Newly Launched Decommissioning Company Makes First Acquisition

A major new entrant to North Sea decommissioning, launched last week, has made its first acquisition.

Well-Safe Solutions, a specialist well abandonment company, has acquired Intervention Project Management (IPM) for an undisclosed sum.

IPM’s founder and managing director, Phil Milton, has been appointed chief executive officer of Well-Safe Solutions which has been set up to capitalise on the significant decommissioning opportunity in the North Sea by providing a ground-breaking approach to the safe and cost-efficient decommissioning of subsea wells.

5WELL SAFE SOLUTIONS Phil and Mark(L to R) Phil Milton, CEO of Well-Safe Solutions and Mark Patterson, executive director of Well-Safe Solutions.

Formed in 2007, IPM provides independent engineering, project management and consultancy services to the global oil and gas industry. Specialising in well intervention, including plug and abandonment, and production optimisation, IPM has worked with an impressive portfolio of clients including CNR International, TAQA Brattani, Repsol-Sinopec ConocoPhillips, Chevron, Halliburton and Schlumberger.

Well-Safe Solutions, which aims to attract £200million in investment and create 400 new jobs, offers a specialist well abandonment service that will allow operators to meet the challenges and regulatory imperatives around decommissioning.

Set up by Mark Patterson, Alasdair Locke and Paul Warwick, Well-Safe Solutions will combine a wealth of subsea oil and gas expertise and experience with dedicated assets and equipment, to become the first-of-its-kind tier one company with a complete P&A capability from front-end engineering and design to project execution.

Mr Patterson, said: “The acquisition of IPM gives us an excellent foundation on which to build our P&A focused business. More importantly, with the appointment of Phil Milton to head up our wealth of P&A expertise and experience, we are firmly on-track to establishing our authority and credibility in the market.”

With over 26 years’ experience in well engineering in the global oil and gas industry, Mr Milton has a track-record in P&A and in start-up companies. His extensive technical knowledge is underpinned by his credentials in the safe and efficient delivery of well services, workovers and well abandonment operations in the North Sea and beyond for CNR, Shell, BP, BG and Conoco. This includes work on the Murchison P&A project and the Hutton TLP abandonment project.

In forming IPM, Mr Milton initially focused on supplying high calibre well engineering personnel to operators and the service sector. The self-funded start-up quickly grew to become a respected and trusted provider of well engineering support and project management in the North Sea, West Coast of Africa and Australia. The company now offers a fully integrated P&A service with differentiated contract models and the use of new enhanced techniques and technology.

Mr Milton said: “The shift towards prioritising decommissioning activity, along with the number of shut-in wells, more incentives and current lower costs, makes P&A activity much more attractive. It’s the right time for Well-Safe to enter the market with a very compelling proposition that will deliver the complete package of collaboration, efficiency, safety and savings.

“I’m really excited to be joining the business at the out-set and bringing IPM’s experience to the development of an approach that will provide operators with the best and most cost-effective solution for their decommissioning liabilities and will offer UK plc a model that positions us as an exemplar for P&A activity around the world.”

Well-Safe Solutions will provide a one-stop-shop approach within a fragmented market by becoming the focal point for operators, handling all aspects of planning, logistics and execution though one contract. By combining competitive asset day rates with long-term service and support contracts at a fixed day rate, Well-Safe will offer higher efficiency and utilisation at lower cost.

The company will acquire high quality assets to carry out well abandonment work, including a semi-submersible rig, jack-up rig and light-weight intervention vessel. These will then be used and mobilised exclusively for P&A activity, providing certainty over availability and therefore long-term commitments for customers with full control over scheduling of well P&A campaigns.

Corporate finance advisers to the energy sector, Simmons & Co, is acting for Well-Safe. Managing director of Simmons & Co, Mike Beveridge, commented: “The launch of Well-Safe Solutions is great news for Aberdeen and the UKCS. The basin evolves continuously and new business models are always necessary to address changing market dynamics. Well-Safe has foreseen the emerging trends in well decommissioning and has built a business dedicated to servicing the new needs of operators.

“The company can quickly become established as a centre of excellence for well abandonment and emerge as an important new employer in the North East. There’s a huge well stock in the North Sea that needs this know-how and experience to decommission wells safely and efficiently. I would expect Well-Safe to take this model to other well decommissioning programmes worldwide – further strengthening the UK’s position as a proving ground for new ideas and business practices which can be adopted elsewhere around the globe.”

DNV GL Delivers Cost Saving Alternatives with Remote Surveillance for Subsea Equipment Manufacturing

The oil price collapse of 2014 triggered a wave of cost reduction among upstream businesses. Global oil and gas companies slashed capital expenditures by about 40% between 2014 and 2016. This delivered a clear message: everyone in the supply chain must advance cost reduction strategies for the offshore industry in order to remain competitive.

With innovation and cost savings in mind, DNV GL developed a solution for remote surveillance service for subsea equipment manufacturing.

The primary goal of this new alternative was based on cost savings; improved safety for surveyors; increased flexibility on testing schedules; availability of experts; and transparency for all stakeholders.

6 1DNVGL RemoteSurveilllanceRemote surveillance test setup at DNV GL offices.

Remote witnessing equips technicians with hardware and software that provide remote support or, depending on the type of test and its critical points, a standalone camera system that can be installed to increase savings and flexibility. At the local office, a DNV GL surveyor is connected to the technician delivering technical expertise in a timely manner.

6 2DNVGL RemoteSurveilllanceRemote surveillance test setup at client's facility.

“Remote witnessing is a part of other DNV GL operations. With this in mind, it was logical that we look at how remote witnessing can improve both on- and offshore subsea verification,” said Eric Allen, Business Development lead for the US based subsea and wells team.

"Furthermore," he continued, “this is an area where digitalization can be coupled with existing processes to provide effective verification services resulting in high cost and safety benefits."

Delivering results

DNV GL’s expert surveyors successfully tested the remote surveillance technology with Trendsetter Engineering Inc. (TEI) on the HPHT Subsea Capping Stack project.

To do this, DNV GL developed specific protocols and optimized the camera and software interface ensuring that the remote surveyor can deliver the same level of quality as if he or she were on site.

The initial pilot was a necessary step used to identify gaps and establish a solid foundation of protocols. The pilot clearly demonstrated that remote witnessing is an acceptable tool that delivers results for independent surveillance when suitable conditions are met.

“The success of this pilot program improved efficiency and delivered cost savings,” said Martha Viteri, Head of Section for DNV GL’s US based Subsea and Wells team. “Working together with our industry partners we clearly recognized how this will change the future of surveillance.”

The future of surveillance

Third party surveillance costs can easily account for a significant portion of a verification project. With this new project execution model, DNV GL will deliver substantial cost savings and improved efficiency by eliminating travel and idle time.

“Remote surveillance demonstrates DNV GL’s commitment to drive innovation forward and deliver actual cost savings as well as value added activities, and faster results (for evidence and feedback) for the benefit of our Customers. In addition, this creates a safer way of working for surveyors,” noted Martha.

