Oceaneering Completes Acquisition of Blue Ocean Technologies

Oceaneering logoOceaneering International, Inc. (“Oceaneering”) (NYSE:OII) announces that it has acquired the assets of Blue Ocean Technologies, LLC (“Blue Ocean”), a privately held provider of riserless light well intervention (“RLWI”) services, for approximately $30 million in cash. Included in the acquisition are three RLWI systems, two of which are currently under construction, and are expected to be fully functional by mid-2017.

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Oceaneering expects to invest approximately $10 million to complete construction of the two RLWI systems.

Subsea well intervention services are intended to maximize production and increase the recovery rate from offshore oil and gas reservoirs or, alternatively, prepare wells to be plugged and abandoned. Blue Ocean’s RLWI systems have the capability to perform a wide variety of cost effective services for well interventions, including well diagnostics, damaged well remediation and workovers, and well plugging and abandonment. Blue Ocean’s leading RLWI technology holds the current depth record for deepwater riserless intervention at 8,200 feet (2,500m).

Kevin McEvoy, Chief Executive Officer of Oceaneering, stated, “We are pleased to complete the acquisition of Blue Ocean, which we believe will enable us to further penetrate the subsea well intervention market and support existing and new customers with additional safe, cost effective subsea solutions. The services offered by Blue Ocean are complementary to our subsea products operations, and Blue Ocean will add talent and expertise that reflects our commitment to provide quality results with an integrated and expanded platform to drive growth. This acquisition fits our strategy on increasing our services and products offerings focus related to the production phase of the offshore field life cycle.”

Oceaneering intends to report the future financial results of Blue Ocean through Oceaneering’s Subsea Products segment, under its Services and Rentals business unit.

Johan Sverdrup: Contract for Mongstad Terminal Upgrade

Aker Solutions has been awarded the contract for upgrading the Mongstad terminal for Johan Sverdrup oil from late 2019.

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The Mongstad terminal near Bergen. (Photo: Øyvind Hagen)

Its value estimated at NOK 350 million, the contract includes engineering, procurement and the construction of a pig receiver for the oil export pipeline from Johan Sverdrup.

In addition, the scope of work includes connecting the Johan Sverdrup oil pipeline to the existing storage caverns at the Mongstad terminal.

The engineering work will be performed at Aker Solutions’ office in Bergen. The pre-fabrication of pipes and steel structures will take place at Aker Solutions’ yard in Egersund, whereas the bulk of the construction work will take place at the Mongstad terminal.

"Starting in early 2017 the work at Mongstad will provide opportunities for local suppliers in the Mongstad area," says Kjetel Digre, project director for Johan Sverdrup.

"It is also gratifying that we can include Egersund as a location and contributor delivering on the enormous jig-saw puzzle that the Johan Sverdrup project represents. In Norway all of the big yards along the entire coast are now involved in developing one of the biggest industrial projects in Norway in recent years," says Digre.

Contracts at a value of more than NOK 60 billion have been awarded for Johan Sverdrup, more than 70 % of this won by Norwegian suppliers.

Click HERE to see the map of Johan Sverdrup contracts.

Launch of New Service Platforms Improves Benchmark for Offshore Hydrocarbon Transfer

3Gall Thomson MBC in operationThe world’s leading manufacturer and supplier of Anti-Pollution and Safety Marine Breakaway Couplings (MBCs) has launched a series of new service packages that will allow end users of MBCs to maintain top level operational performance.

Offering four options, Gall Thomson will now provide customers of its field verified MBCs a flexible range of global service choices based on the customer’s operational requirements and logistics.

Regarded as a vital component for the safe transfer of crude oil and refined products, Gall Thomson MBCs successfully saved nine countries from catastrophic oil spills during 2015 following 14 activations.

Called ‘MBC4’, the new packages are seen as a further step to improved and safer transfer of oil and refined products, as well as achieving minimum down time and offering peace of mind for operators.

The four new packages include In-Field Service, GTAC* Engineer Visit, GT Approved Regional Service Centre and Return to GT UK Technology Centre. All four can be called upon for inspection, refurbishment or resetting of Gall Thomson MBCs.

Max Virgin, MD of Gall Thomson sees this new range of services as a way to consolidate the company’s reputation as the global leader in its field, with the ability to better service their customers’ needs and also feedback information into the continual product development process.

Max said: “Key to this approach is to support customers with a range of inspection and maintenance services to preserve the integrity of the MBC. As Gall Thomson is considered the industry standard with almost 2000 MBCs in service, MBC4 is complimentary to this strategy.

“The operational performance of Gall Thomson MBCs in 2015 speaks for itself. Making sure an MBC is in top working order is vital so that should an offshore accident take place the device will activate as intended when called upon and mitigate the risk of equipment damage and pollution.

“Having four options is the ideal solution for inspection, refurbishment, resetting, repair and upgrade where applicable, and gives our customers total flexibility.”

For those wanting to conduct an In-Field Service, work can be carried out by the operator's own maintenance staff using standard tools and equipment and a Gall Thomson spares kits/maintenance manual. No specialist tools are required and no additional equipment is needed such as assembly frames or complicated apparatus.

There are thee further options available to customers which carry the Gall Thomson Warranty and GTAC certification.

For GTAC Engineer Visit a qualified Gall Thomson engineer will conduct a site visit to carry out the work and is ideal for inspection, refurbishment or resetting.

The GT Regional Service Centre and Return to GT Technology Centre options will see the MBC serviced at one of Gall Thomson’s nine strategically located centers. Both are ideal for inspection, refurbishment, resetting and repair work.

Max added: “Our technology is proven in the field with more than 37 years of field experience and over 270 successful activations to date.

“Constant interaction with terminal operators and with hundreds of MBCs serviced both at home and abroad, has allowed Gall Thomson to amass an unrivalled knowledge bank on operational performance and best practice, providing our customers tailored servicing, MBC handling and operational procedures.

“The culmination of this lends itself to the reliability of the Gall Thomson MBC which has prevented millions of pounds worth of damage to offshore systems and protected the environment from oil spill.”

