Simulation Makes Perfect when Manoeuvring Shell’s Prelude FLNG Facility

At 488m in length, and longer than four football pitches, Shell’s Prelude FLNG facility was always going to represent a formidable challenge even for the skilled tug masters who were charged with towing the facility from the shipyard in South Korea where it was constructed, and delivering it to its final destination, a remote gas field 475 kilometers off the coast of Western Australia.

9 1HR Wallingford simulation left and photograph by Shell right of the Prelude tow with POSH tugs HR Wallingford simulation (left) and photograph by Shell (right) of the Prelude tow with POSH tugs

But practice makes perfect, and HR Wallingford, using its Australia Ship Simulation Centre in Fremantle, W.A., created an accurate and detailed navigation simulation of Prelude for Shell, which was used to prepare the Tow Masters, Tug Masters and Pilots, allowing them to familiarise themselves with a realistic simulation of Prelude manoeuvres at sea. And on 25 July 2017, Prelude arrived safely at its destination in the East Browse Basin.

HR Wallingford’s involvement in the project extends to the real-time navigation simulation for the facility’s departure from the Geoje Shipyard in Korea, along the Busan Channel; positioning and mooring Prelude once on site; conducting berthing and departure simulations of the LNG, LPG and condensate offtake tankers that will moor alongside the FLNG; and providing ongoing pilot and tug master training in the Australia Ship Simulation Centre in Fremantle.

HR Wallingford also created and provided to Shell Australia a bespoke, web-based decision support tool, to assist with operations planning.

Dr.Mark McBride, HR Wallingford’s Ships Group Manager, said: “There was a need to assess many aspects of this unique offshore floating facility, which included the manoeuvring issues associated with the arrival and departure of the offtake LNG carriers. For this we used real time navigation simulation, so that we could identify the limiting conditions for safe manoeuvring, as well as the tug requirements, and for developing appropriate manoeuvring strategies.”

9 2HRWallingford Capt Mike Johnson tug master Prelude LNGCaptain Mike Johnson, Tug Master, in the HR Wallingford simulator

Up to six integrated simulators at the Australia Ship Simulation Centre were used to simulate the FLNG facility and the tugs for the shipyard departure operation, and for the positioning during connection of the FLNG’s mooring lines, once at its installation site. Actual wind, wave and tidal conditions were recorded, and then modelled, which meant that the crew were able to accurately test the capability and power of the tugs in advance. The simulated positioning operation was used to prepare for the real-life operation in which the tugs were attached to the FLNG facility by 700-metre-long wires, weighing approximately 30 tonnes each.

Captain Roy Lewisson, Master of the Deep Orient, the vessel that connected Prelude to its 16 mooring lines, and who took part in the simulator training said: “Being able to accurately test the manoeuvring beforehand was a real advantage. Never before in oil and gas history have we had the chance to practice in the simulator before we get on the water.”

The Prelude FLNG facility is expected to develop gas fields for the next 25 years, extracting natural gas from wells, which is liquefied and chilled to −162 °C. Offloading liquefied natural gas from large FLNG facilities provides a significant innovation, cutting costs and eliminating the need for long pipelines to onshore LNG processing plants.

Ecosse Subsea Target Carousel Market After Delivery of 700Te Wind Farm Contract

Ecosse Subsea Systems (ESS) has successfully designed, built and delivered a 700Te carousel to a major international infrastructure group.

The 700Te carousel designed with the capacity to be upgraded to 1700Te will be used for the storage of cables required for UK offshore wind farm projects.

The design and project management phases were conducted at ESS headquarters in Banchory near Aberdeen, with partial manufacture undertaken at ESS subsidiary firm MASfab in County Durham.

10 1Ecosse Carousel 2ESS Carousel Team left to right (Mark Gillespie - Managing Director, Paul Collie - Carousel Build Co-ordinator, Iain Middleton - Commercial Manager, Kevin Harper - Project Manager)

Now ESS, a specialist subsea and energy sector engineering company will look to win similar orders for the design and construction of carousels for onshore and offshore use.

ESS project manager, Kevin Harper, said: “The delivery of this carousel, demonstrates Ecosse Subsea’s capability in designing, manufacturing and the installation of bespoke infrastructure for use in the energy industries. Utilizing our own in-house design capabilities and fabrication facility gives us greater control and flexibility to ensure projects are delivered seamlessly and on schedule.”

10 2Ecosse Carousel 3Exterior gantry & swan neck roller system for road crossing

This is the second onshore storage carousel ESS have delivered, having previously successfully completed a 800Te offshore rated unit on behalf of a major renewables client.

Mr. Harper added: “There is a growing market for storage carousels for use in the renewables sector and we will leverage our experience to meet this market requirement while exploring other opportunities in traditional subsea oil and gas projects. Most discerning companies tend to prefer key infrastructure built by suppliers with a proven track history of delivery of similar equipment.”

ESS are currently best known for the design build and use of their world leading SCAR equipment which is used for seabed conditioning and boulder clearing, trenching and backfill. ESS also offer specialist engineering and project management services.

ProSep to Transform Global Oil and Gas Industry with Major Milestone Achievement for Osorb Media

11Osorb Media CopyProSep, the industry-leading technology and service provider for integrated process solutions, has announced a major milestone achievement for one of its proprietary produced water treatments, Osorb Media, a revolutionary, re-generable, modified organo-silica used for the polishing oilfield water and gas streams. ProSep has secured a multi-million dollar order for this water treatment system, which is a momentous breakthrough for this technology that has been in a developmental phase for the past seven years.

“Very few technologies have been commercially accepted in the Oil & Gas industry in such a short time from discovery to first commercial sale, specifically ones that are in the tertiary and/or polishing treatment stage,” said Mahesh Konduru, CEO at ProSep. “We believe that the Osorb technology is truly transformational and the global oil and gas industry will have an opportunity to see this technology in action.”

