Technip has been awarded a lump sum contract by Deep Gulf Energy III, LLC (“DGE”) for the development of the South Santa Cruz and Barataria fields. These ultra-deepwater fields are located in Mississippi Canyon, offshore New Orleans, in the Gulf of Mexico, in approximately 2,000 meters of water depth.

Image courtesy: Technip

Covering all aspects of the field development from engineering to design, manufacturing and installation, this new award highlights Technip’s unique vertical integration in the subsea business environment.

Technip's operating center in Houston, Texas, USA, will manage the overall project. The flowline system will be fabricated at the Group’s spoolbase in Mobile, Alabama, USA. The offshore installation is expected to be performed in the second half of 2016 by Technip’s vessel the Deep Blue, the Group’s flagship vessel for deepwater pipelay.

Deanna Goodwin, President of Technip in North America commented: “This contract award by DGE is a testament to their continued trust in Technip’s execution expertise and asset capabilities. I am pleased that this award comes in conjunction with the successful completion of the Kodiak project and with the recent award of the Odd Job project. This will allow us the opportunity to further strengthen the relationship with our client into 2016.”

Wood Group has secured an extension to continue to support Chevron Upstream Europe across four offshore assets in the North Sea. Wood Group PSN (WGPSN) will deliver operations and maintenance services to the Alba Northern platform, Alba floating storage unit, Captain floating production, storage and offloading vessel and Captain wellhead protector platform, under the one year contract that extends an agreement in place since 2010.

Effective immediately, the contract retains more than 30 jobs and adds to Wood Group’s support of Chevron in the UKCS; Wood Group Kenny recently performed the subsea engineering of the trees, wellheads, controls and polymer injection flowlines to the subsea injection wells for Chevron’s Captain Enhanced Oil Recovery Project.

James Crawford, managing director of WGPSN in the UK and Africa, said: “Our firm commitment is to provide effective and efficient services, which assure the safety and performance of our client’s assets; retaining this contract with Chevron Upstream Europe is testament to this focus. We look forward to continuing our strong relationship and maintaining the excellent, high standards we have demonstrated in our service delivery.”

“We don’t usually remove the heads at mid-life on the Cummins engines,” Randy Beckler, Shore Engineer for Seaspan Marine explained in reference to the 2003 launched Seaspan Venture’s third like-for-like repower.

The repower was completed in the first week of February 2016. The Seaspan Venture, like her sister the Seaspan Tempest, had a pair of Cummins KTA38 M0 engines when new builds. These engines were changed out at over 40,000 hours. In 2016, the second set of engines had around 42,000 hours. “We do what we call a top end job on them at 15,000 hours,” Randy said, “We just change the injectors, refurbish the after cooling and address any water leaks, but we don’t change the heads. We do the same overhaul again at 30,000 hours.”

The decision was made to install the third set of KTA38 M0 engines, delivering 850 HP each at 1800 RPM, in the Seaspan Venture at 42,000 hours, as the tug was due for its quadrennial inspection by Transport Canada. This involves pulling the tug out of the water for tail shaft and sea valve inspections. “We try to do everything at once when we have the boat out,” said Beckler, “we could have probably run the engines for another year but this was a good time to make the change.”

These two boats have been very popular with their crews. The hulls were built to order in China, shipped to Canada by barge, and finished up at Seaspan’s Vancouver Shipyard. There was a lot of input from operators in the functional design. At the time they were a new generation of tug with a fine, longer, double-chined hull. The 64- by 23-foot hull has a moulded depth held to 10.4-feet to facilitate working some of the shallower areas of the lower Fraser River while providing good water flow to the propellers. This fine hull form, combined with a smooth "slipper" stern reduced the wake wash and lessoned the need for the tug to make a "slow-bell" past riverside moorings.

The boats tow the big boxy wood chip scows, se they were designed so that the aft bulwarks are the same height as the deck of a loaded chip barge while the bow matches the height of an empty barge. This improves the safety of crews getting on and off both empty and loaded barges. Bulwarks are set two feet back from the hull side to further ease the safety of crew moving between barge and boat.

After nearly 14 years of daily use on the Fraser River the two tugs have proven the effectiveness of the design. And now, with a new set of engines and other upgrades, the Seaspan Venture is ready to go back to barge towing for another 40,000 plus hours.

