Another Substantial U.S. Inventory RecoveryTotal commercial stocks fell 5.1 million barrels this past week led by an almost 10 million barrel stock decline in products, with refinery turnarounds near peak levels. The 3.7 million barrel reported distillate stock decline was one of the largest this year, signaling the U.S. is in the heart of the harvesting season. Reported U.S. crude stocks now exclude lease stocks, which lowered them by roughly 30 million barrels, and week to week crude inventories built 4.8 million barrels largely because of low runs. Cushing crude stocks fell 1.3 million barrels this past week and are forecast to decline 2.3 million barrels next week because of Basin pipeline maintenance. Another large stock decline is forecast for distillate next week (-580 MB/D) with another strong pull from the farm economy, while gasoline inventories modestly build from weaker demand because of the Columbus holiday and the aftereffects of Hurricane Matthew.
Dependency on Lower 48 gas will likely increase next year as expanding domestic production losses leave a widening import gap to serve incremental demand growth. In particular, another round of PEMEX budget cuts has recently been approved, setting the stage for oil and gas production to fall by more than 10% year-on-year. Fortunately, a host of critical infrastructure projects is set to emerge in 2017, enabling imports to meet the organic demand growth within the power and industrial sectors.
With APLNG T2, the last train of the six coalseam projects in Australia, starting production, China plays a key role. Not only does it have 25% equity in two of these unconventional projects, the second largest equity stake of any Asian buyer in any liquefaction project to date, but is also a big buyer from these projects. With a slowly recovering gas demand, LNG faces competition from increased domestic production and pipeline supplies.
Seaborne coal pricing was decidedly bullish this week, with continued tightness in the prompt market pushing forwards higher, particularly in Asia. 4Q16 and 1Q17 FOB Newcastle prices rose from last week as Chinese market players returned from the Golden Week holiday. FOB Newcastle prices are now up over 100% for the year. 4Q16 API#4 prices also jumped while API#2 prices finished the week down. Pricing in the Pacific Basin has shown virtually no signs of cooling off, particularly as coking coal price settlements have been confirmed at over $200/mt. With crossover supply moving into the coking coal market, there is not much prompt thermal coal supply that could come into the market to prevent further price gains.
The International Civil Aviation Organization agreed to adopt a market-based approach to cover global aviation GHG emissions, which requires acquiring and submitting carbon offsets to cover only the increases in international aviation emissions vs. 2019-2020 levels. Exact offsetting mechanisms eligible for compliance have yet to be specified, but the design of the program suggests that costs will be very low in the early years of the program. Voluntary country-level compliance begins in 2021, with mandatory compliance not starting until 2027. Efficiency initiatives also seek to reduce aviation fuel consumption, but PIRA expects aviation emissions to continue to grow, implying that increasing levels of offsetting will be necessary for compliance.
On-peak prices weakened in New England/Mid-Atlantic and Ontario but firmed in most other Eastern Interconnect markets — primarily due to warmer-than-normal weather. Loads in the East edged up 0.5% year-on-year, while ERCOT climbed 4.7%. Henry Hub prices through October have shown remarkable strength, especially in the context of waning shoulder season demand. In contrast, Appalachian prices have inflected sharply to the downside. Looking ahead, heating season power prices will likely lag year-on-year gas gains outside of the Northeast, reducing margins.
Regionally, Asian LPG markets performed best last week. Propane cargoes arriving in November were called 5% higher at $389/MT, and butane rose by the same amount in percentage terms to $418/MT. Butane’s discount to naphtha narrowed to just $27, a price at which it becomes increasingly non-competitive as a petrochemical feedstock.
The S&P 500 moved lower on the week, with volatility up slightly, while high yield debt and emerging market debt moved a bit lower in price. The dollar was generally stronger. For commodities, there continued to be a slight upward bias, but ex-energy appears to have weakened a bit. There continues to be noted declines in the precious metals complex and an upward movement in long-term yields for a host of countries, with a lesser rise on the short end of the curve.
With fairly good weather last week, PIRA expects a 10-15% increase in both corn and soybean harvest numbers today. After posting a 35% completion rate as of last Sunday, PIRA expects that between 45% and 50% of the corn should have been harvested as of Sunday. In soybeans we expect a number close to 55% in this afternoon’s report against 44% last week.
Crude runs eased once again, with higher crude imports such that crude stocks built 2 MMBBls. Finished product stocks drew, across the board, on higher demands. Gasoline demand was modestly higher and stocks drew 0.3 MMBbls to a new 2016 low. Gasoil demand was also modestly higher and helped draw stocks. Kerosene demand was hyped by secondary and tertiary inventories pulling on primary inventories. Stocks posted their first seasonal draw of 37 MB/D. Margins and cracks eased on the week for all the major products, but they staged a bit of improvement in the last few days. Margins in September and into October have improved nicely from the abysmal levels seen in August. Levels are now judged acceptable and supportive of rising runs, post-turnaround.
Coal-to-gas switching has been a big theme emerging in European energy since late last year, but only now are we seeing it come to a head. The switch has migrated from the U.K. to the Continent, which means a potentially larger swing in gas demand on a day-to-day basis. The major flag in recent weeks is that, despite a strong push in European gas prices of more than 50%, we haven’t seen gas-to-power demand disappear. Coal prices have also experienced similar, if not greater, strength due to supply reductions, and it looks like what was once a gas market that was desperate to encourage flexible demand with weak prices is now unable to jettison it.
