Deep Casing Tools, which develops an innovative range of tools designed to land casing and completions at target depth within oil or gas wells, has delivered the 100th tool off the production line.
Photo: Deep Casing Tools Team
The 100th tool was included in a batch of Turbocaser™ Express tools that were dispatched to the Gulf of Mexico for application in field development drilling in approximately 3,650 feet of water. Deep Casing Tools’ unique drill through technology provides significant time and cost savings when compared to conventional methods. Landing casing and completions at target depth first time, avoiding wiper trips and wellbore damage, is a game changer for improved well construction.
Lance Davis, CEO of Deep Casing Tools, said: “The delivery of our 100th tool coincided with the first planned deployment in the deepwater Gulf of Mexico for the Turbocaser™ Express. These two achievements are significant and have occurred since the company established the US subsidiary Deep Casing Tools Inc.” Deep Casing Tools Inc. is headquartered in Houston, and is responsible for deployment of the technology both in the Gulf of Mexico and onshore locations.
In line with the growth in North America, the company has inventory in Houston, Calgary and other key locations to service market opportunities. In addition, key personnel have been appointed to manage the USA and Canada.
Brad Whitfield has been appointed Vice President USA, based in Houston. Brad’s experience includes sales and business development in the completions domain, focusing on products and systems for permanent monitoring and intelligent well completions.
Mike Chomack has been appointed Vice President Canada, based in Calgary. Mike has been active in the Canadian oil industry for 30 years, working directly for both service companies and operators in well construction, and as a consultant in drilling and completions.
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A new three year European Research Project, partly funded by the EU has been launched to help increase efficiencies in regulation compliance and enforcement for the maritime sector. e-Compliance will facilitate tighter integration and co-operation in the fragmented field of regulatory compliance. It will closely align with the EU e-Maritime initiative of which a key priority is supporting authorities and shipping operators to collaborate electronically in regulatory information management.
The maritime sector is, by necessity, heavily regulated. International, EU and national authorities create large numbers of rules and regulations; the long lifetime of ships and the different phases of their operation add to the complexity. As a result, practitioners who need to enforce or comply with regulations are often unsure as to which rules apply for a given vessel in a given situation.
Building on the success of other EU projects such as FLAGSHIP, e-Compliance will look at creating a model for managing maritime regulations digitally and thus help to harmonise these regulations. The project’s consortium comprises representatives of the three main stakeholder groups involved: classification societies (who create class rules), port state control (who enforce regulations) and ships (who need to comply with regulations). This seamless co-operation between the different stakeholder groups will improve the effectiveness of regulations and reduce the burden on practitioners who work with maritime regulations on a daily basis.
Image: Current Regulation Complexity
Philipp Lohrmann, Project Manager for e-Compliance comments: “Presently, there are numerous disparate initiatives and projects that address specific aspects of the regulatory domain. The e-Compliance project will bring these different approaches together, using their most promising aspects in order to increase coherence and efficiency in the world of maritime regulations.”
Specific activities within this three year R&D project will include:
Establishment of a cooperation model between regulation setting and enforcement authorities, both for port state control and IMO regulations, for modelling and interpreting regulations and ensuring harmonisation across national and organisational boundaries.
Demonstration of automated compliance management by:
Modelling and delivery of regulations in electronic format
Harmonised e-Services for more effective and co-ordinated enforcement controls and inspections
e-Services in support of class requirements, particularly on surveys and for ship risk management in upgraded e-Maritime applications
Evaluation of the practical implementation of the above in representative networks and the provision of recommendations for e-Maritime policies.
e-Compliance consists of 10 partners, all of which bring their own areas of knowledge and experience of working in the maritime space. They include: BMT Group Ltd, Det Norske Veritas (DNV), Danaos Shipping Co Ltd, INLECOM Systems, The Netherlands Organization for Applied Scientific Research (TNO), TEMIS, Acciona Infraestructuras, PORTIC Barcelona, Norsk Marinteknisk Forskningsinstitutt AS (MARINTEK) and the Maritime Administration of Latvia.
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A leading engineering consultant says the 2013 rate of investment in North Sea assets is unsustainable and that more carefully-targeted maintenance is now essential for the region to stay profitable.
Philip Lawson, of ABB Consulting in Aberdeen, says North Sea operators are only likely to achieve an acceptable return on investment if they maintain and invest in the right areas from now on.
Offshore industry body Oil & Gas UK recently revealed* that maintenance on ageing infrastructure had dented outputs for 2013, with levels at a record low. Average output for the year has been forecast at between 1.2m and 1.4m barrels of oil and gas per day (BOEPD), down from 1.54m in 2012.
