Wood Group has been awarded a new contract by PetroRio to deliver services to the Polvo A platform, in the southern Campos basin, approximately 100 kilometers off the coast of Rio de Janeiro. Integrated operations and maintenance services will be provided by Wood Group PSN under the two year contract, which is effective immediately.

The contract builds on Wood Group’s experience supporting the Polvo field, which consists of a fixed production and drilling platform connected to a floating production, storage and offloading vessel (FPSO). Wood Group Kenny has held two contracts to provide integrity management support to the field, the most recent of which completed in early 2015.

Robin Watson, chief executive of Wood Group, said: “We look forward to beginning this new partnership with PetroRio, where our focus will be on working collaboratively to deliver safe, efficient and effective services.

“Our experience operating in Brazil, alongside our strong history of supporting offshore assets across their life cycle in the North Sea, positions us well and we are committed to leveraging our knowledge and expertise to optimize the productivity of the Polvo A platform.”

Greene’s Energy Group, LLC (GEG), a diversified oil service company and leading provider of integrated testing, rentals and specialty services, has been awarded a United States patent for its Closed Loop Separator, a step change in safety and solids handling for the oil and gas industry.

This third generation system increases safety by preventing the release of gas on location during well completion and intervention operations. Gas separation is optimized significantly with the addition of a 10-inch diameter internal gas buster tube (more surface area for gas breakout) and an 8-inch diameter vertical vent (minimizes velocity spillover and reduces mist carryover).

With the gas buster enclosed in the tank, the system can be completely sealed, is self-pressurized, safely contains all gas, and is able to securely transmit gas to the vent or flare. Further safety features of the system include level safety low/high shutdown controllers on the primary separator and a secondary level safety high shutdown controller on the gas buster (both are key safety differentiators on flowback operations).

Greene’s Closed Loop Separator is specifically designed for high solids applications through reduced fluids velocity. This is accomplished by large diameter chambers for phase separation and quiet zone baffling.

As a new standard for safe and efficient fluid handling, the Closed Loop Separator provides a four-phase hydraulic or atmospheric separation for gas, oil, water and solids and can be used in many onshore and offshore applications, including well stimulation and flowback operations; well intervention projects – including coiled tubing, wireline and pumping – including subsea wellhead to surface operations including flowlines, risers and umbilicals; and commissioning and decommissioning operations – including pipeline flushing, cleaning and testing. The separator can also be used to replace in-line platform production equipment for routine maintenance or equipment replacement periods.

With an 85 barrel tank and a 40 psi operating pressure, the Closed Loop Separator features include:

H2S Certified

BSSE Compliant

Site glass level indicators conveniently placed for monitoring all phases (bbls in/out)

Oil Bucket with 3 adjustable weirs High flow rate capacity, 6-8 bbls/min with 24 bbls/minute surge capacity Internal gun lines

High solids capacity w/ real time evacuation of solids under pressure

Can be integrated with production flow process to control produced water flow (self-throttling)

“This new technology is a game changer in production and completion fluid separation – for operations and the environment,” said co-inventor Elwin Faulk, Vice President / General Manager Water Treatment Services. “The internal gas buster not only optimizes separation by slowing velocity and breaking down the fluids and solids faster, but when followed by additional filtration, ensures clean water is safely deposited back into the offshore environment.”

Aquatic Engineering & Construction Ltd, an Acteon company, has marked 1 million working hours without a single Lost Time Incident (LTI). This milestone follows on from Aquatic’s achievement of 1000 days without an LTI in December 2014.

Aquatic's offshore team using harnesses and ladders to assemble modular reel drive system

The improvement level in FPAL scoring since 2013 and successful accreditation to BizSafe3 in Singapore demonstrate that Aquatic is continually improving standards and providing training opportunities across HSEQ.

David Tibbetts, vice president technology, Aquatic, and accountable for the health, safety, environment and quality (HSEQ) function, said, “This achievement is due to the commitment of the Aquatic team to maintain the culture of safety promoted globally by Acteon. Our staff training focuses on our obligation to the safety of all those who work with us, and for us. With the support of Acteon, Aquatic is focused on continually improving standards, strengthening its culture of safety and remaining firmly committed to HSEQ leadership in the offshore industry.”

With recent type approval of an 81-meter-high evacuation system, VIKING has answered the needs of offshore fixed and jack-up rigs to handle extreme heights.

Leading maritime safety equipment and servicing manufacturer VIKING Life-Saving Equipment A/S has received type approval from Lloyd’s Register for its new offshore evacuation chute system, certified to operate at an unprecedented evacuation height of 81 meters to sea level.

“The system’s certified evacuation capacity is 146 people in just 10 minutes, comfortably beating the threshold required by maritime authorities, even from such an extreme height,” says Kristian Ellertsen, Norway-based Offshore Technical Manager for the company.