ODE Signs Four-Year Framework Agreement with DONG Energy

ODE, is a leading international Oil & Gas and Renewables Engineering Consultancy, and an integral part of the DORIS Group. The company provides technical services across the full asset life cycle; from conceptual to detailed engineering of greenfield and brownfield projects, and from asset management through to final decommissioning. ODE has continued and strengthened its excellent relationship with DONG Energy by securing an engineering services and consultancy framework agreement.

4ODE Siri Platform Courtesy DONG EnergySiri Platform. Photo courtesy: DONG Energy

ODE will provide support to DONG Energy’s oil and gas assets across the Danish, Norwegian and UK continental shelves. The scope of work includes front-end engineering, maintenance and modifications, discipline engineering (specialist services), late life and decommissioning and procurement services. The contract will run until 2020 with the possibility to extend to 2022.

The work, which utilises ODE’s full range of consultancy, engineering and operations capabilities, will be carried out from the company’s offices in both London and Great Yarmouth as well as within DONG Energy’s offices and asset locations when required.

ODE Managing Director Peter Godfrey said: “This new contract builds on our six-year relationship with DONG Energy and will ensure that ODE continues to provide value- enhancing support to DONG across its assets”

ODE, an integral part of the DORIS Group, was created in 1978 to support the North Sea oil and gas industry. The company provides worldwide cost effective, technically robust, consulting, engineering, project management and operations support services to the upstream oil and gas, and marine renewables industries.

Dril-Quip Agrees to Acquire TIW Corporation for $143 Million

5 1Dril QuiplogoDril-Quip, Inc. (NYSE: DRQ) has announced that it has entered into an agreement to acquire TIW Corporation, a 100-year old industry-leading manufacturer of consumable downhole products for the global oil and gas market, for approximately $143 million, subject to closing adjustments. TIW provides liner hanger systems and related equipment and services worldwide and is based in Houston, Texas.

Blake DeBerry, Dril-Quip's President and Chief Executive Officer, remarked, "We are pleased to include TIW Corporation as part of the Dril-Quip family, and look forward to significantly expanding our product offerings to our customers. TIW has a long history of success as a family-owned company and we intend to preserve that legacy by continuing to reliably serve our customers with our combined teams around the world. TIW is a market leader in the liner hanger business and we are particularly excited about its expandable liner hanger technology that is frequently utilized in deepwater or high pressure/high temperature environments.

5 2TIWlogo"This acquisition will be the first in Dril-Quip's history and allows us to use our strong balance sheet to increase shareholder value in the long-term. TIW's products and services fit squarely with and complement our current product offerings. In addition to its offshore market, TIW's onshore presence, particularly in the Middle East and South America, will provide Dril-Quip with more market opportunities."

Steve Pearce, President of TIW, commented, "I believe this transaction will positively position our business for further expansion. Both TIW and Dril-Quip have a long and proud tradition of innovation and commitment to the oil and gas industry, along with a shared culture of customer service, quality products and continual product development. Dril-Quip's wider product offering and broader international footprint should allow for long-term growth of our liner hanger business."

TIW is being acquired on a debt-free, cash-free basis and Dril-Quip intends to fund the consideration with cash on hand. Dril-Quip anticipates synergies to be realized from this transaction, primarily driven by cost efficiencies as well as expanded sales opportunities. The transaction is subject to regulatory approvals and other customary closing conditions. It is anticipated that the closing of the transaction will occur during the fourth quarter of 2016.

TIW reached peak revenues of approximately $140 million in 2014. Revenue is expected to trough between $60 million and $70 million in 2016 and is expected to increase to between $80 million and $100 million by 2018. EBITDA margins are expected to be similar to Dril-Quip's margins once synergies are realized. Additional transaction details are available in the Investor section of Dril-Quip's website at www.dril-quip.com.

Evercore served as Dril-Quip's exclusive financial advisor and PPHB served as TIW's exclusive financial advisor for this transaction.

Sonardyne Strengthens Maritime Security Presence in Scandinavia

Underwater technology company, Sonardyne International Ltd, has appointed Scandinavian Aerospace and Industry AB (SAI) as a reseller of its maritime security products in Sweden, Denmark, Finland and surrounding territories. 

Based in Tyresö, Sweden, SAI supplies, supports and integrates commercial-off-the-shelf (COTS) technologies for air, land and sea applications. It works with industrial and defense organizations across Scandinavia including harbor authorities, naval forces, maritime enforcement agencies and shipyards. Under the terms of the new agreement, SAI will now promote Sonardyne’s family of underwater security products; Sentinel IDS, NOAS and high resolution mine hunting sonar, Solstice.

6Sonardyne SAI AB Sonardyne has appointed Scandinavian Aerospace and Industry AB as a reseller of its maritime security products in Denmark, Sweden, Finland and surrounding territories.

Sentinel is the security industry’s most widely deployed intruder detection sonar, capable of reliably detecting, tracking and classifying divers and small underwater vehicles approaching a protected asset. Whether it is safeguarding a critical national infrastructure facility, strategic port or naval vessel at anchor, Sentinel provides a rapidly deployable, 360° underwater security solution for any scenario.

SAI is now amongst the first of Sonardyne’s resellers to have the opportunity to market the recently introduced Navigation and Obstacle Avoidance Sonar – NOAS. Installed in the bow of a vessel, 2D and 3D sonar arrays scan the water column looking for navigation hazards that could result in a collision or grounding. The system can be used as a standalone navigation aid or integrated into a vessel’s existing bridge management system.

Commenting on the appointment, Hans Sandström, Business Development Director with SAI said that the company was delighted to be adding Sonardyne to their portfolio of maritime surveillance capabilities. He said, “For many organizations, the underwater domain remains a vulnerability in their security and navigation capabilities. However with technologies such as Sentinel now available to us, it is one we can now help our clients to close.”

Brunei Oil Industry Secures World First with Safety Standard

7OpitoBRUNEI has become the first country in the world to commission International Minimum Industry Standard Training (IMIST), reaffirming its strong commitment towards ensuring the safety of its 20,000-strong oil and gas industry workforce.

Following the Bruneian government’s undertaking to put around 3,000 front line worksite supervisors through the OPITO global standard for health and safety training earlier this year, the country has now set a deadline of November 2017 to roll IMIST out to people in this role.

