The crash in oil prices has led to a dramatic decline in the number and value of awards for FPSO units. There have only been three contracts awarded this year; a conversion for the Sankofa-Gye Nyame development in Ghana, a small conversion in Iran and an upgrade in Indonesia. In total these awards account for around $1.5 billion.
By comparison, in the first half of 2014 there were six orders and crucially, the value of those six was 528% higher than the three this year – demonstrating the lack of high Capex orders in the current low oil price environment. H1 2014 saw two newbuild contracts worth over $1 billion each, in addition to the awarding of a $4 billion contract for two converted FPSOs on the Kaombo field in Angola. This demonstrates the current caution of operators at the moment as they aim to bring costs down and wait for a recovery in oil prices before commissioning major projects.
Expectations for the rest of this year are little-better. Many awards have been pushed into 2016, while Petrobras are rumoured to be considering cancelling two topside contracts for FPSOs planned on the Buzios field. Douglas-Westwood forecasts that four more awards are likely this year while a further five could potentially be awarded if there is an improvement in the oil price.
Whilst the immediate outlook may not be positive, the future of FPSOs is still considered encouraging. FPSO solutions will be vital for the development of oil and gas fields in deeper waters as well as for marginal fields in mature regions. The current low oil price may lead to a decline in orders that continues well into 2016. However, Douglas-Westwood still forecasts FPSOs with a total value of $60billion will be installed 2015-2019 and within our in-house data we are tracking over 130 potential future deployments.
AnTech Ltd, provider of specialist products and services for the upstream oil and gas industry, has reported record results across its product division, with overall sales up by 52% during the last financial year.
As the industry continues to put safety standards at the forefront, the drive to ensure that every well, every platform and pipeline operates safely is essential. As a result, safety practices are improving and technologies continue to evolve in response to market demand, particularly those that monitor permanent completions around-the-clock. AnTech specialises in product technologies that meet the industry’s stringent health, safety and environmental standards, including products that are fully ATEX and IECEx-certified for use in hazardous areas up to Zone 1, whilst meeting NACE and API 6A requirements.
Utilised in some of the most extreme environments around the globe, the majority of AnTech’s product sales are derived from its permanent monitoring and downhole tools product ranges, with the company seeing a significant growth in sales of Wellhead Outlets (WHO) to Australia, USA and Europe. Continued high demand from the Middle East echoes AnTech’s commitment to the area, where it launched its Saudi Arabia premises earlier this year.
Managing director, Toni Miszewski gives an insight into the success of AnTech’s product range: “These excellent results bear testament to our design capability, focus on product quality and customer support. We continue to work closely with the major service companies, and our relationship with them is such that AnTech is now provider of choice for both standard tools and bespoke solutions. That is undoubtedly a crucial component in our success.
“By strengthening the relationships we have with our clients and by building our technical understanding of their requirements, we are working hard to offer a responsive service unlike any other in this field.”
Sales Manager, Tim Mitchell highlights another significant factor in AnTech’s on-going success: “Whilst our entire product range has performed well over the past 12 months, the continued industry focus on tool safety is clearly illustrated through the sales performance of our stripping and splitting tools.
Virtually eliminating the risk of injury whilst preparing to terminate encapsulated line, these tools have seen an impressive sales increase of 300%.”
By focusing on providing the latest product solutions, AnTech now offers a range of world-first fire tested Fibre Optic Wellhead Outlets, certified for use in the most safety conscious oil field environments in the world, including the North Sea.
AnTech also has a Directional Coiled Tubing Drilling Service division, which provides a range of Bottom Hole Assemblies (BHA) for re-entry and grassroots well operations.
Leveraging its expertise to meet ultra-deepwater challenges
Technip was awarded by Chevron North America Exploration and Production Company, a division of Chevron U.S.A. Inc., a lump sum project for the decommissioning of the brownfield development and installation of new subsea equipment supporting a floating production system located in Mississippi Canyon, Gulf of Mexico, in a water depth of approximately 2,000 meters. The project scope includes:
Technip's operating center in Houston, Texas, USA, will perform the overall project management. The infield flowline and riser will be welded at the Group’s spoolbase in Mobile, Alabama, USA. The offshore installation is expected to be performed in the second half of 2016 by vessels from Technip’s fleet. The Deep Blue, one of the world's largest ultra-deepwater pipelay and subsea construction vessel shall install the steel lazy wave riser, flowline, and gas lift umbilical, and the Global 1200, will install the manifold and foundation.