In 2013, Noble Corporation plc, one of the world’s the largest offshore drilling contractors, was in the early planning stage of its CJ70 jack-up rig for delivery in 2016. The company required an evacuation system that could cope with the rig’s unprecedented height, but the previous record for such a system, held by VIKING, was ‘only’ 64 meters.

The Mexican Navy (Secretaria de Marina - SEMAR) and Dutch shipbuilder Damen Shipyards Group have signed contracts for three, 42-meter patrol vessels in addition to their existing fleet. All ships will be of the Damen Stan Patrol 4207 design.

This contract is again proof of the good, ongoing relationship between the Mexican Navy and Damen. The three SPa 4207 vessels, known in Mexico as the Ténochtitlan class, will be built by the Mexican Navy Yard ASTIMAR 1 in Tampico. Damen will provide the engineering, material package, technical assistance and crew training.

The vessels will be named after Mexican historical sites and are expected to be launched in 2016. With these three patrol vessels, the total number of vessels in the Ténochtitlan class will come to ten.

Damen Coastal and Offshore Patrol Vessels already operate for years in the coastal waters of the USA, Canada, Jamaica, Barbados, the Bahamas, Mexico, Honduras, Cape Verde and the Netherlands.

Short videos about Stan Patrols 4207 can be viewed here.

With recoverable oil reserve estimates of approximately 750 and 600 million barrels (mmbbl) in Uganda and Kenya respectively, and with government share of the reserves expected to be about 30–50%, the potential impact on economic development in these countries could be great. However, new infrastructure, including an export pipeline, is required to enable commercialization of these discoveries, says an analyst with research and consulting firm GlobalData.

Overall oil production in Uganda is forecast to peak at about 200,000 barrels per day (bd) by 2023, while Kenya’s production is estimated to reach approximately 85,000 bd by 2027, provided the export pipeline is in place.

According to Jonathan Markham, GlobalData's Upstream Oil & Gas Analyst, while a range of possible pipeline routes to ports in Lamu, Mombasa or Tanga have been proposed, upstream development in the region has stalled due to a lack of progress in developing an export route for these inland discoveries.

Markham explains: “Operators have been lobbying for an export pipeline since the discoveries were made to enable development of the area. Tullow Oil and Africa Oil have cautiously welcomed progress made in agreeing a pipeline route from Uganda through northern Kenya to Lamu, but Total prefers routes further south, citing security concerns in northern Kenya.”

The analyst adds that the development of an export pipeline would also be a driver for upstream exploration in the region. Some blocks have already been licensed by governments in central and eastern Africa, but the remote locations have dampened interest from major oil companies.

Markham continues: “Current license holders view new basin exploration as an area with high growth potential, with South Sudan, Ethiopia, Tanzania, Rwanda and the Democratic Republic of the Congo all possible beneficiaries of new pipeline routes.

“Discoveries in Kenya and Uganda have favorable subsurface characteristics and relatively low exploration and appraisal costs compared with the deepwater dominated exploration in West Africa. Estimated full-cycle capital expenditure per barrel for these upstream developments is about US$8–12, which is increasingly enticing, as the oil and gas industry cuts back on costs. However, without an economical export route, the inland discoveries will remain commercially unviable at current oil prices.”

ICE, Europe's largest independent naval architecture and marine engineering consultancy, has expanded the design facilities of its subsidiary in Galati, Romania and is recruiting 50 additional engineers to help deliver its order book. That brings the number of employees to 350, most of whom are working on current contracts both in the commercial and offshore sector and puts ICE in a robust position from which to start 2016.

At a time when many companies are laying off employees, ICE’s expansion has added a new annex containing yet another modern office landscape with associated meeting room and other facilities to its 8,000 square meter design center. This latest investment brings the total spend at ICE’s Galati facilities to several times what was required under the privatisation agreement when the former ship research institute was acquired fifteen years ago. Regular investments since then have provided the company with substantial building upgrades, up to the minute IT hardware and software, as well as comprehensive training and development.

Steinar Draegebo, Chairman of the ICE group of companies, commented: “ICE is a well-kept secret. Our success is centred on solid business practices - competitive rates, robust delivery processes and extensive experience that draws on half a century of successfully delivering marine engineering projects.”

He continued: “I’m optimistic for the coming year in which we will continue to deliver engineering and design to our customers, while developing new partnerships in new markets. In a period when everyone must focus on cost savings, potential clients are gradually realising that ICE delivers world-class marine design services at very competitive rates, compared with many of the more well-known international design firms.”

As a result of the continuous expansion, ICE is recruiting and would like to hear from suitable, highly skilled individuals who are interested in joining the team. Potential candidates can email at This email address is being protected from spambots. You need JavaScript enabled to view it. attaching a CV and cover letter of experience.

