Hereema Marine Contractors Nederland SE will remove the platform and transport it to shore, while AF Offshore Decom AS has been awarded the contract for disposal and recycling of the platform.
Photo credit: Statoil
The Huldra field is a Statoil- operated gas and condensate field on the Norwegian Continental Shelf, North East of Bergen. The field came on stream in November 2001 and on plateau the field produced 10, 3 MSm3/day.
The gas and condensate production was closed down 3. September 2014. Previously the jack up rig West Epsilon has been awarded the contract for plugging the six wells at Huldra during 2016. On behalf of the partners Statoil has now awarded two new contracts for removal, transportation, disposal and recycling of the Huldra platform.
• The Engineering, Preparation and Removal (EPR) contract has been awarded to Heerema Marine Contractors Nederland SE.
• The contract for disposal and recycling of the platform has been awarded to AF Offshore Decom AS, a subsidiary of AF Gruppen ASA.
The total weight of the platform is approximately 10.000 tons, distributed over a 5, 000 ton topside and a 5, 000 ton steel jacket. It is expected that more than 95 percent of the platform will be recycled.
The plan is to remove the Huldra platform during 2019 with the subsequent disposal and recycling work taking place at AF Offshore Decom’s environmental base in Vats, Norway within the first half of 2020.
The platform is being removed according to the Ospar convention, stating that oil installations no longer being used as a main rule shall be removed.
In the second half of 2015 application of Ecolock started on a newbuild Floating Storage and Regastification Unit (FSRU) in China. This is the second project carried out for EXMAR nv, after the application on the Caribbean FLNG in 2013.
Photo credit: Hydrex
Like the first project, the FSRU is built in blocks and these blocks are coated individually before assembly, leaving only the weld seams and the areas inaccessible due to the support blocks to be painted after the barge is assembled. The Ecolock system consists of a single, homogenous covering of the steel. Painting over weld seams after the blocks have been assembled is very easy. It leaves a smooth finished surface and the erection joint paint blends in perfectly with the coating of the rest of the hull.
As with all Ecolock applications, a trained and qualified paint inspector is on site monitoring the entire preparation and application to ensure adherence to the specifications at each step of the process and to assist with any problems that may arise. This is essential for a coating that is intended to last the life of the ship. Ecolock comes with a warranty as long as it is standardly applied and if the coating is maintained according to the specifications.
The application on the FSRU is scheduled to be finalized later this year with a planned delivery of the unit not much after.
Wood Group Intetech (WGI), a leading asset integrity specialist serving the global energy industry, is launching a new version of its ECE® software in response to client demand.
ECE® is an established tool for corrosion analysis and materials selection. The latest version – ECE® 5.3 – includes a bulk calculation feature, which will enable users to simultaneously upload multiple data streams, saving valuable time in the data transfer process. Customers can upload the inputs and access the results in a user-friendly Excel format – increasing ease of use.
Founder and Managing Director of Wood Group Intetech, Dr. Liane Smith, says: “ECE® is enabling clients to evaluate critical operational decisions and prioritize budget spend at a time when industry resources are limited. The combination of our in-house expertise and large user group feeding into the development process ensures we continue to provide solutions that address the challenges of clients worldwide.”
WGI is experiencing consistent demand for ECE® with over 80 customers worldwide currently utilizing the software.
Aberdeen-based subsea cable and connector specialist Hydro Group, has expanded its premises by investing £2million in a new 13,700 sq ft bespoke facility, set to open in spring 2016.
The company currently occupies a 45,500 sq ft facility at the Aberdeen Energy Park, purchasing the additional 0.63 acres of development land from Buccleuch Property and Moorfield Group (Buccmoor LP) to enable it to expand operations and develop a brand new workshop with mezzanine deck.
Doug Whyte, Hydro Group Managing Director, said: “The new facility and additional space was required in order to diversify and develop our business. It has been a significant investment for the future of our company, helping us to open up new business opportunities and deliver major growth plans for the company.”
Hydro Group’s new facility Photo credit: Hydro Group
Hydro Group, an Energy Park occupier since 2008, designs and manufactures underwater cables and connectors for subsea, underwater, topside and onshore applications. The company, one of very few in the UK that offers this technology, will use the space to install its new armouring line, facilitate a pressure testing area, and for additional storage.
The development follows on from a £300,000 investment last year in the advanced armour line, which extended Hydro Group’s product capabilities, enabling it to offer cable products to improve and support subsea operations.