The drop has been attributed to downtime caused by the extent of asset improvements and repairs that have taken place this year, with investment estimated at £13.5bn so far.
Lawson, who is due to address delegates at September’s Offshore Europe exhibition in Aberdeen, said: “There is no question the region can still be profitable for many years to come, but maintenance programmes must now be targeted very carefully in order to achieve those targets.
“There has been record investment in assets this year but it cannot continue at that rate if an acceptable ROI is to be achieved.
“Assets may be ageing but many of them are capable of safely reaching the end of their design life, particularly over the next two decades as activity in the North Sea slows down.
“It is possible, therefore, to target the right areas effectively – applying maintenance only to the right equipment and systems at the right time, and prioritising investment in areas that are most likely to fail.”
He said it could sometimes be difficult for those working offshore to identify priority areas, which meant onshore support and consultancy was playing an increasingly vital role in the industry.
“Sometimes it can be hard without an outside perspective to identify the most critical assets correctly. Resources and skills are currently at an absolute premium so strategies have to be implemented perfectly in order to achieve profitability for the next 20 years,” he added.
* Oil and Gas UK’s 2013 Economic Report
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Petrobras announces that, in August, oil output (oil plus natural gas liquids - NGL) from all the company's fields in Brazil averaged 1,908,000 barrels per day (bpd). This volume is 1.1% higher than the average output of the previous month (1,888,000 bpd). Including the share operated by the company for its partners, oil output exclusively in Brazil reached 1,971,000 bpd, indicating a 1.3% rise from July.
This positive result is due to the resumption of operations on platforms undergoing scheduled maintenance stoppages in July (P-40 in Marlim Sul, P-20 in Marlim, PPM-1 in Pampo and FPSO-RJ in Espadarte) and the startup of wells on platforms P-54 and FPSO-Piranema. According to the schedule, production was halted on platforms P-26 and P-35 (both in Marlim) in August to comply with the scheduled maintenance shutdown program.
In August, Petrobras' total output (oil and natural gas) in Brazil averaged 2,294,000 barrels of oil equivalent (boed), 0.5% higher than output in July. Including the share operated by Petrobras for partners, total output volume in August was 2,401,000 boed, 0.6% up on the July output. Operations to connect platform P-63, the first production unit in Papa-Terra field, to mooring lines, are currently in the completion phase. This platform will start up operations on October 23.
The construction of platform P-55 has been completed and, on September 17, the inclination tests were initiated. By the first week of October, it should move to the Campos Basin' Roncador Field. Added to the company's August output abroad, total oil and natural gas volume averaged 2,499,000 boe/d, 0.3% up on total output in July.
Natural Gas Production
In August, non-liquefied natural gas output from the company's fields in Brazil was 61.378 million m³ per day. Total natural gas output, including the share operated by the company for its partners, was 68.336 million m³ per day, close to output levels in July.
International Production
In August, total extraction of oil and natural gas abroad was 205,698 boed, 1.4% down on July, due to an adjustment in the calculation of oil from Akpo field, Nigeria.
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NYC-based PIRA Energy Group reports that Brent crude prices came off their early September highs. On the week, the U.S. had strong product demand trend but a large crude stock build. In Japan, crude stocks built. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Brent Crude Prices Came Off Their Early September Highs
Brent crude prices came off their early September highs, but the further crude price declines will be limited by tighter near-term supply/demand balances. Supply losses remain huge. Refinery runs bottom in October as maintenance peaks but then runs recover. The WTI-Dated Brent spread is stabilizing near negative $5-6/Bbl. Atlantic Basin gasoline cracks should stay generally weak as inventory coverage remains ample. Middle distillate cracks should move higher over the next few months. Margins will recover in the weeks ahead, led by growing middle distillate strength.
Strong U.S. Product Demand Trend but Large Crude Stock Build
Product inventories declined for the week ending September 27, but this was overwhelmed by a crude inventory build. The resulting 5 million barrel inventory increase is in sharp contrast to last year's inventory decline for the same week last year. This widened the year-on-year inventory excess to 2.2%. Most of the excess is in gasoline.
Japanese Crude Stocks Build; Turnarounds Continue
Crude stocks built due to imports rising following the impacts of the most recent typhoon, while gasoline and gasoil stocks drew. For gasoline, the draw was due to good demand, while for distillate it was driven by low refinery yield and higher incremental exports. The kerosene stock build rate increased, but the 4-week build rate remained about the same. Refining margins continue to slowly improve from poor levels.
