McDermott International (NYSE:MDR) has successfully completed the installation scope associated with the Otis development in the Gulf of Mexico on behalf of LLOG Exploration Offshore. McDermott’s Lay Vessel North Ocean 105 (LV 105) completed the deepwater subsea tieback from the Otis well in Mississippi Canyon 79 to the Delta House Floating Production System in water depths ranging from 3,861 feet to 4,420 feet.

North Ocean 105 - Fast-transit, dynamically positioned vessel with an advanced Reel-lay system capable of rigid and flexible pipelay in up to 10,000 feet of water. Photo courtesy: McDermott

The scope of work consisted of project management, engineering, and installation of 70,000 feet of insulated rigid flowline and insulated steel catenary riser as well as a control umbilical, PLEM jumper and associated flying leads. The flowline and riser were fabricated at McDermott’s new spoolbase and marine facility in Gulfport, Mississippi. All engineering and project management functions were completed in McDermott’s Americas, Europe and Africa headquarters in Houston.

“This marks an important milestone for the McDermott organization as the first project executed in its Gulfport Spoolbase and the first installation of a steel catenary riser by the LV 105,” said Scott Munro, McDermott Vice President for Americas, Europe and Africa. “The execution of the Otis project has positioned McDermott for success on our other 2016 reel lay projects, including Anadarko Caesar Tonga Phase II. This project demonstrates our commitment to adding value to the subsea tieback market and is the foundation for McDermott to establish itself as the reel lay contractor of choice for our customers in the Gulf of Mexico.”

BMT Fluid Mechanics (BMT), a subsidiary of BMT Group Ltd, a leading international design, engineering and risk management consultancy, has recently completed a comprehensive Computational Fluid Dynamics (CFD) study for an oil major operating offshore Nigeria.

FPSO Gas Dispersion. Image credit: BMT

BMT’s scope of work included an assessment of the current loading to which the FPSO hull is subjected to, which has enabled the oil major to ensure its mooring systems are fit for purpose.

Johnathan Green, Manager for BMT Fluid Mechanics’ Numerical Modelling Group explains: “CFD is becoming more commonplace in the oil and gas sector with many customers recognizing it to be an effective tool for solving challenges the industry faces in a less conservative and more efficient manner. In this project, we were able to use CFD to more accurately analyze the hydrodynamic forces caused by current and waves and asses the subsequent effect these forces have on the bilge keels of the vessel which are designed to stop the vessel from rolling.”

Image credit: BMT

Through the creation of a 3D CAD model and representation of the FPSO below the water line, the team of specialists at BMT were able to run a comprehensive experimental and numerical study of the manoeuvring characteristics. This looked at different parameters of current conditions to help build up a picture of how the forces and motions impact the vessel and how it performs.

Johnathan Green continues: “BMT’s extensive experience with shallow water hydrodynamics, manoeuvring simulation, hydrodynamic model testing and Computational Fluid Dynamics (CFD) allowed us to deliver against the customer requirements. The benefit of using CFD in this study is that the customer can use the less conservative loads estimated to help design the mooring systems.

CFD has a number of applications within the oil and gas market. BMT regularly uses CFD for consequence modelling (e.g. hydrocarbon fire & explosion and gas dispersion), flow assurance, and helicopter operations. Whilst the aim of all of our work is to ensure that risks to personnel, asset, and environment are reduced to as low as reasonably practicable (ALARP) and although there may be a focus in today’s current economic climate on reducing capital expenditure, BMT strongly believes that optimising design early on in a project can considerably reduce costs by avoiding conservatism.”

Protea is well known for delivering high quality handling equipment including cranes, winches and launch and recovery systems for the offshore and onshore energy industries.

In addition to cargo handling equipment, Protea has also developed an extensive track record in the supply of personnel lifts for operations in hazardous areas.

Photo credit: Protea

“Both onshore and offshore, the safety of personnel when accessing equipment at height is key. We have applied our knowledge of the design, build and supply of safety critical handling equipment to develop a range of personnel lifts that can be tailored for specific applications.” highlighted Protea’s Global Sales Manager, Graham Manning.

Most recently Protea delivered a scissor lift for use on an offshore semi-submersible drilling rig. An electrically powered unit with an integral Hydraulic system to operate the lift and drive system, it can safely lift 2 personnel and their equipment to a height of 13m.

The system has a total lift capacity of 300kg and fully complies with all appropriate offshore design codes and regulations including DNV-OS-E101 Drilling Plant, LA 2.22 Standard for Certification – Lifting Appliances and EN 280:2013 Mobile Elevating Platforms.

In addition, Protea has also developed a range of rig elevators for land and offshore drilling applications. Available with lift capacities up to 200kg, these proven elevators allow the safe transport of workers from ground level up to the rig floor.

