Sparrows Group has been awarded a 20-month inspection services contract to cover Stena Drilling’s global fleet of drilling vessels.

The agreement will see Sparrows Group deliver LOLER lifting gear surveys, potential dropped objects surveys, cargo carrying unit (CCU) and non-destructive testing (NDT) inspections as well as rig specific maintenance.

Sparrows Group had previously held a similar contract with Stena for an eight-year period.

Stena Forth. Photo courtesy: Stena Drilling

Stewart Mitchell, chief executive officer of Sparrows Group, said: “Over the years we have developed a strong relationship with Stena and we are delighted to now be working with them again. It is encouraging to see that they are committed to ensuring safety and integrity across their global fleet.

“Our experienced inspection team has a reputation for delivering quality, cost effective services to our customers. I have no doubt their professionalism and track record for reliability has contributed to us regaining this contract. In today’s low oil price environment it is more important than ever to ensure inspection and maintenance is carried out effectively to avoid costly emergency repairs.”

This latest contract with Stena Drilling comes shortly after Sparrows Group announced it had secured a five-year contract in the North Sea with Statoil. In March, the firm revealed it was to deliver cranes and maintenance services at the prestigious Mariner development.

Established originally in 1946, the Sparrows Group moved into the oil and gas market in 1975 and has more than 40 years’ experience working offshore. They are one of the most well-known and trusted names in the oil and gas industry. The company provides engineered products and services, primarily to the offshore sector, specializing in lifting and handling, cable and pipe lay, and fluid power solutions.

Since 2014 Bibby Offshore has invested heavily on its commitment to the workforce of tomorrow by their ongoing support and training of six young ROV apprentices. The apprentices have experienced a variance of training, internally at Bibby Offshore`s workshop facility and externally through the vast network of suppliers and customers. This has allowed the apprentices to gain a great overall insight into the range of offshore services that Bibby Offshore provide. Aleron Subsea has recognised these efforts and is now engaged in supporting Bibby Offshore with their ongoing training.

Managing Director Mike Bisset said: “We understand the need for high quality training of younger staff members and wanted to assist Bibby offshore where we could. We take the apprentices on a rotation in pairs where they spend time working on our ROV’s and ROV Tooling under the direction of our senior technician’s. We have also set up hour long structured lunch and learn sessions each day with Dan Fjellroth who was the senior ROV trainer at Technip Offshore, previously involved in setting up Technip's ROV technicians competence scheme and source in conjunction with the ROV Resource manager complementary courses suitable for ROV Personnel's professional development.

The training partnership has been ongoing successfully since Q4 2015 as is due to continue throughout 2016.

The Middle East has been a relative bright spot for upstream activity during the oil price downturn. International land rig contractors, such as Saipem, are actively focusing their strategy and drilling campaigns on the region in the attempt to limit the negative impact of low oil prices.

Looking at drilling activity, it is clear why the Middle East is a good prospect for contractors hit by the falling rig count. Between 2014 and 2015, Douglas-Westwood’s Drilling & Production Market Forecast saw global onshore wells drilled fall by a staggering 32% as operators slashed drilling campaigns. The Middle East – characterised by low lifting costs and containing almost half of the OPEC membership – was relatively immune from this decline, growing at 3%. Douglas-Westwood expects the Middle East to continue to buck global trends, anticipating another 3% increase in the number of onshore wells drilled this year.

Despite this growth, the region has not been completely exempt from the impact of the downturn – NOCs such as Saudi Aramco have slowed progress at a number of projects. Indeed beyond drilling & production, heavily commodity dependent Gulf producers have felt the strain on their finances. Non-OPEC member Oman has been hit particularly hard, with both Moody’s and Standard & Poor lowering their credit rating – the latter to just one notch above junk status.

However, a regional reliance on oil exports is expected to support continued activity and there are clear bright spots within the region. Since economic sanctions were lifted in January, Iran has stood out as a potential golden opportunity for international rig contractors – Douglas-Westwood’s Iran Oil & Gas Market Forecast expects demand for land rigs to increase at 6% to 2020. However, some bilateral US sanctions remain. This has created uncertainty with regards to payment – understandably a key concern for any potential entrant. This may restrict US based contractors from entering the market directly, therefore, the opportunity – at least in the short term – is likely to be most accessible to indigenous contractors based in the Middle East. As a result, it may be contractors in neighbouring markets that find themselves with an early mover advantage.

Kathryn Symes, Douglas-Westwood London

Dropped objects – still happening; and still harming – we must never expose ourselves, or others, to the risk of dropped or falling objects. That’s the message in a new video now available to watch on the International Marine Contractors Association (IMCA) website. The short, and highly emotive video, highlights the importance of safe working practices, not only to offshore personnel, but to their families at home.

