Increase needed to keep pace with inflation, preserve deterrent effect
As part of the Obama Administration's ongoing efforts to ensure the safe and responsible production of domestic offshore energy resources, the Bureau of Ocean Energy Management (BOEM) has administratively increased the limit of liability for oil-spill related damages from $75 million to approximately $134 million for offshore oil and gas facilities. This is consistent with recommendations to increase the liability cap from the National Commission on the BP Deepwater Horizon Oil Spill and other studies and represents the maximum increase allowable under the Oil Pollution Act of 1990.
"BOEM is taking an important step to better preserve the "polluter pays" principle of the Oil Pollution Act and further promote safe and environmentally responsible operations," said Acting Director Walter Cruickshank. "This is the first administrative adjustment since the Oil Pollution Act was enacted in 1990 and is needed to keep pace with inflation, which has increased 78 percent since then."
The administrative adjustment to the Oil Pollution Act of 1990 liability cap for offshore facilities is based on the significant increase in the Consumer Price Index (CPI) that has occurred since 1990. The liability cap is set by statute and may only be adjusted to address significant increases in the CPI. The increase to $134 million represents the maximum increase that may be implemented absent new legislation.
The increase applies to facilities handling oil and gas in federal and state waters seaward of the coastline. The liability cap applies to damages that result from oil spills, but does not apply to other liabilities such as oil spill removal costs, which remain unlimited. The rule also contains a mechanism to regularly update the limit of liability cap in the future to reflect changes in inflation over time based on the CPI.
The change to BOEM's regulations was proposed in February and the bureau fully considered all stakeholder comments before enacting this rule that will go into effect in January 2015.
FMC Technologies, Inc. (NYSE: FTI) announced on Wednesday that it has received an order from Star Deep Water Petroleum Limited (a Chevron company), operator of the Agbami field, to provide subsea equipment for operations in the Agbami field, offshore Nigeria.
The Agbami field is located 70 nautical miles (113 km) off the coast of the central Niger Delta region, at a water depth of approximately 4,800 feet (1,463 m). The parties in the Agbami field include Famfa Oil Limited, Star Deep Water Petroleum Limited, Petroleo Brasileiro Nigeria Limited (Petrobras), Statoil Nigeria Limited (Statoil), and Nigerian National Petroleum Corporation (NNPC).
"FMC Technologies has supported the Agbami field development for several years," said Tore Halvorsen, FMC Technologies' Senior Vice President, Subsea Technologies. "This subsea equipment will provide additional production and help extend the life of this deepwater development."
Aker Solutions secured a contract from Daewoo Shipbuilding and Marine Engineering to provide engineering, construction and commissioning services for the hook-up phase of the Mariner oilfield development in the UK North Sea.
The agreement is worth more than GBP 120 million. It comes in addition to a five-year maintenance and modifications services contract awarded in June by Statoil for the Mariner field, which is set to start production in 2017.
"We are very pleased to be expanding our already significant role in developing the Mariner field and to be working with Daewoo and Statoil," said Tore Sjursen, head of Aker Solutions' maintenance, modifications and operations (MMO) business. "This is a testament to the strength and know-how of our UK operations."
The work will be managed by Aker Solutions' UK MMO unit through an integrated construction and completions (ICC) organization with Daewoo and Statoil.
At the peak of the offshore phase, the contract will secure as many as 950 jobs in the UK.
Separately, Aker Solutions' Norwegian MMO unit secured a two-year contract extension worth NOK 360 million for asset integrity management work at 11 offshore and three onshore locations in Norway. The extension is part of a four-year contract awarded in October 2010 by Statoil.
Okeanus Science and Technology, LLC (Okeanus) is pleased to announce the addition of the Sonardyne Ranger 2 GyroUSBL (GyroUSBL) system to its fleet of oceanographic and marine scientific and research equipment. The GyroUSBL is used for acoustic positioning of underwater equipment by providing a highly precise, real-world geographic coordinate position from below the surface.
The GyroUSBL is designed for high-precision target tracking to a range of 4,000 m, as well as for dynamically positioned (DP) vessels. Due to its built-in gyro, the USBL can be quickly and readily deployed without the need for post-installation calibration, providing significant savings in time and operational costs. The integrated Lodestar Attitude and Heading Reference System (AHRS)/Inertial Navigation System (INS) provides precise recording of all motion and acoustic data, heightening positioning accuracy and effectively removing many sources of error associated with standard USBL systems.
The highly portable GyroUSBL can be installed on nearly any size vessel and provides value across such subsea platforms as installation, target tracking and surveying. New 6G acoustic communication eliminates on-deck downtime by enabling the acoustic reconfiguration of beacon settings; 4,000m and 1,000m omni-directional beacons are available. The recent acquisition of the GyroUSBL is a testament to Okeanus' reputation as a premier provider of specialized, state-of-the-art subsea rental equipment solutions across numerous applications.