Hyperdynamics Corporation (OTCQX:HDYN) announces an impasse in plans to resume petroleum operations and move forward with drilling an exploratory well under the Joint Operating Agreement governing the oil and gas exploration rights offshore Guinea ("JOA"). The impasse reflects a refusal by the participants in the Guinea project, Tullow Guinea Ltd., ("Tullow") a wholly owned subsidiary of Tullow Oil, PLC and Dana Petroleum (E&P) Limited, ("Dana") a wholly owned subsidiary of the Korean National Oil Company, to meet their obligations under the JOA and the Production Sharing Contract with the Government of Guinea ("PSC").

In August 2015, Tullow as operator under the JOA presented to Dana and Hyperdynamics, through its subsidiary, SCS Corporation Ltd. ("SCS"), a work program and budget to complete drilling of a well before the September 2016 deadline established by the PSC. Tullow and SCS voted in favor of the work program and budget, and it was deemed passed by this vote. On September 23, 2015, Tullow submitted this work program and budget to the Guinea Minister of Mines and Geology. Pursuant to Article 9.4 of the PSC, the annual work program and budget is deemed approved 30 days after submission, and that period has passed. Tullow also submitted a contracting strategy to the Guinea Government and initiated well preparation procedures that included visits to Guinea and meetings with Guinea government officials, all of which indicated that Tullow was on course to resume petroleum operations.

However, in an Operating Committee Meeting on November 18, 2015, in contrast to its prior actions, Tullow stated that it would not restart petroleum operations unless Dana agreed to fund its portion of well costs, which Dana declined to do.

Following Tullow's now withdrawn declaration of force majeure, both Dana and Tullow had raised concerns in 2014 that the Foreign Corrupt Practices Act investigations into Hyperdynamics could cause the Guinea government to question titles provided by the PSC. Notwithstanding the conclusion of those investigations, Dana maintained its position that it would not agree to fund well costs absent further assurances from the Guinea government that the Guinea government would not challenge ownership rights under the PSC. Since that November 18, 2015 meeting, Hyperdynamics has engaged in discussions with Tullow and Dana relating to these positions.

At a Petroleum Operations Management Committee in Guinea on December 16, 2015, Tullow and Hyperdynamics met with representatives of the Guinea Minister of Mines and Geology. Dana declined to attend the meeting. At the conclusion of those meetings on December 17th, the Guinea government agreed to the exact title assurances proposed by Dana, and agreed to by Tullow in previous communications, as an amendment to the PSC. At the meeting, Hyperdynamics executed the amendment and Tullow and the Ministry of Mines and Geology of Guinea initialed the document. Tullow committed to moving the amendment through the necessary approval processes at Tullow.

As of this date, neither Tullow nor Dana has signed the PSC amendment, and both have stated that they will not sign unless the other party signs first. Both have repeatedly refused to sign first, declined Hyperdynamics' suggestion that they sign simultaneously, and have refused to agree to restart petroleum operations.

Hyperdynamics believes that neither Tullow nor Dana has the ability under the JOA to block resumption of petroleum operations regardless of whether a PSC amendment was negotiated. In any event, the fact that the Guinea government agreed to the PSC amendment has removed any title concerns Tullow and Dana had about moving forward with the resumption of petroleum operations.

Ray Leonard, President and CEO, commented, "We are extremely disappointed in the actions of both Tullow and Dana. Dana stated that the only impediment to moving forward with petroleum operations was additional title assurances, but will not sign a document providing the exact assurances it sought. And, even though Tullow is the operator, it is refusing to take the required steps to move this project forward, including promptly signing a document it has already initialed. In sum, neither company has honored the commitments made to us and to the Government of Guinea to proceed with drilling. We will continue with our efforts to get this well drilled, and we are considering all of our options to accomplish this key objective."

Pursuant to the agreement between Tullow and a subsidiary of Hyperdynamics in 2013 in connection with the sale to Tullow of a portion of Hyperdynamics' interest in the Concession, Tullow agreed to drill an exploratory well and to pay all of the costs of Hyperdynamics' participating share of expenditures associated with joint operations up to a gross exploration cap of $100 million. The participating interests are owned 40% by Tullow, 37% by Hyperdynamics and 23% by Dana.

As of 1 January 2016 vessels are no longer able to discharge ballast in US waters unless their ballast water treatment (BWT) systems are compliant with stringent demands from the USCG. Experts believe that now, more than ever, it is imperative that shipowners make the right BWT choice.