“Lifting people as opposed to cargo presents a number of unique challenges. However, with our experienced design team, we have developed a successful range of high quality personnel lift products that tailored to the specific needs of our clients - once again demonstrating our capability to deliver standard products, bespoke design and unique solutions’ commented Tomasz Paskiewicz, Protea CEO.

International energy logistics provider Peterson has secured a long term logistics contract with oil and gas operator TAQA. The five year contract is for integrated supply base and logistics operations supporting TAQA’s offshore assets in the UK North Sea - Harding, Tern, Eider, North Cormorant and Cormorant Alpha.

The contract scope includes the provision of quayside services, warehouse management, cargo carrying units, transport, fuel and marine services and includes an option for two additional, one year extensions.

Peterson will be responsible for managing 55,000 deck tonnes and supplying 50,000 tonnes of fuel annually and will support TAQA from quayside and warehouse facilities in Aberdeen and Kintore.

Chris Coull, Regional Director Peterson said: “This long term contract enables us to deliver sustainable cost saving concepts and systems, whilst ensuring a focus on safe and efficient operations. Peterson is an industry leader in vessel pooling and marine sharing and we look forward to sharing our knowledge and experience in this area with TAQA.

“Peterson will work closely with TAQA to understand their needs and bring new ways of working supported by our proprietary suite of multi-user digital applications including our industry leading cargo management system eCargo and real time inventory and asset tracking through VOR.”

Peterson is working closely with customers to drive efficiencies and generate maximum value across their logistics operations. Last month the company was recognised for its unparalleled record in collaborative vessel sharing arrangements at the SPE Offshore Achievement Awards, winning the award for collaboration.

International oilfield services company, Expro, has successfully completed a plug and abandonment (P&A) project in the Gulf of Mexico (GoM) for Apache.

Expro recently expanded its business capabilities to offer fully integrated well abandonment services including; late-life reservoir management, permanent reservoir abandonment and post abandonment monitoring.

Photo credit: Expro

The Apache work comprised the pre-abandonment and plugging of wells in the ultra deepwater Atwater Valley and Mississippi Canyon areas.

Commencing in March 2016, Expro utilised its well intervention services to provide the first phase of abandonment of the wells. This involved plugging, cutting and perforating using slickline and electric-line cased hole applications to gain access to the wells and allow circulation.

“Expro is uniquely placed to understand the challenges that come with the re-entry and abandonment of an aging well population. We were delighted to demonstrate this on the project with Apache, and continue our global relationship with them.”

Expro has worked with Apache for over 10 years, primarily in the North Sea, supplying subsea, well testing, intervention and sampling services, and well integrity software.

“This contract builds on the long-standing relationship between Expro and Apache, and I’m delighted that we’re providing successful plug and abandonment expertise in the GoM.”

P&A is just one of the four new capabilities developed by Expro in response to current market conditions and being launched at the Offshore Technology Conference (OTC) in Houston from 2-5 May 2016.

The Damen Shipyards Group’s Fast Crew Supplier (FCS) 2610 is proving to be every bit as effective in the oil and gas sector as it is in the offshore wind industry. The application of the renowned design in this arena is a response to a move in offshore O&G towards the high-intensity use of flexible, multi-purpose vessels wherever possible so as to minimize costs. As a twin-hulled vessel, the FCS 2610 combines high speed and stability with substantial deck space for equipment and components. And, with Damen’s philosophy of building in series, the FCS 2610 is available on stock for extra fast delivery.

Damen’s FCS 2610 at sea. Image credit: Damen

Over 40 vessels of this model have been built to date, the majority for the support of wind farm operations, making it a well-proven support vessel in the challenging waters of the North Sea as well as other locations. With its Twin Axe hull design, it provides a stable platform with plenty of deck space, ideal for duties such as crew and cargo supply.

Feedback and initial orders from companies in the offshore oil and gas sector have demonstrated the FCS 2610 has a role to play in their search for the most economical ways to undertake maintenance and service work. Near the top of their lists are fast, flexible vessels capable of operating in a wide range of weather conditions and carrying quantities of both men and equipment. The FCS 2610 fits these criteria well as a high quality, multi-purpose workhorse. Damen FCS 2610 hulls are in stock ready for outfitting to meet the specific needs of individual customers. Options include a multi-purpose deck crane, flexible accommodation capacity, davits for FRC, the fitting of containers for specific roles and safety standby adaptions. Other customizations are readily available on request.

The Twin Axe hull design is a stable and fuel efficient platform for accessing offshore platforms, and, as such, is a valuable member of Damen’s marine access portfolio. This portfolio anticipates the need for cost reduction and logistics improvement, alongside increased safety, in the current oil and gas climate Furthermore, the advancement of minimal facility platforms also drives the need for efficient and safe marine access solutions in place of traditional offshore crew transfer solutions.

