Baltic Pipe Route Survey in the North Sea

6 2MMTMMT has been awarded a contract by the Danish energy transmission system operator Energinet as part of the Baltic Pipe project. The assignment includes a route survey for a new offshore pipeline in the North Sea and in Lillebælt, the inner Danish Seas.

6 1MMT IceBeamSurvey and ROV vessel IceBeam. Photo credit: MMT

The pipeline is planned to have landfall on the west coast of Jutland and the total length of the North Sea offshore part of the pipeline is approximately 105km, the Lillebælt area is approximately 5 km . The entire route is located within the Danish EEZ and the scope includes geophysical seabed survey, geotechnical investigations, ROV inspections of existing utilities and landfall investigations including Borehole drilling, reporting and data delivery and options for benthic investigations. MMT have assigned their survey and ROV vessels Franklin and IceBeam for the offshore survey and smaller nearshore vessels for the intertidal and costal sections. Drones are also used for onshore topography.

The Baltic Pipe is a potential new gas pipeline that would provide Denmark and Poland with a direct access to Norway’s gas fields. The Baltic Pipe project has been included on EU’s list of important infrastructure projects – so-called Projects of Common Interest (PCI) – which are deemed essential to the integration of the European energy networks. As a result, the project has been granted EU funds to perform a feasibility study. It is organized as collaboration between Energinet and the Polish gas transmission system operator GAZ-SYSTEM S.A.

Åsa Pettersson, MMTs Project Manager, comments on the project: “We are delighted to work for Energinet again and being part of another interesting infrastructure project in the North Sea.”

Subsea 7 Announces Contract Awards to Subsea Integration Alliance

7 1subsea 77 2onesubsea logo 3Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY) has announced the award of an integrated contract by Ophir Energy for the Fortuna LNG project offshore Equatorial Guinea, located in average water depths of 1,790 meters. The substantial (1) contract was awarded to Subsea Integration Alliance, which is a partnership between Subsea 7 and OneSubsea, a Schlumberger company.

The Upstream EPCIC (engineering, procurement, construction, installation and commissioning) contract will be delivered as part of an integrated solution combining subsea umbilicals, risers and flowlines (SURF) and subsea production systems (SPS).

Four deepwater wells will be tied-back to a subsea manifold and connected to a FLNG vessel by steel lazy-wave risers, a cost-effective riser solution. EPCIC operations will commence after the final investment decision and offshore operations are scheduled for 2020.

Along with the EPCIC contract, Ophir Energy has awarded the contract for future inspection, repair and maintenance (IRM) services to Subsea Integration Alliance.

Gilles Lafaye, VP Africa for Subsea 7, said: "This award demonstrates the cost effective and collaborative solutions that Subsea Integration Alliance can bring to our clients. We look forward to working with OneSubsea and Ophir Energy to successfully deliver and maintain this FLNG project offshore Equatorial Guinea."

(1) Subsea 7 defines a substantial contract as being between USD 150 million and USD 300 million.

Damen Equips Multi Cat for Shallow Water Dredging Duties

8Damen Multi Cat 1908 Murjan 40 2 lowresDamen Shipyards Group has delivered a Multi Cat 1908 to Murjan Al-Sharq Marine Services. Adding shallow-water dredging capacity to the abilities of this already multi-faceted platform, Damen has fitted the vessel out with a Damen DOP Submersible Dredge Pump 250.

Murjan Al-Sharq Marine Services is based in Saudi Arabia. The company provides marine construction and maintenance, dredging, diving and subsea services. The company’s new vessel, called Murjan 40, has been equipped with a Damen DOP 250. This submersible dredge pump has a 1,250 m3/h capacity and can be deployed for sand mining and maintenance dredging activities.

Flexible dredger

Speaking at the vessel handover at Damen Shipyards Hardinxveld, Chairman of Murjan Al-Sharq Marine Services, Abdullah Natheer said, “By adding a DOP pump to a Multi Cat, we instantly have a dredger – but a dredger which can also undertake the full range of tasks the Multi Cat can do as well.” Indeed, Damen’s Multi Cats are renowned for being able to take on an extremely broad scope of marine support duties for an equally wide range of maritime sectors.

The Murjan 40 has also been installed with a spud system that can be deployed in water depths of up to 10 meters. This will make dredging operations considerably more straightforward as this removes the need for a complex, 4-point mooring system. For operations in deeper waters, the spud system can be extended.

Shallow water solution

Dredging operations will be accomplished by lowering the DOP pump into the water with the Multi Cat’s crane or A-frame. The crane will also be used to handle the spuds.

With the vessel’s first contracts already finalized, Mr Natheer pointed to the benefits of combining the shallow draught of the Multi Cat with the dredging performance of the DOP pump. “Shallow water dredging usually requires a lot of very sophisticated, expensive equipment. A solution such as this represents a cost-effective alternative.”

First Damen vessel

“We can take on a wide range of specialist jobs with this vessel. We call this ‘surgical dredging’ because of the precision required,” continued Murjan Al-Sharq Marine Services Vice President Chris Clark. “What’s more, the versatility of the Multi Cat means that we can also use it for other jobs such as transportation, towage, dive support, pollution control, anchor-handling.”

The relationship between Damen and Murjan Al-Sharq Marine Services goes back to five years ago, when the two companies began talking about vessel options. “This continued when, three years ago, Mr. Kommer Damen paid us a visit – something that meant a lot to us,” said Mr. Clark. “And now, facilitated by Damen Customer Finance, we are pleased to have purchased our first Damen vessel.”

Speaking after the vessel handover, Damen Sales Manager Middle East Jeremy Elschot said: “We are very proud to deliver this versatile Multi Cat dedicated for multiple marine tasks in the Arabia Gulf and Red Sea. We would like to thank Murjan Marine for their trust in Damen and look forward to develop many more projects to come.”

Lloyd's Register is Chosen as Project Management Contractor for Major Offshore Drilling Project Offshore Columbia

9LloydssLogoLloyd's Register's well management expertise is being used by Ecopetrol Costa Afuera S.A.S. (ECAS) of Ecopetrol, for offshore exploration drilling operations in Colombia.

