Ezra Holdings Limited (“Ezra” or the “Group”), a leading contractor and provider of integrated offshore solutions to the oil and gas industry, is pleased to announce that it has received the awards for several new deepwater projects from international oil majors. The awards are valued at approximately US$300 million in aggregate and will be executed in various offshore oil producing regions in the Gulf of Mexico, Southeast Asia and West Africa. Furthermore, the awards include the Group’s largest project win to-date in West Africa.

The scope of work for these new projects include project management, engineering, procurement, fabrication, construction as well as transport and installation of flexibles, umbilicals, flowlines, flowline-end terminals, flying leads and other equipment. Further to this, the Group will also undertake hook-up of pre-laid mooring systems.

Mr. Lionel Lee, Ezra’s Group CEO and Managing Director, said, “We are delighted to have been selected for these projects. Over the years, we have successfully developed a proven track record for completing the most technically demanding projects. Against the backdrop of such challenging and competitive industry conditions, these latest contract awards stand as exceptionally strong testaments to the market’s confidence in our team and our offerings. We are grateful for these opportunities to further galvanize our reputation and look forward to safely delivering on these projects on time and on target.”

Project management and engineering work for the projects have already started.

EMAS, a leading global contracting group, providing offshore/subsea construction, marine, production and well intervention services – is Ezra’s operating brand. With offices across six continents, it delivers best-value solutions to the oil and gas (O&G) industry by combining its global footprint and proven engineering skills with a diverse offering of premium assets and services designed to fully meet clients’ needs.

Operating in unison, Ezra’s core divisions are able to execute a full spectrum of seabed-to-surface engineering, construction, marine and production services anywhere in the world.

EMAS CHIYODA Subsea is a global EPCIC (Engineering, Procurement and Construction) service provider of comprehensive subsea-to-surface solutions throughout the lifecycle of oil and gas projects. On 31 March 2016, Chiyoda Corporation completed its investment in the Group’s subsea services business, EMAS AMC, to form EMAS CHIYODA Subsea - a 50:50 Joint Venture. EMAS Energy provides well intervention and drilling services both onshore and offshore, offering fully integrated solutions that combine its marine assets with state-of- the-art intervention equipment and services.

EMAS Marine, under subsidiary company EMAS Offshore Limited, manages and operates a young, versatile fleet of advanced offshore support vessels, offering an extensive range of maritime services that cater to the client’s needs throughout a field’s life cycle.

EMAS Production, also under subsidiary company EMAS Offshore Limited, owns and operates FPSO (floating production, storage and offloading) facilities, offering services that support the post-exploration needs of offshore fields, such as FPSO conversion management.

TRIYARDS is fast becoming an acknowledged leader in developing advanced and customized solutions for world-class vessels. By focusing on sophisticated platforms and equipment that can tackle even the most complex offshore projects, it has already established itself as a front runner in the fabrication of liftboats (self-elevating, mobile offshore units). TRIYARDS provides its integrated engineering, ship construction and fabrication services out of yard facilities located in Singapore, Vietnam and the US.

An Aberdeen-based specialist hydrocarbon accounting consultancy has launched new bespoke software which will save oil and gas operators money by replacing more complex generic process simulation packages used industry-wide.

Developed in partnership with Robert Gordon University, Accord Energy Solutions has created CHARM (Compact Hydrocarbon Allocation Reference Model) – a cost-effective process simulation software package which models how hydrocarbons behave specifically for hydrocarbon allocation purposes.

The employee-owned company has designed the new software which focuses on easy integration with any hydrocarbon allocation system.

Phil Stockton, Director, Accord Energy Solutions. Photo courtesy: Accord Energy Solutions

Phil Stockton, director at Accord, said: “Our innovative tool will save time and money and replace existing industry-wide process simulation software. CHARM delivers faster, more robust calculations than the established approach. Its simplicity and transparency improves verification and auditability.

“We were delighted to work with RGU via the Knowledge Transfer Partnership program to develop this software. Cost-effective and efficient hydrocarbon behavior modeling is crucial to the oil and gas industry, especially in today’s cost-reduction climate. CHARM delivers both. “Use of general purpose process simulation packages often presents a number of issues, such as their level of complexity, lack of software integration, and requirement for software updates which can result in slightly altered results.

“CHARM offers greater integration, speed and ease of use compared to traditional approaches. The system essentially bridges a gap: it provides the same accuracy as comprehensive process simulation, but can be more readily integrated into existing allocation software systems and vendor products. We hope it will replace conventional systems and usher in a new chapter for hydrocarbon accounting.”

Professor John McCall, from RGU, said: “We are delighted to have been able to contribute our expertise in smart data analytics components to developing this exciting product with Accord. Our research is at its most valuable when it has direct impact in real-world applications.”

