JDR, a leading UK-based supplier of subsea umbilicals and power cables to the offshore energy industry, has been awarded a contract for intervention, workover and control systems (IWOCS) by Aker Solutions Subsea Division. The project – which is scheduled for delivery in summer 2016 – will include the first deployment of JDR’s innovative ‘Mark II Reeler’ concept.

The scope of supply includes two x 1200 meter umbilicals, which provide annulus circulation function to subsea systems. Both umbilicals will be supplied on JDR’s new ‘Mark II Reeler’ technology. The new innovative reeler design will provide customers with a significant reduction in size versus conventional reelers, saving valuable deck space, as well as a lower weight for lifting and handling. The reeler, which has no impact on umbilical capacity, will also lower costs due to reduced materials. In addition, the new design includes a number of key safety features such as improved operator access and compliance with DNV lifting requirements.

David Currie, CEO of JDR, comments: “JDR has collaborated with customers to create a custom engineered reeler design that provides a number of operational benefits. In addition, the new design provides easier access to control panels within the reeler, enabling safer operations offshore. We are delighted to partner with Aker Solutions on this project.”

Churchill Drilling Tools, a specialist oilfield service company, is enjoying significant growth in the Norwegian market. The company that is known throughout the industry as the dart-activation specialists has been experiencing significant export growth for some time, with the most recent success coming from Norway.

This regional growth has been generated through an expansion of the company’s technical capabilities including a recent upgrade of its circulation tool and additional investment in support staff.

The new features in the 2016 version of the DAV MX™ circulation sub are providing Norwegian operators access to significant performance and productivity gains. In addition, multiple wells in the area are now also insured against sticking with Churchill’s HyPR HoleSaver™, a valuable protection against the cost overruns associated with stuck pipe. These enhanced product capabilities are providing a significant regional boost for Churchill with a number of successful new technology applications.

One application highlight is the Ultra Series Dart (USD), which has enabled Norwegian operators to activate faster while pushing the standard differential pressure operating envelope by up to 50%. The addition of the Emergency Shut-Off Dart (ESD) in the upgrade has also provided operators with a unique way to mitigate risk when they find themselves pushed outside the operating envelope due to challenging well conditions. The USD and the ESD have enabled operators to go beyond what is conventional in the knowledge that they can recover the situation quickly and without any extra trips.

Another highlight is the company’s delivery of its first sequential DAV MX™ configuration for both multi-position and multi-cycle hole cleaning and displacement bypass in a single string. In addition to the sequential complexity and compatibility, the valve systems also sustained activation angles of up to 82 degrees in sections of over 4,000 feet.

Director, Mike Churchill, said: “We are pleased with our recent success in Norway. It is apparent that Norwegian operators are keen to improve performance by using new technology to overcome technical and cost challenges. We are glad we are able to make a contribution. The recent application successes in Norway is a testament to the performance and reliability of the new technologies Churchill will be continuing to roll out globally in 2016.”

Sparrows Group has grown its Americas footprint into Trinidad and Tobago following an agreement to work in cooperation with Miguel Mechanical Services Ltd.

The deal combines local knowledge and expertise with global engineering capability and experience to deliver crane assurance and lifting integrity to the country’s energy industry.

Miguel Mechanical Services will supply local expertise, labor, procurement and facilities while the Sparrows Group will deliver engineering and technical support as well as training and competency assessment.

Stewart Mitchell, chief executive officer at Sparrows Group, said: “Our partnership is a perfect fit in many ways. Both parties are specialists in crane services with a combined history of more than 90 years and we are extending our well established presence in the Americas.

“We were keen to work with Miguel Mechanical Services as their track-record of safe working practices and delivery on quality is in-keeping with our core values. Combining local knowledge with global engineering expertise and experience, we can provide customers in the region with an unmatched service covering all aspects of crane operation, maintenance and training.”

The agreement re-establishes Sparrows Group’s connection with Anthony Miguel, the founder of Miguel Mechanical Services. In the 1980s, Sparrows Group was involved in a project to improve crane performance on offshore assets in Trinidad and Tobago. Because of his pivotal role within the operator’s lifting activities, Anthony worked in tandem with Sparrows Group engineers to ensure the cranes reached and maintained optimum levels of operation.

Following the project, Anthony founded his own company in 1988 which has grown to become the premier crane maintenance service company in Trinidad and Tobago.

