A simple, smart concept and increased drilling efficiency have shaved some NOK 200 million off the capital expenditures of this already resilient development project after the investment decision.
The development helps maximize production from the Fram area, in addition to boosting Troll C production and activities.
Fram C East is a long production well drilled from the existing Fram subsea template. Production will be tied back to Troll C, an important North Sea hub.
The development helps maximize production, in addition to boosting Troll C production and activities. (Photo: Øyvind Hagen)
Gas will be transported to Kollsnes via Troll A, whereas oil will be piped to Mongstad for further processing.
Originally estimated at some NOK 800 million capital expenditures have now been reduced to some NOK 600 million thanks to a simple, smart well concept and significantly increased drilling efficiency.
“Fram C East is a small development project, but a key element of our plans to capture maximum value in the Fram area,” says Lars Høier, vice president operations, Troll and Fram.
“We are pleased to see that our targeted efforts to cut costs and improve profitability on the Norwegian continental shelf (NCS) have benefitted this development project. Fram C East has seen profitability rise from good to even better, and will see a positive cash flow as early as in 2016,” Høier adds.
Statoil has a long-standing record of infrastructure development on the NCS, which is key to the profitability of small-size development projects.
Last week Statoil submitted the Plan for Development and Operation of Byrding (north of Fram) together with another partnership. Production from this field, too, is tied back to the Troll C platform.
“Our strong position and role in several partnerships in the Troll / Fram area give us flexibility and possibilities to generate high value by taking an overall approach to the area, maximizing the use of the existing infrastructure. This represents good resource management, benefitting our partners, our owners, suppliers and society at large,” says Gunnar Nakken, senior vice president, Operations West.
Capital expenditures totaling some NOK 600 million, recoverable resources are estimated at 18.2 million barrels of oil and 1.6 billion sm3 of gas. Profitability is resilient with a low break-even.
Quest Offshore Resources, Inc. ("Quest Offshore") announces the sale of its data and subscriptions business to Verisk Analytics, Inc. (Nasdaq:VRSK), a leading data analytics provider.
"We welcome the addition of Quest Offshore's data and subscriptions business," said Scott Stephenson, chairman, president and chief executive officer of Verisk Analytics. "This follows our strategy to invest in businesses with unique data assets, deep domain expertise, and market-leading analysis."
The data and subscriptions business will become part of Wood Mackenzie, a Verisk Analytics business, and will complement Wood Mackenzie's existing upstream analysis expertise.
"Through this acquisition, our upstream oil and gas clients will be able to make better investment decisions through access to a unique understanding of availability, capability, and price in key offshore equipment and service markets," added Neal Anderson, president of Wood Mackenzie.
"The sale of Quest Offshore's data and subscriptions business to Wood Mackenzie, including the market sector specialist personnel who drive it, will enable our collective clients to receive an expanded service offering and added strategic value," added Paul Hillegeist, President of Quest Offshore.
Quest Offshore's dedicated focus on the energy markets will continue through its Consulting and Conference Divisions, both of which will be retained by Quest Offshore. The sale of the data and subscriptions business will allow Quest Offshore to better serve its Consulting and Conference clients and rapidly grow these enterprises.
Quest Consulting will continue its focus on strategy and management consulting across the full spectrum of the energy landscape, including expansion of Quest Offshore's strategic due diligence services related to mergers and acquisitions working with major financial clients globally, including a specialized focus on U.S. private equity. Quest Consulting also specializes in providing customized analysis to help businesses, government agencies and other groups make strategic data-driven decisions led from both qualitative and quantitative research. Quest Offshore's industry expertise and wide array of knowledgeable expert contacts across the supply chain will continue to serve as key assets to Quest Consulting. Quest Offshore will continue its client-driven consulting process to provide accurate and concise results in a tailored customer format.
Established in 2000, Quest Offshore's Conference Division has organized "Deepwater-Focused" events from 100 to 10,000 attendees, primarily in the United States, Europe and Brazil and will continue to strive to deliver the highest quality technical conferences and exhibitions in the Upstream sector. Quest Offshore's annual MCE Deepwater Development conference, first held in Amsterdam in 2003, returns to Amsterdam for its 15th anniversary, April 3 through 5, 2017, and is considered by many to be one of the world's premier Offshore conferences.
"The sale of the data and subscription business will allow us to focus more effort and resources into MCE Deepwater Development, as well as expand our network to serve future industry events," said John Chadderdon, CEO of Quest Offshore.
Ashtead Technology, a global leader in marine technology and subsea services has expanded its equipment rental pool following a significant investment in a state-of-the-art subsea navigation system which has been proven to deliver faster, more accurate results in the toughest environments.
The iXblue RAMSES is an acoustic synthetic baseline positioning tool with self-contained computing, for simple, efficient, real-time underwater navigation. Coupled with iXBlue inertial navigation system (INS), it delivers extreme precision in even the world’s most challenging seas.
