Leading UK engineering solutions provider Costain has been instrumental in helping Ithaca Energy save several millions of pounds, thanks to its sound management of subsea contracts in the operator’s Greater Stella Area (GSA) Development in the central North Sea.

Costain has been working on the project, which is driven by the recovery of approximately 60 million barrels of oil equivalent of proven and probable reserves for the GSA co-venturers, since 2010 and will be supporting the project to first oil, which is anticipated in mid-2016.

Costain’s involvement started at the concept selection phase, continuing through the definition phase, developing project budgets and assisting in placement of the major contracts.

The Company then project-managed the subsea facilities, including the design, procurement, fabrication and installation of all of the subsea equipment, as well as the installation of the Floating Production Facilty-1 (FPF) moorings and assisting with the forthcoming tow-out and hook-up.

Peter Kirkbride, project sponsor at Costain

Peter Kirkbride, project sponsor at Costain, said: “Being involved in this project through the select, define and execute phases is a great achievement for the team. Together with Ithaca Energy and our contracted partners, we are proving the value of North Sea development activity and, by setting and working to realistic budgets, have saved our client millions of pounds in the process.

“Soundly delivered cost saving solutions are more pertinent now than ever, and we look forward to continuing to help achieve these savings for those operating within a new oil price environment in the North Sea.”

Mike Travis, Greater Stella Area Asset Manager of Ithaca, said: “Ithaca asks for safe and efficient execution of the work, and with Costain Upsteam, that’s exactly what we get – as well as technical excellence, creativity and professionalism. The continuity benefits of a long term relationship have also been very apparent and Costain will continue to work with us on the developments plans for the satellite developments around the Stella hub.”

Costain’s capabilities extend across design and consultancy, project management, delivery and operations and maintenance in the energy sector. The Company's philosophy is to provide innovative and commercially attractive solutions to many of the challenges faced across a range of sectors.

With the exploitation of new cost-effective operational concepts, use of digital technologies and increased dependence on cyber structures, the oil and gas industry is exposed to new sets of vulnerabilities and threats. Cyber-attacks have grown in stature and sophistication, making them more difficult to detect and defend against, and costing companies increasing sums of money to recover from.

DNV GL has delivered a study to the Lysne Committee (Lysneutvalget¹) that reveals the top ten most pressing cyber security vulnerabilities for companies operating offshore Norway.

An international DNV GL survey of 1,100 business professionals found that, although companies are actively managing their information security, just over half (58%) have adopted an ad hoc management strategy, with only 27% setting concrete goals².

“Headline cyber security incidents are rare, but a lot of lesser attacks go undetected or unreported as many organizations do not know that someone has broken into their systems. The first line of attack is often the office environment of an oil and gas company, working through to the production network and process control and safety systems,” says Petter Myrvang, head of the Security and Information Risk, DNV GL - Oil & Gas.

While the study focused on operations on the Norwegian Continental Shelf, the issues are equally applicable to oil and gas operations anywhere in the world.

The top ten cyber security vulnerabilities:


DNV GL believes cyber security vulnerabilities can be addressed through a risk-based approach, using the bow-tie model familiar in safety barrier management. This allows companies to identify the threats to and vulnerabilities of assets and operations and plan barriers to prevent incidents and mitigate the consequences of cyber risks. This includes procedures to maintain the barrier quality documented in performance standards.
“As all oil and gas process plants are now connected to the Internet in some way, protecting vital digital infrastructure against cyber-attacks also ensures safe operations and optimal production regularity,” says Trond Winther, head of the Operations Department, DNV GL – Oil & Gas.
The company applies its independent, risk-based approach to designing, implementing, testing, monitoring and maintaining cyber security countermeasures for customers worldwide. The company’s software tool, Synergi™ Life – Risk Management Module, is used to establish a live asset and risk registry. This tool allows vulnerabilities and threats to be assessed and mitigations to be followed up.

Please see summary in English here.

International oilfield services company, Expro, has achieved a significant milestone as it enters Qatar for the first time and expands its Middle Eastern presence with a five-year contract win.

The contract will see Expro provide its range of well intervention and slickline services including high deviation and heavy-duty fishing offshore Qatar, as well as in drilling and workover locations in-country.

Tarek Hekal, Senior Area Manager – Middle East, said:

“This contract is a key win for Expro in the region as we expand our presence to better serve our clients.

“In current market conditions, Expro recognises the need for operators to lower production costs. We will work closely with operators in the region to bring planning, operational and technical expertise that adds real commercial benefit to the cost of intervention.”

For the financial year ending 31 March 2015, Expro’s presence in the Middle East and North Africa region grew with stronger positions in all its main operating countries providing the opportunity to introduce a range of new technologies, products and services into these markets.

MacGregor, part of Cargotec, creates a new division 'Advanced Offshore Solutions' by merging its two Norway-based divisions and combining the strengths in offshore mooring, loading and load handling businesses. With the new joint division MacGregor aims to gain synergies and improve the operations as well as customer service. Høye G. Høyesen has been appointed to lead the new Advanced Offshore Solutions division, which will become operative on 1 January 2016.

MacGregor continues to develop its offshore operations based on its strengths in engineering and strong commitment to customer service. MacGregor customers will benefit from the stronger team of totally over 450 dedicated new building and service professionals in Arendal and Kristiansand in Norway. The new division will offer technologically advanced solutions, develop new products and is agile to serve our world-wide customers throughout the lifecycle.