The video was prepared by Technip with help from Atlas; and as Technip’s Marine Operations Services QHSE Director, Pete Somner, and Chairman of IMCA’s Marine Division Management Committee, says on the video: “It is by better understanding of our processes and correct use of tools and equipment that we can ensure everyone returns home safely.”

Richard Benzie, Technical Director, IMCA

The DROPS Forum has requested that the video be made available across the industry to share good practice, and this has seen Subsea UK, Oil & Gas UK (OGUK) and now IMCA all spreading the word. It is freely available here

“We agree wholeheartedly with the sentiments Pete Somner expresses on the video,” says Richard Benzie, Technical Director of IMCA. “We only have to look at our own safety and environmental statistics for 2015, which will be published in full by mid-June, to see that being struck by moving/falling objects was a significant cause of Lost Time Injuries (LTIs), accounting for 20% of the total reported in the year, to know how important it is to keep stressing that more care must be taken.

“I know members will agree that this kind of collaborative approach to safety is cost-effective and worthwhile. We, and especially our Safety, Environment and Legislation (SEL) Core Committee, would like to thank Technip for making the video so widely available.”

Metocean Services International (MSI) has recently completed the first annual service of McDermott Australia Pty Ltd’s (MAPL) AXYS WatchMate™ current and wave buoy. The buoy was sold to MAPL in 2014 accompanied by an installation and service contract for an initial 3 years.

The buoy is installed in 270m of water in the ICHTHYS field. The INPEX operated ICHTHYS LNG Project in the Browse Basin offshore Western Australia is ranked amongst the most significant oil and gas projects in the world. In field, construction is well underway with the first production targeted at third quarter 2017.

Weight on deck: Photo courtesy: McDermott

Real-time meteorological, current and directional spectral wave data is telemetered back to MSI via Inmarsat satellite and posted onto a client specific website. Data is also posted to an FTP site to allow MAPL personnel to use it to support the ongoing infield construction where accurate, reliable and timely data is essential to ensure safe operations.

The WatchMate™ buoy is a solar powered precision instrument incorporating advanced technologies that make it an easy to use, reliable and rugged buoy for accurate measurement of directional waves. The wave sensor unit comprises three accelerometers, three rate gyros, a fluxgate compass, and the proprietary TRIAXYS™ Processor. Current data is provided via a fully integrated Nortek 600KHz profiler whilst meteorological data can be measured using a variety of sensors.

The WatchMate™ was specifically proposed to MAPL at the tendering stage due to the extreme local metocean conditions at site meaning a standard wave buoy was unlikely to survive. The WatchMate’s™ additional flotation combined with a site specific mooring designed by AXYS make it an ideal solution for these trying conditions proved by the exceptional data return provided over the last 12 months.

The project is expected to last 3 years before the buoy is recovered by MAPL following completion of their offshore work.

A spokesperson for MAPL commented “Reliable and accurate data from the WRB was essential for our offshore operations, as limiting sea states were critical for a number of the structure and spool installations. The WRB provided by Metocean Services International has been very reliable, provided the accurate data required, and the support provided from Metocean Services International for maintenance and any troubleshooting has been very professional and punctual.”

MSI owns and operates a number of similar systems so was confident in its recommendation of the Watchmate. Having been AXYS’s exclusive representative for marine environmental monitoring systems in Australia since 2009, MSI has extensive 'hands on' experience, as both an owner and user, with the AXYS product line and is therefore well qualified to fully support the end user. MSI systems are available on either a purchase or a rental basis and all measurement equipment can be deployed individually or integrated as part of a larger metocean system.

3sun Group, a specialist provider of products and services to the global energy industry, has opened a new base in Hull which aims to provide up to 50 jobs locally. The expansion strengthens the Group’s strategy to become a leading supplier of installation, inspection and maintenance services for the offshore wind industry in the UK and Europe.

3sun Group will support local energy firms such as Siemens who have recently invested in the region as part of their commitments following a number of the up and coming offshore wind contracts off the UK coast.

3sun Group Technician

Commenting on the evolution of 3sun Group, CEO Graham Hacon, said: “Our premises in Hull allows us to continue to advance our strategic growth plans in the UK. We’re looking forward to an exciting new chapter, strengthening our position as experts in the offshore wind industry. By providing a local base, we are ensuring that we continue to exceed our customers’ expectations and meet the demand for services in the region.”

Recruitment will begin this July, with the aim to provide positions for 50 local 3sun Group employees. The Group will provide specialist training to the new employees at their Hull base through in-house training provider 3sun Academy.

Graham added: “We are committed to employing and developing a local workforce and our core electrical/mechanical technician roles will require the expertise of those who live in close proximity to Hull.”