Photo Courtesy: Haig-Brown  for Cummins Marine 

New oilfield services company Ardyne has been launched with £50 million backing from Lime Rock Partners and has made its first acquisition.

Headquartered in Aberdeen, Ardyne will specialize in the provision of downhole products and services for plug and abandonment (P&A) and slot recovery operations in the global oil and gas sector.

To accelerate its growth, Ardyne has acquired Wellbore AS, a Norwegian oil service company that is a leading provider of downhole tools for casing cutting and pulling. Established in 2004, Wellbore has 29 employees and offices in Tananger, Bergen and Aberdeen.

Commenting on the acquisition, Ardyne chief executive officer Alan Fairweather said: “Wellbore’s offering and culture is the perfect complement to Ardyne as we launch our business. We have been very impressed with the Wellbore team’s emphasis on quality and service delivery. The current management team will continue to run Wellbore AS and its facilities in Norway.”

“At Ardyne, we combine technology advancement with a responsive, service-driven mentality. The market insight we have gained through decades of experience operating in the North Sea enables us to address the challenges of maturing basins globally. We are bringing our customers the new technology and service approach they need to optimize operations, cut costs, reclaim rig time and unlock the long-term value of brownfield resources.”

Trevor Burgess, managing director at Lime Rock Partners said: “This is the ideal time to create a market leader in P&A and slot recovery. Commercial pressures are pushing field redevelopment and decommissioning higher up the agenda in the North Sea and elsewhere. We are backing an exceptionally strong management team with a well researched business plan that can exploit this opportunity. Ardyne will help ensure that Aberdeen and Stavanger maintain their position as centers of excellence in the offshore oil and gas business.”

Bibby Offshore, a leading subsea services provider to the oil and gas industry, has developed an innovative vessel share option for clients, which has the potential to provide the subsea industry with significant savings through encouraging collaboration, cost-efficiencies, as well as providing increased productivity.

Unlocking Subsea Productivity (USP) re-evaluates the traditional subsea campaign model, proposing a new alternative structure for how Bibby Offshore delivers services to clients. The concept focuses on a vessel share agreement, with collaboration from several clients, to deliver a single linked campaign workscope that addresses each client’s individual demands.

To demonstrate the real savings available to clients, a simulation campaign was generated using eight previous campaigns completed by Bibby Offshore which were reconstructed and analyzed in order to quantitatively demonstrate the potential savings arising from USP. The findings were presented to 18 client representatives from six separate operators at a recent USP event held in Aberdeen.

The simulation model calculated an average saving of £235,000 per client, based on an overall project duration of 54 days reducing to 41 days. This resulted in an overall cost saving of over £1.8million to be shared amongst the example clients.

Vikki Thom, Subsea Business Manager at Bibby Offshore said: “USP was developed with our client’s needs and the future of the industry in mind. The model is aimed at reducing the costs associated with mobilization periods whilst also distributing further cost savings for individual clients, helping to ensure a reduction in non-productive time and an increase in overall work time.

“With the industry currently facing unprecedented challenges due to the continued low commodity price, the future of the North Sea is more testing than ever. The USP proposal provides an efficient model for a cohesive approach to project delivery and provides a viable alternative to deferring work schedules. This demonstrates that we, as an organization, are doing everything we can to support a more sustainable future for the UKCS Subsea Industry.”

MacGregor, part of Cargotec, can now offer the offshore industry a technology-leading fiber-rope crane. The crane has been developed by combining MacGregor's proven offshore crane technology with the fiber-rope tensioning technology perfected by Parkburn Precision Handling Systems. The companies have entered into a cooperation agreement to combine MacGregor's offshore crane expertise with Parkburn's fiber-rope tensioning technology.

"MacGregor recognizes that by partnering with experts in specific technological areas, it can deliver solutions that exceed its own capabilities," says MacGregor's Vice President, R&D and Technology, Baard Trondahl Alsaker. "We see ourselves as being able to integrate the best technology available to deliver systems with technology-leading capabilities."

The new MacGregor crane features a simple-to-operate fiber-rope lifting system that employs Parkburn's unique tensioning technology. The Parkburn equipment eliminates the heating and degradation problems associated with on-load fiber ropes stored on winch drums. Importantly, it can accommodate non-uniformities resulting from splices in the rope.