Høye G. Høyesen joined MacGregor earlier this year from APL Norway/NOV, where he held several key positions, the latest one being Vice President, Business Development. "I am confident that with his long and valuable industry experience he will lead the merger successfully and develop the operations for the benefit of our customers," says Michel van Roozendaal, President, MacGregor.

ABS, the leading provider of classification services to the global offshore industry, has announced that the ABS-classed Seajacks Scylla, the world's largest and most advanced wind farm installation and offshore construction vessel, has been delivered by the Samsung Heavy Industries Shipyard in Geoje, Republic of Korea.

ABS, the leading provider of classification services to the global offshore industry, has announced that the ABS-classed Seajacks Scylla, the world's largest and most advanced wind farm installation and offshore construction vessel, has been delivered by the Samsung Heavy Industries Shipyard in Geoje, Republic of Korea.

"Industry growth depends on innovation and new designs," says ABS Chairman, President and CEO Christopher J. Wiernicki. "As a technology leader, ABS is pleased to work with Seajacks as it develops and launches vessels with increasingly greater capabilities."

Seajacks CEO Blair Ainslie credits the strong working relationship among the project participants for the successful delivery of this unit. "The cooperation among Seajacks, ABS and SHI was vital to the success of this newbuild effort," he says. "As we bring new designs to the market, we rely on partners who are willing to take on projects like this one that break new ground in the industry."

Based on the Gusto MSC NG14000X design, the Seajacks Scylla, has more than 8,000 metric tons of available variable deck load. Equipped with a 1,540-metric-ton leg-encircling crane and a usable deck space in excess of 5,000 sq m the unit is outfitted with 105-m legs with the ability to install components in water depths to 65 m. The rig is capable of meeting the installation needs of jumbo-monopiles, jackets, and turbines of future wind farms in deeper waters farther from shore.

The Seajacks Scylla complies with ABS classification requirements for self-propelled jackup units, including the DPS-2 for dynamic positioning capability; ACCU, which applies to automatic centralized control unmanned units; and CRC for crane register certificate.

Since 2009, Seajacks has invested in five self-propelled jackup units, all of which have been classed by ABS. The Seajacks Scylla represents a milestone for the company as it is considered to be the most technically advanced installation vessel in the market.

BMT JFA Consultants (BMT), a subsidiary of BMT Group, a leading international maritime design, engineering and risk management consultancy, recently completed the project management and supervision of the 2015 Bandy Creek Boat Harbour Dredging works. This campaign was undertaken as part of the state-wide maintenance dredging program which has been managed by BMT for the Western Australian Department of Transport (DoT).

After the adverse weather conditions that hampered production in the 2013 session, the 2015 campaign successfully dredged a total of 87,000m3 of sediments from the harbour and the entrance channel in 18 weeks against an average of 50,000m³ of sediments dredged in the previous campaigns.

Bandy Creek Boat Harbour is a regional harbour developed in 1983 near the town of Esperance, Western Australia for recreational as well as commercial use. Since the opening, the Harbour has experienced ongoing sedimentation at the entrance area, which requires regular maintenance dredging to be undertaken. With heavy swells propagating from the Southern Ocean, operations such as dredging at the entrance area are challenging and limited by windows of calm sea-state.

To cope with the swells the main contractor, CGC Dredging developed an innovative method to optimize the dredger’s operability by using stern and forward anchor’s to operate in the vicinity of the entrance. The method proved to be successful with the dredge being able to operate effectively in a wider range of conditions in the harbour entrance. As a result of increased operability, the dredge vessel was able to work in areas that were not dredged in previous sessions, such as the harbour fairway, the approach to the jinker ramp and the berths.

Karim Ghaly, DoT Program Manager from BMT JFA Consultants comments: “We are delighted to deliver such a milestone to the local community in the 2015 campaign as a result of team effort. The mariners can now enjoy full-depth access in and out of the Harbour. We look forward to implementing this innovative method in future dredging campaigns to further benefit the stakeholders.”

Airborne Oil & Gas has been awarded a contract for the supply of TCP Downline, Jumpers and deployment system for acid stimulation.

A West African operator selected Airborne Oil and Gas’s Thermoplastic Composite Pipe (TCP) technology as the preferred solution for injecting large volumes of stimulation fluids offshore in deep water offshore West Africa. Airborne Oil & Gas will supply a 1450 meter long, 3 inch ID 5000 psi working pressure TCP Downline and TCP Jumpers, the latter connecting the downline to the injection skid and subsea wellhead. In addition, Airborne Oil & Gas will supply the complete deployment spread, including reeler, tensioner and all pipe ancillaries such as end fittings, bend restrictors etcetera. Airborne Oil & Gas will perform all related engineering including global dynamical analysis of the downline system.

The TCP Downline and TCP Jumpers provide the high flow rates required for effectively stimulating reservoirs. Acid stimulation is a key element in the EOR strategy of most operators; where the flow rate is a prerequisite, the good fatigue performance, lightweight and easy maintenance ensures a good business case compared to alternatives such as steel-coiled tubing.