“There’s so much confusion surrounding the issue of ballast water treatment now,” opines Optimarin CEO Tore Andersen, the head of a firm that brought the first ever commercial BWT system to market back in 2000. “The IMO Ballast Water Management (BWM) convention is close to ratification, but yet to be rubber-stamped, and meanwhile the USCG has taken the bold move to act unilaterally to protect the environment with its own regulations.

“So let’s cut through that uncertainty and state a fact: All shipowners that discharge ballast must get a BWT system, preferably an environmentally friendly one, if they want their ships to operate in the future.

“And, if they want to sail in US waters, then they must act now.”

Two standards, one answer

The fact that there are effectively two sets of regulations regarding BWT standards has muddied the waters for shipowners, making it difficult to find the solution they need.

Classification societies are well aware of this, but aren’t as keen to go on record to explain the situation. An environmental solutions expert at one of the world’s leading classification bureaus agreed to speak, but only on the condition of anonymity.

“Ballast water gets by far the most questions of any issue we deal with,” they note with a smile, “and it’s easy to understand why.

“There’s a major difference between USCG and IMO regulations. Basically this centers on standards.

“USCG judges (BWT) systems on the basis of ‘living/dead’ organisms in ballast water, whereas IMO views them in terms of ‘viable/unviable’. In other words, for USCG approval systems have to kill the organisms, while for IMO they don’t, but must ensure they don’t reproduce.

“USCG tests this using the FDA/CMFDA method, which uses a dye to identify living organisms, while the IMO does not list one specific methodology. The MPN (Most Probable Number) test is the norm here, having been used for almost 40 years, but procedures vary from laboratory to laboratory. This is an issue for USCG – it wants a simple, reliable and reproducible testing method.

“Until this is established, and there are hurdles in doing so, both with validation and law making, FDA/CMFDA will remain the USCG standard.”

For the time being USCG is temporarily accepting the use of Alternate Management System (AMS), whereby vessels with solutions that have already been approved by another flag state can discharge ballast in US waters. However, USCG approved AMS systems will only be accepted for a period of five years after the vessel’s compliance date, and, if they haven’t met the USCG’s own stringent standards by that point, will have to be changed. That burden of potential cost and uncertainty is not one today’s shipowners, operating in a climate of squeezed margins and aggressive competition, may be willing to accept. They need to be sure.

Unfortunately, the systems that many industry observers seem to prefer for their simplicity, ease of operation and environment credentials (utilizing no chemicals) are struggling with USCG approval.

“UV systems are easy to operate, don’t require chemical storage and are a good option for the industry,” opines the classification specialist. “But caution is needed.”

They explain that the majority have been made with the ‘viable’ standard in mind and therefore lack the power – “and you might require a lot more power” – to tackle the tougher FDA/CFMDA test.

“That’s where Optimarin has been smart,” they state. “They’re focusing on USCG current requirements and approval. And the first UV system to get this will have a real market advantage.”

Its technology is the first UV system to meet the USCG marine water requirements, successfully satisfying the FDA/CFMDA criteria. Further tests of remaining water salinities are scheduled for spring 2016, after which point approval is expected later in the year.

“Passing the initial tests puts us in pole position in the market for final approval and is a great endorsement of our system’s effectiveness,” comments Andersen. “Each of our system lamps has a 35kw capacity. This power instantly kills any potentially harmful invasive organisms and that’s exactly what USCG wants to see.

“We’re delighted to be leading the way in our segment - something that we put down to decades of work, sector expertise and investment.”

With 2016 now upon us, both Andersen and the regulation expert offer similar, sage advice to shipowners.

Andersen notes: “Install a system that is reliable, simple to maintain, easy to install (make sure any supplier can show a history of retrofit success) and proven within the marketplace. This is still a relatively young sector, so it pays to go with a name you can trust.”

His classification peer, meanwhile, has regulations front of mind:

“It’s simple,” they say. “The industry has to comply, so choose a system that will be compliant.”

NYC-based PIRA Energy Group reported that the price of WTI dropped in December to the lowest monthly average since 2004. In the U.S., a large holiday week U.S. commercial stock build mirrors last year. In Japan, crude runs are at a new post-turnaround high while demands are impacted by the holiday. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

North American Midcontinent Oil Forecast

The price of WTI dropped $5.55/Bbl in December, averaging $37.25 — the lowest monthly average since 2004. Crude prices were continuing to drop in early January, in anticipation of more stock builds in the first quarter. Crude stocks rose in Cushing and in Western Canada, but generally fell in other regions — particularly in Texas, where ad valorem tax laws encourage minimizing year-end inventories.

Cold Spell Provokes Stronger Demand, Freezes Production

Thursday’s unexpectedly strong 117 BCF reported storage draw gave extra impetus to the already in place bullish price momentum underpinned by two important fundamental shifts since late December — colder weather and structurally weaker production relative to previous estimates. In sum, these developments provide justification for the dramatic upswing in Henry Hub (HH) cash prices after declining to a low of $1.54 over the extended Christmas holiday, as well as the former NYMEX weakness.

