Shell has provided an update on the Burger J exploration well, located in Alaska’s Chukchi Sea. The Burger J well is approximately 150 miles from Barrow, Alaska, in about 150 feet of water. Shell safely drilled the well to a total depth of 6800 feet this summer in a basin that demonstrates many of the key attributes of a major petroleum basin. For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored.
Get background colour from dictionary with a fallback to default value. Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations.
"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program," said Marvin Odum, Director, Shell Upstream Americas. "Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the US. However, this is a clearly disappointing exploration outcome for this part of the basin.”
Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska.
The company expects to take financial charges as a result of this announcement. The balance sheet carrying value of Shell's Alaska position is approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. An update will be provided with the third quarter 2015 results.
Shell holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.
Operations will continue to safely de-mobilize people and equipment from the Chukchi Sea.
DOF Subsea has been awarded several major contracts with a total value in excess NOK 3 billion ($351Million), including options, securing both short term and long term utilization of assets and personnel.
In the North America region DOF Subsea has been successful in securing a major IMR contract with Husky Energy in support of their operations offshore Eastern Canada. The DOF Subsea team based in St. John's will supply IMR services over a period of 10 years firm, with options for an additional 10 years. The work scope includes an IMR vessel and 2 work class ROV systems and personnel. Offshore operations will commence in 4th quarter 2015 by mobilizing 2 work class ROVs on a third party vessel on charter to Husky, followed by delivery of a DOF IRM vessel in 2017. This IMR contract is of strategic importance for DOF Subsea, seeing the Group's presence in the Canadian offshore market being substantially strengthened as well as establishing a solid relationship with Husky Energy.
In addition, the North America region has been awarded a term contract in the Gulf of Mexico. The contract has a firm period of 10 months with option to extend, and the operations will commence in October 2015. One of the Group's subsea vessels will be utilized under the contract. The award is an extension of a current contract held by DOF Subsea North America for a key client in the region.
In the Asia Pacific region, several contract awards over the recent weeks with key clients will secure utilization of the regions vessels. The scope of work includes IMR services, mooring and light construction. With the recent awards, close to full utilization of the regions 4 vessels for the reminder of the year is secured, as well as a good visibility for 2016.
Mons S. Aase stated: "I am very pleased with the Group's ability to secure term work in a challenging market, and especially winning the Husky contract and strengthening the North America subsea region. This award is a team effort, utilizing the expertise within all disciplines in the DOF Group.
The total IMR contract award during 2015 is in excess of NOK 6.5 billion. Securing several strategic long-term IMR contracts will strengthen DOF Subsea's position within the global IMR market over the next years."
Technip USA, Inc., an affiliate of Technip SA of France, and Samsung Heavy Industries (SHI), Ltd. have entered into an agreement to develop a joint design of a low motion semi- submersible production platform. The purpose is to establish a design and delivery model that leverages Technip’s proven engineering expertise as well as SHI’s extensive experience in semi-submersible FPS construction. It also aims at defining a global configuration in full compliance with clients’ specific project design basis. SHI will complete the detail design and fabrication package in alignment with its own yard’s efficiencies.
The hull form to be developed is based on Technip’s patented Heave and VIM Suppressed(2) (HVS) semi-submersible. It has best-in-class overall motion performance for the vital support of both top tension and steel catenary risers. SHI has fabricated several world-class production semi-submersibles including Jack St. Malo for the US Gulf of Mexico and Ichthys for offshore Australia.
The resulting joint design effort will lead to compressed design and delivery of world-class production systems, a feature very much in tune with operators’ demands today for shorter schedules. The relationship also covers joint design and delivery of topsides for the semi- submersible systems.
Jim O’Sullivan, Chief Technology Officer Offshore, Technip USA, Inc., commented: “While our expertise covers a full range of offshore facilities, we are delighted to jointly develop this semi-submersible design for global FPS markets, in close collaboration with our partner Samsung Heavy Industries, building upon our long-term relationship on various projects such as past FPSO fabrications and the current Prelude FLNG facility.”
Last week was 20 years since the start of oil production from the Troll field. The 20 year-old can look back on enormous wealth, with 1.56 billion barrels produced so far and NOK 460 billion in income.
Troll oil is the impossible made possible. Only a few believed in extracting the thin oil zone at Troll, and through a burning desire to make it happen, determination and innovation, Troll oil became reality,” says Øivind Dahl-Stamnes, head of Troll production.
Determination and innovation in reservoir technology, drilling, well and seabed technology and professional and systematic operations have taken Troll Oil to where it is today: Norway's biggest oil producer the last three years.