Saudi Formula Crude Prices for November Reflect Weak Asian Margins
Saudi’s formula prices for November were recently released. In Asia, differentials were lowered most aggressively on lighter grades, but the differentials for Arab Medium and Heavy were raised, with Heavy being raised the most. Asian margins have been poor, so the more generous terms on the lighter grades were in line with market economics.
Latest Oil Inventory Update: Continued Low Stocks
The final June data and preliminary July data for OECD Europe were released this past Thursday and when combined with U.S. and Japanese estimates continue to point to low inventories in the three major OECD markets. The June stock data were revised lower and the second quarter is now showing an inventory decline compared to last month's increase. Relative to the year earlier, stocks began the year with an excess and ended August with a deficit.
Ethanol Prices and Cash Margins Soar
Ethanol values in Chicago rose during the week ending September 6 because of the scarcity of corn in the Midwest, causing production to fall to a 22-week low and inventories to drop to the lowest level in two months. Cash margins for ethanol production rocketed to the highest level since November 2011.
Ethanol Production Rebounds
U.S. ethanol production rose to a 4-week high of 848 MB/D the week ending September 6 from 819 MB/D in the preceding week. Some plants restarted after routine summer turnarounds. In addition, facilities in the Midwest have been able to secure corn via barge and rail from as far south as Mississippi, where the 2013/2014 harvest has already begun.
Relatively Low Propane Stocks to Start Fourth Quarter
U.S. propane stocks entered the fourth quarter relatively low and are likely to remain so given crop drying activity, petchem feed use and growing exports. Ethane stocks continue relatively high, while butane inventory is dropping as gasoline blending picks up the pace. The contango in Asia has widened helping support winter stock building. Propane continues as a preferred olefin cracker feedstock in Europe, helping sustain demand until winter requirements pick up.
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.
Click here for additional information on PIRA’s global energy commodity market research services.
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Shell and its partners have begun production from the second development phase of the Parque das Conchas (BC-10) project, located off Brazil’s south-east coast. The BC-10 project (Shell share 50%, Petrobras 35%, ONGC 15%) is comprised of several subsea fields which are tied back to a floating production, storage and offloading (FPSO) vessel, named the Espírito Santo.
In 2009 the first phase of the project began production, when the Abalone and Ostra fields were connected, along with the Argonauta B-West reservoir. The peak production of the first phase was more than 90,000 barrels of oil equivalent (boe) in 2010, and is currently producing some 35,000 boe per day. Phase 2 connected a fourth reservoir to the vessel, the Argonauta O-North. At its peak, Phase 2 is expected to produce approximately 35,000 boe per day.
“Boosting production at BC-10 with the completion of phase two is another great example of our successful project development, delivery and execution capabilities,” said John Hollowell, Executive Vice President for Deep Water, Shell Upstream Americas. “It is a great day for Shell in Brazil.”
Building on what was already a successful proving ground for technology innovation, a 4-D Life of Field Seismic monitoring system was installed as part of Phase 2 subsea development. This technology, consisting of a network of seismic sensors installed throughout the field on the seabed, allows us to more effectively and efficiently monitor the reservoir. This is the deepest installation of its kind on a full-field scale in the world (approximately 1800m or 6000 feet).
Expecting to maximize the production life of BC-10 even further, Shell and its partners recently announced in July the decision to move forward with the project’s third development phase, which will include the installation of subsea-infrastructure at the Massa and Argonauta O-South reservoirs. Once online, Phase 3 of the BC-10 project is expected to reach a peak production of 28,000 boe.
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Strategically located Gibraltar shipyard Gibdock has continued its run of technically advanced offshore support vessel repair and maintenance projects, securing a contract involving a returning customer. The Viking Vanquish (photo), a high capacity 3D seismic survey vessel operated for CGG, has undergone a 21-day programme of works, leaving the shipyard’s drydocks in mid-September prior to sea trials.
Based in France, CGG operates 23 seismic survey vessels, after acquiring Fugro’s geoscience division earlier this year - claimed to be the largest high-end seismic fleet in the industry.
John Taylor, Gibdock operations director, says: “We are really building up momentum in this demanding sector of the shiprepair business. Our ability to attract contracts from the top players in the industry reflects confidence in our workforce, and our safety procedures. We are now the yard of choice for demanding offshore vessel projects in the Mediterranean.”
The scope of work carried out on Viking Vanquish included a tailshaft withdrawal and the full overhaul of the shaft, couplings, liners and related equipment. This complex process required cutting away a section of the stern tube to gain access.
