U.S. Secretary of the Interior Ryan Zinke has announced that Lease Sale 247 for oil and gas parcels in the Gulf of Mexico garnered $274,797,434 in high bids for 163 tracts covering 913,542 acres in the Central Planning Area of the Outer Continental Shelf offshore Louisiana, Mississippi, and Alabama. A total of 28 offshore energy companies submitted 189 bids. The sum of all bids received totaled $315,303,884.
“Today’s strong sale reflects continued industry optimism and interest in the Gulf’s Outer Continental Shelf, a keystone of the Nation’s offshore oil and gas resources and a vital part of President Trump’s plan to make the United States energy independent,” Secretary Zinke said. “In cooperation with the Gulf offshore industry, we are committed to responsible energy development that spurs economic opportunities, generates jobs for American workers, and produces revenues for local, state, and federal partners. Expanded Gulf production is critical to America’s economic and energy security, and will play a greater role as we move to break our dependence on foreign oil and strengthen the Nation’s energy independence.”
Today’s lease sale, which included all unleased and non-protected areas in the Central Gulf of Mexico Planning Area, is the final to be held in the Gulf of Mexico under the current Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 (Five Year Program). The Five Year Program makes available all offshore areas with the highest resource potential. The first eleven sales in the Five Year Program offered nearly 73 million acres for development and garnered more than $3 billion in bid revenues.
The Department’s Bureau of Ocean Energy Management (BOEM) offered 9,118 unleased blocks, covering 48 million acres, located from three to 230 nautical miles offshore Louisiana, Mississippi, and Alabama, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters).
“The Gulf of Mexico is one of the most productive oil and gas basins in the world, and its mature offshore and onshore infrastructure supports safe and responsible development of our domestic energy resources,” Secretary Zinke said.
BOEM estimates the lease sale could result in the production of 460 to 890 million barrels of oil, and 1.9 trillion cubic feet to 3.9 trillion cubic feet of natural gas. The sale terms include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region. BOEM’s economic terms include a range of incentives to encourage diligent development and ensure a fair return to taxpayers.
The broadcast of the bid reading via the internet livestreaming allowed bid information to reach a much broader audience and eliminated the need for the public to physically attend the bid reading.
Following today’s sales, each bid will go through a 90-day evaluation process to ensure the public receives fair market value before a lease is awarded. Lease awards will be posted to BOEM’s website as they are completed. A Note to Stakeholders will announce final sales statistics and bids rejected upon completion of evaluations. All materials and statistics for Lease Sale 247 are available.
As of March 1, 2017, about 16.9 million acres on the U.S. OCS are under lease for oil and gas development (3,194 active leases) and 4.6 million of those acres (929 leases) are producing oil and natural gas. More than 97 percent of the leases are in the Gulf of Mexico; about 3 percent are on the OCS off California and Alaska.
The company will as a subcontractor of Kvaerner take part in upgrading the platform after operator Statoil exercised an option in an agreement awarded in April 2016. The option is for work in the engineering, procurement and construction phase of the project. Aker Solutions' share of the work is valued at about NOK 1 billion and will be booked in the company's first-quarter orders.
Aker Solutions will provide design engineering for the upgrading of the semi-submersible Njord A platform in Norway. Photo: Thomas Sola / Statoil.
"This is the largest offshore platform in Norway to have been brought to shore for a total upgrade," said Luis Araujo, chief executive officer of Aker Solutions. "We're excited to continue our work with Kvaerner and Statoil on this landmark project, which will enable the Njord field to keep producing oil and gas for several more decades."
Aker Solutions' office in Bergen will execute the engineering work with support from the company's division in Oslo, working as part of an integrated team with Kvaerner. The work has already started and will at its peak involve about 330 Aker Solutions' employees. Delivery is scheduled for spring 2020.
"We have together with Kvaerner and Statoil succeeded in significantly lowering costs on this project and we are now focused on keeping up the momentum," said Knut Sandvik, head of projects at Aker Solutions.
The Njord field, located in the Norwegian Sea, had its first production in 1997. The Njord A platform will be upgraded at Kvaerner's yard in Stord, an effort that will require about 3,000 man-years.
Aker Solutions has previously delivered concept and feasibility studies as well as front-end engineering and design (FEED) work for the Njord upgrade. The subcontractor agreement with Kvaerner includes an option for prefabrication work.
Phase 1 of Johan Sverdrup is under development, with first oil scheduled for late 2019. The partners will now proceed with maturing Phase 2 for the investment decision and submission of the plan for development and operation (PDO) in the second half of 2018. Phase 2 is scheduled to come on stream in 2022.
Illustration of the Johan Sverdrup field center. Credit: Statoil
“We must take a generational perspective on the Johan Sverdrup development. Working closely with partners and government authorities we now have a plan for Phase 2 that maximizes value for society, industry and the licensees”, says Statoil’s project director for Johan Sverdrup, Kjetel Digre.
“The Johan Sverdrup suppliers have demonstrated a willingness and capabilities to develop good solutions in a partnership with us. The contributions have been key to the improvements we have achieved so far. We are pleased to see that this trend is being progressed in the awarded FEED contracts. And we see that Norwegian suppliers are competitive in an international market,” says Digre.
Statoil has implemented several improvement programs for phase 2 in the Johan Sverdrup development. Capital expenditures for Phase 2 are now estimated at between NOK 40 – 55 billion (NOK billion nominal, fixed currency and excluding IOR), halving the estimate since the PDO was submitted for Phase 1 of Johan Sverdrup. “The quality of phase 1 and the improvement work we have performed with our partners and suppliers for phase 2 has enhanced profitability. The break-even price for the full-field development is now less than USD 25 per barrel and with an ambition of a world class recovery rate of 70 %,” says Digre.
The partnership has also decided on the development concept for Johan Sverdrup. Phase 1 of the development establishes a field center consisting of four platforms on the field. Phase 2 builds on this infrastructure, adding another processing platform to the field center. Overall this will result in a processing capacity of 660 000 barrels of oil per day.