Prosep’s Osorb Media utilizes a 5000-barrels of water per day (BWPD) system that is designed to reduce Benzene, Toluene, Ethyl Benzene, and Xylene (BTEX) contaminants to less than 15 parts per million (ppm) on an offshore platform. The advantage of using Prosep’s Osorb technology includes a notably low-system footprint, durability of media, and greater flexibility of regeneration.

SMD Relocates and Expands Operations to Port of Tyne

12SMD logo copySoil Machine Dynamics is relocating its servicing operations to Port of Tyne’s Tyne Dock estate in South Shields. The Tyneside based manufacturing company is already a global leader in building remotely operated vehicles (ROVs), deployed underwater in the global oil and gas, telecommunications and renewables industries.

SMD’s head office and heavy production facility will remain in Wallsend and the company will continue to manufacture ROVs at the Tyne Tunnel Trading Estate in North Shields. Servicing, maintenance and training operations will transfer to the new facility at the Port of Tyne. The firm will occupy a 23,000 sq.ft unit at Tyne Dock, which has been modified to offer bespoke accommodation for SMD.

Inside, the company will be carrying out repairs and upgrades, and will offer training via state-of-the-art simulation technology designed to mimic sea conditions. With an eaves height of up to 8.1 meters, SMD has space for large-scale equipment and benefits from a large, secure storage yard, dedicated parking and high-speed fibre optic data lines to ensure it can stay in constant communication with clients across the globe.

Graham Puntis, SMD Managing Director, Services, said: “As well as focusing on new builds, SMD services enables us to increase our presence in the after-market by helping customers to get the most out of their assets so they can remain where they should be – at sea – for as long as possible.

“The move to Port of Tyne is about a number of factors, including location. We need good access for offshore vessels bringing equipment directly to us for repair, maintenance or overhaul. As this aspect of our work continues to grow the move also provides us with the necessary expansion capacity.”

SMD currently employs 220 people with 50 members of staff now based at Port of Tyne, and that figure is due to rise to 80, plus additional offshore support workers as operations continue to expand.

Alasdair Kerr, Port of Tyne Commercial Director Port Services, said: “We have adapted one of our multi-purpose units to accommodate SMD. It’s tailored to SMD’s needs and represents a major investment for the business and for Port of Tyne. “We look forward to being part of SMD’s future success as it continues to build on its world-class reputation.”

The Port of Tyne is home to a growing number of over 100 commercial tenants that benefit from high security, easy access to global markets and a prime location based near to the A19 with direct rail access to the East Coast Main Line.

SINTEF’s Updated Handbook on Design and Operation of Flexible Pipes

13Sintef handbookIn SINTEF's new edition of the handbook, it is extended to include experience from the operation of flexible pipes as well as updates on methods and technology in the years since the first edition of the handbook.

High pressure flexible pipes are increasingly being used in the offshore production of oil and gas. Early experience with flexible pipes was gained since the late 1970s in relatively benign environments. A breakthrough for flexible pipes as dynamic risers in the harsh environments of the North Sea came in 1983/84 when it was decided to use a flexible dynamic riser system on the Balmoral field. Along with experiences on using flexible pipes, the need to compile information on the design and operation was released in the first issue of a Handbook in 1992.

This is new compared to the previously accessible edition (Vol1) of 2014:

  • Part D: Case Study (from the previously confidential Volume 2)
  • Minor editions, additions and corrections

Please download the handbook here

Decommissioning Debate to Take Center Stage at SPE Offshore Europe 2017

14Roger EssonDecommissioning will be a special focus at SPE Offshore Europe 2017 with a range of expert speakers announced as part of the plenary and new Decommissioning Zone technical program.

Shell will host a keynote panel session with senior spokespeople from CNR, Chevron, Heerema Marine Contractors, Marine Scotland and the UK regulator BEIS.

Supported by Decom North Sea, the new Decommissioning Zone will deliver an extensive line-up including presentations hosted by ITF, The Society for Underwater Technology, ImechE and Decom North Sea. Panellists offering expert insight throughout the three-day conference include Stephen Hall, CEO Society for Underwater Technology; Pieter voor de Poorte, Subsea Decommissioning Lead, Premier Oil and Bill Cattanach OBE, Head of Supply Chain, Oil & Gas Authority.

The zone is set to bring together thousands of highly targeted technical, business and government industry professionals with exhibitors including Diaquip, Integrated DECOM, EMAS Energy, Fairfield Energy, Petroplan Europe Ltd and Xodus Group among those signed up.

Roger Esson, Decom North Sea CEO

With more than 100 offshore platforms forecast for full or partial removal in the UK Continental Shelf (UKCS) and 1,800 wells to be plugged over the next decade, SPE recognised a need to place decommissioning high on the 2017 Offshore Europe agenda.

As several assets in the North Sea reach the end of their lifespan, the latest cost estimate from the Oil and Gas Authority has predicted the cost of decommissioning the UKCS oil and gas infrastructure is £59.7 billion with an ambitious goal of completing this work for less than £39 billion.

Roger Esson, Decom North Sea CEO said: “Operators and regulators are planning for the inescapable responsibility of decommissioning. The inaugural Decommissioning Zone at SPE Offshore Europe 2017 is an important step for the sector and wider industry to further discussions around planning, regulation, execution optimisation and technology.

“Not only will this zone showcase the innovative capabilities of its exhibitors, but its comprehensive programme of conference sessions will provide knowledge and insight into the opportunities and issues arising within the sector.”

Gareth Rapley, SPE Offshore Europe exhibition director, said: “We are looking forward to showcasing the latest advances in decommissioning and the theatre in the new zone will give a platform for debating and sharing lessons learned. We anticipate a lot of interest in the zone as the industry takes stock of the challenges and opportunities around dealing with assets reaching the end of production.”