Are Skaanevik, technical superintendent for ship manager CGG Eidesvik, says: “The project went very well. We chose Gibdock largely because of the capacity and capabilities of its machine shop, which we called upon extensively. We have had a very good experience and I hope that this will be the start of a good long-term relationship.”
“This was certainly not a straightforward or standard job,” explains Mr Taylor. “Usually the couplings can be found in the engine room, without access complications. This was not the case on this project, but we nonetheless managed to finish on schedule.” Gibdock also machined liners for the tail shaft, which were not supplied pre-machined.
The 93.3m long, 8,621grt Viking Vanquish (built 1998) is owned by Norwegian company Eidesvik and was converted for seismic operations in 2007. Towing 12 x 8km streamers as standard, the vessel is capable of acquiring high quality data in all conditions.
Gibdock also carried out a series of load tests on the Viking Vanquish’s many winches and eye-plates, as well as a range of other machinery and pipe works. The yard renewed propeller blade seals and blasted and painted the vessel’s exterior.
Commenting on a period of sustained workload in the offshore sector at the yard, Gibdock managing director, Richard Beards, says: “This project adds another reference to our growing body of work in this specialised market for 2013, following a series of contracts for seismic survey, dive support, pipelayer and other offshore vessel types secured in the past year.”
Mr Skaanevik highlights another notable aspect of the project as using a cleaning product from Ultraclean AS, believed never to have been used before in shiprepair. The product, a combination of gel and chemicals, was applied to remove corrosion on Viking Vanquish’s gun-deck and cranes then washed away with water, to prepare surfaces for coating. CGG, Eidesvik and Gibdock expressed satisfaction with the results of using a product that may provide an environmentally-friendly alternative to conventional blasting.
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Statoil (OSE:STL, NYSE:STO) Canada and co-venturer Husky Energy have announced that the first Bay du Nord exploration well has discovered between 300 and 600 million barrels of oil recoverable.
The Bay du Nord discovery, located approximately 500 kilometers northeast of St. John's, Newfoundland and Labrador, Canada, was announced in August. A sidetrack well has been completed this week and confirms a high impact discovery. Additional prospective resources have been identified which require further delineation.
The Bay du Nord discovery is Statoil's third discovery in the Flemish Pass Basin. The Mizzen discovery is estimated to hold a total of 100-200 million barrels of oil recoverable. The Harpoon discovery, announced in June, is still under evaluation and volumes cannot be confirmed at this stage.
The Bay du Nord well encountered light oil of 34 API and excellent Jurassic reservoirs with high porosity and high permeability.
"It is exciting that Statoil is opening a new basin offshore Newfoundland," says Tim Dodson, executive vice president of Statoil Exploration. "This brings us one step closer to becoming a producing operator in the area."
"With only a few wells drilled in a large licensed area, totaling about 8,500 square kilometers, more work is required," adds Dodson. "This will involve new seismic as well as additional exploration and appraisal drilling to confirm these estimates before the partnership can decide on an optimal development solution in this frontier basin."
The successful drilling results from the Flemish Pass Basin demonstrate how Statoil's exploration strategy of early access at scale and focus on high-impact opportunities is paying off. As an early player in the area, Statoil has confirmed its understanding of the basin and has opened a new oil play offshore Canada. The Flemish Pass has the potential to become a core producing area for Statoil post-2020.
All three discoveries are in approximately 1,100 meters of water. Mizzen was drilled by the semi-submersible rig Henry Goodrich (2009). The Bay du Nord and Harpoon wells were drilled by the semi-submersible rig West Aquarius (2013).
Statoil is the operator of Mizzen, Harpoon and Bay du Nord with a 65% interest. Husky Energy has a 35% interest.
(High impact discovery = > 100 mmboe net to Statoil or > 250 mmboe in total)
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Chevron Corporation (NYSE: CVX) has announced that it is making three key appointments to its executive team and realigning its existing technology and services organizations.
Effective Jan. 1, 2014, Jay Johnson becomes senior vice president, Upstream, and Joe Geagea becomes senior vice president, Technology, Projects and Services. The new roles will report to George Kirkland, vice chairman and executive vice president, Upstream. Also effective Jan. 1, 2014, Pierre Breber becomes corporate vice president and president, Chevron Gas and Midstream, reporting to John Watson, chairman of the board and chief executive officer. Following Kirkland's planned retirement in 2015, consistent with the company's mandatory retirement policy, Johnson and Geagea will report to Watson.