Deanna Goodwin, President of Technip in North America, commented: "We are delighted to have secured this work. Technip will utilize its unique subsea vertical integration to deliver an all-in solution for the ultra-deepwater de-commissioning of the current field to installation of the new subsea equipment”.
There is no question that these are challenging times for offshore oil in the Gulf of Mexico. However, while some vessel operators are tying up boats, Bordelon Marine is continuing with their aggressive build program. Designed for flexibility, the firm’s Stingray 260 Class DP 2 platform supply vessels are proving their design concept.
Photo courtesy of Bordelon Marine
The most recently launched, number two and three in the series, boats are the M/V Shelia Bordelon,(photo) and M/V Brandon Bordelon due for launch later this year. Working with the same hull and accommodation block, Bordelon have been able to modify the vessels to meet the requirements of charterers wanting an ultra-light-intervention vessel. These vessels will carry and deploy remotely operated vehicles (ROV). This required the addition of a 50-ton AHC (Active Heave Compensating) crane, with 3000 meters of wire, mounted on a six-meter pedestal with a maximum lifting height of 90 feet.
“Typically when a charterer adds ROV systems to a vessel, they are required to install extra generators on the back deck, exposing this equipment and taking up valuable cargo space” explains Wes Bordelon, Presidend/CEO of Bordelon Marine, “We’ve added all of these necessary power systems below deck, leaving the back deck open and clear, while also protecting the equipment from the environment. It’s a very clean and safe plug-and-play set up.”
To do this took some serious design work. The standard Stingray 260 PSV design has a pair of Cummins QSK60 Tier 3 main engines, two Cummins QSK38-DM1-powered 975 kW main generators, and a single Cummins QSK19-powered 535 kW genset for reduced consumption during port side service. Two additional Cummins QSK38s and two QSK19s were added below deck to provide fully redundant power to the ships’s 50-ton crane, and up to two complete work class ROV systems.
Marine disconnects were positioned on deck for safe and efficient installation of ROVs. As integral components of the vessel, the additional gensets are tied into the vessel software so that they can be controlled and monitored from the bridge.
The flexible nature of the original Stingray design lends itself to these adaptations, and others, to allow the vessel to meet changing market demands. Total berths have been increased from 54 to 60 along with other modifications to the accommodations area for the ROV support crews.
Aker Solutions and Baker Hughes have agreed to cooperate on early-phase studies to help customers improve the overall economics and value of oil and gas field developments.
Aker Solutions' Front End Spectrum unit and Baker Hughes' Reservoir Development Services group will provide customers with development concept studies that address the entire value chain - from reservoir understanding and well design to subsea and topsides facilities, including flow assurance and risk management. Each company has expertise from the full spectrum of field development. Initial customer studies are already under way.
"Our ability to maximize value is greatest when we can enter a project early at the appraisal and feasibility stages and evaluate the potential of a field's total development instead of parts of it," said Henning Østvig, head of Front End Spectrum at Aker Solutions. "This greatly increases our success in finding solutions that improve the overall economics and value of a development by optimizing capital expenditure and production."
"While we always want to find the best solutions for our customers, the current market environment gives us an added sense of urgency," said Scott Reeves, president of Reservoir Development Services at Baker Hughes. "No tool is more powerful than an early, integrated approach to field design. This helps ensure that all parts of a project are designed to work together throughout the life of the field."
The new agreement comes after Aker Solutions and Baker Hughes in 2014 formed the Subsea Production Alliance to develop solutions that will boost output, increase recovery rates and reduce costs at subsea fields. The alliance uses Aker Solutions' capabilities in subsea production and processing and Baker Hughes' expertise in well completions and artificial-lift technology to deliver integrated in-well and subsea systems solutions. The importance of cooperating during the early phase of a project was recognized quickly in the alliance.
The Front End Spectrum unit and Reservoir Development Services group maintain independent offices in Houston, Oslo, London, Aberdeen, Kuala Lumpur, Perth, Dubai, Abu Dhabi and Moscow.
