Two recent events have highlighted how the International Marine Contractors Association and the Chartered Institution of Civil Engineering Surveyors (ICES) are working closely to promote the importance of hydrographic and civil engineering surveying in the marine environment and the competency of their respective members.

Under the terms of the 2014 Memorandum of Understanding (MoU), signed by both organizations, offshore survey personnel who have completed competence portfolios based on the IMCA framework can use this as a demonstration of their competence for membership of ICES. Likewise IMCA will promote recognition of the competence of ICES members to its international offshore contractor membership where companies have competence management schemes in place based on the IMCA model.

“Working together to improve levels of competence, a vital step to ensuring there are enough trained and competent people to undertake important projects, was a major factor in the signing of the MoU. Indeed, it provides members of each of our organizations with something of a win:win situation. We are now taking things a step further,” explains IMCA’s newly appointed Technical Director, Richard Benzie (photo)

“We have recently seen two important milestones in the cementation of the IMCA:ICES relationship. On 2 September, ICES spoke about its professional qualification route for offshore surveyors at the IMCA Competence & Training Seminar in Aberdeen; and in early October an ICES representative addressed IMCA’s Offshore Survey Committee in Aberdeen. We are also exploring a number of other areas where there may be opportunities for further fruitful cooperation.”

ICES Chief Executive Officer Bill Pryke commented: “I am delighted that both organisations have already acted on our MoU. ICES has tremendous respect for the work IMCA does in promoting standards and competence in the offshore survey industry. By working together to support individuals and contractors, we can ensure all those involved in offshore survey are competent and operate within a professional environment that recognises and nurtures their skills.”

Although the MoU talks primarily about surveyors, as Richard Benzie explains, other roles covered within IMCA’s competence frameworks are not excluded. “Typical examples would be those of geophysicists and data processors. Ed Danson, a much respected offshore survey industry figure, a former member of our Offshore Survey Committee and former president of ICES, has mapped IMCA’s survey competence frameworks against the requirements for technical membership of ICES and has found a positive level of synergy between each organization’s approach to competence assessment.”

Statoil with partners Petoro and OMV have started the world´s first wet gas compression on the seabed of the North Sea Gullfaks field.

The unique technology will increase recovery by 22 million barrels of oil equivalent (oe) and extend plateau production by around two years from the Gullfaks South Brent reservoir.

“We are very proud that we have been able to complete such a demanding pioneering project with start-up ahead of the original plan,” says Margareth Øvrum, executive vice president for Technology, Projects & Drilling (TPD).

“Subsea processing and gas compression represent the next generation oil and gas recovery, taking us a big step forward,” she says.

Statoil is the first company to apply subsea gas compression. In mid-September Statoil also started Åsgard subsea gas compression.

The two projects are the first of their kind worldwide, and represent two different technologies for maintaining production when the reservoir pressure drops after a certain time.

Subsea compression has stronger impact than conventional platform-based compression. It is furthermore an advantage that the platform avoids increased weight and the extra space needed on the platform for a compression module.

Subsea compression is an important technological leap to further develop the concept of a subsea factory.

It is also possible to tie in other subsea wells to the wet gas compressor via existing pipelines. The station has already been prepared for new tie-ins.

“We see great opportunities for wet gas compression on the Norwegian continental shelf. It is an efficient system and a concept that can be used for improved recovery on small and medium-sized fields. We are searching for more candidates that are suitable,” says Hove.

“The Gullfaks wet gas compressor is a unique, compact and cost-effective solution. The concept may be standardized by applying well-known technology components,” says Øvrum.

Extensive preparations had been made on Gullfaks C before the subsea compressor could be started, including modifications and preparation of areas as well as installation of equipment.

Gullfaks licensees: Statoil (operator) (51%), Petoro (30%), OMV (19%)

Fugro (Mexico) in conjunction with long-time associates, Diavaz, has been awarded an extension of the ongoing offshore geophysical and geotechnical campaign by the Mexican national oil company, PEMEX.

Geotechnical field operations, laboratory testing and Geoconsulting activities will support exploration drilling activities in the Bay of Campeche and deepwater locations in the Perdido area. The value of the contract extension is approximately USD 13 million. The field program is planned to start in October 2015, from the ultra-deepwater geotechnical and well services vessel Fugro Synergy, while the Geoconsulting program will continue through 2016. This contract extension represents a continuation of Fugro’s longstanding and successful relationship working with PEMEX and reinforces Fugro’s market leadership internationally as the preferred service provider for geotechnical, geophysical and geoconsulting services.