“We are happy to see that customers continue to positively receive this alternative and view this as a model for future inspection technologies.”

The camera and software system are fully operational and licensed by an independent provider.

 

CGG Launches Gippsland ReGeneration Reprocessing Project in SE Australia

7CGG GippslandCGG has announced the start of its Gippsland ReGeneration 3D reprocessing project in Australia’s premier Gippsland Basin, in South-East Australia. The project will offer the industry the highest-resolution 3D seismic data available in this extremely prospective area.

Historically, imaging the Gippsland Basin’s shelf break and numerous submarine channels has proven extremely challenging. With the application of CGG’s latest high-end technology and workflows, including advanced de-multiple and high-frequency FWI, the Gippsland ReGeneration project will deliver significant reservoir imaging improvements, reveal new potential deep reservoir targets and extensively improve understanding of the basin.

To date, the Gippsland Basin has produced over 4 billion barrels of liquid hydrocarbons and 7 trillion cubic feet of gas, sourced from thick coal seams formed during the Paleocene to Eocene, and trapped in late Tertiary, inversion-formed, compressional structures. The first major offshore discovery was made over half a century ago and there is still tremendous opportunity for new discoveries and developments.

Mark Richards, Senior Vice President, Eastern Hemisphere, Multi-Client & New Ventures, CGG, said: “CGG sees the Gippsland Basin as an exciting opportunity to show how its leading-edge seismic imaging technologies can enable the industry to breathe new life into a mature basin. With its well established infrastructure and under-developed resources, we believe this high-end reprocessing project has the potential to regenerate the basin and offer a solution to the projected shortfall in Australia’s East Coast gas supplies.”

New Oil & Gas Industry Resource Gets Seal of Approval

8ICOELord Cullen welcomed the launch of a valuable oil and gas resource which will help prevent incidents offshore and provide valuable reference material for tomorrow’s industry leaders.

The author of the seminal Cullen Report, following the Piper Alpha tragedy, was speaking at the launch of Encompassing the Future: Offshore Oil and Gas Operations. This resource pulls together 40 years of inter-disciplinary knowledge and experience in environmental, health and safety and performance management in a format that is easy to use and share with current and future generations of oil and gas professionals.

Lord Cullen said: “Painful lessons were learnt from the tragic events on 6 July 1988. These lessons, like so many others in the industry, must never be forgotten. They should be used to ensure the safety of the people who work in it, the protection of the environment and the overall economic health and sustainability of offshore operations. The ten volumes of this resource will be an essential knowledge bank to pass on lessons learnt to the next generation, making sure that the industry retains the full benefit of years of expertise and experience.

“More than ever such comprehensive reference material is required. A mature province with ageing infrastructure, challenging economics, demographics and technology that pushes new boundaries must welcome and make full use of such a resource.”

The launch, sponsored by Brodies, was attended by 80 industry leaders with over 100 future leaders attending the following forum which outlined the content of the resource and explained how it can be used.

Paul Wheelhouse, Scottish Government Minister for Business, Innovation and Energy said: “The oil and gas industry makes a huge contribution to the Scottish economy, and will continue to do so for decades to come. Ensuring that the highest safety standards are applied across the industry is, of course, a key priority for all of us, and it is also essential to North Sea sustainability in the long run.

“So I’m delighted to officially unveil this invaluable resource, which is the culmination of a collective effort by academics and industry experts, who have drawn upon nearly forty years of research and experience. This repository should represent the ‘gold standard’ for health and safety, and environmental management - not just for Scotland, but for the rest of the world. The Scottish Government, along with academia and industry partners, is very happy to have been able to help fund the repository and we strongly support it.”

An ICOE (International Centre for Oil and the Environment) initiative, this knowledge repository will help future leaders deal with the challenges of oil price volatility, technological innovation and the loss of experienced personnel.

William Cairns, executive chairman of ICOE and editor-in-chief of the resource, said: “Compiling such a comprehensive knowledge repository during one of the most challenging periods faced by the industry has been a mammoth task. However, with the support of industry and academic experts, this much-anticipated project distils, records and shares intellectual and operational expertise in a format for the digital age. Its value is inestimable not only in terms of accident prevention and avoidance of environmental damage, improving decision-making to ensure greater efficiency but also in exporting North Sea experience and expertise around the world.”

The launch, hosted by Sir Ian Diamond and held at Aberdeen University’s Kings College Conference Centre, boasted an eminent panel of speakers including Paul Warwick, Colette Cohen, Gunther Newcomb, Chris Bird and Professor Alex Kemp.

Guests were given an overview of the thinking behind the project, the challenges currently facing the sector and how this knowledge bank can help meet these through new thinking, the retention and transfer of expertise and the collaborative imperatives between industry and universities.

Bosch Rexroth Upgrades Hydraulic Subsea Cable Laying Equipment for Blue Offshore

Following the demands of their customers to work with increased cable lengths, Blue Offshore, a rental company for specialized cable laying equipment, decided to upgrade the capacity of its existing equipment. Bosch Rexroth from Boxtel was approached, to increase the pulling force of the hydraulic cable tensioner and to upgrade and modernize the complete hydraulic installation.

9BoschRexrothUpgraded hydraulic subsea cable laying equipment (Photo credit: Blue Offshore)

"This was a challenging and evenly exciting job," says Remco Buskens, Sales Engineer Specialized Services at Bosch Rexroth. "The complete installation of Blue Offshore is based on hydraulic drive and control technology, and was thoroughly checked, serviced, modernized and upgraded. The subsea cables are stored in huge basket carousels for offshore installation, driven by hydraulic motors. Also, the two rubber tensioner tracks that accurately guide the cables, are adjusted relatively to each other by means of hydraulic cylinders. To store an increased amount of cable, the height of the basket carousel had to be increased. The ‘cable guidance device’ in between the basket carousel and the tensioner is tilted by a hydraulic cylinder, as the angle of the cable changes when the amount of cable on the storage wheel in- or decreases. Powered by a dedicated 37kW hydraulic power unit, this complete installation can be defined as a stand-alone unit.”

Efficient service operations

“One way of getting such jobs done is to fully replace all old components with new ones” says Buskens about the extensive service project. “But it is far more cost efficient for our customer, to clean and repair as many hydraulic components as possible. Only those parts that had to be replaced were replaced, others have been brought back in their original state by our service engineers. To do so, we worked closely together with both our experienced team in Zwijndrecht and the technical engineers from Blue Offshore, with whom for example the revised manifolds have been thoroughly discussed.”