“We are now able to manufacture mechanically protected cables which can withstand higher stresses in subsea and defence operations, and the extra space means that we can also offer greater capacity in size and overall lengths," concluded Mr Whyte.
Speaking on behalf of the Park’s owner, Moorfield Real Estate Fund III, Mark Holmes from Moorfield Group said: "It is very encouraging to see Hydro Group diversify and expand operations here at Aberdeen Energy Park. We were pleased to be able to facilitate the sale of development land which was available adjacent to the company's existing facility. We look forward to the business continuing to develop and prosper at the park.”
Doug Garden, partner of Knight Frank in Aberdeen, who advised Hydro Group, added: "Having project managed the original building for Hydro Group, it was pleasing to be involved once again in assisting Hydro Group with its further growth at Aberdeen Energy Park."
Tritech International Ltd, [Tritech], announces that Rotech Subsea Ltd [Rotech] has purchased Gemini Narrow Beam Imager (NBI) systems.
The sonars are to be installed in single head or dual head configuration for use on Rotech's RS range of excavation tools and will support the increased volume of work they are securing worldwide in the oil and gas and renewables sectors. The Gemini NBI can communicate over Ethernet or VDSL and for this installation the systems will run in VDSL mode. The Gemini NBI systems will run on the newly introduced Tritech Gemini 72VDC VDSL Interface Unit, which will supply the sonars with sufficient power to operate over a 300m cable. The unit connects to an Ethernet port on a standard PC running the Gemini software.
Rotech Subsea RS excavation tool, as fitted with a Tritech Gemini NBI. Image courtesy of Rotech Group Ltd
The Gemini NBI operates at 620 kHz and has a 1 degree narrow vertical beam to enable users to accurately identify acoustic target positions. Offering high-speed multibeam imaging, the Gemini NBI is ideally suited for trenching and excavation operations in poor visibility conditions as it features a 130° swath and 0.5° horizontal angular resolution providing 10mm range resolution. Control of the Gemini NBI is via the standalone Gemini software package on a Tritech Surface Control Unit (SCU) or on a desktop PC or laptop.
Kevin Cargill, Subsea Operations Manager, Rotech, commented:
“Rotech Subsea has witnessed first-hand the clear imagery of the Gemini NBI which has allowed us to successfully complete both inshore and offshore jobs including a recent harbor clearance where the sonar also provided continuous visualization as we excavated towards the harbor wall. We have also used the Gemini NBI in cable de-burial and post-trenching projects where continuous observation of the task was critical. We are, therefore, confident that the Gemini NBI systems will further enhance the capabilities of our RS range of excavation tools in visibly-challenging environments.”
Scott McLay, Sales Director, Tritech, commented:
“The Gemini NBI has proven to be highly effective at target visualization in low visibility and turbid waters, providing real-time high speed acoustic images. The sale of the Gemini NBI systems to Rotech Subsea demonstrates the market desire for field-proven technology and it is encouraging that despite current industry challenges, there are still opportunities for our customers and our highly reliable technology.”
In a period of cost constraint and increasingly complex oil & gas production, finding solutions that increase efficiency and production has never been more important. To address the industry’s need for smart solutions that reduce complexity, DNV GL is funding 43 new joint industry projects in 2016 in addition to launching a new Step Change innovation program to help customers leverage opportunities from digitalization.
Both initiatives are based on closed interaction and collaboration with industry partners. Key focus areas for DNV GL in 2016 will be to address challenges on standardization, operations (OPEX services), safety, environment, regulations and performance.
“DNV GL led JIPs aim to provide insights into future trends and technologies. Many of the projects result in new industry standards and practices that support innovation and flexibility in design while managing costs and maintain safety levels,” says Rolf Benjamin Johansen, Technology Manager, DNV GL – Oil & Gas.
The value of standardization is recognized by the industry with 61% of senior oil & gas professionals agreeing that operators will increasingly push to standardize their delivery globally1. The most common strategy for maintaining innovation with lower budgets is to increase collaboration with other industry players (45%) and nearly one in three (30%) plans greater involvement in joint industry projects in the year ahead.
DNV GL’s new Step Change innovation program is focused on digitalization. Only one in five oil and gas companies see themselves as highly digitalized today. However, close to half of senior oil & gas professionals (45%) already see solid or high potential for big data and analytics to transform the operating efficiency of the industry in 2016. DNV GL’s program involves the end-users, e.g. oil companies, drilling contractors and suppliers, in the innovation process. The first pilot projects have already created significant value for these end-users from using new forms of data analytics in combination with domain knowledge and technical insight.