Spanish Flows Swing, Coal Dispatching Set to Decline in 2016

The Spanish market has seen increased price volatility so far this year, with lower day-ahead prices resulting in larger flows toward France. Spain has exported an average of over 400 MWs to France so far in 2016, which compares to imports averaging 2.2 GWs during December 2015. The outcome over the past few days has been led by exceptionally strong wind output (11.6 GWs in January to date) and extremely warmer-than-normal weather, as Spanish demand plummeted by over 6% year-on-year. Higher Spanish exports to France are contributing to undermine French prices, also lowering French imports from Germany.

Coal Fades Again; India Not Providing Uplift

The coal market experienced a modest rally midweek despite the notable decline in oil prices and the major selloff in Chinese equities, perhaps due to the wet weather in Australia and as market participants returned to activity in the New Year. However, the noted factors and continued unsupportive fundamentals were too much of a bearish influence on pricing for the market to end in positive territory for the most part last week. Fueled by weaker dry bulk freight rates, prompt pricing for API#4 (South Africa) and FOB Newcastle (Australia) moved up slightly W/W while API#2 (Northwest Europe) declined. Beyond 1Q16, all three forward curves declined, particularly the long-dated deferred prices, exacerbating the backwardation in the market.

Freight Market Outlook

OPEC continues to keep the taps open to force higher cost production from the market and there is no indication of any change in policy. This has helped the tanker sector in a number of ways. From August 2014, when the Saudis first indicated their intent to defend market share, bunker prices have fallen by 70% to the lowest level in more than 12 years, adding $30,000/day to vessel earnings for a typical VLCC. Higher OPEC production and expanding waterborne trade have added substantially to vessel demand, but a bloated supply chain has also contributed immensely. High inventories have caused excess port time and discharge delays, especially in China. While long-term floating storage is still not attractive, unintended floating storage is widespread as charterers knowing that discharge delays are inevitable on arrival are slowing vessels down on their laden legs, reducing fleet efficiency.

LPG Tanker Rates Swoon on Weaker Shipping Fundamentals

Spot VLGC freight rates have plunged to the lowest level since early 2014. Decreasing U.S. LPG export growth, a rapidly growing tanker fleet, and the fast approaching opening of the expanded Panama Canal will continue to plague rates throughout 2016. Rates fell to $52/MT on the benchmark Ras Tanura – Chiba, Japan route, an 18% decrease from the week earlier and a remarkable 62% lower than last year’s July high.

U.S. Ethanol Manufacturing Margins Rise

Most U.S. ethanol prices were steady in light trading during the final week of 2015. After declining for four straight weeks, manufacturing margins improved as corn costs moved lower.

It’s Go Time

Tuesday’s WASDE and QSR are two of the most critical reports of the year and will set the tone for 2016. While PIRA believes that next week’s reports will be bearish, we are also extremely cognizant of the short Non-Commercial positions going into the reports.

Global Equities Begin the Year Broadly Lower

Global equity markets began the year broadly lower for all of our tracking indices. In the U.S. the utility tracking index, largely a defensive play, was the best performer, down 0.8%. Banking, housing, and materials were almost 10% lower. Internationally, Japan faired the best but still declined about 5%. China was down over 10%.

Libya: ISIS Attacks Highlight Ongoing Risk; Expect to See More

ISIS militants launched a two-pronged attack on Libya’s largest oil export facilities early last week. Suicide bombers struck Es Sider (export capacity 340 MB/D), and an assault at Ras Lanuf (220 MB/D) left an oil storage tank holding 400,000 barrels ablaze. A storage tank at Es Sider was also hit. Neither attack will have an immediate impact on Libyan oil supply, as the terminals have been shut for over a year. But the development highlights the ongoing risk of a growing ISIS presence in Libya. We expect to see more attacks in the near future, which could do further damage to oil infrastructure, disrupt already-minimal oil supplies, or prevent any improvement in output. It may also exacerbate the security vacuum in Libya, igniting broader fighting between the two rival governments in the country. The lack of territorial gains by ISIS in other parts of the world (Iraq, Syria) may encourage more ISIS activity in Libya.

Large Holiday Week U.S. Commercial Stock Build Mirrors Last Year

Total commercial stocks built 7.3 million barrels this week, narrowing the surplus to 163.5 million barrels, or 14.2%. Crude stocks drew 5.1 million barrels this week, versus 3.1 million barrels last year; the four major refined products built 15.9 million barrels this year, versus a whopping 18.6 million barrels last year; and all other product stocks drew 3.5 million barrels versus drawing 5.7 million barrels last year. At 1,312.6 million barrels, total commercial stocks set a new weekly record. We think uncertainty in holiday week data (this year and last), along with a loss in trucking activity, and possibly minimal drawdowns from flooded PADD II terminals, contributed to this year’s large refined product stock build. Last year, the largest product build was in distillate, while this year, it was in gasoline, impacting demand growth rates.

