Denmark is the European Union's (EU) only net exporter of oil. The Nordic state's oil exports totaled approximately 13.7 million barrels of oil equivalent in 2013. This is in stark contrast to the EU's only other significant oil producer, the UK, which became a net importer in 2004 and has experienced a steep decline in output since, as its historically productive North Sea fields reach extreme maturity. Denmark has maintained its status as a net exporter despite peak oil production in 2004. A strong shift towards wind power has seen a decrease in oil used for electricity generation while district heating systems traditionally fuelled by oil are now switching to natural gas and renewable sources.
Denmark's ability to hold on to its status as the EU's last net exporter is likely to diminish in the long-term. Its North Sea fields continue to stutter and decline in output, seeing production half from a peak of 389 kb/d in 2004 to just 192 kb/d in 2014. In 2013, a range of technical issues meant that only 12 of 19 operational fields were producing from August to December. A lack of large discoveries has also inhibited Denmark's upstream sector, seeing oil reserves fall from 1.3 Bnboe in 2006 to 0.8 in 2013. A lack of fresh developments has also led to a decline in drilling, just eight development wells have been drilled over the last three years. Well completions increase slightly in the medium-term with the development of the high-pressure-high-temperature Hejre field – however DW do not expect this to arrest the production decline.
Based on current trends, DW predict Denmark's ongoing issues with North Sea developments will see it become a net importer of oil by 2021. By this time, oil production will likely have waned to around 130 kb/d – the country's lowest daily output in 30 years.
InterMoor UK Operations, part of Acteon's foundations and moorings business, has completedseven years and more than 2,300 projects without a single lost-time incident (LTI).
The safety record includes the companies comprising InterMoor UK Operations – InterMoor Ltd, InterMoor Marine Services Ltd and ChainCo – and operations at three bases, five storage yards and numerous quayside locations where operations have been both in the UK and globally.
Alan Duncan, managing director of InterMoor UK Operations, said, "Providing safe working environments and high-quality training for employees are vital for InterMoor. This milestone highlights the extent of our commitment to safety and the professionalism of our staff. It was achieved with the participation of the entire workforce, from quayside support personnel to senior management."
Throughout 2014, InterMoor UK Operations has renewed its focus on safety. Hazard identification, supervisory controls and management involvement have been top priorities.
Bruce Strachan, InterMoor UK Operations' quality assurance and health, safety and environment manager, said, "Seven years without an LTI places InterMoor UK at the forefront of worldwide safety performance. Very few businesses of a comparable size have conducted operations for this length of time without recorded incidents. Of course, the aim is to continue the trend. Our target is, and will always be, zero accidents or incidents.
"The statistics for 2014 are particularly impressive. In addition to everyday operations, InterMoor has completed two huge projects in China, which have brought the total number of exposure (working) hours to about 500,000 for the year to date."
ABS, a leading provider of classification services to the maritime and offshore industries, has been chosen to class the world's first contracted series of very large ethane carriers (VLECs).
The class contract for the ships, which will be built in Korea by Samsung Heavy Industries (SHI) for an Asian shipowner, represents another gas ship milestone for ABS.
"We are delighted to have received the class contract for the world's first large ethane carriers," says ABS Vice President of Global Gas Solutions Patrick Janssens. "As a result of the shale gas boom in the US, ethane is developing as an exciting new market with great potential, requiring the development of new ship types. This award is an industry testament to the diversity of ABS' technical knowledge and our commitment to remain at the forefront of classification for gas carriers."
The contract is for six 87,000 m3 VLECs and available options. The ships will be built at SHI's main shipyard in Geoje, Korea. ABS, which currently has the largest share of the global orderbook for LNG vessels being built to its class, has built a large team of qualified gas surveyors at shipyards across Korea.
ABS is a pioneer in the safe transport and handling of gas, classing the world's first LNG carrier and responding to the evolving technology demands of the largest and most modern units currently in service. ABS has extensive technical experience with the full scope of gas-related assets, ranging from LNG bunker barges to FLNG units and was recently awarded the classification of the first compressed natural gas (CNG) carriers. In May, ABS announced its first classification contract for a floating LNG facility from PETRONAS, Malaysia's national oil company.
