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Vikas Wsp Ltd.

BSE: 519307 Sector: Industrials
NSE: VIKASWSP ISIN Code: INE706A01022
BSE 00:00 | 20 Oct 5.08 -0.24
(-4.51%)
OPEN

5.35

HIGH

5.35

LOW

5.00

NSE 00:00 | 20 Oct 5.05 -0.30
(-5.61%)
OPEN

5.30

HIGH

5.35

LOW

5.00

OPEN 5.35
PREVIOUS CLOSE 5.32
VOLUME 312050
52-Week high 8.11
52-Week low 3.68
P/E
Mkt Cap.(Rs cr) 104
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5.35
CLOSE 5.32
VOLUME 312050
52-Week high 8.11
52-Week low 3.68
P/E
Mkt Cap.(Rs cr) 104
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vikas Wsp Ltd. (VIKASWSP) - Chairman Speech

Company chairman speech

VIKAS WSP LIMITED ANNUAL REPORT 2010-2011 DIRECTOR'S REPORT Dear Shareholders, It is my privilege to place before you the highlights of your company's performance during the financial year 2010-11. Details of the achievements and initiatives taken by your company are provided in the enclosed Annual Report for the year 2010-11. Through ongoing research and development (R&D) in the fields of hydrocolloids (guar gum polymers) for hydro-fracturing to extract mineral oil and natural gas from the shale rock matrix (sedimentary rocks) formed by the accumulation of sediments at the Earth's crust and within bodies of water that include sandstone, limestone, and shale, your company has produced novel guar gum tailor-made products. This is the main reason for the increased demand of guar gum products in the global market during the last 12 months and is expected to grow further in the years ahead. Guar gum polymers for food use has witnessed a moderate growth during the period under review as in the developing countries, the population growth is negligible. However, the main demand driver is the mineral oil and natural gas industry wherein guar gum derivatives are used in abundance for hydraulic fracturing. What is hydraulic fracturing and how it works-Hydraulic fracturing is the propagation of fractures in a rock layer caused by the presence of a pressurized fluid. Hydraulic fractures form naturally, as in the case of veins or dikes, and is one means by which gas and petroleum from source rocks may migrate to reservoir rocks. Energy companies may attempt to accelerate this process in order to release petroleum, natural gas, coal seam gas, or other substances for extraction, where the technique is often called fracking or hydrofracking. This type of fracturing, known colloquially as a 'frack job' (or 'frac job'), is done from a wellbore drilled into reservoir rock formations. The energy from the injection of a highly-pressurized fracking fluid creates new channels in the rock which can increase the extraction rates and ultimate recovery of fossil fuels. When done in already highly-permeable reservoirs such as sandstone-based wells, the technique is known as 'well stimulation'. Operators typically try to maintain 'fracture width' or slow its decline following treatment by introducing a proppant into the injected fluid, a material, such as grains of sand, ceramic, or other particulates, that prevent the fractures from closing when the injection is stopped. Consideration of proppant strengths and prevention of proppant failure becomes more important at deeper depths where pressure and stresses on fractures are higher. Distinction can be made between low-volume hydraulic fracturing used to stimulate high-permeability reservoirs, which may consume typically 20,000 to 80,000 gallons of fluid per well, with high-volume hydraulic fracturing, used in the completion of tight gas and shale gas wells; high-volume hydraulic fracturing can use as much as two to three million gallons of fluid per well. Mechanics: Fracturing in rocks at depth is suppressed by the confining pressure, particularly in the case of tensile fractures which require the walls of the fracture to move apart. Hydraulic fracturing occurs when the effective stress is reduced sufficiently by an increase in the pressure of fluids in the rock such that the minimum principal stress becomes tensile and exceeds the tensile strength of the material. Fractures formed in this way will typically be oriented perpendicularly to the minimum principal stress and for this reason, induced hydraulic fractures in wellbores are sometimes used to determine stress orientations. In natural examples, such as dikes or vein-filled fractures, their orientations can be used to infer past stress states. Induced hydraulic fracturing: The technique of hydraulic fracturing is used to increase or restore the rate at which fluids, such as oil, water, or natural gas can be produced from subterranean natural reservoirs. Reservoirs are typically porous sandstones, limestones or dolomite rocks, but also include 'unconventional reservoirs' such as shale rock or coal beds. Hydraulic fracturing