Increased pulling force

The increased cable length that is stored in the basket carousel will add up to an astounding 80 kilometers. To handle the bigger forces resulting from this increased size and weight of the basket carousel, the tensioner equipment was modernized and provided with a double set of revised hydraulic cylinders and new Hägglunds hydraulic motors, which are able to generate high torques at low rotations. “By applying these powerful motors from the Rexroth portfolio and replacing all hydraulic piping and hoses, we were able to increase the pulling force of the tensioner from 5 up to 10 tons!” Remco Buskens added. “As these ships mostly operate in demanding marine environments, reliability of the equipment is a very important issue. The hydraulic HPU that powers the compact Hägglunds motors of the tensioner, includes a highly reliable control and monitoring system, providing Blue Offshore with solid insights about the condition of the hydraulic equipment.”

Mermaid Secures Pipeline Repair Air-Diving Contract Award in Singapore

Mermaid Maritime Public Company Limited (“Mermaid”) announces that its Singapore wholly-owned subsidiary has recently been awarded a subsea contract with an estimated value of USD 5 million.

10MeramaidSapphireMermaid Sapphire ROV support vessel. Photo credit Mermaid Maritime

The contract award, with work scheduled to commence in the third quarter of 2017 and to be completed in the fourth quarter of 2017, will involve use of a Company owned ROV support vessel and a chartered-in ROV support vessel with air diving systems, dredging equipment and concrete coating removal equipment to carry out an air diving job to clamp and repair a 48" pipeline and to change-out SBM hoses offshore Singapore for an international upstream oil and gas company.

In line with its strategy to secure new customers in new markets, Mermaid is pleased to add that this is the first time that it secured work of this kind in Singapore and with this customer.

Mermaid’s contract win announcements as published from time to time on SGXNet are not exhaustive as Mermaid continues to be awarded other smaller contracts from time to time in the ordinary course of business which are added to its order book.

Financial Effects

Assuming that the contract had commenced and had been completed within the most recent financial year (the Company’s last financial year ended 31 December 2016), the contract would have had a non-material effect on the earnings per share of the Company (on a consolidated basis) and a non-material effect on the net tangible assets per share of the Company (on a consolidated basis) for that financial year.

KRYPTOSPHERE Builds on Its Success in the Gulf of Mexico’s Deep, High Stress Wells

11KRYPTOSPHERE technology for offshore GOMCARBO Ceramics Inc. (NYSE: CRR) announced KRYPTOSPHERE® HD has been utilized by all super major E&Ps operating in the Gulf of Mexico, for deep, high stress wells.

KRYPTOSPHERE HD is the leading ultra-conductive, high strength ceramic proppant. It was initially engineered to solve the production and completion challenges for Gulf of Mexico Lower Tertiary development, where wells can experience a closure stress range from 12,000 to 20,000 psi. This technology results in higher production and estimated ultimate recovery (EUR), maximizing the operator’s return on investment.

In addition to its production enhancement capability, KRYPTOSPHERE HD’s unique durability, smoothness and sphericity, make it more resistant to cyclic loading and acids and significantly less erosive on frac pumps and downhole tools. These benefits translate into increased completion tool life, reduced rig downtime and overall cost-savings for the E&P operator. One company has reported that KRYPTOSPHERE HD is enabling a multi-fold increase in tool life.

“This is an important milestone for KRYPTOSPHERE HD with all super majors in the Gulf of Mexico now having utilized the technology,” said Don Conkle, vice president of marketing and sales, CARBO. “We are receiving very positive feedback from our clients. Production results are exceeding their expectations on these prolific wells and they are also realizing a substantial reduction in completion equipment wear-and–tear, resulting in lower risk and cost,” he concluded.

Improve Pipeline Sustainability with Non-Destructive Leak Testing

12Nexxis PipelinePipeline accidents are common - and the consequences can be disastrous.

An analysis of federal data by the Associated Press revealed that the number of significant accidents on oil and petroleum pipelines in the US had increased annually by nearly 60% since 2009. Since 1995, over 2 000 significant accidents had occurred, adding up to roughly $3 billion in property damage.

Property damage is only one consequence of a pipeline accident however. Human injury and death, environmental damage, legal ramifications and many other operational issues are all possible consequences and are the reasons why the oil and gas industry allocate such significant time and resources towards testing their pipelines for leaks and weaknesses.

Non-destructive testing enables leaks to be located using various non-invasive methods including pressure, ultrasonic and radiography testing. These are far more productive and cost-effective than the traditional procedures of leak detection which require physical access to the walls of the pipeline, essentially shutting down production while technicians cut into the material to identify or repair a problem.

The research also showed that close on two thirds of the leaks were linked to corrosion or material, welding and equipment failures, issues which are commonly associated with older pipelines. With around 55% of the 217 000kms of oil and gasoline pipelines in the US installed in 1969 or earlier, and some sections as much as 100 years old, the importance of leak detection and testing to improve pipeline sustainability is patently obvious.

Pipelines are vulnerable to internal and external corrosion, manufacturing flaws, damage from third parties and other issues and regular inspections are necessary for early detection of these.

Given that many companies still rely on ageing infrastructure and are also expanding their new pipeline networks, advanced non-destructive leak testing which enables pipelines to go back into production much more quickly, has become a critically important element of their daily operations.

But non-destructive leak testing isn’t confined to evaluating existing pipelines, it also fulfils an important role during the initial construction process as well as during the pre-commissioning phase. The benefits are both immediate (identifying potential flaws that can be sorted out before the pipeline goes into full production) and longer-term (diminishing the likelihood of mechanical failure during production) with the result that companies are less likely to face legal, safety and environmental risks because the sustainability of their pipelines has been improved.

In a nutshell, here are some of the main benefits of non-destructive leak testing in pipelines:

Significantly reduced downtime required for testing (NDT testing is often completed without any operational disruption)

Fast and accurate detection and location of weaknesses, flaws or leaks

Improved safety

Fewer legal implications and costs

Greater environmental protection (fewer leaks and toxic spills)

Long-term cost savings

Optimum asset management

Some of the more common NDT methods for evaluating pipelines are:

Pressure testing (evaluates the performance of a pipeline under adverse or potentially risky conditions)

Ultrasonic testing (the use of high frequency sound waves enables very specific assessment of the thickness, strength and condition of pipeline components)

Radiographic testing (uses short X-rays and gamma rays to penetrate materials to inspect for hidden flaws)

Each of these methods provides engineers with crucial real time information which enables them to take the necessary steps to fix or prevent leaks in the pipeline and ensure long-term asset integrity as well as compliance with regulatory standards.

If improving the sustainability of your pipeline is a priority for your operation, contact the experts in non-destructive testing and remote visual inspection equipment, Nexxis.

TWMA Awarded North Sea Contract with Azinor Catalyst

TWMA, a leading provider of drill cuttings and slop handling, management and treatment solutions, has been awarded a contract estimated to be worth around £1million with UKCS-focused E&P company, Azinor Catalyst Limited (“Azinor Catalyst”).

13TWMA 102TWMA awarded North Sea contract with Azinor Catalyst

The project, which commences in August 2017, will see TWMA provide drill cuttings containment and processing services on the Ocean Guardian rig in the Central North Sea. Azinor Catalyst has contracted the semi-submersible rig for the drilling of two wells in 2017. Anticipated spud of the Partridge exploration well is in August, followed by the spud of the Agar appraisal well in September.