The VLEC award marks one year since ABS unveiled its Global Gas Solutions team, a multidisciplinary group of gas specialists formed to respond to the rapidly escalating number of gas-related projects, including LNG and LPG transportation, and the growing use of LNG and LPG as fuel for the commercial fleet.
DeepWater Buoyancy Inc. announced this week that it has doubled both its facility and workforce during the first eight months of 2014. The new facility was opened in January after securing the rights to the Flotation Technologies syntactic foam-based, legacy oceanographic and oil/gas undersea product lines.
"We are so grateful for the loyal customer support we've seen since opening our doors in January," said DeepWater Buoyancy Co-President & Director of Business Development, David Capotosto. "Because of their trust in our team and products, we have already shipped thousands of buoys, systems and subsea components to a dozen different countries."
"One key to our rapid expansion," said Capotosto, "is that our customers have been able to make a seamless transition from Flotation Technologies to DeepWater Buoyancy. We're shipping new and replacement buoys and components daily." The company manufactures a full line of ADCP buoys, cable floats, instrument collars and custom syntactic solutions reliable at depths exceeding six thousand meters.
Key milestones in DeepWater Buoyancy's growth include:
January 2014
• Company begins to offer newly-acquired, legacy designs from Flotec.
• Ten-thousand square-foot facility designed, refurbished and opened.
• Launched with initial staff of former Flotec workers.
• Initial orders shipped.
August 2014
• Facility doubled to 20,000 square feet with option for significant further growth.
• Staff more than doubled.
• Shipped over 4,800 buoys, systems and components to twelve countries along with United States.
• Served key customers including Scripps, Subsea7, Fugro, FMC Technologies, Woods Hole Oceanographic Institute, Oceaneering International, and PGS Geophysical AS.
DeepWater Buoyancy has also aggressively expanded its network of international sales representatives, recently adding partners in Australia, Brazil, Denmark and South Africa to its sales team. Representatives are based in China, France, Spain, India, Japan, the Netherlands and additional countries across six continents.
NYC-based PIRA Energy Group reports that Asian oil balances remain long, for now. In the U.S., product stock build outpaces crude draw, widening commercial stock excess. In Japan, both crude and finished product stocks rise. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:
Asian Oil Balances Remain Long, For Now
Oil prices are likely to remain soft. Asian oil demand will pick up in 4Q and support a rising run profile post-turnaround. The continued glut of Atlantic Basin crude will need to be moved to Asia which will keep Brent-Dubai narrow. Eventually, Asian crude demand will rise and some of the surplus should be drawn, thus presenting a floor to prices. Gasoil cracks should be supported by seasonal demand increases, while gasoline cracks will weaken seasonally. Refinery margins should show improvement from weak levels seen earlier, but new refinery capacity both in Saudi Arabia and the UAE will present challenges in arbing product out of the Asian theater.
U.S. Product Stock Build Outpaces Crude Draw, Widening Commercial Stock Excess
The stock data for the week of September 5 reflected a rebenchmarking to the latest (June 2014) monthly, raising the possibility that weekly stock changes might be distorted when one week is indexed to a new benchmark, and the prior week to an older one. We mention this because of the larger than expected light product builds, and the unusual propane draw. Looking at the data as reported, crude stocks drew more this year than last, slightly widening the year-over-year deficit.
Both Crude and Finished Product Stocks in Japan Rise
Crude runs fell back slightly and imports rose, thus building crude stocks. Finished product stocks continued rising, though gasoline and gasoil stocks posted a draw. Gasoline demand continues to come in below expectations, but gasoil demand was quite strong this past week. Kerosene demand was higher on the week and the stock building rate came in slightly less than seasonal norms. Refining margins remain poor, but there was a slight improvement in gasoline and middle distillate cracks.
U.S. LPG Strength Continues, Future Prices Increases Will Face Headwinds
Propane prices reacted to Wednesday's EIA surprise of near unchanged stocks by climbing an additional 2% this week. Butane was dragged a penny lower to $1.27/gal by a large drop in gasoline prices, although butane blending economics remain extremely robust. U.S. LPG price increases will likely moderate or re-trace as stock building resumes in the coming weeks, and as the spot arbitrage to Europe and Asia remains challenged, if not closed.