IMIST was launched by not-for-profit industry safety organis\zation OPITO in 2011 to enhance workforce safety and competence by providing a comprehensive and consistent level of training across the world. The standard ensures that workers – no matter where they are based or who they are employed by - have the necessary safety awareness and training to reduce risk and minimize the potential for incidents.

Used by oil and gas companies in almost 50 countries around the world, Brunei is the first in the region to introduce its use for workers engaged in exploration and production activities.

Steve England Head of HSSE at the Energy and Industry Department Prime Minister’s Office said: “The energy sector is a core driver of Brunei’s economy. It accounts for more than 60 percent of Brunei’s GDP. In line with our National Vision 2035 to have sustainable energy for Brunei Darussalam’s prosperity, we aim to boost the skills of Bruneians to achieve the vision’s goals. The introduction of this first phase of minimum HSE standards is the beginning of our (HSSE’s) commitment towards that vision.

“The Bruneian government has undertaken to put approximately 3,000 front line worksite supervisors through the OPITO global standard for health and safety training. We have set a deadline of November 2017 to roll IMIST out to its entire oil and gas front line worksite supervisor workforce.”

Delivered in classroom and digital learning format, three already approved invigilation centers will now provide the training to industry: Mahkota Maju Sdn Bhd, Brunei LNG and Megamas Training Company Sdn Bhd with more to follow.

David Doig, chief executive officer of OPITO Group said: “Every worker has the right to go to work and return safely at the end of the day. Our mission is to support the global oil and gas industry to build a sustainable, competent and safe workforce and to ensure that quality, innovation and partnership underpin everything that we do.

“IMIST provides uniformity in training and ensures that everyone, regardless of their employer, role or discipline, has the same basic safety understanding and can perform their role to the same standard. We have worked closely with the Brunei Government on the implementation of IMIST and firmly believe their commitment will set a precedent in terms of how energy-producing nations train their workforce.”

A unique, not-for-profit organization, OPITO is wholly owned by the oil and gas industry and is responsible for ensuring it has a safe, skilled and competent workforce. With operation centers in Aberdeen, Dubai, Cyprus, Kuala Lumpur and Houston, OPITO standards, qualifications and workforce development frameworks are currently used by employers in over 45 countries worldwide.

Eni: Armada Olombendo FPSO Vessel Ready to Sail to Block 15/06, Offshore Angola

8enilogo copyEni announces that the naming ceremony of the “Armada Olombendo” floating production, storage and offloading (FPSO) vessel was held this week in Singapore. The FPSO shall operate in Block 15/06, offshore Angola, for the East Hub Development Project. The vessel will soon be ready to sail to its final destination where, once in position, will commence mooring and hook-up operations.

Eni and its partners have reached a key milestone towards achieving the first oil from East Hub Development Project, which is planned by the first half of 2017. This follows the successful stream of start-ups in the West Hub Project, in the same Block 15/06, which is the only Block of those awarded in the 2006 bid round that has achieved production.

The East Hub Development Project encompasses 9 subsea wells, of which 5 are producers and 4 are water injectors, in water depth ranging between 450 and 550 metres. The hydrocarbons which are produced from these wells will be transported via a pipeline system to the FPSO to be treated and stored prior to export.

Eni is the Operator of Block 15/06 with a 36.84% stake. The other partners in the joint venture are Sonangol Pesquisa e Produção (36.84%) and SSI Fifteen Limited (26.32%).

Eni has been present in Angola since 1980 with net current production of 135,000 barrels of oil equivalent per day.

Valuing Undrilled Exploration Acreage: CGG and Wood Mackenzie Release EV2 Exploration Valuation Platform

Launched on Monday, October 17, 2016, the powerful EV2 decision support platform enables oil and gas clients to determine the value of undrilled exploration acreage in the world’s most prospective basins. Combining the geological expertise of CGG Robertson with the commercial insight of Wood Mackenzie, EV2 represents an industry first in terms of coupling a flexible valuation tool with a rigorous and detailed geological knowledge base in an intuitive environment. Wood Mackenzie is a Verisk Analytics (Nasdaq:VRSK) business.

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EV2 global coverage map, indicating the 100 priority basins now available in light blue and the additional 80 basins to be released by 1H17 in dark blue.

EV2 differentiates volume and value potential at basin, play, and block scales and combines this analysis with unique functionality, such as the ability to change underlying subsurface modeling assumptions. Users can incorporate proprietary knowledge from seismic, geologic data and in-house expertise to calibrate yet-to-find reserve assumptions, subsurface risk maps, and oil price assumptions. Custom scenarios allow quick comparison of farm-ins, license rounds, and new deal opportunities for new ventures teams, petroleum economists, and financial analysts.

The platform now covers 100 priority basins around the world in areas with leading exploration potential, upcoming license rounds, and high-profile prospects to help clients secure the best value return on their investment. A further 80 basins will be released between now and March 2017, resulting in a comprehensive global data set. EV2 allows users to value corporate acreage portfolios in an objective, comparable, and consistent manner, helping to fill a critical gap in the market.

The EV2 platform is prepopulated with detailed basin, play, and block data, distinguishing it from other offerings that simply provide modeling software. The solution delivers baseline geologic assessments, including play-level maps of combined common risk segment (CCRS), lead density, and hydrocarbon phase. Statistical yet-to-find (YTF) analysis, field development scenarios, and block-specific fiscal terms are also transparently presented in EV2. This data provides trusted insight to expedite the new ventures workflow.

Sophie Zurquiyah, chief operating officer, Geology, Geophysics & Reservoir, CGG, said: “Following industry interest in the prerelease EV2 ten-basin analysis multi-client product in 2014, we are delighted to be delivering the EV2 valuation platform. With our strategic ally Wood Mackenzie, we will continue to expand and update this offering to ensure it brings our clients accurate and reliable insight to increase their chances of success. At a time of continued low oil prices and reduced exploration spending, we believe EV2 will provide crucial input to explorers that will reduce the risks and increase the value of their decisions.”

Neal Anderson, president of Wood Mackenzie, said: “The unmatched alliance of Wood Mackenzie and CGG has created a completely unique offering for our clients. EV2 is timely, easy to use, and adds objectivity to decision-making. This is the first tool that provides an independent, transparent, and consistent view of volume and value potential for undrilled acreage. The ability to value corporate acreage portfolios will help explorers invest wisely.”