Anthony Miguel, managing director at Miguel Mechanical Services, said: “The partnership with Sparrows Group enables us to provide an all-encompassing crane service that meets the needs of many operators in Trinidad and Tobago. We are working together to provide the most efficient and best possible lifting service available to the energy industry.”

Established originally in 1946, the Sparrows Group moved into the oil and gas market in 1975 and has more than 40 years’ experience working offshore. They are one of the most well-known and trusted names in the oil and gas industry. The company provides engineered products and services, primarily to the offshore sector, specializing in lifting and handling, cable and pipe lay, and fluid power solutions.

The Sparrows Group has an existing presence in the Americas with US bases in Houston, Texas, several in Louisiana, and a joint venture, Sparrows BSM, in Macae, Brazil. The company has recently grown its worldwide footprint announcing in 2015 it had entered into partnerships with Eftech in Malaysia and Zamil Group in Saudi Arabia.

Photo - Steve Bertone, Sparrows Group’s Senior Vice President Americas, (left) and Anthony Miguel, Managing Director of Miguel Mechanical Services, shake hands on the firms’ Trinidad and Tobago partnership.

iSURVEY Pte Ltd, Singapore, has been awarded a marine construction support contract by Solstad Offshore Asia Pacific to provide positioning and survey support for its 2016 pipeline and platform installation programme in Thailand, on board the DLB ‘Norce Endeavour’.

DLB ‘Norce Endeavour’

iSURVEY will provide positioning services to support the installation of numerous pipelines and platforms including monitoring during jacket setting, together with final positioning, levelling and survey assistance during pile cut-off. The estimated contract duration is 200 days commencing in mid-January 2016. Subsea positioning will also integrate with IKM Subsea’s Merlin work-class ROV during installation operations.

iSURVEY Singapore’s managing director Bill Petrie said: “We are extremely pleased that Solstad Offshore have entrusted iSURVEY with survey and positioning works for its forthcoming pipeline and platform campaign. This is recognition of the efficiency and quality of our solutions, and we are pleased they have chosen to extend and renew our contract with them.”

iSURVEY Group is a leading provider of survey and positioning services to the global oil and gas, telecommunications and offshore renewable energy sectors. The Group is headquartered in Norway with bases in Singapore and Aberdeen.

Leading international oilfield services company, Expro, has secured a new framework agreement with Statoil Petroleum AS in the Norwegian Continental Shelf (NCS).

The agreement, for three years with options to extend for three, two-year periods will see Expro provide subsea services and well control systems delivering its large bore landing string assemblies for completion, workover and intervention projects from both semi-submersibles and jack-up rigs.

Neil Sims, Vice President - Europe CIS (Commonwealth of Independent States), comments:

“This agreement reaffirms the long-standing relationship between Expro and Statoil, established through the provision of well testing and clean-up services over the last 8+ years. We are proud to now be providing subsea landing strings and supporting services for Statoil’s key projects in the NCS.

“Expro are well positioned to support Statoil in Norway with recent investments in a new base and technology – including our $10m facility in Tananger.”

Last year, Expro secured key contracts with Statoil in Canada and Norway for the provision of surface well testing, subsea safety systems, drill stem testing tools, tubing conveyed perforation, downhole sampling and on-site chemistry services.

NYC-based PIRA Energy Group reports that U.S. consumer spending share on energy will hit record low. In the U.S., stocks make a new high. In Japan, crude imports fell back and stocks moved up fractionally. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

U.S. Stocks Make New High

This past week’s inventory build pushed stocks to a new all-time high. The crude surplus to last year has been narrowing as more of it is converted into products. The overall surplus to last year is about flat versus the beginning of the year, but the crude surplus is down 21 million barrels while the products surplus is up by a similar amount. Within products, the gasoline surplus versus the start of the year is up 21 million barrels, the distillate surplus is up 12 million barrels, while year-on-year surplus in the rest of the products is down 11 million barrels.

Low Oil Prices Strain PEMEX; Budget Likely to Come Under Fire

U.S. gas exports into Mexico remain impressive early in 2016. Indeed, February exports are projected to again be near 3.4 BCF/D, ~1 BCF/D more than the prior year. These stout gains have been primarily facilitated by weaker domestic production and increased gas-fired electric generation — a trend that should continue well into this year. PIRA’s Reference Case calls for exports to average ~3.6 BCF/D in 2016, which would mark yet another record-breaking year.

Takes from E-world in Essen: "For they will drink and forget what is decreed."