It can be used to track the position of subsea structures without the need for multiple transponders or umbilicals, enabling immediate and simplified mobilization. Traditionally, achieving subsea accuracy required the deployment and calibration of subsurface equipment – an often lengthy and very costly process.
With the iXblue RAMSES system, an ROV can place a single beacon on the sea floor and achieve positioning precision, allowing for improved operational flexibility, significant cost savings, improved operational efficiency and higher levels of acoustic accuracy.
Allan Pirie, chief executive of Ashtead said: “Our existing pool of inertial navigation systems has proven to be extremely popular with our customers and we have enhanced our rental fleet to meet their growing demands.
“This investment underlines our commitment to the subsea market, by offering the latest, most efficient technologies available and will see our clients experience a more cost-effective, reliable solution for ROV and AUV navigation, offshore support, metrology, and demanding subsea applications across the UK and beyond.”
A leading provider of navigation, positioning, and mapping solutions for challenging operations at sea and on land, iXblue’s RAMSES offers a variety of new features, including a sparse-array positioning system and enhanced interoperability, making it more versatile, faster to deploy and easier to use – delivering tangible cost savings. The system can communicate with a range of third party transponders, allowing for deployment on existing sensor networks.
Brook Rodgers, iXblue’s Regional Sales Manager said: “We are pleased that Ashtead has added iXblue’s innovative, inertial-acoustic systems to its rental fleet. INS is being increasingly used in subsea operations to provide improved positioning data. The high level of accuracy and ease of operation of RAMSES makes it an ideal choice for a wide range of applications. We believe that our systems offer unrivalled performance and flexibility while maintaining the openness and ease of use which is vitally important to Ashtead and its customers.”
Tullow Oil announces that first oil has flowed from the Tweneboa, Enyenra, Ntomme (TEN) fields offshore Ghana, to the FPSO Prof. John Evans Atta Mills.
Photo credit: Tullow Oil
First oil has been reached on time and on budget three years after the Plan of Development was approved by the Government of Ghana in May 2013.
The TEN start-up process is now well advanced and Tullow expects oil production to ramp-up gradually towards the FPSO capacity of 80,000 bopd through the remainder of 2016. Tullow estimates that TEN average annualized production in 2016 will be approximately 23,000 bopd gross (net: 11,000 bopd).
Tullow is the operator of the TEN fields and holds a 47.175% stake. Tullow’s joint venture partners are Anadarko Petroleum Corporation (17%), Kosmos Energy (17%), Ghana National Petroleum Corporation (15%) and PetroSA (3.875%).
Aidan Heavey, CEO of Tullow Oil Plc, commented:
“I am delighted that the TEN fields have reached first oil. This is an important moment for Tullow as production begins from our second operated development in Ghana. I thank the Government of Ghana, the Petroleum Commission and our partners – GNPC, Anadarko, Kosmos and PetroSA - for their support and co-operation since we made the first discovery in 2009. I also congratulate the project team, our contractors and sub-contractors for delivering this project on time and on budget and with great skill and professionalism and commend them for their commitment to the participation of Ghanaian staff and companies in the project.”
Claxton, an Acteon company, has completed its involvement in the abandonment of two wells on the Horne and Wren Platform in the Southern North Sea.
Completed within 18 days in July 2016, Claxton was responsible for the 5.1/2” tubing cut verification, tubing recovery, sub-mudline abrasive conductor severance, conductor cut verification and the subsequent multi-string recovery from both wells.
Rob Horton, project engineer, Claxton, said: “The multi-string severance was performed from a jack-up lift barge (JULB) for this project, allowing significant cost savings for the client against the use of a rig.
“The Horne and Wren platform has a small 8m x 8m weather deck footprint, creating a space challenge which we managed to overcome. As well as using our latest evolution of the ‘SABRE’ abrasive cutting system, this project also required a full, bespoke, light weight work package. This included a hydraulic proving system and a utility crane to ensure self-sufficiency in handling our equipment.
“Proving of tubing and conductor cuts were completed with the same system, enabling us to reduce equipment, time and money for the client. Equipment was located on the JULB with services run to the platform for the tubing recovery and multi-string severance and subsequent casing retrieval.
“We also developed a bespoke tubing laydown frame that allowed the quick and safe laydown of the severed tubing in a controlled manner.”
Claxton can overcome issues in engineering bespoke designs to accommodate all platforms and environments. Rigless platform well abandonment is just one of the many services Claxton can offer to reduce the costs of decommissioning projects. Learn more about Claxton’s decommissioning services.
Oil Markets Are Tightening and Bullish Catalysts AheadThe global economic backdrop has improved. Oil markets are tightening and there are many bullish catalysts ahead. Demand growth is accelerating while supply growth is declining. Non-OPEC crude/condensate output has declined 1.9 MMB/D between its 4Q15 peak and 3Q16. This, combined with expected strong demand growth, more than offsets OPEC production struggling to increase despite Iran’s return from sanctions and higher non-crude liquids supply, forcing surplus stocks significantly lower in 4Q 2016. PIRA has raised its crude oil price forecast by $3/Bbl over the next 9 months. The downstream is also in the process of rebalancing with the upcoming refinery turnaround season expected to pull product stocks lower. Crude price differentials have been cycling and now call for less U.S. imports and more exports, a substantial change from the last two months.