Trelleborg Goes the Extra Mile for Malaysian Project

10Trelleborg Petronas NC3 gas fieldTrelleborg’s engineered products operation has successfully completed its supply of floatover equipment for the PETRONAS NC3 gas field, located in Block SK316, 200 kilometers North of Bintulu, Sarawak in Malaysia.

Trelleborg provided PAPE Engineering, an engineering company responsible for the transportation and installation of the platform jacket and topside, with four Leg Mating Units (LMUs), as well as four sway fenders, four loadout pads and four deck support units (DSU).

Mr. Olivier Beauclair, Director for Platform Transportation and Installation at PAPE, commented: Having worked closely with Trelleborg to great success on previous projects, we know that they’'re able to supply proven quality solutions with considerable ease of use and offer quick turnaround times - both imperative for a high stakes project like PETRONAS’ NC3. This meant that we had no hesitation it was entirely suited for the project.

In addition, Trelleborg site service engineers were able to provide supervised on-site support, ensuring a seamless LMU installation within the topside of the Central Processing Platform.

Performed at the fabrication yard prior to the floatover process, the LMU installation provided PAPE with assured and risk-free performance before the floatover operation commenced.

Vincent Tan, Sales and Marketing Manager at Trelleborg’s engineered products operation, commented: At Trelleborg, we aim to support every aspect of customer projects with a fast response and high quality solutions, whilst making sure we meet all delivery schedules and site requirements.

With a global reach and local support, we’re able to provide exactly that. Our manufacturing facility in Singapore ensured that PAPE had the local feet on the ground support, whenever it was needed.

For more information about Trelleborg’s engineered products operation, or any of its products and solutions, please visit the Trelleborg Engineered Products website.

Maersk Oil Awards Five-Year Agreement to Lloyd's Register

11LloydRegisterogoMaersk Oil has awarded a long-term contract to Lloyd's Register for a comprehensive suite of asset integrity services to support the development of Maersk Oil’s offshore operations in an efficient, safe and environmentally responsible manner.

Lloyd's Register will provide support in key areas of operational risk – change management, contractor management, inspection plans and reporting, asset optimization, risk-based assessments and written schemes of examination. Additional areas of technical expertise will also be provided on structural and pipeline integrity management systems, and corrosion monitoring.

“Ensuring consistent standards of integrity services across a network of high-value offshore assets is an increasingly complex task. Operators often face challenges that arise from differing operating regimes across different structures, work cultures and levels of asset maturity,” said James Drummond, VP Asset Integrity and Development Solutions from Lloyd’s Register.

Lloyd’s Register has a long standing relationship with Maersk Oil globally for the provision of integrity and compliance services, and has held the Integrity Contract with Maersk Oil UK since 2005, a testament to the quality of service provided and a commitment to improving the performance of its clients’ operations.

Although a key focus of the contract is to mitigate major threats, Lloyd’s Register experts will provide oversight in to the operation of each asset and also address challenging exploration requirements and specific operational needs.

“We are proud to be working with Maersk Oil to help enable their continued focus on safe production and operations to reduce risk. Lloyd’s Register is one of a very few third-party assurance providers with the diversity of technical expertise to fully support multinationals in this area, and we believe this agreement recognizes that,” highlights Drummond.

International Energy Logistics Group Delivers Robust Performance in Challenging Market

12peterson logoLeading international energy logistics group Peterson Offshore Group BV (“Peterson”),has announced its consolidated results for the 12 months ending 31st December 2015.

Commenting on the Group’s performance Erwin Kooij, CEO of Peterson said:

“Peterson has remained profitable in what continues to be a challenging time for the energy sector. We remain committed to supporting our clients to deliver safe, innovative, cost effective solutions that enable collaboration and drive efficiency in the supply chain. Throughout the downturn we continue to invest in the design of unique concepts, technology, equipment, infrastructure and in our people. In 2015, we committed £3.1m which included new cranes, trucks, trailers and SPMT’s (self-propelled modular transporters).”

The group’s UK based companies, including Peterson UK Ltd, 80:20 Procurement Services, Peterson Freight Management and Streamba Ltd contributed 50% of the group’s operating profit, with Peterson investing in new international opportunities. North Sea revenue1 was down on 2014 at £207m generating profit before tax of £4.4m down 32% on 2014.

We successfully retained existing contracts with Maersk, BP, ENI, Centrica, and were awarded new contracts with TAQA, Transocean and ONE. We are working in close partnership with a number of operators to establish a vessel pool to share resources in the Central & Northern North Sea (CNNS), similar to our long-established and successful model in the Southern North Sea. Our decommissioning facility in Great Yarmouth, which we opened in 2015, is now fully operational, and secured its first substantial decommissioning contract. We were awarded2 two long term contracts to provide logistics support for Statoil’s Dudgeon offshore wind farm; and we are firmly into the operational phase with our nuclear industry business.

We continue to invest to take our North Sea experience overseas. We opened new offices in Trinidad and Malta to support customers in these regions and we successfully secured a number of international logistics projects. Significant investment has been made in expanding the geographic footprint of our procurement business 80:20 and we are now operating in Norway, the Netherlands, Houston and Malta.

Our ongoing commitment to technology is focused on driving efficiency and generating maximum value across our clients’ logistics operations. We made significant investment into broadening our eSuite technologies. With a continued focus on asset utilisation across the industry, our new eHire application provides simple and effective visibility and control over all third party rentals, whether regular or high cost rental; and our receipt, store and pack tools support bar coding and Warehouse Management.

Sitting above all our applications is our unique proprietary technology VOR that seamlessly connects people directly and in real time to inventory and assets throughout the supply chain. VOR provides transparency, from ordering a piece of equipment quickly, to seeing what space is available on a vessel to ship it offshore, enabling better, data driven decisions.

Our people are fundamental to our ability to deliver operational excellence and we increased our headcount by 6% in the last year and currently employ 400 people in the Aberdeen area. We made a number of key appointments to further strengthen our management team and support the next phase of the company's growth.

Our parent company approaches its centenary with a strong balance sheet, this enables us to take a long view, invest for the future and allows our clients to trust in Peterson.”