“Troll oil is a story that summarizes the best our operations and the opportunities on the Norwegian continental shelf,” Dahl-Stamnes continues.
A well technology puzzle
The Troll oil and gas adventure started with the awarding of the fourth licensing round in 1979. On 17 July 1979, Borgny Dolphin started exploration drilling, and four months later Troll was a fact.
A thin oil-bearing layer stretches across the entire field, but is only viable in two provinces in Troll west. The oil is produced using 15 seabed frames with a total of 121 well slots linked to the floating production platforms Troll B and Troll C.
The greatest challenge when planning the field was to develop technology to extract the thin oil zones without the wells producing too much gas. Technology was challenged and resolved, and in many ways Troll has been groundbreaking in drilling and well technology.
All of the production wells at Troll oil are horizontal wells. This means drilling in two stages, initially down to the reservoir which is 1,600 meters below the seabed, and then up to 5,500 meters horizontally into the reservoir. Most of the wells are so-called branch wells, which mean that they have two or three horizontal sections that are gathered at a crossroad in the reservoir.
To date 200 wells have been drilled around Troll B and C, which combined have produced 1.56 billion barrels of oil. Troll oil has been Norway's largest oil producer for the past three years. We still have great ambitions for production, and are stretching for 2.1 billion barrel mark in the field's lifetime. The current recovery rate for oil is 40%, with a goal to reach 52%. The Troll oil adventure alone has generated an estimated NOK 460 billion in income, with investments so far of around NOK 100 billion.
The oil is transported to Mongstad, from Troll B through the Troll Oil Pipeline I (completed 1995; 16" diameter, 85 km length, transport capacity 42,500 m3/day), and from Troll C through the Troll Pipeline II (completed 1999; 20" diameter, 80 km length, transport capacity 40,000 m3/day). Associated gas goes to Troll A.
Cortland Company, a global provider of customized rope and cables, has recently delivered a precision lifting solution for the successful installation of a topsides module offshore in the UK North Sea.
This project required an extremely precise lift with millimeter level tolerances. The module needed to remain in a narrow position and at a specified tilt at all times.
Cortland supplied a unique hybrid of high performance Plasma® 12x12 rope slings, and Selantic® round slings to the client, to allow installation of this 800-metric-tonne topsides module. Cortland, the only company to offer this combination of engineered sling types from one source, worked with Seaway Heavy Lifting who were contracted for the transportation and installation of the module.
Dirk-Jan Mattaar, Principal Engineer, Seaway Heavy Lifting said, "We trust Cortland for their engineering expertise and their strong track record in providing synthetic slings for critical heavy lifts. Their recommendation to use both Plasma® 12x12 rope slings, and Selantic® round slings, was the solution we needed.”
“Selantic® round slings are produced with accuracy to .25% length under load,” added Rob Arends, Cortland’s European Rope Sales Manager. “The combination of eight Selantic® slings, along with four Plasma® 12x12 eye-to-eye slings, ensured Cortland provided a tailored solution offering the strength and accuracy required for this project.”
Stuart Janke, Global Sales Leader for Cortland said: "The completion of the installation of this topsides module is a significant milestone for the team, and Cortland is pleased to have played a part in its successful delivery.”
InterMoor UK Operations, part of Acteon’s foundations and moorings business, has surpassed eight years and more than 2,520 projects without a single lost-time incident (LTI).
The safety record is held by InterMoor UK Operations – InterMoor Ltd, InterMoor Marine Services Ltd and ChainCo. Company operations span three bases, five storage yards and numerous quayside locations in the UK and globally.
Alan Duncan, managing director, InterMoor UK Operations, said, “Providing safe working environments and high-quality training for employees are vital for InterMoor. This milestone highlights the extent of our commitment to safety and the professionalism of our staff. It was achieved with the participation of the entire workforce, from quayside support personnel to senior management.”
In 2015, InterMoor UK Operations opened a new base in Aberdeen harbor and continued its focus on safety. The new equipment at the facility was assembled with a focus on safe, effective and efficient operations.
Bruce Strachan, quality assurance and health, safety and environment manager, InterMoor UK Operations, said, “Eight years without an LTI places InterMoor UK at the forefront of worldwide safety performance. Very few businesses of a comparable size have conducted operations for this length of time without recorded incidents. Of course, the aim is to continue the trend. Our target is, and will always be, zero accidents or incidents.
“InterMoor’s main focus is on nurturing our culture of safety. We do this by encouraging employees to get involved and contribute positively through developing hazard awareness and personal accountability.”