“Step change is exactly what it says – a paradigm shift in how we drive innovation to quickly test out data smart solutions and new business models with strong customer involvement at an early stage. In the current price environment, innovation is even more critical. It can both help the industry to reduce complexity short term by standardizing parts and processes and enable new technological developments long-term that will drive efficiencies. At DNV GL, we are continuing to invest 5% of our revenue in R&D because it enables us to provide long-term foresight for our customers,” says Kjell Eriksson, Regional Manager Norway, DNV GL - Oil & Gas.
Currently in the initial phase, DNV GL welcomes industry players to join the JIP projects or contact us if they are interested to be involved in our Step Change program.
Aker Solutions secured an agreement to provide maintenance and other services for subsea facilities at Petrobras-operated oil and gas fields offshore Brazil.
The contract is for a fixed term of three years valued at BRL 435 million net of taxes (NOK 1 billion) and may be extended by another three years. It covers maintenance, storage, supply of parts and technical assistance for all subsea equipment delivered by Aker Solutions to Petrobras in Brazil.
"Brazil is a key global offshore market," said Luis Araujo, chief executive officer of Aker Solutions. "We have a nearly four-decade presence in the country and are committed to finding solutions to help Petrobras develop its petroleum resources in the most efficient and sustainable manner possible."
Aker Solutions is in April opening a new subsea manufacturing center in Curitiba, doubling its local production capacity. The company is also upgrading its subsea services unit in Rio das Ostras to better meet customer demand.
The contract will be managed at the base in Rio das Ostras in Rio de Janeiro, at a local content rate of 87 percent. This builds on a commitment to develop partnerships with national suppliers.
"We are pleased to be able to continue providing top-notch services and technologies to support Petrobras' production and growth plans in the pre-salt deepwater fields," said Maria Peralta, head of Aker Solutions in Brazil.
The agreement is similar to one signed in 2011 for maintenance of equipment and other offshore services. Currently, Aker Solutions' subsea lifecycle services unit has about 360 employees in Brazil, of which 150 are part of the technical team working offshore. The company has about 1,300 employees in the country.
The contract is booked as part of Aker Solutions' first-quarter order intake.
Seanic Ocean Systems Inc. (Seanic) and CSA Ocean Sciences Inc. (CSA) are responding to challenges faced by the oil industry to address increasing regulations and environmental stewardship concerns. This strategic partnership merges technology and environmental expertise with the goal of improving oil spill response equipment and services. Innovative solutions developed by Seanic and CSA will provide much-needed support to the oil industry, which is under increasing pressure to maximize efficiency while minimizing risk and environmental impact.
Both companies already support the oil spill response needs of the energy industry, providing a range of specialized equipment and services, from engineered solutions to oceanographic sensors and from testing and maintenance to developing dispersant monitoring plans. Forging this partnership integrates the skills and experience of each company, resulting in better service to both industry and the environment.
“Seanic’s Remote Systems Technology combined with CSA’s experience in Environmental Sciences will allow us to approach oil spill response, particularly the application and monitoring of dispersants, in a unique and innovative manner,” stated Kevin Peterson, President of CSA Ocean Sciences Inc. “As environmental regulations evolve, water depths increase, and locations become more remote, cost-effective solutions based on solid science and technology become more important than ever.”
Seanic brings expertise in ROV tooling, engineered solutions, and the maintenance and improvement of oil spill equipment. Their corporate headquarters in Katy, Texas offers state-of-the-art facilities for manufacturing, testing, storage, and maintenance of equipment, including stabilized yard space, a tool pool, storage warehouse, and a 500,000-gallon in-ground wet test tank. Overseas facilities in Scotland, Norway, Australia, and Singapore support international operations.
CSA brings 46 years of specialized experience in marine environmental consulting, serving the energy industry worldwide through offices in the United States, the Eastern Mediterranean, Qatar, Trinidad, Singapore, and Australia. CSA’s expertise in coastal, marine, and deep ocean surveys, sampling, monitoring, assessment, and mitigation is built on the integration of science, operations, and an understanding of environmental data collection, management, and analysis within geospatial domains.
A joint industry project established through The Industry Technology Facilitator (ITF) has entered a trial phase with the support of oil and gas operators.
A new technology system designed to address a common problem in the subsea industry is undergoing a shallow water trial at Portishead Quays marina. The system will help to identify the location of electrical faults on subsea installations and will enable field operators to better plan for repair or replacement of failed components which could save the industry millions of pounds in halted production.
The system, known as V-IR, has been developed by Viper Subsea with the support of Total, BP, Shell, and Chevron.