Leading procurement services specialist, Craig International, has launched a ‘win-win’ platform to help oil and gas companies off-load surplus stock worth billions of dollars and buy products and equipment they need at competitive prices.

Craig Collaboration connects companies looking to sell stock with those looking to buy. Oil and gas companies around the world have billions of pounds of surplus stock, much of it sitting in costly storage and Craig Collaboration will allow them to realize value from this.

A radical shift in procurement in the industry, Craig Collaboration represents a major investment by Craig International in an immediate, collaborative solution towards increasing efficiency. It is already gathering momentum with several major exploration and production companies expected to start using it following today’s launch.

Steve McHardy and Jill MacDonald, joint managing directors of Craig International, which has launched the pioneering Craig Collaboration platform.

Steve McHardy, joint managing director of Craig International, said: “With the oil price set to be lower for longer, the industry requires immediate action towards achieving enhanced efficiency and cost control. We have developed a platform which the whole industry can use to buy and sell stock. Using our bespoke electronic tools, our network of buyers and our global experience, Craig Collaboration will, at no cost to industry, ensure that their products are offered to buyers looking to purchase them.

“Our research found that two exploration and production companies had, between them, almost half a billion dollars’ worth of surplus stock. Multiply that by the number of companies operating in the Gulf of Mexico and that’s a considerable amount of products and equipment lying around not making any money and incurring warehousing costs.

Craig Collaboration is accessed through a portal and powered by Craig International’s bespoke SmartBuyer software. For example, if operator A, who is looking for a pump which operator B has in surplus stock, then Smartbuyer would search the inventory on Craig Collaboration, find the pump and offer it at a reduced cost to operator A.

Craig Collaboration will also provide an analysis of the interest expressed on their surplus equipment, allowing clients to make an informed decision on disposal or not.

Craig International has this year secured $60 million in new contracts as a result of the efficiencies delivered by their ecommerce initiatives. A bespoke web-based tool, SmartBuyer makes the procurement process much simpler, more accurate, less time-consuming and much less expensive.

With an increasing marketshare in the Gulf of Mexico, Craig International is in a unique position to observe trends and offer solutions to dramatically reducing costs when it comes to buying oilfield products and services.

Mr. McHardy added: “We already have the buyers looking to purchase the products and equipment that companies have in surplus stock and we have the electronic tools to ensure confidential and efficient transactions between buyers and sellers.

“We are buying the same products over and over again and, with our 16 years’ experience, we are well-placed to exploit this knowledge and buying power to the benefit of the wider industry."

TIW UK Limited recently signed a three-year contract extension with Total E&P UK. This three-year agreement is focused on the supply and rental of Liner Hanger products and services for their upcoming drilling projects within the North Sea.

“TIW has had a long-standing relationship with Total and is delighted to secure this contract extension,” said Matthew Gray, TIW UK district manager. “We are looking forward to continue building on our long relationship with Total and to continue delivering quality equipment, support and solutions to their operations over the next three years.”

Ulstein introduces the LX109 design, a high capacity, highly efficient cable lay vessel with compact dimensions. The completely new, patent pending, ULSTEIN Cable Arch system in combination with open top vessel design results in an unprecedented total of 12,500 t of power cable that can be laid as one single piece.

Image credit: Ulstein

A unique feature is the ULSTEIN Cable Arch connecting the forward and aft turntables, allowing to load and lay one continuous cable of up to 12,500 ton. This capacity was made possible by positioning the turntables into the hull instead of their conventional location on deck, improving vessel’s stability. A feature also applied by Ulstein on a rock installation vessel currently under construction. This approach resulted in a slim vessel that can transport and lay cable much more efficient than conventional vessel designs with larger beams.

Locating the a-symmetrical bridge aft, with the cable passing underneath, provides clear and unobstructed views on the cable lay work deck and cable stingers aft and the turntables forward. Furthermore the vessel features a large hangar with ROV moonpool and workboat storage. In combination with the well-known X-BOW® and X-STERNTM hull features, this results in a very cost efficient, safe and comfortable platform with superior operational uptime and transit speed compared to more traditional cable lay units.

“With this design we like to bring the cable lay market to the next level,” says Edwin van Leeuwen, Product Management Leader at Ulstein Design & Solutions. “Using the ship and equipment knowledge available in the Ulstein Group, resulted in a revolutionary, truly integrated design, based on existing technologies. By focusing on a dedicated vessel for cable lay projects, we have been able to dramatically improve on project economy, seakeeping behavior and fuel economy.”

