Schlumberger Completes Multipurpose Vessel Seismic Acquisition Survey for Roc Oil in Malaysia

Schlumberger has announced that WesternGeco has completed a hybrid seismic acquisition survey using their newly deployed multipurpose vessel (MPV)—a first in the industry. The 340 km2 3D seismic survey was acquired offshore Sarawak, Malaysia, for Roc Oil using a triple source array with simultaneous recording by ocean-bottom nodes and a towed-streamer spread, all from a single seismic vessel.

8Sclumberger WG Vespucci DSCF1754 cr WGWG Vespucci MPV. Photo credit: Ulstein

The WG Vespucci MPV acquired the high-quality ocean-bottom seismic (OBS) data required around existing platform obstructions supplemented by streamer seismic data. Simultaneously acquiring the OBS and streamer data without having to employ multiple acquisition vessels and crews resulted in cost reduction and greater efficiency while achieving the survey objectives.

“Providing a hybrid OBS and streamer acquisition option with our multipurpose vessel versus a traditional OBS or towed streamer survey gave the customer a versatile and cost-effective solution to better fit their specific challenges and budget,” said Maurice Nessim, president, WesternGeco, Schlumberger. “This industry-first acquisition underscores our commitment to offering our customers innovative approaches to offshore seismic acquisition challenges.”

The WG Vespucci is one of three newly configured MPVs in the WesternGeco fleet. The WG Tasman and WG Cook are equipped with Q-Seabed* multicomponent seabed seismic systems.

BW Offshore: BW Catcher Commenced Transit to the North Sea

9BWOffshoreBW Offshore has announced the sail away of the FPSO BW Catcher. The vessel has left Keppel Shipyard in Singapore and is currently in transit to the Catcher field in the central North Sea.

BW Catcher is expected to reach UK waters early in the fourth quarter, depending on prevailing weather conditions. Upon its arrival, BW Catcher will commence a seven-year fixed term contract, with extension options of up to 18 years, with Premier Oil. Based on a field life of 10 years, the contract value is USD 2.3 billion including FPSO charter rate and opex.

“The BW Catcher has been completed on time and within budget, and we are especially pleased with the good HSE performance during the construction project. We have worked over 11 million man hours without a lost time injury and in total around 19 million man hours. The FPSO is now underway to the North Sea for hook-up at the Catcher field, and with first oil scheduled later this year,” said Carl K. Arnet, the CEO of BW Offshore.

BW Catcher has an oil storage capacity of 650,000 barrels and a processing capacity of 60,000 barrels per day. The FPSO has a design life of 20 years of uninterrupted operations, and will be moored using a Submerged Turret Production system.

Shell Starts Production at Gbaran-Ubie Phase 2 in Nigeria

The Shell Petroleum Development Company of Nigeria Ltd joint venture has started production at Gbaran-Ubie Phase 2, a key project in Nigeria’s Niger Delta region.

Phase 2 follows the success of the first phase of the Gbaran-Ubie integrated oil and gas development, which was commissioned in June 2010. Peak production of around 175,000 barrels of oil equivalent (boe) per day is expected in 2019.

10gbaran ubie projectPhoto credit: Shell

“Today’s announcement is a positive step for Shell’s global gas portfolio,” said Andy Brown, Shell’s Upstream Director. “It is also good news for Nigeria as gas from Gbaran-Ubie Phase 2 will strengthen supply to the domestic market and maintain supply to the export market.”

Eighteen wells have been drilled and a new pipeline constructed between Kolo Creek and Soku which connects the existing Gbaran-Ubie central processing facility to the Soku non-associated gas plant. First gas flowed from the wells in March 2016, with the facilities coming on stream in July 2017.

The Shell Petroleum Development Company (SPDC) is the operator of a joint venture between the government-owned Nigerian National Petroleum Corporation (NNPC, 55%), SPDC (30%), Total E&P Nigeria Ltd (10%) and ENI subsidiary Nigerian Agip Oil Company Limited (5%).

  • SPDC is the largest Shell company in Nigeria and produced the country’s first commercial oil exports in 1958.
  • A detailed breakdown of the peak production of Gbaran-Ubie Phase 2 is approximately 864 million standard cubic feet of gas per day (MMscf/d) and 26,000 barrels of condensate per

Trelleborg Supplies Smartport Solution to Prelude FLNG

Trelleborg’s marine systems operation has supplied a suite of products to Shell’s Prelude FLNG facility, the largest offshore facility ever constructed. Prelude, which is 488 meters long, 74 meters wide, and made with more than 260,000 tons of steel, will extract and liquefy natural gas from a site in North West Australia.

Trelleborg supplied its gas transfer technology and SafePilot navigational and piloting systems for Prelude.

11Shell two ship of natural gas in seaShell’s Prelude FLNG. Image credit: Shell

Richard Hepworth, President of Trelleborg’s marine systems operation, says: “We’re delighted that our SafePilot solution, SSL, ESL and radio ESD for tandem condensate offload have been used on Shell’s Prelude FLNG. A project of this size and prestige is one we’re extremely proud to be a part of. The products supplied fall under our SmartPort product range: they represent industry leading technology that enables real time communications and information sharing during vessel approach and the LNG, LPG and Natural Gas Condensate transfer operations.”

In support of Prelude’s process operations, Trelleborg supplied its industry-leading Ship Shore Link (SSL) system for the transfer of LNG from the platform to visiting LNGCs. To achieve this, a full shore SSL system was supplied. In addition, Trelleborg also provided their Electrical Shutdown Link (ESL), known more commonly as the SIGTTO link, for Liquefied Petroleum Gas (LPG) transfer and a new radio ESD link developed with Shell used in conjunction with floating hoses for the tandem transfer of natural gas condensate produced as part of the LNG production process.

In support of Prelude’s marine operations, Trelleborg supplied the navigational system for Prelude. The system is designed to closely monitor the relative motion of the FLNG and the carrier during approach, and the sideways berthing/mooring phase, as well as a tandem berthing/mooring phase. The motion and position data of the carrier are measured by the Differential Global Positioning System (DGPS) / Globalnaya Navigazionnaya Sputnikovaya Sistema (GLONASS) RTK based Portable Pilot Units (PPU) installed on the bridge wing of the gas LNGC.

The PPU is an “all in one” unit with built in roll and pitch sensors. The CAT III unit is quick and easy to set up, as it only contains two GPS antennas and the PPU switches on automatically the moment the antennas are pulled apart.

Position and motion data of the FLNG is measured by the Motion Reference Unit (MRU) and the DGPS / GLONASS RTK based base station on the FLNG. The base and up to five PPUs are linked via a dedicated UHF frequency.

The offshore operation requires a precision approach, monitoring and mooring software for the offshore oil and gas industry. Through the SafePilot system, the pilot, master, tug operator and control room all have access to a real-time, accurate and independent picture of the relative positions and movement between the different objects and tankers in the operation. Trelleborg’s offshore software allows the ability to view all objects and shuttle tankers together, on a single display.

Trelleborg’s SSL and SafePilot solutions fall under the company’s SmartPort portfolio. SmartPort is Trelleborg’s answer to the need for a standardized way to collect and store data. It’s a technology platform that connects port operations, allowing users to analyse asset performance and apply data insights, to improve day-to-day decision making.

