Bergen Group and Calm Oceans Pte. Ltd (COPL) have entered into an agency agreement about marketing of COPL's newly developed Mono-Column Platform (MCP) in the Norwegian market.

This offshore mobile platform is a self-elevating, multipurpose and high payload jack-up, specially designed to address the commercial challenges relating to marginal field technical development, as well as those associated with early monetization of oil and gas fields.

CALM OCEAN 101 will look like nothing else at sea: a broad, square deck surrounding a lone open-truss square jackup leg measuring 20 meters on each side. Image credit: Calm Ocean

Calm Oceans Pte. Ltd is a Singapore-registered company owned by controlled by Brian Chang Holdings Limited, which also is a major shareholder in Bergen Group ASA with their 33.1 % ownership.

“The management in Bergen Group ASA has recently accomplished strategic discussions with CEO Brian Chang in Brian Chang Holdings Limited. We are delighted to perceive a common understanding with the major shareholder of Bergen Group’s about the company’s growth potential going forward”, says CEO Hans Petter Eikeland in Bergen Group ASA.

“The MCP is an effective bespoke solution which caters to any offshore field development that are within 120m water depth, particularly for marginal fields. Together with our leasing business model, we believed that this solution would be especially valuable and beneficial during this challenging period, for field operators whom are looking at means of reducing CAPEX while sustaining the business. We are confident that the MCP would mark its presence in the Norwegian market with the help of Bergen Group”, says Brian Chang.

The MCP supports high Variable Deck Load (VDL) up to 5,000t, with a generous deck space capable of taking on different modular facilities such as Drilling Modules, Production Modules, Accommodation Modules as well as Combined Drilling and Production Modules as may be required. in order to provide the different functions required. When these various functions are put together they serve as a complete Field Development solution for the end-user. The platform essentially comprises a deck box, 4-chord square truss structure (Mono-Column) and a mat foundation. With the mat design, the MCP can operate in oil fields with soft seabed’s which are challenging for conventional jack-ups. Also, with its self-elevating feature, there is no need for sophisticated and expensive offshore construction fleet during deployment and relocation.

The MCP Design is conceptualized by Brian Chang and is classed with ABS (American Bureau Society), adhering to MOU (Mobile Offshore Unit) Code 2008 and other relevant IMO guidelines. For more info, click here

Hereema Marine Contractors Nederland SE will remove the platform and transport it to shore, while AF Offshore Decom AS has been awarded the contract for disposal and recycling of the platform.

Photo credit:  Statoil

The Huldra field is a Statoil- operated gas and condensate field on the Norwegian Continental Shelf, North East of Bergen. The field came on stream in November 2001 and on plateau the field produced 10, 3 MSm3/day.  

The gas and condensate production was closed down 3. September 2014. Previously the jack up rig West Epsilon has been awarded the contract for plugging the six wells at Huldra during 2016. On behalf of the partners Statoil has now awarded two new contracts for removal, transportation, disposal and recycling of the Huldra platform.

• The Engineering, Preparation and Removal (EPR) contract has been awarded to Heerema Marine Contractors Nederland SE.

• The contract for disposal and recycling of the platform has been awarded to AF Offshore Decom AS, a subsidiary of AF Gruppen ASA.

The total weight of the platform is approximately 10.000 tons, distributed over a 5, 000 ton topside and a 5, 000 ton steel jacket. It is expected that more than 95 percent of the platform will be recycled.

The plan is to remove the Huldra platform during 2019 with the subsequent disposal and recycling work taking place at AF Offshore Decom’s environmental base in Vats, Norway within the first half of 2020.

The platform is being removed according to the Ospar convention, stating that oil installations no longer being used as a main rule shall be removed.

In the second half of 2015 application of Ecolock started on a newbuild Floating Storage and Regastification Unit (FSRU) in China. This is the second project carried out for EXMAR nv, after the application on the Caribbean FLNG in 2013.

Photo credit: Hydrex

Like the first project, the FSRU is built in blocks and these blocks are coated individually before assembly, leaving only the weld seams and the areas inaccessible due to the support blocks to be painted after the barge is assembled. The Ecolock system consists of a single, homogenous covering of the steel. Painting over weld seams after the blocks have been assembled is very easy. It leaves a smooth finished surface and the erection joint paint blends in perfectly with the coating of the rest of the hull.

As with all Ecolock applications, a trained and qualified paint inspector is on site monitoring the entire preparation and application to ensure adherence to the specifications at each step of the process and to assist with any problems that may arise. This is essential for a coating that is intended to last the life of the ship. Ecolock comes with a warranty as long as it is standardly applied and if the coating is maintained according to the specifications.

The application on the FSRU is scheduled to be finalized later this year with a planned delivery of the unit not much after.

