Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. Essay Example

Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. Essay Economics of the Financial System Show how transactions in derivatives can be used to either hedge risk or to open speculative positions. Derivatives have become popular in response to the increasing volatility and complexity of financial markets. A diverse range of new financial products have been created to enable market participants to handle the risks arising from trade in securities and to speculate on future expected movements in securities prices, without direct trade in the assets themselves. Derivative contract creates a promise to deliver or trade an underlying product at some time in the future. The contract gives one party a claim on an underlying asset or cash value of the asset, at a fixed date in the future. The other party is contractually bound to meet the corresponding liabilities. Financial derivatives are traded on organized market such as LIFFE (London International Financial Futures Exchange) and through the intermediation of the clearing house system, there is more flexibility of exchange, and the risk of credit default is reduced. The two parties need not know each other they only have to satisfy the exchange that they are creditworthy to transact. The initial purpose of derivative contracts was to allow traders to hedge risk which they faced in the cash market. Two of the most popular derivative instruments are financial futures and options. Financial futures commit the parties to buy or sell underlying assets at set prices on an agreed future date. The benefit of financial futures in its most basic form can be exemplified by a poultry farmer who is worried about the risk of price fluctuations in eggs for instance. He knows in 8 months he will sell a certain quantity of eggs. We will write a custom essay sample on Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Show How Transactions in Derivatives Can Be Used to Either Hedge Risk or to Open Speculative Positions. specifically for you FOR ONLY $16.38 $13.9/page Hire Writer He can hedge against this risk by selling (going short) an eight month â€Å"future† in eggs. The â€Å"future† will consist of a standard amount of chicken to be exchanged in eight months, at an agreed fixed price on the day the â€Å"future† is sold. The agent buying the eggs goes long, and is bound by contract to purchase the eggs in 8 months. A premium reflecting the risk of price fluctuation would be charged by the agent. If all goes well, the rate of profit on future contract can be very high but not without considerable risk. Investing in securities expose investors to many risks, the most important is the risk of an unexpected fall in the value of an investment. Likewise, not investing also exposes them to opportunity risk; the risk that future prices of portfolio of asset would rise thereby making it more expensive to acquire. Derivatives market offer investors an efficient way of managing some of the risks incurred in investment by purchasing derivative instruments. This allows them to attain desired adjustment to risk without having to trade in the underlying securities and sometimes gaining a profit. Hedging has become increasing popular as it helps investors to protect against the future value of their portfolio. An investor with a portfolio of cash, bonds and shares can take out a hedge to protect the future sale price of her portfolio by selling a corresponding amount of the appropriate futures contract. Risk could be hedged through options or future contracts. Hedging through future contracts involves taking a position in financial futures contract that will incur a gain to offset a loss in their existing investment portfolio. For example, Amana Mutual Fund manages a large portfolio of stocks. The portfolio manager speculates the prices of stock will fall over the coming month but will increase again after that time. They would like to hedge their portfolio against a loss over that period. A stock index futures contract with a month to settlement date is offered on the Dow Jones Industrial Average stock index at an index level of 20,000. Amana chooses to sell a futures contract on this index because it reckons that this index is strongly correlated with its existing stock portfolio. In a month, at the stipulated settlement date, Stanford will purchase the same contract. If stock prices plunge over this period, the index will fall as well, and so will the futures contract on the index in response. Amana will profit on its future position, because the future price paid at which the index is sold will be less than price paid for the index at settlement date. After a month, the stock market falls as anticipated, and the futures price of the DJIA is at an index level of 19,000. DJIA futures contract are rated at ? 10 the DJIA index, so Amana stands to gain. Sold DJIA futures for 20,000; receives 20,000 times ? 10 =? 00,000 Purchased DJIA futures for 19,000; owes 19,000 times ? 10 =? 190,000 Gain is ? 200,000 ? 190,000 = ? 10,000 This shows that Amana benefits from selling a DJIA futures contract. Amana has gained from a market decline, which can partially counterbalance the loss on its existing stock portfolio. However, to hedge a huge stock of portfolio, Amana would have to take a short position that had a value equal to the size of its entire stock po rtfolio. Options give one party the right, but not the obligation, to buy (or sell) at a set price on an agreed future date. Future Contracts are a means of avoiding risk but at the cost of eliminating opportunity. A trader may prefer to hedge risks through options so he can take advantage of an unexpected upswing. If hedgers of an equity portfolio sell futures contracts against their position to protect their portfolio and see the stock market go up rather than down as they presumed, they would not be able to take advantage of the upswing. It is therefore advisable to use future contracts when the investor is certain of future outcome as the contract fixes the value of an asset. However, hedging via options is more expensive as it protects from downside loss while leaving upside potentials open with the right but no obligation to purchase asset at a fixed price. Derivatives allow firms to hedge against security prices and interest rate movements, the latter being the most actively traded future contract used by banks and treasury managers. A pension fund manager holds an equity portfolio which closely resembles the US stock market in its compositions. If he thinks the US market is going to fall and wishes to turn his portfolio into cash. He has two choices, he could either sell shares which would not be as profitable because share prices might be depressed if it is a large portfolio plus it is time consuming. Or she could simply sell stock index futures against her portfolio. If accurate, the loss incurred on her equity portfolio will be counterbalanced by a profit on her financial futures position. Derivatives reduce the cost of protection through sophisticated risk management. Firms that are adversely affected by interest rate movements can take particular position in derivative securities to offset the effect of interest rate movement thereby reducing risk. By coming into a ‘forward rate agreement’ a company treasurer can fix the cost of borrowing which will be required on some future date, thus avoiding the risk of fluctuating interest rates in the prevailing period. Interest rate future contracts can be used to match the interest rate characteristics of the bank’s asset and liabilities portfolios. Market makers can hedge the risk resulting from significant positions in equities or bonds by buying offsetting contracts in equity or interest rate futures. Interest rate futures specify the amount of the notional bond and its interest- rate coupon, for instance a ? 