By Chris Brand

Damen Shipyards Group has teamed up with the global leader in motion compensation access solutions, Ampelmann, to conduct tests with Ampelmann’s L-Type system on board a Damen Fast Crew Supplier (FCS) 5009. Damen is developing its marine access solutions in order to guarantee increased safety, reduced costs and efficiency in the global crew transfer market. As part of this mission, Damen has recently increased its cooperation with a number of access suppliers. On this occasion, the process has resulted in a live demonstration of a combined Ampelmann and Damen solution at a North Sea gas production platform.

Photo courtesy: Damen

Teaming up with Ampelmann for a number of tests was a natural route says Damen Business Development Manager David Stibbe. “We’re talking to a number of transfer specialists as we continue to develop our marine access portfolio. Ampelmann has extensive expertise in producing and operating motion compensation access systems and Damen has many years of shipbuilding experience. Working together in this way means that both parties are able to draw on the expertise of the other, leading to the favourable development of their respective solutions and successfully integrated crew change solutions.

30-50 meter crew vessels

The L-type is the smallest of Ampelmann’s systems, ideally suited for smaller crew vessels ranging from 30-50m without DP. The model combines safe and efficient transfer with a capability for reliable operation up to 1.5 meter Hs. Such a profile seemed to suggest a compatibility with the Damen FCS 5009. Together, Damen and Ampelmann carried out extensive research and testing to see if the two were indeed well-matched.

Photo courtesy: Damen

“We invested in a lot of research before sailing, and it transpired that the FCS 5009 and the L-type were the perfect fit.” explains Mr. Stibbe. “Once on the water we carried out in-depth interaction tests to demonstrate just how well the system and the vessel worked in tandem. The results were impressive.”

So impressive, in fact, that the FCS 5009 - L-type combination gained the confidence of a Tier 1 offshore gas production company operating in the North Sea.

Credible substitute for swing-roping and helicopter flights

“The operator was convinced by the extensive data we were able to present and allowed us to make a landing at a working North Sea platform, thus proving the effectiveness of this solution in a real-world scenario. This represents a very promising solution for an oil and gas industry looking to address efficiency and safety concerns in personnel transportation. Our tests demonstrated that the L-type could be added to an existing vessel from the Damen portfolio to provide safe, cost effective transport offshore – a credible substitute for swing-roping and helicopter flights.”

“Ampelmann has already transferred more than 2.5 million people safely worldwide for the top oil majors, mainly supporting maintenance, hook-up, commissioning and shutdown campaigns with Walk-to-Work and floatel services. Now these clients are looking for a solution in the crew change segment to improve safety and effectiveness relative to current helicopter, swing rope, surfer or baskets transfers. However, they are not only interested in the gangway, they are in search of a proven integrated solution of vessel with gangway and that is what we have produced together with Damen”, says Ampelmann Business Development Manager Crew Change Gerbrand Marbus.

As oil prices have fallen in recent times, driving processes of increased efficiency within the offshore industry, Damen has responded by developing its suite of marine access solutions. A key area is the movement of personnel on board a vessel as an alternative to helicopter transportation. A further example of this is the Damen Service Operations Vessel, the first newbuild contract for which has recently been signed with UK-based Bibby Marine Services.

Bollinger Shipyards has delivered the USCGC JOSEPH TEZANOS, the 18th Fast Response Cutter (FRC) to the United States Coast Guard.

The announcement was made by Bollinger President & C.E.O., Ben Bordelon. “We are very pleased to announce the delivery of the latest FRC built by Bollinger Shipyards, the USCGC JOSEPH TEZANOS, to the U.S. Coast Guard. The fleet of FRCs already in commission have more than proven their worth with tons of narcotics seized, thousands of illegal aliens interdicted and many lives saved. We at Bollinger Shipyards are looking forward to hearing of the heroic exploits of the JOSEPH TEZANOS as it joins the Coast Guard’s operational fleet.”

Sister Ship of the USCGC JOSEPH TEZANOS, USCGC MARGARET NORVELL operating in the U.S. Gulf of Mexico.

The 154 foot patrol craft USCGC JOSEPH TEZANOS is the 18th vessel in the Coast Guard's Sentinel-class FRC program. To build the FRC, Bollinger used a proven, in-service parent craft design based on the Damen Stan Patrol Boat 4708. It has a flank speed of 28 knots, state of the art command, control, communications and computer technology, and a stern launch system for the vessel’s 26 foot cutter boat. The FRC has been described as an operational “game changer,” by senior Coast Guard officials.

The Coast Guard took delivery on the 22nd of June 2016 in Key West, Florida, and is scheduled to commission the vessel in Puerto Rico during the month of August 2016.

Each FRC is named for an enlisted Coast Guard hero who distinguished him or herself in the line of duty. This vessel is named after Coast Guard Hero Joseph Tezanos, who was awarded the Navy and Marine Corps medal for distinguished heroism while leading the rescue of more than 40 injured service members following the explosion of a Navy LST in Pearl Harbor, Hawaii in 1944.