"We at Okeanus are excited to announce the addition of the GyroUSBL system to our fleet," said Okeanus Vice President and General Manager Benton LeBlanc. "Its capabilities provide us another opportunity to help our customers allocate their valuable capital resources toward completing their projects on time and on spec without the need to invest in physical assets that require repositioning in the future to provide value."
Okeanus Science and Technology, LLC is a premier provider of state-of-the-art hydrographic, metocean, flotation, water collection and geophysical equipment rental services and solutions.
The Swiss-based Allseas Group, a global leader in offshore pipeline installation and subsea construction, has selected Sonardyne's Ranger 2 Ultra-Short Baseline (USBL) acoustic positioning system for the world's largest pipelay and platform installation/decommissioning vessel, Pieter Schelte.
Built by Daewoo Heavy Industries in South Korea, at 382 meters long and 124 meters wide, Pieter Schelte is almost as long as the Empire State Building and as wide as London's Big Ben is tall. When complete early next year, the vessel will be able to lift loads of 48,000 tons and has sufficient deck space to deliver or remove a complete topside module and jacket in one trip.
Allseas Group, owners of the world's largest construction vessel Pieter Schelte have put their faith in Sonardyne's Ranger 2 acoustic positioning technology
The Ranger 2 USBL system will be used as a high precision independent acoustic reference for the vessel's Kongsberg dynamic positioning (DP) system during structure installation or pipelay operations when maintaining a steady position is a critical requirement. The Sonardyne system measures the range and bearing from a vessel-mounted acoustic transceiver to a transponder deployed on the seabed or attached to a pipe as it is lowered from the surface. The vessel's relative position to the transponder is continuously reported to the DP system in order that the vessel can be maneuvered to remain in the required location.
A key factor in Allseas' decision to select Sonardyne acoustics for their new record breaking vessel was Ranger 2's ability to deliver fast, accurate and repeatable position updates in all water depths and operating conditions. This performance comes as a result of the digital wideband signal technology and Sonardyne 6G hardware platform on which the system is built. As many field developments projects around the world now specify 6G-equipped vessels, Pieter Schelte will be able to arrive at a location and begin working alongside other vessels without any delay or interruption to ongoing subsea operations.
Alan MacDonald, Sales Manager for Sonardyne in Aberdeen commented, "Allseas are a major user of Sonardyne technology and we are delighted that our Ranger 2 system has been chosen for their flagship vessel, Pieter Schelte. This investment reaffirms the robustness, versatility and ease of use that 6G products such as Ranger 2 brings to Allseas' offshore operations."
Hot on the heels of a new Recommended Practice (RP) for subsea lifting, DNV GL has now published an RP providing guidance on how to establish, implement and maintain an integrity management system (IMS). The aim is to help operators carry out maintenance activities at the most cost effective intervals, increase confidence in the condition of the subsea equipment and ensure an unified and reliable reference for both authorities and the industry.
The need to manage the integrity of subsea production systems, including those being operated beyond the original design life, is becoming more significant and technically challenging as maintenance demands increase and the industry as a whole looks to drive down costs. "In many cases, offshore infrastructure and facilities are operating way beyond their original design life," says Bente Helen Leinum, DNV GL business development leader subsea.
The RP (DNV GL-RP-0002 'Management of Subsea Production Systems') is the result of a two year joint industry project (JIP) involving DONG Energy, FMC Technologies, GDF Suez, Norske Shell, Statoil, Talisman, Petroleum Safety Authority and Norwegian Oil and Gas. The JIP work explored the typical failures of existing subsea equipment and how the integrity of subsea equipment could be controlled.
Failures in subsea production systems can for example arise from inadequate design, manufacturing and installation. In operation, material degradation as well as structural threats, natural hazard and operational threats, might cause failure of the system. Information management and documentation is a particular challenge and organizational interfaces can also impede clear communication and exchange of operational data across operators' organizations.
"Integrity management is not only a matter of operational control on a daily basis, it should start from the outset of the design phase and continue through the entire life span of the system," says Leinum. "The RP outlines a step-by-step guideline for how to assess and manage integrity of subsea facilities, and aims to provide a reliable point of reference for both industry and authorities, helping to raise the standard within subsea integrity management."
Elisabeth Tørstad, CEO of DNV GL Oil & Gas, says: "The subsea industry is challenged by high cost levels and complexity. We have completed a number of Joint Industry Projects in collaboration with subsea players resulting in openly accessible guidance for the industry. These projects are a highly effective way of addressing pressing industry issues, resulting in improved quality, reduced costs and safe and efficient projects and operations."
The Recommended Practice is available to download here.