"This is an important advance for handling loads at depth," says Mr. Alsaker. "The great advantage of fiber rope in this context is that it weighs virtually nothing in water, so regardless of the length of rope paid out, it does not add anything to the load experienced by the crane. This is in complete contrast to the situation with wire rope, where the ever increasing weight of wire paid out limits the load permissible in relation to depth."

The new crane will be introduced to the market as a 150T fully heave-compensated knuckle boom crane with capability of reaching 4000m of water depth, but the offering will be extended to the complete range of MacGregor subsea crane fleet.

The MacGregor fiber rope technology is also suitable for retrofit on existing subsea cranes. This enables upgrading the capabilities of existing construction vessel fleet without having to build new vessels, an important feature to meet the requirement for reducing the cost level of the industry.

Parkburn is a UK-based marine handling systems provider that has spent over 40 years perfecting the deep-water handing systems required in fire-rope cranes. Its fiber-rope winch system can be delivered as digitally controlled electrically-driven, or hydraulic-driven. Features include integral active-heave compensation and power regeneration capabilities.

Click here to see the animation:

MacGregor fiber-rope crane: smaller crane to lift heavier loads, deeper. It has less rope wear and greater power efficiency. The MacGregor fiber-rope technology is also suitable for retrofit on existing subsea cranes. The fiber-rope winch system can be delivered as digitally controlled electrically-drive or hydraulic driven.

Almost 7,000 visits were made to Europe’s largest subsea event, Subsea Expo, held in Aberdeen last week, despite the industry facing its toughest year ever.

The exhibition and conference, organized by Subsea UK, attracted just under 5,000 individual delegates, many of whom visited more than once over the three days. International delegates flew in from all corners of the world, including Africa, Brazil, Japan, Mexico, Nigeria and the US.

Chief executive of Subsea UK, Neil Gordon, said: “A clear message from the show was that we have to get fit for $30 oil. We cannot keep hoping that the price, and therefore investment and activity, will pick up in a year or so. Transforming the way we work is crucial. A large dose of vision and courage from the leaders in our industry is needed to achieve the behavioral changes that will ensure we are profitable and sustainable at $30. The good news is that we can do this but it’s not going to be easy. Much greater collaboration will drive standardization and simplification which are key to getting the cost base down. The subsea sector is up for the challenge and there was real evidence of this type of collaboration in action during Subsea Expo.”

A number of companies launched technology at the show. Xodus unveiled its new asset lifecycle screening tool HAWXEYE at the event. Graeme Rogerson, operations director at Xodus Group said: “Subsea Expo has been the ideal venue to not only showcase our new HAWXEYE technology but also demonstrate and discuss our agile way of working in this cost-constrained climate. The mood at the show has been buoyant and very much focused on the need to look at new ways of working to adapt to this ‘new norm’.”

Subsea services company Acteon has launched a new service offering to directly address the demands and changing conditions of the global oil and gas industry.

Acteon Field Life Service (FLS) offers a “joined-up” approach to the capex and opex challenges presently being experienced by the industry. By bringing together the specialist skills and technologies of Acteon’s individual branded service companies, Acteon FLS will provide a broader and more flexible capability to address multi-faceted projects and customer-specific demands.

“Our industry, like many others that have already been transformed, requires radical change with the adoption of new operational and commercial models. There is a clear need for standardisation and repeatability driven by “fit for purpose” specification, skilled resource sharing, informed condition maintenance management and efficient asset utilisation. Acteon FLS is a step down this road,” said Acteon FLS President Paul Alcock.

With a dedicated and highly experienced team, Acteon FLS will be agile and work either to the individual needs of a project or to longer-term partnership arrangements with a client.

“Combining the individual strengths and “deep domain” knowledge of our businesses, Acteon FLS can focus on a client’s desired performance outcome, demonstrating the value a co-ordinated independent subsea service company can bring,” said Alcock.

On 4 February 2016 the DP2 cable installation vessel Maersk Connector was handed over from Damen Shipyards Group to Maersk Supply Service. The vessel is going directly on a long-term charter for subsea services provider DeepOcean. The on-time, on-budget delivery marks the successful cooperation between Damen, Maersk Supply Service and DeepOcean. Based on Damen’s DOC 8500 platform, the vessel has been customised to meet the challenges of reducing offshore renewables costs.