Bureau of Safety and Environmental Enforcement (BSEE) preparedness analysts and engineers recently conducted an unannounced oil spill drill and deployment exercise off the coast of Texas in the Gulf of Mexico. The exercise, conducted on June 8, tested Genesis Crude Oil, L.P.’s ability to execute its oil spill response plan.

Photo courtesy: BSEE

As part of the drill, Genesis Crude Oil, L.P. was required to respond to a simulated discharge originating from a rupture in one of its pipeline facilities by deploying the appropriate oil spill recovery equipment. A 95-foot vessel operated by Clean Gulf Associates deployed from Galveston Channel as the operator coordinated from offices in Houston and Houma, La.

BSEE staff with the Oil Spill Preparedness Division boarded the response vessel to evaluate the use of built-in brush skimmers and boom in approximately 59 feet of water. Scientists from the Bureau of Ocean Energy Management along with staff from the U.S. Coast Guard and Texas General Land Office also observed the exercise. Additional BSEE staff monitored the simulated response actions with Genesis Crude Oil, L.P.’s emergency management team in its command center in Houma, La.

Government Initiated Unannounced Exercises are designed to give BSEE the opportunity to evaluate, on a no-notice basis, an operator’s access to necessary resources and test the effectiveness, performance and viability of oil spill response plans, oil spill equipment and spill management recovery vessels. This was the third deployment exercise that BSEE has conducted within the current year.

InterMoor, an Acteon company and part of its foundations and moorings business, recently completed its involvement in the Shell Malikai Tension Leg Platform (TLP) float-off operations.

The TLP was loaded onto the Dockwise Heavy Lift Vessel White Marlin at Malaysia Marine and Heavy Engineering (MMHE) shipyard in Pasir Gudang, Malaysia, and transported to a float-off location in the Singapore Straits.

Photo courtesy: Dockwise

Contracted by TMJV, a joint venture between Technip and MMHE Shipyard, InterMoor Pte was responsible for the marine aspects of the float-off and tow of Shell’s Malikai TLP through the Johor Straits into the Singapore Straits and to a float-off location for various nearshore commissioning tasks to be performed, prior to return to the shipyard.

The work scope also included engineering analysis and procedures, project management for the nearshore operations, management of chartered vessels, provision of offshore personnel and various ancillary services. InterMoor also subcontracted Acteon sister company UTEC to provide survey and positioning for the TLP and marine spread. The offshore operation was completed safely and without incident in April this year.

Martin Kobiela, managing director, InterMoor Pte in Singapore, said, “From start to finish, InterMoor Pte’s contribution lasted six months. Although a lot of the work is standard for us, particularly the towing and marine activities, many of the work scopes were novel, particularly the provision of catering and sanitation services. Our team was diligent in its care of the project both from Singapore and on location in the MMHE shipyard, Malaysia, and is proud to have been associated with this important development for the region.”

The TLP will be installed at the Malikai field in a water depth of approximately 600 m.

Marsol International, a UAE-based global marine solutions provider focused on the offshore oil terminal market and related infrastructure, has successfully supported Oman Oil Company Exploration & Production LLC’s (OOCEP) first shipment of crude oil from the Musandam gas plant (MGP).

Photo courtesy: Marsol International

Marsol’s involvement included the provision and management of all marine and offshore activities related to the tanker loading, via the single point mooring (SPM) offshore marine terminal including marine works, vessels, equipment and manpower. OOCEP, a subsidiary of Oman Oil Company S.A.O.C safely exported 300,000 barrels of crude oil as part of the operation, which were fully processed at the MGP on 4 May in Oman.

Mike Young, Director of Marsol International, said: “The successful exportation of the first crude oil from the newly constructed Musandam gas plant is a fantastic achievement for OOCEP and we are delighted to have been selected to support this operation. Our tanker operations and our product transfer services ensure safe and efficient mooring and unmooring at the SPM and are a crucial element of our asset integrity management service.”

The Musandam gas plant, located on the west coast of the Musandam peninsula, has a processing capacity of up to 20,000 barrels of crude; 45 million cubic feet of gas and 75 tonnes of LPG per day.

MacGregor, part of Cargotec, has launched a fibre-rope retrofit option for its subsea cranes. The modular upgrade replaces the crane's original steel wire rope with high-performance synthetic fibre rope, using the same technology as MacGregor's advanced fibre-rope crane, the FibreTrac 1500, which was introduced earlier this year.

These game-changing cranes combine MacGregor's proven offshore crane technology with the fibre-rope tensioning technology perfected by Parkburn Precision Handling Systems.

"We are proud to introduce our fibre-rope retrofit option to the market. This unique system offers a good investment to our customers to expand their operational window," says Alexander Nürnberg, Senior Vice President, Technology and R&D, MacGregor.

Heavier lifts at greater depths

Fibre rope's great advantage when used in this context is that it weighs virtually nothing in water, so regardless of the length of rope paid out; it does not add anything to the load experienced by the crane. This is in complete contrast to wire rope, where the increasing weight of wire paid out progressively and seriously limits the load permissible in relation to depth.

