Repsol Makes a Significant Oil Discovery in the Gulf of Mexico

Repsol• A high quality oil net pay of over 150 meters thick has been discovered.

• The well, named León, is located 352 kilometers offshore the Louisiana coast in ultra-deep waters in the United States' Gulf of Mexico.

• With a total depth of 9,684 meters, it is one of the deepest wells operated by Repsol, which has a 60% stake in this license.

• The Gulf of Mexico is amongst the world's most profitable and promising deep water plays. Repsol holds 119 blocks in the area.

• The United States already represents around 10% of the group's total production.

• In 2009 Repsol made one the most important discoveries in this region, Buckskin, 50 km from León, which is in the final stages of evaluation prior to its development.

• With the León discovery Repsol continues to strengthen its position in the United States, which is one of the company's key strategic areas.

Repsol has made a new discovery of high quality oil in the United States' Gulf of Mexico. The find was made 352 kilometers from the Louisiana coast in an ultra-deep water well named León, located in the Keathley Canyon 642 block.

Repsol is the operator of the discovering consortium. The well found more than 150 meters of net oil pay within a column of over 400 meters. The well was drilled in water 1,865 meters deep, and reached a total depth of 9,684 meters, making it one of the deepest wells operated by the company.

The company has a long experience in deep-water well drilling and is internationally recognized for its technological capacity with cutting-edge projects in hydrocarbon exploration and production such as the Kaleidoscope and Sherlock projects.

Repsol has a 60% participation in the license, with Colombia's Ecopetrol holding the remaining 40%.

The US Gulf of Mexico is amongst the world's most profitable and promising deep water plays. Repsol holds 119 blocks in this prolific area together with a share in the Shenzi field, which boasts 16 wells in production connected to two platforms.

In 2009, Repsol had already made one of its most important discoveries in this region. The Buckskin well, 50 kilometers from León, was, like the León discovery, one of the deepest wells operated by the company. The resource potential being carried out by the current operator will lead to a development plan for this and other fields in the near future.

Repsol in the United States

With the León discovery Repsol continues to strengthen its position in the United States, which is one of the company's key strategic regions.

Repsol has mining rights in the country over blocks located in the Gulf of Mexico (Green Canyon, Alaminos Canyon, Atwater Valley, Garden Banks, Keathley Canyon, Mississippi Canyon and Walker Ridge) and Alaska. Additionally, the company is developing unconventional resources in the Mississippian Lime play.

With the addition of new production during 2014, the United States already represents almost 10% of the company's total hydrocarbons output. Repsol has its second largest corporate headquarters in Houston and employs more than 600 people in the United States.

Hess Announces Plan to Develop Stampede Field in the Deepwater Gulf of Mexico

HessHess Corporation (NYSE:HES) announced on Wednesday that together with its project co-owners it will proceed with the development of Stampede, an oil and gas project operated by Hess in the deepwater Gulf of Mexico.

Discovered in 2005, the Stampede Field is located approximately 115 miles south of Fourchon, La., in the Gulf of Mexico (Green Canyon Blocks 468, 511 and 512). The field is located in approximately 3,500 feet of water, with a reservoir depth of 30,000 feet. The plan initially calls for six subsea production wells and four water injection wells from two subsea drill centers tied back to a Tension Leg Platform (TLP). A two-rig drilling program is planned with the first rig commencing operations in the fourth quarter of 2015. First production is expected in 2018.

Gross topsides processing capacity for the project is approximately 80,000 barrels of oil per day and 100,000 barrels of water injection capacity per day. Total estimated recoverable resources for Stampede are estimated in the range of 300–350 million barrels of oil equivalent. The development is estimated to cost approximately $6 billion.

Hess has a 25% working interest and is operator. Union Oil Company of California, a Chevron subsidiary, Statoil and Nexen Petroleum Offshore U.S.A. Inc. each have a 25% working interest.

Hess Corporation is a leading global independent energy company engaged in the exploration

Chevron Announces Oil Discovery in Deepwater U.S. Gulf of Mexico

Chevron Corporation (NYSE: CVX) has announced a new oil discovery at the Guadalupe prospect in the deepwater U.S. Gulf of Mexico. The Keathley Canyon Block 10 Well No. 1 encountered significant oil pay in the Lower Tertiary Wilcox Sands. The well is located approximately 180 miles off the Louisiana coast in 3,992 feet of water and was drilled to a depth of 30,173 feet.

"The discovery further demonstrates Chevron's exploration capabilities," said George Kirkland, vice chairman and executive vice president, Upstream, Chevron Corporation. "Guadalupe builds on our already strong position in the deepwater U.S. Gulf of Mexico, a core focus area where we expect significant production growth over the next two years."

ChevronThe Guadalupe well was drilled by Transocean's Discoverer India deepwater drillship.

"The Guadalupe discovery adds momentum to our growing business in North America," said Jay Johnson, senior vice president, Upstream, Chevron Corporation. "Our deepwater exploration and appraisal program continues to unlock important resources in the Gulf of Mexico."

