final customer price supportive study for the German energy policy MOL Strategy Development Department and of electricity in Germany, since numerous other listed this option as the first alternative scenario Conclusions the European Parliament in Brussels. He has factors are influencing it (e.g. the peak price). that was published as early as the end of 2010. Nuclear energy counts as one of the most graduated in international studies major from Germany has a comparative disadvantage competitive technologies but high CAPEX the Corvinus University of . We have seen that the [1] model does not take as it possesses of advanced nuclear industry threshold and in some cases public aversion and into consideration the anticipatory alteration know-how but it has not been a global nuclear politics make it highly concentrated throughout Ádám Balogh has joined in the load factor by the end of the horizon; technology leader (as it is in the renewable the world. Furthermore, major nuclear accidents FGSZ in early 2011. His chief nevertheless it would affect the LCOE. In our sector) and does not have the whole value such as the TMI and Chernobyl drastically field of work covers market and model however, we have calculated with a chain of the nuclear industry as the US, Russia shaped the global nuclear industry. The March project analysis, policy reviews modified load factor. As mentioned above, the and France do.14 Focusing and concentrating 2011 Fukushima disaster compares to those and external relations. Earlier load factor of the conventional power plants resources on the renewable sector has mentioned in its magnitude both in damages he had worked at ExxonMobil is expected to decrease. According to [1] with already been a lucrative business for German caused and public reaction triggered. Thus far as a controller analyst. Before the decrease of the load factor, the LCOE is companies as well as the whole economy (e.g. it is uncertain whether it will reverse any trend this, he had an internship at the growing. This function is highlighted on the through exports and rapidly growing number of in the global nuclear industry, however locally it Institute for Cultural Diplomacy, Berlin. He has below graph (Figure 16). employees in the sector). Thus the Fukushima already had served as a point of reference. Stress graduated in finance major from the Science disaster has rather been a pretence that tests are currently under way that has an upward University of Szeged. accelerated the German nuclear phase-out and safety cost risk globally. Focusing on Europe, a new green leap. the German nuclear exit will likely generate an Róbert Fehér has joined FGSZ increase in regional electricity prices on top of in 2010. His main focus was From a security of supply point of view, extra safety expenses. It is certain, however, the international trends and replacement scenarios seem to strengthen that abandonment of nuclear capacities is a long strategic movements of the gas Germany’s independence from foreign energy process that will require – if only temporarily – the and all the other related energy sources and gas transit countries in CE/SEE increase of fossil fuels in the energy mix. markets. Earlier he had worked region.15 According to latest news, Germany for MOL Group as Marketing and electricity transmission system operators plan Pricing analyst. He had spent to construct a ‘supergrid’ within the country that References one semester in Denmark, participating in will function as the main physical electricity link [1] Projected costs of generating electricity researches in the field of renewable energies. between different European regions boosting 2010, IEA, NEA and OECD He has graduated in corporate strategies from trade via Germany. [2] The cost of generating electricity, Royal the Corvinus University of Budapest. He joined Academy of Engineering, England, 2010 in September 2011. As a conclusion, we can say that according [3] Powering the Nation Update 2010, Parsons to the model, the baseload production price Brinkerhoff (LCOE) of the German electricity will increase [4] The Economics of Nuclear Power – World by 34% to 49% depending on the replacement Nuclear Association, 2011 scenario including the power plant replacement [5] Energieszenarien für ein Energiekonzept programmes and energy efficiency measures der Bundesregierung, EWI, GWS and from 2010 to 2022.16 As the major point of Prognos, 2010 reference for regionally traded electricity [6] Szenariorahmen für den Netzentwicklungsplan markets is the EEX, this upward momentum 2012, Bundesnetzagentur could appear in regional electricity prices. [7] National Renewable Energy Action Plan, Federal Republic of Germany, 2010 Fig. 16. LCOE as a function of a variation in the load factor [1]

14 Siemens, as the leading German nuclear technology company, announced to wind up its nuclear research branch. Although being very Keywords: nuclear industry, Fukushima interesting, this industry strategy point of view lies outside the scope of this study. 15 The share of locally produced energy will grow. There will be no more demand of nuclear fuels, less demand for imported electricity; direct disaster impacts, electricity price, Germany, route for additional gas volumes are being built via Russia (Nord Stream); there is a transparent world market and local sources of coal. power generation 16 Since the production price is only approximately 35% of the whole price paid by a residential consumer and approx. 60% paid by an industrial consumer, the final consumer price is influenced by other factors such as transmission fee, distribution fee, VAT and other taxes, thus we do not give a forecast for the final residential and industrial price in 2022. 17 On the other hand, it shall be mentioned that the alternative cost of NPP construction is extremely high as these resources could be spent on alternative energy source development. The comparison of the two possible policies is not the purpose of this essay.

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bioüzemanyagok és az energiahatékonyság final targets. Reporting on the progress is also Downstream renewable javítása jelenti az egyetlen lehetőséget az required in each second year from 2010. olajfüggőség, ill. a közlekedésből származó üvegházhatású gáz (ÜHG) emisszió To protect the areas with high biodiversity, energy projects – In drasztikus csökkentésére. Mindezeket the Renewable Energy Directive establishes figyelembe véve az Európai Unió 2008-ban several sustainability criteria for biofuels and széles körű törvénycsomagot fogadott el bioliquids. In accordance with the sustainability harmony with sustainable a klímaváltozással kapcsolatban. Az EU criteria, biofuels must deliver substantial Klíma- és Energiacsomag néven ismert reductions in greenhouse gas emissions törvényjavaslati indítványcsomag a and should not come from forests, wetlands development következő három területre fókuszál: 20%- and nature protection areas, including those os ÜHG emisszió csökkentés az 1990-es imported into the EU. Only biofuels met these szinthez képest, 20%-os megújuló energia criteria can be accounted towards the national részesedés a teljes energiatermelésben, target. The set up valamint az energiafogyasztás 20%-kal certification schemes for all types of biofuels történő csökkentése energiahatékonyság helping to implement the EU’s requirements. Ferenc Torma (29) renewable share in the overall energy javítás révén 2020-ig. Figyelembe véve As for the GHG emission, biofuels must deliver MEng in chemical engineering Refining & Marketing Division, consumption and finally 20% cut in energy az üzemanyag szabványokat, a jelenlegi savings of at least 35% compared to fossil DS Development, Százhalombatta consumption through improved energy autópark összetételét, ill. a bioüzemanyagok fuels, rising to 50% in 2017 and to 60% for [email protected] efficiency by 2020. By considering fuel egyre szigorodó fenntarthatósági biofuels from new plants in 2018. Artur Thernesz (47) specifications, the structure of the current követelményeit, a Klíma és Energia- MEng in chemical engineering car fleet and the tightening sustainable csomag által meghatározott ambiciózus At the same time, an EU directive (2009/30/ Refining & Marketing Division, DS Development, Százhalombatta criteria for biofuels, the ambitious targets célok teljesítése az olajtársaságokra is EC) amending the Fuel Quality Directive (FQD [email protected] of the climate package place a heavy nagy terhet ró. Válaszul a megváltozott - 98/70/EC) as regards the specification of fuels burden on the oil companies as well. As szabályozási környezetre, a MOL különböző and introducing a mechanism to monitor and László Rácz (33) MEng in chemical engineering an answer to the changes in the regulation megújuló fejlesztési projekteket indított reduce GHG emissions has also been adopted Refining & Marketing Division, environment, MOL has started different el, melyek jelentősen hozzájárulhatnak a with the aim of reducing the emission of DS Development, Százhalombatta [email protected] renewable development projects which klímaváltozással kapcsolatos 2020-as helyi different key air pollutants released during the can significantly contribute to the timely célok időbeli teljesítéséhez. A közlemény production and combustion of different fuels. fulfilment of the local final climate-related áttekintést nyújt a mára már befejezett, ill. The Directive sets targets to reduce the life- targets by 2020. This publication provides an még fejlesztés alatt lévő megújuló témájú cycle GHG emission of fuels and it places the Abstract overview about our ongoing and completed projektjeinkről. responsibility of the emission reduction on fuel Global warming and climate change issues renewable development projects. suppliers who are bound to report annually to are perhaps the greatest threat to the planet Member States on the life cycle emissions per nowadays. Scientists predict that if the Regulation unit of fuel supplied. One of the most important planet’s temperature raises more than 2 ºC Összefoglalás points of the Directive is the fuel suppliers’ 6% above the pre-industrial level, there will Downstream megújuló energia projektek – background GHG emission reduction requirement by 2020. be more extreme weather phenomena and Összhangban a fenntartható fejlődéssel As a part of the climate and energy package, The rate of this reduction is compared to the rising sea levels, threatening coastal areas. the Renewable Energy Directive (RED - EU-average level of life cycle greenhouse gas Deforestation and the burning of fossil fuels A globális felmelegedés és a klímaváltozás 2009/28/EC) requires EU Member States to emission per unit of energy from fossil fuels are greatly blamed for the warming effect, napjaink talán legjelentősebb increase the amount of renewable energy to in 2010. Member States can choose to set because they increase carbon-dioxide veszélyforrását jelentik bolygónk számára. 20% in the bloc’s energy mix by 2020. Each intermediate targets of 2% by 2014 and 4%

concentration (CO2) of the atmosphere. In Kutatók becslése szerint, ha a bolygó Member State has been assigned a national by 2017. The additional 2% reduction target rapidly industrializing developing nations hőmérséklete az iparosodás előtti szinthez target based upon its share of renewable can be reached by either supplying electric such as China and India, which now lead képest 2 ºC-kal megemelkedik, akkor az energy production in 2005. This target applies vehicles or using greenhouse gas reducing global growth of vehicle sales, emissions további extrém időjárási körülményekhez, to total energy used in the electricity, heat technologies (including carbon capture and from the sector will probably rise valamint a part menti területeket fenyegető and transport, etc. sectors. There are some storage technology, CCS). far faster over the coming years. For the tengerszint emelkedéshez fog vezetni. countries where the national renewable energy near term, biofuels and improvements in A felmelegedésért a növekvő légköri target for the gross final energy consumption energy efficiency offer the only options for szén-dioxid koncentráció a felelős, ami is quite high e.g. 49% for Sweden or 38% for Greenhouse the dramatic reduction in the demand for nagymértékben az erdőirtások és a fosszilis Finland. faces a 14%, Hungary a 13% oil and transport-related greenhouse gas üzemanyagok elégetésének következménye. target. Within the context of this global target for gas emission of (GHG) emissions. By considering these A Kínához és Indiához hasonló gyors renewable energy, the Directive also specifies facts, the European Union adopted a wide- ütemben iparosodó országokban a növekvő a compulsory 10% minimum renewable target biofuels ranging energy and climate package in gépkocsi eladásoknak köszönhetően in transport for each Member State by 2020. Beside energy efficiency improvement actions, 2008. The package of legislative proposals a közlekedési szektorból származó Individual Member States must submit National biofuel blending is a key option for reducing the focuses on the following three areas: 20% emisszió az elkövetkezendő években Action Plans as well which describe the possible transport-related GHG emissions. In case of GHG emission cut below 1990 levels, 20% valószínűleg tovább fog nőni. Rövidtávon a way of achievement of both the interim and the biofuels such as biodiesel and bioethanol, the

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life cycle analysis of the climate impact includes pesticides also represent a significant factor biogas burning to reduce the life cycle emissions as sugarcane and sugar beet are naturally high all GHG emissions associated with the following in terms of climate impact. Nitrogen fertilizers of the biofuels. As for the transport-related in fermentable sugars (monosaccharides),

life cycle stages: planting and harvesting of emit N2O which is released directly from the emissions, biomass and biofuels are carried by but corn, wheat and potato contain sugar

crops, processing the feedstock into biofuel, soil. Gases such as N2O and CH4 have larger trucks, however, rail or pipeline transportation polymers such as starch or cellulose. Starch transporting the feedstock and the final fuel global warming potential than carbon-dioxide can significantly reduce the emissions. In the is the chief storage form of carbohydrate in (including storing, distributing and retailing the thus life cycle calculations are always given future, GHG emission reduction can be further plants consisting of glucose molecules linked

fuel) and finally the exhaust emissions from in CO2 equivalent. Feedstock selection is also increased with the improvement of existing crop together by covalent bounds. To form free combustion. Biofuels are known to be carbon a critical part, because there are differences yields, process efficiency, new energy crops and sugar molecules for the fermentation process, neutral over their life cycle, namely they emit in the energy yields per unit of land and the new technologies. glucose polymer chains of starch are broken

only as much CO2 as the feedstock absorbs. amount of necessary fertilizers uses (e.g. 2,500 down by an enzyme called amylase. Today Outside the combustion-related emission, the litres of ethanol per hectare from European sugar cane is the main feedstock for ethanol primary sources of life cycle GHGs can be wheat or 1,200 litres of biodiesel per hectare Biocomponent production in Brazil, but ethanol is mainly attributed to their production. from European rapeseed). The emission, produced from corn in Europe and in the USA. released during the feedstock processing into blending From the emission point of view, not all biofuels biofuels, depends on the conversion efficiency The European Union started to take actions There are two basic types of corn ethanol perform equally (Figure 1), because their GHG of the refining process or facility, source of on biofuels in 2003 by adopting the Directive production, the ‘wet mill’ and the ‘dry mill’ saving efficiencies depend on several factors process energy and the emissions attributed to (2003/30/EC) on the promotion of the use of technology. The main difference is in the initial such as the type of feedstock crop, the type co-products as well. The efficiency of feedstock biofuels or other renewable fuels for transport. treatment of the grain. The ‘wet mill’ process of cultivated land and farming practices and conversion is important, because it determines Indicative values (2 e% for 2005 and 5.75 e% soaks the grain in an acidic solution until it is able therefore, they have a different impact on the the amount of feedstock required for a given by 2010) were given for the energy content to be broken down into its components. Corn state of the environment. volume of biofuel affecting the amount of land share (e%) of biofuels and other renewable germ is removed from the slurry to produce corn fuels placed on the market. According to the oil while the remaining slurry contains starch, renewable-related EU directives, biofuels bran and gluten. After separation, the remaining are defined as liquid or gaseous fuels for starch is taken for ethanol fermentation. The transport produced from biomass. According ‘dry mill’ technology which is the most common to the European Commission’s Joint Research type of ethanol production, grinds or mills the Centre, EUCAR and CONCAWE joint statement corn into flour by using hammer mills. This flour (6 July 2010) biofuels can be defined by then goes through the fermentation process feedstock utilization and technology maturity. where the starch is converted to ethanol First generation biofuels such as ethanol (from and the reminder is dried and sold as DDGS sugar cane, grains, sugar beets, etc.) and fatty (dried distillers grains with solubles). There is acid methyl ester (‘FAME’ from vegetable oils a greater range of valuable products that can and animal, waste oils) are produced through be produced by the ‘wet mill’ process, however, widely available commercial technologies (like the cost of building a wet mill facility is far fermentation, etherification, esterification). greater than that of a ‘dry mill’ plant. In both Second generation biofuels are ethanol from cases, distillation is needed to purify aqueous biomass, di-methyl ether (DME) from black ethanol produced by the fermentation of simple liquor, and biomass to liquids, hydrogenated sugars. This involves the separation of water oils as well as FAME from non-edible seeds and other components from ethanol to yield (jatropha, karanja) and new seed oils (cuphea, approximately 95% purity ethanol. However, crambe, cotton seed). Their processing alcohol and water form azeotrope thus further technologies (gasification / synthesis, separation by distillation cannot be performed hydrotreating, hydrogenation, lignocelluloses directly. In most cases molecular sieves are process) are being implemented or are at used to remove the remaining water from the pilot plant stage. Third generation biofuels are ethanol. represented by biogas from waste, biohydrogen and biodiesel from algae and can be produced The first step towards the introduction of

Fig. 1. Greenhouse gas emission (g CO2 eq/MJ) of different types of fuels. by processes at research stage (like pyrolysis, renewable fuels into our fuel portfolio was the (1) process fuel not specified, (2) lignite as process fuel in CHP plant, (3) natural gas as process fuel in conventional boiler, (4) natural gas as hydrothermal upgrade). revamp of the existing methyl tert-butyl ether process fuel in CHP plant, (5) straw as process fuel in CHP plant, (6) process not specified, (7) process with methane capture at oil mill, (8) waste vegetable or animal oil biodiesel. GHG saving values, set by the Directives, are also presented. (MTBE) unit into bio-ethyl tert-butyl ether BIOETHANOL (ETBE) production in 2005. The successful Ethanol, also known as ethyl alcohol and project was executed without external license At the cultivation stage, the level of fertilizer and fossil fuel input needed to grow, transport grain alcohol, can be produced from a variety partners and finally the MTBE unit of MOL Duna and pesticide use, the fuels utilized to drive and process the crop. For different production of feedstocks, but only corn and sugarcane (Százhalombatta) and Slovnaft () farm machinery, the means of irrigation and technologies, significant amounts of energy are are used for large-scale production. Ethanol refineries started the production of the partially treatment of the soil are all important parts needed (process heat, mechanical energy and production is based on a fermentation process renewable gasoline octane booster fuel which have to be considered during the life electricity). Process heat is usually derived from where sugars are converted to ethyl alcohol additive. After a fuel test period on bioethanol cycle analysis of biofuels. Fertilizers and natural gas, but it can be replaced with biomass or and carbon-dioxide by yeast. Feedstocks such blends, E5 fuel grade (max. 5 v/v% ethanol

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1MOL GROUP 1MOL GROUP Challenges 2011/3 2011/3 Challenges

content) was introduced into MOL markets in its more complex structure. Cellulose is the make the production commercial. Technologies with a residence time of a few seconds. To 2007. most common organic compound on Earth using genetically modified microorganisms avoid poisoning of the Fischer-Tropsch (FT) which is the major component in the rigid cell are being investigated to convert cellulosic catalyst, syngas is cleaned and then it is sent to As for transportation, pipelines are considered walls of plants. Cellulose exists within a matrix feedstock to sugar and produce alcohol in an FT synthesis reactor. Reaction is carried out to be the fastest and the most economical mode of other polymers, primarily hemicellulose and one step without the addition of enzymes. The in the temperature range of 210-340 °C and at of transporting liquid fuels, however, wider use of lignin. Cellulose is a linear chain of several production is expected to commence in 2013 in high pressures (1.5-4.0 MPa). The products are pipelines for transporting ethanol is problematic hundred to over ten thousand linked glucose Michigan, USA on the basis of an agreement mainly straight-chain hydrocarbons including for several reasons. Ethanol absorbs water and units connecting to each other by chemical between Mascoma Corp. and Valero Energy light hydrocarbons, propane, butane, gasoline, impurities appear in pipelines. Water can cause bounds much stronger than in starch. Cellulose Corp. Main ethanol production technologies diesel and waxes. The relative distribution of separation of the ethanol-gasoline blends, is enveloped by lignin which is a complex can be seen on Figure 2. the products depends on the catalyst and the which can reduce the engine performance. compound and part of the cell walls. Lignin process conditions (temperature, pressure, Another challenge of transporting ethanol inhibits enzyme access to polysaccharides As another promising gasoline substitute, and residence time). Pyrolysis is the thermal by pipeline is the corrosion. To avoid these representing a significant barrier in biomass biobutanol has advantages over traditional decomposition of biomass, which occurs in the potential problems, ethanol is usually blended conversion to biofuels. Therefore, a fuel ethanol in terms of energy density and absence of oxygen or when significantly less to gasoline at distribution and storage terminals pretreatment step with heat, acids or enzymes vapour pressure. It is also produced by oxygen is supplied than needed for complete instead of refinery blending. However, due to is needed to remove lignin and hemicellulose fermentation from the same agricultural combustion. Depending on the measurement the successful ethanol blending project, MOL and to make the enzymes accessible to the feedstocks as ethanol and it can be blended conditions (e.g. temperature, speed of heating, is able to blend ethanol to gasoline directly in cellulose polymer chains. The separated with gasoline at higher concentrations than residence time), pyrolysis can convert biomass the refinery and the blend can be transported lignin, as a residue of the biomass conversion, ethanol in standard vehicle engines. Biobutanol into more useful fuels such as hydrocarbon- via pipeline. The refinery blending and pipeline can be burned to produce heat or electricity does not absorb water like ethanol so there is rich gas mixture, an oil-like liquid (‘bio-oil’) and transportation is an outstanding industrial consumed by the ethanol production process. no corrosion or water contamination problems a carbon-rich solid residue. Biomass pyrolysis solution saving significant investment cost for The economic competitiveness of the cellulose during transportation. Butanol tolerance of a is typically carried out in the temperature range the company. ethanol production is highly depends on the bacterium used in the fermentation is one of of 400-700 °C and at near-ambient pressure. feedstock cost consisting of the collection, the important aspects affecting the economics The main aim of pyrolysis is the production Further biofuel production technologies on storage and transportation of the biomass. The of the production. Despite the problems and of ‘bio-oil’ which is a viscous, corrosive and the edge of commercial-scale feasibility primary challenge of the production technology challenges to overcome, the first commercial unstable mixture of oxygenated molecules. Second generation ethanol production is breaking down (hydrolyzing) cellulose into its scale biobutanol facility is expected to begin This oil needs to be upgraded before use as a consists of a sugar fermentation step like sugar components in a cost effective way. The operation in 2013 in Hull, UK in the frame of a liquid fuel by e.g. hydroprocessing or catalytic first generation methods described above, cost competitive enzyme production is still a Joint Venture between BP and DuPont. cracking. however, it is more difficult to break down technological challenge and research is being cellulose into fermentable sugars because of carried out worldwide to reduce enzyme cost and The use of cellulose biomass feedstocks The thermo-chemical conversion technologies has the potential to dramatically expand the of biomass into fuel are still too expensive resource base for biofuel production. However, to become economical, and additional the production cost of cellulose originated development is needed for overcoming the biofuels has not been competitive with barriers (e.g. clean-up requirements of syngas -derived fuels yet. for removing the possible poisons for FT catalyst). Although the processes for production The so called biomass-to-liquid (BTL) of BTL are well known and have been applied technologies mean thermo-chemical using fossil-feedstocks, such as methane (gas- conversion of biomass to produce a wide to-liquid, GTL) or coal (CTL), commercial range of products such as synthetic diesel and biofuels based on these technologies are not gasoline, aviation fuel or alcohols. Gasification currently available on the market. is usually used to obtain diesel from coal (coal-to-liquid, CTL) when coal is gasified to BIODIESEL synthesis gas (or syngas), a mixture of carbon Conventional biodiesel is produced from monoxide and hydrogen. During gasification, vegetable oils or animal fats by a process steam is used to provide needed hydrogen. called catalyzed transesterification (Figure 3). Typical operating temperature is 1,330-1,500 °C

Fig. 3. Transesterification reaction Fig. 2. Main ethanol production technologies

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Base and acid catalysts can be used, but Biodiesel production from municipal waste cooking oil price was much under the vegetable base catalyzed process is more favourable By considering emission and land-use oil prices which made the biodiesel production because of its lower pressure and temperature change issues, the European Union supports more profitable. However, as a consequence need and higher conversion yields without biocomponent production from residues, non- of the growing demand for waste feedstocks, intermediate compounds. Enzymes are also food cellulose materials and wastes such as used cooking oil prices started to increase. used to catalyze the process, but maintaining used cooking oil (UCO) or animal fats. According This price increase made us start to think about the relative expensive enzyme active during to RED, these waste-derived biocomponents our own waste oil collection from households the repeated batches is the barrier to the full are counted twice towards the national biofuel at MOL filling stations. The institutional waste commercialization. However, there is no soap quota because of their reduced greenhouse cooking oil collection (e.g. from restaurants) is or salt formation which results in purer and more gas emissions. As the Hungarian legislation has regulated by law in Hungary and oil is collected

valuable co-products. In most cases a short translated the double counting-related article by several oil pick-up service companies such Fig. 4. Hydrogenation of bio-originated triglyceride chain alcohol (usually methanol or ethanol) is of the Directive into the national law, MOL can as Biofilter. A part of the municipal waste charged in excess to ensure total conversion take the advantage of it from the beginning of cooking oil, however, is poured into the drains Hydroprocessing can be carried out either by co- of the oil or fat to its esters. Methanol is usually 2011. Blending of waste-based biocomponents causing damage to the environment. In a frame processing the feedstock in an existing distillate used for the reaction because it is cheaper has several benefits such as the realization of a pilot project, started in May, 2011, more hydroprocessing plant of the petroleum refinery than ethanol (anhydrous ethanol is needed) of higher refinery margin by blending less than a hundred filling stations were equipped or in a standalone unit. Hydrotreating is a process and denaturated ethanol is not pure enough biocomponent, the GHG emissions reduction to handle and store the waste oil. As it is hard traditionally used by petroleum refineries to for the process. The catalyst is usually sodium of our fuels and the lower feedstock price. Our to estimate the amount of the collectible oil remove sulphur impurities from diesel fuel. Co- or potassium hydroxide that has already been further aim is to maximize the used cooking oil at the beginning, depending on the results processing method has a lower implementation mixed with the alcohol. The resulting biodiesel processing at our joint ventures. the project will be expanded countrywide not cost, however, vegetable oils contain trace is an alkyl ester of fatty acid (e.g. FAME) which only at the filling stations but supermarkets metal contaminants such as phosphorous, contains an alcohol group attached to a single Unfortunately, waste vegetable oil processing as well. Currently the oil is collected and pre- sodium, potassium and calcium which have to hydrocarbon chain comparable in length to that causes technical problems in FAME production, treated by Biofilter specialized in collection and be removed because of catalyst poisoning and

of diesel (C10H22 to C15H32). After separation of because the several reheating of the cooking purification, and the oil is handed over to Rossi the cold flow properties of the combined diesel the glycerol and biodiesel phases, the excess oils results in quality deterioration. Oils become Biofuel for biodiesel production. product may limit the quantity of vegetable oil alcohol is removed with a distillation step. Since more acidic because reheating process that can be processed. As the deoxygenation biodiesel contains oxygen, the combustion of causes some of the fatty acids, bonded to the Second generation biodiesel reactions have a tendency to compete with the the fuel is more complete helping to reduce glycerol, to break away and float freely in the Hydrotreating of vegetable oils or animal fats primary desulphurization, co-processing can air pollutants such as particulates, carbon vegetable oil - hence the name Free Fatty Acid is an alternative process to esterification for present high risk of producing the required ultra- monoxide and hydrocarbons. Biodiesel needs (FFA). The amount of catalyst, used in the producing bio-based diesel fuels. Hydrotreated low-sulphur diesel fuel. Main biodiesel production additives to improve its sensitivity to cold transesterification reaction, depends on the products, called renewable diesel fuels as technologies can be seen on Figure 5. weather and to fight its long-term storage acidity of the oil, because free fatty acids react well, are considered to be second generation problems. with alkali catalysts to produce soaps inhibiting regardless of the mainly edible feedstocks Renewable diesel can also be produced by the reaction. Soaps allow emulsification that processed. Hydrotreated vegetable oils (HVO) using hydrotreating technology in a standalone Parallel with the increased diesel demand, the leads to less sharp separation of the glycerine do not have the detrimental effects of ester-type unit that uses only vegetable oils or animal

biodiesel need of a MOL Group’s has significantly and ester phases. Soap formation also produces biodiesel fuels, like increased NOx emissions, fats as feedstock. The Finnish Neste Oil has increased. In 2006, a strategic decision was made water that can hydrolyze the triglycerides deposit formation, storage stability problems, already developed a standalone process that to establish two biodiesel production joint ventures and contribute to the formation of more soap. more rapid aging of engine oil or poor cold produces non-ester renewable diesel through to secure the Group’s biodiesel need in long-term. Catalyst that has been converted to soap is properties. HVOs are straight-chain paraffin a thermal/hydrotreating process, called The annual capacities of the plants (150,000 no longer available to accelerate the reaction. hydrocarbons that are theoretically free of NExBTL technology. Nowadays, this is the only tonnes in Komárom, Hungary and 100,000 For feedstocks with higher amounts of FFA aromatics, oxygen and sulphur and have high existing commercial scale technology in the tonnes in Leopoldov, Slovakia) are significant (e.g. animal fats) the addition of extra catalyst cetane numbers. field of renewable diesel production made by even on a European scale. The continuous may create more problems than it solves. The hydrotreating in the following operating plants: efficiency improvement initiations have resulted large amount of soap created can form gel Hydroprocessing method uses hydrogen to Porvoo, Finland 170,000 mt/year capacity, in 12,000 and 20,000 tonnes capacity increase, preventing the separation of the glycerol from break C-C double-bounds and to remove Singapore and Rotterdam, the Netherlands respectively. Rossi Biofuel Plc. (Komárom) started the ester. Moreover, this technique converts the oxygen from the triglyceride molecules to 800,000 mt/year capacity (Source: www. its production in December, 2007, Meroco a.s. FFAs to a waste product instead of converting produce renewable diesel. Oxygen is easily nesteoil.com). This process uses vegetable oils (Leopoldov) in March, 2008. B5 fuel grade (max. it to biodiesel. However, used cooking oil removed via two competing reactions: and / or animal fats and produces a mixture of 5 v/v% biodiesel content) was introduced in 2008 usually contains fewer amounts of FFAs which decarboxylation and hydrogenolysis (Figure hydrocarbons similar to petroleum diesel fuel. as well. The main feedstock is rapeseed oil, but can be neutralized with more catalyst causing 4). The extent for each reaction depends on soybean oil and used cooking oil is also processed no harmful effects during the production. Due the catalyst and process condition. The three- The European Union’s climate-related in small ratio. Due to our technology and product to our technology and product development carbon backbone produces propane which requirements pose a huge challenge for every development actions, different options have been actions, we are able to process larger amount can be easily recovered and can be a valuable fuel supplier worldwide. Due to the differences analyzed to improve the efficiency and the GHG of used cooking oil besides maintaining high renewable LPG product. Oxygen contained in in the chemical structure, current diesel fuel emissions saving ability of the existing technology product quality. the feed is rejected either as carbon monoxide / standards (EN 590) set a 7 v/v% blending limit e.g. more waste processing, reducing the chemical carbon-dioxide or water. In addition, all olefinic for first generation biodiesel (FAME). According component need by recycling the methanol used Before the double counting opportunity of bonds are saturated forming a consistent, pure to back-of-the-envelope calculations, maximum for the esterification. waste-derived biocomponents, the used paraffin product. biocomponent blending on both gasoline (E10)

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/ carbon-dioxide production ratio changes to cost saving can be reached (10% of Duna approx. 50-50%. Around 80-85% of the biogas refinery’s annual natural gas need for heating). forms in the first 15-18 days, thus the optimal According to our estimations, significant digester retention time is approx. 15-18 day amount of waste will be formed parallel with as well. The temperature of the reaction has a the gas production. Since biogas waste very strong influence on the anaerobic activity management is a worldwide problem, different and there are two temperature zones which solutions are being investigated to solve it in are optimal for the microbal activity and the a profitable way. Utilization as bio-fertilizer biogas production rate. In the mesophilic zone is a standard option, however, huge storage (25-35 °C) temperature must be kept constant capacity and transportation cost are one of the with 2-3 °C drift, however, only 1 °C drift can be disadvantages of this solution. By concentrating accepted in the thermophilic temperature zone on the water content and the possibility for (45 °C or higher). Operation at thermophilic refinery integration, experiments have already temperatures allows for shorter retention been started to study the application of the time in the fermentor and higher biogas biogas waste as cooling water in the delayed production rate, however, maintaining the high coking unit of Duna Refinery. Another possible temperature generally requires an outside treatment of the fermentation residue is the heat source, because anaerobic bacteria do separation when fluid phase can be cleaned in not generate sufficient heat. For the proper wastewater treating plant and the solid phase

operation and multiplication of the methanogen can be used as fertilizer. Because of the CO2

microorganisms, the humidity of the feedstock and H2S content, the biogas produced needs must be at least 50% and oxygen- and light free special upgrade before feeding it into the environment with neutral pH value (approx. refinery’s local heating system. As a refinery close to 7.5) must be provided. integrated solution, the amine washing method seems to be the best way for purifying the Depending on the type and nature of the biogas in the existing amine washing unit of the biological components, different methane yields refinery. In case of successful measurements, can be obtained from different biodegradable we will have an opportunity to implement a wastes (e.g. biogas yield/t feedstock is 202 m3 fully refinery-integrated biogas production for maize silage, 163 m3 for grass silage and technology with zero waste emission. 3 Fig. 5. Main biodiesel production technologies 70-60 m for poultry/pig manure). Biogas yield can be further improved by mixing substrates and diesel (B7) side will not be enough to reach with different gas yields. Due to the relative Algae as a new the 10 e% renewable target by 2020, thus there Biogas production low methane content (typically 60-70%) and is a need to further diversify the fuel portfolio by high concentration of contaminants, biogas is source of third introducing higher quality biocomponents. In a as a useful way of not suitable for direct use in vehicles. It can frame of a research consortium, established with be utilized to produce both electricity and heat generation the in 2006, MOL started waste utilization in systems called combined heat and power its own second generation research project with Converting biomass into biogas is another way (CHP or cogeneration) equipped with heat biofuels the aim of developing a unique and profitable of sustainable energy production. Biogas is a exchangers. The purified gas can be burnt Among alternative feedstocks, algae holds

production technology. The MOL-led consortium mixture of mainly CH4 and CO2 formed by the for steam production in boilers, and electricity enormous potential to provide a non-food, high- had significant representatives of the Hungarian anaerobic digestion of waste materials with can be produced directly in fuel cells. After yield, non-arable land-use source of biodiesel,

agriculture and research institutes as well such methanogenic bacterial species. Anaerobic appropriate gas cleanup (receiving 97% CH4 bioethanol and biogas. Algae are organisms

as Olajterv Co. Ltd., KITE Zrt., Biodiesel Ltd., digestion consists of a series of biochemical without H2S and any impurities), the utilization using photosynthesis to convert solar energy the Chemical Research Centre of the Hungarian reactions involving distinct types of bacteria. of biogas can be the same as for fossil natural into chemical energy stored in the form of oils, Academy of Sciences, the Institute of Agricultural Hydrolytic and fermentative bacteria first gas e.g. feeding into the natural gas grid, carbohydrates, and proteins. In some algae, up Engineering and the Regional Centre of break down carbohydrates, proteins and CNG production and different technologies for to 50% of their mass is oil which makes them Innovation Veszprém. The first phase of the fats present in biomass feedstock into fatty producing chemicals such as biomethanol. attractive feedstocks for e.g. biofuel production. project (2007-2009) resulted in a patent and the acids, alcohol, carbon-dioxide, hydrogen, Algae-based technologies can provide a key research program continued at the beginning ammonia and sulphides. This stage is called Considering the valuable by-products of the tool for reducing greenhouse gas emissions of 2010. Currently we have reached the point ‘hydrolysis’ (or ‘liquefaction’). Acetogenic (acid- biodiesel joint ventures, investigations have from coal-fired power plants and other carbon- of having enough experimental data to analyze forming) bacteria further digest the products been initiated to work out a concept for biogas intensive industrial processes as well, because

the feasibility of the commercial scale (200 kt/yr) of hydrolysis into acetic acid, hydrogen and production. Our experiments have proved they absorb CO2 as a nutrient as they grow technology. Beside the application possibility of carbon-dioxide. Methanogenic (methane- that the soapy water and glycerine-rich waste offering cleaner and sustainable alternative to wider feedstock range, the importance of the forming) bacteria then convert these products material are excellent feedstocks for biogas replace the currently used fossil fuels. When second generation biodiesel lies in its chemical into biogas. For the first 3 days, methane yield production by using a special recipe. By sources of carbon, light, nutrients and warm structure which can significantly increase the is near 0% and carbon-dioxide generation is feeding the calculated amount of biomethane water are mixed in the right quantities and biocomponent blending level. almost 100%. From the day 11th, the methane into the refinery heating system, significant grown under the right conditions, certain algae

