Damen SAR Vessel Passes Capsize Test with Engines Running

1 1Roll over testing of SAR 1906 3 lowresMarking a true unique test, Damen has successfully completed full scale roll-over testing of its Search and Rescue Vessel 1906 with running engines. The tests were performed in Antalya, Turkey in cooperation with the Turkish Coast Guard and the International Organization for Migration (IOM), in addition to engine manufacturer MTU.

Ever since its conception, the Damen SAR 1906 has been an example of technological and academic cooperation. For instance, the innovative design itself is the result of close collaboration between Damen and the Royal Netherlands Sea Rescue Institution (KNRM), Delft University of Technology, De Vries Lentsch Naval Architects.

These latest ‘roll-over with running engines’ tests demonstrate that now, almost five years since the vessel was introduced to the market, Damen is still working towards improving this award-winning design by implementing results of ongoing research.

Full control

“This unique test with running engines was at the Turkish Coast Guard’s request. This excellent result has been accomplished with the great cooperation between all parties,” comments Damen’s Sales Manager Boran Bekbulat.

“Moreover, we are proud to say that this is the first time that such a roll-over test has been carried out successfully with running engines. We would like to thank the Turkish Coast Guard for challenging us to test our limits. Most importantly, proving the capabilities of the vessel for which she is designed, giving her crew the confidence and the control in all weather conditions.”

1 2Roll over testing of SAR 1906 4 lowresRoll-over mode

Describing the events leading up to these successful tests Meredith Dijkstra, Damen Product Portfolio Manager High Speed Craft, highlights Damen’s cooperation with MTU: “We have been working closely with MTU to develop and improve engine software that is able to handle a capsize situation. This has been backed up by engine roll-over tests at their facilities and our own proven investigations into the roll-over capacity of the SAR 1906.”

In the eventuality of a vessel capsize in extreme weather conditions, the capsize switch detects the roll-over and sends out signals to, for example, the engine software which will go into ‘roll-over mode’. “At this moment, the water jets are automatically clutched out and the engine returns to idle mode to protect the engine,” she explains. “This continues until the software detects the vessel has righted itself and the crew can directly regain control.”

The SAR 1906 also has several mechanical design features in place to enable continuous and safe operation of the engine. “We purposely used mechanical solutions, instead of electronic solutions, because they are safer and more durable.” Examples of the mechanical design features are the addition of extra water traps to the ventilation inlets and exhaust systems.

“After all, this is the principle that we have been working towards; when all other vessels have to turn back to port because of bad weather, the SAR 1906 needs to be able to continue her work when no one else can.”

Expro Secures $5million/£3million Well Testing Contract in UK North Sea

2Expro well testingLeading international oilfield services company, Expro, has been awarded a five-year contract extension for surface well testing services across several assets for an operator in the UK North Sea.

The $5million/£3million contract includes the clean-up of existing wells and the testing of a series of newly drilled wells and is due to commence later this year.

Commenting on the award, Europe CIS region director, Neil Sims said:

“Expro has a strong heritage and reputation for well testing services in the UK North Sea. Initially established in 1973, we are now a global market leader in this area - alongside our broader portfolio of subsea, completion, intervention and production services.

“Our long-term relationships with operators are the foundation of our business and exemplify our passion for delivering the highest standards of safety and service quality.

“We look forward to supporting production maximisation from the existing wells while assisting in the development of the new wells in the UK North Sea.”

Expro is the market-leading provider of well testing and appraisal services, globally. Headquartered in the UK, the company’s global well test operations are run from Great Yarmouth and Aberdeen (UK), alongside regional hubs in North and Latin America, Sub-Saharan Africa, Asia, the Middle East and North Africa.

Ampelmann Keeps Industry Moving with Offshore Marine Crew Change Solutions

Ampelmann, a global leader in offshore access solutions, has supported the offshore crew change market with more than 180,000 offshore workers transferred safely to date – 100,000 this year alone through its innovative offshore marine crew change solutions. Although a little amount compared to nearly four million transfers Ampelmann has supported in total, this particular segment is growing rapidly.

The company operates a number of motion compensated gangway systems which have been developed specifically for crew change operations in the Middle East, Gulf of Mexico and Asia Pacific regions. The company has already deployed three gangways for dedicated crew change projects. Two in the Caspian Sea off the coast of Baku since 2015 and one in the Middle East of the coast of Dubai in 2017.

3Ampelmann crew Change A typeAmpelmann Crew Change A-type

Ampelmann’s crew change solutions including the A-type, L-type and newly introduced S-type gangway system are a safe, reliable and more cost-effective alternative to helicopter and swing rope transfers.

Jan van der Tempel, founder and CEO of Ampelmann, commented: “The main drivers in the crew change market are safety and efficiency. There is an increasing awareness within international oil companies that current operations can be significantly improved on in these areas and de-risk their logistics operation to ultimately increase productivity.”

“A key factor for this is poor helicopter safety statistics and an increasing pressure on OPEX due to the ‘lower-for-long’ oil price levels. We have already successfully transformed three operators operations from helicopter to marine-based crew change solutions in the last two years.”

Ampelmann’s commitment to innovative personnel transfer systems resulted in the development of the S-type gangway this year, produced specifically for the crew change market. Scheduled to start production in 2018, the system is designed to be fully integrated into large, high speed vessels for long-term crew change operations.

For the global oil and gas market where volume of crew is high and the sea state can be severe, the S-type can continuously transfer 50 people and luggage in five minutes in significant wave heights of up to three metres Hs. Due to the innovative design of the compensation technology it offers vessel owners a huge energy saving of up to 50% compared to Ampelmann’s current gangway systems.

“There is a perception that since the industry downturn there is less people working on assets offshore and therefore, a greatly reduced number requiring transport to their workplace. Our experience is that the industry continues to be very active and workers still need a safe and efficient way to get to work to ensure the sector continues to survive and thrive,” added Van der Tempel. “With more than 180,000 safe people transfers on crew change specific projects, we already have solid experience in this relatively new market.”