Oil & Gas Veteran Sees More Opportunities in Low Oil Price Environment
ABIS Projects has won a clutch of contracts worth around £1million over the next 15 months. The oil and gas project services consultancy has secured frame agreements and call-off contracts with ADTI, Hunting, Talisman Sinopec and North Sea newcomer, MOL.
Aberdeen-based ABIS Projects is working with these new clients providing multi-discipline resources covering business strategy, acquisitions, risk, projects and management systems across the supply chain.
Francis Kiernan, who acquired an interest in ABIS Projects earlier this year, said: "With the considerable drop in oil price, the focus in the North Sea once again turns to innovative ways of working which will deliver cost-efficiencies and greater value. A one size fits all approach is no longer sustainable. The ability to take a commodity, whether it be intellectual property, material, goods or supply chain risk and turn it into a value proposition is now required".
The oil price has dropped by more than 25% in recent months and Mr Kiernan said that this is exacerbated by high production costs. "Unit operating costs have risen 62% since 2011. The industry has lost sight of achieving optimal value for minimal cost. We need a much better alignment of cost and value."
Mr Kiernan, who has been involved in the oil and gas industry for over 30 years, has been through several downturns. He said: "The cyclical economics of oil and gas are nothing new and we are already dipping into a downturn. I reckon we will have three years of challenging times before we get back to the highs of this summer. And these challenges are going to be similar to the ones we faced in the early nineties when the UKCS contracting model changed dramatically, when there was fundamentally a balance sheet transfer from the oil company to the supplier."
During this coming period, companies will be focused on doing things smarter. Mr Kiernan believes that oil companies will be more willing to look at creative opportunities to work with suppliers who have the flexibility to expand in a contracting market because they are willing to work more innovatively.
"While this is not good news for the big service companies, who need to pursue volume and service their overheads, it is good news to the smaller companies who can interpret and deliver what an oil company needs and meet that need through a boutique service with high-end intellectual property and value.
"Smaller, nimbler oil companies, like MOL, have clear terms of reference and want to engage with suppliers on how they can really work together to deliver value and not just add cost," Mr Kiernan said. "Suppliers, like Hunting Energy Services, who are growing and maturing with a unique offering in the marketplace, are able to offer what their customers want which is a reduction in inventory and capital balance to allow their clients to shift their focus forward to exploration and development."
Mr Kiernan is also forecasting opportunities in the Norwegian sector for UK companies. He explained: "Norway has invested heavily in best-in-class technology and operations but the Norwegian Continental Shelf (NCS) has reached a production plateau. Having peaked in terms of high end capital investment, the NCS must now embrace more effective business models and contractual arrangements to regain competitiveness. This will lead to the recalibration we saw in the UKCS in the nineties, which until now, Norway has resisted and potentially open up opportunities for UK companies who learnt the lesson of optimal value for minimal cost and are prepared to return to this mind-set."
Mr Kiernan has served as a of several companies in the UK and Scandinavia including Nexus Ltd, Aker Operations, Aker Kvaerner, Kvaerner Oil and Gas, Dietsmann Morgan Moore and Press Offshore/AMEC
• GE to Bring New Subsea-Electric Actuators Technology to Full-Scale Commercial Production
• Technology Supports Industry Efforts to Enhance Conventional Electro-Hydraulic Controls Acquisition Expands GE Oil & Gas' Existing Subsea Controls Product Line Portfolio
GE (NYSE: GE) formally announces that it has signed an agreement to acquire the Subsea Electric Actuator product line of Oceaneering, a global provider of engineering services and products to the oil and gas industry.
The product line goes to market under the Oceaneering Subsea All Electric and Ifokus brand, which specializes in the design and manufacturing of specialty subsea products, with a focus on electric valve actuators. The closing of the deal—subject to the standard regulatory approvals—is expected to be completed in the first quarter of 2015.
"We are extremely pleased to sign our agreement with GE, which has the global resources, subsea controls technology and systems integration expertise required to bring Ifokus technology to full-scale commercial production to meet the growing demands for subsea electrification," said Mark Peterson, Oceaneering's vice president of corporate development.
Oceaneering's 16-strong Stavanger-based engineering team dedicated to the Electric Actuator product line will join GE Oil & Gas, transitioning into the Subsea Systems business that also has operations based in Stavanger, Norway.
Rod Christie, CEO of GE Oil & Gas' Subsea Systems business, explained: "With Ifokus as part of our solutions portfolio, GE has the opportunity to pave the way for electrification in the oil and gas subsea space, giving us a new technology that is faster to operate for processing applications, has excellent enhanced diagnostic capabilities and can be seamlessly integrated into a customer's existing controls, communications and power network."
Ifokus is at the forefront of the offshore industry's efforts to enhance conventional, hydraulic fluid-based subsea controls equipment with faster electric actuation systems that offer increased diagnostic capabilities.