U.S. ethanol prices rose the week ending October 7 after a bullish DOE report and support from higher corn and oil values. Manufacturing margins declined. D6 RIN values were higher as the EPA will finalize the 2017 margins soon.
Prices increased in September with continued weak trading, but they slipped in October, with the final auction at the 2016 reserve price a month away. Going into the November 1 partial surrender requirements, sources hold enough CP2 compliance instruments to cover emissions through 2016 and free allocations for 2017 are also on the way. A severely undersubscribed November auction could see unsold allowances go to the Reserve, reducing CP2 supply. The market may deem the federal Canadian carbon price proposal bearish, but PIRA believes it can be aligned with WCI cap and trade. Environmental justice concerns over cap and trade have intensified, the market awaits the auction court decision, and critical emissions data releases are expected in coming weeks (CA, QC, perhaps ON).
Permian Basin crude and condensate production growth, as in other U.S. tight oil plays, has slowed dramatically this year. But in contrast to other plays, growth is likely to remain positive, both in 2016 and 2017. In 2018, Permian crude and condensate production is projected to rise more than 300 MB/D. New pipelines out of West Texas have more than kept up with production growth so far. Nearly 1.5 million barrels per day of takeaway capacity have been added in the past four years, creating a pipeline surplus of around a half-million barrels per day this year. As production continues to grow, this pipeline surplus capacity will erode. The only new pipeline project currently planned is a 300 MB/D Enterprise Products line from Midland to Sealy, slated for completion in 2018.
The latest EIA Monthly Crude Oil and Natural Gas Production (914) report broadly reflects PIRA’s reference case, with all regions reported either flat or in month-on-month decline for July. However, the report fails to convey the complete narrative on real-time supply.
In September, global auto sales rose to their highest level on record. In the U.S., vehicle sales remained at elevated levels and played a key role in the expansion of consumer spending. In Europe, a jump in car sales during September sent an encouraging signal about industrial production. In China and India, major growth in car sales is driving gasoline demand substantially higher.
Pakistan’s Oil and Gas Regulatory Authority (Ogra) has said that no increase in the gas price for domestic as well as fertilizer feedstock was proposed by the authority. A spokesman clarified that a news item — that claimed an increase in gas prices by 36% was forthcoming — was not true. The spokesman further explained that the Ogra had issued its decisions with respect to SSGCL and SNGPL’s petitions for determination of prescribed price for FY 2016-17 on October 6, 2016. In the case of SSGCL, Ogra determined the average prescribed price at Rs354/MMBtu ($3.37/MMBtu). In the case of SNGPL, Ogra had determined its average prescribed price at Rs480/MMBtu ($4.57/MMBtu).
One side effect of the ongoing French nuclear issues is the disruption of the historical interconnector flows across Europe. Those French flows with Spain are no exception. Last week, Spain turned into a net exporter to France, reaching a daily flow of 2 GW on Wednesday, a multi-year high in the fourth quarter. This amount of exports is occurring even in the context of relatively stronger demand in Spain (weather-adjusted loads are reported to be up 1.6% year-over-year), together with low hydro and wind output, supporting domestic Spanish thermal generation from both coal and CCGTs.
The announcement of Mexico’s intention to export Maya to the USWC signals that the domestic refining system is struggling with operational issues and that the USWC could be an economically advantaged destination relative to Asia or Europe, the usual marginal Maya markets.
U.S. ethanol dropped 22 MB/D to 962 MB/D the week ending October 7, the lowest since June as some plants continue their seasonal maintenance. Stocks fell by 784 thousand barrels to 19.4 million barrels, the lowest level thus far in 2016. Ethanol-blended gasoline value was relatively flat.
Chinese car sales rose at a fast pace this year, and gains were particularly strong in September. The number of cars on the road, therefore, continues to expand rapidly, and gasoline demand is rising accordingly. PIRA’s model, comprised of car fleet size, distance traveled, and fuel efficiency, pointed to recent demand growth of about 300 MB/D year-on-year, and this estimate was roughly in agreement with reported demand figures. Recent gains in truck sales were more modest, and pointed to a small increase in transport-related diesel demand.
Global equities were broadly lower on the week. In the U.S., utilities posted a moderate gain and consumer staples were little changed, but all the other indices fell back. Energy basically matched the market decline of about 1%. Internationally, Latin America moved higher, but all the other tracking indices gave ground. Most of those declines exceeded that seen in the U.S. market.
The new heating season is off to a cold start in Europe and Japan while weather is warmer in the U.S. With half the month completed and a second half forecast, October is expected to be 6% colder than the 10-year normal and 7% warmer on a 30-year-normal basis.
French nuclear outages are an ongoing factor, but EU carbon prices also rose in early October in sympathy with strong rises in thermal fuels prices. Continued gains in thermal fuels prices should support carbon prices in their current range for the balance of 2016. An EU Parliamentary committee (ITRE) approval of post-2020 market reforms seems positive, but a lack of substantive progress in a more important committee (ENVI) ahead of a December vote is concerning. PIRA is not currently building in additional 2016 policy support, but constructive negotiations ahead of ENVI’s vote can push prices upward. Neither the supply nor the demand side support 2017 price gains, at a time when Brexit negotiations add policy risk.
At its Annual Client Seminar, October 6-7 in New York, PIRA tackled the subject of a challenging farm economy. Here is the presentation.
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.