ITF CEO, Dr. Patrick O’Brien
The shallow water trial will run in phases and could last up to 12 months. The initial trial will take three months, during which time the V-IR technology suite will undergo communications and performance testing in a sea water environment that includes the use of 2km of subsea cable which has been deployed onto the bed of the marina.
Although a shallow water trial, the main components are already designed for 3000m water depth. Following the shallow water trial there will be a period of further equipment qualification before the system is fully commercialised later in the year.
ITF CEO, Dr Patrick O’Brien said: “It is encouraging to see that one of our JIPs is nearing the latter stages of deployment with this trial. Identifying the exact location and why the failure occurred is time consuming and difficult with existing technology, meaning that the recovery and repairs of cables is risky and very expensive. Viper’s V-IR system has the potential to provide substantial savings in time and costs to the industry.”
ITF is driving oil and gas technology development and collaboration. With a membership of international oil and gas operator and service companies, the industry technology facilitator has launched over 200 innovative joint industry projects. ITF champions technology development and believes investment is crucial to solving the most pressing challenges the industry faces in securing reserves.
Latin American Light Product Imports Level Off/Decline
Latin American oil demand is downshifting in 2016 with gasoline expected to grow only slightly and diesel to contract. Product imports into the region are down, but there is upside risk stemming from operational issues in the Venezuela refining system. Latin American refinery runs are expected to improve in Mexico, Colombia and Brazil, but Venezuela is deteriorating. PIRA’s analysis of Latin American heavy crude values in different markets shows that since 2015 Maya has been relatively more attractive versus alternatives in some European/Asian coking capacity. Whereas for the U.S., Maya remained in the middle of the range of competition.
The Recovery in U.K. Gas Production Is Not the Start of a New Trend
A key shift in European gas balances in the years ahead will be increasing dependence on LNG and Russian gas in N.W. Europe. U.K. and Dutch production are both shadows of their former selves at 121 mmcm/d and 184 mmcm/d, respectively, in 2015, and declines almost guarantee this shift to occur. Buyers have prepared by investing in more import infrastructure and working gas storage, while sellers are also positioning themselves to be more competitive. Gazprom has recently converted more major customers to spot gas indexation, and if Nord Stream 2 does manage to be built, access to Russian gas at the farthest reaches of N.W. Europe will be in play and more transparent pricing will make it a more competitive environment.
Gas Units Online After Years of Hibernation, with the Help of Resilient Carbon Prices
Increased dispatching of gas has already emerged in the U.K. so far this year, with an extra 5 GWs on average dispatched year-on-year, but as the oversupply in the LNG markets continues to build, coal-to-gas switching will increasingly become a reality on the Continent. Gas prices have been drifting low enough to push RWE to announce that it will bring back online the Dutch MOERDIJK 2 gas unit (430 MWs). This move suggests that the positioning of gas is improving relative to coal on the Continent, with this outcome also in part the result of resilient carbon prices. Will carbon pricing continue to ignore the overwhelmingly bearish underlying fundamentals?
Gas Surplus Weighs on Coal
Low gas prices continue to result in cannibalization of coal dispatch, aided by robust growth in wind generation due to new capacity in service. At the same time, U.S. coal producers are slashing output dramatically, especially in the PRB. This sows the seeds for a market recovery in 2017 once gas and coal stocks normalize and natural gas prices recover.
Freight Market Outlook
Volatility in the tanker sector seems to be increasing as evidenced by wide swings in VLCC rates. Rates in the benchmark AG-Asia trade plunged from WS 115 early in January to WS 49 early in March then back to WS 97 by mid-March, only to fall again to WS 60 in April. But the daily drip feeding of new tonnage into the fleet with few offsetting deletions will ultimately result in lower peaks and deeper rate troughs in 2016 and next year. Tanker demand has also been helped immensely by a bloated supply chain, but PIRA expects this support to wane as global inventories start to decline beginning late in 2Q with the decline accelerating in 2H16.
European LPG Catches a Bid
Closed arbitrage economics from the US to NW Europe over the past months have led to reduced cargo flow between the regions. This has helped tighten supplies in local European propane markets, which is beginning to affect a price response. May propane futures added a solid 5% last week to $298/MT — a premium of over $100 to Belvieu propane, the largest since January. Butane continued to languish however, as a lack of gasoline blending hinders demand. Cash butane cargoes were at a $20/MT discount to propane futures on Friday.