Electric actuators are fitted to the subsea systems that control the flow, usually oil or gas, out of the well or the injection of fluids into the well to enhance recovery. Electric actuators appeal to operators because they offer potentially lower overall system costs and are more environmentally compatible by reducing the risk of hydraulic fluid leaks.
The technology is ideally suited for complex subsea processing applications and more difficult extraction environments such as deepwater fields, or fields with longer offsets from the shoreline. With the end of easy oil recovery, this is expected to be a key growth segment for the industry.
Statoil and its partners have decided to develop the Rutil discovery located in the Gullfaks Rimfaks valley in the North Sea. Providing close to 80 million barrels of oil equivalent, the development will extend the lifetime of the Gullfaks A platform.
The plan for development and operation (PDO) was submitted to the authorities on December 16th.
"We are pleased about the investment decision we have made that will extend the period of profitable production on the Gullfaks A platform. By using existing infrastructure and standardized solutions we are able to create great value for our owners," says Ivar Aasheim, senior vice president for field development on the Norwegian continental shelf (NCS).
"Statoil is currently implementing a major improvement effort to reduce costs and increase profitability to secure longterm activity and value creation on the NCS. The Gullfaks Rimfaks valley is a good example of this work," underlines Aasheim.
Gas and condensate will be transported in existing pipeline for processing in the gas processing facility at Kårstø north of Stavanger. The processed gas is transported to markets on the European continent.
"Production from the Gullfaks Rimfaks valley helps secure jobs and value creation from the Gullfaks field and throughout the whole value chain beyond 2030," says Kjetil Hove, senior vice president for the operations west cluster in Development and Production Norway (DPN).
The investment costs of the Gullfaks Rimfaks valley development are estimated at 4.6 billion 2014 NOK.
The Gullfaks Rimfaks valley development will consist of a standard subsea template with two simple gas production wells, and possibilities of connecting two more wells. The well stream will be connected to the existing pipeline to the Gullfaks A platform.
The Gullfaks Rimfaks valley is one of Statoil's fast track projects, aiming at realising resources quickly and cost-efficiently by for example using existing infrastructure while it is still available.
Production start is scheduled for the first quarter of 2017.
The license partners are Statoil (operator) (51%), Petoro (30%) and OMV (19%).
Elliott Bay Design Group (EBDG), a leading naval architecture and marine engineering firm with offices in Seattle and Ketchikan, recently announced the delivery into service of the CAPE HORN, a Specialty Oilfield Vessel that it designed. EBDG partnered with Gulf of Mexico Operator SeaMar, LLC and Gulf Island Marine Fabricators on the class design and production engineering for the ship.
"We would like to congratulate our valued client, Darrel Plaisance of SeaMar, LLC on the delivery of their EB-220CC and the shipyard on a fine build," stated Gulf Coast General Manager, Keith Keller.
The design of the CAPE HORN was developed from concept to production in EBDG's Gulf Coast office and features an innovative tank farm unique to Specialty Design Oilfield Vessels. EBDG provided full design services including structural, mechanical, piping and outfitting design, and served as the primary point of contact for all regulatory body requests for information.
EBDG credits great teamwork, communication and project management expertise for the successful journey of the CAPE HORN from design to delivery and looks forward to a continued relationship with SeaMar, LLC and delivering its next vessel, the CAPE COD, into service.
A. K. Suda has successfully completed the design of a 335 ft (102.5m) pipe-legged liftboat. This vessel, which is the world's largest pipe leg liftboat, is being delivered to its owners in 4th Quarter 2014. This vessel follows on the heels of the world's largest liftboat, the SUDA 450-L3T, delivered earlier this year.
According to the firm's CEO, Mr. Ajay Suda, "Liftboats are getting larger and more sophisticated. We are at the forefront, having designed the top three largest liftboats in the world."
This state-of-the-art vessel is a 3-legged, self- propelled, self-elevating, general service liftboat, known as the SUDA 335-L3P. It is ABS classed with Unrestricted Service, A-1, AMS, Ⓔ, DPS 1 Accommodation Service, Wind Farm Installation Maintenance and Repair Certification. The hull dimensions are 194 ft x 131 ft x 16 ft (59m x 40m x 5m). It has two leg encircling cranes of 250T each, with a maximum reach of 129 ft (39m). The quarters arrangement can accommodate 160 persons including crew.
With its long legs, this Self-Elevating Unit is capable of working in water depths up to 262 ft (80 m). It also has a CAP 437 heliport, capable of supporting Sikorsky helicopter models S-61N & S-92A.
The liftboat is the first of a series of this design to be delivered. Two additional vessels based on this design are currently under construction.