Ecopetrol Costa Afuera S.A.S. (ECAS), an affiliate company of Ecopetrol, the National Oil Company of Colombia, is contracted with Lloyd's Register (LR) to provide wells project management services to drill the Molusco-1 exploration well offshore Colombia. Drilling commenced in September.

The project is being delivered over a nine-month period and includes specialist technical and project management expertise covering drilling well management, well engineering, in-country logistics, safety and operations supervision.

LR's Vice-President of Wells, Matt Rothnie, says: "The Molusco-1 project marks a significant milestone for ECAS as it is the first offshore drilling project the company will deliver as Operator. The company elected to outsource well management support to provide a high level of assurance that is seeing the Molusco-1 project developed using the latest technical insight to help ECAS operate with confidence."

Rothnie highlights: "Our experience in managing well operations in remote locations and supporting new country start-ups, was a key decision factor for ECAS in deciding to choose LR for their project."

"LR is excited to be involved in this high-profile activity. Our Wells group identified Colombia as a target growth region a number of years ago and our hard work has now paid off. We are looking forward to progressing work with ECAS and are committed to further strengthening Ecopetrol's capability in the offshore sector."

Ecopetrol is the largest and primary petroleum company in Colombia, where it accounts for 60% of total production. It is one of the top 50 oil companies in the world and the fourth largest oil company in Latin America. The Company is also involved in exploration and production activities in Brazil, Peru and the United States Gulf Coast, and owns the main refineries in Colombia, most of the network of oil and multiple purpose pipelines in the country, petrochemical plants, and is entering into the biofuels business.

The Molusco (Spanish for Mollusk) prospect is inside Block RC-9, operated by Ecopetrol along with partner India's ONGC Videsh.

Petrofac Awarded Training Contract for Major North Sea Development

10PetrofacPetrofac has secured a training management services contract from Maersk Oil in relation to the North Sea High Pressure High Temperature development, Culzean.

The two-year agreement, with a further one year option to extend, was awarded following competitive tender. Under the contract, Petrofac will deliver training across a wide range of subjects, including HSE, survival, fire and marine, whilst also managing and coordinating all third-party training requirements.

Petrofac’s cloud-based Training and Competence Management System, SkillsVX, will also be deployed as part of the contract scope, providing a transparent overview of compliance and assurance, ensuring workforce capabilities are in compliance with operational and regulatory requirements.

As well as training of personnel in the UK, the award includes planning and delivery of training in Singapore, where the Ailsa floating, storage and offloading (FSO) vessel is currently under construction.

Karim Osseiran, Global Head, Training Services, Petrofac Engineering and Production Services, said: “Through the Culzean development, Maersk Oil is making a significant investment in the North Sea’s future so we look forward to drawing on the strength and depth of our experience to support this important development.

“Throughout the duration of the contract, our specialists will focus on ensuring the skills and knowledge of Maersk Oil’s teams are maintained and enhanced, in support of continued safe and efficient operations.”

Trelleborg Presents Advanced Fire Safety with Rubber-based Solutions at OTD 2017

11 1TrellborgTrelleborg will present its range of passive fire protection solutions at Offshore Technology Days (OTD) 2017 in Stavanger, Norway. Located in Hall B on stand 2708, the company will showcase a number of offshore innovations including Elastopipe™, Vikodeck™ and FireNut™.

Torbjorn Pettersen, Sales Manager for Trelleborg’s offshore operation based in Norway, states: “As the offshore oil and gas industry continues to push the limits, improving fire safety is becoming an ever greater critical element, resulting in a growing need for higher performance solutions which are guaranteed to perform in extreme environments.

"Our range of passive fire protection solutions include: Elastopipe™, a flexible piping system; Vikodeck™, a surface protection material and FireNut™, a fire protection for bolted connections or flanges. All our fire protection solutions are manufactured using our Firestop technology and protect people, structures and equipment in the most severe fire scenarios.”

11 2Trelleborg1Elastopipe™ is a patented flexible piping system developed for transporting a variety of fluids and is the first corrosion-free, explosion, impact and jet fire resistant flexible piping system. This next generation system uses synthetic rubber instead of traditional materials and incorporates the only piping material approved for offshore deluge systems that has survived sequential explosion, impact and jet fire testing. Elastopipe™ has been independently tested and certified by DNV, as well as approved by Lloyds, RMRS, ABS and the US Coast Guard.

Vikodeck™ is designed to offer surface protection against blast, jet and pool fire in harsh environments. It can be tailored to withstand various chemical and mechanical conditions. In addition, it provides excellent corrosion protection and anti-fatigue dampening support for the comfort and safety of employees.

FireNut™ is a light weight, easy to install alternative to the fire-insulated metal boxes used for the protection of bolted connections or flanges on offshore installations. A rubber-based fire protection system, it specifically protects just the nuts of a bolted connection or flange. In stark contrast to the traditional bulky metal boxes, this lightweight solution is customizable to accommodate almost any bolt size, is easy to install and extends the service life in the event of a fire, being resistant to both jet fire and pool fire.

OTD is a meeting place created by, and for the Norwegian Offshore Suppliers. Here you can meet all the players in the business in one place, from the big majors to the smaller niche companies, as well as enjoying the very special OTD spirit.

For additional information visit Trellborg Offshore.

Mohawk Energy Qualifies MetalPatch on 9-5/8”Casing

12mohawk newMohawk Energy, a premier developer of tubular expansion technologies, has announced the release of its 9-5/8” MetalPatch system. This system was fully qualified and field tested in the Gulf of Mexico in a deep-water application.

With this latest addition, MetalPatch tools can now cover a full range of 4-1/2” to 9-5/8” applications from corrosion isolation, well integrity, or sliding sleeves failures. Furthermore, Metal to Metal sealing offers superior high-pressure isolation from hydraulic fracturing operations.