Global Maritime Consultancy & Engineering, a provider of marine warranty, dynamic positioning and engineering services to the offshore sector, has appointed Helge Flesland to lead its Mission Critical Systems Group in Norway.
Helge will be responsible for managing and further developing Global Maritime’s mission critical systems, including crane, marine operations and dynamic positioning (DP). Other areas of Helge’s brief will include ensuring that all operations are compliant, actively participating in the company’s future strategic direction, and defining mission critical services and client priorities.
Mikal Grure Eie, Regional Manager for Norway, said: “Global Maritime is an industry leader in the operation and inspection of mission critical and marine control systems and we are delighted that Helge has agreed to head up this vital role. As we move forward, Norwegian customers can look forward to the very highest standards in safety and risk reduction and the effective operation of all their mission critical systems.”
Helge has more than 25 years experience in HSE safety, risk analysis and risk management for both onshore and offshore operators, with his main focus over the last few years being large modification projects on platforms in the North Sea related to oil field life extensions.
Prior to joining Global Maritime in 2015, where he has held a number of roles including managing Global Maritime’s risk and HSE business in Singapore, Helge was Senior Principal Consultant and also Risk Services Manager at Lloyds Register Consulting. In his career at Lloyds Register, Helge managed the company’s risk and safety departments in Australia and Lloyds Register’s involvement in the Johan Sverdrup project, one of Norway’s largest-ever offshore projects. Helge also worked for Statoil as HSE Manager on the Gullfaks project, where he conducted HSE risk management, safety analysis and design reviews among other activities. Helge has a BSc in Petroleum Technology and a Master of Management from the BI Norwegian Business School.
Global Maritime’s Mission Critical Systems Group specializes in risk reduction and assurance for all equipment and systems. Applying the latest industry standards, Global Maritime works closely with clients to identify and control vulnerabilities and hazards, maximizing safety and minimizing downtime. Areas of expertise include audits relating to cranes and other lifting equipment that ensures safe and efficient operation; dynamic positioning (DP); subsea systems; umbilical pipe lay systems; jacking systems; bow loading and cargo handling systems; anchor chain and cable spooling equipment; and more.
SapuraKencana Petroleum Berhad (“SapuraKencana”) has been awarded new contracts by clients with a combined value of approximately USD215 million (approximately RM889 million, based on USD/MYR exchange rate of USD1: RM4.14).
Details of each of these contracts are as summarized below:
Award of Contract in relation to the B127 Cluster Pipeline RTR Project by Oil and Natural Gas Corporation Limited
A consortium of SapuraKencana TL Offshore Sdn. Bhd. and SapuraKencana HL Sdn. Bhd. has been awarded a contract by Oil and Natural Gas Corporation Limited (ONGC) in relation to the B127 Cluster Pipeline RTR Project. The scope of work consists of engineering, procurement, construction, installation and commissioning of 11 pipeline systems and associated topside modifications in B127 and surrounding Mumbai High fields located off the west coast of India. The Contract is for a period of 20 months.
Award of Contract for the Provision of Tender Assist Drilling Rig SKD Pelaut by Brunei Shell Petroleum Sdn. Bhd.
SapuraKencana Drilling Asia Limited has been awarded a contract by Brunei Shell Petroleum Sdn. Bhd. (“Brunei Shell Petroleum”) for the provision of its Tender Assist Drilling Rig SKD Pelaut. The contract builds on the long term partnership between Brunei Shell Petroleum and SapuraKencana whereby Brunei Shell Petroleum will continue to use SKD Pelaut as a bespoke technical solution for its development drilling campaign offshore Brunei Darussalam. The contract is for a firm period of 2 years with options to extend for an additional 2 years.
Award of Contract for the Provision of Underwater Maintenance Services for Sepat Mobile Offshore Production Unit (“MOPU”) by PETRONAS Carigali Sdn. Bhd.
SapuraKencana Subsea Services Sdn. Bhd. (formerly known as SapuraKencana Allied Marine Sdn. Bhd.) has been awarded a project by PETRONAS Carigali Sdn. Bhd. (“PCSB”) for the provision of underwater maintenance services for Sepat MOPU.
The scope of work consists of inspection, maintenance, repairs, drilling support and other work for PCSB’s underwater facilities to be executed in the water shore and offshore Peninsular Malaysia at 0-2000 meters water depth, with diver intervention at 0-300 meters water range at the Sepat MOPU Field. The Contract is for a period of approximately 2 months.
Fugro is marking a 35-year history of providing an asset integrity program on one of the Ninian oil field platforms in the North Sea. Operator CNR International is working with Fugro to monitor the structural integrity of the Ninian Southern Platform (NSP) using a permanent online monitoring (OLM) system. Following completion of initial structural integrity measurements in 1979, Fugro installed the OLM system on the platform in 1985 and since then it has carried out multiple upgrades. The current system is contracted through to 2020.
Accelerometers positioned at various locations on the platform combine with a wave radar to help correlate structural motions with wave conditions. These sensors allow Fugro to monitor the sway and torsion natural frequencies of the platform in response to changing weather patterns – any significant change in these values could indicate a loss in stiffness and would require further investigation. The OLM system is interrogated daily by Fugro’s onshore team, who check key parameters and assess data trends. Communications with the offshore system are conducted via a link to CNRI’s offices in Aberdeen and then offshore via CNRI’s network.