For more information on Trelleborg’s SmartPort solution, including its SSLs and SafePilot solution, click here.

CGG Starts Espirito Santo IV Survey Offshore Brazil

CGG announces the start of work on Espirito Santo IV, a large BroadSeis™ 3D multi-client survey in the deep and ultra-deep waters of the Espirito Santo Basin offshore Brazil.

12CGG EspiritoSanto IV BroadSeis mapMap showing location of CGG’s Espirito Santo IV multi-client survey offshore Brazil.

The Oceanic Champion is acquiring the survey which is expected to take seven months. This industry-supported survey will cover 10,300 sq km and be processed at CGG’s Rio de Janeiro Subsurface Imaging center. The high-end broadband sequence will include the latest 3D deghosting, Full-Waveform Inversion (FWI) velocity modeling and Tilted Transverse Isotropy (TTI) imaging. Fast-Track PSDM products will be delivered six months after completion of the acquisition.

Jean-Georges Malcor, CEO, CGG, said: “This new survey will expand our high-quality coverage across the Espirito Santo Basin, enhancing industry understanding of exploration potential in this promising region with an upcoming lease round. It reflects CGG’s commitment to invest in the innovative products required to support the successful development of Brazil’s oil and gas resources.”

Oil Spill Response Limited (OSRL) Regional Forum: Preparedness for a Major Subsea Incident in Brazil

On Wednesday, August 16, OSRL's CEO Robert Limb lead a multifaceted OSRL team to Brazil to present a forum on Preparedness for a Major Subsea Incident. The forum was held at the Brazilian Petroleum & Gas Institute (IBP) in Rio de Janeiro, with a follow-on visit on Thursday, August 17, to the SWIS base at Angra dos Reis.

The forum brought together approximately 70 operators, government regulators, and stakeholders and almost 30 visitors to the SWIS base. Three constant themes, introduced by OSRL's Americas Regional Director, Kurt Kriter, provided the context for the entire forum:

  • Tiered Preparedness & Response
  • Planning & Logistics
  • Working Together

Matt Clements, Chris Moore, and Matt Simmons, provided information on OSRL’s global capping, containment and subsea injection (SSDI) capabilities, B727 Tersus aerial dispersant spray systems, and surface response capabilities. Brazil Country Manager, Aldo Pace, examined OSRL capabilities in Brazil and the Brazilian response environment, and logistics and regulatory coordination issues, including information about the new Water Column Monitoring Package soon to enter the OSRL inventory.

The forum also included a presentation on Petrobras’s Centers for Defense Environmental (CDA), and closed with a panel discussion with BP, the National Petroleum Agency (ANP), National Environmental Agency (IBAMA), and OSRL. Paul Schuler, OSRL's Director of Regional External Affairs moderated the forum and Mitch Quinn, OSRL's Senior Response Specialist, provided subsea engineering expertise.

13OSRL base visit pictureSRL's Angra base was opened to a small entourage of OSRL Members, potential members and representatives of ANP and IBAMA. Photo credit: OSRL

On Thursday, August 17, OSRL's Angra base was opened to a small entourage of OSRL Members, potential members and representatives of ANP and IBAMA, for a guided tour of the Capping and Containment equipment. Brazil is one of the most active offshore (and deep water) plays in the world.

The forum provided a good opportunity to build relationships with Members, exchange information vital to effective preparedness and response, and facilitated exchanges with regulatory authorities on key topical issues.

M2 Subsea Achieves ISN Approval in US for Employee Safety Management Program

14M2SubsealogoM2 Subsea, the global independent provider of ROV services, has secured the seal of approval from ISNetworld (ISN) in the US for its Safety Management System.

Following an evaluation of the company’s internal system for managing its health and safety, M2 Subsea met the required standards from the global leader in contractor and supplier management.

ISN is an internationally recognized resource for connecting companies with safe, reliable contractors and suppliers and is designed to meet internal and governmental record keeping and compliance requirements. It measures key performance indicators among workers in meeting industry needs and regulations.

Mike Arnold, chief executive officer of M2 Subsea, commented: “Over the past couple of years, the increase in turnover of personnel has been a problem for some companies, often having to take on new personnel with less experience or asking employees to do more with less – all creating greater potential for incidents.

“At M2 Subsea, commitment to the quality and safety of our workers is of the utmost importance, so it’s great to see our efforts to track compliance and training meets the high standards required by ISNetworld and the clients who use this service to identify companies they wish to work with.

“The transparency the ISN membership offers will further showcase the robust ROV services company we are building both in the Gulf of Mexico and across the world.”

ISNetworld provides companies with the tools required to measure their health and safety performance, identify strengths and weakness and assess how they can drive improvement across the business. It serves as a forum for sharing industry best practices and benchmarking resources, leading efforts to improve the efficiency and effectiveness of contractor management systems.

SPE Offshore Europe Set to Welcome UK Government Minister and New Technology Pioneers

SPE Offshore Europe 2017 has secured Exchequer Secretary to the Treasury Andrew Jones MP as a speaker at the opening plenary and has also confirmed a strong line up for its all new Tech Trek.

15OE17 Andrew JonesExchequer Secretary to the Treasury, Andrew Jones, MP.

As Exchequer Secretary to the Treasury Mr. Jones oversees UK growth and productivity, with interests in industrial strategy and North Sea oil and gas.

He will attend the conference and exhibition’s gala dinner and deliver a 10 minute address during the plenary, which also features industry heavyweights BP CEO Bob Dudley, Royal Dutch Shell’s CEO Ben van Beurden, Wood Group’s CEO Robin Watson and Petrobras’ chief E&P officer Solange Guedes.

Also featuring at OE17 is Tech Trek, where more than 30 pioneering new technologies will form part of an innovation trail. The idea is to highlight new technologies and make them easily identifiable to visitors via the OE app and website, the show catalogue and onsite through floor stickers.

All exhibitors were invited to be part of Tech Trek through a free submission process. The line-up includes a deep-water survey camera system by 2G Robotics, a warehouse logistics module developed by Kardex Systems, an ROV lifting device to reduce shedding and snagging by Ralston Instruments and a cable retrieval tool by Allspeeds, developed in consultation with international certification body DNV GL.

Gareth Rapley, SPE Offshore Europe exhibition director, said: “We welcome Andrew Jones MP and anticipate that he’ll benefit from meeting key industry players and hearing first-hand about the opportunities and challenges being experienced at this pivotal time.

“New technologies are a big part of our central theme Embracing New Realities: Reinventing our Industry and we’re excited by the products we’ve gained a sneak preview of during the Tech Trek selection process.

“Feedback from previous shows found visitors wanted an easier way to find new technologies and we see Tech Trek as the answer. With detailed information, maps and an app we have a ready-to-go route amongst our expected 1,000 exhibitors.”

The wider Technology Zone at OE17 by the Oil and Gas Technology Centre (OGTC) will present a series of technologies used in alternative sectors to encourage the oil and gas industry to think differently about the adoption of new products.

