Neptune is pleased to announce it has been awarded a geophysical and light geotechnical survey services contract by Shell Australia Pty Ltd (Shell).

The work will commence in November 2015 and includes a site survey of the Crux gas field and a 160km route survey between the Crux and Prelude gas fields, in water depths ranging from 90m to 280m.

Neptune will collect high resolution Multi Beam Echo Sounder (MBES), Side Scan Sonar (SSS) and Sub Bottom Profiler (SBP) data on-board the Mermaid Investigator Offshore Supply Vessel (OSV).

Neptune Chief Executive Officer, Robin King, said “this project is the first to be awarded to Neptune by Shell in Australia and we are delighted to be involved. Furthermore, our survey business in Australia has been awarded a number of contracts in recent months and it is pleasing to see a steady flow of work for our Geomatics team”.

The API Director of Upstream Erik Milito released the following statement regarding the Obama administration’s decision to deny Arctic offshore development extension requests and scheduled 2016 and 2017 Arctic lease sales:

“Our industry’s strong interest in developing our country’s vast offshore oil and natural gas resources in Alaska was undermined years ago when the administration began implementing a system of regulatory and permitting unpredictability and uncertainty.

“Investment decisions have been directly thwarted by the policy decisions of the administration related to Alaskan Outer Continental Shelf development, and lease extensions are clearly justified under the circumstances. And while it is not surprising that Interior canceled the remaining lease sales because there was an absence of nominations, it is the significant regulatory uncertainty that has created the reluctance on the part of our industry. Still, America’s oil and natural gas industry remains firmly committed to the long-term development of offshore Alaska resources.

“Arctic oil and natural gas represent incredible potential for American energy security, jobs and revenue for the government. Access to the region’s oil and natural gas resources will remain necessary to provide energy supplies to meet the world’s growing demand and vital to keeping America’s status as a world leader in energy.”

API represents all segments of America’s oil and natural gas industry. Its more than 625 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy.

Key findings from this year’s Oil and Gas UK activity survey state that the annual average expected spend on decommissioning on the UK Continental Shelf (UKCS) over the second half of the decade has increased to £1.8billion from £1.5billion. With the low oil price, rising costs and ageing infrastructure, the huge task of removing redundant installations from the North Sea is gathering momentum.

With the pace of decommissioning activity accelerating, Mark Walker, Client Partner at Optimus Seventh Generation, a behavioral change consultancy, discusses the vital need for leadership to help ensure projects are as safe as possible.

With over 600 offshore oil and gas installations in the North Sea, of various sizes, and more than 10,000km of pipelines, wells and accumulations of drill cuttings, the biggest concern is how the infrastructure can be removed in a safe and cost effective manner.

In high hazard industries, and specifically the energy sector, we talk about safety culture and understand the importance of it but do not always understand how we can assess it and, therefore, how we can improve it.

Optimus Seventh Generation has developed an approach to safety culture assessment, drawing upon High Reliability Organisation (HRO) principles, seeking a diagnostic as a means of providing the assurance that things are as they should be. They ask the diagnostic to identify the most significant safety issues confronting the organization or site, gathering evidence of safety culture by a combination of observation and audit of work products and perception-based surveys and interviews.

The diagnostic seeks to establish the aspects of resilience that are present, i.e:

• The ability of the business to stop something bad from happening
• The ability to stop something bad becoming worse
• The ability to recover something bad once it has happened

Resilience is assured not just by the behaviors of people but also by the consistent application of processes and procedures as well as the functionality of safety critical equipment.

The diagnostic is also looking for what barriers there are and how many are in place, with the use of personal protective equipment (PPE) at one end of the scale as the weakest defence and the elimination of hazards at the other end of the scale as the strongest. Between these we would hope to see others that give the business the ability to detect hazards by fixed detection systems, hazard spotting and management processes, adequate planning and active monitoring.

The glue that would hold all of the above together is the leadership.

Many operators are seeking less expensive alternatives to deliver decommissioning work, but want to ensure that safety remains a priority. However there are needs to be the acknowledgement that there may be gaps in their safety culture that should be addressed to deliver successful, safe projects. Optimus Seventh Generation imparts the skills and capabilities to deliver incident-free projects by motivating the workforce to follow the rules and to intervene, while educating leaders so they understand the influence they have over their teams.

When we deploy our leadership and workplace safety coaches in the field, our clients and their workforce often ask; what does an authentic leader look like? How will we know them when we see them? Our coaches encourage our clients to turn that statement around and ask; what do followers want? One of the principal roles of a leader is to create an engaged workforce or, more simply expressed, to create followers. Without an engaged workforce, there is no relationship and no leadership.

At Optimus Seventh Generation, we have recognized that this poses challenges for our industry - to incorporate authenticity as an assessment criterion for our current and future leaders during selection and to re-design our leadership training to establish authenticity as an outcome of such programs.

Working with safety leaders in individual companies or in our open course – Leading Safety Performance ™ – we have witnessed many “light bulb moments” when leaders have realised what skills they require to be authentic and have left with a strong desire to be that authentic person and to lead based on their values.