The importance of online monitoring was highlighted during a moderate winter storm in 2006, when Fugro quickly detected and located a brace failure event on the east face of the platform; this structural failure was later confirmed by an inspection. The multiple redundancies in the structure meant that the platform remained in a safe and useable condition until summer 2007, when the necessary repairs were carried out. Fugro continued to monitor NSP closely throughout this important period.
Fugro Project Manager Waheed Siddiq, who leads the OLM activities on NSP, said, “It’s a privilege to provide our asset integrity solutions to the structural team at CNRI. After more than 35 years of monitoring NSP, our analysts know exactly how it behaves in all weathers; this intimate knowledge means we are able to identify any structural issues very quickly and accurately, and can alert CNRI immediately.”
Mark Wilson, Structural Technical Authority at CNRI said, “The support we get from Fugro is a vital part of our overall integrity management of this key asset. The information provided by the continuous monitoring of the structure helps us optimise our underwater inspection and provides an additional level of confidence in the condition of the platform.”
CNR International (CNRI) forms part of Canadian Natural Resources Limited, one of the largest independent crude oil and natural gas producers in the world. CNRI’s portfolio spans offshore interests in the UK sector of the North Sea and offshore Africa in Cote d’Ivoire, Gabon and South Africa.
In a move to increase foreign investment amid the nation’s worsening economic position, Brazil’s Congress has approved legislation that will remove state-controlled Petrobras’ obligation as sole operator on the country’s pre-salt developments. Discovered in 2007, these ultra-deepwater fields represent a huge opportunity – they are the largest group of offshore reserves discovered this century.
Financial difficulties resulting from the ongoing low oil price environment, combined with the crippling impact from the “Operation Car Wash” corruption scandal, have slowed development in the prolific pre-salt fields, as mounting financial pressure has led the NOC to cut Capex plans and production targets. The opening of these deepwater assets to foreign investors is intended to increase development and production from the pre-salt fields, whilst allowing Petrobras to shift focus to more developed plays with existing infrastructure and lower Capex requirements.
Due to the significant potential the pre-salt fields offer, many international E&P companies can be expected to vie for a slice of the substantial pie – Shell has previously commented on the nation’s need to open up to foreign investment. However, E&P activities in Brazil are largely controlled by Petrobras – the few internationals currently active in deepwater Brazil, namely Shell and Anadarko, may see themselves tied to commitments elsewhere. Shell’s recent acquisition of BG sees the company bound to projects inherited through the deal; and Anadarko has the large Shenandoah discovery in the GoM, as well as advancing developments in Mozambique.
As such, the impact from last week’s legislation change may not be as significant as the nation’s government hopes. The current oil price environment has the potential to deter some operators from the huge Capex required for ultra-deepwater developments, particularly if not already present in the nation. However, if OPEC’s recent announcement to cut production results in a significant oil price rally next year, it may become somewhat of a moot point, increasing the attractiveness of the pre-salt fields to international investors.
Kathryn Symes, Douglas-Westwood London
Ashtead Technology has strengthened its UK team with the appointment of a regional technical support leader, to provide its customers with the most efficient, cost-effective technological solutions.
With a career spanning more than 25 years in the subsea industry, Graeme Booth joins Ashtead from Subsea 7 where he held a number of technical support and offshore operational roles, including survey equipment superintendent.
Mr. Booth will provide customers with technical support covering equipment rentals and custom engineered packages, for survey and ROV operations worldwide.
Based in Aberdeen, Mr. Booth’s role has been created in response to increased customer demand for outsourced integrated technical support from initial pre-bid stage through to offshore execution, ensuring projects are delivered on time and within budget.
Allan Pirie, chief executive of Ashtead Technology, said: “We understand that selecting the right technological solution, with 24/7 support is critical to the success of our customers’ subsea operations. We will continue to expand our technical support team in response to current market challenges.
“Our customers are increasingly looking to their suppliers for ways to minimize technical and operational risks and drive down costs. Graeme will be integral to driving this forward, supporting our existing customers, developing new business opportunities and growing our service offering. “Graeme’s extensive industry experience, coupled with his in-depth knowledge of survey and ROV equipment, will provide additional value to our customers.”
Commenting on his appointment, Mr. Booth said: “Ashtead is a company with a clear vision and a highly skilled team who have helped shape the company into the industry leader it is today. I look forward to playing my part in the next phase of the company’s growth, as it looks to enhance its range of value-added services to support customer projects globally.”
Founded in 1985, Ashtead Technology is a world-leading, independent subsea equipment solutions specialist providing rental and sale of marine equipment, offshore personnel, calibration, repair and maintenance, asset management, training and custom engineered solutions. Positioned at the forefront of technology and innovative solutions, Ashtead strives to provide a one-stop-shop for cost effective solutions to maximize performance with high quality service and delivery.
This spring and summer saw buzzing activity at water depth of 1300 meters on the Aasta Hansteen field. Four vessels have carried out successful field operations for nearly 200 days.
The waters on the Aasta Hansteen field are deep, very deep, as much as 1300 meters to be precise, but for the deep-sea fish there was much to watch on the field this year.
Pipelines, risers and spoolers have been installed and hooked up to subsea templates and umbilicals that were installed last year.
The pipelines have been pressure-tested and prepared for production, and mooring lines have been carefully installed on the seabed – everything has to be ready before the platform arrives in 2018.
The Aasta Hansteen field is located in one of the harshest environments along the Norwegian coast, even if the weather is better in the summertime in this area too.