Henry Hub (HH) cash prices recently neared the $2.60/MMBtu mark — a level not seen since late June — before rebounding back towards $2.90 this week as even hotter weather still grips many regions this month. The concurrent forecasts that have extended the threat of additional above-normal cooling degree days (CDDs) into September are also fostering more downward revisions to weekly storage refill expectations, buoying NYMEX futures. Even so, for the month as a whole HH cash prices are still on track to be modestly lower than the July average of $2.80. The same can be said for most prices around the country outside of New England, and even more so in the case of price markers in western Canada.
With around 14 GW of installed wind capacity, of which 9.7 GW connect to the high-voltage transmission network, and an estimated 10.7 GW of solar P.V. plants connected between distribution and lower level networks, renewables are now more influential in U.K. price formation. The historical analysis of the past four quarters shows spark spreads turn negative as wind share moves to 15% of demand and above. It appears that the increase in the solar share has so far limited implications on spot power prices on average, judging from the last four quarters.
The coal market moved modestly lower for most of the week, with a slight downturn in the oil market and continued easing in Chinese buying activity weighing down pricing. After the sizeable rise in seaborne prices essentially since June stemming from the surge in Chinese demand, the market is questioning the ability for prices to continue to rise, particularly as the weather in China has become less destructive to production and less supportive to demand. The skepticism that market has had over the ability for the market to rise was the most evident by Glencore showing a $395 million loss by hedging coal output ahead of the price rise in 2Q16. After several years of prices falling, keeping coal supply in check, higher prices may incent some suppliers to bring tonnage back to the market. While PIRA is wary of supply returning to the market, we believe prices will be able to hold on to recent gains for several months, particularly if oil prices move higher.
The August WCI Current Vintage auction saw an improved coverage ratio, but no CA state-owned allowances were sold. This puts them at risk, under the proposed cap and trade amendments, of being moved to the Allowance Price Containment Reserve (APCR), accessible only at a very high price point. The State Assembly did not wait to see these results to pass SB 32, and the State Senate also passed companion bill AB 197. While chances are good that these bills make it to the Governor’s desk, they did not achieve the 2/3 majority that could have offered protections from legal challenges that consider cap-and-trade auctions as taxes. There was no explicit mention of continuing the cap and trade program in the bills.
Global equities eased modestly, though Europe in the aggregate was higher. In the U.S, housing and banking posted gains as money was reallocated into some sectors that had lagged in the most recent up leg. Utilities, retail and energy were the laggards for the week, with energy down about 1.5%. Internationally, all the tracking indices other than Japan, lost ground.
The most recently reported EIA domestic propane inventory increase of nearly 2.4 million barrels comes as little surprise as decreased export volumes out of the United States have been noted by PIRA shiptracking efforts. This was the highest build for this particular week since 2010. Propane moved into a 411,000 Bbl surplus stock position versus 2015 levels.
U.S. ethanol manufacturing margins improve the week ending August 19. Renewable identification number (RIN) values also increase.
Overall commercial stocks had their largest build in the last several weeks, up 6.6 million barrels with a surprising crude inventory increase of 2.5 million barrels. Most of the product build was once again in propane and other NGLs, a typical seasonal occurrence. Product demand remained strong, and this continues to be a regular feature in the current low price environment. For next week, crude imports are forecast to drop sharply, forcing crude stocks to decline. Light product demand remains strong, keeping major light product stocks roughly flat, despite somewhat higher crude runs.
While generally we’ve focused on optimization across all suppliers, recently a new form of optimization popped up in European trade: Algerian balancing between LNG and pipeline gas exports, which is further strengthening Europe’s connection to global gas pricing. This optimization play makes perfect sense, but it is just not something that has emerged on a month-to-month basis until quite recently.
Total U.S. coal stocks continue to normalize due to supportive weather conditions, as residual coal production cuts on an annualized basis draw inventories. Days burn has levelized, as the peak of the summer burn season has passed. In addition, coal burns remain off slightly year-on-year given growth in renewable capacity and coal unit retirements. Gas forwards (12-month-strip is just over $3/MMBtu) suggest further gas-to-coal switching for lower cost coals such as PRB, other western, and ILB coals (in that order) over this coming winter.
The RGGI Program is at a crossroads, as partners negotiate the post-2020 cap declines, with PJM states reportedly resisting the steeper reductions favored by New England. Allowance prices received a boost from the June Stakeholder Meeting, but declined on news of the NY nuclear subsidies in July. Average August prices are lower than July, but they have recently moved up towards the $5 mark. PIRA expects the Sept. auction to be dominated by compliance buying as the market continues to await a draft Model Rule, expected this fall. Longer term, it must be decided whether the RGGI price signal will be the primary mechanism to reach climate goals.
