Seatronics, an Acteon company, and part of its survey, monitoring and data business segment, has announced the appointment of Kevin Strachan as head of finance. The new role will require Strachan to lead the finance function in each of Seatronics’ global bases and divisions.

Strachan holds a masters degree in accounting from Aberdeen University, and a chartered accountant designation from the Institute of Chartered Accountants of Scotland. With more than 20 years of experience, he has held a number of managerial roles, including chief financial officer at Chantry Networks in Toronto, Canada, and group financial controller for the Ferguson Group in the UK.

Phil Middleton, group managing director, Seatronics, said, “Seatronics welcomes Kevin to the company in this new role. Kevin has an impressive track record, and we are looking forward to him adding significant value to the management team at Seatronics as we continue to develop our strategic goals in this challenging market.”

Strachan said, “I am excited to join the successful team at Seatronics and look forward to supporting the company's position as the global leader in the rental and sale of marine electronic equipment.”

The Brave Tern, a vessel used for the installation of wind turbines at sea, dominated the Rotterdam skyline on February 23rd. The 132 meter long ship was jacked up to a height of about seventy meters to test its extended legs.

The Brave Tern is owned by Norwegian Fred. Olsen Windcarrier. The vessel has four so called jacking legs with which she can position herself firmly on the seabed. The four legs of the Brave Tern are extended with fourteen meter each up to 92,4 meters during recent weeks in Rotterdam.

The upgrading of the jacking legs of the Brave Tern is executed by Franklin Offshore Europe in Rotterdam in close co‐operation with SRC from Estonia. In Rotterdam the extended legs are tested by jacking up the Brave Tern.

Also the frame and the boom of the ship’s crane are extended, in total of twenty meters. The crane is now capable to lift up to 120 meters above the deck of the Brave Tern.

The modifications of the 2012 build Brave Tern are necessary because wind turbines become more heavy and the blades of the rotor blades becomes larger. Also wind farm are installed in deep water more often. Sister vessel Bold Tern will get the same upgrade later this year.

The Brave Tern is now capable of carrying four complete ‘multi megawatt’ turbines, including towers and rotor blades. The vessel can operate in water depths up to sixty meters.

The Brave Tern will first do a maintenance job at the North Sea, before heading to the US east coast where it will assist in the construction of the first US offshore wind farm.

Franklin Offshore Europe in Rotterdam is a world leading service provider for the offshore industry. The company is part of Singapore headquartered Franklin Offshore with offices in Australia, Indonesia, South Korea, Azerbaijan, Qatar and the USA.

Fugro has been awarded an inspection, repair and maintenance (IRM) contract by Petrobras in Brazil.

Under the contract Fugro will deploy its new 83-meter ROV support vessel, Fugro Aquarius, for the IRM activities. The contract duration is one year with an option for an additional year.

Fugro Aquarius has been designed specifically for operations in the challenging conditions offshore Brazil. Capable of operating in water depths of 3,000 metres, the vessel was built in Brazil and the local content exceeds 60%. Specialised equipment on board includes two 150HP Fugro FCV3000 work class ROV systems.

Commenting on the award, Mathilde Scholtes, Managing Director, Fugro Brasil, said, “This contract reinforces Fugro’s market leadership in the IRM segment in Brazil and underlines the success of Fugro’s long-term relationship with Petrobras.”

Operations will commence in April 2016.

Harkand has signed a new joint venture agreement with Esopeg Lda in Angola, its first strategic partnership in the country and third in the region as the global inspection, repair and maintenance (IRM) company continues to strengthen its capabilities across West Africa.

The newly formed company Harkand Angola Lda, based in Luanda, will focus on the development of local IRM capabilities and services in country, providing support and local content on both large major capital development projects and maintenance to existing ageing operations. It makes the full spectrum of Harkand’s ROV and diving, inspection, engineering, project management and survey services available to the Angolan market.

“Harkand is very proud to bring its technology transfer, technical expertise and training contribution to the developing local subsea oil service sector in Angola,” said general manager for Africa, Doug Fieldgate.

“This new venture, combined with the operations of the Swordfish DP2 multi-purpose vessel in the country, provides a very sound and sustainable operational basis for further development and growth both in Angola and the African region as a whole. We are now in position to offer all our knowledge, assets, services and support to all of our international and locally based clients operating in the area.”

Harkand has forged a number of strategic partnerships as it progresses its ambitious global growth strategy. In the past 12 months the company has established joint ventures in Nigeria and Ghana, facilitating the delivery of its suite of integrated subsea services to the West African marketplace.

Chief executive officer John Reed said: “Angola is amongst the most resilient of the African regions in this sustained lower oil price climate. The joint venture in this country is a key milestone in the deployment and continued growth of Harkand in Africa.

“It not only strengthens our ability to respond to the needs of our clients, it complements our network of partnerships and local companies already operating in Ghana and Nigeria and makes a clear statement of Harkand’s commitment to becoming an integral local and sustainable player in all the regional markets we work in.”

On Tuesday, March 1^st, the Deepsea Atlantic drilling rig commenced on the first of a total of 35 wells to be drilled in the first phase of the Johan Sverdrup field development.

“The Deepsea Atlantic drilling rig is currently predrilling the first production well for the first phase of the Johan Sverdrup development. This is a central operation in a complex Johan Sverdrup puzzle. Predrilling allows the production capacity on the field to be utilized as efficiently as possible when Johan Sverdrup has come on stream late in 2019. This way, we maximize value from the field from day one,” says Kjetel Digre, senior vice president for the Johan Sverdrup project.