Illustration: The Aasta Hansteen platform will be the largest SPAR platform in the world. (Illustration: GeoGraphic / Statoil)
The installation season is shorter compared to other places along the coast, and the weather windows are shorter and more unpredictable. In addition, the field lies farther from shore.
"It is definitely more complicated to plan subsea, umbilical, riser & flowlines (SURF) operations here than in the North Sea,” says Helge Hagen, project manager for the Aasta Hansteen SURF project.
It is also far down to the seabed, and the vessels have to carry heavy loads of pipelines and umbilicals designed for ocean depths of 1300 meters.
“We fully depend on good suppliers and Subsea 7 has done a great job in this year’s campaign,” says Per Rusås, project director for Aasta Hansteen.
He praises the SURF team for properly planning and completing this year’s marine season and avoiding any serious incidents.
“It takes knowledge, experience and hard work to reduce risk in operations like these. The result is a perfect illustration of how to conduct an offshore installation campaign, and demonstrates Statoil’s ability to carry out complex deep-water operations,” says Rusås.
This year’s campaign started at full speed on 27 April, when the Seven Oceans vessel mobilized at Subsea 7’s base at the island of Vigra in West Norway by spooling pipelines and risers on board the vessel. They were installed on the field during a couple of months.
“Seven Oceans had a demanding scope, yet we managed to halve the time spent on waiting on weather from an estimated 20 days to 10 days,” says Kjersti Kværnæs, pipeline and marine manager. That was not only due to good weather luck!
“We split the most weather-sensitive operations into sub-operations and consequently we did not have to wait for long weather windows to carry out the operations,” she explains.
This is the first time Statoil uses BuBi pipes, which consist of liner pipes and steel catenary risers for corrosion protection.
At such depths it is namely possible to use rigid risers, which also cost less than flexible risers.
During two weeks in June the spoolers were also installed. Normand Oceanic did the job perfectly and ahead of schedule.
“During this operation we did not have to wait on weather at all, and in mid-July the job was done,” says Kværnæs.
The spools were manufactured locally by Aker Sandnessjøen, who also manufactured the subsea templates.
Last year the subsea templates and umbilicals were installed on the seabed. After the pipelines, spoolers and risers had been placed on the seabed, it was Seven Viking’s turn.
This vessel carried out all the hook-up jobs before flushing and pressure-testing all pipes.
Finally, the vessel filled the pipes with nitrogen to make them ready for production when the platform arrives.
The vessel also connected Polarled, the 482-kilometre-long pipeline from the Aasta Hansteen field to Nyhamna, to the riser that will send processed gas from Aasta Hansteen, marking the first physical contact between the two mega-projects.
“When the platform arrives the risers that are currently in wet storage on the seabed will be pulled up by the vessel and connected to the platform,” explains Hagen.
Safely stored on the seabed are also the mooring lines that will keep the huge platform in place. A total of 17 mooring lines, each measuring 2500 meters, will be installed in a circle around the platform. On the seabed they are connected to the suction anchors from Momek that were installed last year. The fiber ropes have been installed by Skandi Skansen.
The Normand Oceanic, Seven Viking and Skandi Skansen have all been in shuttle traffic between the Asta Hansteen field and Sandnessjøen this summer, totaling 17 port of calls.
When large construction vessels like this arrive, they lead to buzzing activity, on the base, at Aker’s premises and in the local community in general – involving a range of services from food supply to transportation.
“The Aasta Hansteen SURF project has led to major spin-offs in North Norway, for example manufacturing of subsea templates, spooles and suction anchors as well as coating of pipes for the Polarled pipeline and also base services. Drilling on the field will start at the turn of the year 2017/2018, involving helicopter traffic from Brønnøysund and base services in Sandnessjøen. In the operations phase Aasta Hansteen will be even more visible in the north,” says Torolf Christensen, project director for Aasta Hansteen.
The field operations this summer have involved close to 200 vessel days. The result can only be seen by the deep-sea fish.
Watch video here
DEA has now awarded the EPCI (Engineering, Procurement, Construction and Installation) contract for the smaller structures and pipelines as well as the subsea installation work of the Dvalin development to Technip Norge AS.
The contract includes the fabrication of smaller structures, the 12/16-inch pipe-in-pipe production flowline, the 12-inch gas export pipeline and the installation of pipelines as well as all subsea structures and umbilical for the Dvalin field.
“This contract is another major element for the Dvalin field development. We will now start to collaborate closely on the details with all companies we have on board, to continue the efficient work on the project”, says Hans-Hermann Andreae, Managing Director of DEA Norge.
“The Dvalin license has awarded contracts with a value of 530 million EUR (4.5 billion NOK) over the past days. These contracts will create hundreds of jobs in a demanding time for the supplier industry”, says Andreae. Later in the project phase, several other contracts will be awarded, among others a contract for the drilling of four production wells.
The development cost is estimated to 1.1 billion Euros (10 billion Norwegian Kroner), with planned production start in 2020. Dvalin will be developed with a four wells subsea template, which is connected to the Heidrun platform. At Heidrun, the gas will be partly processed in a new module, before the gas is transported in a new export pipeline to Polarled, going to the Nyhamna onshore gas terminal. At Nyhamna, the gas will be processed and transported to the European market.
Recoverable reserves of the Dvalin field are estimated to around 18.2 billion cubic meters gas and 0.4 million cubic meters of condensate. The field is located in PL435, blocks 6507/7/9 and 6507/8 in the Norwegian Sea, approximately 15 kilometers north west of Heidrun and 290 kilometers from Nyhamna in Mid-Norway.