“Following the other orders that Airborne Oil & Gas won recently, on downlines and acid stimulation systems, this most recent order is clear evidence of a growing acceptance of TCP technology in the offshore industry, and of our leadership position in the acid stimulation and intervention business”, says Martin van Onna, Airborne Oil & Gas’s Chief Commercial Officer. “We are working with all of today’s leaders in the field of intervention, stimulation and plug and abandonment and see a strong growth over the coming period. Cost effective intervention is key to enhanced oil recovery for subsea wells. Especially in these times, where cost reduction is a central theme for many operators, our technology provides new ways to increase recovery ratios in the most cost efficient manner.”

Statoil and its partners were the successful bidders for six exploration licenses in the Flemish Pass Basin, offshore Newfoundland, and two licenses offshore Nova Scotia.

The licenses offshore Newfoundland total 1,466,918 hectares (14,670 km2), and are located in an area in proximity to the Statoil-operated Bay du Nord discovery. Statoil will operate five licenses, and participate in one license as a partner. The offshore Newfoundland licenses awarded are as follows:

• NL15-01-02: Chevron 35% (operator); Statoil 35%; BG 30% (274,732 hectares)

• NL15-01-05: Statoil: 40%; Exxon Mobil 35%; BG 25% (267,403 hectares)

• NL15-01-06 Statoil 34%; Exxon Mobil 33%; BP 33% (262,230 hectares)

• NL15-01-07: Statoil 34%; Exxon Mobil 33%; BP 33% (254,321 hectares)

• NL15-01-08: Statoil 50%; BP 50% (268,755 hectares)

• NL15-01-09: Statoil 100% (139,477 hectares)

The licenses offshore Nova Scotia (NS15-1 Parcels 1 and 2) cover an area totaling 650,000 hectares (6,500 square kilometers), and are located approximately 250 kilometers from Halifax, Nova Scotia. The growth of Statoil’s portfolio offshore Newfoundland and new entry offshore Nova Scotia strengthens the company’s long-term position in the Canadian offshore.

“The successful bids in these frontier areas offshore Canada are in line with Statoil’s strategy of deepening our position in prolific basins and securing access at scale, while also adding important optionality to our exploration portfolio,” says Tim Dodson, executive vice president for Exploration in Statoil.

“The significant exploration investment offshore Newfoundland will provide Statoil an opportunity to further advance our established exploration position in this region through a step-wise approach, while in Nova Scotia, we are able to apply the exploration knowledge and experience we have gained globally and in the North Atlantic specifically,” he said.

Statoil holds an extensive position in the Flemish Pass Basin, and the licenses awarded support developing the company’s exploration portfolio in an environment where Statoil is experienced. The licenses awarded are located in an area nearby to Statoil’s previous discoveries in the Flemish Pass Basin – the Mizzen discovery was made in 2009, and Harpoon and Bay du Nord were both discovered in 2013.

Starting in November 2014, Statoil has undertaken an 18-month exploration drilling program in the Flemish Pass. The program will appraise the Bay du Nord discovery and also test new prospects in the greater Basin area. Statoil is the operator of the Bay du Nord discovery with a 65% interest, and Husky Energy has a 35% interest.

Inmarsat (LSE:ISAT.L), a leading provider of global mobile satellite communications services and Ericsson (NASDAQ: ERIC), a world leader in communications technology and services, have signed a strategic maritime agreement that is intended to facilitate the sharing of cargo, logistics and vessel operational data to help streamline the maritime supply chain. The two companies will jointly develop services, solutions and applications to drive industry standards for satellite connectivity and application integration in the maritime industry.

As a first step, Ericsson has signed a distribution contract to offer XpressLink, Inmarsat’s combined L-band and Ku-band VSAT network for the maritime market. XpressLink offers an easy upgrade path to Inmarsat’s Fleet Xpress service, powered by the new Global Xpress constellation, when it becomes available in the coming months. It is intended that the distribution agreement with Ericsson will be extended to Fleet Xpress at that time.

The new strategic relationship will also pave the way for integration between Ericsson’s Maritime ICT Cloud and global connectivity delivered over Inmarsat’s satellite communications network, including both Ka and L-band.

Ericsson’s Maritime ICT Cloud is an end-to-end managed cloud solution that connects vessels at sea to shore-based operations including maintenance service providers, customer support centers, fleet/transportation partners, port operations and authorities. Enabled by Inmarsat, the Maritime ICT Cloud will ensure that trucks will spend less idle time at ports, cargo will spend less time in transit, and producers will be better able to plan their shipments.

An example of how the strategic cooperation agreement works in practice was highlighted with the recent announcement of a contract between Ericsson and U-Ming Marine, a leading shipping company specializing in the transportation of cement, dry commodities and industrial raw materials. Ericsson will provide U-Ming Marine with end-to-end connected vessel and voyage optimization solutions, including satellite connectivity from Inmarsat.

Ronald Spithout, President Inmarsat Maritime, says: “With Fleet Xpress, the world’s first mobile hybrid Ka/L-band high-speed broadband service, embedded in and enabling world-class solutions from Ericsson, we are re-defining maritime connectivity. This transformational agreement will open up opportunities for vessel operators and managers to capture intelligent data immediately.

“Everyone is talking about ‘big data’, but eventually it is the deployment of applications onboard and the end-to-end management of integrated intelligence, that will ultimately change the way the maritime industry operates; making it more efficient, greener and unlocking greater value. We are happy that the reliability of the Inmarsat constellation of satellites and operational standards are recognized as the best fit in the Ericsson roadmap of integrated services.”