Relocated Louisiana Methanol Plant Now Up and Running

The Methanex Corporation announced that on December 27, 2015, the company successfully produced the first methanol from its newly completed one million ton Geismar 2 methanol plant in Geismar, Louisiana. The plant was relocated from the company's production site in Punta Arenas, Chile. The total combined cost for the completion of the two Geismar plants is approximately $1.4 billion.

U.S. Coal Market Forecast

Record warmth in December drove natural gas pricing and coal burns lower, driving coal stocks to a record level for the month of December. With gas forwards in the $2.30/MMBtu range and coal stocks at limit levels, we foresee deep cuts in coal production. We have cut our outlook by 60 MMst since last month. This will likely push some producers into bankruptcy.

Financial Stress Builds

Financial stresses are building with financial markets starting the year with increased volatility and a definitive move to the downside. The ripples are being felt globally. The S&P 500 closed the week down 6%. Surprisingly, high yield debt (HYG) and emerging market debt (EMB) indices improved slightly again on a weekly average basis, but that will not hold up if markets remain under pressure.

Inventories Rise to an Eight-Year High

U.S. ethanol-blended gasoline manufacture plummeted to a two-year low. Due to the large decrease in demand and high output, ethanol inventories increased for the eighth time in 10 weeks, rising to an eight-month high.

Major Reports Ahead

As harvest was ending two to three months ago, prompt corn was trading around $3.75, soybeans were holding on around $9.00, and wheat was a $5.00+ commodity. The corn and soybean markets seemed to be taking the annual harvest pressure in stride at the time, with many looking forward to the possibility of a year-end rally as seen in 2014, or at least some stability going into the new calendar year as seen in 2013. Neither of those occurred, but there may be some light at the end of the tunnel.

Japanese Crude Runs at New Post-Turnaround High, Demands Impacted by the Holiday

Crude runs rose to a post-turnaround high, while crude stocks increased to just short of 100 MMBbls and then fell back slightly. Gasoline demand was helped by the holiday and stocks drew both weeks. Gasoil demand, after posting a gain, plunged with the New Year and stocks built. Kerosene stocks continued to draw seasonally. Refining margins remain strong, though distillate cracks continue under noticeable pressure but are offset by very strong gasoline and naphtha cracks.

Should Ukraine Be an Ongoing Concern?

Colder temperatures are finally returning to Europe after an incredibly warm 4Q 2015. Storages are being used as they should and demand numbers are starting to rise quickly. PIRA estimates residential and commercial demand figures will rise by 18% in Germany and 12% in the U.K. Looking farther east we can see that temperatures have already hit deep winter lows and storage draws have already shot up.

Healthy U.S. Job Growth Bodes Well for Outlook, but Weak ISM Is Source of Concern

The latest U.S. payroll data surpassed all expectations, and the pace of job growth accelerated significantly during the fourth quarter. Wage growth, however, remained tame. The ISM manufacturing index was disappointing, but the likelihood for now is that manufacturing’s difficulties will not spill over into other sectors. This week’s developments in China weighed on financial market confidence globally. Confusion over the country’s currency policy proved especially damaging.

Forward Brent Structure to Remain Under More Contango Pressure than Currently

While February-March Brent futures prices are under $0.40/Bbl contango, forwards like March-April and beyond are trading around $0.90/Bbl contango. This is very much related to misalignment between the futures contract and the forward BFOE market. This will change for the March and subsequent futures contracts, which will go off the board 15 days earlier than has been the case. Thus, unlike previous months, the whole March North Sea program will underlie the March futures contract, compared to just half earlier. In a contango market, having half the program go physical before expiration leaves the higher priced second half of the program to drive valuation of futures expiration, thereby directionally narrowing the contango. With the whole March program underlying futures expiration, almost double the volume previously, the contango will naturally be wider. Thus, March-April contango is already double that of February-March.

China Balancing Role in 2016: Positive, Negative or Neutral?

Long in the works, China announced a new financing source for Russian LNG supply at Yamal despite a recent stall in its actual LNG buying.

Aramco Pricing Adjustments for February — Maintaining Competitiveness

Saudi Arabia's formula prices for February were just released. The adjustments made to differentials against its key regional benchmarks were within market expectations and do not suggest a shift in Saudi export pricing policy. Pricing policy continues to be one of maintaining competitiveness, volumes, and liftings. Northwest European pricing was made more generous, Asia tightened in alignment with market circumstances and expectations, and U.S. prices left unchanged for all but the lightest grade, Saudi Extra Light. Pricing for delivery into the ports of the Mediterranean Sea was left mostly unchanged.