Fugro’s geotechnical soil data collection, lab testing and consultancy services are centered around onshore and offshore site investigation. The geotechnical information is used to design foundations for deepwater wells, offshore structures, on and offshore pipelines, ports, large buildings, bridges, and other infrastructure. Fugro is the largest global supplier of offshore geotechnical services.

Jee Ltd, a leading independent multi-discipline subsea engineering and training firm, has secured a contract extension with BP for the provision of integrity management services and in-line inspection engineering support in the North Sea.

The contract involves project coordination, risk and corrosion management, span assessment, intelligent and operational pigging support and ad hoc engineering studies.

Jamie Burrows, Business Development Manager at Jee Ltd, said: “We pride ourselves on our collaborative approach when working with clients and aim to become a seamless extension of their team. We are delighted with the renewal of the contract with BP, as it demonstrates our robust relationship.

Jamie Burrows, Business Development Manager at Jee Ltd

“We are committed to providing quality engineering services in a technically advanced, secure and sustainable way. Our clients’ needs are always at the forefront of what we do, and it has become evident in the current climate that there is a strong focus on efficiency and cost reduction throughout the industry.”

Jee recently implemented a new business structure to strengthen its capabilities and champion the delivery of projects. The restructure underpins Jee’s core services including design, integrity management, pigging and late life, working to support current and future opportunities, and help ensure Jee is responding to its clients’ needs effectively and efficiently.

Mr Burrows continued: “We define the inspection interval that is required for our clients’ pipelines using a risk-based approach for cost optimisation. Our effective planning methods, combined with our in-depth experience of integrity management and in-line inspection, ensure each scope of work is examined and any potential challenges are identified and addressed early on, eliminating the need for costly changes. In addition, this ensures delays to the schedule of inspections are avoided, providing further cost savings.”

Jee has worked with BP for more than two decades on ad hoc global operations and project support in locations including Aberdeen, Grangemouth and London in the UK, and Angola, Azerbaijan, Norway and Trinidad internationally.

Jee is an independent subsea engineering and training company with offices in Aberdeen, London and Tonbridge. Jee’s multi-disciplined capabilities and integrated services include pipeline integrity management, pigging, third party verification, plugging analysis and verification, and cover the spectrum of subsea engineering for the whole of life-of-field.

The acquisition of Imtech Marine by Pon Holdings and Parcom Capital has been finalized. The European Commission has approved the takeover of the leading maritime service provider. Imtech Marine will continue to operate independently and will, in the coming period, further focus on its growth ambitions.

René ten Brinke, CEO of Imtech Marine: ‘’Now that the acquisition is completed, a new era arises for Imtech Marine. The coming years, our aim will be to further strengthen our leading position in the maritime sector, with dedicated focus on our customers, employees and suppliers. With this new start comes a new company name, which we will announce on November 5th at the maritime Europort exhibition in Rotterdam.’’

Imtech Marine is a leading company in the global maritime market, operating as a full-service provider and system integrator of tailor-made, innovative and sustainable technology solutions covering the whole ship. The company employs almost 2,500 staff, of which over 900 employees are based in The Netherlands. More than 85 offices are positioned in 30 countries along strategic shipping routes and close to shipbuilding centers.

About Pon Holdings

Pon, one of the largest Dutch family businesses, is an international trading and servicing company, with a great variety of activities. With approximately 13,000 employees spread over 450 branches, Pon is active in 32 countries. The company realized a turnover of close to 6 billion euro in 2014. For more information www.pon.com.

About Parcom Capital

Parcom Capital is a leading mid-market private equity firm and was founded in 1982 as one of the first buy-out and expansion capital providers in the Dutch market. It manages over 1 billion euro’s in investments divided over multiple sectors, including the offshore and maritime sector. For more information www.parcomcapital.com.

McDermott International, Inc. (NYSE:MDR) announces it has been awarded a sizeable brownfield project by Qatar Petroleum for the engineering, procurement, construction and installation (EPCI) of four wellhead jackets.

McDermott has been awarded a sizeable brownfield offshore project by Qatar Petroleum for the engineering, procurement, construction and installation (EPCI) of four wellhead jackets, similar to this file photograph. (Photo: Business Wire)

Installation of two jackets in the Bul-Hanine field offshore east of Doha has been scheduled to be completed by December 2016 with the remaining two scheduled for completion in July 2017. The total weight of all four structures combined is 3,495 tons.