"Chevron subsidiaries are among the top producers and leaseholders in the Gulf of Mexico, averaging net daily production of 143,000 barrels of crude oil, 347 million cubic feet of natural gas, and 15,000 barrels of natural gas liquids during 2013," said Jeff Shellebarger, president, Chevron North America Exploration and Production Company. "The company expects additional Gulf of Mexico production from the Tubular Bells and Jack/St. Malo projects by the end of the year."

Chevron subsidiary Chevron U.S.A., Inc. began drilling the Guadalupe well in June 2014. More tests are being conducted on the discovery well and additional appraisal wells will be needed to determine the extent of the resource.

Chevron U.S.A., Inc., with a 42.5 percent working interest in the prospect, is the operator of the Guadalupe discovery well. Guadalupe co-owners are BP Exploration & Production, Inc. (42.5 percent) and Venari Resources LLC (15 percent).

Eni Announces Significant Gas Finding Offshore Indonesia

enilogoMerakes is the first exploration well drilled by Eni in the East Sepinggan Block, which was assigned to the Company in 2012 following an International Bid Round.

Eni has made an important gas finding in the Merakes exploration prospect, in the East Sepinggan Block, where Eni is operator with a 100% stake. The Block is located in the offshore East Kalimantan (Borneo), 170 kilometers south of the Bontang LNG Plant and 35 kilometers from the offshore Jangkrik field, also operated by Eni.

The finding was made through the Merakes 1 well which was drilled at a water depth of 1,372 meters and reached a total depth of 2,640 meters. The well encountered a significant accumulation of gas in the lower Pliocene clastic sequence. Merakes has crossed a hydrocarbon column of 60 meters in high quality sandstones.

Merakes is the first exploration well drilled by Eni in the East Sepinggan Block, which was assigned to the Company in 2012 following an International Bid Round. Merakes finding potential has been preliminary estimated to be 1,3 Trillion cubic feet (Tcf) of gas in place. The finding has further upside that will be assessed with a delineation campaign.

Claudio Descalzi, Eni's CEO said: "This new success further implements the Company's growth strategy in the Pacific Basin where, in addition to its presence in Indonesia, Australia and China, Eni recently signed new exploration contracts in Vietnam, Myanmar and China. Merakes finding is a significant one as it strengthens our position as operator in Indonesia. Moreover thanks to its proximity to the Jangkrik field, which is currently under development, this new gas finding could supply in the future additional gas volumes to the Bontang LNG plant. This new achievement proves once more the effectiveness of Eni's strategic approach to exploration, which is based on operating with elevated stakes in exploration phase to better valorize exploration success"

Eni has been operating in Indonesia since 2001 and currently has a large portfolio of assets in exploration, production and development which have an increasing importance in contributing to the overall Company's production growth. The company holds working interests in fourteen permits and is operator in ten of them. The exploration activities are located in acreage in the Tarakan and Kutei Basins, offshore Kalimantan, north of Sumatra, West Timor and West Papua. In the Kutei Basin in early 2014 Eni started the development activities of the deep offshore Jangkrik gas field in the Muara Bakau PSC. Eni also holds a participating interest in the development of significant gas reserves located in the Ganal and Rapak PSCs. Production activities are located in the Mahakam River Delta, East Kalimantan through the participated Company VICO Ltd (Eni 50%, BP 50%) operator of the Sanga Sanga PSC that provides an average equity production of 17,000 barrels of oil equivalent per day.

BP and CGG Agree to Develop Next-Generation Marine Seismic Source Technology

Two global companies to collaborate on R&D to take offshore industry's subsea imaging capability to the next level.

BP-LogoCGGlogo copyBP and CGG have announced an agreement for collaborative research and development in the field of new types of marine vibratory seismic sources. The agreement combines the companies' research efforts and expertise to develop and deploy innovative seismic source technology, and builds on successful prototype trials.

Seismic surveys have for decades been the exploration industry's key tool for identifying oil- and gas-bearing rocks below the seabed. And both BP and CGG recognize the significant potential for new vibratory seismic sources to improve technical performance, while maintaining a focus on environmental sensitivity.

"BP has an established track record of innovation and industry leadership in the area of seismic acquisition, which plays to our notable strengths in exploration and resource progression," said Eric Green, Vice President Advanced Seismic Imaging Technology at BP. "This agreement highlights BP's ongoing commitment to remaining at the forefront of this important field. We welcome this exciting opportunity to cooperate on novel marine source technology with CGG."

Thierry Brizard, Executive Vice President, Technology, CGG, said: "Historically, CGG has consistently taken the lead in the development and implementation of new technological advances for seismic acquisition. Recent examples are our BroadSeis-BroadSource technology for true broadband marine seismic imaging and our Sercel 508XT, which sets the new standard for onshore MegaCrew acquisition. We look forward to joining forces with BP to develop new seismic source technology that will have a profound impact on the future of the seismic industry."

BP invented and was the first company to deploy wide-azimuth towed-streamer (WATS) technology to better illuminate and image below complex structures like salt.