Since inception in 2007, 3sun Group has grown rapidly to now employ over 280 people across the group, and has earned a global reputation for resolving some of the key energy engineering challenges facing the energy sector. The opening of the Hull base coincides with the two-day offshore wind event, Offshore Wind Connections (OWC) 2016 held at the Bridlington Spa where 3sun Group is exhibiting.

AnTech Ltd, provider of specialist products and services for the upstream oil and gas industry, has responded to industry demand, with the launch of three new products within its best-in-class Wellhead Outlet range.

The Type-C Wellhead Outlet, which was designed and developed by the company for use in hazardous environments, has been on the market since 2013 and has achieved great success due to its safe and simple installation, created in compliance with API 6A, ATEX and NACE standards. In response to the product’s success and customer feedback, AnTech has launched two further outlets, namely: Types CB and CC. Each adaptation has been carefully designed to suit various working environments including pressure, ranging from 10,000 - 15,000psi, temperatures from -60°C to +160°C, whilst meeting ever-tightening budget constraints.

Type FC Wellhead Outlet

The Type CB and CC Wellhead Outlets provide solutions to the demands of high technical specifications and the rippling effect of the low oil price. Driven by strong customer feedback from key clients, the company has designed, tested and manufactured both variations to AnTech’s customary high standards. Both options meet API 6A and NACE certification and have been designed for applications in North America, Africa and Europe.

With the increasing demands for more data and distributed measurements, there has been a growth in the use of fibre optic cables for permanent monitoring. These solutions are only as good as the connections at surface and AnTech’s Type FC outlet has been designed specifically to meet this demand whilst maintaining the highest safety standards at a cost effective price.

In order to meet a lower price point, AnTech has reviewed its current material costs and utilised new manufacturing processes including 3D printing. As a result, the new Type FC outlet incorporates a 3D printed smart system for handling and storing up to four fibres. The unit is suitable for operating in some of the world’s most stringent wellsite environments, as it is certified to both API 6A and NACE, additionally it can hold pressures of up to 10,000 psi.

AnTech sales manager, Tim Mitchell said: “AnTech continues to lead the way for innovative design and customer service when it comes to wellhead outlets for permanent monitoring. We’ve worked hard to develop a range of electrical and fibre outlets in order to meet the needs of varying environments around the world, focusing on certification and, of course, a cost effective price point. We’ve listened to our customers’ requirements and as a result have developed market-driven solutions which now create a larger range of products.”

Commenting on the cost effective options, AnTech managing director, Toni Miszewski said: “We have realised that we not only need to meet today’s demands but also look towards the future. With the current low oil price, customers are demanding our high certified products but at a lower price point. After considerable research and development, we are pleased to announce three new lower cost options, which result in a wider choice within our product lines. This will help our customers to provide safe solutions to their clients without breaking the bank.”

Founded in 1992, AnTech operates globally across two divisions and provides products and services to the upstream oil and gas industry. On the Products side of the business, AnTech offers patented and innovative products in the areas of permanent monitoring, data acquisition, coiled tubing and downhole tools. In addition, AnTech provides a Directional Coiled Tubing Drilling (DCTD) Service with a suite of proprietary bottom hole assembly tools, trained teams and operational facilities in Saudi Arabia and Houston, USA.

Hoover Container Solutions Norway AS (“Hoover” or the “Company”), a subsidiary of Hoover Group, Inc., and Consult Supply, a Hoover company, have appointed Tor Olav Schibevaag as managing director for Europe and Kjetil Skaaren as general manager for Norway. Jan Sekse, vice president global procurement, will continue to support the efforts of the Hoover Norway management team.

Tor Olav Schibevaag

Schibevaag will report to Hoover’s president, Paul Lewis, and joins Hoover with more than 12 years experience from Euro Offshore, where he developed and led the company as one of the leading cargo carrying unit (CCU) rental businesses in Norway.

Lewis said, “Tor Olav’s intimate knowledge of the CCU rental market will support Hoover’s position as a true market leader in Norway and globally. As an experienced leader with a history of developing and managing successful businesses within the oil and gas industry, he has a successful track record of implementing business process improvements and defining strategic direction.”

Schibevaag commented, “Hoover Norway has been active in the North Sea for more than 20 years, and continues to invest in the equipment and the people to serve this region. I look forward to supporting the development of Hoover and the team throughout the business.” Reporting to Schibevaag as general manager for Norway, Kjetil Skaaren has more than 15 years of experience in effectively managing and building highly complex and detailed projects for the oil and gas market.

Jan Sekse, vice president global procurement, will continue to support the efforts of Hoover Norway, providing input on relationships and design criteria for specialized and standard equipment.