Ethanol Prices Plunge
Most U.S. ethanol assessments reached seven-month lows September 4 as the DOE reported that stocks built 356 thousand barrels and the production of ethanol-blended gasoline fell 1.1% from the previous week. Corn futures were also the lowest in over four years.
Production of Ethanol-blended Gasoline Declines
U.S. ethanol-blended gasoline manufacture plummeted to 8,553 MB/D the week ending September 5 from 8,802 MB/D during the previous week, as total gasoline output declined. U.S. ethanol output rose to 927 MB/D from 921 MB/D as production outside of PADD II reached another record high.
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-based subsea IMR provider, N-Sea Offshore Ltd is to move into new premises as business continues to grow.
The company has outgrown its current offices in Dyce and is adding additional office space to accommodate an increase in staff numbers as it expands operations both in the UK and internationally.
The new office facility at Salvesen Tower will not only accommodate N-Sea's significant expansion of Aberdeen-based staff, but has also been chosen to house an enlarged project management and engineering department. Since early 2014, N-Sea has added 15 UK staff allowing the company to expand its service offering.
Explaining the strategic relevance of the move, N-Sea's chief operating officer, Roddy James said (photo) : "N-Sea has evolved considerably in the short time since we established our presence within the UK. We are currently in the process of articulating our plans for expansion through investment in people, equipment and vessels to ensure we continue to deliver effective and cost efficient solutions to our clients.
"Our new premises will house our ever-increasing personnel and its professional capabilities, which are fundamental to our drive to become a leading subsea IMR company in the North Sea and beyond."
N-Sea is known for its innovative work as an independent offshore subsea contractor, specialising in IMR services for the international oil and gas, renewable and telecom/utility industries, as well as for civil contracting communities. With particular focus on North Sea activity, N-Sea provides near shore, offshore and survey services to major operators and service companies alike.
Apache Corporation (NYSE, Nasdaq: APA) has launched its 2014 Sustainability Report website.
The online report features expanded disclosure of Apache's performance in governance, economics, environmental stewardship, health and safety in the workplace and community outreach. The report is available at http://www.apachecorp.com/Sustainability/index.aspx.
"The relentless pursuit of operational excellence has been a hallmark of Apache since its founding in 1954," said Apache Chairman, CEO and President G. Steven Farris. "Our commitment to the environment, good governance, health and safety and the communities where we live and work is no less emphatic."
Among the highlights, the report:
• Discusses in the Governance Section how governance hit a high-water mark in 2013 when members of Apache's Board of Directors had individual meetings with nearly 60 percent of its shareholder base, addressing compensation and other issues and resulting in many state-of-the-art additions to the company's governance profile.
• Describes how Apache has developed a unique system using brackish and recycled produced water to maintain an aggressive drilling program without competing for freshwater supplies in drought-stricken West Texas in the Environment Section.
• Outlines the new Operational Excellence program, which introduces a common framework across regions for improving performance in seven key areas of operation, including asset integrity, safety and environmental responsibility in the Workplace Section.
• Describes in the Society Section how employees and their families donate their time, effort and money to hundreds of charitable causes each year, with matching gift funds totaling $2.4 million worldwide.
The 2014 report was prepared using the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines. GRI is a non-profit organization that promotes economic, environmental and social sustainability. Its comprehensive sustainability reporting framework is widely used around the world.
Also used as a reference was the Oil and Gas Industry Guidance on Voluntary Sustainability Reporting by the International Petroleum Industry Environmental Conservation Association (IPIECA), the American Petroleum Institute (API) and the International Association of Oil & Gas Producers (OGP).
Another reference was Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations published by the Investor Environmental Health Network (IEHN) and the Interfaith Center on Corporate Responsibility (ICCR).
A summary version of the 2014 Sustainability Report, published in print format, is available at http://www.apachecorp.com/Sustainability/Sustainability_Report/index.aspx. The summary report was printed on paper made from recycled material and certified by the Forest Stewardship Council, an independent, nonprofit organization established to promote the responsible management of the world's forests.