It is clear that those organisations whose culture is underpinned by strong values will create a workforce willing to engage with new safety processes and will therefore be best equipped to protect both their people and their assets. If these values have been socialised within the business and are used by leaders at all levels in an authentic manner then the safety culture in our industry will create the resilience it needs.

Case Study

In May 2015, Optimus Seventh Generation was awarded its first decommissioning contract with a major North Sea operator to supply induction training, through its program Induction Plus™ and back to back health and safety advisors to support the safe decommissioning of a floating production, storage and offloading vessel in the North Sea.

When embedded by the presence of Optimus safety advisers, Induction Plus™ helps influence the decision-making of all involved, ensuring rules are being followed and incident-free projects are being delivered.

The four-hour induction is aimed at projects experiencing a large influx of new, often subcontracted, labour during decommissioning and construction projects or shutdowns. It educates the attendees on the company’s expectations with respect to compliance with the company’s safety rules, alongside a motivational element to engage the project team with ‘why’ compliance is important and how they can raise their awareness of the hazards specific to the asset.

Optimus worked with leaders to educate them with the understanding that their decision making is key in the project’s success, increasing workforce engagement, which helps ensure that the work force remained focused and motivated creating a safe environment.

The work scope is based in the North Sea, where fields continue to provide opportunity in the current climate with collaboration being key between operators, the supply chain and, more pertinent than ever right now, specialist safety professionals.

This is an exciting project for the team, and the North Sea operator will be able to take advantage of Optimus Seventh Generations’ 12 years’ of providing specialists safety support services to the energy sector to decommission the floating production, storage and offloading vessel, in a safe and environmentally responsible way.

Sea Trucks has just completed successful sea trials of the DP3 offshore construction vessel Jascon 18 (photo) in Singapore. Imtech Marine and Radio Holland supplied the propulsion and power distribution systems as well as the nav/com systems.

Jascon 18 features a 1,800-ton crane, 1,800 sq m deck and a 750-ton pipelay system. Capable of performing a wide variety of marine construction and pipelay tasks in both ultra deepwater and continental shelf environments, the vessel’s hull was built in China and the outfitting was done in Singapore. Imtech Marine in Rotterdam commissioned the thrusters and switchboards and the company’s engineers in China assisted with the low voltage switchboard, while Radio Holland Singapore commissioned the nav/com systems.

Pleun Noteboom, Imtech Marine project manager of the Jascon 18, comments: “The project has been run with a dedicated team with engineering support from our colleagues in China and Singapore, which has proven to be of great benefit for both the customer and Imtech Marine. We were close by in Asia to work on the project.”

The total scope includes the high voltage (6.6kV) main switchboards and low voltage switchboards, main thruster propulsion drives including the thruster motors, the retractable azimuth thruster and bow thruster propulsion drives, distribution transformers, nav/com equipment, as well as project management, design, engineering and commissioning.

“This project had been subject of some delays so it was a challenge to start up systems and commission the installation in a fairly short space of time. So we are pleased that the sea trials have been successful and that the thruster drives performed very well,” says Pleun.

The next vessel, the Jascon 35, for which Imtech Marine has already delivered some parts, is expected to get underway for outfitting end of this year or in the beginning of 2016.

CGG announces that it has now received all necessary permits to start acquiring the industry’s first regional broadband seismic survey of the Barreirinhas Basin in the Equatorial Margin of northern Brazil in early November. The MegaBar 3D multi-client survey has received strong industry support and will benefit from the full bandwidth offered by BroadSeis™ to illuminate the untapped potential of this frontier basin.

The 14,500 km2 survey is being acquired by the Oceanic Vega deploying Sercel Sentinel® solid streamers. The high-end BroadSeis dataset will be processed in CGG's Rio de Janeiro Subsurface Imaging center using the latest processing technology. The processing will also benefit from extensive in-house experience of the Brazilian Equatorial margin and its specific challenges. Fast-track processing deliverables will be available in several phases, starting in May 2016.

Jean-Georges Malcor, CEO, CGG, said: “CGG has responded to significant client interest in the potential of the Barreirinhas Basin with an ambitious program for a new benchmark broadband regional survey. BroadSeis has provided significant insight to explorers in the Atlantic and Equatorial margins of Brazil, and is the natural choice for our MegaBar survey. With over 50 years of operating history in Brazil, CGG is as dedicated as ever to supporting Brazil’s exploration, development and production challenges and believes that this new regional seismic data set will offer an excellent opportunity to understand the geological potential of this new frontier.”

Norwegian petroleum and other liquids production, which had been declining since 2001, increased in 2014 and will likely continue increasing in 2015. The production growth in 2014 was mainly the result of new fields coming online, but also included a small increase in output from existing fields. Production has continued to grow in the first half of 2015 and is expected to remain relatively stable over the next few years as growth from new fields balances declines from older fields.