As offshore oil exploration and production expands, the need for high speed spill response vessels has increased. G.M. Penman is Rozema Boat Works' newest skimmer boat. The 65' vessel depends on Twin Disc QuickShift® transmissions and EC300 Power Commander® electronic control system with Express for the critical task of remediation. "The G.M. Penman is like a fire truck," said Jason Rozema, Rozema Boat Works operations manager. "It'll run high speed at 26 kts to the incident, but when it arrives at the spill it has to maneuver carefully around piers and other boats. Twin Disc provides complete control at slow speed."
The oil spill recovery vessel (OSRV) is equipped with a pair of Twin Disc QuickShift MGX-6620 RV transmissions. With the EC300 Power Commander electronic propulsion control system, the boat is capable of instantaneous shift response from neutral to full ahead to full reverse. "It has fantastic maneuverability," noted Rozema.
Operating at 1–1.5 kts with its QuickShift transmission, the boat utilizes 1,500' of Kepner ocean boom and dual Lamor three brush skimmers. It has an on board storage capacity of 215 bbl of recovered oil and crude. The vessel is based out of Vancouver, British Columbia, Canada.
The G.M. Penman is the boatbuilder's fifth 65' OSRV. The company also produces a 47' skimmer; all 14 builds have included Twin Disc QuickShift transmissions.
Since 1955, three generations of the Rozema family have built a wide variety of commercial and recreational vessels used throughout North America. The Puget Sound, Washington-based company's website is www.rozemaboatworks.com
Twin Disc is a global manufacturer of engineered commercial and recreational marine propulsion equipment. Its innovative products are in use on countless vessels worldwide.
International energy consultancy Xodus Group and Dutch innovation company TNO have completed the first phase of a pioneering joint industry project (JIP) into the dynamic forces which affect the integrity of piping systems, in particular through multiphase flow. The second phase of the project, which is expected to be run across three stages, is now open for new participants to join.
Eight companies were involved in the first phase of the project: BP, Statoil, Total, Suncor, Shell, Lundin, Aker Solutions and FMC. TNO carried out the bulk of the test work at their facilities in The Netherlands, while Xodus managed the programme and developed CFD schemes to be able to reproduce the measured results. Based on the outcome of analyses by both companies, new scaling rules were produced. Additionally, CD-adapco provided software (STAR-CCM+) and carried out simulations in support of the JIP.
The JIP rig with an upstream U bend with slug flow through the system
Multiphase flow, the passage of more than one fluid, gas or chemical substance through a pipeline, can cause flow induced vibration (FIV). This is an increasing concern on subsea (and topsides) production piping systems. As data is limited in this highly technical arena, the aim of the JIP is to investigate and understand the forces induced by multiphase flow on piping systems, and generate validation data for multiphase computational fluid dynamics (CFD) to model and analyse its occurrence.
Phase 1 was valued at more than £500,000 and involved testing on a 1.5 R/D stiff bend for a range of flow conditions. The inlet pipe to the bend had three configurations: straight, u-bend vertical and u-bend horizontal. Detailed measurements were made to analyze the forces acting on the bend, pressure and void fraction distributions upstream, downstream and within the bend. Computational fluid dynamics (CFD) calculations were carried out to compare test results with a range of flow conditions.
Phase 2 is actively seeking additional sponsors and will look to extend the work carried out in Phase 1 to cover a range of bend radii. It aims to begin in autumn this year. The scope is as follows:
• Testing additional bend configurations
• Preparation for testing at in service conditions for Phase 3
• Additional CFD studies
The goal is to raise awareness of this complex issue and increase knowledge to incorporate into advance screening, simulation and prediction models.
“This project will extend intelligence from small scale laboratory tests to ‘industrial scale’ piping systems,” said Mike Lewis, Global Lead - Computational Fluid Dynamics with Xodus Group. “As E&P activity goes ever deeper and into more extreme environments, and as subsea equipment becomes more complex, with the additional subsea processing for example, the potential increases for FIV to go unnoticed.
“The JIP is addressing this area of uncertainty in the industry and will provide a benchmark in order to carry out more accurate design calculations and prediction work. This will ultimately improve piping integrity, potentially increase production, and mitigate risk in this high consequence arena.”
“The experimental results thus far have given us new insights on how to improve the mechanical integrity analyses of subsea templates,” said Erik Nennie, Project Manager – Heat Transfer and Fluid Dynamics with TNO. “The outcome of the next phases will further improve the modelling tools for integrity analysis, as both design and operation of subsea templates can greatly benefit from these studies.”