The OGTC believes technologies such as robots, composite materials, additive manufacturing and augmented reality are all currently underutilized in offshore oil and gas, despite being part of a general industrial transformation in other industries.

SPE Offshore Europe 2017 which will be held at Aberdeen Exhibition and Conference Centre, Aberdeen, Scotland from 5-8 September 2017.

It will offer more than 65 technical papers and 11 keynote panel sessions combined with business breakfasts and topical lunches. Also new in 2017, a Decommissioning Zone will feature a themed exhibition and conference space. Free-to-attend, the zone will include decommissioning technology and service providers in the exhibition as well as a conference program organized in association with key industry associations including Decom North Sea, ITF, SUT and IMechE.

Visit Offshore Europe for further information.

McDermott Appoints John Freeman as Senior Vice President, General Counsel and Corporate Secretary

McDermott International, Inc. (NYSE:MDR) announces that John Freeman has been appointed Senior Vice President, General Counsel and Corporate Secretary. He succeeds Liane Hinrichs who has announced her intention to retire from the Company at the end of the year.

16John Freeman 2687 RT2v1John Freeman, Sr. Vice President, General Counsel and Corporate Secretary, McDermott International, Inc.

David Dickson, President and Chief Executive Officer of McDermott, stated, "The Company is grateful for Liane's contributions to McDermott over the past 18 years, and her leadership of the Company's legal group. We extend our best wishes to Liane for the future. As McDermott continues to grow, John's versatility and global experience in our industry will be of particular benefit to the Company. I am looking forward to working closely with him."

Freeman joins McDermott from TechnipFMC where he was most recently Special Advisor to the Integration of Technip and FMC. Prior to the merger of Technip and FMC, Freeman was Group (Corporate) General Counsel for Technip, based in Paris, where he had worldwide leadership responsibility for all legal and compliance matters for Technip. Prior to joining Technip in 2009, Freeman was with Baker Hughes Incorporated, where he held a number of different legal and compliance positions.

Freeman has over 30 years of legal experience both in the private and public sector. He holds a Bachelor of Business Administration in Business Management from The University of Texas, and a Juris Doctorate from the Washington & Lee University School of Law.

PIRA Energy Market Recap for the Week Ending August 28, 2017

17PIRALogoSurplus Stocks Substantially Reduced but Paper Supply Limits Upside

The global economy is accelerating. Oil demand is strong, helping to substantially reduce surplus stocks. Third quarter surplus stocks are expected to decline significantly, and much of it will be crude oil. But the largest surplus stock decline will be behind us after the third quarter because of increased U.S. shale oil production. Surplus stocks will stay a feature of the market through 2018, limiting the ability of crude oil prices to be backwardated. This particularly applies to WTI but much less so for Brent.

Tanker Rates in Crude Sector Stuck Near or Below Cash Breakeven Levels

Strong compliance to OPEC production agreement and fleet capacity growth have pushed crude tanker rates down to seasonal lows near cash break-even levels.

As Buyers Sharpen Pricing Terms, Suppliers Stall

The U.S. is the primary progenitor (with 80%) of the 53-mmcm/d of new volumes to appear in the Atlantic Basin to date in 2017, and concerns about the ability of buyers to keep buying at this level are growing. The third round of delays announced by Sempra recently on the 18.6-bcm/yr. three train U.S. Cameron project may well be more than just routine.

September RGGI Carbon Auction to Rebound vs. June

The August WCI current and future vintage auctions returned to full subscription, clearing at historic high prices. Auction pricing failed to reach highs seen in July, but is above the expected 2018 reserve price. Coverage ratios were strong and the number of registered bidders increased significantly. Compliance entities secured most of the winnings. Secondary market reaction to the results has been decidedly bullish. With August the second consecutive auction to clear above the reserve price, unsold allowances can start to be re-offered beginning with the November auction. This will increase supply and allow for the surplus/bank to build.

Economic and Market Data Both Suggest Healthy Growth for Trade

This week’s calendar featured crucial data releases from the U.S., Europe, and Asia. U.S. durable goods shipments and orders pointed to a strengthening in business investment, and the German IFO index hinted at solid growth in economic activity. Industrial production from Taiwan, however, was somewhat disappointing. Meanwhile, growth in global trade volume continued to accelerate in recent periods. Based on historical relationships, trade activity is likely to remain healthy in the second half of the year.

U.S. Stock Deficit Continues to Grow

Overall U.S. commercial inventories were flat last week, but nevertheless widened the year on year stock deficit by another 6.6 million barrels to 65.0 million barrels, or 4.8%. Four week average adjusted demand is inexplicably weak, given the strong U.S. economy, with demand essentially flat year on year. With refinery runs remaining very high, light product inventories were basically flat, though gasoline stocks did decline by 1.2 million barrels. For next week’s EIA data PIRA sees light product inventories modestly declining as demand strengthens. High runs cause crude stocks to substantially. All eyes will be on Tropical Storm Harvey since it could substantially impact refinery operations and trade.

Steam Cracker Margins Increase with Olefin Prices Outpacing NGL Feedstock Prices

NGL prices closed the week lower, except for propane, following the lead of declines in crude prices. On the other hand, propane prices increased 0.8% week-on-week due to seasonally strong demand and exports. With strength in olefin and aromatics prices, steam cracking margins increased from 13% (ethane) to 66% (normal butane) The Asia LPG arb remains closed, and current movement in Asian prices suggests no improvement in the export outlook. Reduction in domestic petrochemical demand and in export loadings due to Hurricane Harvey will likely outpace production shut-ins, leading to a strong storage injection of propane this coming week, pressuring propane prices, compared to crude.

U.S. Ethanol Prices Tumble

U.S. margins for manufacturing ethanol improved the week ending August 18. D6 RIN prices fell. A Federal Court vacated EPA’s denial of Sinclair Oil’s request for a small refiners exemption from the Renewable Fuel Standard. Brazilian ethanol prices rose as ethanol manufacture became more profitable than sugar production. European ethanol prices dropped to a four-month low.

Big Week of Corn Pricing Ahead?

With Crop Tour over, corn is looking at a big week of pricing with these so-called deferred pricing (DP) contracts rolling off as the Marketing Year comes to a close on Thursday. While it’s impossible to quantify exactly how many bushels need to be priced this week, a country elevator operator in Kentucky told us over the weekend that his operation alone has about 1.5 million bushels to price before Thursday and confided he’s a “bit nervous” about how many other elevators are in a similar situation.

The U.S. to Become North America Oil Independent by 2019

PIRA forecasts the U.S. to become a net oil exporter by 2023, as rising shale liquids output continues to outpace oil demand growth. In the meantime, rising Canadian imports will make the U.S. a net oil exporter to the world outside North America by 2019. Lower oil import dependence will likely have political implications, including a growing temptation to use SPR sales to fund non-energy items. Calls for a reduced military presence in the Middle East could also grow louder.