TWMA is providing offshore personnel, drill cuttings containment and onshore drill cuttings processing as part of a three-year contract, which has two additional one-year options.

Marlene Mitchell, Sales Director at TWMA, said: “We are very pleased to secure this contract, which marks our first work with Azinor Catalyst. TWMA will support this drilling activity by safely and effectively managing drill cuttings, through containment offshore and processing onshore.

“We will be utilising a number of our proprietary technologies including EfficientC®, which will allow us to collect and contain the drill cuttings offshore before transport onshore. From there, drill cuttings will be treated by the TCC RotoMill® at our Peterhead facility, thus minimising the environmental impact of the drilling programme.

“TWMA has built a strong international track record since our inception in 2000, and we are proud that this reputation continues to be recognised by new and existing clients.”

For more information on TWMA and its services, click here.

Kosmos Energy Announces 2nd Quarter Results and Operational Update

14 1KosmosEnergyKosmos Energy Ltd. (“Kosmos”) (NYSE:KOS) has announced financial and operating results for the second quarter of 2017. For the second quarter of 2017, the Company generated a net loss of $8.5 million, or $0.02 per diluted share as compared to net loss of $108.3 million or $0.28 per diluted share in the same period last year. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss(1) of $8.4 million or $0.02 per diluted share for the second quarter of 2017.

“Kosmos is truly differentiating itself in 2017. In this lower-for-longer price environment, we are generating significant free cash flow and continuing to strengthen our balance sheet. This solid financial position enables us to execute our planned work program with the potential to drive significant growth,” said Andrew G. Inglis, Kosmos Energy’s chairman and chief executive officer. “Over the next 18 months, we plan to drill five prospects that are amongst the industry’s most significant exploration wells in the world’s two most promising offshore basins. We are also advancing the development of our large gas discoveries beginning with the low-cost Tortue project, which remains on schedule to reach FID in 2018 and first gas by 2021.”

Operational Update

Ghana

During the second quarter of 2017, gross sales volumes from Ghana averaged approximately 131,000 barrels of oil per day (bopd), including volumes from the Jubilee and TEN fields which averaged approximately 86,000 bopd and 45,000 bopd, respectively.

The Jubilee FPSO turret remediation project has continued to make good progress during the year. Following the spread mooring of the FPSO at its current heading in late February, optimization of the offtake procedures has allowed the Jubilee field to regularly produce in excess of 100,000 bopd. The Jubilee partners and the Government of Ghana are now planning the next phase of remediation which will involve stabilizing the turret bearing. The operator estimates this will require a shut down of approximately five to eight weeks in late 2017.

However, the partnership continues to evaluate options to minimize downtime. Planning for the rotation of the vessel to its optimal heading and the installation of a deep water catenary anchor leg mooring (CALM) buoy is currently ongoing and these work programs are expected to occur in 2018 and 2019, respectively, subject to final partnership and government approval. The partnership is focused on minimizing field downtime, and the operator anticipates that the total shutdown duration for stabilization, rotation and CALM buoy installation is not expected to exceed 12 weeks as previously forecast by the operator.

14 2Kosmos senegal asset map2Image credit: Kosmos Energy

Mauritania and Senegal

In May, Kosmos announced a major gas discovery offshore Senegal at Yakaar-1, the first well in a series of four independent tests of the basin floor fan fairways, outboard of the proven slope channel trend opened with the Tortue-1 discovery. Located in the Cayar Offshore Profond block approximately 95 kilometers northwest of Dakar in approximately 2,600 meters of water, the well has been drilled to a total depth of approximately 4,900 meters. Yakaar-1 intersected a gross hydrocarbon column of 120 meters (394 feet) in three pools within the primary Lower Cenomanian objective and encountered 45 meters (148 feet) of net pay. Well results confirmed the presence of thick, stacked, reservoir sands over a very large area with very good porosity and permeability. Together with the Teranga-1 discovery made last year, we believe this resource will support a second cost-competitive LNG hub.

After completion of operations on the Yakaar-1 well, the Atwood Achiever mobilized to the Tortue-1 well to conduct a drill stem test (DST) on the Tortue discovery, which is expected to provide key information to support the Front End Engineering Design (FEED) in the second half of 2017, with Final Investment Decision (FID) in 2018 and first gas in 2021.

In June, Kosmos entered into a farm-in agreement to acquire a 15% non-operated participating interest in Block C18 offshore Mauritania. The farm-in is expected to close in the third quarter following customary government approvals.

PIRA Energy Market Recap for the Week Ending August 7, 2017

15PIRALogoAsian Refining Margins to Remain Healthy as Product Balances Look Constructive into 2H17

Oil markets are rebalancing slowly, hindered by higher output from Libya/Nigeria and weaker demand from China and Venezuela. Indian oil demand rebounded in 2Q17 with growth of 3.3%, but expansion in June was weaker at 1.5%. Despite demand slowing in China and India, the two populous countries will remain as the twin engines of Asian oil demand growth. Asian refining fundamentals should generally be constructive this year as demand growth is expected to outpace incremental refinery runs. Key Asian product balances, such as for gasoline and gasoil/diesel, also are constructive into 2H17.

Take-away Capacity to Lift Canadian Prices

Plummeting Canadian natural gas prices have raised concerns about the prospect for recovery. To be sure, benchmark prices hit an annual low last month and retested close to those levels this month — as a combination of pipeline maintenance and limited outlets for supply amplified the regional surplus. These developments and the resulting exaggerated cash weakness have cast a long shadow on deferred pricing. Yet, the worst of the summer-time blues for the producers might be in the rear-view mirror as pipeline expansion plans should help alleviate congestion-related blowouts. Moreover, completion of oil sands related turnarounds and evolving structural tightness stateside might provide further relief before year-end.

Asian Buyers and the Emerging Role of Storage

U.S. LNG capacity that has been bought and paid for by Asian utility and portfolio buyers will have major implications for the global LNG trade. It will provide a form of virtual storage for Asian importers, but will also create an enhanced need to trade. With the lackluster performance of NBP, Dutch TTF has a lot in its favor to replace NBP as a key European benchmark and balance 2Q/3Q markets – more storage, declining domestic production, close borders with Germany (Europe’s biggest gas consumer), and a highly evolved LNG import terminal.

Weather & Gas Disappoint, But Production Disciplined

June temperatures came in lower than normal and the year-over-year increase in gas prices at Henry Hub shrank from 65% in May to 16% in June, but slowing production helped keep markets in balance. 2Q17 PRB production came in at 76 MMst, down 9.6% Q/Q. With a gas price outlook above the forward curve, PIRA maintains its bullish bias on PRB.