Weatherford International plc announces the commercial release of JetStream® Radio Frequency Identification (RFID) circulation sub at the Annual Technical Conference and Exhibition. Poor wellbore integrity can cause events such as stuck pipe, wellbore collapse, sloughing shales and lost circulation, which are major concerns for drillers in deep water. The JetStream RFID circulation sub enables operators to run a series of tools at different positions along the drillstring and remotely actuate the valves an unlimited number of times in a single trip to achieve higher flow rates and cleaner wellbores.
Jetstream RFID Circulating Sub tool Weatherford (PRNewsFoto/Weatherford International plc)
"Weatherford has pioneered the innovative application of RFID technology in the oil and gas industry to drive operations efficiency," said Neil Gordon, Vice President of Intervention Services and Drilling Tools at Weatherford. "As operators deal with more complex wellbores, the ability to drop an RFID tag from the surface and circulate it through the sub enables our clients to open and close downhole tools multiple times, which provides superior operational flexibility and saves days of rig time. In deepwater drilling operations, RFID technology can save the client over $1 million per application by reducing the amount of non-productive time. This is critical in the current economic environment."
Recently an operator drilling in the North Sea deployed the JetStream RFID circulation sub in a 6.5-inch intermediate section that was drilled to total depth of 10,446 feet through a soft, porous limestone formation. The JetStream RFID circulation sub was actuated a total of 16 times to spot 29 lost-circulation material pills, which allowed the operator to maintain loss rates below 20 bbl/hr (3 m3/ hr) and avoid abandoning the well.
For more information on the JetStream RFID circulation sub, click here.
Bad experience with the reliability of a vane air motor prompted oil and gas well services company, Blue Manta International, to look for a better performing alternative. This type of motor is ideal for operation in ATEX environments but the existing model was proving inefficient in extreme conditions, a problem exacerbated by its inaccessibility for repair and maintenance. Both were resolved when the company switched to a Huco Dynatork piston air motor.
Air motors are used by Blue Manta to tension cable as it is lowered into the well which can be offshore or in the desert. In both environments the efficiency of the vane motor was compromised by the extreme conditions. Its design makes it very difficult to seal, exposing the unit to the ingress of salt water and sand. By the same token air is lost to the atmosphere rather than being converted into motion.
A Huco Dynatork piston air motor is immune to such problems. The operating principle of the product is simple. Via an integral rotary valve, air up to 100 psi is supplied to each of three pistons in turn. The free floating pistons transmit torque on start-up that can be adjusted via a pressure regulator. This results in high torque at variable low speed.
As the motor traps the compressed air within the cylinder, maximum energy conversion is assured. The design is also easily sealable so not only does it consume up to 80% less air than its vane counterpart, it is also far more reliable in hostile environments.
Another important design feature of the Huco Dynatork piston motors is their internal pneumatic porting. Competitors’ products have porting external to the housing and this makes the units more sensitive to temperature extremes and also prone to damage.
The model of Huco Dynatork piston motor that Blue Manta chose is manufactured in stainless steel and supplied with a helical gearbox. For 80% - 90% of its utilisation, the unit serves as a back stop when the reel is in a holding position. Unlike a DC motor in a similar application, the piston air motor will not burn out or cause overload. And thanks to its sealed body it is proving highly reliable and cost efficient in the field.
Mexico needs to attract significant interest to salvage a bidding round hampered by delays and low oil prices, with Phase 4 of the current Round 1 licensing process offering the country’s first deepwater assets, says research and consulting firm GlobalData.
The company’s latest report* states that a total of 13 exploration blocks will be open for bidding, together with several deepwater discoveries, with the general expectation that the assets will be offered under a royalty/tax contract called a license.
Adrian Lara, GlobalData’s Senior Upstream Analyst, says that evolutionary evidence from shallow-water terms suggests that the Mexican government is likely to change the adjustment mechanism to reduce the maximum additional royalty rather than accepting lower bids.
Lara explains: “To account for higher costs and exploration risks in deepwater areas, the additional royalty will need to be lower than that envisaged onshore.
“While this would ease the overall tax burden for potential investors, the government may still be able to mandate a reasonable minimum additional royalty rate.”
GlobalData’s report also found that exploration and production companies with over 1.6 million barrels of oil equivalent per day of production may no longer be restricted from partnering, and changes to unpopular corporate guarantee rules are also being considered.
Despite these attempts to make the current phase more attractive, Round 2 is expected to be more popular amongst bidders.
Lara adds: “Many companies are happy to wait to invest in Mexico if the Round 1 terms are not right, as a number of blocks in the Perdido area for Round 2 are possibly more attractive than those on offer this time around.