Mississippi River Flooding Is Not a Major Concern for Product Supply

There are fears that recent flooding along the Mississippi River will drive up gasoline prices out of concern that refineries either will shut or slow production as the flood waters head downriver. PIRA believes that those concerns are overblown. The last major flood along the Mississippi River occurred in April and May 2011. There was only one flood-related refinery outage then. The Krotz Springs refinery was idled when the Morganza Spillway was opened to relieve flood pressure on the Mississippi River.

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.

Crowley Maritime Corporation announces that Kerri McClellan has been promoted to vice president and deputy general counsel for the corporation. McClellan, who is based in Jacksonville and reports to Senior Vice President and General Counsel Mike Roberts, joined Crowley approximately two years ago as senior corporate counsel and assistant corporate secretary and has excelled at corporate governance and transactional work among other legal areas.

“Kerri has been a tremendous partner in the legal department, and a key leader on important initiatives throughout the company,” said Roberts. “She is a first-rate transactional lawyer and is unafraid to take on any substantive assignment. From IT contracts to complex regulatory matters she always adds value.”

McClellan supervises two members of Crowley’s legal team, and serves as the legal representative on numerous important company projects, including a cyber-security task force, the new Crowley Cares Foundation, and many others. With extensive experience in corporate finance, mergers and acquisitions, corporate governance, and compliance, McClellan is responsible for a wide array of legal matters.

“She consistently brings innovative ideas and a valuable perspective to each project,” said Roberts. “She anticipates needs extremely well, and brings professionalism, great energy and good humor to all. She is a source of positive encouragement, support, and reinforcement to those around her who seek to model her best behaviors.”

Prior to joining Crowley, McClellan served as a transactional attorney, strategic advisor and compliance counsel to multinational corporations while at a large law firm. She also served as a transactions and tax controversy advisor at a large professional services firm where she specialized in mergers and acquisitions, transaction integration, and taxation. McClellan has a Bachelor of Arts degree with honors from the University of Florida, a Juris Doctor degree from Suffolk University Law School, and a Master of Laws in Taxation degree from Boston University School of Law. McClellan is a licensed attorney in Florida and Massachusetts.

Fugro has been awarded a contract by Esso Exploration and Production Guyana Limited, an ExxonMobil affiliate, for survey services at a deepwater field development offshore Guyana. The contract provides for autonomous underwater vehicle (AUV) geophysical survey and an environmental baseline survey, along with shallow geohazard and geotechnical coring.

The discovery of more than 295 feet of high quality, oil-bearing sandstone reservoirs in the Stabroek Block of the Liza Field represents a significant deepwater production find in the Guyana-Suriname basin.

Fugro Americas will perform the work

Fugro will acquire, process and analyse high quality AUV multibeam bathymetry, side scan sonar and sub-bottom profiler data, as well as environmental and geological/geotechnical samples, providing seabed and shallow sub-seabed information to support the initial development of offshore structures in the field. The survey will cover an area of approximately 640 square kilometres in depths reaching 2,800 metres.

Patrick Lee, P.E., CPE. Aust., Arctic Geotechnical Engineer at ExxonMobil said, “The ability to provide all relevant expertise and skilled personnel to undertake this complex project highlights Fugro as the right company for this job.”

Melissa Jeansonne, Vice President, Fugro added, “Fugro has executed numerous high profile, large scale, and remarkably successful geophysical and geotechnical programmes throughout the globe, including many of the largest surveys in the oil and gas industry, and we look forward to continuing this model of excellence in the Guyana-Suriname basin.”

With an emphasis on efficiency improvements, Seadrill has chosen to extend its leasing of the SafeEx tablet-based software module for Ex inspections and registration, for use on seven units. At the same time, three new ones have also been added.

To further optimise their already quite modern fleet, Seadrill initiated a working relationship in March 2013 with SafeEx, a Danish company, whose products include software for Ex inspections that streamline procedures, improve documentation and increase safety.

Since then, Seadrill has leased the SafeEx Software for a total of 14 drilling rigs, including the seven for which the licenses were expiring and which have been renewed now for either one or three years. In addition, three new agreements were signed.

Ex inspections using the SafeEx Software are performed for Seadrill by third-party inspection firms, such as K2 Velosi for example. Previously, these inspections were conducted using pen and paper, but with the software solution from SafeEx they are now performed using a tablet containing General Arrangement (G.A.) Drawings and checklists for the unit concerned.