BP developed independent simultaneous source (ISS®) acquisition technology whereby seismic sources operate independently of each other and interference between their signals is removed later by advanced processing. This enables coverage of much larger areas more quickly, reducing survey costs.

BP has invested in the Centre for High Performance Computing in Houston. It is the world's largest computing centre dedicated to commercial research and has processing capacity measured in petaflops (one thousand trillion calculations per second). It enables BP to do complex modelling of the geological formations below the surface, develop advanced algorithms to improve the understanding of hydrocarbon-bearing reservoirs, and develop new acquisition technologies and survey designs that help see the subsurface more clearly.

Technip Wins Substantial Subsea Contract for Bangka Development in Indonesia

Leveraging its unique subsea vertical integration

techniplogoTechnip has been awarded a substantial(1) subsea contract by Chevron Indonesia for the Bangka Development, located in Rapak PSC area, approximately 70km offshore the province of East Kalimantan, Indonesia.

The contract covers engineering, procurement, construction, installation, commissioning and pre commissioning of flexibles, umbilical, and subsea structures.

Technip's operating centers in Jakarta, Indonesia, and Kuala Lumpur, Malaysia, will execute the contract and provide customer support, from conception to execution.

Technip will:
• fabricate the flexible pipes, at the Group's Asiaflex Products plant in Tanjung Langsat, Johor, Malaysia;

• manufacture the umbilical at Technip Umbilicals' facility in Texas, USA;

• mobilize the Deep Orient, its multipurpose installation and construction vessel, for the installation phase of the project. She joined the fleet last year and works predominantly in the Asia-Pacific market.

KK Lim, President of Technip in Asia Pacific, stated: "We are delighted to be awarded this new project. It demonstrates our differentiating advantage of having a unique vertically integrated value chain for subsea infrastructures to provide the most competitive solutions to our client."
(1) For Technip, a "substantial" subsea contract is ranging from €100 to €250 million.

VAALCO Energy Announces Entering into the Subsequent Exploration Phase on Block 5 Offshore Angola

VaalcoLOGOVAALCO Energy, Inc. (NYSE: EGY) has announced that the Company has entered into the Subsequent Exploration Phase ("SEP") on Block 5 offshore Angola together with its working interest partner, Sonangol P&P, as provided for in the Production Sharing Agreement signed in 2006 with the Republic of Angola.

The SEP extends the exploration license for an additional three year period such that the new expiry date for exploration activities is November 30, 2017. The SEP requires the Company and its partner to acquire a 3D seismic program covering six hundred square kilometers and to drill two additional exploration wells. The seismic obligation has been satisfied with a seismic program already completed covering 1,058 square kilometers over the outboard portion of the block.

By entering the SEP, the Company is now required to drill a total of four exploration wells during the exploration extension period. The four well obligation includes the two well commitment under the primary exploration period that carries over to the SEP period. A ten million dollar assessment (five million dollars net to VAALCO) applies to each of the four commitment exploration wells, if any, that remain undrilled at the end of the exploration period in 2017.

As previously announced, the Company has contracted for the Transocean "Celtic Sea" semi-submersible rig to drill the first exploration well, the post-salt, Kindele-1 well. The Kindele well is targeting the Mucanzo sand (Pinda group) with a planned total depth of 2,250 meters in a water depth of 101 meters. Gross unrisked recoverable resources are estimated to be between 20-49 million barrels. The rig is currently estimated to be on location in mid-December 2014.
The decision to enter the SEP was made in part to remove uncertainty that the primary term of the exploration license would be extended by the Republic of Angola before the November 30, 2014 expiration date.

Steve Guidry, Chairman and CEO, commented, "We believe entering into the SEP is a sound strategy for the Company. Although the SEP comes with additional commitments, we believe this is a coveted block with potential in the deep syn-rift and sag play. The SEP allows VAALCO and its partner to properly assess the results of the current seismic reprocessing that is being merged with previously licensed seismic data through pre-stack depth migration. This will help us determine the best opportunities in the pre-salt horizons. The action we took to enter into the SEP removes the uncertainty of an exploration license extension and allows us to focus on our exploration activities on the block."

Rolls-Royce Awarded Its Largest Single Subsea Contract

The-Aker-WayfarerRolls-Royce has signed a major contract to supply a complete module handling system to the subsea construction vessel Aker Wayfarer. The vessel was built by Vard Søviknes in 2010 and will now undergo project modification work at Kleven's Myklebust Verft yard in Norway. The contract is with Ocean Yield ASA, and the vessel is under long term charter with AKOFS Offshore.

The £24M contract marks the largest single subsea vessel project ever undertaken by Rolls-Royce.

The 157m long, 16,000t Aker Wayfarer will be modified by Myklebust Verft to allow for the deepwater installation and retrieval of subsea equipment; subsea trees and modules, including subsea structures and manifolds.

Ståle Rasmussen, CEO of Kleven, said: "Myklebust Verft's location, in the very heart of the maritime cluster on the North West coast of Norway, is a great advantage for all parties involved in the project, and this serves as a great example of local cooperation between Kleven, Vard and Rolls-Royce."