Refinery Margins Remain Strong

Healthy refinery margins are expected to continue through year end. Net refinery utilization rates will stay high in both the U.S. and Europe but autumn maintenance will push runs lower. Product cracks will average stronger than last year. Atlantic Basin gasoline cracks are getting a boost from refinery problems in Latin America. Residual fuel oil cracks are getting a boost from refinery conversion capacity, lower Russian/other exports, and a lighter crude slate on the margin. Diesel cracks are slowly improving as inventory levels decline.

Cape Demand Prospects Dip While Cape Supply Expands

After sliding in early July, capsize dry bulk freight rates have recovered to over $9,000/day. However, the outlook for freight rates have dimmed over the past month as demand side prospects have faded, partially due to potential cuts in U.S. steel imports in response to the Trump Administration’s Section 232 investigation. The capsize fleet also continues to grow, which has dampened PIRA’s freight rate outlook. Despite these downward adjustments, rising bunker fuel prices along with year-over-year demand growth will see freight rates continue to rise from current levels, and generally outperform FFAs.

California Cap and Trade Extension Passes

AB 398, the bill to extend cap and trade through 2030, passed the CA Legislature with a two-thirds majority. CARB will now take up the Cap and Trade Amendments at the July Board Meeting and announced a new rulemaking process to implement AB 398. Apart from new limits on offsets, other Environmental Justice concerns dealing with toxic and criteria pollutants have been moved to separate legislation. AB 398 has provisions to set a hard price cap and also intermediate cost containment “speed bumps.” It also directs CARB to address banking and over-allocation. The handling of unsold allowances is a key lever to control supply of allowances and measures to address oversupply have the potential to significantly affect balances and pricing. Otherwise, industrial allocations are continued under this legislation and local air districts are prohibited from regulating GHGs from sources covered under the Cap and Trade.

Seasonal Decline in Tanker Rates During Summer Likely to be Steeper than in 2016

The seasonal decline in tanker rates during the summer will likely be steeper this year than in 2016, as vessel supply growth and OPEC reductions reduce fleet utilization rates.

China’s Economic Momentum Is Better-Than-Expected

China’s GDP growth was better-than-expected in the second quarter. The industrial sector was a source of strength, and recent machinery orders by Chinese businesses was a positive sign for the sector’s outlook. Consumer spending growth accelerated, in spite of a higher vehicle sales tax. This sector is expected to keep its momentum, given healthy job gains and recent signs of improvement in various spending data. Investment activity was softer during the second quarter, and spending on infrastructure showed a marked slowing. Growth in credit is decelerating gradually.

NGL Prices Post Week-on-Week Gains

The Mont Belvieu prices of all NGL purity products posted week-on-week gains for the week ending July 21st. Waterborne LPG exports remain relatively robust even with challenging Asian and European arbs. U.S. propane stocks appear to be well positioned going into the last half of the stock build season. The latest EIA stock data for the week ending July 14th report a propane inventory build of 3.5 million barrels, which brings total propane stocks 65.7 million barrels. The Dow Chemical 1.5 million tonnes per year steam cracker in Freeport, Texas continues operate in commissioning mode and is expected to begin commercial operation in August.

U.S. Stock Deficit to Last Year Will Continue to Grow

Stock deficit to last year continues to widen, increasing to almost 30 million barrels this past week, all of which is in products which is supporting strong refinery margins. Four week average adjusted demand is up 3.3%, or 640 MB/D, with gasoline and distillate contributing approximately half of this growth. Both gasoline and distillate stocks drew sharply this past week and another week of significant draws is anticipated. Crude stocks drew 4.7 million barrels this past week and is forecast to decline further next week with a pick-up in exports. Cushing crude stock draws had a respite this past week but should resume its substantial weekly declines in next week’s data.

Margins for Manufacturing Ethanol in the U.S. Improve

Margins for manufacturing ethanol in the U.S. rose the week ending July 14. RINs prices were sharply higher the week ending July 14. The Sugarcane Harvest in the South-Central region of Brazil ramped up, but ethanol production still lagged prior years. European ethanol manufacturing margins were lower due to higher wheat prices.

The Rains Came

With all the focus on Iowa and Illinois, Friday night’s rain event was the obvious talk of the weekend, and the driving force in a lower opening Sunday evening. In critical NW Iowa we’ve spoken with as many farmers who said they got rain as those who said they got nothing. According to one metrological source, western Iowa generally got 30% coverage. How many inches fell in that 30% coverage area is still being debated.

TTF Should Emerge as the New LNG Benchmark

Europe’s fickle relationship with LNG comes not only from an uneven record in providing enough demand, but also lack of clarity on how to price it. While NBP seems to be the benchmark of choice for Atlantic Basin spot trade, its emerging detachment from Continental prices is a cause for concern among sellers looking for protecting netback value in a low-priced environment. Enter TTF as the emerging long-term solution, as the Dutch market faces lower domestic production while also possessing one of the most flexible and innovative LNG import terminals in the world.

Pace of July Injections Imply Build Ahead Likely to Disappoint

The NYMEX nearby rallied more than 20¢ from the lows plumbed earlier in the month. Yet, the initial surge in buying has stalled keeping the August contract anchored near the $3 mark. With the climatological temperature peak traditionally occurring next week, the market appears to be looking beyond the current tightness to heftier injections ahead. While more normal weather ahead might enable incremental restocking, the aggregate additions will likely fall short of levels seen in recent years. This would more easily allow the market to shift attention beyond shoulder-season looseness to the more noted structural tightness that looms later this year.

Germany: Lower Renewables Support July Prices; Bearish Risks for August

With overall wind output so far in July averaging below expectations, or only 6.4 GW, and nuclear still below full capacity, German fossil fuel generation has been relatively more supported this month. However, even with lower renewables and nuclear, day ahead prices have been settling generally in line with forecasts, or in the mid €30/MWh. While gas units have been reported to be ramping up more significantly this month, both wind and nuclear are set to improve next month, providing some downward risks to prices.

Pacific Basin Coal Prices Rise Along With Asian Temperatures

Seaborne coal prices, led by the Pacific Basin, pushed notably higher this week, with 3Q17 FOB Newcastle prices surging by nearly $3.50/mt, despite slipping on Friday. Gains in FOB Richards Bay and CIF ARA prices were more muted by comparison, rising by $1.70/mt and $0.80/mt, respectively. The rise in pricing was driven by tighter Asian fundamentals on both the demand and supply side. Hot temperatures across Asia over July-to-date extended bullish energy demand in China, while both Australian and Indonesian exports have been underwhelming due to labor and weather issues. This tightness in the prompt market takes away some of the fundamental bearishness that is likely to occur later on in 2017, as restocking for the Northern Hemisphere winter will be more pronounced.

Upcoming Auction to Determine MA SREC Demand

The Massachusetts Solar Clearinghouse Auctions for compliance year 2016 will be held next week, for two Solar Renewable Energy Credit (SREC) programs. Quantities indicate a modest surplus for SREC I and a significant surplus for SREC II. Should the SREC II auction not clear in the first two rounds, the 2018 compliance obligation will be adjusted upward by the auction offering, tightening balances significantly and affecting market pricing. Current market pricing for SREC I is close to the fixed auction bid price after a spike in 2015/16 related to the 2013 auction, though this maxed-out program is now largely in balance. The SREC II program has a declining auction bid price schedule that may drive down SREC II prices over time. Pricing is currently lower in this market compared to SREC I, and in anticipation of the auction results. Emergency regulations were filed in June 2017 to support the SMART successor solar program that will replace SRECs as the chosen solar incentive program starting next year.