For more information click here

1. Revenue, inclusive of vessel charters was down sharply on 2014, mainly driven by the reduction in vessel charter day rates with oversupply of vessels.

PIRA Energy Market Recap for the Week Ending October 17, 2016

13PIRALogoAnother Substantial U.S. Inventory Recovery

Total commercial stocks fell 5.1 million barrels this past week led by an almost 10 million barrel stock decline in products, with refinery turnarounds near peak levels. The 3.7 million barrel reported distillate stock decline was one of the largest this year, signaling the U.S. is in the heart of the harvesting season. Reported U.S. crude stocks now exclude lease stocks, which lowered them by roughly 30 million barrels, and week to week crude inventories built 4.8 million barrels largely because of low runs. Cushing crude stocks fell 1.3 million barrels this past week and are forecast to decline 2.3 million barrels next week because of Basin pipeline maintenance. Another large stock decline is forecast for distillate next week (-580 MB/D) with another strong pull from the farm economy, while gasoline inventories modestly build from weaker demand because of the Columbus holiday and the aftereffects of Hurricane Matthew.

Signs of Rising Import Dependency

Dependency on Lower 48 gas will likely increase next year as expanding domestic production losses leave a widening import gap to serve incremental demand growth. In particular, another round of PEMEX budget cuts has recently been approved, setting the stage for oil and gas production to fall by more than 10% year-on-year. Fortunately, a host of critical infrastructure projects is set to emerge in 2017, enabling imports to meet the organic demand growth within the power and industrial sectors.

China Steps Up on the Gas

With APLNG T2, the last train of the six coalseam projects in Australia, starting production, China plays a key role. Not only does it have 25% equity in two of these unconventional projects, the second largest equity stake of any Asian buyer in any liquefaction project to date, but is also a big buyer from these projects. With a slowly recovering gas demand, LNG faces competition from increased domestic production and pipeline supplies.

Australian Coal Prices Jump with Limited Short-Term Capping Mechanisms

Seaborne coal pricing was decidedly bullish this week, with continued tightness in the prompt market pushing forwards higher, particularly in Asia. 4Q16 and 1Q17 FOB Newcastle prices rose from last week as Chinese market players returned from the Golden Week holiday. FOB Newcastle prices are now up over 100% for the year. 4Q16 API#4 prices also jumped while API#2 prices finished the week down. Pricing in the Pacific Basin has shown virtually no signs of cooling off, particularly as coking coal price settlements have been confirmed at over $200/mt. With crossover supply moving into the coking coal market, there is not much prompt thermal coal supply that could come into the market to prevent further price gains.

Soft Landing for Global Aviation GHG Emissions Plan

The International Civil Aviation Organization agreed to adopt a market-based approach to cover global aviation GHG emissions, which requires acquiring and submitting carbon offsets to cover only the increases in international aviation emissions vs. 2019-2020 levels. Exact offsetting mechanisms eligible for compliance have yet to be specified, but the design of the program suggests that costs will be very low in the early years of the program. Voluntary country-level compliance begins in 2021, with mandatory compliance not starting until 2027. Efficiency initiatives also seek to reduce aviation fuel consumption, but PIRA expects aviation emissions to continue to grow, implying that increasing levels of offsetting will be necessary for compliance.

Fuels Rally; Winter Sparks Down Except in Northeast

On-peak prices weakened in New England/Mid-Atlantic and Ontario but firmed in most other Eastern Interconnect markets — primarily due to warmer-than-normal weather. Loads in the East edged up 0.5% year-on-year, while ERCOT climbed 4.7%. Henry Hub prices through October have shown remarkable strength, especially in the context of waning shoulder season demand. In contrast, Appalachian prices have inflected sharply to the downside. Looking ahead, heating season power prices will likely lag year-on-year gas gains outside of the Northeast, reducing margins.

Asian LPG Prices Improve; Petchem Usage Challenged

Regionally, Asian LPG markets performed best last week. Propane cargoes arriving in November were called 5% higher at $389/MT, and butane rose by the same amount in percentage terms to $418/MT. Butane’s discount to naphtha narrowed to just $27, a price at which it becomes increasingly non-competitive as a petrochemical feedstock.

S&P 500 Moves Lower

The S&P 500 moved lower on the week, with volatility up slightly, while high yield debt and emerging market debt moved a bit lower in price. The dollar was generally stronger. For commodities, there continued to be a slight upward bias, but ex-energy appears to have weakened a bit. There continues to be noted declines in the precious metals complex and an upward movement in long-term yields for a host of countries, with a lesser rise on the short end of the curve.

Harvest Progressing Nicely

With fairly good weather last week, PIRA expects a 10-15% increase in both corn and soybean harvest numbers today. After posting a 35% completion rate as of last Sunday, PIRA expects that between 45% and 50% of the corn should have been harvested as of Sunday. In soybeans we expect a number close to 55% in this afternoon’s report against 44% last week.

Japanese Data Remain Supportive to Margin and Crack Recovery

Crude runs eased once again, with higher crude imports such that crude stocks built 2 MMBBls. Finished product stocks drew, across the board, on higher demands. Gasoline demand was modestly higher and stocks drew 0.3 MMBbls to a new 2016 low. Gasoil demand was also modestly higher and helped draw stocks. Kerosene demand was hyped by secondary and tertiary inventories pulling on primary inventories. Stocks posted their first seasonal draw of 37 MB/D. Margins and cracks eased on the week for all the major products, but they staged a bit of improvement in the last few days. Margins in September and into October have improved nicely from the abysmal levels seen in August. Levels are now judged acceptable and supportive of rising runs, post-turnaround.

Coal-Gas Correlation Picks Up Due to Power Economics

Coal-to-gas switching has been a big theme emerging in European energy since late last year, but only now are we seeing it come to a head. The switch has migrated from the U.K. to the Continent, which means a potentially larger swing in gas demand on a day-to-day basis. The major flag in recent weeks is that, despite a strong push in European gas prices of more than 50%, we haven’t seen gas-to-power demand disappear. Coal prices have also experienced similar, if not greater, strength due to supply reductions, and it looks like what was once a gas market that was desperate to encourage flexible demand with weak prices is now unable to jettison it.