Cash Prices Retreat Amidst Unseasonably Mild August

Yesterday’s EIA lighter-than-consensus build in the mid-40s failed to stimulate NYMEX buying. Following yesterday’s decline, the nearby contract is now back trading toward the lower end of the weekly range at ~$2.90/MMBtu. In the context of the general trend in prices this summer, the season has thus far proved disappointing for gas bulls. Despite the fact that the population-weighted cooling degree days (CDDs) from June to August will likely register in the top twenty hottest on record, the heat has been restricted to the West. Moreover, the numbers are beginning to fade with August stand-alone CDDs now on track to be down Y/Y by ~20%, thanks to the likely ~10% shortfall versus the 10-year normal tally. As a result, physical prices are already facing downward pressures ahead of the normal seasonal falloff.

Newer Small Markets Come to LNG’s Rescue

Could we look on Pakistan, Thailand and Bangladesh for 2017-18 to be the Kuwait, Egypt and Jordan of 2016? How far will they go in trying to balance the market with the issues we have raised in our recent publications – slower Indian demand, the full force of Australian supply, and Japan and Korea trying to get rid of destination clauses? They will go far, especially in the short term though Dec. 2018.

As German Thermal Stack Steepens, More Bullish Risks Emerge for September

German baseload prices have been generally on a bearish trajectory so far in August, with month-to-date base prices well below our expectations. However, the hourly pricing has displayed great volatility, with hour 12 on Aug. 11 reaching €61.4/MWh, the highest level for August since 2013. Such an extreme settlement comes less than two weeks after the plunge to -€67.1/MWh, an all-time low for 3Q, while a repeat of negative hours occurred again on Aug. 19 and 20. While negatively priced hours are a rare occurrence in the summer months – the latest being in 2014 – the high price settlements seen throughout the month are perhaps more surprising and warrant closer attention.

Unusual Storage Inflexibility Driving High Prices

If current trends in storage nominations persist, it would be highest ever month-on-month change in injections and some of the highest ever seasonal injections. These injections have been surging, as German spot has been converging on local and British first quarter pricing. As you can see in the chart below, in the €3.50/MWh to €4/MWh range, injection sensitivity to pricing was relatively comparable to last year, but from there on, divergence only grows as pricing for spot and 1Q converges – making for a somewhat puzzling situation. The logic in evaluating this spread is that Germany is an important balancing market for peak winter across N.W. Europe, combined with the fact that the U.K. will be an important market draw for Continental storage with the loss of the Rough storage facility.

Bullish Momentum in the Coal Market Eases

Coal prices were relatively tame this week compared to the past several weeks of active bullish momentum. While CIF ARA prices tacked on $1.00/mt at the front of the curve, price gains moderated further along the curve. Prompt FOB Newcastle forward prices declined W/W this week, after rising by over $3.00/mt last week. The market seems to be looking for signs that tightness in the prompt is easing after such an extended run. PIRA continues to caution that after an extended period of tightness, prices remain susceptible to spikes if there are unforeseen interruptions in supply or if the Northern Hemisphere summer ends with a heat wave. However, PIRA believes that as the calendar turns into 4Q17, bearish price risks will surpass bullish ones.

WCI Carbon Auctions Clear at Historic Highs

The August WCI current and future vintage auctions returned to full subscription, clearing at historic high prices. Auction pricing failed to reach highs seen in July, but is above the expected 2018 reserve price. Coverage ratios were strong and the number of registered bidders increased significantly. Compliance entities secured most of the winnings. Secondary market reaction to the results has been decidedly bullish. With August the second consecutive auction to clear above the reserve price, unsold allowances can start to be re-offered beginning with the November auction. This will increase supply and allow for the surplus/bank to build.

Japan Holiday Impacts Noted, Gasoline Disappoints

Two weeks of data were reported due to the holiday period. Much of the data performed along seasonal trends. Runs continue rising post-turnaround with almost all capacity back onstream. Crude imports were very low and then surged, so stocks drew sharply and then built. Finished product stocks rose along seasonal lines, with middle distillate builds being the driver. Aggregate demand fell both weeks and was a bit weaker than seasonal norms. Gasoline demand failed to exhibit holiday uplift and declined both weeks. Gasoil demand held up reasonably well the first week and then predictably plunged. Refining margins have continued to perform strongly and remain supportive to rising runs, for the moment.

Generally Positive Week for Credit and Financial Stress

It was generally a constructive week for financial stress with the S&P 500 gaining week-on-week, along with lower volatility (VIX), positive performance on credit pricing and commodities, and a lower U.S. dollar. The St Louis financial stress indicator posted a third straight rise, but stress indicators remain very low.

U.S. Ethanol Production and Stocks Fall

U.S. ethanol production declined by 7 MB/D to 1,052 MB/D the week ending August 18, though output was still the sixth highest ever reported. Total inventories fell by 319 thousand barrels to 21.5 million barrels, with draws in the East Coast, Midwest and Gulf Coast. Ethanol-blended gasoline production was relatively flat, increasing slightly to 9,392 MB/D from 9,383 MB/D in the preceding week.

Crops Need Some Time

Both legs of the 2017 Tour, which had a record number of scouts pull a record number of samples this year, ended Thursday night in Rochester, Minnesota with a general consensus that soybeans were the story and many areas from Ohio to Minnesota need some sunlight and heat to finish or risk getting smaller. While a cool “break” was welcomed in August, a continuation of that pattern along with cloudy skies for an extended period of time, may have a negative effect on the yield estimates made this week.

RGGI Announces Program Changes

RGGI announced a consensus on “draft program elements”, seeking comments in advance of an end of September stakeholder meeting to discuss a revised Model Rule for adoption by individual states. It will help inform participants in the upcoming allowance auction. Agreement on a “full” banking adjustment starting in 2021 provides bullish sentiment, while PIRA believes that the size of the price-supporting Emissions Containment Reserve may not be large enough to ensure a strong impact on pricing, at least initially. The proposed approach will work to narrow the allowance surplus, but does not require dramatic emissions reductions vs. expectations.

Greater Weight to Developing Countries Lifts World GDP Growth Rates

PIRA has updated the global contribution of all the 142 individual countries it covers to reflect the new purchasing power parity results from the World Bank’s 2011 International Comparison Program (ICP). By incorporating those results, the impact raises the importance of developing countries, relative to the traditional OECD basket of countries. The overall impact raises global GDP growth going forward about 0.1%, each year. It does not impact the actual forecast of individual country GDP growth, nor the energy consumption figure associated with that growth. It also changes regional global aggregates to the extent those regions have greater contributions from developing countries, relative to developed countries.

Global Equities Post a Positive Week

Global equity markets generally rebounded on the week. In the U.S., among the tracking indices, retail and banking did the best and outperformed. Consumer staples declined and underperformed, while energy was a slight outperform, up 1.1%. The international tracking indices did even better than the U.S., with China, emerging markets, and emerging Asia were the best performers.

First Take on Hurricane Harvey Market Implications

Without knowing the duration of market disruption it is hard to judge its lasting impact but here are some initial thoughts. With a substantial amount of Texas refinery capacity shut down, crude demand in the United States will fall, backing up U.S. and Canadian supplies feeding the USG into northern storage in Cushing, other PADD II and Canada. Offshore crude inbound to the USG will stack up on the water. This will weaken WTI time spreads, and weaken WTI and Canadian grades relative to offshore crude (Brent). With some crude pipelines shut down, especially from Eagle Ford and West Texas, production will likely also face temporary losses, particularly in Eagle Ford, but not as much as crude refinery capacity closed. As the storm moves east more Texas, and perhaps Louisiana, refineries are possibly at risk.