Japan Limited Holiday Impacts

The Sea Day holiday had limited impact on the data this past week. Japanese runs rose 53 MB/D on the week, as turnarounds continued to lessen. Crude imports were surprisingly low at 2.98 MMB/D, and crude stocks drew 1.05 million barrels. Finished product stocks rose a modest 0.3 million barrels. Aggregate demand was a modest 28 MB/D higher, with gasoline demand falling below expectations, but gasoil demand exceeding expectations. The 4-week average trend in demand continued to move seasonally higher. Kerosene demand fell back, but is within seasonal norms and the 4-week stock build rate remained just under July norms. Refining margins were lower on the week, but remain acceptable.

Financial Stresses Still Lower

Another very bullish week, with good performance on investment grade debt, emerging market debt, high yield debt, along with energy and high yield energy debt. Financial stresses remain exceedingly low, with the St. Louis financial stress indicator moving lower. Commodities had a positive week, though energy underperformed. The reflationary trade appears to be reaching a point of decision, as to whether it can continue momentum, or slips back into disinflation mode. The U.S. equity market continues to set new record highs.

Production and Inventories Rise

U.S. ethanol production rose 19 MB/D last week to a nine-week high 1,026 MB/D the week ending July 14. Inventories increased for the first time in five weeks, building by 956 thousand barrels to 22.1 million barrels. Ethanol-blended gasoline production fell 90 MB/D to 9,133 MB/D, the third consecutive decline after having reached a record high.

What’s Corn Really Worth?

With so many corn yield numbers being thrown around and some weather forecasters seemingly skewing their forecasts to meet some sort of subjective narrative, PIRA took a step back from the noise and added up the numbers as another critical weekend looms. Last week’s Crop Progress report showed that 40% of the corn crop nationally was silking, up 21% from the previous week. PIRA expects a similar 20% increase, if not more, occurred during the current week.

More Equity Records Being Set

More records are being set in world equity markets. In the U.S., a new record was set, while the strongest performers were utilities, retail, technology, and consumer discretionary. Energy eased -0.3% on the week, and underperformed. Banking was even weaker, dropping -1.5%. Internationally, most of the indices posted gains. Japan did particularly well, up 1.4%.

Significance of Mexico’s New Discoveries for Crude Production

Mexico’s crude production prospects are now brighter after two new discoveries. ENI and Talos each reported that Mexico’s historic decision to open exploration and production to foreign investment has resulted in new large shallow water discoveries and that each hold promise of over 1 billion barrels of oil in place. This was a surprising result because the major upside to future production was expected from deepwater and secondarily from shale while shallow waters close to shore were thought to be much less likely to yield large finds. PIRA has estimated that each new find could produce slightly over 100 MB/D at peak.

Asian Oil Demand: Achieving Peak Demand Growth, but Only a Minor Falloff Expected

Our snapshot of Asian oil demand growth continues to show broad based improvement. Growth in our July snapshot reached 1,093 MB/D, an incremental gain of 378 MB/D from last month. The key drivers were accelerating growth for China and India, a small gain in Korea, and a lesser decline in Japan. The profile was along the lines that PIRA expected. We specifically mentioned last month that growth should average 900 MB/D through August, which so far, it has.

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.

Westwood Insight: Will New LNG Trade Routes Support Demand for LNG Carriers?

The Liquified Natural Gas (LNG) carrier market has been highly cyclical and is often driven by global macroeconomic events. The growth of LNG carriers over the past decade has been synonymous with the growth in global LNG import and export capacity. However, in recent years the increase in LNG cargos hitting the market has led to an oversupply problem, causing a significant decline in LNG spot prices. This oversupply has heavily impacted the LNG carrier market resulting in appetite for newbuild carriers to dwindle. In 2016, orders for newbuild LNG carriers amounted to only 6 units (excluding two optional orders) – a 92% decline compared to the number of LNG carriers ordered in 2014.

16 1WI Global LNG carrier fleet by year for the period 2011 2021Global LNG carrier fleet by year for the period 2011-2021

The recent focus on the LNG market oversupply and the continuous growth in LNG export capacity is, however, masking the continuous increase in LNG demand. Whilst increasing demand has been driven by traditional demand hubs, such as China and India, several new LNG importers including Poland, Jordan, Malta, and Pakistan have also emerged in the last two years. This is part of a trend of more countries seeking to utilise LNG to diversify their gas supply and improve power generation. Westwood expects this trend to continue, as 16 additional countries, including Bangladesh, India, Russia, and Sri Lanka, commission their first floating import units (FSRUs) over the 2017-2021 period. These units are expected to unlock new import markets by providing a quick and cost-effective solution to the increasing local gas demand.

16 2WI Average carrier capacity by year for study period 2011 2017 1024x555Average carrier capacity by year for study period 2011-2017

Over the forecast period, much of the LNG that will drive supply increase, will come from mega projects like Chevron’s Wheatstone in Australia, as well as North American projects such as Next Decade’s Rio Grande and Cheniere’s Corpus Christi. The increase in demand will be driven by small and medium sized projects dotted across the world. As a result, LNG carriers will have to travel longer distances from supply bases such as the US to Asia/Europe or East Africa to Asia and this could potentially lead to an increase in carrier demand.

This latter situation provides a silver lining to a recent gloomy market, as over 219 new-build LNG carriers are expected to be delivered over the 2017-2021 period, including 17 new units that have been ordered in since 2017. The expected deliveries also include 92 new-build LNG carriers, which are yet to be ordered. Over 80% of LNG carriers ordered in recent years have trended towards the large conventional carriers (150,000-179,999m3). This indicates the significant design improvements the industry has made for greater cost and operational efficiencies.

Whilst Westwood still expects oversupply to persist beyond the forecast period, continuous pro-gas energy policies in Asia in combination with expanding LNG trade routes are expected to support the demand for newbuild LNG carriers.

Mark Adeosun, Analyst, Westwood Energy

World LNG Market Forecast 2017-2021, view details here

Hess to Begin Operations at North Malay Basin in the Gulf of Thailand

1HESS the north malay basin

Map courtesy: Hess

North Malay Basin is a long-life natural gas asset comprised of nine discovered natural gas fields with an estimated gross recoverable resource of more than 1.5 trillion cubic feet of natural gas and more than 20 million barrels of condensate.

The North Malay Basin Block PM302 is located approximately 186 miles (300 km) offshore the Trengganu Gas Terminal in the Gulf of Thailand, with a water depth of approximately 180 feet (55 m) and multiple gas bearing zones located at depths of 3,500 – 10,000 feet (1,000 – 3,000 m).