Brazilian Political Upheaval
Lots of moving parts as a new trading week begins, and we’re not just talking tractors with planters attached. With that said, there’s very little in the way of surprises as the OPEC meeting in Doha yielded no agreement, the Brazilian lower house voted to move forward with impeachment proceedings against Dilma Rousseff, and weekend weather saw an awful lot of planting activity from Minnesota and Iowa east. With soybeans leading this most recent rally, the question on everyone’s mind is whether or not the real will continue to rally now that a vote has been taken and remain the force behind higher prices.
U.S. Ethanol Prices and Margins Jump
Ethanol assessments climbed to new 2016 highs for the week ending April 8 as the long anticipated reduction in output and stocks finally materialized. Strengthening corn and oil prices supported the move.
April EUA Price Bump Temporarily Camouflages Bearish Market
Despite the expected EUA price bump during the April compliance period, bearish indicators remain in the EU ETS. Power sector EUA demand is weak, with competitive gas generation, coal retirements and a downward revision in implied CO2 prices. The bearish supply picture includes incoming 2016 free allocations, higher auction volumes, and little expectation of pre-2019 policy support. Excepting the possibility of greater alignment with rising oil prices, there is little upside price potential through summer 2016.
Global Equities Resume Their Advancing Trends
Global equities resumed their broad based gains for the week. In the U.S., the banking index had a particularly strong performance. Retail and materials also outperformed. Only consumer staples posted a small decline. Internationally, all the tracking indices gained and outperformed the U.S. overall tracking index.
Crude Imports and Crude Stock Build Drive Record U.S. Commercial Stock Level
A sharp week-to-week increase in crude imports, partially driven by a recovery from fog-impeded flows the week before, contributed to a 6.6 million barrel crude stock build. This crude build drove a 6.9 million barrel build in total commercial stocks, driving them to a new record high. With a similar build last year, the surplus remained about the same. Domestic crude supply increased sharply on the week, but we think another week of data will better gauge April’s apparent production recovery.
Competing Forces Emerge in Near-Term LNG Spot Price Discovery
Don’t forget that for key LNG buyers in Japan and Korea, low spot priced cargos, as attractive as they may be, cannot always find a home owing to limited LNG storage. In the second quarter, when Asian demand is at its seasonally weakest point, this effect is exacerbated, particularly as Asian buyers emerged from a warmer-than-normal winter with stocks intact. For now it appears that current levels of spot gas are not yet low enough to trigger a substitution effect for coal, at least not in Japan.
Fuel Forwards Rally; Power Prices Lag
Influenced by mild weather, March spot power prices were down from February levels in every market except NY-A, where transmission congestion caused spreads with Ontario to expand to nearly $40/MWh. Since bottoming in late February, NYMEX winter 2016-17 gas contracts have risen, bringing the market into closer alignment with PIRA’s forecast. Wind provided over 20% of SPP and ERCOT generation in March, limiting gas burn. Fewer nuclear outages are scheduled this spring and fall than in 2015, which will also restrain gas burn.
Fresh Chinese Data Release Points to Potential Coal Demand Stabilization
Seaborne coal pricing moved decidedly higher last week, aided by a firming in oil prices and newly released data showing a potential resurgence in Chinese coal demand. Atlantic Basin prices rose more than Pacific Basin pricing, with stockpiles at ARA declining last week and shipping data indicating a sizeable reduction in Colombian exports in March, particularly in Europe. Additionally, tightness has emerged for higher grades of South African coal, causing API#4 (South Africa) to remain out of sync with API#2 (Northwest Europe) and FOB Newcastle (Australia) prices.
Financial Stress Stable
The S&P 500 gained on the week after a slight decline the previous week. It has now posted gains the past eight of nine weeks. Most of the other key indicators improved. The yield of the BAA-rated corporate bond has continued to decline. Commodities, including total, energy and ex-energy, were higher on the week. The Cleveland Fed released its inflation expectations series for April, which showed a raise for all maturities.
Ethanol Manufacture Plummets
U.S. ethanol production plunged 38 MB/D last week to a six-month low 938 MB/D as more plants reduced output to perform annual maintenance.
Producer Selling Opportunity
Fundamentally there is still no reason to own these markets, but the power of money flow was on full display last week after a mundane WASDE on Tuesday. Planting conditions and soil moisture profiles were impressive for many we visited in the Midwest. Planters were starting to roll late week and should be out in earnest by the weekend. Planting in Iowa and Missouri was ahead of pace this past week while others are just biding some time while watching the impressive rally.