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1MOL GROUP 1MOL GROUP Challenges 2011/3 2011/3 Challenges

have the potential to produce large quantities of reactor to continue our research towards the Association), the BoD of the

oil. This oil production process can be combined CO2 capture from refinery flue gases and According to the sustainable development Hydrocarbon Strategic Reserves Association with wastewater treatment and nutrient recycling the profitable algae utilization in renewable strategy of MOL, beside biofuels synthetic of Hungary, and the Presidium of Hungarian where polluted water (cleaned by algae) acts fuel production. Our current oil yield is about crude oil, originated from plastic waste, can be Innovation Association. He is an active lecturer as a nutrient in their growth. As for their land- 20 t oil/ha/year which may make the algae an alternative source of fuels. With our main at Budapest University of Technology and use, algae cannot require agricultural land as cultivation technology profitable. However, R&D partner, the University of Pannonia, our Economics, and Pannon University of Hungary. they can be grown in the open sea, open ponds this requires further improvements of the aim is to develop an environmentally-friendly He has an MSc degree in chemical engineering (open cultivation systems) or on industrial harvesting process or biomass separation and technology for converting polyolefin-type waste from the University of Veszprem and earned an land in photobioreactors (closed cultivation oil recovery. Besides the several unsolved plastics into fractions that can be directly utilized MBA in financial management from Budapest systems). Depending on the algae strains, problems, algae biomass utilization as in refineries or industry. During University. He speaks fluent business English, algae farms can produce approx. over 10 to 100 biogas feedstock seems to be more profitable this project, MOL will test synthetic crude and German, and Russian languages. times of oil as compared to any other source of than biodiesel production, because the survey processing routes in the refinery to oil crop. In closed systems, controlled research expensive thickening up to 80% of dry solids maximize fuel production. László Rácz joined MOL Ltd. in 2002 and experiments for maximum oil production can be after harvesting phase can be omitted by worked as a chemical engineer in the FCC and carried out where measurements parameters concentrating the algae suspension only to HDS unit of the Duna Refinery. He’s gained such as gas levels, temperature, pH, mixing, 5-10% (dry solid content). Conclusions experience in the field of SCM and worked for media concentration, and light can be optimized. Considering the gradually growing biofuel EUROPIA in Brussels as well. After working In spite of the fact that open cultivation systems demand, required by the European Union as a secretary for the Executive Board, he have lower capital costs and easy operation, Production of legislation by 2020, non-edible feedstocks such was appointed to lead the Management they have several drawbacks such as different as algae and other waste materials will have Support Team and currently he leads the contaminations from the surrounding area, synthetic crude oil a more and more significant role in the near Renewable Fuel and Energy Department of the low light penetration, high rate of evaporation, future. With special emphases on efficiency Downstream Development. He has an MSc of dilution caused by rainfalls, destruction of by waste plastic improvement in our existing facilities and chemical engineering. algae strains by too much direct sunlight and cutting edge renewable development trends, not steady temperature. Light penetration is cracking our biofuel strategy is continuously revised and a common problem for both open and closed Cracking is one of the best technologies to improved. As the main steps have already been systems, because light is able to penetrate manage the huge amount of polluting waste taken towards both the implementation of the only the top of the water and during algae grow plastics formed annually worldwide. During second generation biodiesel technology and a and reproduction the culture media becomes plastic cracking, a preparation step (including refinery integrated biogas production concept, denser. As an innovative approach for the size reduction and removal of most non- it can be concluded that MOL is on the right equal light distribution, so called light rods plastics components) is followed by feeding the track of becoming a more sustainable company are being developed worldwide which can be feedstock directly into a heated reactor which in the region. immersed deep into the algae culture to light operates in the absence of air. There are two below the surface layer. After the growth phase, main types of plastic cracking; the thermal Keywords: biofuels, bioethanol, biodiesel, algae must be harvested by centrifugation, and the catalyzed cracking process. In the bioethanol, biogas, algae flocculation, or froth flotation. Harvesting latter case, the structure of the final product process includes the separation of the algae can be significantly influenced by the catalyst Reviewed by Gabriella Szalmás, PhD from the growing medium followed by a drying applied. However, there are several drawbacks process. Unfortunately, harvesting and oil of the catalyst utilization such as maintaining Ferenc Torma joined MOL Ltd. in 2009 and extraction costs may contribute to a significant its activity and separation. Under optimized worked as a development engineer in the extent of the total cost of algal biomass and that conditions, the plastics crack thermally to Renewable Fuel and Energy Department. He is why the whole technology has not reached hydrocarbons which vaporize and finally the gas took part in the optimization of MOL Group’s the commercial scale yet. Many research and vapour are cooled to condense most of the biofuel strategy and his task included the projects are being carried on worldwide to hydrocarbon as valuable distillate feedstock. second generation biodiesel project as well. make the technology feasible, because algae The proper set of the reaction temperature has He has an MSc of chemical engineering based biofuel is said to be the best potential an important effect on the product quality. To from the Budapest University of Technology answer for the sustainable aviation fuel in the obtain paraffin-olefin mixture, temperature must and Economics, and then completed the future. be kept at approx. 400 °C. The composition of Eötvös Loránd University, Faculty of Science, the feedstocks is especially important, because Chemistry Doctoral School. Currently he By recognizing the possibilities in both the it affects the quality of the final product. The studies at the Corvinus University of Budapest, reduction of greenhouse gas emissions in the optimal feedstocks for the technology are Faculty of Business Administration. refinery and the suitable feedstock production plastics containing no heteroatom. In the case for biodiesel or biogas, MOL Downstream of PVC processing, solid impurities, including Artur Thernesz leads development activities has started its own algae research project in metals from stabilizers and some coke can of the downstream division of MOL Group. Százhalombatta. Based on the laboratory- pollute the catalyst. The decomposition of PVC Before invited to MOL, he assumed diverse scale photobioreactor experiments, achieved leads to the formation of HCl as well, which international leadership positions of ExxonMobil together with the University of Pannonia, we must be neutralized by bringing the hot gas into Supply and Fuels Marketing organisations. He have carried out and installed an open-air pilot contact with a solid absorbent. is member of the Board of EUROPIA (European

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‘Freshhh’ on-line recruitment competition program of MOL Group

Sándor Galambos (49) more valuable, - prize offered to participants Strategic HR Expert Competency Development and Strategic Human Resources is the professional carrier opportunity with Fig. 1. Participants’ countries in 2011 (62) [email protected] MOL Group. As a result of the last 5 years, MOL Group has employed almost half (over Andrea Kóródi (28) Strategic HR Associate 60) of the members of top 10 teams (about and open to any student on international level. Competency Development and Strategic Human Resources 150 participants in total) in various forms. Introduction The design, structure and content should [email protected] ‘Freshhh’ on-line, recruitment and Employer ensure a fair but demanding competition. The Branding oriented competition was process is expected to select the best teams Összefoglalás established in 2007 to address changing into the final round and provide some useful A MOL-csoport toborzási célú szakmai external and internal labour market trends. ideas / inputs to MOL Group as a result of the Abstract vetélkedője: a ‘Freshhh’ External factors include the increasingly students’ efforts. ‘Freshhh’ on-line, recruitment and widespread and popular use of on-line Employer Branding oriented competition A ’Freshhh’ online toborzási vetélkedőt 2007- and alternative forms of job search among The international oil and gas industry was established in 2007 to address ben a változó külső és belső munkaerőpiaci students, and the ‘war’ for (outstandingly) competition starts with the registration of changing external and internal labour trendek hívták életre. A ’Freshhh’ vetélkedő talented students. Key internal triggers 3-member teams. The participants are asked market trends. It is one of the first and mellett az egyetemi és középiskolai included long-term (min. 3 year) corporate to be prepared for solving oil and gas industry most visible and popular but not the only kapcsolatokat is felölelő stratégiai succession needs: unfavourable workforce related tasks for valuable prizes. Since the tools to meet external and internal strategic utánpótlást biztosító koncepcióban age structure, the expected number of introduction in 2007 ‘Freshhh’ competition HR needs. MOL Group strategic human számos más, egymásra épülő tevékenység retirements and the lack of professionals database records 6,186 students representing resources concept addressing university is szerepel, amelyekre részletesebben aged between 30 and 40 − that collectively 67 countries (see Figure 1), setting up total of and secondary school relations involves a kitérünk a cikk folytatásában. led to increasingly structured HR efforts 2,062 teams [1]. coherent set of other inter-modular activities focused on strategic human resources. that are discussed in the following article. A ’Freshhh’ nemzetközi olaj- és gázipari The competition's target group is university vetélkedőben a versenyzők háromfős ‘Freshhh’ competition is probably the most and college students pursuing studies mainly Since the introduction in 2007 ‘Freshhh’ csapatokat alkotva mérkőznek meg olaj- visible and popular but not the only tool to in engineering and natural sciences that competition database records 6,186 és gázipari szakmai feladatok megoldásán meet external and internal strategic HR needs are of utmost importance for MOL Group. students representing 67 countries, setting keresztül az értékes nyereményekért. 2007 at MOL Group. The strategic human resources Based on MOL's strategic objectives and up total of 2,062 teams. The international óta összesen 6 186 diák versenyzett, 2 062 concept addressing university and secondary daily operations, ‘Freshhh’ is organised as oil and gas industry competition starts csapatot alkotva, 67 országból. A műszaki, school relations involves a coherent set an international competition right from the with the registration of 3-member teams és természettudományos hallgatók aránya of other inter-modular activities that are start. Advertisement campaigns and the in which the participants are asked to be az összes résztvevő közül már 75% discussed in more detail below. competitions themselves are conducted in prepared for solving oil and gas industry feletti volt az elmúlt 3 évben. A 20 000 English through all the three (On-line, Creative related tasks for valuable prizes. During EUR-os összdíjazás mellett értékes, ha Let’s see ‘Freshhh’ competition details first. and Live Final) rounds. the competition’s history, we incrementally nem értékesebb nyereménynek számít a managed to access the target group: the rate versenyzőknek az az előrelépési lehetőség Besides the Euro 20,000 prize another valuable of students pursuing studies in engineering is, amit egy szakmai gyakorlat, diplomaírás What does − or even more valuable − prize offered to and natural sciences has continuously vagy álláslehetőség jelent a vállalatcsoport participants is the professional carrier opportunity increased compared to students involved valamelyik tagjánál. Az elmúlt 5 évben ‘Freshhh’ with MOL Group. We offer professional in economics / other studies, and it has a mindenkori legjobb 10 csapatból internship, thesis-writing traineeship or a regular reached 75% by 2011. However, it is a (körülbelül 150 fő) versenyzők közel stand for? job opportunity (e.g. free placement at the recruitment competition, besides the Euro felét, hozzávetőlegesen 60 fő, valamilyen The competition is designed to provide several ‘Growww’ fresh graduate program) at different 20,000 prize, another valuable - or even formában foglalkoztatta a MOL-csoport. key features. It should be known, available MOL Group member companies. As a result

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of the last 5 years, MOL Group has employed It clearly shows that it requires thorough feel the early effects of a global talent shortage China). However, according to technical almost half (over 60) of the members of top 10 preparation every year to ensure that technical that is expected to last for decades. Against literature and HR consultants, it is the only teams (about 150 participants in total) in various competence of the participants is thoroughly this backdrop, businesses of every shape and possible way forward for large multinational forms. Since it is not required to be a graduate tested through the tasks presented. During size must find new ways to attract, develop companies of international experience. “In to participate and students just starting or being the last 5 years, we incrementally managed to and retain qualified employees. … The the United States, 75 million baby boomers in the middle of their studies are increasingly access the target group: the mix of participants problem is particularly severe in developed are approaching retirement, and only 30 successful, the number of those who work for originally involving more students pursuing countries where decades of declining birth million members of X generation are available MOL Group is expected to increase. So the economics studies is gradually shifting towards rates and shifting education patterns are as successors. In the European Union, the competition’s recruitment role works well. students pursuing studies in engineering. Some producing chronic talent shortages in science, working-age population is forecast to fall by testimonies from 2011 participants prove this technology, engineering and healthcare” 48 million, or 16 percent, by 2050. Countries The first round of ‘Freshhh’ is always an on- as follows: ”The competition was exciting and [3]. This clearly shows that every developed such as India, China, Brazil, and Russia that line competition that involves a number of difficult. I have never yet met such a complex country struggles with talent shortage in have the highly educated workers can help professional tasks becoming increasingly and practical knowledge-intensive game. We're science, technology and engineering. As for fill the gap. In China, there will be 375 million complex over the years, such as quiz questions, chemists, but we could learn a lot about the the oil industry, it can be clearly concluded students enrolled in higher education between technology-focused riddles covering the entire oil upstream area and the economic calculations that there is a worldwide war for talented 2007 and 2015, more than double number in industrial value chain, refinery simulation tasks as well. Sometimes the technical issues seemed professionals. the United States” [5]. and in 2011, operation of a virtual oil company as if it would go beyond our knowledge but then within the framework of a strategic game. after a lot of research and learning we were able In general, experts also predict (radical) By contrast, MOL as a 'young' multinational to solve them. To be honest the competition changes in key HR areas. According to a study company is experiencing an earlier stage of The most important part of the competition every was worth a semester. Unfortunately we did not published by Boston Consulting Group the HR these integration processes. And that is why year is the technology-focused on-line game. score the Final level, but we really enjoyed the area facing three main challenges: “Three in terms of succession it focuses on countries The basis for the game is developed by MOL game. We will be back next year.” trends are pushing Western companies to where it is present (such as Slovakia, , Group experts in a form of professional case alter their HR strategy: globalization, ageing Italy, / , and Hungary) to find MOL studies. This content is then adapted for the Especially in the last 3 years, the rate of students workforce, and decreasing loyalty employees Group-level solutions (often in co-operation students’ level and presented in an attractive pursuing studies in engineering and natural have to their employers” [4]. By using the 'EGG with local educational authorities). Besides and exciting form of an on-line game. Over sciences increased to 75% compared to students Model' (see Figure 2), the study discusses ‘Freshhh’ competition, there are multiple the years the on-line part has been gradually involved in economics / other studies [2]. It is a the combined effect of challenges facing international programs with similar objectives, becoming more and more complex. significant achievement − and a recognized companies: vanishing borders (Globalization), such as the PIMS-Academy.2 feature of ‘Freshhh’ −, since similar competitions changing employee attitudes and expectations The first, on-line round is followed by the are usually designed / announced for students (Ego) and ageing workforce (Generation). In the future, it should be carefully considered second, so-called ‘Creative Round’ open for the pursuing economics and management studies. how MOL Group can at least partially mitigate selected top 40 teams. It is usually an essay- Further details are discussed below. talent shortages from countries it operates in - writing task focusing on a specific MOL Group for example, from Pakistan, where the lack of activity or an issue to be solved (e.g. the ‘Junior This approach is well received by the student university faculties most important for the oil Freshhh’ Concept in 2010) or an industry-related communities and the feedbacks confirm both industry and European ageing problems are topic concerning the society as a whole (e.g. the high professional quality and the ‘fun factor’ almost unknown and the graduates’ motivation consequences of Fukushima catastrophe in of the competition as well. is well above the average. 2011).

Winning this competition takes more than ‘Freshhh’ is How ‘Freshhh’ lexical knowledge. The number of participants decreases throughout the rounds significantly. spurred by the responds to Therefore during the Live Final attended by the 10 best teams (30 participants) the so-called labour market challenges of the 'soft skills' − such as presentation techniques, Fig. 2. The EGG model (Source: Growing their own – Nurturing talent in a tough environment. 2007 Global Survey of CEOs in the problem-solving, stress tolerance and teamwork undergoing Deloitte Technology Fast 500) labour market − play an increasingly important role. In the final the most successful participants can prove transformation undergoing their abilities in the presence of MOL Group top After getting more familiar with ‘Freshhh’ itself, When applying this metaphor to MOL Group, executives and experts (in practical terms it is let’s see the business environment it fits in. we got a different picture. All three effects transformation? like a live Assessment Centre1). After the on-line, In the introduction to the essay ‘Nurturing can be observed in CEE countries, but, The ‘Freshhh’ competition concept attempts technology skills and knowledge oriented rounds talent in a tough environment’, Igal Brightman, for the present, companies managing their to influence all three pillars of the above EGG the ‘soft skills’ come to the front completing the Deloitte Global managing partner says operations from this region, including MOL model. set of evaluation criteria for the participants. about labour market transformations that: Group, do not open new succession channels 1. Globalization. It is an international “Companies around the world are starting to towards developing Asian countries (India, competition for university and college

1Assessment Centre is a selection tool designed to measure to what extent participants can handle situations similar to those they would 2The goal of the program is to educate specialists of supply chain optimization in petroleum industry for MOL Group. Academy graduates experience as officers holding specific positions during their everyday work, based on predefined competencies. are capable of modelling and optimizing the whole value chain using refining, logistical, commercial and petrochemical knowledge.The program is designed and delivered in a partnership with the University of Pannonia.

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students. Therefore it ensures that any test their skills through such games. Almost Due to the characteristics of public education, gas industrial competition with two objectives: student living outside MOL Group countries 500 employees have taken the challenge the Secondary School Concept is focused it is designed to improve the effectiveness and inclined to submit an application may since 2010 in 156 3-member teams from 10 on local solutions. However, there are of MOL recruitment / succession processes participate, and it also offers a larger pool MOL Group countries. On the whole these international aspects, such as the: and raise awareness / popularity of oil of talents to select from. Entering the achievements may increase their and other • MesterM / Naj Mentor Award9 industrial knowledge. Besides soft promotion competition by joining 3-member teams colleagues’ loyalty and engagement level. • ‘Junior Freshhh’ competition10 of the brand, the main objective was to raise makes it possible to experience teamwork • ‘Freshhh’ EDU (Educational Framework the awareness of to-be professionals of and offers the opportunity for students of System)11 opportunities offered by the industry. Year various nationalities pursuing studies in MOL's general • Scientific competitions foundation12 over year, this form of communication is geographically remote areas to submit joint • Refinery visits13 found increasingly effective in accessing the applications. There are an increasing number response to • Dialogue Teacher’s Conference14 relevant target group. This trend is also true of examples of such co-operation: in the 2011 • Together for Future Engineers Association.15 in terms of addressing foreign students: in Final, there was a Hungarian-Romanian- challenges 2011, the number of participating countries Canadian trio from the University of Alberta. Besides ‘Freshhh’, there are plenty of other broke all records with the involvement of 62 ways to recruit young talents and ensure Why the student nations. To a significant extent it is attributable 2. Generation / ageing workforce. It promotes strategic succession (see Figure 3). The to the radical transformation of advertisement long-term commitment of young people University and Secondary School Concept competition has forms, as Facebook, Twitter and LinkedIn play who will, later on or as early as in the year that is designed to provide for long-term a pivotal role. The media and social media16 of competition, become potential employees succession includes a number of other an outstanding coverage of ‘Freshhh’ has never been so after entering the competition as graduates or program components as well. Key elements of widespread before in these new ways: the some semesters later, after completing their the University Concept: role? games official website www.freshhh.net has studies. Of the 150 finalists between 2007 and Student competitions were not unknown in the doubled to over 23 600 individual visitors in 2011, more than 30 participants have already • Strategic university relations4 past. In Hungary, such competitions gained 2011 compared to the over 12 500 individual joined MOL Group member companies and • Council of University Relations (EKT)5 popularity in the mid-90s and today it has since visitors in 2007. Additionally via Facebook 30 more still pursuing their studies were • Co-operation with student organisations become a ‘separate industry’ encompassing ‘Freshhh’ gained almost 1,000 ‘friends’ which offered other forms of co-operation. The ratio (e.g. BEST6/AIESEC7) and other higher both conventional talent management (student means more than 224,600 visitors who clicked of returning participants is around 25% every educational student organisations competitions) and recruitment. In Hungary, either intentionally or accidentally on the year, and MOL can potentially rely on it as a • Traineeships about 8,000 students joined such competitions, competitions’ Facebook page. pool of potential employees of the immediate • Student fellowships including ‘Freshhh’ since 1996. Most of them future. • Professorships (55-65%) entered these competitions near Last, but certainly not least, ‘Freshhh’ is a • ‘Growww’ Fresh Graduate Programme.8 graduation. Nowadays many industries and household name for students without any 3. Ego. ‘Freshhh’ attracts young people and their renowned representatives appear in particular direct marketing efforts involved it is almost conceived as an independent the market of student competitions from the and it has actually become an independent brand among students. Since 2007, in spring financial sector (K&H Bank, Big Four) through brand. It was well demonstrated in 2011 each year young people pursuing relevant IT firms (Microsoft) to producers (Dreher by the questionnaire of Ecosim Ltd.: it was studies look forward participating in upcoming Breweries Ltd.) and energy and industrial completed by 11% of the 1,800 participants ‘Freshhh’ competitions. It shows that members (MOL Plc., E.ON Hungary) companies [6]. (204 students), indicating that 40% of them of Generation Y3 can be accessed by such learnt about ‘Freshhh’ from friends. It is competitions. Computer-aided, simulation- In 2007, MOL decided to launch its own oil and followed by email-based advertisements based riddles presenting challenges attract them from round to round. These young people seeking challenges in work, alternative solutions 9 MesterM / Naj Mentor: Hungarian and Croatian students pursuing studies in engineering and natural sciences can acknowledge the contribution of their former secondary school teachers to their professional career. The awards are given by MOL / INA based on the and 'entertaining'/satisfying experience, who submitted nominations. more and more frequently start their career 10 ’Junior Freshhh’ is the 'little brother' of ‘Freshhh’, offers interesting on-line challenges to secondary school students in the areas of physics, chemistry, mathematics and biology. Similarly to ‘Freshhh’, this competition is designed to make studies in engineering and building in a structured way are inclined to natural sciences – considered as basic sciences required for oil industry –, more attractive to students involved in public education. ‘Junior participate in talent search competitions. As Freshhh’ was first launched in 2010 as a pilot limited to Hungary, but its regional level roll-out is already in progress. In the first year 900 teams of three-students competed with each another. for retention, another version of ‘Freshhh’ 11 Freshhh EDU in parallel to ‘Junior Freshhh’ was also developed. It is an Internet-enabled application facilitating training and examination designed for employees ‘FRESHHH FOR of secondary school level natural science knowledge of students, making it possible for teachers to get statistical details during and after individual phases of problem-solving and on achieved results by using a built-in statistical module. Thus they can get more direct feedback PROFESSIONALS' is organised since 2010 to on the performance of students (e.g. about their strengths and difficulties in the task solving) and continuously upload new tasks to the ensure that talents already employed can also Fig. 3. MOL Group main strategic recruitment activities database via an on-line interface. 12 MOL Group supports a number of country-level scientific competitions, typically in Hungary (Dániel Arany Mathematics Competition, National Leó Szilárd Competition in Physics) and Slovakia (e.g. Chemical Olympiad, Summer School of Chemistry). 3 Born between the late 1970s and early 2000s. 13 There are company visits frequently organised as part of such competitions or separately, where experts provide technology-focused 4 Strategic University Relations mean close cooperation with the most important oil and gas related universities in many of those countries presentations and guided tours to production units (e.g. refinery) for groups of students. where MOL Group has significant operation, e.g.: Croatia, Hungary, Slovakia. 14 The Conference aims at improving the quality of national middle and higher education based on a regular professional discussion – 5 EKT: Utilising the co-operative potential of higher education institutional and vocational training school relations based on mutually dialogue – among teachers, educational decision makers and companies as final users. benefits to leverage advantages arising from effective succession management. In addition, acquisition of latest theoretical knowledge, 15 This association founded by several parties e.g. Ericsson, LEGO, ABB, and Hungarian Association for Innovation. It aims at developing understanding and integrating scientific achievements into the MOL Group training system and knowledge base. This particular committee the recognition and reputation of engineers amongst all stakeholders involved (Educational Institutions, Government, Employers, Student, operates in Hungary. Parents) in the economic growth long-term employment. 6 BEST: Board of European Student of Technology. 16 Social Media: the use of web-based and mobile technologies to turn communication into an interactive dialogue. Andreas Kaplan and 7 AIESEC: Association Internationale des Etudiants en Sciences Economiques et Commerciales. Michael Haenlein define social media as "a group of Internet-based applications that build on the ideological and technological foundations 8 Nearly 900 entry-level job applicants (with 0-2 years of professional experience) have started their professional career at MOL Group in of Web 2.0, and that allow the creation and exchange of user-generated content”. (Source:.www.wikipedia.com) the frame of the Growww fresh graduate program since 2007.

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(22%) and teacher recommendations (15%). putting MOL Group on the map of growing and Thus it is clearly visible that together with other Conclusions and well managed international enterprises. Sándor Galambos joined elements of the strategic succession concept, MOL Group in November 2001. this competition successfully contributes to the future possibilities First he worked as Knowledge promotion of MOL Group and its subsidiaries On the whole we can conclude that it made References Management Expert at IS as attractive employers both in Hungary and a good sense to launch the competition, [1] MOL Plc. Internal Data and from 2007 at the Human neighbouring countries. especially because it established an [2] MOL Plc. Internal Data Resources. At the same time he overall concept which fully covers the key [3] Growing their own – Nurturing talent in a tough started to organise the online, stakeholders of the ‘hottest’ recruitment environment 2007 Global Survey of CEOs in oil-industry related, recruitment- Additional / hidden issues. Moreover, it is a cost effective the Deloitte Technology Fast 500; Deloitte purpose ‘Freshhh’ competitions. Organising way to recruit young talents since this a Touche Tohmatsu Web page: http://www. them annually together with other tasks derived values structured and fine-tuned recruitment for the deloitte.com/assets/Dcom-Global/Local%20 from MOL Group’s secondary school concept most needed professions e.g. chemical, oil Assets/Documents/Tech%20Fast%20 (e.g. Junior Freshhh scientific competition of of ‘Freshhh’ and gas engineers, or geologists. Most of 500%20Global%202007%20CEO%20 natural sciences) are his main activities today. It is clear that besides accessing an adequate those who have joined via ‘Freshhh’ are still Survey%20(global).pdf [2011. 09.05.] His original profession is chemical engineer from volume and quality of workforce, ‘Freshhh’ working for MOL with great success, which [4] Jean-Michel, C. - Iván, M.: „Talent University of Pannonia, Veszprém, Hungary. competition and related strategic HR programs may be derived from two factors: they have management: Nurturing the EGG”, The play a pivotal role in brand promotion and have been selected thoroughly by the three rounds Boston Consulting Group, (2007) Web page: a substantial 'branding' value. and the trust and engagement towards the http://www.bcg.com/documents/file15108. Andrea Kóródi started working company might have been created in an pdf [2011. 09. 05.] for MOL Group in 2008. Firstly Subsidiaries are important stakeholders of early stage, even earlier than they joined. [5] Daniel, F. - Jim, H. - Jacqueline, C.: „Aligning she took part in the Round Table, the competition, since many of them are Many of them fulfil responsible positions or Talent for Global Advantage: How Top Employee Engagement Survey traditionally strong employers (e.g. Slovnaft, even have been appointed to be managers Companies Develop the Right Talent in the 2008 project. From 2009 she INA). In the brand research program 'Employer or expatriates. The competition itself can Right Places”, The Boston Consulting Group, was responsible for learning and Branding 2010' conducted at MOL companies be considered as a CSR activity since it (9/07 rev. 11/07) Web page: http://www.bcg. development related tasks at HR operating in Hungary, ‘Freshhh’ and ‘Growww’ addresses not only the students and their com/documents/file15087.pdf [2011.09.05.] and from 2010 she is fulfilling were specifically referred to as reasons to institutions but also many kinds of industrial [6] Ecosim Ltd. Internal Data her current position at the Strategic Human work for MOL. and non-industrial competitors and the Resources team where she is working on the society / parents in a way that awareness Keywords: strategic recruitment, online ’Freshhh’ competition and ’Growww’ Fresh In many countries, not exclusively in Hungary, of workforce shortage has been raised. professional competition, Freshhh, Growww, Graduate Program. Her original profession findings of internal assessments are also Providing jobs, traineeships and various kinds labour shortage is sociologist from Eötvös Loránd Science supported by external results.17 Based on of supports to students in those societies University, Budapest. a research conducted in 2007, the parent where MOL Group is operating is also part Reviewed by Gábor Varjasi and Róbert Tóth company was not or barely known by fresh of CSR.18 The competition strengthens the graduates in Hungary, while in 2011, MOL Plc. co-operation in MOL’s everyday life because was the second Most Desired Company. This it mobilizes significant internal resources to MOL GROUP WINS EUROPEAN HUMAN RESOURCES AWARD research program was conducted by AON- support the student relation / recruitment MOL Group has won an HCM Excellence Award in the Recruitment category, given for the first time. Hewitt-AIESEC and Figyelő Weekly by using activities on Group level since it is always MOL was recognised for its unique, integrated talent attraction strategy which includes online games – a methodology similar to that of 2007. Out of being organised in close co-operation with ‘Junior Freshhh’ for secondary school pupils, ‘Freshhh’ for university students and for its fresh graduate 32,000 who filled the questionnaire in 8,000 the subsidiaries involved. programme – ‘Growww’. were fresh graduates with maximum 2 years The Awards were first launched to recognise and reward European organisations that demonstrate of work experience. They considered MOL as What can we expect from 2012? The excellence in their Human Capital Management practices. Prizes were presented on 25 October 2011 one of the most preferred employer in terms of framework of the game enables us to further at Budapest during the Human Asset 2011 conference. Hungarian companies. develop the competition in which new, even 65 nominations from 14 different countries were entered and the final decision was made by a more demanding challenges will be introduced. prestigious international jury headed by Professor Dave Ulrich. For the sixth consecutive year, Dave INA d.d. also got a reward called Golden Simultaneous professional and financial Ulrich was named as Most Influential International Thinker by HR Magazine. Student Index 2010 which is awarded by management of the integrated (upstream and The head of the jury Professor Ulrich commented: “MOL has done an incredible job in demonstrating the leading student association in Croatia downstream) virtual company will be the core what we consider the future of HR to be, which is to understand and adapt to one’s particular business E-student for its initiatives: Top Scholarship task with high focus on the technical issues. context. The company has created awards and games and established excellent relationships both for Top Students, Competition for Young Besides the business advantages (e.g. strategic with students and teachers significantly increasing its pool of talent in the process. The number of Talents – ‘INA gives you a scholarship!’ – in and law cost recruitment, employer branding) applicants grew from 1,009 in 2007 to 7,897 in 2011. Its investment has resulted in an increased pool collaboration with daily newspaper Jutarnji this system also aims to be a teaching tool of talent, retention of key talent and created a strong employer brand. MOL Group has developed a List and Scholarships for students of lower for universities in the long-run. In other words model of future HR by mastering and knowing the business context within which it finds itself and then economic status. ‘Freshhh’ is a small but efficient contribution to shaping it to meet its objectives.” Mr. László Szőcs – Senior Vice President of MOL Group HR added: “I am really pleased. This award from the professional European HR community is a great honour for our company and particularly for 17 AIESEC ’Most Desired Company 2007’ research program. our HR team. Professor Ulrich’s special recognition and his kind words about our work make us very 18 CSR: Corporate Social Responsibility. proud and happy and inspire us to even greater efforts.”

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We should rather underline that effects can Enterprise Risk be limited with conscious, proactive risk Enterprise-wide risk management. Recognizing these tendencies, Management: MOL Group took the decision in 2005 to extend its risk mitigation practices and charged scope and context Group Risk Management to move on from management at Every business faces the challenge to financial risk and insurance management maximize earnings and to manage risks related towards the development of an Enterprise Risk to the strategic goals and objectives (incl. key Management (ERM) model. The main objective operations) that generate those earnings. of ERM is to identify, assess and control Risk is an everyday part of any business – the risks faced by the company. The ERM MOL Group establishing a culture that inherently finds the model of MOL Group has since continuously right balance between growth and risk taking improved through benchmarking, performance is an elementary role of the risk management measures, trend analyses, external / internal process. This way risk management becomes audit reports, results of previous risk surveys: an important contributor to shareholder value. these are crucial information sources to the Máté Gerebenics (26) for insurance and business continuity successful operation of ERM. Financial risk specialist MOL Group Risk Management management as the company will be able to By not taking enough risk, a company may [email protected] capture a wider range of risks and will also underutilize its capital – excessive risk taking, be able to exploit synergies of the different however, can push the company towards Éva Bocsárdiné Geréb (41) Enterprise Risk Risk management expert systems. negative returns. The balancing act is the point MOL Group Risk Management of optimal risk taking. To find this equilibrium, Management [email protected] the company must have up-to-date information Bálint Kelen (32) Összefoglalás on its risk exposure and should develop an framework at Risk management expert Vállalati szintű kockázatkezelés a MOL- integrated approach to identify and measure MOL Group Risk Management [email protected] csoportnál all of its risks, set specific tolerance levels and MOL Group treat these risks as integral part of its regular Integration of risk management into other Zsolt Nándori (37) Insurance specialist A MOL-csoport Enterprise Risk Mana­ business processes. regular business processes of the company is MOL Group Risk Management gement (ERM) rendszerének elemzése of key importance to successful identification [email protected] áll a közlemény fókuszában, amelyet Risk is assessed by estimating its two and treatment of risks and threats associated Attila Szűcs (28) a vállalat a kockázatok kezelésének parameters: likelihood of occurrence with company operations. Risk management expert integrált megoldásaként használ. A MOL (probability) and impact – the higher the MOL Group Risk Management [email protected] elkötelezte magát az ERM használata probability and impact, the higher the risk is. Incorporation of the broadest variety of risks mellett, hogy a kockázati tudatosságot és into a long-term, comprehensive and dynamic a kockázatcsökkentési megoldásokat cso­ In many cases management may decide system is arranged by Enterprise Risk portszinten erősítse. Az ERM – többek között to accept risks: typically those that have Management (ERM) on group level for all Abstract – támogatja a stratégiai döntéshozatalt, low impact, or have relatively high upside divisions. ERM is a consolidated, top-down, Setting the Enterprise Risk Management (ERM) erős biztosítási tevékenységet, rendszeres potentials. In other situations risks may be cross-functional risk management framework system as the integrated risk management és részletes pénzügyi elemzéseket és appropriately controlled (e.g. compliance) covering all business units and risk factors. practice of MOL Group is in the focus of our kockázatkezelési megoldásokat kínál, illet­ or transferred to third parties (partnership, analysis: MOL has committed itself to use ve az üzletfolytonosság menedzsment egyik outsourcing, etc.). Risks can also be MOL’s ERM utilizes Monte Carlo simulation ERM in order to enhance risk awareness alapjaként szolgál. completely avoided by stopping the activity in quantifying the riskiness of its activities by and mitigation programs on a company- that contains the specific risks (e.g. statistically measuring the deviations of their net wide basis. Amongst others, ERM is used Szoros kapcsolat van az ERM rendszer cancellation of a project). As it is seen there present values (NPV). These deviations in NPV to complement strategic decision-making, a fejlesztése és a stratégiai döntéshozatali are various mitigation approaches available emerge from the uncertain outcomes of different robust insurance program, regular in-depth folyamat minősége között: az ERM to keep exposures at an agreed level of risk underlying risk drivers. It would be a mistake if financial risk analysis and management, and támogatja a megbízhatóbb és pontosabb, tolerance. Nevertheless, even the best risk the focus was only on potential losses, because also to form basis for business continuity a kockázatok figyelembevételével készült management shall not keep up the illusion risks are not necessarily linked to negative management. előrejelzéseket a döntési folyamat bármely that future can be always foreseen. Just events, but also to attainable gains. Therefore pontján. A rendszeres ERM-értékelések ered­ remember the so called ‘Black Swan’ events it is essential to analyze overall distribution A strong correlation exists between the ményeinek és tanulságainak felhasználása (very low probability, but very high impact including downsides and upsides, instead of application of ERM framework and quality további lehetőségeket teremt a működési events), think of the Hungarian red sludge concentrating only on unfavourable outcomes. of the strategic decision-making: ERM kockázatok kezelésében: a biztosítási te­ outflow or the Japanese tsunami with the supports more reliable and accurate risk- vé­kenységhez és az üzletfolytonosság nuclear accident. These are not more frequent ERM integrates financial, compliance and adjusted forecast at any decision-making menedzsmenthez kapcsolódóan a vállalat nowadays than they were in earlier days, but operational risks along with a wide range of point. Incorporating lessons learnt from a kockázatok szélesebb spektrumát tudja public scrutiny has dramatically increased in strategic risks: the regular ERM exercises in operational megragadni és kihasználhatja a különböző how media and firm’s managements handle • Financial risks incorporate market related risk management offers opportunities rendszerek közötti szinergiákat. such incidents and their consequences. risks such as commodity price, FX (foreign