Mohawk Energy developed the MetalPatch system to provide mechanical isolation while maintaining large inner diameters to withstand high burst and collapse pressures. The product can cover areas ranging from 30’ to 8,000’ in length.

“The 9-5/8” MetalPatch is the next step in our ongoing commitment to developing tools with greater contingency and larger diameters,” said Scott Benzie, co-founder of Mohawk Energy. “We’re thrilled to roll this product out to the market and look forward to its success.”

DNV GL Appoints Liv Hovem as New Oil & Gas CEO

13DNV LivHovemLiv Hovem will take over as CEO of DNV GL’s Oil & Gas business area, which provides integrated technical assurance and advisory services to operators, suppliers and regulators across the oil and gas value chain, from project initiation to decommissioning. She will be based at the DNV GL – Oil & Gas headquarters in Høvik, Norway and be a member of the DNV GL Group's Executive Committee. Liv Hovem succeeds Elisabeth Tørstad, who has been appointed CEO of DNV GL’s new Digital Solutions business area.

DNV GL Group President & CEO Remi Eriksen says; “I'm very pleased to announce that Liv Hovem has accepted the position as CEO of our Oil & Gas business area. She has extensive knowledge of the oil and gas industry and has held various leadership roles within DNV GL. I am confident that she will successfully lead our business through the current period of significant changes in the industry, working together with her colleagues in our Oil & Gas business area.”

Commenting on her appointment, Hovem says; “I look forward to leading the Oil & Gas business area in its next phase of development. The oil and gas industry has the opportunity to play an important role in a sustainable energy portfolio.”

DNV GL’s recently published Energy Transition Outlook shows that the world’s energy system is going through a transition. The oil and gas industry will continue to play an important role and will account for 44% of the total energy mix in 2050. Gas will become the largest single source of energy from 2034.

“Over the next thirty years it will change significantly in its composition as it decouples from carbon, population and economic growth. While our model forecasts that oil demand will flatten from 2020 onwards, the stage is set for gas to continue playing a key role alongside renewables in helping to meet future, lower carbon energy requirements,” says Hovem.

Hovem has been with DNV GL since 1988, most recently as Regional Manager for Continental Europe, the Middle East and India in DNV GL’s Oil & Gas business. She has more than 25 years of experience in international management, technical advisory and engineering services, research and development in the oil & gas and maritime industries. She has an MSc in Naval Architecture and Offshore Engineering from UC Berkeley (1990) and an MSc in Civil Engineering from the Norwegian University of Science and Technology (1987).

N-Sea Strengthens Renewable Capabilities with German Office

As part of its continuing global growth strategy, subsea IMR provider N-Sea has announced the opening of a new office in Stralsund, Germany.

The new base will support the country’s offshore renewable energy market, with N-Sea undertaking on-going maintenance and repair services to existing and planned windfarms.

The company has appointed Jörg Butgen as Business Development Manager, who will be responsible for the establishment and growth of N-Sea’s services and products in the region.

14Roddy James Chief Operating Officer N SeaRoddy James, N-Sea Chief Operating Officer

N-Sea Chief Operating Officer, Roddy James said: “In order to meet the increasing needs of the German offshore renewable market, and service our clients to the optimum degree, it was essential to establish a permanent presence in the area. The market is growing at an exponential rate as the German government investigates renewable energy options to supply its national grid.

“N-Sea’s field personnel and management teams have accrued a significant array of expertise and experience in delivering the relevant services to the European renewables sector, with an extensive portfolio of experience in both the German and Dutch energy sectors.

“Jörg brings over 30 years of invaluable experience, having held several high-level industry positions, including Head of Marine Operations and Diving Superintendent for Bard Offshore. His knowledge of the region and its renewable marketplace will prove indispensable, as we support our customers through our specialist solutions.”

N-Sea is known for its innovative work as an independent offshore subsea contractor, specialising in IMR services for the renewable, oil and gas, and telecom/utility industries, as well as for civil contracting communities. N-Sea provides near shore, offshore and survey services to major operators and service companies alike.

Phoenix Welcomes New Bayou Vista, Louisiana, US, General Manager

15Phoenix Troy Turner RotatedPhoenix International Holdings, Inc. (Phoenix) announces that Troy Turner has been appointed as Area Manager for our Bayou Vista, Louisiana location. In this position, Troy will be responsible for overseeing and directing the day-to-day activities of the office, and actively pursuing growth opportunities for all Phoenix services in the area.

Throughout an Oil and Gas career that spans over 28 years, Troy has garnered a vast amount of knowledge and experience in the commercial diving industry by working through the ranks as a tender, diver, supervisor, project manager and general manager. As a professional commercial diver for over half his career, Troy also possess an unwavering commitment to safe diving practices and procedures, and is an industry advocate for diver safety.

A graduate of the Commercial Diving School at the College of Oceaneering, Troy has completed extensive leadership and team performance training and participates in several charitable organizations benefiting those in need in the Oil and Gas Industry.

“Troy’s background is a strong fit for Phoenix as Area Manager of our Bayou Vista, Louisiana facilities,” stated Warren Sturges, General Manager-Gulf of Mexico. “His wealth of knowledge will make an immediate and substantial contribution as we continue to offer cutting edge support to our clients in the Oil and Gas Division,” Sturges added.

PIRA Energy Market Recap for the Week Ending October 2, 2017

16PIRALogoU.S. Commercial Stocks Declining

Overall commercial stocks declined by 5.1 million barrels for the latest week, led by a decline in crude inventory of 1.8 million barrels and other products falling by 3.6 million barrels. Refiners have been recovering from the aftermath of Hurricane Harvey somewhat faster than expected with runs up by one million B/D from the previous week to 16.2 MMB/D. Runs are expected to reach 16.3 MMB/D as turnaround season commences, and some refiners are seeing delays in crude arrivals due to rough waters brought about by hurricane activity. For the next week crude storage is expected to fall by just around 1.3 million barrels, as Cushing storage sees a further gain.

