Once again demonstrating their power and agility in both nearshore and offshore waterways, Crowley Maritime Corp.'s ocean class tugs have successfully delivered oversized, overweight equipment – comprised of topsides, tendons, piles and more – that are now part of a massive semi-submersible floating production facility located in the U.S. Gulf, approximately 280 miles south of New Orleans, La. Working alongside the tugs were Crowley's 455 series high-deck-strength barges, which carried much of the equipment as it was towed offshore. Utilizing the Crowley tugs' dynamic positioning capabilities, the facility, known as Jack/St. Malo, was successfully moored and made storm safe at a depth of 7,000 feet between the Jack and St. Malo offshore oil and natural gas fields, which are within 25 miles of each other.

As was done when Crowley's ocean class tugs successfully delivered the Olympus platform and Lucius spar to the U.S. Gulf, both completed late last year, the company's Houston-based Solutions project management team, which manages the tugs and barges, completed the delivery in three stages of work in both nearshore and offshore waters.

During the first stage, the nearshore phase, the topsides were skidded onto the company's 455 series barge Julie B at the Keiwit facility dock in Ingleside, Texas, in Corpus Christi, where they were later lifted and installed onto the hull of Jack/St. Malo. Once in place and secured, the Ocean Wind and Ocean Wave next provided assistance by pushing the Jack/St. Malo facility, away from Corpus Christi, through the Port of Aransas, Texas, and out to deeper waters. The Ocean Sun followed the flotilla and was equipped to provide assistance, if needed.

Relocation to deeper waters marked the beginning of the second phase of work, the offshore stage. Here, the Ocean Wind and Ocean Sun towed the facility to its final location, alongside the Crowley-contracted tugboat Harvey War Horse II. Also during this phase, the Solutions team arranged for the company's 455 series barge 455 7, towed by Crowley's tug Warrior, and third-party barge Marmac 400, towed by Crowley's tug Pilot, to deliver the piles, or long pipe-like structures that serve as anchors for the platform, to the project site. Finally, the Marty J, towed by the Pilot, made three subsequent trips to the installation site to deliver additional equipment – including chains, connectors and line reels – that were used in the mooring of the floating facility.

In the final stage, the positioning phase, the Ocean Wind, Ocean Wave, Ocean Sky, Ocean Sun and Harvey War Horse II worked together to hold the Jack/St. Malo in its final location, and remained on site in a star pattern to provide support as the spar was connected to its moorings and made storm safe in more than 7,000 feet of water.

"This was another successful pairing of Crowley's new ocean class tugboats and high-deck strength barges," said Crowley's John Ara, vice president, solutions. "Not only was the project completed safely and on time, but it also helps to illustrate the increasing competence and capability of our crew and vessels. We look forward to utilizing these specialized teams and assets in projects in the future."

Crowley's ocean class tugs are modern ocean towing twin-screw vessels with controllable pitch propellers (CPP) in nozzles, high-lift rudders and more than 147 MT bollard pull. The first two ocean class vessels, Ocean Wave and Ocean Wind, are classed as Dynamic Positioning 1 (DP1) tugboats and are twin-screw, tugs with an overall length of 146 feet, beam of 46 feet, hull depth of 25 feet and design draft of 21 feet. The second two tugs of the class, Ocean Sky and Ocean Sun, are classed as DP2 and are 10 feet longer. All four vessels are capable of rig moves, platform and Floating Production, Storage and Offloading (FPSO) unit tows, emergency response, salvage support and firefighting.

Scheduled to begin producing oil and natural gas later this year, the facility will have a capacity of 170,000 barrels of oil per day and 42.5 million standard cubic feet per day of natural gas. Jack/St. Malo will act as a hub for the 43 subsea wells, including pumps and other equipment on the seafloor.
Crewmembers involved in the project include Captains Charles Alan Williams, Andrew C. Ashworth, Ted Caffy, Brian Cain, Stuart B. Andrews Jr., Stephen Berschger, Laurence Christie and Ward P. Davis; Chief Mates Darrel Koonce, Dustin Marks, Clyde McNatt, James Hoffman and Scott R. Ellis; Chief Engineers RD Lewis, Charles Pate, Scott Bovee and Edgar C. Henson; Able-Bodied Seamen Terry Laviolette, Ryan Landers, Dave Heindel, Orvin McCoy, Preston Harper, Farrell Bodden, Steven Kendrick, Jonathan Solomon, Corey Hill, Satchel G. Caffy, Ben E. Johnson and Edward J. Rynn; Assistant Engineers Micheal Bibby, Keith Smith, Matthew Hamer, Andralesia Terrell, Richard A. Saunders, James H. Murray, Thomas Murphy and Isaac Levine; Second Mates Travis Cheer, Nate Leachman, Eric A. Eaton, Cecil Wilson and Ray Adams; Third Mate Scott M. Tompkins; Dynamic Positioning Officer John Willson; and Ordinary Seamen and/or Cooks Johnny Godwin, Stephen R. Goletz, Rene Fuentes, Evan Flynn and Glen Williams.