The exploration rig Deepsea Atlantic. (Credit: Statoil. Photo: Marit Hommedal)

The rig is drilling the first production well through a predrilling template that was installed on the field in the summer of 2015. A total of eight wells will be drilled through the predrilling template, before the rig is relocating to drill injection wells on three locations on the field.

In 2018 the permanent Johan Sverdrup drilling platform will be installed as the second of four platforms. The drilling platform is currently being constructed at Aibel’s yard in Haugesund, north of Stavanger, and in Thailand. When the drilling platform is installed and operational, the eight predrilled wells will be hooked up from the predrilling template. At this point Deepsea Atlantic will be drilling the injection wells providing reservoir pressure support to maintain high field production.

The operator Statoil, the rig owner Odfjell Drilling and the drilling service provider Baker Hughes have cooperated closely to ensure safe and cost-effective deliveries. The Johan Sverdrup project introduces integrated drilling services as a new concept, which means that Baker Hughes will provide the main deliveries together with Odfjell Drilling.

“Statoil and the drilling service providers have worked as an integrated team in planning the drilling operation. Deepsea Atlantic is a good rig and everything is set for a safe and cost-effective drilling operation on Johan Sverdrup. This is vital to ensure production start from the field at the end of 2019,” says Digre.

The contract for integrated drilling services worth NOK 1.5 billion was awarded to Baker Hughes on 6 July 2015.

The contract for rig and drilling services on Johan Sverdrup, totalling more than NOK 4.35 billion, was awarded to Odfjell Drilling on 15 June 2015.

Contracts worth more than NOK 50 billion have been awarded by the Johan Sverdrup project. More than 70% of them have been awarded to suppliers with a Norwegian billing address.

Facts about Johan Sverdrup

Johan Sverdrup is one of the five biggest oil fields on the Norwegian continental shelf.

With expected resources of between 1.7 – 3.0 billion barrels of oil equivalent, it will also be one of the most important industrial projects in Norway over the next 50 years.

Peak production on Johan Sverdrup will be equivalent to 25% of all Norwegian petroleum production.

First-phase investments estimated int the plan of development and production (PDO) at NOK 117 billion (2015 value)

Daily production during first phase estimated at 315,000 – 380,000 barrels per day

Peak production estimated to reach 550,000 – 650,000 barrels daily

Partners:

Asset Guardian Solutions Ltd (AGSL), which specializes in protecting companies’ process control software assets, announced that Total E&P UK has selected its software management platform Asset Guardian. The software will help to secure the integrity and improve management of the process control software used to operate Total E&P UK’s offshore developments in the North Sea.

Asset Guardian software offers a multifaceted, single point solution to manage all requirements associated with the process control software systems that are used to operate key oil and gas assets. Amongst its wide range of capabilities, Asset Guardian provides a centralized, secure repository for storing software files, disaster recovery and software version control.

Total E&P UK’s Elgin - Franklin development in the North Sea

Using Asset Guardian to centralize the management of process control software ensures that authorized personnel - onshore and offshore - have access to the same information, while the workflow built into Asset Guardian prevents simultaneous changes being made to software configuration code. Asset Guardian’s use of MD5 Checksums software provides integrity assurance of files during upload, storage and download.

As part of the project, AGSL is also providing AGSync software, which allows data and files to be seamlessly synchronized between multiple onshore and offshore locations. The ability to synchronize servers will allow Total E&P UK engineers based onshore to transfer new versions of software directly and speedily to engineers located offshore, removing the need to fly software files to remote locations. It also reduces the requirement for transporting software on portable media, which enhances cyber security.

The first Total E&P UK offshore asset to have access to Asset Guardian will be the Elgin Franklin and following a test period the software could then be deployed on other Total E&P UK offshore assets.

“We are extremely pleased to be providing Asset Guardian to Total E&P UK. Installation of Asset Guardian and AG Sync is well underway,” said Sam Mackay, Managing Director of AGSL. “The Asset Guardian solution will complement existing process control software management procedures.”

To support the project, AGSL engineers will assist Total E&P UK with the installation of Asset Guardian software and provide User and Administrator training.

Since 2004, AGSL has been supplying the oil and gas industry with the Asset Guardian toolset. Dana Petroleum, Woodside Energy, GDF Suez, Inpex, Dolphin Drilling, Stena Drilling, BP, Nexen Petroleum and nuclear energy provider EDF Energy are among those using Asset Guardian to protect and enhance management of their critical process control software assets.

Statoil Exploration (Ireland) Limited has been awarded six Licensing Options in Ireland’s 2015 Atlantic Margin Licensing Round.

Statoil will be the operator of four Licensing Options and partner in two Licensing Options, operated by ExxonMobil Exploration and Production Ireland (Offshore South) Limited. Ireland’s Department of Communications, Energy and Natural Resources (DCENR) yesterday published a map with grid locations for the Licensing Options awarded in the first phase of this licensing round.

The six Licensing Options awarded to Statoil total approximately 7,700 km2 in the Porcupine Basin in water depths ranging between 1,100 and 3,150 meters. Statoil and ExxonMobil each hold 50% equity in all the Licensing Options.

Work program commitments are limited to 2D and 3D seismic surveys to be acquired during 2016 and 2017. The analysis of that seismic data will then determine whether the company will seek to convert the Licensing Options into Frontier Exploration Licenses, enabling possible exploration drilling at a later stage.