Paris, France – October 13, 2016
CGG announced that it has been awarded an extensive multi-client program by the Instituto Nacional de Petroleo (INP) to acquire seismic data offshore Mozambique. The multi-survey program is designed to improve industry insight into the region’s geology and provide oil and gas companies with a greater level of understanding of the country’s prospectivity.
The program includes a 2D survey of over 6,550 km in the offshore Rovuma basin, including blocks R5-A, R5-B and R5-C, and a large 3D survey over the Beira High in the Zambezi Delta. The 3D survey is expected to be up to 40,000 km², subject to pre-commitment. It will cover blocks Z5-C and Z5-D and surrounding open acreage in this deltaic area which is believed to be prospective. CGG has also been awarded an onshore airborne gravity and magnetic survey in the Southern Mozambique Basin.
Location map of the CGG multi-client surveys in Mozambique.
The proposed multi-client seismic program in the Mozambique Zambezi region will form part of a comprehensive, fully integrated geoscience package that will give participating companies a better overall understanding of the region. Marine gravity and magnetic data will be acquired simultaneously with the seismic to aid regional interpretation. The interpretive phase of the program will benefit from the full range of geoscience expertise from CGG’s Geology, Geophysics & Reservoir businesses. This will include geological and remote sensing expertise from Robertson and NPA Satellite Mapping.
Jean-Georges Malcor, CEO, CGG, said: “CGG has a long track record of delivering successful multi-client programs in the Sub-Saharan Africa region and this award underlines the extent to which our reputation for high-quality services and delivering value to our clients is recognized not just by oil and gas companies but also by national governments. As our first multi-client projects in Mozambique, these awards fit well with CGG’s long-term multi-client strategy to provide our clients with the most advanced understanding of the subsurface across the world’s key basins. The 5th License Round award process undertaken by the INP in 2015 saw a high level of interest in the Zambezi region and we believe our multi-client projects will highlight the exploration upside potential.”
BP has taken the decision not to progress its exploration drilling program in the Great Australian Bight (GAB), offshore South Australia.
The decision follows the review and refresh of BP’s upstream strategy earlier this year, which included focusing exploration on opportunities likely to create value in the near to medium term, primarily building on BP’s significant existing upstream positions.
BP has determined that the GAB project will not be able to compete for capital investment with other upstream opportunities in its global portfolio in the foreseeable future.
“We have looked long and hard at our exploration plans for the Great Australian Bight but, in the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals. After extensive and careful consideration, this has proven not to be the case for our project to explore in the Bight,” said Claire Fitzpatrick, BP’s managing director for exploration and production, Australia.
“This decision isn’t a result of a change in our view of the prospectivity of the region, nor of the ongoing regulatory process run by the independent regulator NOPSEMA. It is an outcome of our strategy and the relative competitiveness of this project in our portfolio.”
Fitzpatrick said BP has informed federal and state governments of its decision.
“This decision has been incredibly difficult and we acknowledge it will be felt across the South Australia region. We have made significant progress with preparations for drilling in the Bight with the support of communities and federal, state and local governments. We acknowledge our commitments and obligations and our priority now is to work with government and community stakeholders to identify alternative ways of honoring these.”
BP has also consulted with its joint venture partner, Statoil, who fully understand BP’s change in strategic direction and accept BP’s decision.
“BP is a long-term, significant investor in Australia, most visibly through our retail network and refinery and also as partners in the North West Shelf and Browse ventures,” added Fitzpatrick. ”We expect to continue to consider further opportunities to invest and grow our business here.”
BP was awarded exploration licenses for four blocks in the Ceduna area of the GAB in January 2011. Seismic data was acquired in the area in late 2011-early 2012. Statoil acquired a 30% interest in the licenses in 2013, BP remained operator with 70% interest.
BP has a contract with Diamond Offshore Drilling for the provision of a new Moss CS60E design semisubmersible drilling rig, which Diamond commissioned Hyundai Heavy Industries to build and is specially designed for use in deep water and harsh marine environments. BP’s decision does not impact this rig contract.
Cybercrimes cost energy and utilities companies an average of USD 12.8 million each year in lost business and damaged equipment1. Platform operators need confidence that countermeasures can deal with bigger and more sophisticated cyber-attacks. DNV GL is now collaborating with Shell, Statoil, Lundin, Siemens, Honeywell, ABB, Emerson and Kongsberg Maritime to develop best practice in addressing this threat. Other companies are still welcome to join.
Cyber security is a growing issue in the oil and gas sector since critical network segments in production sites, which used to be kept isolated, are now connected to networks. The trend is towards remote operations, remote maintenance and tighter inter-operability with centralized process data and plant information. Old and outdated installations are at particular risk and require risk mitigation actions.
“We see that cyber-security incidents are increasing with attempted attacks on a daily basis. By collaborating with others in the industry, we can ensure that we end up with one globally applicable regulation that is suitable for the oil and gas sector,” says Rune Wærstad, Control & Automation Engineer, Shell.