Japanese Crude and Product Stocks Build, with Weaker Demands
Crude runs were modestly lower and crude imports remained around 3.8 MMB/D, which built stocks 2.8 MMBbls. Finished product stocks built with increases in gasoline, gasoil, and kerosene. Naphtha stocks continued to decline. Gasoline demand fell back from strong levels with much lower yield, and stocks posted a minor build. Gasoil demand also fell back with much lower yield and a drop in exports, such that stocks built similarly to gasoline. Kerosene demand again declined seasonally. Refining margins remain good, but have eased. All the cracks gave ground on the week.
Shoulder Season Stockpiling Threatens Early Entrants
With NYMEX prices challenging $2/MMBtu earlier in the week, or ~25% higher than last month’s lows, cautious optimism might be returning to the market. Signs of slowing domestic production and recent “tightness” revealed in early April storage reports have arguably fueled more bullish sentiment than the prior month, when Henry Hub (HH) cash traded $1.49/MMBtu. The lethargic pace of restocking thus far, i.e. ~2.5-3 BCF/D less than 2012, has provided fodder to those looking to build opportunistic length. Should such tightness continue, gas prices would naturally recover to levels more aligned with lifting costs. However, extrapolating early-season tightness is probably unreasonable given looser shoulder season balances.
April Weather: U.S., Europe and Japan Warm
At midmonth, April looks to be warmer than normal (-7%) in the three major OECD markets with a net effect on oil-heat demand to be -91 MB/D. On a 30-year-normal basis, the markets are almost 17% warmer.
Upside Surprises for China, But Downbeat Data from the U.S.
In China, the first quarter GDP reading matched the market’s expectation exactly. Underlying data from four key sectors (manufacturing, housing, consumer spending, and trade), on the other hand, were better-than-expected, and indicated a strengthening in the economy’s momentum. These improvements owed significantly to the Chinese government’s recent policy stance on credit creation. In the U.S., the latest industrial production data disappointed significantly, but manufacturing is still expected to strengthen in the coming months.
Asian Demand Update: China and India Pushing Faster Growth
PIRA's latest update of Asian product demand shows improved growth due to acceleration in China and India. China and India show combined growth of over 1 MMB/D, a pickup from the last update and incorporating the latest three-month actuals through March. China posted growth of 528 MB/D (vs. 394 MB/D in last update) and India was higher by 528 MB/D (vs. 358 MB/D, previously).
Fracking Policy Monitor
President Obama has taken aim at regulating methane emissions from the oil and gas sector, announcing new EPA regulations for existing oil and gas sources but leaving follow-through to the next administration. 2016 Presidential candidates have shown predictably opposing views on the importance of fracking along party lines. The USGS released its seismic forecast, for the first time taking account of induced quakes, prompting policy discussion on the state level. Oklahoma is likely to continue with its current voluntary compliance scheme despite increased quakes, lawsuits, and a difficult business environment. Limits on local control remain a key issue in Colorado and West Virginia.
Iran Set to Lower Petrochemical Gas Feedstock Price
Iran is preparing to cut the price of natural gas as a feedstock for petrochemical plants for the next six months, the deputy minister of oil for planning and supervision of hydrocarbon reserves Mohammad-Mehdi Rahmati said on April 11. He said that the final price hasn’t been set yet, but it would be announced in a week. It will be the first time for two fiscal years that Iran has cut the gas price for petrochemicals despite falling oil prices since mid-2014.
Electric Vehicle Outlook: Tesla, Batteries, and the Transport Fuel-Power Intersect
Tesla Motors unveiled its all-new Model 3 electric vehicle on March 31, 2016, attracting a record-breaking number of pre-orders. PIRA does not view Tesla’s new vehicle and pre-order announcement alone as reasons for adjusting the short- or long-term outlook, which already models significant growth in plug-in electric vehicle (PEV) sales after 2017. Nevertheless, competitive pressures from additional PEV models, the downward trajectory of battery costs, and upcoming Environmental Protection Agency (EPA) standards review will be important trends to watch over the medium term.
PIRA Expects Record Summer Gasoline Demand, Albeit with Lower Hydrocarbon Portion
PIRA expects gasoline demand this coming summer to finally exceed the peak period of 2006-2007. Demand had fallen sharply following a period of high prices and weak economic activity. The increased use in ethanol, however, means the hydrocarbon portion of demand this summer will be down from previous peaks. From the refiners' perspective, this fact is mitigated by a significant reduction in net imports of total gasoline, requiring record production this summer to meet domestic and export demand.
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.