Wood Group Intetech (WGI), a leading asset integrity specialist serving the global energy industry, is launching a new version of its ECE® software in response to client demand.

ECE® is an established tool for corrosion analysis and materials selection. The latest version – ECE® 5.3 – includes a bulk calculation feature, which will enable users to simultaneously upload multiple data streams, saving valuable time in the data transfer process. Customers can upload the inputs and access the results in a user-friendly Excel format – increasing ease of use.

Founder and Managing Director of Wood Group Intetech, Dr. Liane Smith, says: “ECE® is enabling clients to evaluate critical operational decisions and prioritize budget spend at a time when industry resources are limited. The combination of our in-house expertise and large user group feeding into the development process ensures we continue to provide solutions that address the challenges of clients worldwide.”

WGI is experiencing consistent demand for ECE® with over 80 customers worldwide currently utilizing the software.

Fabrication of the billion dollar topsides destined for the Maersk Oil operated USD 4.5 billion UK North Sea megaproject, Culzean has begun. The steel-cutting ceremony for the first of the three topsides modules took place at the Sembcorp Marine Offshore Platforms (SMOP - formerly known as SMOE) Admiralty Yard in Singapore on April 7th.

Culzean is the largest hydrocarbon discovery in the UK North Sea for over a decade. The field is approximately 145 miles east of Aberdeen and is expected to produce between 60,000 - 90,000 boepd at plateau production, producing for at least 13 years. The project was sanctioned in August 2015. Maersk Oil’s coventurers in Culzean are JX Nippon Exploration & Production (UK) Limited (34.01%) and BP (Britoil) (16%).

Jakob Thomasen, CEO of Maersk Oil, igniting the flames for the steel-cutting ceremony. This is the first sheet of steel cut for the Culzean megaproject. Credit: Maersk Oil

“Starting the fabrication of the topsides is an important milestone. When the field begins to produce in 2019, Culzean will become a key contributor to Maersk Oil’s ambition to become a Top 5 operator in the North Sea in the 2020s, and provide around 5% of UK gas demand at peak production. Maersk Oil and coventurers’ investment will also support employment in both the UK and Asian supply chains,” said Maersk Oil Chief Executive Jakob Thomasen, speaking at the ceremony in Singapore.

“Our focus for the next three years is working with our partners and suppliers to deliver the project from fabrication right through to commissioning safely, on time and within budget,” says Thomasen.

The contract with SMOP, worth over USD 1 billion including long lead items, was awarded in September 2015. The contract includes the building of the Central Processing Facility plus two connecting bridges, Wellhead Platform and Utilities & Living Quarters Platform Topsides for the Culzean Field Development.

The platforms will be built with enhanced digital and monitoring capability.

“We will be harnessing technology to develop a 21st century facility with the ability to remotely monitor critical equipment 24 hours a day, and enable offshore colleagues to access real time data and immediate technical evaluation and onshore support. The technology will minimize time spent on plant and enhance safety and efficiency. Maersk Oil estimates this digital toolkit can save more than USD 10m annually,” says Martin Urquhart, Culzean Project Director.

Tritech International Ltd, [Tritech], announces that Rotech Subsea Ltd [Rotech] has purchased Gemini Narrow Beam Imager (NBI) systems.

The sonars are to be installed in single head or dual head configuration for use on Rotech's RS range of excavation tools and will support the increased volume of work they are securing worldwide in the oil and gas and renewables sectors. The Gemini NBI can communicate over Ethernet or VDSL and for this installation the systems will run in VDSL mode. The Gemini NBI systems will run on the newly introduced Tritech Gemini 72VDC VDSL Interface Unit, which will supply the sonars with sufficient power to operate over a 300m cable. The unit connects to an Ethernet port on a standard PC running the Gemini software.

Rotech Subsea RS excavation tool, as fitted with a Tritech Gemini NBI. Image courtesy of Rotech Group Ltd

The Gemini NBI operates at 620 kHz and has a 1 degree narrow vertical beam to enable users to accurately identify acoustic target positions. Offering high-speed multibeam imaging, the Gemini NBI is ideally suited for trenching and excavation operations in poor visibility conditions as it features a 130° swath and 0.5° horizontal angular resolution providing 10mm range resolution. Control of the Gemini NBI is via the standalone Gemini software package on a Tritech Surface Control Unit (SCU) or on a desktop PC or laptop.


Kevin Cargill, Subsea Operations Manager, Rotech, commented:


“Rotech Subsea has witnessed first-hand the clear imagery of the Gemini NBI which has allowed us to successfully complete both inshore and offshore jobs including a recent harbor clearance where the sonar also provided continuous visualization as we excavated towards the harbor wall. We have also used the Gemini NBI in cable de-burial and post-trenching projects where continuous observation of the task was critical. We are, therefore, confident that the Gemini NBI systems will further enhance the capabilities of our RS range of excavation tools in visibly-challenging environments.”