Through water communication and positioning technology company, Nautronix, is pleased to announce a new appointment within the sales team.
Experienced Business Development Manager, Thomas McCudden has been appointed as the company's Global Sales Manager for NASNet® and will be responsible for developing awareness and worldwide sales of NASNet® positioning technology.
Prior to joining Nautronix, Thomas gained a wealth of experience within the Oil and Gas, Telecommunications and Finance industries through previous positions at IET, FreeAgent, BT and latterly Coda Octopus.
Donald Thomson VP Sales, Global Commercial Acoustics who has been with the company for a number of months, will continue to be responsible for sales in the global marketplace for Nautronix' product lines; NASCoM, NASDrill and NASDive.
Mark Patterson, CEO, comments, "Thomas brings over 15 years of experience with him to Nautronix and his experience is exactly what we need to increase our sales efforts for NASNet®. By focussing the efforts of Thomas and Donald on the opportunities we have for our product lines, it will enable us to continue to grow and develop the business further."
Due to overcapacity in their rig portfolio, Statoil will lay up the COSL Pioneer rig in the fourth quarter of 2014.
The rig is currently carrying out an assignment on the Visund field and is scheduled to complete this work at the end of September.
The COSL Pioneer drilling rig.
(Photo: Ole Jørgen Bratland)
"After a careful review of our drilling plan, we find it necessary to suspend COSL Pioneer for the time being," says rig procurement responsible Tore Aarreberg.
In the beginning of July Statoil also announced that the drilling rig Scarabeo 5 will be temporarily suspended. Scarabeo 5 will be taken out of operations at the end of September for the rest of the year.
"At the moment we have three rigs contracted from COSL Drilling Europe. Our offshore organisation enjoys excellent cooperation with the contractor's drilling teams, and COSL Pioneer has demonstrated consistent, high efficiency in drilling operations. We are in close dialogue with the contractor concerning how the suspension of the rig will be implemented in practice, and we continue to look forward to many years of cooperation with COSL on the Norwegian shelf," Aarreberg says.
The rig is contracted until 2016 and will be used for drilling and completion of production wells on the Norwegian continental shelf.
COSL Pioneer being taken out of operation for a shorter period will have no impact on Statoil's production targets or planned exploration activity on the Norwegian shelf. The company will still be drilling 20-25 exploration wells on the Norwegian shelf in 2014, where the company operates about two-thirds of all wells.
Production is now underway from the Cardamom development, the second major deep-water facility Shell has brought online in the U.S. Gulf of Mexico this year, following the start-up of Mars B in February.
Oil from the Cardamom subsea development (100% Shell) is piped through Shell's Auger platform (photo). When at full production of 50,000 barrels of oil equivalent a day (boe/d), Auger's total production capacity will increase to 130,000 boe/d.
"Cardamom is a high-value addition to Shell's production at the Auger platform and is another example of our excellence in deep-water project delivery," said Marvin Odum, Shell Upstream Americas Director. "The work to extend the production life of our first deep-water tension-leg platform is impressive and involved advanced exploration and development technology. Our future opportunities in deep water mean that this will remain an important, high-return growth area for Shell."
Since its first production in 1994, the facility has received several upgrades to process additional production from new discoveries. Cardamom is Auger's seventh subsea development.
The Cardamom reservoir sits beneath thick layers of salt in rock more than four miles (6.4 kilometers) below the sea floor and went undetected by conventional seismic surveys. Shell used the latest advancements in seismic technology to discover Cardamom in 2010.
The Cardamom field is 225 miles (362 kilometres) south-west of New Orleans, Louisiana, in water more than 2,700 feet (820 metres) deep.
Other deep-water Gulf of Mexico growth for Shell includes the Mars B (Shell 71.5%) development, which continues to ramp up production; the ultra-deep-water Stones (Shell 100%, 50,000 boe/d) project, which is under construction; front-end engineering and design is progressing for the Appomattox (Shell 80%) project; and, in a recent exploration success, Shell announced a major discovery at its Rydberg (Shell 57.2%) well in the Norphlet play. Shell also discovered oil at its Kaikias (Shell 100%) well in the Mars basin, which will require further appraisal in 2015.