"MacGregor is always searching for new solutions that deliver a competitive edge for our customers," says Gaute Sjusdal, Director of Advanced Offshore Solutions, Global Lifecycle Support at MacGregor. "By employing this fibre-rope technology, a crane is able to use its full lifting capacity at maximum depths, so a smaller crane and vessel can be used for more assignments. The fibre rope crane can lift loads at practically any depth that is required, allowing these vessels to bid on a wider range of contracts."

Quick installations minimize downtime

The retrofit system is designed in modules for rapid installation. It includes a deep water capstan traction device, delivered in partnership with Parkburn Precision Handling Systems, which replaces the crane's original main winch and overcomes the problems traditionally associated with handling fibre rope. The system also includes a low tension fibre-rope storage drum.

The fibre rope can be inspected for wear, internally and externally. The ability to splice in new sections adds great flexibility to the system. "While the entire rope can be replaced if necessary, damaged sections can easily be replaced and the length can be increased as required," says Mr. Sjusdal. "Transportation is simple and requires no special equipment. In contrast, 3,000m of steel wire rope poses some significant challenges and has special transportation, handling and spooling requirements. With its low weight, a synthetic fibre rope can be shipped in a normal container; there is no need for a drum. Also unlike wire rope, fibre rope does not require lubrication, eliminating a source of pollution.

"The crane will be continuously connected to a monitoring system, which delivers real-time data used to detect conditions that could lead to a breakdown. We will distribute operational parameters to our customers, to ensure that the equipment works to its best potential," Mr. Sjusdal notes. "This is also a good example of how MacGregor customers can benefit from the broader experience that Cargotec has across the cargo and load handling industries in leveraging analysis to develop insights and value from data."

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OneSubsea, a Schlumberger company, has been awarded an engineering, procurement and construction contract totaling more than $170 million from Belayim Petroleum Company (Petrobel). OneSubsea will supply the subsea production systems for the first stage of the Zohr gas field, located in the Shorouk Concession, offshore Egypt.

Zohr gas field offshore Egypt

“Zohr is one of the largest gas fields discovered in the Mediterranean Sea to date, and is also the world’s second longest step-out, a distance greater than 150 km. This step-out will be enabled by OneSubsea controls systems with fiber-optic communications technology,” said Mike Garding, president, OneSubsea. “Our supplier-led approach to the field development, coupled with our FasTrac* program capability, and our integrated offering that includes flow assurance, subsea production system and landing string capabilities, will help Petrobel meet their first gas commitment.”

The award follows an accelerated FEED study by OneSubsea in which a multidisciplinary team collaborated with Eni and Petrobel to develop the subsea equipment architecture and control system to validate handling of high gas volumes, considering reservoir characteristics and subsea equipment specifications.

The scope of contract includes six horizontal SpoolTree* subsea trees, intervention and workover control systems, landing string, tie-in, high-integrity pressure protection system, topside and subsea controls and distribution, water detection and salinity monitoring provided by the AquaWatcher* water analysis sensor, and installation and commissioning services. The FasTrac program comprises a strategic inventory capability with the flexibility to configure the system to the customer needs and deliver on a fast turnaround.

Underwater communications equipment that enables video to be transmitted through the water and unmanned vehicles to be controlled without a tethered link to the surface, has been supplied to the Korean Research Institute of Ships and Ocean Engineering (KRISO) by Sonardyne Asia Pte. Ltd. in Singapore, and its Korean agent, Insung.

The BlueComm 100-series optical modems will be used to stream high-definition imagery from cameras installed on seafloor sensor platforms and command Crabster, an autonomous walking and flying crab-like robot being developed by KRISO’s ocean systems engineering department.

Photo courtesy: Sonardyne

Transferring data using subsea modems provides a reliable alternative to using cables underwater which can be expensive to install and vulnerable to damage. However, unlike conventional acoustic-based devices that use pressure waves to send and receive relatively small packets of data at low bandwidths, Sonardyne’s BlueComm uses rapidly modulated light emitting diodes (LEDs) and high power lasers to quickly deliver very high volumes of data.

Typically operating in the 450 nanometer Blue Light region of the spectrum, data rates of up to 500 megabits per second are achievable making the technology suitable for a wide range of underwater applications that require a high bandwidth, low latency, bi-directional communications link. These include harvesting data from seabed landers using AUVs, remote video monitoring of science operations and piloting unmanned vehicles without the need for a control umbilical.

When deploying battery-powered subsea instruments and vehicles, operating life is always a major consideration for users. BlueComm’s unique method of optical data transmission is however, also highly efficient, enabling for example, one gigabyte of data to be transmitted with the energy contained within a single lithium ‘D’ sized cell over distances greater than 150 metres.

The BlueComm modem family is currently made up of three variants and to support its work, KRISO has selected the BlueComm 100 model. Featuring Ethernet connectivity and a deep depth rating, the design is optimized to offer a good balance between data rate and range in all conditions, including high ambient light.