Source: U.S. Energy Information Administration, based on Norwegian

Petroleum Directorate Petroleum development projects in the North Sea generally have long lead times, meaning that production from a new field occurs several years after the decision to develop that field. These lead times often increase for projects that are farther north or far from existing infrastructure. The decisions to develop many of the fields now coming online in Norway occurred around 2012, when Brent crude oil prices averaged more than $100 per barrel. The current price is about half that level. In 2014 and the first half of 2015, four new fields with significant volumes of liquids production came online. Another four fields are scheduled to come online in the second half of 2015 and in 2016.

Source: U.S. Energy Information Administration, based on Statistics Norway

Although production in Norway has not yet responded to lower oil prices, investment in Norway's oil and natural gas industry is declining. This decline will likely lead to lower production in the future. Annual growth in total investment slowed to 1% in 2014 after being more than 15% in each of the preceding three years, and investment is expected to decrease in 2015. Currently, funding is being diverted toward the shutdown and removal of equipment at old fields and away from finding and developing new fields. Spending on exploration and field development in the first half of 2015 was 18% lower than in the first half of 2014, while spending on shutdown and removal was more than 70% higher.

Principal contributor: Justine Barden

Source: EIA

Subsea 7 S.A. announces the award of a sizeable(1) contract to Subsea 7 by Pharaonic Petroleum Company S.A.E. for the development of the East Nile Delta Phase 3 Project (END-3). This award was the result of a competitive tender process.

The project scope includes installation engineering, procurement and fabrication of rigid spools, and installation of pipeline, umbilical and subsea structures to develop the resources from two wells including 8 kilometers of umbilicals and pipeline. The field development will be at depths of approximately 80 to 90 meters.

Fabrication of spools will be carried out at Petrojet's yard in Egypt. Offshore installation is scheduled to commence in the fourth quarter of 2015 using the Subsea 7 vessels Rockwater 2 (photo)and Seven Borealis.

Gilles Lafaye, Vice President Africa, said: "Subsea 7 is pleased to once again provide services for the Taurt and Ha'py field developments. This important award recognizes our technical expertise and strong track record of good execution for Pharaonic Petroleum Company and reinforces our presence in Egypt."

(1) Subsea 7 defines a sizeable contract as being between USD 50 million and USD 150 million.

Consilium opens office in the Norwegian city of Stavanger as part of its focus on fire alarms for the offshore industry. Stavanger is a base for the Norwegian oil industry and proximity to customers therefore make the city a natural choice for Consilium to establish themselves in. The establishment will initially be supported by Consilium's offices in Oslo and Gothenburg. As operations in Stavanger develop, the idea is that it will include sales as well as project management, service and support.

- The offshore industry is an interesting market for Consilium to develop. Despite the temporary downturn in the offshore industry we see that Consiliums solutions, that are flexible and possible to escalate, can create value for the operators. Norway has some of the most stringent requirements in the world within the offshore sector. By establishing ourselves here, we demonstrate that we meet high quality and safety requirements, says Trygve Andersen, Managing Director of Consilium Norway A/S.

Fire alarm according to SIL2 standard

Consilium is one of the world's leading suppliers of fire alarm systems for marine environments. The company has spent several years developing a new fire alarm, CFD 5000, designed specifically for offshore applications, such as oil platforms, refineries and floating support units. The fire alarm is designed to meet high demands for reliability and quality. It is in the final phase of its SIL2 certification and hardware as well as software is developed in close cooperation with the certification body TÜV NORD.

In addition to high reliability and quality the fire alarm is designed to be cost effective in both the deployment and operational phases. This allows Consilium to support the oil industry's efforts to reduce its costs.

When installing our fire alarm, it is possible to use the existing cable installation in the object where the installation will take place, which could mean significant cost reductions. The high quality of our fire alarm system also makes it possible to extend the interval for the mandatory testing of the system that needs to be carried out regularly, which also means cost savings, says Trygve Anderse.

AAL, one of the world’s leading multipurpose shipping operators, has announced the opening of a new office in Dubai, its third new office launch in the past two months following South Korea and Canada. ‘AAL Middle East’ will place the operator at the centre of an emerging and strategically important region for the project shipping sector, as government and private equity investment across the region brings exciting new infrastructure and energy developments into the fore.

AAL Middle East will offer Arabic and English language capabilities and provide local customers with tramp and project shipping solutions, featuring the highest level of technical expertise and competitiveness for all industry sectors and cargo types. The office will also draw upon AAL’s fleet of seven classes of multi-purpose heavy-lift vessels, ranging from 12,000dwt to 31,000dwt. As well as offering tailor-made solutions, AAL will harness the scalability of its operations and infrastructure, to potentially develop regular semi-liner services based on customer demand.

Commenting on the development, Namir Khanbabi, Managing Director of AAL’s global Tramp & Projects division, said: “The Middle East and Gulf market continues to experience significant capital expenditure and development in its infrastructure. It has also seen investment in construction and now growth in nuclear energy - as well as being a major hub for oil and gas projects. In conjunction with the changing geopolitical landscape, there is a real opportunity to work on-the-ground, to deliver competitive transportation solutions for complex and high value cargo in this important region.”

DNV GL has secured a contract to provide in-service verification and classification services to a range of facilities at the Ichthys LNG project in Australia.