Last month, Shell also started oil production from its Bonga North West (Shell 55%, 40,000 boe/d) deep water development off the coast of Nigeria and recently announced a natural gas discovery at its Marjoram-1 (Shell 85%) deep-water well in Malaysia, where the Gumusut-Kakap (Shell 33%) deep-water platform is also on track for production this year.
The shipping industry is largely based on networking. Surprisingly, it has not had its own social media platform - until now.
Brokers, owners, crews, agents, educational institutions and others confined to Google to locate businesses, services and people within their industry, have something to get excited about, says Eirik Fosse, CEO and founder behind the Norwegian developed social network Shippingcluster.
"Shippingcluster is a social network exclusively for the global shipping industry, eliminating all unrelated noise, making people and business easy to find and be found," he says.
The service is free and members will collaborate to keep it highly relevant for shipping business.
The shipping industry is the world's most international business. In Norway alone, the industry creates an annual value worth 150 billion NOK, and employs over 100,000 people.
The potential shipping-specific network is huge
Likened to Facebook and LinkedIn, Shippingcluster as an online social networking website, has a huge future potential, believes Fosse.
The social media is here to stay. Why? Because its is efficient. But it has its disadvantages as , according to Fosse, "general networks are too broad."
"Focusing on specific business sectors, such as shipping, eliminates noise and increasesuser relevance, " says Fosse, referring to Shippingcluster as a maritime combination of Finn.no (an equivalent of Norwegian Ebay) and LinkedIn.
To make it happen, Fosse is teaming up with shipping and IT experts, bringing vast xperience and know-how to the table.
"We are a specialist industry with its own terminology and specific networking criteria. Industry know-how is therefore crucial in order to succeed within industry-specific social media," he predicts.
The ability to continously develop intuitive and technologically advanced web design is another prime asset. Industry-specific social networks must be as intuitive and user-friendly as the best internet services.
"IT-systems that require introduction courses in order to be used, are no longer acceptable. The site must be very simple and efficient, yet flexible," he says.
As the membership base grows, Shippingcluster will add new and effective maritime services to its members, such as CO2 reporting, vessel performance, benchmarking and port calls .
"The realization of network-dependent services will provide enormous opportunities and synergy for the industry," says Fosse, adding that the Shippingcluster will be the leading social network for maritime students and academia.
"This will be a perfect medium to highlight innovation projects and connect students and businesses related to these projects," says Fosse.
Launched last June, Shippingcluster today boasts a membership base of over 1,000 maritime people and 250 companies from over 40 countries.
"This is far above our expectations and obviously driven through word of mouth. We have given the shipping industry a communiative missing link which has very positive global ramificiations," says Fosse.
Statoil has completed the Martin well in US Gulf of Mexico and the Dilolo well in the Kwanza basin in Angola.
Statoil announces a small discovery in its Martin prospect located in the Gulf of Mexico (GoM). Statoil does not consider this to be a commercial discovery. The well has been drilled efficiently and plug and abandonment operations (P&A) are now ongoing.
Once P&A operations are completed the Maersk Developer rig (photo) will move to the impact Perseus prospect in De Soto Canyon (DC) 231.
Angola, Kwanza basin
The Dilolo-1 exploration well in block 39 offshore Angola in the Kwanza basin was drilled to its pre-salt target.
The first drilling operation in block 39 has now been completed. In this first well hydrocarbons were not encountered, but the operation did provide a valuable calibration for other prospects in the area.
Further studies are needed in order to fully understand the well results. The well is now in the process of being plugged and abandoned.
The Stena Carron drillship (photo-right) will soon move to block 38 to spud the exploration well Jacaré-1.The Angolan pre-salt is a frontier play where Statoil will participate in eight commitment wells across five blocks.
Other ongoing activities
Statoil is currently also drilling the Giligiliani well in block 2 in Tanzania and has recently spudded the Romeo prospect near the King Lear discovery in the Norwegian North Sea.
Statoil is also preparing for its 18-month drilling campaign on the east coast of Canada following up the Bay du Nord oil discovery.
The company is also participating in two more wells in the Kwanza basin in Angola. These are the Puma well in block 25 (operated by Total) and the Locosso well in block 22 (operated by Repsol).