“The more important element of licensing in Round 1 is the farm-out of deepwater discoveries Exploratus, Trión and Maximino in the Fold Belt, which could contribute production within a much shorter time frame. Outside of the farm-outs, the government only risks the political capital it has invested if the terms are deemed unattractive,” the analyst concludes.
A recent survey conducted by Trelleborg’s offshore operation paints a positive industry outlook with decision makers taking a long term value-add view. Original equipment manufacturers (OEMs) rated product quality, responsiveness and skills above cost as the most important supplier attributes. In fact, only 4% cited cost as a primary driver in determining preferred partners. However, there is a missing value link, as in practice cost savings appear to be taking priority.
While suppliers with more substance may be winning-out at the tender stage, when it comes to implementation the temptation to try and make short term cost savings is clear. 78% of OEMs, operators, contractors and consultants admitted to changing the specification of a project for budgetary reasons.
Thor Hegg Eriksen, President of Trellebog’s offshore operation, says: The overall effect of reduced oil prices is applying pressure across the supply chain and that’s evidenced by the research findings. While the market buys into choosing a value-add partner over a purely transactional arrangement, it doesn’t appear to be maximizing the third party expertise we know can make the difference.
Our survey points toward an offshore industry that believes it is putting long term strategies first, when the research shows short term decisions with cost front of mind. The market also seems to under-prioritize some of the most important value-add attributes that it should be seeking from a provider that can compete on more than just price.
Innovation, for example, should be high on the agenda but it appears the link between new thinking, products and solutions and a healthier bottom line is missing.
Indeed, only 3% of respondents identified creative approach to the brief as a sought after supplier competency. This could lead to truly innovative suppliers being overlooked and potential overall cost savings being unexploited.
Trelleborg’s offshore operation surveyed a global audience sample of original equipment manufacturers, operators, contractors and consultants, to identify ways in which the industry can respond to pressure against a backdrop of slowed market growth. Trelleborg studied the responses for its brand new Next Level Report to comprehend what is affecting corporations and how this pressure can be overcome.
You can download the Next Level Report here.
NYC-based PIRA Energy Group reports that improved sentiment is important to support demand for crude inventory and price, especially with the global stock surplus expanding in 4Q15. U.S. total commercial crude stocks drew the week ending September 18th, lowering stocks from prior week’s record. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Global Stock Surplus Increases and the Problem for Oil Prices
Improved sentiment is important to support demand for inventory and price, especially with the global stock surplus expanding in 4Q15. Supply/demand revisions also reduce 2016’s anticipated stock decline, but it still remains substantial and important to driving prices higher. Nevertheless, higher inventories lead to roughly 3-4% mark down in 2016 crude oil prices. Rig count declines must translate into inventory declines for prices to move higher on a sustainable basis. The problem for prices is production growth still remains strong, benefitting from local currency declines and legacy projects. Refinery margins will continue to benefit from demand growth outpacing refinery capacity (ex-China) and crude price contango.
Gas Flash Weekly
The prior Gas Flash Weekly published on September 17th indicated a string of triple-digit builds were on the horizon and the latest report confirmed how imminent those hefty builds were. Aside from the 106 BCF figure, preliminary balances suggest builds in the 100+ vicinity for at least the next two weeks. PIRA’s projected end-September carryout is now ~3.63 TCF and easily puts the market back on course for a new record end-October carry in excess of the 3.93 TCF set in 2012.
French Nuclear Availability to Keep Prices Strong in the Shorter-Term
French nuclear availability is a concern in the shorter-term and will keep French prices strong, but EDF's incentive to run the fleet harder is unchanged, considering Belgium's nuclear output remains down year-on-year for the time being. Availability of French oil and gas units is now more certain and bearish for French winter prices, especially given the weakness in the oil and gas balances.
Busy Week with Chinese PMI, U.S. / Europe Momentum Indicators, and Yellen Speech
As expected, latest indicators from the emerging Asia region (such as China’s purchasing managers’ index) turned weaker. Momentum indicators from the U.S. and the euro area, in contrast, were constructive, suggesting that the regions are largely insulated from difficulties in emerging markets. Policymakers from the U.S. and Europe are concerned about potential negative spillovers from emerging economies. An apparent message from Fed chair Yellen’s speech this week was that the Fed would not wait too long before making up its mind about monetary tightening – but the speech also contained dovish elements.