U.S. Ethanol Prices Advance

U.S. ethanol prices rose the week ending October 7 after a bullish DOE report and support from higher corn and oil values. Manufacturing margins declined. D6 RIN values were higher as the EPA will finalize the 2017 margins soon.

California Carbon Awaits New Data, Court Decisions, Post-2020 Direction

Prices increased in September with continued weak trading, but they slipped in October, with the final auction at the 2016 reserve price a month away. Going into the November 1 partial surrender requirements, sources hold enough CP2 compliance instruments to cover emissions through 2016 and free allocations for 2017 are also on the way. A severely undersubscribed November auction could see unsold allowances go to the Reserve, reducing CP2 supply. The market may deem the federal Canadian carbon price proposal bearish, but PIRA believes it can be aligned with WCI cap and trade. Environmental justice concerns over cap and trade have intensified, the market awaits the auction court decision, and critical emissions data releases are expected in coming weeks (CA, QC, perhaps ON).

Permian Basin Pipeline Capacity Surplus to End by 2020 (or Sooner)

Permian Basin crude and condensate production growth, as in other U.S. tight oil plays, has slowed dramatically this year. But in contrast to other plays, growth is likely to remain positive, both in 2016 and 2017. In 2018, Permian crude and condensate production is projected to rise more than 300 MB/D. New pipelines out of West Texas have more than kept up with production growth so far. Nearly 1.5 million barrels per day of takeaway capacity have been added in the past four years, creating a pipeline surplus of around a half-million barrels per day this year. As production continues to grow, this pipeline surplus capacity will erode. The only new pipeline project currently planned is a 300 MB/D Enterprise Products line from Midland to Sealy, slated for completion in 2018.

Numbers Belie Appalachian Spare Production Capacity

The latest EIA Monthly Crude Oil and Natural Gas Production (914) report broadly reflects PIRA’s reference case, with all regions reported either flat or in month-on-month decline for July. However, the report fails to convey the complete narrative on real-time supply.

Auto Sales Spark Activity in World's Largest Vehicle Markets

In September, global auto sales rose to their highest level on record. In the U.S., vehicle sales remained at elevated levels and played a key role in the expansion of consumer spending. In Europe, a jump in car sales during September sent an encouraging signal about industrial production. In China and India, major growth in car sales is driving gasoline demand substantially higher.

Pakistan Ensures Fertilizer Feedstock Prices Remain Unchanged

Pakistan’s Oil and Gas Regulatory Authority (Ogra) has said that no increase in the gas price for domestic as well as fertilizer feedstock was proposed by the authority. A spokesman clarified that a news item — that claimed an increase in gas prices by 36% was forthcoming — was not true. The spokesman further explained that the Ogra had issued its decisions with respect to SSGCL and SNGPL’s petitions for determination of prescribed price for FY 2016-17 on October 6, 2016. In the case of SSGCL, Ogra determined the average prescribed price at Rs354/MMBtu ($3.37/MMBtu). In the case of SNGPL, Ogra had determined its average prescribed price at Rs480/MMBtu ($4.57/MMBtu).

Spain Sees Sharp Increase in CCGT Load Factor as Wind and Hydro Decline

One side effect of the ongoing French nuclear issues is the disruption of the historical interconnector flows across Europe. Those French flows with Spain are no exception. Last week, Spain turned into a net exporter to France, reaching a daily flow of 2 GW on Wednesday, a multi-year high in the fourth quarter. This amount of exports is occurring even in the context of relatively stronger demand in Spain (weather-adjusted loads are reported to be up 1.6% year-over-year), together with low hydro and wind output, supporting domestic Spanish thermal generation from both coal and CCGTs.

Mexico Aims at Resuming Exports of Maya to the USWC

The announcement of Mexico’s intention to export Maya to the USWC signals that the domestic refining system is struggling with operational issues and that the USWC could be an economically advantaged destination relative to Asia or Europe, the usual marginal Maya markets.

Ethanol Production and Stocks Plunge

U.S. ethanol dropped 22 MB/D to 962 MB/D the week ending October 7, the lowest since June as some plants continue their seasonal maintenance. Stocks fell by 784 thousand barrels to 19.4 million barrels, the lowest level thus far in 2016. Ethanol-blended gasoline value was relatively flat.

Large Gains in Chinese Car Sales Are Lifting Gasoline Demand

Chinese car sales rose at a fast pace this year, and gains were particularly strong in September. The number of cars on the road, therefore, continues to expand rapidly, and gasoline demand is rising accordingly. PIRA’s model, comprised of car fleet size, distance traveled, and fuel efficiency, pointed to recent demand growth of about 300 MB/D year-on-year, and this estimate was roughly in agreement with reported demand figures. Recent gains in truck sales were more modest, and pointed to a small increase in transport-related diesel demand.

Global Equities Move Broadly Lower

Global equities were broadly lower on the week. In the U.S., utilities posted a moderate gain and consumer staples were little changed, but all the other indices fell back. Energy basically matched the market decline of about 1%. Internationally, Latin America moved higher, but all the other tracking indices gave ground. Most of those declines exceeded that seen in the U.S. market.

October Weather: U.S. Warm, Europe and Japan Cold

The new heating season is off to a cold start in Europe and Japan while weather is warmer in the U.S. With half the month completed and a second half forecast, October is expected to be 6% colder than the 10-year normal and 7% warmer on a 30-year-normal basis.

EU Carbon Rebounds on Thermal Price Gains, Nuclear Outages

French nuclear outages are an ongoing factor, but EU carbon prices also rose in early October in sympathy with strong rises in thermal fuels prices. Continued gains in thermal fuels prices should support carbon prices in their current range for the balance of 2016. An EU Parliamentary committee (ITRE) approval of post-2020 market reforms seems positive, but a lack of substantive progress in a more important committee (ENVI) ahead of a December vote is concerning. PIRA is not currently building in additional 2016 policy support, but constructive negotiations ahead of ENVI’s vote can push prices upward. Neither the supply nor the demand side support 2017 price gains, at a time when Brexit negotiations add policy risk.

The Farm Economy

At its Annual Client Seminar, October 6-7 in New York, PIRA tackled the subject of a challenging farm economy. Here is the presentation.

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.