In Brazil, the Repsol-operated Seat-2 well in block BM-C-33 in the Campos basin is currently being drill stem tested (DST) after encountering a pre-salt hydrocarbon-bearing section.
Ownership overview:
Statoil is the operator (42.5%) of Martin, and its partners include Nexen (25%) and LLOG (26%).
In Angola on block 39, Statoil is the operator (37.5%), and its partners include Total (7.5%), WRG (15%), Ecopetrol (10%) and Sonangol P&P (30%).
In block 38 Statoil is the operator (45%), with WRG (15%), Ecopetrol (10%) and Sonangol P&P (30%) as partners*.
* The Ecopetrol farm-in is subject to approval by Sonangol E&P and the Angolan minister of petroleum.
IKM Testing AS from Norway ordered a 1600 meters Thermoplastic Composite Pipe (TCP) from Airborne Oil The TCP Downline will be used for the pre-commissioning of risers and pipelines.
Odd Reidar Boye, Engineering Manager with IKM Testing explains the preference for the composite downline over steel coiled tubing and other downline solutions: "The TCP Downline has a superior fatigue life compared to other solutions we have looked at for execution of pre-commissioning operations in these water depths (1300 m). The light weight, ease of handling and the external pressure resistance capability makes it the preferred alternative for us, both technically and operationally".
With this order, Airborne solidifies its leading position in composite downlines and composite pipes for deepwater applications in general. "Having built a track record for a number of years, including a deepwater world record, this order is testament to the success of the composite pipes in these challenging deepwater applications" says Rogier Cornelisse, Sales Manager TCP Downlines and TCP Hoses.
Airborne Oil & Gas is the first and leading manufacturer of Thermoplastic Composite Pipes. Founded in 2007, Airborne manufactures flowlines, risers, downlines, hoses and jumpers for offshore application.
With the oil & gas industry's push into new energy frontiers, the offshore pipeline industry is faced with greater technical challenges relating to pipelines and the expectation that it will optimize solutions to be cost effective. DNV GL is launching three new Joint Industry Projects (JIPs) to help the industry address these challenges.
The first JIP will make pipeline free span intervention less costly, the second will result in faster and more consistent pipeline repair and the last will optimize the design of pipeline components faster.
"Offshore pipelines are the veins on an offshore field development and represent a large part of the total investment and the value of the transported product can be enormous. DNV GL is committed to supporting the industry to work smarter, safer and greener. All three cooperation projects present an opportunity for the industry to work more efficiently, either through optimized and more reliable design, faster execution of projects, or safer and more robust operation", says Asle Venås, Global Director for Pipelines in DNV GL.
Free Spans in Trenches JIP
Gaps between the seabed and pipeline, known as free spans, can lead to vibrations which may damage the pipeline. "Lack of knowledge about the extent of vibrations in small gaps that typically occur on sandy seabeds means the industry is conservative and is potentially over-dimensioning designs and conducting unnecessary interventions. The DNV GL JIP aims to address this problem by developing improved free span assessments which will lead to fewer interventions and reduced cost," says Olav Fyrileiv, Project Manager, DNV GL – Oil & Gas.
The project comprises computational fluid dynamic analysis combined with a significant test program and the outcome will be an extension of DNV GL's Recommended Practice for Free Spanning Pipelines (DNV-RP-F105). DNV GL has already partnered with Dutch pipeline operator BBL Company V.O.F. and is now inviting other pipeline operators to also join the project.
Pipeline Repair JIP
Maintenance and modification technology on offshore pipelines is developing to accommodate deeper and harsher environments and reduce downtime. Technology and operational experience have been developed through several projects, such as remote pipeline operations using hyperbaric welding and Statoil's successful Hot Tap operations in the North Sea.
"DNV GL is inviting the main players in the pipeline repair equipment sector to collaborate with us in reviewing recent developments in pipeline repair and maintenance. We plan to develop formalized criteria and procedures in an updated version of DNV GL's Recommended Practice on Pipeline Subsea Repair (DNV-RP-F113). The aim is to reduce the time and cost spent on the design and execution of pipeline repairs," says Dag Øyvind Askheim, Project Manager, DNV GL – Oil & Gas.