"These appointments ensure a smooth transition in our upstream business and simplify the delivery of technology and services to all of our businesses," Watson said. "Jay, Joe and Pierre are experienced leaders who will enhance a very effective leadership team."
Johnson, 54, currently is president of Chevron's Europe, Eurasia and Middle East Exploration and Production Company, based in London. He joined Chevron in 1981 and previously has been managing director of the Australia and Eurasia upstream business units.
• Johnson will lead an upstream organization that continues to have four regional operating companies:
• Todd Levy will replace Johnson in London as president of Europe, Eurasia and Middle East Exploration and Production Company. Levy currently leads a key Chevron upstream support organization and has wide-ranging upstream experience with past assignments for the company in Kazakhstan, Angola, Australia and the United States.
• Melody Meyer continues as president of Asia Pacific Exploration and Production Company, based in Singapore.
• Ali Moshiri continues as president of Africa and Latin America Exploration and Production Company, based in Houston.
• Jeff Shellebarger continues as president of North America Exploration and Production Company, based in Houston.
Geagea, 54, will lead a new organization composed of energy and information technology, capital projects management, procurement, upstream production services and workforce development organizations. These groups will support the company's upstream, downstream and midstream businesses. Geagea, who joined Chevron in 1982, has held positions in each of these three areas. He is the current president of Chevron Gas and Midstream and previously was the managing director of the Asia South upstream business unit and president of the company's downstream operations in East Africa, the Middle East and Pakistan.
Breber, 49, currently is managing director of the Asia South upstream business unit, based in Bangkok, Thailand. He joined Chevron in 1989 and previously has held senior roles in Chevron's finance organization, including corporate vice president and treasurer. He will lead a Gas and Midstream business that was reorganized earlier this year to consolidate trading operations and strengthen its support to the upstream and downstream businesses.
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Total announces that it has received approval from the South African authorities and has completed the acquisition of a 50% interest in Block 11B/12B, from CNR International (South Africa) Ltd., a wholly owned subsidiary of Canadian Natural Resources Limited.
The asset is located in the Outeniqua Basin, around 175 kilometers off the southern coast of the country, and covers an area of 19,000 square kilometers with water depths ranging from 200 to 1,800 meters.
Total also becomes Operator of Block 11B/12B and will drill an exploration well on the Block in 2014.
“Our acquisition in this extensive frontier exploration asset demonstrates our determination to establish ourselves in new plays. South Africa's deep offshore, in particular the Outeniqua Basin, is one of the few remaining under-explored offshore regions in Africa. Recent discoveries in the Falkland Islands (Malvinas Islands) together with the prospects identified on the block offer us very promising opportunities." commented Marc Blaizot, Senior Vice President, Exploration at Total. “The results of the upcoming exploration well will be decisive, especially in terms of operability of the area in such a harsh environment. As the Operator, we will leverage our recognized deep offshore expertise and experience in challenging waters such as the North Sea and the Barents Sea, to quickly appraise the potential of this acreage." This acquisition is aligned with Total’s strategy of expanding its exploration and production operations in under-explored countries with strong growth potential.
Total in South Africa
Present in South Africa since 1954, Total is now the country’s fifth-ranked marketer, with sales of 3.1 million tons of products each year, a network of 528 service stations, its biggest outside Europe, and a 36.6% interest in the Natref refinery alongside Sasol. The Group is also South Africa’s third-ranked LPG marketer and fifth-ranked coal exporter.
Total’s solar affiliate, SunPower, is active in ground-mounted solar power plants and off-grid solar facilities in South Africa. It is currently building two solar power plants near Douglas, in The Northern Cape. Total is also implementing decentralized rural electrification programs through KwaZulu Energy Services (KES).
The newly created exploration and production affiliate is based in Cape Town.
.NYC-based PIRA Energy Groupbelieves that Asia Pacific refinery margins begin recovering and global crude markets are supported. On the week, the U.S. had a small stock build, while Japanese stocks drew. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Asia Pacific Refinery Margins Begin Recovering, Global Crude Markets Supported
Refinery margins in Asia are starting to recover from poor levels amid increasing refinery turnarounds and good demand growth. Global crude markets are supported by continuing supply outages, and with strong crude stock draws resuming in November and increasing sharply into December. Product demand growth increases seasonally through year-end which should support improved cracks, particularly gasoil, and refinery margins.
U.S. Small Stock Build
Crude stocks surprised to the upside with a sharp drop in runs for the week ending September 20, making the week earlier 16.1 MMB/D print an outlier, while product stocks fell for the second consecutive week. Crude stocks remain above average, but this is largely due to new infrastructure to service growing U.S. production, while the inventories of the four major products are below the historic average. The stock excess to last year widened, particularly gasoline. Last year's stocks were especially low and the current gasoline inventory level is equal to the average of 2009-2011.