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 Acquires Maersk Oil for $7.45 Billion

1 1Total logo1 2Maersk oil logoTotal announces that the Boards of Total and A.P. Møller – Mærsk have both approved the acquisition of 100% of the equity of the E&P company Maersk Oil & Gas A/S (Maersk Oil), a wholly owned subsidiary of A.P. Møller – Mærsk A/S, by Total in a share and debt transaction.

Under the agreed terms, A.P. Møller – Maersk will receive a consideration of $4.95 billion in Total shares and Total will assume $2.5 billion of Maersk Oil’s debt. Total will issue to A.P. Møller – Maersk A/S, 97.5 million of shares, based on the average Total share price on the 20 business days prior to August, 21 (signing date) which will represent 3.75% of the enlarged share capital of Total. Underpinning this share based partnership, subject to Total shareholders’ approval, Total has also offered the possibility of a seat on its Board of Directors to A.P. Møller Holding A/S, main shareholder of A.P. Møller – Mærsk.

The proposed transaction is subject to the applicable legally required consultation and notification processes for employee representatives and to approvals by the relevant regulatory authorities. The transaction is expected to close in first quarter 2018 and has an effective date of 1st July 2017.

The combination with Maersk Oil offers Total an exceptional overlap of upstream businesses globally which will enhance Total’s competitiveness and value in many core areas, in particular through some high quality growing assets and through the delivery of synergies. Specifically, the transaction will bring the following benefits to Total:

  • Around 1 billion boe of 2P/2C reserves, 85% of which are in OECD countries (more than 80% in the North Sea), contributing to Total’s continuous balancing of country risks of its portfolio to enhance shareholder value
  • The addition of 160 kboe/d of mainly liquids production in 2018, acquired at an average price of 46 k$/boepd, offering high margins with an estimated free cash flow break-even of less than $30 per barrel and growing to more than 200 kboe/d by the early 2020’s further strengthening Total’s leading production growth outlook
  • Total expects to generate operational, commercial and financial synergies of more than $400 million per year, in particular by the combination of assets of Total and Maersk Oil in North Sea, an area of excellence for both companies
  • The transaction is immediately accretive to both earnings and cash flow per share underpinning Total’s dividend profile.

At closing of the transaction, in order that Total’s shareholders benefit from the accretive impact of the acquisition of Maersk Oil on earnings and cash flow, the Board of Directors of Total will consider removing the discount offered on the scrip dividend.

Commenting on the transaction, Patrick Pouyanne, Chairman and CEO said, “This transaction delivers an exceptional opportunity for Total to acquire, via an equity transaction, a company with high quality assets which are an excellent fit with many of Total’s core regions. The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries. Internationally, in the US Gulf of Mexico, Algeria, East Africa, Kazakhstan and Angola there is an excellent fit between Total and Maersk Oil’s businesses allowing for value accretion through commercial, operating and financial synergies.

We are also very pleased that we will have a new anchor point in Denmark which will host our North Sea Business Unit and supervise our operations in Denmark, Norway and the Netherlands. We intend to build on the strong operational and technical competencies of the Maersk Oil teams in the same way we managed to do it in Belgium with the teams of Petrofina in the refining & chemical businesses."

Patrick Pouyanné concluded: “This transaction is immediately accretive to both cash flow and earnings per share and delivers further growth over coming years. It is in line with our announced strategy to take advantage of the current market conditions and of our stronger balance sheet to add new resources at attractive conditions. By adding such a portfolio of growing conventional offshore North Sea assets, we confirm our strategy for value creation of, on the one hand, playing to our core strengths in order to grow further and, on the other hand, to constantly seek to lower our break-even by delivering significant synergies. This transaction will deepen and accelerate this strategy significantly, as Total will become a 3 Mboe/d major by 2019 to the benefit of all Total shareholders.”

Key Themes of Transaction

Acquisition transforms Total’s North West Europe outlook.

  • This transaction will make Total the second largest operator in the NW Europe offshore region which is the 7th largest oil and gas producing region globally. Post completion, Total will operate over 500 kboe/d (gross) production in this region.
  • The transaction strengthens Total’s existing North Sea offshore producing business in UK and Norway. The addition of Maersk Oil’s world class assets, including the operated UK gas field Culzean (49.99% Working Interest), close to the Elgin-Franklin hub operated by Total, and its stake in the giant Johan Sverdrup oil development (8.44% Working Interest) in Norway will bolster Total’s production profile in these countries.
  • The transaction adds a new production hub with Maersk Oil’s operatorship and 31.2% ownership of the DUC producing assets in Denmark with net production in 2018 estimated at around 60 kboe/d. Maersk Oil has been the leading operator in Denmark for almost 50 years. The pooling of Total’s and Maersk Oil’s technology and operating expertise will optimize the long-term value potential of the DUC assets to the benefit of Denmark and Total shareholders.

Excellent overlap internationally enhances Total’s regional businesses.

The transaction also will strengthen other core Total regional businesses due to clear complementary positions between Total and Maersk Oil including:

  • consolidating Total’s US Gulf of Mexico presence with the Maersk Oil interest in the Jack development in the Wilcox formation
  • becoming the second largest IOC in Algeria by production
  • complementing Total’s leading East Africa position via Maersk Oil’s Kenya assets
  • strengthening of Total’s Kazakh business via addition of operated production
  • benefiting of potential upsides in Angola and Brazil
  • pooling of Total and Maersk Oil geological and operational expertise in Middle East - North Africa Region.

ENSCO DS-7 Contracted to Noble Energy in the Mediterranean Sea

2ENSCO DS 7Ensco plc (NYSE: ESV) announces that ultra-deepwater drillship ENSCO DS-7 has been awarded a contract by Noble Energy to drill two wells and complete four production wells at the Leviathan field development in the Mediterranean Sea. This contract is expected to commence in March 2018 and be completed in December 2018. The contract also includes four one-well priced customer options that if fully exercised would extend the contract into 2020.

Chief Executive Officer and President Carl Trowell said, “We are pleased to announce another significant contract award for one of our high-specification assets – our fourth drillship contract awarded during the third quarter. This award and our other recent contract wins validate our strategy, increase contracted revenue backlog and advance our efforts to drive growth and value creation for all Ensco shareholders.”

Mr. Trowell concluded, “As contracting activity continues to increase, customers are demonstrating a clear preference for established offshore drillers such as Ensco with operational track records, financial strength, superior technology and broad geographic reach. Our recent contract awards underscore that there is strong customer demand for the type of high-specification assets that will be added to Ensco’s fleet through our pending acquisition of Atwood, which will create a leading global offshore drilling company and better position us as the market recovery cycle unfolds.”

ENSCO DS-7 will be upgraded with a second blowout preventer. This upgrade, combined with the rig’s dual derricks and other technical specifications, will make it one of the most capable assets in the global fleet. As previously announced, this upgrade is expected to cost less than $10 million since it will utilize a blowout preventer currently in inventory. Following its upgrade, ENSCO DS-7 will mobilize to the Mediterranean Sea to begin its contract with Noble Energy.