Ampelmann’s L-type gangway also has a proven track record in the global oil and gas market and has successfully transferred more than 130,000 offshore workers to date. The system allows a continuous flow of personnel from vessels to offshore structures and is particularly suitable for smaller crew change vessels such as Crew Boats and Fast Support Intervention Vessels (FSIV). The L-type offers a 30% reduction in cost compared to other transfer methods such as swing ropes, basket transfers and helicopter operations.

Celebrating its ten-year anniversary this year, Ampelmann launched the A-type, the first full active motion compensation access system, commercially in 2008. The A-type has completed more than 110 projects worldwide, transferring more than two million globally and almost 500,000 personnel to date in the Middle East.

Atlantic Offshore Scotland Ltd Secures Two Year Charter with Maersk Oil UK

Leading Emergency Response and Rescue Vessel (ERRV) operator Atlantic Offshore Scotland Ltd, has secured a two-year firm charter with Maersk Oil UK.

The company’s ERRV Ocean Troll, will provide Emergency Response and Rescue services for Maersk Oil’s Culzean project in the central North Sea. The Charter is the first Fire Fighting Class II (Fi-Fi II) ERRV to have operated in the UK sector.

The charter commenced in July 2017 and will last for a firm period of two years, with two, one-year options thereafter.

4Ocean TrollAtlantic Offshore’s Ocean Troll

Atlantic Offshore Scotland Ltd is part of the Norwegian-based Aeogopodium AS and employs circa 210 people (approximately 200 seamen and 10 office-based staff) and provides multi-role ERRVs for many of the oil majors operating in the North Sea.

The 78m Ocean Troll is an ERRV with multirole functionality including Fi-Fi II, with the capacity to accommodate a crew of 21 people. It is managed by the company from its Aberdeen base at Waterloo Quay.

Matthew Gordon, managing director of Atlantic Offshore Scotland Ltd, said: “Robust emergency response is indispensable to all oil and gas operations. Our aim is to cement our position as the UK’s leading ERRV supplier for high end multi-role services.

In addition to this contract, Atlantic Offshore will also be renewing its relief vessel with the newly converted Ocean Clever. Built in 2009, the vessel will take over the relief duties of the Ocean Troll and will provide employment for an additional 30 seafarers.

Roy Wareberg, CEO of Atlantic Offshore, said “It is a great achievement to secure Maersk Oil’s Culzean project - not only does it allow the team to support a high-end project - but to further grow our fleet. Our recent conversion of Ocean Clever is something we aim to continue in the coming years as we seek opportunities that fit our niche service offering.”

Inclusive of Atlantic Offshore Scotland’s range of six ERRVs, the Aeogpodium AS group currently operates a fleet of nine ERRVs and three Platform Supply Vessels (PSVs).

The Group’s aim is to continue to expand its capabilities within both the Norwegian and UK sectors of the North Sea and to be able to provide cross-border solutions reflecting the needs of its clients.

Innovative Rotating Buoyancy Modules Create Safe Buckling Zones

5TrelleborgBucklingTrelleborg’s offshore operation recently developed a new Rotating Buoyancy Module system for buckling mitigation for subsea pipelines. The advanced solution is engineered to roll on the seabed to reduce lateral friction and berm creation thereby creating repeatable and predictable pipeline behavior.

Steven Bray, Oil and Gas Business Manager with Trelleborg’s offshore operation, states: “Doing business in today’s globalized markets requires a long-term approach with solutions that protect people, the environment and our customer’s investment. We are committed to improving the functionality of our products and solutions to provide wide-ranging benefits to our customers.

“With this in mind, we developed the rotating buoyancy module design to roll on the seabed to ensure predictable pipeline behavior. The modules practically eliminate rogue buckles and reduce axial walking in the pipeline. The new design reduces the quantity of modules needed to create safe buckling zones and this can lead to a significant reduction in overall project costs.”

When hot liquid flows through a pipeline, buckling typically occurs as thermal fluctuations cause the pipeline to expand and contract during start-up and shutdown sequences. This can possibly lead to problematic buckling along the length of the pipeline. While traditionally non-rotating cylindrical buoyancy modules are installed along these sections to reduce weight and friction as well as promote controlled bending, in certain conditions the modules displace seabed material. This displacement can lead to ridges or berms of earth, which start to restrict the lateral movement of the buoyancy modules.

Rotating Buoyancy Modules can be used on subsea pipelines or flowlines to reduce berm creation and create predictable, safe bucking zones. The modules practically eliminate rouge buckling and can reduce project costs for customers.

GATE Energy Awarded Leviathan Commissioning

6Gate EnergylogoGATE Energy has been selected as the provider for facility commissioning of the Leviathan Project Platform for Noble Energy Mediterranean Ltd. The associated scope includes topside commissioning planning, onshore commissioning execution and offshore commissioning services of the Production Platform for the Leviathan Field Development Project.

Leviathan is a natural gas mega project offshore Israel with first gas targeted for the end of 2019. Noble Energy is the operator of the Leviathan Field, which contains approximately 22 trillion cubic feet of gross recoverable resources and represents Noble Energy's third major gas development in the region.

Steven Guy, President of Commissioning: "This award highlights the capability of GATE as a world leader in commissioning services. GATE is very excited to continue our Commissioning Services partnership with Noble Energy, including prior projects in West Africa, the Gulf of Mexico and onshore United States. GATE is proud to represent the best interests of Noble Energy as we support the delivery of a world-class project. This award is a testament to the trust-based relationships we develop with our clients and our ongoing commitment to health, safety and the environment. These have driven increased backlog for the years ahead, even in the face of intense global competition."

GATE Energy is a family of companies that provide scalable, fit-for-purpose services for the energy sector including project delivery, engineering, commissioning, field services, and integrated production operators.

SeaRobotics Appoints 4D Ocean as a Reseller for Northern Europe

7SeaRobotics ASV HarrySeaRobotics has announced that 4D Ocean has been selected as its reseller for Northern Europe.