There has been a large increase in demand for liftboats in recent years, with many owners and charterers not being able to wait out the time frame that it takes to have the vessels built. Per Mr. Suda, "Our designs have evoked a lot of interest in the Middle East and Far East. When you can get more cost effective solutions than what has been available, why would you not be interested?"
Mr. Suda further says, "The larger vessels of our designs like the SUDA 450-L3T can easily be morphed into rigs at significantly less cost than the traditional designs. We are excited at the tremendous opportunity to usher in a new generation of jackup rigs. The industry has not seen new concepts in rig design for a long time."
In addition to the SUDA 335-L3P hulls, there is a 3 truss legged version under construction, the SUDA
335-L3T. Some other new models already under construction are a 320' 4-legged truss design (SUDA
320-L4T) and a 300' 4-legged truss design (SUDA 300-L4T).
Asset Guardian Solutions Ltd (AGSL), which specializes in protecting companies' process critical software assets, announced that it has been awarded a contract by Dolphin Drilling AS of Tananger, Norway. The contract is a breakthrough for AGSL, as it is the first contract it has been awarded by a Norwegian-based company.
Protecting and managing process critical software
AGSL will provide Dolphin Drilling AS with Asset Guardian, a fully configurable process software management tool designed to meet the needs of Rig Control and Automation Systems. By using Asset Guardian, Dolphin Drilling AS will centralize its software and data storage into a single repository, which will enhance workflow management, minimize risk and speed recovery of software and data in the event of software failure, reducing any impact on drilling operations
Asset Guardian software will be installed on Dolphin Drilling's entire fleet, which consists of nine mobile drilling units. It will provide a more effective method of managing the data associated with each programmable system, and a safer, more secure means of storing critical software.
Improving communications with worldwide fleet
Dolphin Drilling's drilling vessels and semi-submersible rigs work all over the world. They operate in remote waters where access to the Internet is limited. To improve communications between these remote locations and its onshore facilities, AGSL will also provide AGSync, a solution designed for the oil and gas industry that makes it possible for data and files to be seamlessly synchronized between remote locations and the company's master server, which is located at the company's headquarters in Tananger, Norway.
The contract from Dolphin Drilling AS is the most recent in a string of awards from oil and gas operators and suppliers to AGSL. These awards include GDF Suez, which will use Asset Guardian to manage all of its process control-related software assets associated with the Cygnus Project, the largest undeveloped gas discovery in the Southern North Sea in 25 years. BP, which uses Asset Guardian on many of its global production facilities, selected Asset Guardian for the company's iconic Clair Ridge and Quad 204 projects. Operators Woodside and INPEX also use Asset Guardian for their projects and developments in Australia.
"We are very excited to be working with Dolphin Drilling AS, not only because it represents our first contract in Norway, but because it is the second major contract we have been awarded by a drilling company," said Peter Beales, Business Development Manager for AGSL.
2H Offshore, an Acteon company, will deliver a lightweight conductor-supported platform for EQ Petroleum Developments Malaysia Sdn Bhd for installation in the Tanjong Baram field, offshore Malaysia. EQ Petroleum Developments Malaysia Sdn Bhd is a subsidiary of EnQuest PLC. The award follows completion of a competitive tender process, in which 2H successfully developed a jack-up installable platform design to meet EnQuest's project timeline and budget.
Installed in 10 m water depth, the platform has three decks with a subsea template and will host two wells with spare capacity for future additions. The decks will be supported by three 30 in. well conductors. A boat landing and crane will also be provided. The platform will be tied back with an 8 km long flexible pipeline to the existing West Lutong-A facility, and will be fabricated locally in Malaysia. Installation is planned for Q1/Q2 2015.
2H's scope of work includes all platform and conductor detailed engineering, equipment procurement, fabrication, installation support and offshore commissioning.
Feisal Alhady, executive director of 2H's Kuala Lumpur office, commented, "During the six years we have been established in Kuala Lumpur, we have developed a successful track record in conductor-supported platform engineering. This, coupled with our experience of the local fabrication market, will enable us to effectively deliver this lightweight platform for Enquest."
AVEVA will support Det norske to improve quality and cut project time
AVEVA has announced that a brand new customer, Det norske oljeselskap ASA (Det norske), has begun deployment of AVEVA's Progressive Handover Solution to manage Life Cycle Information for the high profile Ivar Aasen field project. The AVEVA solution allows Det norske to benefit from improved information quality within its projects and to reduce the time it takes to access key technical information.
AVEVA's Progressive Handover Solution is made possible by AVEVA's industry leading Digital Information Hub technology enabling Det norske to accept data from various sources, regardless of software system. By utilising dashboard reporting with its EPC, Det norske can monitor information that will be automatically and progressively updated throughout the project. The result is a streamlined handover from construction to operation with higher quality information.