Map courtesy: Hess

This project utilizes Hess’ capability to safely and successfully implement complex, offshore development projects, including offshore drilling and project execution. It also demonstrates Hess' commitment to safety performance, logging more than 20 million man hours without a recordable incident.

Hess is the operator of the development with a 50-percent working interest. Petronas Carigali, also Hess’ partner in the adjacent Block A-18 located in the Malaysia–Thailand Joint Development Area (JDA), owns the remaining 50-percent working interest. The North Malay Basin Full Field Development project benefits from a strong and long-term Petronas-Hess relationship and leverages experience gained from other projects within the JDA.

The North Malay Basin Production Sharing Contract was signed in June 2012, and production began in October 2013 from the Kamelia Field. After project completion, the production capacity will quadruple to gross 400 MMSCFD.

Key Project Milestones

Offshore installation and drilling work for the first phase of the Full Field Development program has commenced with installation of four wellhead platform topsides and jackets, intra-field and export pipelines and associated SSIVs (subsea isolation valve skids), the Floating Storage and Offloading unit (FSO) mooring systems and drilling of 14 shallow production wells were all completed in 2016. The completion and installation of the FSO and the Central Processing Platform (CPP) topsides is in progress. First gas is expected in the third quarter 2017.

Maersk Oil Completes Culzean Jacket Installation

The Maersk Oil operated high pressure, high temperature (HPHT) Culzean development in the UK North Sea has reached a key milestone with the safe installation of all three of the project’s jackets, on time and on budget.

The Culzean field lies approximately 145 miles east of Aberdeen and is estimated to produce between 60,000-90,000 barrels of oil equivalent per day (boepd) at plateau production and produce for at least 13 years.

2 1MAERSKCULZEANJACKET1Maersk Oil CEO Gretchen Watkins at the final installation of the third Culzean jacket in the UK North Sea. Photo credit: Maersk Oil

“Culzean was sanctioned less than two years ago and already we’ve progressed the project over the halfway mark. We’re continuing to hit our milestones on time and this progress means we’re on track to deliver first gas in 2019. Nonetheless with a project of this size we can’t be complacent so we’re committed to ensuring remaining workscopes are executed safely and successfully,” said Gretchen Watkins, CEO, Maersk Oil.

The installation of Central Processing Facilities (CPF) and the Utilities and Living Quarters (ULQ) jackets was completed on 20 July, while the Wellhead Platform (WHP) jacket was installed last year. All three jackets were built by Heerema and installed using the Heerema Marine operated crane vessel; the Thialf.

2 1Maerskoil2The Culzean Field. Photo credit: Maersk Oil

“Completing the installation safely and on time is a great achievement when you consider the sheer scale of the structures involved; the combined weight of the jackets is over 22,000 tonnes, the equivalent of around 30 jumbo jets per jacket so we used the world’s largest crane vessel for the installation,” says Martin Urquhart, Culzean Project Director.

“From the design phase we’ve been focused on future proofing the Culzean installation – these jackets have a design life of over 40 years, much higher than a typical jacket so will be comfortably capable of serving the duration of production.”

Across the project, progress is steady and on track to meet the next key milestones, Martin Urquhart concludes:

“With the foundation of the Culzean installation firmly in place and waiting, focus is now fixed on finalising the construction of the three topsides and the Floating, Storage and Offload (FSO) vessel Ailsa. We have just celebrated the completion of the deck stacking of the topsides and the sail away of these structures is on schedule for next year. Their installation will take us to the beginning of the hook up and commissioning campaign, the final step before first gas is delivered in 2019.”

Facts and figures

  • Maersk Oil is operator (49.99%) and coventurers are BP (Britoil) (32%) and JX Nippon (18.01%)
  • Discovered in 2008
  • Reservoir is around 4,300 meters below sea level; pressure is 13,500 psi and the temperature is 175°C
  • Water depth is approximately 88 meters
  • Capable of meeting 5% of UK gas demand by 2020/21
  • Gas will be exported via the CATS pipeline, coming onshore at Teesside

SeaRobotics Awarded Contract for Autonomous Unmanned Surface Vehicles

3 1SeaRobotics3 2SeaRobotics LogoSeaRobotics Corporation (SeaRobotics) has delivered two complete autonomous 2.5 m unmanned surface vehicles (USVs) to a government hydrographic service. These USVs, built by SeaRobotics, are complete hydrographic systems, including multibeam echo sounders, support sensors, a cast winch, deployment carts, and road trailers.

This contract reinforces the commitment government and commercial entities are making to take unmanned surface vehicles out of the laboratory and research environment and integrate them into the world of professional surveyors. The efficiency and cost effectiveness of each application will be reviewed, and a profile of high-productivity, cost-reducing activities will be developed. Both traditional survey tasks and previously denied areas that remain unsurveyed will be evaluated.

This system leverages SeaRobotics’ extensive expertise and history delivering USVs for high-precision bathymetric surveys, water quality analysis, hydrographic surveys, and many other applications. The USV was delivered with a fully integrated R2Sonic multi-beam echo sounder, integrated motion reference unit and dual antenna RTK GPS, surface sound velocity probe, and a cast winch with deployable CTD—all tightly integrated with HYPACK software.

“The 2.5-m USV is one of the smallest systems capable of practical, general purpose MBES deployment,” stated Don Darling, president of SeaRobotics Corporation.

“The USV will be used extensively for waterways, estuaries, and coastal bathymetric surveys,” further explained Geoff Douglass, USV development manager at SeaRobotics.

SeaRobotics Corporation, headquartered in Stuart, Florida, specializes in small, smart vessels that are remotely or autonomously operated. Its clients include major military and commercial organizations, both U.S. and foreign. SeaRobotics' seasoned marine survey software interfaces with most data acquisition hardware, software, and sensing systems to produce multi-spectral, DGPS-stamped data for survey, research, or surveillance efforts. Applications for SeaRobotics vessels range from bathymetric and hydrographic surveys to coastal, harbor, and riverine surveillance. Many SeaRobotics vessels are small, modular, and man-portable, allowing rapid deployment in remote areas or deployment by larger vessels, and its command and control systems are user-friendly and compact, allowing backpack mobilization.

Saipem Awarded $900 Million Offshore Contract for the Zohr Field Development Project

4 1zohr field4 2saipemSaipem and Petrobel have finalized offshore contract variations worth 900 million USD for Engineering, Procurement, Construction and Installation (EPCI) activities in relation to the “Optimised Ramp Up” phase of the “supergiant” Zohr Field Development Project situated in the Mediterranean Sea off the Egyptian coast.

Petrobel is a joint venture between IEOC (An Eni subsidiary in Egypt) and EGPC (Egyptian General Petroleum Corporation) and is in charge of the development of Zohr on behalf of PetroShorouk, a joint venture between EGAS (Egyptian Natural Gas Holding Company) and IEOC.