DW Monday, October 17, 2016: Brazilian Breakthrough

14 1DWMondayIn a move to increase foreign investment amid the nation’s worsening economic position, Brazil’s Congress has approved legislation that will remove state-controlled Petrobras’ obligation as sole operator on the country’s pre-salt developments. Discovered in 2007, these ultra-deepwater fields represent a huge opportunity – they are the largest group of offshore reserves discovered this century.

Financial difficulties resulting from the ongoing low oil price environment, combined with the crippling impact from the “Operation Car Wash” corruption scandal, have slowed development in the prolific pre-salt fields, as mounting financial pressure has led the NOC to cut Capex plans and production targets. The opening of these deepwater assets to foreign investors is intended to increase development and production from the pre-salt fields, whilst allowing Petrobras to shift focus to more developed plays with existing infrastructure and lower Capex requirements.

Due to the significant potential the pre-salt fields offer, many international E&P companies can be expected to vie for a slice of the substantial pie – Shell has previously commented on the nation’s need to open up to foreign investment. However, E&P activities in Brazil are largely controlled by Petrobras – the few internationals currently active in deepwater Brazil, namely Shell and Anadarko, may see themselves tied to commitments elsewhere. Shell’s recent acquisition of BG sees the company bound to projects inherited through the deal; and Anadarko has the large Shenandoah discovery in the GoM, as well as advancing developments in Mozambique.

As such, the impact from last week’s legislation change may not be as significant as the nation’s government hopes. The current oil price environment has the potential to deter some operators from the huge Capex required for ultra-deepwater developments, particularly if not already present in the nation. However, if OPEC’s recent announcement to cut production results in a significant oil price rally next year, it may become somewhat of a moot point, increasing the attractiveness of the pre-salt fields to international investors.

Kathryn Symes, Douglas-Westwood London

CGG Awarded Multi-Client Projects Offshore Mozambique

Paris, France – October 13, 2016

CGG announced that it has been awarded an extensive multi-client program by the Instituto Nacional de Petroleo (INP) to acquire seismic data offshore Mozambique. The multi-survey program is designed to improve industry insight into the region’s geology and provide oil and gas companies with a greater level of understanding of the country’s prospectivity.

15CGG Mozambique surveys PRThe program includes a 2D survey of over 6,550 km in the offshore Rovuma basin, including blocks R5-A, R5-B and R5-C, and a large 3D survey over the Beira High in the Zambezi Delta. The 3D survey is expected to be up to 40,000 km², subject to pre-commitment. It will cover blocks Z5-C and Z5-D and surrounding open acreage in this deltaic area which is believed to be prospective. CGG has also been awarded an onshore airborne gravity and magnetic survey in the Southern Mozambique Basin.

Location map of the CGG multi-client surveys in Mozambique.

The proposed multi-client seismic program in the Mozambique Zambezi region will form part of a comprehensive, fully integrated geoscience package that will give participating companies a better overall understanding of the region. Marine gravity and magnetic data will be acquired simultaneously with the seismic to aid regional interpretation. The interpretive phase of the program will benefit from the full range of geoscience expertise from CGG’s Geology, Geophysics & Reservoir businesses. This will include geological and remote sensing expertise from Robertson and NPA Satellite Mapping.

Jean-Georges Malcor, CEO, CGG, said: “CGG has a long track record of delivering successful multi-client programs in the Sub-Saharan Africa region and this award underlines the extent to which our reputation for high-quality services and delivering value to our clients is recognized not just by oil and gas companies but also by national governments. As our first multi-client projects in Mozambique, these awards fit well with CGG’s long-term multi-client strategy to provide our clients with the most advanced understanding of the subsurface across the world’s key basins. The 5th License Round award process undertaken by the INP in 2015 saw a high level of interest in the Zambezi region and we believe our multi-client projects will highlight the exploration upside potential.”

ELA Offshore is Prepared for The Cold Season: Offshore Drying Containers in Stock

ELA Container Offshore GmbH ordered several Drying Systems from Pronomar BV to increase stock. By doing this, ELA prepares itself for the cold season in which there is a high demand for Drying Containers. “We always have containers in stock to be able to react to customers’ demands on short notice. Especially within the offshore industry where every second counts”, says Hans Gatzemeier, Managing Director of ELA Container Offshore GmbH. “Since all of our Offshore Drying Containers are leased out, we ordered new drying systems to have some containers available on short notice”, explains Gatzemeier.

16ELA DryingContainer webThe container is equipped with a Pronomar Drying system suitable to dry suits, gloves and boots

The 20 ft ELA Offshore Drying Container is available for rent and sale. It is equipped with a Pronomar Drying System which is suitable to dry suits, boots and gloves for up to 20 people. All drying systems are made from solid stainless steel and are therefore built to last. The drying systems dry the clothes from the inside out by means of a large amount of warm air entering from a powerful blower. Within a maximum time of three hours, all clothing will be dry. “The drying systems prolong the lifetime of the costly work wear. Seen from a health perspective, the amount of sick leave decreases as workers are more likely to get sick when working in wet or damp overalls”, says Jiska Bazuin, Operations Manager at Pronomar BV.

ELA Container has already gained diverse experience in the Offshore-Wind and Offshore Oil & Gas Industry. Whether on pontoons, transformer platforms, rigs or supply vessels - ELA Container is the ideal partner, offering tailor-made concepts for all requirements in the form of Living Quarters, Offices, Dining Rooms, Galleys, Laundries, Recreation or Locker Rooms and all types of Carrying Units. ELA Offshore containers are equipped with all the necessary utilities. This guarantees, in combination with all ELA Offshore features, a long service life, functionality and comfort.

The high quality Containers are “Made in Germany” according to German quality standards and possess all necessary certifications such as DNV 2.7-1 / EN 12079-1, DNV 2.7-2, based on SOLAS, IMO FSS Code and MLC as well as CSC and are approved from several IACS-companies. In terms of fire resistance, an A60 insulation provides high safety standards. Every container will be checked before delivery. Depending on customer requirements, ELA Offshore Containers are individually customized, immediately operational and are available at short notice.

The main features of ELA offshore accommodations include:

  • Flexibility on demand
  • One base type with various accommodation solutions
  • Easy handling thanks to standard 20 ft High-Cube ISO standard dimensions
  • Highest quality standards

Global Maritime Appoints Mission Critical Systems Manager for Norway

17helge profile MCSGlobal Maritime Consultancy & Engineering, a provider of marine warranty, dynamic positioning and engineering services to the offshore sector, has appointed Helge Flesland to lead its Mission Critical Systems Group in Norway.