Radoil announces that their MUX and Hotline Reels were used on Maersk Venturer ultra-deepwater drillship offshore Uruguay in water depths of 3,400 meters (11,156 ft). The previous record for world’s deepest well by water depth was held by Transocean’s drillship Dhirubhai Deepwater KG1, off the coast of India in water depths of 3,174 m (10,411 ft), also utilizing Radoil reels. MUX and Hotline Reels are installed on the rig near the rig’s moon-pool. MUX Reels store and deploy electric and fiber optic cables and Hotline Reels store and deploy hydraulic hoses. The electric/fiber optic cables and hydraulic hoses communicate and operate the Blowout Preventer (BOP) System positioned on the ocean floor during deepwater drilling.

Maersk Venturer: Photo credit: Maersk Drilling

Radoil’s Umbilical reels (BOP Control, IWOCS, Chemical Injection, Workover) offer at least six (6) patented and patent pending features that Lower Operating Costs and Improve Safety. In addition, Radoil’s patented Depth Compensated Accumulators use the pressure of the ocean’s water column to boost the hydraulic pressure, thereby allowing fewer number of accumulator bottles mounted in the BOP and subsea systems requiring local hydraulic pressure. In some cases, the number of accumulator bottles can be reduced by over 90%.

Radoil is an ISO 9001:2008 certified engineering, design and manufacturing company located on the NW side of Houston, TX. Radoil provides a variety of products that are used in deepwater drilling activities around the world and we are currently expanding our product lines into the completion and production processes.

Supply Rebalancing Is Well Under Way

Supply rebalancing is well under way. Year-on-year non-OPEC output declines are accelerating, while demand growth has not disappointed. Worries of excessive Saudi, Iranian or Libyan supply growth are unwarranted. Prices will have to rise to the level where they begin to create supply. The signal will have to be there at least one year in advance for shale crude reserves to significantly contribute. The end of OPEC market management will lead to more price volatility and PIRA continues to see elevated risks of supply disruptions in the near future. Product markets are carefully balanced with strong demand growth and high refinery production/stock levels.

Too Soon

Despite growing bullish sentiment, the market deemed it too soon for $2+/MMBtu gas as per the final settlement price for the May futures contract. The related tepid May contract termination underscores concerns regarding the timing of supply rebalancing. With the June contract now in the “pole position,” traders will be more focused on weather and related demand prospects this summer. Yet, HH cash will still remain susceptible to renewed weakness due to building storage congestion — at least for the next few weeks. Such a backdrop would require supply to be pushed (or kept) out of the region, thus requiring MW basis premiums. Meanwhile, the more acute price weakness in western Canada is being “exported” into the West — especially when demand is weak — as highlighted by the depths prices at Sumas reached this month.

NP15 Rises on Firmer Gas While SP15 "Ducks"

On-peak prices rebounded at NP15 and Palo Verde assisted by a rebound in Southwest gas prices and the start of a refueling outage at Palo Verde 1. Mid-Columbia and SP15 markets continued to move lower, however. PIRA expects gas prices to move higher during the second half of the year as a tighter supply/demand balance shrinks the storage overhang. Higher gas prices will exert downward pressure on implied heat rates in most markets. The CA ISO released a preliminary assessment of summer 2016 loads and resources in late March, but it did not include possible impacts of the Aliso Canyon outage. PIRA believes that mitigation measures will be largely successful in preserving LA Basin reliability except under severe weather/outage conditions.

Coal Prices Rally; PIRA Remains Bullish for 2017

Seaborne coal prices moved up notably from the end of last month, particularly deferred prices, flattening the backwardation and bringing the market up to PIRA’s Reference Case. We have moved our pricing outlook for 2017 over the past month, on a stronger oil price forecast and some evidence that demand in Asia will strengthen next year.

Why Did Distributed PV Developers Abandon Nevada? A Comparison of Policy Drivers in Nevada and California

Nevada recently moved to address the contentious issue of cost-shifting from customers with distributed photovoltaic (PV) installations to those without via implementation of new and additional charges for distributed PV. Afterwards, three major distributed PV developers exited the state. Nevada’s experience can offer guidance for the numerous states that are considering new charges for distributed PV or revisiting Net Energy Metering policy. Nevada’s revisions immediately reduced the value proposition for distributed PV installations, but the revisions could still result in lower customer annual electricity costs relative to no solar. By comparison, California’s recent decision to address cost-shifting through broader retail rate design changes may have little practical impact on distributed PV penetration for the foreseeable future and earned solar industry support.

Global Equities Ease

Global equities generally fell back on the week. In the U.S., energy continued to outperform, up 0.7% for the week. Utilities and consumer staples also posted gains. Technology and housing were the worst performers and posted moderate declines. Internationally, many of the indices lost ground. Latin America, however posted a strong gain, while Japan posted a sharp decline as the yen strengthened.