Commenting on the contract, Anthony Gleeson, Vice President of Sonardyne in Singapore said, “Now that it’s possible to send and receive data underwater at speeds comparable to domestic broadband, it’s exciting to consider the huge range of potential applications for BlueComm.” He added, “KRISO are the first institute in our region to invest in BlueComm and we are delighted that this unique technology will help to advance their pioneering ocean research.”

For more information on BlueComm, click here.

McDermott International, Inc. (NYSE:MDR) announces it has been awarded further pipeline work for 2017 under a multi-year offshore installation contract with Brunei Shell Petroleum Company Sdn. Bhd. (BSP). The work includes transportation and installation (T&I) of pipelines and umbilicals in the Fairley and Ampa Fields offshore Brunei.

The full scope of work for the 2017 campaign is expected to include T&I for 20 miles of pipelines, with the associated beach and pipeline crossings, tie-ins, riser installation and pre-commissioning of the completed system. The 2017 campaign is part of a three-year work installation contract signed in 2014 and will be included in McDermott’s second quarter 2016 backlog as a Sizeable project.

“Brunei has significant long-term plans to increase investment and production in its energy sector and the successful installation of these new pipelines in the Ampa and Fairley fields is expected to help ensure production continuity of the mature reserves,” said Hugh Cuthbertson, Vice President, Asia. “McDermott’s demonstrated performance during the 2015 campaign built customer confidence critical to winning this award. Our contribution in developing these facilities plays a vital role in helping Brunei Shell Petroleum meet its production targets and Brunei meet its energy goals.”

The 2017 campaign will see McDermott’s Derrick Barge 30 (DB 30) continue to be deployed for the execution of pipeline work in Brunei. Both the DB 30 and Emerald Sea diving support vessel were deployed for the successful 2015 campaign, which was one of the largest shallow water pipeline campaigns undertaken by McDermott Asia in recent years.

U.S. Commercial Stocks Slightly Decline

Overall commercial inventories declined this past week with the entire decrease due to a decline in crude stocks. The crude stock decline was much smaller than expected, about equally caused by both higher-than-forecast crude imports and the balancing item. The latter could have been related to EIA re-benchmarking. The year-on-year stock surplus did narrow by 3.4 million barrels to 113.5 million barrels (or 9.1%).

Exports Expected to top 4.5 BCF/D in 2017

Since 2014, Mexican energy policy reforms, coupled with low oil prices, have accelerated the nation’s dependency on U.S. gas exports. Indeed, net shipments to Mexico remain upward trending, with June flows projected to average ~3.7 BCF/D, an increase of ~0.7 BCF/D versus the prior year. Equally striking is our expectation for 2017, which should see exports average ~4.5 BCF/D and yield a year-on-year gain of ~0.9 BCF/D. Notably, the upgrading and development of new critical infrastructure, including gas pipelines, electric generation and transmission capacity, are anticipated to significantly shape cross-border flows in 2017, providing a rich environment for gas demand.

Italy: Nord Prices Trade a Huge Discount versus PUN

Italian day-ahead prices have been generally firmer during June, but day ahead prices in the Northern regions have been settling at a significant discount relative to the PUN, coming closer to the other Continental markets. While Italy has switched to a net exporting position to Slovenia, flows from the other Continental markets, most notably France, remain generally resilient.

Gas Prices Lead Coal Higher

U.S. coal pricing has seen a modest lift from the recent move in natural gas forwards. Coal market balances, however, will require a bit more time to readjust (i.e. trim elevated stock levels). PIRA still sees U.S. coal markets realigning over the course of the next seven to nine months even current forces remain on track.

EUAs Correlated with Fuels, EU ETS Reform Talks Continue

A continued closer relationship between EUAs and thermal fuels could limit downside price movements. However, we still expect EUA prices to decline over the next few months in line with summer natural gas prices, bearish fundamentals, and a lack of policy support as talks on post-2020 ETS reforms continue. A small gain should come starting in August, when auction volumes are lower than in other months. Longer term, a positive Brexit vote could have implications for the ETS.

Fed Projections Suggest Interest Rates Will Stay Lower for Longer

At this week’s policy meeting, the Fed stayed put, as widely expected. Its updated macro forecast also did not surprise, showing little changes from the previous version three months ago. Projections on the future policy rate from meeting participants, however, contained noteworthy developments — in short, their estimate of the neutral interest rate has gone through significant changes, suggesting that rates will likely stay lower for longer in the future. The British referendum about whether to remain in the European Union will take place June 23, with the result expected by the next morning. The outcome of the vote has the potential to create uncertainties on several different levels.

U.S. LPG Prices Outperform

Improving fundamentals, namely tightening propane inventories, helped U.S. LPG prices improve last week. Mt Belvieu propane easily outperformed broader energy markets by logging a 1.5% gain, bringing C3’s value to 45% of WTI. Gulf Coast butane prices also rose 1.2%. Meanwhile ethane prices plunged 10% to 22¢/gal, perhaps as markets digest the large 3+ million barrel improvement in inventories reported for end March.