50,000 nominal 15-year treasury bond with a 10 per cent coupon. Traders using futures to hedge against risk to which they are exposed in the cash market are seeking to lock into existing exchange or interest rates on future transactions. Once a firm has traded out of its open position in the cash market it no longer needs the hedge in the futures market. Howe ver, the use of futures to hedge to hedge against interest rates for instance can give rise to basis risk. Basis risk is the risk that fluctuations in future prices will differ from movement in the price of risk being hedged. Firms are also faced with exchange rate risks, in the absence of fixed exchange rates or monetary unions, firms must take action to protect themselves against these risks by taking out contracts which carry the opposite risk to that which they face in the underlying market. Another advantage of financial futures contract is that they offer both traders and investors the ability to take a short position in the underlying security; sell something they do not have. Traders may think a financial market is falling, by selling future contracts and buying them back later after the price has fallen they would be able to gain profit in a bear market. Derivatives help to combat adverse effects of volatile commodity prices on the economy as forward prices tend to be less volatile than spot prices. Since the spot price of a security can be offset by the sale of future contracts, the risk of holding securities is neutralized. Hedging is the basic motivation for a lot of businesses trading in financial derivatives market. Nonetheless, speculation is just as popular as derivatives allow firms and investors to take positions in the securities on the basis of their expectations of movements in the underlying financial asset. In other words, derivatives are instruments that allow market agents seeking profit gain to gamble on movements in the prices of other instruments without being required to trade in them. Furthermore, speculation provides liquidity in the markets and enables it to operate efficiently. Speculative positions are required to offset any imbalance which may arise from hedging transactions, and active speculation in response to small price movements ensures that any temporary imbalance would not lead to a drastic price change thereby reducing volatility. Derivative markets respond to information quicker than cash market. Therefore it allows speculators to predict with accuracy cash market prices and return of their investment. For example, a speculator who presumed that interest rate was likely to rise or a currency’s value decline would go short in the particular asset by selling a future contract. Derivatives permit traders to build an open position with speed, traders usually close this position when they have achieved profit objective. If anticipated profits are unlikely, they cut losses before delivery date. Investors could either purchase call or put options for speculative purposes. Call options are bought by investors who speculate a rise in price of underlying stock. An investor pays the option premium and becomes the owner of a call option he is entitled to the right to purchase stock at the exercise price up to the time of expiration date. The advantage of this is that investors have secured a price to be paid for stocks and therefore gain a profit in secondary market of stock prices rise. Tayo purchased a call option on British Telecoms (BT) Plc. for $3 per share, with an exercise price of $75 per share. She decides to exercise her option at the expiration date if the market stock price is above $75 at the time. Tayo wants to find out what her possible profit outcomes are per share under the different prices of Boots plc. stock. Possible Outcomes for Investment in a Call Option Possible price of boots plc stock at expiration($)| Premium paid($)| Amount Received from Exercising Option($)| Profit share from investment($)| 71| 3| Option not exercised| -4| 76| 3| 1| -2| 78| 3| 3| 0| 82| 3| 7 | 4| 85| 3| 10| 7| At any price above $75 but below $78, Tayo will exercise the call option but make a loss. For instance, at the price of $76, she can exercise the option by buying the stock at $75 and selling them for $76. However, with a premium of $3 to be paid, she incurs a loss of $2 on her investment. At the price of $78, tayo breaks even and at any price beyond that she makes a profit from this call option. On the other hand, put options are purchased by investors who expect a fall in price of assets. The contract is set at a predetermined rate lower than the current market price, so if prices do plunge further investors earn a profit from put option. This leverage allows speculative investments to be used to take advantage of specific profit opportunities or to insure a portfolio against risk. For an options contract, there has to be a corresponding seller (or writer) to the purchaser of an option, who is prepared to accept the increased risk exposure and the premium has to be large enough to compensate risk. The buyer of a call option acquires the right to buy specified instrument. For example, an investor who speculates that euro will rise against the US dollar could buy a euro surplus giving the right to buy euro at a specified price, say $0. 60 =? 1. If the spot exchange rate were to rise to $0. 68 =? 1, the option holder could acquire euro at $ 0. 60 under the terms of the option and sell them in the spot market at $0. 68. As the price of the underlying product rises, so too will the profit that can be made from exercising the option. The buyer of a call option thus assumes a long position in the underlying product. Swaps are a huge market. The first major example of a derivative trade occurred between the World Bank and IBM in 1983. The World Bank was lending in Swiss Francs and wanted to borrow in Swiss Francs, but it had depleted all its borrowing options, hence it faced rising costs. On the other hand, IBM was a dollar borrower but had never borrowed in Swiss Francs as it had no use for the currency. Nonetheless, Salomon Brothers, the investment bank set up a deal with IBM because IBM could borrow Swiss Francs at a cheaper rate than the World Bank could, so both institutions borrowed currencies they did not need. IBM in Swiss Francs and World Bank in dollars, this was done simultaneously and they converted proceeds into currencies they did need. Salomon Brothers was the ‘writer’ of the debt obligation and because of their dealings with each other; both institutions faced a lower interest rate. All of the above gives evidence that derivatives are a powerful instrument in combating risks and making profits from speculation amongst other. However, Warren Buffet warns that derivatives are not without its curses. He likens derivatives to â€Å"hell†¦. easy to enter and almost impossible to leave† and states that increasing trade in it pose a mega-catastrophic risk for the economy as it pushes companies onto a ‘spiral that can lead to a corporate meltdown’. For example, derivatives trading were held partially responsible for the collapse of the stock market in 1987. The story being that stock market trader anticipated a decline in the price of stocks that weekend. Immense orders to sell were made at brokerage houses and many traders automatically sold futures in shares of major corporations. This panic and wrong speculation destabilised stock markets and contributed to the volatility of the cash market. An example closer to home is the losses of ? 91 million made by traders at NatWest Capital Markets (the investment banking arm of the National Westminster Bank in London) in 1995 and 1996 on deutschmark and sterling options. In Conclusion, financial derivatives , although not without faults, has become a major global growth industry as financial agents have become increasingly assertive and innovative in their use of futures, options and swaps to hedge risks and take speculative positions. References 1) http://news. bbc. co. uk/1/hi/2817995. stm Accessed on the 20th April 2010 2) http://www. globalresearch. ca/index. php? context=vaaid=8634 Accessed on the 28th April 2010 3) Howells P Bain K (2007) Financial Markets and Institutions, London: Prentice Hall 4) Mervyn K. Lewis (1999) The Globalization of Financial Services, Cheltenham: Elgar Reference Collection 5) Rutterford J Davison M (2007) An Introduction to Stock Exchange Investment, New York: Palgrave Macmillan 6) Howells P Bain K (2002) The Economics of Money, Banking and Finance, Essex: Pearson Education 7) Henderson R (1993) European Finance, Berkshire: McGraw Hill Book Company 8) Gitman L Madura J (2001) Introduction to Finance, Boston: Addison Wesley 9) Heffernan Shelagh (1996) Modern Banking in Theory and Practice, Chichester: Wiley 10) A. D Bain( 1992) The Economics of the Financial System, Oxford: Blackwell

Essay on The use technology and information resources to research issues in crime and criminal behaviorEssay Writing Service