“We’ve already been awarded three UK and North Sea contracts for Maersk Connector, so we’re very satisfied,” reports DeepOcean Commercial Director Pierre Boyde. “The working relationship has been productive and Damen has delivered a state-of-the-art cable installation vessel. Maersk Connector is fine-tuned around DeepOcean’s 20 years’ experience of installing and trenching more than 1,000 kilometres of power cable and backed up with Maersk Supply Service’s long pedigree of superior marine operations.”

Owned and operated by Maersk Supply Service, the vessel is the latest addition to the 50-plus strong Maersk offshore support vessel fleet. Søren Karas, Chief Commercial Officer of Maersk Supply Service, praises the constructive cooperation between the three parties.

“Maersk Connector is the result of a successful tri-party cooperation between a quality yard, an experienced subsea service provider and a leading vessel owner and marine operator. Throughout the process there was close communication between all parties, focused on finding solutions. Maersk Supply Service is very happy with the outcome resulting from this cooperation; the vessel has been delivered on time, on budget and the quality is good. We are excited to embark on the long term cooperation with DeepOcean supporting their subsea operations.”

Contributing to production efficiency, the vessel is capable of grounding out with its seven points mooring system. This eliminates the need for a separate shallow water cable lay vessel and minimises the number of cable joints required. The bespoke 7000-ton carousel system accommodates bundled installation of high specification cables with no requirement to coil the cables.

Crowley Maritime Corporation’s tanker escort and docking services group in Valdez is celebrating over seven million man hours and more than six years since logging its last Lost Time Injury (LTI). In addition to this remarkable number, the company announced that it had not had an OSHA recordable case in over two million man hours while performing tanker assist and escort work for Alyeska Pipeline Service Company. In 2015, the company logged over one million man hours while safely escorting 236 tankers through Prince William Sound, transporting 185 million barrels of oil in one of the harshest environments in the world.

“We’ve partnered with Alyeska Pipeline Service Company for more than 25 years to provide the safest, most comprehensive spill prevention and response services available for tankers traveling through Prince William Sound,” said Rocky Smith, Crowley’s senior vice president and general manager, petroleum distribution and marine services. “This achievement is a testament to the keen focus on safety our professional mariners and Valdez shore side support team displays. They are relentless in their pursuit of zero harm to people, property and the environment.”

In Valdez, Alaska, Crowley personnel and tugs help protect the environment through a contract with Alyeska Pipeline Service Company's Ship Escort/Response Vessel System (SERVS). As part of this commercial partnership the company provides tug escorts for tankers traveling through Prince William Sound to and from the Valdez Marine Terminal, assuring safe passage, even under the most extreme winter weather conditions. They also provide secure docking and undocking operations at the oil product loading terminals.

In 2015, Crowley continued its support of SERVS by planning and supervising classroom and field training exercises for the spring and fall fishing vessel training program. This training involved over 400 boats and 1,700 attendees, who gained familiarity with the equipment, tactics, and resources needed to quickly and professionally respond to an oil spill incident in Prince William Sound. Crowley’s nearshore response barge 500-2, and company-owned tugs visited the communities of Cordova, Whittier, Seward, Homer, Kodiak and Valdez in further support of the training.

Additionally in 2015, Crowley tug Endurance provided transportation and accommodation for the Prince William Sound Traveling Health Fair - a community outreach program supported by Alyeska to inform local communities about oral hygiene, nutrition, physical fitness, depression/suicide awareness and emergency preparedness. The program is driven by numerous dedicated individuals including nine very enthusiastic coordinators and educators who joined Endurance and her crew for the eight-day initiative.

“For Crowley, this was another chance to be a part of something much bigger than just tankers, tugs and barges,” remarked Endurance’s crew. “For most of the hundreds of Crowley employees on the vessels and ashore in Alaska, this isn’t just where we work, this is our home. Customer representatives, contractors, and shipmates are people we work with, but they are often also neighbors and friends. For our captain and crew, this latest adventure was another inspirational example of why we invest more than just our work ethic when we report to the job, this is also who we are.”

Alyeska Pipeline Service Company's Ship Escort/Response Vessel System (SERVS) is one of the largest oil spill prevention and response organization in the world, with a mission to prevent oil spills and to protect the environment by providing rapid and effective response services to the Valdez Marine Terminal and Alaska crude oil shippers.