The following FEED contracts will be awarded in connection with the decision to proceed with the development that has now been made:
- Processing platform, Aker Solutions
- Jacket, Kværner
- Power supply from shore, Siemens
Phase 2 also includes the development of the Avaldsnes (east), Kvitsøy (south) and Geitungen (north) satellite areas to be phased in for processing and export on the field center.
28 new wells are planned to be drilled in connection with the Phase 2 development. The Phase 2 concept also includes the establishment of an area-wide solution for power from shore for the Utsira High by 2022.
Maturing and planning Phase 2 parallel with the development of Phase 1 will ensure a consistent full-field solution and cost-efficient hook-up when Phase 1 is on stream. With a field life estimated at 50 years, Johan Sverdrup will generate great value for society and the partners.
Includes the development of four platforms, three subsea installations for water injection, power from shore, export pipeline for oil (Mongstad) and gas (Kårstø)
Under development. Approx. 40 % of the development is completed
More than NOK 60 billion worth of contracts awarded. More than 70 % of the suppliers with a Norwegian billing address
CAPEX estimate: NOK 97 billion
Break-even Phase 1: Below USD 20 per barrel
Production start: late 2019
Includes development of another processing platform for the field centre + the Avaldsnes, Kvitsøy and Geitungen satellite areas, in addition to power from shore to the Utsira High in 2022
Made the DG2 decision to proceed with the development
Investment decision (DG3) and submission of the plan for development and operation: Second half of 2018
Investment estimate: NOK 40 – 55 billion
Break-even price: Below USD 30 per barrel
Production start: 2022
Full field (Phase 1 + Phase 2)
Includes both Phase 1 and Phase 2 of the Johan Sverdrup development
Resource estimate: 2.0 – 3.0 billion barrels of oil equivalent
Break-even price: below USD 25 per barrel.
Subsea 7 announces the award of a large(1) contract by BP as part of the deepwater Mad Dog 2 development, located approximately 190 miles south of New Orleans.
The contract scope covers engineering, procurement, construction and installation (EPCI) of the subsea umbilicals, risers and flowlines (SURF) and associated subsea architecture.
Subsea 7 has worked closely with BP to deliver a lump sum integrated solution from design through to supply, installation and commissioning. Furthermore, by collaborating with OneSubsea, a Schlumberger company, our Subsea Integration Alliance(2) partner that has been awarded the Subsea Production Systems (SPS) contract, additional areas of cost improvement have been identified to provide greater cost certainty and reduced risk.
This has enabled the original cost of the Mad Dog 2 development to be substantially reduced.
Together the SURF and SPS contract awards are a significant endorsement of our Alliance offering and confirmation of the client's high level of interest in this approach, and in Subsea 7 as a key partner. This is also the first substantial project in the US to use Subsea 7' Swagelining(3) polymer lining technology.
Project management and engineering will take place in Houston, Texas with support from Subsea 7's Global Project Centre in London, UK. Offshore installation activities are scheduled for 2019 and 2020.
Craig Broussard, Subsea 7 Vice President for the Gulf of Mexico, said: "The Mad Dog 2 project is a significant award for Subsea 7. It combines Subsea 7's capability with our Subsea Integration Alliance value offering to reduce risk and provide lower cost solutions for BP. This project serves as a step-change of how we work in the region and in Subsea 7's ability to deliver superior value to the industry."
The Shah Deniz consortium has announced the sail away of the second jacket for the Shah Deniz Stage 2 platforms. The Quarters and Utilities (QU) platform jacket sailed away to the Shah Deniz contract area in the Caspian Sea from the Heydar Aliyev Baku Deepwater Jackets Factory (BDJF) ahead of schedule on 15 March.
The transportation, launch, positioning, pile installation and final completion activities of the jacket structure are expected to take around 75 days, depending on the prevailing weather conditions.
Photo credit: BP
The construction of the jacket was completed ahead of schedule on 20 February 2017 and was then successfully loaded onto the transportation barge STB-1 at the quayside of BDJF.
The QU platform jacket, built by the BOS Shelf, Star Gulf and Saipem consortium, was fully constructed in country at the BDJF, using local construction infrastructure and facilities. 2000 people including sub-contractors and specialist vendors were involved in the construction works. Some 90% of the construction workforce was Azerbaijani citizens.
Ewan Drummond, Vice-President, Shah Deniz 2 Projects, said: “The second jacket sail away is the first major milestone planned for this year and we are pleased to have achieved it ahead of schedule. 2017 is an important year for BP and for the Shah Deniz 2 project, which is already around 90% complete. We have planned a series of key completion milestones for this year. We are committed to achieving all of these milestones on schedule to make BP’s 25th anniversary celebrations in Azerbaijan a big success.
“On this occasion, I would like to thank SOCAR and our partners for their support and cooperation in moving this giant project forward. My thanks are also to all people representing BP, contractors and subcontractors whose hard work has made it possible to achieve this milestone ahead of schedule. I would like to specifically thank the BOS Shelf, Star Gulf and Saipem consortium for their firm commitment to BP’s safety standards throughout the 22-month construction period of this jacket. This is a great safety achievement and I am confident that the offshore installation will be performed with the same level of commitment to safety and quality”.
The QU platform jacket weighs approximately 12,084 tons and stands 105 meters high. It contains 31 J Tubes, 7 utility caissons and 3 J tube caissons. The jacket will be installed in a water depth of 95 meters.
On behalf of its client Seaway Heavy Lifting, subsea technology company Seatools completed the development, manufacturing, and installation of a piling instrumentation and control system for the Pile Installation Frame (pre-piling template) which will be used for the construction of a large offshore Windfarm. Seaway Heavy Lifting will commence the offshore installation operations in April of this year.
For this project, Seatools’ scope of supply comprised the complete mechanical, electric, hydraulic, and software design of the pile template instrumentation and control system, complemented by the hydraulic and mechanical system for template leveling and pile positioning. The entire project has been successfully completed in as little as 5 months, from signing the contract to FAT.