The Rolls-Royce automated handling system consists of a complete tower structure, skid system, deepwater lifting system as well as power units and controls. The deepwater lifting system is a Fibre Rope Deployment System (FRDS), based on our patented Cable Traction Control Unit (CTCU) technology. The equipment is due for a delivery in the first quarter of 2016.

John Knudsen, Rolls-Royce President Commercial Marine, said: "This a very important contract for Rolls-Royce and it shows that the offshore industry has taken yet another step in accepting the superior performance of synthetic fibre ropes for lifting operations in deep and ultra-deep waters."

A similar system was installed by Rolls-Royce in 2009 onboard the AKOFS operated subsea equipment support vessel Skandi Santos, which has now been on contract with Petrobras for nearly five years. The vessel has successfully installed and retrieved subsea trees and modules in water depths up to 2300 meters.

Geir Sjøberg, CEO of AKOFS Offshore, said: "Skandi Santos has been rated by Petrobras as one of their top performing vessels. Its track record makes us confident in the decision to install the handling system from Rolls-Royce on Aker Wayfarer."

Going Global, Subsea Vision Grows Compact Cougar Fleet

Subsea-Cougar3Aiming at the global FPSO market, Subsea Vision has added another Saab Seaeye Cougar XT Compact to its ROV fleet.

The compact concept is especially suited for working in strong currents and where the spread of equipment is small enough to need little deck space.

The addition to their fleet follows expanded opportunities coming to the company since joining the James Fisher Group and linking with Fendercare Marine's diving resources.

Chris Bryant, managing director of Subsea Vision, says the slim profile compact Cougar is ideal for working in constrained spaces around FPSOs and platforms – and in high current areas.

"It's a phenomenal vehicle that has great power and easy tooling integration for a wide spectrum of work - and can undertake long excursions."

He sees the exceptional inspection capability of the Cougar fleet, alongside Fendercare's diving operations, as "opening more doors around the world" and the company taking on a more primary contractor role.

Despite its small size the Cougar XT Compact can be fitted with a wide range of equipment.

Designed especially for working in shallow waters and in tight situations, the low-profile Cougar XT Compact minimises the effect of current with its reduced frame size, buoyancy and weight – and a thinner 17mm tether cable that reduces the effect of drag.

The unrivalled power and manoeuvrability of the vehicle comes from its six thrusters: four vectored horizontal and two vertical, each with velocity feedback for precise control in all directions, and interfaced to a fast-acting control system and solid-state gyro for enhanced azimuth stability.

DeepFlex Selected by RPSEA for Phase 3 of Field Development Supply Project

DeepFlex-Logo-CMYK smallDeepFlex announces that RPSEA has awarded Phase 3 of their "Qualification of Flexible Fiber-Reinforced Pipe for 10,000-Foot Water Depths" project. Phase 3 of the project – Field Development Supply – includes field specific engineering, fabrication, delivery, deployment and operations of the actual deepwater riser system as an ultimate verification of the composite fiber reinforcement technology. This award demonstrates the confidence that RPSEA and supporting operator companies have in DeepFlex technology and delivery capabilities.

The riser system is scheduled to be delivered and ready for installation in September 2016. The main maximum capability requirements are: 10,000 foot water depth, 7-inch ID, 120⁰C temperature, sour service, and a 25-year design life. Its design and manufacturing will be conducted in accordance with API 17J, API 17B, DNV OS-C501 and DNV RP-A203. Prototype development, testing and riser manufacturing will be performed at DeepFlex's Pensacola Plant, which is currently under construction.

This riser system is to date the most challenging application of composite fiber materials in subsea risers and pipelines. The benefits of the composite technology – light weight and corrosion resistance – are key enablers for future ultra-deepwater fields and offer significant value for challenging subsea field developments worldwide.

The award is a major milestone for DeepFlex and is a result of years of hard work and perseverance in developing new technology in the subsea oil and gas production industry. The entire DeepFlex team would like to thank RPSEA and supporting operators for their backing, input and direction. Without their vision and dedication could not have progressed to this stage of development.

"We are extremely honored that RPSEA selected our project. This is the ultimate demonstration of our capabilities in research, development, engineering and qualification of high technology flexible pipe solutions for harsh and challenging environments" said Felipe Lamego, DeepFlex President and CEO. "The award of phase 3 is a key step in technology development and also a cornerstone of success of DeepFlex's plant in Pensacola, FL, further stimulating future growth of the region."

InterMoor Announces Double Success Offshore China

InterMoorInterMoor, an Acteon company, has completed two major offshore projects for China Offshore Oil Engineering Corporation (COOEC) with support from Acteon sister companies in the Panyu and Enping fields, Pearl River Mouth basin, South China Sea.

To extend the life of the Hai Yang Shi You III FPSO, the first project involved full mooring system replacement in the Panyu field. InterMoor provided on- and offshore project management; installation engineering, procedures and procurement; and key offshore personnel for the installation of nine suction pile anchors and preset moorings for the FPSO internal turret buoy system. The permanent mooring system was installed in water depth of 105 m, and the FPSO remained connected and in service throughout the operation. Detailed procedures and SIMOPS documentation were developed to allow the mooring components to be deployed less than 1.5 m from existing moorings, and to enable the PIV to work in close proximity to the FPSO and offtake tankers safely, with uninterrupted production throughout.