NYC-based PIRA Energy Group reports that dated Brent traded below WTI in January, on a monthly average, for the first time since 2010. In the U.S., there was a new record high stock level. In Japan, crude runs fell, imports moved lower and stocks drew again. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

North American Midcontinent Oil Forecast

Dated Brent traded below WTI in January, on a monthly average, for the first time since 2010. Both crudes fell to new 12-year lows, dipping below $30/Bbl on occasion. Differentials of onshore crudes remained strong relative to LLS, as PADD III stocks also hit record highs. Cushing is struggling with oversupply and this will persist.

Updated Weather Outlook Prompts Price Meltdown

Judging from last week’s price correction, from a high in the nearby contract that topped $2.30/MMBtu last week to this week’s dip below $2.00/MMBtu, the market appears to have gleaned additional clarity on the weather to justify breaking out of its former holding pattern. The decided shift to even warmer temperatures this month and the related rapid decline of storage draws (from 200+ BCF last week to 152 BCF this week and next week’s projection for a draw less than half that) are the driving forces influencing price perceptions.

UK: More Coal Retirements Will Further Tighten the Market

The proposal to close three out of four Fiddler's Ferry units is quite bullish for the UK market. While retiring Fiddler's Ferry, SSE will have to unwind its capacity contract for delivery 2018-19, setting a precedent that other plant operators may follow as well. The fallout of these decisions will probably lead to a revision of the capacity market design, which will, however, take time to finalize while a messy policy debate will continue in the UK. In the meantime, power generators will be dashing to secure additional Supplemental Balancing Reserve contracts. From a wholesale pricing standpoint, we are wondering if there is a risk that the activation of this reserve may undermine price formation, but we believe this risk should be quite small, based on current information.

Coal Prices Deteriorate on Lack of Fundamentals, Weaker Gas Pricing

Coal pricing in the Atlantic Basin moved lower last week, with API#2 (Northwest Europe) prices falling by the largest extent. Another round of mild European weather, easing oil and natural gas prices, and news that more coal-fired generating capacity will likely be retired in the U.K. pushed 2Q16 API#2 prices down. API#4 (South Africa) prices also faded, although declines were more moderate than API#2, while FOB Newcastle (Australia) prices were mixed. Prices do not have a fundamental anchor at this point, and high stockpiles in many markets will make it difficult for prices to appreciate over the next 90 days.

U.S. Supreme Court to Decide on Stay of Clean Power Plan: Possible, But Not Likely

On January 21st, the D.C. Circuit Court of Appeals declined to stay EPA's Clean Power Plan pending legal review. In a highly atypical move, the state petitioners appealed the denial of the stay to the U.S. Supreme Court on January 26th. While granting the stay is a possibility, PIRA believes respect for the standard judicial process will persuade Chief Justice Roberts to vote to deny a stay, even if — as we believe — he would vote against the rule when it eventually comes before the Court. A decision by the Court could come as soon as this week.

U.S. LPG Prices Rising as Supply Tightens

March Mt. Belvieu LPG prices strengthened as another large national stock decline narrowed the year-on-year surplus appreciably. Winter heating demand and strong export flows are pulling LPG stocks down just as PIRA expects domestic production growth to wane, tightening supply levels throughout 2016. LPG shrugged off broader market declines with propane adding 2% to 36.6¢ and butane a healthy +5% to 53¢/gal.

No Love for the Dollar

The U.S. dollar appeared headed for its largest weekly decline (pre-NFP) since 2009, and yet grains/oilseeds remained mired in narrow trading ranges, presumably heading for lower weekly closes. Some would call it somnolence. Then again it was Groundhog Day last week.

Ethanol Stocks Build to Near a Four-Year High

Ethanol inventories soared to a near four-year high the week ending January 29. Ethanol production declined slightly.

Financial Stress Remains Elevated

The S&P 500 fell Friday to Friday, although the weekly average was higher for the second week in a row, as were the weekly averages for other key indicators such as VIX, high yield debt (HYG) and emerging market debt (EMB). The U.S. dollar generally fell in value, and commodities were mixed.

Weaker Economic Projections Set the Tone for a Challenging Year in Latin America

Slower economic growth in Latin America signals flat to declining demand for diesel, but gasoline is still showing growth in 2016. Consumption of the four major products (gasoline, diesel, jet/kero and fuel oil) is projected to stay flat this year at about 7.24 MMB/D. Year-on-year gasoline demand is forecast to increase, while diesel is flat and fuel oil is lower. Product imports into the region are expected to contract but remain fairly high. Planned and unplanned refinery outages continue to impact the region. In 2015 regional CDU offline capacity averaged 625 MB/D, while FCC downtime reached 200 MB/D.