The contract marks INPEX’s commitment to continue working with DNV GL as it prepares to transition from the project execution phase to the operational phase of the mega project. DNV GL has provided vendor inspection, verification and offshore classification support to the USD 34 billion venture since 2012.

This latest contract will see DNV GL continue its expert support to the project as it transitions into operation in 2017. The primary scope of work includes in-service verification of the Ichthys facilities; the central processing facility (CPF), floating, production, storage and offloading (FPSO), subsea production system, gas export pipeline, onshore combined cycle power plant and onshore LNG plant. DNV GL will also provide in-service classification of the CPF and the FPSO hulls.

Richard Palmer, (photo) Regional Manager for Australia, New Zealand and Papa New Guinea, DNV GL, Oil & Gas said: “The transfer of the Ichthys LNG project to operation will mark a significant moment in Australia’s oil and gas industry. We have learned a great deal from supporting Ichthys and a range of mega project operators in Australia as the country moves closer to becoming the world’s largest LNG producer. We look forward to applying our experience in Australia and gas projects in other countries to support the safe and efficient operations from the project’s first day in service.”

Located 220 kilometers offshore Western Australia, the Ichthys field is situated on block WA-285-P in the Browse Basin, Timor Sea. This gas and condensate field lies at a water depth of 250m, and represents the largest discovery of hydrocarbon liquids in Australia in 40 years. The Ichthys LNG project is ranked among the most significant oil and gas projects in the world. It involves some of the largest offshore facilities in the industry, a state-of-the-art onshore processing facility and an 889 km pipeline that will unite them for an operational life of at least 40 years.

First production is scheduled for 2017 and the project is expected to produce 8.9 million tons of LNG and 1.6 million tons of LPG per annum, along with more than 100,000 barrels of condensate per day at peak. Gas and condensate from the Ichthys field will be exported to onshore facilities for processing near Darwin via the 889 km pipeline. Most condensate will be directly shipped to global markets from an FPSO facility permanently moored near the Ichthys field in the Browse Basin.

Aberdeen-based, Reftrade UK has seen record growth this year within the rental market for its fleet of refrigerated containers and temperature controlled units. The market leading specialist has seen rental sales increasing 33% from July 2014 to July 2015.

Based in Westhill Aberdeen, Reftrade UK is the only locally owned and operated supplier of refrigerated and temperature controlled containers which supply both the onshore and offshore energy sector with quality, bespoke Zoned and Safe Area units. The company’s Aberdeen location allows for rapid and efficient dispatch of its refrigeration containers to clients operating in the North Sea.

Greg Spence, Managing Director of ReftradeUK

Greg Spence, managing director of Reftrade UK said: “We are particularly pleased with the success and growth we have had in the rental market this year given the difficulties facing the oil and gas industry. I feel our team’s belief in hard work, high operational standards, striving to exceed expectations and going the extra mile is working.

“With a focus on quality and reliability, our product range has been developed to withstand the harshest environments which has been proven time and time again through servicing North Sea and Arctic insulations for over 15 years.”

To sustain future growth the company has effectively diversified into the pharmaceutical market and the transportation of temperature controlled medicines and equipment.

Mr. Spence continued; “The success we have had this year has presented new opportunities for diversification into new markets such as the pharmaceutical industry. Reftrade is already well positioned within these markets throughout Europe and we hope to do the same here in the UK. Our existing capabilities and position are a perfect fit for these markets, and it is the next step for phased growth for the company.”

NYC-based PIRA Energy Group Reports that there are further markdowns to long-term fossil fuel prices. In the U.S., low runs and stronger demand pull product stocks lower and push crude stocks higher. In Japan, runs continue to ease and crude stocks are sharply lower. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Low Runs, Stronger Demand Pull Product Stocks Lower, Push Crude Stocks Higher

Refinery turnarounds continue to dominate the U.S. petroleum balance sheet. Low crude runs are causing crude stocks to build, and product stocks to draw. Total weekly petroleum inventories set a new record, and increased their surplus over last year. Recent trends in gasoline and distillate demand coming in under modeled values could be an indication of an upward revision when we see the monthly data, but it also could be an indication of weakening economic trends. We expect one more week of peak refinery maintenance, followed by crude runs trending back up.

Even Lower Price May be Needed

With October halfway through, U.S. balances remain on course to end the month with storage near 4 TCF, which would mark a new high and also best the year ago level by ~0.4 TCF. Underlying balances for the month are pointing to more of the same with production still largely range bound and gas burn in the power sector somewhat stronger year-on-year. In sum, though, storage refills have remained relatively stout.

Eastern Grid/ERCOT Market Forecast

On-peak prices recorded a strong m/m increase (+33%) in Ontario (nuclear outages), saw moderate weather-related gains in the Northeast (MA Hub, NY-J, NY-G and PJM-W), fell slightly in the Great Plains (rising wind generation), and declined more sharply in ERCOT and MISO South (fading cooling loads). Northeast winter prices have been revised down as weaker fuel oil and LNG prices are expected to limit upside risk in gas prices. Winter prices are down year-on-year in most markets assuming normal weather (Feb 2015 was much colder than normal).