Helge will be responsible for managing and further developing Global Maritime’s mission critical systems, including crane, marine operations and dynamic positioning (DP). Other areas of Helge’s brief will include ensuring that all operations are compliant, actively participating in the company’s future strategic direction, and defining mission critical services and client priorities.

Mikal Grure Eie, Regional Manager for Norway, said: “Global Maritime is an industry leader in the operation and inspection of mission critical and marine control systems and we are delighted that Helge has agreed to head up this vital role. As we move forward, Norwegian customers can look forward to the very highest standards in safety and risk reduction and the effective operation of all their mission critical systems.”

Helge has more than 25 years experience in HSE safety, risk analysis and risk management for both onshore and offshore operators, with his main focus over the last few years being large modification projects on platforms in the North Sea related to oil field life extensions.

Prior to joining Global Maritime in 2015, where he has held a number of roles including managing Global Maritime’s risk and HSE business in Singapore, Helge was Senior Principal Consultant and also Risk Services Manager at Lloyds Register Consulting. In his career at Lloyds Register, Helge managed the company’s risk and safety departments in Australia and Lloyds Register’s involvement in the Johan Sverdrup project, one of Norway’s largest-ever offshore projects. Helge also worked for Statoil as HSE Manager on the Gullfaks project, where he conducted HSE risk management, safety analysis and design reviews among other activities. Helge has a BSc in Petroleum Technology and a Master of Management from the BI Norwegian Business School.

Global Maritime’s Mission Critical Systems Group specializes in risk reduction and assurance for all equipment and systems. Applying the latest industry standards, Global Maritime works closely with clients to identify and control vulnerabilities and hazards, maximizing safety and minimizing downtime. Areas of expertise include audits relating to cranes and other lifting equipment that ensures safe and efficient operation; dynamic positioning (DP); subsea systems; umbilical pipe lay systems; jacking systems; bow loading and cargo handling systems; anchor chain and cable spooling equipment; and more.

Ashtead Boosts Customer Technical Support Team

18Ashtead Graeme BoothAshtead Technology has strengthened its UK team with the appointment of a regional technical support leader, to provide its customers with the most efficient, cost-effective technological solutions.

With a career spanning more than 25 years in the subsea industry, Graeme Booth joins Ashtead from Subsea 7 where he held a number of technical support and offshore operational roles, including survey equipment superintendent.

Mr. Booth will provide customers with technical support covering equipment rentals and custom engineered packages, for survey and ROV operations worldwide.

Based in Aberdeen, Mr. Booth’s role has been created in response to increased customer demand for outsourced integrated technical support from initial pre-bid stage through to offshore execution, ensuring projects are delivered on time and within budget.

Allan Pirie, chief executive of Ashtead Technology, said: “We understand that selecting the right technological solution, with 24/7 support is critical to the success of our customers’ subsea operations. We will continue to expand our technical support team in response to current market challenges.

“Our customers are increasingly looking to their suppliers for ways to minimize technical and operational risks and drive down costs. Graeme will be integral to driving this forward, supporting our existing customers, developing new business opportunities and growing our service offering. “Graeme’s extensive industry experience, coupled with his in-depth knowledge of survey and ROV equipment, will provide additional value to our customers.”

Commenting on his appointment, Mr. Booth said: “Ashtead is a company with a clear vision and a highly skilled team who have helped shape the company into the industry leader it is today. I look forward to playing my part in the next phase of the company’s growth, as it looks to enhance its range of value-added services to support customer projects globally.”

Founded in 1985, Ashtead Technology is a world-leading, independent subsea equipment solutions specialist providing rental and sale of marine equipment, offshore personnel, calibration, repair and maintenance, asset management, training and custom engineered solutions. Positioned at the forefront of technology and innovative solutions, Ashtead strives to provide a one-stop-shop for cost effective solutions to maximize performance with high quality service and delivery.

BP Decides Not to Proceed with Great Australian Bight Exploration

1BPAustralia copyBP has taken the decision not to progress its exploration drilling program in the Great Australian Bight (GAB), offshore South Australia.

The decision follows the review and refresh of BP’s upstream strategy earlier this year, which included focusing exploration on opportunities likely to create value in the near to medium term, primarily building on BP’s significant existing upstream positions.

BP has determined that the GAB project will not be able to compete for capital investment with other upstream opportunities in its global portfolio in the foreseeable future.

“We have looked long and hard at our exploration plans for the Great Australian Bight but, in the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals. After extensive and careful consideration, this has proven not to be the case for our project to explore in the Bight,” said Claire Fitzpatrick, BP’s managing director for exploration and production, Australia.

“This decision isn’t a result of a change in our view of the prospectivity of the region, nor of the ongoing regulatory process run by the independent regulator NOPSEMA. It is an outcome of our strategy and the relative competitiveness of this project in our portfolio.”

Fitzpatrick said BP has informed federal and state governments of its decision.

“This decision has been incredibly difficult and we acknowledge it will be felt across the South Australia region. We have made significant progress with preparations for drilling in the Bight with the support of communities and federal, state and local governments. We acknowledge our commitments and obligations and our priority now is to work with government and community stakeholders to identify alternative ways of honoring these.”

BP has also consulted with its joint venture partner, Statoil, who fully understand BP’s change in strategic direction and accept BP’s decision.

“BP is a long-term, significant investor in Australia, most visibly through our retail network and refinery and also as partners in the North West Shelf and Browse ventures,” added Fitzpatrick. ”We expect to continue to consider further opportunities to invest and grow our business here.”

BP was awarded exploration licenses for four blocks in the Ceduna area of the GAB in January 2011. Seismic data was acquired in the area in late 2011-early 2012. Statoil acquired a 30% interest in the licenses in 2013, BP remained operator with 70% interest.

BP has a contract with Diamond Offshore Drilling for the provision of a new Moss CS60E design semisubmersible drilling rig, which Diamond commissioned Hyundai Heavy Industries to build and is specially designed for use in deep water and harsh marine environments. BP’s decision does not impact this rig contract.