The Hoover Norway management team is working on a global project to standardize the worldwide Hoover rental fleet design and procurement of cargo carrying units, chemical tanks and related offshore equipment. When this project is complete, Hoover will offer a global library of all DNV 2.7-1 type approvals and designs that specifically meet the requirements and standards for each geographical market the company serves. This directive will also serve as the basis for selecting partners to manufacture Hoover products, which will in turn drive lower cost and improve Hoover’s competitive position.

The Libra consortium has invited Airborne Oil & Gas to perform a failure mode, effect and criticality assessment (FMECA) for a TCP Riser that could be used at the giant Libra field offshore Brazil. The request followed a successful feasibility study (preliminary version) performed by Airborne Oil and Gas and Wood Group Kenny, that showed a 45% reduction in top tension in a cost effective riser solution, using a hybrid riser design comprising of the conventional flexible pipe (used for the top and bottom riser-sections) and the TCP section inserted at the mid-water depth.

Henk de Boer PhD, Engineering Manager Airborne Oil & Gas: "We are independent in our material choice and select the right material for every application. In this case, we assessed 3 different composite materials in the riser design and optimized it for installation, fatigue, top tension and pipe cost. Interestingly, the most cost effective riser solution turned out to be the technically best performing as well."

The TCP Riser solution (provided for the full riser length) could offer significant benefits in deep water riser applications: first, the lightweight TCP Riser reduces the top tensions up to 50% (as compared with the conventional flexible pipe), reducing the weight loading on the FPSO. Second, the TCP Riser itself is a simple monolithic wall pipe; while still flexible, it is inherently simple in its design leading to a very cost effective solution for deeper waters.

Airborne Oil & Gas is the world's first manufacturer of Thermoplastic Composite Pipe (TCP) to have qualified its design, production and materials in compliance with the new DNV Recommended Practice for Thermoplastic Composite Pipe, DNVGL RP F119. The FMECA will be conducted in accordance to this recommended practice.

U.S. Secretary of Commerce, Penny Pritzker, has presented LAGCOE (Louisiana Gulf Coast Oil Exposition) with the President’s ‘E’ Award for Export Service at a ceremony in Washington, DC. The President’s ‘E’ Award is the highest recognition any U.S. entity can receive for making a significant contribution to the expansion of U.S. exports.

In her congratulatory letter to the company announcing its selection as an award recipient, Pritzker said, “LAGCOE has demonstrated a sustained commitment to export expansion. The ‘E’ Awards Committee was very impressed with LAGCOE’s work to promote sales opportunities for oil and gas companies in international markets. The company’s extensive support of matchmaking activities was also particularly notable. LAGCOE’s achievements have undoubtedly contributed to national export expansion efforts that support the U.S. economy and create American jobs.”

From left to right: U.S. Secretary of Commerce, Penny Pritzker, presents President’s ‘E’ Award for Export Service to Angela Cring, Executive Director, LAGCOE, and Claire Thom, Industry Relations Director, LAGCOE.

LAGCOE, located in Lafayette, Louisiana, is a non-profit organization which supports the stability and growth of energy companies (in the U.S. and globally) through a biennial exposition and conference and ongoing programs. LAGCOE’s presentations, receptions, luncheons and programs promote education about new technologies and ventures, and provide invaluable opportunities for energy companies to display their products and network with potential buyers.

Angela Cring, executive director, LAGCOE, said, “We are thrilled to receive this recognition of our hard work in assisting U.S. companies with their international business development efforts; reducing barriers to foreign markets and opening the door to more trade around the world. The combined efforts of our international committee, LAGCOE volunteers, staff and community partners play a major role in effectively serving our companies. We look forward to continuing to grow our international business development programming to further assist energy companies with export efforts.”

LAGCOE has increased the focus on international expansion annually since 2003 and has been selected to participate in the Department of Commerce International Buyer Program since 2007. Statistics from LAGCOE’s most recent biennial exposition tracks increasing efforts to support U.S. companies’ export success. As a result of this extensive outreach, countries with international buyers attending LAGCOE grew from 26 in 2011 to 40 in 2015. At the most recent exposition in 2015, international buyers from 40 countries attended LAGCOE and 71 counseling sessions were held with 28 U.S. companies. Additionally, 95 international companies met in 286 business-to-business meetings with U.S. exporters.

In 1961, President Kennedy signed an executive order reviving the World War II ‘E’ symbol of excellence to honor and provide recognition to America's exporters. Secretary Pritzker honored 123 U.S. companies with the President’s ‘E’ Award for their outstanding work to reduce barriers to foreign markets and to open the door to more trade around the world.

In 2015, U.S. exports totaled $2.23 trillion, accounting for nearly 13 percent of U.S. GDP. Nationally, exports contributed to the U.S. economy, supporting an estimated 11.5 million jobs.