This issue of plant retirements was brought up in several of PIRA's discussions during E-world, with concerns that even some lignite units may be shut down. We have noted in our prior EES scorecard that daily average lignite output declined substantially over the past 30 days, as day-ahead prices moved lower. So far, with average daily data from Jan. 1, 2016, we want to note that lignite output moved down to about 11.2 GWs, as day-ahead prices settled at €12/MWh on Jan. 30, equivalent to a loss of 7.5 GWs.

Colombian Labor Strike Risk Buoys Coal Pricing

The coal market rebounded notably last week, with API#2 (Northwest Europe) and API#4 (South Africa) prices recording similarly strong gains at the front of the curve, while FOB Newcastle (Australia) price increases were more subdued. A modest rebound in oil/gas pricing provided some of the updrafts for coal pricing, although a growing likelihood of a labor strike at the Cerrejón mine in Colombia gave Atlantic Basin pricing the extra amount of stimulus. In the Pacific Basin, a reduction in Australia’s thermal coal exports in December/January, coupled with news that Anglo American is looking to divest its coal assets globally, is showing that pressures to curtail coal supply are becoming more binding.

Indian LPG Imports Set to Drop in 2016

India’s domestic LPG production is jumping a step change higher as the Indian Oil Corporation inaugurates its eighth refinery in Paradip on the east coast. The refinery includes a one-of-a-kind heavy oil-to-LPG conversion unit that is ramping to a production capacity of 1 million MT of LPG/year. Indian LPG production is climbing 11% higher this year as a result of Paradip’s startup, effectively backing out 24 VLGC cargo imports/year.

Global Equities Stage a Broad and Strong Rebound

Global equities posted solid and broad gains on the week. In the U.S., all of the tracking indices gained ground, with the retail, consumer discretionary, housing, and technology indices outperforming. Internationally, all the tracking indices also gained. The best performers were China, the other BRICs, Emerging Asia, and Japan.

Ethanol Stocks Soar

U.S. ethanol inventories set another record last week, building by 262 thousand barrels to 23.2 million barrels. Ethanol production increased for the second consecutive week, rising to a four-week high 975 MB/D.

Annual Outlook Forum this Week

Focus this week will be on the USDA’s Outlook Forum generally and how government analysts keep the corn carry out below 2 billion bushels and soybeans below 500 million specifically. All this in preparation for the Prospective Plantings report at the end of March, which last year showed a combined 173.8 million acres intended to be planted with either corn or soybeans, a fact that seems lost on many estimating the 2016 acreage mix.

Justice Scalia’s Passing Improves Prospects for Clean Power Plan’s Survival

With the recent unexpected passing of Supreme Court Justice Antonin Scalia, the chances that EPA's Clean Power Plan will survive legal review have improved. The 5-4 decision to stay the CPP last week indicated the Court would likely strike down the rule. With the current court split 4-4, the identity of that last justice is critical to the prospects of the CPP and may not be determined until after the 2016 elections. In the event the CPP is ultimately upheld by the Supreme Court, we would expect EPA to toll the CPP's deadlines for both filing SIPs and compliance by roughly two to three years.

Japanese Crude Imports Fell Back and Stocks Moved Up Fractionally

Crude runs showed very little change on the week. Crude imports fell back, and on balance crude stocks moved up fractionally. Finished products drew 2.4 MMBbls with almost half the decline in kerosene. Gasoline, gasoil, jet-kero, and fuel oil demands all fell back, but stocks still drew to varying degrees. Major product demand was lower on the week, but it continued rising slightly on a trend basis. Margins have softened in January and into February, but on the week were slightly higher.

How Will the European Gas Market Cope with the Ever Lengthening LNG Market?

With winter nearing an end, is it still worth staying short? The answer looks to be yes. Even though spot prices have come down by 8% M/M and by 16% quarter-on-quarter, prices can still go lower. As always, significant risks remain in place, especially as we enter the summer period, when injection account for over 20% of what happens to supply.

Stress Eases this Week

Financial stress appears to have eased up a bit this week. The S&P 500 rose Friday to Friday and on a weekly average basis. All of the other indicators, such as volatility, high-yield debt and emerging market debt, also staged varying degrees of improvement. The U.S. dollar has been increasingly mixed. Commodities ex-energy are looking marginally better. The Cleveland Fed released its inflation expectations for February, which showed a ratcheting down across all time frames.

U.S. Ethanol Prices Fall; Margins Trending Downward

Record-high inventories and lower oil values drove ethanol prices to a three-week low last week. High demand on the export market prevented sharper declines, though prices are expected to fall further in upcoming weeks. Manufacturing margins were up slightly last week, but they were trending downward by the weekend.