Essay on The use technology and information resources to research issues in crime and criminal behaviorEssay Writing Service Essay on The use technology and information resources to research issues in crime and criminal behavior Essay on The use technology and information resources to research issues in crime and criminal behaviorThe topic chosen for this project is â€Å"The use technology and information resources to research issues in crime and criminal behavior†. In fact, this topical area is of great importance for criminologists because it highlights the need for using use technology and information resources to facilitate the process of crime investigation. The history of criminology can be effectively used in study of different aspects of criminology through construction of a framework for the study of crime based on the available knowledge of the proper facts, events and individual behaviors (Lawrence, 2012).The topic needs to be researched not only to better understand the nature of criminology and the functioning of criminologists in different periods of time, but also to identify the relationship between the past, present and future aspects of crime investigation. In addition, the chosen topic area needs to be researched to address a wide range of problems and challenges that exist in today’s field of criminology. The history of criminology helps to assess the relationship between social structures and criminological ideas (Laub, 2004).   Due to this research, it is possible to find solutions to various issues in the field of contemporary criminology based on the use technology and information resources.Defining the problems and challenges that exist in crime and criminologyBased on the chosen topic, it is necessary to define the problems and challenges that exist in crime and criminology. The history of criminology allows identifying serious problems connected with the studies of punishment. According to researchers, earlier studies in this field are based primarily on the issues of unemployment (Laub, 2004; Peelo Soothill, 2013).   Later studies in this area are focused on the critical assessment and analysis of the trends in punishment.   Researcher s explore historical contingencies that reflect the relationship between unemployment and imprisonment. These issues create certain problems in the field of crime and criminology. To make deeper understanding of the key challenges faced by criminology, it is necessary to place emphasis on the new form of knowledge that helps to assess crime trends and criminal behaviors. Actually, criminology is a rather new discipline, although it has its history. Criminology faces some problems connected with certain conflicts that appear within the discipline (Peelo Soothill, 2013). Criminology needs more and more studies to make the discipline less â€Å"static†. As the major task of criminology is to â€Å"explore and explain crime† as social construction, it is necessary to define the boundaries of criminology and the impact of other disciplines on its development (Peelo Soothill, 2013).In general, many challenges face the field of criminology as it continues to grow and become less â€Å"static†. The historical issues that have contributed to the problems and challenges are connected with social, cultural, political and economic changes. According to researchers, there are three major challenges faced the file of crime and criminology. First, â€Å"criminological research has been futile†(Laub, 2006, p. 237). Researchers suggest the work of criminologists in the field lacks scientific approaches to the study of the phenomena of crime. Besides, the knowledge provided by the discipline of criminology lacks a comprehensive scientific proposition and conclusion (Laub, 2006). Second, â€Å"the reason for the futility of research in criminology is the incompetence of criminologists in science† (Laub, 2006, p. 237). Researchers argue that the use of scientific method in the field requires the proper theoretical analysis, observation, and interpretation, which characterize crime and criminology field as â€Å"raw empiricism† (Laub, 20 06). Special attention is paid to observation, while the abstractions of analysis are neglected. Researchers suggest that â€Å"the assurance with which criminologists have advanced opinions regarding the causes of crime is in striking contrast to the worthlessness of the data upon which those opinions are based† (Michael Adler, 2003, p. 169). The third problem is that the current methods applied to crime and criminology research are ineffective, and scientists should come to the field of criminology from other fields to improve these methods (Laub, 2006). It has been found that the common sense knowledge used in crime and criminology field is insufficient to effectively address the practical problems regarding crime control. Besides, the descriptive knowledge generated by criminological research fails to increase the role of the common sense knowledge in order to compensate for its insufficiency. Criminology as a science should be constructed not only by criminologists, but also by psychologists, biologists, sociologists or by others.Thus, these problems lead to the failure of criminology to address a wide range of issues connected with crime control (Garland Sparks, 2000; Laub, 2004).The contributions of internal and external stakeholders to the problems and solutions in crime and criminologyThe internal stakeholders can be found inside the field of crime and criminology. They are criminologists, staff members of the criminological organization, its management and the board of directors. The external stakeholders can be found outside the field of crime and criminology. They include the environment, government, the media, and the members of society, clients, victims, and criminals.The internal and external stakeholders contribute to both the problems and the solutions in crime and criminology. They influence the success of the research in crime and criminology and possible outcomes, the historical development of the field and the areas of study. For example, criminologists contribute to finding solutions to the existing problems and challenges through the application of the proper scientific methods and theories. The media and the government contribute both to the problems and solutions in crime and criminology through various policies and programs aimed at crime control (Laub, 2004).Generally speaking, the contributions of internal and external stakeholders to the problems and solutions in crime and criminology should be taken into consideration while conducting a criminological research.Discussion of the data and information that have been collected while conducting research on the topicThe data and information that have been collected while conducting research on the topic can be characterized as valid and reliable. Much information has been taken from peer-reviewed journals and scholarly sources. The authors of these sources are competent to write about crime and criminology.Moreover, the data relates to the problems and ch allenges in crime and criminology because the authors are interested in critical assessment of criminological research and its findings. The authors of the sources used in this study are focused on exploring the nature of criminology and its impact on crime control.Developing a solution that addresses the problems and challenges in crime and criminology, based on the research findingsIn order to develop the proper solution that would address the problems and challenges in crime and criminology, based on the research findings, it is necessary to identify three areas that would be addressed:to make improvements in criminological research;to improve the competence of criminologists in the field of crime and criminology;to improve the current methods applied to crime and criminology research, inviting scientists from other fields.Thus, taking into consideration the above mentioned areas, it is necessary to conclude that the problems and challenges in crime and criminology should be addr essed through the application of more effective methods and strategies in criminological research, enhancement of the competence of criminologists in the field of crime and criminology, and the involvement of scientists from other fields to the field of crime and criminology.   According to recent findings, the theories of crime can be applied to different disciplines, including psychology, sociology, biology and other disciplines. Criminologists are encouraged to use this knowledge in a meaningful way.   It is necessary to remember that â€Å"misunderstanding of the present is the inevitable consequence of ignorance of the past† (Laub, 2006, p. 250). As a matter of fact many of current issues in the field of crime and criminology have a long and interesting history. Criminologists should pay more attention to the history of criminology in order to effectively apply technology and information resources in the study of crime and criminal behavior (Garland Sparks, 2000). T he history of criminology could be used as the basis for the proper analysis of crime, crime policies, crime rates and other issues.