Transocean Agrees to Acquire Songa Offshore SE

3 1transocean logo3 2Songa Offshore logoTransocean Ltd. ("Transocean" or the “Company”) (NYSE:RIG) has reached an agreement with Songa Offshore SE (“Songa Offshore”) whereby it will, subject to certain conditions, make a Voluntary Exchange Offer (the “Offer”) to acquire 100 percent of the issued and outstanding shares of Songa Offshore, including shares issued before expiry of the offer period as a result of the exercise of warrants, convertible loans and other subscription rights.

The consideration in the Offer will be based upon NOK 47.50 per share of Songa Offshore, representing a 37.0% premium to Songa Offshore’s five-day average closing price of NOK 34.68 per share. The consideration implies an equity value of Songa Offshore on a fully diluted basis of approximately NOK 9.1 billion (USD $1.2 billion), and an enterprise value of approximately NOK 26.4 billion (USD $3.4 billion).

The transaction strengthens Transocean’s industry-leading position with the addition of Songa Offshore’s four “Cat-D” harsh environment, semisubmersible drilling rigs on long-term contracts with Statoil in Norway. Songa Offshore’s fleet also includes three additional semisubmersible drilling rigs. The transaction is expected to be accretive on an EBITDA, Operating Cash Flow, and Net Debt / EBITDA basis, and the Company anticipates annual expense synergies of approximately USD $40 million.

The combined company will operate a fleet of 51 mobile offshore drilling units with backlog of USD $14.3 billionconsisting of 30 ultra-deepwater floaters, 11 harsh environment floaters, three deepwater floaters and seven midwater floaters. Additionally, Transocean has four ultra-deepwater drillships under construction, including two contracted with Shell for ten years each. Consistent with Transocean’s strategy of recycling older less capable rigs, Transocean anticipates re-ranking the combined fleet, which may result in additional rigs being recycled.

Jeremy D. Thigpen, President and Chief Executive Officer of Transocean said: “Songa Offshore is an excellent strategic fit for Transocean. With this combination, we add four new state-of-the-art Cat-D semisubmersible rigs to our existing fleet, further enhancing our position in the harsh environment market. We also demonstrate our continued commitment to the Norwegian market and strengthen our technical and operational presence in that region. Importantly, we add approximately USD $4.1 billion in contract backlog to our already industry-leading backlog of USD $10.2 billion, which provides us with even more visibility to future cash flows in this challenging market.”

Thigpen added, “We look forward to consummating the transaction and elevating the operational and financial performance of the combined company, creating incremental value for our customers and shareholders.”

Frederik Wilhelm Mohn, Chairman of Songa Offshore, said: "The combination of Songa Offshore and Transoceanis a strategic fit. The combined company will have an unparalleled backlog backed by strong counterparties. By adding Songa Offshore's four Cat-D rigs to Transocean's existing harsh environment fleet, the combined company will be the leader within this segment which is showing signs of recovery."

Gulf of Mexico Oil & Gas Lease Sale Generates $121 Million

4Multisale Regionwide Map copyU.S. Secretary of the Interior Ryan Zinke announced on August 17, that the region-wide Gulf of Mexico lease sale generated $121,143,055 in high bids for 90 tracts covering 508,096 acres in federal waters of the Gulf of Mexico. A total of 27 companies participated in the sale, submitting 99 bids totaling $137,006,181. The sale offered the largest amount of acreage in the history of the federal offshore program in the Gulf, including parcels offshore Texas, Louisiana, Mississippi, Alabama, and Florida.

“The path to American energy dominance starts in the Gulf, and the hard work of rig and platform workers, support staff onshore, and the industries that support them cannot go unnoticed,” said Interior Secretary Ryan Zinke. “Today’s results will help secure their jobs and create more good paying jobs while generating $121 million in revenue to fund everything from conservation to infrastructure.”

Lease Sale 249, livestreamed from New Orleans, is the first offshore sale under the National Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2017-2022. Under this program, nine additional region-wide lease sales that combine all three planning areas are scheduled for the Gulf, where resource potential and industry interest are high, and oil and gas infrastructure is well established.

On June 29, President Donald J. Trump and Secretary Zinke announced a public comment period for a new National OCS Oil and Gas Leasing Program Program for years 2019-2024. The comment period is the first step in executing the new program. The 2017-2022 Program, which begins with the lease sale held today, will continue to be executed until the new National OCS Oil and Gas Leasing Program is complete.

Lease Sale 249 offered approximately 76 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida for oil and gas exploration and development. It included 14,220 unleased blocks, located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters). Excluded from the lease sale are blocks subject to the Congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks that are adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundary of the Flower Garden Banks National Marine Sanctuary.

"Today's lease sale is another important step in this Administration's strategy of responsible resource development and energy dominance,” said Vincent DeVito, Counselor for Energy Policy at Interior. “Investors response reflects our work of making the Department of the Interior a better business partner and optimism in the results of this Administration."

The lease sale terms include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region.

Additionally, BOEM has included appropriate fiscal terms that take into account market conditions and ensure taxpayers receive a fair return for use of the OCS. These terms include a 12.5 percent royalty rate for leases in less than 200 meters of water depth, and a royalty rate of 18.75 percent for all other leases issued pursuant to the sale. The 12.5 percent royalty rate for leases in less than 200 meters is lower than the proposed 18.75 percent royalty rate for shallow water leases that BOEM published in the Proposed Notice of Sale.

"Through regulatory streamlining, expanded offshore and onshore opportunities and great cooperation with our stakeholders, we expect to encourage competition while continuing to receive a fair and equitable return on oil and gas resources,” said Katharine MacGregor, Acting Assistant Secretary for Land and Minerals Management.

The estimated amount of resources projected to be developed as a result of the region-wide lease sale ranges from approximately 0.21 to 1.12 billion barrels of oil and 0.55 to 4.42 trillion cubic feet of gas. Most of the activity (up to 83% of future production) of the proposed lease sale is expected to occur in the Central Planning Area.

As of August 1, 2017, 15.9 million acres on the U.S. OCS are under lease for oil and gas development (2994 active leases) and 4.3 million of those acres (870 leases) are producing oil and natural gas. More than 97 percent of these leases are in the Gulf of Mexico; about 3 percent are on the OCS off California and Alaska.

All terms and conditions for Gulf of Mexico Region-wide Sale 249 were detailed in the Final Notice of Sale (FNOS) information package and available here.

Damen Shiprepair Rotterdam Successfully Completed the Refit of Petrojarl 1

On the 18th of August 2017, Damen Shiprepair Rotterdam (DSR) has delivered the FPSO Petrojarl 1 to Teekay Offshore following a complete redeployment project taking place over the past 2 ½ years.

The Petrojarl 1 has been operated by Teekay for 28 years in the North Sea and is now destined for the Atlanta Field in Brazil. After extensive engineering (over 450,000 engineering hours), more than 50% of the process equipment was removed and replaced by new and additional equipment, required to treat heavy oil at the new location in accordance with the most stringent specifications and Brazilian compliance requirements. The available deck space presented major challenges during engineering and execution of the work on board, which was done by Damen and its subcontractors. All workers returned home safely every day.