U.S. Consumer Spending Share on Energy Will Hit Record Low

U.S. consumer spending on energy will soon hit a record low as a share of total consumer expenditures. Variations in the consumer energy spending share have been largely driven by oil prices, and the decline in retail gasoline prices should push the share below 3.5% this quarter. As consumers have spent less of their budget on energy goods and services, they have spent more on healthcare goods and services and in restaurants. As oil prices start to recover later in 2016, as PIRA projects, these industries may well face headwinds as the share of consumer spending on energy increases.

End to 2015-16 Heating Season Already in Sight

The mild-weather forecasts weighing on gas prices are reinforcing perceptions of an “early end” to the heating season. As it now stands, the next EIA weekly storage report is likely to feature the last triple-digit withdrawal of this heating season. While the books have not yet closed on February, PIRA’s balances are coalescing around an end-month storage position of ~2.48 TCF, which would yield a year-on-year surplus of ~840 BCF. Consequently, March, largely viewed as a bookend to the season with its seasonally dwindling degree days, is front and center.

The Good, the Bad, and the Potentially Ugly of the U.S. Economy

Recent U.S. data releases on manufacturing, jobs, consumer spending, and housing have been encouraging and pointed to an acceleration in economic activity during the first quarter. Business investment, on the other hand, may experience a contraction in the near term. A firmer-than-expected inflation reading for January is likely to embolden hawkish members of the Federal Reserve policy committee.

Japan’s SPR Will Be Drawn Down Under a New Proposal

The Japanese government released a new proposal about the management of its strategic petroleum reserve. A government stock sale of at least 20 MB/D on average over the next four years is in store, since the current official reserve level is elevated according to the new rule. Separately, the draft recommended an expansion of government storage for LPG by 4.2 MMB in the next two years, based on the positive demand outlook for the fuel.

UK Businesses Will See Lower Gas Prices Later this Year

British firms can expect to see their energy bills fall by between 10-20% this summer as turmoil in the oil market pays dividends for customers. The wholesale cost of gas on the UK market has plummeted by more than 40% in the last year due to a global oversupply and depressed oil prices. The weaker gas price has also caused wholesale electricity prices to slump by more than 30%, because a large amount of the UK's power network is gas fired.

Asian Demand Update: Growth Continues to Slow

PIRA's latest update of Asian product demand shows continued slowing. PIRA's January update had shown growth of 741 MB/D, down from over 1 MMB/D in the December update. The latest average three-month data indicate growth of only 294 MB/D. Looking at the upside, India and Korean growth is still good at 335 MB/D and 179 MB/D (vs. 396 MB/D and 154 MB/D last month). A weak performance was registered by China with growth of only 48 MB/D (255 MB/D last month), while Japan now posts a decline of -274 MB/D (-98 MB/D last month). The current growth assessment for Asia picks up preliminary January data on China and India and full 4Q15 data for all the other countries other than Thailand. Looking at individual products, gasoline accounts for 223 MB/D of the growth, but down from growth of 308 MB/D in our last assessment. Weakness continues in middle distillate demand performance, both gasoil and jet-kero. Asian gasoil demand growth is now 77 MB/D, down from 149 MB/D last month, while Asian jet-kero demand growth has also slowed.

Tighter Europe-Asia Spreads Feed AB Supply Glut Concerns

The specter of JKM dipping below NBP in the coming months looms large, particularly as Japan appears to be contemplating the restart of Tepco’s Kashiwazaki-Kariwa (KK) nuclear facility. It is highly unlikely that such a thing would happen this year; in fact, any restart at KK is not built into the PIRA nuclear forecast in Japan at all at this point, owing to the very high political hurdles that are in place for Tepco in particular. But the fact that it is now on the table is worrisome for Asian gas consumption.

Rising U.S. VMT Growth Supports Strong Gasoline Demand

Since mid-2013, growth in U.S. vehicle miles traveled has displayed accelerating growth. Even with that growth, the pace has been below what traditionally has occurred out of a deep recession and compared to what PIRA’s modeling efforts would indicate. In the most recent VMT data, year-on-year gains remain robust, up over 4% in November. The good year-on-year growth in VMT, seen in the most recent data for 2015, helps explain the strong gasoline demand that has been witnessed. For 2015, PIRA estimates gasoline demand grew 2.5%, or 227 MB/D, the strongest since 2002, when year-on-year growth was 2.8%, or 238 MB/D.