InterMoor completed the offshore installation work in May 2014.

The second project was the installation of a full single-point mooring system in the Enping 24-2 oilfield and was completed in August 2014. InterMoor again provided on- and offshore project management; installation engineering, procedures and procurement; and key offshore personnel for the project. The mooring system consisted of an internal turret buoy, 12 x chain/sheathed spiral strand wire mooring legs, 84" driven pile anchors, 1 x 12" x 2450 m static flowline and 175 m dynamic riser, 2 x power/optical composite cables and associated PLEM power cable support structures.

InterMoor conducted the installation at the Enping field in water depths of 86 - 96 m.
Several Acteon sister companies were involved in both projects. Seatronics provided suction pump skids for the Panyu piles and MENCK and LM Handling supplied the piling spread and associated handling tools. Engineering support for flexible installation was delivered by 2H Offshore, and Aquatic Asia Pacific was responsible for a modular drive system and tensioner solution to support the flowline and power cable installation.

Wang Jiewen, project manager, COOEC, said, "We were impressed by InterMoor's innovative solutions and attention to detail, which, allowed us to safely complete these challenging projects on time. Furthermore, InterMoor's project management expertise and ability to work closely with COOEC allowed us to successfully manage multiple vessels and an international workforce on two complex projects operating concurrently."

Global Demand for Better Emergency Pipeline Repair Systems Means Expansion for IRM Systems

Irm slide 0000 Services-2IRM Systems, the independent authority in the design of emergency pipeline repair systems (EPRS), announced that it has expanded its staff to meet growing demand for its services. The new full-time personnel are based at its headquarters in the Netherlands.

Over the course of this year, IRM Systems has landed four new clients, and have had new work contracted with existing ones. Growth is consistent with its business strategy and the increased demand made it clear that the company required additional capacity within its core team. The three new employees are Senior Engineer Firdaus Hadi, Engineering Consultant Derek Enhao Lee, and Junior Engineer Saad Wahid.

Quality Staff for Quality Services

Firdaus Hadi, who comes from Kuala Lumpur, formally joined the company payroll in September as a Senior Engineer. Before arriving in the Netherlands, he was Project Engineer for BC Petrochemical Sdn Bhd in Kuala Lumpur, where he worked for three years. He holds a BSc. in Mechanical Engineering from the Universiti Industri Selangor in Malaysia and is a member of ASME. He is currently working on a pipeline integrity assessment project in South East Asia.

Derek Enhao Lee is IRM's new Engineering Consultant. Originally from Singapore, he holds a degree in Mechanical Engineering from the University of New South Wales, and has worked in the oil and gas industry for the past seven years. He was previously an Assistant Project Manager for Audex Netherlands BV, based in Den Haag, where he worked for four years. At IRM Systems, he is responsible for evaluating the EPRS needs of each client, in order to ensure that equipment and personnel conform to requirements.

Saad Wahid, a Dutch national, has been appointed as Junior Engineer after gaining qualifications at the University of Applied Sciences in Amsterdam, and later at the Technical University of Delft, where he gained a Master of Science degree in Offshore and Dredging Engineering. Saad's role is to support the engineering team with computer modelling and finite element analysis.

New Appointments Offer Convincing Evidence of Vitality of IRM Systems

Since its founding in 2011, IRM continues to support an increasing number of clients, taking on additional staff and expanding its range of services within pipeline integrity. The company is growing because no other independent engineering firm in the industry offers a more experienced, in-house capability that is primarily focused on designing EPRS. EPRS are the plans, procedures and equipment in-place to ensure minimum possible downtime following an unplanned emergency. An effective EPRS will ensure the greatest post-repair integrity at the best possible cost.

"We are completely independent, so it means that we aren't trying to push a particular technology, vessel, item of equipment or, indeed, a consumable," said Ralph Hassall, consultant for IRM Systems. "Our clients realise this right away in the money they save when investing to protect their critical pipelines. We use a structured approach to designing each of these systems, and the breadth of experience we have now generated in this specialist area is significant."

While the company is steadily expanding, it is still small enough to be able to offer a personal and highly responsive service. Each and every employee understands that every assignment undertaken is crucial to the company's reputation and success. "At no point do we try and re-invent the wheel; we make sure that the solutions put forward are based on proven technology wherever possible. A complex repair operation is truly the last place you want to be introducing more unknowns and more risk," said Hassall.

Hassall's pride in the firm is evident. "Other engineering firms may be good 'on paper' but we strive to be the best 'in practice,'" he said. "What that means is that our work covers the operational aspects of the task, such as isolation and re-commissioning, and not just the repair engineering. We have also got a very detailed and current understanding of the repair market so we are able to put together an EPRS that is, objectively-speaking, the best value that the market can offer."