U.S. companies are nominated for the ‘E’ Awards through the Department of Commerce’s U.S. Commercial Service office network, located within the Department’s International Trade Administration, with offices in 108 U.S. cities and more than 70 countries. Criteria for the award is based on four years of successive export growth and case studies that demonstrate valuable support to exporters, resulting in increased exports for the company’s clients.

For more information about the ‘E’ Awards and the benefits of exporting, visit www.export.gov.

LQT Industries, LLC, a full-service provider of high quality accommodation facilities, design-build construction services, and support services to the oil and gas industry, has been awarded the construction of modular buildings from four (4) companies in the upstream and downstream market.

“We are pleased to continue to be a key supplier to our clients in a difficult market,” said John Alford, President of LQT Industries. “We appreciate the confidence our customers show in us and continue to gain customers due to our design-build capabilities and our on-time delivery of projects.”

The fabrication and outfitting of these customized buildings will be completed at LQT’s Fabrication Facility in Abbeville, LA, which specializes in designing and fabricating various types of modular structures including blast rated buildings, MCC buildings, and accommodation buildings.

At this year’s OTC in Houston the Damen Shipyards Group and GustoMSC announced the forming of a collaboration in order to produce a range of self-propelled and non-self-propelled jack-up platforms for the offshore industries – the DG JACK range. The collaboration will be based on GustoMSC’s strong track record in the design of jack-ups and provision of jacking systems, combined with Damen’s extensive experience in shipbuilding and vessel optimization, financing and worldwide after-sales services.

GustoMSC Managing Director Nils van Nood said of the collaboration: “We are very pleased to team-up with Damen to provide their clients proven and reliable jack-up solutions. These jack-ups form an expansion of the Damen portfolio targeting the offshore markets in oil & gas, renewables like offshore wind, and civil construction. The jack-ups will be based on GustoMSC’s proven designs and will include GustoMSC’s proven jacking systems.

DG Jack platform. Photo credit: Damen

“As a result of this collaboration the joint Damen and GustoMSC team is fully aligned to provide an optimized solution covering the complete lifecycle of the units, including the design, the construction and delivery as well as the services during operational life. The future owners of these jack-ups will enjoy a product of combined Damen and GustoMSC quality and they will experience first class global services.”

This arrangement provides the market with a total solution, drawing on the extensive experience of both companies, and on the wealth of knowledge within the Dutch maritime industry. Working together in this way, GustoMSC and Damen will be able to offer total control over the entire process, covering everything from basic design, through construction, to after-sales care – anywhere in the world.

Damen Chief Commercial Officer Arnout Damen explained: “The collaboration between Damen and GustoMSC represents a considered response to the needs of the entire offshore industry. It provides operators with a reliable, effective solution, combining GustoMSC’s expertise in design and engineering with Damen’s knowledge of construction, quality, outfitting, after sales service and finance options.

“We are looking forward to working with GustoMSC on the development of this range. The DG JACK will provide a bridge between the offshore energy sectors and offer the versatility to carry out multiple and varied tasks, safely, efficiently and at competitive rates, in line with market expectations”

The decision to partner up and produce the DG JACK range is based upon feedback from the offshore markets. DG JACKs will operate across the offshore spectrum, in both renewable and non-renewable sectors.

Damen Head of Business Development Peter Robert explained: “In the oil & gas markets, the demand for self-elevating service vessels such as the DG JACK range is driven largely by operation and maintenance (O&M) requirements. Age significantly increases the amount of topside repair, maintenance and refurbishment the operator must undertake for the platform to remain serviceable and compliant. In such circumstances the DG JACK represents an extremely cost-effective solution.

“At the same time, shallow water offshore fields remain a major source of production. With enhanced technology and recovery, combined with the relatively low cost of production compared to deep and ultra-deep water locations, such sites will ensure a continuing demand for the DG JACK range, particularly at this time of low oil prices.”

Mr Robert also stated that trends in the offshore wind industry gave the DG JACK range an assured welcome: “Wind turbine capacity has grown 41.1% from 2010 to 2015. In 2015, the average capacity of new wind turbines installed was 4.2 MW, a significant increase from 3.0 MW in 2010, reflecting a period of continuous development in turbine technology to increase energy yields at sea. The deployment of 4-6 MW turbines seen in 2015 will be followed by the gradual introduction of 6-8 MW turbines closer towards 2018.”

Operational experience to date has shown that jack-up vessel intervention has been required at operational windfarms to correct failures in relation to main components, both for isolated defects and to introduce design improvements. Most of the interventions have been in relation to early operational life and there is currently only a limited experience from offshore wind turbines on longer-term wear out rates and the typical length of life for critical main components, including blades, generators, transformers and gearboxes.