Competition Is Heating Up for Product Exports to Australia

Australia has emerged as a major importer of refined products in the Asia-Pacific region over the past few years due to refinery closures there. Net imports more than doubled from some 233 MB/D in 2010 to about 506 MB/D last year, led by diesel, gasoline and jet fuel. Competition is heating up among exporters to supply Australia, with China and India entering the market Down Under. But Australia’s imports of refined products are expected to only increase slowly from here due to relatively slow demand growth, unless there are more refinery closures, and none are currently expected. Australia alone will not correct the surplus of refined product production capacity in Asia-Pacific.

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.

On Sunday February 21^st at 12:09PM Eastern time, the LNG ship Asia Vision arrived in Sabine’s southern berth. Genscape’s Commodity Vectors product as well as Genscape’s visual camera confirmed the arrival of the ship as there are two berths at Sabine’s LNG facility for ships to dock. The Asia Vision has been waiting out in the Gulf of Mexico along with the Energy Atlantic for many weeks now as Cheniere has encountered delays in the commissioning and startup of Train 1.

As of Sunday afternoon the Energy Atlantic is still waiting out in the Gulf of Mexico. Since Asia Vision did not immediately come into Sabine’s berth it is known that the ship is empty (and not bringing in a maintenance cargo) as part of the commissioning process. The last ship to appear in Sabine’s berth was the British Innovator on November 14^th of last year. The British Innovator unloaded 2.87 Bcf as a maintenance ‘cool-down’ cargo in the startup and commissioning process of Train 1. As liquefaction continues at Train 1, Asia Vision appears to be the ship to take Sabine’s first LNG for export to Brazil or Europe, most likely. It is also anticipated that Sabine may fill all of their 17 Bcf of LNG storage before any LNG is loaded for export. As of this last week, Sabine has just begun this process of filling up their storage.

After a successful survey, DNV GL and the Danish Maritime Authority can confirm that the AHTS Magne Viking, owned by Viking Supply Ships, is in compliance with the new IMO Polar Code.

“Having followed the development of the Polar Code for some years, it is a great achievement to finally survey the first vessel to comply with the Code” says Morten Mejlænder-Larsen, responsible for Arctic and Polar activities at DNV GL - Maritime.

Magne Viking, care of Viking Supply Ships.

Based on long experience from Arctic operations in low temperatures and ice covered waters, Viking Supply Ships saw the value in the IMO Polar Code and decided to implement it early on. The process has included updates of vessel and equipment, as well as providing the required documentation.

“As this vessel was already winterized and built for operation in cold climate, most of the additional requirements in the Polar Code were already fulfilled before we started the implementation process,” says Andreas Kjøl, Project Director at Viking Supply Ships.

The IMO Polar Code is mandatory for all SOLAS vessel entering Arctic and Antarctic waters from 1 January 2017. The Code is an add-on to existing IMO codes where the main requirements are related to safety (SOLAS) and protection of the environment (MARPOL). DNV GL will, on behalf of the Flag Authorities, issue the Polar Ship Certificate for vessels complying with the new code.

As a result of less ice and easier access to polar waters, IMO saw the need for a common set of minimum requirements for vessels operating in these areas which are not covered by other regulations. In addition, increased shipping to support the oil and gas industry, mineral export, and an expansion of cruise visits to these regions, prompted IMO’s work with the code.

The main additional risks identified when operating in polar waters are addressed in the IMO Polar Code and the different chapters describe different measures to mitigate these risks.

Magne Viking is an ice-classed AHTS vessel capable of operations in harsh environment offshore regions, as well as Arctic/Sub-Arctic operations. The DNV GL classed vessel is owned and operated by Viking Supply Ships.

Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY) announces it has secured a sizeable(1) extension to the existing contract by BP Exploration Operating Company Limited, for the provision of Subsea Construction, Inspection, Repair and Maintenance (IRM) services in the North Sea.
 


Under the terms of this agreement, Subsea 7 will provide BP with an additional two years of cost-effective IRM delivery, extending the contract to 2019. This is the continuation of the long-standing relationship between Subsea 7 and BP that has been in place since 1998. It covers the maintenance of the Schiehallion, Loyal, Foinaven and East Foinaven fields west of Shetland and will provide increased operational value and return for BP and its joint venture partners in the respective fields (Shell, OMV, Marathon Oil and Faroe Petroleum).
 


Project management and engineering work will be managed from Subsea 7’s Aberdeen office.
 