Aker Solutions' Front End Spectrum unit provides expertise in subsea and topsides systems, life-of-field production management and flow assurance. Baker Hughes' Reservoir Development Services group uses its subsurface expertise to improve reservoir understanding and determine efficient methods to capture a field's full potential.
Ceona, SURF contractor with deepwater subsea construction capabilities, has announced today that the company’s executive vice president commercial and business development, Mark Preece, has been appointed as Chief Executive Officer (CEO).
Mark takes over from current CEO, Steve Preston, who after 40 years in the industry has decided to retire from operational management and step down. Steve has worked tirelessly to establish Ceona as a key subsea player over the last three years, having been a prime mover and overseeing the construction of the company’s purpose-built flagship, Ceona Amazon.
John Smith, chairman at Ceona, said: “Steve is an inspirational leader who has worked with our teams to develop the strong building blocks for our business. His dedication to seeing the Ceona Amazon come to fruition, combined with his passion for innovation, saw him lead the project from design concept right through to the successful launch of the next generation, hybrid field development vessel, on time and on budget.
“We are sorry to see Steve go and extend our best wishes to him for the future, and look forward to Mark building on the foundations he has laid. Mark is a highly-experienced industry figure who has been involved with the subsea market for over 32 years. We believe he will be well placed to lead Ceona through what is an extremely challenging market environment for the industry as a whole.
“Our industry is cyclic and we remain confident in the long-term fundamentals for the deepwater subsea sector. The Ceona team, with the Amazon, will deliver a quality, cost-effective service, while our focus continues to involve working with all our stakeholders to ensure that our cost base is aligned to come through this down cycle strongly.”
Mr Preece said of his appointment: “Working with Steve has been great and he leaves some big shoes to fill. But with the team’s support, especially chief operating officer Stuart Cameron, who has been fundamental in getting the company this far, and despite the strong head winds, I feel optimistic for the future.”
Ceona is a SURF and heavy subsea construction contractor in the deepwater market, specialising in full-service engineering, pipelay and construction project management and execution, including floater installation (Semi, TLP, SPAR). The company has already established an impressive track record which has seen it expand into West Africa, the Gulf of Mexico and Brazil.
The ground-breaking Ceona Amazon is a powerful, purpose-built hybrid vessel that can execute complex logistical projects in remote, harsh and deepwater territories in one trip. Designed to deliver full flexible or full rigid pipelay, she can change easily and quickly between each mode within five days and is weather resilient. Due to her on-board capacity – the Amazon has a deck area of 4,600m2 and the ability to carry 9,500te of pipe on deck and in her two holds – she can carry more product than any other of her counterparts while the multiple, vertical-lay pipelay system features a top tension of 600 tonnes and capable to lay rigid pipe to 3,000m (10,000 ft) water depth.
The Amazon can cover the majority of deepwater field development needs including 100% of tie-backs while her two 400te cranes, which have been designed to operate in tandem to support work in water depths of up to 3,000m (10,000 ft), enabling her to lay manifolds and other structures. Ceona, which is backed by majority shareholder Goldman Sachs Capital Partners, has offices in London, Aberdeen and Houston, with strategic partners in Brazil and West Africa.
Ceona is certified by DNV to ISO 9001, 14001 and OHSAS 18001 standards. FPAL supplier number: 10053050 – Achilles ID: 29319 www.ceona-offshore.com
Most people know Alaska as the last frontier – a vast place where nature can be wild, unpredictable and uncooperative. Case in point: the Prudhoe Bay oilfields, where about half a million barrels of oil is extracted each day. One of the drilling sites is Endicott, located on a spit of land connected by the gravel Prudhoe Bay road system and normally accessible by truck. That is until recently, when the road was washed out. Faced with the dilemma of how to get workers, food and supplies to the work site, Hilcorp, one of the largest, privately-held exploration and production companies in the United States, turned to Crowley.
“With the road cut-off and heavy fog preventing helicopters from flying in and out, Hilcorp diverted the hovercraft Arctic Hawk from its normal duties of supporting NorthStar Island, to shuttle people, groceries and other supplies to Endicott,” said Bruce Harland, Crowley vice president. “Hilcorp was already chartering the Arctic Hawk to provide a similar shuttle service to and from their Northstar Island drill site, so this was a natural extension of that service, which we were happy to provide.”