The S&P 500 was lower on the week, after having set record highs. As would be expected, volatility was higher, while high yield debt and emerging market debt indices declined. The dollar generally strengthened. It moved particularly higher versus the euro and yen, while only being modestly changed versus the British pound. It also strengthened against most of the commodity producers, including the South African rand, as commodities declined.
Stocks increased 392 thousand barrels to 20.817 million barrels, up 2.19 million from last year. Output dropped to 1,028 MB/D, just short of the record high 1,029 MB/D the prior week.
Two weeks of data were reported coming off the mid-August holiday hiatus. Crude runs dropped back slightly. Crude stocks built in the first week, but then dropped as expected. Gasoline demand was seasonally strong and performed as expected. There was a good stock draw, followed by a modest build. Gasoil demand was seasonally damped by the holiday and significant stock builds occurred in both weeks. Refining margins remain very weak with little overall improvement.
The Federal Antimonopoly Service (FAS) has no plans to revise the current wholesale price of gas before the end of this year, the head of Department of Regulation of Fuel and Energy Dmitry Makhonin told Interfax. According to the PIRA forecast, an increase in wholesale gas prices by 2% in July was scheduled, but that did not happen. Meanwhile, the regulator representative confirmed that a project on liberalization of prices for natural gas in three pilot regions can be implemented in the first half of 2017.
Cape freight rates are struggling to find momentum despite continued signs of expansion in iron ore trades, particularly to China. PIRA expects iron ore exports in August to increase from Brazil and hit record levels from Australia. Slow steaming makes economic sense in the current market even at relatively low bunker fuel prices, artificially inflating bulk demand. Speed switching is not expected in late 2017 unless rates push close to $26,000/day, but further structural gains beyond that level will be more difficult as the fleet accelerates.
U.S. GDP growth disappointed in recent periods, as the economy was hit by three separate negative influences: a slump in business investment a lengthy inventory adjustment process and the strong dollar weighing on trade activity. But PIRA’s expectation is that all three will reverse course soon, and GDP growth will strengthen meaningfully in the second half of 2016. This week’s July data releases on durable goods orders, trade, business inventories, and new home sales all had positive implications for the U.S. economic outlook.
PIRA's latest update of Asian product demand shows a continued slowdown in demand growth. Our latest assessment of growth is now 640 MB/D versus year-ago. Data actuals cover the three month period May-July for China, India, and Korea, while Japan and Taiwan pick up data April-June. Our last assessment, in July, indicated growth of about 1 MMB/D. The slowdown in demand growth is along the lines expected, but that slowdown will reverse as we move increasingly into 4Q.
2017 is poised to be a breakout year for pipeline development, with more than 40 BCF/D of additional capacity announced for next year. If just 15 BCF/D of these pipelines commence service, or those having FERC approval, the potential supply response would overwhelm nascent structural demand growth. Yet, downsizing the projects to just half the proposed capacity would still likely tip the fundamental balance back into surplus, raising valid concerns about the extent and duration of the forthcoming recovery.
We are entering a period when new supply is outpacing disruptions from existing producers, which means the balances will be stretched like never before. Now the issue will be whether newer buyers can grow faster than older ones are shrinking.
Long-awaited U.S. natgas production declines arrived in 2Q16, as the combined pressure of low rig counts, bloated storage, and poor prices finally caught up with U.S. producers. The E&P companies in PIRA’s Survey Group shrank volumes by 0.6 BCF/D, or about 1% compared to 1Q16. Most of these losses were concentrated outside the Northeast, but even Appalachia growth was essentially flat quarter-on-quarter. The recent subdued production levels (aided by transitory disruptions) together with the assistance of warm weather helped rebalance the market and push storage levels closer to seasonally normal levels. Looking ahead, producers seem optimistic about production growth resuming with forward-looking statements highlighting plans to ramp up drilling in time for the heating season and beyond.
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.
Bureau of Ocean Energy Management (BOEM) Director Abigail Ross Hopper announced that last week’s oil and gas Lease Sale 248 garnered $18,067,020 in high bids for 24 tracts covering 138,240 acres in the Western Gulf of Mexico Planning Area. A total of three offshore energy companies participated in 24 bids. The sum of all bids received totaled $18,067,020.
In this sale, BOEM offered 23.8 million acres in federal waters offshore Texas for oil and gas exploration and development.
“The Gulf of Mexico continues to be one of the most productive basins in the world and is an important part of our Nation’s domestic energy portfolio,” said Hopper. “Though this sale reflects today’s market conditions and industry’s current development strategy, the bidding confirms that there is continued interest in the deepwater areas of the Gulf”.