SPE Offshore Europe takes place 5 – 8 September in Aberdeen and will feature 1,000 exhibitors with 65 free to attend technical presentations and 11 keynote panel sessions combined with business breakfasts and topical lunches.

For full details of the SPE Offshore Europe 2017 Decommissioning Zone including how to become an exhibitor and the program of events, click here.

28% of Offshore Vessels Currently Laid Up

15Percentage of Offshore Fleets Laid UpUsing VesselsValue's Offshore mapping service VV@, Senior Offshore Analyst Charlie Hockless has put together a snap shot showing the percentage of the offshore fleet currently laid up. Across all offshore types, 28% of the fleet is currently laid up, with PSVs topping the table with 36% of their fleet currently laid up.

Mr. Hockless explains the definition of 'laid up' used in this context: 'Estimating the number of vessels in lay-up is an imperfect science, however, using a big data approach VesselsValue can provide a valid estimation using the following methodology. VV observes the recency of a vessel's AIS signal and filters the data appropriately. Vessels that have not signaled for over a week are considered to be in lay-up.'

The VesselsValue offshore database includes:

  • Offshore Support Vessels (PSV, AHTS, AHT, FSV, Ocean Going Tug and ERRVs)
  • Offshore Construction Vessels (Pipe layer, Cable Layer, Well Intervention, Dive Support Vessels, MPSV, Floatel, Accommodation Ship, Crane, Lift Boats, SOV, Utility Vessel)
  • Mobile Offshore Drilling Units (Drillship, Semi submersible, Jack Ups)


PIRA Energy Market Recap, July 31, 2017

16PIRALogoStock Draws Counter Paper Selling Pressure

Global liquidity remains very supportive to economic growth and is leading to strong oil demand growth. Global supply/demand balances are tighter in the middle quarters but weaker in 4Q17 and 2018. The 3Q 2017 decline in surplus inventory will be mostly in products. The momentum or initiator for financial length has moved from the buyer to the seller of paper, undermining traditional oil price appreciation from increased financial length. Lower forecast inventory should allow prices to hold onto most of the recent gains, but a strong demand for inventory is required to offset the negative impact of increased paper supply. Geopolitical risks to supply are helping inventory demand despite supply disruptions falling. Refining margins will stay healthy through year end with distillate cracks taking the lead as demand increases and stocks continue to fall. Residual fuel oil cracks will stay firm due to supply side factors. Global crude quality is getting lighter.

Structural Limits to Shoulder Season Weakness

The call on U.S. supply this month will register a Y/Y gain for the first time this injection season — marking a key turning point in balance formation. Narrowing Y/Y losses in gas EG should facilitate continued overall growth for the remainder of the season — placing increased emphasis on supply growth to support storage injections ahead of the heating season. Even so, the ensuing restrained build in inventories has failed to elicit much NYMEX buying interest. That said, critical for the price recovery we see ahead is the timing of when the market puts the injection season in the “rearview mirror.” With this in mind, the market will likely look ahead to the next season before the air-conditioners are completely switched off. Nevertheless, this month’s failure to launch on patently lean inventory builds has forced reconsideration of our immediate price outlook.

Bullish Surprises Abound

Hotter and drier than normal weather boosted Mid-Columbia average on-peak prices to $30/MWh in July, nearly double June’s level. California on-peak prices recorded moderate gains, rising to the low $40s, but Palo Verde sank below the $40 mark as loads faded during the second half of the month. Alberta markets firmed as strong loads and outages led to several price spikes toward the end of the month. Sustained heat over much of the West will continue to support prices and implied heat rates in August but we look for heat rates at U.S. hubs to move toward the lower end of the historical range during Q4/Q1 squeezed by higher gas prices that lead to a temporary rebound in coal unit market share.

Coal Pricing Stays Hot, Along With Asian Temperatures

Seaborne coal prices, particularly in the Pacific Basin, continued to rally over the past month, stimulated by sweltering weather conditions in several Asian markets, and labor-related supply disruptions in Australia. In light of the stronger-than-expected coal demand, the prompt market will remain well supported, delaying the inevitable downward adjustment in pricing. However, pricing support from supply/demand fundamentals is expected to fade over next several months, and PIRA retains a bearish outlook for 4Q17 and beyond.

NGL Prices Continue to Advance with Crude

All Mont Belvieu NGL purity product prices advanced for the week ending July 28th and generally followed the lead of crude price increases. Ethane gained the least at 1 ¢/gal to close the week at 26.1 ¢/gal. Propane stocks were virtually unchanged at 65.9 million barrels. Propane stock builds were restrained by strong propane demand from wholesalers building winter stocks and steam cracker feedstocks. LPG exports remain robust at 768 MB/D. Steam cracker feedstock margins declined 2-6% as feedstock prices outgained olefin prices. Ethylene prices declined 1.9% to close the week at 19.6 ¢/lb, and propylene prices increased 2.1% to close the week at 28.5 ¢/lb. Two PDH turnarounds, Dow’s Freeport, Texas plant and Flint Hills Houston, Texas plant have supported propylene prices, and both plants will be back in full operation by the end of August.

Lack of News

The last trading day in July opened with corn in the same price range as posted on June 30th, although that was a major report day. Soybeans on the other hand were a good 50 cents above the June 30th price, continuing to be a much better story than corn for the bulls. Chicago wheat, which had the most movement during the month of July, is down roughly 30 cents. While the soybean market is respectful of its demand component, fully realizing that any sizeable loss in production could result in an extended rally, corn continued what could be described as a mindless walk due to onerous supplies both in the U.S. and Brazil.