"We are pleased with these awards that will see Statoil re-entering the Irish exploration scene. This supports Statoil`s exploration strategy of early access at scale and enables us to apply the exploration knowledge and experience we have gained globally and specifically on the conjugate margin offshore Newfoundland. We look forward to working with ExxonMobil on exploring these opportunities,” says Erling Vågnes, senior vice president Exploration Northern Hemisphere Statoil ASA.

Statoil has had a presence in Ireland since 1992. Currently, the company’s main asset in Ireland is a 36.5% interest in the Shell operated Corrib gas field off the country’s north-west coast.

Sentinel, a Beier Radio company, has designed and manufactured a new Rudder Feedback Unit (RFU) with many innovative features long sought by the marine industry. Unlike other RFU’s on the market, Sentinel’s new RFU has watertight components and connections that can be flooded in up to one meter of water for a 24-hour period and still provide accurate positioning for control systems.

The unit provides precise rudder position feedback via four non-contact inductive resonance encoders with IP67/IP69K degree of protection. The encoders are mounted in a custom-designed RFU enclosure constructed of 3/8” nominal impact, highly corrosion resistant Vintec I ^® PVC to IP68 standards. The RFU utilizes IP68-rated proximity sensing limit switches providing accurate, non-contact electrical travel limits.

Sentinel manufactured Rudder Feedback Unit.

“Our engineers have designed an RFU that meets the environmental demands of today’s inland and offshore vessels,” says David Lirette, Vice President of Manufacturing for Sentinel Control Division of Beier Radio. “Where other units in the past have been completely damaged by water intrusion, this unit can survive complete submersion and still provide accurate positioning to the control system.”

“RFU design has not changed in more than 30 years, and Sentinel recognized the industry’s need for a more reliable steering system. We spent two years designing and testing multiple prototypes to make a feedback unit that eliminates issues with previous technology, and Sentinel is pleased to now offer this innovative new design to the marine industry,” Sentinel Design Engineer James Cole.

IP67-rated external connectors match factory-supplied cables that are available in five pre-cut lengths, and drilling is not required, reducing installation time. The stainless steel linkage shaft is adjustable from 3” to 15-5/8” length from center of rotation. The RFU has no internal wiring, which eliminates wiring errors and faults. The inductive resonance encoders feature voltage and current outputs that can interface to the majority of steering and dynamic positioning systems available on the market today and are programmable to provide maximum resolution within any span of rotation.

The RFU is designed and manufactured by Sentinel at Beier Radio’s 20-acre facility in Gray, La. Sentinel is an original equipment manufacturer of high quality control and instrumentation products and systems and is an affiliate of Beier Integrated Systems and The Marine Training Institute within the Beier Radio family of companies. Additional Rudder Feedback Unit specifications are available at www.BeierIS.com.

It is not the intent of Sentinel Control to install this unit in a tank or compartment designed to be flooded, however, if the steering compartment becomes flooded, this unit is designed to operate submerged and provide accurate position information allowing the vessel to be maneuvered to a safe area for repair.

Global inspection, repair, maintenance (IRM) and light construction company Harkand has been chosen to deliver installation work to support a leading US headquartered operator with its existing drilling campaign in the Nevis South Field in the North Sea.

The project will see Harkand provide project management and engineering services and deploy its personnel and one of its dive support vessels (the Harkand Da Vinci or Harkand Atlantis) to install new subsea equipment for North Sea subsidiary Apache Beryl I Limited (Apache). The scope of work has been called off against the master service agreement (MSA) the IRM firm signed with the operator in 2014.

Harkand previously performed tie-in work in 2015 for the Nevis S67 well at the Beryl field and a Beryl midline disconnect scope under the contract. The company also supported Apache with phase 1 of the Aviat development which included preparation work and platform tie-ins of the newly installed Aviat flowline.

Harkand Europe managing director David Kerr said: “In this low barrel price climate, our strong reputation for quality and operational efficiency is proving to be particularly appealing to operators in the region.

“Being selected for Apache’s latest campaign builds on the strong relationship we have established with this key operator over several years. We are committed to delivering the same high standards of safety, quality work and performance for them on this project and in the most efficient manner.”

Apache’s subsea projects manager Patrick Duggan said: “For this latest campaign, Apache have selected Harkand, which aligns with the company’s project culture of pace, innovation and excellence. We are committed to build upon the successful previous performances on the Nevis and Aviat work scopes and see Harkand as an ideal partner in this project.”

Gibdock has confirmed its role as one of the offshore industry’s pre-eminent shiprepair and conversion yards through its selection for the afloat mobilization of Seajacks Scylla, the largest and most advanced windfarm installation jack-up ever built.

Following delivery to Seajacks by Samsung Heavy Industries at the end of 2015, Scylla was discharged to Gibraltar waters from the heavylift transporter Osprey before being towed into Gibdock for reactivation works at the yard’s South Mole.

“This is a remarkable acknowledgement of Gibdock’s emergence as a yard of choice for owners wishing to mobilize offshore assets,” said Richard Beards, Managing Director, Gibdock. “Our location at the gateway to the Mediterranean and our accreditation for offshore work are proving pivotal for owners in the high specification offshore industry. The arrival of this state-of-the-art jack-up also demonstrates that the sector’s true innovators recognize Gibdock as their first option for quality workmanship and on time completion.”

Gibdock was chosen for the mobilization of Seajacks Scylla, the largest windfarm jack-up ever built

Kevin Alcock, Seajacks Vice President New Build Projects, said: “We are very pleased with the assistance given by Gibdock in the successful reactivation of Seajacks Scylla following delivery to Europe. Gibdock has proved to be a very competent and flexible shipyard. We look forward to working with them again in the future.”