About Independent Risk Management Systems B.V.
Independent Risk Management Systems B.V. (IRM Systems) is dedicated to helping pipeline operators and owners understand, mitigate and manage risks that could damage or interrupt the operation of critical pipeline networks. The company specializes in developing, implementing and operating Emergency Pipeline Repair Systems (EPRS) and pipeline integrity services. These services are provided by an experienced team of risk, marine and pipeline technology specialists. Founded in 2011 by Rutger Schouten, IRM Systems operates from its headquarters in Delft, The Netherlands.

Continental Resources CEO Sees No Big Impact Yet from Oil Price Fall: Platts Energy Week

platts-logoPlatts – U.S. oil prices would have to fall another 20% or so before one of the leading American shale oil producers, Continental Resources, would cut back significantly on its operations, the company's CEO said Sunday on Platts Energy Week.

"We're hurt, but we're not to the point we're shutting down," Harold Hamm said. "And we're not getting close to that, yet, within a pretty good measurable amount, you know, $15 or $20. And certainly that's the case in the Bakken."

West Texas Intermediate (WTI) crude oil for December delivery fell 90 cents last week, to close at $81.01 per barrel (/b) Friday.

Hamm, whose company is the second-largest producer in the Bakken, said he was optimistic that the oil price decline would reverse soon.

"I've thought that we ought to be in the $90 range for sure," he said. "And I think the price will quickly come back to that."

Rising demand in China, primarily for transportation, would remain a key driver of world oil prices, he added.

Hamm said he preferred not to talk about the point at which oil prices would cause sharp declines in U.S. drilling activity.

"I don't like to go there, talking about where would you stop," he said. "That gets to be putting more fear into the market, if you will, and panic. And that's certainly not anything we should be talking about."

Nevertheless, such speculation has been prevalent among analysts following the oil price decline. For example, Standard & Poor's Rating Services last week said a reduction in U.S. shale drilling is likely if WTI prices fall below $80/b. S&P, like Platts, is part of McGraw Hill Financial.

Still, Hamm acknowledged that Continental Resources and other companies have begun to scale back some activities in response to the price decline.

"Certainly, we've had a serious reduction in price, losing some $20/b over these last few weeks," he said. "So, that's a pretty good pull-back. And certainly, people will probably start adjusting right there on projects that they can push back or don't have to do for a while. And our company has done the same thing, and others have."

But Hamm said the impacts vary depending on the locations of the wells, the financial needs of individual companies and other factors. The Bakken shale, he added, "probably lends itself to lower prices" more than other shale reserves.

Other Program Highlights

Also Sunday, Brigham McCown, a former head of the U.S. Pipeline and Hazardous Materials Safety Administration, shared some of the infrastructure challenges facing the U.S. oil and natural gas sector.

During another segment, Murray Energy CEO Robert Murray discussed his efforts to help Republicans re-take the U.S. Senate this November amid sentiment that the Obama administration and Democrats in Congress are contributing to the decline of coal.

In "Market Spotlight," Andrew Moore, managing editor of Platts Coal Trader, gave an overview of the myriad factors shaping the U.S. coal market.

Platts Energy Week airs at 8 a.m. U.S. Eastern time Sunday mornings on WU.S.A9 in greater Washington, D.C., and in Houston on KUHT, a PBS affiliate, as well as on other PBS stations in cities throughout the U.S., including Anchorage, Billings, Houston, Juneau, Las Vegas, Minneapolis, San Francisco, Raleigh and Wichita. For online viewing, the program is accessible at www.plattstv.com.

Norway’s High Tax Burden Hindering Commercial Viability of Arctic Oil Opportunities, says GlobalData Analyst

GlobalDatalogoStates and International Oil Companies (IOCs) are banking on the Arctic as a major source of future oil and gas production, but the high costs and risks involved with operations in the area mean that an attractive fiscal regime is essential if developments are to be commercially viable, says an analyst with research and consulting firm GlobalData.

Will Scargill, GlobalData's Upstream Fiscal Analyst, states that Norway's high tax burden poses a challenge to commerciality when compared with Russian, Canadian and US Arctic fiscal regimes, although the country has already made significant progress in Arctic oil and gas development.

Scargill says: "In contrast to Russia, which introduced tax incentives for offshore Arctic developments earlier this year, Norway does not provide special incentives for its oil and gas industry. Norwegian fiscal terms were made even less appealing in May 2013, when the Labour-led government reduced the capital expenditure uplift, allowed over four years, from 30% to 22%.

"This change had a particularly detrimental impact on the potential economics of projects requiring high capital outlay, and the effects are especially visible in the marginal commerciality of Statoil's proposed Johan Castberg project in the Barents Sea. Although the right-wing coalition, which came into power in September 2013, indicated that it may introduce measures to mitigate the effect of the change, no incentives were announced in the recent budget."

According to Scargill, Johan Castberg's economics suggest that without such measures, new developments are unlikely to be commercially viable further north in the Barents Sea, where costs are expected to be higher.

On the other hand, the Canadian and US Arctic regimes would likely enable a project with Johan Castberg's cost profile to generate a fair return on investment.