Storage Deficits and Power Support Gas Pricing

Hydro and nuclear power production each down 5+GW YTD versus normal levels, which is heavily supporting gas demand. Gas demand across Europe’s biggest consuming nations is up by 47-mmcm/d YTD versus the past four years. While we see nuclear availability at/above normal levels by 4Q’16, PIRA is lowering forecasted hydro production for the balance of the year and will lend significant demand support throughout the winter. Meanwhile, Dutch storage stocks are entering August 3-BCM below last year. Thanks to a strong prompt, the Netherlands is being limited in its abilities to max inject this summer, which is particularly worrisome for a U.K. market that is increasingly reliant on imports. Stepping in to help balance Europe through discounted pricing and flexible supplies across Central Europe, Russia is cementing itself as a bigger baseload supplier of gas to much of Continental Europe. Contracted Russian supplies have been discounting similar Norwegian ones by €2/MWh since the beginning of the gas year in October.

Gas-Fired Output Surge Limits Summer Price Recovery

With nuclear setting a new multi-year minimum and hydro heavily down Y/Y, gas-fired output has surged across the board, with the five major markets (U.K., Spain, Italy, Germany and France) showing a gain by 18% Y/Y. However, the increase in gas-fired generation did not translate into a major power price surge, especially in Spain and Italy.

Going forward, we continue to see upside risks for the French market. In spite of recovering nuclear availability, hydro generation continues to disappoint. While not factored into our balances, policy risks remain constructive for the back of the curve, with Spain also impacted through lower French flows.

An increase in nuclear and wind availability over the next few months poses bearish risks for German prices, but stronger marginal costs for coal and lower-than-expected coal dispatch will be bullish, especially if gas units do not ramp up as often as in July.

U.S. Coal Stocks in May Decline Counter to Pattern Over Much of Last Decade

EIA coal stockpile data was released on July 25, showing that end-May stockpiles declined to 164.9 MMst, which ran counter to the five-year average May stock build of 3.6 MMst. MSHA data is trickling out and showing that 2Q17 production declined with the seasonal fall in demand, indicating some producer discipline that is supportive of prices.

U.S. Deficit to Last Year Widens

Commercial oil inventories again declined sharply this past week, falling 9.5 million barrels and bringing the year on year stock deficit to almost 42 million barrels (or 3.0%). Demand was also strong with adjusted product demand up 5.2%, or 1.0 MMB/D, in the latest four weeks. Crude oil stocks fell 7.2 million barrels this past week and for the first time this year are below year ago levels by 7.1 million barrels. Cushing crude stocks fell 1.7 million barrels for the tenth consecutive weekly decline. Next week’s EIA data will show another substantial crude stock decline (5.0 million barrels).

Global Economy Is on Solid Ground

As expected, U.S. GDP growth rebounded in the second quarter. Core inflation decelerated, while wage growth stayed subdued. Underlying data for consumer spending and business investment trended solidly. In China, evidence for the industrial sector rebound continued to accumulate. July survey results from Europe were generally encouraging. Data for global trade and vehicle sales were positive.

Ethanol Manufacturing Margins Improve

The cash margins for manufacturing ethanol improved the week ending July 21 due primarily to lower corn costs. D6 RINs were sharply higher. Brazilian based Petrobras raised the taxes on gasoline and ethanol manufacture in order to generate much needed revenue. European ethanol prices move lower.

What’s Normal?

This time of year agricultural analysts like ourselves are obsessed with normal, particularly in July for corn and mid-August through mid-September for soybeans. Whether it is temperature or moisture, our models are reliant on normal weather as the key to producing trend line yields. If you went away on holiday/vacation a week ago Monday when corn was trading at $3.90 and soybeans at $10.00, paid no attention to the markets, and then returned the past few days to look again, you’d think everything was normal as markets have strayed little from those price points. In fact, the situation is far from normal.

Shoulder Season Weakness Sets In

NYMEX futures are rounding out the month on a softer note, with the September contract establishing a new calendar-year low today — falling ~15¢ relative to Friday’s close. While milder forecast revisions have hastened the month-end sell-off, the market appears to be looking beyond the current tightness to heftier injections ahead. The drag on cash prices that has traditionally occurred as the industry enters the shoulder period probably is feeding such a bias.

Australia Provides a Bullish Sliver of Hope for LNG Markets this Winter

Heavier buying interest by Asian end users in the past week can be traced to growing concern over supply availability out of portions of Australia. If the Australian government goes through with it, the cuts could start as early as Jan 2018, which is the peak demand period for the Asian winter, when seasonal prices typically reach high points.

Japan Higher Runs and Higher Demand

Japanese runs continue to march higher, up 89 MB/D on the week. Crude imports rose sufficiently to build stocks 0.5 million barrels, much less than expected. Finished product stocks posted a second straight increase of 0.3 million barrels. Aggregate demand was again modestly higher, but is generally rising in sync with the run profile. Refining margins were higher on the week and are supportive to rising runs.

Stresses Remain Very Low

Another very bullish week, with the St Louis financial stress indicator moving to a new cyclical low, more record highs in the equity space, along with positive gains in commodities and also some of the debt pricing indicators. Energy had a solid week, with energy debt pricing doing well. The reflationary trade has been moving higher the last two weeks, with some traction being noted as the dollar has tended to weaken.

U.S. Ethanol Production and Stocks Drop

U.S. ethanol production dropped 14 MB/D the week ending July 21 to 1,012 MB/D, but remained above 1 MMB/D for the fifth consecutive week. Inventories decreased for the seventh time over the past ten weeks, falling by 608 thousand barrels to 21.5 million barrels. Ethanol-blended gasoline production jumped 234 MB/D to 9,367 MB/D, rebounding from a three-week losing streak.

Above-Normal Heat Fails to Support $3 Price

Yesterday, the Aug’17 natural gas futures contract exited the board below $3/MMBtu, despite the light build reported this week by the EIA. On balance, this month’s failure to launch on patently lean inventory builds suggests that prices might remained anchored in the current trading range, particularly as the industry transitions into the shoulder season. Taking stock of daily cash prices this month, Henry Hub (HH) barely rose relative to the June average of $2.93. This was largely the case in many regions given the large Y/Y declines in cooling degrees seen in most areas outside of the West.