An Impressive April Comes to a Close

After making a low of $3.5125 on April 1st, the day after the surprise 93.6 million acres in the Prospective Plantings at the end of March, July corn had quite the month, closing up 38 cents, although no fireworks were set off at the close of this impressive month of trading. July soybeans had an even more impressive month, closing up $1.13 at the end of the 21 trading days, but nothing out of the ordinary there either. As compared to the 10.7% gain in corn and 12.3% in soybeans, wheat couldn’t even return 2% for the month.

Ethanol Output and Stocks Plunge

For the week ending April 22, output plunged as many plants were shut down for maintenance. The output of ethanol-blended gasoline surged to the highest level since October.

U.S. Commercial Stocks Build

Overall stocks built 5.3 million barrels this past week, with a 2 million barrel build in crude oil, mostly in Cushing. Gasoline inventories had their largest build (1.6 million barrels) in the last nine weeks, while distillate stocks had their second consecutive weekly decline (-1.7 million barrels). Domestic crude supply continues to average 8.92 MMB/D in April, 30 MB/D below March and 770 MB/D below last year.

Ukraine’s End-Users See Gas Price Revision

Ukraine’s new government overhauled household heating prices to help restart a $17.5 billion loan from the International Monetary Fund as the U.S., another major donor, told the ex-Soviet republic it must start prosecuting corrupt officials. A cabinet meeting Wednesday in Kiev approved a new natural gas tariff to strengthen the budget, as sought by the IMF. The new gas tariff eliminates separate winter and summer prices for households, and it unifies what they pay with the cost for industrial customers.

Is the Price Surge Justified?

For the moment, PIRA doesn’t see an extended contract price breach as sustainable over the course of a season. Additionally, PIRA believes that the supply and demand for forward gas is very different than for spot gas, making NBP and TTF very vulnerable to these sharp swings upward. Many natural gas producers avoid forward selling, leaving the forward curve to be filled with net buyers. This forward market imbalance can create high spike risk when strong hedging activity gets concentrated in a short amount of time, which may have easily been the case here.

S&P Eases, Key Indicators Mixed

The S&P 500 eased up this past week. It was only the second decline in 11 weeks. The key indicators were mixed with high yield debt (HYG) and the Russell 2000 improving, while volatility increased and emerging market debt eased off. The yield on the BAA-rated corporate bond has continued to decline, although the pace of decline has slowed. The U.S. dollar was mixed. The British pound strengthened, as did many of the currencies of the key commodity producers, along with the South African rand. The Polish zloty has been notably weaker. Commodities, including total, energy, and ex-energy, were again higher on the week.

Freight Rates Rally on China Optimism

Freight rates rallied in April, having been pulled up by surging steel and iron ore price in China. Bunker fuel prices have continued to climb, adding upward pressure on spot rates. We have trimmed our Cape fleet supply projections, but we have also downgraded our Cape demand forecasts, largely due to the slump in the Chinese steel market over the winter. The net effect was to leave our Cape utilization and freight rate forecasts largely unchanged. PIRA expects bunker fuel prices to increase in the coming months, boosting spot freight rates.

The Soybean Games

The length in soybeans seems to have fallen into slightly less stronger hands. The drop in open interest suggests to us that strong players have left the arena, leaving latecomers with some length. Soybeans remain a money game at this point as fundamental confirmations remain unfounded, except maybe for the Brazilian real continuing to find a bid. PIRA would not be surprised to see this week’s soybean highs hold for a while, while corn may have some room to go.

U.S. Ethanol Price Surged

Lower production and stocks drove the market. Rising corn and oil prices were supportive.

Japanese Crude Stocks Drew

Crude runs rose under the influence of the Kawasaki restart, while imports fell sharply and crude stocks drew 4.8 MMBbls. Finished product stocks built slightly. Gasoline stocks were little changed despite higher demand, while gasoil stocks drew due to a low refinery yield. Kerosene stocks reverted back to building at a rate of 33 MB/D, with higher yield. Refining margins were modestly higher on the week, but they have clearly weakened.

PEMEX Cash Infusion; Production Outlook Unchanged

U.S. gas exports to Mexico continue to ramp higher, with April exports projected to near 3.6 BCF/D, ~1 BCF/D more than the prior year. For the year as a whole, exports to Mexico look equally striking, topping the year-ago period by a similar margin. Such growth has been particularly impressive given that daily flows on Net Mexico (range-bound since January) suggest the commissioning of Los Ramones Phase II – North may have been delayed. Moreover, despite the government’s recent ~$4B capital infusion to PEMEX, reversing structurally declining production will remain difficult, particularly as financial strains within the company limit its ability to invest.