BOEM oversees 160 million acres on the Outer Continental Shelf in the Gulf of Mexico. Approximately 20 million acres (3,762 blocks) are leased for oil and gas development; and 4.3 million of those acres (883 blocks) are producing oil and natural gas.
The August 24 sale in New Orleans, Louisiana, was the first federal offshore oil and gas auction broadcast live on the internet, delivering pertinent bid information immediately to a much broader national and international audience. Through this approach, BOEM aims to promote greater government efficiency and transparency. A video of the livestream broadcast will be posted to the BOEM website.
Today’s auction is the eleventh Gulf of Mexico offshore sale and the final one for the Western Planning Area, under the Administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 (Five Year Program). This sale builds on the first ten sales in the current Five Year Program, which offered more than 60 million acres and netted nearly $3 billion for American taxpayers.
Sale 248 included approximately 4,399 blocks, located from nine to 250 nautical miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,340 meters). As a result of offering this area for lease, BOEM estimates a range of economically recoverable hydrocarbons to be discovered and produced of 116 to 200 million barrels of oil and 538 to 938 billion cubic feet of natural gas.
The decision to hold this sale follows extensive environmental analysis, public comment and consideration of the best scientific information available. The terms of the sale include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species and avoid potential conflicts associated with oil and gas development in the region. The lease terms also include a range of incentives to encourage diligent development and ensure a fair return to taxpayers.
Following the sale, each bid will go through an extensive 90-day evaluation process to ensure the public receives fair market value before a lease is awarded.
Statistics for Western Sale 248 are available here.
Damen Shipyards Sharjah (DSS) in the United Arab Emirates has won a contract to build a shallow draught, self-propelled Jack-up Pontoon 3526 for the UAE-based contractor Aqua Diving Services Ltd. Once delivered, it will be used primarily to deliver offshore support services, including the provision of accommodation facilities for personnel as well as operating as a work platform with crane facilities.
Aqua Diving Services (ADS) has specifically designed the Jack-up for Middle East operations and is closely cooperating with Damen Shipyards Sharjah for the construction of the unit. The jack-up, which will be named the Aqua Rise III and will have accommodation for up to 128 personnel with a 350m² of deck space and two cranes, rated at 75 and 15 tons respectively. The vessel will also be fitted with a helideck and life boats.
Aqua Diving Services was established in the United Arab Emirates in 1975 and today delivers a wide range of sub-sea services as well as other support to offshore oil and gas operators in the region. The company already owns and operates a fleet of two Jack up pontoons. Aqua Rise III is due for delivery in early 2018 and promises to be a state of the art vessel offering services to a long list of clients in the Arabian Gulf.
Mr. Clive Frost, Managing Director of Aqua Diving Services, commented that building the vessel of Aqua design at a high quality shipyard like Damen Shipyards Sharjah was a win-win for both parties and that he is very much looking forward to the delivery of Aqua Rise III.
Pascal Slingerland, Sales Manager Middle East for Damen Shipyards Group commented that this order is fitting in with Damen’s strategy to become more active in the lift-boat market and to build vessels outside the standard Damen portfolio. This is a further sign that local clients value Damen’s strong track record and reputation as a shipbuilder delivering superior quality at the right price.
The Njord A platform arrived at Kværner Stord on Thursday 25 August. The platform will now be reinforced and renovated for production beyond 2030.
Oil and gas production on Njord should in fact have ceased a long time ago. When the field was developed, it was scheduled for production until 2013.
The Njord A platform being towed by the anchor handling tug supply vessel "KL Sandefjord". (Photo: Thomas Sola/Statoil)
“We have been able to recover more of the reserves than originally expected, and following new discoveries and the Snilehorn development, field production will continue for at least ten more years. This is a big and important project and Statoil is working closely with the partners and suppliers to succeed,” says Snorre Grande, project director for the Njord Future project. The commercial basis for the Njord A renovation still requires production from Njord and Hyme, where we have identified 177 million barrels of oil equivalent (boe) remaining to be produced.
Scheduled for tie-in to Njord, the Snilehorn discovery contains 66 million barrels. These two fields combined will provide more recoverable resources than the Gina Krog field, which is currently under development on the Norwegian continental shelf.
To enable Njord A to receive these resources, the hull must first of all be reinforced. Extensive renovation on board the platform will also be made.
Njord has been on stream for 6821 days and 54 wells have been drilled, including exploration wells. A total of 167 million barrels of oil and 41 billion standard cubic meters of gas have been produced since the start-up almost 20 years ago.
We are about to pass a key milestone in the history of Njord as the Njord A platform comes “home” to Kværner Stord, where it was constructed in 1997. At that time the yard was called Aker Stord. In April this year Kværner Stord was awarded the framework contract for renovation of the platform and pre-engineering will continue throughout this year. The framework contract also includes an option for the platform renovation work.
“We have been preparing the platform on the field since March. Marine operations have been carried out safely and successfully, and well within the planned execution period. It has been great to take part in the Njord A platform’s voyage to Klosterfjorden, where Kværner is now taking over,” says Knut Lorang Alvheim, project manager for marine operations on board Njord A.