5FPSO Petrojarl 1 after refit ready for deliveryFPSO Petrojarl 1 after refit ready for delivery. Photo credit: DAMEN

“The Petrojarl 1 project fits within the strategy of Damen to expand further into the repair and conversion of complex offshore vessels and operating units. The recent acquisition of the Damen Verolme Rotterdam yard (DVR), located in the Botlek area of the Port of Rotterdam and holding an extensive track record of successfully refurbished offshore vessels, further complements us in this ambition.” says Mark Witjens, Director with Damen Shiprepair & Conversion responsible for the project.

Damen believes that, with DSR and DVR, it offers clients two yards in the Rotterdam area with excellent facilities and management capabilities to perform any conversion or refit, however complicated, at the highest standards of safety and quality.

Scope of work

The self-propelled FPSO spent 14 months in Dock no. 8 (300x50m) undergoing refurbishment of its marine systems, underwater hull, seawater system, crane booms, heating coils in the cargo tanks and specialised steelworks in the upper and lower turret areas, which needed to be completely revised and adapted to suit the 1500 metre deep mooring location. Simultaneously, new designed high quality, prefabricated equipment skids containing heating, cooling, separation, compression, boilers, centrifuges as well as a new E-house with electrical equipment were placed on board. Interconnecting piping and cabling was subsequently installed to complete the topsides and connect it to the remaining facilities.

The successful completion of the Petrojarl 1 project confirms Damen’s capability to perform the most complicated refurbishments of offshore production units, involving design, procurement and installation of all systems and equipment required for safe and reliable operations at sea.

VIDEO

Statoil Signs Swap Agreement for Dogger Bank Offshore Wind Farm

Statoil has signed a swap agreement with Innogy and SSE for equity interests in the Dogger Bank offshore wind development project.

The Dogger Bank development consists four offshore wind farm projects, Creyke Beck A and B and Teesside A and B. Following the transaction, Statoil and SSE will own 50% each in Creyke Beck A and B and Teesside A, while Innogy will own 100% of Teesside B.

6Statoil DoggerBankSheringham Shoal off the coast of Norfolk. Photo credit: Statoil

Dogger Bank is the world's largest offshore wind development, having achieved consent for an agreed target installed capacity of 4.8 GW, with 1.2 GW consented for each of the four projects. In total, the Dogger Bank projects have the potential to provide renewable energy to up to 5 million UK homes.

“Dogger Bank represents a unique opportunity for the UK to develop secure, sustainable and cost-competitive energy from its world-class wind resource and the asset constitutes a very important element in Statoil’s strategy to gradually complement our oil and gas portfolio with profitable renewable energy solutions,” says Irene Rummelhoff, Statoil’s executive vice president for New Energy Solutions.

The three Dogger Bank projects that Statoil and SSE will own, are located between 125 and 195 km off the east coast of Yorkshire. Each of them extend between 500 and 600km2.

“As operator of both the Sheringham Shoal and Dudgeon offshore wind farms, located in the same area, we can further improve efficiency and increase competitiveness across projects. Statoil and SSE will continue to mature the three Dogger Bank development projects towards a potential Contracts for Difference auctions,” says Rummelhoff.

Dresser-Rand to Supply Equipment for CNOOC Limited’s Offshore Projects in China

The Dresser-Rand business, part of Siemens Power and Gas, has been awarded two orders to supply power generation equipment for two projects for CNOOC Limited (China National Offshore Oil Corporation Limited). CNOOC Limited is the client for the Penglai 19-3 oil field project and Harbin Guanghan Gas Turbine Co., Ltd (HGGT) is the client for the Dongfang 13-2 gas field development project.

7Dresser RandCore engine of the gas turbine SGT-A30 RB The Dresser-Rand business will deliver two SGT-A30 RB (formerly Industrial RB211) power generation trains for the Penglai platform in China.

The Penglai oil field is one of the largest offshore oil fields in China and was discovered in 1999; it’s located in Bohai Bay. The scope of supply comprises two SGT-A30 RB (formerly the Industrial RB211 GT62) power generation trains for the Penglai platform. The Penglai field’s 30-MW ISO power rating SGT-A30 RB turbines represent the first offshore aeroderivative gas turbine packages the Dresser-Rand business sold to CNOOC Limited. The SGT-A30 RB gas turbine is a mature product that offers fast delivery times and is ideal for minimizing project risks. With high output the turbine offers cost-effective solutions for challenging offshore applications. The Industrial RB211 evolved over 40 years of technological advancements and has more than 800 installations worldwide exceeding 37 million operating hours.

The Dongfang field, discovered in 2012, is a high-pressure, high-temperature gas field located in the South China Sea. The scope of supply comprises three SGT-600 power generation trains for the Dongfang platform. The core components of each train are supplied by the Dresser-Rand business, including an industrial gas turbine, base frame, lube oil system, unit control panel and gearbox. And auxiliary systems such as air intake and fire-fighting system are supplied and packaged by HGGT. The Dongfang platform’s 25-MW SGT-600 trains add to the growing list of offshore power generation references for the SGT-600 turbine. The industrial gas turbine packages offer the optimum size turbine to meet the client’s power demand.

USCG Type Approval Tests Complete for Evoqua SeaCURE® System

8 1EvoquaBoat rig pSeaCURE® Ballast Water Management System (BWMS), the electrochlorination based solution pioneered by Evoqua Water Technologies, has successfully completed all biological efficacy US Coast Guard Type-Approval tests.

Tests were carried out under the supervision of classification society Lloyd’s Register and the independent laboratory NSF International will now compile test data for submission to the USCG for imminent approval.

Matt Granitto, Business Manager, Ballast Water, said: “We are delighted that the SeaCURE system has successfully completed and exceeded all testing requirements and protocols for USCG certification. It has been a lengthy process but the importance of these tests and USCG Type Approval cannot be undervalued.

“The testing regime we opted for was the most stringent because it uses natural organisms in natural environments over those that are manufactured. By using real organisms, it takes a lot longer as nature doesn’t always have sufficiently high organism counts.”

8 2EvoquaElectrochlorination is an effective, safe and simple method of treating ballast water. As the hypochlorite is produced from seawater, there is no need to handle and store on board harmful biocides, whilst proprietary control logic ensures that the production is limited to only meet the demand reducing the power consumption requirement. The SeaCURE system also offers dual-purpose operation if required. Image credit: Evoqua

All testing was carried out by NSF International. The first five tests in brackish waters took place in Baltimore harbour in the summer of 2015 by NSF partner Maritime Environmental Resource Centre (MERC). Another partner laboratory, Great Ships Initiative (GSI), then carried out five freshwater tests in the summer of 2016, with the final set of land based tests (marine water) completed by Holland’s MEA-NL, working in conjunction with classification society Lloyd’s Register, on 27th July 2017. Shipboard testing was conducted in various locations around the globe with scientists from MERC.