To address these challenges, DNV GL has established a Joint Industry Project (JIP) together with Shell, Statoil, Lundin, Siemens, Honeywell, ABB, Emerson and Kongsberg Maritime. In addition, the Norwegian Petroleum Safety Authority will take part as an observer. The JIP will produce a guideline for protecting oil and gas installations against cyber-security threats. The IEC 62443 standard will be used, but will be tailored to the oil and gas industry. The standard defines what to do, while the guideline will describe how. The JIP will result in:
“Dealing with cyber-security challenges has become a key focus area for the oil and gas sector. Attacks are becoming increasingly costly and harder for companies to recover from. This JIP will lower the risk of cyber-security incidents and trim costs for operators, contractors and vendors by reducing the resources needed to define requirements and by driving a standardized approach,” says Pål Børre Kristoffersen, Principal Consultant, DNV GL – Oil & Gas.
The scope of the JIP is to produce cyber-security guidelines to simplify and clarify the use of IEC 62443 for the FEED, projects and operations. Good practice and reusable patterns are to be produced. The JIP will result in a Recommended Practice (RP) for Industrial Automation and Control Systems in 12 months' time.
DNV GL is currently assisting Total E&P Norge with cyber-security risk management for the Martin Linge field development and associated operations offshore Norway. DNV GL’s scope of work includes the day-to-day management and coordination of cyber security during the project phase and through preparations for operation, with a specific focus on integrated control and safety systems. The project also aims to raise awareness of cyber-security risks and to train personnel to take simple preventative measures.
See more about the JIP here.
Trelleborg’s engineered products operation has supplied a selection of bearing solutions for the world's first floating liquefied natural gas (FLNG) project, Shell’s Prelude FLNG.
Trelleborg has manufactured and delivered 52 vertical elastomeric bearings and 156 horizontal bearings for use on the 13 modules onboard the facility, as well as 40 turret bogey bearings to enable natural movements of the turret.
Shell’s Prelude FLNG
Responsible for procuring bearings for the topside modules, Byoung-Gark Park, Topside Structural Engineer for Samsung Heavy Industries, said: Many of Prelude’s topside modules weigh as much as a single typical offshore platform. In fact, along with its contents, Prelude is expected to weigh a total of 600,000 tons. So, optimum quality and performance of the bearings used to secure each module is vital. We have worked closely with Trelleborg previously and are very confident in their ability to manufacture first class bearings. We were keen to involve their expertise on this prestigious project too.
Trelleborg’s elastomeric bearings are steel plate laminated and installed between the hull of the facility and its modules. They accommodate axial, shear and rotational movement to keep the modules safe from impact, damage and deformation. Similarly, they prevent the concentration of excessive strains and stresses around the mounting points of the modules and the hull caused by adverse sea and weather conditions.
JP Chia, Engineering Manager for Trelleborg’s engineered products operation, says: We design and manufacture all of our elastomeric bearings specifically for their application, to ensure that they always perform exactly as required. This approach was especially important for the Prelude topside, to guarantee that the record-breaking weight could easily be supported over its life. We are very proud to have been selected to supply such a landmark project.
All of Trelleborg’s bearings are tested by its engineering team. They check the design for specified loads and deformations and the fatigue performance by means of crack growth analysis calculations.
Additionally, they examine wave action and the resulting multi-directional loads between a facility’s hull and topside modules. After production they are a 100% individually tested according a specified test procedure.
For more information about Trelleborg’s engineered products operation, or any of its products and solutions, please visit the Trelleborg Engineered Products website.
ELA Container Offshore GmbH ordered several Drying Systems from Pronomar BV to increase stock. By doing this, ELA prepares itself for the cold season in which there is a high demand for Drying Containers. “We always have containers in stock to be able to react to customers’ demands on short notice. Especially within the offshore industry where every second counts”, says Hans Gatzemeier, Managing Director of ELA Container Offshore GmbH. “Since all of our Offshore Drying Containers are leased out, we ordered new drying systems to have some containers available on short notice”, explains Gatzemeier.
The container is equipped with a Pronomar Drying system suitable to dry suits, gloves and boots
The 20 ft ELA Offshore Drying Container is available for rent and sale. It is equipped with a Pronomar Drying System which is suitable to dry suits, boots and gloves for up to 20 people. All drying systems are made from solid stainless steel and are therefore built to last. The drying systems dry the clothes from the inside out by means of a large amount of warm air entering from a powerful blower. Within a maximum time of three hours, all clothing will be dry. “The drying systems prolong the lifetime of the costly work wear. Seen from a health perspective, the amount of sick leave decreases as workers are more likely to get sick when working in wet or damp overalls”, says Jiska Bazuin, Operations Manager at Pronomar BV.
ELA Container has already gained diverse experience in the Offshore-Wind and Offshore Oil & Gas Industry. Whether on pontoons, transformer platforms, rigs or supply vessels - ELA Container is the ideal partner, offering tailor-made concepts for all requirements in the form of Living Quarters, Offices, Dining Rooms, Galleys, Laundries, Recreation or Locker Rooms and all types of Carrying Units. ELA Offshore containers are equipped with all the necessary utilities. This guarantees, in combination with all ELA Offshore features, a long service life, functionality and comfort.
The high quality Containers are “Made in Germany” according to German quality standards and possess all necessary certifications such as DNV 2.7-1 / EN 12079-1, DNV 2.7-2, based on SOLAS, IMO FSS Code and MLC as well as CSC and are approved from several IACS-companies. In terms of fire resistance, an A60 insulation provides high safety standards. Every container will be checked before delivery. Depending on customer requirements, ELA Offshore Containers are individually customized, immediately operational and are available at short notice.
The main features of ELA offshore accommodations include:
The Plan for Development and Operation (PDO) for the Dvalin field (previously named Zidane) has been handed over to the Ministry of Petroleum and Energy in Norway by operator DEA. Dvalin will be the company’s first operated field development project in Norway.