As a leading company in the use of autonomous systems, 4D Ocean will provide sales and support for SeaRobotics’ autonomous surface vessels (ASVs) to survey companies, scientific research organizations, ports, offshore energy companies and mapping agencies. This also extends to a broad range of survey and scientific equipment which can be installed onto the ASVs. Full training on the vessel, sonar equipment, and software will also be provided by 4D Ocean.

Don Darling, President of SeaRobotics commented, “We are excited to have a close and experienced partner in Europe to help us expand the business and to support our growing customer base in Northern Europe.”

“4D Ocean undertook a detailed analysis of the different ASV suppliers when choosing an ASV and SeaRobotics was, without doubt, the most advanced”, commented Duncan Mallace, 4D Ocean’s Managing Director. “It is therefore very exciting to become the North European reseller for their products and we look forward to fulfilling an autonomous vision with SeaRobotics and our European partners.”

4D Ocean is a newly formed company specializing in autonomous survey solutions based in Banbury, UK. 4D Ocean has over 25 years of seabed mapping experience and is recognized as being a ground-breaking company when it comes to technology. NetSurvey, 4D Ocean founder Duncan Mallace’s previous company, has helped push the boundaries of multibeam technology from its infancy to the defacto tool for seabed mapping that it is today. 4D Ocean aims to make autonomous survey the common method of conducting seabed and oceanographic surveys.

SeaRobotics has wide-ranging experience in maritime unmanned systems including ROVs, AUVs, USVs and the integration of various sophisticated sensing subsystems. We offer expertise in a broad range of engineering disciplines along with extensive field support and training in order to provide a foundation upon which to build game changing solutions for our clients.

SeaRobotics specializes in smart vessels that are remotely or autonomously-operated. Our products serve major military and commercial organizations across the globe. SeaRobotics' seasoned marine survey software interfaces with most data acquisition hardware, software, and sensing systems.

Well-Centric Awarded North Sea Well Integrity Contract

Well-Centric, a leading independent specialist operating in the well integrity and production technology sectors of the oil and gas industry, has secured a contract worth up to £300,000 per year with independent exploration and production company, Chrysaor.

The one-year contract, which has two, one-year extension options, will see Well-Centric provide offshore services across three North Sea platforms; Lomond, Everest and Armada. Services include surface wellhead and xmas tree repair, testing and maintenance. Annulus top-up operations will also be carried out using Well-Centric’s innovative Annulus Lubrication Filling (ALF) Valve. The company will also be providing workshop testing, refurbishment and storage of equipment.

8Well CentricMen at work

Well-Centric CEO, Gary Smart, said: “Securing this contract was a direct result of work we previously carried out on all three North Sea assets, and demonstrates Chrysaor’s confidence in our ability to successfully deliver efficient and cost-effective services.

“Our services are of special benefit to assets operating in the mature phase, such as the Lomond, Everest and Armada platforms. This contract award demonstrates Well-Centric’s capabilities as a multi-disciplined well integrity organisation, and enables us to continue strengthening and optimising our portfolio.

“These types of contracts demonstrate the industry’s commitment to, and competitiveness in maximising the ongoing economic recovery of the North Sea and effectively extending the life of mature assets.”

Well-Centric, alongside Well-SENSE Technology and ClearWELL Oilfield Solutions, is part of FrontRow Energy Technology Group – a group of complementary upstream oil and gas technology focused businesses bringing new solutions to market to meet industry challenges and reduce costs.

Danos Completes Water Injection Piping Fabrication for Offshore Platform in West Africa

9Danos 70 logoDanos has completed water injection piping work for an offshore platform operated by a major oil and gas producer subsidiary off the coast of Equatorial Guinea. The on-time, incident-free fabrication project was completed at Danos’ Amelia Integrated Services Complex.

The project required five-and-a-half months to complete, with Danos posting a weld-repair rate of 0.0007% for the 26,578 inches inspected.

“In addition to fabrication, we also have extensive experience performing installation, hook-up and turnaround projects in West Africa,” said Mark Danos, vice president of project services for Danos. “As a result, we’ve developed long-term partnerships with our clients who rely on our integrated services to operate their gas processing plants and offshore platforms in the area.”

Danos supports regular maintenance needs and shut-in/turnaround projects for onshore gas processing plants and offshore platforms in West Africa. The company has been operating in the region since 1992, providing project management, construction, instrumentation and electrical, scaffolding, and fabrication services to clients in the area.

PIRA Energy Market Recap for the Week Ending November 20, 2017

15PIRALogoAsian Refining Margins to Remain Healthy as Product Balances Look Constructive into 2018

Global oil surplus declined sharply in the first three quarters of 2017 and will be completely eliminated by the end of the year. India’s oil demand is expected to grow by ~300 MB/D next year on a better GDP outlook with the government stepping up its efforts to boost economic activity. China’s net crude imports are expected to increase by ~400 MB/D next year due to higher refinery runs and lower domestic crude output. Asian refining fundamentals should generally be constructive next year as demand growth is expected to outpace incremental refinery runs. Furthermore, key Asian product balances, such as for gasoline and gasoil/diesel, are also constructive into 2018. Overall, Asia’s net exports for gasoline and gasoil (including blending components) are expected to be slightly lower next year.

November U.S. Gas Short-Term Forecast

S&P Global Platts’ outlook calls for higher prices through the winter, as well as next year relative to NYMEX Henry Hub futures. Upside price risks remain through 1Q 2018 in particular. The extent of tightness U.S. balances face this winter, though, will influence the magnitude of downside price risks that loom next year.

Elevated Exports and Producer Discipline Push Prices Up

U.S. coal exports that hit their highest levels since 1Q14 in September and falling 3Q17 Eastern coal production kept prices supported over the last month. With export margins positive through 1Q18 and price risks to the upside on the potential for continued elevated exports, PIRA is either in-line with or bullish to most forward U.S. coal prices. However, CAPP rail coal prices may need to pull back modestly to allow for continued exports to the Atlantic Basin, barring another leg up in CIF ARA prices.