'The Life Cycle Information portal will contribute to converting the project from being document-centered to focus on tags', said Ellinor Meling, responsible for implementing the AVEVA solution in Det Norske. 'As the quality of the Life Cycle Information is improved during the project, approximately all technical information may be located directly from a tag. The solution will be gradually developed with new functionality being added, including inter alia integration with SAP. This is the solution that will be utilised in the Ivar Aasen project for operation and modifications'.
'AVEVA has added Det norske to an already strong roster of major Owner Operator customers', said Jan Edvin Pedersen, Head of Enterprise Asset Management, AVEVA. 'By selecting AVEVA's Progressive Handover solution they can have absolute confidence in the integrity of its project data and a clear strategy for handover. It will save time and reduce the risk as information will be correct at every stage of the project. We have seen a number of customers realise handover cost savings of up to 85%.'
Det norske has installed the following AVEVA products:
AVEVA NET Workhub and Dashboard, AVEVA NET Gatekeeper, AVEVA TIM Analyser, AVEVA Information Standards Manager (AVEVA ISM), AVEVA NET Data Extractor Gateway, AVEVA NET PDMS Gateway, AVEVA PDMS
About the Ivar Aasen field.
The Ivar Aasen field is situated west of the Johan Sverdrup field in the North Sea, and contains approximately 210 million barrels of oil equivalents. Total investments are estimated to NOK 24.7 billion. The anticipated economic life of Ivar Aasen is 20 years, depending on oil price and production trend. The field is planned to start-up production in the fourth quarter 2016. Det norske is the operator of Ivar Aasen.
About Progressive Handover
AVEVA's Progressive Handover Solution de-risks the transition of a new facility from its EPC-managed CAPEX project phase into production by the client's operations team. A progressive handover approach, enabled by AVEVA's industry-leading Digital Information Hub technology, can reduce handover costs by 85%, reduce information retrieval time in operations and streamline the population of operational readiness systems in time for first production.
As a continued demonstration of its commitment to offshore safety, the Center for Offshore Safety (COS) has opened membership to all companies operating on the U.S. outer continental shelf, regardless of water depth.
Since its creation in 2011, the COS worked with industry stakeholders to promote the highest level of safety for the U.S. offshore oil and natural gas industry through effective leadership, communication, teamwork, utilization of disciplined management systems and independent third-party auditing and certification. The Center has worked to draw lessons learned from successful, existing safety management programs, and to stimulate cooperation and sharing amongst industry participants to enhance the collective safety management knowledge of the industry and develop tools and good practices based on the knowledge sharing.
Most notably, the Bureau of Safety and Environmental Enforcement (BSEE) incorporated three COS documents by reference into the new SEMS II rule:
COS-2-01 Qualification and Competence Requirements for Audit Teams and Auditors Performing Third-party SEMS,
COS-2-03 Requirements for Third-party SEMS Auditing and Certification,
COS-2-04 Requirements for Accreditation of Audit Service Providers Performing SEMS Audits.
The COS is undertaking an outreach effort to broadly engage the industry in the continuous enhancement of safety management systems and in the creation of an environment where the entire industry has a voice in future offshore safety.
Bibby Offshore's Houston-based division, Bibby Subsea, is proud to welcome the Olympic Ares, a multi-functional subsea construction support vessel (CSV) which is due to arrive in the port of Galveston on 16 December 2014.
The 115 metre Olympic Ares is an extremely capable vessel, with specifications including a 250 tonne heave compensated crane for subsea use to 3,000 meter water depth and 1300 square meter of clear back deck space.
Ahead of arrival in Galveston, the Olympic Ares was recently installed with two SMD Quantum MkIII 250hp 3,000 meter rated Work Class ROVs. Each of these high specification Quantum Work Class ROV systems includes SMD's Extended Tophat Tether Management System (TMS), telescopic A-Frame, umbilical winch, deck pack and fully integrated control cabin.
Andrew Duncan, President and Managing Director of Bibby Subsea, said: "Taking delivery of the Olympic Ares further expands our capacity for our oil and gas clients in the Gulf of Mexico, and allows us to continue to deliver comprehensive CSV support in this region.
"Welcoming the Olympic Ares follows recent investment in new operations facilities and key appointments into the business, with further asset based announcements to follow. The Olympic Ares will be primarily focused on the US Gulf of Mexico market but will also be available to support project commitments in Mexico, Trinidad and Canada as required and is a strategic step into the deepwater construction market. The vessel deployment further demonstrates Bibby Subsea's commitment to offer clients in the region a cost effective and efficient alternative to other options currently available."
Since its inception in August 2013, Bibby Subsea has experienced significant client demand for its service offering. A recruitment drive is planned to increase the number of Bibby Subsea staff in the region by more than 70, both onshore and offshore, throughout 2015 to strengthen the business's presence and enhance its on-the-ground support for clients in the region.