Seajacks Scylla completed reactivation in record time (five days) and departed for Great Yarmouth (UK) in preparation for starting her first contract with on the Veja Mate offshore windfarm in March, off the coast of Germany.

Scylla has been designed to meet demands set by North West European markets, including those associated with working UK Round 3, Scottish territorial waters. The self-propelled jack-up is equipped with a 1,540T leg-encircling crane, can install components in water depths of up to 65m, and can transport monopoles and turbines of up 7-8MW capacity. She is the fifth modern, specialized offshore vessel to join the fleet of UK-based Seajacks.

Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY) announces the award of a major(1) contract by BP, and partner DEA (Deutsche Erdoel AG), for the development of the Giza, Fayoum and Raven subsea fields offshore Alexandria, Egypt.

This is the second phase of the West Nile Delta project, where the field development will be at depths of up to approximately 800 meters.

The contract scope includes engineering, procurement, installation and pre-commissioning of the subsea infrastructure from twelve wells, with 80 kilometers of umbilicals and 220 kilometers of pipelines. It also includes the installation of the export lines from the subsea location to the Idku terminal.

Engineering and project management work will commence immediately and will be undertaken at Subsea 7's Global Projects Centre in London. Offshore installation is scheduled to commence in two stages.

The first stage, commencing in 2017, will comprise the landfall and shallow water pipelay, and the second stage, commencing in 2018, will involve the installation of deepwater pipelines and execution of the SURF scope. Subsea 7 vessels Seven Borealis and Seven Antares will be used for the pipelay, with the heavy construction vessel, Normand Oceanic, being used for the other construction activities.

Øeyvind Mikaelsen, Executive Vice President Southern Hemisphere and Global Projects said: "This major contract awarded by BP recognizes our performance during the first phase of the West Nile Delta project and allows us to deliver synergies across multiple work packages. Our early engagement on this project has enabled BP and Subsea 7 together with DEA to develop an optimized solution for the development of the Giza, Fayoum and Raven fields and demonstrates the effective collaboration between us. We look forward to consolidating our presence in Egypt and building on our long and successful relationship with BP."

(1) Subsea 7 defines a major contract as being over USD 750 million.

NYC-based PIRA Energy Group reports that Asia continues to drive global oil demand growth. In the U.S., product stocks drew. In Japan, crude runs are little changed; imports fell and stocks drew. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Asia Continues to Drive Global Oil Demand Growth

Oil markets remain structurally weak for the near term due to turnarounds and as Iranian crude oil exports increase and will take time to rebalance. Asia continues to drive global oil demand growth despite the economic slowdown in China. Asian refinery runs will increase this year with capacity expansions and higher runs in Chinese “tea kettle” refineries. Gasoline cracks will continue to outperform diesel cracks this year.

Gas Prices Collapse Underweight of Outsized Storage Inventories

After briefly breeching the former low set in late December, the NYMEX nearby contract went off the board at ~$1.71/MMBtu — setting the stage for a March Henry Hub Bidweek price that will be ~50¢ below February and also marking a low for the benchmark not seen since March 1999. Much is riding on the demand and supply response to such prices considering the fallout on U.S. and Canadian storage tied to the collapse in heating loads during February. The South Central will account for ~50% of this month’s overall expansion in the year-on-year U.S. storage surplus. The resulting end-February overhang is clearly an impediment standing in the way of a near-term price recovery, especially after considering the South’s increased exposure to Appalachia supply tied to pipeline capacity additions between the regions. Still, given the lack of any draw last March, that surplus is likely to start to contract. Moreover, the acute price weakness now in effect also stands to accelerate U.S. production weakness — even in Appalachian.

February Blows Warm and Is Gone with the Wind

German forward prices are no longer allowing the most efficient coal units to fully recover their fuel, transportation, and carbon costs. Hedging strategies are in part to blame, as power generators continue to sell to secure cash. French prices are more likely to firm, as France will see a heavier nuclear outage schedule this year, while draconian cost cutting measures will undermine nuclear output. Italian prices have been undermined by improving hydro (not only in Italy itself, but also Alpine region) and higher imports from both France and Switzerland. 3Q contract is trading with a €2-3/MWh risk premium.

Coal Pricing Mixed Despite Stronger Oil Market

A general increase in oil pricing helped give the coal market an uplift, although API#2 (Northwest Europe) prices actually lost ground last week. API#2 gave back some, but not all, of the sizeable gains made last week when the market surged on labor strike risk from Colombia. In the Pacific, some signs of stabilization in China’s buying activity along with the rise in oil prices allowed API#4 (South Africa) and FOB Newcastle (Australia) to rise modestly. PIRA continues to believe that API#4 prices remain too strong relative to FOB Newcastle, and we expect more downside for API#4 over the next 90 days, barring unforeseen supply disruptions.

California Carbon Auctions Undersubscribed

With CA/QC allowance prices having fallen below the auction floor in the secondary market, auction results released today indicate both the current and future vintage auctions were undersubscribed — a first for California. Demand was more than sufficient to allow for the sale of all allowances consigned to auction on behalf of CA entities. Unsold allowances will be offered at future auctions — generally when/if auction pricing exceeds the reserve price for two consecutive auctions.

Production Rises, But Stocks Fall

U.S. ethanol production has increased for three consecutive weeks, reaching 994 MB/D, the fifth highest level ever reported. Ethanol inventories dropped from a record high in the previous week, falling by 113 thousand barrels to 23.1 million barrels.