Bibby Offshore's newest international division, Houston-based Bibby Subsea, has gone from strength to strength since its launch in October last year, having trebled the team in the past four months.

The subsea installation contractor developed the base in North America as part of its continued global growth strategy and to meet the growing demand of its clients in the region. In a bid to further strengthen ties with the region, Aberdeen-based Bibby Offshore last week hosted Houston based HM Consul General, Andrew Millar, the senior official representing the government in Texas, Louisiana, Arkansas and Oklahoma.

Alongside Aberdeenshire Council Provost Jill Webster, Chief Executive of Subsea UK Neil Gordon, and senior members of Aberdeenshire Council; discussions were held regarding Aberdeenshire's extensive investment into the Subsea Industry and plans to further develop Bibby Offshore's presence in Houston and the Gulf of Mexico.

This expansion plan is already evident with Bibby Subsea having increased its initial Houston team of three to now include Barry Straughan as HSEQ Manager, Daniel Wheeler as Subsea Business Manager, and four offshore personnel. It plans to double the Bibby Subsea workforce by the end of the year.

Mr Straughan brings 37 years' health and safety experience to the team, having previously worked internationally in the subsea industry. Mr Wheeler also complements the team with several years' experience and will provide the team with a wealth of regional expertise and knowledge to develop the company's business opportunities in the Gulf of Mexico.

Andrew Duncan, President and Managing Director of Bibby Subsea, said: "We have received significant interest in the division since its launch, with Bibby Subsea being perfectly positioned to deliver enhanced capabilities and undertake subsea projects using our international fleet of subsea support vessels and remotely operated vehicles (ROVs).

"Bibby Subsea's preliminary $1million contract with Cal Dive International to mobilise a work-class remotely operated vehicle (WROV) on Cal Dive International's support vessel in Mexico, the Mystic Viking, is ongoing, with talks in place to increase our ROV presence in the region.

"Market demand for subsea services is forecast to grow by 43% over the next five years, and Bibby Subsea is positioning itself as a major player within the ROV market, with an increased level of in-house capabilities which we can offer to clients."

Bibby Subsea aims to deliver a diverse range of subsea construction projects for operators worldwide. Services include project management and engineering, innovative remotely operated vehicle support vessels (ROVSV) and survey capabilities, diverless intervention, advanced remote systems and tooling packages, in-house survey and data processing, subsea construction support services, and inspection, repair and maintenance (IRM).

The Obama administration is expected to move closer this week to allowing new exploration for oil and natural gas in the Atlantic Outer Continental Shelf (OCS).

Surging oil and natural gas production onshore has sparked an energy and manufacturing revolution in America. But offshore, 87 percent of federal waters remain closed to energy exploration. A recent report projects big economic gains if we remove self-imposed obstacles and open the Atlantic OCS to responsible energy development.

Between 2017 and 2035, oil and natural gas development in the Atlantic OCS could:

·         Create nearly 280,000 new jobs along the East Coast and across the country

·         Generate an additional $195 billion in private investment on oil and natural gas activity

·         Contribute up to $23.5 billion per year to the U.S. economy

·         Add 1.3 million barrels of oil equivalent per day to domestic energy production, which is about 70% of current output from the Gulf of Mexico

·         Raise $51 billion in new revenue for the government

Seismic surveys, an advanced exploration technique used to locate potential oil and natural gas reserves below the ocean floor, are an essential first step. The Obama administration will publish this week an environmental study that could pave the way for the first seismic surveys of the Atlantic OCS in three decades.

Existing estimates of the oil and natural gas available in the Atlantic OCS are out of date. New surveys using state-of-the-art techniques and technology would provide a better understanding of the oil and natural gas resource potential in that area. Watch this video to learn how it works.

By allowing seismic surveys in the Atlantic and including the area in its upcoming five-year offshore leasing plan, the Obama administration can open the door to significant economic growth for the U.S. and Atlantic coastal states.