U.S. Commercial Crude Stocks Draw for the First Time Since End-July, Narrowing Surplus
U.S. total commercial crude stocks drew the week ending September 18th, lowering stocks from prior week’s record. This is the first weekly draw in total commercial stocks since July 31. U.S. total commercial stocks built this week last year, narrowing the year-on-year excess. Total reported petroleum demand spiked back up for the week following the period containing the Labor Day holiday. The latest four-week average of export-adjusted total petroleum demand, however, is up only 140 MB/D, or 0.7%.
Pakistan to Look to Offer Subsidized LNG for Fertilizer Industry
The Pakistan government is mulling over providing a subsidy on imported LNG supply to fertilizer plants that have been shut because of dearth of domestically produced natural gas – a significant move that will make urea available to farmers at affordable prices. Four fertilizer plants connected to the pipeline network of state-owned Sui Northern Gas Pipelines Limited (SNGPL) have been encountering gas supply problems because of shortage since the days of previous Pakistan People’s Party government.
European LPG Prices Push Higher W/W
Propane prices in Europe rose 6.1% the week ending September 25th, as seasonal demand increases and markets look tighter in October. Prices will have to continue to increase to attract additional volumes from the U.S. as current spot arbitrage economics remain challenged. Butane prices creeped higher, after larger increases in the prior week.
U.S. Ethanol Prices and Margins Higher W/W
U.S. ethanol prices rose the week ending September 18 as inventories drew to the lowest level of the year the prior week. Ethanol manufacturing margins were slightly lower, as co-product DDG values fell sharply.
U.S. Coal Stockpile Estimates
U.S. power sector coal stocks commenced a seasonal build this month despite warmer than normal weather conditions across the central U.S. on through the Northeast. PIRA estimates U.S. electric power sector coal stocks will reach 165 MMst as of the end of this month, or 86 days of forward demand based on our forecast of Oct/Nov average coal burn (vs. 60 days one year ago).
Low Natural Gas Stock Levels in Europe
Low natural gas stock levels in Europe validate both a comfort with the supply outlook and a lack of concern over peak demand this winter. A conscious decision has been made to rely on incremental imports to balance during peak winter gas demand with the decision tied to broader financial constraints as well as comfort with alternate fuels and forms of power generation available.
S&P 500 & Commodity Prices Fall W/W
The S&P 500 declined the week ending September 25th. Volatility was little changed, but high yield credit (HYG) and emerging market credit fell back. Overall, commodities declined for the third straight week. With regard to currencies, many of the emerging Asia currencies weakened again, particularly the Indonesian rupiah, while the Brazilian real also posted a noticeable decline. Bond yields on longer term Japanese debt continued their easing trend, while U.S. and Euro longer-term yields also eased on the week. Greek bond yields also continue to decline.
China’s 2017 Emissions Trading Scheme Spooks CY18 FOB Newcastle Prices Lower
International coal prices continued to move lower last week, with flat oil prices and a lack of fundamental support allowing for further reductions across the forward curve. Losses for CY18 FOB Newcastle (Australia) prices were most pronounced, likely as a result of China announcing a nationwide emissions trading scheme starting in 2017. Without a rebound in Chinese import demand, the market will remain over supplied, as there isn’t enough seaborne demand to offset continued losses in Chinese import s. With India’s imports exhibiting softness as well, PIRA continues to believe that the risks remain to the downside, although a recovery in oil prices would provide some upside to pricing.
Supply Length Drags Down Price; Will Demand Respond?
Balancing the LNG market is becoming a tougher and tougher proposition in the short term and if the new government-issued METI numbers for Japanese LNG imports by 2030 are anywhere near accurate, a perpetually soft market is not out of the question.
Global Equities Decline W/W
Global equity markets largely declined the week ending September 25th. U.S. equities out performed global equity averages, but still fell. The best performing equity sectors in the U.S. were banking, utilities, and consumer staples, which all posted gains for the week. The weakest performer was materials. Internationally, Japan equities moved higher, while Latin America was the worst performer, dragged down by big drops for Brazil and Argentina.
Dry Bulk Freight Market Forecast
There was a bounce back in Cape market sentiment the week ending September 18 with freight rates increasing sharply as evidence arose of increased iron ore loadings this month in both Brazil and Australia. Iron ore stock levels at Chinese iron ore ports also increased recently however, and with more iron ore afloat this month bound for China, there may be some downward pressure on iron ore prices. With little sign of a recovery in Chinese domestic steel demand and high volumes of Chinese steel exports, PIRA believes current FFA value for Q4 is slightly on the high side.
Stocks Up/Production Down W/W
U.S. ethanol production dropped to a 19-week low 938 MB/D the week ending September 18 as manufacturing margins remained relatively poor, largely due to low gasoline values. Ethanol inventories rebounded after having declined sharply to the lowest level since December 2014.