Louisiana Offshore Oil Port (LOOP) to Offer Export Option

The Louisiana Offshore Oil Port (LOOP) is the only VLCC port in the United States. It announced on July 24th that it will be offering exports from their facility by early next year. This is a welcome optimization but not a transformation for the U.S. export industry. It will allow exporters to avoid reverse-lightering fees (roughly $0.50/Bbl) when packaging up VLCC lots and it will probably help sour exports more than sweet.

Still Setting Record Highs

More records are being set in world equity markets, though on the week, the U.S. market was unchanged from the week before. In the U.S., the strongest performing sectors, where the two sectors, which had been taking a beating. Retail and energy were the top performers, while housing was the laggard. Internationally, China and emerging Asia posted solid gains for the week.

Just Taking What the Market Allows

Saudi Arabia's formula prices for September were just released. The important take-away is that despite greater avails in September due to reduced domestic burn, Saudi generally tighten pricing in all the key markets. Most of the adjustments were in alignment with market drivers. Clearly, there is no impetus to push volume, despite available volumes that could be pushed.

U.S. Production Returns to Sequential Growth

U.S. crude and condensate actuals for May 2017 came in at 9184 MMB/D, up 89 MB/D month-on-month, up 302 MB/D year-on-year, and 24 MB/D below PIRA’s forecast. The miss relative to PIRA’s Reference Case was primarily due to the Gulf of Mexico coming in below forecast.

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

EIA just released its final monthly May 2017 (PSM) U.S. oil supply/demand data. May 2017 demand came in at 20.021 MMB/D, which is 79 MB/D higher than PIRA had assumed. Total product demand grew 4.3% versus year-ago or 819 MB/D, and the strongest performance since July 2015. Over the last three months, growth has averaged 500 MB/D. Among the components, gasoline demand was the only laggard, but still up 1.6% or 154 MB/D. The other products all had growth 6%, or higher. Compared to the weeklies, demand was lowered 194 MB/D, with distillate being lowered 109 MB/D.

Mexico’s Downstream Infrastructure Projects Set to Redefine the Country’s Supply and Distribution Landscape

A number of downstream infrastructure projects have been developing in Mexico in the context of the country’s energy reform. Somewhat less publicized than its upstream counterparts, these projects will change the landscape of fuels supply and distribution in Mexico in the next 1-3 years. So far the ventures have focused on increasing product imports and distribution, not on local refining.

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.

ExxonMobil Announces Successful Payara-2 Well Offshore Guyana

Exxon Mobil Corporation (NYSE:XOM) has announced it has discovered additional oil in the Payara reservoir offshore Guyana, increasing the total Payara discovery to approximately 500 million oil-equivalent barrels.

These positive well results increase the estimated gross recoverable resource for the Stabroek Block to between 2.25 billion oil-equivalent barrels and 2.75 billion oil-equivalent barrels.

1ExxonMobil Guyana june 2017 updated project map articleImage credit: ExxonMobil

The well was successfully drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Limited and encountered 59 feet (18 meters) of high-quality, oil-bearing sandstone in the Payara field.

It was safely drilled to 19,068 feet (5,812 meters) in approximately 7,000 feet (2,135 meters) of water. The well is only 12 miles (20 kilometers) northwest of the recently funded Liza phase 1 project on the Stabroek Block, which is approximately 130 miles offshore Guyana.

“Payara-2 confirms the second giant field discovered in Guyana,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Payara, Liza and the adjacent satellite discoveries at Snoek and Liza Deep will provide the foundation for world class oil developments and deliver substantial benefits to Guyana. We are committed to continue to evaluate the full potential of the Stabroek Block.”

The Stabroek Block is 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

Prelude Arrives in Australia - a New Era for the LNG Industry

Shell Australia confirms that its Prelude floating liquefied natural gas (FLNG) facility has arrived in Australian waters.

Prelude is the first deployment of Shell’s FLNG technology, that will see a 488-meter long floating facility extracting and liquefying gas at sea, before it is exported to customers around the globe. The project is located approximately 475km north-north east of Broome in Western Australia.

2preludeimage masterAerial shot of Prelude FLNG facility being towed to Australia. Photo courtesy: Shell

Shell Australia Chairman Zoe Yujnovich said the arrival of the Prelude FLNG facility signaled a new era for the Australian LNG export industry, with the first floating liquefaction facility deployed in local waters.

“Prelude’s arrival is a clear demonstration of Shell’s long standing commitment to investment and development in Australia – delivering significant economic benefits to the nation.”

Ms Yujnovich said Shell had awarded a majority of Prelude contracts to Australian contractors, including the contract awarded to Australian engineering company Monadelphous for maintenance and modification services valued at $200 million.

“Prelude is an Australian project and Shell has recognized how important it is to build strong partnerships with Australian industry,” she said.

“To develop and maintain a safe, high performance culture on the facility, Shell has partnered with South Metropolitan TAFE in Western Australia to develop specific training for Prelude technicians.

“One hundred and fifty technicians have been trained across a broad range of critical skills, including helicopter landing and refueling skills, rigging, scaffolding and first aid.

“West Australian based company CIVMEC, a construction and engineering services provider, constructed the four massive anchor piles for Prelude’s subsea flowlines from their facility in Henderson.”

The Prelude project will employ 260 local workers on board the facility during operations and create over a 1500 jobs during the hook-up and commissioning phase of the project. Shell expects to see cash flow from the project during 2018.

MacGregor Receives an Order for Mooring and Riser System from Excelerate Energy

MacGregor, part of Cargotec, has signed an order for on-vessel equipment, product fabrication, engineering and project management for a complete mooring and riser system that will serve Moheshkhali floating liquefied natural gas (LNG) terminal. The order was booked into Cargotec second quarter 2017 order intake. The delivery will be completed in the second quarter 2018.