Oceaneering International, Inc. (NYSE: OII) announces that Eric A. Silva has joined Oceaneering as Vice President and Chief Information Officer (CIO).

Mr. Silva's career spans over 30 years, with more than 10 years of information technology services leadership experience, in the chemical, energy, and oil and gas industries. He was most recently the CIO at El Paso Corporation and, prior to that, at LyondellBasell and Lyondell. Mr. Silva holds a Bachelor's degree in Accounting and is a Certified Public Accountant in the State of Texas.

Marvin J. Migura, Executive Vice President, stated, "I am pleased to make this announcement regarding Eric's appointment at a time when Oceaneering is being challenged by our customers to deliver more technology-based services. Eric's experience has prepared him to provide us leadership to improve and expand our information technology capabilities and thereby enhance our global competitiveness. He has a record of accomplishing the strategic alignment of technology and services with corporate goals for maximizing bottom-line results."

Mr. Silva is replacing Gregg K. Farris, who will be retiring at the end of March 2014.

Statoil and co-venturer ExxonMobil have announced the results from their first drill stem test in the Tanzania Block 2 offshore discoveries.

The data acquired is important to reduce technical uncertainties in a possible future Tanzania offshore and LNG development.
The Zafarani-2 operation tested two separate intervals and flowed at a maximum of 66 million standard cubic feet of gas per day, constrained by equipment, and confirmed good reservoir quality and connectivity.

The drill stem test operation was performed through a re-entry in the Zafarani-2 well, in 2,400 meters water depth and approximately 80 kilometers off the coast of southern Tanzania.

"The ongoing appraisal program is crucial to firm up the design and development basis for bringing gas to shore and a first phase onshore LNG project in Tanzania," says Øystein Michelsen, Statoil's Tanzania country manager.

"We are now working constructively with our co-venturer ExxonMobil, Blocks 1, 3 & 4 and the Tanzanian authorities to progress the plans for a joint LNG plant development."

The production well rate potentials are estimated to be higher than the equipment constrained rates obtained during the test. The Zafarani-2 operation will be followed by the appraisal well Zafarani-3, which concludes the planned appraisal in the Zafarani reservoir, the cornerstone for a field development in Tanzania Block 2.

The Zafarani-2 well test announcement follows the Mronge-1 discovery made in December 2013, which was the fifth discovery in Block 2 and brought the natural gas in place volumes up to 17-20 trillion cubic feet (Tcf)*.

The Mronge-1 was preceded by three successful high-impact gas discoveries during the first drilling phase with Tangawizi-1, Zafarani-1 and Lavani-1, and a deeper discovery in a separate reservoir in Lavani-2.

Statoil operates the license on Block 2 on behalf of Tanzania Petroleum Development Corporation (TPDC) and has a 65% working interest, with ExxonMobil Exploration and Production Tanzania Limited holding the remaining 35%.

Statoil has been in Tanzania since 2007, when it was awarded the operatorship for Block 2.

(*1 Tcf =180 million barrels of oil equivalent)

Niche Products Ltd is pleased to announce that the formal establishment of Niche Produtos do Brasil is now underway. The coming Niche facility will provide in.country manufacturing of subsea control fluids as well as 24 hour technical support for present and future customers.

Mike Mahaney, Vice President at Niche Products LLC stated "We are very pleased to be a player in the most active exploration & production area of the world. The establishment of Niche Produtos do Brasil signifies a major commitment and investment by Niche Products to provide Brazilian customers more choices and value through increased competition and cutting edge field proven technology."

Brad Jeter of Niche Products added "Moving forward we fully anticipate Niche Produtos do Brasil will play a key global role as we support projects both inside and outside of Brazil from this facility. In addition, we are creating skilled job opportunities for Brazilians as we staff and train our manufacturing, laboratory, and support staff personnel."

Niche Products specialize in the offshore industry and have been supplying environmental fluids since the company was founded in 2001. The Pelagic range includes environmental fluids for subsea production control systems, drilling and umbilical storage. Niche currently has manufacturing facilities in Manchester UK, Houston TX and Perth Australia and the new facility in Brazil will ensure customers receive rapid delivery worldwide.