Bearish Fundamentals Continue to Depress Coal Pricing

The coal market returned to its downward trajectory this week, with prices essentially giving back all the gains made last week. Weaker oil prices, the end of the labor strike in South Africa, the extension of the lifting of the rail ban in Colombia, and news that Chinese import declined again in September all served to push the market lower. The market continues to search for a bottom, but with no end in sight to the declines in Chinese imports (particularly with domestic producers cutting prices) and limited production cutbacks, PIRA believes that this bottom has not yet been reached.

Pakistan Reveals RLNG Prices

Pakistan’s Oil and Gas Regulatory Authority (Ogra) has issued the much awaited RLNG (Regasified liquid natural gas) prices and announced the provisional rates of the gas. The authority, however, refused final determination of the RLNG prices until certain condition are met…the authority has agreed to determine the RLNG prices on provisional basis, the notification said.

Asian LPG Outperforms, Arbs Open

Asian LPG markets were by far the best performers last week, especially considering they didn’t have a chance to perform in the West’s Friday afternoon rebound. Propane and butane both lost around 2.5% of value, far less than seen in Western markets. The relative strength in Asia led to the opening of the spot arbitrage from the U.S. by the largest amount since June.

RGGI Nuke Retirements Tighten Balances

Nuclear units are a key source of non-emitting generation in the RGGI cap and trade region. Entergy announced it would close Massachusetts’ Pilgrim nuclear plant (680 MW) no later than June 1, 2019 and the James A. Fitzpatrick plant in NY, is facing some of the same challenges. Replacing power from these two plants with in-region natural gas combined cycle generation would add to emissions, challenging the RGGI compliance cushion.

U.S. Ethanol Prices and Margins Lower

Ethanol prices fell the week ending October 9, pressured by lower corn prices. Margins also declined, partly due to a drop in co-product DDG values.

Iowa is Dry and Confused

After a brief two-day visit to Iowa last week, two things are certain; it’s extremely dry, resulting in little propane use for crop drying, and there’s a lot of uncertainty about what 2016 will bring acreage-wise with these below profitable-level-prices in corn.

Freight Market Outlook

Rising tonnage demand and modest fleet growth have allowed excess capacity to be absorbed in 2015 and this has produced the strongest tanker markets since 2008, helped further by very cheap bunker fuel prices. But volatility remains as evidenced by the wide swings in tanker rates. VLCC markets staged a remarkable rally rising from their lowest levels of the year in late August to their highest in early October. But so far the knock-on benefits of higher VLCC rates have not filtered down to the other tanker groups, creating some unusual rate spreads and perhaps signaling that the VLCC rally was overdone.

Euro Area’s Economy Is Strengthening Broadly, but U.S. Is Still Ahead of the Curve

The U.S. and the euro area updated data on consumer spending, inflation, and manufacturing output this week. Key takeaways: household spending data have been mostly solid; excluding energy and food prices, inflation has been trending resiliently; and a recent slowing in U.S. manufacturing growth is potentially a worrisome sign. Next week’s major data releases include third quarter GDP from China.

Canadian Federal Elections: Lack of Outright Majority Signals Political Uncertainty To Come

Only a few days remain until Canada’s October 19 federal election, and the race is looking increasingly tight. At this point, it appears unlikely that any party will win an outright parliamentary majority. But at the very least an end to the Conservative Party’s four years of majority rule would have implications on the energy sector. On balance, the Conservatives are more supportive of pipelines and LNG projects, while the centrist Liberals and center-left New Democratic Party (NDP) favor more stringent carbon policies. Although the makeup of the next government is highly uncertain, we believe the lack of an outright majority will make the government formation process more complicated and reaching a consensus on core issues may be more difficult over the coming years.

Japanese Runs Continue to Ease, Crude Stocks Sharply Lower

For the week, crude runs eased again with very low imports such that crude stocks drew a sharp 5.5 MMBbls. Finished product stocks rose mostly on a naphtha stock build. Gasoil and kerosene stocks posted draws. Indicative refining margins remain good but were lower on the week.

Suppliers Immediately Responds to Weather-Induced Demand and Then Some

The response to colder than normal weather has been immediate and decisive by a variety of suppliers and shows that even in a relatively bullish environment for storage in Germany, the price risk to the upside is limited. If just-in-time-supply can perform for the entire winter like it has over the past week, the relatively lean storage situation compared to last year is not going to be an issue.

French Front Month Dive in Spite of Early Cold Snap

With colder weather emerging this past week, the most interesting dynamic was the ability of all gas-fired markets connected with France to lower their call on French power, with Italy even shifting into a net exporting position - an outcome we have not seen in a while. However, is this dynamic justifying France pricing at €40/MWh for the balance of the year?

Ethanol Stocks Rise

U.S. ethanol Inventories built by 144 thousand barrels to 19.0 million barrels the week ending October 9. Production was relatively flat the week ending October 9, decreasing slightly to 949 MB/D from 950 MB/D in the prior week.

Interest Waning

A quick look at Fund interest shows very little interest in corn and beans on a net basis with a continuing short position in wheat. Consensus pointed towards a short bean/long corn position going into last week’s WASDE and when the numbers failed to confirm the positioning an exodus ensued.