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exchange market), interest rate risks or even data are provided by the Group’s Planning to remain competitive. The global shortage of demand, adequate, practical and international the evolution of the financial markets in the and Controlling and Strategy departments, professional experts in the upstream activity experience and knowledge over a sufficiently future (external business environment) which data is based on business plans. To has an unfavourable effect on MOL, as well. In long period are required. • Compliance risks stem from regulatory non- create risk-adjusted cash flows, relevant Hungary the supply of graduated experts has compliance, breach of internal policies and rows in the cash flow are shocked by the become increasingly tight. In the international To ensure the continuous growth and procedures, fraud or ethical misconduct embedded uncertainties of the risk drivers. By arena the brain-drain of experienced drilling competitiveness in Upstream, MOL decided that • Operational risks bind together risk drivers discounting simulated FCFF’s, the distribution experts is a common practice with the the specific, sufficient skills must be available such as equipment or IT system breakdown, of net present values (both divisional and participation of the oil majors. In the meantime within the company and the processes would or possible environmental accidents caused group levels) becomes available Russia, which was one of the earliest labour not be outsourced. by a potential large-scale facility disruption exporters of upstream business, has become • Strategic risks contain all key challenges that • Mitigation actions. Line management is an importer of qualified workforce recently, Mitigation strategies are crucial for the organisation to deliver its responsible to address risks identified and set further highlighting the seriousness of the In general, risks can be mitigated internally strategy, ensure long-term sustainability and individual actions to treat those ones that have situation. In light of these, it is highly required to by the Divisions or by the functional units. In development. significant impact on the NPV of the division. build up, improve and retain key competencies: this special example, as a main mitigation Group Risk Management co-ordinates the reasons and explanations are detailed below. tool, MOL Upstream Division has introduced All of these risk-types are relevant for each formulation of these mitigation actions and competency based development programme business unit, although differences exist in monitors their execution over time Profit loss from competence shortage and has set up an internal academy to train their priorities, attributes and resource needs We have defined the possible losses on MOL employees. On the other hand, HR has division-by-division. • Reporting and communication. Results upstream projects separately for the exploration adjusted its priorities in light of the above risk of the annual validation are shared with and the production phase according to their analysis to support the expansion strategy of The risks are reassessed on a yearly basis Executive Board of MOL and the Finance features. We have had to determine the sum Upstream Division. as a joint effort between experts of Group and Risk Management Committee of the of the competences that could be at risk. Then Risk Management and responsibles of line Board of Directors. Also, at mid-year, a status the probabilities and potential impacts of the Additionally, in order to secure the future need managements, supporting the decision-making report on mitigation steps is provided to the following losses were specified: of professionals MOL decided to sponsor a process by providing analysis regarding risk above bodies. Moreover, shareholders and • Decrease of drilling success faculty at University of Miskolc (Hungary), profile evolution of the Group and the divisions. stakeholders receive a high-level overview as • Over/underestimation of reserves where key competences required by the oil and The yearly update process consists of the part of the Annual Report. • Increase of project CAPEX /OPEX gas sector are in the focus of education. following five steps: • Increase of relevant (employee-dependent) By managing the ERM process, Group Risk operational risks • Qualitative assessment. During the qualitative Management improves profitability of the • Delay of projects Synergies between assessment Group Risk Management businesses and contributes to sustainable • Decrease of produced volume (due to interviews business unit managers to identify growth. employee failure). the ERM and the all material risk drivers and to select the quantification paths. This phase represents the EXAMPLE: ANALYSIS OF A RISK The results of the modelling proved that the long-term strategic validation of risk trees (or risk pyramids), which DRIVER IN ERM shortage of internal competences would have show all risks faced by the business units on a The practical example below presents how major effect on the value of the actual and decision-making 10 year strategic horizon ERM assesses those risks which are above future Upstream portfolio, which may force MOL the risk tolerance level, thus inevitable for the to resort to alternative recruitment practices process • Quantitative assessment. The quantitative company to deal with. The evaluation process such as the use of contractors, consultants, There are plenty of evidences in the assessment incorporates estimation of for possible impacts of a risk driver is crucial, and outside vendors. While these solutions international corporate governance literature probabilities of risk events and their possible because it directly influences final results, solve the problem in the short-term it is not that there is a linear correlation between the impacts. During this phase Group Risk which determine the necessity and content of sustainable on the long run. level of Enterprise Risk Management and the Management team transforms the real risks the mitigation action plans. quality of strategic decision-making. In fact, into probability distributions which can be Strategic opportunity cost development of Enterprise Risk Management used during the modelling phase. Estimation Building up key competencies and to retain This risk is estimated as the possible decrease partially emerged from the incentive to provide of probabilities and impacts are provided them on the longer term is an area where the of acquisition success (due to uncompetitive more reliable and more accurate risk-adjusted by business units’ experts or external data energy industry, including the oil and gas sector, evaluation and negotiation processes). forecasts for possible outcomes at any key providers based on historical experience is facing difficulties to keep it in line with the decision-making point. or professional judgment. The assessment expansion strategies [1]. In this respect this is The upstream oil and gas sector has unique is also linked to definition of correlations a complex risk driver that possibly has several challenges that may only be understood by From historical point of view it is worth between different risk drivers in order to take impacts on future EBITDA (earnings before someone with substantial experiences in mentioning the period of late 1980’s when into account the interdependent structure of interest, taxes depreciation and amortization) resolving them. The negotiation techniques are inorganic growth possibilities, i.e. the start risk events generation; therefore it must be mitigated with not comparable with other industrial segments of global mergers and acquisitions (M&A) different tools at the same time. due to its unique features, such as the life-time at a large scale were the primary source of • Modelling. The aim of the modelling process of the projects and the involvement of special growth for enterprises, by exploiting synergies is to forecast distribution of free cash flow MOL’s Upstream Division operates in an stakeholders (e.g. governments). Additionally, between business activities of the acquirer and to firm (FCFF) of all divisions by simulating international environment, aiming the best to manage the growing geopolitical risks the potential target. In this period huge risks future risk-adjusted cash flows. The baseline technology and knowledge available in order and the uncertainty of future supply and were undertaken in hope for extra benefits in

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return, but a series of these acquisitions were integration problems. not always justified by long-term scenario The process of project evaluation represents analyses. another application of ERM for strategic decision-making. By the utilization of the ERM Due to this uncertain situation, shareholder and capabilities (historical database, skills and also stakeholder expectations forced senior competencies, tools, etc.), strategic, financial executives of organisations to place more and operational risks of any new proposed emphasis on raising the correlation between investment can be assessed and measured. strategy and risk management processes in the frame of a coherent enterprise-wide This means that ERM contributes to the structure. Although ordinary assessment tools decision-making process by determining were available for project / M&A evaluations distribution of the net present value of the providing relatively reliable inputs for project, which encompasses not only the risk- decisions on financial and operational risks, adjusted expected net present value, but also Fig. 1. NPV distribution of R&M Division with and without hydrocracker the management of strategic risks was out of the spread of the distribution. Risk-adjusted scope for senior executives at most enterprises NPV provides more accurate and more reliable at that time. estimation compared to ordinary measures, in Another possibility is to analyze different which only limited risk factors are captured baskets (smaller portfolios) of projects and In case of financial risks, long history of available or riskiness of the investment is not captured make specific decisions about the basket that market data provided a basis for estimation at all and decision makers can only rely on has the highest contribution to expected return of volatilities, expected values, dependency estimations for the expected value or, in better and the lowest incremental risk at the same structures between different markets and case, one or two alternatives. The spread time. products. This risk type was usually managed and the shape of the distribution provides well by transferring risk to third parties by using additional information for senior management derivative transactions or by establishment regarding probability of a given NPV outcome, of naturally balanced positions within the as well as minimum and maximum possible production cycle of the company. profit levels for the most pessimistic and most optimistic realizations. In case of operational risks, estimations were also available based on professional judgments The illustrative example below (see Figure 1) Fig. 3. Comparison method of simulation results with strategic and historical experiences. The emergence of shows the NPV distribution of R&M Division (business) plan different insurance types also contributed more with and without a hydrocrack investment. It effectively for the proper management of these can be seen that without hydrocrack the NPV competent risk management activity is a clear risks. distribution had a larger spread and probabilities source of competitive advantage. of extreme outcomes were higher than zero. On The lack of proper assessment for strategic the other hand, implementation of hydrocrack risks however was caused by the difficulty was expected to result narrower distribution in Integration of in precise predictability. Estimation of discounted future cash flow and reduced the Fig. 2. Hypothetical risk / return profile of projects (portfolios) possible impacts and their probabilities were probabilities of extreme realizations to zero operational risk determined exclusively on a professional without shifting expected NPV to any new level. Another application of the ERM in strategic judgment basis and by top management From risk/return point of view this project was decision-making process is the analysis of risk- practices with ERM only. Corporate culture and management evaluated as a strategic risk mitigation project. adjusted expected values of different financial The fast changing environment forces philosophy at that time was not supportive to measures (EBIT – earnings before interest operational risk management towards new collective participation and involvement of wide Possible projects can be analyzed not only and taxes, EBITDA, FCFF). By estimation efforts that attempt to hit multiple moving range of employees in setting and executing separately, but also by taking into consideration of the risk-adjusted financial measures, they targets. In the same time, businesses have strategy. There was no transparent database portfolio effects. Simplest solution for this is the become comparable with those set in the long- stretched their limits to grow internationally, available, which would provide industry-wide, mean / variance analysis [2], which represents term strategy (see Figure 3). Moreover, it can increase efficiency and reduce costs. Reliance consolidated estimations. With ERM in place at comparison of the given project’s risk / return be analyzed whether strategic targets are still on IT systems and automated controls has many firms by now, most of the strategic risks profile with existing risk / return profile of the attainable and whether the enterprise can become part of normal course of business. can be foreseen and mitigated by traditional, corporation (see Figure 2). By elaboration of reach better profit levels than those ones set in This implies emerging new threats and more already existing risk management tools. As such analysis it is possible to analyze whether the strategic goals and objectives. imminent risks to continued activities: need for an example, customer surveys can now be a given project improves the risk / return profile higher resilience of the business moved high used to anticipate possible change in demand of the corporation, or contrary to this, the project Implementation of the ERM process in an up on boardroom agendas. and as such be entered into risk analysis and deteriorates it. Another point of view of such organisation can therefore ensure a better modelling. Also, scenario planning and game analysis is whether implementation of the new decision-making process. When risk awareness These tendencies have increased high level theory can be used to anticipate potential investment supports the current portfolio to get and risk management culture are in line with attention to business continuity management competitive pressures, or an in-depth and closer to the target portfolio set in the long-term development of risk management techniques and insurance. Beyond any perception that upfront planning can prevent potential M&A strategy of the enterprise. and risk assessment tools, a systematic and the world is an increasingly dangerous place

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to make business, various external evidences from a strategic point of view. Also, by BCM, the INSURANCE AND ERM following an incident until the end of the insured influence heightened focus on operational quantification of impacts may be more precise Revision of risk quality was always associated period (indemnity). risk management: extremely complex network being identified lower down in the organisation with providing insurance [4]. In its modern form of partners are being dealt with, with higher – compared to ERM, where specific risks may in the energy industry, engineers of the insurers BCM can also be used to protect against losses reliance on their performances. Regulators be considered less important being within the and insurance brokers are doing regular visits to incurred through traditionally non-insurable and shareholders are also requiring companies tolerance level at the aggregated level of the main sites of the insured, rating the risk quality perils, such as supplier insolvency or pandemic to reassure continuity of business and well company. and giving risk improvement recommendations flu [6]. planned measures in place to deal with based on their experiences gained through business interruptions and risk mitigation As recommended by Marsh Risk Consulting having looked at similar sites worldwide, also Mitigation of risks by BCM programmes may actions to reduce negative consequences. [3], an integrated approach to ERM and having looked at losses incurred to peers. By also lead to reduce indemnity periods by BCM eliminates gaps and overlaps whilst still accomplishing such recommendations the faster recovery – having effect on insurance BUSINESS CONTINUITY recognising desire for the two disciplines to risk of a loss is already reduced to a certain premium paid. In this respect, detailed MANAGEMENT (BCM) have separate identities but with a common extent. The level of management response to scenarios can make insurance settlement In the past few years, business continuity goal – to achieve an optimal balance such recommendations is an important factor (loss reimbursement) easier, by estimating management has emerged as one of the key between organisational performance and risk in insurers’ risk assessment and affects the e.g. how much financial support is required in tools besides insurance that companies use governance, thereby allowing a more efficient pricing of insurance. the sequence of recovery actions. Insurance to manage operational risks. A number of low allocation of capital and risk-adjusted decision- procedures should therefore be included in probability but high impact events have alerted making. Non-commercial insurers, e.g. mutual insurers business continuity plans and insurers shall be executives that more cautious preparations for like OIL Limited also establish some criteria kept up to date with BCM arrangements of the damaging incidents are necessary: beginning INSURANCE to measure the risk quality of their insured’s insured. with the Y2K threat, followed by 11th September Insurance is often considered to be one (i.e. their members). As the information to attacks, pandemic bird flu, then the BP oil of the most effective ways of managing be provided by members is fairly limited The three elements (ERM, Insurance and BCM) catastrophe have shed light on vulnerability of operational risks. However, in fact, insurance (only audited gross asset values need to be are in close co-operation and may be further businesses to ‘Black Swan’ events. is rather the final tool to manage certain reported broken down by business sectors), developed in the future by new relationships risks: if you consider that you have made all OIL’s distinction is made through allowing only to be created, synergies to be used, also with The successful management of operational reasonable preventive steps to eliminate or investment grade energy companies to gain other strategic areas as well. risks requires companies to conduct a broader mitigate operational risk and still you think membership. assessment of risks and threats and try to that a potential event creates an exposure establish proactive controls early in time. that is in excess of your risk tolerance, then In the context of ERM, the financial impact of a Conclusions The solution has evolved as the integrated you may want to transfer a part of this risk to facility disruption event is reduced through the As mentioned earlier, integrated risk approach by incorporating lessons learnt from third parties and protect yourself by way of application of insurance coverage. Therefore, management supports enhanced management the ERM exercise into business continuity procuring insurances. management is able to focus and allocate decision-making on different levels. management (BCM) that can enhance resources on other risk exposures where capturing a wider range of risks, extending risk It is important to understand which risks such tools to mitigate or transfer risks are not Leading corporations of the world are using mitigation activities and risk awareness through are insurable and which are not. Overall, available. risk management methodologies to achieve the company both horizontally (line-by-line) and frequent events with low impact are usually better results by taking advantage of long-term vertically (through the chain of command from not part of insurance cover – rather those INSURANCE AND BCM opportunities consciously: enterprise-wide risk the top to all employees). ‘Black Swan’-type patterns referred already Recent studies point out that existence of management enables them to achieve goals in this article. Generally speaking, the most BCM is gradually becoming a pre-requisite within set levels of values, rules and parameters. Business continuity management shall be important risk for an energy company which for insurers to underwrite energy risk [5]. This There are also serious improvement reserves developed to be a natural addition to the can be subject to insurance protection is is again a sign that insurers expect that their in processes, strategies and tools to manage network of management systems in companies, the damage to its assets (property damage client is aware of the risk and the potential loss risks: companies are facing serious challenges by completing risk management with a more insurance) and the consequences of such it transfers to insurers, and has appropriate in implementing their business strategies – one tactical view on processes and value creation damage on the continuation of the company’s plans to minimise that loss, particularly on the way of enabling fulfilment of targets is through chains, as compared to the strategic, long-term business activity (business interruption business interruption side. effective risk management. approach of ERM. insurance). In addition, unforeseen adverse events could cause harm to people’s health Also, the probability of loss is reduced in case Rating agencies and investors are also looking A BCM-led approach prioritises key products, e.g. bodily injury or loss of / damage to the company has a trusted BCM programme, more carefully at risk and compliance, and processes and services delivered by the property of third parties or the environment. which ensures reliable strategies for coverage there is a growing consensus that effective business on the basis of their contribution Liability insurance is a typical tool to cover of less extreme events, too. It also makes management in this area is not just hygiene for to value creation; furthermore, identifies such risk exposure. sense to take all reasonable measures to business, but a barometer of good management dependencies, and assesses impacts of avoid considering insurance as the only one overall [7]. To underline this fact, we shall be disruption. Business continuity plans ensure Financial risks, market risks and business risk management tool, as BCM is to protect aware that MOL Group’s performance is also the business is able to recover from such counterparty risks are typically not possible to market share and brand through returning the evaluated globally: a proud example is MOL disruptions. be covered by classic insurances. There are, organisation (or its unit and function) back to Group being selected as an index component however special products which may partially normal business as soon as possible, while in the Dow Jones Sustainability Index (DJSI), BCM captures also such risks that may be reduce counterparty risks (credit insurance, risk transfer (to insurers) will complement the most prestigious sustainability index omitted by ERM due to low aggregated effect political risk insurance). this strategy by helping to provide cash flow globally [8]. According to the assessment, MOL

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is among the top 12 out of the 112 analysed oil resilience and the capability for an effective the Treadway Commission, 2004 Attila Szűcs started his carrier at MOL Group and gas companies. response which safeguards the interests of its in Budapest as a project manager in GLOBAL5 key stakeholders, reputation, brand and value- [10] British Standard for Business continuity project and then he was delegated in the Bridge Amongst other reviewed elements, risk creating activities” [10] . management, BS – 25999 - 1:2006 project and Optina2 project. Attila joined MOL management of MOL (with the score of 88 Group Risk Management in 2010, dealing with points) is well above both the industrial average OIL Limited: mutual insurer for energy sector Keywords: Enterprise Risk Management, Downstream risk management in case of ERM, (60) and MOL's total (75): another motive to companies, only for property insurance with 51 management practices, risk awareness, risk and also business continuity. He is economist, ensure better focus and stronger integration of members (incl. Chevron, ConocoPhillips, , mitigation, insurance, business continuity specialised in Commercial Economics, risk management tools for an enhanced global OMV, TOTAL, , Statoil) currently. graduated at the , performance of MOL Group. Reviewed by Dénes Doszpod Hungary, in 2007. Indemnity period: the period beginning with As a conclusion, enterprise risk management is the occurrence of the Damage and ending not Máté Gerebenics started his career as FX, a relatively new discipline, constantly changing, later than the number of months specified in the money market, and energy market dealer in the that has become more and more important as Schedule thereafter during which the results of Treasury Department of MOL Group. He moved recognized by MOL Group: the aim is to embed the Business shall be affected in consequence to the Group Risk Management Department risk management into other regular business of the Damage. in 2009 as a financial risk specialist. He processes of the daily operations. To achieve is responsible for the management of the this target, ERM of MOL Group shall be further Group’s financial risks, including the price risk improved and innovative ways of exploiting management of the Group’s commodity trading results shall be applied. References unit. He is a member of the risk modelling team, [1] Ernst & Young Business Risk Report 2010: and also risk controller of the Gas&Power The top 10 risks for businesses (www.ey.com/ related activities. Máté graduated at Corvinus Glossary businessrisks2010); and Quantifying the University of Budapest in 2008 as economist Enterprise Risk Management (ERM): Workforce Crisis in Upstream Oil and Gas, specialized in investment analysis and risk “Enterprise Risk Management: is a process Talent and Technology, Vol.1, Nr.3 (2007), management. effected by an entity’s board of directors, Society of Petroleum Engineers (www.spe. management and other personnel applied in org/spe-app/spe/tt/vol1/no3/workforce) Éva Bocsárdiné Geréb started her carrier at strategy setting and across the enterprise, KPMG Hungária Kft. in Budapest as an audit designed to identify potential events that may [2] Harry Markowitz: Portfolio selection, The assistant then joined Unilever Hungary in affect the entity, and manage risk to be within its Journal of Finance Vol. 7, No.1. (March 1998 as an Operational Risk Manager. Éva risk appetite, to provide reasonable assurance 1952), pp.77-91 , American Finance joined MOL Group Risk Management in June regarding the achievement of entity objects” [9]. Association 2010, dealing with Operational Risk issues, focusing on business continuity and also ERM. Monte Carlo methods: a problem solving [3] Richard Waterer, Senior Vice President, She is economist, specialised in industrial technique used to approximate the probability of Marsh Risk Consulting at “Risk, Resilience management, graduated at the Babes Bólyai certain outcomes by running multiple trial runs, and Continuity Workshop”, on 2 February University in Cluj, in 1995. called simulations, using random variables. 2010, Business Continuity Institute (www. thebci.org/workshopresources) Bálint Kelen started his carrier at Lidl GmbH. in Risk tree: network of risk drivers, which visually Budapest as a Logistic Professional, and then illustrates the relationship between risk driver [4] John J. Hampton: Fundamentals of joined MOL Group in 2005 as an Analyst of categories and subcategories. enterprise risk management, American Upstream Business Development. Bálint joined Management Association (AMACOM), New MOL Group Risk Management in January Net Present Value (NPV): the difference York, (2009) 2009, focusing on ERM, also as risk controller between the present value of future cash of the Upstream business. He is economist, inflows and future cash outflows. NPV is used in [5] Business Interruption Insurance & BCM: a specialised in industrial management, capital budgeting to analyze the value creation BCI Partnership Guide, March 2011 graduated at the University of Hertfordshire in capability of an investment or project. Budapest in 2003. [6] Business Interruption Insurance & BCM: a Free Cash Flow to the Firm (FCFF): a measure BCI Partnership Guide, March 2011 Zsolt Nándori started his carrier at MOL plc. of financial performance that expresses the net as a financial analyst, from 2000 worked for amount of cash that is generated for the firm, [7] Ascending the maturity curve: Effective Treasury (long-term) funding as a financing including expenses, taxes and changes in net management of enterprise risk and expert. Zsolt joined MOL Group Risk working capital and investments. compliance, Economist Intelligence Unit Management end of 2005, he is responsible Report, June 2011 for MOL Group level insurance matters as Business Continuity Management (BCM): [8] Dow Jones Sustainability Index Results of an insurance specialist. He is economist, “An holistic management process that identifies the 2010 Review, 9 September 2010 specialised in Finance, graduated at the potential impacts that threaten an organisation, Budapest University of Economic Sciences in and provides a framework for building [9] Committee Of Sponsoring Organisations of 1997.

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The management of Marketing and Refining As an impact of the forum number of ideas Division decided to meet this expectation by has increased. Keeping up idea generation is Efficiency improvement developing a system, where everyone has one of the most important tasks. As it can be the opportunity to come up with an idea, seen on Figure 1 we have nowadays almost which is not part of the daily routine. The aim 1,000 ideas in the system. was to get ideas which can be the basic of (‘Eiffel’) programme at efficiency improvement. This became the As Figure 2 shows half of the new ideas came Eiffel programme, being developed by each from shift-worker colleagues. organisation of the Division, based on their MOL Refining own organisational culture. Secondly, Refining is in a relatively good position, because there is a continuous demand on each level, to have the opportunity to make a proposal. Our colleagues feel it important to share their observations, Edit Keöves (36) tér el a korábbi kezdeményezésektől, hogy proposals, and expect from the management Efficiency improvement expert (Eiffel coordinator) MOL Group, DS, Refining, Production Excellence olyan alulról építkező keretprogramme, amely to listen to them – which is one of the main [email protected] mindenki számára lehetővé teszi, sőt bátorítja, pillars of Eiffel programme. hogy a finomítói hatékonyság növeléséhez saját ötletével hozzájáruljon. Másrészt, a munkavállalók igénylik is, hogy lehessen Eiffel programme Fig. 2. Distribution of idea generators by scope of activity Abstract ráhatásuk az adott terület működtetésére. Efficiency improvement is an operational at Refining requirement at MOL Group. Compared to A MOL Finomításban a szervezeti kultúrához The first step of launching the Programme Eiffel ideas can be basically divided into two the former instances, Eiffel programme igazodó keretrendszert dolgoztunk was idea-collection in each unit. We have groups. They want to eliminate a formerly is a unique one, because it has a bottom- ki a hatékonyságnövelési folyamatok been continuously gathering the new ideas evolved bad practice or to improve efficiency up framework that allows and encourages összefogására és fenntartására. Az since then. In 2008 a forum was held by of the operational systems. The second group people to contribute to the refinery efficiency alapgondolat az, hogy ötletet bárki beadhat, the managers of Refining for the production represents the real scope of Eiffel program improvement. On the other hand, it meets a kiértékelést szakmai team támogatja. people. Managers asked colleagues to start and EIF. requirements of the employees as well, since A felállított kritériumrendszer alapján up and run Eiffel programme and got a lot of they would have the opportunity to influence kivitelezhetőnek ítélt ötletek megvalósításra useful recommendations that contributed to We must not leave out of consideration operation of a specific area. kerülnek. Az elvi hibás vagy gazdaságtalan the successful start-up of the programme. recommendations that are beyond the daily ötletek értékelését az ötletadó megismeri, A framework adjusted to the organisational így a rendszer a tudásmegosztásban culture was elaborated at MOL Refining is fontos szerepet játszik. Ahhoz, hogy to coordinate and maintain efficiency fenntartható legyen a folyamat, motivációs improvement processes. Possibility to rendszert dolgoztunk ki, amely erkölcsi és generate an idea is a motive. Evaluation is anyagi elismerést is jelent. based on a well-defined criteria system, and supported by an experts team composed from members from different areas of Refining. What is Eiffel Ideas, which are judged to be efficient, are to be implemented. Idea generator is informed programme? about the evaluation of her / his idea. To Eiffel programme at Refining was launched maintain the process, a motivation system in 2008, in order to collect, analyze, evaluate was developed, which means moral and and coordinate the implementation process of financial acknowledgement, too. the efficiency improvement ideas. The basic assumption was that everyone would have real effect on the refining costs, and a huge Összefoglalás amount can be saved by human knowledge, Hatékonyság-javítási (Eiffel) programme a attention and creativity. Its launch was MOL Finomításnál supported by two simultaneous facts.

A mindenkori menedzsment elvárása a Firstly, Efficiency Improvement Framework hatékony működtetés, a MOL Csoport minden (EIF) programme was started on Group level. működési területén, melyre számtalan példát A software background has been developed, lehet mondani. Az Eiffel Programme annyiban it is operated in cooperation with Controlling. Fig. 1. Cumulated number of submitted ideas, shown quarterly

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routine and obligation on different levels of the Idea should be sent in written form, but to deal with the problem recognized by the An allocated amount, the so called Eiffel organisational hierarchy. It has significance there is no defined format. In some cases, idea generator. In these cases, we try to find package is available to implement the in motivation and will be mentioned later. idea generator does not have all the required the good solution with the help of colleagues approved ideas aiming at efficiency professional knowledge, tool and information taking part in the evaluation team. improvement. Cost and profit sides of the to submit a complete proposal. In this case, subprojects should be provided in details. The evaluation Eiffel-coordinator keeps in touch with idea If implementation is not refused on technical generator, to get more information about the and HSE point of view, economic calculation Eiffel package is actually a collection of process idea and more work should be done by the has to be done. The experts assess whether smaller projects, being submitted in more The incoming idea is registered in the evaluating team. Idea generator can attend the execution is profitable. It means that we phases in a year. database then evaluated according to the the meetings of the evaluating team. have to calculate profit, and on the other methodology, shown on Figure 3. hand, cost evaluation based on technical When the idea seems to be worth to be The first decision-making point (see Figure description shall be done. implemented after the first evaluation, a Description of the idea, status of evaluation, 3) is to decide whether the recommendation more detailed evaluation is carried out by type and amount of savings both in kind and results in efficiency improvement or not. Although the primary task is to find and Downstream Technology Department, with in HUF, cost of implementation, and the date Ideas, having no economical results or better realize ideas having clearly demonstrable the contribution of Project Development, of implementation or reason of refusing are future alternatives (e.g. cheaper solution) profit, in case of a less scaling idea, it is not Corporate Services Investment and registered in the database. exist will be filtered out. The remaining ideas always possible to see the results because Procurement Departments. In this step, the will be accepted into the Eiffel programme, of the size of the system. Depending on the final technical description and cost calculation A notable ratio, two thirds of proposals tend and go for evaluation by the experts. If an available data, we draw the conclusion and is made. Payback (NPV – net present value, to save energy, what is not amazing, if we idea is received into the Eiffel programme, make calculation from measured data or from IRR – internal rate of return, etc.) calculations consider structure of operating costs. Beside next step is to ask experts, whose knowledge (partly) estimated data if we can not assign a are made with the help of Controlling. energy savings, the most frequently received is elemental to evaluate the idea in measuring point in the examined area. When recommendations relate to reductions of technological, HSE, legal or other point of the result can not be proved, technical or The project proposal is made according to maintenance costs, chemical consumption, view, as the task requires. model calculations are made, based on the MOL Plc. regulations, and should be accepted lab costs, and slop production-reprocessing. available data. by Investment Committee. Afterwards, Part of idea evaluation is searching for other implementation is carried out according to Responsibility of administration, managing solution. Sometimes, we can find simpler Afterwards, based on other facts (annual the previously elaborated schedule. of evaluation, and initiating implementation way of implementation. In other cases, the operating hours, run times, etc.) and on belongs to the Eiffel coordinator. recommended solution is not implementable, the official prices, the yearly profit can be The Eiffel coordinator does not take part but it is obvious, that it is worth and we have calculated. This has to be compared to the in this phase, but follows the process with implementation cost and the simplified return attention. rate is defined roughly. If this rate is under the expected value, idea is being put into the list When the equipment, technical solution is of ideas to be realized. This mentioned value put into operation, the date is recorded in the always depends on the actual economic database. This is regarded as the start-up environment, and on the return period of the date of the follow up period. parallel ideas to be realized. Follow up Financing Aim of follow up is to compare the planned Worked out ideas are ranked by the return rate and actual data. On the other hand, the and realized depending on the amount of the conclusions make possible to improve the available CAPEX. Since both idea generation process itself. Last, but not least, basis of and idea evaluation are done continuously, it rewarding is the actual benefit. can happen that a recommendation coming in the good moment, can be immediately Follow up period is basically one year, but the implemented, and others are postponed to a frequency depends on the action. It makes certain time (e.g. if realization is connected to sense to check results month by month only a plant shutdown). at the starting of the action, because the initial difficulties can be corrected. When a Idea generator is informed about the result process is in steady state, such a tight control of evaluation, and in case of refusal, its is not necessary. cause has to be explained. This is clue of the process, since he/she can easily accept If results can be demonstrated as it is required a well-justified expert report without being in EIF, idea is registered as an action in the discouraged. On the other hand, for those, system, and follow up is done according to

Fig. 3. Process of idea evaluation who read the database, it’s a good occasion its rules. for knowledge-sharing.

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If the implemented proposal is proved to be working on unit level (where idea comes from), we check over the whole Refining, if it is possible to achieve further savings by enlarging or adapting the idea. Eiffel is a good possibility to take over good solutions from each other. We have to ask ourselves, if it is really the best practice as we are doing now? Motivation One of the biggest challenges is to maintain the idea generating mind, what can be achieved by using different motivation devices.

Tickets can be won periodically to different programmes; a poster competition was launched to popularize Eiffel programme; related articles are published in internal press regularly; forums are organised connected with the rewarding ceremony; but first of all, premium is given. Reward is given only for an idea which is beyond obligation in scope of activities. Premium is given according to regulation, based on the actual results of one year, corrected with implementation cost. We have to mention, that 12 months follow up is not reasonable in all cases. In some cases, annual results are concluded on the basis of 3-6 months’ benefit, and premium can be given.

We can never say that we have done the best, on continuous changes of possibilities and demands in our internal and external environment. We can do it well, but it can be done better.

Reviewed by László Lázár

Keywords: efficiency improvement, idea generating, idea implementation, benefit, motivation, follow up, Refining

Edit Keöves joined MOL Group Refining & Marketing in 2001 and worked in various positions in Hungary (refinery dispatcher, SCM scheduler, operational programme model developer). Since 2008 she co-ordinates Refining efficiency improvement initiative (‘Eiffel’). She graduated at University of Veszprém as a chemical engineer and also owns an engineer-economist degree.

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The changing customer loyalty

Gábor Farkas (48) loyalty initiative at MOL Plc. and draw up the Head of Business Analysis and Support MOL Group, Downstream division, future intentions inasmuch as it makes sense [email protected] before going public. There was an article titled “How to win loyal customers” in issue 2008/2 of MOL Scientific Magazine from three Retail colleagues (A. Éber, A. Balásfalvi-Kiss and G. Abstract Dolezsai) who summarised the basic principles The article describes the recent market and practices around customer loyalty, which developments which shaped the relationship might serve well for the reader to refresh between customers and retailers. It explains related theories. The current article builds upon the rationale behind MOL’s decision to the previous one in this subject from 2008 revitalize Multipoint loyalty programme by and updates the reader what hectic changes establishing a new multi-partner (coalition) influenced customer behaviour and what Table 1. Attitude dimensions to loyalty programmes based loyalty scheme together with OTP changes applied in MOL’s approach to it [1]. Bank. want tangible benefits and they want it there The dimensions are best characterized by and then, on the spot when they purchase. the extreme opinions pro and con, however, Loyalty, as it matters Also, businesses want somehow to secure none of the identified significant dimensions Összefoglalás the desired repeatability and preferably tie reveal any loyalty aspect in the customer- A változó vásárlói lojalitás for both parties customers to themselves. Ultimately, both retailer relationship. This is particularly true Whilst the above mentioned article defines parties want real benefits that are expressed if we consider the underlying meaning of A cikk bemutatja a közelmúlt piaci customer loyalty, in simple words loyalty in money terms, so we can hardly call this loyalty, i.e. faithfulness or devotion. As one of fejleményeit, melyek a vásárló-kiskereskedő means very different things to customers and loyalty any more rather we consider it financial the survey respondents summed it up: “I have kapcsolatát az utóbbi időben alakították. A businesses. Customers exercise their loyalty interest. The crisis enhanced this effect and to be loyal to my own pocket not to an alien cikk feltárja a MOL azon döntésének hátterét, by purchasing the same products and services in deed, MOL experienced that customers brand”. Nevertheless, for the sake of tradition miszerint új alapokra helyezi a Multipont and by going back to the same places, not redeemed more intensively in the past years and simplicity let us use the word ‘loyalty’ for törzsvásárlói rendszert és több résztvevős questioning why they do so repeatedly. By than before. any programme that aims to maintain the (koalíciós) lojalitás programot alkot az OTP doing so, customers enjoy the certainty that repeatability we discussed earlier. Bankkal közösen. they get what they got used to, they know MOL commissioned a research from a the price and quality and they can expect professional service provider, who conducted consistency in how they get treated. For the a large-scale survey [2] re. people’s Introduction businesses this repeatability is the actual perspective on ‘loyalty programmes’. Their The MOL Customer loyalty is a convenient subject to benefit of fostering customer loyalty. They can technique is to dig down to the very bottom talk about, because everybody is somebody’s count on a solid customer base and calculate of the respondents’ mind and reveal the perspective customer hence everybody is affected or at with expected volume and turnover. This all fundamental thought (meme) about the The ‘customer loyalty journey’ started at MOL least has an opinion on it. At the same time, it is sounds nice so far, but something happened matter. In our instance, over 1,400 individual in 1998 when MOL ‘Törzsvásárlói Program’ also a difficult subject for the very same reason. along the way! Walking down the street – say thought items were processed, and based on – ‘Regular customer programme’ was first It is like football, politics or raising a child – there in the UK – proudly with the precious Marks their filtering/categorisation, four significant implemented. The basic principle was that is no need to be an expert to comment. & Spencer’s, Selfridges, John Lewis bags, dimensions were identified. The wide diversity after registration, customers could collect projecting to the neighbours that we shop at of opinions is indicated by the fact that only (earn) points on their spending written up to Despite such a public exposure for the subject those fancy places is not enough any more. 62.3% of all responses had substantial weight a plastic card, equipped with a data storage matter, the author attempts to summarise in this Customers are now demanding more than to identify as a major dimension (see Table 1). chip. They could also redeem (burn) the points article the major findings of a recent customer prestige, consistency and reliability. They when bought either fuel or shop items at MOL