Vessels to Supply Maritime Industry with Clean Fuel Source and Build LNG Infrastructure along U.S. Gulf Coast

Jensen Maritime, Crowley Maritime Corp.'s Seattle-based naval architecture and marine engineering company, has been awarded a contract to design some of the first liquefied natural gas (LNG) bunker barges in the U.S. for customer LNG America LLC, a Houston-based LNG fuel supply and distribution company. Currently no LNG bunkering barges are in operation in American waterways and these vessels will be among the first to be developed and built, marking a significant step in LNG America’s build-out of LNG bunkering infrastructure along the U.S. Gulf Coast and in delivering a new clean fuel to the maritime industry.

The vessels, which are expected to deliver in late 2015, have an initial planned capacity of up to 3,000 cubic meters of LNG.  Once in operation, the bunker barges will serve the dual purpose of moving LNG from LNG America’s Louisiana supply source to coastal-based storage and distribution terminals and in directly bunkering large ships.   

“Through LNG America’s LNG bunkering initiative, we plan to serve and facilitate the growing marine demand for LNG,” said Keith Meyer, CEO of LNG America. “LNG America sees the demand for marine LNG to be robust as long as LNG can be made available to the maritime industry on a reliable, dependable and cost-competitive basis. Our mission is to deliver competitively priced LNG as fuel where needed, when needed and in the quantity needed.”

“The significance of this agreement is not only incredible news for the marine industry, which struggles with whether to develop LNG infrastructure or vessels first, but also for companies along the U.S. Gulf that hope to replace their traditional vessels with cleaner, more efficient LNG-powered ones,” said Jensen’s Johan Sperling, vice president. “We are thrilled to be working with LNG America in the development of its marine infrastructure and also in providing a green fuel source to this important region. Jensen is on the leading edge when it comes to LNG vessel design and we look forward to serving LNG America and other customers with this valuable service.”

Jensen first produced prototype designs for LNG vessels in 2008. Additionally, Jensen has developed designs for a 100’ x 40’ LNG tugboat and is currently working on several other prototype designs of LNG bunker vessels, harbor tugs, ATBs, container ships and tankers, along with inland vessels for a variety of customers in the U.S.

LNG America was formed last July to develop LNG distribution infrastructure that serves not only the marine market but the burgeoning use of LNG in the oil and gas, rail, mining and heavy-duty trucking markets as well.  These markets have emerged due to the fuel’s price competitiveness resulting from the abundant U.S. natural gas reserves.

LNG facts from the Center for Liquefied Natural Gas (CLNG):


LNG, or liquefied natural gas, is natural gas that is cooled to -260° Fahrenheit until it becomes a liquid and then stored at essentially atmospheric pressure. Converting natural gas to LNG, a process that reduces its volume by about 600 times allows it to be transported. Once delivered to its destination, the LNG is warmed back into its original gaseous state so that it can be used just like existing natural gas supplies. When returned to its gaseous state, LNG is used across the residential, commercial and industrial sectors for purposes as diverse as heating and cooling homes, cooking, generating electricity and manufacturing paper, metal, glass and other materials. LNG is not stored under pressure and it is not explosive. LNG vapors (methane) mixed with air are not explosive in an unconfined environment. When exposed to the environment, LNG rapidly evaporates, leaving no residue on water or soil.

Stone Energy Corporation (NYSE: SGY) has announced exploration discoveries at its deep water Amethyst and deep gas Tomcat prospects. Stone operates and owns a 100 percent working interest in both discoveries.

The deep water Amethyst exploration well in Mississippi Canyon block 26 encountered approximately 90 feet of net hydrocarbon pay in one interval which suggests a commercial discovery. Analysis of logging, coring and fluid data confirmed the existence of natural gas, condensate and natural gas liquids in the pay zone (an estimated yield of 60-80 barrels of liquids per million cubic foot of natural gas). The interval has been placed safely behind pipe for a future completion. A full evaluation, including seismic and subsurface data integration, is needed before hydrocarbon quantities can be estimated and a specific development plan is sanctioned. A single or multi-well tie-back to Stone's 100 percent owned Pompano platform, located less than 5 miles from the discovery, is a likely development option.

The results at the deep gas Tomcat exploration prospect at West Cameron block 76 also suggest a commercial discovery with approximately 30 feet of net hydrocarbon pay in the Camerina interval. Well log analysis, combined with offset Camerina production history, would suggest the zone should produce rich natural gas with approximately 60 barrels of condensate per million cubic feet of natural gas as well as additional natural gas liquids volumes. Initial development plans call for a tie-back to a nearby Stone operated East Cameron block 64 production platform with production estimated to commence in second half of 2014.