Marcel Remijn, Project Manager at Seaway Heavy Lifting,: “We are very pleased with the technical solutions Seatools have provided to our Pile Installation Frame. By using proven technology and ruggedized equipment we are confident that the provided technology will result in a solid performing Pile Installation Frame. Working together with Seatools has been an absolute pleasure and we look forward to see the Pile Installation Frame in action”
The project’s challenging deadline required close collaboration between Seatools’ in-house technical disciplines and related suppliers, as well as between Seatools and its client Seaway Heavy Lifting. Early-stage dialogues, during which Seatools linked its technical expertise to the operational expertise of the client, opened up a number of suitable technical configurations and potential solutions. Complemented by a thorough FMEA analysis, this resulted in an adequate system architecture and related solutions featuring a high level of redundancy, a solid backup strategy, and innovative measurement technologies. Thanks to the delivered solutions, Seaway Heavy Lifting is set to stay well within the limits of the prescribed pile installation tolerances.
Jan Frumau, Managing Director at Seatools, said: “In addition to the honor of collaborating with a prominent EPCI player like Seaway Heavy Lifting, I am very pleased with the delivered technical solutions. We are confident that the developed solutions will allow Seaway Heavy Lifting to perform efficient piling operations. The highly ruggedized equipment will result in a solid performance, despite vibrations and shock loads that are present during piling operations.”
Apart from drawing on Seatools’ extensive subsea technology toolbox – containing rugged dredging sensors, among others – the project demanded for the development of several innovative measurement technologies that facilitate efficient piling operations. A case in point is the Post Pile Stick-up Measurement system, which facilitates very accurate determination of the (relative) pile stick-up height.
Learn more about Seatools’ offshore and subsea installation equipment here.
Vryhof, a trusted partner to many of the offshore industry’s leading players, and its business unit Deep Sea Mooring (DSM), a leading provider of offshore mooring services, have launched a new engineering unit to support the company’s offshore oil & gas, renewables and aquaculture operations across the globe.
The new unit, which is just one element of Vryhof that also includes anchoring technology specialists Vryhof Anchors and Moorlink, a provider of mobile and permanent mooring solutions, will be home to some of the industry’s leading engineers with previous experience as oil & gas operators, rig owners and vessel designers.
A time domain simulation model where a flotel on DP (Dynamic Positioning) is connected to a moored production unit. The model has been used for availability analysis and forecasting of gangway. Image credit: Deep Sea Mooring
The unit will provide expertise in hydrodynamic and vessel motion analysis; advanced mooring analysis (including for offshore wind turbines and offshore fish farms); dynamic positioning (DP) analysis; flexible and rigid riser analysis; complex marine operations (including offshore crane operations and subsea operations); and probabilistic and deterministic stability analysis for all ship types and floating structures.
A main element of the new unit’s activities and a key differentiator in the marketplace will be one of the industry’s largest servers with parallel processing capabilities. This will enable Vryhof and DSM to carry out 120 simultaneous engineering simulations, thereby shortening computational times, reducing assumptions and simplifications, and delivering highly accurate and less conservative engineering analysis for customers.
Wolfgang Wandl, Vryhof CEO, continued: “When is it safe to drill? What are my optimal mooring line arrangements? How does my vessel react to different sea-states? How can I ensure safe connections between accommodation platforms and the main rig? What issues should I be aware of when installing my flexible riser? Our engineering team can provide answers to these questions and more...”
He continues: “At a time when engineering innovation is so important to operators as a means of increasing efficiencies and managing costs, access to many of the foremost technical and engineering minds in the mooring industry is a definite value-add for our customers. The result will be viable engineering solutions and highly accurate information and analysis for real-life challenges.”
One recent engineering project and a key area of innovation at Vryhof and DSM is availability and forecast response analysis to facilitate the link-up of floating offshore accommodation platforms (known as ‘flotels’) to their main rigs. In one North Sea application, availability analysis provided by DSM saw the input of hindcast data - over 50 years of historical weather data - in order to estimate the expected availability of the flotel at a specific location. Working with Storm Geo, a global provider of decision support for weather sensitive operations, DSM combined state-of-the art hydrodynamic software and weather forecasts to forecast gangway motion, maximize availability, reduce risk, and optimize operations.
Endeavor Management is pleased to announce a second phase follow-on to its earlier successful Joint Industry Project (JIP) "Stocking the Decommissioning Tool Kit" completed in 2016. That JIP delivered results covering eleven (11) topics and identified several areas for additional work.
Bruce Crager, Executive Vice President of Endeavor Management, stated, “We are delighted to be able to continue the work of defining improved operations, new technologies and methods to evaluate whether to leave subsea hardware in-situ or recover it. It is only with the cooperation and dedication of our Member Companies that significant progress is being made to deliver state-of-the-art tools and techniques to overcome the major operational and economic hurdles of offshore oil & gas decommissioning.”
Building on the results of the initial JIP, Phase II “Plugging in the Power Tools” will focus on several issues being proposed:
1. USA GoM Financial Requirements: common sense rationalization of regulatory requirements.
2. Using NEBA [Net Benefits Environmental Analysis] in decommissioning decisions: five (5) separate issues proposed, including 3 case studies.
3. Proving resins’ long term durability for well P&A and other interventions.
4. Examine the case for leaving subsea equipment in place as the best option for deep water ecosystems and outline ways for companies to gather, store, and share oilfield environmental data to prove or disprove this theory.
Keith Caulfield, JIP Project Manager for Endeavor Management, stated, “The collaboration of our Member Companies during the initial JIP was exemplary. Their contribution along with Endeavor’s subject matter experts truly brought a new level of insight into the problems and solutions available for deepwater decommissioning. I look forward to additional advances coming from the Phase II effort.”
Details of the JIP, Phase II will be revealed at this week’s DecomWorld GOM 2017 March 14-15 at the Omni Houston Hotel, in Houston, Texas during a presentation by Keith Caulfield, JIP Project Manager.
The JIP Proposal for “Plugging in the Power Tools” is available here.