enables the production of natural gas and oil from rock formations deep below the earth's surface (generally 5,000-20,000 feet or 1,500-6,100 m). At such depth, there may not be sufficient porosity, permeability or reservoir pressure to allow natural gas and oil to flow from the rock into the wellbore at economic rates. Thus, creating conductive fractures in the rock is essential to extract gas from shale reservoirs because of the extremely low natural permeability of shale, which is measured in the microdarcy to nanodarcy range. Fractures provide a conductive path connecting a larger area of the reservoir to the well, thereby increasing the area from which natural gas and liquids can be recovered from the targeted formation. So- called 'super fracking'-creating longer, deeper cracks in the target reservoir formation to release more oil and gas-will allow companies to frack more efficiently. While the main industrial use of hydraulic fracturing is in stimulating production from oil and gas wells, hydraulic fracturing is also applied to: * Stimulating groundwater wells * Preconditioning rock for caving or inducing rock to cave in mining * As a means of enhancing waste remediation processes, usually hydrocarbon waste or spills * Dispose of waste by injection into deep rock formations * As a method to measure the stress in the earth * For heat extraction to produce electricity in an enhanced geothermal systems Method A hydraulic fracture is formed by pumping the fracturing fluid into the wellbore at a rate sufficient to increase pressure downhole to exceed that of the fracture gradient of the rock. The rock cracks and the fracture fluid continues farther into the rock, extending the crack still farther, and so on. To keep this fracture open after the injection stops, a solid proppant, commonly a sieved round sand, is added to the fluid. The propped fracture is permeable enough to allow the flow of formation fluids to the well. Formation fluids include gas, oil, salt water, fresh water and fluids introduced to the formation during completion of the well during fracturing. The location of one or more fractures along the length of the borehole is strictly controlled by various different methods which create or seal-off holes in the side of the wellbore. Typically, hydraulic fracturing is performed in cased wellbores and the zones to be fractured are accessed by perforating the casing at those locations. Well types: While hydraulic fracturing is many times performed in vertical wells, today it is also performed in horizontal wells. Horizontal drilling involves wellbores where the terminal drillhole is completed as a 'lateral' that extends parallel with the rock layer containing the substance to be extracted. For example, laterals extend 1,500 to 5,000 feet in the Barnett Shale basin in Texas, and up to 10,000 feet in the Bakken formation in North Dakota. In contrast, a vertical well only accesses the thickness of the rock layer, typically 50-300 feet. Horizontal drilling also reduces surface disruptions as fewer wells are required. Drilling usually induces damage to the pore space at the wellbore wall, reducing the permeability at and near the wellbore. This reduces flow into the borehole from the surrounding rock formation, and partially seals off the borehole from the surrounding rock. Hydraulic fracturing is a unique technique used to restore permeability. Hydraulic fracturing is commonly applied to wells drilled in low permeability reservoir rock. An estimated 50 percent of the natural gas wells in the United States, Russia and China over the next decade will use hydraulic fracturing to produce gas at economic rates. Fracturing: The fluid injected into the rock is typically a slurry of water, proppants, chemical additives and a specially produced guar gum derivative. Additionally, gels, foams, and compressed gases, including nitrogen, carbon dioxide and air can be injected. Various types of proppant include silica sand, resin-coated sand, and man-made ceramics. These vary depending on the type of permeability or grain strength needed. Sand containing naturally radioactive minerals is sometimes used so that the fracture trace along the wellbore can be measured. Chemical additives and guar gum derivatives are applied to tailor the injected material to the specific geological situation, protect the well, and improve its operation, though the injected fluid is approximately 98-99.5% percent water, varying slightly based on the type of well. The composition of injected fluid is sometimes changed as the fracturing job proceeds. Often, acid is initially used to scour the perforations and clean up the near-wellbore area. Afterward, high pressure fracture fluid is injected into the wellbore, with the pressure above the fracture gradient of the rock. This fracture