Where to Find Research Papers Online Discover Google Scholar

Where to Find Research Papers Online Discover Google Scholar Where to Find Research Papers Online: Discover Google Scholar Where to find research papers online? If you use Google as your search engine of choice you will be pleased to learn about Google Scholar, Google ´s Online search engine for scholarly research, papers, articles books, abstracts and more. It is easy to access and you are able to find everything all in one place. Google Scholar is a very useful tool for students. Across all Disciplines Articles and works in the database are too numerous to list. They include articles from economics, arts, physics, mathematics, social sciences, business, humanities, chemistry, engineering and Google Scholar has a special search for case law. In addition to that, Google Scholar offers specific languages you can search with if you need documents in a language other than English, or if the document was only published in one language.   Whatever your subject, give Google Scholar a try first, it will not disappoint. References and Citations As an author of scholarly works, Google scholar offers a citation count and visual aids such as charts, to show you how many times your article has been cited. As a student writing a paper and using the scholarly literature found in Google Scholar, you can cite the referenced work using a link directly from Google Scholar. Google scholar offers the MLA, APA, Chicago, Harvard and Vancouver styles of citation. Your Own Library Once you perform a search you can enable your library in Google Scholar. This library is attached to your Google account which means you can access it wherever you log into Google. Once you find a document you want to add to your library simply click save and the article will be in your library for future reference. You can organize your library by document date, adding labels and other useful features. Types of Publications The publications Google Scholar uses are numerous. However, they do maintain a top 100 list if you would like to browse publications. You may also browse by a specific area of interest. The interface is straightforward, logical and user friendly. Search Features Google scholar has several handy search criteria available to narrow your search. You can search by date published, author name, phrase, exact phrase and title search. You can also use an option to exclude certain words or phrases. In addition to that you can search specific sources, such as searching a specific medical journal or publication. Some articles may require subscriptions but much of what is on Google Scholar is free, so don’t hesitate to use it. You can read many of the articles immediately in Google’s PDF reader, and cite them with a click. In addition to that, once you find an article, Google Scholar offers links below the search result for similar articles and search terms included in the current article to give you even more avenues to explore, making research so much easier. Google Scholar is a top notch tool for any student who needs to write a research paper  from scratch. Its powerful search capabilities, vast selection of publications and languages and features like the library and citations make this a must have tool.

IMPERIALISM, VEBLEN Essay Example | Topics and Well Written Essays - 1000 words

IMPERIALISM, VEBLEN - Essay Example Even so, the rise of World War 1 proved otherwise, by the time Veblen was writing Absentee Ownership, which he did in 1923; capitalism had done more harm than good. The financial management was poor, the cost was rising and the economy was becoming less productive and less competitive. The fruits of technology were not being realized. That is where Veblen argued that the economy or the market was organized in a way that there was a ‘free lunch’ privileges for some people. Some group of people could seize the income without really contributing to the production process. The power and ownership of property was rewarded more than labor. At this time, the economy sought to guide the economic policies and those in power only served their own interests. In his entire economic theory, Veblen is critical to the issue of imperialism, militarism, patriotism, nationalism, and emulative consumption. The greatest economist of all time analyzes capitalism as it is reflected in the lar ge corporations, financial institutions, imperialism, militarism and patriotism. He does this by looking at how society is divided into the groups; the leisure class, and the rest of the population. The leisure class is there to exploit the others while the rest of the population is characterized by workmanship which is constantly rejecting leisure group resulting in a social conflict. The social conflicts exist in much society either in form of slavery, feudalism or capitalism. As a result, the society is divided into two distinct classes (Veblen 12). In modern times, they can be termed as the exploit and the industry. The industry means innovation or creation of new things while the exploit seizing other peoples work or innovation. For that reason, to maintain the status quo, and prevent war, some form of military must be in place to ensure that war is prevented. In addition, to ensure that the power remains only on the hand of the few patriotism exist to ensure that those who sup ports the status quo are greatly rewarded. Veblen regarded patriotism as the collective expression of what he called the archaic human propensity (Veblen 165). He argued that patriotism was being used by interest of capitalism to legitimize imperialism condemned imperialism on the ground that it retarded the economic growth and it was wasteful. Emulative consumption, according to him was a personal treadmill. This means that there was no possibility of progress. There was no way possible to escape the cycle. According to him, the power to rule over the society depended on the ability to control the ideologies and the emotions of the rest of the society and that was only possible to those who controlled the modes of production. Comparison of Veblen’s Ideas about Imperialism with Each of Hobson’s, Lenin’s And Luxemburg’s Views of Imperialism Imperialism can be defined as the highest stage of capitalism. It is a concept in a left theory of politics which sho ws the aggressive nature and characteristics of modern capitalism. The term, over the time keeps changing in meaning, from the classical Marxist theory to present day. Different scholars have different meaning of what really imperialism means. Hobson, for example, explains it as a symptom of capitalist crisis. According to him, capitalism has moved beyond its competitive stage to another high level characterized by a