NSF International was the first independent laboratory to be certified by the USCG for BWMS testing and is widely regarded as the most stringent testing regime there is for a ballast water management system, as Ian Stentiford, Evoqua’s Global Vice President, Electrochlorination, attests.

“We deliberately selected an independent laboratory that would challenge the SeaCURE system as part of the whole approval process. The testing NSF partners carry out is extensive and places considerable demands on the system in real-life, operational conditions. Testing uses real organisms, in different salinities, different water temperatures and different local environments, taking into account organism regrowth.

“It is very stringent; but we knew that if the SeaCURE system could pass these tests, then shipowners will be confident that the system they have invested in is very robust and it can actually do what it has been designed for in all at-sea operating conditions encountered.”

The SeaCURE system is one of the smallest electrochlorination-based ballast water treatment systems to have completed USCG testing, with one unit capable of treating up to 6,000m3/h from an easy-to-install skid of just 2m x 1.5m.

Evoqua anticipates receiving USCG BWMS Type Approval before the end of the calendar year.

BOEM Publishes Draft Environmental Impact Statement for Hilcorp Liberty Oil and Gas Project in Beaufort Sea

9BP Liberty mapThe Bureau of Ocean Energy Management (BOEM) announced a draft Environmental Impact Statement (EIS) analyzing the possible environmental impacts of the activities proposed in an offshore oil and gas development and production plan (DPP) submitted to BOEM by Hilcorp Alaska LLC. on Sept. 18, 2015.

The publication of the draft EIS opens a 90-day public comment period, which extends through 11:59 p.m. Eastern Time on Nov. 18. During this time, BOEM will conduct public hearings and accept comments. The input received via this process will be used to inform preparation of the final EIS.

"Today's publication of the draft EIS is another important step in the Department's strategy of responsible resource development and we are committed to working with states, Alaska Native communities, investors and all stakeholders when we analyze development and production plans," said Vincent DeVito, Counselor for Energy Policy at Interior.

The draft EIS and instructions for commenting may be found here. A Notice of Availability can be found in the Federal Register reading room.

In its DPP, Hilcorp proposes to build a small artificial gravel island in the shallow (19 feet) federal waters of the Beaufort Sea, about 20 miles east of Prudhoe Bay. To be located about five miles off the coast in Foggy Island Bay, the 9-acre site would be similar in nature to the four oil- and gas-producing artificial islands currently operating in the area’s state waters (Spy Island, Northstar Island, Endicott Island, and Oooguruk Island).

Hilcorp plans to install a “pipe-in-pipe” subsea pipeline to deliver oil to shore. The offshore portion of the pipeline will be laid in a trench, then buried. It will include automatic leak-detection and temperature-monitoring technology. Onshore the pipeline would connect with the Badami pipeline which connects with the existing oil and gas infrastructure at Prudhoe Bay.

“The federal submerged lands of the Beaufort Sea are known to have great oil and gas potential,” said BOEM Acting Director Walter Cruikshank. “They also contain sensitive marine and coastal resources that Alaska Native communities depend on for subsistence. During this comment period we look forward to discussing this draft EIS with the Beaufort Sea coastal communities and getting meaningful feedback on ways it can be refined and enhanced.”

A DPP describes development and production activities proposed by an operator for a lease or group of leases. The description includes the timing of these activities, information concerning drilling methods, the location of each proposed well or production platform or other structure, and an analysis of both offshore and onshore impacts that may occur as a result of the plan's implementation.

In its project design, Hilcorp included numerous measures to mitigate potential impacts and the company will also be required to comply with all stipulations associated with their three federal leases. The mitigation measures that the federal government will require of Hilcorp will be determined during the NEPA review process and Endangered Species Act consultations, resulting in Biological Opinions, Marine Mammal Protection Act authorizations, and other permits that must be obtained from the Federal regulatory agencies.

Hilcorp’s DPP commits the company to several actions to minimize disruption to subsistence activities – including whaling – that play a vital role in the lives and cultures of Alaska Native communities along the Arctic coast, and BOEM continues to be committed to protecting this unique way of life. For example, potentially noisy activities will be scheduled to avoid the spring and fall whale migration periods, and flight activities will be arranged to avoid hunting areas. Significantly, Hilcorp has committed to signing a Conflict Avoidance Agreement with local whaling groups to engage with the whalers to protect subsistence activities.

Tests Confirm that New Patented Buoyancy Design Eliminates VIV in High Currents and Minimizes Drag

A major milestone is successfully completed under the joint development agreement between Diamond Offshore, Inc. and Trelleborg that focuses on creation of a helically grooved buoyancy design with enhanced performance for drilling riser operations in high current conditions. Test results revealed that, when using the patented design, Vortex Induced Vibration (VIV) is effectively eliminated in high currents, with the added bonus that drag loading on the riser is also reduced to a level comparable with fairings.

In June of this year, tow tank testing on the patented helically grooved design was performed at SINTEF Ocean’s Tow Tank facility in Trondheim, Norway. The joint facility, under SINTEF and the Norwegian University of Science and Technology (NTNU), is one of the premier hydrodynamic research facilities in the world, allowing testing of the new buoyancy design in the supercritical flow regime representative of offshore current conditions.

10 1TrelleborgSubsea View of Helically Grooved Drill Riser Buoyancy. Photo credit: Trelleborg

Antony Croston, Business Group Director with Trelleborg’s offshore operation in Houston says: “Based on the extensive modelling performed by both Diamond Offshore and ourselves, we were very confident that the design would be fully validated by testing. In reality, the results exceeded even our own expectations.

“For many years, fairings have been accepted as the best technical solution for drag and VIV reduction on drilling risers. Their use has come with an operational penalty in the form of increased running and retrieval time, as well as handling issues, especially in harsh weather. We now have an integral concept, which has been proven to match the performance of fairings, without any issues in drilling riser handling and running methodologies.”

10 2Trelleborg2Helically Grooved Buoyancy during testing. Photographer: Collin Gaskill

The extensive test program provided valuable hydrodynamic data confirming the design’s drag reduction and VIV suppression performance. Fixed and dynamic drag coefficients of the new design were recorded during separate fixed and free vibration tow testing. Drag coefficients at an average of 0.65 were observed for relevant flow regimes, which is comparable to the performance of riser fairings. This is achieved through the highly successful VIV suppression of the design, effectively eliminating VIV response and subsequent drag amplification in the high excitation response range of offshore drilling risers.

Forced motion testing of the helically grooved design was also performed to better understand excitation of the riser under high current conditions and for the development of lift coefficient data for use in analytical fatigue damage prediction programs.

The helical drag reduction and VIV suppression performance shows strong independence of current speed, which is consistent with the behavior of an external helical strake. However, the underlying flow physics causing the suppression are quite different, leading to the suitability of the helically grooved design for large diameter drill riser buoyancy.

Both Diamond Offshore and Trelleborg are delighted with the success of the joint development, which has resulted in the validation of the design through tow tank testing. In addition, Trelleborg has manufactured and delivered two complete strings to Diamond Offshore that have been recently deployed in the Gulf of Mexico. The two companies look forward to making this technology available to the offshore drilling industry to enhance safety and efficiency of operations in environmentally challenging locations around the globe.