However, as Scargill continues: "IOCs considering Arctic operations must balance the attractiveness of fiscal regimes with other obstacles.
"Despite the potential for promising economics in Alaska and Canada's offshore regions, these areas are subject to stringent environmental regulations, which could frustrate operators' plans."

PIRA Energy Group's Weekly Oil Market Recap for the Week Ending October 26th, 2014

piraNYC-based PIRA Energy Group believes that cyclical strengthening is currently underway in the global economy with the U.S. in a better position to support global growth. In the U.S., stock excess modestly widens. In Japan, crude runs ease, but crude stocks draw. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

World Oil Market Forecast
Cyclical strengthening is currently underway in the global economy with the U.S. in a better position to support global growth. OPEC cannot rebalance oil markets because the surplus is too large. Even with PIRA's assumed substantial OPEC cuts at the upcoming November 27 meeting, supply will be over 1 MMB/D higher than demand in 2015. Oil markets will have to be rebalanced via price. The market will see greater contango but prices in the front of the market will inevitably be anchored by bullish medium term oil supply/demand balances.

U.S. Stock Excess Modestly Widens
This past week's inventory increase was slightly larger than the increase last year in the same week, widening the year-on-year inventory. Crude stocks still remain 2.1 million barrels below last year, middle distillate nearly 1 million barrels below, and gasoline 11.1 million barrels lower. Gasoline stocks are relatively low, but with resupply expected from higher runs and imports, gasoline has recently taken a drubbing. Not surprisingly, the one major product category showing a large surplus to last year's inventory is "other" products, which is mostly NGLs.

Japanese Crude Runs Ease, But Crude Stocks Draw
Crude runs eased, while crude imports declined sufficiently to draw crude stocks moderately. Finished product stocks resumed building with much of it being kerosene. Gasoline demand was modestly higher, and stocks posted a small draw. Gasoil demand was surprisingly weak, but lower yield tempered the stock build. Kerosene demand continued to run at seasonally low levels with higher yield, which boosted the stock build rate to a strong 132 MB/D. Refining margins remain soft with all the major product cracks, except for middle distillates (kero and gasoil) weakening.

The Sensitivity of Shale (and Other) Oil Production to Lower Price
We expect shale oil production to be relatively sensitive to a drop in oil prices, but the response will not occur immediately. A price lower than $80 on an LLS basis will reduce production, both due to the deterioration of the economics of the key shale plays as well as the reduction of cash flows and borrowing capability for the operators. However, the production impact during the first year will emerge slowly, as existing hedges, rig obligations and high-grading of drilling will initially temper the effect of lower prices. In the long-term, these impacts will grow substantially although lower activity levels should also eventually lead to lower costs, partially offsetting the price effect.

U.S. NGL Complex Spirals Lower
December Mont Belvieu propane futures continued to spiral lower, falling 5.4% to $0.86/gal the lowest price since July 2014. Ever increasing stocks and challenging export economics continue to complicate matters for the fuel/feedstock. Midcontinent propane markets were slightly better, only 3.4% lower, widening the Conway premium to 6.5¢/gal – the highest this season. Next week, falling crude prices will continue to drag on NGL prices while closed spot arbitrage economics will hinder exports to Europe and Asia.

U.S. Production Margins Improved After Declining for Eight Straight Weeks
The cash margins for U.S. ethanol manufacture rebounded the week ending October 17 as the market tightened. Ethanol was $1.78 per gallon in Chicago on Friday, up 21.9% from its $1.46 bottom on October 2.

U.S. Ethanol Stocks Fall to Seven-Week Low
U.S. ethanol inventories declined for three consecutive weeks, dropping to a seven-week low 17.9 million barrels. Ethanol production rebounded to 896 MB/D the week ending October 17, up from 885 MB/D during the preceding week.

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.

Mexico’s Naviera Integral Orders Two Damen FCS 4008

New Sea Axe design: a 40-metre Fast Crew Supplier

DamenNaviera Integral of Mexico is the launching customer of Damen's new Sea Axe Fast Crew Supply vessel, the FCS 4008. President of Naviera Integral, Juan Pablo Vega is pictured at the official signing ceremony for the two Damen FCS 4008 vessels at the Offshore Energy Exhibition in Amsterdam.

A leading company in offshore transport and supply services with a fleet of 35 vessels, Naviera Integral has already been a customer of Damen since the late nineties, operating more than 20 Damen vessels. The Mexican company was also a pioneer of the Damen flagship Axe Bow vessel, the 5009.

Mr Vega explains: "We choose to invest in Damen vessels because of their quality and this is combined with a very good delivery time, plus Damen provides excellent after sales services and offers creative solutions for financing."

100 passengers
Damen and Naviera Integral have worked very closely on developing the new FCS 4008, which is mainly focused on passenger transport rather than a combination of passengers and cargo. "Naviera Integral is having an increasing focus on passenger transportation and this new 42m vessel has capacity for 100 people."