“McDermott’s integrated EPCI capabilities are critical to these offshore projects,” said Tom Mackie, McDermott’s Vice President, Middle East. “This award is another example of collaboration with our customers to meet their critical production and project requirements. The award is expected to be executed with McDermott’s internal resources and backed by our proven track record of designing, building and installing offshore and subsea solutions.”

Revenue for the order will be included in McDermott’s third quarter 2015 backlog.

McDermott has been delivering projects in Qatar for more than 40 years. Detailed design engineering and procurement is expected to be performed by McDermott’s teams in Dubai, U.A.E. Jackets are scheduled for fabrication by McDermott’s Dubai, U.A.E.-based fabrication facility. Vessels from the McDermott global fleet are scheduled to undertake the installation work.

Asset Guardian Solutions Ltd (AGSL), which specializes in protecting companies’ process critical software assets, announced that it has successfully completed a series of three projects for a major North Sea oil and gas operator that manages and operates numerous developments in the North Sea, Norway, Algeria and Russia.

During the past two years, AGSL has completed three linked contracts, two of which required that the Asset Guardian toolset be customized to meet the customer’s specific requirements.

The initial contract awarded to AGSL provided the operator with a secure electronic, centralized repository to store all process control systems software back-up files. As a result, the company’s ability to recover quickly in the event of an unplanned production shutdown due to process control software failure has been significantly improved. In addition, the Asset Guardian toolset included software version control and the ability to manage all software configuration changes.

To ensure that all of its personnel, whether working onshore or offshore, have access to the same information, AGSL also supplied its AGSync software module. By using a master/slave server topology, AGSync synchronizes data and files between multiple locations, while simultaneously safeguarding the integrity of files and data. This is particularly important should communication links between locations be disrupted.

The successful deployment of the Asset Guardian toolset to manage the operator’s process control systems software encouraged the company to use Asset Guardian to provide a corporate, multidisciplinary management of change system (MOC) solution. Following successful completion of the work scope by AGSL, the solution has been implemented and released across all company assets.

By using the same Asset Guardian core software and some of the functionality of the two previous projects, AGSL developed a subsea asset management solution that makes it possible for the customer to use and share common data across different business units and disciplines. This integrated approach has benefited the company by providing improved reporting, workflow data management, and enhanced efficiencies, resulting in a capex cost reduction.

As Mexico’s first offshore bidding round for already discovered fields saw bids significantly higher than the minimum set up by the government, adding further transparency to the process would be positive for the round as it approaches its deepwater phase, according to an analyst with research and consulting firm GlobalData.

Adrian Lara, GlobalData’s Senior Upstream Analyst for the Americas, says that the Mexican government’s announcement of the minimum profit oil worked out well, especially in discovered fields, as opposed to the disappointment surrounding the exploration blocks on offer during the previous phase of Round 1.

The minimum for Area 1 of this second phase was established at 34.8% and the bids ranged from 46.7% to 86.7%. GlobalData’s assessments suggest that assuming a price of $60 per barrel, these fields would be profitable with bids of up to 65%. Four of the nine bids were above this threshold, and two were significantly higher.

The size of the winning bid indicates that competition drove bidding higher because the floor was known. The previous phase also involved determining the potential floor for bidding, which could have led to negative bidding strategies designed to minimize outlay.

Lara comments: “So far, the particular design of Round 1 with its phases has functioned well, as it incorporates lessons learned in the previous phase.

“The success of the last phase, for example, was in part due to the failures of the first phase, namely that not disclosing the minimum adds uncertainty to the geological risk and ultimately lowers the incentive to bid high, or even bid at all.”

While GlobalData believes that the most promising deepwater prospects are the three discoveries Trion, Exploratus and Maximino being offered by Pemex as farm-outs, bidding activity in the next deepwater exploration block phase could be positively impacted if at least the framework for the farm-out agreements is released.

Lara explains: “Building on the premise that disclosing the minimum decreased uncertainty and added a degree of transparency to the process, it would be positive for the next phase if CNH provided more transparency on the terms of the farm-outs.

“This would provide a more comprehensive perspective on the final deepwater phase of the Round 1 and finally set an optimistic precedent for future bidding rounds,” the analyst concludes.

The World Ocean Council (WOC) is bringing together the shipping industry’s sustainability and environmental performance initiatives at the Sustainable Ocean Summit (SOS), Singapore, 9-11 November, to explore possible synergies for better serving the shipping industry and better delivering results.