John Taxgaard, Head of Maritime at Ericsson, says: “Ericsson believes that the Internet of Things has the potential to generate tremendous value for the maritime industry. Partnering with the leading provider of global mobile satellite communications services is the best means of helping the maritime industry to realize this value. Together with Inmarsat we will jointly develop fully integrated services, solutions and applications, and work toward establishing maritime industry standards for satellite connectivity and application integration.”

NYC-based PIRA Energy Group believes that entering 2016, the oil market really faces two surpluses: excessive inventories and an ongoing imbalance between supply and demand of over 1 MMB/D. In the U.S., the commercial stock surplus made a new high. In Japan, crude runs eased and stocks corrected downward. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

World Oil Market Forecast

The global oil surplus grew in 4Q15. Entering 2016, the oil market really faces two surpluses: excessive inventories and an ongoing imbalance between supply and demand of over 1 MMB/D. Strong demand growth in 2016 and declines in non-OPEC supply eliminate the imbalance but excess inventory remains.

Ukraine to Align Gas Royalties with Market Rates

The Ukrainian parliament has amended the Tax Code and changed the conditions of calculating the sale price of natural gas for royalties for the use of deposits during gas production. The amendments to the Tax Code bring the calculation of the royalty in line with the requirements of the law on the natural gas market. Previously, the calculation of the royalty was pegged to the upper price of natural gas set by the National Commission for Energy, Housing and Utilities Services Regulation (NCER) before October 2015.

Switching Away from Coal

An extremely long LNG market is translating into a structural recovery of the spark spreads, while the dark spreads have collapsed, especially in the summer months, mirroring the ineluctable eclipse of coal in favor of gas. Our balances have now been changed to reflect a higher risk that French net power exports will be moving lower, especially during the summer. This shift means that French prices will eventually converge more closely toward Germany, also in light of the recent announcement that Belgium’s Doel 3 and Tihange 2 will be soon reconnected to the grid. Germany is relatively less affected by a bearish gas market, as it is pricing closer to marginal costs for efficient coal, which is relatively more difficult to displace.

Dry Bulk Freight Outlook Cut on Iron Ore Outage, China Weakness

The prospects of a late rally in Cape freight rates during the remainder of 2015 have faded. In the Atlantic, the disaster at Samarco’s 30 MMmt/year iron ore operations in Brazil will reduce cargo volumes and restrict long-haul shipments to the Far East. Over in the Pacific, a structural realignment in China’s steel industry finally appears to be taking place, with crude steel production, steel exports and iron ore imports all down in October. The Cape market looks grim for the rest of this year having hit bottom earlier compared to last year. We will be marking down our near-term Cape demand forecasts following the loss of Samarco exports plus its consequential impact on Atlantic to Pacific trade and ballasting patterns. We also have a more bearish outlook on China’s dry bulk demand and on the outlook for Cape freight rates in 2016.

Less-Than-Bullish WCI Auction with New 2016 Reserve Price

The California/Quebec joint carbon auction saw current vintage allowances clear at the projected 2016 minimum reserve price. This mirrored the November 2015 auction, but is lower than secondary market pricing at the time of the auction suggested. Though the future vintage auction saw solid bidding interest, it cleared a bit lower than expected. 88 bidders registered for the auction with 3 new bidders and a number of formerly active bidders taking a break. See PIRA’s excel sheet summary of the auction results and participants.

U.S. Ethanol Prices Decline

U.S. ethanol prices tumbled during most of November, although assessments bounced off the bottom the last few days. The market softened because of higher production and lower demand for ethanol-blended gasoline. As a result, stocks built to a 16-week high.

Corn Demand Picking Up

Export Sales for the week ending November 19th, as released Friday, showed strong corn sales as seasonality hopefully starts to takes over. Soybean sales were average, while wheat sales once again lagged. Corn sales/exports have made up significant ground against last year’s numbers but remain 23% behind, while soybeans are 17% behind last year’s pace at this point.

Global Equities Modestly Changed

Global equities were fractionally changed on the week. In the U.S., the indices were modestly higher. For individual sectors, retail, consumer staples, and energy all outperformed. Utilities were the weakest. Internationally, many of the tracking indices declined. The poorest performers were Latin America, BRIC’s, and emerging markets.

Freight Market Outlook

Wide monthly swings in tanker rates have become the new normal, and October was no exception. VLCC rates plunged from a high of WS 88 in early October to WS 46 by the end of the month, but they have bounced back since. Rates in other size sectors also experienced wide swings. The current glut of oil (500 MMB by end 4Q 15) has helped the tanker sector in a number of ways. Higher OPEC production and expanding waterborne trade have been added substantially to vessel demand, but a bloated supply chain has also contributed. Higher land inventories have caused excess port time and discharge delays, especially in China. In addition, charterers knowing that discharge delays are inevitable on arrival are slowing vessels down on their laden legs while capturing contango credits, reducing fleet efficiency. Floating storage economics are improving and the volume of crude stored in tankers will grow in 1Q16.

U.S. Stock Surplus Makes New High

The U.S. commercial stock surplus has increased to the highest surplus of the year. Coming out of turnarounds, crude runs continue to ramp up, and are now 1.0 MMB/D over early October run rates. This alters the balance to where refined product stock builds have been outpacing crude stock builds, and we expect the same for the week of November 27. Domestic crude supply, however, is remaining high, reflected by crude stocks posting small builds instead of draws, with the ramp up in crude runs.