Japanese Crude Runs Continue Declining, But Crude Stocks Draw
Crude runs continued declining as turnarounds ramp up. The crude import rate was sufficiently low to produce a large crude stock draw. Gasoline demand was higher with a low yield that drew stocks. Gasoil demand stayed low reflecting holiday impacts and despite lower exports, yield dropped sufficiently to keep stocks flat. Refining margins began to improve, but remain statistically poor.
Higher U.S. Octane Values Here to Stay
U.S. octane value has trended higher in 2012 and 2013. One of the main reasons is that the U.S. has effectively reached its maximum ethanol utilization, and gasoline blenders cannot adjust octane with additional volumes of ethanol. In addition, increasing runs of paraffinic U.S. shale crudes are putting downward pressure on catalytic reforming yields and generating substantial quantities of low octane light naphtha.
Refiners Continue to Maximize Diesel/Gasoil Yield
In the Atlantic Basin, refiners have responded to the higher price of diesel/gasoil vs. gasoline by steadily increasing diesel/ gasoil yields as a percentage of crude. Even in Western Europe, where it was thought refiners were close to maximum diesel/ gasoil yields in 2007-8, yields have continued to creep up. In the United States, diesel/ heating oil yields have increased from roughly 26-27% to over 30% or more. Hydrocracking additions have played an important role.
VLCC Rates Improving
VLCC rates improved somewhat when chartering activity picked up substantially in September as production from Saudi Arabia continued at record levels. While this has produced only a modest increase in rates, it has at least kept rates from falling further in an over-supplied market. On the vessel supply side, the international order book seems to have bottomed with the focus increasingly on product tonnage. The biggest new developments are in the U.S., where high rates, thin spot markets, and uncertain availability have prompted a significant increase in orders for Jones Act tonnage.
Chemical Demand Supporting Propane
Preparations for winter are beginning, with a far better crop drying season than last year anticipated. Higher demand and exports will keep U.S. propane inventory relatively low. Propane remains a preferred feedstock over naphtha in international markets.
Ethanol Manufacturing Margins the Highest Since November 2011
Ethanol prices rose in most of the U.S. the week ending September 20, reversing some of the prior week’s losses. Cash Margins for ethanol manufacture were the highest since November 2011. RIN prices fell to the lowest values since February.
Ethanol Output and Inventories Decline
U.S. ethanol supply was tight the week ending September 20 as production fell to 832 MB/D from 838 MB/D in the previous week and inventories declined by 565 thousand barrels to 15.6 million barrels. PADD I stocks are at the lowest level in over 3 years.
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.
Click here for additional information on PIRA’s global energy commodity market research services.
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Firm represents Teekay Shuttle Tanker Finance LLC in issuing 10-year senior secured notes for delivery of a pair of identical tankers built in Korea to work Brazil’s offshore oil fields
In its latest major transaction in the service of Brazil’s burgeoning offshore energy sector, Milbank, Tweed, Hadley & McCloy has advised Teekay Shuttle Tanker Finance LLC, as issuer, in the $174,150,000 financing of two Suezmax-class shuttle tankers designed to operate between Brazil’s offshore oil fields and coastal refineries and terminals.
The bond financing is to be split into two equal tranches and funded through two issuances the first taking place this month, the second scheduled for November, prior to the delivery of each tanker. Proceeds from the secured 10-year notes will be used to fund delivery of the two vessels.
The two tankers are being built by Samsung Heavy Industries Co. Ltd. of South Korea and will be under 10-year charter to BG in Brazil. Each identical tanker, Bossa Nova Spirit and Sertanejo Spirit, is 282 meters in length and with a capacity of 167,500 cubic meters.
Teekay Shuttle Tanker Finance LLC is a wholly owned subsidiary of Teekay Offshore Partners LP, one of the worlds leading owners and operators of shuttle tankers, which since the 1970s has provided an alternative to conventional pipelines for transferring oil from offshore to storage or refining facilities. Shuttle tanker technology permits their operation in deep water and harsh or remote locations, which has earned them the moniker floating pipelines.
Project Finance partner Daniel Bartfeld, who co-led Milbank’s team, says that the successful notes offering for the two shuttle tankers marks a significant milestone and is noteworthy for its multi-vessel and multi-issuance structure, which we believe is a first in this industry. We’re very pleased to have led in this private placement for Teekay.