Phil Simons, Vice President UK and Canada, said: “We are pleased to extend our delivery of IRM services for BP’s west of Shetland developments. In the current commercial environment our track record in IRM and in-house capability for remote tooling design, build and operation, ensure we continue to offer low-cost solutions and respond to our client’s challenges and needs. We look forward to working with BP on maximising the production objectives for their operated fields.”


(1) Contract term: Subsea 7 defines a sizeable contract as being between USD 50 million and USD 150 million.

The protracted low price environment is pushing the offshore marine supply chain to breaking point. Rig managers, OSV contractors and subsea vessel owners are trading at 60-70% discounts to 2013 highs and every week seems to usher in a new wave of profit warnings, impairments or defaults. Although E&P customers are also taking a beating, they are firmly in the driving seat when it comes to bargaining power.

Taking the jack-up market as a microcosm of the wider offshore marine industry, DW estimate that average jack-up fixtures have fallen by 50% whereas average O&M costs per rig have seen reductions of just 25-35. In short, buyers have shown far greater efficiency in cutting their supply chain costs. Whilst E&P companies are able to take advantage of major oversupply throughout the entire offshore marine segment, contractors are left footing the labor bill. Since 2014, labor costs have fallen just 10% as compared to R&M or SG&A associated costs at 35% and 30% respectively. Despite lower demand, there is still a limited number of competent crews (particularly highly trained personnel for DP operations and subsea work) and contractors are loathe to cut ties with capable people for fear of losing out in the (inevitable) upturn or jeopardizing LTI and HSE performance, which in turn reduces the marketability of their assets.

With dayrate growth unlikely over the next 12-18 months and the supply/demand situation expected to only get worse, offshore marine players need to optimize their bottom line strategies and breakaway from prevalent operating models. Mid-sized owners may be evaluating the potential of greater outsourcing and the scale players may see merit in vertical integration. The answers will be unique for everyone but when the market does rebound from current depths, we can expect those that adapted to be the ones still standing.

U.S. Gulf of Mexico (GOM) crude oil production is estimated to increase to record high levels in 2017, even as oil prices remain low. EIA projects GOM production will average 1.63 million barrels per day (b/d) in 2016 and 1.79 million b/d in 2017, reaching 1.91 million b/d in December 2017. GOM production is expected to account for 18% and 21% of total forecast U.S. crude oil production in 2016 and 2017, respectively.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, February 2016

Production in the GOM is less sensitive than onshore production in the Lower 48 states to short-term price movements. However, decreasing profit margins and reduced expectations for a quick oil price recovery have prompted many GOM operators to pull back on future deepwater exploration spending, reduce their active rig fleet by scrapping and stacking older rigs, and restructure or delay drilling rig contracts. These changes added uncertainty to the timelines of many GOM projects, with those in the early stages of development at greatest risk of delay or cancellation.

Contributing to the forecasted production growth are 14 projects: 8 that started in 2015, 4 starting in 2016, and 2 anticipated to start in 2017.

Source: EIA

During 2015, eight fields in the Gulf of Mexico came online. With the exception of Anadarko's Lucius field, each of the fields was developed as a subsea well that is tied back to nearby existing production facilities. The use of subsea tiebacks allows producers to reduce both project costs and start-up times. The Lucius field produces oil using a type of floating production platform that supports drilling, production, and storage operations known as a truss spar. The Lucius spar is the largest in Anadarko's fleet. It consists of a large, hollow, weighted cylinder supporting a deck and is connected to an anchor on the seabed through a mooring system. Its design provides increased stability in harsh offshore conditions.

Four fields are expected to start producing in 2016, including the Anadarko-operated Heidelberg field, which began producing in January. Heidelberg is producing at a spar that uses the same design as the Lucius truss spar, allowing the company to reduce development costs. Shell's Stones field development uses the first floating production, storage, and offload (FPSO) vessel in the GOM. FPSOs allow the development of fields that are complex, that have unique reservoir properties, and that do not have existing infrastructure. Crude oil produced from the Stones field will be transported from the Stones FPSO using tankers to refineries along the U.S. Gulf Coast. The other two fields expected to begin producing in 2016 (Gunflint and Holstein Deep) are subsea tiebacks. Two additional projects are projected to begin producing in 2017, and both are expected to be developed as subsea tiebacks.

Principal contributor: Terry Yen

By combining well-proven MacGregor Pusnes technology in bow loading and offloading systems, MacGregor, part of Cargotec, has helped to develop a solution that enables crude oil to be loaded directly from a floating production storage offloading (FPSO) facility or a floating storage offloading (FSO) unit to a conventional tanker, up to very large crude carrier (VLCC) size. The first contracts for the systems have been signed with China's Cosco Shipyard Group.