fluid contains water-soluble gelling agents (guar gum derivatives) which increase viscosity due to its unique crosslinking properties with various crosslinkers that efficiently deliver the proppant into the formation. As the fracturing process proceeds, viscosity reducing agents such as oxidizers and enzyme breakers are added to the fracturing fluid to deactivate the gelling agents and encourage flowback crosslinked guar gum derivative viscosity can be reduced easily and effectively in this process. The proppant's purpose is primarily to provide a permeable and permanent filler to fill the void created during the fracturing process. At the end of the job the well is commonly flushed with water (sometimes blended with a friction reducing chemical) under pressure. Injected fluid is to some degree recovered and is managed by several methods, such as underground injection control, treatment and discharge, or temporary storage in pits or containers while new technology is being developed to better handle wastewater and improve disposability. Hydraulic fracturing equipment used in oil and natural gas fields usually consists of a slurry blender, one or more high pressure, high volume fracturing pumps (typically powerful triplex, or quintiplex pumps) and a monitoring unit. Associated equipment includes fracturing tanks, one or more units for storage and handling of proppant, high pressure treating iron, a chemical additive unit (used to accurately monitor chemical addition), low pressure flexible hoses, and many gauges and meters for flow rate, fluid density, and treating pressure. Fracturing equipment operates over a range of pressures and injection rates, and can reach up to 100 MPa (15,000 psi) and 265 L/s (100 barrels per minute). Fracture monitoring: Measurements of the pressure and rate during the growth of a hydraulic fracture, as well as knowing the properties of the fluid and proppant being injected into the well provides the most common and simplest method of monitoring a hydraulic fracture treatment. This data, along with knowledge of the underground geology can be used to model information such as length, width and conductivity of a propped fracture. For more advanced applications, Microseismic monitoring is sometimes used to estimate the size and orientation of hydraulically induced fractures. Microseismic activity is measured by placing an array of geophones in a nearby wellbore. By mapping the location of any small seismic events associated with the growing hydraulic fracture, the approximate geometry of the fracture is inferred. Tiltmeter arrays, deployed on the surface or down a well, provide another technology for monitoring the strains produced by hydraulic fracturing. Emission of gases displaced by hydraulic fracturing into the atmosphere may be detected via atmospheric gas monitoring, and can be quantified directly via the eddy covariance flux measurements. Horizontal completions: Since the early 2000s, advances in drilling and completion technology by making use of guar gum derivatives has made drilling horizontal wellbores much more convenient and economical. Horizontal wellbores allow for far greater exposure to a formation than a conventional vertical wellbore. This is particularly useful in shale oil and gas formations which do not have sufficient permeability to produce economically with a vertical well. Such wells when drilled onshore are now usually hydraulically fractured many times, especially in North America and more recently in Russia, Canada & China and many other Countries in queue. The type of wellbore completion used will affect how many times the formation is fractured, and at what locations along the horizontal section of the wellbore. In North America, tight reservoirs such as the Bakken, Barnett Shale, Montney and Haynesville Shale are drilled, completed and fractured using this method. The method by which the fractures are placed along the wellbore is most commonly achieved by one of two methods, known as 'plug and perf and 'sliding sleeve'. The wellbore for a plug and perf job is generally composed of standard joints of steel casing, either cemented or uncemented, which is set in place at the conclusion of the drilling process. Once the drilling rig has been removed, a wireline truck is used to perforate near the end of the well, following which a fracturing job is pumped (commonly called a stage). Once the stage is finished, the wireline truck will set a plug in the well to temporarily seal off that section, and then perforate the next section of the wellbore. Another stage is then pumped, and the process is repeated as necessary along the entire length of the horizontal part of the wellbore. The wellbore for the sliding sleeve technique is different in that the sliding sleeves are included at set spacings