Pressure Continues

Late Friday afternoon saw the wheat short set a record in one COT category while Nidera registered 227 new certificates for delivery against the March soybean contract. No wonder that SRW made a new low last week while soybeans had five losing days in a row.

Currency Depreciation Offsetting Some, But Not All, of the Consumer Benefit of Low Crude Prices

PIRA’s analysis of retail fuel prices around the world shows that the decline in fuel prices is not keeping pace with that of Brent. On a demand-weighted average basis, we estimate that global gasoline and diesel prices are down 40% from July 2014 to January 2016 in U.S. dollar terms, compared to Brent’s 70% fall. Part of the discrepancy can be attributed to subsidy and pricing reforms, fixed taxes, relatively stable downstream margins, and tight gasoline supplies in some locations. But currency depreciation is also having a notable impact. Gasoline and diesel prices in local currency terms are down less than 30% over the period. We estimate that currency weakness versus the dollar is offsetting roughly a third of the price benefit of low crude prices for local consumers. Even so, realized fuel price declines are still substantial and, in our view, will continue to support global oil demand this year.

Financial Stress Eases

Financial stresses eased again this past week. For the second straight week, the S&P 500 rose Friday-to-Friday and on a weekly average basis. All of the other indicators, such as volatility, high yield debt and emerging market debt, also staged varying degrees of improvement. The U.S. dollar has been increasingly mixed. Debate on a U.K. withdrawal from the EU has fed weakness in sterling. Commodities ex-energy are looking significantly better the last several weeks.

Gasoline Cracks Will Strengthen, But Not as Strongly as in 2015

Growing crude stocks continue to weigh on Brent structure for next few months, but fundamentals are starting to improve. Gasoline strength will return and will outperform diesel, partially echoing 2015. Product stock levels grow, but not uniformly as refiners shift yields from middle distillates toward gasoline. Refining margins will recover from recent decline and stay generally healthy, and runs stay reasonably high through the summer before weakening.

North American Gas Forecast Monthly

North American gas market fundamentals have assumed a much less bullish posture, starting with an end-March storage carryout now expected to be within striking distance of 2.3 TCF, ~0.2 TCF above our month-earlier Reference Case. A collapse of February gas-weighted heating degree days relative to normal was the principal cause, but other factors have played a role. Production, led by Appalachian Basin, has made a strong recovery of late, fostering doubts about a near-term Lower 48 rollover. PIRA’s Reference Case sees limited marketing opportunities and capital spending, making the region’s growth prospects even more vulnerable. Sequentially stronger western Canadian gas production of late, coupled with unusually flush inventories, also poses a greater perceived supply side threat to tighter U.S. gas balances.

European LPG Prices Pulled Higher by Broader Markets

European LPG prices firmed, but mostly due to the strength in crude and naphtha prices and not as a result of a tightening supply and demand situation. The region remains well supplied, particularly as larger fully refrigerated cargoes are now loading in Marcus Hook, Pennsylvania, and will be increasingly pointed at the region due to proximity. March propane futures added $22/MT to $256/MT, while cash butane cargoes were called a somewhat narrow $20 higher.

Outlook Forum Mission Accomplished

On paper, the USDA was able to keep carry-outs below 2 billion, 500 million, and 1 billion, its goal going into the Outlook Forum. The questions remains, however, can it last? Without a major weather disruption during the upcoming growing season, prospects for a price recovery seem bleak.

U.S. Ethanol Prices Increase

Ethanol prices rose last week despite record inventories. Manufacturing margins were steady and sufficient for most plants to operate at high rates.

Global Equities Post Another Positive Week

Global equities posted a second straight week of gains, rising 1.1%. The Americas continue to outperform. In the U.S, almost all the tracking indices were higher on the week. Retail, housing and materials all outperformed, while utilities lagged and were neutral on the week. Internationally, the tracking indices were more mixed. Japan, Latin America, and BRICs all outperformed.

Dry Bulk Shipping Market in Crisis Mode

Last month, we discussed the unprecedented collapse in dry bulk freight rates highlighting the breadth, speed, and extent of the rate declines. It is much the same story this month. Hopes that the Chinese, on returning to work after their Lunar New Year holidays, would provide some market momentum have been all but dashed. While Chinese economic data have been delayed by the holidays, the dry bulk freight market has provided its own measure on China’s faltering physical demand for raw materials and it remains ugly. As hopes of a demand-led shipping recovery dwindle, the focus is shifting to supply-side responses. The sheer scale of the dry bulk shipping crisis is starting to have some significant consequences.

U.S. Commercial Stocks Draw

Strong product demand was reflected in a product stocks draw for the week of February 19, while lower crude runs contributed to a crude stock build. This build in crude stocks occurred in spite of mounting evidence that the pace of declines in domestic crude supply has quickened. Gasoline production has begun to transition to a lower RVP content, and this will be reflected by lower butane use and lower gasoline yield. Next week we expect flat crude runs to contribute to another crude stock build, but low runs also contribute to product stock draws.

The Tug of Oil and the Weight of Supply/Demand

Gas is continuing its search for demand as it sets to enter the last month of the winter. February has been another warm month across major gas-consuming markets in Europe. Temperatures are up significantly over last month and are quite high historically.