Uptrend in Global Economy and Markets During the Third Quarter

During the third quarter, several encouraging economic trends became clear. In the U.S., even though distortions from Hurricanes Harvey and Irma muddled the picture, the underlying growth momentum remains constructive. Europe is also on an uptrend, based on positive business survey results. World financial markets had a solid quarter. The performance by the Korean equity index was particularly encouraging, a conclusion echoed by the September Chinese business confidence reading. Meanwhile, the U.S., the euro area, and Japan all reported slower-than-expected inflation this week. The mystery of low inflation in developed markets is becoming a major issue for monetary policy.

LPG Exports Top 1 Million Barrels per Day for Second Consecutive Week

Propane and butane prices continue to rise with the propane price increasing to 78% of the WTI crude price. LPG prices are being supported by a combination of high exports and tightening supply caused by flat production and inventory draws. LPG exports totaled more than 1 million barrels per day for the second consecutive week, and a weekly propane stock draw of 1.4 million barrels brought propane inventories down to 7% below the five-year average as the LPG heating season approaches. U.S. NGL production was down 1% week on week but remained above 3.9 million barrels per day. Ethane prices were basically flat last week, and the ethane Btu premium to Henry Hub natural gas remained strong to support ethane extraction. U.S. ethane and propane demand will be increasing as DowDuPont’s new build 1.5 million tonne per annum steam cracker.

U.S. Manufacturing Margins Improved During September

The EPA revealed that it is considering reducing the biofuel mandates proposed earlier this year and possibly allowing RINs attached to ethanol exports to count towards compliance. RINs and biomass-based diesel prices tumbled. Ethanol output in the South-Central region of Brazil jumped. European ethanol values continued to decline.

Weather Buoys Pre-Winter Inventory Stocking

Weather related looseness in U.S. supply/demand balances has lifted our end October storage estimate to ~3.8 TCF. This elevation of inventories coupled with domestic production growth, suggests that the industry is better positioned to offset winter-time demand. Consequently, we have further trimmed our 4Q17 price forecast by an additional ~$0.08/MMBtu, with the largest markdowns of 10¢ reserved for October and November. Our price guidance for 2018, however, remains unchanged at $3.37/MMBtu.

Hurricane Harvey Causes Wide Swings in Aframax and Product Tanker Markets

VLCC and Suezmax rates continued to weaken in August and September, but Hurricane Harvey caused sharp increases in Aframax and product tanker markets in the Atlantic Basin.

Gas Pricing Buoyed by Regulators – Near and Far

With European gas’ lockstep movement alongside coal, recent decisions by Chinese and Indian regulators to helping stem the rise in coal may be a little late after coal stocks remain incredibly low in both countries. Also, French nuclear news continues to send gas pricing to ever new heights, thanks to an immediate shutdown of the 4 unit 3.6-GW Triscatin power plant ordered by ASN. Nevertheless, strong September deliveries, thanks to Russian maintenance on the Nordstream pipeline, is ensuring that storage facilities remain busy due to in-the-money cycling opportunities. Weather will be an important factor for October if these injection nominations actually become fulfilled. PIRA models don’t indicate major injections will fully materialize though.

Low Stockpiles Pose Near-Term Bullish Risks

Seaborne coal prices largely pushed higher over the past month, despite a weaker turn in the second half of September. Heighted levels of coal demand in 3Q17 have drawn on coal stockpiles, notably in India and China. These reductions pose a significant upside risk to prompt pricing, particularly if there were to be a disruption to supply and/or unanticipated strength in coal demand. However, prices are expected to fade considerably over 2018 on weakening demand fundamentals and rising supply.

Japan Demand Better, Big Crude Draw

Aggregate demand improved on the week, though finished product stocks still posted a modest build. Crude stocks posted a sharp draw of 7.8 million barrels, due to a very low implied crude import rate. Runs eased as maintenance again begins to gear up. Gasoline demand rose 74 MB/D, but still characterized as lackluster. Gasoil demand eased 37 MB/D, and the robustness has begun to ebb. Kerosene demand was surprisingly strong at 137 MB/D, but the supply side gained sufficiently to accelerate the stock build rate. Refining margins eased slightly on the week, but remain good and supportive of a high level of runs, though fall turnarounds are gearing up.

ASN Turns the Screws on EDF

With nuclear revised sharply lower in October, French prices have significant upside, coupling more often with Italy for Baseload. November prices have also upside since this is the month with the largest capacity affected by the Creusot review set to restart, but the dike issues found in the Tricastin site and the concerns around Belleville could spell trouble for the French nuclear availability, if the ASN remains strict. The ASN approach is, however, clearly unrealistic during the winter months, especially as the French system’s ability to cope in periods of system stress (colder weather) would be seriously jeopardized under lower nuclear availability. Will ASN take the risk of a system failure or even demand disconnections or other exceptional measures, or rather allow the plant checks or work to be postponed once again?

Milder Weather Prunes Premiums

A pendulum shift in inventory restocking has sent NYMEX futures on a wild ride this month, with the Nov’17 contract falling from a mid-month high of $3.21 back down to ~$3/MMBtu as traders reassess pre-winter supplies. Looking ahead, the latest weather guidance indicates a milder weather regime will unfold during the first half of October, raising the risk of relatively stout injections ahead.

Venezuelan Economic and Sanctions Risks Coming to a Head

PIRA understands that Venezuela has yet to issue a loadings program for October, a particularly worrying development amid U.S. financial sanctions and deteriorating economic conditions. In addition, reports indicate Venezuela is now demanding refiners pay for shipments in euros, causing some customers in the U.S. to balk. The payment issue appears linked to U.S. sanctions announced by the Trump administration in August, which ban trading in certain Venezuelan securities. As a result, alternative heavy crudes are seeing a boost, given the uncertainties and as some buyers seek alternatives. PIRA expects the loadings program to be issued shortly, and its volumes should be relatively normal, but the delay and payment uncertainty are causing a dislocation. The September loadings program was about 1.7 MMB/D.