Fracking Policy Monitor

EPA, in August, issued a significant regulation impacting fracking, implementing President Obama’s Methane Strategy. Another higher profile federal effort suffered a setback as a judge called into question BLM’s authority to regulate fracking at all. Fracking rules are the subject of policy riders on still-pending federal budget bills. North Dakota continues to be responsive to industry concerns, relaxing regulations where production or profits are threatened. Seismic activity in Oklahoma continues to be a growing issue. Local authority to regulate fracking remains in question.

Key Indicators Continue to Improve

The S&P 500 posted a second week of gains. Also, all of the related indicators improved again (Russell 2000, volatility, high yield credit and emerging market credit). Overall, commodities eased slightly, but ex-energy was higher. Oil was slightly lower. With regard to currencies, many of the currency groups that had been performing poorly continued to post renewed strength. The U.S. dollar was slightly weaker against the euro and British pound. The Cleveland Fed released their expected inflation series for October, and all tracking maturities showed a lower rate of expected inflation.

Stock Build Slows

Commercial oil inventories in the three major OECD markets — United States, Europe and Japan — based on preliminary data increased 42 million barrels in the third quarter, down from 63 million barrels in 2Q and 92 million barrels in 1Q. The third quarter 2015 stock build was 9 million barrels less than the year earlier stock increase and, therefore, modestly reduced the year-on-year stock surplus to 181 million barrels (or 8%). While not a record, the end 3Q inventories were the highest level since 1990.

More Nuclear Restarts are Just the Beginning for Reduced Gas Demand in Japan

Almost everything about Japanese gas demand will be looked at to be some level of bearish at this point. Short of a full stop in nuclear restarts, both short and long-term considerations will mean the world's largest importer of LNG will be buying less and less in the months and years to come.

Saudi Arabia: Relying on Oil in Power Generation

Faced with rapidly increasing domestic demand for oil and gas in the power sector at still heavily subsidized prices, Saudi Arabia's stab at rebooting its energy policy squarely focuses at diversifying its supplies away from traditional sources. Such a transition is going to take time, but the goals are just as clear in Saudi as they are in Europe; a movement away from fossil fuel use in areas where both strategic and cost effective alternatives exist. An ambitious announcement of a large nuclear program of 16 reactors over the next several decades and a plan to bring online over 40 GWs of solar capacity by 2040 are the end game, but the Kingdom will continue to see increasing domestic oil and gas burning in the short- and medium-term in order to meet aggressive electricity demand growth.

Weak Fundamentals To Weigh on European Carbon Gains?

Higher auction volumes, combined with potential additional industrial sales, could increase EUA supply in 2016-2018. Emissions demand growth remains weak, and lower gas prices are leading to lower implied carbon prices. There are no upcoming policy developments until post-2020 reform discussions begin in earnest next year. Market sentiment can still play a major role, but stronger fundamentals may soon be needed to maintain the price increases of the last few months.

Global Equities Post a Third Straight Positive Week

Global equities gained again. In the U.S., many of the tracking indices were positive on the week, with utilities and technology performing the strongest. Energy was slightly higher, but underperformed. Internationally, all the tracking indices other than Latin America posted gains, with China doing the best.

Third Quarter Asian Demand Looking Robust

Partial third quarter demand data is now available for seven countries in Asia which represent over 24 MMB/D, or 77% of Asian oil demand. The data is admittedly preliminary but it is indicative and does show that this group of important Asian countries are growing 1.4 MMB/D, or 6% year on year. China and India account for 96% of the growth of the seven countries.

October Weather: U.S. Warm, Europe and Japan Cold

The new heating season is off to a cold start in Europe and Japan and warm weather in the U.S. With half the month completed and a second half forecast, October is expected to be 18% warmer than the 10-year normal and 5% warmer on a 30-year-normal basis.

Further Markdowns to Long-Term Fossil Fuel Prices

As a result of our bi-annual development of our long-term energy balances, PIRA has marked down its long-term fossil fuel price projections for crude oil, international gas (NBP and Asian LNG), and coal. In the case of oil, the principal driver was the view on long-run supply cost and price responsiveness. International gas price reductions reflected both lower crude prices and the impact of potential gas supply that looks likely to far exceed demand growth. The reductions in coal were primarily associated with greater competition from lower priced gas and lower costs associated with oil.

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.

One of the largest seagrass mitigation projects undertaken in the U.S. created over 17 acres of seagrass habitat in Biscayne Bay

CSA Ocean Sciences Inc. (CSA) has successfully completed the transplantation of over 115,000 seagrass plants into a newly filled dredge hole north of the Julia Tuttle Causeway in Miami, Florida as part of the overall environmental mitigation requirements for the deepening and widening of Miami Harbor. CSA was part of the Great Lakes Dredge and Dock LLC (GLDD) team that was awarded the prime contract by the U.S. Army Corps of Engineers. The “deep dredge” project took two years to complete and is the first federal navigation project in the southeast built to accommodate post-Panamax vessels.