Coal-to-Gas Switching Enters the Discussion

The central focus on gas demand growth should be on power generation. Lower spot and contract prices have reached the point where a competitive position versus coal is beginning to enter the conversation. The market for gas to replace the least efficient coal units with the most efficient gas units began to emerge in the U.K. in recent months and is now spreading to the Continent, as day ahead and front month prices slowly deteriorate on an absolute basis and relative to ARA coal, which has bottomed out to a greater extent.

U.S. Coal Stockpile Estimates

Power sector coal stocks continued to expand this month as mild weather east of the Rockies, and resulting slack gas prices, deflated coal burns. PIRA estimates U.S. electric power sector coal stocks will reach 185 MMst as of the end of this month, their highest level in three years.

RGGI Fundamentals Weak but Policy Support Strong

Even with additional nuclear retirements, our latest modeling indicates a fundamental cumulative surplus in RGGI through 2020 without any CCR tons. The Dec. auction is expected to affirm prevailing higher price levels seen since the Sept. auction, though the market has also seen strong interest gains in put options. At its Stakeholder Meeting, RGGI confirmed that it wants lead on climate – offering a transition to a post-2020/CPP-compliant RGGI market that supports the value of currently-traded RGGI allowances.

Mixed Week for Key Indicators

The S&P 500 moved modestly higher on the week. Some of the related indicators also improved (Russell 2000, VIX, emerging market debt). The notable outlier was the decline in high yield credit for the third straight week. This is believed to be an important leading indicator with regard to overall market health. Commodities remain in a downtrend, both energy and ex-energy. Precious metals were again lower along with copper and aluminum. With regard to currencies, the U.S. dollar was again mostly stronger. The strength was focused against the euro and the British pound, along with key Eastern European currencies.



Record Ethanol Output

U.S. ethanol production soared to 1,008 MB/D last week, eclipsing the mark of 994 MB/D set in the third week of June. Record outputs were established both inside (916 MB/D) and outside (92 MB/D) of PADD II. Total manufacture was up from 975 MB/D in the prior week. Inventories rose for the fourth consecutive week, building by 378 thousand barrels to 19.6 million barrels.

Japan Crude Runs Ease, Crude Stocks Correct Downward

Crude runs eased in line with our turnaround schedules. Crude imports fell back sharply and produced a strong crude stock draw. Finished product stocks also drew due to a decline in gasoil and naphtha stocks. Kerosene stocks continued building. The most recent holiday appeared to have minimal impacts on the data. Refining margins remain strong with all the major product cracks improving further on the week.

LNG and Seasonal Storage: The Next Major Conflict

A delay of a few weeks here and a few months there on new supply is managing to support spot prices in Asia, but the second quarter of 2016 is sizing up as one of the weakest we have ever seen. Asia is capable of storing very little LNG on a seasonal basis, which will shift the burden to Europe.

Intangibles Sealed the Deal to Lower PIRA’s Reference Oil Prices

Lots of assumptions go into forecasting global supply/demand balances which are aggregated from data for over 140 countries of the world. In recently revising 2016 crude oil prices, PIRA was reflecting in prices a higher starting surplus stock position and higher end year 2016 stocks. Another important factor which contributed to the decision to lower prices was the intangibles associated with our forecast having more downside than upside risks. This is the case despite the greater surplus in our revised November balances.

More Extended Price Weakness

Directionally the answer to near-term HH price prospects is that aside from all important winter weather, prices should remain under enough downward pressure to keep gas competitive against coal for electric generation (EG) — a need reflected by PIRA’s price markdown for the first several months of 2016 tied partly to lower prices going into 1Q16.

OPEC to Meet Dec 4 with Little Flexibility

PIRA’s view is that the most likely outcome of the upcoming December 4 OPEC meeting is a rollover, continuing the current market share policy. The Organization faces four rather big problems which are unlikely to be resolved.

Another Bearish Bidweek Signals Weak Fundamentals Ahead

Last week's report revealed 4,009 BCF in the ground setting a new record for U.S. storage. With such high storage, the need for gas to continue to price low enough to stay competitive with coal in the EG queue remains paramount, though seasonally rising heating loads, however delayed at this point, will support sequential increases in demand and mitigate the overall tenor of substitution necessary.

Qatari Marketing Challenges Offer New Solutions to Pricing Conundrums

It’s back to the future for the Qatari marketers that just agreed in principle to a significant downward price revision on an existing long-term contract. The move will essentially halve the sales price for the 10.8-bcm/yr. (7.5 million tons) the Qatari's sell to India’s Petronet.



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 maintenance and modifications services at BP-operated oil and gas fields offshore Norway.

The contract has a fixed period of five years valued at as much as NOK 3.2 billion. It also contains options to extend the agreement by as many as four years. The accord starts on December 1, 2015 on expiration of an existing agreement for similar services.

"This contract was won in stiff international and national competition and will help secure jobs on the west coast of Norway as well as provide crucial support for our development of operations further north," said Per Harald Kongelf, head of Aker Solutions in Norway. "We're very pleased to continue our strong partnership with BP on the Norwegian shelf."

The agreement is for work on the North Sea fields Ula, Tambar, Hod and Valhall as well as the Skarv deposit in the Norwegian Sea. The work will be managed and executed by Aker Solutions' maintenance, modifications and operations units in Stavanger and Sandnessjøen and at the company's fabrication yard in Egersund.