The Arctic Hawk, Crowley Offshore Services’ hovercraft, entered service in Prudhoe Bay in 2004 transferring BP work crews (now Hilcorp work crews) between land and the Northstar Island production facility about six miles offshore in the Beaufort Sea. A hovercraft is the most practical mode of transport for this service as the route must be traveled over open water in summer and ice during the winter and a mixture of ice and water during freeze-up and break-up. The Arctic Hawk is 38.8 feet in length with a 15.5 foot beam. It is considered a passenger vessel by the Coast Guard and carries a Certificate of Documentation (admeasured at 17 gross and 14 net tons) and Certificate of Inspection issued by Coast Guard Sector Anchorage.
New simulator wing features DNV certified VSTEP Dynamic Positioning and Full Mission Bridge Simulators and type approved ECDIS classroom
The simulation center of the Technical University of Varna has officially opened its new simulation wing on May 21st, 2015. Following the opening of its simulation center in 2012, the TU Varna has known a steady growth and further expansion into a new simulator wing was required. All the simulators in the TU Varna training center are delivered and installed by VSTEP. The new wing features a NAUTIS Class B DP Simulator as well as a NAUTIS class A Full Mission Bridge Simulator and a new ECDIS Simulator classroom.
The opening ceremony was attended by representatives of the Technical University and officials of the municipal government of Varna. The rector of the Technical University, Mr. Ovid Farhi, and the mayor of Varna, Mr. Ivan Nikolaev Portnih, were present during the opening.
Simulator developer VSTEP was again the developer of choice to deliver and install its DNV certified NAUTIS simulators at the facility, including a NAUTIS DP Class B simulator and a NAUTIS Class A Full Mission Bridge Simulator. Using state of art simulation technology, the DP Class B simulator can be directly combined with the Class A FMB to form a fully multifunctional 360° Bridge setup. The bridge can also be transformed into a Full Mission Tug Simulator.
In addition to the DP and FMB simulators, the existing NAUTIS ECDIS Classroom has been extended with 5 new ECDIS stations. The NAUTIS ECDIS Classroom is now fully operational to provide type approved training for all current ECDIS systems, including Maris, Kelvin Hughes, NavMaster and SevenCS’ E-Globe which are all integrated into the NAUTIS ECDIS Systems.
Pjotr van Schothorst, VSTEP CEO: “The necessity and opening of this new simulator wing reminds us of the importance and growth of the TU Varna as a maritime educational facility in the region. Following our cooperation with the TU Varna simulation center in 2012, VSTEP is proud to have once again been selected as the simulator supplier for this new simulator wing. The new DP simulator and Type Approved ECDIS simulator classroom allows the TU to proceed with a very extensive and state of the art curriculum of maritime training courses. ”
The simulation center of the TU Varna is one of the most advanced training and education hubs in the region. Simulation developer VSTEP was selected as simulator contractor for the center in 2012 and has since delivered three NAUTIS Bridge Simulators, five Engine Room Simulators, an Incident Command Simulator, a DP Simulator and a full classroom with desktop ECDIS trainers for the facility.
Bulgarian National TV created a news report about the opening of the new simulator wing of the TU Varna. Watch the video report at here.
International oilfield support services company ASCO, has secured a key contract worth in excess of £50 million for work in the North Sea for Marathon Oil UK, further strengthening the company’s market leading positioning in the UK.
Commencing in July 2015, the five-year contract with further extension options, will be serviced out of ASCO’s South Base in Peterhead and will include quayside services, warehouse management and the provision of marine gas oil in support of Marathon Oil’s Brae field.
Well established in the North Sea, ASCO has provided offshore supply base management services to key clients in the region for the last 48 years.
Commenting on the recent contract win, Craig Lennox, CEO Europe at ASCO, said: “ASCO has supported Marathon Oil for many years and we are delighted to secure a new long term contract with them.
“This contract demonstrates the value of ASCO’s integrated service provision within the North Sea and will allow us to build upon our existing strong relationship.”