At this session, the shipping industry will have an unprecedented opportunity to provide input and drive improvements in the cost-effectiveness, efficiency and delivery of results that could be achieved through increased synergies, coordination, communication and collaboration among the programs.

The SOS 2015 session on “Shipping, Sustainability and Synergies: Engaging Green Shipping Initiatives with Each Other and with Other Ocean Industries” will be chaired by INTERMEPA and the panel of programs includes, to date:

‬Other sustainable/green/environmental shipping initiatives and programs are invited to participate in the panel as well.

This unique gathering will address:

The updated Sustainable Ocean Summit program is now available.

Conference space is becoming limited, so register for SOS 2015 to not miss the opportunity to participate in this 2-yearly gathering of the ocean business community to address leadership and collaboration in “Corporate Ocean Responsibility”.

About the Sustainable Ocean Summit (SOS ) 9-11 Nov 2015, Singapore

The SOS is the only international ocean business community gathering dedicated to industry leadership and collaboration in developing solutions to ocean sustainable development challenges. The SOS 2015 theme is “Sustainable Development and Growing the Blue Economy - the Next 50 Years”. This event brings together a wide range of ocean industries, including: shipping, oil and gas, fisheries, aquaculture, tourism, renewable energy (wind, wave, tidal), ports, dredging, cables, seabed mining, the maritime legal, financial and insurance communities, and others.

James Fisher and Sons plc has announced the launch of James Fisher Subsea Excavation, the new trading name and brand of the sole dedicated MFE service provider worldwide.

The launch follows an exciting period of growth and development in James Fisher’s MFE business over the last 15 months that commenced with the combination of the assets and knowledge of KDM Marine with James Fisher’s HydroDigger fleet, as well as the assets of X-Subsea being acquired in May 2015, to deliver the current JFSE capability. JFSE is now able to deploy a significant range of MFE tooling and other assets from within the wider James Fisher group to support subsea projects globally.

“The launch of JFSE reflects our continued commitment to deliver the very best mass flow excavation services to our global client base. It also demonstrates the company’s strength in the marketplace and reassures our customers of our global reach, financial stability and position of strength for future growth” explained Kenneth Mackie, managing director of James Fisher Subsea Excavation.

James Fisher Subsea Excavation, led by a team with unrivalled experience, will support its customers from principal locations in Aberdeen, North America, Mexico, Dubai and Singapore with access to James Fisher’s facilities in more than forty countries to fully support customer operations globally.

“JFSE now has the world’s largest subsea mass flow excavation capability, meaning we can provide a comprehensive and value added service, with access to new regions and opportunities by leveraging the footprint and capabilities of the wider James Fisher Group. Our aim is to provide clarity and confidence to our customers, while developing our position in the global marketplace.” Concluded Aidan Douglas, group operations director at James Fisher and Sons plc.

On behalf of the Johan Sverdrup license, Statoil is awarding contracts for two Johan Sverdrup jackets to Kvaerner Verdal and Dragados Offshore S.A.

The contract awarded to Kvaerner Verdal has a value of approximately NOK 1 billion and covers engineering, fabrication and construction of the steel jacket for the Johan Sverdrup processing platform. Weighing 17,700 tons, the jacket will be constructed at the yard in Verdal and installed on the Johan Sverdrup field in the summer of 2018.

“This is the third delivery based on the letter of intent signed by Statoil and Kvaerner for delivery of jackets. This means that Kvaerner will deliver 3 of 4 jackets for the first phase of the Johan Sverdrup development,” says Kjetel Digre, senior vice president for the Johan Sverdrup development project.

“Having documented learning and synergies in connection with existing contracts, Kvaerner has become the supplier of these three jackets and will contribute to improved competitiveness and maximized value creation from Johan Sverdrup,” says Digre.

The contract awarded to Dragados Offshore S.A. covers engineering, fabrication and construction of the steel jacket for the Johan Sverdrup utility and accommodation platform. Weighing 7,600 tons, the jacket will be constructed at the yard in Cadiz. Field installation is scheduled for the summer of 2018.

“We are pleased to include Dragados Offshore in the Johan Sverdrup project, which is a complex puzzle requiring precision and quality in all deliveries. We have good experience with Dragados Offshore from construction of the jacket for the Statoil-operated Mariner project. We are looking forward to resuming our good cooperation, and from day one we will focus on utilizing our experience and ensuring the same quality in this Johan Sverdrup assignment,” says Digre.