Design of Pipeline Components JIP
Today, internationally recognized standards and recommended practices cover the limit state design of subsea pipelines. However, such design codes only provide high level guidance on how to consider pipeline components within a pipeline system.
Currently, there is not a consistent and unified approach to the design of pipeline components. With modern pipeline standards, the pipeline design is optimized and this gap becomes even more pronounced. The objective of this JIP will be to develop an approach, based on industry experience and best practice, to pipeline component design that is compatible with a modern pipeline limit state design code such as DNV-OS-F101. "The aim is to help prevent project delays, increased costs and, in some cases, compromised safety, which can happen when the interpretation of codes is stretched. We are inviting major players working with pipeline systems and components," says Jonathan Wiggen, Project Manager, DNV GL – Oil & Gas.
NYC-based PIRA Energy Group reports that Cushing stocks to rise in 4Q, while pipeline projects relieve congestion in other midcontinent markets. In the U.S., slight stock build matches last year's. In Japan, crude stocks draw and finished product stocks continue rising. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:
Cushing Stocks to Rise in 4Q, While Pipeline Projects Relieve Congestion in Other Midcontinent Markets
Fourth quarter crude stock increases, both in Cushing and on the Gulf Coast, will very likely lead to contango for LLS and Mars and quite possibly for WTI as well. However, stronger fundamentals in other regions should lead to improved differentials for Canadian, Bakken, Rockies and Permian Basin crudes.
Slight U.S. Stock Build Matches Last Year's
Overall inventories built this past week, keeping stocks just 3.2 million barrels above year-ago levels. The product stock build was 2.4 million barrels, as strong product demand offset a one-week surge in product imports. Crude stocks drew about one million barrels less than the week before, largely because of the decline in run rates. Refinery margins are great and refiners have been running more crude than last year over the last four weeks.
Japanese Crude Stocks Draw; Finished Product Stocks Continue Rising
Runs continued to rise with a still lower crude import rate that allowed crude stocks to draw. Finished product stocks continued rising. Gasoline and gasoil demand fell, and for both products there were stock builds of about 0.4-0.5 MMBbls. Kerosene stocks continued to build along seasonal norms. Refining margins remain poor, but there was a slight improvement in gasoline and gasoil cracks.
China Quarterly Oil Demand Monitor
Growth in China's apparent oil demand exhibited extreme volatility in recent periods. On a smoothed (four-quarter moving average) basis, however, demand growth has been relatively stable and has tracked the path of GDP expansion. Physical indicators that can be tied directly to oil demand (such as car sales and ethylene production) have also expanded solidly of late. Looking forward, the short-term volatility in reported figures may very well persist, but the underlying pace of oil demand growth will remain constructive.
3Q14 Iraq Oil Monitor
Territorial gains by ISIS reignited Iraq's sectarian crisis. U.S. airstrikes have stalled ISIS's momentum for now, but the military stalemate is likely to persist. Current PM Maliki agreed to step down, but deep-rooted sectarian mistrust presents a challenge in forming a unified government. Flows through the Kurdish pipeline are nearing 200 MB/D and Kurdish cargoes continue to load from Ceyhan, but buyers are hesitant without U.S. approval. A new 1 MMB/D pipeline from the Halfaya and Missan fields to the Fao storage facilities removes one constraint from southern capacity expansion. However, bureaucratic holdups during government formation will likely constrain capacity growth. Furthermore, southern infrastructure could be at risk if ISIS switches to guerilla tactics.
What GDP Growth Rates Are Required for Positive Oil Demand Growth?
One commonly heard refrain in the oil industry is that GDP growth must exceed 2.5% in order to see positive oil demand growth. A recent PIRA report addresses this issue and determines that the GDP growth threshold is 2.1% for the U.S. and 2.3% for Europe. These results accord with PIRA's own rigorous bottoms-up approach, which includes fuel efficiencies, fuel substitution, lifestyle changes, etc. PIRA's long-term outlook, which calls for U.S. GDP to grow 2.7% per annum through 2020, forecasts oil demand growth of 0.4% per annum. Because European GDP growth lags at only 1.8% p.a., oil demand declines 0.5% per year.