U.S. Prices and Margins Soar

The week ending June 10, U.S. prices reached the highest level since December 2014. Manufacturing margins were the strongest in over a year.

All Eyes on Corn

2015/16 export sales/shipments in corn have now surpassed last year’s pace by 2%, a remarkable achievement considering the lag for most of the year. Ethanol production set a weekly high for the previous week while Funds turned seller’s midweek after an early week buying spree.

Japan Runs Rise, Inventories Draw

Crude runs rose a bit on the week due to a restarting of units down previously for unplanned maintenance. Crude imports declined sufficiently to draw crude stocks 1 MMBbls. Finished product stocks drew a similar amount. There were modest builds in gasoline and gasoil stocks, and a more moderate build in jet-kero. Naphtha and fuel oil stocks drew moderately and were more than offsetting. Refining margins had improved a bit, but have continued to soften as June unfolds.

Structural Tightness Raises the Floor for Gas Prices

Despite Thursday’s slightly higher-than-expected storage release of 69 BCF, the general momentum in structural tightness appears to be adequate to safeguard the ~15% rally in natural gas prices this month. To be sure, sequential domestic production losses and early cooling demand have raised the floor for the prompt futures contract as well as cash prices.

Financial Stress Builds

Most key indexes fell on a weekly average basis as stress grew due to concerns over the possibility of the United Kingdom leaving the European Union. The S&P 500, US High-Yield Corporate Bond, Russell 2000, and Emerging Market Bond indexes were all lower, while VIX rose substantially. The dollar was mostly stronger, while commodities were mixed. Short- and long-term bond yields in a host of major countries fell. The Cleveland Fed released their inflation expectations for the month, which showed decreases in all the major maturities.

Production Reaches a Record High the Week Ending June 10

Stocks rise for the first time in six weeks. Ethanol demand in blended gasoline remains strong.

Weather Volatility Increases

After a strong close Friday, which saw notable volume of 5K December ’16 corn contracts in the last five minutes and 3K more during the post-close, weekend weather forecasts literally had something for both bulls and bears. Consensus continues to point to hot temperatures, but precipitation forecasts were drier, wetter, and then drier again, and finally wetter, pushing markets lower Sunday evening.

Iraq Oil Monitor, 2Q16

The oil dispute between Baghdad and the KRG resurfaced in March, resulting in the suspension of 150 MB/D from NOC-controlled fields to the Kurdish pipeline. We believe a $5.4 billion IMF package will facilitate an agreement by 2017. Government requests for spending cuts are delaying development plans at large southern fields. Investment reductions and infrastructure constraints underpin our belief that capacity growth will be limited. We also see risks that additional government forces will be diverted north to combat ISIS, leaving more of a security vacuum in Basra.

Lagging LNG Flows Support Prices amid Dutch Output Weakness and Temporary Outsized Impact of Disrupted Norwegian Volumes

After 14 straight months of increases highlighting a new and more aggressive marketing strategy, Norway’s first year-on-year export decrease in June (down 27-mmcm/d) is largely being driven by unplanned outages (Kvitebjorn), not any notion of a change in the new way the gas is being marketed. All of the year-on-year cuts are coming from flows to the Continent instead of to the U.K., where a price premium makes it the last place a marketer wants to cut. Flows to Germany tested a five-year low in early June, but they appear to be on the rebound in the past week. Put in proper perspective, the loss of Kvitebjorn flows are not going to change the trajectory of the market on a fundamentals basis, but do justify short-term price support amid other lingering issues affecting supply.

Global Equities Decline on Heightened Brexit Fears

Global equities were broadly lower on the week. The U.S. market was down 1.7%, with banking and technology posting the sharpest losses. Energy was down about 1%, but outperformed. Internationally, all the tracking indices were lower, with World, ex-US, being the weakest. Europe also posted greater-than-average declines.

Venezuela: Risks Rising, But No Change to PIRA Reference Case

PIRA estimates delinquent payments to service companies have reduced Venezuelan crude production to 2-2.15 MMB/D in May and June, from 2.3 MMB/D in 1Q16. Our Reference Case assumes these issues will be gradually resolved by the end of the year. Recent reports on agreements with Schlumberger and China are marginally encouraging. Higher oil prices may also help. However, worsening economic conditions present more risk to our 2017 forecast, where we have output averaging 2.2 MMB/D. Venezuelan debts are even higher next year, which will leave the government facing increasingly difficult choices between debt payments, oil sector spending, funding for social programs, and imports of consumer products. This raises the risk of social and political unrest, which have the potential to disrupt oil operations. We are watching events closely, as more payments come due and protests worsen.