Chairman, President and Chief Executive Officer David H. Welch stated, "It is a great start to the year to make discoveries at Amethyst and Tomcat, our two 100 percent working interest exploratory prospects. The close proximity of both prospects to Stone platforms should provide us with attractive development options and enhance the economic value of the discoveries. The knowledge and information gained from the Amethyst well will also be helpful in evaluating our existing portfolio of prospects in the Mississippi Canyon area where we expect to be an active player for the next several years."

The rigs remain on location at both Amethyst and Tomcat to conduct operations to prepare the wells for future production.

NYC-based PIRA Energy Group believes that recent economic softness will be temporary and we continue to expect above-trend growth in 2014. On the week, pretty close to flat U.S. stock profile, while Japanese crude stocks built sharply. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Economic Softness Will Be Temporary

PIRA believes recent economic softness will be temporary and we continue to expect above-trend growth in 2014. While flat price has ignored weaker economic data, crude stock builds are forecast to somewhat undermine bullish sentiment. Global refinery runs will bottom in April and then move sharply higher by midyear. Light product inventories will remain low, but diesel cracks will seasonally ease while gasoline cracks strengthen. Political risks to supply are growing, raising the probability of even larger MENA disruptions than PIRA is assuming.

Pretty Close to Flat U.S. Stock Profile

Commercial oil inventories decreased a slight 0.50 million barrels this past week, all of which was in products. This is the seventh consecutive week of product stock declines. Large product stock declines are quite typical in February because it is a strong product demand month. In fact, last year's product inventory decline during February was even larger with this past week's decline being 7.0 million barrels.

Japanese Crude Stocks Build Sharply

Total commercial stocks jumped 7 MMBbls with crude moving higher by nearly 8 MMBbls due to a surge in implied imports. Finished product stocks fell largely due to a strong draw on kerosene but also smaller draws on the other major products. Gasoil demand was very strong at 992 MB/D, the third highest level in a year. The indicative refining margin was modestly lower with all the major cracks weakening slightly.

Prices Will Be Under Some Downward Pressure

Brent crude prices remain supported by relatively tight global supply-demand balances due to continued supply disruptions and low stocks. United States crude prices relative to Brent will be choppy with WTI stronger with new pipelines, while the entire USG complex will see inventory builds during U.S. refinery maintenance before tightening again later in the 2nd quarter. European distillate cracks will trend lower as demand seasonally eases and currently tight inventories build back when Atlantic Basin runs ramp up after maintenance. Gasoline cracks are likely to increase significantly over the next few months with Atlantic Basin inventories expected to be lower than last year.

December 2013 DOE Revisions

DOE recently released its final monthly December 2013 (PSM) U.S. oil supply/demand data. While demand was revised lower by 519 MB/D, strong year-on-year gains continued. Total commercial inventories were revised higher by 8.5, with all the upward revision in products. Inventory levels of both crude and product were in deficit compared to year-ago, with that deficit having grown from end-November comparisons.

Severe Winter Weather Impacts Rail Performance

Every few years, severe winter weather causes major problems for rail transportation. This winter the weather problems have caused a record deterioration in service performance for the major U.S. railroads. These problems have contributed to the slight decline in U.S. crude by rail volumes since early December 2013. It will take two or three weeks for the rail system to recover from the cumulative effects of the weather, assuming that the rest of the winter returns to “average.” So the impact on crude by rail volumes will continue to be felt until mid-March, at a minimum.

U.S. Propane Exports Set a Record

U.S. propane exports set a new record in 2013 and are expected to increase further during the course of 2014. This will tend to keep inventories relatively low during the upcoming year, especially with stocks ending 1Q at around a record low for the period. As the season ends it will be necessary for the European and Asian chemicals operations to pick up the pace of LPG feedstock usage.

The Output of Ethanol-Blended Gasoline Soars

The production of ethanol-blended gasoline increased to a two-month high of 8,364 MB/D the week ending February 21 from 8,069 MB/D in the preceding week. U.S. ethanol output climbed for the third consecutive week, reaching 905 MB/D for the first time in five weeks.

Russian Gas Risks Greater for Central Europe; Oil Risks Minimal

The Ukrainian corridor for Russian gas exports is not as important as it used to be, but it still plays a central role in European gas supply. PIRA's analysis of pipeline flows shows that Russia can divert a little over half of the gas it moves through Ukraine to locations all over Europe. Spare capacity in the Nord Stream (Baltic) pipeline to Germany and the Yamal pipeline through Poland will allow Western Europe to receive most of the gas it needs. Central Europe and the Balkans could face some scarcity if the Ukrainian route were to temporarily disappear, but this is considered unlikely. For oil, there is less potential impact than with gas since most Russian oil exports go by tanker from Russian ports in the Baltic and Black seas.