Decom North Sea, the membership organization for the oil and gas decommissioning sector, has announced Chris Cox, managing director of Centrica’s Exploration & Production business, as keynote speaker for its flagship conference and exhibition, Decom Offshore 2017.
This year’s annual conference, entitled “Challenging the Norm”, is principally sponsored by Bureau Veritas UK and takes place on 24 May at Aberdeen Exhibition and Conference Centre.
Chris Cox, managing director of Centrica Exploration & Production
With over 30 years’ extensive experience in global oil and gas upstream activities, Chris has also held a number of senior roles at BG Group plc and a variety of international technical, commercial and management roles with both Amerada Hess and Chevron Corporation.
Outlining his vision for North Sea decommissioning, his keynote address will explore a number of themes, including: risk-based and total cost approach to optimal timing; collaboration between regulators; industry bodies and operators to establish fit-for-purpose work scopes, and the urgent need for the supply chain to focus on solutions and delivery models that can support and collaborate with operators to manage their decommissioning activities and costs.
Commenting on the announcement, Decom North Sea chief executive, Roger Esson, said: “With a number of mature assets in the Centrica portfolio and efficient decommissioning amongst his top priorities, Chris is ideally positioned to provide insight into the current decommissioning landscape from an operator perspective and we are delighted to announce him as keynote speaker.
“Now in its fifth year, Decom Offshore 2017’s program will reflect the title, “Challenging the Norm”, by focusing on providing a clear picture of recent and current activity within the decommissioning sector. This is an evolving sector, and fundamental to our commitment to assisting a robust, global supply chain win work, is to ensure we are constantly learning from latest experience.” This annual, sell-out event has gained a reputation for providing unrivalled learning and networking opportunities for the expected 400 delegates. This year, the programme is keenly focused upon the current opportunities available in the late life and decommissioning sector, for all levels of the supply chain.
In addition to plenary sessions, interactive break outs and over 30 exhibitors, Decom Offshore 2017 introduces One-to-One sessions, with a particular emphasis upon supply chain export opportunities via engagement with Decom North Sea’s board of directors and other strategic partners.
Delegate bookings are now open for Decom Offshore 2017. Sponsorship and exhibition opportunities are also currently available. For further information on both, click here.
Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY) has announced the acquisition, from K&S Baltic Offshore (Cyprus) Limited, of its 50% shareholding in Seaway Heavy Lifting Holding Limited (Seaway Heavy Lifting).
Following signing and completion, after close of business on 10 March 2017, Seaway Heavy Lifting and its subsidiaries became wholly-owned by Subsea 7 (the Group).
Jean Cahuzac, CEO, said: "Our investment to acquire the remaining shares in Seaway Heavy Lifting, such that it becomes a wholly-owned subsidiary of our Group, is aligned with our strategy to grow and strengthen our business for the long-term. Consolidating Seaway Heavy Lifting into the Group increases our participation in Renewables, Heavy Lifting and Decommissioning services. These are areas where we expect market activity to increase and see potential to grow our market share."
The Group will report revenues and net operating income from Seaway Heavy Lifting within a new Business Unit 'Renewables and Heavy Lifting'. This new reporting structure will be reflected within the Group's first quarter results, which will be announced on 27 April 2017.
For more information, click here.
Two Houston-based solution providers in the oil and gas industry, Mexssub and INTECSEA, announced the formation of a strategic alliance built to deliver permanent riser and pipeline integrity solutions to operators worldwide. The companies will present details of the alliance at oil and gas industry trade show, Subsea Tieback and Exhibition, hosted this week in San Antonio.
The alliance provides INTECSEA customers additional options for pipeline integrity management, designed to minimize risk and maximize production, while Mexssub gains an increased footprint beyond its historic work predominantly in the Gulf of Mexico.
“Mexssub celebrates this new partnership with INTECSEA, a well-respected leader in offshore infrastructure projects, and an ideal ally in pipeline integrity management. "Our two missions converge nicely at a time when proper integrity management serves a critical role in maximizing year to year productivity.”
- CEO Jesus Silva of Mexssub.
“For our customers, we strive to maximize the value of their assets, and facilitate the adoption of innovative technologies,” said Geeta Thakorlal, president of INTECSEA. “In Mexssub, INTECSEA has found an alliance partner that helps us achieve that objective more fully.”
VIKING Life-Saving Equipment A/S is experiencing a moderate slowdown following several years of continuous growth. In a market affected by continued decline in two important segments, cargo vessels and offshore, revenue for 2016 totaled DKK 1.858 billion, compared to DKK 1.891 billion in 2015. Profit before tax for the financial year totaled DKK 183.5 million, compared to DKK 200.5 million in 2015.
“We want to continue developing and delivering growth in terms of both revenue and earnings. In the current market situation, we are performing well compared to our peers, while maintaining – and in most segments increasing – our market share. We also continued to invest in and develop our business with new products and concepts in 2016, and we established positions in the strategically important markets of Korea and Thailand. We will continue this offensive approach to the market, ensuring that we can seize the growth that is expected to return in 2018,” says CEO Henrik Uhd Christensen.
Cargo and offshore segments hit hard
VIKING operates in three main segments: cargo vessels, passenger vessels and offshore, two of which have been hit hard by the overall state of the economy. Although the scrapping of cargo vessels has increased globally, this has merely put a damper on the extreme expansion of capacity seen in the market over the last several years. In the offshore sector, lower oil prices continue to dictate the extremely low level of newbuild activities.
“The downturn has been deeper and longer than what could have been predicted a few years ago. The contours of a weakened market emerged in the years 2013-2014, combined with an absence of positive trends in the market economy to cushion the fall. You would have to go back decades to find a similar situation where the cargo newbuild market had fallen by more than half, as is the case now. Meanwhile, the operational market – the vessels in operation – are under pressure due to low demand and low freight rates,” says Henrik Uhd Christensen.
Signs of improvement in some segments
VIKING has launched a number of successful concepts in recent years for shipowners and offshore rig owners, which are adapted to the difficult market conditions. Customers are seeking multi-year agreements with transparent pricing on safety equipment and service, combined with reduced administrative burdens. The efforts to meet these needs will continue in the coming years.