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filling stations. This meant that both account companies’ loyalty schemes or (ii) were the - Village also a much wider opportunity to collect their and transactional information was stored at the companies pushing it to the customers in the A natural progression from the previous stage points and an equally wide choice to harvest card and the central card processing system heat of competition and because technology is when several smaller players get together the points for something that suits their was responsible to reconcile data between was not a barrier any more? and broaden their proposition to essentially needs when they need it. Large coalition the cards’ data and a central database. This the same customer base. The partners know schemes are usually owned by one or more method was selected at the time due to low The answer is simple. Yes! Both assumptions each other well, they probably have even of the participating parties. It can be also data network bandwidth and availability are true. In fact, it appears to be a self- ownership relations, too, and they cherish run by them or by their co-owned service across the network. This system generated spiral. The first one (i) is true their customers like shopkeepers to do with provider, but an independent party can also enabled an offline operation, i.e. earning because customers wanted benefits for their regulars along the high street at the be contracted for the operations. There are a and burning was possible even though there returning and they increasingly become village. few large schemes that are owned and run by was no online connection between the card conscious about their spending. They are professionals and not retail market players. terminals at the filling station and the central more conscious about what they buy, where - TESCO The most prominent ones are Nectar in the card authorisation system. they buy it they consider several factors (price, There are few players who have such a UK, Smiles in France. quality, origin, bio, supporting local business, scale that justify a standalone scheme. The This scheme was limited to MOL network sundry benefits, etc.) before they actually name of this class probably best describes it. and the points people could earn could also spend their money. The latter assumption There are on average 3.7 million transactions burn within the same filling station network. (ii) is also true, because competition is the executed at TESCO in one calendar week in MOL achieved little over 600,000 registered foundation of market economy where all Hungary. No one can beat such a number customers but the active users – who players want to be differentiated and attract of customer interactions, and it is well interacted at least once in the past year – are more customers. Every retail business is harvested by the company’s own ‘Clubcard’ just half of this number. interested to provide higher Customer Value scheme across Europe. The major principle Proposition (CVP) with the products/services in Hungary is that every HUF 200 is rewarded MOL is also a founder and member of the that project enhanced Customer Perceived by one point, which is an opportunity to spend ‘Multipont’ loyalty programme operated by Value (CPV) relative to competition. At only when an eventually accumulated 400 OTP Bank. This enables customers to earn the same time, technology has become points get converted to a HUF 400 voucher. and burn points (one point is equivalent to accessible at a reasonable price to serve We consider a 0.5% discount of the previous one Hungarian Forint) to/from their OTP all those customer and company needs like purchase when redeeming a voucher, which bank cards branded with the ‘Multipont’ logo. access anywhere (good network penetration), is actually earned at a consecutive purchase. (The third founder, MATÁV withdrew from the quick service (megabit network speed, ever programme as a result of the merger of all increasing processing power), confidentiality Based on the immense success in the UK, Deutsche Telekom interest companies.) (identification and secure data handling TESCO established its financial service Fig. 1. Loyalty schemes technologies), large/increasing customer line as well as its travel agent activities in A DECISION TO BE MADE numbers (wide range of system scalability), the Central European countries. The latest In the meantime, several retailers started and specific offers (segmentation based on retail type service penetration from TESCO MOL, as a dominant player in the fuel retail their own loyalty schemes more or less history). is mobile telephone that has been running arena and OTP Bank as the market leader under similar principles, occasionally with successfully in the UK and Ireland. After in retail banking in Hungary, have decided to a more sophisticated IT infrastructure. By Depending on the route one decides to take, Slovakia, Hungarian shoppers will have a join forces in improving both CVP and CPV 2005, a commercially agile customer could at least four options are open to proceed choice to join the TESCO/Vodafone offer by establishing a new ‘Multipoint’ loyalty easily be a proud owner of several dozens of towards a sensible loyalty programme. It is in 2012. This might question the single scheme. The basic principle is to gather loyalty cards which thickened his/her purse. mainly determined by two major parameters; company’s own loyalty scheme, but it is very a well-defined circle of retailers whose Little we know about the origin of coalition what customer base is reachable by the obvious that these businesses belong to one products / services are complementary schemes but the first ones were certainly company and who else are the potential company. to the participating companies (partners), using convenience as an argument for having partners to work together in the programme therefore making a wide range of choice the benefit of point collection/redemption at (see Figure 1). - Coalition for customers (members) to earn and burn several retail players, yet holding one card There are few players who can match up to their points. This is essentially the coalition only. With this, we arrived at a decision - Intimacy TESCO. However, there are market leaders type loyalty scheme. To implement that, point, where a retail market player has a The company with a limited number of at certain segments who already have a the founders of the scheme (MOL, OTP) serious decision to be made; either continue customers in reach can decide (or can find relatively large pool of customers. Their establish a purpose built company – let us to fight for customers’ loyalty on its own or itself in a situation) where it is best to create a dilemma is if they were running a standalone call it Multipoint Zrt. for the time being – that join a group of other market players who act scheme on its own. To make such a scheme scheme, the customers might not have a high is responsible for marketing the brand and together in a coordinated manner to attract / work well, it has to find a differentiator that perception of their products and service as ‘an the benefits members can have from it, as retain customers. makes it worth to customers to return. These object of desire’ when redeeming the earned well as for administering the point issuance can be centred on a deep knowledge of the points. By joining forces, these companies and redemption across all the partners. The Scale that helps customers, having a close relationship with provide benefits for themselves and for their reader might ask: what is the motive behind Two major trends hit the market simultaneously them, treating them like part of the family customers. The companies extend their this? There are several reasons. in the past decade that resembles the ‘chicken in a local shop, essentially creating and reach to each others’ customer base, hence and egg’ dilemma. Was it (i) the customer maintaining a very close, intimate relationship. achieving a much larger scale than they used Relevant offer demand that created the need for so many to have individually. The customers will have In the endless flow of promotions, special

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offers, all kinds of creative ways to promote goods and services, customers become fatigued; they often get tired of all the hassle involved with selecting what they really want or need. However, if they bump into something that is really close to their actual needs, that is exactly what they wanted for quite some time or something that matches exactly their desire then they are far more willing to spend on it. If this happens, then both the customer and the company are satisfied and such transitions shall enhance the relationship between them. This transaction certainly involved a relevant offer. Relevant for the customer because the offer has an exact match with the needs and relevant for the company because it is part of its service / product portfolio. The only trouble with it for the companies is to identify / create that something, that relevant offer for the several million customers. Fig. 2. The customer process collection on their spending. A single retailer Despite all the complexity of customer- can grow membership only within its own company relationship, there is no other way network, but more retailers have a larger but to get to know the customers, learn about pool of customers to join in. Similarly, the Fig. 4. Which of these challenges are impacting your customer strategy? [3] (CRM – customer relationship management) their buying habits, their preferences. coalition partners’ outlets provide more data on existing members’ spending, hence there of how important is this step these days is the Once the segments established, the partners The customer ‘process’ is a statistically bigger certainty to identify result of a survey conducted amongst 104 (ideally together) shall find the appropriate Some of the more experienced readers trends and behaviour. Moreover, banks and executives who are directly responsible for product / service portfolio in certain situations might recall the times when a small grocery telecommunication companies actually have customer relationships. As Figure 4 indicates, and (5) develop their relevant offers as well shop served only the nearby community, the customers’ spending related data even from over three quarter of the respondents consider as configure that to the loyalty IT solution. This shopkeepers knew each and every customer, outside the coalition; after all, people use their in-depth customer knowledge as number shall ensure that each Member will have relevant they greeted them by name, they knew about bank cards everywhere and interact with their one challenge. Moreover, understanding offer(s) because they are members of a defined their problems and they had time to chat about mobile phones increasingly. With necessary customer behaviour is number two. customer segment. things. That kind of relationship remains attention on personal data protection, today only at smaller, local communities, but aggregated information can be fed back to The next step in the process is a proper The final step is (6) targeting customer at the scale of nation wide companies, with the scheme from these partners, too, that will (4) segmentation of customers based on segments with relevant offers. The impact on the several million members, we need a different enhance the picture of the identified customer the typical behaviour they possess. These customer can be achieved by active sales process, solution to find the relevant offer. segments within the coalition scheme. two steps require an in-depth knowledge of by promotion via appropriate channel. With all the the market, its social, economic, as well as promotional effort, there are customers who are In order to create relevant offer in a large regulatory environment and largely require not affected by the upfront work, which makes the scheme, the following steps are necessary: human intelligence. However, with the recent second phase of targeting even more important; 1. Acquiring members development of software solutions and the actual interaction with the customer. Staff has 2. Collecting data on customers’ spending hardware processing power, a purpose built to be properly trained to recognise what to offer 3. Analysis of data and understanding IT package is employed to do this. Ideally, it is to which customer (segment) and bridge the gap customer behaviour part of the loyalty package that administers the between uninformed customers and available 4. Segmentation of customers earning and burning process but transactional relevant offers. 5. Developing the relevant offers data is often exported into a separate system 6. Targeting customer segments with relevant (or professional service provider) that will When a member interacts with a partner and offers. identify the trends, customer habits and the shop attendant (with the help of the system) recommends segmentation. Sophisticated presents the relevant offer, chances are that the Figure 2 is a highly simplified visualisation of segmentation methods go well beyond social member will take up the offer. what a coalition scheme needs to process in demographic data and take advantage of the order to assure that their offer will not be more historic spending of individual customers. The Repeat business than an endless point gathering program for a Fig. 3. Source of customer reach more precise the analysis, the narrower the All so called loyalty schemes’ objective is to vague catalogue item. segments can be, yet, there should be only make people somehow attached to the company, The art of a large loyalty scheme is a thorough as many segments as the responsible staff hence make them come back with their purchase Figure 3 is a good indication of how much (3) analysis of data related to individual can administer. The right segmentation shall intentions again and again. MOL has also found more a coalition scheme can contribute to customers’ spending and establishing a sound enable the desired differentiation in the service that in its current loyalty programme the average both (1) acquiring members and (2) data conclusion of their behaviour. A tangible proof / product offers [4]. customer basket size is twice as large, than an

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average customer’s basket who is not a loyalty away the benefits originally aimed at. However, it all the staff at all the shops segmenting them according to their behaviour card holder. Taking into consideration the customer also appears that BCM agencies do find creative • Competent systems are also required for running and by proposing them relevant offers that they lifetime value (LTV)1 of active loyalty customers ways for differentiation every year. E.g. SPAR a joint promotion in a coalition scheme, where are most likely to take up. vs. ordinary customers, the difference grows to Jungle Mania and MOL Victorinox campaigns two or more partners agree on providing benefits threefold over a five year horizon. This presents were/are experiencing very good market response for customers based on defined buying criteria. The expectations include good understanding of a large monetary difference that no retailer can in 2011 in Hungary. that part of the market which operates in cash, neglect these days. Figure 5 below is an indication of those medium better customer engagement and ultimately BCM campaigns are most likely to stay in the that will serve as customer identification under the increased results in both fuel and non-fuel sales. In a well founded coalition scheme, there are market for some time. However, due to their new ‘Multipont’ loyalty scheme. A simple magnetic several partners (service providers, product temporary nature they are not suitable to support stripe card, a radio frequency operated (RFiD) References sellers) who together cover a typical customer the desired long-term / permanent customer- keychain or even a barcode on the mobile phone [1] Internal project work, MOL Group Retail basket (food, clothing, telecommunication, retailer (loyalty) relationship. Therefore, MOL enable smooth interaction with the customers. Loyalty Programme – Hungary, Retail banking, transportation, utilities, etc.). The concentrates on the coalition based ‘Mulitpont’ Division, 2009-2011 likelihood that a high CPV item for a customer loyalty scheme. [2] External project work, MOL Group Retail exists in a coalition scheme is proportional to the Loyalty Programme – Hungary, Darwin’s participating partners’ product / service portfolio. Benefits delivered by technology Marketing Evolution, Retail communication Retailers are often criticized for their loyalty The role of technology was discussed as part of the research, April – June 2011 programme that they make people collect few customer process, but it is important to highlight, [3] Loyalty World 2011 – Survey Results, points on their high value purchases yet give what is made available in a sophisticated loyalty Terrapinn Limited, 2011 peanuts when it comes to redeem the points. This IT package and with the integration of mobile and [4] Peppers, D. - Rogers, M.: Aligning is particularly true for fuel retailers for an obvious internet technologies. The following items are far Customer Loyalty with Business Strategy, reason; the margin content on fuel is far less than from a complete list of advanced functionalities, Peppers and Rogers Group, 2010 it is for clothing, white goods or on the majority of but they indicate the journey ahead: Fig. 5 Medium for customer identification under the new ‘Multipoint’ [5] Oliver, D.: Retention vs. acquisition: grocery store merchandise. Therefore a coalition • The customer identification can be now achieved scheme [1] the case of investing in the customer to scheme is twice beneficial for a fuel retailer; not only with plastic cards but with barcode that maximise return, Big Difference Marketing, customers collect points on a wide retail scope as is placed either on a keychain or even displayed MOL international perspective 2010, Presentation at the Loyalty World well as have the opportunity to redeem points for on a mobile screen. Radio frequency driven MOL Retail has been operating loyalty Conference, organised by Terrapin Ltd, ‘an object of desire’. MOL also expects benefits microchip technology is also common programmes in Hungary, Slovakia and Romania. London, 2010 from the future ‘Multipont’ loyalty scheme as a • The individual members can organise The Slovak and Romanian programmes are result of partnering with OTP, a grocery chain, a themselves in a group within the loyalty system running very successfully as a single player Keywords: Retail, customer, loyalty, telecommunication company, a fast food network and set up an account structure for themselves scheme. Redemption is possible on a printed relationship, CVP, CPV, BCM, behaviour, and several other retailers complimenting each where they can collect points together onto the catalogue basis which is used in both countries as Multipont others portfolio. same account and set the rights of redemption. a promotional exercise in the event of renewals. All family members have their own cards, they all MOL Romania implemented the catalogue in a Reviewed by László Piry Collecting the vignettes – best customer earn the points onto the family account but only webshop format, too, which further boosted the management (BCM) the mother can burn the points choice of redemption opportunities for members. Gábor Farkas first got involved One of the recent years’ top sales phenomena is • Mobile phones are often used for identification with MOL in the MARS project the so called best customer management (BCM) and as promotional vehicles, too. Members can Current plans include the renewal of the Hungarian as consultant from Accenture type promotion. The essence of BCM is also to receive virtual vouchers onto their mobile from scheme as described in this paper and roll it out in 1997. His process oriented achieve customers’ regular return. By returning the loyalty programme that they do not have to to other countries, too, as local market conditions consulting experience was regularly to the retailers over the promotional print but if they decide to take advantage of it, the determine. well utilised in the outsourcing period, customers earn the right to buy a high integrated systems administer the discount for focused part of his career. After CPV item for an attractive price. The supplier of them. The most sophisticated recent invention being responsible for shaping the high CVP item is assured for high volume enables the member to point his/her smartphone Conclusions new outsourcing engagements he became therefore provides a major discount, whilst the camera at the middle of the high street onto the MOL embarked on the road of customer loyalty Commercial Director for the European finance retailer enjoys the increased volume on its own shops and by turning around all available virtual in 1998 and achieved similar success to its peer and accounting outsourcing engagements. products during the vignette / point collection vouchers are displayed on the screen group. However, recent market developments He was responsible for the Bratislava period. MOL has been running these promotions • One of the fundamental benefits of a good took us to a tipping point when MOL had to decide delivery centre when MOL offered him to since 2008 with Fila, Frottana, Swarowsky and loyalty IT package is to administer the item which way to proceed in order to improve the join a major corporate project in 2007. Since Victorinox. All major retail chains use this method based discounts that members can enjoy. loyalty aspect of our customer relationship. The then Gábor held senior advisor and regional to boost sales, but over the years it also turned out Typical situation is that if one takes 20 litres of revitalisation of ‘Multipoint’ loyalty programme has management positions at the Corporate that the positive effect of such promotion is strictly premium fuel then a certain shop item costs been decided as a joint effort together with OTP Centre, Information Services and recently limited to its defined period. Once the collection is half price only. This requires close integration Bank and the creation of a multi-partner coalition at Retail. Gábor graduated as a Mechanical over, volumes return sharply to normal. Moreover, across the cashier-, retail- and loyalty systems, scheme is now under implementation. Engineer at Miskolc University. He earned the increasingly more and more competing BCM especially if the retailer wants to make sure that his MBA degree at Ashridge Management campaigns run simultaneously and start taking the promotion is running swiftly without training The intention is to achieve long-term, lasting School in the UK. customer relationship by getting to know the customer community much deeper, by 1 Customer Lifetime Value: LTV = Gross Marginal Contribution × (1 – Cost of Capital) × (1 – Customer Churn Rate) × Number of Years [5]

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The recovery of the remaining and trapped extends over a period of weeks or months. The role of microbiology oil in the reservoir requires more and When oil production declines, another injection more sophisticated and expensive tertiary phase is started. The goal of cyclic microbial technologies, called recovery is to alter the drainage patterns and in oil industry, from the (EOR). Globally, about 1 trillion barrels (0.16 rock wet ability near the well to improve oil Tm3) of oil have been recovered until today and production rates. Cyclic microbial recovery about 2 to 4 trillion barrels (0.3 to 0.6 Tm3) still may not increase the ultimate amount of oil remain in oil reservoirs being a target for EOR recovered from a reservoir, but can increase laboratory research to the technologies [1]. The most effective techniques cash flow and thus and a positive benefit to the for tertiary oil recovery are the chemical producer. enhanced oil recovery (CEOR), heat enhanced pilot MEOR test oil recovery (HEOR) and miscible displacement In microbial flooding nutrients are injected oil recovery (MDOR) [2]. However, all these into the formation to stimulate the growth and technologies have shortcomings that constrain activity of microorganisms indigenous to the their implementation. These include shortage formation. If the requisite microbial activity of gas such as carbon dioxide for MDOR; is not present, microorganisms can be bio- Hajnalka Füvesi (29) to produce useful products such as gases, premature water breakthrough; problems augmented into the formation along with the PhD student Zoltán Bay Foundation for Applied Research, biosurfactants, biopolymers, etc. to improve of exorbitant fluidity in MDOR; high cost nutrients. The goal of microbial flooding is Institute for Biotechnology oil recovery. Since 1946 more than 400 patents and unsuitability of surfactant enhanced oil to alter crude oil properties and/or reservoir [email protected] have been issued on MEOR, but none of them recovery; the degradation of polymers by flow patterns within the reservoir to mobilize Ákos Koós (31) could gain widespread acceptance by the oil mechanical damage or microbial action; entrapped oil and increase the ultimate amount Research fellow industry. This paper reviews the progress, deemulsion blockage in polymer enhanced oil of oil recovered from the reservoir [5]. From this Zoltán Bay Foundation for Applied Research, Institute for Biotechnology achieved over the past years in enhanced recovery (PEOR); damage to the equipment in point of view a plugging effect of the biomass [email protected] oil recovery with Pseudomonas aeruginosa the well or crude oil coking for oil caking under or the extracellular matrix of bacterial biomass bacteria and their metabolic products, and the the formation in HEOR; and the low efficiency of can be very important. Due to reduction of the Péter Kesserű, PhD (38) Head of department MEOR technology development in Hungary. heat utilization in steam-enhanced oil recovery permeability, fluid and surfactants (naturally Zoltán Bay Foundation for Applied Research, [2]. Clearly, additional technologies are needed occurred or synthetic) are redirected into the Institute for Biotechnology [email protected] to enhance oil recovery. unwept regions of the formation, which gains Összefoglalás additional oil recovery [6,7]. Ágnes Dergez (31) The microbial enhanced oil recovery (MEOR) Research fellow A mikrobiológia szerepe az olajiparban, a Zoltán Bay Foundation for Applied Research, laboratóriumi kutatástól a mezőbeni MEOR was first tested by Beckmann et al. in 1926 [3]. Several field tests of microbial selective Institute for Biotechnology kísérletig Since then numerous studies demonstrated plugging have been carried out in the past [email protected] the effectiveness of this technology. MEOR decades. Gray et al. (2008) [8] suggest that Margit Balázs (31) A konvencionális termelési eljárásokat is a collection of techniques that utilize reservoirs with less than 6% of the pore volume Head of department Zoltán Bay Foundation for Applied Research, követően az ismert olajkészletek felét- microorganisms and their metabolic products to in high-permeability layers would be the best Institute for Biotechnology kétharmadát még mindig őrzik a tárolók. improve the recovery of crude oil from reservoir prospects for microbial selective plugging. [email protected] Bizonyított, hogy mikroorganizmusok rock. MEOR technologies involve stimulating István Kiss, PhD (40) alkalmazásával többletolaj kihozatal érhető indigenous reservoir microbes, injecting Results of basic research and field studies Director el harmadlagos művelési technológiában, single species, consortia of naturally occurring show that MEOR is broadly applicable to many Zoltán Bay Foundation for Applied Research, Institute for Biotechnology melynek során a kút saját flóráját vagy akár bacteria into the reservoir, produce specific different kinds of oilfields, since it is simple [email protected] exogén baktériumokat felszaporítva és a metabolic products or perform specific activities to implement, needs low capital investment, rétegbe juttatva a termelt gázok, felületaktív to improved oil recovery [4]. MEOR can also can give a quick response, it is more flexible Imre Mécs, DSc (80†) Scientific advisor anyagok, biopolimerek növelik a kihozatali involve injection of microbially-made agents than other EOR approaches, and uses Zoltán Bay Foundation for Applied Research, arányt. 1946 óta több mint 400 szabadalmi produced ex situ by traditional fermentation biodegradable and renewable resources. Institute for Biotechnology bejelentés született ebben a témában, azonban approaches. Microbial methods are new and Maudgalya et al. (2005) [9] reported a survey in Sándor Puskás, Dr. (50) az olajiparban egyik sem tudott világszerte experimental area of EOR research. Generally, which they concluded that 96% (388 out of 403) R&D senior expert there are two ways to apply MEOR. of the reported MEOR field trials worldwide MOL Plc Exploration & Production Division elterjedni. Jelen publikáció a hazai kutatási New Technologies and R&D eredményeket foglalja össze és bemutatja, were considered successful. [email protected] hogy Pseudomonas aeruginosa baktériumok Cyclic microbial recovery is a single-well alkalmazásával hol tart a magyarországi technique, similar to cyclic steam and cyclic Although MEOR technology is a more or less Abstract MEOR technológia. CO simulation method [5]. The first step is accepted tertiary technology in oil industry, 2 One-half to two-third of the oil ever found is a short (few hours) injection period when only a few studies are known in Hungary. In still in the reservoir even after primary and microorganisms and nutrients are injected into most cases the application of cyclic microbial secondary production. Microbial enhanced Introduction the production wells. Next, the wells are shut- recovery had been occurred when nutrients and oil recovery (MEOR) is one of the tertiary Oil industry has to face the increasing crude oil in for a period long enough to allow microbial glucose were injected into the reservoir. There methods applied to increase oil recovery. demand of the world nowadays. Conventional growth and product formation. The wells were some trials to bio-augment exogenous This technique exploits the ability of technologies only recover about one-third to incubation period may last days or weeks. fermented bacteria to the wells also. Although microorganisms either indigenous or injected one-half of the oil initially in place (OIIP). Finally, the oil production phase begins and both approaches have been resulted in

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increased oil recovery, the microbial enhanced sequence was amplified by polymerase chain for 168 hours aerobically. The 5 days old records pressure, temperature, flow rate and oil recoveries are still out of practice in Hungary reaction (PCR) method, using the primers EubA biopolymers synthesized by Pseudomonas pressure difference during the measurement until yet. Already three years have passed and (1522R; 5’-AAGGAGGTGATCCANCCRCA-3’) aeruginosa ‘785’ and ‘1604’ strains were automatically. the well is still producing similar results. and EubB (27F; completed with reservoir water and crude 5’-AGAGTTTGATCMTGGCTCAG-3’; [11]). The oil in the ratio shown in Table 1. Proceed to PILOT MEOR FIELD STUDY In recent study we have investigated the reactions were carried out in 30 μl volume, 0.5 μl mechanical homogenisation of the different During first half of 2008, due to our successful possibility of the application of exogenous genomic DNA preparation served as template. solutions the volume of oil-water emulsion was development work, we prepared 2 m3 double biopolymer synthesized by Gram-negative Samples were subjected to PCR using the highly determined after 4, 12 and 24 hours. diluted biopolymer fluid, which retained its Pseudomonas aeruginosa strain in MEOR accurate KOD DNA polymerase (Novagen) in viscous-elastic behaviour. Applying the well technology. In the project the production, a Peltier thermocycler (MJ Research) with the MEOR: LABORATORY treating method ‘Huff and puff’ no problems characterization and the optimization of the following program: denaturation at 94 °C for 2.5 MEASUREMENTS have occurred during the injection of solutions biopolymer for MEOR process had to be solved. min, 30 cycles at 95 °C for 20 sec, 55 °C for 20 The microbial enhanced oil recovery was listed below: sec, 70 °C for 25 sec and final extension at 70 examined in a self-made laboratory model I. 1 m3 Baybio-Meor well tr eating liquid °C for 20 sec. system (Figure 1). The simulation of the (biotenside solution) Materials and pressure (p), temperature (T) and the flow II. 1 m3 Baybio-Meor biopolymer solution The PCR fragments were analyzed by rate of the reservoir water characteristic for III. 1 m3 thinner solution (fermenter culture methods agarose gel (1%) electrophoresis and made the reservoir can be set using this instrument. medium) visible by ethidium bromide staining and UV During the determination the MEOR effect of IV. 1 m3 Baybio-Meor well treating liquid ISOLATION OF BACTERIA ABLE TO transillumination. The PCR products were the biopolymers on 125-250 μm fraction of (biotenside solution) SYNTHESIZE BIOPOLYMER purified using the QIAquick Gel Extraction original cores and the original crude oils of the V. 5 m3 produced water. The samples of the investigated wells (more Kit (Qiagen), and sequenced at the DNA given wells were observed. The treatment of than 100) were inoculated first onto Bouillon sequencing laboratory of BayGen Institute the core was the following: The wells were closed for 7 days after the medium (10 g pepton, 3 g Beef extract, 4 g (Szeged, Hungary). For sequence homology • Determination of pore volume (PV) and the intervention. Cyclic stimulation, also

Na2HPO4x12H2O, 3 g NaCl and 25 g agar in search, we used the SEQMATCH tool at the water permeability known as 'Huff and puff' method, is sometimes

1,000 ml distilled water, pH adjusted to 7) and Ribosomal Database Project (RDP; [12]) • Determination of initial oil (Soi) and water applied to heavy-oil reservoirs to boost the

incubated for 48 hours aerobically at 37 °C. The server. saturation (Swi) recovery during the primary production phase.

ability of bacteria to utilize or mobilize crude oil • Determination of residual oil saturation (Sor) Steam, tensides and/or polymers are injected

was tested on the surface of DSM-457 (2.44 RHEOLOGICAL MEASUREMENTS (with 1 PV of synthetic water: 0.2 g CaCl2xH2O, into the reservoir, than the well is shut in. After

g Na2HPO4, 1.52 g KH2PO4, 0.5 g (NH4)2SO4, For the determination of the rheological 2.6 g NaHCO3, 2.6 g CH3COONax3H2O and a sufficient time, generally a week or two, the

0.2 g MgSO4x7H2O, 0.05 g CaCl2x2H2O, 10 properties of crude oil and biopolymer samples, 0.5 g NaCl per liter) injection wells are placed back in production.

ml SL-4 in 1,000 ml H2O) agar plate covered programmable Brookfield DV-II+ rotational • Oil recovery with 1 PV bacterial biopolymer (P. This cycle may be repeated until the response with crude oil (500 μl oil, solubilised by 10 % viscometer was applied. The flow ability of aeruginosa ‘785’ and ‘1604’) double diluted becomes marginal. hexane), aerobically at 37 °C for 168 hours. crude oil samples was given according to with synthetic reservoir water The bacteria were capable of degrading or plastic viscosity calculated by the software of • 2 PV flooding with synthetic reservoir water. mobilizing crude oil were picked up and were the instrument automatically, while in case of Results inoculated into modified Bouillon medium bacterial biopolymer the characteristic data Pseudomonas aeruginosa strains were isolated where biopolymer synthesis took place at 37 °C was calculated as quotient of shear stress (N/ from oil well product as a part of the natural for 5 days aerobically. From those bacteria (20 m2) and shear rate (1/s) (apparent viscosity). flora on oil covered medium. The selected isolates) that were able to synthesize structured Due to the inhomogeneous structure of the bacterial strains called ‘785’ and ‘1604’ are biopolymer, 2-3 was selected and identified as biopolymers (viscous-elastic gel or liquid proved to be able to utilize and mobilize crude Gram-negative Pseudomonas aeruginosa depending on the concentration) apparent oil on oil covered plate (see Figure 2). This strain. viscosity had to be calculated. feature was much more expressed in case of Ps. aeruginosa ‘785’. IDENTIFICATION OF ISOLATED STUDY OF THE EFFECT OF BACTERIA BIOTENSIDE, OIL EMULSIFICATION Both strains produced high-quality biopolymer Bacterial genomic deoxyribonucleic acid The biotenside content of the biopolymers and growing in special medium. This is an alginate- (DNA) was prepared by conventional phenol the ability to generate emulsion with crude oil type polymer, which contains mannuronic and extraction technique [10]. The 16S rDNA was tested in emulsification experiment at 37 °C guluronic acid units. The balance of β-1,4- linked D-mannuronic acid and L-glucuronic Sample Oil (ml) Reservoir water (ml) Biopolymer (ml) Fig. 1. MEOR test instrument acid residues lead to viscoelastic behaviour of 1. control, no biopolymer 50 50 0 the polymer (see the inserted picture on Figure 2. 50 47.5 2.5 After all the collected effluents were centrifuged 3). Measurements on oscillation viscosimeter 3. 50 45 5 (30 min, 37 °C, 4,000 rpm) the volumes of oil proved that the biopolymer produced by Ps. 4. 50 40 10 and water fractions were determined. Based aeruginosa shows viscoelastic behaviour

5. 50 35 15 on these data we calculated the total (ER) and this character is preserved in the diluted

6. 50 30 20 and the enhanced (ERin) oil recovery, and we form as well. For the acquisition of structural monitored the pressure difference (∆P) during information, we concluded on the basis of Table 1. The volume of the components in emulsification experiments the measurement. The computer program the frequency sweep measurements that the

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Our emulsion stability measurements showed that neither the ‘785’ nor the ‘1604’ strains has formed an emulsion which was stabile for more than 24 hours. In addition, the thickness of the emulsified layer was larger in the ‘785’ system under the same conditions after 4 hours (Figure 4). On this basis, it could be assumed, that Table 2. Differences between polymer solutions during oil recovery processes larger amount of surface-active components are produced by ‘785’ during the biopolymer PILOT TEST production. These surfactants are rhamnolipids Based on the results of laboratory research a [13]. The produced rhamnolipids contain either pilot test for the application of Ps. aerugionsa one (mono-rhamnolipid) or two (di-rhamnolipid) ‘785’ biopolymer as MEOR fluid was carried linked rhamnose sugars with alkyl chains. The out in 2008. chain length can be varied from C8 to C14, which gives high variability. During the treatment of ‘22. well’, the 9 m3 well treating fluid (composition see in part ‘Materials and methods’) was easily injected into the reservoir through the ‘Huff and puff’ way. Reopening the well after 7 days the production restarted without any problem and resulted in a significantly increased Fig. 2. Clean up zones on ’22. well’ oil covered plates by different recovery. However some comments have to strains of Ps. aeruginosa Fig. 4. Emulsion stability test with ‘22. well’ oil and biopolymer be made in relation to the treatment. The well structure of viscoelastic polymer is responsible secreted by Ps. aeruginosa ‘785’ (left) and ‘1604’ (right) strains treating ‘Huff and puff’ method rather leads to after 4 hours incubation. From left to right the first tube shows the for weak physical forces and they also allow control system, the others show the continuously increasing ratio of suppress the oil that hides in capillaries near its regeneration. The rheological properties biopolymer solution the well base zone. In our case the biotenside- Fig. 5. Flow curves of ‘22. well’ oil samples determined with of the biopolymers synthesized by two Ps. biopolymer solutions could clean the area programmable Brookfield DV-II+ rotational viscosimeter at 20 °C aeruginosa strains pointed to that exopolymer MEOR TESTS around the well bore due to the surface-active secreted by ‘1604’ is more stabile and shows The distributions of the residual oil yield substances allowing the residual oil to flow higher durability. On the flow curve of the differ in situ sub-processes of laboratory easier to the production tubes. The quality of secreted biopolymer of ‘1604’, higher shear MEOR experiments, depending on which oil produced subsequently to the treatment stress values can be observed than with ‘785’ bacterial cultures were used in the tests has clearly improved. Figure 5 shows the flow (Figure 3). There is a breaking point on the (Table 2). The results proved that the curves of the oil samples produced by ‘22. flow curve of ‘1604’ at shear rate of 12/s. The majority of the recovered oil during laboratory well’. We measured the viscosities at 20 °C reason for this phenomenon is that during the MEOR measurements was detected in the to gain information on the water content of measurement on the rotational viscosimeter displacement water injection phase in the each sample. 8 days before the treatment the biopolymer screws up on the rotating body. case of Ps. aeruginosa ‘785’, while the ‘1604’ the water content of well product was 20% marked polymer showed enhanced oil yield (v/v) with an 8.9 % intermediate (emulsified) during its injection phase. This effect can be phase. From time to time we measured the explained by the higher stability of the ‘1604’ water content and it was almost the same (core forming effect of the biopolymer) and for each samples. During 10 days after the the higher biosurfactant content of ‘785’ intervention the water distribution rose to 38 (core forming effect of the biopolymer and oil %, but until the 29th day it decreased to 10% emulsification of the biotenside). (v/v), while the emulsified part of well product increased to 20-25% (see Figure 5). The Fig. 6. Comparison of ‘22. well’ oil samples after centrifuged with We recorded on-line the pressure differences excessive formation of emulsion is the clear 3,500 RPM at 37 °C during the laboratory tests and we observed evidence of the injected polymer solution pressure rises between the two ends of the ability to reduce the interfacial tension in the aeruginosa ‘785’. Practically no sediments core during the biopolymer injection phase. oil-rock system. were detected in the oil sample, 29 days after Subsequently, in most cases we detected the treating process. partial residual oil yield. This reinforces our Examining the ‘22. well’ products we found hypothesis that besides the oil emulsification that, the sedimentary, sandy phase ratio After that the well treatment dynamometric due to the secreted surface-active components was specifically high before the treating well analyzer measurements were also the biopolymer has a special rock-forming role. procedure. All samples also contained a carried out by the specialists of MOL Plc. Namely, after the sealing of larger diameter small amount of emulsion. Figure 6 clearly They found, that the influx of liquid from rock- pores the displacement fluid, rich in biotenside shows significant reduction of the sediment, layer to well bore has been grown, and the Fig. 3. Flow curves of biopolymers secreted by different Ps. molecules can flow to the low diameter pores. owing to the well treatment with biotenside amount of well product doubled due to the aeruginosa strains; inserted picture shows the viscoelastic polymer Henceforth it can easily emulsify the residual oil. and biopolymer solutions made by Ps. bacterial intervention. Already three years

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have passed and the well is still producing [4] Youssef, N. – Elshahed, M.S. – McInerney, [13] Robert, M. – Mercade, M.E. – Bosch, M.P. Ágnes Dergez joined Zoltán Bay similar results. M.J.: Microbial processes in oil fields: – Parra, J.L. – Espuny, M.J. – Manresa, A. Foundation for Applied Research culprits, problems, and opportunities. Adv – Guinea, J.: Effect of the carbon source on Institute for Biotechnology in Appl Microbiol, 66: 141-251. (2009) biosurfactant production by Pseudomonas the theme of degradation of Conclusions aeruginosa 44T1. Biotechnol. Lett., 11, crude oil pollution in soil by The scale-up production of biopolymer [5] Zhang, X. – Xiang, T.: Review on Microbial 871-874. (1989) biotechnological methods as a by Pseudomonas aeruginosa ‘785’ was Enhanced Oil Recovery Technology and student of University of Szeged, successfully completed, and it was applied in ‘22. Development in China International Journal Keywords: microbial enhanced oil recovery, Hungary. Then she started to well’’s ‘Huff and puff’ treatment. The produced of Petroleum Science and Technology, biopolymer, Pseudomonas aeruginosa, work in the Institute as a PhD student. At the biopolymer is a viscous-elastic gel, which was Volume 4, Number 1, pp. 61–80. (2010) biotenside, pilot test Institute, she has been working as project proved with rheological measurement. manager from 2009, then as research fellow [6] Raiders, R.A. – Knapp, R.M. – McInerney, Reviewed by István Koncz, Dr. from 2011. At present, her main scientific Based on the results of laboratory MEOR tests, M.J.: Microbial selective plugging and projects are the investigation of biorefinery of field experiment was carried out, where the enhanced oil recovery Journal of Industrial Hajnalka Füvesi joined Zoltán Bay high added value plant materials and properties ‘sanding’ effect of the reservoir consequently Microbiology, 4: 215-230. (1989) Foundation for Applied Research and bacterial products. She was graduated decreased. The amount of debris from bedrock Institute for Biotechnology, as as Hungarian-English and English-Hungarian was reduced in the samples after the treatment, [7] Stepp, A. K.: Biotechnology: Alternative a PhD student. Within R&D technical text translator in Biology MSc at thus the quality of crude oil is improved. permeability-modification methods. Journal activities, she practices oil- University of Szeged. of Petroleum Technology, 49(3): 280-281. recovery processes on behalf Based on the hydrodynamic studies by MOL (1997) of MOL on a model system. Margit Balázs was graduated at Plc., the following conclusions can be made: Furthermore, she has got a great University of Szeged as chemist - The amount of produced oil was doubled [8] Gray, M. – Yeung, A. – Foght, J. – Yarranton, experience in general microbiology and colloid at 2004 thereafter he became compared to the initial state H.: Potential Microbial Enhanced Oil chemistry. She is graduated as a chemist MSc in the PhD student of Imre Mécs, - The quantity of oil / water emulsions was Recovery Processes: A Critical Analysis, 2007 at the University of Szeged, Hungary. Dr. at the Institute. From 2008 increased in the samples after the treatment. SPE 114676-PP. Proceedings of the she worked as research fellow in SPE Annual Technical Conference and Ákos Koós is employed by BayBio Institute and from 2010 – Due to the effect of the biosurfactant and the Exhibition, Richardson, Texas. (2008) Zoltán Bay Foundation for after the structural reorganisation biopolymer solutions, the entrapped oil fractions Applied Research, Institute for of the Institute – she became the head of were mobilized in low-permeability regions, so [9] Maudgalya, S. – Knapp, R. – McInerney, Biotechnology as a chemist MSc the Department of Applied Microbiology. the composition of well product was changed. M. – Folmsbee, M. – Nagle, D.: Tertiary since 2010. As a research fellow Her research activities concentrate on Oil Recovery With Microbial Biosurfactant he takes part in the preparation environmental microbiological and soil All the presented data confirm the necessity of Treatment of Low-Permeability Berea and realization of national and diversity experiments. She has educational further research and test of MEOR applications Sandstone Cores. In: R.T. Society of international projects (R+D, FP7, activities at University of Szeged and he was not just in laboratory phase, but in pilot scale Petroleum Engineers (Editor), SPE 94213. etc.). He is responsible for the HPLC analytics. the supervisor of several PhD students. She as well. Proceedings of Society of Petroleum He had his PhD studies at University of Szeged finished her studies at Univ. of Szeged Faculty Engineers Production and Operations from 2006 to 2009, where he was a member of of Economics and Business Administration as Symposium, Richardson, Texas. (2005) Reaction Kinetic Research Group of Hungarian economist (engineer) in 2011. Acknowledgements Academy of Sciences. He is the author and This work was financially supported by MOL [10] Ausubel, F.M. – Brent, R. – Kingstone, co-author of several international scientific István Kiss, PhD was graduated Hungarian Oil and Gas Company. We should R.E. – Moore, D.D. – Seidman, J.G. – publication (SCI). at University of Szeged as be sincerely grateful to Ms Mária Tóth for Smith, J.A. - Struhl K.: Current protocols in biologist in 1995 thereafter technical assistance and Mr József Apjok, PhD molecular biology. John Wiley & Sons, Inc. Péter Kesserű, PhD is he became the PhD student for useful discussions. (1995) employed by Zoltán Bay of Miklós Kálmán, Dr. at the Foundation for Applied Research Institute. He worked as a scolar [11] Suzuki, T.M. – Giovannoni, S.J.: Bias Institute for Biotechnology at Jacob Blaustein Institute for References caused by template annealing in the since 1996. From 2003 he is Desert Research (Sede Israel) [1] Hall, C. – Tharakan, P. – Hallock, J. – amplification of mixtures of 16S rRNA the leader of the fermentation from 1998 to 1999. After returning he became Cleveland, C. – Jefferson, M.: Hydrocarbons genes by PCR. Applied and Environmental department of the Institute. Dr. a research fellow in BayBio Institute and and the evolution of human culture. Nature, Microbiology, 62: 625-630. (1996) Kesserű was the head of the he obtained his PhD in 2002. From 2004 he 426(6964): 318-322. (2003) Bioremediation Department since 2007. and was the head of the Department of Applied [12] Cole, J.R. – Wang, Q. - Cardenas E. – established Industrial Microbial Department in Microbiology and from 2007 he is the director of [2] Song, S. – Zhang, Z. – Li, S.: Progress Fish, J. – Chai, B. – Farris, R.J. – Kulam- 2011. Their main activities relate to MOL Group Institute for Biotechnology. He has educational of Microbial Enhanced Oil Recovery Syed-Mohideen, A.S. – McGarrell, D.M. biotechnology development, like enhanced oil activities at University of Szeged and he was in Laboratory Investigation. Petroleum – Marsh, T. – Garrity, G.M. – Tiedje, production and environmental research. He the supervisor of several PhD students. Science, 1(4): 23-30. (2004) J.M.: The Ribosomal Database Project: is the author or co-author of several original improved alignments and new tools for scientific publications. He has graduated as Imre Mécs, DSc. in the year 1954 received [3] Beckmann, J.W.: The action of bacteria on Mineral rRNA analysis. Nucleic Acids Res. 37 PhD at the József Attila University of Szeged a degree as a biology-chemistry teacher. oil. Ind. Eng. Chem. News, 10(4): 3. (1926) (Database issue): D141-5. (2009) on Environmental Chemistry Faculty at 2003. In 1958 received a doctoral status of the

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Hungarian Academy of Science. He became the candidate of science in 1977 associate professor in 1979. Between 1957 and 1989 he worked as junior, later as senior scientist at Institute for Microbiology of Semmelweis University (Budapest). From 1989 he became the head of the Biotechnology Department of Szeged University. He retired in 1996, and later became the head of the Department of medical microbiology at the Zoltán Bay Foundation for Applied Research, Institute for Biotechnology. His main research fields of interest were development of environmental and bioremediation technologies. He passed away in 2011.