Four Biggest Economies in the World Send Reassuring Messages

China, the U.S., Europe and Japan reported key data this week. The bottom line was that solid and synchronized global economic growth appears very likely to keep going. In China, there were signs of slowing in housing and investment, but other data pointed to resilience and strength. U.S. activity data for October showed solid gains. This partly reflected a rebound from Hurricanes Harvey and Irma in August and September, but the underlying pace of activity has also apparently strengthened. This was particularly the case in the industrial sector. European GDP data were healthy across the board. Japan is benefiting from the positive global wind, and its trade sector substantially boosted economic growth during the third quarter.

Propane Prices Run Counter to Crude Prices

All NGL purity product prices except for propane declined last week in line with weakening crude prices. In contrast, propane prices rose 3.5% and closed the week at 99.9 cents/gal. Average U.S. raw mix production pushed past its recent highs, increasing 15,000 b/d last week. PADD 3 production continues to increase and reaches 1.958 million b/d with average weekly production increasing by 3,000 b/d. Propane inventories fell 2.5 million barrels and settled at 74.5 million barrels. Stocks in PADD 3 fell by 1.8 million barrels to 38.6 million barrels, which is 20% below the five-year-average and 38% below levels at this time last year. Tightening inventories are responsible for the rise in propane prices when crude prices are falling. Three steam crackers planned for 2017 commissioning have been delayed until 2018, which reduces ethane demand by 195,000 b/d and places downward pressure on ethane prices. The three steam crackers are Indorama Ventures Lake Charles 370,000 mt/year cracker, ExxonMobil’s new Baytown 1,500,000 mt/year cracker and Chevron Phillips Chemicals’ new Cedar Bayou 1,500,000 mt/year cracker. All three steam cracker plants are expected to begin commissioning in the second quarter of 2018.

Latin American Gasoline & Diesel Imports to Stay Strong Thru Year End…And Beyond

Latin American refiners continue to struggle. Regional crude refinery runs are projected to stay subdued in 4Q17 at around 4715 MB/D, 175 MB/D lower year-on-year and be flat year-on-year in 1Q18. Mexican 4Q17 runs should see some support from the restart of Salina Cruz, but are projected to stay relatively low at 565 MB/D, 215 MB/D lower year-on-year. Brazilian crude throughput seems to be on the rise, 4Q17 runs are forecast at 1765, 80 MB/D higher year-on-year; 1Q18 runs also projected higher year-on-year. Refinery outages are keeping refined product import volumes high.

Ethanol Prices Mixed the week Ending November 10

U.S. Ethanol values steady but manufacturing margins climb due to lower corn cost. Ethanol production and sales in the South-Central region of Brazil jump during October. European ethanol prices reach one-month high. U.S. biodiesel prices rocket to a six-week high. Manufacturing margins more than double.

November U.S. Gas Regional Short-Term Forecast

Despite a massive surge in production and limited capacity additions heading into the month, prices at US Northeast supply hubs posted impressive gains in early November. This relative price strength should persist through the winter. A tight supply and demand balance in Southern California (SoCal) and ongoing restrictions at pipelines and storage facilities supplying the region favor significant volatility in SoCal pricing this winter, barring mild weather conditions in the West.

Korea High Retail Gas Prices Curb Consumption, Hampering 2018 Balancing Act

The relatively high retail gas prices that Korean power generator Kepco is currently estimated to be paying to secure LNG for EG, has totally dis-incentivized gas consumption in favor of coal this year. As Korea runs out of storage space in an effort to honor surging LNG contract obligations as well as of course prepare for winter, this backlog will hamper the need to maintain contracted levels of imports in 2018.

Higher Call on Hydro Reservoirs and Imports from UK So far Offsetting French Nuclear Shortfall

The average delay of the already cleared seven plants from their original restarting schedule is 17 days. The restarts of the other five still not cleared have been delayed by already 13 days on average, so they face potentially even lengthier delays. While the limited amount of restarts so far keeps the outlook extremely fluid, it’s interesting to note that, at the current levels of French demand, the interconnectors have been playing an increased bearish role to soften the nuclear shortfall, with the UK flows directed towards France more often than last year during on-peak hours. The improvement in the nuclear availability in the neighboring markets should allow France to import more power, but weather will remain the major price driver as we head toward the peak of the heating season.

VA Approves RGGI Proposal

Virginia released draft regulations for a power sector carbon cap and trade system with a proposed link to RGGI on Election Day, as Democratic Candidate Ralph Northam won the Governor’s race. The Virginia Air Pollution Control Board approved the proposal for public comment in a 7-0 vote. The program design includes plans to allocate allowances to covered entities and require consignment to auction. It is aligned with RGGI program design elements and calls for participation in the RGGI-wide “full” banking adjustment, effectively reducing the state caps/allowances available to allocate for 2021-2025. VA DEQ modeling shows a binding program, although adding VA to RGGI lowers allowance prices. However, PIRA’s Reference Case (which had assumed no carbon price for VA), sees emissions below the caps, at least through the first compliance period.

Pessimism on Chinese Coal Demand Drives Prices Sharply Lower

The coal market dropped sharply this week, on weaker oil/gas prices, and easing concerns regarding tightness heading into the winter. 1Q18 forward prices declined by ~$5.00/mt W/W, while Cal-20 prices shed at least $3.00/mt. For prompt pricing, FOB Newcastle prices declined by a slightly larger extent than CIF ARA and FOB Richards Bay, while the opposite was the case for more deferred prices. Much of the downward momentum was due to developments in China, following the release of weak thermal electricity generation statistics for October on top of growing concerns that coal quality and port quota restrictions will dampen import demand considerably. Additionally, power sector coal stockpiles in both China and India moved higher W/W, alleviating some of the shortage risks in the market. On the supply side, the South African labor union NUM deferred a labor strike that was set to begin on November 18. While seasonal risks still cannot be ignored at this time of year, the market is softening structurally ahead of previous expectations.

U.S. Shale Operators to Start Living within Cash Flows

The third quarter saw continued growth in U.S. shale crude and condensate production and a plan from most operators to start to live within operational cash flows.