The investment costs in the first phase of the Johan Sverdrup development are estimated to be in the order of NOK 117 billion (2015 value) with expected recoverable resources in the range of 1.4 – 2.4 billion barrels of oil equivalent. The ambition is a recovery rate of 70% for Johan Sverdrup. The first phase of the Johan Sverdrup field development will consist of four installations, including a utility and accommodation platform, a processing platform, a drilling platform and a riser platform, as well as three subsea water injection templates. The platforms will be bridge-linked.

The Johan Sverdrup field partners: Statoil 40.0267% (operator), Lundin Norway 22.6%, Petoro 17.36%, Det norske oljeselskap 11.5733% and Maersk Oil 8.44%.

Deloitte’s survey of oil and gas operators and oilfield services companies* has found that a lack of effective supply chain collaboration means companies are missing out on maximizing the potential value from the UK Continental Shelf (UKCS).

74% of respondents said collaboration was an integral part of their day-to-day business but only 27% reported that the majority of their efforts resulted in a successful outcome. Cost reduction was found to be the main driver for collaboration today, with nearly a third (31%) of company respondents in agreement. 90% said that supply chain collaboration would also play a greater role in their company’s success.

Nick Clark, a director in Deloitte’s consulting team and contributor to the research, said: “While it’s encouraging that collaboration is seen by the industry as an important tool in helping companies succeed in maximizing economic recovery of the UKCS in line with the Wood Report, there’s clearly work to be done, and fast given the current tough environment.

“The industry needs to address a number of practical, cultural and behavioral barriers that are standing in the way of realizing this successful future. These include fundamentals such as a lack of effective financial incentives, a lack of clear communication and misalignment of expectations between operators and service companies in execution.”

The most critical finding highlighted the discrepancy between what drives successful collaboration, and the actions of leadership and business processes to underpin it. Whilst there was clear recognition of the value of collaboration and what’s needed to make it happen, trust and mutual benefits for example, less than 10% said that leadership regularly emphasized its importance or included it in their business strategy.

Despite this 20% of respondents still said they actively sought out opportunities to collaborate, which shows that the potential is there if the right leadership and incentives are in place.

Deloitte suggests that whilst industry must take the lead to make collaboration effective in the UKCS, it should look to the regulator, the Oil and Gas Authority (OGA), and Oil and Gas UK (OGUK), the industry trade body for support, pointing out that initiatives like OGUK’s Efficiency Task Force can be a real driver for positive change.

Oil & Gas UK’s business development director, Stephen Marcos Jones, commented: “In a world of a fallen oil price and high costs, industry is facing a difficult time. Whilst there are some signs of recovery - through an upturn in production and concerted focus on improving efficiency - there's also growing consensus that much more needs to be done. Deloitte’s report is a welcome contribution to this important debate, it is valuable to have a means to measure industry’s progress in terms of collaboration – which is no easy task.

“Collaboration is crucial if we're to fulfil Sir Ian Wood's vision to maximize economic recovery from the UK Continental Shelf.

“I believe industry is now starting to readjust its way of working together. It is vital we work together proactively - not just between operators, but crucially between operating companies and the wider supply chain - to deliver the transformational change we need to see.

“That is why Oil & Gas UK has put in place an Efficiency Task Force - championed by leaders from across the industry - we hope this group will challenge existing behaviors and be a catalyst for pan-industry improvement, in addition to the extensive work being undertaken by companies individually.”

Clark continues; “Thirty years ago health and safety was the major focus for the North Sea, and the industry made that a central tenet of its culture – for collaboration to succeed it has to be addressed with the same urgency and senior leadership.

“Our research shows that the industry recognizes this, and the critical value that effective supply chain collaboration can deliver in securing the future of the UKCS. We need to act fast and I believe that every company involved in the North Sea will want to play its part in making it a safe, collaborative, efficient and profitable region for many years to come.”

About the Deloitte oil and gas collaboration survey

This is the first Deloitte oil and gas collaboration survey in the UK and took place between 1st July and 31st July 2015.

The survey was supported by industry body Oil and Gas UK.

*61 people participated from a wide range of operators and oilfield services companies

For more information please visit: www.deloitte.co.uk/UKCS-collaboration or www.deloitte.co.uk/UKCScollaboration

Global shipping, logistics and marine services provider GAC is strengthening its strategic focus on the Asian Pacific energy sector with the appointment of Lailah Soon as Regional Business Development Manager, Oil & Gas.