California Allowances Can Be a Source of Cash for Challenged Oil Producers

California carbon allowance prices dropped dramatically, crashing through the auction floor, indicating expectations that the current vintage auction was undersubscribed — a first for CA. Environmental commodity markets well beyond California have also been sliding over the past two months. For California carbon, financially challenged oil producers that receive free allowance allocations but do not face immediate allowance surrender requirements could sell allowances to raise cash, in turn boosting near-term supply — a phenomenon observed in the EU ETS in the past.

Japanese Crude Runs Little Changed; Imports Fell and Stocks Drew

Crude runs showed very little change for the second straight week. Imports fell back and stocks posted a draw. Finished product stocks drew due to declines in naphtha, fuel oil, and jet-kero more than offsetting lesser builds in gasoline and gasoil. Demands were broadly lower and considered soft. Margins continued to weaken, extending their decline from peak December levels.

The U.S. Is Better, but It Can’t Carry the World Economy Alone

U.S. economic growth is picking up pace, powered by strengthening consumer spending. GDP growth for the fourth quarter was revised up, and households significantly increased their spending during January. Manufacturing-related activity data (such as industrial production and durable goods orders) were constructive in January. But based on a historical pattern, the U.S. strength is probably not sufficient by itself to lift the slumping global manufacturing sector. Important economic events pack the calendar for the next few weeks.

U.S. Exports Debut Amid Unstable Arbitrage Outlook

The recent plunge in Henry Hub prices, combined with some support for NBP prices at current levels, has made this U.S.-Europe trade look quite appealing — so appealing that it is hard to make a case for the U.S. LNG to go anywhere else other than to South America, which is typically looking at paying the netback equivalent that would be captured by sending the cargos to Europe. Europe also has several buyers in the Mediterranean gauging the relative value of LNG versus oil-indexed prices.

Gulf of Mexico Production to Demonstrate Short-Term Resilience, Medium-Term Weakness

Gulf of Mexico crude production has grown at a 7% CAGR since 2012 and is expected to continue to grow at this pace until 2017. The resilience is the result of the ramp-up of recent projects and the start-up of new projects already under construction. However, low prices will have medium-term impacts as project sanctioning has slowed, causing few projects to come online in the 2018-2020 period. PIRA expects GOM crude production to grow from 1,550 MB/D in 2015 to 1,800 MB/D in 2017, then decline by 200 MB/D to 1,600 MB/D in 2020. Longer term, we expect production to breach its 2017 highs by 2023 as projects currently in the appraisal/definition stage come online.

Supply Growth Becomes Increasingly Unaffordable

While March signals the approaching official end of the heating season, the dearth of degree days in February has seemingly convinced the market that the winter has already concluded — given the improbability of clearing excess seasonal inventories. Thursday’s extraordinarily light 117 BCF draw, relative to expectations pinned ~20 BCF higher, likely represents the final triple-digit draw of the season. The fundamentals for the week-in-progress suggest that withdrawals have plummeted to a historically bearish seasonal level in the low-30s, with only three other sub-40 weekly readings ever recorded in February (1995, 2006 and 2009). Thereafter, milder weather and the transition to spring will significantly limit the call on storage through end March.

Oil Substitution Re-Enters the Debate as U.S. LNG Turns South Before East

PIRA sees every reason for the deterioration of bids in Asian spot markets to continue in the month ahead. Regional gas markets will be entering the lowest period of the year for seasonal gas demand and, additional LNG supply from Gladstone, APLNG, and Gorgon is scheduled to emerge from Australia alone. Buyers may not be in too much of a hurry to lock down spot volumes given the circumstances and the position of buyers to lift more contract LNG as the new trains emerge.

Russia and Turkey’s Gas Price Dispute Leaves Gas Flows Lower

Russian Gazprom reduced daily natural gas supplies to Turkey by around 50% from Feb. 10 along the western line. The company decided to reduce its natural gas flow after a price dispute with private buyers in Turkey. Earlier it was reported that Gazprom, which was in discussions with six Turkish private companies on Jan. 29, cancelled the 10.25% discount applied on natural gas supplies from Gazprom from Jan. 1 this year.

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. To read PIRA’s Market Recap first, subscribe to PIRA Perspectives here.

Situated approximately 80 kilometres off the east coast of Trinidad and Tobago, this unmanned gas platform holds a special place in one major oil operator’s family. Since it went into production in 2009, it has become one of the largest net producers of natural gas in the operator’s global portfolio.

The platform’s average production is around 600 million standard cubic feet of gas per day (or 600 MBTU per day) in addition to associated condensate, from four wells at a depth of approximately 300 feet (90 metres). These figures make the platform a significant revenue generator for the Trinidad and Tobago operation.

The challenge: sand and the sea

As with any asset, maintaining integrity to ensure optimum output and meet regulatory requirements is a priority – which presents its own logistical problems in an offshore, unmanned platform.

Sand erosion is a particular challenge and one that the operator was conscious of from the outset. Traditionally difficult to detect and evaluate, the rate of erosion is rarely linear over time, and intensifies rapidly with an increase in flow rates. Sand can remove metal and cause damage very quickly. Operators must therefore walk a careful line between conservative production rates, which lower revenues, or driving the assets harder and increasing the risk of unplanned outages or even loss of hydrocarbon containment.

Permanently mounted acoustic sand detectors and alarms were deployed on the stainless steel topside risers of the platform. These sensors could detect the presence and quantity of produced sand, and therefore indirectly indicate the likelihood of erosion taking place. However, they provide little information about the shape, size and hardness of the sand particles however – all of which can significantly affect metal erosion rates.