Sándor Puskás, Dr. is employed by MOL as a petroleum engineer MSc since 1985. He is a petroleum engineer and holds R&D senior expert position at the New Technologies and R&D Department at the Exploration and Production Division of MOL, in Szeged, Hungary. He has 25 years of experience as a field, research and development engineer in the crude oil production. He holds a Dipl. Eng. degree in from Moscow I. M. Gubkin Petrochemistry and Gas University and a Dr. Univ. degree in colloid chemistry from Attila József University in Szeged, Hungary. He holds a postgraduate degree in R&D management and human management from Budapest University of Economic Sciences Management Development Centre. He is the author and co- author of several technical papers.

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Upstream Information Systems developments from the perspective of integration in the last 5 years

Tamás Krasznavölgyi (36) milestones regarding special upstream IT US Information Systems advisor MOL Group, E&P, IFA from 2006 to the present day. [email protected] Összefoglalás Integrált szemléletű upstream informatikai Abstract fejlesztések az elmúlt 5 évben Fig. 1. Highlighting gaps aided by data-applications and knowledge-information-data process map Thanks to the spread of efficient information technology (IT) systems over the past twenty Köszönhetően a hatékony informatikai A közleményben bemutatjuk, hogy a Kutatás- 2006-2010: years, but especially in the last decade, the rendszerek elterjedésének az elmúlt Termelés Divízió milyen fejlődésen ment upstream process has been accelerating húsz évben, de különösképpen az elmúlt keresztül 2006-tól napjainkig upstream Plan – Manage significantly in the oil and gas industry. évtizedben, az upstream folyamatok informatikai szempontból. jelentősen felgyorsultak az olaj- és – Implement – Since the paper might lose its ability of gáziparban. preserving data and information, might Initial state in 2006 Integrate become unreadable and foxed, it is time to A papír elvesztheti adat- és információ- We had several dataset gathering and fully give up working on paper. If every single tárolási képességét, olvashatatlanná válhat database-like solutions of different First of all we had to launch a comprehensive professional idea exists in digital format, we és megsárgulhat, így itt az ideje teljesen professional areas (Geology & Geophysics analysis in order to get a real and clear could easily and effectively take step forward felhagyni az adatok papír formában való (G&G), Production, , Drilling), but picture on the information technology status of in a given topic. Otherwise we have to wait tárolásával. Ha minden egyes szakmai ötlet the digital fundamentals of information storing Exploration and Production Division (EPD). It couple of days while the idea is digitized and létezne digitális formában, akkor könnyen és and managing was just partially existing or meant that alongside the upstream value chain translated, then loaded to the appropriate hatékonyan tudnánk lépéseket tenni előre totally missing. we sat together with the key users of each modelling systems. The preparation of egy adott témában. Egyébként várnunk geo-discipline and asked them on the core datasets for different geo-modelling systems kell pár napot, amíg az ötletet digitalizálják, These so called geo-IT systems did work processes in which they worked. As a result might be outstandingly time-consuming lefordítják és a megfelelő modellező alone and separately in MOL Group. There of the analysis we created the process map of in particular cases. Based on international rendszerbe betöltik. Az adatok előkészítése was no standard way of how these systems EPD and revealed the IT gaps of the division. experiences this process might consume különböző geomodellező rendszerek would be connected to each other. It was even the 60% of an entire modelling task from számára rendkívül időigényes lehet bizonyos obvious that we need a team who can manage In the first project plan covering the period of the data preparation to the results. esetekben. Nemzetközi tapasztalatok alapján projects for developments of databases and 2007-2008 we set several target areas aimed elmondhatjuk, hogy az adatelőkészítés a application systems harmonized with each to eliminate the biggest gaps. Figure 1 shows On the way of MOL we think that the best teljes modellező munkafolyamat akár 60%-át other. what kind of gaps we faced in 2006. As an solution is to provide specialized database is kiteheti. overall evaluation we found e.g. in case of Field and application system to each geo-discipline In 2006 a 7-membered upstream IT team was Engineering that there were pretty large gaps in (geology, geophysics, drilling, reservoir A MOL-ban mi úgy gondoljuk, hogy a established with brand new strategy in order their processes caused by missing engineering management, production engineering, etc.), legjobb megoldás az, ha szakmailag to mitigate and/or eliminate gaps within the database and suitable technical applications. then put an integration tool on the top of specializált adatbázisokat és alkalmazás- EPD IT systems. Each expert of the team that, like a large wing, which aggregates the rendszereket biztosítunk minden egyes was responsible for a professional area to On the basis of analysis of other upstream different types of information on defined geodiszciplinának (geológia, geofizika, be improved such as Geology & Geophysics, processes we planned introduction of new interfaces. fúrás, tárolómenedzsment, termelés, stb.), GIS (Geographic Information System), systems to facilitate integrated approach. It aztán pedig kiválasztunk egy integrációs Petrophysics, Document Management, means that we planned one joint solution to This article explains Exploration and eszközt, mely definiált interfészen keresztül Production, Drilling and Well Planning, and eliminate even more gaps. For instance in Production Division (EPD)’s developmental aggregálja a különböző típusú információkat. Knowledge Management. case of well planning we took into account

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Projects in 2006-2010 Scope and target(s)

Petroleum Resource and Reserve Inventory - IHS® To provide geotechnical and business information Energy and database for the EPD projects

IPIMS To provide geo-professional e-learning systems

Digital Well Archive (DocPort) To set up the digital well file library, to provide a favourable and reliable environment for the change management of the wells’ documentation, to create a single physical archive for the paper well files

Cerity Enterprise Content Management (ECM) - To provide a solution to register, store, backup and Laboratory Information Management System (LIMS) make reusable the primary laboratory data and published analysis reports of Upstream Laboratories (in line with legal obligations)

Regional Asset Management Desktops To support on-site data acquisition, processing during data room visits, data and information exchange with partner companies, to create the infrastructural environment of geotechnical asset and project Fig. 2. Web interface of DocPort document management system for well files evaluations the Drilling Management’s processes. Since DIGITAL WELL ARCHIVE Petroleum Resource and Reserve Inventory - To create information management background for the both activities are in close relationship and (DOCPORT) MERAK System petroleum resource tracking, assessment and reserve their processes are intertwined very well, We had to electronically reserve in safe evaluation processes of MOL it was a straightforward and reasonable environment the paper-based well files solution to build up a common database and library. It meant that we had to elaborate a Integrated Geological and Reservoir Modelling System To implement the one-off modernization of the IT application system for both upstream units. kind of document management system which Development - RECALL operation supporting system of the G&G applications It was Landmark’s Engineer’s Data Model™ included scanned documents of million pages and to consolidate the result of this development (EDM™) solution which is natively linkable of different sizes. It had to meet the criteria to (including PetrisWINDS® Recall for petrophysics) with G&G’s OpenWorks® system. be searchable, indexable, structured, scalable and 7/24 available. Uniform platform for Geographic Information System To prepare on corporate level useful geographical The team always strove for ‘off-the-shelf’ (GIS) users information system with several platforms upstream solutions, namely purchasing DocPort is planned to create a digital database industry-standard databases and applications of documentation of those wells drilled under Upstream Application Portfolio Development (yearly) To focus on the consolidation and technological which are easily supportable and have relatively the operational control of MOL. The wells supply update of the existing upstream application portfolio. cost-effective operation. relevant information today for the planning and According to main goals we should further develop execution of exploration, field development and modernize our current Integrated Drilling, In the beginning of 2006 we had all the necessary projects and the production operation. Geological and Reservoir Modelling System (license information to start individual projects to ‘erase’ extensions, change, migration, training elements) systematically the gaps. Table 1 contains a list In the period of 2003-2004 the EPD Kiskunhalas of the completed tasks. Production Unit executed the scanning of 847 Drilling Information Management To replace several, partly technologically obsolete analogue files of wells located in the operational Development (DIMD) software currently in use, and drastically reduce cycle Four projects were significantly larger in their size, area of the Unit. The digital archive was available times of technical planning and rig reporting jobs. At scope and budget than the others, these are: for production and drilling experts working in the the same time, by creating an integrated database will Unit’s area through user interfaces developed improve the quality of performance. As an additional 1. Digital Well Archive (DocPort: 2006-2007- accordingly. The work handled as the pilot of outcome the technical database will be used as an 2010) DocPort. The DocPort project in fact, was the information source by relevant E&P units 2. Drilling Information Management extension of the Kiskunhalas area pilot. In the Development (DIMD: 2007-2009-2010) frame of the project we intended to increase Seismic Re-mastering To decrease the risk of the data loss with re-mastering 3. Integrated Geological and Reservoir this database within one year that it should of seismic tapes, and uploading them to archived Modelling System Development (RECALL: contain the documentation of all the wells storage system 2008-2009) located within the area of the existing mining 4. International Petroleum Industry Multimedia plots, exploration licences and additionally on System (IPIMS: 2004- ). areas which might reasonably be potential Table 1. Overview of completed upstream IT projects in the period of 2006-2010 operational areas in the near future. As

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Fig. 3. Infrastructure and networking of MOL’s solution in terms of OpenWells®/EDM™ EDM™ – Engineer’s Data Model™; FTP – File Transfer Protocol; QA/QC – Quality Assurance/Quality Check; SDE – Senior Drilling Expert

it is planned, the digital documentation is reporting system. These reports were not available for all upstream experts and leaders internationally standardized and the information Fig. 4. Functions of OpenWells® and Engineering Data and Application Model of competent organisations through the user was collected in paper-based well archives. interfaces of intranet and terminal server Reutilising drilling information by associated farm. The primary benefit of creating DocPort engineering units in the course of the daily work solution in a package to the remote offices. OpenWorks® as well, so the relevant drilling is the reduction the life cycle of geological was very time-consuming and roundabout. In December 2008 the Pakistani system, in information can be displayed (without long and geophysical interpretation, reservoir and It was obvious that a new software tool is November 2009 the Iraqi one, in October 2010 preparation) even in our basin model. production modelling, and needed to organise and record information in a the Kazakh database went live. They are still well construction, and several other activities database, thus eliminating multiple data mining in production. Since January 2010 the system The geocommunity who just needs drilling what require today time consuming data mining and long preparation work phase. has been working smoothly for daily reporting parameters, various reports in their daily performed by the experts in the analogue of drilling and well work over activities in activities can also follow the operation via web- Upstream Data Archive (see Fig. 2). In the same time the well planning unit needed Hungary as well. based interface of the database iWellFile™. a new well design application package in order This intranet portal is ‘read-only’, so its users After 3 years launch we can assess the to replace their obsolete technical software. The system infrastructure and networking can read various reports, export technical data outcome of the project. DocPort system is The majority of their actually used programmes layout is displayed on Figure 3. Every rig or grab the results of individual predefined a frequently used tool taking actively part in were in-house developed in the mid 90’s. These has an own local database which can be requests even in Excel format. professional life of EPD. It can run as a server- softwares did not follow the latest technology synchronized automatically into the corporate client application or as a web-based portal (DOS platform), furthermore they were not database (available for the office workers) as Summarizing, the project had a very tough, which provide flexibility and easy access to supported by general desktop IT since 2002. per the administrator selects the ’Transfer’ but successful introduction. Nevertheless the well files digitally anywhere the MOL user In 2006 the well planning team had already option of the software. we will never be ready with the system. It works, even across the globe. Since DocPort is Landmark well construction software package, is always on the way of changing by the based on Oracle® solution, it can link directly to but it was not sufficient in capacity and integrity Figure 4 shows the wide usage of the drilling regulations, processes, updates and working OpenWorks®. Nowadays we are making further to do well planning. system. The biggest advantage (vs. Excel mechanisms. It needs constant supervision, steps to improve functionality of DocPort and to sheet) is that after the drilling or work over support and development. It is the nature of increase its integration role. Originally the project had two main phases. One activities are finished we can make statistics database systems. Year by year we set new of them targeted the domestic customization and and analyze data in a smooth way. It brings targets to widen the scope and tasks aiming introduction of Landmark OpenWells® system. the next fact that the well designer experts can new elements to be implemented. In 2011 we DRILLING INFORMATION The other was for creating the database digitally follow their technical plans in the light are now adjusting the database according to MANAGEMENT DEVELOPMENT of the international sites such as Pakistan, of the real performance in the course of the the professional processes in order to handle (DIMD) and Iraq. Of course in case MOL drilling and/or well work over activities. well site geology, logging, coring, Drill Stem In 2006 Drilling Management department will have new upstream activities anywhere Test (DST), logistics reports and laboratory still operated a phone- and document-based in the world we can provide our standardized OpenWells® database can link directly to results.

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Fig. 6. IPIMS usage statistics for 2004-2008

Archive. The Original Format files are managed the evaluated tests. by Recall and can be archived on online, near- The purpose of the training is to develop line or offline storage systems” [1]. business / professional intelligence along the full spectrum of E&P business processes. As a result of the project we combined the above mentioned implementations in order to The individual training programs consist of 4-5 achieve strong integration. Figure 5 shows the modules, and one is common. This common workflow of combined using Recall Online and module explains the functionalities of the Original Format Corporate Databases. IPIMS competence development system and offers user skills. The other 3-4 modules do INTERNATIONAL PETROLEUM not contain overlaps on group level, or only at Fig. 5. Workflow with combined Recall Online and Original Format Corporate Databases [1] INDUSTRY MULTIMEDIA SYSTEM minimum degree, and it is selected from the QC – Quality Check (IPIMS: 2004-) IPIMS Background Learning Encyclopaedia. IPIMS is the product of International Human INTEGRATED GEOLOGICAL AND environment. Its scope extends well beyond Resources Development Corporation (IHRDC) The system time for the solution of tasks RESERVOIR MODELLING SYSTEM the simple wire-line well log data including mud which is a comprehensive e-learning system is 18-24 hours per participant. Individual DEVELOPMENT (RECALL: 2008-2009) logs, borehole images, waveforms (including covering all areas of upstream petroleum performance will be measured by tests for The project was planned to implement and Nuclear Magnetic Resonance), zones and technology. This is a corporate solution for each module. Test evaluation happens in real- introduce PetrisWINDSTM Recall database zonal attributes, and more. The system building competencies of EPD professionals time and the success rate has to be over 80%, and its petrophysical processing applications provides comprehensive history tracking, at all levels. It includes , otherwise the user has to repeat the training in order to ensure accessibility and security of identifying workflow, and maintenance of key petroleum geophysics, petroleum engineering and the test. petrophysical data. environmental information. and formation evaluation. In accordance with the implementation of the career plan it is a motivation tool in the hands RECALL project was designed as a full-cycle Recall Corporate databases exist in two Starting from 2007 we systematically manage of the managers as well. integrated information technology for storing different implementations: training programmes for the geodepartments any borehole data recorded as a function of from different types of perspectives. Figure 6 Training for different typed employees depth or time. This coverage includes standard - Recall Online Corporate Database is used to displays the usage statistics for the last years. involved in US business processes single sample wire-line measurements, multi- store all types of borehole data in structures IPIMS can offer training sample image data and waveforms, mud designed to optimize the speed of bulk data In the following part we list the training • for employees who have to obtain skills for logging data, core data (including Special Core access and the efficiency of bulk data storage. programmes that have been organised and independent work and task performance Analysis Laboratories (SCAL) and complex Recall Online Databases can store any type of managed since 2004. • for senior officers who have to obtain skills core data types), scanned core and thin section borehole measurement sampled as a function for professional leadership in team work. photographs, zones and complex zonation, etc. of depth or time E-learning training programme for Precondition regarding the employee is to RECALL covers online corporate database of Upstream Talent Programme participants have 3-5 year experience in E&P sector petrophysics as well original format digital well - An Original Format Digital Well Archive The role of E&P e-learning systems in talent • for experts who have to improve their archive (raw and edited tape image files of consists of Well data in its original digital management is unique. In this category the professional / business skills for leading borehole data, films, plots, photos and reports, format. It includes raw and edited tape image goal is not to acquire special, expert-level interdisciplinary teams (covering upstream in industry standard digital formats, received files of borehole data, films, plots, photos and technological knowledge, but to offer a wide processes). In case of success the from logging contractors, service companies reports, in industry standard digital formats, background material for interdisciplinary participant might be taken into account as and other oil companies). received from logging contractors, service communication and wide range of E&P potential manager in relevant upstream companies and other oil companies. A Recall knowledge (Wide Range Knowledge). project. Precondition regarding the “The database itself is an integrated suite Archive or Original Format Database (OFDB) employee is to have more than 5 year designed to store geological, geophysical is a mechanism for cataloguing and organizing The training period starts from handing over experience in E&P sector. and petrophysical data in a geoscientific all of the data in an Original Format Digital Well the talent tasks and ends with the reception of

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proactively capture the knowledge of those Information Management Development. Since nearing retirement, through a series of August 2010 he has been leading the Upstream interviews. Pre-retirement interviews focus on Information Systems team. key decision paths, key documents, personal networks & experience such as tips and tricks, best practices.

We have several new ideas in order to improve knowledge sharing, knowledge retention processes such as: - Collaborative intranet portal for geocommunities - Collaborative upstream software and tools like a visualization room equipped with special 3D environment and aided by e.g. DecisionSpace® integrative application system from Landmark - Social media tools like a company-Facebook - Knowledge sharing portal in digestive manner like Wikipedia - Brand new techniques to grasp senior’s knowledge - Brand new methodology for critical knowledge retention.

Fig. 7. The results of upstream IT developments in last 5 years EDM™ – Engineer’s Data Model; KTIR – Központi Termelési Információs Rendszer; OFM – OilField Manager; Acknowledgement PI – Plant Information; IHS – Database of IHS Inc.; OW/SW – OpenWorks/SeisWorks; Lims/Cer – Cerity I would like to say ‘Thank you very much!’. I Laboratory Information Management System; DWA – Digital Well Archive; DB - Database really appreciate those experts’ great efforts who have been actively taking part in different Training for employees on probation and for - Reliably operating new database systems geo-IT systems introductions starting with the fresh engineers were targeted. professional contributors, through procurement Purpose of this training type is to measure and management to the end-users. and assess professional capacities regarding employment in the planned area or unit, as Future plans well as to offer basic knowledge for EPD We have now the strong application References processes. In case of success the participant fundamentals and database pillars. In the [1] PetrisWINDS™ Recall Corporate Database might be potentially employed in full time. next three years we have to deepen US IT Technical Overview, p.13. system introductions by fine-tuning the links between different geosystems. The goal is to Keywords: integration, integrated, Upstream Conclusions enhance development in managerial levels IT, Information, Data Management, G&G, Period 2006-2010 was about eliminating by introducing a new project management drilling, reservoir all gaps caused by missing databases / upstream administration system, thus and applications. We strove to get rid of mitigating risks and reducing uncertainty of Reviewed by Marilla Bodrogi and Elek any obstacle from the upstream workflow business decisions. Turtegin supporting IT elements (see Figure 7). It meant that MOL had to invest larger sums for Other main element of the new improvements Tamás Krasznavölgyi is a purchasing the missing system elements and is management of culture change process, Senior Upstream Information put great efforts to build the newly introduced where the knowledge management might Systems engineer. He joined systems into the different types of workflows get broader role. It means that we would MOL Group in August, 1998 for the implementation of the integrated create an upstream knowledge management immediately after graduation from approach. During the implementation strategy which includes knowledge capture, University of Miskolc. He worked retention and sharing to prevent vital corporate as a petrophysicist between 1998 - Focus was on expert level; knowledge and experience from being lost at and 2006. Through this position - Important applications/databases have been retirement of key workers. he got acquainted with the upstream value chain procured; and its working mechanism. In 2007 he joined - Great emphasis was on the organic Our intention is to start a pre-retirement the Upstream Integrated Information Systems development at expert level; ‘retention of critical knowledge’ process to Development team and led the project of Drilling

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these achievements could be identified. The capable of mapping the rock sample with a main drivers of such developments can be resolution of 1-5 microns and in the range of divided into two categories. The first is of micrometer fractions down to ten nanometre technical nature, in details this is to find out scale, respectively [6]. These techniques have iCore – Development what could not be known before on account of been being used intensively to explore the either technical constraints of data acquisition internal structure of the porous material and or processing and speed. The other is about constructing its 3D numerical equivalent in the to do something better and faster than our size of a few mm3. Today there are still some results and prospects competitors do – putting it simple: economic limitations on the quantity of data that can development. be processed within a reasonable timeframe therefore a trade-off should be kept between In Upstream, especially in exploration there the size of the sample and the resolution of the is a specific area where a technological mapping. breakthrough has been taking place and some scientists speak about a change of paradigm The above described stages of developments in conventional and special core analyses [1]. could be discerned if we take a closer look at László Győry (39) The aforementioned theoretical development one of the most advanced development teams. Advisor to New Technologies and R&D MOL Group, MOL, Upstream IFA Összefoglalás referred to a new approach in flow modelling. This is Numerical Rocks AS, the Norwegian New Technologies and R&D iCore – Fejlesztési eredmények és kilátások This is the lattice-Boltzmann (lB) method that team which has been developing its numerical [email protected] has been standing in the centre of intensive rocks applications for 15 years [7]. They János Geiger, Dr. (56) A hagyományos és speciális magvizsgálati attention of scientists for a bit more than ten provide a wide range of core analytical services Associate professor at Department eljárások modellezésének új megközelítését years long period of time and the fields of for companies. Other important teams are an of Geology and Paleontology University of Szeged, SZTE tanulmányoztuk, és potenciális megoldásként its applications are growing rapidly. In core American company, Ingrain, established by a [email protected] azonosítottuk ezt az új eljárást e szakterület analyses lattice-Boltzmann proved to be a useful former Stanford professor [8] and an Australian bizonyos adatelőállítási aspektusai modelling tool at pore size level of the rock and company, Digitalcore, whose technology Gergely Kristóf, Dr. (43) Associate professor at Department of Fluid Mechanics szempontjából. A jelenlegi fejlesztési munka has found applications in both one phase flow derives its origins from R&D has been Budapest University of Technology and Economics, BME a következő területeket öleli fel: a modellezés studies and multiphase investigations. conducted at the Australian National University [email protected] irányzatainak vizsgálata és azon pontok and the University of New South Wales over Judit Tóth, Dr. (31) azonosítása, ahol a követelményeinkhez An intensive development could be seen in the the past ten years [9]. They basically focus on R&D project manager field of imaging technologies as well supported two key areas like imaging technology and lB MOL Group, MOL, Upstream IFA szabott megoldásokra van szükség, New Technologies and R&D üledékes kőzetek részecske-modelljeinek by huge improvements in computational applications. They also provide a complex and [email protected] előállítása némileg módosított eljárással, technology. This considerably influenced the fast service in the field of core analyses for geostatisztikai módszerek tanulmányozása subject matter of flow simulations – the rock companies. és alkalmazása törmelékes kőzetek sample and its numerical equivalent. A bit more mintázatainak előállítására, a rács-Boltzmann than ten years ago the technical limitations of The numerical equivalents of real rocks módszer tanulmányozása egyfázisú porózus computer tomography (abbreviated as CT) produced either by particle models or imaging Abstract kőzeten át bekövetkező áramlás modellezése could not allow scientists to get a deep and technique were used for lB applications to A new approach to modelling conventional and céljából és a porózus rendszerek jellemzése, detailed insight into the real structure of the model the rock sample’s permeability. Beyond special core analyses has been studied and beleértve a pórusméret-eloszlást is. Az iCore rocks at pore size level. Therefore the numerical this parameter many other can be calculated identified as a feasible answer to challenges K+F projekt első eredményei biztatóak, ami model of the rock sample was built up from like pore size distribution, formation factor, bulk arising in certain aspects of data acquisition alapján jelentős lehetőséget látunk az ilyen elemental particles using computer models and shear moduli and relative permeability processes in this field. The present phase modellek fejlesztésében és alkalmazásában of rock formations. That meant considerable that are very important for geologists and of development comprises studying the mind technikai, mind gazdasági szempontból. efforts to model the process of sedimentation, reservoir engineers to construct their models current trends in modelling and identifying compaction and diagenesis with some of the reservoir [10]. Using the achievements those areas where new approaches have to advances in imitation of all these processes that of such developments a considerable amount be applied that are tailored to our specific Introduction originally affected the rock formation [2]. These of analytical time and costs can be saved requirements, constructing particle models Computer modelling in the last decade gained works yielded physics-based sedimentation since real experiments are not only costly but of depositional rocks in a slightly modified lots of attention and a rapidly increasing models among other approaches [3,4]. These time-consuming processes, as well. Of course way, analyzing and applying geostatistical number of applications. The reasons for that and similar models, especially discrete element modelling cannot substitute real measurements methods for pattern generation of clastic achievement can be found in the intensive methods form an important branch of research on real samples and neither do we intend to rocks, studying lattice-Boltzmann method for theoretical development of various branches and nowadays they find increasing number of believe that, but in certain situations when the modelling one-phase flow through porous of science and a massive development of applications in powder engineering technology amount of sample is limited or the total length rocks and porous systems’ characterization computers and computational technology that in the first place [5]. As the imaging technique of measurements exceeds a reasonable time including pore size distribution. The first took place in the past ten years. These two continuously developed scientists started to modelling can be very useful. Simulation of flow results of the R&D project iCore are inspiring facts together raised considerable interests in use real rock samples for mapping the nature of various fluids might be the only solution in and prove that there is a considerable potential exploiting the new technology’s capabilities both at micron size. These techniques are micro- those cases when the experimental conditions in developing and applying such models for in technical and economic terms finding those CT, nano-CT and focused ion beam scanning are beyond the capabilities of our instruments. both technical and economic reasons. fields of applications where synergies between electron microscopy (FIB-SEM) that are We had to experience many times that there

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might be samples that are not appropriate for representative sampling but keeping this in new insight into the effects of diagenesis on their results [21]. In case of an unconsolidated measurements at all because the conventional mind it is still possible to conclude correctly the pore structure of the consolidated rocks, it sample at least we do not have to deal with the sample shape of core analyses can not be regarding the nature of the reservoir itself. requires huge resources in both theoretical and problems of how to disintegrate the grains of a formed from the bulk sample consequently Although by today these imaging techniques programming areas. consolidated rock sample because the grains measurements can not be performed on them. gained wide acceptance among scientists and in the former case are either not attached at all These two latter fields of applications can be engineers and are applied for modelling, they Taking account of the above discussed or there is just a small cohesion between the our targets in present R&D efforts and in case are very expensive techniques and require constraints we have decided to narrow down grains and they easily fall apart. Nevertheless of success it might deliver some of the technical specialists to operate them. the possible directions of developments in this GSD measurements of consolidated samples and economic advantages described above for field. As we saw imaging requires real samples are important from the point of view of model geological and reservoir modelling at MOL. Particle models show a wide range of of a few mm3 volume and the results can be validation. Therefore disintegration techniques approaches and solutions. The first trials applied to that specific volume only, furthermore draw a lot of attention and require some focused on process-based and statistical the packing models can not really cope with considerations when they are applied. solutions [2,3,13]. In the early phase of diagenesis we decided to put unconsolidated Preludes to current developments, the process of sedimentation formations in the centre of our attention. This A geostatistical approach shall be applied was in the centre of attention and the whole approach carries further advantage for us, if modelling in a wider sense is used and its developments process finished at that stage. Later on because unconsolidated formations is the results are interpreted not only for the sample Though the aforementioned applications new solutions were achieved regarding the sample type that can not be processed in the investigated but for various types of sediments in imaging and lB modelling are highly sedimentation and it continued with modelling usual way and with the usual techniques since in the reservoir. The mathematical analyses sophisticated and cover a wide range of the effects of compaction and some aspects of no plug can be formed from the powder-like applied in this study for clastic core samples modelling areas and apply special techniques, diagenesis in case of consolidated rocks. More bulk sample. Instead of trying and describing were used for partly revealing the most they are limited to the size and character of the sophisticated, so called physics-based models a small piece of sample very precisely we also important relations between petrophysical sample investigated in terms of what can be came into existence that took account of the decided to concentrate on the type and nature and textural properties and identifying the concluded from that sample volume regarding effects of grain-grain contacts. This approach of sediments that form the reservoir. This way characteristic spatial (3D) continuity of the whole of the reservoir. In case of a particle revealed some important results in the field on the one hand we use geostatistical methods grain size compositions measured on hand model it is vital to compare the model with the of grain motion within tight packs of particles. to form a comprehensive picture of the reservoir specimens. In case of relations between textural real sample in order to prove its correctness. Diagenesis and its effects on the grains forming and on the other hand we apply grain packed and petrophysical characters of the samples Since these systems are rather complex, a specific rock especially a consolidated one models to explore the inherent nature of the the very first point to make clear is whether consequently the methods of comparison also was still too difficult to be explored totally [14]. rock or packing in question. these relations depend on original depositional bear some complexity. Possible inputs of the This was probably an important constraint on or on diagenetic processes. In fact, these comparison are thin section investigations such models of consolidated rocks and this is Since there is a direct connection between the processes affect the petrophysical properties carried out by both geologists specialized why the attention of scientists turned towards grain size and the void space size distribution from shallow burial depth. Nevertheless, during in microscopic investigation of rocks and the imaging technology. Another path was in any tight packings of particles, it is evident the burial history the original textural framework computerized analyses of thin section images followed by other researchers who applied a that this sort of connection can be used for have also a control on petrophysical systems. [11]. If they are combined, these 2D images different approach to forming closely packed characterization of the pack. In case of powder- Since the main goal of this project to predict of the real sample taken with the required particles. It could be applied to any packings like bulk samples the only input parameter for the petrophysical properties from modelled resolution might give a 3D model of the sample. but the best field of its application was in a particle model is the grain size distribution grain composition, only hand specimens in Both the 2D and 3D images can be subject condensed matter modelling, consequently (GSD) of the solid sample. If we can precisely which diagenetic processes are subordinate to of extended statistical investigations [2, 12]. from our point of view it could not improve the determine the GSD of the sample then we can depositional framework in forming petrophysics The results of these statistical investigations results considerably [15]. As a result of the give an estimation of its pore size distribution fit this purpose. performed both on real samples and the massive developments in computer technology (PSD) with a specific certainty of measurement. model might validate the numerical model huge computational performance became For such relations there can be simple rule of The key question, when deciding whether the of the sample. In case of micro-CT or other available for small scale users as well. This thumbs like the Saucier principle applied more actual sample set is acceptable or not, is: which imaging techniques, the other possible input enabled further jump-like developments in or less successfully in sizing the bridging agent petrophysics-affecting systems have significant to modelling, there is no need to validate the particle-based modelling of grain packs but in in or sand control technology [18], control in the samples? In our view, this decision model. The only limitation of these techniques this case in powder engineering applications and more precise methods as well [19]. In case can be made by using multivariate classification is the resolution of the measurements and the first of all [16,17]. By today discrete element of Saucier principle the on-site information methods. For this purpose we applied a quantity of the data to be processed in order methods (DEM) became prevalent in this field. gained from the GSD of the drill cuttings and hierarchical cluster technique for the measured to produce any images. The trade-off between They apply a totally physics-based approach applying the statistical rule between GSD and petrophysical properties. In this manner we these two factors is achieved by constraining giving account of precise grain-grain contacts PSD the proper size of the bridging agent can described each sample by its effective porosity, the volume of the sample to be mapped. This and the forces between them. Supported by be determined within an hour and decisions can horizontal and vertical permeabilities, and the generally falls in the range of a few mm3 that can parallelized computations very spectacular be made. Actually this approach gave the very average size of its pore throat system and the not be regarded as a representative sample of applications can be made and applied for first spark to this project and served as a starting relative frequencies of the significant pore size the rock. In both cases it must be stated that the powder technology problems. They can very base [20]. GSD can be determined with various classes. These properties were regarded as results and the conclusions are constrained to precisely describe the motion of the particles techniques, of which the most powerful and components of radius vectors representing the the samples and their volume. This is not a too even in an enormous amount but can only economic is the low angle laser light scattering hand specimens. When clustering the sample serious constraint however, if we think about be applied to simple packings and their (LALLS) method. Though the GSD techniques space, the similarity coefficient was the cosine the real samples’ volume and the reservoir compaction. No word about diagenesis again. seem to be very straightforward, it is vital of the angle between any two radius vectors. In volume. Not in the latter case can we talk about Besides the fact, that DEM cannot reveal any to know their limitations and how to interpret the hierarchical solution the reduction method