The Njord Future project will also be prepared for further phasing-in of third-party fields. A new and fortified Njord platform may furthermore become a field centre in the future for new discoveries in the area.
Production on Njord and Hyme was shut down in June and preparations for the Njord A tow-in have continued through the summer, including tasks such as securing of wells and facilities before the actual disconnection.
The Njord Bravo storage vessel arrived at Umoe Sterkoder in July. Extensive work is currently being made to examine the vessel’s condition closely. A decision will be made this year whether it is possible to extend the life of the storage vessel or we need to construct a new vessel.
Pressure is mounting on the global oil and gas industry to reduce environmental footprint at the same time as the industry is under significant cost pressure. Since business as usual is not an option, DNV GL has launched two papers to advise the industry on how and where to make impactful changes within financial constraints.
The paper, ‘A cost-efficient approach to reducing environmental impact’ provides a framework for the industry on how to improve environmental sustainability by identifying the most cost-efficient mitigating measures. To demonstrate how the abatement framework can work in practice, DNV GL has also carried out a case study for an offshore asset. The second paper, ‘CO2 abatement potential for offshore upstream installations’ demonstrates the results of a comprehensive case study on how CO2 emissions can be reduced through the implementation of a number of cost-effective measures for offshore production on the Norwegian Continental Shelf (NCS).
Elisabeth Tørstad, CEO, DNV GL – Oil & Gas, says: “Cost management is a top priority for the industry right now but it’s still possible to reduce our environmental footprint without breaking budgets. Cost-effective measures can be implemented across the lifecycle of assets and throughout the supply chain. Our papers will advise and support decisions in this critical area. Greater transparency by the industry on environmental risk management processes and sustainability reporting will give the sector much needed credibility and speed up sustainability improvements as a business advantage.”
The framework proposed in ‘A cost-efficient approach to reducing environmental impact’, is based on internationally recognized guidelines (IPIECA, API and IOGP) for sustainability reporting. It can also be used alongside other sustainability reporting initiatives or company specific sustainability KPIs. Aligned with UN Sustainable Development Goals for the environment, it covers a wide range of indicators, including emissions to air and discharges to sea (i.e. hydrocarbon spills, produced water, etc) for specific offshore assets. It is based on a three-step integrated approach: reporting and accounting of emissions and discharges; impact and risk assessment; and prioritizing cost-efficient environmental improvements.
“Our approach allows better informed decisions to be made on how and where to improve the environmental performance of a single or multiple mix of assets,” explains Tørstad. “This will support operators in reporting and communicating with stakeholders, as well as in their efforts for continuous improvements and benchmarking. It will also increase control and opportunities for improving global environmental risk management.”
The pathway study resulting in the paper ‘CO2 abatement potential for offshore upstream installations’ describes how adopting cost-effective practices could provide a 29% reduction in the current CO2 emissions from offshore production on the NCS whilst also securing significant cost savings. The results took into account efforts already made to lower emissions such as reduced gas flaring activity.
“Despite the NCS being known as best in class when it comes to combating CO2 emissions and footprint, the work we have done with the CO2 abatement reveals that there is still cost effective potential left. The promising and inspiring results are making a profitable case for already available technologies for energy efficiency and storage, and the earlier the measures are implemented for a field production, the greater the cost savings. As around 75% of global oil production in 2040 is projected to come from new fields, it should be possible to reduce CO2 emissions dramatically on a global scale over the next quarter of a century,” adds Tørstad.
In order to ascertain the status of sustainability efforts across oil and gas producing regions and current field developments, DNV GL has also developed a map based on publicly available databases and literature. The map identifies regions and field developments with the most and least potential for improvement on governance and production efficiency. The results are presented in a traffic light system detailing economic, environmental and social performance criteria of resources and production in regions. The results of the benchmark are dynamic and can be used to identify areas for sustainability improvements as well as enable a wider basis for investments decisions.
Last week, U.S. Department of the Interior Deputy Assistant Secretary for Land and Minerals Management Amanda Leiter and Bureau of Safety and Environmental Enforcement Director Brian Salerno announced final regulations to ensure that safety and maintenance requirements are current for offshore oil and gas production technologies. The Production Safety Systems Rule utilizes industry standards and best practices for the use of offshore safety equipment and systems, while also prescribing maintenance, testing and reporting requirements for specific production and subsurface safety devices.
“The Department has a responsibility to update its regulations to keep pace with advancing technology and ensure the safest possible offshore oil and gas operations,” said Deputy Assistant Secretary Leiter. “The regulations issued today reflect the industry’s shift to deeper waters and adoption of more sophisticated technology. The Administration is committed to safe and environmentally responsible operations utilizing the most effective technology available.”