Co-lead partner Jay Grushkin, a member of Milbank’s Structured Finance group, added, This is yet another example of the willingness and appetite of the traditional private placement market to fund non-traditional assets.
Also working on the transaction were Milbank associates Caroline Conway, Sean O’Neill and Mikhel Schecter.
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T.D. Williamson (TDW), a worldwide provider of equipment and services for operators of pressurized piping systems, announced that Chad C. Fletcher has joined the executive management team as Vice President of Western Hemisphere Operations. As of August 12, Fletcher is responsible for overseeing the fulfillment of strategic initiatives, as well as driving day-to-day execution of all business in the Western hemisphere.
Chad brings TDW a valuable entrepreneurial skill set and an impressive career history, says Bruce Thames, Senior Vice President and Chief Operating Officer. He possesses all of the characteristics you would expect in an executive at this level, but it’s Chad’s commitment to performing as a servant leader selflessly investing in the growth and development of the company that makes him the right person for TDW.
Fletcher has more than 25 years of experience in the energy business, beginning his career in the pipeline industry as an engineer and technical services manager for Tenneco Gas Corporation. Fletcher later founded a technology solutions firm, Enginuity International, Inc., that became the dominant market share leader for combustion and emission solutions for the pipeline industry. Enginuity was purchased by Dresser-Rand in 2008, where Fletcher was retained and made responsible for creating a new global business unit serving the midstream market. Fletcher then moved to Paris, France, where he led the service and engineered solutions business, covering Europe, Russia and the Commonwealth of Independent States, Middle East and Africa, into a $400 million Profit and Loss (P&L) success. Fletcher’s most recent position was Vice President of Marketing & Global Business Solutions for Dresser-Rand, which posted $2.7 billion in sales for 2012.
.Chevron Corporation (NYSE: CVX) has announced that its Australian subsidiaries have signed binding long-term Sales and Purchase Agreements (SPAs) with Tohoku Electric Power Company, Inc. (Tohoku) to supply liquefied natural gas (LNG) from the Chevron-operated Wheatstone Project in Western Australia.
Under the agreements, Chevron subsidiaries, together with subsidiaries of Apache Energy and Kuwait Foreign Petroleum Exploration Company, will supply Tohoku with 0.9 million tons per annum of LNG for up to 20 years.
Joe Geagea, president, Chevron Gas and Midstream, said, "These agreements with Tohoku create a new partnership between our companies and demonstrate the benefits of buyers and sellers working together to ensure supply is brought to the market to meet growing LNG demand."
Roy Krzywosinski, managing director, Chevron Australia, said, "We welcome the agreements with Tohoku, which mean that 85 percent of Chevron's equity LNG from Wheatstone is now committed to customers in Asia on a long-term basis. These agreements, combined with our ongoing exploration success, demonstrate that our Wheatstone and Gorgon projects in Australian are well-placed to meet the growing demand for natural gas in the Asia-Pacific region."
The Wheatstone Project is located at Ashburton North, 7.5 miles (12 kilometers) west of Onslow in Western Australia. The project will consist of two LNG trains with a combined capacity of 8.9 million tons per annum and a domestic gas plant.
The Wheatstone Project is a joint venture between Australian subsidiaries of Chevron (64.14 percent), Apache Energy (13 percent), Kuwait Foreign Petroleum Exploration Company (7 percent), Shell (6.4 per cent), and Kyushu Electric Power Company, Inc. (1.46 percent), together with PE Wheatstone Pty Ltd. (8 percent).
Chevron also holds an 80.17 percent equity interest in the Wheatstone and Iago fields that provide 80 percent of the feed gas to the Wheatstone Project. The participants in the fields are PE Wheatstone Pty Ltd. (10 percent) as well as Australian subsidiaries of Shell (8 percent) and Kyushu Electric Power Company, Inc. (1.83 percent).
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Apache Corporation (NYSE, Nasdaq: APA) has announced it has completed the previously announced sale of its Gulf of Mexico Shelf operations and properties to Fieldwood Energy LLC, a portfolio company of Riverstone Holdings, for $3.75 billion in cash (subject to customary post-closing adjustments) and assumption of liabilities for future abandonment costs of the properties with a discounted value of $1.5 billion.
Apache retained 50 percent of its ownership interest in all exploration blocks and in horizons below production in developed blocks, where high-potential deep hydrocarbon plays are being tested.