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was the nearest neighbour algorithm. The for describing the lateral continuity of the grain flow simulation through the porous medium and sometimes the only input parameter for clusters were defined until the Mahalanobis sizes on individual laminas. One of the best will be modelled by lB. This pore size level lB particle models, GSD methods using LALLS distance between their centrums was spatial continuity measurements is the semi- modelling is a totally new method in both our technique were studied along with sample significant. This latter constraint was controlled variogram. It shows the direction-dependence of industrial practice and research and at this size preparation / disintegration methods. The by discriminant analysis. The end-groups with the variance of attribute-increments calculated level in Hungary as well. In case of a successful investigation showed that depending on the their hierarchical system contain those samples with gradually increased distances. One of development beyond the current goal this disintegration technique GSD results might whose petrophysical systems are more similar the most important results of this variography- will be a huge step toward the possibility of change even considerably, which might affect within the groups than between the groups. analysis is the explicit expression of the range further developments focusing on two phase the model and its validation. Since LALLS The samples belonging to these clusters were of influence. This is the distance within which flow simulations or even more sophisticated technique applies 101 detectors it produces analyzed for their depositional history. If we the textural elements are correlated with each solutions. a quasi-continuous distribution of grain sizes found that the disjunct petrophysical groups other. It gives such results, that size of grain that must be discretized so that GSD results were homogeneous in their depositional history, particles should be decreased in a particular The iCore development project is run by can be fit for particle modelling applications. too, then the dominance of primary depositional direction even if the grain size class is the same cooperative partners of MOL Integrated Field Discretization revealed that even in moderate control on the petrophysical processes seemed in that direction. Applications (MOL IFA), Department of Fluid size of samples the number of particles might to be valid. Otherwise there had to be chosen a Mechanics at Budapest University of Technology reach an unbelievably high value, therefore a new set of hand specimens. Lattice-Boltzmann methods gained widespread and Economics (DFM BME) and Department lower end cut of the distribution curve should applications from macro-sized problems of Geology and Paleontology at University of be applied otherwise over 100 millions or even Supposing that the sample set chosen is to micron-sized ones, or pore-size level Szeged (DGP SZTE). In the framework of the billions of tiny particles have to be included into a representative result of the depositional applications in the past ten years. In contrast work share scheme MOL IFA focuses on the the model without any reasonable contribution process, the next step was to select the sufficient to the generally used fluid type view of flow particle model of unconsolidated formations to the correct numerical representation of the and necessary number of those measured problems in computational fluid dynamics, and poorly consolidated formations as well for real sample. Our approach, therefore, is to textural properties which control the effective lB applies a particle type of view of flow via validation purposes. The team’s responsibility have the sample’s thin section analysis done porosity and permeabilities. The necessary computing the interactions between fluid furthermore to work on pore size distribution and according to the findings regarding the and sufficient conditions were important as packets and fluid packets and its stationary modelling algorithms that are to extract this type and degree of cementation an appropriate they could avoid biasness and redundancy. In surroundings using immense statistical physics. sort of information from the numerical model disintegration method shall be chosen. This will addition, these textural properties should be of the formations using percolation algorithms be applied for the sample and the suspension tuned when the virtual sample volume is being developed and tailored to the needs of the of the particles will be measured. It is very formed by an algorithm. The input properties for The purpose of project. DGP SZTE will provide those geological important that the suspension is checked using this study were as follows: (1) median diameter data and expertise that determine the particle a microscope determining whether there are of the grain size distributions; (2) weight the project model input parameters by analyzing a wide still agglomerates of particles that survived the percent of standard grain size classes (i.e. clay, After the first feasibility study of the idea – still range of data with geostatistical methods and dry or wet disintegration process. If there are fine silt, coarse silt, fine sand, coarse sand, in its initial state – the possible users of the tools and supervising the geological aspects still such agglomerates then either longer or a and coarser-then-medium-sand fractions); future model were invited to share their views of the development work. DFM BME works on more intensive disintegration method shall be (3) relative frequencies of the pore size with us. They expressed their concerns and lB method development focusing on pore size chosen. If it is still not successful, then these classes. The method which gives the required suggested some modifications of the initial level applications in the first place and they big fake particles must be eliminated from the number and types of the above properties in goals in a way that better fit their intentions and also develop a pore size distribution calculation picked. Regarding the upper end cut of the the approximations of effective porosity and aims when using such models and its results. method that is based on Poisson differential curve it is necessary to renormalize the curve two permeabilities was the multiple stepwise Actually, putting the unconsolidated formations equations and their solution in 3D. with the volume of the fake particles removed regression analysis. into the centre of research was their request from the system. In case of the lower end cut – because of sensing the problems caused by removing the tiny particles like clay and fine silt Several studies dealing with the petrophysical the lack of measured data in this area and the Results of – there is no need for renormalization since the characters of recent depositional environments potential of this approach to deliver valuable volume removed can be put back in pore-lining have shown that these physical properties are results. With this move the scope of the project the current and / or pore-filling positions. significantly affected by both the distributions was luckily narrowed down in harmony with the of the grain size constituents (i.e. grain size outcome of the literature research. The other developments PARTICLE MODELS AND THEIR distribution) and the spatial geometry of the important remark from the geologists was that The development work runs in a parallel ALGORITHMS grain particles. Sedimentologically this latter they are pretty much interested in capillary fashion. All the data is shared among the After carefully studying the particle models a one is reflected by the bedding characters. For pressure curves of such unconsolidated cooperative partners with those focal points number of numerical experiments were done instance, horizontal laminations significantly formations consequently it would be very that ensure the homogeneity of the project and the process-based method was chosen decrease vertical permeabilities, in case of important to seek solutions for how to extract and at the same time serve as the interfaces due to first of all being impressed by the early cross laminations this decreasing process pore size distribution information from such between the partners. The project is kept on the eCore developments [2,10,13]. The algorithm strongly depends on the dip angles of laminas, systems in a manner similar to the laboratory proper track by the regular project meetings. In that mimics the sedimentation process was or in massive sandstones the poor spatial mercury capillary measurements. It was very the first quarter of the two-year-long project the developed in a number of steps and was sorting of grains can decrease not only the important that the nature and interpretation of following results were achieved. optimized according to parameters like run vertical, but the horizontal permeabilities, these data should not change in comparison time and packing density. In case of the former as well without changing significantly the to the measured laboratory data set fostering INPUT PARAMETERS OF PARTICLE optimization method the algorithm yielded a effective porosity. These facts emphasized the the smooth introduction of such computed PSD MODELS very loose random monodisperse packing importance of using two-point spatial statistics data into the geological model. The gas phase As it was shown that GSD is an important with a packing density of 0.56. Monodisperse

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packings were used only for studying the The random walk method itself is capable of decreasing step size from 5 units (micrometer) case of the process-based solution. The packing effects of the algorithm’s input parameters on dealing with particles of regular shapes or even down to 5/214 units (~0.0003 micron) in contrast density changed in the favourable direction, it the density of the packings. The run time of the irregular convex objects. This feature of it was to the original model that is based on voxel- rose from 0.56 to 0.60-0.62 depending on the program was just a few hundreds of seconds demonstrated with a packing of very diverse, sized movement and collision detection. This initial parameters. These were only the first in case of 30,000 particles, but we found it not even concave objects like nails, discs and sort of solution results in a considerably faster trials using a rather weak or underperforming satisfactorily enough with regard to the width other shapes in a complex environment with algorithm and a very fine resolution. In our computer consequently the full power of the of the target zone in which the packing density obstacles in the way of the moving objects [23]. development work, collision detection is based algorithm could not have been studied so far. might change. In the process each particle was It resolves the problem of particle placement on the investigation of surfaces expressed Despite this fact, fortunately even in this trial placed, as a result of the solution of a set of at the same time because it eliminates any in analytical formulations. As a result of this and error way a very loose random packing non-linear equations with a modified Newton- mathematical calculations regarding the feature we can rotate the moving objects in any was turned to a poured random packing. In our type iteration method. In case of polydisperse optimum position of a particle. In case of the direction without the necessity of applying the view there is still considerable room for further packings we used the above described GSD former solution the contact between neighbour shear-based rotation technique [24]. improvements regarding the density and the of real samples and these numerical models particles was subjected to numerical precision nature of the packing. of poorly consolidated samples were further of the iteration and therefore it determined Collision detection might be approached in a studied and used for other investigations the quality of the packings regarding collision number of ways. We applied the broad and CHARACTERIZATION OF THE (see Figure 1). This rigidity of the model and / overlapping between particles. The main narrow sense contact detection algorithms in MODEL PACKINGS the constraint of using spheres only - this is principle of the method is that each particle has a partly reinterpreted fashion. If the bounding Characterization of the packing will give the inherent in the placing method - as particle 26 directions of motion in 3D, this characteristic box of the particle is defined, then in the broad basis of comparison between the model and representations, however led to the conclusion carries some resemblance with lB for that see sense of collision detection it is enough to check the real sample. The following parameters that we had to find another way to model Figure 2, and each of these directions might the contact of the bounding boxes of various can be used for this purpose: the porosity, the packings of solid particles. have specific likelihood of motion. Varying particles. In the narrow sense of collision co-ordination number and the pore volume the probability distribution of these directions detection, if the broad check showed contact, distribution. The last one will be discussed in very different situations can be constructed. the actual particles’ contact must be computed details in a later section of this article. Each Including the possibility of upward movements [25]. For this purpose analytical functions can characteristic of the packing was computed by for example and scaling properly its likelihood be applied provided the particle has such a programmes written for that specific purpose a never resting system can be formed, just like function at all. This is luckily the case for super- therefore these programmes could be used not the one that can be discerned on a vibrating ellipsoids and therefore they are fit for such only for characterization of the packing, but they table. Life is governed by chances like in case applications. They have an analytical surface served as an independent check of the packing of random walk, so particles may settle and that is called inside-outside function as well. itself regarding the neighbourhood of particles, find their position randomly after a great deal of This function for a general super-ellipsoid looks overlapping, particles without any contacts, etc. collisions and if it can move in none of the 26 like the following: Porosity was calculated using a hybrid method. directions the particle is fixed by its neighbours. The wall effect has to be eliminated from the Actually it gets squeezed between them system by marking the internal space within as it happens to real particles during burial the packing correctly. This rectangular shape’s processes. This situation might change if some volume can be calculated analytically giving of the neighbours move away form the particle the total volume of the subsample. Spheres giving it room for free motion again as if some being totally within the space investigated vortex had stirred up the surface of the bed. where x, y, z is an arbitrary point in the space, can be calculated analytically just like those In case of random walk method the particle- a, b, c designate the super-ellipsoid’s radii in spheres’ volume that are cut through by the

particle contact detection is put in the focus that the three directions of space, e1 and e2 are sides of the internal space. The volume of other

uses simple processes though requires a vast the shape factors. If e1=e2=1 and a=b=c, then spheres that are mutilated by the edges or amount of computations. the super-ellipsoid becomes a sphere. By vertices of the internal space can be calculated adjustment of these parameters a wide range by voxelization giving an approximate value for Fig. 1. Random particle packing consisting of spheres of convex shapes can be produced. This range these fragments of spheres. From these data of shapes might represent the variety of the real the total void space and its ratio to the total grains in nature, at least to some extent. If F=1, volume can be given with some uncertainty. After additional intensive studies of packings a then the point is on the surface of the super- not very often used solution was picked for our ellipsoids, it F<1, then it is inside the particle, SEDIMENTOLOGICAL purposes. This was the random walk method. otherwise it is outside. In this way it is easy CONSIDERATIONS IN ASSEMBLING It was first described by a university research to check two particles’ contact at reasonable THE SET OF HAND-SPECIMEN group and according to their results the method computational costs. Another approach to this Since this project is addressed to the clastic seemed to be much promising [22]. Actually 02Q9 D3Q27 phenomenon is the Minkowski difference of reservoir rocks of Pannonian age, the reference

it captured our attention right away and since Fig. 2. Numerical representation of f in a lattice node convex particles [25]. set of hand specimens must be representative the first trial versions of the algorithm’s results, for Pannonian reservoirs. Fortunately most of it was constructed from scratch along our The simple case of sphere representations of these reservoirs consist of sandstones being in ideas and views, were very interesting, it both Besides the random walk model’s development particles has already been tested for random the lithification stage of sandstone diagenesis. In seemed flexible enough and gave a number we improved / altered the model as follows: we walk model and the results showed that the this stage the physical properties are controlled of opportunities how to handle the packing. apply regular shape particles and a continuously variability of the packing is greater than it was in dominantly by depositional processes. These

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processes can be subdivided into delta, and then the number of particles in the given state The most commonly used implementations basinal courses. In the former one the main will change, because particles will scatter in of the lattice-Boltzmann method utilize the sub-environments are the followings: (1) delta and out of the group. Gains and losses must second order Taylor series approximation of the plain and delta front; (2) pro-delta. Within the lead to equilibrium in the number of particles. Maxwell-Boltzmann distribution for calculating delta plain successions the characteristic According to the Bhatangar-Gross-Krook the equilibrium population, which leads to Eq.6. sandstone bodies are formed in (1) channel, (2) (BGK) model this relaxation to equilibrium can crevasse splay, (3) mouth bar environments. be characterized by a time constant (Eq.3). The pro-delta sequence is the place of pro- (6) delta fans, which can interfinger with the deeper (3)

basin fan or ramp type sedimentation. Our goal In Eq.6 i and are the particle velocity and

is to collect representative hand specimens fluid velocity vectors respectively, wi is the with representative sedimentary structures for It can be shown, that the relaxation time is weight of the i-th component defined below, and 2 2 the above mentioned depositional units. The proportional to the macroscopic transport c s=c /3 is the square of the model sound speed.

other very important constraint is that both coefficients such as kinematic viscosity. Any c=Δx/Δt is the grid velocity. i is displacement

grain size and petrophysical analysis should macroscopic field variable can be expressed vector, e.g. in D2Q9 model i=(1,-1)c. The be available from these samples. In the very as a momentum of f in the velocity space: numerical process involves 3 consecutive

first phase the delta plain sequence is targeted. , steps in any internal points: promotion of fi to e One of the outstandingly sampled reservoirs neighbouring points, calculation of fi equilibrium

is the Szőreg-1 of Algyő field (Hungary). From Fig. 3. The pattern of a clastic rock sample visualized by Hounsfield (4) populations and updating fi according to the the laboratory analysis of the Szőreg-1 UGS values . collision formula Eq.5. (underground gas storage) project we were able to collect samples of fine and coarse kinetic theory of gases. The method is used A comprehensive description of the sandstones, fine and coarse siltstones and with benefits for solving problems of continuum index ‘a’ corresponds to Cartesian components discretization method is given by Succi [26].

argillaceous marls with channel, crevasse mechanics, such as the numerical solution of x, y and z, thus va refers to particle velocity One advantage of lattice-Boltzmann method is

splay and mouth bar origin. The number of the governing equations of single phase and components and ua refers to fluid velocity its ability to simulate multiphase flows involving samples by sedimentary rock types belonging multiphase flows. Giving some insight into its components. ρ and e represent fluid density finely structured interfaces. This makes the to these units was enough for statistical formalism, see the next simplified description and specific energy respectively. f must be method particularly suitable for some porous inference. The average grain size distributions (Eq.1) for it. We can introduce ∆n, which is the discreetly represented in numerical solution media application in oil industry. with the corresponding average effective average number of particles around position procedures. The most obvious way of porosity and permeabilities as well as pore size and particle velocity : discretization of the Boltzmann equation is the A number of general purpose commercial and distributions could be derived. On these data ∆n=f∆ ∆ (1) application of an equidistant lattice with the free open source implementations are known. sets we performed statistical analysis outlined ∆ and ∆ are finite cubes centred around resolution of Δx and an even time stepping by Δt. In this research, the PALABOS (PArallel LAttice before. What we have got is the following: (1) and in the so called phase-space (6 f must be also discretized in the velocity space, BOltzmann Solver) is used, which is open receipt for the weight percent of grain size dimension space of location and velocity). therefore f needs to be represented in multiple source (Gnu) C++ library for the development of constituents to derive virtual grain volumes; (2) The above expression is the definition of the particle velocities at every simulation point. single phase and multiphase lattice-Boltzmann receipt for tuning the virtual grain volume to fit probability density function f( , ,t), depending applications. PALABOS allows efficient parallel the measured petrophysical properties. on 7 independent scalar variables. The change Various approaches exist for 2D and 3D flows, computing, which is very important for practical of the kinetic state of the system consisting two of them are shown in Figure 3. The simplest applications. Software utilities have been For describing the inside geometry of samples, of many spherical particles, characterized possible representation is D2Q9 that assumes developed in the framework of the present some CT measurements were used. Some by particle mass m, can be described by the 2D – movement is possible in two dimensions research for automatic generation of the lattice earlier studies have proved that in the same Boltzmann equation (Eq.2). only – and 9 possible directions of movement and for the visualization of the results. The

diagenetic stage, clastic rock types can be for f, where f0 stands for zero velocity, f1,f3,f5,f7 lattice size – number of lattice nodes in each

recognized from the probability distributions represent orthogonal velocities, while f2,f4,f6,f8 co-ordinate directions – in an example run of of Hounsfield units measured by human (2) stand for diagonal velocities. As can be seen the programmes was 256x256x256 and the CT – for example see Figure 3. In addition, in Figure 3, discrete representations of f are corresponding computing time of a single the sedimentary structures, as well as the selected on the way to point towards the phase flow in this lattice was 2 hours on a 16 spatial variability of the textures can also be In the absence of collisions, f should obey Eq.2 neighbouring points, therefore the right hand core 64 bit PC with PALABOS solver. interpreted. For this purpose we have collected with G=L=0, which describes the trajectory side of Eq.2 is easily modelled – at least in

a representative set of CT analysis showing of a group of particles of closely identical the absence of external force. fi is passed to EXTRACTION OF PORE SIZE horizontal laminations, cross laminations and location and velocity in the phase-space. This the corresponding neighbour in each time DISTRIBUTION FROM THE MODEL massive sandstones. The 3D geostatistical expression explains where to look for a group of step. Actual calculation is necessary only for At this stage of the R&D project there are analysis of the measured 3D volume of f∆ ∆ particles in the phase-space (originally modelling collision effects. With this assumption two possible candidates for the purpose of densities will lead to the characterization of the being at and ) after a time step ∆t. Its the discrete form of Eq.2 reads: extracting PSD information from either the individual laminas and other spatial characters. position will change due to the particle velocity numerical model or the 2D/3D image of the , and the velocity will change due to the (5) real sample. First of all it is very important to LATTICE-BOLTZMANN METHOD external field . If the particle group can collide determine precisely what is meant by pore e DEVELOPMENT with other particle groups of different velocity – in which fi is the i-th component of the size distribution in our industrial practice. As it Lattice-Boltzmann method is derived from the positions must be the same if collision occurs, equilibrium particle population. was already mentioned this sort of information

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is produced by laboratory measurements. through the aforementioned spheres pack at 2D percolation algorithm was first constructed shape and test it for constructing numerical Pieces of real porous material are put into the z=1,000 – for example see Figure 4 regarding and run a special hybrid method tailored to the models based on real samples and their instrument’s sample holder and the sample is the black circles only. needs of the task was applied [30]. As the grid measurements. Parallel to this the model and then flooded with mercury. Mercury invades size was gradually reduced and the programme the algorithm have to be developed further to the porous material from all directions at a was run each time, the increasing area flooded a fully fledged solution regarding its geological specific pressure applied and the pressure by mercury could be discerned. It showed that pattern construction feature using geostatistical value and the change in mercury volume are it behaved as it was anticipated (Figure 5). methods. The requirements and conditions of recorded. This is repeated many times at lB applications for flow modelling of this type different pressure values up to 200 or in some The surrounded areas were only flooded have been clarified and the lB solver has been cases 400 MPas. The whole measurement by mercury if the grid size or its equivalent successfully tested in simple situations like consists of the penetration and the retraction curvature radius was reached just like in case ordered sphere-packings. lB programmes phases, which means that the measurement is of real measurements. For better visualization will be developed in order to comply with our carried out in both directions. As mercury can of the process and the 2D percolation algorithm expectations and requirements in the next enter the porous system – the pore spaces was written in this way, mercury invaded the three quarters of the total project timing and through the pore throats, through processing porous material from one direction – mimicking tested for random polydisperse packings. The the series of data we actually get how much the statistical evaluation function, local numerical model’s results are compared to that pore volume can be flooded with mercury percolation probability applied in case of thin of simple real models. Pore size distribution through a specific size of pores that belongs section numerical analysis. Percolation is not of the model was one of the most difficult to a specific mercury pressure. The theoretical a dynamic method, much rather it shows the problems to be solved. We believe that there basis of this measurement is described by the end result of a particular situation. This can are two potential solutions in our hands to this Washburn relation [27]. PSD computations be meant by reaching the state of equilibrium problem that were successfully tested so far shall reflect this sort of nature of the laboratory Fig. 4. Contour plot of the pore size of a synthetic geometry in a at a specific mercury pressure, and there is and in the mid future these solutions will be section plane as a result of Poisson DE based calculations data because the geological and petroleum no further movement of the mercury fluid. further developed and tested. Nevertheless engineers’ practice is based on this laboratory This state of equilibrium can be shown by the biggest challenges of the project are measurement and interpretation. This is an imaginary thin section of a numerical percolation as well. undoubtedly the appropriate particle packing rock sample and it was used without further generation, the lB modelling of flow through the The pore size distribution of any porous modifications, which means that the wall effect The solution of Poisson differential equations particle packing and the extraction of pore size materials can be determined in a number of was not excluded. The circles or spheres in applies a different approach to this problem. distribution from either voxelized real samples ways. They mostly apply the inscribed spheres case of the 3D version, form clusters that might It is a dynamic method and identifies the pore or numerical models. These challenges have to techniques and / or the Voronoi tessellation encompass areas within the plane or space. spaces and throats as maxima and saddle be addressed properly by the team members in methods making difference between pore These areas, subsections of space might only points of the solution of the Poisson equations the further development works and efforts. spaces and pore throats. Some of the methods be invaded through narrow passages between in the pore space. Size information is then flood- are better than others but all are computationally the cluster’s members. This might be applied filled around pore space and throats within the very intensive applications and despite their for the whole of the set and this way it is quite corresponding radius and the pore structure Acknowledgment correctness in geometric terms they do not understandable what was meant before by can be visualized as shown in Figure 5. Authors express their thanks to Miklós Balogh meet the above mentioned requirement. They bottlenecks. The invaded area can be registered (BME) for contributing to and acting as the cannot handle the problem in a way that is as the function of the grid size. The grid size pillar of the project. Many thanks go to Balázs more or less like the laboratory measurement might be linked to the specific pressure through Results so far Kiss, Dr., Michael Gysi, Andrea Lövei (MOL itself. The laboratory measurement method’s the interfacial tension of the mercury and its Reservoir&Technology Engineering), András inherent nature is that it is capable of detecting contact angle as a non-wetting fluid in a rock and further Nusszer, Ferenc Berecz, Andrea Mátrai and identifying those constraints or better sample. Percolation can happen in two ways: (MOL New Technologies and R&D) for their phrased as bottlenecks that are in the way of there are site and bond percolations. When our development plans ideas, support and significant consultations. any fluids flowing through the porous material We managed to clarify the basic assumptions The help provided by János Vad, Dr. (BME), and it quantifies it. In our comprehension about this approach to model conventional and Janina Horváth, Angelika Sóla (SZTE) and percolation algorithms might be one of the best special core analyses and lay the foundation of Béla Lakos (MOL New Technologies and tools for such purposes. Percolation theory the project regarding particle models, the range R&D) is also highly appreciated. The paper is part of statistical physics not fully explored of input parameters, the role of geostatistical has been greatly improved by the critical and explained yet, though successfully parameters in recipe making of geological comments and constructive suggestions of applied for many problems [28,29]. This is patterns, lattice-Boltzmann flow modelling our reviewer, Zsolt Molnár (Manager of MOL also a quickly developing area of science and and pore size distribution of the voxelized real Reservoir&Technology Engineering). We also practical applications of it. The current state samples and models. Two particle packing thank MOL IFA for supporting the idea and of this development direction of the project is generators have been constructed and tested financing this project. in its initial phase. A 2D algorithm has been on both monodisperse and real, polydisperse developed and written by us and applied for a packings. The results showed considerable numerical representation of a spheres packing. difference between the two solutions in favour The algorithm’s performance and capabilities of random walk method. Our goal in the References Fig. 5. A comparison of a real 3D measurement and a 2D percolation simulation were studied on this random set of circles. This on the numerical model of the original rock immediate future is to fully develop the random [1] Dvorkin, J. – Armbruster, M. – Baldwin, set of circles was made by cutting horizontally walk method for convex particles of general C. – Fang, Q. – Derzhi, N. – Gomez, C.

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– Nur, B. – Nur, A. – Mu, Y.: The future of and its coupling with finite element facets. áramlástani szimuláció megalkotása rock physics: computational methods vs. lab Engineering Computations, 27/4, pp. 519- és alkalmazása. K+F jelentés, 2011/I, testing. Petroleum Geology, Special Topic, 550. (2009) témaszám: KF-0671, 25 p. (2011) First Break, 26, pp. 63-68. (2008) [17] Sitharam, T.G.: Numerical simulation of [2] Øren, P.E. – Bakke, S.: Process Based particulate materials using discrete element Keywords: geostatistics, particle packings, Reconstruction of Sandstones and Prediction modelling. Current Science, 78/7, pp. 876- lattice-Boltzmann, percolation of Transport Properties. Transport in Porous 886. (2000) Media, 46, pp. 311-343. (2002) [18] Xiang, W. – Wang, P.: Application of Bridging Reviewed by: Zsolt Molnár [3] Jin, G. – Patzek, T.W – Silin, D.B.: Physics- theory on Saucier gravel to examine the based Reconstruction of Sedimentary Rocks. sand control effect. SPE 80450. Manuscript received: 14th August, 2011 SPE 83587, 14 p. (2003) [19] Vickers, S. – Cowie, M. – Jones, T. – Twynam, [4] Bryant, S.L. – Lerch, C. – Glinsky, M.E.: A.J.: A new methodology that surpasses Critical Grain Size Parameters for Predicting current bridging theories to efficiently seal Framework and ‘Floating’ Grains in Sediments. a varied pore throat distribution as found in Journal of Sedimentary Research, 79, pp. natural reservoir formations. AADE Drilling 817-830. (2009) Fluids Technical Conference in Houston, [5] Wellmann, C. - Lillie, C. – Wriggers, P.: USA, 9 p. (2006) Homogenization of granular material modeled [20] Dormán, J. – Drávucz, I. – Kálmán, Gy.: by a three-dimensional Discrete Element Fúróiszapok optimalizálása a tárolóvédelem Method. Computers and Geotechnics, 35/3, érdekében. K+F jelentés, projektszám: pp. 394-405. (2008) UW3307.09.28/95. (2008) [6] Dvorkin, J.: Digital rock physics bridges scales [21] Rawle, A.: Basic Principles of Particle Size of measurement – New sampling techniques Analysis. Training material of Malvern. http:// bring field-size tests into the laboratory. E&P www.rci.rutgers.edu/~moghe/PSD%20 Online, 9, 3 p. 2009 Basics.pdf [7] http://www.numericalrocks.com [22] Jia, X. – Williams, R.A.: A packing algorithm [8] http://www.ingrainrocks.com for particles of arbitrary shapes. Powder [9] http://www.digitalcore.com Technology, 120, pp. 175-186. (2001) [10] Nur, A. - Mukejeri, T. – Gonzalez, E. – Richa, [23] Jia, X. - Gopinathan, N. - Williams, R.A.: R. – Keehm, Y. – Nat’l, K.: Computational Modelling complex packing structures and Rock Physics, Energy Research at Stanford their thermal properties. Advanced Powder 2005-2006. http://gcep.stanford.edu technology, 13/1, pp. 55-71. (2002) [11] Bakke, S. – Øren, P-E.: 3-D Pore-Scale [24] Chen, B. – Kaufman, A.: 3D Volume Rotation Modelling of Sandstones and Flow Using Shear Transformations. Graphical Simulations in the Pore Networks. SPE Models, 62/4, pp. 308-322. (2000) Journal, 2, pp. 136-149. (1997) [25] Kockara, S. – Halic, T. – Bayrak, C. – Iqbal, K. [12] Okabe, H. - Blunt, M.J.: Multiple-Point – Rowe, R.A.: Contact Detection Algorithms. statistics to generate geologically realistic Journal of Computers, 4/10, pp. 1053-1063. pore-space representations. Symposium of (2009) the Society of Core Analysts in Pau, France, [26] Succi S.: The Lattice Boltzmann Equation for SCA2003-09, 14 p. (2003) Fluid Dynamics and Beyond. Oxford Science [13] Biswal, B. - Manwart, C. - Hilfer, R. - Bakke, Publications, Oxford University Press, 288 p. S. – Øren, P.E.: Quantitative analysis of (2001) experimental and synthetic microstructures [27] Webb, P.A.: An Introduction to the Physical for sedimentary rock. Physica A 273, pp. Characterization of Materials by Mercury 452-475. (1999) Intrusion Porosimetry with Emphasis on [14] Øren, P-E. – Bakke, S.: Reconstruction of Reduction and Presentation of Experimental Berea Sandstone and Pore-Scale Modelling Data. Micromeritics Instrument Corp, of Wettability Effects. Journal of Petroleum Norcross, Georgia (2001) Science and Engineering, 39/3-4, pp. 177- [28] Newman, M.E.J. – Ziff, R.M.: Efficient Monte 199. (2003) Carlo Algorithm and High-Precision Results [15] Kansal, A.R. – Torquato, S. – Stillinger, F.H.: for Percolation. Physical Review Letters Computer generation of dense polydisperse Volume 85/19, pp. 4104-4107. (2000) sphere packings. Journal of Chemical [29] Barabási, A.L.: Invasion Percolation and Physics, 117, 18, pp. 8212-8218. (2002) Global Optimization. Physical Review [16] Yan, B. – Regueiro, R.A. – Sture, S.: Letters, 76/20, pp. 3750-3753. (1996) Three-dimensional ellipsoidal discrete [30] Győry, L.: iCore - numerikus kőzet- és element modelling of granular materials pórusmodell, valamint modellszintű

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not high enough, micro cracks initiate and are the direction of the maximum strain and micro Examination of the relationship growing; surface active materials accelerate cracks and micro voids are forming. The voids the formation of microscopic voids within the are separated by highly oriented polymer fibrils. polymer chains. These voids combine and Eventually the molecules untangle and the between ESCR and the grow to form larger crazes and cracks, which voids coalesce to form a crack [2]. At the end lead to the failure of the polymer material. of the progress the stretched chains break, the voids open together and the crack propagates. molecular structure of HDPE The ESCR value is a characteristic feature of Figure 1 shows the mechanism of ESC. HDPE product, which limits its application. The development of HDPE product turns to the raw blow molding grades materials with higher ESCR value. The ESCR value is an important property as shown, but the determination of this feature is not easy. The ESCR value of a HDPE blow molding type product can be 10 hour to Zsolt Dudás (36) termék mennyire képes tárolni a bele töltött 2,000-3,000 hour. In the course of product Product development engineer Petchem Technology and Project Development, anyagot (vegyszerek, italok, kozmetikumok development this time is very long, the new Product- and Application Development Department (TVK plc) stb.), mennyire hajlamos repedésekre, experimental product can lose the market [email protected] törésre, és melyik alapanyag a legmegfelelőbb position, or the launch to the market become az adott termékhez. difficult without fast measurement results. Consequently, a rapid measurement method A hagyományos ESCR vizsgálati módszer is required for the product development, and Fig. 1. ESC mechanism [2] hátránya, hogy rengeteg hibalehetőséget for the examination of other grades and for the Abstract rejt magában, amelyek az eredmények customer claims investigations. The ESCR value depends on the polymer The environmental stress crack resistance bizonytalanságához és nagy szórásához structure. The effect of the molecular structure (ESCR) is an important property of HDPE (high vezetnek (a szórás egy sarzshoz tartozó This article shows a new method, which is shown in the Figure 2. The molecular weight density polyethylene) products especially mintasor esetén is akár 20% is lehet). predicts the ESCR result within some days and its distribution, the short and long chain of blow molded products. The ESCR result after the production. branching have the highest influence on the informs us about the prediction of the long- Munkánk célja olyan szerkezeti jellemző ESCR result [1,3,5,6,7]. term behaviour of the products, how suitable keresése, amely korrelál az ESCR értékkel, is HDPE for storage of several final products valamint olyan módszer kifejlesztése, illetve Theoretical without cracking and which basic material is cégen belüli honosítása, amely alkalmas a adaptable for the product. feszültségkorrózió mérésének kiváltására, overview helyettesítésére, gyorsabb és viszonylag The ESCR measuring method (ASTM pontos eredményt ad, valamint a TVK THE ORIGIN OF THE ESC D1693) has a lot of failure possibilities and termékeinél eredményesen használható. The semicrystalline polymer structure is built disadvantages. The purpose of our work was up from three regions: crystalline, amorphous to develop and apply a new method in cases Az új módszer 80 °C-on végzett szakítás and interface regions. The last is the most of TVK products, which method is suitable to a szakítási görbéből, az ún. keményedési important and critical in the ESCR of a replace the ESCR measurement. modulus meghatározása, amely összefügg semicrystalline material. This region is the az ESCR értékkel. interface between the crystalline region and The new method: tensile test propagation at its adjacent amorphous region. This interface 80 °C, stain hardening modulus determination region connects the crystalline and amorphous from the real stress-stain curves (G ). This Introduction phases and without it the polyethylene material Fig. 2. The effect of the polymer structure on the ESCR result. MW – molecular p weight, MWD – molecular weight distribution, SCB – short chain branching, modulus correlates to the ESCR result. The ESC (environmental stress crack) is a would be very weak. This interface or boundary SCBD – short chain branching distribution, LCB – long chain branching [5] damaging process of plastic products due to region is the zone through which the loads surface initiated micro cracks or fractures, are carried and transferred between the long Összefoglalás which are caused by the combined presence molecular chains and the different crystals. THE MEASUREMENT OF THE ESCR Fúvási típusú nagy sűrűségű polietilének of internal and external stresses and the effect The stress cracking starts with breaking of the VALUE ESCR – molekulaszerkezet összefüggésének of the environment. The polymer resistance to boundary chains. This break is then develops There are a lot of test methods to examine the vizsgálata such failure is the environmental stress crack into micro crack that will ultimately grow to slow crack propagation and to determine the resistance (ESCR). The internal stresses form a crack big enough to be seen and cause ESCR value. The methods are the models of A feszültségkorrózió vizsgálat (ESCR) a are remaining by the production (extrusion, product failure [1]. real product damage but with faster progress. HDPE (nagy sűrűségű polietilén) termékek, injection molding and thermoforming), the The most widely used method is the so called elsősorban fúvási típusúak (kannák, hordók, external stresses originate from the application; The long polymer chains form a 3D entanglement Bent Strip method of ASTM D1693. The palackok stb.) fontos vizsgálati módszere. for example the bottle is filled with fluid (e.g. in the amorphous phase. In response to sample is notched and bent perpendicularly to Információt nyújt arra vonatkozóan, hogy a surfactant). If the ESCR value of the material is stress, the individual segments orientate to the direction of the notch then it is taken into

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detergent solvent at 50 °C, as Figure 3 shows. and hence of the material in a pure plane stress about 20 min in the heated chamber at the The time value is the ESCR value, where 5 uniaxial load as is schematically represented in envisaged test temperature so as to attain samples from 10 begin to crack perpendicularly Figures 4 and 5. This is why a simple tensile thermal equilibrium. to the notch. The role of the detergent is the test to assess the strain hardening behaviour acceleration of the progress [1,3,7,9]. of a material will be predictive for the slow Figures 4 and 8 show the tensile test curve of crack growth resistance” [4]. The similar fibrillar a PE sample. At the beginning, at low shear The ESCR result depends on the polymer orientation can be seen in Figure 6, where SEM force deformation is linear elastic. After the structure (as seen above), on the internal (scanning electron microscope) pictures (made curve bending non linear elastic deformation and external stress in the product and on the by TVK – Product Development Department) takes place. After the yielding phase necking thermal history. show the ESC and tensile test mechanisms and and orientation of the polymer chains start, the similar polymer morphologies. Microscopic just as in case of the ESC mechanism under aspects of surface deformation and fracture of the influence of stretching stress. Plastic HDPE are studied in [10]. deformation and the breaking of polymer chains take place at the end of the progress.