The current variations to the scope of work include the installation of a 30-inch diameter gas export pipeline and an 8-inch diameter service pipeline, as well as EPCI work for the field development in deep water (up to 1700 meters) of 4 wells and the installation of umbilicals. Works will commence in July 2017 and are due to be completed by the end of 2018.

In order to meet the requirements set by the Client, Saipem will deploy several vessels from its highly specialized fleet, including the Castorone (the latest generation ultra-deep water pipelayer); the subsea field development ship Saipem FDS2; the Saipem 3000 (a subsea construction vessel) and, finally, the Castoro 6 and the trenching barge Castoro 10.

“We are pleased that our activities in the development of the Zohr field are in line with the challenging schedule set by the Client”, said Stefano Cao, Saipem CEO. “In the execution of this further phase of the development, we will deploy our most technologically advanced vessels and leverage our proven abilities and skills so that the achievement of the Client’s requirements is ensured. This acquisition confirms and consolidates our presence in the Eastern Mediterranean Sea and is yet another milestone for Saipem in the SURF (subsea, umbilicals, risers, flowlines) segment of Offshore E&C projects”.

Okeanus Science & Technology Acquires DT Marine Products

5 1OkeanuslogoOkeanus Science & Technology, LLC (Okeanus) announces that it has acquired the business assets of DT Marine Products, Inc. (DT Marine) of Houston, TX. This acquisition will allow Okeanus to offer for sale or rental DT’s full catalog of marine and oceanographic winches to customers around the world. The acquisition will also give Okeanus a new presence in Houston, expanding the company’s capabilities in the Gulf of Mexico region and complementing its existing offices in Houma, LA and Redmond, WA.

Founded in 1999, DT Marine has an established track record of building durable, high-quality winches, and customers have come to depend upon their reliability and effectiveness for projects around the world. DT has also constructed a number of custom-built systems for customers to meet specific project-related requirements.

“We are thrilled to be a part of the expanding Okeanus family,” said Darrell Troville, President and CEO of DT Marine. “The combination of our manufacturing capabilities with Okeanus’s Redmond-based engineered solutions team will allow us to offer a complete range of competitively priced custom and standard products.”

5 2Okeanus DropVideoWinch EDITOkeanus was founded in Louisiana as a rental company offering a complete catalog of oceanographic, scientific research, and survey equipment. In 2016, Okeanus acquired the business assets of Sound Ocean Systems, Inc. of Redmond, WA (SOSI). Since that acquisition, Okeanus has been the exclusive source for SOSI branded winches, launch and recovery systems, deck equipment and other products.

“The addition of DT Marine to the Okeanus family is exciting as it adds to our product portfolio a proven line of dependable, industry-accepted winches, and gives us a Houston base of operations to better support customers in the Gulf of Mexico region and around the world,” said Okeanus CEO, Ted Brockett.

Statoil and Partners Start Production at Byrding

Statoil and its partners have started production on the Byrding field as planned. Recoverable volumes in Byrding are estimated at a good 11 million barrels of oil equivalent.

Byrding is an oil and gas field north of the Troll field in the North Sea. The partners have invested around NOK one billion in Byrding, which is a reduction from the original estimate of around NOK 3.5 billion. “Good utilization of existing infrastructure has resulted in a cost-effective development that will add profitable resources to the Troll field,” says Gunnar Nakken, senior vice president for the operations west cluster in Statoil.

6ByrdingImage credit: Statoil

Statoil increased its share in Byrding from 45% to 70% when the company acquired Wintershall Norge’s share of 25% in October 2016.

BYRDING FACTS

Licensees in Byrding are Statoil Petroleum AS (70%, operator), Engie E&P Norge AS (15%) and Idemitsu Petroleum Norge AS (15%).

The Byrding development includes a two-branch multilateral well drilled from the existing Fram H-Nord subsea template, through which oil and gas are flowing to Troll C.

The multilateral well is around seven kilometers long and is split in two branches after a few kilometers.

After processing on Troll C, the oil is routed in existing pipelines to Mongstad and the gas via Troll A to Kollsnes.

Expro Secures 26 Well Abandonment Contract for UK North Sea Multi-Field Campaign

7Expro WT photoLeading international oilfield services company, Expro, has been awarded a substantial contract from global oil and gas company Maersk Oil for the provision of subsea and well test services on two offshore units in the North Sea.

The contract will extend the long-standing partnership between the two companies until 2020, for well abandonment services on two rigs, for a 26 well campaign across the Janice, James, Affleck and Leadon North developments in the Central North Sea.

Expro has held a contract with Maersk Oil since January 2012 and was the primary supplier of well test and subsea landing string systems for the company in the UK; this included planning work for both the Janice and Leadon North abandonment campaigns.

The recent contract win also includes the option for two further, one-year extensions.

Commenting on the award, Neil Sims, Vice President for Europe CIS region, said:

“Our long-standing association has given us deep knowledge and understanding of the aspirations for this project. We enjoy partnering with our clients and particularly Maersk, which is why we were thrilled to secure this contract award.

“Given our strong track record of operational performance and delivery to date, we feel confident in our ability to maintain these high standards as we transition in to our new agreement with them.”

Kevin Illingworth, Global Well Abandonment Manager, added:

“This is an excellent example of a successful long term partnership that delivers integrated well abandonment services. We are delighted to continue our work on this key North Sea abandonment campaign, ensuring we maintain the highest levels of safety while ensuring a cost-effective approach to this multi-field program.”

First Sign of Johan Sverdrup Emerging Offshore

Last week the jacket for the Johan Sverdrup riser platform was installed by Thialf crane vessel owned by Heerema Marine Contractors (HMC). Weighing a good 26,000 tonnes the jacket is the largest on the Norwegian continental shelf (NCS).

The jacket is stretching 140 meters from the seabed, where it covers an area measuring 94 times 64 meters. It is attached to the seabed by 24 poles weighing more than 9000 tonnes in total.

8JohanSverdrupPhoto credit: Statoil

“This is a special milestone for us, because it is the first visible sign of the Johan Sverdrup field. I am happy that the installation has been carried out safely and fully in line with the plan. We are now looking forward to the next steps of this industrial adventure and the long line of major operations awaiting us. We have already done a lot of work on and below the seabed, and in the time ahead we will gradually become more visible above the sea surface as well,” says Kjetel Digre, project director for Johan Sverdrup.

Head of transport and installation on Johan Sverdrup Thor Kråkenes has followed the installation of the jacket that was delivered by Kværner Verdal.

“The execution of the work has simply been a feat of engineering. It took a lot of good work and detailed planning to prepare the careful lowering of the jacket onto the seabed without any unforeseen incidents,” says Kråkenes.

The topside is scheduled for installation next year, and production from the field is to start at the end of 2019. Plateau production is estimated at 40% of NCS oil production. Expected field life is 50 years and the ambition is a world class recovery rate of 70%. Recoverable resources are estimated to be between 2 and 3 billion barrels of oil equivalent.

For further information about Johan Sverdrup, please click here.