Financial Stresses Very Low, Credit Remains Constructive

Much like the previous week, credit conditions again remained highly constructive, with the S&P 500 setting new records, volatility (VIX) declining further, and some high yield credit prices still rising. Emerging market debt, however, is still sluggish and moved down fractionally, while other credit instruments gained, particularly energy and high yield energy. The commodity space was weaker, but energy was again stronger. The dollar was strongly higher. The St Louis financial stress indicator again moved lower for the fourth straight week.

China’s Key Product Exports to Decline in 2H17 Due to Lower Quotas

PIRA has long believed that China’s product export quotas would be lower this year. China last week allocated some 1.6 million MT of oil product export quotas for the fourth quarter under the traditional processing trade route to two state-owned oil companies. This is likely to be the last batch of quotas granted this year, and would bring the total export quotas granted for both normal and processing trades this year to 38 million MT, down 16% from last year. Overall, China’s key product exports are expected to decline in 2H17 (vs 1H17) by as much as 28% under the assumption of 85% utilization rate. As a result, this is constructive for regional refining margins and should add to the expected strength in gasoil/diesel.

Production Plunged the Week Ending September 22

U.S. ethanol production plummeted the week ending September 22, falling by 37 MB/D to 996 MB/D as more plants went offline for scheduled maintenance. This was the largest weekly drop since June 2016. Inventories declined by 398 thousand barrels to 20.7 million barrels, with Midwest stocks sinking to a 2017 low. Ethanol-blended gasoline output rebounded to 9,054 MB/D from a six-month low of 8,887 MB/D during the preceding week as overall gasoline production increased.

Too Much Corn

While 2.3 billion bushels of corn in the Quarterly Stocks report released Friday was 60 million less than expectations, and the September WASDE, the number was a multi-decade high for September 1st and 32% higher than last year. Usage during the 4th quarter of the Marketing Year was down 40 million bushels, despite much larger stocks, obviously not a “good” sign. A deeper dive into the state-by-state statistics paints a sobering picture, reflective of either a strong belief that prices will go much higher or an emotional attachment to corn. PIRA certainly understands that it “pays” to store corn given the current market structure, but at some point capitulation is coming given harvest is upon us, to say nothing of hungry bankers looking to recoup a major portion of their lending.

Sidelined Speculative Money Awaiting Clearer Signs of Tightening

Shrugging off yesterday’s lighter-than-anticipated weekly storage report, the market walked back the previous session’s gains to close the Nov’17 futures contract at $3.017/MMBtu, ~4 cents lower on the day. With short-term weather forecasts now pointing to a reasonably strong build in inventories ahead, the newly minted NYMEX contract will remain anchored near the $3 mark. Taking stock of the season as whole, daily cash prices have vacillated in an exceptionally narrow trading range of ~50¢, between $2.75 and $3.27/MMBtu. Importantly, despite prices currently entrenched in the middle of this range, revisiting the low end in the final weeks of the injection season cannot be ruled out — especially as a timely start to October heating loads appears to be delayed.

LNG Trade Talk in Asia Reveals Ongoing Doubts about Next Generation U.S. Supply

Twin oil and gas conferences in Singapore and Sakhalin reveal deep seated industry concerns about the ability of the next generation of global liquefaction to cope with a lower oil priced environment, even as ample untapped reserves are uncovered throughout the Russian east as well as in East Africa. Added to these concerns are stronger demands from the end-use buyer side for ultimate contract, price and destination flexibility, virtually ensuring that the next projects to be sanctioned will be underwritten mainly by the largest portfolio players that have the balance sheets to support the price and demand risk. As the generally accepted period for market clearance keeps getting pushed out, now to around 2023-24 from the latest 2022 period, end-use buyers continue to bide their time.

Saudi Arabia: Foreign Exchange Reserves Continue Drawing in August

Saudi’s foreign exchange (fx) reserves for end-August were just released. They declined -$6.9 billion, an acceleration from the -$6.2 billion monthly draw posted in July. The improvement in the financial draw rate seen in May and June has apparently proven temporary. Reserves have now been drawn $258 billion (-34.6%) since their peak in August ’14. The improvement seen in May and June appears to have been related to the Kingdom’s first dollar dominated $9 billion Islamic bond offering back in April.

Summer Coal Stockpile Draw Above Average

The EIA reported end-July electric power sector coal stockpiles of 148.1 MMst on September 26, a decline of 12.5 MMst M/M for what is typically the largest monthly stock draw of the year. The July 2017 stock draw was ~14% greater than the five-year average for July of 11 MMst and came close to the 13.7 MMst stock draw of July 2016. U.S. coal prices, particularly in the PRB, rose in response to the July 2017 stock draw, but price action was more muted than last year, when the industry was rebounding from depressed Spring natural gas prices.

DOE’s New Category for Subsidy, “Fuel-Secure Generation”, Would Undercut Natural Gas Power Gen

The U.S. Department of Energy has taken steps to bolster the economics of at risk coal and nuclear capacity, directing FERC to finalize a rule ensuring that “fuel-secure generation” in competitive markets is made whole. While the overall approach and aggressive timeline are sure to be strongly contested – the potential impact on coal burn (positive) and gas burn (negative) in the short term will depend on whether the required tariffs to support “eligible units” are channeled through energy prices, or are more like “capacity prices” (with more limited impacts on dispatch and fuel burn). In the longer term, under either approach, potential coal and nuclear retirements could be re-evaluated, lowering the incentives for new generation – which is bearish for natural gas demand.

Australian Gas Producers Pressured to do More for Domestic Users

The Australian Competition and Consumer Commission has criticized the country's east coast-based LNG exporters' efforts to address the region's gas supply problems. ACCC's criticism could be seen as a harbinger to the tone of its soon-to-be-releasd report to the Treasurer which will feed into the government's deliberations on whether or not to implement LNG export restrictions next year. In a speech at the nation's capital, Canberra, on Wednesday, ACCC's chairman, Rod Sims, reminded those in attendance of the advice he had given to Queensland's LNG producers six months ago: support the domestic market as much as possible at this crucial time.