Consents granted to forthcoming projects indicate that this trend of scaling up is set to continue in the long term. Also, the fact that wind farms are placed farther offshore and in deeper water, means different capabilities are required than those seen in the current fleet of jack-ups operating in offshore wind. And, with the design life of offshore wind farms being between 20 and 25 years, routine operation and maintenance tasks are assured to ensure performance optimization.

Hili Company, the logistics division of Hili Ventures, has entered into a joint venture agreement with leading international energy logistics company Peterson, to provide oil and gas logistics services across the Mediterranean and North Africa.

Due to growing customer demand from the region, Peterson (Malta) Ltd will provide supply base services, warehousing and logistics management, procurement and recruitment, for oil and gas clients in the Mediterranean and North Africa. The company currently has more than 2,000 square meters of freetrade zone warehousing space in Malta, with access to a further 4,000 square meters of yard space for logistics supply base services.

Peterson offers a comprehensive range of safe, reliable and value added logistics solutions to the global energy industry from locations including the Netherlands, North America and the northeast of Scotland. Established in 1920, the organisation has expanded throughout the UK with facilities at several prominent ports, including an integrated asset base in Aberdeen.

The joint venture marries Peterson’s expertise in global oil and gas support with the wide-ranging capabilities of Hili Company, an internationally-focused group incorporating key capabilities in logistics, including global air, road and sea freight, ship agency and tramper services, clearances and deliveries, warehousing, courier solutions, ship-to-ship operations, and project cargo.

Its portfolio includes Mediterranean shipping and logistics firm Carmelo Caruana Company Ltd, logistics firms Baltic Freight Services, operating from Vilnius, and Prime Logistics based in Minsk, and a joint venture with leading shipping line CMA CGM.

Hili Company chief executive officer Davide Biron said: “We were attracted to Peterson because of its innovative approach to the oil and gas industry, with a strong focus on technology and collaboration. The joint venture will combine our broad range of capabilities with decades of oil and gas logistics experience from Peterson. Peterson is able to partner customers for a wide spectrum of operations and projects, including the decommissioning of oil rigs and repairs.”

Peterson director Jim McSporran said: “Our agreement with Hili Company provides us with additional strength to better serve our clients in this important region. As a result, we look forward to providing customers in the Mediterranean and North Africa with even greater cost-effective and innovative supply chain solutions.

“Our continuing investment in technology allows us to offer customers industry- leading solutions through our suite of digital applications which includes eCargo, the first system to digitise quayside operations, making them more transparent and efficient, including the handling of transport requests, container management and cost allocation for supply vessel pools.”

Markets React Positively to Just Modest Stock Declines as Concerns Grow of System Failure

U.S. commercial oil inventories fell just this past week, but markets reacted very positively to the data. First, crude and the four major products had an inventory decline, the largest this year. Also, the crude stock decline came before any impact from the Canadian wildfires. Furthermore, product demand put in another strong performance. Finally, oil markets are beginning to get the sense of a growing problem of system failure. Oil prices are just too low and circumstances are unraveling in places like Venezuela and Nigeria, while Libya is in chaos and Iraq may be there any day. Very low oil prices are not just undermining supply and encouraging stronger oil demand, they are eating away at the social fabric in many oil exporting countries.

Cause for Pause

Although the first round of hot weather has arrived in some markets last week, as per recent temperatures readings in Houston and Dallas, conditions in many other areas have been relatively benign as underscored by near equal national cooling degree day (CDD) and heating degree day (HDD) counts. The lack of a more material assist from weather explains in part the ongoing tug of war between the nearby NYMEX futures contract and cash Henry Hub (HH) prices, with the latter struggling to hold above $2/MMBtu so far, as was the case for May Bidweek.

Renewable Surge and Lower Exports Undermine German Spot Prices, but Bearish Risks Already Factored in the German Curve

The price crash in the German day-ahead auctions recently are not changing our price outlook for 2017, which remains constructive for German power, as a result of a more supported fuel pricing complex, led by the gains in the oil market.

Oil Moves Coal Higher; Limited Fundamentals Support for Now

Taking a cue from the oil market, coal prices largely moved higher last week, although prices did not move higher across the board, with deferred prices mostly losing ground (except for South African prices) compared to the end of the prior week. Looking forward, PIRA believes that aside from the linkage with oil pricing, there will be little support for coal pricing over the next several months, particularly as demand is moving toward seasonal lows. We do retain a bullish outlook for 2017 prices, however, as fundamentals will be more balanced next year.

EPA Regulates Oil and Gas Sector Methane

On May 12th the EPA issued a suite of rules directly regulating methane for the first time and expanding 2012’s NSPS for fracked gas to oil wells as well as other parts of the supply chain. A number of changes from proposal to final were made, in many cases strengthening the rule in response to concerns from environmental groups. EPA estimates 11 MT CO2e of methane emissions reductions in 2025 mostly from fugitive emissions and oil well completions. The annualized compliance cost is estimated between $530 MM and $800 MM.