These final regulations revise and update the Code of Federal Regulations section that addresses oil and gas production safety systems. The section was first published in 1988. The rule published today incorporates many Bureau of Safety and Environmental Enforcement (BSEE) policies that have been developed over the past 28 years. In 1988, many of the technologies currently in use did not exist. The final rule addresses a number of safety issues including production safety systems, subsurface safety devices, safety device testing, and production processing systems.
“By updating the requirements for these critical safety systems, we are meeting our commitment to promote the highest level of protection for both offshore workers and the environment,” explained BSEE Director Salerno. “The rulemaking process allowed us to develop the most effective and timely revisions by incorporating input from our partner federal agencies, industry, and research organizations.”
The revised requirements have been sent to the Federal Register and will go into effect 60 days following the publication of the final rule. BSEE has deferred the compliance dates for certain provisions of the final rule. These provisions and deferred compliance dates can be found in the Federal Register notice.
Statoil and its partners have submitted the Plan for Development and Operation of the Byrding oil and gas discovery in the North Sea to government authorities.
Capital expenditures estimated at approximately NOK 1 billion, recoverable volumes are projected at approx. 11 million barrels of oil equivalent.
“This is another example of a new discovery being realized through existing infrastructure,” says Torger Rød, Statoil’s senior vice president for project development.
The development will boost activity and production on the Troll C platform. (Photo: Øyvind Hagen)
The Byrding development includes a duo-lateral well drilled from the existing Fram H-Nord subsea template through which oil and gas from Byrding will flow to Troll C.
Oil and gas will be piped from there through existing pipelines to Mongstad and Kollsnes respectively.
Capital expenditures have been reduced from initially approximately NOK 3.5 billion to the current estimate of approximately NOK 1 billion. “Byrding shows that successful improvement efforts in Statoil, and in this case particularly within drilling and well, allow new development projects to be realized,” Rød says.
The duo-lateral well to be drilled is some seven kilometers long, the first kilometers being shared by the two laterals.
“Combined with the use of an available well slot in an existing subsea template this reduces the costs of the project substantially. The project is profitable also in the current oil price environment,” Rød says. The field is scheduled to come on stream in the third quarter of 2017. The project will thus yield a return in the same year as investments are made.
“Byrding will add new profitable volumes from the Troll / Fram area, boosting the activity and production on the Troll C platform,” says Gunnar Nakken, Statoil’s senior vice president for Operations West.
According to plans Byrding will remain on stream for 8-10 years.
Partners: Statoil Petroleum AS (operator) 45%, Wintershall Norge AS 25%, Idemitsu Petroleum Norge AS 15% and Engie E&P Norge 15%
Discovery year: 2005
Location: north of the Fram field in the North Sea
Water depth: 360 meters
In the peak period in 2017/2018 Byrding is expected to produce almost 8,000 barrels of oil equivalent per day.
The GLOBAL PROVIDER, Maxum Petroleum's newest vessel is currently under construction at Jesse Co. in Tacoma, Washington and expected to enter service in January 2017.
Scott Prince, CEO of Maxum Petroleum said “The launch of this vessel demonstrates our continued commitment to enhance our service capabilities for our customers throughout the West Coast and Pacific Northwest.”
“The GLOBAL PROVIDER is the result of years of collaboration between our Maxum Team, our valued customers, Elliott Bay Design Group (EBDG) and Jesse Engineering to develop a tank-ship with the versatility and capacity to enhance our commitment to quality, customer service and our on-going dedication to providing fuel, lubricants and related services to meet the mission critical needs of our valued clients,” says Dan Kovacich, VP of Maxum Petroleum.
EBDG's scope for the project included concept and contract design, regulatory support and detail design. The EBDG Team is working closely with Jesse Engineering, the Washington based fabricator selected to undertake the build for this project. EBDG Project Manager, James Jennings is “proud of the results of our work with Maxum and Jesse Engineering designing such a capable vessel to support the Puget Sound Maritime Community.”
Features of the GLOBAL PROVIDER include:
Maxum Petroleum is the premier provider of marine diesel fuel and lubricants on the US West Coast between San Diego, Ca, and Vancouver, B.C. with offices and operations in Seattle, Wa., Portland, Or., San Francisco, Ca. and LA/LB, Ca.
EBDG is an employee-owned company with offices in Seattle, New Orleans and Ketchikan that provides naval architecture, marine engineering and production support services to owners, operators and shipyards across the country. With a focus on responsiveness, EBDG delivers designs that are better to build and better to operate.
Jesse Co, a Washington Corporation, was founded by Darrell Jesse in 1976, and has grown to be one of the largest specialty steel fabricators on the West Coast. They have built a solid reputation for innovative solutions, efficiency in design, and strong collaborative project management that provides smooth project facilitation. Cost Savings in construction and operations are the result of the expert strategic planning team and extensive customer service.