Global Equities Setting More Record Highs

Global equity markets continue to set broad based record highs in a host of countries and across a host of market indices. In the U.S., the S&P 500 gained 0.7% and pushed further above the 2,500 level. The best performers were banking, housing and retail, while energy also outperformed and gained 1.9%. The utility tracking index was again the worst performer, -0.3%. Internationally, some of the key tracking indices lost ground, particularly, China, Latin America, emerging markets, and emerging Asia. Europe and Japan moved higher on the week, and came in just under U.S. performance.

Cape Freight Rates Climb but the Market Faces Headwinds

Capesize dry bulk freight rates have surged over the past month, with rates rising to over $22,000/day. Chinese steel production has been strong recently, with output rising ahead of mandatory cuts for pollution control. With iron ore prices fading along with Chinese steel prices, the market looks ready for a downward correction. Looking further ahead, we are seeing China’s steel sector moving towards becoming a smaller, higher-quality, and less polluting industry. This change, along with the potential for tightening credit controls will weigh on freight rates over the short-term forecast horizon.

U.S. July 2017 DOE Monthly Revisions: Demand and Stocks

EIA just released their monthly July 2017 (PSM) U.S. oil supply/demand data. July 2017 demand came in at 20.0 MMB/D, 848 MB/D lower than the weeklies had indicated. Total product demand growth slowed to 1.2% versus year-ago or 244 MB/D vs. the 3.5% or nearly 700 MB/D growth in June. Distillate demand outperformed the barrel average, correlating well with continued acceleration in the trucking activity indicators. Gasoline demand declined -0.1% vs. year-ago and lost marginal volume, which corroborates with slower VMT growth reported through July. Compared to July 2016 PSA data, total commercial stocks are now lower than year-ago by 52.4 million barrels, an improvement from what was seen end-June for both crude and product.

U.S. Production in July Grows on Gulf of Mexico; Growth Stays Modest in Texas

U.S. crude and condensate actuals for July 2017 came in at 9,256 MB/D, up 144 MB/D month-on-month, up 560 MB/D year-on-year. This is 9 MB/D above PIRA’s forecast. Despite the small miss for total U.S. production relative to PIRA’s Reference Case, significant variances were seen in Texas and the Gulf of Mexico.

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.

Total and Chevron Partners in Gulf of Mexico Deepwater Exploration

1 1Total logo1 2ChevronlogoTotal announces that its subsidiary, TOTAL E&P USA, INC. (“Total”), has entered into an agreement to capture 7 prospects operated by CHEVRON U.S.A. INC. (“Chevron”) in the deepwater Gulf of Mexico. The agreement covers 16 blocks.

The associated prospects are located in two promising plays and areas of the GoM: Wilcox in Central GoM next to the Anchor discovery, and Norphlet in Eastern GoM nearby to the Appomattox discovery. Total’s participation in these wells will be between 25% and 40%. The first of these wells was spudded late July on the Ballymore prospect in Mississippi Canyon.

“This agreement, together with the recently announced participation in the Jack field as part of the Maersk Oil acquisition, increases Total’s footprint in the USA GoM where it can apply its exploration expertise and deepwater technologies. Total values Chevron’s performance as a GoM deepwater company and this agreement expands a successful co-ownership already in place on the Tahiti field”, stated Arnaud Breuillac, President Exploration & Production. “As a continued effort to highgrade its portfolio, Total won six offshore exploration licenses in the August Lease Sale.”

Total Exploration & Production in the United States

Total has been active in Exploration & Production in the United States since 1957.

In the Gulf of Mexico, Total focuses on the deepwater with a participation in two producing fields, Tahiti with 17%, operated by Chevron, and Chinook with 33.33%, operated by Petrobras, as well as in the world-class discovery of North Platte with 40%, operated by Cobalt International. As part of the acquisition of Maersk Oil company, Total will also become a 25% partner in the Chevron operated Jack field. Total also has a participation in over 160 exploration leases.

Onshore, Total owns and operates 100% of the former Chesapeake properties in the Barnett and is a 25% participant in the Utica field.

Aker Solutions Wins Troll FEED Contract with EPCI Option from Statoil

Aker Solutions won a contract from Statoil for front end engineering and design of a module that will increase output at Troll, one of Norway's largest natural gas fields.

2Aker TrollPhoto credit: Statoil

The order includes an option for engineering, procurement, construction and installation of the module, which will receive and process gas from the Troll West field before it is exported to the onshore Kollsnes facility near Bergen in Norway. The module will be installed on the Troll A platform in the North Sea.

"We're excited to start working on the next phase of this important development and look forward to collaborating with Statoil to optimize value from this field," said Aker Solutions Chief Executive Officer Luis Araujo.

The Troll field, located about 65 kilometers west of Kollsnes, contains around 40 percent of Norway's offshore gas reserves. Production from the field is expected to continue beyond 2050.

The contract will be booked as part of Aker Solutions' third-quarter orders.

InterMoor Moors First Non-Pemex Rig Off Mexico’s Coast

3IntermoorInterMoor, a leading provider of mooring services, foundation solutions, and offshore installations in subsea services group Acteon, has moored the first privately-operated rig in Mexico’s offshore waters since 1938.

InterMoor was contracted by Talos Energy to moor semisubmersible ENSCO 8503 in the Bay of Campeche, offshore Mexico. The asset is the first privately-operated rig to be moored in the area since the energy reform of 2013 opened the Mexican waters to the private sector.

InterMoor’s scope provided Talos Energy with engineering services, mooring equipment, shorebase loadout services, and experienced personnel to deliver the project.

Tom Fulton, global president, said: “InterMoor is proud to be at the forefront of the new exploration cycle in offshore Mexico. These are important times for the region and this project shows that we are ready to help operators new to the area with their local needs.”

The installation and hook-up were completed on time and with zero incidents.