Bibby Subsea aims to deliver a diverse range of subsea construction projects for operators in the Americas Region. Services include project management and engineering, innovative remotely operated vehicle support vessels, construction support vessels, survey capabilities, diverless intervention, advanced remote systems and tooling packages, in-house survey and data processing and inspection, repair and maintenance services.
Bibby Offshore has grown from 10 employees in 2003 to now employing more than 1,450 people onshore and offshore worldwide, with offices in Aberdeen, Liverpool, Newcastle, Singapore, Trinidad, Houston, and Norway. The company has an international fleet of seven subsea support vessels and 17 ROVs, and will continue to add to its fleet to meet demand.
Well management and performance improvement specialist Exceed has announced significant growth in 2014, reaching its target turnover of £15 million. In addition, the expansion of its Aberdeen team adds 10 new business support positions to the head office, including the appointment of a global business development manager. Founded in 2005, the Aberdeen-based company now employs a team of 75 with an international presence in Canada, Ghana, Kenya, Myanmar and Malaysia.
During the course of 2014 Exceed has expanded its client portfolio, resulting in a contracts value in excess of £5million, and is targeting business growth in new strategic markets in 2015.
Ian Mills, Exceed founder and director & Al Brockie, Exceed well management director
Exceed established an impressive track record as a performance improvement specialist before diversifying in 2009 to launch the industry's first wells management team to focus on deepwater well delivery, delivering projects in the Black Sea, East Mediterranean and Indonesia. The company continues to trail blaze, currently planning the very first deepwater campaign in Myanmar, expected to commence in early 2015.
The establishment of Exceed Canada in 2013 followed an agreement with two Canadian operators to provide high-calibre wells teams to support their existing drilling programmes. Exceed now has a team of harsh environment drilling experts supporting operations offshore on three rigs East Coast Canada.
In keeping with Exceed's strategy of client demand-led growth and diversification, a new enterprise is being established in Ghana driven by a high degree of confidence in the growth of the region following the announcement of the TEN deepwater field development offshore Ghana and other emerging opportunities in the Gulf of Guinea.
Exceed founder and director Ian Mills, who has 30 years' experience in the oil and gas industry including senior drilling roles at Shell and BP, said: "This year, we have experienced an increase in client-led enquiries across the business and as a result of the increased number of projects, we have invested heavily in our recruitment.
"2014 has been an exciting year for the company, with new projects enabling us to build on our international footprint while strengthening our presence in Canada and Africa. In 2015, our aim will be to look at further prospects in South East Asia and Brazil. We are also excited by the contracts we have been awarded and delivered in Iraq and Kenya which reinforces our industry reputation. The fact that we have been requested to support land-based well construction projects, which are typically much lower cost operation, highlights the clients' belief and commitment in our performance improvement solutions."
Exceed's Performance Improvement division has a proven track record of helping clients save millions of pounds by improving safety and increasing rig productive time, typically by 10-15%.
Exceed launched its well management service with the aim to become the world's preferred wells specialists partnering with clients to develop prospects without incidents and at the lowest possible cost of access. The key benefits to Exceed's target market – NOCs and the independent IOCs – include the calibre and training of its people and its track record for consistently delivering well objectives safely, on time, and within budget.
NYC-based PIRA Energy Group reports that the creeping stock surplus continues. In the U.S., overall commercial stocks built last week with the build in both products and crude.. In Japan, crude runs and imports are higher and crude stocks built fractionally. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:
Creeping Stock Surplus Continues
Preliminary data is now in for end November and it shows that commercial oil inventories in the three major OECD markets – United States, Europe and Japan – drew just 12 million barrels (400 MB/D) compared to a year earlier 37 million barrel (1.2 MMB/D) decline. Commercial stocks in these markets began the fourth quarter 22 million barrels, or 1%, higher than the year earlier and have now ended November 76 million barrels, or 3.5% higher. This stock profile is consistent with PIRA's balances showing year on year supply growth outpacing demand growth by over 1 MMB/D. This imbalance grows even larger in 2015.
Data Issues Likely an Important Factor in Big U.S. Stock Build
Overall commercial stocks built last week with the build in both products and crude. Re-benchmarking occurred this week indexing the December 5 stock levels to the September PSM, which resulted in substantial upward revisions to stocks. Part of this adjustment could have inflated inventories and correspondingly deflated reported demand. An added factor could be the stock data for the prior Thanksgiving holiday week was underreported, thus distorting this week's stock change. Probably both factors are to blame but, nevertheless, this week's reported inventories reflect a growing surplus of inventory relative to last year.