Gas-to-Renewables Switching Is Happening in the UK. Soon the Rest of Europe?

Coal-to-gas switching will continue to be a central focus of our analysis, as spot gas prices fall into an area (below 27p/th) where such switching will intensify. However, gas demand will depend on more than just what coal prices do. Focus on gas-to-wind switching is already playing out in the U.K. as a significant issue and may be a preview of additional switching issues on the Continent.

U.S. Coal Market Forecast

U.S. coal demand continues to erode in the face of persistently low natural gas prices and milder weather, as well as a weak international coal market. We are seeing growing signs of a supply-side response from producers, setting the stage for a market recovery in 2017.

Key Themes Impacting U.S. Distributed Solar PV Penetration

Policy, cost, and electricity market drivers will define the level and location of U.S. distributed solar photovoltaic (PV) penetration. Policy uncertainty remains, especially related to net metering changes, state-level renewable energy targets without an explicit carve-out, and grid modernization efforts. Flat to declining PV costs in the coming years will ultimately support increased penetration. Retail electricity prices under current rate design could support penetration, but potential changes to rates add risk.

U.S. Ethanol Prices and Margins Improve

Ethanol prices rose the week ending January 29 as production tumbled and the market tightened. Manufacturing margins rose as higher product values outweighed the increase in corn cost.

Global Equities Largely Negative

Global equities generally fell back on the week. In the U.S., most of the tracking indices lost ground, though materials and utilities were able to post gains. The weakest performers were consumer discretionary, retail, housing, and technology. Internationally, the Latin America tracking index posted a gain, while all the other tracking indices lost ground. China and the other BRICs posted the largest declines.

New Record High U.S. Stocks

Commercial U.S. oil inventories increased this past week, led mostly by crude oil, as runs made a marginally lower low and crude imports ramped up to the highest level in eight weeks. Product demand weakened on the week as the record snow storm took its toll on demand, turning the week earlier 9.4 million barrel product stock decline into a 1.7 million barrel build. One silver lining: the stock build was larger last year for this week so the year-on-year stock surplus narrowed.

Russia Looks at Lowering Contracted Gas Prices

Gazprom could lower its prices to keep European customers locked into long-term supply contracts, maintaining an arrangement that has for decades helped Moscow secure political leverage in Europe. However, Russia will only be able to preserve its long-term contracts for the next few years and will eventually have to sell more of its gas on the spot market, loosening its hold over customers. The long-term deals, some of which span 25 years, have been the bedrock of Gazprom's dealings with Europe.

Japanese Crude Runs Fell, Imports Moved Lower and Stocks Drew Again

Crude runs fell yet again reflecting the full impact of a known turnaround that had begun. Crude imports moved lower such that crude stocks drew again, this week by 4.6 MMBbls. Product stocks also drew, with over half their 3 MMBbl decline being in kerosene. In January, refining margins have come off their peak with further easing as we enter February. While all the major cracks softened on the week, margins remain statistically good.

Russian Outage Affects Japanese Markets More than Other Asian Buyers

Project delays and unplanned production outages will create support for Asian spot prices in the short term, but do not expect the rally to persist. The issue is not a shortage of volume; it is the repositioning of portfolios to adjust to the various outages and delays that will work themselves out in a few weeks. PIRA certainly foresaw this coming, as weak market conditions were not exactly a motivating force among the producer class to add incremental supply to the market in 2016 and 2017.

U.S. Recession Scenario Is Not Plausible

The view that the U.S. economy will experience a recession this year has found some traction in recent economic commentary. As recessions are difficult to forecast in advance, the possibility of significant economic disruptions should not be dismissed outright. But based on analysis of key data (including those pertaining to the January labor market conditions), it is difficult to make a case that a recession is under way. In fact, a reasonable assessment of the current condition is that the U.S. economy is not too hot (where aggressive monetary tightening by the Fed becomes a risk), nor too cold (where a recession is a risk).

Global Biofuel Supply and Demand to Increase

The driving forces for biofuels consumption still exist. However, the collapse of energy values will slow growth in consumption.