During August and September 2015, CSA staff systematically planted 14.3 acres of the 17-acre mitigation site using donor manatee grass (Syringodium filiforme) harvested from a nearby healthy seagrass community in Biscayne Bay. CSA utilized proven methods developed and published by Dr. Mark Fonseca, a world-renowned marine ecologist and Vice President of Science at CSA. Regular coordination with the GLDD team and federal and state agencies was necessary during the planning and implementation phases due to the location of the mitigation site (situated in a state Aquatic Preserve), the high-profile nature of the project, and low success rates associated with prior large-scale seagrass restoration projects.

Sensitive to desiccation and temperature extremes, seagrass plants were carefully extracted from the sediments of an approved seagrass bed, sorted, and assembled into 29,000 individual bare root “planting units” while ensuring they remained bathed in ambient seawater using a custom-made on-board circulating system. Scientific divers meticulously planted each planting unit by hand to ensure the growing tips of the plant were buried to the appropriate depth below the sediment surface. To provide passive fertilization to the plants through the introduction of coastal bird feces, over 1,150 bird roosting stakes were installed within the planted areas of the mitigation site.

In early October, CSA conducted the first monitoring survey to assess the success of planting and verify that the planting units remained firmly anchored in the sediment. A comprehensive evaluation of the entire planted area and all planting units was conducted and, despite frequent feeding by manatees on the planted seagrass, the percent survival was documented at 97.6%—much higher than the mandated 70% survival. Dr. Fonseca noted that “barring any unforeseen disturbances, this is on course to be one of the largest and most successful actively planted, commercial (seagrass mitigation) projects to date.”

CSA Ocean Sciences Inc. specializes in consulting services for federal, state, and private industry clients in multidisciplinary projects, integrating science and technology to evaluate environmental activities throughout the world. CSA offers a wide variety of services related to environmental management, geospatial data utilization and community planning to support clients working in marine, estuarine, wetland, freshwater, and terrestrial habitats throughout the United States and overseas.

The horrific explosions in the Chinese port of Tainjin illustrated vividly just how volatile port operations can be. But safety issues are only one facet of risk in the complex world of shipping ports.

From piracy on the high seas to data thievery in port, players all along the shipping value chain need to be on constant alert for the dangers that nature and human actions can present.

Political unrest, theft, smuggling and corruption all figure in to the risk picture that ship owners, brokers, and cargo owners have to consider when planning and executing port calls. “The security picture can change quickly at ports,” says an Oslo-based global cruise operator. “We call around the world, and not always at the largest or most modern ports, so we have to be aware of the whole risk picture in order to guarantee our passengers’ safety.”

Another shipowner, a leading global tanker owner operating out of Copenhagen, confers: “We had an armed robbery just the other day,” he reports. “If we know the risk picture in advance, we can take preventative measures, like putting more guards on watch. If we don’t know beforehand, we are vulnerable.”

Port operations are often exposed when the stability of a country is compromised. Ports are choke points for transportation of energy, food and materials, and the normal functioning of a country can depend on safe operations in key ports.

For cruise operators, ports could be attractive targets for kidnapping, smuggling, theft or even terrorism. “We plan our routes as much as two years in advance,” the cruise owner confirms, “so things can change dramatically from planning to sailing. We basically have to monitor the situation in every port of call on a day-to-day basis.”

The tanker operator points out that the master is not capable of assessing risk on his own. “We have to call an agent, and they generally give us a copy-paste reply that is of little or no help.” In addition an agent generally has no opportunity to provide a security assessment, including standards at the gate, or the state of the local police.

While cruise lines play it as safely as possible, tanker operators call on some of the riskiest ports in the business, in West Africa, Indonesia, and South America. “There are some clauses in the contract that allow us to avoid the most dangerous situations, like armed conflict, but we still have to deal with stowaways, theft, and more in many of our ports of call.”

As if physical threats were not enough to put grey hair on shipowner heads, a new risk has emerged – in cyber space. Information technology has become an integral part of port and ship operations, but ICT systems in the shipping world are not always designed with cyber safety in mind. Hackers can alter or jam the Automatic Identification System (AIS) that tracks hips at sea, and the ISPS code that ensures physical port safety only marginally addresses the threat of cyber attack.

Matt Haworth, a Cyber and Information Assurance Specialist with cyber advice service provider Templar Executives believes that cyber security is now one of the most complex threats faced by the maritime industry and its critical infrastructure. “Ports and terminals are under attack from cyber criminals, organised crime and terrorist groups looking to disrupt national infrastructure and hostile governments,” he says.

So how dangerous does it have to get before shipowners just say no? Most shipowners would agree that it depends on the risk profile that owners carry. Cruise operators have a very low risk threshold because they can take no chances with their human cargo. For others, certain risk factors are acceptable, but everyone has a limit.

In any case, it is up to ship and cargo owners to decide how much risk they are willing to take. The one thing they can do is be as informed as possible. No one can guarantee safety, but knowing risk is the key to making the decisions that are right for shipowners, their crew, and their cargo.