Enviromental science Essay Example | Topics and Well Written Essays - 500 words

Enviromental science - Essay Example Over-population is one of the majors for most of the problems being faced in the world. Population increases with 1.5 people per second around the world, therefore in an hour it increases at the rate of. If we go on to ignoring these statistics and the problems they are creating it is only increasing the human suffering. We human beings are capable of doing many things and so we have accumulated the data of every person who ever lived on earth and it is safely kept in the US. The UN not only preserves the data but it also helps predict the future and these predictions are astounding. It is possible that the total population will increase with the 3.1 billion people till the middle of this century making it 9 billion; we have 6.8 billion people today and it is expected to increase up to 7 billion within the coming 4-5 years this is the most startling fact mentioned in the movie. It means that in 50 years the earth will need to accommodate up to 3 billion more people. Within the next 50 years the people will suffer no matter where they are or how they live. When there is abundance of food, water and right availability of material for shelter, the population thrives and succeeds. But when there is scarcity of the most basic necessities, the world comes under depression. Humans and resources have a very close relationship; the food production cannot increase as fast as the human reproduction can. Therefore, the demand will gradually exceed the supply; if the human population is not controlled at once the life would end miserably. The green revolution was not harmful in fact it was more effective in producing food in abundance through modern farming methods. It helped many countries become self-sufficient in food and alleviate hunger in the world. Out of 70% of water present in the world only 1 % is being provided to the people living in it and the rest is

Tubing design

Tubing design Tubing design In the previous chapter, selection procedure of tubing diameter was based on well performance analysis. In this section, the procedure for selecting tubing material properties is presented. Selection of material is carried out by considering different forces that act on the tubing during production and workover operations and then a graphical method is used to present the tubing load against material properties. 1.1 Forces on tubing During the life of the well, tubing is subjected to various forces from production and workover operations which include: * production of hydrocarbon, * killing of the well, * squeeze cementing, * hydraulic fracturing etc. The activities result in change in temperature and pressure inside the tubing and casing-tubing annulus, which can cause a change in tubing length (shortening or lengthening). The change in length often leads to increase in compression or tension in tubing and in extreme situation unseating of packer or failure of tubing (Hammerlindl, 1977 and Lubinski et.al, 1962). According to the authors the change in pressure inside and outside of tuning and temperature can have various effects on tubing: * piston effect(According to Hookes Law), * helical buckling, * ballooning and * thermal effect. HOOKES LAW EFFECTS Changes in pressure inside and outside the tubing can cause tubing movement due to piston effect. According to Hookes law, change in length of tubing caused by this effect can be calculated using the Equation 4.1. Where is the change in forces due to the change in pressures inside ( ) and outside () tubing and can be expressed as: Where, (see Fig. 4.2) DL1= change in length due to Hookes Law effect, inch, L = length of tubing, inch, F = force acting on bottom of tubing, lb., E= modulus of elasticity, As = cross-sectional area of tubing, inch2, Ai = area based on inside diameter of tubing, inch2 and Ao = area based on outside diameter of tubing, inch2, Ap= area based on diameter of packer seal, inch2, = change in pressure inside annulus at packer (Final Initial), psi and = change in pressure inside tubing at packer (Final Initial), psi. Notes: DL, DF, DPi or DPo indicates change from initial packer setting conditions. It is assumed Pi = Po when packer is initially set. HELICAL BUCKLING The difference in pressure inside tubing and casing-tubing annulus acts on the cross sectional area of packer bore at tubing seal and leads to a decrease in the length of tubing due to buckling. This effect is known as helical buckling. When the tubing is restricted from movement, a tensile load is developed. This effect is increased with increase in inside tubing pressure. The change in length caused by helical buckling can be calculated by the Equation 4.3. where Force causing buckling: Ff = Ap (Pi Po) If Ff (a fictitious force) is zero or negative, there is no buckling. Length of tubing buckled: n = Ff / w Where, DL2= change in length due to buckling, inch, r= radial clearance between tubing and casing, inch, w = ws + wi wo, ws = weight of tubing, lb/incn, wi =weight of fluid contained inside tubing, lb/in. (density multiplied by area based on ID of tubing), wo= weight of annulus fluid displaced by bulk volume of tubing, lb/in. (density multiplied by area based on OD of tubing), =tubing outside diameter, inch and =tubing inside diameter, inch. Buckling can be avoided by applying surface annular pressure. BALLOONING EFFECTS The radial pressure inside the tubing causes tubing to increase or decrease in length. When the pressure inside the tubing is greater compared to the pressure inside the casing-tubing annulus, it tends to inflate the tubing, thus shortening the tubing. If the pressure inside the casing-tubing annulus is greater compared to pressure inside the tubing, then the tubing length