Earlier this year ASCO announced significant contract wins with BP E&P and Statoil UK. Combined with recent wins, ASCO has secured long-term business in the North Sea worth in excess of £500 million.
The high-resolution multi-bean sonar is part of a specialized inventory of hydrographic and geophysical equipment.
HOUMA, La. – Okeanus Science and Technology (Okeanus) is pleased to announce the acquisition of a new multi-beam system to its portfolio of oceanographic and scientific research rental equipment. The Kongsberg Mesotech M3 Sonar in combination with the OE10-102 Electric Multi-Purpose Pan & Tilt Unit allow subsea survey operators accurate movement and positioning to obtain real-time imaging capabilities of conventional multi-beam sonar with quality imaging comparable to a single-beam sonar.
The Kongsberg Mesotech M3 Sonar offers both imaging and profiling capabilities in the field of hydrographic and geophysical survey. The sonar is used for high-resolution site clearance surveys, ROV navigation, and shallow water multi-bean profiling surveys. The M3 Sonar can detect small objects out to 150 meters with real-time, high quality imaging offering significant time savings to the operator.
The Kongsberg Mesotech M3 Sonar is equipped with the OE10-102 Electric Multi-Purpose Pan & Tilt Unit offering exceptional torques (up to 35Nm from a 24V power input) and positioning performance. The Pan & Tilt Unit provides accurate 2 axes movement and positioning while directing cameras and sonar equipment. Its performance in the harshest subsea environments is continuous due to high shock and vibration tolerance, environmental and electrical protection features, and a pressure compensation unit with a depth rating of up to 6,000 msw.
Along with the M3 Sonar, Okeanus has an extensive portfolio of hydrographic and geophysical rental equipment including a variety of echo sounders, side-scan sonars, sub-bottom profilers, and magnetometers. The ability to lease equipment meant to aid in the measurement of features in relation to offshore oil exploration, drilling, marine construction, dredging, and navigation alleviates project challenges and budgetary constraints.
“The acquisition of these multi-beam sonars and pan & tilt units add another exciting dimension to our hydrographic and geophysical survey rental equipment portfolio’” stated Benton LeBlanc, Vice President and General Manager of Okeanus. “Our customers have spoken, and we are listening. We have noticed a great response to this addition, which is proof that we are creating value for our customers by allowing them to lease these assets rather than having to purchase them. In addition to our Simrad Echo Sounders, Klein Side-Scan Sonars, EdgeTech Sub-Bottom Profiling Units, and our Geometrics Magnetometers, the Kongsberg M3 Sonar systems further solidify our position as a premier provider of hydrographic and geophysical rental equipment.”
ABS, a leading provider of marine and offshore classification services, has been selected by Baoham Offshore (HK) Ltd. to class a drilling semisubmersible and a liftboat.
“This award is a reflection of the solid reputation ABS has built as a classification society over more than 30 years in China,” says ABS Executive Vice President of Energy Project Development Ken Richardson. “We are particularly excited about working with Baoham Offshore as an emerging Chinese company.”
This artist’s rendering shows the three units that will make up the Baoham fleet upon delivery of the newbuilds now on order. According to Baoham Offshore General Manager Xu Jun, the company’s goal is to be a first mover in China. “We are not building on speculation. On top of our first 300-ft harsh-environment ABS-classed liftboat (GM-J1000) already under construction, the addition of these units extends our ambition of building a flexible fleet,” he says. “We believe partnering with ABS will strengthen the foundation we are creating to build our fleet development program.”
The GM-4E mid-water semisubmersible drilling unit will have both an eight-point mooring system and Class 3 dynamic positioning and will feature a variable deck load that exceeds 4,000 metric tons. The GM-J1450 has a water depth capability of 80 m (~260 ft) and will be equipped with a 400-metric-ton deck crane.
“We are pleased to continue our working partnership with Baoham Offshore,” says Global Maritime Engineering Services Manager Mark Cooper, whose company provided the designs for an earlier unit as well as both of the contracted newbuilds. “We are excited to be introducing this flexible design on a groundbreaking project with not only an owner with a strong vision, but a very experienced class society.”
Singaporean engineering house Gulf Offshore will carry out detail engineering and production design. The liftboat will be built at the PaxOcean yard in Zhoushan, China. A yard has not yet been selected for the semisubmersible unit.