U.S. Ethanol Prices Slide the Week Ending May 6

A main driver was a lower output of ethanol blended gasoline. Lower corn values also put downside pressure on prices.

Global Equities Post Another Decline

Global equities generally fell back again on the week. Defensive sectors again did the best with utilities posting a gain, while consumer staples and technology were flat. Energy performed in line the overall market, down about 0.4%. Retail was the worst performer. Internationally, all the indices, other than Japan, posted a decline. China and emerging Asia were the weakest performers.

LPG Price Gains in Asia Lag Other Markets

Asian markets, while easily besting broader crude’s gains, increased by less than those in the West. Cash propane cargoes arriving in the Far East during June were called 6% higher near $350 and butane improved to $380/MT. Smaller gains in Asia vs. the U.S. translate to a further narrowing of the physical arbitrage, which has become increasingly uneconomic — posing significant challenges for long-term U.S. export contract holders.

Japanese Crude and Product Stocks Rose

Two weeks of data were reported due to the string of Japanese holidays. Broadly speaking, both crude and product stocks rose. Gasoline demand was helped by the holiday and then fell back. Gasoil demand fell slightly pre-holiday, but then dropped sharply, as would be expected. Gasoil stocks rose both weeks with an average build rate of 148 MB/D. Kerosene stocks continued to build at an average rate of 73 MB/D. Refining margins continue under pressure with little support within the barrel.

NBP Has Breached Contract Pricing: Has Anything Changed?

While Russian gas pricing is far from monolithic, data indicate that NBP breached Russian delivered prices to Germany for March and April of this year. This inversion is unusual territory for the gas market, as we’ve traditionally seen a reversal for only a month at a time, either sparked by weather or supply disruption. This time seems to be different and is certainly a warning call that raises the broader question of whether contract gas can still be considered a sustainable ceiling for spot gas down the road.

Power Prices Catching Up on the Rally

Spot on-peak power prices increased from March levels in nearly all Eastern markets, supported by higher gas prices and maintenance outages. Colder weather in the Northeast and Midwest nearly offset the impact of weaker cooling demand across the South. Given lackluster March heating loads, demand was only slightly weaker in April, and the loss was countered by lower hydro generation and imports. Gas prices are projected to increase for the balance of 2016, with Henry Hub spot moving above $3/MMBtu in December. Seasonal basis strength in the Northeast lift New England and NY prices above $5/MMBtu in December with further increases in Jan.-Feb. 2017. As a result, we look for a significant improvement in coal unit competitiveness during the 2016-17 winter.

EUA Prices See Volatility, Correlation to Nat Gas Emerges

The supply picture has not changed, and power sector EUA demand remains very weak. The market may be looking for price support in the form of policy developments, but this is overly optimistic. The recent lack of clear EU ETS fundamental indicators resulted in high volatility, but a high correlation with natural gas prices has also emerged. As such, we maintain a EUA price forecast in sympathy with natural gas prices that fall through summer 2016.

Ethanol Production Rebounds from 51-Week Low

U.S. ethanol stock draw was the largest this year. Output rebounded as plants returned to normal operation after spring maintenance.

State of the Global Economy in Early Second Quarter

In PIRA’s economic outlook for 2016, global activity is expected to pick up steam after a sluggish start to the year. For this forecast to track, data for the second quarter will need to register meaningful improvements from the first quarter. It is too early to determine whether the expected lift is taking place — key global statistical releases currently extend only through April. But available information has been generally encouraging for the U.S., Europe, India, and Brazil, while growth in China will probably stay similar to the pace observed during the first quarter. In Japan, economic uncertainty is elevated.

Canadian Oil Sands Production to Resume

Oil sands operators have begun to resume production following the devastating Fort McMurray wildfires that started early last week. The fires continue to burn but have moved eastward away from Fort McMurray and oil companies are allowing workers to return to sites. The pace at which production returns will depend on pipeline restarts, power availability, and labor availability. PIRA expects most production will return by the end of this week, putting the cumulative loss around 15 MMB.

Asian LNG Buyers Shrug off Late-June Opening of Panama Canal

The Panama Canal Authority finally set a target date of June 27 for a first plus-sized cargo to transit the newly expanded locks. After years of anticipation and much hand wringing on the part of global LNG suppliers, particularly Trinidad and the U.S., both of which had long eyed the much more attractively priced Asia-Pacific market, including Chile in South America, the reality is that at this point Asian markets have lost all of their allure for Atlantic Basin suppliers.