in the steel casing at the time it is set in place. The sliding sleeves are usually all closed at this time. When the well is ready to be fractured, using one of several activation techniques, the bottom sliding sleeve is opened and the first stage gets pumped. Once finished, the next sleeve is opened which concurrently isolates the first stage, and the process repeats. For the sliding sleeve method, wireline is usually not required. These completion techniques may allow for more than 30 stages to be pumped into the horizontal section of a single well if required, which is far more than would typically be pumped into a vertical well. What Is Shale Ga and Why Is It Important? Shale gas refers to natural gas that is trapped within shale formations which are rare Earth elements. Shales are fine-grained sedimentary rocks that are rich sources of petroleum and natural gas. Shale gas is natural gas produced from shale. Shale gas has become an increasingly important source of natural gas in the United States over the past decade, and interest has spread to potential gas shales in the rest of the world. One analyst expects shale gas to supply as much as half the natural gas production in America by 2020 which is now just 14 to 15% of the conventional gas production or to say it is just a beginning of new era of shale gas production. Some analysts expect that shale gas will greatly expand worldwide energy supply and is expected to commence its production in almost all the 48 shale basins across the world in as many as 38 nations as have been identified by Energy Information Administration (EIA). A study by the Baker Institute of Public Policy at University concluded that increased shale gas production in the US and Canada could help prevent Russia and Persian Gulf countries from dictating higher prices for the gas it exports to European countries. The Obama administration believes that increased shale gas development will help reduce greenhouse gas emissions. History: Shale gas was first extracted as a resource in Fredonia, NY in 1825, in shallow, low-pressure fractures. Work on industrial-scale shale gas mining did not begin until the 1970s, when declining production potential from conventional gas deposits in the United States spurred the federal government to invest in R&D and demonstration projects that ultimately led to directional and horizontal drilling, microseismic imaging, and massive hydraulic fracturing. Mitchell Energy, a Texas gas company, utilized all these component technologies and techniques to achieve the first economical shale fracture in 1998 using an innovative process called slick-water fracturing by making use of specially designed (tailor-made) guar gum derivatives. Since then, natural gas from shale has been the fastest growing contributor to total primary energy (TPE) in the United States, and has led many other countries to pursue shale deposits. According to the IEA, the economical extraction of shale gas more than doubles the projected production potential of natural gas, from 125 years to over 250 years. Geology: Because shales ordinarily have insufficient permeability to allow significant fluid flow to a well bore, most shales are not commercial sources of natural gas. Shale gas is one of a number of unconventional sources of natural gas; other unconventional sources of natural gas include coalbed methane, tight sandstones, and methane hydrates. Shale gas areas are often known as resource plays (as opposed to exploration plays). The geological risk of not finding gas is low in resource plays, but the potential profits per successful well are usually also lower. Shale has low matrix permeability, so gas production in commercial quantities requires fractures to provide permeability. Shale gas has been produced for years from shales with natural fractures; the shale gas boom in recent years has been due to modern technology in hydraulic fracturing (horizontal tracking) to create extensive artificial fractures around well bores. In this process tailor-made guar gum derivatives are used for compelling technical considerations. Horizontal drilling is often used with shale gas wells, with lateral lengths up to 10,000 feet (3,000 m) within the shale, to create maximum borehole surface area in contact with the shale. Shales that host economic quantities of gas have a number of common properties. They are rich in organic material (0.5% to 25%), and are usually mature petroleum source rocks in the thermogenic gas window, where high heat and pressure have converted petroleum to natural gas. They are sufficiently brittle and rigid enough to maintain open fractures. In some areas, shale intervals with high natural gamma radiation are the most productive, as high gamma radiation is often correlated with high organic carbon content. Some of