Hydraquip Custom Systems Inc., which has produced more than 100 jacking systems over the past two decades, will provide the jacking system for the liftboat, while Gulf Offshore Pte Ltd will provide detail engineering and production design.
The European Innovation Project LeanShips – Low Energy And Near To Zero Emissions Ships – will demonstrate the effectiveness and reliability of energy saving and emission reduction technologies at real scale. LeanShips is one of the first projects funded under the new European Research and Innovation Framework Program HORIZON 2020.
The project is coordinated by Damen Shipyards Group and jointly managed by the Netherlands Maritime Technology Foundation (NMT), the Center of Maritime Technologies (CMT) from Germany and Cetena, the Italian Ship Research Centre.
LeanShips officially started on 1 May 2015 with a grant of 17 million Euro. The large project partnership consists of ship owners, shipyards, equipment suppliers and research institutes. In total, 46 partners (81% from industry) from 12 EU member states and one associated country are part of the project.
LeanShips aims to put innovations into practice by carrying out eight demonstrator show cases that combine technologies for efficient and less polluting vessels with end-users’ needs and requirements. Dedicated teams of equipment manufacturers (technology providers), shipyards (technology integrators) and ship owners (technology users) as well as rule makers will make certain that the innovations developed in the project are matured to market uptake capability.
The following eight demonstrators are part of the project:
The project target markets are the small to midsized ships for intra-European waterborne transport, vessels for offshore operations and the leisure and cruise markets. First impact estimates for LeanShips show fuel saving of up to 25%, CO₂ reduction of at least 25% and an expected decrease of SOx/NOx/PM air pollutants by up to 100%. Through their participation in the project, the LeanShips partners intend to set an example and encourage more ship owners to invest in green technologies.
Assystem, a leading innovation and engineering consultancy, providing multi-discipline design services to clients throughout the world successfully presented a paper at the NAFEMS seminar which took place in Aberdeen, demonstrating how Assystem can drive value for the oil & gas industry in the current financial climate.
Against a challenging backdrop, the oil & gas industry is currently facing a host of challenges. The integrity management of structures, pipelines and risers in a hostile marine environment, as well as increasing pressure to minimize costs, safety risks, downtime, and emissions all present key challenges for the simulation community.
The accurate representation of the reality of loading and response of offshore installations and their mechanical components requires a multi-disciplinary approach, as well as knowledge of current best practices & standards to deliver the innovative solutions which are required by industry.
David Lister, Senior Stress Engineer and Dr. Adam Towse, Assystem’s UK Head of Discipline for Stress at Assystem in the UK
The NAFEMS seminar on the ‘Latest Developments of FEA & CFD for Offshore Oil & Gas Facilities’ explored the latest challenges in the oil & gas industry, and provided an opportunity for attendees to gain an insight into the current applications of FEA and CFD from oil and gas industry experts.
Dr. Adam Towse, Assystem’s UK Head of Discipline for Stress and David Lister, Senior Stress Engineer at Assystem in the UK, presented a paper on “Leveraging Cross-Industry Simulation Methodology To Drive Value For The Offshore Industry”. Assystem in the UK are leading the way in the use of simulation tools to aid the engineering process across multiple industries, either by building more efficient structures, extending the life of existing assets or speeding up the design process to minimize development costs. Working across; energy, infrastructure, aerospace and automotive industries, Assystem has the ability to look across industries and understand the most effective approaches for typical engineering problems.
The purpose of the presentation was to showcase similarities in assessments across industries, and how best-practice methodologies can be used to drive value for the offshore industry.
Commenting on the event, Adam Towse said: “The seminar was very positive – lots of papers demonstrating that life extension is a key demand, and given our experiences across a range of industries, we are well placed to assist our customers in this regard. There was also positive interest in the fracture assessments, pressure vessel assessments and cutting-edge topology optimization, which were highlighted in our presentation.”
Within the Energy & Infrastructure business area, Assystem specializes in Oil & Gas systems and infrastructures at different stages of the Oil & Gas cycle including through upstream, midstream and downstream. Key capabilities include Project Management, Multi-discipline Engineering Design and System Integration.