Aramco Announces October Price Reductions for Differentials
Saudi Arabia's formula prices for October were just released. A reduction in differentials was enacted for all the key markets with the most aggressive reductions being to Asia. Prices into the U.S. were cut $0.40/Bbl, across the board, against the ASCI benchmark, after a $0.80/Bbl reduction for September barrels. Even with the reduction, Saudi barrels remain less competitive than like U.S. domestic grades by about $2-3/Bbl. In Asia, not surprisingly, terms were made more generous. The biggest reduction was for Arab Extra Light -$2.00/Bbl. Arab Heavy was reduced the least at -$1.20/Bbl. The reductions are seen as necessary to maintain refiner demand amid rising fall turnarounds and a very poor margin environment. Also, competiveness versus competing grades has waned, so a reduction in differentials was warranted.
U.S. LPG Prices Strengthen Despite Record High Stocks
U.S. LPG prices ripped higher this week despite sharply lower crude oil prices. Mt Belvieu propane futures increased 3.3% to the highest level since July 1 as open interest and trade volume soar to all-time highs on the contract. But with spot arbitrage movements to Europe and Asia turning flat to negative, U.S. prices make take a breather from recent strength and look to destination market prices for future direction.
Ethanol Prices Soar
U.S. ethanol prices jumped the week ending August 22 after a bullish DOE report indicated a huge inventory draw the prior week. Production was less than many expected, while the output of ethanol-blended gasoline was higher.
Ethanol Manufacture Increases
U.S. ethanol output rose to 921 MB/D the week ending August 29 as production outside of PADD II reached a record high 81 MB/D. Inventories increased to 17.7 million barrels, up 356 thousand from the prior week.
The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.
Noble Energy, Inc. (NYSE: NBL) has announced final well results at the Katmai exploration well and the Dantzler appraisal well in the deepwater Gulf of Mexico.
At Katmai, wireline logging data indicates a total of 154 net feet of crude oil pay was discovered in multiple reservoirs, including 117 net feet in Middle Miocene and 37 net feet in Lower Miocene reservoirs. The discovery well, located in Green Canyon 40, was drilled to a total depth of 27,900 feet in 2,100 feet of water. Total gross resources(1) at Katmai are now estimated at between 40 and 100 million barrels of oil equivalent, including 40 to 60 million barrels of oil equivalent discovered from this initial well. Additional exploration and appraisal drilling will be required to test the remaining upside potential.
The Dantzler-2 appraisal well, located in Mississippi Canyon 782, encountered 122 net feet of crude oil pay in two high-quality Miocene reservoirs. The well was drilled to a total depth of 18,210 feet in 6,600 feet of water. Gross resources(1) at Dantzler have increased to between 65 and 100 million barrels of oil equivalent. Dantzler has been incorporated into the Company's plans in the Rio Grande development area, which also includes discoveries at Big Bend and Troubadour. The Rio Grande development remains on schedule, with first production from Big Bend expected in the fourth quarter of 2015 and Dantzler in the first quarter of 2016.
Susan M. Cunningham, Senior Vice President, Gulf of Mexico, West Africa, and Frontier, said, "The results at Katmai and Dantzler highlight Noble Energy's successful deepwater Gulf of Mexico program, which will contribute significant production and cash flow growth in the coming years. What we discovered at Katmai represents another commercial discovery in the Miocene trend and de-risks nearby prospects in the Company's Aleutians area. Our appraisal program at Dantzler has exceeded our expectations and enhances the value of the development."
Noble Energy operates Katmai with a 50 percent working interest. Ridgewood Energy Corporation holds the remaining 50 percent working interest.
At Dantzler, the rig has started well completion operations on Dantzler-2 and will then complete the Dantzler-1 discovery well. Noble Energy operates Dantzler with a 45 percent working interest. Additional interest owners are entities managed by Ridgewood Energy Corporation (including ILX Holdings II, LLC a portfolio company of Riverstone Holdings, LLC) with 35 percent and W&T Energy VI, LLC (a wholly owned subsidiary of W&T Offshore Inc.) with 20 percent.
(1) Range of resource estimate based on 75th and 25th percentile probabilities
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