Domestic Gas Producers in Romania Could Be Challenged by Imports

Romanian Regulatory Authority for Energy (ANRE) president Niculae Havrilet said that the local gas industry might incur some losses due to price liberalization. According to the price liberalization calendar, natural gas prices should increase by 10% on July 1; the suppliers of households will have to make a pool at the lowest price, and with cheaper imports, they will incur losses because of costs of building up stocks. The gas pool for households includes quotas of the current domestic production, stored gas, and imports. As the ANRE sets these quotas to obtain the minimum end price, the president urged for the continuing of the liberalization process. “The end price of gas will definitely not increase by 10%,” he stated.

Nigeria Devaluation Will Lower Oil Production Costs

The recent announcement from the Nigerian Central Bank to devalue the naira could result in lower costs for operators in Nigeria. The Central Bank had previously pegged the naira at around 200 to the U.S. dollar. Several sources estimate the market value of the naira to be around 300 to the U.S. dollar. Assuming a 300 exchange rate and an increase in inflation as a result of the devaluation (from the current rate of 14% to around 22%), costs to produce existing oil supplies and to develop new ones (denominated in U.S. dollars) could be reduced by around 14%. However, the reduction in costs will be a function of how the exchange rate and inflation develop over time.

Despite Weaker Oil Market, Coal Prices Continue to Gain

Coal pricing surged last week, continuing the market rally that has been occurring essentially since February. API#2 (Northwest Europe) and API#4 (South Africa) increased by the largest extent, while gains for FOB Newcastle (Australia) prices were less pronounced. While a recovering oil market has been the primary factor in the surge in pricing for most for the year-to-date, the oil market lost ground last week, with the coal market gaining ground for other reasons. It will be difficult for the coal market to hold on to these gains, unless the oil market continues its upward trajectory, as Atlantic Basin coal fundamentals are on shaky ground.

Asian Refiners Shift Yields to Cope with Strong Gasoline Demand

Asia-Pacific’s oil demand remained robust in 1Q16, with an increase of 1.12 MMB/D year-on-year. China and India contributed almost the entire growth, driven by gasoline and LPG. Asian refiners responded to higher gasoline demand by shifting their yields from gasoil/diesel to gasoline. While there will likely be a temporary shift back to gasoil now because of its recent relative price strength, refiners will soon return to emphasizing gasoline because of relatively strong demand.

Stabilizing Hydro, Destabilizing Finances Threaten Brazil LNG outlook

Long a staple player among counter-seasonal buyers, Brazil’s role as a key 2Q/3Q buyer of LNG is coming under question, as it recovers from a severe years-long drought. YTD LNG import levels through May are down by 40%, or the equivalent of some 20 cargos (11-mmcm/d through May), as the hydro reservoir levels in Brazil show a significant improvement over last year.

Asian Demand Update: Acceleration in Growth Continues

PIRA's latest update of Asian product demand again shows improved growth due to further gains in Chinese demand. This acceleration in Chinese growth was pointed out in our "Spotlight" piece issued June 8th titled "Soaring China Crude Imports Driving Strong Apparent Demand." The latest year-on-year Asian demand growth is now 1.35 MMB/D, with China apparent demand up 1.1 MMB/D. This marks the fourth monthly improvement in Asian demand growth. The low point was in our February assessment, when growth had only been about 0.3 MMB/D. That steady improvement suggests that low prices earlier in the year, have in fact stimulated growth, while economic performance in Asia appears to be improving.

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

Following successful delivery of recent cable-lay and trenching projects for the renewables sector, Fugro has secured three contracts for its trenching services for oil and gas clients. The contracts will see its high performance Q1400 trenching systems deployed in the North Sea over the next 12 months.

Photo courtesy: Fugro

At the Wintershall-owned Maria development in the Norwegian sector of the North Sea, Fugro will deploy the Q1400 trenching system under a contract with Subsea 7. At Det norske’s Ivar Aasen development, the system will be deployed for EMAS CHIYODA Subsea in June. For both projects the trencher will operate in jetting mode for burial of pipelines, power cables and umbilicals. In the UK sector, a contract with Bibby Offshore will see Fugro’s Q1400 trencher operating in both jetting and cutting modes to bury a new umbilical at the BP ETAP redevelopment.

“Since launching the Q1400 system in 2012, Fugro has successfully completed numerous trenching projects at oil and gas developments and more recently at offshore wind developments. We are looking forward to continuing to demonstrate how our trenching capabilities can bring benefits to clients in both sectors,” said Mike Daniel, Construction and Installation Manager at Fugro Subsea Services.

Energy services company Proserv has won two significant contract wins in the Gulf of Mexico. The deals with Talos Energy and Hess Corporation will see Proserv carry out work at the operators’ respective Phoenix and Conger field expansion developments.

The delivery of these contracts will be a truly collaborative effort involving Proserv’s global team of subsea controls and communications experts in Great Yarmouth, UK; Trondheim, Norway and Houston, USA.