is increased. This effect is known as ballooning and the change in length caused due to this effect is given by Equation 4.4. Where, DL3=change in length due to ballooning, in. m= Poissons ratio (0.3 for steel) R= tubing OD/tubing ID Dri=change in density of fluid inside tubing, lb/in3 Dro=change in density of fluid outside tubing, lb/ in3 Dpi=change in surface pressure inside tubing, psi Dpo=change in surface pressure outside tubing, psi d=pressure drop in tubing due to flow, psi/in. (usually considered as d= 0) THERMAL EFFECTS Due to the earths geothermal gradient, the temperature of the produced fluids can be high enough to change the tubing length. The effect is opposite (decrease in length) when a cold fluid is injected inside the tubing. It is ideal to take the change in average string temperature. The change in length due to temperature can be calculated using the Equation 4.5. Where, DL4=change in length, in. L=length of tubing string, in. C=coefficient of expansion of steel per oF DT=temperature change, oF PACKER SETTING FORCE The setting of packer requires forces which may lead to change in length of tubing. This change in length can be calculated using the Equation 4.6., which is derived based on Equations 4.1 and 4.3. The force on packer should not exceed critical values whereby it can cause permanent damage to the tubing. The initial weight on packer may cause slack off and to check if this situation might exist, one could use Equation 4.7. Where, F = set-down force. The tubing can suffer permanent damage if the stress in the tubing exceeds the yield strength of the tubing material. It is therefore advised to determine the safe tubing stresses for a given production or workover operation. The safe tubing stress can be calculated by using the following Equations (Allen and Roberts, 1989): The critical values can be calculated using Equations 4.8 and 4.9. Where, Si=stress at inner wall of the tubing So=stress at outer wall of the tubing For free-motion packer: When the packer exerts some force on the tubing, an additional term Ff should be added to Fa and the sign in Equations 4.8 and 4.9 varies in way to maximize the stresses. Example 4.1: An example of Tubing Movement calculation: The following operations are to be performed on a well completed with 9,000 ft of 2-7/8 OD (2.441 ID), 6.5 lb/ft tubing. The tubing is sealed with a packer which permits free motion. The packer bore is 3.25. The casing is 32 lb/ft, 7 OD (6.049 ID). Calculate the total movement of the tubing (note: notation is used for inch). Conditions Production Frac Cement Initial Fluid 12 lb/gal mud 13 lb/gal saltwater 8.5 lb/gal oil Final Fluid Tubing 10 lb/gal oil 11 lb/gal frac fluid 15 lb/gal cement Annulus 12 lb/gal mud 13 lb/gal saltwater 8.5 lb/gal oil Final Pressure Tubing 1500 psi 3500 psi 5000 psi Annulus 0 1000 psi 1000 psi Temp Change +25oF -55oF -25oF SOLUTION Production: Hookes Law Effect At bottom hole conditions DPi = Final pressure inside tubing Initial pressure inside tubing DPo = Final pressure inside annulus initial pressure inside annulus Using Eq. (4.2) Using Eq. (4.1) Helical Buckling Effect Using Eq. (4.3) Ballooning Effect Using Eq. (4.4) Temperature Effect Using Eq. (4.5) Total Tubing Movement (Tubing lengthens) Fracturing: Hookes Law Effect At bottom hole conditions DPi = Final pressure inside tubing Initial pressure inside tubing DPo = Final pressure inside annulus initial pressure inside annulus Using Eq. (4.2) Using Eq. (4.1) Helical Buckling Effect Using Eq. (4.3) Ballooning Effect Using Eq. (4.4) Temperature Effect Using Eq. (4.5) Total Tubing Movement (Tubing shortens) Cement: Hookes Law Effect At bottom hole conditions DPi = Final pressure inside tubing Initial pressure inside tubing DPo = Final pressure inside annulus initial pressure inside annulus Using Eq. (4.2) Using Eq. (4.1) Helical Buckling Effect Using Eq. (4.3) Ballooning Effect Using Eq. (4.4) Temperature Effect Using Eq. (4.5) Total Tubing Movement (Tubing shortens) 1.2 Selection of Tubing Material Tubing selection should be based on whether or not the tubing can withstand various forces which are caused due to the variations in temperature and pressure. The API has specified tubing based on the steel grade. Most common grades are: H40, J55, K55, C75, L80, N80, C95, P105 and P110. The number following the letter indicates the maximum yield strength of the material in thousands of psi. The failure of the tubing can be attributed to the loading conditions. There are three modes of tubing failure which include: * burst (pressure due to fluid inside tubing), * collapse (pressure due to fluid outside tubing) and * tension (due to weight of tubing and tension if restricted from movement). The graphical design of the tubing can be achieved by creating a plot of depth vs pressure. This design is carried out by calculating pressures inside the tubing and casing-tubing annulus at the bottom hole and tubing head. The maximum differential pressures at surface and bottom hole are examined using the plot. This maximum condition usually occurs during stimulation. When the maximum allowable annular pressure is maintained during stimulation, a considerable amount of reduction in the tubing load can be achieved. The burst pressure load (difference between the pressure inside the tubing and annulus) is mostly experienced in greater magnitude close to the surface but may not necessarily be always true. The burst load lines are plotted followed by plotting collapse load lines. The collapse loads are calculated with an assumption that a slow leak at the bottom hole has depressurized the tubing. This scenario is sometimes expereinced after the fracturing treatment when operators commence kickoff before bleeding off the annular pressure. If the data for pressure testing conditions (usually most critical load) is available, it should be included in the plot. Along with the collapse and burst loads, the burst and collapse resistance for different tubing grades (available) are plotted. By observing the plot we can determine which tubing grade to be selected that can withstand the calculated loads. An example of selecting tubing based on graphical design is presented below. Example 4.2: Graphical tubing design Based on the data given below, select a