"Aker Solutions is a very experienced and capable supplier that has over many years had large and demanding deliveries to BP both in development projects and in the production phase," said Eldar Larsen, vice president of operations for BP in Norway. "The company has shown great flexibility and willingness to develop and use local businesses, which is especially important for activity in Sandnessjøen."

Aker Solutions has worked with BP in Norway for more than twenty years and signed the first long-term framework agreement contract of this type with the company in 1999.

"We look forward to continuing the constructive relationship we've developed over the years with BP as we work together to find the most cost-effective solutions for these fields," said Knut Sandvik, head of Aker Solutions' maintenance, modifications and operations business.

Crowley Puerto Rico Services, Inc. announces that it has broken ground on a $48.5-million construction project for a new pier at its Isla Grande Terminal in San Juan, Puerto Rico. The project includes the development of a new 900-foot-long, 114-foot-wide concrete pier and all associated dredging needed to accommodate Crowley’s two new liquefied natural gas (LNG)-powered, Commitment Class ships, which are scheduled for delivery in 2017. Crowley’s terminal expansion also includes the installation of three new ship-to-shore container gantry cranes, which will be supplied under a separate contract.

“This important project represents close collaboration between private business and the Puerto Rico Ports Authority (PRPA) to make a major investment in the infrastructure of Puerto Rico,” explained Jose “Pache” Ayala, Crowley vice president, Puerto Rico. “We are very pleased to be working with a Puerto Rico-based construction company that is utilizing workers on the island and keeping the money in the local economy.”

The construction contract is being executed by L.P.C. & D. Inc., of Las Piedras, Puerto Rico, which began driving the first piles for the pier last week. About 75 jobs have been created during the construction phase and about 100 new jobs will be created when the construction is completed in mid-2017 and Crowley begins service with its new ships.

“With the first pile driven, we look forward to watching the coming transformation of our terminal into the most modern and efficient port facility on the island,” said Tom Crowley, company chairman and CEO. “Our new terminal infrastructure will help us reposition Puerto Rico as a shipping and logistics hub for the Caribbean Basin and beyond, and open up many new opportunities for our customers.”

In all, Crowley is investing about $500 million in its Puerto Rico service with the construction of two new state-of-the-art ships, the new pier, three new container cranes, new truck access gates, reefer plugs, new containers and container handling equipment, and more.

“This investment, which is resulting in jobs, economic impact, a cleaner environment and significant service enhancements for Puerto Rico shippers, would not be possible without the Jones Act,” said Crowley.

The Jones Act is a federal statute that provides for the promotion and maintenance of a strong American merchant marine. It requires that all goods transported by water between U.S. ports be carried on U.S.-flag ships constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents.

“While the act ensures that we have a robust shipbuilding capability and skilled merchant mariners in the U.S. essential to our national defense, it has also created a commercial shipping market between the mainland and Puerto Rico that is highly competitive, customized and dedicated,” said Crowley. “It is because of this competition and the longstanding rules of engagement spelled out in the Jones Act that we have the confidence to make this major investment for the benefit of the people of Puerto Rico.”

The pier design, using the latest displacement-based performance criteria, has been carefully developed over the past year with the PRPA and Harbor Consulting Engineers, Inc., of Seattle, Wash. As the lead design firm for the project, Harbor is the engineer of record for the project and the duration of the construction. Crowley and Harbor have worked together on infrastructure projects for nearly 40 years. Crowley recently completed the acquisition of the necessary permits, including those from the U.S. Army Corps of Engineers and other local agencies.

Crowley has served the Puerto Rico market since 1954, longer than any other carrier in the trade, and occupied the now 75-acre Isla Grande Terminal the entire time, making it the longest continual occupant of any Jones Act carrier in the trade. The company, with over 250 Puerto Rico employees, is also the No. 1 ocean carrier between the island commonwealth and the U.S. mainland with more weekly sailings and more cargo carried annually than any other shipping line.

Jacksonville-based Crowley Holdings Inc., a holding company of the 123-year-old Crowley Maritime Corporation, is a privately held family and employee-owned company. The company provides marine solutions, energy and logistics services in domestic and international markets by means of six operating lines of business: Puerto Rico Liner Services, Caribbean and Latin America Liner Services, Logistics Services, Petroleum Services, Marine Services and Technical Services. Offered within these operating lines of business are: liner container shipping, logistics, contract towing and transportation; ship assist and tanker escort; energy support; salvage and emergency response through its 50 percent ownership in Ardent Global; vessel management; vessel construction and naval architecture through its Jensen Maritime subsidiary; government services, and petroleum and chemical transportation, distribution and sales. Additional information about Crowley, its subsidiaries and business units may be found on here.

With the oil and gas industry forced to work harder to extract oil around the globe and an increasing reliance on reserves in difficult to reach locations, the resurgence in floatover installation practices continues. In its new whitepaper, ‘The Floatover Forecast, Trelleborg’s engineered products operation recounts the lessons learned, changes in technologies and materials; as well as the trials and errors that have contributed to developments in the field.

Over the past 15 years in particular, incremental improvements have established the floatover approach as an often preferred alternative to traditional heavy crane lifting. Trelleborg’s JP Chia, has been an active industry expert on the global scene since the technology came to the fore for topside deployments in the early 2000s.

Supported by statistics from a current research paper, the whitepaper details just how far the offshore industry has come in three decades of development of the floatover process and how much further it can advance as oil companies utilize the technology in even harsher environments.