G.A. Drawings are interactive maps of the area concerned on the unit, where pointers show the equipment's exact position. Inspections of each individual piece of equipment are initiated by using the tablet to scan an RFID tag affixed to the equipment. This loads the related checklists, and data is registered directly. At the same time, it is possible to reposition equipment or register new equipment in the map.

"The G.A. Drawings provide extremely useful functionality. They are more efficient, simple to use and save time in comparison to the paper system previously used", says Oliver Donahue, Lead Inspector & Electrical Supervisor for K2 Velosi.

Inspectors can also take pictures with the tablet, for example of defects or non-conformities, and register them. In addition, the SafeEx Software features the significant benefit that all information is made available to onshore management instantaneously once the inspection has been performed.

According to K2 Velosi, this has both optimised the work procedures as well as improved documentation and safety, with further optimisation being expected for maintenance in future due to the system now having been implemented and become a natural part of the procedures.

"The SafeEx Software is a big improvement from the old system", emphasises Oliver Donahue.

The SafeEx Software is DNV approved and in addition to Seadrill is also used by companies such as Statoil, Petronas, TRESE/PEMEX, DONG Energy, Noble Drilling and BW Offshore.

Oil prices have been extremely volatile since the first trading day of 2016 and hit 12-year lows last week with Brent dropping below $33 a barrel for the first time since 2005. The fall in the Chinese manufacturing index, the Saudi-Iran standoff and North Korean nuclear test have all had a significant impact on shaping oil price trends.

Brent crude rose to a three-week high of $38.91 a barrel on the 4th January as a consequence of the Saudi-Iran geopolitical risk but these gains were quickly diminished due to concerns over economic slowdown. Rising tensions in the Middle East typically trigger an increase in the price of oil, yet it seems that bearish sentiment elsewhere has prevailed over potential risk.

China’s manufacturing sector shrank for the fifth consecutive month and the Shanghai Composite stock index finished 10% down for the week; leading to uncertainty over the outlook for energy demand in China. It is a clear indication that oil demand from the world’s number two oil consumer is slowing and that the current oversupply of oil may be more persistent than expected.

Adding to uncertainty over the growth in China, news of the North Korean nuclear test came on the 6th January, which triggered Japanese and South Korean stocks in Asia to decrease overnight as investors looked to less risky assets. Whilst this has contributed to further geopolitical uncertainties, it is unlikely that it will have a sustained impact on oil prices.

Nevertheless, oil prices are likely to remain at low levels until the supply-demand balance tightens, with prospects of production declines or a pick up in the global state of the economy seeming unlikely in the short-term.

Rob Spillard (photo) brings over twenty-five years’ experience in the offshore survey industry and will take overall responsibility for the technical direction of the Wirral-based company. Having previously performed key roles at Fugro EMU, the Maritime and Coastguard Agency and the United Kingdom Hydrographic Office, Rob will play an intrinsic part in the continuing growth of the company.

As part of the company’s focus on efficiency, the newly created role has followed a restructuring of the senior management team, which included the appointment of Mick Slater to Operations Director earlier this year. Bibby HydroMap Managing Director Andrew McLeay comments: “We are very pleased to have Rob join us as a key member of the executive board. I am looking forward to working closely with him during what is a very challenging time for much of offshore industry but one which also throws up a series of exciting opportunities for Bibby HydroMap as we continue to develop our range of services.”

Rob comments: “I’m both excited and delighted to join the company. Bibby HydroMap’s focus on a quality product, together with their investment in new, state-of-the-art vessels and innovative technologies like the d’ROP survey platform were all aspects that made me keen to join the team. I am thrilled to be a part of the company and look forward to working with our customers in 2016”.

Prosafe and Statoil (U.K.) Ltd (“Statoil”) have agreed to re-phase the Mariner Project in the UK Continental Shelf of the North Sea from 2016 into 2017, and extend the firm hire duration from 8 months to 13 months.

Operations at the Statoil Mariner platform will commence within Q3 2017 and will be performed by either the Safe Zephyrus or Safe Boreas accommodation support vessel. In addition to the revised extended firm hire duration, Prosafe has granted Statoil six additional one-month options linked to the Mariner project.

The Mariner Field is located on the East Shetland Platform of the UK North Sea approximately 150km east of the Shetland Isles. Image courtesy: Statoil

Total value of the re-phased and extended firm hire duration for the Mariner Project has increased from USD 76.3 million to approximately USD 131.8 million, including a re-phasing charge payable in 2016.

Prosafe is the world's leading owner and operator of semi-submersible accommodation vessels. Operating profit reached USD 248.3 million in 2014 and net profit was USD 178.8 million. The company operates globally, employs 800 people and is headquartered in Larnaca, Cyprus. Prosafe is listed on the Oslo Stock Exchange with ticker code PRS.

For more information, please refer to www.prosafe.com