Secretary of the Interior Sally Jewell and Director of the Bureau of Safety and Environmental Enforcement Brian Salerno have announced final well control regulations to reduce the risk of an offshore oil or gas blowout that could result in the loss of life, serious injuries or substantial harm to the environment. The regulations represent one of the most significant safety and environmental protection reforms the Interior Department has undertaken since Deepwater Horizon, and builds upon a number of reforms instituted over the last six years to strengthen and modernize offshore energy standards and oversight.
Following their recent announcement of a partnership that will install over 17,000km of new subsea cable directly connecting Angola, Brazil and the United States, Angola Cables has affirmed and praised Ocean Specialists, Incorporated (OSI) for the highly strategic role the subsea cable advisory and project management firm has played in the design and development of Angola Cables’ global network build out.
Angola Cables, with the strategic and operational support of OSI, has initiated two innovative new subsea cable networks. The first, known as the South Atlantic Cable System (SACS) links Angola with Brazil, is already under construction and marks the first South Atlantic modern D-WDM fiber optic cable network in history. The second, the recently announced Monet cable network, will further connect Santos and Fortaleza in Brazil and Boca Raton, Florida, providing onward connectivity to Angola via SACS. The Brazil-US network is currently under construction in partnership with Algar Telecom (Brazil), Antel (Uruguay) and Google.
Subsea telecommunications cable networks are critical to global voice and data communications, and carry over 98% of the worlds’ telecommunications traffic. High-speed fiber optic networks are essential to both businesses and consumers, and allow real-time access to apps, social media, websites and other bandwidth intensive services. As the most efficient way to transmit information between continents and cities, fiber optic cables provide added benefits of security and reliability that are indispensable to both telecom service providers and their enterprise customers.
“The design and implementation of a subsea cable network is a highly specialized undertaking, and OSI, as our partner in network development from the very beginning of the South Atlantic Cable System (SACS) discussions, has been instrumental to our success. From providing an initial economic viability analysis and network development strategy to evaluating investment options and network design, and then on to running a competitive tender process and rigorous evaluation process for our network contractor, OSI has been absolutely critical in supporting Angola Cables as we execute our regional and global strategy,” stated Antonio Nunes, CEO, Angola Cables.
“With their existing ownership in the West Africa Cable System (WACS), Angola Cables’ network build out across the Atlantic and on to the United States is an important piece in its Tier 1 global connectivity strategy,” stated Tom Soja, Vice President, OSI and Strategic Advisor to Angola Cables. “The SACS and Monet networks, combined with the existing WACS network, place Angola in an excellent position to function as the ‘hub’ of Africa’s regional communications needs.”
Angola Cables has extended OSI’s five-year relationship and responsibilities to the project implementation phase which will carry the company’s involvement through to the final acceptance and initial O&M of the new subsea network. OSI – the industry’s leading submarine cable project management and delivery firm – has actively led and directed these two major supply contracts on behalf of Angola Cables, from project feasibility and funding to network build and installation, contracting two leading suppliers in the undersea cable industry for final project completion.
About OSI: OSI Delivers Global Connections. OSI’s team combines unequalled subsea cable development experience throughout the planning, design, procurement and installation phases of a subsea network development. OSI minimizes project and network risk and maximizes return on investment to ensure project success.
About Angola Cables: Angola cables is an international wholesale carrier that operates submarine cable systems throughout the South Atlantic and Africa. Angola Cables also operate the Angonix (Angolan IXP) in its data center (Angonap) in Luanda. Africa is today the fastest growing region of internet penetration in the world. Angola Cables’ goal is to transform Angola into one of the telecommunication hubs in Africa. For more information visit www.angolacables.co.ao
Statoil together with operator Repsol Sinopec and partner Petrobras has completed the Gavea A1 well in the ultra-deep pre-salt block BM-C-33 in the Campos basin in Brazil.
The well encountered a hydrocarbon column of 175 meters in a good-quality reservoir of silicified carbonates of the Macabu formation.
The well reached a total depth (TD) of 6,230 meters and was successfully tested producing around 16 million standard cubic feet (scf) of gas and 4,000 barrels per day of oil (32/64” choke).
Map image courtesy: Statoil
This is the fourth appraisal well in the license, which comprises the Seat, Gavea and Pão de Açucar (PdA) discoveries. In 2013-2015 the consortium drilled and tested the Seat-2, PdA-A1 and PdA-A2 appraisal wells.
With Gavea A1 the consortium has finalized the appraisal activities in BM-C-33 and will now evaluate the sub-surface data and assess lean and cost-effective development concepts.