JP Chia, Engineering Manager within Trelleborg’s engineered products operation, says: “Oil and gas exploration continues to grow and develop year on year and as technology becomes more sophisticated, the effectiveness of extraction will further increase. However, as floatover installations increase, it is vital that the industry applies the right thinking to ensure that projects are implemented safely and efficiently from beginning to end.

The whitepaper provides details to achieve this, enabling owners, operators, EPC contractors and consultants to confidently keep up to speed with the world of floatover installations.”

With a mere four orders so far this year the Floating Production System (FPS) sector is suffering. However, things are anticipated to be better next year, with the US Gulf of Mexico (GoM) in particular, having a surprisingly bright future. The area is expected to have as many orders next year as there were globally in 2015 and this positive upturn has already started with the Appomattox Floating Production Semi-Submersible (FPSS) being awarded in Q3, the most expensive unit ordered all year.

A few years ago this would have been unthinkable, with interest in the deepwater GoM waning as numerous companies gave up their offshore acreage to focus on the shale market onshore. Yet the declining oil price has, if anything, bolstered interest in the region. An employee of a major engineering company recently told Douglas-Westwood (DW) of their surprise at how many tenders they were invited for in the GoM.

This demonstrates the fact that the US GoM is an attractive investment area at a time of low oil prices, with field development approvals despite the low oil price. This highlights the appeal to operators of a well-established, politically stable investment climate and until the oil price improves, most frontier areas are likely to be ignored.

A crucial point found in DW’s new World Floating Production Market Forecast 2015-2019, Q4 update, however, was that units ordered next year will be significantly cheaper than those ordered before the downturn. For the US, cheaper developments were already the norm due to smaller reserves, leading to a preference for ‘mini-FPS’ developments. The downturn has seen even these costs slashed with the Mad Dog Phase 2 development that was uneconomical at $110 a barrel being ready for a final investment decision next year, after numerous front end engineering design revisions, despite the bleak oil price forecast.

Regardless, any upturn after a dismal 2015 will be greeted gratefully from the array of shipyards and suppliers who are hurting badly in the current environment.

MacArtney has accepted responsibility for the in-field sales and after-sales support of Focal products in the commercial marine markets of the north-west region of North America via its office located in Victoria, BC in Canada.

Moog Focal Technologies Corporation and the MacArtney Group have agreed to intensify their multi-service partnership aiming at expanding their long-term business cooperation in favor of their extensive customer portfolio.

Trained MacArtney Inc.technicians servicing a Focal slip ring

Representing a wealth of marine experience and knowledge and having many years of experience attending to Focal products, the MacArtney Group considers the strengthening of their Focal business relations quite essential. An increase in global sales and servicing capacities fortifies the foundation for a strong business alliance between the two companies.

Decommissioning within the offshore environment is rapidly becoming a focused activity for the oil and gas industry. Latest figures from Decom North Sea suggest that there are, approximately, 470 offshore installations in the UK sector due to come out of service by 2030 with an associated cost of US$46.8 billion (£30 billion). With such a formidable undertaking ahead, oil and gas operators are developing their decommissioning plans.

The effective management and mitigation of potential environmental impacts and risks is key to the success of this process. Integral to this are marine growth assessments which are increasingly being used to provide valuable information for decommissioning plans. Faron McLellan, Environmental Consultant, Dr. Dorota Bastrikin, Senior Consultant, and Dr Joe Ferris, Associate Director at BMT Cordah, a subsidiary of BMT Group, discuss the importance of these assessments drawing on a number of projects carried out both within the North Sea and overseas, and how they can assist the planning process, minimise the environmental impact and financial risks. An important environmental issue is the occurrence and spread of marine species on decommissioned structures outside their naturally occurring range with the risk of introducing an invasive species.

There are over 1,500 registered offshore oil and gas installations in the North Sea, 470 of which are in United Kingdom (UK) waters with more than 10,000 km of pipelines and circa 5,000 wells. Many of these structures are over 40 years old and are now coming to the end of their design life. Over the next couple of decades a growing number of redundant oil and gas installations will be taken out of service and decommissioned. As well as the physical removal of the component parts, decommissioning of offshore subsea structures must include the management and mitigation of any potential environmental impacts and risks. This includes the consideration of organisms that colonise submerged oil and gas structures referred to as ‘marine growth’. These colonies may form habitats from a range of species assemblages, the composition of which will differ depending on the structure’s depth, geographical location and age. Marine growth introduces a wide range of issues in the context of decommissioning, including the added weight to a structure, colonisation by protected species, the potential for transfer of invasive (non-native) species and management of marine growth waste. Existing literature indicates that the colonisation of offshore structures can commence within weeks of submergence, continuing until the time of decommissioning. Throughout that period, marine growth can colonise and re-colonise, sometimes with species different to those originally found on the structure. In some cases, facilities may have been in place since the late 1970’s, providing opportunities for colonisation by a succession of marine species.

There are two protected species in the North Sea that must be recognised during the decommissioning process: Lophelia pertusa, a cold-water coral and Sabellaria spinulosa, a reef building polychaete worm. The Department of Energy and Climate Change (DECC) Guidance Notes on the Decommissioning of Offshore Oil and Gas Installations and Pipelines under the Petroleum Act 1998 provide guidance on these. If either of these species is likely to be present, it is prudent to confirm or disprove their presence prior to undertaking decommissioning operations. Both of these species are listed under the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES). This listing means that a CITES certificate is required if transporting Lophelia or Sabellaria between states.