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.

MacGregor, part of Cargotec, has acquired Norwegian privately owned Deep Water Solutions AS, specialising in lifting applications utilising electric multi drive technology.

"Customer requirements for environmentally friendly solutions are increasing in offshore load handling applications, such as subsea cranes, module handling and LARS (launch and recovery) systems and having Deep Water Solutions' experts in the MacGregor family we enhance and strengthen our multi-drive (electric) technology know-how to be able better to serve and support our customers", says Tom Harald Svennevig, Vice President for MacGregor Advanced Load Handling business. "The owners and operators are looking for vessels designed for worldwide service with a 'clean design' and Green Passport. Clean Design requires minimum fuel consumption, requires no spill philosophy and makes electrical multi drive technology a preferred choice", Mr Svennevig continues.

NYC-based PIRA Energy Group believes that ongoing growth of shale continues to dominate both the oil and gas outlooks. On the week, the U.S. product stock draw resumes, while Japanese commercial stocks drew sharply. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Shale Growth Continues To Dominate

The ongoing growth of shale continues to dominate both the oil and gas outlooks. Even with a slowdown in growth from the recent pace, shale will remain a major contributor to global liquids growth and the US will still face a steady decline in import requirements. However, we continue to face increasing violence in Iraq, significant outages in Libya coupled with political turmoil, sanctions and extremely uncertain negotiations with Iran, growing unrest in Venezuela, and an unending war in Syria that could spread violence anywhere in the Middle East. The bounceback of global demand growth in 2013, even during a subpar economic growth year, confirms our view that reports of the death of demand growth are premature.

U.S. Stock Draw Resumes

Overall commercial oil inventories drew this past week with product stocks falling and crude building. This was the sixth consecutive weekly product stock decline and fifth consecutive crude inventory build. The entire product inventory decline was outside of the three major light products, for they built a combined 0.6 million barrels. A similar major light product inventory profile is forecast for next week. In contrast, crude inventories are forecast to decline, for the Gulf Coast faced extended weather related delivery delays which will keep imports low.

Japanese Commercial Stocks Draw Sharply

Total commercial stocks were sharply lower by 8.6 MMBbls due to a sharp drop in crude stocks and a much lower draw in finished products, which was mostly kerosene. Runs eased slightly and crude imports plunged. Gasoline and gasoil demands fell back slightly, and gasoline stocks build modestly, while gasoil stocks still were able to post a small draw on much lower yield and higher incremental exports. Kerosene demand perked up and the draw rate came in at its highest rate of the year

U.S. Refiners Have Significantly Reduced Yield of Fuel Oil + Asphalt

U. S. refiners have typically had the lowest yield of residual fuel products (residual fuel oil plus asphalt) compared to other refiners worldwide. However, beginning in 2008, U.S. refiners have reduced their yield of fuel oil/ asphalt at a faster rate than can be accounted for by facilities additions alone, from over 7% to less than 5%. With continued substitution of light shale crudes, PIRA estimates that the yield of fuel oil plus asphalt for U.S. refiners will continue to decline to around 4%.

U.S. Propane Stocks Will Continue Lower

Export cancellations and fog delayed shipping from the USGC led to a relatively low stock draw last week. The pace of inventory decline should pick up as new record low positions will continue to be set. The March trading arb is open. Winter is not yet over but sentiment shifted as it is close to winding down, but not before some late season cold blasts.

Ethanol Manufacturing Margins Rise

U.S. ethanol production margins improved significantly the week ending February 14 due to higher ethanol values, stable corn costs, and lower natural gas prices. Rising DDG and RIN values also provided support

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.

Noble Energy, Inc. (NYSE: NBL) has announced the signing of a gas sales agreement between NBL Eastern Mediterranean Marketing Ltd., the Arab Potash Company ("Arab Potash"), and the Jordan Bromine Company ("Jordan Bromine"), both of which are located in Amman,

Jordan. Under terms of the agreement, Noble Energy will supply natural gas from the Tamar field, offshore Israel, to Arab Potash and Jordan Bromine for use in their facilities near the Dead Sea. Natural gas sales are anticipated to commence in 2016, once minimal required pipeline infrastructure has been completed. The agreement is for an initial term of 15 years and a total gross contract quantity of approximately 66 billion cubic feet of natural gas. The price for the natural gas sold will be based on a floor price of at least $6.50 per thousand cubic feet of natural gas with upside linked to Brent crude oil prices. Gross revenues are estimated at $500 million, with actual sales dependent on final purchased quantities and oil prices at the time of sale.