tubing string that will satisfy burst, collapse and tension with safety factors of 1.1, 1.0 and 1.8 respectively. Planning Data: D =9000 ft true depth, f = 2.875 inches, tubing OD, CIBHP = 6280psi, closed-in bottom hole pressure, FBP = 12550psi, formation breakdown pressure, FPP = 9100psi, fracture propagation pressure, Gpf = 0.4 psi / ft packer fluid gradient, Gf = .48 psi /ft fracturing fluid gradient, g = 0.75 gas gravity at reservoir, Pann = 1000 psi, maximum allowable annulus pressure, SFB =1.1, safety Factor, Burst Condition, SFC =1.0, safety Factor, Collapse Condition, SFT =1.8, safety Factor, Tensile Load, Burst and Collapse rating of available tubings: B_L80 =9395 psi, C_L80 =9920 psi, B_J55 =6453 psi, C_J55 =6826 psi, B_H40 =4693 psi and C_H40 =4960psi. Solution: Step 1: Calculate the ratio of bottomhole pressure to surface pressure. Referring table 4.1 in the manual, determine the ratio of surface and BHP at the given reservoir gas gravity, At a gas gravity = 0.8 and Depth 9000 ft, the ratio is 0.779 At a gas gravity = 0.7 and Depth 9000 ft, the ratio is 0.804 At gas gravity 0.75 the ratio of surface pressure to BHP is Table 4.1 Ratio of surface pressure and BHP in gas wells for a range of gas gravities. Depth of Hole Gas Gravity (ft) (m) 0.60 0.65 0.70 0.80 1000 305 0.979 0.978 0.976 0.973 2000 610 0.959 0.956 0.953 0.946 3000 915 0.939 0.935 0.93 0.92 4000 1219 0.92 0.914 0.907 0.895 5000 1524 0.901 0.893 0.885 0.87 6000 1830 0.883 0.873 0.854 0.847 7000 2133 0.864 0.854 0.844 0.823 8000 2438 0.847 0.835 0.823 0.801 9000 2743 0.829 0.816 0.804 0.779 10000 3048 0.812 0.798 0.764 0.758 11000 3353 0.795 0.78 0.766 0.737 12000 3660 0.779 0.763 0.747 0.717 13000 3962 0.763 0.746 0.729 0.697 14000 4267 0.747 0.729 0.712 0.678 15000 4572 0.732 0.713 0.695 0.659 16000 4876 0.717 0.697 0.67 0.641 17000 5181 0.702 0.682 0.652 0.624 18000 5486 0.687 0.656 0.645 0.607 19000 5791 0.673 0.652 0.631 0.59 20000 6097 0.659 0.637 0.615 0.574 Step 2: Calculate the pertinent pressures for different operating conditions. a) Pressures inside casing-tubing annulus Assuming during the production and killing of well, packer fluid is present inside the casing tubing annulus. For producing situation: Pressure inside annulus at surface = packer fluid gradient * Depth Pkill_prod_surface= = 0.4* 0 = 0 psi Pressure inside annulus at bottom hole = packer fluid gradient * Depth Pkill_prod = Gpf *D = 0.4* 9000 = 3600 psi For Stimulation: Pressure inside annulus at surface= Pstim_surf = 1000 psi Pressure inside annulus at bottomhole = packer fluid gradient * Depth + (Max Allowable pressure inside annulus) Pstim_bh= Gpf *D + Pann = 0.4*9000 + 1000 = 4600 psi b) Pressures inside tubing At bottom hole, pressure = CIBHP At surface, pressure = CITHP (closed in tubing head pressure) CITHP = ratio * CIBHP CITHP = 0.792 * 6280 = 4973 psi KILL SITUATION: When a well is killed, the bottom hole pressure is given as sum of CIBHP and maximum allowable annulus pressure. At bottom hole, pressure inside tubing during kill situation (BHIP) = CIBHP+Pann BHIP =6280 +1000 = 7280psi Tubing head pressure during kill situation is calculated by multiplying BHIP with gas gravity. At tubing head kill pressure (THIP) = ratio * BHIP = 0.792*7280 = 5765 psi FORMATION BREAKDOWN SITUATION: During stimulation the bottomhole pressure is the formation break down pressure and can be calculated by the density of the fracture fluid .In this problem the break down pressure is specified. At bottomhole, pressure inside tubing during formation breakdown (BHFBP) = FBP BHFBP = 12550 psi The tubing head pressure can be calculated by subtracting the hydrostatic head generated by the fracturing fluid from the bottomhole pressure. At tubing head, pressure (THFBP) = FBP -Gf* D =12550- 0.48* 9000 = 8230psi FRACTURE PROPAGATION During stimulation (propagation), we experience some pressure drop due to friction. Based on the pumping rates and properties of proppants we can determine the drop in pressure. Assuming a pressure drop of 0.35 psi / ft (usually calculated through properties of fracturing fluid and pumping rate), the bottomhole pressure at fracture propagation (BHFP) can be calculated as: DPfr = 0.35 psi/ ft At bottomhole, BHFP = FPP BHFP =9100 psi At tubing head, the pressure inside tubing can be calculated as: Tubing head fracture propagation pressure (THFP) = BHFP + DPfr* D Gf*D = 9100 + 0.35*9000 -0.48*9000 =7930 psi Step 3: Calculate the burst load for different operating conditions: Defining the burst loads: Burst Load pressure = pressure inside tubing pressure in the casing- tubing annulus Burst Load at tubing head for producing conditions: BL _surface_prod = CITHP Pkill_prod_surface = 4973 0 = 4973 psi Burst Load at bottomhole for producing conditions: BL _bh_prod = CIBHP Pkill_prod = 6280-3600 = 2680 psi Burst Load at tubing head for killing operation: BL _surface_kill = THIP Pkill_prod_surface = 5765 -0 = 5765 psi Burst Load at bottomhole for killing operation: BL _bh_kill = BHIP Pkill_prod = 7280-3600 = 3680 psi Burst Load at tubing head for formation breakdown: BL _surface_fbp = THFBP Pstim_surf = 8230 -1000 = 7230 psi Burst Load at bottomhole for formation breakdown: BL _bh_fbp = BHFBP Pstim_bh = 12550 -4600 = 7950 psi Burst Load at tubing head for fracture propagation: BL _surface_fbp = THFP Pstim_surf = 7930 -1000 = 6930 psi Burst Load at bottomhole for fracture propagation: BL _bh_fbp = BHFP Pstim_bh = 9100 -4600 = 4500 psi Step 4: Calculation of collapse Load Defining the collapse loads: Collapse load pressure = pressure in casing-tubing annulus- pressure inside tubing In order to plot critical collapse load conditions (CLL) normally, we assume that a slow leak in tubing has changed the pressure inside casing-tubing annulus to CITHP and that tubing is empty and depressurized. Step 5: Plot the Load lines. Plot the burst load and collapse load lines for various completion operations, burst and collapse resistance lines for the available tubing grades. The obtained plot is illustrated in Fig. 4.4. It can be observed from plot that formation breakdown situation has the maximum burst pressures. The maximum burst pressure line and collapse line are plotted with the available ratings of tubing. The resulting plot will look like Fig. 4.5. Then by