3MacGregor ExceleateEnergyMoheshkhali Floating LNG project. Image credit: Excelerate Energy

MacGregor's order is part of an Engineering, Procurement, Construction and Installation (EPCI) contract to provide Excelerate the mooring and gas transfer system for a floating storage and regasification unit (FSRU). MacGregor's scope of the order includes on-vessel equipment, Flintstone mooring connectors, as well as project management for the fabrication, procurement and project management of the complete mooring and riser system for the FSRU operated by Excelerate Energy.

"This is an important order for us. We are happy to be involved in this interesting collaboration project of several trusted companies," says Høye G. Høyesen, Vice President, Advanced Offshore Solutions, MacGregor. "We bring our vast expertise in managing demanding mooring projects but also our long experience from the mooring business."

"We are happy to be involved in this floating LNG terminal project. This order is a natural step in our strategy to expand to the FSRU market with one of world's leading players" says Michel van Roozendaal, President, MacGregor. "This order proves the combined strength of both MacGregor and Flintstone". MacGregor acquired the majority of Flintstone shares last autumn.

BiSN Announces Multimillion Pound Investment Agreement

BiSN, a global leader in innovative metal-to-metal downhole sealing solutions, has signed an investment agreement worth £5m with corporate venture capital groups BP Ventures, Schlumberger Ventures and GE Ventures.

Under the terms of the investment, BiSN and BP Ventures will work together to develop a commercial portfolio of technology, to be applied across BP’s conventional, unconventional and deepwater portfolio.

“In addition to investing in digital technologies and lower carbon solutions, BP Ventures is committed to investing in the next generation of disruptive technologies that will transform how we find and produce oil and gas”, said Luis Alcoser, BP Ventures’ Upstream Principal.

“BP is delighted to be working with BiSN on the commercialisation of technologies that have the potential to benefit BP’s global upstream operations.”

4BiSN Paul CarragherPaul Carragher, BiSN Chief Executive

Paul Carragher, Chief Executive Officer of BiSN, explains the significance of the agreement: “Our award-winning technology, Wel-lok M2M, provides innovative, downhole seal solutions across the spectrum of completions, intervention and abandonment projects.

“We believe BiSN presents a disruptive approach to standard well sealing activity and by working closely with BP Ventures, we have the ability to deliver a structured qualification and commercialisation process for our patented portfolio of technologies.”

BiSN provides metal-to-metal downhole sealing solutions to the oil and gas industry. Established in 2010, BiSN operates manufacturing and assembly facilities in both Runcorn, UK and Houston, USA. With a focus on game-changing technology research and development, the company also undertakes specialist alloy development from its own UK-based laboratory.

Using modified thermite heaters, BiSN’s unique technology reduces the heating time required for metal-to-metal sealant from hours to minutes, whilst eliminating the need for specialist wireline equipment, or restriction on deployment depth.

BP, Schlumberger and GE join ConocoPhillips as investors in the company.

Sparrows Group and SPIE Seal First Joint Cranes Contract in the Congo for Total

5SparrowsSparrows Group and SPIE Oil & Gas Services have secured their first joint delivery project, which is in West Africa, after Total E&P Congo awarded the partners the crane maintenance contract on the Moho Nord development.

The scope of the agreement covers maintenance, inspection and testing services on five pedestal cranes on the development’s Likouf Floating Production Unit (FPU) and Tension Leg Platform (TLP) over three years.

Commencing in quarter three 2017, the project will be managed locally by SPIE, with expert specialist technical personnel delivered by Sparrows.

In August last year, Sparrows and SPIE announced they had agreed a partnership with an initial view to developing a collective service offering throughout Africa before expanding the scope globally.

Stewart Mitchell, chief executive officer at Sparrows, said: “We have operated successfully in West Africa for several years however this is the first significant contract we have secured in the Congo. Being able to grow our footprint into new areas was key in us choosing to partner with SPIE to deliver a service that provides clients with the highest standards in crane operations and maintenance.”

The contract involves the review of existing plans before the firms take on full maintenance responsibility. This includes inspection and testing of all cranes, with corrective maintenance and spare parts supplied where required.

The cranes supplied for the Moho Nord development TLP were manufactured by Sparrows at their US manufacturing facility.

Richard Masson, general manager at SPIE Oil & Gas Services said: “Our partnership with Sparrows enables us to provide the highest standards in safety and operational reliability on all crane operations and maintenance work. Being able to partner with a world-class specialist service company provides demonstrable benefits to operators in maximizing the operations and working life of their assets.”

Trelleborg Sealing Solutions Helps Develop Revolutionary Subsea Product

Trelleborg Sealing Solutions goes ‘above and beyond’ in helping to solve a complex subsea challenge when an effective sealing solution was required for a revolutionary connector.

6Trelleborg STL(Left to right) James Simpson (Trelleborg), Drummond Lawson (STL), Daniel Grainger (Trelleborg)

As a leading global supplier of polymer-based critical sealing solutions, Trelleborg was asked to create a seal that would work inside a pioneering new product which was developed by Subsea Technologies Ltd (STL).

STL’s two inch Hydraulically Retractable Subsea Coupler assists in creating its XR Connector’s unequalled high-angle release capability, which has no maximum riser angle limit. It was designed to deliver radically improved vessel safety, reduce environmental risk and decrease costs by greatly boosting a vessel’s operating window.

STL had previously developed small bore retractable couplers, used as sub-components in its unique XR Connector, however, scaling up to a large two inch bore to allow for choke and kill lines passing through, posed a number of major challenges.

In order for the full potential and functionality of the two-inch coupler to work, it needed a seal to be developed that would work in harmony with the coupler, the world’s first of that size, with a hydraulically retractable element.

Trelleborg set about meeting requirements and developed custom versions of its Turcon Captive Glyd Ring with XploR V9T82 elastomer material and Turcon Stepseal 2A CR with PEEK corner reinforcement rings.