An offloading system enables an offshore unit to offload oil to a shuttle tanker or tanker of opportunity.

"MacGregor, and its Pusnes brand, has a long history of developing pioneering offshore loading systems within the industry," says Høye Høyesen, Vice President, MacGregor Advanced Offshore Solutions. "Based on this legacy, MacGregor was invited by Cefront Technology, who developed the concept, to participate in the design and development of the loading systems."

The Cosco Shipyard Group orders will see MacGregor design, manufacture, deliver and commission complete Pusnes loading systems for two cargo transfer (CTV) vessels. The vessels will be built at Cosco Nantong Shipyard and at Cosco Guangdong Shipyard. MacGregor deliveries are planned to start at the end of 2016.

Each vessel will feature MacGregor's well-known Pusnes bow loading and offloading system, which principally comprises: two Pusnes bow loading systems, one Pusnes offloading system, including the world's largest crude oil hose reel with offloading hose; and two sets of Pusnes-patented releasable 700-tonne hawser winches, in addition to auxiliary winches and an integrated electro/hydraulic control system.

"MacGregor is proud of its long and close relationship with Cosco shipyards in China," he adds. "The Cosco Shipyard Group is an important partner for the future and has proved to be a strong player in the merchant and offshore industries."

MacGregor has previously delivered four sets of Pusnes bow loading systems to Cosco Nantong Shipyard and two sets to Cosco Zhoushan Shipyard, of which, one project is still ongoing. In addition to these MacGregor has delivered a range of deck machinery and steering gear to different Cosco shipyards.

International manufacturer Roxtec is targeting the marine and offshore oil and gas sectors with a new innovative safety seal which protects life and assets from a multitude of hazards.

The firm’s Single Pipe Metal (SPM) product can be used to seal any kind of metal pipe in steel decks or bulkheads and specifically guards against fire, gas and water ingress.

Roxtec UK managing director Graham O’Hare said the patented technology is manufactured with highly elastic EPDM rubber allowing easy weld-free installation.

“The certified Roxtec SPM seal has been carefully designed to address specific requirements within the marine sector, and the offshore oil and gas markets,” said Mr O’Hare. “Fundamentally, we believe it will help drive greater cost efficiency across industry.

“It is a lightweight, single-sided solution which is quick and easy to install. The seal is made out of durable and malleable rubber, while the fittings are made out of acid-proof stainless steel.

“A crucial point is that it provides an alternative to the costly and laborious welding process often used to seal metal pipes. This process requires a re-paint after weld. In addition, current practices involve pipes being hit with hammers which can lead to damage. Our seal is easy to open up and re-seal for maintenance.

“It further comes with an A-60 fire rating, and is watertight to 1 bar and gastight to 0.67 bar. The comprehensive range of options – with 16 seal sizes catering for 12mm to 222mm pipes – also makes it a highly versatile solution.”

“We wanted to develop an intelligent and progressive product which will help drive efficiency for our customers, particularly in the current challenging economic environment.

“We also have an extensive portfolio in the oil and gas sector on major UK and international projects. Roxtec is accredited by FPAL to work in the UK North Sea. We have further subscribed to the UKCS Oil and Gas Industry Supply Chain Code of Practice which is administered by the Department for Energy and Climate Change (DECC).”

Watch an overview of the Roxtec SPM seal.

GE Oil & Gas has signed a Master Service Agreement with Statoil for new subsea projects that will enable GE to continue to support the international energy company’s value creation in a low oil price environment.

The global agreement forms the basis for potential new contracts for subsea equipment and services on new projects and field developments. The contract is valid globally until 2025. “We are pleased to have secured an agreement with Statoil that paves the way for further and deeper collaboration between the companies within the subsea segment in the next decade,” says Tom Huuse, Managing Director of GE Oil & Gas in Norway.

GE Oil & Gas recently delivered subsea production system equipment for Statoil’s Snøhvit gas field in the Barents Sea on the Norwegian Continental Shelf.

In today’s oil price environment, sustained focus on costs and efficiency will ultimately be the key to develop several currently marginal prospects and discoveries. GE and Statoil are already working closely together in the Power Collaboration initiative, which aims to accelerate the development of sustainable cost efficient energy solutions. More about Powering Collaboration.