inspecting the graph we can come to a conclusion that L-80 grade is the best grade available that can withstand the collapse and burst pressures during various operations. But in other situations we have an option to select multiple grades on tubing which are guided by the estimated loading conditions. Estimation of Tensile Load: Most of the tubing failures are caused due to coupling leakage and failure. The failure of coupling can be attributed to inadequate design for tension of the tubing. This load being one of the significant and causes most failures compared to failures due to burst and collapse pressures. A higher safety factor is used while designing tubing. The design can be initiated by considering only the weight of tubing on packer. Some companies even ignore buoyancy effects while calculating weight to have a better design. So ideally a tubing design for tension is carried out by calculating the weight of the tubing in air. Then the buoyant weight of the tubing is calculated using the densities of steel and mud. Selecting a grade of casing which can handle the tensile load generated due to the weight of the tubing. An example below illustrates the design of tubing for tension. Example 4.3 Tension Design Tubing weight: 7.2 lb/ft Tubing length: 12,500 ft Packer fluid: 0.38 psi/ft = 54.72 lb/ft3 Density of steel: 490 lb/ft3 Win_air = 7.2 x 12,500 = 90,000 lb Wbuoyant = = 0.89 x 73,600 = 80,100 lb Joint Specifications J55 L80 EUE HYD CS EUE HYD A95 API joint strength (Klb) Design factor Design capacity (Klb) 99.7 1.8 55.4 100 1.8 55.6 135.9 1.8 75.5 150 1.8 83.3 Tubing Tension Design Considerations 1. Requires L80 tubing at surface 2. Requires joint strength capability of HYD A95 or equivalent Review questions 1. When would buckling of tubing above a packer likely to occur? 2. A 10,000-ft, high-rate oil well is completed with 5ÂÂ ½ 15.5 lb/ft tubing (wall thickness 0.275). Under producing conditions the flowing temperature gradient is 0.40F/100 ft, and under static conditions the geothermal gradient is 1.8oF/100ft from a mean surface temperature of 40oF. When the well is killed with a large volume of 40oF seawater, the bottom-hole temperature drops to 70oF. If free to move, what tubing movement can be expected from the landing condition to the hot producing and to the cold injection conditions? If a hydraulic packer were to be used and set in 30,000 lb tension, what would be the tension loading on the packer after killing the well? (Ignore piston, ballooning and buckling effects). 3. A 7000-ft well that is to be produced with a target of 15,000 STB/D using 5ÂÂ ½ tubing encounters 170 ft of oil-bearing formation with a pressure of 3000 psi. What rating of wellhead should be used? If a single grade and weight tubing is to be used, what is the cheapest string that can probably be run, assuming that Grade Weight (lb/ft) Collapse Strength (psi) Burst Strength (psi) Tensional Strength (1000 lb) Cost Comparison J-55 C-75 N-80 15.5 17.0 17.0 17.0 20.0 4040 4910 6070 6280 8830 4810 5320 7250 7740 8990 300 329 423 446 524 Cheapest Most expensive Moderately expensive REFERENCES 1. Allen, TO and Roberts, AP, Well Completion Design- Production Operations-1, 3rd edition, 1989, pp 182-187. 1. Hammerlindl, DT, Movement, Forces and Stress Associated with Combination Tubing Strings Sealed with Packers, JPT, February 1977. 2. Lubinski, A, Althouse, WS, Logan, TL, Helical Buckling of Tubing Sealed in Packers, JPT, June 1962. 3. Well completion design and practices PE 301-IHRDC EP Manual Series, Boston, MA 02116, USA.

Ota Essay

The role of an Occupational Therapy Assistant is to help people participate in the things they want and need to do through a therapeutic use of activities. The function of the OTA is not limited to other duties such as preparing materials and equipment, collaborate with health professionals, evaluate progress and maintain records, and clerical duties. The OTA works closely with the Occupational Therapist to assist in the development of treatment plans, carry out routine functions, and direct activities. Occupational therapy is useful in many areas of functional life.Helping children in their school environment is one example. A program can be designed to enhance a student’s ability to access and be successful in the learning environment. Curriculum may include tuning fine motor skills, handwriting skills, organizational techniques, and classroom modification in conjunction with the teacher to ensure successful participation. Another area suited for occupational therapy would b e assisting the elderly. The OTA may assist with everyday functions such as dressing and grooming. Focus is to adapt the environment to fit the patient.This can increase the chances of remaining in the home. Adults with limited vision can maintain their independence and complete daily activities with the help of the OT and OTA. Daily tasks can include showering, dressing, cooking, shopping, managing finances, and mobility. As an Occupational Therapy Assistant, I believe I can care for others personally, medically, and emotionally. I will be a productive and effective part of the dynamics between the OT, myself as the OTA, and the patient to achieve the quality of life that is my responsibility to provide.I communicate clearly, have compassion and reasoning, and thrive to become a rehabilitation leader. I can perform independently under instruction, possess organizational skills, and have sense of priority. Being part of the academic system for the past three years has conditioned me to balance life and college responsibilities. My anticipation of entering into a medical health program, such as Occupational Therapy, has allowed me to make adjustments and preparations in my life.I feel that this is an appropriate time in my life to devote myself and become the medical professional I have always wanted to be. I chose to enter this profession because I feel that I can be a productive member of a team and provide physical rehabilitation to others in need. I have the capability to perform all the duties required of the OTA. My goal is to successfully complete the program and become an important part of someone’s life. Further education is a long term goal and am looking forward to starting this new chapter in my life.