The Turcon Stepseal 2A CR is a new standard corner reinforced rod/piston seal for single-acting use and has many advantages, such as its anti-tilt design and that the dimensions of the seal body and corner reinforcement ring can be modified to facilitate installation.

Andrew Longdon, Technical Manager for Trelleborg Sealing Solutions in the UK, said: “Throughout the process we constantly had to think about the safety issues and challenges that are frequently faced when working with heavy duty engagement of subsea equipment.

“We worked with STL as the team conducted a very lengthy test program including a full PR-2 temperature and pressure cycling program along with endurance cycle testing on the products in accordance with the ISO 10423 standard.

“STL also conducted two disconnects with 10,000 psi bore pressure. This was all completed with one set of seals, which I think is some achievement.

“We pride ourselves on innovation and relished this opportunity to work with STL in a bid to find an effective sealing solution and ensure the two inch Hydraulically Retractable Subsea Coupler was working to its full capability.”

Not only does the coupler provide new opportunities for remote emergency release system designs for subsea applications, it also enables people to be removed from stab plate engagement functions on the surface. By being hydraulically retractable, it allows the heavy-duty engagement of equipment both on surface and subsea to be separated from the comparatively delicate engagement of control system interfaces.

STL’s Managing Director Drummond Lawson said: “We knew Trelleborg would be able to solve the challenge of finding a durable and robust seal to work in harmony with our product.

“Not only have they gone above and beyond in meeting expectations of the brief we outlined, but we were also impressed with the service we received throughout the process. We are by no means Trelleborg’s biggest client – but the support we received has been second to none. At every stage of the process a member of the Trelleborg team kept us fully informed from prototype development right through to bringing the product to market.

“This was no easy challenge and without Trelleborg, we would not have been able to produce what we believe to be the first coupler of this size ever to be made with a hydraulically retractable element, which we are certain will create opportunities for our clients beyond just its use in our XR Connector.”

The coupler is fully Lloyds design verified and qualified to 3,000m (10,000ft) water depth, rated to 10,000psi hydraulic bore pressure and up to 5,000psi hydraulic function pressure.

Aquaterra Energy Signs Investment Deal with EV

Aquaterra Energy, a leading global offshore engineering solutions provider, has secured a multi-million pound investment from EV Private Equity as the company gears up for service expansion and new technology launches.

The deal is the first to be agreed following EV’s pledge last year to invest $200 million in North Sea businesses with new technologies and high growth potential. The independent private equity firm confirmed it was seeking to invest between $10 million to $40 million in each company.

7 1Aquaterra Energy Aquaterra Energy recently designed, fabricated and installed a new Sea Swift platform for PICO Petroleum Integrated Services, offshore Egypt

Aquaterra, which has operations in Aberdeen, Norwich and Cairo provides riser systems, offshore structures and rental equipment to the global oil and gas industry. The company recently designed, fabricated and installed a new Sea Swift platform for PICO Petroleum Integrated Services, the lead contractor for the Amal field in the Gulf of Suez, offshore Egypt. In another multi-million pound contract, Aquaterra is supplying high pressure riser equipment for a subsea abandonment project in the central North Sea.

Aquaterra is also seeing growing interest from operators in its specialist ‘WellStart’ service, which minimizes third party interfaces in early stage well construction, providing the expertise to overcome the technical and economic challenges in setting out the first phase of the well.

7 2Aquaterra Energy 3Aquaterra Energy’s Well Start specialism minimizes third party interfaces in early stage well construction

George Morrison, managing director of Aquaterra Energy said: “We have a robust plan for service and product expansion including a strong focus on our WellStart capability and the investment will help us to fuel the growth of the business. EV’s support to the existing management is a vote of confidence in the hard work of the team and the success that has been achieved during what has been a challenging period for the industry.

“We have exciting opportunities for ongoing investment in new technologies and will be looking to maximize value from our innovative field development solutions including Sea Swift, WellStart and riser analysis. We look forward to working together with EV to continue to deliver the high quality, high value products and services needed by our customers in the improving oil and gas environment.”

Greg Herrera, Senior Partner at EV, commented: “EV is excited to partner with Aquaterra and to have the opportunity to work with the company’s talented management team and employees. We believe this will be an excellent platform for both organic and acquisition based growth opportunities.”

Tomas Hvamb, Investment Director at EV, added: “We believe that the company’s core offering, providing net lower cost solutions, resonates in today’s capital constrained market and furthermore that there may be excellent synergies to be realized with other companies in the EV portfolio.”

Aquaterra has appointed Alan Wilson as Chairman. Mr. Wilson is a Chartered Engineer with 33 years’ experience in the oil and gas industry. Added to his extensive experience in senior executive roles in the industry, he has also served as Chairman and non-Executive Director of other private equity-backed and privately owned companies within the oil and gas sector. He said: "Aquaterra Energy has achieved impressive growth and success in the international oil and gas market by providing world-class products and services and I'm delighted to join the board at such an exciting phase of the company's development."

The company has also appointed its co-founder Mark Boyd and the former CEO of Expro, Gavin Prise, as non-Executive Directors.

As part of the deal a re-finance package has been agreed with HSBC. Keith Robertson, Associate Director, Leveraged Finance Scotland, commented: “HSBC welcomes this opportunity to support the next phase of development for this innovative and internationally focused oilfield services company, which is well positioned to capitalize on current market dynamics. We look forward to working together with Aquaterra’s highly regarded management team and sector specialist investors EV Private Equity over the years to come.”

CGG Extends Santos VII Multi-Client Survey Offshore Brazil

cgg logoCGG announces the completion of an extension of its Santos VII broadband 3D multi-client survey offshore Brazil. The 1,867sq. km extension to the original footprint gives CGG a total of almost 16,000 sq. km of newly acquired and imaged pre-salt coverage.

8CGG BR Timeslice 24July17 LGLocation map of the different CGG multi-client survey products available in the Santos Basin, including the Santos VII extension.