The Dvalin license plans to produce a total volume of approximately 18.2 billion cubic meters of natural gas from two reservoirs. The development cost is estimated to 1.1 billion Euros (10 billion Norwegian Kroner), with planned production start in 2020. “It’s is a major step for DEA to hand-in the PDO and to transfer this project into the next phase,” says Thomas Rappuhn, CEO of DEA Deutsche Erdoel AG. “The Dvalin development will contribute significantly to DEA’s ambition to further grow our business in Norway,” Rappuhn adds.
Dvalin will be developed with a four wells subsea template, which is connected to the Heidrun platform. At Heidrun, the gas will be partly processed in a new module, before the gas is transported in a new export pipeline to Polarled, going to the Nyhamna onshore gas terminal. At Nyhamna, the gas will be processed and transported to the European market.
Image courtesy: DEA Group
“Dvalin is DEA’s first development as field operator in Norway, and we are looking forward to the upcoming tasks,” says Hans-Hermann Andreae, Managing Director of DEA Norge.
“Together with our partners, we have come up with a development solution with sustainable long term economics in an environment of low market prices”, Andreae underlines. Creative work in the project team and market developments in the supplier industry have made it possible for the partnership to make the project economical sound.
“Over the last few years we have managed to reduce cost by more than 20 percent. As a consequence, DEA has got the opportunity to open a new area in the Norwegian Sea for gas production and export”, says Andreae.
The Dvalin field is located in PL435, blocks 6507/7/9 and 6507/8 in the Norwegian Sea, approximately 15 kilometers north west of Heidrun and 290 kilometers from Nyhamna in Mid-Norway.
DEA Norge is operator of license PL435 with a 40% share. Partners are Edison (20%), Maersk (20%) and OMV (20%)*. The development is subject to the approval from the Norwegian authorities.
Dvalin – a stag in the tree of life
When a Norwegian oil and gas field enters the development phase, it will change name according to official guidelines.
In the area of license PL435 it is an established tradition to give the fields names from Norse mythology. The nearby field Heidrun is named after the goat that grazes on the roof of Vallhalla, a majestic, enormous hall located in Åsgard, ruled over by the god Odin. Yggdrasil is an immense ash tree that connects the nine worlds in Norse mythology. Dvalin is one of four stags that grazes off the leaves of Yggdrasil.
*OMV Norge AS has entered into a sale and purchase agreement with Petoro AS, under which Petoro AS will be assigned a 20% working interest in the Dvalin-license (PL 435) from OMV Norge AS. The agreement is subject to approval by the General Assembly of Petoro AS and Governmental approval.
The Maersk Resolve has finalized the planned work scope for DONG Energy at the Hejre field in the Danish sector of the North Sea, and Maersk Drilling has therefore received a letter of early termination. The original contract was scheduled to end in January 2017. The compensation under the early termination agreement leaves Maersk Drilling financially neutral to the original contract.
“We are all acutely aware of the difficult market situation we are facing in the offshore drilling industry, however, it is gratifying to see a rig like the Maersk Resolve and her crew outperform expectations and complete her work scope several months ahead of schedule for the complex HPHT development at Hejre,” says Head of Global Sales, Michael Reimer Mortensen and continues:
“The Maersk Resolve and her crew has delivered a great performance throughout the duration of the contract, and we aim to secure a new contract for the rig as soon as possible.”
Maersk Resolve is a High Efficiency jack-up built in 2009 and is designed for year-round operation in harsh environments and in water depths of up to 350ft. The rig is fully HPHT capable and prepared for Managed Pressure Drilling technology.
Airborne Oil & Gas announces the start of a project to qualify Thermoplastic Composite Pipe (TCP) for a deepwater jumper spool application for French operator Total.
The non-corrosive and spoolable Thermoplastic Composite Pipe (TCP) is Airborne Oil & Gas’ answer to today’s industry call for cost effective spools, well jumper, flowline and riser solutions to deal with corrosive fluid conditions and deep water environments: TCP Flowlines, Jumpers and Risers are flexible, corrosion free, light weight and have high strength and thus enable a significant reduction in total installed cost. For the deepwater spool application, the TCP offers the possibility to save time and cost due to the inherent flexibility of the product. TCP allows installation without high-precision subsea metrology, as is the case for rigid steel spools.
The Airborne Oil & Gas’ TCP that will be qualified on this project targets deep water applications. Client Total foresees the first application by the company to be for water injection well jumpers: “The possibility with TCP to handle large deflections, the ability to cut-to-length and terminate the pipe at location and the subsequent installation with small vessels, make a compelling business case for TCP jumpers. We estimate we can achieve considerable cost savings by using TCP jumpers” says Frédéric Garnaud, R&D Deep Offshore Program Manager with Total.
Airborne Oil & Gas has been working with Total in the development of TCP since the start of the Cost Effective Riser Thermoplastic Composite Riser JIP in 2009. “The start of this project underpins our long-lasting relationship with Total. It demonstrates their trust in Airborne Oil & Gas’ ability to provide cost effective solutions that address the challenges of today’s SURF market” says Bart Steuten, Business Development Manager with Airborne Oil & Gas.
The project includes the manufacturing and qualification testing of full-scale (6 inch ID) prototypes and is planned to deliver qualification to DNVGL standard RP-F119 in Q1 2017.
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