Repsol Sinopec Brasil (35%) is operator of BM-C-33 with Statoil (35%) and Petrobras (30%) as partners.
As announced in December 2015, Statoil will take over operatorship of the license. This is expected to happen in the third quarter of 2016, subject to the approval from Brazilian authorities (ANP).
In 2015, Russian onshore drilling bucked global activity trends and reached record highs. Depreciation of the rouble cushioned the Russian oil industry, incentivizing operators to boost activity and pay for services in roubles while gaining dollars on international markets. Last year, the global number of onshore wells drilled decreased 31%, yet the Russian market – notable for its comparative resilience – experienced year–on–year growth of 6%.
Unfortunately, 2016 is not shaping up to be a bumper year. Onshore drilling within the country is expected to fall, as major operators reduce capital expenditure to cope with a “lower for longer” price environment. As operators focus on maturing fields in Western Siberia and Volga-Urals, the industry will need to embrace new trends in drilling in order to maximize production.
DW expects any recovery in onshore drilling activity to be predominately driven by an increase in horizontal wells. Vertical wells drilled in Russia are expected to grow modestly at CAGR 3% through to 2020, however, growth in horizontal wells drilled is anticipated to be robust – CAGR 14%. Horizontal wells take longer to drill and require comparatively higher specifications (hookload and drawworks ratings). This is expected to boost demand for >1250HP rigs – sheltering both utilization and dayrates.
Indigenous contractors – led by Eurasia Drilling and Rosneft – continue to lead the market, accounting for approximately 93% of the total fleet. Low horsepower rigs (<1250HP) dominate Russia’s active rig fleet, accounting for an estimated 80% of the total identified fleet. This trend is anticipated to reverse over time as demand for >1250HP rigs increases. Current market trends suggest that contractors with greater portion of >1250HP rigs in their portfolio are likely to be well positioned to take advantage of any recovery.
Iva Brkic, Douglas-Westwood London
Amec Foster Wheeler has announced the appointment of Eoin Quirke as President, Asia Pacific. Effective immediately and based out of Singapore, Eoin will report to Roberto Penno, Group President for Asia, Middle East, Africa & Southern Europe (AMEASE) region.
Prior to his appointment, Eoin was AMEASE Project Delivery Director. Since joining Amec Foster Wheeler in 1989, his career has included a variety of roles in Country Management and Project Management. Eoin has more than 15 years of experience in the Asia Pacific region and has successfully delivered projects and solutions for a very broad range of locally based and international customers in the region.
Roberto Penno Group, President for Asia, Middle East, Africa & Southern Europe for Amec Foster Wheeler said:
“This region has vast opportunities and is central to Amec Foster Wheeler’s strategic development plans. Eoin’s deep understanding of the region and his invaluable expertise will play a key part in realizing our ambitions to become contractor of choice to owners and operators throughout Asia Pacific, and deliver growth in line with the quality of our offering.”
Aquatic Engineering & Construction Ltd, an Acteon company, has mobilized two projects in the Gulf of Mexico. Both projects build toward the company’s value proposition focused on strength in depth and development of Aquatic’s growth in the Americas market.
The first project involved installing steel flying leads incorporated into the subsea distribution system. For this project Aquatic utilized its 120Te modular drive system, which was based out of Aquatic’s operational yard in Morgan City, Louisiana. The project was executed offshore by Aquatic’s local support staff during the installation campaign. This project is currently underway and will be completed in mid-2016.
The second project uses Aquatic equipment also based out of Morgan City to install a deepwater umbilical. The project is another example of Aquatic’s full solution offered in-country to minimize both mobilization costs and project delivery time. Aquatic’s 500Te reel drive system and 50Te 4-track tensioner system were deployed to safely handle the installation of the umbilical. The project created unique challenges which included complex equipment deck layout plans and handling of the product. A team of six Aquatic Offshore Supervisors and Operators were mobilized to support the client’s offshore operations.
Aquatic’s managing director, Martin Charles commented, “Aquatic is a UK company that promotes the principal of local people for local jobs and this global and local philosophy is already at work in our bases in Singapore. We believe by supporting local economies, we can develop long term relationships in strategic places around the world and these diverse projects gave us the opportunity to take this step for the US market. Aquatic focuses on the added value necessary to slot seamlessly into the organization of our customers, offering engineering support and equipment which is designed and built to provide reliability and capability for flexible product solutions. This allows our specialist teams of people to support the installation, recovery and replacement of reelable products offshore. Aquatic’s strength in depth means our partners can be confident that working with us will deliver their projects safely with proven solutions in deepwater applications.”
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