Globally, Assystem is an international Engineering and Innovation Consultancy. As a key participant in the industry for more than 45 years, Assystem supports its customers in developing their products and managing their capital expenditure throughout the product life cycle. Assystem employs more than 11,000 people worldwide and reported €871 million in revenue in 2013.
The plugging and abandonment (P&A) of offshore wells represents a significant cost to operating companies and national authorities. On the Norwegian Continental Shelf (NCS) alone, the cost is estimated to be USD108bn (NOK1870bn) over the next 40 years. Now a new DNV GL guideline will introduce a risk-based approach instead of the current prescriptive practice. DNV GL estimates that when combined with optimized project execution and new technology, the P&A cost can be reduced by 30-50%.
When the production from an oil or gas reservoir ceases or is no longer profitable, authorities require the well to be P&A’d. The purpose is to establish a permanent barrier to prevent the migration of hydrocarbons to the surface. Traditional P&A methods are time consuming, costly and have remained unchanged despite technological advances across many other aspects of the industry. There are currently around 2,350 wells that will require P&A on the NCS, and 3,000 more wells are planned to be drilled in the future. In the UK, close to 5,000 offshore wells will need P&A.
Blackford Dolphin
“These costs are enormous. With current practices, the wells on the NCS will require the deployment of 15 rigs full-time over the next 40 years. Based on the 2013 cost, this is equivalent to more than a tenth of the current value of Norway’s sovereign wealth fund (GPFG),” says Per Jahre-Nilsen, Senior Principal Engineer in DNV GL – Oil & Gas. “We believe the time has come to tackle this issue head on by assisting regulators and the industry to establish a new methodology for dealing with the decommissioning of wells,” he continues.
The main barrier to change in this sector has been today’s prescriptive approach to the regulations, which represents a conservative interpretation of past experience. Practice also differs from country to country. In the upcoming P&A Guideline, DNV GL will use well-known and accepted risk-approach methodology in which both environmental and safety risk aspects will be key factors. DNV GL has already worked with international operators to develop an initial set of criteria. These will be further strengthened through collaboration with regulators and the oil and gas industry. The guidelines are under development and will be issued in the second half of 2015.
“This means that hazardous wells will get the attention they deserve, and benign wells will avoid excessive rig-time and expenditure. We can potentially halve the costs of plugging and abandoning wells. We're looking at potential cost savings of more than USD32bn on the NCS alone, and even more globally,” adds Jahre-Nilsen.
“DNV GL’s contribution as a risk-management expert is to help the industry, which is facing increasingly complex and demanding operations, to understand the risks and find the most efficient way to deal with these risks. Risk-based approaches are widely used in all other offshore disciplines, ensure appropriate long-term environmental protection and also represent the most rigorous method to enhance safety. It is time to apply these principles to P&A,” says Elisabeth Tørstad, CEO of DNV GL -Oil & Gas.
Statoil has awarded Odfjell Drilling two contracts for drilling services on the Johan Sverdrup field. Deepsea Atlantic is awarded a three year contract for drilling production wells and Odfjell Drilling is also awarded a four year contract to provide platform drilling services on the Johan Sverdrup Drilling Platform.
These two contracts represent the recognition of Odfjell Drilling’s ability to provide both mobile drilling and platform drillings services to one of the most prestigious offshore field development projects in the world. We appreciate the trust Statoil and its partners show us, and I can assure that all people in Odfjell Drilling will demonstrate the company’s firm commitment to the successful development and production drilling of Johan Sverdrup, says CEO Simen Lieungh.
The drilling services for the Johan Sverdrup field are covered by two contracts:
These contract awards contribute significantly to increase the order backlog and earnings visibility of Odfjell Drilling during a tough market cycle. The employment of Deepsea Atlantic under a long-term contract in Norway and the increased market share for our platform drilling services in the North Sea are of great importance and inspiration to our whole organization, says Lieungh.
In February 2015, Odfjell Drilling was awarded a sub contract to Aibel to provide drilling facility engineering services to Drilling Platform topside for Johan Sverdrup. By the award of the drilling service contracts, Odfjell Drilling has gained an important position in all phases of the Johan Sverdrup drilling activities, add Simen Lieungh.