Keith Elliott, Noble Energy's Senior Vice President, Eastern Mediterranean, commented, "The execution of this agreement evidences the growing regional opportunities for our natural gas and brings forward value for the Tamar asset. We have now signed the first regional export agreements for both Tamar and Leviathan, and we are in a number of additional negotiations to sell significant quantities of natural gas from both fields to multiple customers."
Finalization of the purchase and sales agreement is subject to necessary and customary conditions and regulatory approvals.

Noble Energy operates Tamar with a 36 percent working interest. Other interest owners are Isramco Negev 2 with 28.75 percent, Delek Drilling with 15.625 percent, Avner Oil Exploration with 15.625 percent, and Dor Gas Exploration with the remaining four percent. The Tamar field has an estimated 10 trillion cubic feet of discovered natural gas resources.

Subsea 7 S.A. (Oslo Børs: SUBC) has announced the award of a US$75 million three-year subsea construction services contract by ExxonMobil Canada Properties.

The contract supports the Hebron heavy oil field development, located in the Jeanne d'Arc
Basin 350 kilometres southeast of St. John's, Canada.

The contract scope includes the project management, engineering and installation of two Offshore Loading Systems in a water depth of 92 metres. Engineering and project management will begin immediately from Subsea 7's offices in St John's.

Stephen Henley, Managing Director of Subsea 7 Canada, said: "This contract award further enhances our construction capability across offshore Canada, building on the successes of our subsea engineering and construction work for our clients in the region."

The project for joint seismic acquisition in the southeastern Barents Sea has been joined by 16 new companies. A total of 33 companies are now part of this project, which will secure good data quality and low acquisition costs.

Illustration of seismic acquisition. (Photo: Ole Jørgen Bratland)

A joint acquisition of data will also limit any possible negative consequences for the fishing industry.
The recently opened southeastern Barents Sea is part of the 23rd licensing round on the Norwegian continental shelf in 2014. At the request of the Norwegian Ministry of Petroleum and Energy (OED), the Norwegian Oil and Gas Association launched an initiative for a joint project relating to acquiring 3D seismic data from blocks in this area. Statoil took on the operator role for the acquisition.

On 10 December last year, 17 companies joined the project as early participants. A further 16 companies followed suit after the OED on 14 February circulated a proposal regarding block announcements for public consultation.

A doubling of the number of companies in the project shows that the initiative enjoys solid industry support. It is a project that will further reduce costs while ensuring good quality data by utilising the companies' concerted competencies.

In March the project will announce the awarding of contracts and present further plans for the acquisition.

List of companies participating in the project:

Early participants:
BP , Chevron, 
ConocoPhillips, 
Det Norske Oljeselskap, 
ENI ,
GDF Suez, 
Idemitsu, 
Lukoil,
Lundin, 
A/S Norske Shell, PGNiG, 
Repsol , Spike, 
Statoil , Suncor, 
VNG , 
Wintershall

New participants:
Bayern Gas,
BG, Dong , Edison, 
E.ON, 
Explora Petroleum, ExxonMobil, Faroe Petroleum, Inpex, 
KUFPEC,
MOECO, 
OMW, 
RN Nordic Oil, 
RWE Dea, 
Total, 
Tullow Oil

Net income was 11% up on 2012 due to diesel (20%) and gasoline (11%) price increases in 2013, increased production of oil products, cost optimization, gains from the sale of assets, lower write-offs for dry wells and lower foreign exchange impact due to hedge accounting. Adjusted EBITDA totaled R$ 62.967 billion, up 18% on 2012.

Fourth quarter net income was R$ 6.281 billion, up 85% on the third quarter. This result reflects higher oil export volumes, lower dry well write-offs, gains from sale of the interest in block BC-10 and tax benefits stemming from provision of interest on own capital.

2013 oil and natural gas production totaled 2.539 million barrels of oil equivalent per day (boed), down 2% on 2012, primarily due to delays in starting up new systems, natural decline of fields and sale of assets abroad. Fourth quarter domestic output was up 1% on the third quarter.

In 2013, five new platforms came on stream and another four systems were deployed at their permanent locations. A pre-salt daily output record of 371,000 bpd was set on December 24th.