Leading global deck machinery specialist, ACE Winches, has recently been awarded a spooling contract with Vard Group AS for Norway’s largest construction vessel. The scope of work includes the spooling of two 3,500 metre ROV umbilicals, the spooling of a crane boom wire and aux wire, including 3,900 metres of 135mm wire on to the vessel’s crane. The largest wire on this project weighs 360te, ACE Winches had to build a new upgraded spooling winch to accommodate the weight. The contract will see a dedicated team work on the project.
Alfie Cheyne, CEO, ACE Winches said: “This project is a huge achievement for ACE Winches and demonstrates our capacity to take on large scale contracts where we are given responsibility for the whole project.”
The project comes as ACE Winches announced the appointment of Andy Thom to its board as Chief Commercial Officer. Andy joins ACE Winches from Sea Trucks Group where he had held several senior management roles since 2008. Andy will be attending ONS 2016 along with Alfie Cheyne and the ACE Winches Norge team. ONS takes place from 29 August – 1 September.
Alfie continued: “We are thrilled to be welcoming Andy to the team. Andy’s experience and knowledge will be invaluable to the company and I look forward to working closely with him to steer the company through the current challenging market conditions.”
NOIA President Randall Luthi issued the following statement on yesterday’s Western Gulf of Mexico Oil and Gas Lease Sale:
“Congratulations to the Bureau of Ocean Energy Management on their first livestream oil and gas lease sale. The relatively modest results of today’s Western Gulf of Mexico lease sale are indicative of the current market conditions and regulatory environment. Despite these challenging circumstances, the companies that participated in today’s sale are investing millions of dollars in the future of America’s energy and economic security with no guarantee of success or financial return. The purchase of a lease block is a first step in a lengthy process that involves rigorous regulatory oversight including extensive environmental reviews, permitting, and safety checks.
Gulf of Mexico Western Planning Area Lease Sale 248, Map courtesy: BOEM
“The development of offshore oil and natural gas helps power our nation. Oil and natural gas are abundant and affordable sources of energy needed to fuel our vehicles and heat, cool and power our homes, schools and businesses. While government estimates show that non-traditional sources of energy will continue to provide more of our nation’s energy mix, they also show that for the foreseeable future, oil and natural gas will provide the bulk of reliable, reasonably priced energy to U.S. consumers, including those who protested today’s sale.
“It’s hard to miss the irony of activists traveling to such protests in gasoline fueled vehicles, or the fact that oil and natural gas provide low cost fuel to the income dis-advantaged populations that these activists claim to protect. Should the ‘keep it in the ground’ movement stop federal leasing, we can all expect to pay far more for our basic energy needs and we will witness the loss of thousands of jobs in the Gulf of Mexico region. Billions of dollars to state and federal treasuries will also be left in the ground.
“Attempting to link the recent flooding and disaster to the offshore lease sale not only lacks wide-spread scientific backing, it is also shameful to take advantage of a disaster that impacted thousands of Louisianans, who now find themselves in need, to try to score cheap political points. As a matter of fact, oil and natural gas are helping these communities that face disaster. From fueling the vehicles that helped people evacuate, to powering the boats of the "Cajun Navy" that rescued thousands, to getting the lights back on so clean-up efforts could begin, not to mention all the petroleum-based goods and services that will be needed as the recovery process continues, fossil fuels are helping save lives and rebuild communities. For protesters to try to use this awful disaster to further their political objectives is ill-conceived and does nothing to help the people of Louisiana.”
Decom North Sea, the representative body for the offshore decommissioning industry, launches the ground-breaking Late Life Planning Portal.
The operational website – also known as L2P2 – has been designed to support the North Sea oil and gas industry in the planning and execution of late life and decommissioning projects. Providing a single access point for knowledge sharing and cross sector learning, L2P2 reflects Decom North Sea’s overarching objective to bring the regulators, operators and supply chain together to create the co-operative environment required by the decommissioning industry.
Roger Esson, Decom North Sea Chief Executive
Roger Esson, chief executive of Decom North Sea explains the drive behind the portal: “Decommissioning is a long game, with over 40 years of decommissioning activity yet to take place and around 90% of North Sea assets yet to be decommissioned. For that to happen as efficiently and as cost-effectively as possible in the long term, we need to make good decisions in the Late Life phase.
“Taking that into account, it is easy to understand why Decom North Sea has developed a portal which provides the ultimate decommissioning toolkit: a repository for lessons learned, a forum for discussion and a gateway to contacts, analytics and market intelligence. At this stage in any industry, a toolkit such as this provides fundamental support in achieving the overarching objectives of efficiency, simplification, standardisation and cooperation.”
Project workstream champions have populated the portal with what have been characterised as foundation tools and lessons learned. Decom North Sea business manager – and L2P2 project manager – Pamela Ogilvie explains why industry engagement is a fundamental to the portal: “It is now up to industry to share the tools and processes that have materially added value to their decommissioning projects, so that others can share the benefits.
“Given the incredible level of genuine collaboration on this project to date, I am confident that L2P2 will be adopted as an industry standard information portal – we believe the potential is limitless.”
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