Intrusive methods, that place a sacrificial probe inside the fluid stream and measure its demise as it corrodes or erodes, are also able to indirectly detect periods of high wear. However, since they are not measuring the pipework, they do not give the operator an understanding of the actual asset condition. Intrusive methods also come with additional hazards, getting the worn probe out from inside the pipe is a skilled and dangerous activity. Safety concerns around online probe replacement are causing many operators to reduce their use, or not replace them once they have expired.

The acoustic sand detectors and intrusive probes were not able to measure the actual impact of the produced sand – metal loss - on pipework integrity as it happened. Instead of continuous monitoring of asset piping integrity during production, maintenance operatives had to take periodic manual wall thickness measurements and make incomplete extrapolations on erosion rates using very minimal data sets. The reliance on manual measurements was made more expensive by the hard-to-access site: a dedicated crew of four was helicoptered in every three months to inspect the integrity of the topside risers and pipe work. In addition, the acoustic sand sensors had to be recalibrated on-site every six months.

The operator also ran computational models to understand the impact of given levels of sand production. But the shortage of actual integrity measurements meant that the production rates were being throttled back substantially to avoid sand erosion issues.

The solution: continuous wall thickness measurements

As one of the most advanced and technologically sophisticated platforms in the operator’s estate, they wanted to ensure that production was optimised to maximise revenue and increase payback from the significant capex investment.

Tom Fuggle, Business Development Director at Permasense said, “The initial discovery well for this platform indicated that there was upwards of two trillion cubic feet of natural gas in place. For the client, sand erosion wasn’t solely a question of maintaining its assets, essential though that is. They also wanted to maximise output from this significant discovery. But increasing production without understanding the immediate effect on well integrity would be as reckless as driving blind in the Monte Carlo rally – with equally damaging consequences.”

The operator had previously worked closely with Permasense to develop a new method of measuring the level of erosion and corrosion within piping. Already installed in all of its refineries, a programme to roll out the technology to upstream assets was underway – and this platform was identified as a valuable target where the technology would offer significant advantages.

The Permasense solution uses proven ultrasonic principles for measuring the thickness of any fixed equipment. But instead of relying on inspection teams to periodically take these measurements and record them manually, permanently mounted sensors deliver their data wirelessly to existing communications infrastructure used by the onshore operations team. The team can then view and analyze the information without leaving their desks.

Implementation: targeted measurements and instant data

Permasense sensors were initially installed in areas of elevated erosion risk. This included areas experiencing the highest flow velocities in one of the producing wells that had the highest sand production rate. A cluster of sensors were installed in an array formation downstream of the first cushioned Tee and a circumferential ring of sensors was installed downstream of the choke.

Once the initial installation on a single well was complete and providing a regular supply of consistent and robust data, a similar system was installed on the additional producing wells. In addition, the operator was concerned that produced sand from this platform would carry over through the flow line to the neighbouring gathering platform, from where the produced gas is then pumped back to shore. A further 80 sensors were therefore installed in a grid formation on the inlet manifold of the carbon steel flow line from this platform on the neighbouring manned platform.

The first round of sensors were mounted onto threaded studs that had to be welded to the pipe. However, to overcome difficulties associated with qualifying a weld procedure for use in a live production environment, Permasense mounted the next group of sensors onto clamps designed to further simplify installation in an upstream production environment. Permasense has since developed a magnetically mounted sensor that can measure through external corrosion protection coatings to further ease installation.

Peter Collins, Permasense CEO says, “Once the locations for monitoring were selected, installation and commissioning of the Permasense system was very straightforward – and took just one day on the platform. When specifying and supporting the installation of the initial system, our team thoroughly understood the requirements of the client – and the system started to deliver data immediately and reliably to the desks of the operator’s onshore engineers.”

The results: production, safety, integrity

With the Permasense system installed, previously unavailable insights into the condition and capability of the fixed equipment on the platform have become available.

By default, the system transmits measurements on wall thickness back to shore every 12 hours. Although, onshore engineers have occasionally increased measurement rates during periods of elevated risk such as periods of high sand production or changes to production flow rates. Data management software within the system calculates the rate of wall loss and classifies the measurement locations by user-defined rate thresholds.

The data is mainly viewed and analysed by asset-integrity specialists at the operator’s office in the Port of Spain, but is also available for viewing from any PC on the operator’s network.

The Port of Spain team can instantly analyse data and compare it against historical trends. Graphical representations of the data indicate which sections of the infrastructure show signs of degradation. In effect, the system acts as an early warning which enables the Trinidad and Tobago operating team to monitor the impact of changes to production rates and adjust them as necessary.

With this new insight, they have increased production of the well by 12 per cent - confident that the impact on erosion rates is well within the safety parameters. This increase in production rate is equivalent to an increase in saleable gas of 30 million standard cubic feet of gas per day, or US$ 90,000 a day increase in revenue (at a price of three dollars per million standard cubic feet).

Jake Davies, Marketing Director at Permasense says, “The Permasense monitoring solution revolutionised the operator’s knowledge and management of sand erosion. We use trusted ultrasound technology, and the level of data, insight and analysis that this gives the operator is making a major contribution to optimising output at the site. Because of the safe increase in production, they saw payback in just days.”

The operator is now installing the Permasense system on other manned and unmanned gas production platforms in the region.

Summary

Falck Safety Services and VIKING Saatsea have signed a preferred partnership agreement to offer unique blended learning STCW refresher training that combines onboard-online theoretical and practical exercises with practical onshore training. The unique training gives the maritime industry three benefits: Lower costs, better learning and global consistency in how mariners are trained.