Fig. 6. Correlation between the ESCR measurement and the tensile test in microscopy aspect

blow molding and pipe samples come from the bimodal Mitsui technique (using Ziegler-Natta type catalyst). All samples contain antioxidant. Samples were prepared in the following conditions:

Fig. 3. The arrangement of the samples during ESCR measurement Press temperature: 177 °C Preheating: 5 min, 3 MPa THE NEW METHOD AND THE ESCR Pressing: 1 min, 10 MPa MEASUREMENT Cooling: 12-15 °C/min. Slow crack propagation takes place in case of the ESCR measurement and also of the The samples were blank. The geometrical ESC progress which can be modelled with a parameters of the samples which were used for simple tensile test [4,8,11,12,13]. “The craze- tensile tests are shown in the Figure 7. Fig. 8. Tensile test curve Fig. 4. Tensile curve of PE sample [2] crack mechanism, from the development of the deformation zone up to the fracture of the The tensile test result is transformed to true fibrils, within a craze is usually considered values using the following equilibriums. to proceed through three main stages, i.e. True strain is calculated as: initiation, propagation and the craze crack transition. The initiation step includes the (no dimension) formation of the deformation zone, which is strongly associated with the yield stress and stiffness of a material. Once the deformation zone is formed it will start to propagate which where

is usually associated with the formation of a L0 – gauge length at the beginning of the test surface tension driven meniscus instability void (mm), formation at the crack tip. The oncoming of this ΔL – strain (mm). voided material is dominated by yield stress True stress is: Fig. 5. Correlation between the ESCR measurement and the tensile and surface tension. Consequently the material test (to gold painted part is the specimen) [2,5] Fig. 7. Geometrical parameters of samples for tensile test: A – 40 mm, between voids stretches into a network of strain B – 75 mm, D – 10 mm, E – 15 mm, C – 3 mm, thickness – 2 mm hardened cross tied fibrils. This network will (MPa) eventually fail due to the stress concentration Experimental part, THE NEW METHOD in the critically loaded fibril at the craze crack Tensile measurement where transition point. The failure of this critically results The measurement is in principle a standard F – measured force (N), loaded fibril is governed by the network of tensile test at 80 °C. The test specimen is A – area of the cross section at the beginning effective entanglements in the strain hardened EXAMINED MATERIALS extended along its major axis at constant of the test (mm2), fibril. This basically means that the resistance to The samples were produced at TVK plc by speed (10 mm/min). The maximum strain value λ – true strain (-). craze initiation and failure in such a slow crack polymerization techniques. The ‘PEI’ sample is limited by the length of the heated chamber. Figure 9 represents the tensile test curve with growth mechanism is primarily determined by is a blow molding product and comes from the A 1 kN load cell is used for the load measurement. true values. The value of the slope of the tensile the intrinsic strain hardening response of fibrils Phillips loop (using Cr-type catalyst), the ‘PEII’ Prior to testing the test specimens are kept for test curve before the braking is the so called

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growth resistance in materials without using (ESCR) test in stretched polyethylene: A surfactants. The presented test method shows vibrational spectroscopy and a SEM study, very low standard deviation and furthermore, Polymer 40, 1629–1636. (1999) measuring times are dramatically reduced [10] A. Dasari – R.D.K. Misra: Microscopic in comparison to traditional methods from aspects of surface deformation and thousands of hours to only a few. fracture of high density polyethylene, Materials Science and Engineering A 367 This new way of assessing slow crack growth 248–260. (2004) data can be applied in product development, [11] A. Dasari – R.D.K. Misra: On the strain rate quality control, examination of claims and sensitivity of high density polyethylene and others. Using this new method beside ESCR polypropylenes, Materials Science and other test results are also predictable which Engineering 368 356-371. (2003) are in connection with crack propagation, for [12] David Roylance: Stress-strain curves. Fig. 9. Tensile test curve with true values example special pipe examinations such as S4 Massachusetts Institute of Technology

Fig. 10. Tensile test curves of different HDPE types (Small Scale Steady State test, ISO 13477) and study, Cambridge (2001) stain hardening modulus, Gp, which value is in FNCT (Full Notched Creep Test ISO 16770) [13] L. Kurelec – M. Teeuwen – H. Schoffeleers relationship with the ESCR result. tests. – R. Deblieck: Strain hardening modulus as a measure of environmental stress crack RESULTS resistance of high density polyethylene, The tensile test curves of different HDPE types References Polymer 46, 6369–6379. (2005) can be seen in Figure 10. We can recognize [1] Raed Al-Zubi, PhD – Dr. A. Brent Strong that the slopes of the curves are different. The – Marshall Lampson: Understanding Keywords: polyolefin, ESCR, blow molding, slope of the curve is high if the ESCR value is Environmental Stress Crack Resistance crack propagation high. If we plot the relation between the ESCR Web document from Poly Processing

value and the strain hardening modulus (Gp) in Company (2003) Reviewed by Zsolt László case of monomodal (PEI) and bimodal (PEII) [2] Jeffrey A. Jansen: Prediction & Prevention HDPE samples we get Figures 11,12. The of Environmental Stress Cracking. Zsolt Dudas joined TVK Ltd. separation of the two PE types is necessary Presentation (2010) in 1998 and has been working because their polymer structures are different [3] Ladtech Inc.: Resistance to environmental at Product Development and the ESCR measurement methods are stress cracking. Technical sheet (2006) Department. He is responsible also different. In case of monomodal PE the [4] M. McCarthy – R. Deblieck – P. Mindermann for the electron microscopic detergent concentration is 100% but in case of – R. Kloth – L. Kurelec – H Martens: New measurements for the elemental bimodal product it is only 10% (this 10% solvent accelerated method to determine slow analysis and plastic testing is more aggressive). crack growth behaviour of polyethylene pipe methods, for extruders and Fig. 11. ESCR value vs. G in case of monomodal HDPE (PEI) p materials. http://www.ppxiv.com/posters/ sample preparation equipments. His main

According to the ESCR vs. Gp curves we can mccarthy_poster.pdf (2008) areas in the Development Department are establish that the correlation between the two [5] Joy J. Cheng – Maria A. Polak – Alexander the development of HDPE products and the values is good. After doing a simple tensile Penlidis: Influence of micromolecular examination of customer’s complaints. He test, based on the received curves we can structure on environmental stress cracking graduated at Budapest University of Technology predict the ESCR value of the unknown or new, resistance of high density polyethylene. and Economics (1998) and Kecskemét College experimental materials. It is possible to predict Tunnelling and Underground Space of Mechanical Engineering and Automation the ESCR value of the samples with very high Technology (2011) (Hungary) (2011) Plastic and Rubber ESCR in a much shorter period of time. [6] J. Cazenave – R. Seguela – B. Sixou – Technology Departments as development Y. Germain: Short-term mechanical and engineer and polymer processing technologist. structural approaches for the evaluation Conclusions of polyethylene stress crack resistance, Important property of the blow molding and pipe Polymer 47, 3904–3914. (2006) type HDPE products is their resistance against [7] Jeffrey A. Jansen: Environmental Stress slow and rapid crack propagation quantified as Cracking – The plastic killer, Advanced ESCR value. Materials & Processes 06, 50-53. (2004) [8] P. A. O'Connell – M. J. Bonner – R. A. Fig. 12. ESCR value vs. Gp in case of bimodal HDPE (PEII) The invention of the bimodal HDPE was Duckett – I. M. Ward: The relationship a significant event in the history of HDPE several months. A new, rapid measuring method between slow crack propagation and tensile development. It has good processability and has been developed to predict the ESCR value, creep behaviour in polyethylene, Polymer excellent mechanical properties. Presence of and predict the crack grow process. 36, 2355-2362. (1995) both low and high molecular weight parts would [9] Jose´ M. Lagaron – Jose´ M. Pastor – Bert result in more than 1,000 hour ESCR value, but The strain hardening measurement offers J. Kip: Role of an active environment of use the measurement of this high value would take a relatively easy way to predict slow crack in an environmental stress crack resistance

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is növelni lehetett, így a katalizátorok az The first catalysts at the initial stage of the Examination of the effects of elfogadott polimerizációs segédanyagok development of the Ziegler-Natta-type, were listájára felkerülhettek. unable to connect the monomers in a regular manner, so large part of the product was not different internal electron donors isotactic (atactic), moreover the catalysts did Perspectives of not have high activity, so additional steps had to be performed to separate the catalyst and of Ziegler-Natta catalysts on the PP market the atactic phase from the isotactic PP [2-5]. Today with catalysts containing e.g. diether GLOBAL PP MARKET internal donor (ID) and using D (Dicyclopentyl- From 2011 to 2015 the global PP consumption dimethoxy-silane) external donor (ED), propylene polymerization is forecasted to grow at 5.7%/y. This growth is isotacticity up to 99% (w/w) can be reached heavily depends on the Asian markets which (should the final application of the PP grade account for over half of the growth. A huge needs it). component of the Asian growth is derived from China, with India also showing significant The first catalyst was prepared by mixing

Imre Balogh (25) potential. a special crystal type of TiCl3 and Al(Et2) Development engineer Petchem Technology and Project Development, Cl. Today a support is used which is MgCl2. Product- and Application Development Department (TVK plc) Összefoglalás The capacity addition of the next two years The support is impregnated with TiCl 4 [email protected] Ziegler-Natta katalizátorok különböző belső will exceed the previous years’. This capacity and an ID (i.e. Lewis base). The mix of elektron donorjai hatásának vizsgálata a will come on-stream by the slowly recovering this three components is not active in the propilén polimerizációban demand after the economical crisis, so the polymerization media, its Ti4+ content partly Abstract pressure on plants with lower production needs to be activated (reduced to Ti3+) with

There are two polypropylene (PP) plants A TVK területén jelenleg két polipropilén rates or outdated technology located in less Al(Et)3 a common cocatalyst and an ED is operating at TVK (Hungary) based on (PP) gyár üzemel Spheripol technológiával advantaged exporting areas will be high so also needed in most cases for the required Spheripol process, at nominal capacity of 100 100 ill. 180 kt/év kapacitással. A jó minőségű closures are imminent in the USA, Western stereoregularity [6-9]. and 180 kt/y respectively. Basic properties alapanyag előállítása vagy újszerű Europe and Japan. of the PP grades produced by these plants technológiákkal, vagy új katalizátorokkal ROLE OF INTERNAL AND EXTERNAL highly depend on the technology and the (melyek fejlettebb belső elektrondonort (ID) The new export-oriented capacities in Middle DONORS polymerization materials, e.g. the catalysts tartalmaznak), és külső elektrondonorokkal East will account for a large proportion of inter In order to obtain a catalyst system capable (containing also improved internal electron lehetséges. regional trade. Based on developments and of polymerizing propylene monomer, donor (ID)) and external electron donor (ED). installation of steam-crackers, Eastern Europe resulting in highly isotactic PP, we need two A legújabb 6. generációs Ziegler-Natta and South America will also develop a position donors. The first type is bonded directly to The latest (6th) generation of PP catalysts típusú katalizátorok olyan belső donorokat in the export market [1]. the support (ID). Direct connection of the contain such internal donors by which the tartalmaznak, amelyekkel a kész PP termék donor and support suggests that the ID has basic properties of the final product can be tulajdonságai széles skálán változtathatóak. CENTRAL EUROPEAN PP MARKET a higher impact on the product properties varied more broadly than ever before, so Egy katalizátor-váltással olyan mértékben In Central Europe the trade patterns are set to than the ED, which is exactly the case. The we can alter the product and make it more változtathatunk a PP por végső change significantly with exports from the Middle ID takes part in the active site formation, versatile by using the same technology for tulajdonságain, mintha más fajta technológiát East entering the markets directly and displacing while the ED only selectively poisons these more specific applications. alkalmazó üzemben gyártottuk volna le azt, the volumes from Western Europe [1]. sites and replace some ID from the catalyst így speciálisabb alkalmazási területekre is during the lifetime of the catalyst to fine Our main goal was to replace the previously megfelelő anyagokat nyerhetünk. In this economical environment TVK intends to tune final product properties like activity or used phthalate ID containing catalysts by remain competitive by trading PP of improved stereoregularity [10,11]. The main difference a novel 6th generation catalyst, containing Fő célunk az volt, hogy a korábban quality. The export situation of Hungary on the between these donors lies in their usage. The diether or succinate type of internal donor használt hagyományos ftalát belső donort polyolefin market is supported by two PP plants ID is catalyst dependant, but the ED can be and through this achieve improved physical, tartalmazó katalizátor helyett új alternatívákat of TVK with the nominal capacities of 100 chosen freely (from technical point of view, but optical, organoleptic and morphologycal keressünk. Az üzemi tesztek legfőbb (PP-3) and 180 kt/y (PP-4) respectively. legal restrictions should also be considered). properties. Firstly, we tested the alternative célja az alternatív katalizátorok esetén a In some special cases ED’s feeding can be catalysts in lab scale reactor. Based on termékek fizikai, optikai, organoleptikus és eliminated, because the catalyst ID provides the favourable results we recommended morfológiai tulajdonságainak javítása volt. Ziegler-Natta (ZN) enough stereoregularity for the PP chains. plant trial. Based on the results of the plant Az alternatívákat először labor reaktorban trial, we could achieve better morphology, teszteltük, majd a sikeres labor tesztek után catalysts As noted above, ED has only limited impact on organoleptic properties and in some cases a katalizátorokat üzemi tesztre bocsátottuk. the product properties. If we want to change higher production rate, so the two catalysts Az üzemi eredmények alapján a diéter INTRODUCTION OF ZIEGLER-NATTA some parameters drastically, the only way is to containing diether and succinate types of és szukcinát belső donort tartalmazó CATALYSTS change the catalyst itself. internal donors could be registered on the katalizátorokkal jobb morfológiájú, ill. fizikai Basic properties of the PP products depend internal list of accepted polymerization tulajdonságú PP porokat sikerült előállítani, on the catalyst. The role of the catalyst is The main groups of the IDs can be seen in materials. egyes esetekben a gyártási sebességet to connect the monomer units together. Figure 1.

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flowability of the polymer obtained at 210 °C drum at each PP plant, not only to be able to use Fix parameters (MFR) will be. This has advantageous effect two catalysts simultaneously, but to decrease Reactor volume 4 l on organoleptic properties too, because we the risk of mixing the catalysts that can cause Rpm of the stirrer 250 1/min do not have to degrade the product directly quality problems at more sensitive grades. Polymerization temperature 70 °C with peroxides to achieve the needed high Propylene amount 2 l flowability (so called visbreaking or controlled Cocatalyst TEAL rheology process), which are the major cause Preparation for Polymerizations’ time 2 h of the high C-emission values at these grades. Variable parameters Fig. 1. Chemical formulas of the most common ID types Other advantage is good appearance due the plant trial Catalyst amount 0.0118 g to the smooth surface of the final product at The main goals of the plant trial were to make Hydrogen amount at fill up 0-800 mg Benzoate type IDs are only used in less plastic converters. a better product at about the same operating Al/Ti molar ratio 1,300-3,000 advanced plants because of their unfavourable conditions. In case of the PP powders made by Table 2. Fix and variable test parameters in lab reactor. TEAL – polymerization capabilities, so their The catalysts containing succinate type ID are diether type catalyst, this means better optical triethylaluminium consumption decreases steadily. mainly suited for the production of grades for properties in case of random grades, low special injection moulding and pipe extrusion C-emission and shrinkage, higher stiffness / impact As it can be seen, there are fix parameters Phthalate type is the most common type of applications. The polymerization properties of balance through better comonomer incorporability. which were held constant throughout the whole IDs used nowadays. The best known members these catalysts are good, so the temperature In case of the succinate type catalyst, a sheet experimental plan, and there were variable of this family are dibutylphthalate, and control is easy and in case of reactor or pipe material with better processability and ones, like the amount of hydrogen which had to diisobutylphthalate. The catalysts, that have temperature overrun the catalyst deactivates pressure endurance with higher stiffness / impact be increased step by step to obtain a hydrogen phthalate type ID, are the so called ‘general’ itself, so we do not have to expect large chunks balance through broader MWD was required. ca libration curve. type catalysts. Their polymerization capabilities of polymer which could cause plugging at the In case of both catalysts, the main goal was to are good still they are continuously replaced by bridge connection between the loop reactors increase competitiveness and to eliminate bridge The Aluminium/Titanium molar ratio was defined alternative candidates to be able to gain more like in case of a phthalate type catalyst. Other pluggings occurred very frequently lately. Because by separate experiments for each catalyst and specific final products. advantage is high stiffness / impact balance of the favourable morphological properties (higher kept constant after the calibrations. in case of copolymer products. MWD of the average particle size (APS)) of the PP powders The catalysts containing diether and succinate products made by this type of catalyst is broad produced with the new catalysts, trouble free Measured parameters type IDs are of the 6th generation ones. These compared to the phthalate type. MWD of the operation, lowering or totally eliminating the bridge The following parameters were measured from IDs are free of aromatic ring and grades of products is a very important property because plugging had been preferred. the lab made PP powders. special properties can be produced by them. the short and long-term properties are largely Activity: measure of the grams of polymer Main features of the grades produced by dependant on it. The shorter chains account LAB SCALE TESTS produced per gram of catalyst during 2 hours. diether catalyst are good physical, organoleptic for the good processability, while the longer The tests of the new catalysts were started in MFR: measured at 210°C with a given weight properties and better transparency. The main chains for the physical properties and chemical lab reactor of 4 l capacity (see Figure 2) at the according to MSZ EN ISO 1133 on a Dawenport areas of application for the PP grades produced resistance. Its hydrogen response is low, but in following parameters (see Table 2). type instrument. It relates to the flowability of with it are fibre, healthcare products and case of its main application i.e. pipe making, it the polymer melt. packaging materials. The main features of the is not a drawback. CXS: xylene soluble part of the polymer, catalyst are high activity, excellent hydrogen defined by the evaporation method. response, narrow molecular weight distribution Table 1 summarizes the main features of the APS: defined by regular sieve analysis (MWD), and low xylene soluble content (CXS) catalysts described above. according to ASTM D1921 on Octagon Digital of the polymer. The catalyst needs very little sieve shaker with the following mesh diameters: amount of ED, in extreme cases it even works Phthalate ID Diether ID Succinate ID 4; 2.5; 2; 1.25; 0.8; 0.6; 0.25; 0.125; 0.063 mm. without any. The good transparency can be Activity Average High High MWD: measured by gel permeation explained by the more even comonomer (in Isotacticity High High High chromatography (GPC) on Malvern Viscotek this case ethylene) incorporability. Ethylene Hydrogen response Average High Low 350 HT-GPC instrument. units are located on every chain and more MWD Average Narrow Broad evenly throughout the chains contrary to the Other parameters can also be measured by the phthalate type catalysts, where the ethylene Quality Control Department of TVK at request, Table 1. Literature review of different ID types mainly incorporates into the short chains. The like catalyst residue. better comonomer incorporability results in lower CXS and melting point than in case of a LAB RESULTS phthalate type catalyst. (For some applications, As it can be seen, the most comfortable tool at Activity as a function of MFR depicts the the lower CXS is a requirement in order to hand if we want to change a product parameter activities at a given MFR value (see Figure 3) obtain product of higher stiffness.) Another significantly is the change of the catalyst itself. which is the most important product property. advantage of the diether type is the better This practice is widespread and used in many As it can be seen, the activity of the succinate hydrogen response which means higher melt newly built plants where the product portfolio type is very high at lower initial amount of flow rate(MFR) at a given amount of hydrogen. can only be covered by two catalysts, because hydrogen, but toward higher MFR values the Hydrogen acts as a chain transfer agent during of large differences among grades. activity decreases because of the dominance the polymerization with Z-N catalysts [12]. The Fig. 2. Picture of the lab reactor of the chain transfer effect of hydrogen over more the amount of hydrogen, the higher the TVK also installed a second catalyst dispersion the reactivation of dormant (active sites onto

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which the propylene connected irregularly, tests, the phenomena can not be observed in homo and random products where the pore Mainly in case of random copolymer products, the methyl group of the propylene unit creates plants). The three catalysts’ donor responses at size should not be large. APS values on the production rate intensification could be done, sterical hindrance which can be reactivated the given polymerization conditions are about diagram were chosen from the same MFR due to the higher activity (+30%) and APS. by hydrogen) sites of the catalyst [13]. The the same (see Figure 5). It should be noted, range to make a fair comparison, since APS is diether type’s activity is also higher than that that the diether type can make PP powders of activity dependant. MFR of 45 g/10 min could be made as a of the phthalate type, so based on productivity very low CXS, even without external donor. reactor grade which significantly reduced the curves the two alternatives were proved to be Based on the gel permeation chromatography C-emission values, peroxide degradation in promising. It should be noted that the upper (GPC) results, the broadest MWD was obtained some cases was not needed or the consumption MFR limit of the plant-made products is about in case of the succinate type and the narrowest of peroxide could be minimized which resulted 20 g/10 min (with traditional phthalate ID was in case of the diether type (see Table 3 in cost saving and more chance in applications catalyst), thus above this value the results only and Figure 7). These results are in conformity where stricter certifications are necessary. have theoretical importance. The optimal Al/Ti with those presented above, so in case of a ratio in case of the diether type was significantly plant trial, the same MWD curves thus better Polymers of about the same physical properties lower compared to the succinate type's. physical properties would be expected. could be produced by the diether and phthalate type catalysts. In some cases flexular modulus Sample Mw Mn Pd was higher with the diether type. Phthalate ID 318149 93401 3.41 Diether ID 366813 155265 2.36 SUCCINATE CATALYST Succinate ID 343448 79768 4.31 The goals of the plant trial were similar to that of Fig. 5. Average xylene soluble content of the polymers, i.e. donor the diether type, but in this case the main goal response Table 3. GPC results was to make a better pipe material through the Mw – weighted average molecular weight, Mn – number average molecular weight, Pd – Mw/Mn powders’ broader MWD. Average particle size (APS) is an important powder parameter. The higher the APS, the During the plant trial we could easily keep the easier the degassing and catalyst deactivation levels in the steamer and dryer due to higher after the reactors will be, because the fluidization APS of the PP powders. Catalyst consumption of the powder is less complicated. As it can was less due to higher activity. We could Fig. 3. Activities as a function of MFR, i.e. productivity curve be seen on Figure 6, the powders made by differentiate the plant made powders by succinate type of catalyst, has the highest APS, GPC which suggests better behaviour during while the lowest APS was obtained in case of converting at consumers. At higher MFR values the hydrogen response powders made with phthalate type. However, of the diether type was proved to be better than it should be noted that APS is not in direct In case of both new catalysts, ‘angel hair’ (fibre- that of the phthalate type, the hydrogen response relation with the internal donor alone, but also like polymer instead of grain, which is a type of of the succinate catalyst was significantly lower depends on the particle size (diameter) and production defect) formation could be observed than that of the diether and phthalate type (see activity of the catalyst, since in case of Z-N because of the changed morphology but the Figure 4). These results are in conformity with catalysis the final polymer grain will practically problem with the adjustment of the extruder’s those in the scientific literature. be a magnified version of the catalyst particle. feeder could be eliminated. In case of the succinate type (which is designed Fig. 7. GPC curves of polymers to perform better after the bulk loop reactors in Green – Phthalate ID type, Light blue – Diether ID type, Dark blue the gas phase polymerization too), the larger – Succinate ID type Conclusions particle diameter is a requirement. In case of TVK has a development chain which has to be our phthalate type catalyst, particles of smaller Realization of followed when an alternative material has to be diameter are also acceptable because the registered on the list of accepted chemicals. catalyst is mainly suited for the production of the plant trials Before large scale consumption, lab reactor tests and analytical measurements have to prove that DIETHER CATALYST the new material has an equal, or in better case Main goals are as follows: improved quality which would result in cost saving - Improved plant operability or in improved final product properties. - Less volatile content of the final polymer - Production of high MFR reactor grades Based on scientific literature and lab reactor Fig. 4. MFR as a function of hydrogen amount at fill-up, i.e. hydrogen response curve (without controlled rheology) tests we chose two catalysts, which contain - Products of improved physical properties. diether and succinate types of IDs and are Lower xylene soluble content (CXS) was suitable to replace the previous one containing obtained at the powders made by dieter type ID These goals were achieved which can be phthalate ID and recommended them to plant containing catalyst, CXS of the powders made summarized as follows. The bridge plugging and trial. The trial was successful, all products were by succinate type was higher than expected, fluidization problems were eliminated mainly of first grade, and our goals had been reached, which was probably due to the leaching of ID by because of the higher APS thus more efficient so the two catalysts could be registered on the Fig. 6. Average particle size of polymers TEAL (higher Al/Ti mole ratio in case of lab scale drying. list of the accepted polymerization materials.

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References [1] Nexant, Chemsystems: PPE program, Petrochemical Market Dynamics: Polyolefins, Europe, , , July 2010. [2] G. Natta: J. Inorg. Nucl. Chem., 8, 589 (1958) [3] G. Bier: Kunststoffe, 48, 354 (1958) [4] H.F. Mark: Plastic Progress, Liffe, London, 1 (1958) [5] H. Uelzmann: J. Polym. Sci., 32, 457 (1958) [6] K. S. Minsker, M. M. Karpasas, Macromol. Chem. Phys., C27(1), 1-90 (1987) [7] J. Huang – G.L. Rempel: Prog. Polym. Sci., 20, 459-526 (1995) [8] J.P. Hogan – R.W. Myerholtz: Olefin Polymers, 14, 259-308 (1967) [9] Polypropylene: past, present and future: the challenge continues, Ferrara, 19th-20th October 1998. [10] Albizatti, E., et al.: Macromol. Chem. Macromol. Symp., 89, 73-89 (1995) [11] Terano, M. – Kataoka, T. – Keii, T.: Macromol. Chem. 188, 1477 (1987) [12] K.-J. Chu – J. Soares – A. Penlidis – S.-K. Ihm: European Polymer Journal, 36, 3-11 (2000) [13] J. Pater – G. Weickert – J. Loos – W. van Swaaij: Chemical Engineering Science, 57, 3461-3477 (2002)

Keywords: Ziegler-Natta, internal donor, phthalate, diether, succinate

Reviewed by Péter Suba

Imre Balogh is a development engineer at TVK Nyrt. He joined to the company in 2008 as a fresh graduate. His main task is the management of one of the two lab reactors located at TVK’s site which is capable of carrying out polypropylene and high density polyethylene tests. He graduated at the University of Debrecen as chemical engineer.

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medencei projekt kis részletének eredményeit ismerteti. A rendelkezésre álló szénhidrogén- Introduction New results in the kutató és más fúrások eredményeiből The present article is one of the conclusions kiindulva megkísérli lehatárolni a Villány– of a thematically broad project dedicated to Bihari-zónát nyugati és déli irányban, annak recognizing the regularities and clarifying legmarkánsabb, mezozoos képződményeinek the geological build up of the East Drava Mesozoic stratigraphy of beazono­sításával. Szálkőzetet ugyan csak Basin located on the Croatian and Hungarian kivételesen sikerült kimutatni, de kiegészítő sides of the River Drava. Large majority of vizsgálatokkal a miocén üledékciklus nagy the geologists agrees that the nearby hilly vastagságú durva bázistörmelékeiben a and mountainous areas (Villány Hills and the East Drava Basin Villányi-hegységre, illetve környezetére Slavonian [Papuk] Mountains respectively) jellemző jura, sőt kréta képződményeket is are parts of the Tisza tectonic unit (Figure kimutattunk, igazolva egyúttal a hegységből 1) called microplate but there are much less kifutó takarók jellemző felépítését a zóna in accordance regarding the question which nyugati, délnyugati részén is. subunits they belong to. The Drava Basin is located between the Villány Hills and the Géza Császár, DSc Mesozoic formations. Bedrocks of these retired research professor Eötvös Loránd University, Budapest, Hungary formations could only be evidenced [email protected] exceptionally but these kinds of rocks are common in the very thick coarse-grained Lilit Cota BSc geologist, exploration manager basal beds of the Miocene succession. In INA, Zagreb, Croatia addition to the predominating Middle Triassic [email protected] dolomites and limestones Jurassic and even Zsolt Horváth Cretaceous limestones typical for the Villány MSc geologist engineer, project manager Hills they have been also identified here. As MOL Plc., Nagykanizsa, Hungary [email protected] a consequence the nappes characteristic for the Villány Hills are proven in its western and Gyula Konrád, CSc senior lecturer south-western continuation as well. Pécs University, Pécs, Hungary [email protected] Kresimir Krizmanić Sažetak BSc geologist, rocks research and palynology expert Mezozojska stratigrafija istočnog dijela INA, Zagreb, Croatia [email protected] Dravske potoline, novi rezultati András Nusszer MSc geologist, exploration expert Ovom studijom se žele prikazati postignuća MOL Plc., Budapest, Hungary prekograničnog projekta u Dravskoj [email protected] potolini. Temeljem rezultata nafnogeoloških Davor Pavelić, DSc istraživanja i istražnih bušotina, pokušalo se university professor definirati južnu i zapadnu granicu Villany-Bihor University of Zagreb, Croatia [email protected] zone te utvrditi njezine tipične mezozojske formacije. Podloga ovih formacija se može Balázs Szinger utvrditi samo u rijetkim slučajevima ali je MSc exploration expert MOL Plc., Budapest, Hungary njihovo pojavljivanje učestalo u bazalnim, [email protected] izrazito krupno klastičnim naslagama Andrea Szuromi-Korecz, PhD Miocena. Pored dominantnih dolomita exploration expert srednjeg trijasa i jurskih vapnenaca, utvrđeni MOL Plc., Budapest, Hungary [email protected] su čak i kredni vapnenci karakteristični za područje brda Villany. Posljedično, navalake vezane za Villany su dokazane i u zapadnom, jugozapadnom produžetku istraživanog Abstract područja. This study is to show the minor achievements of a multilateral Drava Basin project. Based on the results of the hydrocarbon Összefoglalás prospection and other wells, an attempt is Új eredmények a Kelet-Dráva-medence made to delineate the southern and western mezozoos képződményeinek rétegtanában boundary of the Villány–Bihor Zone with the identification of its most characteristic Jelen közlemény egy átfogó Dráva- Fig. 1. Sketch map showing the geological background and the frame of the study area

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Slavonian Mts and filled with a few thousands Hills [3], (as it is evidenced by the following of metres of Neogene successions, and wells: Se–1, –2 Okorág Ok–1, –2, in spite of the several dozens of wells that and Felsőszentmárton Fel–1) in which the explored them there is no proper information basement of the Miocene is Palaeozoic about the lithology and much less about the metamorphite. The model has not changed age of the basement rock of the Neogene too much up till now as it is shown on the new basin. One of our aims with this paper is to map [4]. However, dolomite and limestone determine the extent of the Villány–Bihor breccia and pebbles are the dominant rock Zone westwards and control how this unit is types in the very thick basal formations of developed. Does it still contain the same or the Miocene succession along the Croatian– similar facies in the Triassic, Jurassic and Hungarian border. More to the west, in the Cretaceous supposing that the latter two Darány area the basement is formed by are also involved into the nappe stack of metamorphites, or granitoid rocks, and they the Villány–Bihor Zone? The uncertainty is do not have Mesozoic limestone or dolomite even greater regarding the question where fragments in the basal conglomerate and the tectonic contact is between the Villány– breccia beds, except the Potony–1 well in Bihor and the Békés–Codru Zones. Just which a few have been mentioned but they as an example according to [1] the Papuk may derive from the Permian as well. Mts are part of the Biharia nappe system, while the majority of the geologists do not Jurassic and Cretaceous formations are take sides. As these tectonic zones are not indicated outside the Villány Hills built basically on the Alpine development where at least Jurassic is found on the and tectonics, practically there is chance surface on the frontal part of each nappe to draw the boundary between these zones [5]. In addition to these both Jurassic and there where Mesozoic succession still exits. Cretaceous limestones were proved in Luckily the Croatian (INA) and Hungarian three hydrological wells out of the Villány (MOL) partners recognized in due time that Hills at . The results of this study the above questions can only be answered are shown in Figure 2. with joint effort. Fig. 2. Geological map of the East Drava Basin without Cenozoic. Legend: 1 Cretaceous, 2 Jurassic, 3 Triassic, TRIASSIC FORMATIONS 4 Permian, 5 Carboniferous, 6 Metamorphic formations, 7 Nappe / overthrust, 8 Normal fault, 9 Strike slip fault Within a narrow belt of the Villány nappe The geological stack area several wells and boreholes (Hegyszentmárton K–5, –5a, –6, Diósviszló background of B–2, K–4, Csarnóta Cs–1, Csr–1, –2, –3, –4, Harkány B–58, Dravaszabolcs K–7, the Mesozoic Túrony T–1, Sz–2, –3, –5) explored Triassic formations. Albeit Triassic bedrocks formations are known to occur only in a few wells to The basement of the study area is formed the west and south-west of the Villány by the Slavonia–Dravia Subterrane [2] Hills including the Hungarian (Cun–1) and composed of metamorphic complexes and Croatian (Podravska Slatina PS–5 Orešac remnants of the carboniferous and Permian Or–1, Or–2 and Miljanovićevo Mlj–1) parts Molasse-type sequences deposited after of the Drava Basin (Figure 2), but there are Photo 2. Conglomerate of prevailingly Triassic limestone and Photo 1. Matrix supported, monomictic breccia, core No 6 (2,407– the Variscan orogeny with some rhyolitic several other wells in which extremely thick dolomites with varied sizes, roundness and colour; surface of a 2,413 m) Moslavina Podravska MoP–1 well. It can be correlated with core No 5 (1,502–1,518 m), Cun–1 well, Pécsszabolcs Fm, Lower volcanic bodies in the middle part of the latter dolomite and limestone conglomerate or the Budafa Fm (Photo by G. Császár) Badenian (Photo by Gy. Konrád) one. They occur in a W-NW–E-SE oriented breccia successions are found at the base narrow belt above the crystalline basement of the Miocene. Usually the lower part of It is very difficult to distinguish them even in core There is only one (Cun–1) well in the area which and below the Alpine succession of the this mainly coarse-grained (occasionally without special studies therewithal corings are contains Lower Triassic (Jakabhegy Sandstone Villány–Bihor Zone. The Alpine succession medium-grained) clastic beds are composed very scars. That is why our paper is focused on Formation — Figure 3). All the rest explored only continued with the same fluvial clastic of monomictic (Photo 1) or oligomictic the investigation of carbonate rocks, with special Middle Triassic limestone and dolomite beds. In character fining upward as it happened breccia which turns into mononomictic (or attention to the non typical Triassic rocks in order the Cun–1 well Lower Triassic greenish-grey in the Permian. The larger part of the oligomictic) conglomerate upwards and to clarify their origin. Because cores were taken and purplish-red Jakabhegy Sandstone with a basement of the study area was supposed the uppermost beds are already polymictic rarely the majority of thin sections were made thickness of 119 m and the 306 m thick Middle to be part of the Villány–Bihor Zone and conglomerate (Photo 2). This regularity from cuttings. As the Triassic rocks have only a Triassic dolomarl-, silty dolomarl- and anhydrite- this idea was supported by the sequence of suggests that the lowermost part can already few micro- and macrofossils it is difficult to get bearing Dolomite Fm of (Photo 3) are the Cun–1 well. The extent of the Mesozoic be bedrock or at least the place of source obvious evidences for the presence of Triassic explored with tectonic contact between the Lower formations is restricted not far to the west limestone and dolomite beds must be very rocks and especially for their stratigraphic and Middle Triassic. That is why the lowermost from the surface occurrences of the Villány close. position. Middle Triassic Patacs Formation is completely

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relatively seldom occurs: oomicrosparitic, bioclastic packstone to grainstone or pelletal grainstone with some bioclasts or forams. The results of partial or total neomorphism at limestones and dolomites are the microsparitic or complete sparitic texture often involving the bioclasts, too.

It is very important to mention, that limestone fragments are found not only above carbonate basement rocks but seldom above crystalline rocks as well (Sellye Se–2). In the one

Photo 3. Thin anhydrite layers in the Middle Triassic Hetvehely Fm, time report of the MOL Lab, Békásmegyer 1,710–1,712 m, Cun–1 well (Photo by Gy. Konrád) Mesozoic type fossils were already mentioned from the limestone pebbles from this well. missing. There are no other occurrences The revision of these thin sections was made of Lower Triassic known from the area. The by B. Szinger (in [6]). According to him in situation is similar in the Orešac Or–2 well, most cases the allochemical components where the highly brecciated Middle Triassic are very few: micritic nodules, occasionally dolomite also contains anhydrite intercalation peloids, ooids and mainly badly preserved which can be correlated with the Hetvehely Fm. microfauna which are benthic forms (forams, The contact between the anhydrite-bearing ostracodes). Ooids have single core dolomite and the metamorphites without doubt occasionally with micritic incrustation. The tectonic probably left lateral displacement or rare oncoids have multi-granular structure overthrust. and multi-generation micritic incrustation. Radial-fibrous ooids are scattered. From the 1,741–1,753 m interval the following taxa have been documented: Pilaminella cf. semiplana (Kochansky-Devide & Pantić) Photo 5, Pilaminella cf. grandis (Salaj) Photo 6, Frondicularia sp. Photo 7, Nodosaria sp. Spirillinid forams Photo 8, crinoid ossicles, Ostracode shells, fragments of Dasycladales (?) and Favreina sp.