French Policy and Oil Reverse Bearish Run

While the fuel pricing complex has been rallying, driven primarily by recovering oil prices, French President Hollande's formal endorsement of a unilateral carbon floor in France has added a significant dose of risk for prices in the upcoming year. The French proposal is ironically also a gift for German coal-fired generators, as it will lead to higher German exports toward France. At the same time, reported nuclear availability is bullish for German forward prices. Downside risks for gas prices remain a concern for German margins, but we believe current 2017 power prices are already aligned with PIRA's bearish gas prices.

Stocks Mirror 2012 Levels

PIRA estimates that power sector coal stocks have seasonally risen by ~5 MMst as of end-April with demand losses in the power sector to natural gas and other renewables (hydro, wind) exceeding falling production levels. To add insult to injury, mild April weather resulted in flat load levels. PIRA estimates U.S. electric power sector coal stocks will reach 202 MMst as of the end of this month, close to its historic maximum level.

LPG Weekly Scorecard

U.S. propane prices narrowly outperformed the broader energy market last week with May Belvieu 5.2% higher. Butane was better bid, up 6.8% to just under 63¢/gal. Ethane was up only marginally, while natural gasoline prices improved by 3%.

U.S. February 2016 DOE Monthly Revisions: Demand and Stocks

DOE released its final monthly February 2016 (PSM) U.S. oil supply/demand data. February 2016 demand came in at 19.68 MMB/D. Growth was particularly strong for gasoline (+6.4%, 556 MB/D), kerojet (+5.8%, 83 MB/D), and "other" (+4.8%, 218 MB/D), though the overall barrel was up 1.5%, or 284 MB/D. The performance was stronger than PIRA had been assuming in its balances, and total stock levels came in lower than assumed by 4 MMBbls. Warmer temperatures depressed distillate demand performance, but also boosted gasoline demand. End-February total commercial stocks stood at 1,349.5 MMBbls, lower than what PIRA had assumed by 4 MMBbls, but revised up 3.5 MMBbls compared to the preliminary data.

NYMEX Futures Trying to Look Beyond Storage Overhang

The supply-side rebalancing currently under way has seemingly provided the necessary encouragement for sidelined investors, with broad price gains lifting the NYMEX price curve closer to PIRA’s forecast. Moreover, the collapse in drilling and protracted capital constraints implies more headroom for recovery — not just in 2017, but also for 2H16.

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

April weather was warmer than normal by 2% in the three major OECD markets, bringing the month’s oil-heat demand below normal by 17 MB/D. The three-region composite was almost 11% warmer on a 30-year-normal basis.

Market Takes "Show Me" Attitude

Thursday’s EIA release marked the onset of larger and more normal injections after a final push of late season cold limited builds earlier in the month. For the next two releases, PIRA estimates point to similar week-on-week additions near 70 BCF. While that would still trail the year-ago figure, matching those 2015 levels is not an option with a storage surplus at 870 BCF and expected end-month storage near levels seen at the end of June last year.

French President Hollande Blesses the French Carbon Floor

While uncertainties exist on the timing, magnitude and form, the fact that President Hollande — the central political figure in France — blessed the introduction of a French carbon floor "unilaterally" is very notable. The impact of a carbon tax similar to the U.K. could be more significant for French winter pricing, with the summer prices less impacted. With the French market significantly interconnected, this policy move would end up lending support to the surrounding markets, primarily Germany.

The Fed Is Not Likely to Rock the Boat, but What About the BOJ?

U.S. GDP growth during the first quarter, while sluggish, was in line with the market expectation. The Fed stood pat at its policy meeting last week. Based on various signals, it is unlikely that the central bank will make a move at its next meeting in June. The Japanese currency strengthened sharply against the dollar after the Bank of Japan stood pat at its meeting this week. At this point, the monetary easing cupboard may be bare for the Japanese central bank. European GDP data for the first quarter were encouraging, while South Korean data disappointed.

Brazil Production to Remain Buoyant in Low Price Environment

Brazil has been one of the main drivers of ex-U.S. Non-OPEC crude and condensate production growth, growing 375 MB/D from 2012 to 2015 (6% CAGR). Growth is expected to continue at a much lower pace (2% CAGR) until 2020 despite low prices as projects under construction — sanctioned when crude prices were higher — come online. Longer term, Brazil represents the third largest Non-OPEC source of growth (behind U.S. and Canada), with development breakevens around $50/Bbl and a world class resource in the pre-salt formations. More robust growth (4% CAGR) is projected between 2020 and 2025, as new developments come on line.

Solving India's U.S.-Sourced Cargo Dilemma

India’s chronic shortage of gas comes from two fundamental truths: End-user prices are not necessarily high enough to support additional LNG imports for many buyers without additional subsidies, and domestic production is stymied by government limitations on what producers may charge. These structural issues often make LNG imports by India difficult to predict and this past week showed just the latest example. The same week that India was broadly swapping out its long position in U.S. LNG, it was also importing U.S. LNG cargoes for the first time. The longer-term swap arrangement highlights what PIRA sees as an emerging trend around the world: end-user buyers optimizing import costs by cutting new deals with portfolio players in a position to do the optimizing for them.