the gas produced is held in natural fractures, some in pore spaces, and some is adsorbed onto the organic material. The gas in the fractures is produced immediately; the gas adsorbed onto organic material is released as the formation pressure is drawn down by the well. By applying modern technology (fracking) the entire gas remains are squeezed off for energy purposes. Economics: Although shale gas has been produced in low quantities by drilling the shale rocks for more than 100 years in the Appalachian Basin and the Illinois Basin of the United States, the wells were often marginally economical. Higher natural-gas prices in recent years and advances in hydraulic fracturing and horizontal completions have made shale-gas wells more profitable. As of June 2011, the validity of the claims of economic viability of these wells has begun to be publicly accepted. Shale gas tends to cost more to produce than gas from conventional wells, because of the expense of the massive hydraulic fracturing treatments required to produce shale gas. However, this is often offset by the low risk of shale-gas wells. As of 2011 all successful shale-gas wells have exploited Paleozoic and Mesozoic rocks. North America has been the leader in developing and producing shale gas. The great economic success of the Barnett Shale play in Texas in particular has spurred the search for other sources of shale gas across the United States and Canada. Research has calculated the 2011 worth of the global shale-gas market as $26.66bn. and the same is expected to grow to be triple by 2035. Horizontal Drilling and Hydraulic Fracturing: Over the past decade, the combination of horizontal drilling and hydraulic fracturing has allowed access to large volumes of shale gas that were previously uneconomical to produce. The production of natural gas from shale formations has rejuvenated the natural gas industry in the United States. The U.S. Has Abundant Shale Gas Resources Of the natural gas consumed in the United States in 2009, 87% was produced domestically; thus, the supply of natural gas is not as dependent on foreign producers as is the supply of crude oil, and the delivery system is less subject to interruption. The availability of large quantities of shale gas will further allow the United States to consume a predominantly domestic supply of gas. According to the EIA Annual Energy Outlook 2011, the United States possesses 2,552 trillion cubic feet (Tcf) of potential natural gas resources. Natural gas from shale resources, considered uneconomical just a few years ago, accounts for 827 Tcf of this resource estimate, more than double the estimate published last year. Enough for 110 Years of Use At the 2009 rate of U.S. consumption (about 22.8 Tcf per year), 2,552 Tcf of natural gas is enough to supply approximately 110 years of use. Shale gas resource and production estimates increased significantly between the 2010 and 2011 Outlook reports and are likely to increase further in the future. What is a Shale 'Play' Shale gas is found in shale 'plays,' which are shale formations containing significant accumulations of natural gas and which share similar geologic and geographic properties. A decade of production has come from the Barnett Shale play in Texas. Experience and information gained from developing the Barnett Shale have improved the efficiency of shale gas development around the country. Other important plays are the Marcellus Shale and Utica Shale in the eastern United States; and, the Haynesville Shale and Fayetteville Shale in Louisiana and Arkansas. Surveyors and geologists identify suitable well locations in areas with potential for economical gas production by using both surface-level observation techniques and computer-generated maps of the subsurface. These shales are yet to exploit for commercial gas production that offers rejuvenating opportunities to the guar gum industry in the years ahead. Shale Gas vs. Conventional Gas Conventional gas reservoirs are created when natural gas migrates toward the Earth's surface from an organic-rich source formation into highly permeable reservoir rock, where it is trapped by an overlying layer of impermeable rock. In contrast, shale gas resources form within the organic- rich shale source rock. The low permeability of the shale greatly inhibits the gas from migrating to more permeable reservoir rocks. Without horizontal drilling and hydraulic fracturing, shale gas production would not be economically feasible because the natural gas would not flow from the formation at high enough rates to justify the cost of its production.. China to promote shale gas exploration: BEIJING:- The Ministry of Land and Resources (MLR) said Sunday that China will increase efforts to explore shale gas in 2012, a move expected to help restructure the country's