Some Noted Cross Currents in Credit Conditions

A mixed week, with some “rotation into and out of” different asset classes being the overall theme. The S&P 500 was modestly lower, but showed a jump in volatility. Investment grade credit was modestly lower, while high yield and emerging market credit indicators were higher. Commodities were lower by -0.59%, and energy underperformed, but precious metals moved higher. The dollar was weaker by -0.78%. The St. Louis financial stress indicator moved to a new cyclical low.

U.S. Ethanol Output fell for the First Time in Five Weeks

U.S. ethanol output fell for the first time in five weeks, dropping by 3 MB/D to 1,054 MB/D. Total inventories built by 152 thousand barrels to 21.5 million barrels, despite large draws in the Midwest and the Gulf Coast. This was the first draw in the Midwest since early September. Ethanol-blended gasoline production declined 14 MB/D to a seven-week low 9,100 MB/D.

Corn-fusing Rally

Given the fact that December corn had shown gains of 6.5 cents only twice in the past four months, Friday’s rally of that magnitude was a bit of a surprise with the absence of any new data. Not to be outdone, soybeans had their own “hold my beer” moment, posting the largest single day price gain since the October WASDE lowered yield to 49.5 bpa, a level still maintained today. Corn was the leader though as rumors of the Chinese sniffing around the corn export market permeated through trade desks as well as additional talk that the Chinese are interested in importing U.S. ethanol.

U.S. Gas Weekly Report

Over the past seven days, Henry Hub cash prices rallied to average ~$3.11/MMBtu —up 16 cents/MMBtu (6%) compared to prior the seven day average. Despite strengthening cash prices—prompt month December futures slumped. Uncertainty over the 6-10 and 11-14 day weather forecasts appear to be to blame.

Are Prices Firm From a Lack of Supply?

Spot prices across Europe have experienced a steep ascent over the last several months despite significant bouts of warmer than normal weather. One may come to the conclusion that perhaps Europe is starved of supply and that is what has been driving continued price ascent. After all, the news regularly reports about continued declines from Dutch Groningen, how low British supplies are compared to peak production levels, and how LNG continues to avoid Northwest Europe. In fact, there is plenty of supply. It turns out though that contract pricing has stepped up significantly – forcing the full gas curve to shift upwards with the assist of a thirstier Asian market for LNG and Brent pricing that has risen 44% off of June lows.

Inflation Data Release Sets 2018 CA Carbon Auction Floor

The CA carbon cap and trade program auction reserve price, by design, escalates each year by 5% plus the rate of inflation. The BLS 12-month Oct-Oct inflation release (the inflation indicator used for this calculation), came in at 2.04% - implying a 2018 reserve price of $14.52, though it could move up to $14.53, depending on rounding practice. The formal CARB announcement of the official price will come December 1st. This compares to an inflation rate of 1.64% that was used to set the 2017 auction reserve price of $13.57. Inflation indicators started 2017 well above 2%, but came down over the summer before increasing again last month (to 2.2%). Today’s 12-month inflation figure is lower than last month’s, but in line with expectations.

U.S. Inventory Declines Temporarily Interrupted

Softer product demand caused product stocks to build while a jump in crude imports led to an increase in crude inventories to take overall commercial inventories up 2.8 million barrels this past week. The year on year stock deficit, nevertheless, widened another 4.3 million barrels to 81.1 million barrels (6.0%) below the year earlier, while four week average adjusted demand is up 3.4% (670 MB/D) versus last year, a constructive combination illustrating global oil market rebalancing. Runs increase another 360 MB/D in next week’s EIA data to 17.0 MMB/D, up 1 MMB/D in three weeks. Higher runs cause gasoline stocks to build but distillate and jet inventories still manage to decline because of continued strong demand.

Global Equities Ease Modestly

Global equity markets eased on the week, having been unable to breach the 2,600 level. Retail (+3.8%), banking (+2.7%) and housing (+1.7%), posted solid gains and outperformed, while energy was one of the weakest performers (-3.2%). Internationally, Latin America, emerging markets and emerging Asia posted good gains on the week.

The Fund Game

In essence, the short Funds are playing alongside the farmers and not against them as is common belief. The December short that they’ve accumulated will soon be rolled to March (3 months) at a 3.3% “profit” given market structure. A 5 month roll to May currently offers a 5.5% return, while a 7 month roll to July offers 7.6%. A 1.1% monthly return on a commodity investment in this extremely low volatility environment is nothing to ignore and the Funds are taking advantage of the situation with one major exception; no storage costs. Yes, there is the “cost of money” for the shorts but with margin levels around $800 per contract price and a price depreciation of roughly the same amount in little more than a week since the November WASDE, a vast majority are playing this carry game with “house money”.

Japan Runs Rising, but Higher Demands Absorbing Supply

The key takeaway this week was the continuing return of capacity previously down for maintenance, with a strong uptick in demand that helped absorb the rising supply. A drop in crude imports and higher runs drew crude stocks 2.75 MMBbls, while finished product stocks drew 0.38 MMBbls. While gasoline and jet stocks rose, all the other product stocks drew in varying degrees, with gasoil and kerosene leading the pack. Aggregate product demand rose 314 MB/D on the week, with the 4-week demand growth accelerating to 103 MB/D. Implied refining margins were modestly higher on the week and remain decent, though they are lower than their September peak. Retail prices continue to rise and the indicative marketing margin remains under pressure as higher prices have been unable to be fully passed through on a retail level. The margins on both gasoline and gasoil/diesel are below statistical means, but still above statistical lows.

November Weather: U.S., Europe and Japan Cold

At midmonth, November looks to be 14% colder than normal on the 10-year-normal basis for the three major OECD markets. On a 30-year-normal basis the markets are 4% colder. The November forecast takes into account first half actual weather and the current forecast for the rest of the month.