Soon has more than a decade of experience in the oil & gas logistics sector in Singapore, New Zealand and Dubai. She is now drawing on that experience to drive GAC’s business offering a wide range of integrated solutions to support oil & gas operations at established and new locations for exploration and extraction throughout the region.

She is based in Singapore, and reports direct to Group Vice President – Asia Pacific, Fredrik Nystrom, who says: “Despite the prices fluctuations of recent years, the oil & gas industry remains a key component in our long-term plans.

“Lailah’s appointment to this new dedicated role demonstrates our belief in Asia’s increasingly important contribution to the world economy and the GAC Group’s long-term commitment and global focus on oil & gas. She will serve an important role in the Asia region, steering our efforts to deliver world-class support and achieve even greater engagement with the sector.”

Claxton, an Acteon company, has improved the technological advantage of its Suspended Well Abandonment Tool (SWATTM) by developing an extension module. In turn, this enables Claxton and Acteon sister company, Offshore Installation Services Ltd (OIS), to set deeper environmental and intermediate barriers.

Neil Watson, SWAT product leader, Claxton, said, “SWAT holds the Queen’s Award for Innovation in the UK, and the Petroleum Institute Platinum Award for Innovation. It is the first tool of its type, and is provided by Claxton in co-operation with OIS. In combining our proven SWAT tool with the new extension module, we have significantly increased the range of wells that can be abandoned using SWAT. By providing our customers with more opportunities to opt for this rigless method, we enable them to reduce their well abandonment costs considerably.”

The existing multi-award winning SWAT tool is deployed from a vessel of opportunity through the moonpool, eliminating the need for a drilling rig. It is positioned on the wellhead and then used to perform casing perforation, recovery of drilling mud and placement of the required cement barriers in the well.

SWAT utilises the extension module to enable cement to be positioned even deeper within the well. A wiper plug is positioned before and after the cement column, which ensures that the wellbore is cleaned ahead of the cement. The lower plug forms a base for the column and slurry is uncontaminated when it enters the annulus. The cement is then displaced to the required depth in the well. In OIS’s most recent well abandonment campaign, the depth was 2400 feet below mudline. This added depth capability significantly enhances well decommissioning capacity; previously, the SWAT tool was limited to environmental barriers up to 600 feet below mudline, which limited the wells eligible for abandonment with SWAT.

OIS successfully completed its 18th multi-operator plug and abandonment (P&A) campaign for Centrica Energy and Antrim Energy in the central North Sea, using Claxton’s new SWAT extension module. Ten subsea wells in categories 1, 2.1 and 2.2 were abandoned with the rigless method.

Valerio Percoco, vice-president business development, OIS, said, “This project is the largest well decommissioning campaign completed by OIS since Acteon sister company, Claxton, introduced SWAT in 1996. The successful completion of this project, with zero environmental or lost-time incidents, reinforces our position as a global leader in the vessel-based P&A market, having safely abandoned 128 wells over the past 19 years. Furthermore, this multi-operator approach enables operators to share project costs, which, when combined with the rigless approach, provides a cost-effective method for decommissioning non-revenue generating assets. Project costs are divided equally between operators on the basis of number of wells brought to the campaign, and lump sum costs such as mobilisation and demobilisation are shared.”

OIS conducted offshore operations from an anchor-handling tug supply vessel (AHTS) the Island Valiant. In phase one, Claxton’s SWAT system was deployed through the vessel’s moonpool to perforate, circulate and set cement barriers in the bore and across all the casing annuli. An AHTS is more cost-effective and fit for purpose than a construction vessel or rig; able to move quickly and easily between work site locations and conducting operations using dynamic positioning, which saves significant amounts of time compared to using a semi-submersible or jack-up/drilling rig. Intervention operational times are also reduced with a vessel, which are typically between 36 – 60 hours.

Classification societies are changing their monitoring rules for seawater-lubricated propeller shafts in line with the rules governing the inspection and withdrawal of oil-lubricated stern tube systems.

China Classification Society (CCS) announced in July that if certain condition monitoring criteria are met, shaft withdrawal for inspection may be extended to 15 years.

The rule change follows recent revisions by Lloyd’s Register and Bureau Veritas which published amended SCM and MON-SHAFT rules in January 2013 and January 2014, respectively. DNV GL, the world’s largest classification society, with a registered fleet of 266.9mgt, is expected to publish new rules in 2016.