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.

Casing and completion tools specialist Deep Casing Tools has expanded into the Kazakhstan market with its reaming and unique drillable turbine technology.

The company’s 7” Turbocaser Express™ high-speed reaming system was deployed recently in the Chinarevskoye field where the client had experienced previous casing running issues. The casing reached total depth on first attempt and, following a typical cement program, the Turbocaser Express™ was successfully drilled out with a polycrystalline diamond compact bit on a rotary steerable assembly and next section drilled in one run.

Deep Casing Tools’ technologies provide significant time and cost savings. With the ability to ream while running in, the casing can be run sooner while the hole is in best condition, eliminating wiper trips and open hole exposure time.

The company’s expansion into Kazakhstan has been supported by Oil Tools Services, a Kazakh company based in Aktobe city with a wide established client base. Oil Tools Services established the demand for Deep Casing Tools products in the region by performing market research and identifying several applications where clients had suffered significant non-productive time running tubulars attributed to wellbore instability.

Alan Phillips, Vice President Sales of Deep Casing Tools, said: “Our entry into Kazakhstan is great news for both Deep Casing Tools and Oil Tools Services and is in line with our global expansion strategy. Despite the downturn we are well placed to succeed in this market as our technology saves clients flat time and reduces overall well costs. We look forward to further expansion into Kazakhstan and neighboring territories”

A spokesman for Oil Tools Services Management said: “We are proud to be part of this success alongside Deep Casing Tools. This is the first round of benchmark testing for running production casing with the Turbocaser Express™ versus conventional casing running methods in this region. A professional commitment from the team led to the client’s success by generating value through the application of innovative products and service”

Additional business expansion for Deep Casing Tools includes a record order book in Russia and a first Turbocaser Express™ deployment offshore Netherlands.

Intertek, has launched a new remotely operated vehicle (ROV) potable water tank inspection service that offers clients the option of using ROV’s to inspect their large-capacity water tanks. Potable water tank inspection must be carried out periodically to mitigate health risks to those working on offshore platforms or in other facilities that require their use. Vitally, inspections should detect any evidence of contamination, biofilm deposits, corrosion formation and the growth of Legionella.

Preparing ROV for water tank inspection. Photo credit: Intertek

Typically, potable water tanks are taken out of service to be emptied and inspected directly by personnel, a process which can be hazardous and time consuming, sometimes taking up to three days. Intertek’s new service allows clients to instead send in a mini ROV, which removes the need to drain and refill the tank, mitigates risks to personnel and can ensure that tanks are back in service after 12 hours. When evidence of corrosion or bacteria is detected, Intertek can make treatment recommendations, including operational advice, cleaning, patch recoating or complete tank refurbishment.

Julie Hart, Water Hygiene Technical Manager for Intertek Production and Integrity Assurance, said: “Regular water tank hygiene inspection is extremely important as the tanks can become a breeding ground for Legionella and other bacteria which cause water quality degradation. Our ROV’s deliver close visual inspection which allows for fast, accurate pricing of remedial work. This new equipment and methodology, along with our decades of experience in microbiology, really allows us to provide forerunning services to clients who take these procedures very seriously and prioritize the health and wellbeing of their personnel.

As well as tank inspection and potable water management services, Intertek Production and Integrity Assurance provides clients with a range of related solutions, including legionella management, water system disinfection, microbiological surveys, molecular analysis, media test kits and oilfield microbiology training.

More than 140km of pipeline manufactured at Tata Steel’s recently enhanced double submerged arc welded (DSAW) mill has achieved an industry first by becoming the deepest to be laid in the Mexican section of the Gulf of Mexico.

The company was awarded a contract to supply 457mm OD x 28.6mm WT API 5L PSL2 X65MO line pipe from its large diameter 42” DSAW mill in Hartlepool, UK, for the development.

The project marked the first time that a pipeline had been laid at water depths greater than 3,000ft in the Mexican section of the Gulf.

Photo credit: Tata Steel

Tata Steel was selected for the project due to its extensive experience in the manufacture of small diameter and thick wall deepwater line pipe.

The mill has been the focus of significant recent investment to enhance technology and processes and increase power efficiency. More than 125 improvements were completed in 2015 to strengthen its overall operational and performance capability.

The improvements include significant upgrades to welding equipment using the latest closed loop digital weld control technology to deliver greater weld stability, reduced repair rates, and total traceability of the process. Tata Steel has also invested in a laser profiling system to provide a 3,600 point profile to monitor pipe straightness and provide a full dimensional survey of the pipe end. This data can be used to ensure minimum ‘hi/low’ in girth welding for high fatigue and other applications.