“Even well-established shipowners see their liquidity dwindling these days; and some may go under, while consolidation in the form of mergers and acquisitions will also continue. I believe in a recovery in 2018. We are now seeing that parts of the market, most recently dry cargo vessels, are on the road to recovery,” says Henrik Uhd Christensen.
A few of the major bright spots
On a positive note, the holiday-driven cruise industry has remained successful for decades and proven less dependent on the global economy. The part of the passenger ship market that transports both passengers and cargo has also benefited from growth and lower oil prices. This has had a positive impact on both newbuilds and the existing tonnage.
In 2015, VIKING acquired the Danish manufacturer of a game-changing technology for handling lifeboats, Nadiro A/S. The market has warmly embraced the Drop-in-Ball™ system, and VIKING Nadiro has achieved high growth rates and excellent earnings in a market driven by new SOLAS rules that will take effect in 2019.
Robustness for all market conditions
2016 was the first year of the new five-year business plan, BP20, which includes ambitious growth objectives. One of the objectives of BP20 is to strengthen our foundations, ensuring that VIKING’s position remains robust and attractive following years of crisis-like conditions in a number of maritime industries.
“We expect profit in 2017 to be on par with what we achieved last year. Despite the slightly declining top and bottom lines in 2016, we saw growth in important key figures, such as gross profit, EBITDA and cash flows. The good development in equity has also continued as a result of sustained solid earnings and the high level of investment. VIKING is therefore in a good position to withstand the difficult market conditions of recent years and to achieve accelerated growth when conditions hopefully improve within the next couple of years,” says Henrik Uhd Christensen.
VIKING’s equity at the end of 2016 totaled DKK 922.9 million.
|Profit before tax||184||201||184||141||115|
|Profit after tax||140||147||135||108||79|
|Average no. of employees||2,014||1,914||1,860||1,766||1,694|
GRAY, La. – Danos completed 2016 with a Total Recordable Incident Rate (TRIR) of 0.11, the lowest since the company began tracking the data in 1979. The company credits this record to its comprehensive safety management system and the dedication of employees at every level.
“We’re extremely proud that our team’s focus on working safely is reflected in this record-low TRIR,” said Eric Danos, executive vice president. “Whether it’s mentoring or safety seminars or process audits – everything we do is about giving our employees the skills they need to be safe and to be leaders by improving the overall safety of the places they live and work.”
Danos’ comprehensive approach to safety begins with the hiring process, ensuring that all employees are tested, screened and selected based on strict criteria. Once onboard, new hires undergo a multilevel orientation program that provides both general and job-specific training and education. All Danos employees are required to sign a “Work Safe” pledge, committing to abide by established safety practices. Ongoing safety meetings, seminars, training and mentoring reinforce this commitment and provide opportunities for further learning and improvement.
In addition, Danos incentivizes safe behavior for all employees through a variety of proprietary initiatives, rewarding them for using stop work authority or sharing safety concerns with customers. In order to make safety reporting easier and more effective, Danos developed “W.A.T.C.H.” cards (Working Always to Control Hazards) that workers can submit via paper slips or electronically. This program allows managers to closely track safety successes or concerns in real time and to use that information to improve safety throughout the company. In 2016, Danos employees submitted nearly 17,000 W.A.T.C.H. cards.
Danos also works in partnership with its customers to develop safety standards and procedures that are aligned and meet project needs. Pre-job safety planning processes detail the necessary equipment and personnel assignments for every project. Safety inspections and audits of worksites, including joint audits with customers, provide additional accountability.
Over the course of its 70-year history, Danos has constantly sought to improve and refine its approach to safety, developing new programs, positions, departments, standards and training modules to address new challenges. Danos employees are active in a number of industry groups focused on safety, including the American Society of Safety Engineers, Gulf Coast Safety Training Group, National Institute for Occupational Safety and Health, the National Safety Council, Offshore Operators Committee, Center for Offshore Safety, LA1 Coalition and the Board of Certified Safety Professionals.
Ardyne, provider of specialised plug and abandonment and slot recovery technology and services to the global energy industry, has made two new top tier appointments in its technical support division.
Duncan Livingstone and David Stewart both come to Ardyne from Schlumberger, and have a combined experience of more than 70 years working in the global oil and gas industry. The appointments are part of Ardyne’s commitment to bringing in expertise to the company’s UK technical support offering for clients.
Both Duncan and David will be working out of Ardyne’s offices in Aberdeen and Stavanger, and will be part of a team of experienced field engineers servicing the company’s international operations, as well as a R&D team developing new technologies and equipment modifications for specific operational needs.
Duncan commented: “I’m delighted to be joining Ardyne where I can continue my involvement in managing clients and projects. My role in the technical support team will see me out and about with clients, solving their problems with solutions bespoke to them.
“I am confident that my previous experience will help me provide Ardyne’s customers with the best technical assistance and service available, and I look forward to working closer with the team in Aberdeen and Stavanger.”
David added: “Staying hands-on in the industry and finding original and innovative solutions to the current oil and gas market is what drew me to Ardyne.
“I’m looking forward to continuing to support clients in finding different ways to tackle their challenges, a goal I share with the company.”
The appointment of David and Duncan represents a significant addition to the expert team at Ardyne. Having launched in early 2016 and quickly acquiring Norwegian oil services company Wellbore AS, Aberdeen-headquartered Ardyne is already working on a number of projects in the UK, Norway, Australia, and the Americas
Alan Fairweather, chief executive officer, Ardyne said: “We have an ambitious growth plan already in motion and we are absolutely delighted to welcome Duncan and David to Ardyne. Their appointment solidifies Ardyne as a company that is bringing new technology, combined with robust thinking and risk minimising for our clients, to market.
“Together, we will deliver on our promise to bring our customers the new technology and service approach they need to optimise operations, cut costs, reclaim rig time and unlock the long-term value of brownfield resources.”