Atlantic Basin Gasoline Demand Outlook in 2016 and 2017

The decline in gasoline prices since mid-2015 has given a boost to gasoline demand on both sides of the Atlantic. PIRA's current forecast calls for gasoline demand in the U.S. to increase by 1.6% and 0.3% in 2016 and 2017, respectively. Gasoline demand in Europe is projected to grow 0.9% this year and by 0.3% in 2017. A key factor in our forecast for 2017 is the lagged positive effect that declining prices in 2015 and 2016 will have on demand in 2017. PIRA's analysis makes the case that these price declines could result in even faster demand growth next year.

Special Report: The Oil Market in 2017

The year 2017 is looking more and more like the year when the turnaround in fundamentals that have been depressing the oil market since mid-2014 will take hold. The imbalance between supply and demand will have been eliminated and declines in surplus inventories will occur. This turnaround has taken more time than initially expected. Over the past year, oil demand for 2015 was significantly revised up, but oil supply was revised up much more, putting oil prices on a downward path from their monthly 2015 high of $64/Bbl for Brent in May to $30.69/Bbl for January 2016. The year 2016 is seen as a transition year when monthly fundamentals swing to promote firming of the market.

Fire at Tupras's Izmit Refinery and Its Impact

A fire apparently broke out at Tupras’ 220 MB/D Izmit refinery in Turkey on February 3, and it is not clear how many and which units are affected. In a worst case scenario, light product losses would be 70 MB/D gasoline, 60 MB/D jet fuel, 90 MB/D diesel, and 20-30 MB/D more fuel oil would be produced.

Aramco Pricing Adjustments for March: — Staying the Course

Saudi Arabia's formula prices for March were just released. The adjustments made to differentials against their key regional benchmarks were within market expectations and do not suggest any change in Saudi export pricing policy, which has been to maintain competiveness with regard to volumes, liftings, and pricing in key markets. Pricing in both Asia and Europe was cut on the lighter grades and raised on the heavier grades, reflecting weaker light product cracks and firmer fuel oil cracks.

IMO Study Under Way — 2025 Implementation Is Reference Case, But Earlier Is Possible

The IMO has initiated a study to help decide when to implement a global requirement of 0.5% sulfur maximum for marine bunker fuels. Recent events such as the collapse in crude prices have increased the chances that the implementation date will be earlier rather than later. This change will be very disruptive commercially for the global bunkering business and would require significant changes in investment/operations for the global refining industry.

Projects Continue to Be Delayed in Low Crude Price Environment

New projects continue to be delayed or cancelled due to low oil prices. PIRA estimates a cumulative net impact of 600 MB/D of oil from these delays in 2016 and growing to 1,300 MB/D by 2018. As expected, most of the delays come from projects that have high development costs. The most affected areas are Canadian oil sands and offshore projects (GOM, North Sea, Angola, and Nigeria.

World Trade Growth and World Bunker Consumption

The slowdown in world trade growth in 2015 has been laid at the feet of a slowdown in Chinese economic activity. The reasons for last year's trade slowdown actually reflect generalized weakness in GDP in non-OECD apart from China. Applying PIRA forecast growth rates for GDP we expect world trade to grow 3.2% in 2016 and 6.0% in 2017. This implies world-wide bunker demand to grow 1.5% and 2.6% in 2016 and 2017, respectively.

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.

Aker Solutions won a framework agreement to provide engineering and construction services for several offshore oil and gas fields in the UK North Sea.

The contract has a fixed period of five years as well as an option to be extended by five years. Aker Solutions' maintenance, modifications and operations (MMO) business in the UK will deliver on the assignment, which was awarded by an international oil and gas operator.

"Winning this contract in such a competitive market proves Aker Solutions' ability to find effective ways to support our customers at a challenging time for the industry," said David Clark, Aker Solutions' regional president for Europe and Africa.

The contract was booked as part of Aker Solutions' fourth-quarter 2015 order intake.

Fugro has been awarded a contract by BHP Billiton Petroleum Pty Ltd for the Pyrenees Phase 3 Installation Project.

The Pyrenees development is located offshore Western Australia, in approximately 200 metres water depth, 45 kilometres northwest of Exmouth, and comprises six separate fields: Stickle, Crosby, Tanglehead, Moondyne, Wild Bull and Ravensworth. The project includes the tie back of the Stickle 9 well to the existing Tanglehead manifold.