Brazilian Real Trumps Chinese Buys
13.18 million MT was a stunning number to come out of the Chinese delegation’s ceremonial soybean purchase yesterday in Des Moines, surpassing even the most aggressive estimates, but it was the Brazilian Finance Minister who is really responsible for Friday’s price support.
Soybeans Yields Getting Bigger
PIRA is re-issuing our expected soybean yields this week after inputting the all-important August 15-September 25 weather data in our model over the past few days. PIRA’s current objective yield model showed a similar gain to late August, but still didn’t quite get to the NASS Crop Production number in the September WASDE.
The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.
Oil prices have finally crept up on drilling and production levels in the US. The onshore rig count has continued to soften as many operators, particularly some large independents, have chosen to wait for improved economics to continue operations. In other cases, smaller companies such as Sampson and Quicksilver Resources, have filed for bankruptcy protection amid economic stress – and more are likely coming with bank borrowing base assessments in October.
Slowing operations have led to a half a million bpd decrease in US production since April. While oil prices are very difficult to predict in the short-term and many do not expect a rapid price recovery, added confidence in the global oil supply/demand balance could help push some larger scale projects forward.
Large-scale developments with proprietary designs do not have the optionality of shale developments. Many long-lead offshore and oil sands projects have already been sanctioned and some have much of the major capital costs sunk – making full project break-even figures much less relevant than shale investments with steep production curves. In this case, long-term high-capital cost developments are likely to be pushed forward as they can be 30-year producing prospects and are not easily scalable to the short term environment.
So what does this mean for unsanctioned projects? Numerous IOCs are waiting to see if the U.S. production decline is signaling a bottoming out of the oil price slide. Then begins a process of reevaluation of their own asset portfolio in the new price and development cost environment. Schlumberger’s acquisition of Cameron displayed their observed importance of reducing costs for their customers through supply chain efficiencies. Future commitments to new developments will be driven not just by the oil price but also through the ability of the supply chain to deliver cost efficiencies.
J2 Subsea, an Acteon company, has renewed its global sales and rental distribution partnership with WeSubsea. The partnership provides customers around the world with technical support from J2 Subsea, and global access to the WeSubsea range of baskets, dredgers and tooling, available for rental and sale.
John Walker, director, J2 Subsea, said, “J2 Subsea has extensive experience with high quality tooling, suitable for a range of subsea ROV operations. The J2 tooling fleet is for use in subsea operations, including construction, decommissioning and inspection, maintenance and repair. Our fleet is complemented by the WeSubsea tooling range of dredgers and baskets, and the renewed partnership supports J2’s strategy; to provide quality, integrated services through the creation of close partnerships and innovative tooling solutions. The partnership enables J2 to offer even more cost-effective solutions with outstanding support for customers worldwide.”
Rune Svendsen, CEO, WeSubsea, said, “WeSubsea dredgers are the most efficient in the marketplace, and can easily be operated by divers or ROVs. The dredgers are constructed mainly from titanium, and with few parts, in order to increase operational dependability and provide a lightweight, robust solution. The renewed agreement with J2 Subsea strengthens our ability to provide proven technology and innovative solutions to a growing global marketplace. Due to the ongoing commitment from all involved, the partnership has facilitated international expansion for both companies.”
WeSubsea’s new 4 in. titanium HC ROV dredger is the most powerful 4 in. ROV dredger on the market, and is used for the removal of clay, sand and gravel. The highly efficient unit is supplied ready for mounting to the ROV, with the new compact lightweight backflush system for quick and easy operation.
All WeSubsea products are supplied as complete out-of-the-box solutions for ROV operations, with accessories, as is standard for the J2 range of tooling.
Wilhelmsen Ships Service is pleased to announce that Frank Liang (photo) has been named Regional Offshore Manager Asia, tasked with building the company’s business with rig contractors.
According to Sean Neilan, Sales & Marketing Director in Asia Pacific, Liang will play an important role in WSS's strategic initiative towards the offshore market. “Frank has a strong business development background and a proven track record in maintaining long term relationships with clients,” he says. “This will be needed as Frank demonstrates the value he and WSS can deliver to our new target market and builds up our profile and reputation in this important segment.”
In his almost three-decade career working as an ITC specialist within the marine, offshore & energy industries, Liang brings a wealth of experience and a vast network to WSS operations in Asia. “My primary focus is to leverage our global network and comprehensive product assortment to meet the specific demands of rig contractors,” he says. “While the company has been active in this segment for decades, we are confident that by refocusing our approach to this market, we can generate strong growth.”