Effective promotion of safe working practices is high on the workplace agenda, and keeping safety material fresh and accessible remains vital to putting over the message. This has led to the International Marine Contractors Association (IMCA) launching a new series of mini safety videos, each with a supporting pocket safety card.
The series launches with ten videos with ‘Be Prepared to Work Safely’ as part of the title. The first is ‘Be Prepared to Work Safely – Working at Height’ and there are nine others dealing with preventing slips and trips; toolbox talks; manual handling; permit to work; watch your hands; lifting operations; line of fire; lifting equipment; and confined spaced – the dangers. A further five videos (and accompanying pocket cards) will be available later in 2017.
“The phrase “Are you prepared?” is key to the videos and the accompanying cards,” explains IMCA’s Technical Director, Richard Benzie. “It is a vital question that any worker, starting any task, should ask of him or herself. All feature the same blue animated character, which enables IMCA to publish safety promotional material with a common look and feel.
“The videos and cards are easy to understand and intended for use as part of a briefing session or toolbox talk, as well as by individuals. The new videos and pocket safety cards demonstrate that ‘less is more’. Words have been kept to a minimum, and a new and eye-catching format is used for each card, including the use of stills from the videos.
“Work on the development of the videos and cards began in Autumn 2015. A small and committed workgroup of members of our Health, Safety, Security and Environment (HSSE) Core Committee has continued the work; we would like to express our gratitude to them for the cost-effective and timely manner in which they have delivered this vital project. Safety is of paramount importance and we believe these new safety promotion tools have an invaluable role to play.”
The videos are available in Arabic, Brazilian Portuguese, French, Indonesian, Italian, Latin American Spanish, Malay, Russian and Tagalog as well as in English, and are designed to appeal to a wide range of cultural backgrounds. The English language version of the videos is streamable from the IMCA website. IMCA member companies can download all other language versions.
Further information on IMCA and its work on behalf of around 1,000 member companies in over 60 countries is available here.
Ocean Scientific International Ltd. (OSIL) have recently supplied Exploration Electronics with a custom built 10m Vibrocorer system for use in their rental pool.
Exploration Electronics specializes in the rental and operation of marine seismic systems for oil and gas exploration, hazardous site surveys and engineering investigations.
Paul Fisher, Business Manager for Exploration Electronics, said that “As a geotechnical & seismic service provider with a 35-year track record and a reputation for providing reliable and high quality equipment, maintaining that reputation across all of our services has been a key objective. To that end we have selected OSIL as our preferred supplier of sediment corers and grabs.
Our most recent addition to our rental pool is the OSIL modular Vibrocorer, we chose this unit in response to customer demand for core samples up to 10m in length, using an easily transportable modular system.
The OSIL modular Vibrocorer fits the bill, exactly.”
The Vibrocorer purchased by Exploration Electronics comes in easy to assemble 2m barrel and frame sections to allow different corer configurations/heights to be built up depending on the requirements of the end user. The system can be used in dense or compacted sediments in depths of up to 600m.
The purchase of this system adds to Exploration Electronics’ existing rental pool of seabed sampling equipment, which includes CPTs, Vibrocorers, Piston Corers, OSIL Box Corers, Grabs and Multi (Multiple) Corers.
OSIL adapted the vibrocorer system to meet Exploration Electronics’ exact requirements, maintaining their reputation for working closely with customers to deliver high quality reliable equipment.
OSIL offer a wide variety of sediment coring equipment, from off-the-shelf grabs and box (spade) corers, to bespoke coring systems such as the Gravity Corer, Piston Corer (available in lengths from 3m to 60m), Vibrocorer for dense or compacted sediments or the industry standard Multiple Corer for undisturbed sediment sampling.
Asian Net Exports of Key Products to Ease
Asian refiners have been buying more crude from the Atlantic Basin due to narrower Brent-Dubai price spreads and declining freight rates. Asian net exports of key light products will ease as demand growth is expected to outpace incremental refinery runs in the region in 2017. Product exporters to Australia are fighting for market share. Asian LPG imports will grow more slowly this year due to moderating demand growth. Asian refining margins will remain generally healthy in 2017.
Russian Gas Price Up in February
The price of gas supplied by Russian state-owned Gazprom at Germany’s border climbed 14% in February IMF data show. Day-ahead gas on the UK’s National Balancing Point fell 20% in February, according to broker data compiled by Bloomberg. Gazprom, which supplies about a third of Europe’s gas, sees its prices recovering from a 12-year low in 2016. Most of the exporter’s contracts have an oil link, usually with a delay of six to nine months, while some also have minimum and maximum prices indexed to market rates. Gazprom plans to ship a record volume to its biggest market for a second year even as more liquefied natural gas may come to Europe this summer. It sees European gas demand rising about 5% in 2017, deputy head Alexander Medvedev said last week in an interview.
U.S. Power Storage Outlook
PIRA’s U.S. Power Storage Outlook reviews the latest trends in U.S. storage project installations, policy and market changes, and technology and cost developments, providing an updated market penetration forecast through 2024. PIRA has upgraded its post-2018 penetration forecast for SPP, ISO-NE, and NYISO, which will be most impacted by FERC’s recent proposal, along with other updates. Beyond the FERC proposal, PIRA does not see Trump administration policies changing our outlook, though tax reform, FERC appointments, and an infrastructure package are areas to watch in the coming months. The report also reviews the state of long-duration storage systems, including pumped-hydro storage (with around 30 U.S. projects in the development pipeline), compressed air, gravitational storage, thermal storage, flow batteries, and hydrogen systems.
EU Council Weighs in on Post-2020 Carbon Market Reforms, With Short-Lived Price Gains
EU Carbon Allowance (EUA) prices rose on the EU Council’s support for post-2020 market reforms and a stronger oversupply measures at their Feb 28th meeting, but the price gain was short-lived. The reform package could still change in the upcoming “Trialogue” negotiations, but the reforms currently on the table will have only a limited near- to mid-term impact on market oversupply. With the exception of a compliance-related rise in April, we maintain a generally flat view for EUAs in 2017. The possibility of price gains from positive Trialogue talks is balanced by a poor fundamentals situation, with auction volumes remaining high and declining power sector EUA demand.