Thordon Bearings’ seawater-lubricated propeller shaft bearing system meets classification society rules for extended shaft withdrawal periods

“Changes to classification society rules represent a significant breakthrough for manufacturers of water-lubricated shaft bearing systems,” said Andy Edwards, Commercial Director of market leader Thordon Bearings.

“A major stumbling block to the wider take-up of the more environmentally efficient seawater-lubricated system has been the requirement to withdraw the shaft for inspection every five years. So the changes are very welcome as they are more representative of the advancements made in polymer bearing technologies and corrosion-resistant shaft coating systems.

“We expect the revision will be highly welcomed by those shipowners looking to comply with the stringent U.S. Environmental Protection Agency vessel general permit (VGP) regulations, which are now in force to impose strict limits on operational oil discharges for vessels operating in US coastal waters and the Great Lakes,” Edwards added.

The revised CCS notation stipulates that certain shaft condition and monitoring protocols have to be verified at each annual survey in order to benefit from extended shaft withdrawal periods.

The rules state that a shaft condition monitoring system may be used in place of conventional shaft withdrawals, such as the retention of water sampling results for class surveyor review. It also stipulates that a water-lubricated shaft has to be protected with a corrosion resistant material, protective liner or a coating and that wear and tear be assessed. Shaft seals also have to be designed so they can be replaced without having to withdraw the shaft, while bearing clearances and shaft coating measurements need to be retained onboard.

Vessels operating seawater-lubricated systems also need to be fitted with a water filtration, separation or conditioning system capable of removing particles greater than 80μm, with samples taken under service conditions. Two independent sensors are also required to monitor water flow to the stern tube bearing, with any alarms recorded.

Craig Carter, Thordon Bearings’ Head of Marketing and Customer Service, said: “Our Thordon Water Quality Package and Thor-Coat shaft protection system satisfy all of these new requirements, meaning that shipowners no longer need to worry about the costs associated with having to withdraw the shaft every five years. With classification societies now changing their shaft condition monitoring rules in view of the technological advancements we have made over recent years, we expect more shipowners will see merit in converting from oil to seawater-lubricated systems.”

NYC-based PIRA Energy Group reports that problems at Canadian oil sands facilities curtailed production and lifted northern differentials last month, while outright crude prices registered a very mild recovery. In the U.S., total commercial stocks built less than last week, albeit to a new record level. In Japan, crude stocks posted a large rise, but finished products drew. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

North American Midcontinent Oil Forecast

Problems at Canadian oil sands facilities curtailed production and lifted northern differentials last month, while outright crude prices registered a very mild recovery. Crude stocks declined from Alberta to Oklahoma, but rose along the Gulf Coast, lifting Cushing WTI values relative to foreign and coastal grades.

Weather Emerges to Add Demand Early in the Fourth Quarter; Supply Comes From…

The PIRA 10-day daily demand outlook shows a significant increase in demand emerging due to colder than normal weather. The colder-than-normal weather is not emerging in the heart of the winter, but it is emerging at a time when minor supply side questions have been raised on several fronts.

Colder Weather and Poor Wind Generation Underpin Short-term Prices

While French nuclear unavailability has returned well above year ago levels, colder weather will add about 5 GWs of demand on average in France in the upcoming week, firming day ahead prices. The upcoming week will provide some indications of the potential swings in French exports under a colder weather scenario, especially in light of the recent increase in the NTC with Spain and introduction of the FB Market Coupling with CWE.

U.S. NGLs Rally with Crude

The U.S. NGL complex rose with broader energy markets last week. Crude oil’s 9% rally helped Mt Belvieu propane prices to increase by 4.2% to 49.1¢/gal for November delivery – this despite a 1.6 MMB increase in stocks to a record 95.9 MMB. Butane at the market center improved by nearly the same amount, while purity ethane prices jumped to near the strongest levels of the year, just below 20¢/MMBtu.

Coal Moves Higher On Oil and Gas Rally, Labor Strike

The coal market experienced its first weekly rally since early August, with prices rising by between $0.70/mt to $1.45/mt across the forward curve. The rise in pricing was mostly due to the labor strike in South Africa, but also stronger oil and gas prices. While the loss of some South African coal is unquestionably bullish for pricing, the magnitude of the oversupply in the global seaborne market will limit the upside for pricing even if it lasts for several weeks. PIRA continues to believe that coal prices over the next 90 days have limited upside, although an expected rise in oil prices in the latter stages of 2016 should stimulate coal pricing somewhat as costs rise. However, until demand and supply structurally recalibrate, any bullish rally will likely be tamped down by the prevailing fundamentals.