One of Proserv's subsea technicians working on the development of a subsea controls solution. Photo credit: Proserv

Proserv will provide subsea communications and controls solutions to support the brownfield upgrade of the Phoenix field for Talos Energy. Specifically, the company will design, manufacture and supply an Open Communications Hub (OCH) and Electrical Distribution Units to interface with the existing subsea infrastructure previously supplied by Proserv. The design, manufacture and supply of the OCH will be delivered by Proserv’s dedicated controls team in Houston with support from the company’s engineering and project teams in Trondheim.

The award with Hess Corporation calls for Proserv to provide a Subsea Control Module (SCM) and associated tree mounted equipment for the expansion of the Conger field. The design and manufacture of the SCM will be carried out by Proserv’s team of subsea experts in Great Yarmouth. The tree mounted equipment and the final testing, servicing and the integration of equipment will be performed at Proserv’s controls facility in Houston.

Over the past three years, Proserv has provided Hess Corporation with controls solutions for Hess’ Tubular Bells, Stampede and now, Conger projects in the Gulf of Mexico.

The workscopes for both projects will be delivered later this year, in line with key project milestones.

David Lamont, Proserv CEO, said: “As one of the leading challenger brands in the oilfield services sector, we remain focused on providing our clients with ingeniously simple solutions through the delivery of appropriate, efficient and highly-reliable technology.

“Winning these awards is testament to the strength of our relationship with both operators and their trust in our ability to deliver robust technology solutions and services on time and to the very highest standards.

“We look forward to working with both Talos Energy and Hess Corporation in the successful delivery of these projects.”

Maritime operations in West Africa are affected by threats from piracy and other maritime crime. It is very complex to get an overview of the different types of maritime security provisions that are legal in the countries throughout the region. Risk Intelligence now provides this insight with a new service, including reports with an overview of the use of private and government security in 18 countries in the region.

Risk Intelligence CEO Hans Tino Hansen: “We have provided security analysis for West Africa for more than 10 years. It has always been a complex area with many different types of threats and many different types of security risk mitigation and legal frameworks. This service and the new report provides a clear and comprehensive overview that many maritime operators have been asking for.”

The new report provides a concise overview of operational and regulatory risks related to the use of additional security services in West Africa. The report covers the use of armed guards and escort vessels provided by private maritime security companies or government security forces as well as additional protection services such as secure anchorages or areas for STS operations.

Color-coded tables for every country provide a quick overview of the current situation in 18 countries from Senegal to Angola. Moreover, brief assessments of the efficiency of specific security services against the main threats, which maritime operators have to face in the respective region, are included. Overall, the report is a valuable tool for conducting the necessary due diligence prior to contracting additional security services for operations in the region.

In addition, clients will have access to Risk Intelligence’s West Africa specialists for questions related to the report, which will be updated every six months.

Attempts to transfer the Indian Ocean PMSC model to West Africa have created problems for ship operators, who were made to believe that the solutions involving the use of government security forces on board their ships was "legal" or "approved" and provided the necessary level of security. In many countries in West Africa this is not the case, says Dirk Steffen, Director Maritime Security and head of West Africa Analysis at Risk Intelligence.

In recent years, Liquefied Natural Gas (LNG) has become integral to meeting global energy demand. However, as the oil & gas industry continues to navigate the prolonged downturn, capital intensive export LNG projects have been in the spot light due to questionable economic viability. A key driver is oversupply in the global LNG market – spot prices are expected to remain low in the near-term (Henry Hub averaged $1.92MMBtu in May 2016 a 58% decline from May 2014). This gloomy scenario presents limited economic incentives for companies to commit to capital intensive projects in a period plagued with budget austerity.

With the world’s LNG export capacity currently above 310.8 mmtpa, an additional 30.8 mmtpa is expected to be added by the end of 2016 – annual additions are expected to increase by 37% in 2017. However, demand is expected to plateau over the next two years. Reduced demand from Japan will likely be made up by growth from China and India. Both of these factors increase the risk of a short-term demand – supply imbalance. Massive investment prior to the industry downturn on large Australian and US LNG projects has driven this growth. Other projects expected over the same period include the PFLNG-Satu (Malaysia), Prelude FLNG (Australia), Yamal LNG Train 1(Russia) and Bintulu LNG train 9 (Malaysia).

Despite near term concerns of oversupply, natural gas is expected to play a vital role as a bridge fuel between environmentally damaging coal and oil to renewables. This will be vital to ensuring that the COP21 commitment to limiting global temperature increase to 1.5 degrees by the middle of the century is achievable. There is plentiful gas supply, as well as massive yet to be developed gas reserves in the Mediterranean Sea, East African Basin, and various unconventional reserves. This is the window of opportunity to implement constructive legislative strategies to help switch industries with heavy carbon footprints, such as the maritime industry to gas. Such a shift in legislative strategy and improvement in technology will increase both the appeal and use of a fuel that could help lower the global carbon footprint.

Mark Adeosun, Douglas-Westwood London