Sparrows Group Secures Three-Year Contract with Total in Angola

4Sparrows workshop winch refurbSparrows Group has signed a three-year contract with Total to supply crane maintenance and engineering services at four of the operator’s assets in Angola.

The agreement will see the company implement planned maintenance routines as well as delivering all major preventative maintenance, and associated engineering for Total across its Floating Production Storage Offloading (FPSO) units in Block 17. A total of 14 cranes will be serviced as part of the work scope.

Sparrows has provided the services since 2010 where prior to that they delivered ad-hoc maintenance and design scopes related to the field for a number of years. The new deal will protect existing jobs in both Aberdeen and Angola as the company’s bases in both regions will work in collaboration on the project.

The maintenance will cover a total of four fields situated within the block including the Girassol, Dalia, Pazflor and CLOV FPSOs.

With facilities in Talatona and Malonga, Angola is the hub of Sparrows operations in Africa.

Stewart Mitchell, chief executive officer at Sparrows, said: “Having established a strong track record with Total focussed on safety and reliability, the contract is testament to the high-quality services provided by our teams in Aberdeen and Angola and we look forward to continuing this partnership for years to come.

“Angola continues to be an area of growth for Sparrows. We are experiencing a strong demand in Africa for companies that can demonstrate high quality knowledge and skills with a focus on reliability.”

Block 17 currently produces around 600,000 barrels of oil per day, a third of Angola’s overall output.

M2 Subsea Unveils Purpose-Built Test Tank in Aberdeenshire

5Test tank 1M2 Subsea, the global independent provider of ROV services, has unveiled its recently commissioned purpose-built test tank at the company’s base in Westhill, Aberdeenshire.

The indoor fresh water tank, which can hold 73,600 liters of water, has been created for the primary purpose of testing ROVs and ancillary equipment. The facility will allow the company to be in total control from the planning to completion of asset testing, ensuring the quality and rapid turnaround of results before they are deployed for both domestic and international projects.

The tank is commercially available for subsea manufacturers and service providers to rent, along with or without M2 Subsea’s ROV fleet. The facility has already been successfully used by Acteon Group for product testing.

Located within M2 Subsea’s existing workshop, the test tank measures 8 x 4 x 2.3 meters and can accommodate both work-class and observation ROVs. It also features a gantry crane which has a S.W.L 15t and an independent 415v three phase 200a power supply to accommodate testing equipment. 2t and 16t forklifts are also onsite at all times for any unloading and loading requirements.

M² Subsea chief executive officer Mike Arnold said: “The commissioning of the test tank offering at our Aberdeen base is a great benefit to M² Subsea. The facility provides us and the local subsea market with a high-quality area for the wet testing of new equipment and will allow for us to test assets more quickly and effectively.

“The tank provides M² Subsea complete control over the testing process and enables us to deliver clients exactly to their requirements, ensuring the quality they receive is to our high standards. We are also able to access the data gathered and provide reports in an efficient manner as there are no third-party data companies involved. This will prove invaluable to ensuring we are continually improving our services across the oil and gas industry as well as for the renewable and decommissioning sectors.”

Mermaid Secures Key Contract Extension for Subsea Services in the Middle East

6 2Mermaid MaritimeThe contract extension, worth approximately US$ 96 million, has been secured with a reputable oil major client by a joint-venture company formed between Mermaid and local offshore services operator in a GCC country in the Middle East. The contract extension duration is for a firm one year plus a one-year option.

Mermaid Maritime Public Company Limited (“Mermaid”) announces that its joint-venture company formed between Mermaid and a local offshore services operator has secured a contract extension for offshore inspection, repair and maintenance services with a national upstream oil and gas company following its initial five-year contract period, whereby Mermaid will continue to provide a suite of diving services using its modern DP2 saturation dive support vessel “Mermaid Asiana” along with remotely operated vehicles, specialized diving equipment and divers. Mermaid’s joint venture partner, a reputable offshore and marine services company, will provide other offshore vessel related services and logistics.

6 1MermaidAsianaMermaid Asiana. Photo credit: Mermaid Maritime

The total contract value for the initial one-year extension period is estimated to be approximately US$ 96 million. Mermaid’s potential revenue represents a major part of said contract value over this period. Performance of the extended contract period is scheduled to commence in the fourth quarter of 2017.

“For Mermaid, this contract extension represents a stream of stable revenue over the next financial year, and is a clear and positive step towards the steady growth of our company. We are very proud of all our team involved in delivering the highest quality of services to our customers”, said Mr. Chalermchai Mahagitsiri, Chief Executive Officer of Mermaid.

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 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.

RINA Will Support Eni’s Coral South, the First FLNG Project in Mozambique

7RINARINA Services has been chosen by Eni East Africa to act as Certification Authority for the design and fabrication of subsea structures and equipment and to provide technological validation services for the company’s Floating Liquefied Natural Gas (FLNG) unit intended for the Coral South Development Project - the first project of its kind in Africa.

The Unit will be one of the only three existing globally and will be installed in the South Part of Area 4 offshore Mozambique in the deep waters of Rovuma basin. The Coral South LNG project, for its size, quality of resources and geographical position is expected to boost Mozambique’s economy.

Discovered by Eni in 2012, the Coral natural gas field contains approximately 450 billion cubic meters (16 tcf) of gas. The first phase of the Coral field exploitation includes the development of five trillion cubic feet (5 tcf) of gas and the commencement of the production is expected by 2021.

The FLNG unit will have a capacity of around 3.4 MTPA (million tons per year) and RINA Services, besides being the Certification Authority for the design and fabrication of the riser and flowlines, the umbilicals and the subsea production system, has been contracted by Eni to provide technological validation of those technologies that Eni deems unproven and could represent major criticalities for their implementation.

The Coral South FLNG project is the first of its kind for the Italian oil major and is “breaking technical new ground”. It is fundamental that the technology is validated by a third party to ensure that it meets the specified performance criteria while being safe.