The extension was made to fully image this highly prospective area after images recently delivered from the Fast-Track PSDM over a priority area of the Saturno field clearly indicated further structure to the east. This addition will aid in the interpretation and understanding of the Saturno field well in advance of the May 2018 lease round.

Jean-Georges Malcor, CEO, CGG, said: “Having the fast-track data available so soon after acquisition and working in close client consultation increased our confidence to extend our Santos VII survey. This addition to our already very large 3D multi-client library in the Santos Basin underlines our commitment to offering the industry ultramodern exploration data sets to support the next pre-salt licensing round.”

Maersk Oil Contract Sees North Sea Success for Nature Group

Nature Group, a leading oil, gas and maritime waste collection and treatment company, has secured a five-year contract with Maersk Oil in the Central North Sea.

The contract will see the company mobilize offshore slop processing environmental units and operational staff to drilling rigs on contract to Maersk Oil. The work has created 10 jobs for Nature Group, both on- and offshore.

9Nature Group Compact Treatment UnitsA Nature Group engineer operating one of the company’s Compact Treatment Units (CTU)

The Group’s offshore slops treatment units combine a small footprint with a high treatment capacity, without the use of filtration membranes. Thanks to continued innovation and investment in research and development, Nature Group helps customers to minimize logistics and transport costs, demonstrate an environmentally conscious approach and in turn, reduce risks and liabilities.

Allan Mitchell, general manager UK at Nature Group said: “We are delighted that Maersk Oil has awarded Nature Group this significant contract, our first project in the UK sector of the North Sea. This is a reflection of the strong track record we have built in other regions and sectors, and Maersk Oil’s confidence in our experience and technology is highly encouraging.

“We are also particularly pleased that this long-term project has allowed us to create a number of jobs within the oil and gas industry, which is a very positive story. We have exciting growth plans in the UK, and having the right people in our team to fulfil these ambitions is critical. Securing this contract is a major milestone in Nature Group’s journey and we are confident this work will act as a springboard for further opportunities in the UKCS and beyond.”

Founded in 1999, Nature Group is headquartered in Amsterdam and has bases in Aberdeen, Rotterdam, Stavanger, Houston, Abu Dhabi and Rio de Janeiro. The company, which employs 70 people, offers environmental waste management services to both the oil and gas and maritime sectors.

Proserv Secures Series of Decommissioning Contracts in Asia Pacific

10ProservEnergy services company Proserv has been awarded a series of contracts worth around $4m for its well severance, platform and FPSO decommissioning services in the Asia Pacific region.

The contracts have been awarded by Premier Oil in Indonesia; Chevron, through Baker Hughes, in the Gulf of Thailand; BHP, through Fugro, in Western Australia and by PCPP Operating Company, through Sapura Technology Solutions Sdn Bhd in Malaysia.

As part of the project work-scopes, Proserv will provide abrasive cutting, cold cutting and dredging services using its wide portfolio of field-proven products and technologies. The company will also develop custom tooling solutions, which is core to Proserv’s expertise, to support client engineering and decommissioning challenges.

These awards build upon decommissioning successes for the company globally in recent months with around $12 million worth of work secured in Asia Pacific, the UK, Scandinavia and Gulf of Mexico.

Mathieu Al Kharfan, region president for Asia Pacific, said: “We are delighted to have secured these awards which builds on our 40-year track record in this sector and reinforces the quality and reliability of our products and services.

“These recent wins are also a sign of our growing reputation as a decommissioning services partner in the region, providing clients with the most reliable and efficient technology solutions, delivered at the lowest cost, with no compromise on best in class HSE performance.”

The contracts come at a time of strong investment and development with the company currently investing more than $2million to develop two new multi-string cutting (MSC) systems for well severance campaigns, to meet market demand.

Sapura Technology Solutions Sdn Bhd (formerly known as SapuraKencana Technology Sdn Bhd), is a wholly-owned subsidiary of Sapura Energy Berhad (formerly known as SapuraKencana Petroleum Bhd).

Mermaid Expand into New Markets Through Recent Contract Awards

11MermaidlogoMermaid Maritime Public Company Limited (“Mermaid”) announces that it has recently been awarded two subsea contracts with a combined estimated value of USD 4.6 million.

The first contract award, with work scheduled to commence in the third quarter of 2017, will involve a short ROV campaign for pipeline touchdown monitoring for an international EPCIC contractor offshore in the Middle East GCC.

The second contract award, with work scheduled to commence in the fourth quarter of 2017, will involve use of a diving vessel with work class ROV carrying-out a subsea services project offshore East Kalimantan, Indonesia, for an international upstream oil and gas company.

Mermaid is also pleased to highlight that the first contract award is from a new customer in a new country in the Middle East GCC and the second contract award is from an incumbent long term customer in one of its key markets in South East Asia. This is in line with Mermaid’s strategic initiative to retain its key customers and to seek out new customers in new regions to strengthen its market share and deliver sustainable growth.

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 contracts had commenced and had been completed within the most recent financial year (the Company’s last financial year ended 31 December 2016), the contracts 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.

Subsea 7 Awarded Contract Extensions Offshore Brazil

Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY) announces the award of contract extensions for three Pipelay Support Vessels (PLSVs) currently on long-term day-rate contracts offshore Brazil. These extensions have a combined value of approximately USD 250 million.

12Seven Waves 24064Seven Waves. Photo credit: Subsea 7

The firm contract periods for the Seven Waves, Seven Rio and Seven Sun will now end respectively in Q2 2021, Q3 2021 and Q2 2022. The extensions have been awarded at the same day rates and on the same commercial terms as the original contracts.

Marcelo Xavier, Vice-President for Brazil Region, said: "These contract extensions reflect our long-standing relationship with Petrobras. We are focused on delivering a safe and reliable performance. We have the right capability and capacity in Brazil to meet our clients' needs."