Energy efficient inverters have replaced more than 50 traditional transformers/rectifiers on production lines to enable quick and repeatable set ups at industry-leading levels while cutting the mill’s electricity demand by nearly a third, allowing Tata Steel to produce more pipe with less energy.

The mill’s ‘O’ press control has been upgraded to optimise the forming process, ensuring uniform pressing along the full length of pipes to achieve optimum pipe shape. This has benefits for deepwater operations, as both the shape and balancing of the ‘forming ratio’ of the pipe are critical for deepwater collapse resistance.

Richard Broughton, Commercial Manager, Energy and Power, Tata Steel, said: “Our investment in the DSAW mill and our continuous improvement discipline enables us to offer extremely high integrity solutions to our clients for the most challenging of offshore and onshore projects.

“The overall benefit of the investments can be seen in the welding quality performance achieved during the project in the Gulf of Mexico. Where small diameter and thick wall pipe is typically more challenging, on this project a combined repair rate of 0.25% was achieved. This was delivered not only due to the investment in welding technology, but also through a programme of continuous improvements in the welding area which has seen similar developments across many sizes of pipe.

“The manufacture also demonstrated a more sustainable approach to production, with reduced energy utilisation through the deployment of digital welding control. Our new inverter based power sources have significantly improved welding machine availability and have resulted in an increase in power efficiency from 60% to 95%.”

The Johan Castberg development has faced numerous challenges since inception. If production in the Barents Sea wasn’t difficult enough, Statoil has had to contend with changes to Norwegian Tax laws as well as disappointing drilling results. In May 2014, it was confirmed that of five exploration wells drilled in the area, only two yielded oil reserves: the Skavl and Drivis fields. This initially challenged the viability of commercial development, however, it now appears Statoil may have found a solution.

Low oil prices have pushed back Johan Castberg’s onstream year considerably. In the current climate, development of such a technically challenging field – in the hostile waters of the Barents Sea – might seem an impossible proposition. However, against the odds, it appears the project could go ahead with first oil in 2022. Statoil’s Chief Executive recently stated production costs at the field have been nearly halved since the oil slump, which raised the question - how?

Construction costs have dropped considerably since the downturn, with EPC providers bidding aggressively on the few contracts available. Yet with oil prices remaining low, reduced contractor rates are not enough to ensure the viability of complex projects. Put simply, a pragmatic approach to developments is needed. Costs at Johan Castberg have been cut by reducing the number of planned production wells and choosing a single FPSO rather than an FPSS and pipeline – reducing the break-even price for the field from ~$80 a barrel to ~$45.

The story is remarkably similar to that of Mad Dog Phase 2 – another field that has arguably suffered from over-engineering and has endured numerous development plans: A spar, TLP and an FPSS were all considered by BP, before committing to an FPSS – later cancelled due to inflated costs. With lower supplier costs and a company focus on re-engineering BP have managed to make the project commercial, bringing the break-even price down from ~$110 a barrel to ~$50.

Both fields demonstrate that even in a low oil price environment, complex fields can still be developed by utilising a pragmatic approach. Keeping costs at a manageable level over the next cycle will be the challenge - when the oil price recovers will the industry revert to its old ways?

Mike Green, Douglas-Westwood London

On Thursday, April 28, at a special reception for clients and business partners, Next Generation Marine announced the opening of its global headquarters in the New Orleans Metropolitan area in May. The new headquarters will serve as a central hub for Next Generation's thriving marine operations. In addition, the marine start-up celebrated the christening of two of its newest vessels at the Port of New Orleans Thursday night. 



"The marine industry is booming in the metro area and we are confident that our business will thrive here," said Captain Eddie Compass, IV, CEO of Next Generation Marine. "Contributing to the marine industry here in New Orleans is something I've always dreamed about, and now we have the opportunity to do it." 

Next Generation Marine is one of only two African-American owned marine transportation companies in the country to own and operate its fleet of vessels. Next Generation Marine was founded in 2015 by Eddie Compass, IV, and Julien Chouest, II.

"The marine and maritime industry is such a vital part of Louisiana's economy, and like most industries, it has been vastly under represented by people of color," said Congressman Cedric Richmond. 

Compass, a New Orleans Native, has more than 10 years working in the marine and maritime industry. He has traveled around the world logging time in Chile, Lima Peru, Ireland Angola, and Trinidad to name a few.

Compass earned his Bachelor of Science in Marine Transportation from the Maritime Academy Texas A&M University. 

The company expects to hire an additional 60 employees by May 2017. This will bring the total employees from 40 to nearly 100. Salaries range from $60,000 for deckhands to six figure salaries for captains.