energy supplies. The government will strengthen the survey and appraisal of shale gas this year to speed up the development of the shale gas industry, MLR Vice Minister Wang Min said at a national geological survey conference. The move comes after the recent approval of the State Council, or the Cabinet, to list shale gas as an independent mineral resource, making the total number of mineral resources discovered in China to 172. Realizing scale production of shale gas will help ease the country's natural gas shortage and even change its entire energy supply structure, Wang said. China has a rich reserve of shale gas resource, which is estimated at 31 trillion cubic meters, equivalent to the total amount of conventional natural gas, according to Wang. If developed properly, the country's shale gas output will exceed 100 billion cubic meters in 2020, Wang said. Shale gas, a clean and high-efficiency energy resource, is produced from shale through a complicated process called hydraulic fracturing, or 'fracking'. Currently, China has no commercial shale gas production, but shale gas has become an increasing important source of natural gas in the United States and Canada. The MLR said in December 2011 that it will formulate a series of supporting policies to bring in diversified investment in shale gas exploration to push forward large-scale extraction of the resource. Potentiality of Shale Gas: Shale gas in 2009 made up 14% of total U.S. natural gas supply. Production of shale gas is expected to continue to increase, and constitute 45% of U.S. total natural gas supply in 2035, as projected in the EI A Annual Energy Outlook 2011. Encouraged by the availability of inexpensive and cleaner domestic gas, some electric utilities are replacing their coal burning capacity with gas fired units. Energy intensive manufacturers of chemicals, plastics, and steel are beginning to bring home operations that they exported years ago. Shale production in the US has increased from practically nothing in 2000 to more than 13 billion cubic feet per day, or about 30% of the country's natural gas supply. That proportion is heading toward 50% in coming years. The US passed Russia in 2009 to become the world's largest producer of natural gas. An Energy Department advisory panel on which Krupp sits estimated in August that more than 200000 jobs, both direct and indirect, 'have been created over the last several years by the development of domestic production of shale gas in USA'. At present shale gas is just started to exploit mainly in the USA and Canada. Energy Information Administration (EIA) of America has identified 48 shale gas rich basins in 38 countries that include Mexico, Brazil, Peru, Chile, Argentina, South Africa, Poland, Bulgaria, England, Australia, France, Ireland, New Zealand and India. Therefore, shale gas exploitation is bound to increase in these countries in the years ahead. Being a leading guar gum derivative manufacturer, this offers good fortune to your company for many years to come. Socio Economic Responsibility: Our vision for responsible growth builds on your Company's belief that we do well when our interests are aligned with farmers community, we serve. Farmers are at the heart of our business. Our deep commitments to the farming community and our ability to offer them exciting opportunities and realizations enable us to attract them to harvest need-based guar crop in the years ahead that give us the competitive edge. Enhanced realizations provided to the farming community during the year under review has considerably changed the life style of the poor farmers residing in the Great Indian Desert who were previously deprived off the basic needs to maintain their livelihood. Better crop realization have enabled them to provide good education to their children which in turn will help in building a good society thereby eradicating the evil of poverty in the times to come from the state. Listing of Company's stocks in NSE:- Your company has planned to list its stock for trading in the National Stock Exchange of India (NSE) during the month of May-June 2012. This will enhance the liquidity of stocks to a great extent. I am happy to announce that the Board of Directors of your company has proposed a dividend @ 25% for the year ended 31st March 2011 also. Going forward, your company is seen as one of the engines powering global energy market and re-shaping the global landscape. Your company will remain alert to the new opportunities being offered by the modern technology for the exploitation of shale rocks, while at the same time continuing to consolidate and build on its core competencies. Best wishes for a prosperous tomorrow Place: Siwani B.D. Agarwal Date : 16-1-2012 Chairman and Managing Director
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