Lower Price Trend to Persist as Shoulder Approaches
With warmer weather dominating in February, electric loads fell nearly 4% year-on-year and coal burn was up only negligibly as compared with last year’s levels. As winter supply risks have fallen off and demand is close to entering the shoulder period, it is unlikely that coal prices will be able to break out of their downward trend and push higher until summer arrives.
U.S. Ethanol Prices Higher
U.S. ethanol prices bounced late in the week ending March 10. RIN prices rebounded after plummeting the previous week. January exports of fuel grade ethanol climbed after shipments to Brazil reached a five year high and cargoes to Asia more than doubled. European ethanol values plunged as more supply became available.
A deeper dive into the Trump budget released Thursday morning showed that the hefty $4.7 billion proposed cut to the USDA budget would not affect crop insurance although that remains a hot button topic. Cuts in USDA county offices and statistical capabilities at NASS were specifically mentioned, along with rural water infrastructure. The county office cut was previously mentioned by the Obama Administration with no result. Going to be a long and tough fight amongst factions on the USDA budget in our opinion.
Fed Paints Rate Hike in Positive Light; Better Data from U.S. / China
At the policy meeting, the U.S. central bank did two things. First, as expected, it hiked the policy interest rate by 0.25%. Second, it sent a constructive message about the economic growth and monetary policy outlook via its communication tools. Specifically, policymakers assigned a good grade to the economy’s current performance; and they also made certain to communicate that the Fed has not become more hawkish compared to three months ago. In China, data releases for January / February were solid, indicating that the economic growth rate probably strengthened from the fourth quarter of last year.
Weak Start in 2017 Portends Challenging Year
Tanker rates are off to a slow start in 2017 and are expected to weaken further due to OPEC and non-OPEC production cuts and excessive vessel supply growth. Suezmax markets were a notable exception with rates recovering in February from rock-bottom levels in January. But the respite may be short as we approach the seasonally weak second quarter.
Gasoline Imports into Latin America to Stay Strong in 2Q17
Gasoline imports into Latin America are expected to stay strong in 2Q17. However, gasoline and diesel demands are forecast to be modestly lower year-on-year. Mexican and Venezuelan gasoline demand is projected lower year-on-year while Brazil’s is flat. Furthermore, Brazilian spark ignition fuel demand is set to fall in 2017 with petroleum gasoline demand to be flat as ethanol market share is projected to decline. PIRA expects regional refining crude runs in 2Q17 to be lower year-on-year.
Storage Deficit Re-Widening Ends Assault on Prices
Winter-like weather conditions finally returned — catching many off guard — with some parts of the U.S., primarily in the Northeast and Midwest, facing the coldest temperatures of the year. The belated return of cold air from the Arctic put an end to worries that U.S. storage levels would swell to 2.2+ TCF, which was weighing heavily on price expectations throughout February. The end of such concerns is allowing attention to shift back onto the other issues at work that have tightened weather-adjusted balances and kept gas prices at ~$3/MMBtu throughout much of the heating season.
French Nuclear Availability Low in March, in Spite of ASN Clearance
French nuclear availability remains at a multi-year low point for this time of the year (48.3 GW, or the lowest in the past six years), but the French nuclear regulator ASN has issued a press release on March 15 confirming the authorization to restart 12 of the reactors affected by the steam generator anomaly. It is interesting to note that the previous minimum availability for nuclear in March was set in 2014 (50.8 GW), i.e. 36 months ago. As a result of the generation cycles adopted by EDF, similar availability patterns are likely to recur every 3 years because of the length of the two maintenance cycles. The increased availability to 50.3 GW next month, the highest of the past six years for April, and high levels of availability through to June, based on REMIT data, recalls the pattern seen in 2014, when availability was also at a record high.
FOB Newcastle Prices Drive Higher, Atlantic Basin Dips
Coal market prices diverged considerably this week, with FOB Newcastle prices rising considerably across the forward curve, while FOB Richards Bay and CIF ARA prices pushed lower. Physical tightness surrounding China was the driving force behind the rise in FOB Newcastle prices in PIRA’s view. PIRA’s belief that China’s domestic coal demand strength was maintained into 2017 was confirmed this week, with the National Bureau of Statistics (NBS) releasing strong electricity generation figures for the January/February aggregate.
LPG Prices Fall in the United States
Despite some strength in WTI prices, falling demand and a decline in Henry Hub prices lowered U.S. NGL prices. Mont Belvieu ethane futures fell by 5% to 22¢/gal, while propane futures fell by 6% to 59¢/gal. Normal butane futures declined by 5% to 75¢/gal and isobutane similarly declined by 5% to 77¢/gal. Natural gasoline registered no week-on-week decline and was flat at $1.10/gal.
Global Equities Exhibit Rotation Near Record Highs
There was noted rotation in the domestic vs. international equity markets this past week. The broad U.S. market was little changed, with housing being the best performing sector. Energy basically matched market performance. International indices were all broadly higher and did very well as noted by the strength in the world, ex-US, tracking index. Performance was led by emerging markets, emerging Asia, and China.
U.S. Ethanol Scorecard and Supply Report
U.S. ethanol production rose 23 MB/D to a 5-week high 1,045 MB/D the week ending March 10, the sixth highest output ever reported. PADD II stocks climbed to a record 8.4 million barrels despite a decline in total U.S. inventories to 22.8 million barrels. Ethanol-blended gasoline manufacture increased to 9,049 MB/D from 8,697 MB/D as total gasoline production increased.
An extremely slow end to the trading week received a jolt on Friday afternoon as the weekly Commitment of Traders report reflect surprisingly large selling by the Funds in commodities generally, and grains/oilseeds specifically. The 900 million combined bushels of corn, soybeans, SRW, and HRW sold by the Funds was one of the heaviest single weeks in our memory. Combined with large bean oil liquidation, and some meal, Funds sold a record 207.5K contracts during the reporting week which included a WASDE but did not include the Fed’s rate hike.