Factors influencing the distribution and occurrence of marine growth colonisation include water temperature, salinity, depth, distance from shore or from other fouled structures, exposure to wave action and predation. Geographical differences in these parameters exist as demonstrated in the variation in marine growth between the northern, central and southern North Sea. For example, Lophelia has not been recorded on southern North Sea structures and is typically only observed in the northern and central North Sea in deep waters (>50 m) and colder conditions. Marine growth will develop at different rates, but it is not unusual for significant cover of marine growth to be established in as little as five years after installation. Lophelia has not historically been recorded within the first decade after installation. However, with an increasing number of platforms with Lophelia, these colonized platforms may provide a “stepping stone” effect and facilitating colonisation within the first decade. In the SNS Sabellaria has been reported growing on the exposed surface of pipelines in areas designated as conservation sites. The decommissioning options for these pipelines may be affected by the occurrence of this species.

The differences in species composition and distribution between areas of the North Sea can be demonstrated through two marine growth assessments carried out by BMT Cordah.

Considering the aforementioned factors, the importance of a marine growth assessment in the management of the decommissioning process to minimise potential environmental impacts and risks becomes more apparent. Whilst not a statutory requirement within UKCS decommissioning environmental impact assessments (EIA), marine growth assessments offer a practical and cost-saving option for its effective management. Furthermore, a marine growth assessment contributes to both the environmental and socioeconomic aspects of the EIA. At a minimum, these assessments can be used to provide a quantification of the weight of fouling organisms and identification of species, including those subject to protection. The weight of the structures to be decommissioned is a fundamental consideration when planning lifting, transportation and disposal operations. Marine growth, by increasing the structural weight, can increase costs and the complexity of lifting operations.

Current approaches to the management of marine growth include (i) offshore removal of marine growth by a Remotely Operated Vehicle (ROV) and/or divers in situ; (ii) onshore removal from cut jacket sections and subsequent landfilling; and (iii) land-spreading or composting of removed marine growth. All of these options bring with them potential environmental impacts which need to be considered Potential seabed impact from marine growth removed in situ will also be influenced by the species composition. The suitability of landfill or composting sites will depend on species composition. The EU Landfill Directive (1999/31/EC) includes an obligation for member states to reduce the amount of biodegradable waste, which includes marine growth destined for landfill. The UK targets, based on the 1995 waste quantities, are a reduction of 75% by 2010, 50% by 2013 and 35% by 2020. Therefore disposal in landfill may become a last resort for this waste.

Offshore structures brought to shore with marine growth have often resulted in complaints from local communities regarding the odour. The major sources of smell following removal of structures laden with marine growth are the biologically-emitted odors from dying organisms, disturbed anoxic layers and removal of putrefying organisms, particularly originating from highly productive areas. The intensity of smell can become a considerable nuisance to local communities. The platform location and time of year for planned removal should be taken into consideration when developing the decommissioning programme. Due to the seasonality of the productivity of fouling organisms, jackets and other subsea structures removed during the summer and autumn would be expected to emit a stronger odour for longer than those removed in spring from the same location.

A marine growth assessment also provides information on the presence of potentially invasive alien (non-native) species (species from outside of their natural range) which can threaten the diversity or abundance of native species, the ecological stability of infested waters and/or commercial, agricultural or recreational activities. Invasive species can often out-compete indigenous species, detrimentally affecting local ecosystems. Mobile structures, such as Floating Production Storage and Offloading (FPSO) vessels, could act as sources for the introduction of invasive species when taken to different geographical regions for decommissioning or reuse. The European Union (EU) Marine Strategy Framework Directive (MSFD) that came into force on 15th July 2008 aims to protect the marine environment across Europe by achieving and maintaining Good Environmental Status (GES) by 2020. It lists prevention of the adverse alterations to the environment by non-native species, as one of the vital elements of maintaining GES. In 2014, UK published Part Two of the Marine Strategy which focuses on a coordinated monitoring programme for the ongoing assessment of GES and includes invasive species. A new EU Regulation No. 1143/2014 on Invasive Alien Species came into force on 1st January 2015 and foresees three types of interventions: (i) prevention; (ii) early detection and eradication; and (iii) management. A marine growth assessment can satisfy requirements for detection and management.

With the transportation of offshore structures comes an increased potential risk to the marine environment of the introduction of invasive species. This is particularly important if the structure is to be transported out of the North Sea. This risk is determined by the:

Presence and abundance of invasive alien (non-native) species and/or species that have the potential to become invasive;

Period of air exposure of the marine growth during transport and resultant mortality of the species; and

Capacity of alien organisms to colonize, survive and out-compete native species along the transport route and at the final destination.

The major considerations when deciding the movement of the FPSO and geographical location of the decommissioning yard were:

Identification of the suspected invasive coral;

Consideration of remedial options for in situ removal; and

Assessment of existing international regulations and compliance with the transportation and deposition of non-indigenous species in international waters.

An assessment of the marine growth on offshore structures is an important component of decommissioning programmes. The implications of additional weight and the occurrence of protected or invasive species are key drivers in lifting operations and final disposal. These must be considered to ensure the decommissioning process is completed safely, cost-effectively and within the frameworks of both best practice and relevant legislation.