The new offering, launched on 1 January 2016, forms an innovative answer to the maritime industry’s need to achieve full compliance with the STCW Convention and Code by January 1, 2017 in regards to training, certification and competency management.

While such time- and cost-efficiencies are welcomed in the industry, VIKING Saatsea’s CEO, Kim Baarsøe, explains that there is a broader perspective to the alliance:

“In the past, learning was squeezed into a rather short period of time,” he says. “Research tells us, however, that this is anything but optimal for learning retention, which is why our new, joint training package with Falck Safety Services covers a five-year certification period that combines on shore practical exercises with onboard training in the participant’s real environment.

This also means, for example, that the theory component can be repeated as often as needed without incurring further costs.”

VIKING Saatsea, with its unique digital platform, will offer onboard refresher theory training as part of the deal. The company’s solution enables crew to reduce their training time on shore, lets crew train at their own pace while at sea, and tracks competency status for easier administration. Company-specific training requirements and equipment can be added to the solution.

Falck Safety Services is the worldwide leader in safety training and brings practical, land-based STCW refresher training to the table, using its onshore facilities in 19 countries and at 38 training centers. In 2014 Falck Safety Services trained more than 370,000 people worldwide and thus brings deep expertise to the table.

Working together, the two companies initially plan to offer seven courses, ranging from Sea Survival to Advanced Fire Fighting. The new training concept has been approved by the Danish Maritime Authority.

By combining Falck’s safety training experience with VIKING Saatsea’s innovative technology we are creating a cost effective and high quality safety training solution for the industry”, says Torben Korsgaard, Senior Director of Global Business Development at Falck Safety Services. “VIKING and Falck have worked together for 30 years, so we know we can deliver high quality to the customers together”.

Cyberhawk Innovations, a world leader in aerial inspection using Remotely Operated Aerial Vehicles (ROAV), also referred to as drones or Unmanned Aerial Vehicles (UAV), has completed an offshore ROAV inspection in North America for one of the world’s largest oil and gas supermajors.

The multiple workscope project was completed over the course of two weeks in Newfoundland, Canada.

Cyberhawk used ROAVs to inspect the live flare, the platform underdeck and the roof of the giant concrete gravity base, and conduct numerous thermal surveys in order to maximise the mobilisation. A back log of complex inspection and survey work was competed whilst the Cyberhawk team was on the platform.

Offshore worker with drone

ROAVs were opted as the preferred method of inspection for this project, primarily to reduce safety risks posed to personnel in the notoriously hazardous, foggy conditions present off the east coast of Canada.

Stringent HSE regulations imposed mean that frequent inspection of offshore assets is required, in order to verify the integrity of the asset and maintain an operating licence. Due to the short weather windows available, the speed of ROAV inspection and the ability to capture large amounts of data in a short time presented a significant advantage.

Malcolm Connolly, technical director and founder of Cyberhawk, was part of the team mobilised back in August 2015. He said: “Cyberhawk is well-known for pushing the boundaries of what is possible in the field of ROAV inspection, however even with eight years of rope access inspection experience and seven years using ROAVs, this was one of the most challenging projects I have been involved in.

“Carrying out the underdeck inspection workscope alone would have taken weeks of complex overside work for a rope access team, or months for scaffolding to be erected. Add to that the challenging weather conditions on the Grand Banks and this would realistically have resulted in an inspection campaign spanning over the whole summer.

“The main advantage that the ROAV had over other access techniques in this instance was its speed and its ability to capture large amounts of inspection information in short periods. Although the ROAV is able to operate safely in 30kts of wind, during this project we were only able to fly on five out of 15 days due to either fog or gale force winds. The number of areas that were inspected in five productive days proves the speed and efficiency of ROAV inspection.

“The successful completion of this project reinforces that ROAV technology can produce results in the harshest of offshore environments. It is also an exciting step forward for Cyberhawk entering the North American market”

Saudi Arabia and Russia agreed to freeze production at January levels on February 16th in the first coordinated effort to stabilize prices for 15 years. Expectations of an output cut were rife in the days leading up to the meeting in Doha, with Brent gaining 10.9% on February 12th. However, traders were left disappointed, given January’s near-record production levels and any output freeze contingent on other producers following suit. Consequently, there has been little change in day-to-day commodity price volatility.

Production has continued to soar in recent months. January saw a post-Soviet record high of 10.9 million barrels per day (mmbbl/d) pumped from Russian oil fields and both Saudi Arabia and Iraq broke output records in mid-2015. Despite high breakeven prices, other OPEC members such as Venezuela, Nigeria and Angola have been forced to maintain output to sustain cash flows.

The chances of a sanctions free Iran freezing production are slim. Recent reports from the Islamic Republic indicate production capacity has already grown by some 400 thousand barrels per day (kbbl/d), with a further 300 kbbl/d to be added in the near future. DW’s Iranian oil production forecast (inclusive of condensate and NGLs) shows a 2016 average production rate of 3.9 mbbl/d, with output rising above pre-sanction levels in 2017. Consequently, any production freeze is likely to thaw – and quickly – as Saudi Arabia continues to priorities market share. Conversely, production cuts from non-OPEC countries are likely to determine the direction of the market through 2016. According to the IEA, Non-OPEC supply contracted by 0.5 mmbbl/d in January 2016.

Given demand growth expectations of only 1.2 mmbbl/d this year and an output freeze which is unlikely to stick, any potential oil price recovery in late 2016 continues to rest on the US’s shoulders.

Matt Adams, Douglas-Westwood Faversham