Scott McLay, Sales Director, Tritech, commented:

“The Gemini NBI has proven to be highly effective at target visualization in low visibility and turbid waters, providing real-time high speed acoustic images. The sale of the Gemini NBI systems to Rotech Subsea demonstrates the market desire for field-proven technology and it is encouraging that despite current industry challenges, there are still opportunities for our customers and our highly reliable technology.”

In a period of cost constraint and increasingly complex oil & gas production, finding solutions that increase efficiency and production has never been more important. To address the industry’s need for smart solutions that reduce complexity, DNV GL is funding 43 new joint industry projects in 2016 in addition to launching a new Step Change innovation program to help customers leverage opportunities from digitalization.

Both initiatives are based on closed interaction and collaboration with industry partners. Key focus areas for DNV GL in 2016 will be to address challenges on standardization, operations (OPEX services), safety, environment, regulations and performance.

“DNV GL led JIPs aim to provide insights into future trends and technologies. Many of the projects result in new industry standards and practices that support innovation and flexibility in design while managing costs and maintain safety levels,” says Rolf Benjamin Johansen, Technology Manager, DNV GL – Oil & Gas.

The value of standardization is recognized by the industry with 61% of senior oil & gas professionals agreeing that operators will increasingly push to standardize their delivery globally1. The most common strategy for maintaining innovation with lower budgets is to increase collaboration with other industry players (45%) and nearly one in three (30%) plans greater involvement in joint industry projects in the year ahead.

DNV GL’s new Step Change innovation program is focused on digitalization. Only one in five oil and gas companies see themselves as highly digitalized today. However, close to half of senior oil & gas professionals (45%) already see solid or high potential for big data and analytics to transform the operating efficiency of the industry in 2016. DNV GL’s program involves the end-users, e.g. oil companies, drilling contractors and suppliers, in the innovation process. The first pilot projects have already created significant value for these end-users from using new forms of data analytics in combination with domain knowledge and technical insight.

“Step change is exactly what it says – a paradigm shift in how we drive innovation to quickly test out data smart solutions and new business models with strong customer involvement at an early stage. In the current price environment, innovation is even more critical. It can both help the industry to reduce complexity short term by standardizing parts and processes and enable new technological developments long-term that will drive efficiencies. At DNV GL, we are continuing to invest 5% of our revenue in R&D because it enables us to provide long-term foresight for our customers,” says Kjell Eriksson, Regional Manager Norway, DNV GL - Oil & Gas.

Currently in the initial phase, DNV GL welcomes industry players to join the JIP projects or contact us if they are interested to be involved in our Step Change program.

Aker Solutions secured an agreement to provide maintenance and other services for subsea facilities at Petrobras-operated oil and gas fields offshore Brazil.

The contract is for a fixed term of three years valued at BRL 435 million net of taxes (NOK 1 billion) and may be extended by another three years. It covers maintenance, storage, supply of parts and technical assistance for all subsea equipment delivered by Aker Solutions to Petrobras in Brazil.

"Brazil is a key global offshore market," said Luis Araujo, chief executive officer of Aker Solutions. "We have a nearly four-decade presence in the country and are committed to finding solutions to help Petrobras develop its petroleum resources in the most efficient and sustainable manner possible."

Aker Solutions is in April opening a new subsea manufacturing center in Curitiba, doubling its local production capacity. The company is also upgrading its subsea services unit in Rio das Ostras to better meet customer demand.

The contract will be managed at the base in Rio das Ostras in Rio de Janeiro, at a local content rate of 87 percent. This builds on a commitment to develop partnerships with national suppliers.

"We are pleased to be able to continue providing top-notch services and technologies to support Petrobras' production and growth plans in the pre-salt deepwater fields," said Maria Peralta, head of Aker Solutions in Brazil.

The agreement is similar to one signed in 2011 for maintenance of equipment and other offshore services. Currently, Aker Solutions' subsea lifecycle services unit has about 360 employees in Brazil, of which 150 are part of the technical team working offshore. The company has about 1,300 employees in the country.

The contract is booked as part of Aker Solutions' first-quarter order intake.

Intertek, a leading quality solutions provider to industries worldwide, has launched an onsite Coriolis flow meter calibration service, delivering industry leading technical expertise and cost and efficiency savings to its oil and gas clients.

Photo credit: Intertek

Coriolis flow meters are one of the most reliable instruments with which to determine flow measurement and have become increasingly commonplace in oil and gas flow measurement systems. However, they must be calibrated periodically to ensure they are performing as accurately as possible. As part of a new service, Intertek has invested in a highly specialized mobile Coriolis master meter skid unit to conduct Coriolis flow meter calibration. The unit performs to a greater level of precision than widely encountered in the market, with better than 0.1% accuracy. In an industry handling a high-value product such as oil and gas, the accuracy of measurement equipment is crucial for correctness and profitability. Mismeasurement of oil and gas quantities can be extremely costly and affect an operators’ overall profit margin.