Asian Oil Demand: Faster Growth in Evidence

Our snapshot of Asian oil demand growth improved on the month to 980 MB/D vs. 852 MB/D seen last month. The December snapshot should remain strong, most likely over 1 MMB/D, before some slowing back to 840 MB/D in Jan/Feb. In Mar/ Apr there is expected to be a reacceleration back towards 950 MB/D. This month, the key drivers of the 128 MB/D improvement to demand growth were gains in China (a gain from last month of +60 MB/D), India (+24 MB/D), Taiwan (+35 MB/D), and a lesser decline in Japan (+8 MB/D).

Price Differentials as New Product Specs Introduced

Complying with tighter environmental specifications for refined products comes at a cost, which can be seen by the price differential between the new product and the previous one. Looking at three key changes that have occurred over the past several years, there is a distinct difference between prices at the implementation date of the new specification and in the months following. In all three cases analyzed here there was not much of a discernible pace of pre-buying activity leading to an early price spike, but spikes did occur during initiation and afterward. The situation for the bunker fuel specification change is likely to be very different given the daunting nature of the challenge faced by refiners.

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. To read PIRA’s Market Recap first, subscribe to PIRA Perspectives here.

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LUX Assure Develops Next Generation in Corrosion Detection

LUX Assure, a specialist in the provision of chemical monitoring and management solutions, has re-developed its successful CoMic™ technology to create the world’s first operator-deployable corrosion inhibitor micelle detection tool.

The development of CoMic was inspired by technologies being used in the life sciences and was first deployed in 2012. It works to maintain asset integrity through delivering effective corrosion management, by informing the management of corrosion inhibitors and providing data on the optimal level of corrosion inhibitor.

CoMic identifies the presence of corrosion inhibitor micelles in oilfield fluids, by using these nanoscale aggregates of chemical as a marker for optimal dosage. Previously all testing was done on-site by LUX Assure specialists, but in response to a direct call from oil and gas operators LUX has redeveloped CoMic into a solution which can now be deployed in the field by on-site personnel, with minimal training required.

10Lux Emma Outside Building smallEmma Perfect, CEO at LUX Assure

Emma Perfect, CEO at LUX Assure, explains the catalyst behind the new product: “The redevelopment of CoMic as an on-site, operator-deployable testing kit has been in direct response to feedback from both our clients and the wider industry, who have witnessed first-hand how CoMic can enhance their corrosion management regimes.

“Until now, micelle detection required LUX personnel to undertake on-site sample testing. Not only can this cause logistical issues, and additional costs for clients, but the process can also be delayed whilst travel is arranged and bed space sought. A simple product that can be deployed by existing personnel alleviates these issues, reducing costs and logistical requirements. It also allows operators to deal with any concerns more promptly, and to look at trends in corrosion inhibitor availability over time.”

The newly redeveloped technology aligns with a call from industry to upskill local workforces. Ms Perfect continues: “On-site staff, be they from operator or service companies, can now be trained to gather and test samples in situ. The instrumentation is robust and simple to operate, resulting in easier, and therefore more frequent data collection.

“In turn, this means better ongoing monitoring and control of assets which may be subject to corrosion. The data collected by CoMic remains critical to system performance and associated cost efficiencies, by detecting whether pumps are operating at optimum levels, or require an adjustment of corrosion inhibitor dosage.

“As an oil and gas technology firm which is focused on innovation to address the oil and gas industry’s most prominent concerns, LUX Assure continues to invest in research and development to develop an industry-leading portfolio of solutions.”

LUX Assure products, CoMic™ and OMMICA™, together represent a revolution in monitoring and managing difficult-to-detect chemicals on-site in oil, condensates and water, specifically the thermodynamic hydrate inhibitors and corrosion inhibitors used to protect oilfield assets, on and offshore.

Hydro Group Systems Secures Inaugural US Contract

Hydro Group Systems Inc, subsidiary to subsea cable and connector specialist Hydro Group, has announced its inaugural contract win in the US, worth an estimated $550,000.

The company has secured a significant contract with the US Navy to supply neutrally-buoyant plow umbilicals for the Military Sealift Command, an organization which is responsible for providing sealift and ocean transportation for all US military services. The agreement was designed to meet all client manufacture and performance requirements.

11Bill Mildon president of Hydro Group Systems Hydro Group Systems has also bolstered its credentials in the region, expanding its footprint and workforce. This includes the launch of its manufacturing facility in Pinellas County, Florida, in summer 2017, and the appointment of Christopher Scanlon, as senior design engineer. Christopher has over 12 years’ experience working in the harsh environment cable and connector industry and in his new role, he will be focusing on the company’s core markets of defense, oil and gas and renewable energy.

Bill Mildon, Hydro Group Systems’ president

Bill Mildon, Hydro Group Systems’ president, said: “This contract represents a momentous milestone for the Group’s US presence. We are proud to have been selected to provide this comprehensive scope to the US Navy, which further underpins our reputation as a serious provider of bespoke engineered cable and connector assembly solutions.

“We are firm believers in offering excellent service quality, and a permanent local presence in the US allows us to continue to surpass client expectations by offering a superior service, while building on our customer base.”

In recognition of this growth, Hydro Group Systems has also announced a new partnership with Texas-based Design Forward, Inc., an agency representing manufacturers who specialize in custom-engineered components.

Bill continued: “This partnership will enhance our long-term relationship with Swann and Associates, based in Longbeach, CA and extend Hydro Group Systems’ customer support throughout the US, helping us develop key business opportunities.

“This is an exciting time for Hydro Group Systems. We have evolved considerably in the short time since we established our presence within the US, and I look forward to identifying new business opportunities, which will enable us to boost the Hydro Group brand.”

Trelleborg Builds Strategic Alliance for the Future of Subsea Storage

12 1Trelleborg12 2SMTlogoTrelleborg’s offshore operation has signed a strategic alliance agreement with Safe Marine Transfer, LLC, to collaboratively mature and commercialize Safe Marine Transfer’s subsea chemical storage and injection system.

Art J. Schroeder, Jr. Principal with Safe Marine Transfer states: “After performing evaluations with several companies, we chose Trelleborg for its material expertise, in-depth applications know-how, and global footprint. The company is known for specializing in the development and production of syntactic foam and the Houston team is keen to share their vast buoyancy knowledge with us. Our partnership will ensure we can accelerate market delivery and improve the performance of our products, to meet the needs of our customers and the industry.”