Photo 4. Micrograph of typical texture types of the carbonate pebbles of the Lower Badenian Budafa Formation exposed by the Zaláta–1 well from the core interval 3,322.0–3,322.5 m. a) biomicrosparite, bioclastic packstone with echinoderm fragments; b) oomicrosparite, ooidal-bioclastic packstone-grainstone; c) pelsparite, pelletal grainstone with foraminifers (top); d) sparitic micrite-microsparite, with partly recrystallized carbonate bioclasts; e) microsparite; f) biomicrite, bioclastic, filamental wackestone; g) microsparite, with redeposited crinoid ossicle in the matrix (Micrograph by Gy. Konrád)

The texture types of the Middle Triassic formations are summarized in Photo 4 compiled from pebbles of the Lower Badenian Budafa Fm of the Zaláta–1 well, core interval Photo 5. Micrograph of Pilaminella cf. semiplana (Kochansky-Devide & Pantić) in biopelsparitic grainstone, 1,741–1,753 m Sellye Se–2 3,322.0–3,322.5 m. The prevailing texture well (Det. and photo by B. Szinger) type is microsparite of varies crystallinity mainly barren of fossils, or with a few bioclasts (filaments, crinoid ossicle). The The texture, the allochemical components biomicrosparitic, bioclastic packstone with and the taphonomic features clearly indicate echinoderm fragments are less frequent, such a shallow water (platform) high energy as the sparitic micrite-microsparite occasionally depositional environment. The facies Fig. 3. Columnar sections of selected wells for correlation of the basal formations of the Miocene with recrystallized calcitic bioclasts. The characteristics and the foraminifera content packstone- and grainstone-type texture suggest Triassic, Anisian age. These data

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In the Podravska Slatina PS–5 well in some Upper Jurassic Szársomlyó Limestone cuttings (4,150–4,550 m) sporadically Formation was discovered in 53 m thickness have been found forams (Frondicularia sp., without traversing the base of the formation. Nodosaria sp.) that could indicate Middle to The highly karstified limestone is massive, Late Triassic age (but practically the Upper light- or medium-grey in colour, micritic or Triassic is missing in the Villány Unit). microcrystalline in texture with frequent echinoid and a few molluscan shell fragments. JURASSIC FORMATIONS Jurassic formations are known to occur on Varied Jurassic limestones are also found in the surface in the Mecsek Mountains and the Zaláta Zal–1 well (see Figures 3 and 4) as Villány Hills in fundamentally different facies fragments in the lower half (3,322–3,515 m) (Figure 4). The Jurassic of the Mecsek Zone of the basal conglomerate and breccia beds of forms a continuous succession while that one the Miocene succession. The larger part of the Photo 6. Micrograph of Pilaminella cf. grandis (Salaj) in grainstone of the Villány Zone is highly lacunous. breccia-conglomerate belongs to the Budafa Photo 11. Micrograph of ooidic, pelletal grainstone with Globochaete biopel-oosparitic limestone, 1,741–1,753 m Sellye Se–2 well (Det. and Bositra shell fragments, Jurassic in age, cuttings, 3,420 m, and photo by B. Szinger) Formation which to certain extent is different Zaláta–1 well (Photo by G. Császár) A few uncertain indications were found in from the short definition of [7]. Its predominant the Miocene basal breccias / conglomerate component is Triassic dolomite and limestone beds from a few wells. In the Gordisa Grd–2 but Jurassic limestones are prevailing in some borehole (see Figure 2), close to the surface horizons, especially in the interval between 3,394–3,420 m. Their most common types are as follows: mudstone with Globochaete alpina Lombard; bioclastic wackestone to packstone with Bositra fragments (Photos 9–11), calcareous benthic foraminifera (Lenticulina sp. Photo 12), Involutina liassica [Jones], arenaceous benthic

Photo 12. Micrograph of wackestone type limestone with Lenticulina Photo 7. Frondicularia sp., 1,741–1,753 m Sellye Se–2 well (Det. sp. of probably Jurassic age, and microsparry Triassic dolomite, and photo by B. Szinger) cuttings, in 3,510 m, Zaláta–1 well (Photo by G. Császár)

ones) ostracodes, molluscan shell fragments, Cadosina lapidosa Vogler, echinoderm and, Saccocoma fragments and dubious Calpionellids and green algae. There are also ooidic or pelletal grainstone (Photo 13) with ostracodes and Globochaete. The peculiarity of the situation is that the well is located within the Villány Zone but Photo 9. Micrograph of pelletal, Bositra and Globochaete--bearing the fossil association seems to be more complete packstone-type Middle Jurassic limestone, cuttings 3,410 m, Zaláta–1 well (Photo by G. Császár) than it is known in the Villány Hills. It can be explained with the different tectonic influences, including the altitude differences of the blocks. This phenomenon can be recognized in the

Photo 8. Micrograph of Spirillinid benthic foraminifera in biopelsparitic grainstone, 1,741–1,753 m Sellye Se–2 well (Det. and photo by B. Szinger) derive from pebbles from an extraordinary situation, out of the recent extension of the sensu stricto Villány Zone from above the metamorphic rocks.

Regardless of the above mentioned taking into consideration the geological condition in the Fig. 4. Stratigraphic chart of the Jurassic formations of the Mecsek Photo 10. Micrograph of pelletal to ooidic and Villány Zone the age can be Middle Triassic as Zone, the Máriakéménd–Bár Range and the s. str. Villány Range. Bositra-bearing packstone type Middle Jurassic this kind of platform carbonates were formed K.L. = Kecskehát Limestone, MkL = Máriakéménd Limestone, P.L. = limestone, cuttings, 3,410 m, Zaláta–1 well (Photo by G. Császár) exclusively in the Middle Triassic. Pusztakisfalu Limestone, Vl = Villány Limestone Photo 13. Micrograph of ooidic grainstone and packstone, supposed to be Jurassic in age, cuttings, in 3,009 m, Zaláta–1 well (Photo by G. Császár) 112 113

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Máriakéménd–Bár Range and Bóly–Mohács As Ethelia alba is known from the Cretaceous Basin where the Jurassic succession is more to Oligocene in this case the pebbles must complete than it is in the Villány block itself. have derived from the Lower Cretaceous

Green algae fragments were reported from the lowermost Miocene core of the Sellye Se–2 well, from a limestone pebble of the Budafa Formation. As this kind of fossils are also unknown in the Triassic rocks of the Villány Zone and common only in the Jurassic and Cretaceous formations of the close area, the presence of Jurassic and Cretaceous cannot be excluded from the basal conglomerate at Sellye either. A few Radiolarians were also Photo 15. Micrograph of radiolarian- and Globochaete-bearing Photo 20. Micrograph showing mudstone- to packstone-type wackestone-type limestone with a few Bositra shells, and sponge limestones. In the large (upper) cuting rudist shell, in the lower left mentioned from a limestone pebble of this spicules, probably Middle Jurassic, cuttings – 4,850 m, Podravska cutting green algae can be supposed. The age is uncertain, probably well. It is very probable that they also derived Slatina PS–5 well (Photo by G. Császár) Early Cretaceous. cuttings, Zaláta–1 well (Photo by G. Császár) from a Jurassic formation as they are also found in the Jurassic of the Mohács Basin. Photo 17. Micrograph of wackestone type limestone with Quinqueloculina cf. robusta Neagu, Lower Cretaceous; cutting 3,394 m, Zaláta–1 well (Photo by Szuromi-Korecz) According to the report of [8] Middle and Upper Jurassic fossils were identified in the limestone and even dolomite pebbles derived from the Budafa Fm of the Cun–1 well. Unfortunately the thin sections containing these fossils were not available for control.

In addition to the Middle Triassic forams within the interval 4,670–4,910 m of the Podravska Slatina PS–5 well the following fossils were identified in thin sections made from cuttings:

Saccocoma (Photo 14), Bositra (Photo 15), Photo 16. Calcitized radiolarian wackestone of probably Middle or Photo 21. Micrograph of floatstone limestone with molluscan shell Radiolarian (Photo 16), shell fragments, Late Jurassic age and pelletal, intraclastic (coprolithic?) grainstone, fragments of Jurassic or Cretaceous age, cuttings – 4,850 m, echinoderm spine and Globochaete (?). 4,705 m, Podravska Slatina PS–5 well (Photo by G. Császár) Podravska Slatina PS–5 well (Photo by G. Császár)

Photo 18. Micrograph of Ethelia alba (Polystrata alba PFENDER), The first two elements are clear indication CRETACEOUS FORMATIONS Miliolina sp, rudists and other bivalve shell fragments in Lower Taking into consideration the fact that the great of the Middle and Late Jurassic age. This Cretaceous limestone is also known in situ in Cretaceous packstone- to floatstone-type limestone, cuttings majority of the Jurassic fossils listed under association agrees with those found within the Gordisa Grd–1 and Grd–3 boreholes with 3,394 m, Zaláta–1 well (Photo by G. Császár) the previous subheading indicate pelagic and the breccia of the Miocene Budafa Fm of the a thickness of 13 and 185 m respectively. The deep water environment, these algae probably Zaláta Zal–1 well. Urgon Nagyharsány Limestone [9] is grey to Nagyharsány Limestone Formation. According belong to the Lower Cretaceous. dark-grey, rudistid, gastropoda- and foraminifera- to Piros there are also a few badly preserved, (Miliolidae-) bearing, with mudstone to packstone unidentifiable Dasycladalean algae (Photo type texture. The lower 43 m of the Grd–3 borehole 22), which can be Late Jurassic or Early was suggested by the describer to belong to the Cretaceous. Upper Jurassic Szársomlyó Limestone Formation but based on the description it is hard to find reason not to leave it as Cretaceous.

While studying the thin sections made from the cuttings and cores of the breccias-conglomerate beds of the Zaláta Zal–1 well (3,394 m — Figure 3) in a few samples Miliolid forams: Glomospira urgoniana Arnaud-Vanneau, Vercorsella? sp., Quinqueloculina cf. robusta Neagu (Photo 17 Photo 22. Micrograph wackestone to packstone limestone with Salpingoporella, other green alga and rudist shell fragments, Lower — det. by Szuromi-Korecz), one Ethelia alba Cretaceous, cuttings, 3,394 m, Zaláta–1 well (Photo by G. Császár) Photo 14. Upper Jurassic wackestone-type radiolarian limestone (Polystrata alba Pfender Photo 18), dubious with Saccocoma, Globochaete, echinoid spine, and a few mollusc shell fragments. In this thin section mudstone- and wackestone-type green algae, 1 Orbitolina sp. (Photo 19), small limestone are dominating, while sparry dolomite are scarce, 4,670 m, fragments of rudist-like bivalve (Photo 20) and Photo 19. Micrograph of limestone with micritic matrix and a In a report [10] Cremušina Cr–1 was the Podravska Slatina PS–5 well (Photo by G. Császár) fragment of Orbitolina sp., Lower Cretaceous; cutting 3,394 m, some other bivalves (Photo 21) were discovered. Zaláta–1 well (Photo by G. Császár) only well from which possible Cretaceous

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PS–5 wells the Jurassic and in part the hard to accept the model of [1] according Cretaceous samples are found in a relatively to which these mountains are part of the high frequency and namely more or less on the Biharia Zone. same horizon (Figure 5). From this correlation the following inference can be drawn: Acknowledgement 1. The Jurassic (and Cretaceous) could have The authors thank the staff of MOL and been an extended body during the Middle INA companies that all the way through the Miocene research they strongly supported this activity the minor result of which is introduced above. 2. The Jurassic (and Cretaceous) rocks may derive from the same distance (from the same nappe — probably the Babarcszőllős References Nappe) [1] Kemenci, R. – Čanović, M.: Geologic setting of the pre-Tertiary basement in 3. Based on Figure 5 it can be predicted Vojvodina (Yugoslavia). Part I. The Tisza with high likelihood that the Jurassic rock Megaunit of North Vojvodina. — Acta fragments are involved in the Miocene Geologica Hungarica 40/1, 1–36. (1997) basal breccia of the wells Dravica Dra–1 [2] Kovács, S. – Szederkényi, T. – Haas, J. – and the Moslavina Podravska MoP–1. In Buda, Gy. – Császár, G. – Nagymarosy, A.: brackets, we believe that this is the case Tectonostratigraphic terranes in the pre- with the tuff horizon marked in the wells Neogene basement of the Hungarian part PS–5 and Zaláta Zal–1. It is regrettable of the Pannonian area. — Acta Geologica that the prospect could not pay a little bit Hungarica 43/3, 224–328. (2000) more attention to coring on both sides of the [3] Fülöp, J. – Dank, V. (chief eds): River Drava. Magyarország földtani térképe a kainozoikum elhagyásával (Geological map of Hungary without Cenozoic). — A Conclusions Magyar Állami Földtani Intézet kiadványa, 1. The admissible variety of fossils gave Budapest. (1987) clear evidences that nappe found in the [4] Haas, J. – Budai, T. – Csontos, L. – Fodor, Villány Hills are continuing to the west with L. – Konrád, Gy.: Magyarország pre- the same characters known in the Villány kainozoos földtani térképe, 1:500 000 Hills, namely they contain relatively thick (Pre-Cenozoic geological map of Hungary, and almost continuous development of 1:500 000). — A Magyar Állami Földtani Jurassic and occasionally also Cretaceous Intézet kiadványa, Budapest (2010) formations. [5] Fülöp, J.: Les formations Crétacées de la Montagne de Villány. — Geologica

Fig. 5. Litho- and chronostratigraphic correlation of the lower part of the wells Podravska Slatina PS–5, Dravica Dra–1, Zaláta Zal–1 and 2. The Jurassic succession seems to be more Hungarica, ser. Geologica 15, 131 p. Moslavina Podravska MoP–1 located along the River Drava complete in the study area than it is in the (1966) Villány Hills. It means that along the strike of [6] Farkas, I. – Nusszer, A. – Szinger, B. – sedimentary rock was mentioned. Although Triassic of normal marine origin has been the Villány–Bihor Zone the completeness of Szurominé Korecz, A. – Kocsis, M. –, Ladislavci doesn’t belong to the study area found in the basal breccias / conglomerate the succession and the facies are altering, Krausz, S. – Nagy, A. – Szabó, Cs.: Report since it is very close to our field and part beds of the Miocene succession, namely and the development in the Drava Basin is of re-examination of selected core samples of the same tectonic unit it is worth while almost exclusively from cuttings. Because comparable with the one developed in the from the eastern part of the Drava Basin, mentioning that [11] reported varied size of of the scarcity of microfossils of the Middle Bóly–Mohács Basin. Hungary. — MOL Plc. Hungarian Oil & Lower Cretaceous limestone fragments from Triassic in the Villány Zone and the dispersion Gas Company Exploration & Production; the rockfall breccias and also olistolith of of samples the succession cannot be chopped 3. In addition to our study data of [11] also IMA, New Technologies & R+D, Geological cataclasyzed limestone from there. stratigraphically. support the idea that the entire study Group, 101 p. (2010) area is part of the Villány–Bihor tectonic [7] Hámor, G.: Budafa Formation. — In: The situation is similar in the case of Jurassic zone, namely the boundary line between Császár, G. (ed.): Basic Lithostratigraphic Discussion and Cretaceous albeit Jurassic and in particular the Villány–Bihor and the Békés–Codru units of Hungary. — Geological Institute of There was only one well (Cun–1) from among the shallow marine Cretaceous formations Zones cannot be marked. Without special Hungary, Budapest, 41–42. (1997) the wells the Triassic could be investigated are abundant in fossils and their stratigraphic investigation we are unable to decide [8] Bakony, I. (szerk.) – Jámbor, Á. – from core of bedrock. Unfortunately this well values are higher but the number of their whether the Slavonian Mountains belong Guzyné – Petrásné – Kovács M.-né cut through the non-marine Lower Triassic samples is irrelevant in comparison with the to the Villány–Bihor or to the Békés–Codru – Kocsisné – Ravasz, Cs. – Lénárd, T. and the hypersaline lower part of the Middle Triassic ones. In spite of these difficulties in Zones. At the same time because of the – Zilahy – Földváriné Vogl M. – Viczián, Triassic tectonically. The rest of Middle both the Zaláta Zal–1 and Podravska Slatina presence of Mesozoic formations it is I. – Ravaszné –Baranyai, L. – Hózerné

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– Petróczyné – Lőrincz – Nagy L.-né – Koreczné – Korpásné – Hódi, M.: A Cún–1 fúrás földtani vizsgálatának értékelése. — Kézirat, MÁFI, Középhegységi Osztály kézirattára, 94 p. (1977) [9] Császár, G.: Urgon formations in Hungary — Geologica Hungarica, ser. Geologica 25, 209 p. (2002) [10] Pavelić, D. – Tomljenović, B. – Vranjković, A.: Tectonic model, sedimentary environments and depositional mechanisms of potential hydrocarbon reservoirs in the middle and western part of the Drava Depression from the basement to the Miocene. — Manuscript, Zagreb University, 63 p. (2010) [11] Tišljar, J.: Sedimentary bodies and depositional models for the Miocene oil- producing areas of Ladislavci, Beničanci and Obod. — Nafta 44/10, 535–542. (1993)

Reviewed by Viktor Sőreg

Géza Császár is retired Research Professor at the Eötvös Loránd University, Budapest. He was co-leader of the IGCP Project 262, President of the National Committee for CBGA, Chairman of the Stratigraphic Commission of Hungary, Chairman of the Geological Scientific Committe for the Hungarian Academy of Sciences. His main interest is the stratigraphy, carbonate sedimentology, palaeogeography and regional geology. His main achievement is the recognition of a special type atoll developed on continental crust, called Mecsek type atoll. MSc (1966), PhD (1984), Habilitation (1999), DSc (1999).

Slightly folded and strongly tilted Upper Jurassic and Lower Cretaceous limestones with Upper Cretaceous basalt dyke (on the left side) from the Szabolcs Valley quarry, Tenkes Hill, Villány Hills (Photo by G. Császár)

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‘Killing two birds with one stone’ – Barlahida 3D second stage: successful geological and geophysical interpretation

László Pollner, PhD quantitative approaches of seismic events Senior geophysicist MOL Group, E&P, IFA are highlighted in the present article. [email protected] Successful integration of geological methods Marianna Vincze Senior geologist led to better understanding and modelling of MOL Group, E&P, IFA Pannonian turbidite bodies in the Zala basin. [email protected] As a consequence, several stratigraphic and Fig. 1. Progradational delta environments combined HC traps could be identified and delineated as prospects. play concepts and powerful integrated „Gold and silver are mined, then purified; the geoscientific approach. Geological setting same is done with iron and copper. The Pannonian series are well known in the Miners carry lanterns deep into the darkness Összefoglalás As for the concepts, traditionally and domestic exploration. Therefore we speak about to search for these metals. „Két legyet egy csapásra” – Barlahida 3D conventionally exploration in this region it’s special feature in Barlahida area. They dig tunnels in distant, unknown places, második szakasz: sikeres geológiai és targeted Mesozoic basement, however where they dangle by ropes. geofizikai értelmezés several wells encountered hydrocarbons The areal extend of 3D survey covered the whole Far beneath the grain fields, fires are built to (primarily gas) in the Pannonian sequence. deposition system, from the alluvial plain to the break loose those rocks that have jewels or Az új play koncepció és az integrált geológiai- Some of these hits were mere lucky chances basinal marls (Figure 1). Thus we could build the gold. geofizikai értelmezés eredményeként új of testing upper levels after a less successful progradational sequences step by step. Miners go to places unseen by the eyes of távlatot sikerült nyitni a Zala-medence target in the basement. In spite of these hawks; they walk on soil unknown to the szénhidrogén kutatásában. findings, many questions remained open in When we built up the general deposition model, proudest lions. connection with the explored gas fields as well we look for the unique of sedimentological With their own hands they remove sharp A régió “érett terület” a megkutatottság as with the future potential of the Pannonian face. The result was very interesting. rocks and uproot mountains. tekintetében. Valamennyi szerkezeti until recent years. Without ignoring the They dig through the rocks in search of jewels magaslatot számtalan fúrás harántolta. further potential of the Mesozoic, exploration We pick up the following single traits connecting and precious metals. Ezért a relative mélyebb helyek a kutatás has now changed focus to Pannonian the reservoir lineation and position: They also uncover the sources of rivers and perspektivikus területei. through updating play concepts and initiating 1. The area is rich in turbidites (see Figure discover secret places.” systematic exploration efforts. 2) without lowstand system tract, without Job 28.1-11. A szeizmikus információk sokféle mennyiségi erosion of higher structural position [2,3] és minőségi megjelenítését és felhasználását As for the approach, 2008 opened the way 2. The area has got no end of turbidites in mutatjuk be. A földtani módszerek segítettek in the form of a new 3D seismic acquisition, numberless horizons but the turbidites have Abstract megérteni és modellezni a Pannóniai turbidit which enabled us to use integrated, state- got very restricted coverage Updated play concepts and powerful homokkövek elterjedését és litológiáját a of-the-art exploration methods to exploit 3. On the delta slope we detect ‘braided river integrated geoscientific interpretation Zala-medence e részén. the most of the accumulated and acquired series’ as feeder channel of the turbidites. resulted in successful renewal of exploration information, i.e. ‘finding and killing the efforts approach in the Zala basin (Hungary). birds’. The present article shows highlights What do the above mentioned facts mean? It is a ‘matured area’ in exploration Introduction of the methods used and the way how these 1. Turbidites without erosion: possibilities. Every structure is penetrated Can exploration be renewed in a mature were integrated into a powerful model. - Rich sediment supply from the alluvial plain, by several wells. Thus the relatively deeper hydrocarbon basin where literally thousands The reader may refer to an earlier article minor deltas with several distributary channels structural positions are the prospective area. of wells had already been drilled? The answer in MOL Scientific Magazine 2010/3 on the - No shelf, no sedimentation near the coast Several successfully applied methods of turned out to be – yes. Yes, even in the case acquisition and processing of 3D seismic line, the whole range of sediments moved visualization, delineation and definition of of the Zala basin, the cradle of Hungarian [1], which may also reveal what birds are into the basin by the delta slope feeder exploration targets as well as qualitative and oil exploration. And the clue is in updated mentioned. channels.

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2. No end of turbidites with restricted coverage: is the following. - Very complex coast line, with several streams, deltas as multiply sediment Generally, the horizon interpretation technique sources depends on the purpose. Stratigraphic traps - Short distance between the sediment were the targets in the siliciclastic Pannonian source and the depositional area, short deposition system. According to the basic route on the slope. concept people use the same reflector in the 3. ‘Braided river series’ on the slope: whole area. We know that it is impossible to - No clear incised valley on the slope, but keep on the 300 km² area. wide migration of the feeder channels There were individual decisions in several cases how to follow the convergent and divergent or disappearing reflections. The sedimentological model and feature as back knowledge helped to interpret the exact horizon (see Figure 3).

Attribute analysis is a well known working step. But how can we decide whether an attribute map has geological meaning?

Fig. 3. Seismic interpretation across the exploration target In Barlahida 3D area there was a basic problem: the reflection pattern did not show the sedimentological feature according to techniques. In Barlahida primary focus was on Fortunately, an arsenal of methods is available attribute image. It raised the question how we detecting, interpreting and delineating turbidite to help interpreters detecting and delineating can validate the geological content of attribute channel sand bodies, and providing guidance for thin channel sands. These range from simple maps. stratigraphic interpretation and model building. attribute maps through spectral bluing to Difficulties associated with the small thickness spectral decomposition techniques [4]. The paleoenvironment and sedimentological of these sand bodies had to be overcome. model represented another serious risk factor, because of mainly stratigraphical trap type. We detected many-many separated turbidite bodies and channels with different shapes in different deposition positions. The lithological prediction proved to be a great challenge because of the different clay and silt content of sand bodies. There is no clear sandstone generally, but clay and silt beds and grains in the reservoirs. Fig. 2. General lithological columns with the target zone Separation of the potential reservoirs was performed on different aspects: such as the - Relatively gentle dipping on the slope. lithology and the good position of the targets regarding both lithological changes and the migration path (see Figure 4). Geological interpretation Extracting technique information from When we start to interpret a new 3D survey the 3D seismic we exploit general knowledge and practice that lies within the organisation. But the key of cube success is to find individuality of interpretation A 3D seismic cube contains a huge amount technique and of the geological setting. of digital data, of which interpreters extract information important for geological model The speciality of the Barlahida 3D interpretation building by elaborated processing and visualizing Fig. 4. Seismic attribute and depositional model of the exploration target

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reference horizon along which slicing is Interpreted data helped defining the structure done, is crucial to obtain good quality slices, of the reservoir, while attribute analysis especially in the case of thin channels. contributed to the estimation of reservoir Knowledge obtained on channel evolution parameters within the 3D model. was then extensively utilized and integrated into paleoenvironment reconstruction and Multi-attribute analysis is always a statistical stratigraphic model building. estimate, and as such it is probabilistic. However, with a suitable geological model in the background a physical, petrophysical 3D visualization casual link can be established between the spatial variability of the estimated parameter and model building and the resulting petrophysical variability of Advances in software technologies and computer rocks. Rock properties can directly influence graphics have an impact on exploration methods the spatial variability of the shape of seismic Fig. 9. Light in the dark – successful test of the first well of the [5]. Today we are in a position to delineate and reflection waves and the computed seismic exploration project analyze underground geological objects such attributes. as sand bodies in three dimensions. Fancy 3D give a scientifically sound estimate, two key graphical representation of underground targets components were required: (such as on Figure 6) is not only l’art pour l’art – An integrated geological background model visualization, but also a handy tool for interactive to establish an indirect petrophysical link discussion and communication of ideas and between spatial permeability variations and problems among exploration team members as seismic attributes, and well as for 3D model building and well planning. – Proper pre-conditioning of well data Fig. 5. A series of slices from a reflection strength cube showing changes and evolution of turbidite channels (permeability) to achieve the best possible statistical correlation between permeability A successfully used example in Figure 5 Seismic reservoir and attributes. demonstrates that even such simple and basic tool as reflection strength computation parameter The former one was fulfilled by the model can be of great value if properly combined presented in preceding sections. An essential with horizon slicing. estimation element was identification and differentiation Seismic attributes and attribute maps can be of the role of different types of clay content of Fig. 8. Permeability map of gas reservoir calculated using seismic Reflection strength attribute was used to used not solely for qualitative interpretation, attributes the sandstone reservoir. eliminate phase effects, due to small errors detecting and defining inner structure and and variances in horizon interpretation and boundaries of a geological object, but also In our case the major rock property factors The latter one is based on a special technique interpolation, which otherwise diminish for quantitative estimation of certain reservoir influencing seismic attributes were published also in MOL SM 2009/1 [6]. The key geological information. parameters. – Changes in thickness of reservoir is to selectively correlate permeability values – Changes in rock matrix composition (clay to seismic data according to macro- and The series of slices from top left to bottom content and type) microporosity classes. right correspond to channel evolution in – Porosity changes and geologic time. The series is even more – Saturation. Statistical multi-attribute analysis of seismic revealing if it is viewed in an animation These effects can not be distinguished from and well data by HRS ISMap resulted (click on Fig. 5). Careful selection of a each other by sole attribute analysis, but an in parameter maps of the logarithm of integrated approach using well data (logs and permeability in the reservoir. Figures 7 and 8 tests) and seismic together is able to result in show correlation of a seismic attribute to well the 3D spatial distribution model of a specific test data and the associated permeability map reservoir parameter (e.g. porosity or rock matrix of the reservoir respectively. composition). 3D parameter distribution in turn can then be utilized in reservoir model building. Summary In the case of our reservoir we faced a Successful integration of geological methods somewhat unusual situation, where porosity led to better understanding and modelling of estimation failed due to poor correlation with Pannonian turbidite bodies in the Zala basin. Fig. 7. Correlation between seismic and well data seismic attributes, and total porosity was As a consequence, several stratigraphic and also known not to be indicative of better or combined HC traps could be identified and Parallel to exploration, Barlahida seismic data worse reservoir zones. To solve the puzzle, delineated as prospects. were also used to help building a reservoir we introduced a novel approach, in which Fig. 6. 3D volume rendered image of a seismic attribute with delineated sand bodies model of an already existing gas reservoir. permeability was directly estimated from Building a powerful model with integration of (Another one of the birds to be killed.) well data and seismic attributes. In order to several geo-disciplines is a scientific success

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in itself, which can not be underestimated, developing in Pannonian series. Geographical but the proof of the pudding is in the eating. areas: Hungarian Plain, Zala-basin, Romania And the primary proof of a geologic model is and partly the middle part of the West-Siberian in a commercial well. In June 2011 the first Basin. She is a member of successful groups prospect was targeted by a well and gave of HC-exploration. She graduated at University successful result (Figure 9). of Szeged (geography - geology). Acknowledgement Authors would like to express their thanks to all members of Barlahida and PEFAG teams. References [1] Ferenc Regős – István Sebe – Géza Wittmann, PhD: Killing two birds with one stone - Barlahida 3D seismic acquisition and processing, MOL SM 2010/3, pp. 50- 57. [2] Harold G. Reading, Marcus Richards: Turbidite systems in deep water basin margins classified by grain size and feeder system, AAPG Bulletin, V. 78, No.5 Page 792-822. [3] Siliciclastic sequence stratigraphy in well logs, cores and outcrops, AAPG Methods in Exploration Series, No. 7. [4] Partyka, G. – Bottjer, R. – Peyton, L.: Interpretation of incised valleys using new 3-D seismic techniques: A case history using spectral decomposition and coherency: The Leading Edge, pp.1294- 1298. (1998) [5] Huw James – E. Ragoza – T. Kostrova: A new method of volume rendering applied to a seismic dataset of the Barnett shale, First Break, Vol 29/3, (2011) [6] Miklós Váry: Macro- and microporosity – a new approach in reservoir geologic modelling, MOL SM 2009/1, pp. 37-46.

Keywords: mature area, turbidite, seismic event-geological information, seismic attribute, 3D visualization

Reviewed by István Czeller

László Pollner, PhD works for MOL since 1998 as seismic interpreter and modeller in domestic and Middle-East exploration and development projects (senior geophysicist). He graduated at Eötvös Loránd Science University, Budapest in 1994, and awarded PhD at University of Technology an Economics in 2000.

Marianna Vincze scope of activities: stratigraphy, sedimentology, geomodel

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the organisational reform of the Hungarian oil industry, which took place 20 years ago, was the largest-scale task of his professional Gábor József career. From October 1991 on, he held the position of Managing Director of MOL, and was responsible for international relationship (1937-2011) management and PR works aimed at developing the identity of the newly formed MOL. In particular, his duties involved the development of international professional relationships, the coordination of co- operation with multinational companies, and the establishment of the corporate share office. In addition, he was member of the during his primary, secondary and university Expert Committee on Energy Policy of the studies. He participated and won a national Hungarian Academy of Sciences (MTA), academic achievement competition in and held the position of Secretary of the chemistry in the secondary school and Hungarian National Committee of World was enrolled at the University of Veszprem Petroleum Congress. He was lecturer and without entrance exam. In 1960, he earned co-presenter at numerous international oil his degree ‘summa cum laude’ in chemical business events and congresses. engineering, at University of Veszprém, Chemical Mineral and Coal Processing He also held the position of President of the Industry Department. Petroleum and Petrochemical Section of the Hungarian Chemists' Society during the Between 1960-1970, Mr. Gábor József 1990s. worked as a factory manager and deputy head of the manufacturing facilities at Mr. Gábor József retired from his position in Almásfüzitő site of Komárom Oil Company. 1995 and gave back his technical and legal mandates afterwards. He became a member of the team conducting the large scale investment of Tisza Oil Mr. Gábor József was an excellent oil industry Refinery (TIFO) in 1970. From 1973, he professional. He was a man of continuity, a worked as Head of Technology and Technical representative of high-standard team-work. Development Department, at TIFO. As a Throughout his life, he aimed to find the culmination of his early engineering career, answer if he did everything possible in order he formulated the technical concept of Tisza to continuously gain knowledge and how to Mr. Gábor József (1937-2011), former deputy and managed the implementation master creativity. In his memoirs, he always CEO of OKGT (Hungarian National Oil and of the greenfield investment. As the Head considered himself a team player, and it was Gas Trust), retired managing director of MOL of Technology and Technical Development always his intention to achieve this. He also (Hungarian Oil and Gas Company), passed Department, he had decisive role in the claimed that the clue to success, besides away at the age of 75, on September 11, planning, the coordination of construction, team work, lies in continuous learning. 2011. He was one of the founders of Tisza and the implementation of subsequent Oil Refinery (TIFO) and the former President improvements at the refinery. He will be remembered for his outstanding of the Petroleum and Petrochemical Section human qualities and excellent leadership- of Hungarian Chemists' Society. His funeral Mr. Gábor József was selected and got the skills. He will be deeply missed by his family, took place at the National Cemetery, Fiumei position of Deputy Chief Technical Officer of former class-mates and colleagues. We Street, Budapest on 29 September. His fellow OKGT in 1985. Among his responsibilities, will cheris Mr. Gábor József's memory with colleagues, former superiors and class- we would find the management of petroleum respect and affection. mates accompanied him on his last journey. refining, hydrocarbon trading, gas distribution services and the monitoring of information Mr. Gábor József was born in technology of the Company Headquarter. Dicsőszentmárton, Transylvania, in 1937. He He participated in the preparatory works and his family arrived in Hungary in 1940 and aiming the privatization of the Hungarian settled their home in the town of Ajka. He oil industry, and in the foundation of MOL in always delivered outstanding performance 1991. Mr. József claimed that participating in

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As a result of his development-oriented policy Duna Refinery became the largest individual company in Hungary (in terms of yearly turnover Ernő Rátosi, Dr. according to the Hungarian weekly ‘Figyelő’). He builds a team from excellent experts. His charismatic personality holds him up as a model for peers and subordinates. He supports is 80 years old the young people, draws attention to their professional education and stands for the promising initiatives.

For a long time he is a titular assistant professor of Veszprém University (Hungary). He is the vice-president of Hungarian Chemical Society in 1985-1990 and he plays a very active role in a sectorial chief engineer in the Ministry of the implementation of the Society’s initiative to Heavy Industry. In 1969 he takes the place outline the prospects of the Hungarian chemical of the chief technologist of Duna Refinery industry. (Százhalombatta), Mr. László Hága, who passed away in a tragic refinery accident Mr. Rátosi’s activity is recognized and rewarded in 1968. In 1973 he becomes the technical with, among others Eötvös Loránd-prize in deputy director, and in 1975 as the successor 1979, Pfeiffer Ignác-medal in 1985. In 2002 of Mr. Béla Péceli the director (later general the freedom of University of Veszprém was director) of Duna Refinery. He retires from presented to him. In 2007 he receives the Life’s Duna Refinery at the end of 1991 and work prize of MOL. subsequently becomes the member of the first Board of Directors of MOL headed by Mr. Rátosi still keeps track of development count Pál Teleki. After leaving this position activity and business results of MOL Group, in 1995, he remains an active participant of inquires after young generation’s work. In the modernization of the oil and gas industry the wide circle of his direct and indirect and serves as an advisor at Refining and acquaintances he enjoys high recognition, Marketing and Petrochemical Divisions up to esteem and respect up to now. the end of 2003. His eightieth birthday is remembered without His name is linked with the configuration of the presence of his wife who passed away on the complex oil refinery, implementation of New Year’s Eve of 2010 but in the company a deep conversion process, introduction of their three sons with families, including six and production of high quality products grandchildren. May God give him long life and Ernő Rátosi, Dr. the former general director recognized by both the industry and the good health. of Duna Refinery (Százhalombatta), the market and laying the foundation of local and doyen of the Hungarian crude oil processing international co-operation with marketing and industry, known and recognized by many industrial companies. The most important people is 80 years old. investment linked to Mr. Rátosi is the fluid catalytic cracking (FCC) plant (1984) leading He is born on 4th of October, 1931 in a Western to considerably higher efficiency of crude Hungarian village, Zalagyömörő. He graduates oil processing and notable product quality in 1960 as a chemical engineer at Veszprém improvements. As a result of this investment University. Later he also receives degree in the oil industry became the most important petrochemistry (1973) and technical doctor ‘hard currency’ export sector in Hungary. In degree (1981) from the same university. a later conversation Mr. Rátosi remembered Besides his native Hungarian he speaks FCC-investment as follows: “This was the German and Russian. culmination of my carrier, the greatest victory, and the best solution in technical terms... That Mr. Rátosi starts his carrier at Csepel Oil time there was no such plant in the Eastern Refinery (a former Shell refinery in Budapest) bloc... Such world class technology in the as a chemical engineer in 1960. From Western world was implemented only in a few February of 1968 to June 1969 he works as refineries.”

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