Naviera Integral's vast experience of operating the Sea Axe 5009 in the Gulf of Mexico has been taken on board with the design of the new FCS 4008, with any suggestions for improvements incorporated in the new FCS type. The vessel combines a steel hull with an aluminium superstructure, which allows the vessel to combine strength with speed.

"Damen Sea Axe vessels have excellent seakeeping characteristics and our client PEMEX sees the benefits of this. The vessels are much more comfortable for the crew and they arrive in better shape to carry out their work. The FCS 4008 is also very fuel efficient, consuming at least 10% less than conventional vessels, which is an important consideration," Mr Vega says.

Naviera Integral's two new vessels are due for delivery in 2016. Mr Vega adds: "We see many opportunities in the Gulf of Mexico given the energy reform, therefore we see these investments as preparing for the future. And we look forward to working with Damen."

Willard Marine Selected to Provide Demonstration Craft for US Navy

WillardWillard Marine, Inc. (WMI), a leading manufacturer of composite and aluminum boats for more than 50 years, has been selected through a competitive solicitation process to supply a demonstration model of a new, advanced combatant craft for the U.S. Navy under an SBIR contract modification awarded to Structural Composites, Inc.

Under the contract, WMI will design, construct and test a fleet-ready version of an advanced combatant craft incorporating foam/fiberglass extrusion technology developed by Structural Composites. The boat will be based on WMI's standard U.S. Navy MK 3 RIB with a lightweight Steyr diesel engine and sterndrive propulsion.

The new, framed construction technique will eliminate the need for a traditional foam-core and fiberglass sandwich hull, resulting in a substantial reduction in overall boat weight with no sacrifice in strength and durability. The deck frames will not be connected directly to the hull beams, providing improved shock mitigation when operating in rough seas. The boat will also feature Structural Composites' new Co-Cure resin and coating technology that has superior cracking resistance for demanding naval applications.

Ulrich Gottschling, president and CEO of WMI, said, "Willard Marine has built the most durable military RIBs for the U.S. Navy for more than 20 years, and we are committed to leading improvements through more innovative products, designs and production techniques. By partnering with Structural Composites on this advanced construction method, Willard Marine will potentially improve payload capacities while improving crew comfort, which are critical factors for our customers."

Scott Lewit, president of Structural Composites, said, "This contract modification from the U.S. Navy allows us to integrate our newest composite advances into the recently selected lightweight engine technology from Steyr. The combined benefits of reduced structural and engine weight offer great synergistic benefits."

Express Energy Services Agrees to be Acquired by Apollo Funds

Express Energy Services ("Express" or the "Company"), a North American oilfield services company, has announced that funds managed by affiliates of Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, "Apollo") and participating management have agreed to acquire the Company from its existing shareholders. Terms of the transaction were not disclosed.

Express, founded in 2000, is a premier provider of products and services to the petroleum and energy industries. Offering oilfield services in every major hydrocarbon basin in the United States, Express assists its customers with six service lines, including casing and tubular running and completion and production services, and a workforce of approximately 1,700 employees in more than 30 locations.

"Apollo is one of the largest and most successful private equity firms in the world and possesses the type of deep energy expertise that we believe will enhance the value of Express Energy Services," said Darron Anderson, chief executive officer, Express Energy Services. "We are proud Apollo has chosen Express as a platform for oilfield services and are thrilled to partner with them to further develop and grow our business. We expect this transaction will provide considerable strategic benefits to our underlying business along with our customers and employees."

"We look forward to our new partnership with Express Energy Services and its outstanding management team and employees. We have been extremely impressed with the Company's culture of excellence, track record of operational success and strong commitment to training, safety and service quality," said Michael Jupiter, partner, Apollo Global Management. "We believe we are well positioned to help Express achieve its long-term growth strategies for its existing and future service line offerings."

Express will continue to be headquartered in Houston, Texas.

Hoover Container Solutions Moves to New Australian Complex

Hoover-AustraliaHoover Container Solutions Pty Ltd (Hoover), a subsidiary of Hoover Group Inc., has moved to a larger and newly renovated facility in Perth, Western Australia (WA) to accommodate its expansion in the region. The new distribution and service center allows Hoover to provide expanded services in WA while handling all intermediate bulk containers (IBCs), ISO tanks and offshore equipment destined for oil and gas platforms, mining sites, islands and supply bases north of Perth.

The site sits on more than an acre in the Marine Support Complex in Henderson, WA, a suburb of Perth. It is approved as a washing facility by the Department of Agriculture and is completely funded for approval by the Environmental Protection Agency. The facility plans to commence operations by late fall and will have the capability to launder to National Australian Standard - Class Six (NAS 6).

The complex hosts two large wash bays and workshop that have in-ground sump pits and underground storage tanks. A concrete hard stand has numerous ground tanks that capture all rain water that will later be used for the rinsing of tanks.

"Our new location allows us to efficiently and safely clean tanks in Western Australia, which helps us to better serve our customers," said Paul Lewis, president and chief operating officer of Hoover. "We are eager to expand into Western Australia, and this new location is a reflection of that desire."

In the future, the facility will also provide re-certification, repairs and maintenance at a National Australian Testing Authorities (NATA) certified level.