Portfolio rebalancing progress
"Completing this transaction is a significant step toward our goal of rebalancing Apache's portfolio to focus on assets that can generate strong returns and drive more predictable production growth, including our deep inventory of onshore liquids assets in North America," said G. Steven Farris, chairman and chief executive officer.
On a pro forma basis accounting for the Fieldwood transaction and the previously announced partnership with Sinopec International Exploration and Production Corp. in Egypt, Apache's second-quarter 2013 production from North American onshore assets and from Egypt would have comprised approximately 55 percent and 15 percent, respectively. In 2010, onshore North America contributed 31 percent of Apache's overall production, Egypt represented 25 percent and the Gulf of Mexico Shelf represented 17 percent.
Apache also announced that it has completed the previously announced sale of oil and gas producing properties in the Nevis, North Grant Lands and South Grant Lands areas of western Alberta, Canada, to Ember Resources Inc., a private Canadian company, for $214 million. Proceeds from the Ember transaction are subject to customary post-closing adjustments.
Including the Fieldwood and Ember transactions, the partnership with Sinopec and two additional agreements to sell oil and gas producing properties in western Canada, Apache has completed or announced more than $7 billion in asset sales year-to-date.
"In addition to enhancing our production and return profile, these transactions enable Apache to retain our an optimal capital structure for growth by reducing debt, enhance shareholder value through a 30-million-share repurchase authorization, and fund future capital expenditures including high-impact international projects," Farris said.
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Noble Corporation (NYSE: NE) announces that its Board of Directors has approved a plan to separate a business comprised of many of its standard specification drilling units, resulting in the creation of two separate and highly focused offshore drilling companies. The drilling units that would be owned and operated by the new company comprise most of the standard specification drilling units in the Noble fleet, including five drillships, three semisubmersibles, 34 jackups, two submersibles, and one FPSO. The new company would also be responsible for the Hibernia platform operations. Noble will continue to own and operate its high-specification assets with particular operating focus in deepwater and ultra-deepwater markets for drillships and semisubmersibles and harsh environment and high-specification markets for jackups.
The plan approved by the Board of Directors involves the separation of the standard specification business through the distribution of the shares of the new company to Noble shareholders in a spin-off that would be tax-free to shareholders. Subject to business, market, regulatory and other considerations, the separation may be preceded by an initial public offering of up to 20 percent of the shares of the new company. Consummation of the transaction is contingent upon the receipt of a tax ruling from the IRS, which Noble expects to receive soon. If Noble proceeds with the IPO as part of the spin-off, Noble expects that the new company would file a registration statement for the IPO with the U.S. Securities and Exchange Commission in late 2013 or early 2014. The transaction is also subject to the approval of Noble's shareholders, which the company anticipates seeking in the second quarter of 2014. Noble anticipates that the spin-off would be completed by the end of 2014. Noble expects that the new company would use the net proceeds from borrowings by the new company (and the IPO if undertaken) to repay to Noble the debt the new company would incur to Noble in order to acquire the standard specification business and assets from Noble. Noble expects that, in turn, it would use such proceeds to repay outstanding indebtedness of Noble and its subsidiaries.
The purpose of the separation is to:
• separate Noble's existing rig fleet into high specification and deepwater and ultra-deepwater assets, which will remain with Noble, and many standard specification assets, which will comprise the new company's fleet, as set forth in the attachment to this release;
• allow each company to have a more focused business and operational strategy;
• enhance each company's growth potential and overall valuation of its assets;
• provide each company with a greater ability to make business and operational decisions in the best interests of its particular business and to allocate capital and corporate resources with a focus on achieving its strategic priorities;
• better utilize the professionalism and skills of Noble's team and culture to deliver excellent service, safety and operational integrity to its customers;
• improve each company's ability to attract and retain individuals with the appropriate skill sets as well as to better align compensation and incentives with the performance of these different businesses; and
• allow the financial markets and investors to evaluate each company more effectively.
David W. Williams, who will remain as Chairman, President and Chief Executive Officer of Noble, said, "The purpose of the separation is for Noble to move forward with our development as a robust high specification and deepwater drilling company through continued execution of newbuilds and fleet enhancements. By separating these two businesses, we believe each company will be able to better leverage the overall value of its fleet by focusing on the drivers of its particular business."
There can be no assurance that Noble's proposed plan will lead to an initial public offering or spin-off of the new company or any other transaction, or that if any transaction is pursued, that it will be consummated. This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities. This announcement is being issued pursuant to, and in accordance with, Rule 135 under the Securities Act of 1933, as amended.
Due to limitations imposed by U.S. securities laws, Noble will not hold a conference call to discuss the contents of this release.
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