Offshore installation activities will take place from Fugro’s multi-role construction vessel, the Southern Ocean

Fugro’s scope of work includes suspension of existing infrastructure, and installation and pre-commissioning of the new flexibles and flying leads. ROV intervention and well commissioning support will be provided and the scope also includes the supply and fabrication of crossings, stabilisation and installation aids, along with mobilisation and transportation of equipment to the field.

Commencing in May 2016, all offshore activities will take place from Fugro’s modern, multi-role construction vessel, the Southern Ocean. The fuel efficient, DP2 vessel is fitted with the required installation spreads to complete the subsea workscope.

All project management, engineering and associated support functions will also be provided by Fugro.

Paris, France – 3 February 2015

CGG announces that it has been awarded an extension to a major 3D seismic survey it successfully completed on the Caribbean coast offshore Colombia in late 2015.

The new survey follows on from the original over 16,000-km² survey CGG conducted over portions of the Col-1 and Col-2 blocks, which was the largest survey ever recorded offshore Colombia. This major extension is expected to start in February 2016. The additional data will also be processed in CGG’s Houston subsurface imaging center.

Jean-Georges Malcor, CEO, CGG, said: “This survey extension is the latest in a series of projects we have conducted for this key client offshore Colombia since 2013 and indicates the continuing satisfaction with CGG’s seismic technology and operational performance. We look forward to continuing to support high-impact exploration opportunities with our high-end geosciences services and solutions.”

Brent oil price reached lows of $27/bbl in mid-January, but has recovered over the past two weeks to above the $30/bbl mark. Nevertheless, volatility is expected to remain as the market is yet to find a new equilibrium. So far, only modest cuts in US shale production have been realized, and global oil supply has continued to increase.

Nevertheless, in spite of the oversupplied market, OPEC – led by Saudi Arabia – continues to pump in order to defend its market share against non-OPEC supply. With a coordinated change in strategy highly unlikely, prices will have to remain lower for longer to force the market to reach a new equilibrium.

However, a critical turning point – when a produced barrel no longer finds spare capacity within existing onshore storage – is approaching. According to the IEA, global oil stocks increased by 1 billion barrels in 2015, and the Agency expects a further increase of 285 million barrels over the course of this year.

In the case where onshore storage gets filled, the excess barrels will need to be stored in the form of floating storage, which is a more expensive option. Despite the high cost, this would not be without precedent: in 2009, trading companies stored circa 120 million barrels offshore in 64 tankers. In order to make this type of storage economical, the market would need to be in a state of “super-contango” – a situation in which the front few crude spreads are wide enough to cover the costs of storage in tankers. This implies that prices may need to remain lower for longer than previously anticipated. Current market trends suggest that widespread filling of offshore storage is likely before significant erosion of supply takes place and the market eventually starts to rebalance.

Siemens UK & Ireland has formed a strategic partnership with oil and gas control system specialist, EFC Group, in a collaboration which promises to deliver innovative, cost-saving solutions for the industry.

The partnership developed after EFC Group selected Siemens as its preferred supplier of automation and control systems in 2010, following an audit into its Programmable Logic Controller (PLC) supply, usage and technology.

Siemens UK & Ireland’s technology has since assisted EFC Group with developing and certifying its Hazardous Area range of Remote I/O (RIO). This is now implemented across its range of drilling safety critical control systems for the oil and gas industry. The RIO solution has a number of benefits over traditional enclosure-based EExD technology, including the ability to deploy at convenient locations, leading to cost savings due to reduced cabling requirements.

Users of EFC’s systems can also make further savings through preventative maintenance, delivered by condition monitoring technology from Siemens. This ensures there is minimal unplanned downtime, increasing a site’s operational efficiency. The systems’ reduced size is also ideally suited to offshore installations where floor space is at a premium.

Louise Creane-Smith, Commercial Director at EFC comments: “We have experienced positive uptake and success using the certified RIO solution across a number of our safety-integrated systems, with benefits being realised for clients at both time of installation and long term support provision. Thanks to our partnership with Siemens we can offer condition monitoring as standard, which has cemented our position at the forefront of delivering industry compliant systems and ensures our customers can benefit from productivity efficiencies.”

Chris McComb, Account Development Manager – Oil & Gas, Siemens UK & Ireland, adds: “Because of our work to develop solutions to support companies in the oil and gas industry, Siemens is well placed to stand back, take a holistic view of all requirements and help maximise operating efficiencies. Our partnership with EFC Group shows what can be achieved through collaboration to develop a solution to drive tangible benefits for customers.”