Odfjell Drilling has since the 1973 developed as a reliable provider of integrated platform drilling and drilling facility engineering services in the North Sea region. In 1979 Odfjell Drilling was awarded the platform drilling contract on the Statfjord B-platform, one of Statoil’s legacy North Sea installations. This contract represented the start of the development of Odfjell Drilling’s platform drilling services.
The company currently provides integrated drilling services on 19 production facilities in UK and Norway. Under existing contracts with Statoil, Odfjell Drilling already provides platform drilling services on seven installations in Norway and is involved in the design and construction phase of the Mariner field in the UK where drilling operations will commence in 2017.
NYC-based PIRA Energy Group reports that Brent crude prices lost their earlier upward momentum over the last few weeks with on-going Atlantic Basin crude length. In the U.S., slight stock decline this past week further narrows stock excess. In Japan, runs drop Sharply and crude stocks surge. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
European Oil Market Forecast
Brent crude prices lost their earlier upward momentum over the last few weeks with on going Atlantic Basin crude length. But fundamentals are at an inflection point and will improve from here with high refinery runs this summer and sequentially declining U.S. crude production. As crude stocks erode, prices will gradually strengthen. Gasoline cracks are currently strong with declining inventories and increasing coverage requirements for local/export demand growth in the Atlantic Basin. Gasoline cracks should remain very healthy for the next few months. With high refinery production in the Atlantic Basin and new distillate-oriented refineries starting up in the Middle East, Turkey, and Latin America, middle distillate stocks will build. Diesel cracks will weaken, bottoming in July-August before seeing seasonal recovery. Recent European refinery margin strength, the best in many years, will gradually erode.
Slight U.S. Stock Decline this Past Week Further Narrows Stock Excess
The crude stock decline this past week more than offset the product inventory increase, leaving stocks slightly lower. This was the largest crude stock decline this year and it came as refiners ramped up runs to a weekly high for the year. For the same week last year, overall commercial stocks increased, resulting in the year-on-year stock excess narrowing. The bulk of this excess is in crude oil. Gasoline stocks are now just 1.8% higher than last year, and with recent demand up 4.6%, days supply forward inventory cover is a lot tighter than last year.
Japanese Crude Runs Drop Sharply, Crude Stocks Surge
Crude runs dropped sharply reflecting a major refinery fire and ongoing turnarounds. Crude imports rose and crude stocks surged 6.7 MMBbls. Finished product stocks drew 0.5 MMBbls. Gasoline demand rebounded with higher yield, and stocks posted a draw. Gasoil demand eased with a surge in yield and lower exports so stocks built. Kerosene demand was very low and the stock build rate came in at 41 MB/D, despite lower yield. The indicative refining margin remains very good.
Earthquakes in Oklahoma: Increased Costs Looming for Wastewater Disposal
The increasing frequency of earthquakes in Oklahoma is becoming a growing concern for the state’s fracking industry. While the causal link may not have been conclusively proven, regulators are already taking action to impose restrictions on the disposal of produced water. Additionally, insurance companies are denying coverage for "man-made" earthquakes, and lawsuits from parties suffering earthquake damage continue to increase in frequency. While we do not believe that production is threatened, costs are likely to rise. If shallower injection wells and lower pressures solve the problem, the cost impact will likely be minor. If water treatment is required, the costs would become meaningful, but we do not believe that is a likely case.
Propane Price Recovery Underway
U.S. NGLs prices were broadly higher last week as the plunge in propane over the past several weeks was seen as overdone. Market participants saw value at lower levels and scooped up length. Mt. Belvieu June NYMEX futures ripped 15% higher on conviction buying, with prices increasing every day of last week. Contango in the June-August propane spread has blown out to 6¢/gal, a price sufficient to make storage plays profitable in even the most expensive storage situations.
Manufacturing Margins Fell for the Third Straight Week
U.S. ethanol prices were slightly higher the week ending June 5, tracking corn values. Manufacturing margins fell for the third straight week as co-product DDG prices decreased.
U.S. D6 Values Plunge
U.S. ethanol production advanced to 992 MB/D last year matching the highest level ever reported in the DOE's weekly supply report. D6 RIN values plunged to the lowest levels in over a year.
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.
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