Proven reserves in Brazil reached 16 billion barrels of oil equivalent, up 1.6% on 2012. The Reserve Replacement Ratio has been higher than 100% for 22 years in a row.

Average production of oil products in Brazil totaled 2.124 million bpd in 2013, up 6% on 2012, cutting back diesel and gasoline imports.
 PROEF (Campos Basin operational efficiency improvement program) contributed with additional oil output of 63,000 bpd. Operational efficiency reached 75% for the Campos Basin Operational Unit (UO-BC) and 92% for Rio (UO-RIO).

PRODESIN (divestment program) contributed R$ 8.5 billion to cash flow in 2013 .

PROCOP (operating costs optimization program) achieved savings of R$ 6.6 billion in 2013, exceeding the R$ 3.9 billion target set for the year.

Statoil and the partners in the Johan Sverdrup field have decided on a concept for the first development phase. The partners have agreed on a field center consisting of four installations and power from shore.

Johan Sverdrup is among the largest oil fields on the Norwegian shelf, and will at peak contribute with 25% of the production from the Norwegian shelf. The giant field is expected to start production in late 2019. The field lifetime will be 50 years, with an anticipated plateau production of 550,000-650,000 barrels of oil equivalent/day (boe/d) field capacity (Statoil share ~40%).
The partners have decided on power from shore for the Johan Sverdrup field in the first phase, which will reduce total CO2 emissions from the Utsira High area by 60-70%.

"This is historic. We have not made a concept selection for a field this size since the 1980s," says Arne Sigve Nylund, executive vice president for development and production in Norway.

Establishing a field center 
The field will be developed in multiple phases. The design capacity of the first phase is 315,000 barrels of oil equivalents per day field capacity (Statoil share ~40%) with an expected production between 315,000 and 380,000 boe/d in the early phase. Pre-drilling of wells will contribute to a rapid production ramp-up.
"The ambition is a recovery rate of 70% for the full field," says Øivind Reinertsen, senior vice president of the Johan Sverdrup field.

Investments in the first phase are estimated at between NOK 100-120 billion. These include the field center, wells, export solutions for oil and gas, and power supply. The estimates also include contingencies and provisions for market adjustments. In addition, the first phase will facilitate measures for improved oil recovery.

The partners are working continuously to lower the investment level for the first phase.

The field center in the first phase comprises a process platform, drilling platform, riser platform and living quarter, and has been designed so as to facilitate future development. The installations have steel jackets that are linked by bridges. The water depth is approximately 120 meters in the area.

Power from shore 
Johan Sverdrup phase 1 will be supplied with power from shore with a transformer on Kårstø delivering direct current to the riser platform, ensuring an estimated 80 MW.

As part of the plan for development and operations, scheduled to be delivered in early 2015, alternative power solutions for the future phases will be described. One of the alternatives will be power from shore to the whole Utsira High area based on updated power requirements.

"This alternative, if selected, has the potential to capture more than 90% of the total CO2 emissions from this area," says Reinertsen.
Export solutions 
The export solution for oil and gas from Johan Sverdrup is based on transport to shore through dedicated pipelines. The oil will be transported to the Mongstad terminal in Hordaland county.

The gas will be transported via Statpipe to Kårstø in Rogaland county for processing and transport onward.

"Johan Sverdrup is the result of 40 years of development and activities on the Norwegian shelf. This is the opportunity to advance history several steps," summarizes Nylund.
Facts about the Johan Sverdrup field (PL 265, PL 501 and PL502)

• Johan Sverdrup is an oil field.
• Johan Sverdrup consists of a combined discovery which makes up one field.
• Location: Utsira High in the North Sea, 140 kilometers west from Stavanger.
• The water depth is 120 meters, and the reservoir depth is 1,900 meters.
• We expect approval of the plan for development and operation (PDO) during the Norwegian Parliament's (Stortinget) spring session in 2015.
• Production start is expected at the end of 2019.
• The field has a production horizon beyond 2050.
• The first phase is the establishment of a field center consisting of four platforms.
• Oil transport via pipeline to the Mongstad terminal in Hordaland, and gas transport to Statpipe, and then further to the Kårstø processing plant in northern Rogaland.
• The field will receive power from land.

Partners:

PL 501: Lundin Norway (operator - 40%), Statoil (40%), Maersk Oil (20%)
PL 265: Statoil (operator - 40%), Petoro (30%), Det norske oljeselskap (20%), Lundin Norway (10%)
PL 502: Statoil (operator – 44.44%), Petoro (33.33%), Det norske oljeselskap (22.22%)