McDermott International, Inc. (NYSE:MDR) has announced that its new flagship derrick lay vessel, the DLV 2000, has secured scope as part of the current McDermott work schedule for the INPEX Ichthys LNG Project offshore Western Australia.

The DLV 2000 is a class 3 dynamically positioned vessel combining a 2,200-ton revolving crane with a deepwater S-lay pipelay system configured to install pipelines with diameters ranging from 4.5 to 60 inches in water depths up to 10,000 ft. The vessel can accommodate up to 400 personnel to facilitate large hook-up and commissioning projects and incorporates a large, 43,000 sq. ft. open deck to allow the transportation and assembly of large subsea structures; enabling safe and efficient stand-alone operations in remote areas.

The DLV 2000 is expected to join the project as part of McDermott’s 2016 current project schedule by installing large subsea spools, laying infield umbilicals and lifting several Subsea Distribution Units that will provide the hydraulic, chemical and electrical distribution from the umbilicals to the subsea drill centers. Work is expected to be performed in conjunction with McDermott’s other new subsea installation vessel, the Construction Support Vessel 108 (CSV 108), that is already working successfully on the project. The CSV 108 is expected to undergo an upgrade later this year to install a Vertical Lay System and Reel Deployment System, also for use in the project and will then be referred to as Lay Vessel 108 (LV 108).

“It is an exciting time to see our newest subsea vessels working side-by-side on this landmark project,” said Hugh Cuthbertson, Vice President, Asia. “We look forward to this being a very successful start for the DLV 2000 and helping us deliver a successful project for our client, INPEX, and other project stakeholders as well as demonstrating the capability and versatility of the McDermott subsea fleet to the industry.”

McDermott anticipates several months of work for the DLV 2000 offshore Western Australia during the second and third quarters of 2016.

As part of the Obama Administration's continued commitment to safe and responsible domestic energy production, Bureau of Ocean Energy Management (BOEM) Director Abigail Ross Hopper has announced that the bureau will offer approximately 45 million acres for oil and gas exploration and development in the Gulf of Mexico in two March lease sales.

“These lease sales continue the President's commitment to create jobs through the safe and responsible exploration and development of the Nation's domestic energy resources,” said Hopper. “As an important component of the U.S. energy portfolio, the Gulf of Mexico holds vast energy resources that can continue to spur economic opportunities for Gulf producing states as well as further reduce the Nation's dependence on foreign oil.”

Photo credit: BOEM

Central Planning Area Lease Sale 241 and Eastern Planning Area Lease Sale 226 will be held consecutively in New Orleans, Louisiana, on March 23, 2016. The sales will be the ninth and tenth offshore auctions under the Administration's Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 (Five Year Program), which makes available areas with the highest-known resource potential for oil and gas leasing. These lease sales build on the first eight sales in the Five Year Program that offered more than 60 million acres for development and garnered $3 billion in high bids.

“These Gulf of Mexico lease sales reflect this Administration's commitment to facilitate the orderly development of offshore energy resources while protecting the human, marine and coastal environments, and ensuring a fair return to American taxpayers,” Hopper added.

Sale 241 encompasses about 8,349 unleased blocks, covering 44.3 million acres, located from three to 230 nautical miles offshore Louisiana, Mississippi and Alabama, in water depths ranging from nine to more than 11,115 feet (3 to 3,400 meters).

Sale 226 is the second of two lease sales proposed for the Eastern Planning Area under the current Five Year Program. The sale encompasses 162 whole or partial unleased blocks covering about 595,475 acres in the Eastern Planning Area. The blocks are located at least 125 statute miles offshore in water depths ranging from 2,657 feet to 10,213 feet (810 to 3,113 meters). The area is south of eastern Alabama and western Florida; the nearest point of land is 125 miles northwest in Louisiana.

Most of the Eastern Gulf of Mexico Planning Area (EPA) cannot be offered for lease until 2022 as part of the Gulf of Mexico Energy Security Act of 2006.

The decision to hold these sales follows extensive environmental analysis, public comment and consideration of the best scientific information available. The terms of the sales 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.

All terms and conditions for Lease Sales 241 and 226 are outlined in the Final Notices of Sale that will be published tomorrow and can be viewed today in the Federal Register. The terms and conditions for Sale 241 are fully explained in the Final Notice of Sale information package, which is available here. The Final Notice of Sale information package for Sale 226 is available here.

CD's of the sale package as well as hard copies of the maps can be requested from the Gulf of Mexico Region's Public Information Office at 1201 Elmwood Park Boulevard, New Orleans, LA 70123, or at 800-200-GULF (4853).