California Emissions Trading System Market Outlook

The surrender for Compliance Period 1 (2013-14) will take place in less than a month, on Nov. 2nd. Offset usage will ultimately determine the size of the bank carryover. While the CP1 offset limit is about 26 MT, sources do not appear well-positioned to maximize offsets use. CARB is engaging stakeholders in developing post-2020 regulations to implement the 2030 target (Scoping Plan), to amend the cap and trade and to comply with the Clean Power Plan. While CARB is looking to streamline the offsets process, at the same time it has moved to invalidate additional offsets. In moving forward with its own ambitious, economy-wide and international climate agenda, CA does not appear to make interstate carbon trading under the CPP a priority. Allowance prices held steady in Sept., although moved up at the end of the month. PIRA continues to expect a rise in allowance prices through the end of the year, with floor price expectations for 2017 starting to play a larger role.

U.S. Ethanol Prices Increase

Prices rose the week ending October 2. Higher corn and oil assessments provided support, but manufacturing margins decreased partly due to lower co-product DDG values.

WASDE Corn Surprise

A decrease in corn acreage was expected, an increase in yield was not. In the end, carry-out for the current marketing year was reduced 31 million bushels, not enough for the Managed Money net long which added 50K longs in the week prior to the report. For now, the corn market seems once again stuck in the $3.75 to $4.00 range, making trading difficult to say the least.

China Is Not Facing Currency Crisis; Key Central Banks Update Their Message

After an unexpected currency devaluation in mid-August, China’s monetary authority has drawn down foreign exchange reserves aggressively to defend the post-devaluation exchange rate. Unlike high-flying emerging Asian economies in mid-1990s, China is not facing a balance-of-payment crisis. But the government is still likely to guide the currency lower in the not so distant future. Communication materials were released by the U.S. Federal Reserve, the European Central Bank, and the Bank of Japan this week. Financial markets now widely expect the BOJ to expand its quantitative easing program in end-October.

U.S. Commercial Stock Build Slows

Total commercial stocks built less than last week, albeit to a new record level. They also built less than last year, so the surplus narrowed. Driven primarily by weakness in other demand, the latest four-week average of total petroleum demand was negative for the first time since earlier in the year. The decline in crude runs due to refinery maintenance dominates the crude balance, and we expect fall maintenance to peak the week of October 9. The latest monthly average of weekly domestic crude supply continues to decline.

US Gulf/ Mideast Gulf Competition to Emerge This Winter

The competition between Qatar and the U.S. for market share in N.W. Europe is about to heat up with first volumes from Sabine Pass coming this winter. Both suppliers have contract obligations to varying degrees for N.W. Europe specifically, where the spot market is going into the winter with relatively low stocks and is counting on LNG, to a larger extent, to balance seasonal increases.

U.S. Ethanol Production Higher

U.S. ethanol production climbed the week ending October 2, rising to 950 MB/D from 943 MB/D in the prior week. Inventories were essentially flat, building by only 30 thousand barrels to 18.8 million barrels.

Key Indicators Show Strength

The S&P 500 posted strong gains for the week, the best weekly performance since mid-December ‘14. All the related indicators also improved (Russell 2000, volatility, high yield credit and emerging market credit). Overall, commodities improved, both energy and ex-energy. With regard to currencies, many of the currency groups that had been performing poorly posted noted strength. Emerging Asia, along with commodity producers such as Russia, Brazil, Canada and Australia all posted gains. Indian, South African and Turkish currencies also displayed strength.

Japanese Crude Stocks Post a Large Rise, but Finished Products Draw

For the week, crude runs eased slightly with higher imports such that crude stocks posted a large rise to begin October. Finished product stocks drew on lower gasoline, gasoil, and naphtha inventories. Gasoline demand eased, but so did yield and stocks drew slightly. Gasoil demand rebounded from holiday impacts, while yield rose, but exports ebbed and stocks posted a moderate draw. Kerosene demand rebounded with lower yield and the stock build rate moderated. Indicative refining margins remain good.

Global Equities Post Another Strong Rebound Global equity markets posted a solid rebound this week, the second in a row. In the U.S. market, energy, materials, and industrials all outperformed by a large margin. They utility index was the laggard, but still posted a gain. Internationally, all the tracking indices again advanced with Latin America and emerging markets doing the best.

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.