Japanese Crude Runs and Imports Higher and Crude Stocks Built Fractionally
Crude runs were marginally higher on the week. Alignment with our planned turnaround schedules still looks good. Crude imports were higher and crude stocks built fractionally (0.2 MMBbls). Finished product stocks drew due to draws in all the products but jet.
Re-Weighting of Major Commodity Indices in January 2015 Boosts Brent but Lowers Natural Gas and European Gasoil
The S&P GSCI and the Bloomberg Commodity Index (BCI), the two major indices for passive investment in commodities, have recently announced the new weighting schemes that they will apply to their respective commodity indices effective January 2015. The BCI index will see $2.6 Billion flow into energy against a $0.5 Billion loss for GSCI. Natural gas is the big loser down $1.2 Billion in January 2015 vs. current levels, while Brent is the big winner picking up $2.6 Billion. WTI increases only $334 Million. Oil products over the same time period increase $407 Million. European gas oil is the other major loser in the re-weighting down 7 MMBBLs or $575 Million.
When Will the Bloodletting Stop?
Saudi Arabia's relinquishing its role as oil price anchor has caused a catastrophic decline in the demand for inventory which has resulted in oil prices collapsing. Both physical and financial "inventory" holders have been selling. The selling has had a snow ball effect because of a lack of liquidity, one of the consequences of Dodd Frank regulations, and ongoing producer hedging. With many U.S. shale oil producers under hedged in 2016, with say 15% coverage, versus 40-50% for 2015, the selling pressure will not end until prices drop to the level where hedging is uneconomic.
NGL Prices to Continue Falling
With crude oil prices likely to continue to push lower and U.S. LPG export economics continuing to flash negative, the path of least resistance seems to be lower for U.S. prices. Internationally, recent LPG gains on naphtha in Europe and Asia come at the expense of less attractive petrochemical feedstock margins. LPG's discount to the refined product will need to widen for higher consumption to occur.
Ethanol Output Reaches All-time High
U.S. ethanol production soared to a record 988 MB/D the week ending December 5, up 26 MB/D from the previous week. Stocks built by 461 thousand barrels to a seven-week high 17.75 million barrels.
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.
Short-term investment models for shale make it more vulnerable to project cuts
With oil prices plummeting to a five year low, and project cut backs likely in 2015, short-term funding for US shale may lose out to the country's higher cost deep water developments, the latest article by leading petroleum industry advisor Gaffney, Cline and Associates (GCA) suggests.
The current low price of oil has been blamed on reduced demand and a global oversupply. Much of that oversupply is due to the huge increase in oil production from the US unconventional or shale industry.
New analysis from GCA indicates that where companies have the flexibility to choose, shale activity will most logically suffer first as a result of the price crash, leaving activity in other areas such as the Gulf of Mexico relatively more protected. However actual cuts will be influenced by a large number of individual company factors, and the squeeze on cash flow will undoubtedly cause cuts to be felt everywhere.
"Whilst high cost environments such as the deep water Gulf of Mexico would appear to be vulnerable, and undeniably cuts should be expected there, economic rationality suggests that the brunt of cuts should be directed at onshore unconventional investments. However, in the short term there is not always the operational flexibility to make decisions based solely on fundamentals," says the article's author Bob George, Executive Director and Senior Strategic Advisor at GCA.
Another key difference for deep "water projects is their longer-term investment lifecycle. In the Gulf of Mexico (GoM) for example, where a company's investment in a typical project may be US$1 billion or more, much or all of the investment will be committed and spent around five years before any returns are seen. The critical point for such projects is not the price of oil now, but its anticipated price in the future and where deferral in the short term may result in missed gains later.
"From a decision-making perspective, this means the risk lies in the expected price of oil in 2020. As a result, projects currently underway are less likely to be stopped. This is in contrast to onshore unconventional shale investment where decisions are often much more short term," says George.
"Shale drilling can be cut back or ramped up in fairly short order to accommodate the market conditions, resulting in more rapid response to fluctuating oil price."
At the end of October 2014 GCA posted an article* looking at the potential impact of US$80 per barrel on activity in unconventional shale oil plays in the United States. The article indicated that, using the "sweet spot" volatile oil window of the Eagle Ford as an example, activity was still profitable at that price although more fringe areas (and other basins with pricing disadvantages) might be more challenged. However, even the sweet spots in the Eagle Ford oil window started to look challenged at US$70 per barrel.
Co-authors Cecilia Jing Cui and Neil Abdalla point out that strong offshore GoM projects can still be viable down to US$60 per barrel. Economic rationality would suggest that where the opportunity exists, onshore shale spending would be a more appropriate short-term target for capital deferral because operating flexibility allows any adjustments made there to be reversed in equally quick order.
Bob George states, "Although pain is likely for areas like the offshore Gulf of Mexico in 2015, it should be much better placed to weather the storm of depressed oil prices in the short term than the US onshore unconventionals industry."