Financial Stress Stable

The S&P 500 was modestly higher on a weekly average basis but declined Friday-to-Friday. Many of the other indicators were fractionally changed. High yield debt (HYG) was slightly lower, while emerging market debt (EMB) was slightly higher. The yield on the BAA-rated corporate bond was also slightly lower, extending its trend towards lower rates and narrower credit spreads. The U.S. dollar was generally higher, particularly against the euro, pound and yen.

OPEC Supply Reductions Providing Support for Oil Prices

OPEC supply disruptions surged in early May and show no sign of abating. In Venezuela, delinquent payments to service providers have caused companies to curtail activity in the country, reducing crude production to ~2 MMB/D in May. Similarly, economic problems in Nigeria have reduced amnesty payments to Niger Delta militants. This is the likely driver of a recent spike in oil infrastructure attacks, which have reduced output by upwards of 100 MB/D. In Libya, ongoing political disintegration is shutting in even greater export volumes, resulting in a ~100 MB/D output cut versus the April average. The situations in all three countries appear to be worsening, which will be constructive for oil prices amid the ongoing supply rebalancing.

Thailand’s Natural Gas Supplier Wants to Up Industrial Prices

PTT Plc is in talks with Thailand’s Energy Regulatory Commission (ERC) to restructure the price of natural gas sold to the industrial sector after the company suffered huge losses from current pricing, says a senior PTT official. Noppadol Pinsupa, senior executive vice-president for gas business, said the oil and gas conglomerate suffered a loss of about 3 billion baht ($85 million) in 2015 from selling gas at a price below market level. The price of gas sold to the industrial sector is pegged to the bunker oil price, which moves in line with the oil price, depressing the gas price 7% below the market price.

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.

Aberdeen-headquarted subsea cable and connector specialist Hydro Group plc announces multiple Asia Pacific Business Partner agreements as the firm continues strategic growth in the region.

As part of international expansion plans in 2013 the firm formed its Singapore based division, Hydro Group Asia, which has shown an annual increase of sales in the region of over £1.5M. The five new Business Partner agreements with Uni-One in Taiwan, ISL in China, Oceanpixel in the Philippines, PT Indonesia in Indonesia and DKHG in Vietnam will aid Hydro Group’s cabling interconnect solutions presence in these important markets.

L-R) Doug Whyte, Hydro Group managing director and Steve Ang, Hydro Group Asia technical sales manager.

Steve Ang, Hydro Group Asia technical sales manager, said: “Entering into these new agreements allows us to improve our network across South East Asia, as part of our continued growth plans for the region. As we specialise in custom designs, improving our network also means a greater level of contact with our customers, which is vital for our hands on design and engineering approach.”

Hydro Group is at the forefront in the development and innovation of subsea product technologies, with involvement from prototype concept through to design, manufacture and project management.

Doug Whyte, Hydro Group managing director, said: “Asia currently represents Hydro Group’s second largest export market, with significant growth in demand for our range of subsea optical cables, electrical cables and connectors from defence markets and increasingly energy customers, due to the expansion of exploration activities in the region.

“These new agreements allow us to increase efficiency and ensure regular interaction with customers across the region. We look forward to working with our new Business Partners and fulfilling increasing demand for our products.”

A team led by AJ Jain, Harkand North America Managing Director, has agreed to a management buyout (MBO) of Harkand’s North American and African business. The new company, to be named ETHOS OFFSHORE LIMITED, will continue to provide subsea engineering and construction services to Harkand’s existing US, Mexican and West African client base to market-leading standards.

The new company, backed by investment funds advised and managed by Oaktree Capital Management, L.P. (“Oaktree”), is expected to have a contracted backlog of $145 million worth of projects. The move also could potentially safeguard more than 100 jobs across North America, Africa and Mexico.

The MBO has ensured that Ethos Offshore is able to deliver the full scope of subsea services to established clients, including ROV and diving, inspection, engineering, project management and survey services. This will provide a sound platform for growth as new opportunities arise.

Operations in the three regions will continue to be led by AJ Jain as chief executive officer, supported by Brian Schacht, head of business development and communications, James Parker, head of North America operations and Doug Fieldgate, head of West Africa operations.

Mr Jain said: “Throughout the transition process, our focus will be to ensure that there is no disruption to clients. Our project teams will continue to deliver the high standard of services that our clients are accustomed to. We are delighted that Oaktree Capital Management continues to believe in the business created by the North America team of Harkand and is supporting not only the current projects but also the growth ambitions of our new company.”

Guillaume Bayol, Vice President at Oaktree, said: “The management team of Ethos Offshore, led by AJ Jain, has an established track record of delivering excellence to clients and partners in the Gulf of Mexico and West African markets. We are excited to work with them to build Ethos Offshore into a company with the highest reputation for safety, service and value for money in the subsea engineering and construction sector. We view this as an opportunity to build a platform and business model that can thrive in today’s challenging environment.”