CEO Hans Tino Hansen of Risk Intelligence, suppliers of the popular MaRisk security threat monitoring service, offers his take on the current state of port risk:

“We follow the development of risk in ports closely, and we are seeing a clear trend toward an increasingly critical and more complex global port risk picture.

Our customers operate more than 12% of the world fleet. They see the same picture, and in response, they have told us they need a one-stop port risk advisory service. Right now they have to access many channels to get port risk information, and they find the information they are getting is often unreliable.

The industry has a pressing need for a single, easily accessible channel for comprehensive and reliable intelligence on risk in ports. Providing that solution will be our main priority going forward.”

For more information contact:

Hans Tino Hansen 
Managing Director & CEO

About Risk Intelligence

Risk Intelligence provides independent, unbiased, intelligence-led advisory services to private and governmental clients on security threats and risks.

Risk Intelligence has been specialising in analysing threats from and interaction between piracy, organised crime, terrorism, insurgency and military conflicts since 2003.

Read more on our website: www.riskintelligence.eu

Gulf Coast Shipyard Group (GCSG) is proud to announce the delivery of Harvey Power, the second LNG vessel operating in the United States—for Shell Upstream America’s deep water operations in the Gulf of Mexico—is fully in service. She is the second of six LNG OSVs being built for Harvey Gulf International Marine, and like her sistership Harvey Energy, Harvey Power is capable of operating on LNG or diesel fuel.

Along with being able to operate on LNG, she also meets the strident criteria of the ABS Enviro+, Green Passport notation. When operating on LNG, these vessels exceeds the new Tier IV emissions regulations requiring lower sulphur oxides and nitrogen oxides emissions as part of the North American Emission Control Area (ECA). She will refuel with LNG at Harvey Gulf’s new LNG bunkering facility at Port Fourchon in southern Louisiana which allows easy access to more than 600 oil and gas rigs and platforms within a 40-mile radius.

Running on 99% LNG fuel (she is dual fuel), Harvey Power is a 310’ x 64’ x 24.5’ platform supply vessel powered by three Wärtsilä 6L34DF dual fuel gensets, providing 7.5 MW of power and fueled by a Wartsila provided LNGPac system. With 5,219 metric tons of deadweight the vessel is capable of carrying 253,000 USG of fuel oil, 18,000 bbls of liquid mud, 1,600 bbls of methanol, 10,250 ft3 of dry cement and 73,000 USG of LNG fuel. When operating on LNG the Harvey Power can operate in excess of 19 day in normal GOM rig supply mode between refueling.

Marvin Serna is the new COO of Gulf Coast Shipyard Group and the new protocols and operational improvements he has put in place are becoming evident, such as the reduction of commissioning time from the first vessel to the second vessel of 45 days.

Harvey Gulf has 4 more vessels under construction with Gulf Coast Shipyard Group and is confident the shipyard can maintain the high quality of construction while continuing to improve on construction techniques resulting in shorter delivery times.

Mr. Shane Guidry, Chairman and CEO of Harvey Gulf, comments: "This is our second vessel capable of operating on LNG and is a testimony of Harvey Gulf's commitment to its customers and the environment to provide the most affordable, innovative, environmentally-friendly technical solutions to meet their business demands. We are happy to announce that Harvey Power has begun its’ 5 year contract operating in the Gulf of Mexico."

Gulf Coast Shipyard is located in Gulfport, Mississippi and the 60 acre facility has 10 acres under roof with a 4,700 ton syncrolift and 500 travel lift for new construction and repair of commercial and military vessels.

In the desert of New Mexico, just forty miles from producing wells in Artesia, lies an aircraft boneyard filled with the remains of once great aeroplanes. Like these planes, nearly 4,000 frac trucks are sitting idle throughout the United States as the demand for horsepower (HP) has fallen as quickly as WTI over the past year. Could there be potential for these trucks to be utilized again, or will frac trucks join aeroplanes in boneyards across Texas and North Dakota?

From 2011-2014 frac pump manufacturers were in a race to see how fast horsepower could be added to the United States’ frac fleet. Frac HP capacity rose from 12.6m HP (million horsepower) in 2011 to over 17m HP in 2014. With onshore wells drilled in the US expected to fall 42% in 2015 from 2014 highs, a glut of oilfield equipment is likely to continue in the US for some time.

With the major equipment glut in the US, are there opportunities outside of drilling-led completions or are North American pressure pumpers treading water until drilling activity picks back up? While some service companies are bullish on re-fracturing as a source of additional frac truck utilization, the process comes with a high price tag and relatively unproven benefits. Some hope may lie in the over 4,500 drilled but uncompleted wells in the United States that are awaiting a commodity price recovery to be completed, but the EIA’s forecast 2016 average price of $53.57 does not provide rosy economics. One of the only benefits of this underutilization for pressure pumpers is the ability to save money on replacement costs by switching an idle truck out for one requiring maintenance.

When the frac fleet was at its utilization peak in 2014, over 20,000 horizontal wells were drilled in the US, and it is highly unlikely that we will see such a high number of wells drilled before the North American pressure pumping market is restructured. The question on pressure pumpers’ minds is simple: what will it take to get utilization back up?