U.S. Light Products Lead Inventory Lower
Overall commercial stocks declined by 7.8 million barrels on the latest week, led by a steep 9.8 million barrel drop in the four major products. Crude stocks were down just 0.2 million barrels, although Cushing added 2.1 million barrels, given the temporary closure of the Seaway Pipeline. Imports of crude were down to 7.4 MMB/D, 750 MB/D less than the previous week. Refinery runs were flat week-on-week. With planned downtime anticipated to fall in the coming weeks, refinery runs will be increasing.
Gazprom’s Proposal to Alter Contracts May Have Unintended Consequences
Gazprom has offered to settle their longstanding disputes with European antitrust authorities, theoretically in exchange for greater access to European markets and for their bigger ambitions to deliver more gas volumes through a second Nordstream pipe and the Turkstream pipeline. Gazprom offered to remedy issues with 8 Eastern European nations that represent around 15% of Russia’s pipeline gas sales, the biggest of whom is Poland that represents 4.5% of Russia’s total pipeline sales. On the surface, it may seem like Gazprom is sacrificing these sales for the hope of bigger ones when OPAL capacity is freed up and their new pipeline projects are fully operational. However, there seems to be some space for Gazprom to charge similar or even higher prices than before.
Stress Remains Low as Fed Rate Hike Announced
The S&P 500 was modestly changed on the week, but other indicators, such as the Russell 2000, posted more noticeable gains. Volatility (VIX) was lower, while the prices of high yield debt (HYG), and emerging market debt (EMB) moved higher. The Fed raised its target fed funds rate 25 basis points, while long-term U.S. government rates also tended to move higher, along with mortgage interest rates.
Japanese Crude Stocks Build, While Demand Eases Seasonally
Japanese crude runs continue to ease on the week, while crude imports rose sharply and crude stocks built 5.7 million barrels. Finished product stocks drew 1.2 million barrels, with much of the decline being in naphtha. Aggregate major product demand continued to decline seasonally. Gasoline and gasoil demands were lower. Gasoline stocks drew slightly, while gasoil stocks built moderately. Kerosene demand rose marginally, but with much lower yield, and the stock draw rate accelerated.
Australian Supply Tensions Threaten Coalseam LNG Exports
As Australia positions itself to become the world’s largest supplier of LNG, long simmering concerns about domestic supply availability for the key consuming southeast regions within the country have erupted in recent weeks to threaten the short-term viability of export growth from the recently commissioned Queensland export projects in the northeast.
March Weather: U.S. and Japan Cold, Europe Warm
At midmonth, March looks to be 2% colder than the 10-year normal for the three major OECD markets, with a composite net oil-heat demand effect of -41 MB/D. The markets are 6% warmer than the 30-year-normal.
Fire at Syncrude’s 350 MB/D Mildred Lake Upgrading Plant
An explosion struck Syncrude’s 350 MB/D Mildred Lake upgrading site on March 14. A 48 MB/D naphtha hydrotreater as well as piping from the hydrogen plant were damaged. Reports indicate that it could take two months for these units to be repaired and return to full service. Until then, modified production of lower quality, high sulfur syncrude is expected. The Mildred Lake upgrading plant has more than one train, meaning the temporary loss of the hydrotreating facility will not result in a complete shutdown. Expect Syncrude differentials to remain tight during the outage.
75 MB/D “Hidden” Demand Growth in 2017 Due to New Facilities Infrastructure
PIRA sees “hidden” demand associated with the start-up of new petroleum/petrochemical facilities and the Myanmar/China pipeline. 1.5-1.7 MMB/D of new refining capacity and 8-9 MMT/A of ethylene capacity are expected to start up in 2017. These new facilities will require oil for infrastructure needs, such as feed tankage and pipeline line fill. This will add roughly 75 MB/D to 2017 demand.
Asian Demand Growth: Expected Downshift is Unfolding
PIRA's latest update of major country Asian product demand indicates that year-on-year growth in our latest snapshot slowed to 556 MB/D, vs. 1,157 MB/D last month. Data actuals cover the three month period Dec-Feb. for China and India, while Japan, Taiwan, and Korea pick up data Nov-Jan. Much of the slowing was anticipated and relates to timing issues with regard to the Chinese New Year and India’s removal of “small denomination rupee bills” from circulation.
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.
Chevron Corporation announced that its subsidiary, Cabinda Gulf Oil Company (CABGOC) Limited, has commenced oil and gas production from the main production facility of the Mafumeira Sul project offshore Angola.
“This milestone supports our priority of completing major projects and improving free cash flow,” said Jay Johnson, executive vice president, Upstream, Chevron Corporation. “The Mafumeira Sul project generates new production and value for Angola, our partners and the corporation.”
Located 15 miles (24 km) offshore Cabinda province in 200 feet (60 m) of water, Mafumeira Sul is the second stage of development of the Mafumeira Field in Block 0. It has a design capacity of 150,000 barrels of liquids and 350 million cubic feet of natural gas per day. Early production from the project commenced in October 2016 through a temporary production system. Ramp-up to full production is expected to continue through 2018.
CABGOC is the operator and holds a 39.2 percent interest in Mafumeira Sul. Chevron's partners are Sonangol E.P. (41 percent), Total (10 percent) and ENI (9.8 percent).
CSA Ocean Sciences recently provided, mobilized, and operated a deep water towed video system and all the ancillary equipment to conduct a video survey down to 2650m (8,700 feet) off the coast of Colombia. Included with the ancillary equipment was a slip-ring winch with 6,000 m of .68” EM cable, a Sonardyne USBL system, DGPS unit, and Hypack navigation software.
After overseeing the shipping of the equipment spread from the U.S. to Colombia, CSA assisted with the mobilization and demobilization of the equipment to and from a Colombian offshore supply vessel of opportunity. The project data was collected in less than one week time and was a huge success, collecting over 2,000 photos and video of over 235 line km during the field effort. CSA operated all listed equipment and directed navigation of the vessel.
For more on CSA’s primary underwater imaging system capabilities, click here.