Phil Walsh, Business Development Manager within Trelleborg’s offshore operation, states: “Working with Safe Marine Transfer enables us to use our deepwater buoyancy knowledge for a new application. As a proactive business partner, we strive to add value far beyond better function in critical applications. We enhance the business performance and competitiveness of our customers by setting up partnerships with companies like Safe Marine Transfer.”

Safe Marine Transfer was established to provide subsea chemical storage and injection of production chemicals at the point of need down to 10,000 feet of seawater as a service to help accelerate growth and profitable exploitation of resources via subsea tie-backs.

Vestdavit and Hukkelberg Boats in Dive Boat Cooperation

13Hukkelberg 2048x1536A new cooperation with specialized diving boat manufacturer Hukkelberg Boats brings together two like-minded companies renowned for innovation, in an informal partnership that both believe will generate new business opportunities.

The new associates aim to work together in forthcoming projects involving dive-boats, ROVs, wind turbine support vessels and crew transfer boats, with each recommending the products of the other.

Vestdavit Sales and Business Development Director Bjørnar Dahle says that established PLR-12000 and PAP-15000 davits provide the focus for the new agreement. The proven performance of these davits in the demanding seismic and windfarm vessel sectors should prove persuasive for new clients in the dive boat sector, where safe and reliable operations are no less critical, he says.

Opportunities in the offshore market are resurfacing after a long dry spell, according to Hukkelberg Boats sales manager Kenneth Dale. “Our boats are very well known, especially in the oil market, but there is significant potential from other sectors, such as the aquaculture industry and wind turbine markets. We look forward to working with Vestdavit in an exciting initiative for both companies.”

“The offshore market is changing,” adds Bjørnar Dahle. “We are seeing new requirements in the North Sea, for example, as new technology unlocks the potential for more subsea operations. Dive boats and ROVs are increasingly becoming tools of choice for maintenance activities.”

As companies of around the same size and with the same philosophy when it comes to design innovation and product performance, Vestdavit and Hukkelberg make a formidable team, he says.

The new pairing made its presence felt at the Offshore Technology Days, Stavanger in mid-October, where Hukkelberg customer SubseaPartner exhibited a state-of-the-art light dive boat, held in place by a davit from Vestdavit. The outdoor exhibit drew a stream of visitors, according to Dahle.

New CEO and President Appointments for TWMA

14TWMA Ronnie GarrickTWMA, provider of specialized Drilling Waste Management services, is expecting its growth strategy to accelerate, with a target turnover of £200 million and headcount to reach 1,500 following investment from Buckthorn Partners earlier this year.

To support the strategy implementation, Tony Branch will expand his current Director role within TWMA, taking over from Ronnie Garrick as CEO. Mr. Garrick expands his remit as President of the Company, focusing and leading on three key growth development areas: merger and acquisitions activity; new geographic expansion; and new product and technology development.

Specialists in the oil and gas sector, private equity investors Buckthorn acquired TWMA in May 2017. With a current a turnover of £50million, TWMA employs 540 personnel across offices and service bases in Europe, the Middle East, North Africa, West Africa and the Americas. The

firm’s expertise and technology continue to be internationally recognised for providing tailored, drilling waste management solutions that reduce drilling costs and maximise operational efficiency.

With a strong presence in the Middle East and North Africa, including a new service base in Abu Dhabi, TWMA will shortly announce further growth plans across the region.

Tony Branch commented: “Since the initial investment we received six months ago, the TWMA team has created robust plans, which will result in an exponential level of growth. The development of our senior management structure is a natural and positive step, which better allows us to drive those plans forward, and meet some exciting objectives.

“A key goal is to develop TWMA’s already-strong international profile, which is centred on a clear commitment to our clients who require innovative and cost effective solutions for their drilling operations. I look forward to leading the global team and building upon the successes we have achieved to date.”

Most recently President of Regional Operations at Weatherford, Tony brings over 25 years’ experience in the global drilling sector.

Ronnie Garrick added: “Since TWMA was formed in 2000, we have been committed to providing specialised technology which is utilised in everyday drilling operations, as well as for more challenging projects. The expertise and investment Buckthorn brings has allowed us to focus on the next stage of development – with a specific emphasis on acquisitions.

“Our aim is to expand both geographically and via new products and services that provide our clients with the significant financial returns to be gained from effective management of drilling waste.”

Alaska and China Sign Historic Joint Development Agreement
Developing America’s Largest Energy Export Project

1Alaska China Sinopec

Senior executives from the State of Alaska, AGDC, Sinopec, Bank of China and CIC Capital Corporation, sign historic Joint Development Agreement in front of U.S. President Donald J. Trump and China President Xi Jinping, Beijing, China, November 9, 2017.

Alaska Gasline Development Corporation (AGDC), the State of Alaska, China Petrochemical Corporation (Sinopec), CIC Capital Corporation (CIC Capital), and Bank of China (BOC), announced a joint development agreement to advance Alaska LNG, Alaska’s strategic gas infrastructure project.

The agreement was signed in the presence of United States President Donald Trump and China President Xi Jinping, and expresses the common interests in the preparatory work of Alaska LNG.

Alaska LNG is designed as a 20 million tonnes per annum (MTPA) integrated LNG system comprised of a three train liquefaction plant in Southcentral Alaska at Nikiski; an approximately 800 mile, 1.1 meter diameter gas pipeline; a gas treatment plant on the North Slope of Alaska; and various interconnecting facilities to connect the Prudhoe Bay gas complex to the gas treatment plant.

Under the agreement, the parties have agreed to work cooperatively on LNG marketing, financing, investment model and China content in Alaska LNG, and get a periodic result by 2018.

“Today’s agreement brings the potential customer, lender, equity investor, and developer together with a common objective of crafting mutually beneficial agreements leading to increased LNG trade between Alaska and China,” said Keith Meyer, president, AGDC. “Sinopec is interested in the possibility of LNG purchase on a stable basis from Alaska LNG,” said Sinopec.