The development of Mozambique’s 85 trillion cubic feet of gas reserves in the Rovuma basin is of great importance, not only to the country, but the world as a whole as the demand for clean power grows. Gas is now being considered the ‘go to’ fuel to allow countries to meet their “green” regulatory commitments.

The Coral South FLNG Unit is a further validation of RINA’s expertise within the oil & gas market in Africa, where the company is already working on several other projects. “Through RINA’s Gas Centre of Excellence, that gathers the best of our technical competence, we help clients facing challenging projects in the gas sector. The 11 offices that RINA now has across Africa are part of it and are the evidence that we see the continent as an important future energy market. Naturally, Mozambique is particularly important and we look forward to strengthening our relationship with Eni playing a major role in Mozambique’s oil & gas industry” said Andrea Bombardi, CCO Energy & Infrastructure at RINA Services.

ELA Container Offshore to Equip M/V ‘Meri’ with Mobile Accommodation

ELA Container Offshore GmbH recently supplied two Offshore Living Quarters and two Offshore Wastewater Tanks to Meriaura Group based in Turku, Finland. The units were installed on board their open deck cargo carrier ‘Meri’.

Together with their vessel ‘Aura’, ‘Meri’ will be performing marine research for the Finnish Environment Institute SYKE and the Swedish Meteorological and Hydrological Institute SMHI. “The contract consists of several expeditions, which requires efficient mobilization and demobilization of the research equipment on board.

8 1ELA1MV MeriM/V ‘Meri’ will be performing marine research for the Finnish Environment Institute SYKE and the Swedish Meteorological and Hydrological Institute SMHI

The two vessels included in the contract provide flexibility and reliability to the client, as the time frame for the measurement periods are tight”, explains Lassi Eloranta, Marine Superintendent at Meriaura Group. Both vessels are ice classed, enabling research also during the winter time. “We require additional accommodation capacity on board the vessel ‘Meri’ during the research expeditions, and therefore we installed ELA’s mobile accommodation units on board our vessel”, Eloranta continues.

“The Offshore Living Quarters and Wastewater Tanks that we supplied are ‘made in Germany’ and possess the DNV 2.7-1 certification for offshore use. Since we always keep a stock of offshore units at our premises we were able to supply the containers and tanks at short notice”, Niels Albers, Business Development Northern Europe at ELA Container Offshore GmbH, summarizes.

8 2ELA2Containers ondeck MeriTwo ELA Offshore Living Quarters were installed on deck M/V ‘Meri to provide extra accommodation for the project

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

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

The main features of ELA offshore accommodations include:

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

Building a National Resource Offshore Brazil

CGG has been present in Brazil for over 55 years, since the company began working with Petrobras in 1961. Its long-established Rio de Janeiro Subsurface Imaging Center, with its strong reservoir characterization group, has the largest computer capacity and greatest expertise in the region. In 2010, CGG also opened a technology center in Rio with a world-class R&D team, working with Petrobras and other local agencies to focus on solving local geoscience challenges. The company’s commitment to Brazil is demonstrated by its investment in over 170,000 km2 of 3D multi-client seismic data offshore, which it continues to upgrade and increase.

9CGG Santos Basin 828X331Fast-track data from CGG’s latest Santos VII BroadSeis survey (image courtesy of CGG Multi-Client & New Ventures)

Currently, CGG is spending considerable time and effort in the pre-salt area, reprocessing its conventional 3D surveys with the latest technology, including 3D deghosted broadband processing and TTI (tilted transverse isotropy) FWI (full-waveform inversion) velocity model building, to upgrade them with its latest processing and imaging advances. It is also acquiring new BroadSeis™ surveys to fill the gaps and create a contiguous volume of over 80,000 km2 of state-of-the-art seismic data, bridging the Santos and Campos Basins to cover the entire pre-salt area.

The first stage of this reprocessing, the Galaxy project covering approximately 34,000 km², delivered grids of 3D migrated images, extracted from CGG’s Cluster and Cluster Extension surveys, for a quick evaluation of the Santos Basin in advance of the licensing rounds. This was a precursor to the ongoing 23,750-km2 Constellation project, which will apply improvements in subsurface imaging achieved over the past decade to these legacy data sets and bring new insight into the Lula, Peroba and Pau Brasil fields.

Further up the coast CGG is reprocessing the Santos VI-A, VI-B, and Campos II surveys as the Pulsar project. Although these surveys are relatively recent, advances in FWI velocity modeling and the benefits of a consistent, contiguous data volume led to them being included in the reprocessing effort. This complies with CGG’s policy of applying the most advanced technology to its multi-client data.

CGG also recently acquired the 15,700-km2 Santos VII BroadSeis survey, which will be seamlessly merged with Constellation and Pulsar to complete the picture from the Pau Brasil to Saturno fields and beyond, including Tres Marias. The fast-track volume over Saturno has already been delivered.

As a geoscience company, CGG also provides multi-client gravity and magnetic data for Brazil in addition to seismic. Its NPA Satellite Mapping Seep Explorer database provides details of all the naturally occurring seeps for the entire coast of Brazil. Its Robertson geoscience experts have conducted several in-depth geological studies, including a review of the tectonostratigraphic development and source rock distribution in the Santos and Campos Basins. It is also currently undertaking a JumpStart™ program, integrating all this data and the available wells, to complement the 80,000-km2 seismic volume and deliver from one place all the information needed for a comprehensive understanding of the petroleum systems in the pre-salt area.

CGG also provides coverage of other significant basins offshore Brazil. Its recently completed Megabar pre-stack depth-migrated data set in the Barreirinhas Basin is part of its extensive Equatorial Margins coverage, where it is also working on another JumpStart program. Its newest 3D survey is the 10,300-km² Espirito Santo IV, which commenced acquisition in July.

It is a very exciting time for CGG offshore Brazil, as decades of hard work come to fruition. For over half a century it has been building up its expertise in the region, using its latest worldwide technology and customizing it for Brazil. This enables it to minimize customer risk by providing the finest subsurface images, enhanced with geological data, studies and services, to maximize understanding of the petroleum systems and prospectivity.

by CGG