While Liang acknowledges that low oil prices have slowed offshore production in the region, he notes that rig contractors are under increasing pressure to improve services and reduce costs. “The scale and scope of our offering and global network puts WSS in a strong position to attract new customers,” he says. “We have also identified areas where we can easily create bespoke solutions to meet the specific demands of individual rig customers.
Liang will also work closely with WSS’ global offshore team, which works with the top 18 rig contractors in the world, and coordinate with other Regional Directors to help standardise WSS product and service offerings. “The leading contractors serve about 60 per cent of the world’s rigs, so represent a critical part of our business going forward,” he explains. “We will also target smaller contractors serving rigs here in Asia.”
Liang has moved quickly to get to know his sales staff and share his ideas. In late July, he hosted a two-day offshore conference in Singapore, bringing together about 30 Account Managers, Sales Managers and Product Managers in the Asia Pacific region for training. “Our goal was to introduce the specific risk factors and business strategies use to target the offshore market,” he says. “We are confident that by working more closely with our colleagues in other regions and departments to align our services, we will be in a stronger position when the rig market improves.”
Some 50% of crews working on offshore support vessels are willing to compromise safety rather than say ‘no’ to clients or senior management, while nearly 80% believe commercial pressures could influence the safety of their working practices.
Image credit: Helm Operations
The findings come from a newly published report on workboat and OSV safety commissioned by operations and maintenance management software specialist Helm Operations.
The independent report summarize six months of research by Fathom Maritime Intelligence and primary data collection and analysis by Southampton Solent University. It draws on original analysis of Port State Control detention records, feedback from 50 individuals from various off-shore companies, incident case studies, and input from leaders in best practice.
The full version of the OSV Safety report is available to download here.
Jee Ltd, a leading multi-discipline subsea engineering and training firm, has unveiled its 2016 course schedule and training and development brochure offering new cost-effective, flexible training programs for the global oil and gas and offshore wind industry.
Covering the whole life-of-field, Jee has designed its portfolio of 27 courses to help subsea engineers build on their existing competencies and meet the standards demanded of them at every stage of their career.
With a reputation for excellence, Jee has been training the global oil and gas industry for more than 20 years, working with over 7000 delegates in 37 countries. With a clear understanding of the necessity for a flexible approach to learning, the company’s methodologies are at the forefront for both the new generation of engineers and experienced professionals.
Jee’s Head of Courses, Jenny Mathew said: “At Jee we understand that in the current climate budgets are being cut, particularly in areas such as training. Cost reduction and efficiencies are key to ensure investment in subsea training continues to be a feasible option for our customers.”
The 2016 schedule offers a variety of online or face-to-face deliveries, at a Jee course hub (Aberdeen and Houston) or in-house at client offices. New options are also available to enhance courses, allowing delegates to create their own unique learning experience.
“Our new training outlook provides cost-effective, flexible training solutions that can be tailored to any organization’s requirements and budget. Delegates have the option to choose a standard ‘off the shelf’ course, customize part of a course, or develop a completely bespoke program to meet specific requirements.
“Using the latest learning theory and offering a range of options, often referred to as blended learning, helps to ensure knowledge is effectively retained and produces real business value when applied to the work of an individual and organisation.” concluded Ms Matthew.
The training team at Jee develop courses in collaboration with tutors, all practising engineers with a wealth of expertise in their field, and incorporate lessons learned from their engineering division to ensure up-to-date content in line with the latest industry codes, standards and best practice.
Impact Subsea has announced the opening of its new headquarters in Ellon, Aberdeenshire, UK.
Following the launch of the ground breaking ISA500 the company has moved into premises in the Castle Road Industrial Estate, Ellon, UK.
The new premises will enable the company to continue to support and expand on its innovative underwater engineering and product solutions to the Oil and Gas, Renewables and Scientific markets.
Benedict Grant, Managing Director, commented: 'To support the growth of Impact Subsea, we are delighted to announce the move to larger premises. Our new premises not only enable continued support for the ISA500, but provide a strong base to develop and launch further innovative underwater products later this year.'
Alastair Mclennan-Murray, Technical Director, also commented: 'The new premises will greatly assist in the ability to develop, prototype and produce products in line with our product development roadmap. The year ahead is going to be an exciting one, as we release new products to challenge the status quo of existing solutions in the market.'
Impact Subsea was founded in February 2015 by two experienced ROV & AUV equipment developers. The company launched its first product – the ISA500, the state of the art Altimeter, Heading, Pitch and Roll Sensor at the end of August 2015. Further product launches are planned for Q4 2015.
Further detail, click here.