“This is an agreement that will provide Alaska with an economic boom comparable to the development of the Trans-Alaska Pipeline System in the 1970s,” said Governor Bill Walker, State of Alaska.

“CIC Capital is an experienced financial investor in the energy and infrastructure sectors and has long been interested in investing in American LNG infrastructure. CIC Capital is pleased to work with fellow industry and financial partners on this project,” said CIC Capital.

“As the most internationalized bank in China, Bank of China is willing to facilitate the China-U.S. energy cooperation and provide financial solutions for this transaction by taking advantage of its vast experiences and expertise in international mega-project financing,” said Bank of China.

Sinopec is a huge, state-owned, fully integrated energy and chemical company. Based in Beijing, Sinopec is the largest oil and gas company in the world by revenue with annual revenue of USD 455.49 billion.

CIC Capital is China’s direct investment arm, which is mandated to make direct investments and manage bilateral and multilateral fund investments in order to pursue long-term financial returns and promote international investment cooperation. CIC Capital is a market-oriented commercial entity with a specialized mandate and global reach. As a long-term financial investor, CIC invests on a commercial basis. Bank of China is a state-owned commercial bank. Bank of China ranks top 10 largest banks in the world by market capitalization value and provides a comprehensive range of financial services to clients in 52 countries and regions around the world.

The Alaska Gasline Development Corporation (AGDC) is an independent, public corporation of the State of Alaska, empowered to maximize the benefit of Alaska’s vast North Slope natural gas resources through the development of infrastructure necessary to move the gas into local and international markets. Visit the Alaska Gasline Development Corp.'s website for up to date information.

The State of Alaska is responsible for developing Alaska’s immense natural resources for the benefit of all Alaskans. In addition to huge, proven natural gas reserves, Alaska contains some of the world’s largest oil and mineral deposits, including gold, coal, zinc, copper and rare earth elements.

Statoil’s Valemon Platform First to be Remote-Operated from Land

2 1ValemonStatoil’s Valemon Platform. Photo credit: Statoil

On Thursday, November 9, the opening of the Valemon control room was celebrated at Sandsli in Bergen. Valemon will be the first platform in Statoil’s portfolio to be remote-controlled from land.

“This is a vital milestone for Statoil. We have had land-based surveillance and control of offshore operations for a long time, however, the remote control of Valemon marks one important step forward on our digitalization journey,” says Gunnar Nakken, head of the operations west cluster in Statoil.

2 2StatoilProud of the new Valemon onshore control. From the left Gunnar Nakken, head of the operations west cluster in Statoil, Norwegian minister of petroleum and energy, Terje Søviknes, head of Kvitebjørn Valemon and Grane operations, Nina Birgitte Koch and control room operator Joakim Tesdal. (Photos: Christian Djupvik Brandt-Hansen)

Valemon is designed and constructed for such remote control. Statoil has currently no other platforms of this kind, but this solution will undoubtedly be considered for other small and medium-sized platforms in the future, and remote control will be a central building block.

“Most of our production will still be carried out on large, manned platforms, such as Aasta Hansteen and the Johan Sverdrup platform, but for somewhat smaller platforms and fields it will absolutely be considered. First, we must gain experience from Valemon,” says Nakken.

“Thanks to new technology and knowledge we can utilize the advantages of our smaller, standardized building blocks that are combined differently from field to field for optimal resource exploitation. We want to combine the best technology, below and above water, to find optimal solutions for every project, thereby ensuring safer operation,” says Nakken.

Onshore remote control of the Valemon platform is one example of how new ways of working and interacting offer new possibilities and advantages.

McDermott Awarded Major EPCI Contract in Middle East

3mcdermott squarelogoMcDermott International, Inc. (NYSE:MDR) has announced a major* contract award from a Middle East customer for engineering, procurement, construction and installation (EPCI) services offshore in the Arabian Gulf.

“McDermott continues to receive considerable projects in the Middle East. This award signifies our long-standing position and strong relationships with our Middle East customers,” said Linh Austin, McDermott Vice President, Middle East and Caspian.

Work on the contract is expected to begin immediately and will be reflected in McDermott’s fourth quarter 2017 backlog.

McDermott plans to use its engineering and procurement teams in Dubai, Chennai and Al Khobar, Saudi Arabia. Construction is expected to take place at McDermott’s facilities in Dammam, Saudi Arabia and Jebel Ali, Dubai. Vessels from McDermott’s global fleet are scheduled to perform the installation work.

* - McDermott defines a major contract as between USD $750 million and USD $1,500 million.

VIDEO: Conquering Deeper Waters

Expro Secures Well Testing Contract with INEOS Breagh in the Southern North Sea

4Expro Well TestLeading international oilfield services company, Expro, has been awarded a two-year contract to provide well testing services for INEOS, a global manufacturer of petrochemicals, speciality chemicals and oil products.

The contract will see Expro provide testing services for at least three wells, including two new drills and one re-entry, at the Breagh Alpha Platform as part of the Southern North Sea (SNS) Development Programme. The contract includes an option to extend for a further two wells.

Neil Sims, Vice President for Europe CIS region, said:

“We are excited to be working with a new operator like INEOS Breagh and this contract signifies the commitment both companies have to the SNS area. The possibility of a further three wells shows the potential still remaining in the region.

“As Expro provided testing services for other wells in the Breagh Alpha complex, we were uniquely positioned to offer specialist knowledge and insight to INEOS Breagh. With changing operators, it’s an exciting time to be a part of the SNS Development Programme, and we look forward to supporting our new client to unlock the potential of the region.”

Mervyn Williams, Supply Chain Manager at INEOS Breagh, added:

"INEOS Breagh is delighted to have partnered with Expro for well testing services. We saw in Expro a keen value proposition and a highly professional team that we are convinced will add genuine value to our Breagh Alpha drilling programme.”

Initially founded in 1973 as a well testing company, Expro is headquartered in the UK and has key operating regions in Europe CIS, North and Latin America, Sub Saharan Africa and Asia, Middle East and North Africa.