Greg Dinkelman, Business Development Manager for Calibrations and Metering at Intertek Exploration and Production, said: “Historically, calibrating Coriolis flow meters has proved challenging to operators. It usually involves the movement of large units between offshore and onshore sites, which requires downtime and can be costly. The mobile Coriolis master meter skid unit will now allow us to offer this service onsite, saving our clients time, money and the inconvenience and risk of moving their equipment.”

The skid unit’s relatively compact size means it can be easily transported to offshore environments with restricted deck space, or to sites in very remote locations. An additional benefit is that calibration can be conducted under normal operating conditions, rather than within the artificial environment of a laboratory.

Intertek’s calibration and metering business assists clients in assuring the accuracy of their systems and equipment. Metering consultancy, flow measurement services, meter prover calibrations, tank calibration, 3D laser scanning and cargo inspection are some of the related solutions Intertek specializes in delivering to oil and gas clients.

A joint industry project established through The Industry Technology Facilitator (ITF) has entered a trial phase with the support of oil and gas operators.

A new technology system designed to address a common problem in the subsea industry is undergoing a shallow water trial at Portishead Quays marina. The system will help to identify the location of electrical faults on subsea installations and will enable field operators to better plan for repair or replacement of failed components which could save the industry millions of pounds in halted production.

The system, known as V-IR, has been developed by Viper Subsea with the support of Total, BP, Shell, and Chevron.

ITF CEO, Dr. Patrick O’Brien

The shallow water trial will run in phases and could last up to 12 months. The initial trial will take three months, during which time the V-IR technology suite will undergo communications and performance testing in a sea water environment that includes the use of 2km of subsea cable which has been deployed onto the bed of the marina.

Although a shallow water trial, the main components are already designed for 3000m water depth. Following the shallow water trial there will be a period of further equipment qualification before the system is fully commercialised later in the year.

ITF CEO, Dr Patrick O’Brien said: “It is encouraging to see that one of our JIPs is nearing the latter stages of deployment with this trial. Identifying the exact location and why the failure occurred is time consuming and difficult with existing technology, meaning that the recovery and repairs of cables is risky and very expensive. Viper’s V-IR system has the potential to provide substantial savings in time and costs to the industry.”

ITF is driving oil and gas technology development and collaboration. With a membership of international oil and gas operator and service companies, the industry technology facilitator has launched over 200 innovative joint industry projects. ITF champions technology development and believes investment is crucial to solving the most pressing challenges the industry faces in securing reserves.

Latin American Light Product Imports Level Off/Decline

Latin American oil demand is downshifting in 2016 with gasoline expected to grow only slightly and diesel to contract. Product imports into the region are down, but there is upside risk stemming from operational issues in the Venezuela refining system. Latin American refinery runs are expected to improve in Mexico, Colombia and Brazil, but Venezuela is deteriorating. PIRA’s analysis of Latin American heavy crude values in different markets shows that since 2015 Maya has been relatively more attractive versus alternatives in some European/Asian coking capacity. Whereas for the U.S., Maya remained in the middle of the range of competition.

The Recovery in U.K. Gas Production Is Not the Start of a New Trend

A key shift in European gas balances in the years ahead will be increasing dependence on LNG and Russian gas in N.W. Europe. U.K. and Dutch production are both shadows of their former selves at 121 mmcm/d and 184 mmcm/d, respectively, in 2015, and declines almost guarantee this shift to occur. Buyers have prepared by investing in more import infrastructure and working gas storage, while sellers are also positioning themselves to be more competitive. Gazprom has recently converted more major customers to spot gas indexation, and if Nord Stream 2 does manage to be built, access to Russian gas at the farthest reaches of N.W. Europe will be in play and more transparent pricing will make it a more competitive environment.

Gas Units Online After Years of Hibernation, with the Help of Resilient Carbon Prices

Increased dispatching of gas has already emerged in the U.K. so far this year, with an extra 5 GWs on average dispatched year-on-year, but as the oversupply in the LNG markets continues to build, coal-to-gas switching will increasingly become a reality on the Continent. Gas prices have been drifting low enough to push RWE to announce that it will bring back online the Dutch MOERDIJK 2 gas unit (430 MWs). This move suggests that the positioning of gas is improving relative to coal on the Continent, with this outcome also in part the result of resilient carbon prices. Will carbon pricing continue to ignore the overwhelmingly bearish underlying fundamentals?

Gas Surplus Weighs on Coal

Low gas prices continue to result in cannibalization of coal dispatch, aided by robust growth in wind generation due to new capacity in service. At the same time, U.S. coal producers are slashing output dramatically, especially in the PRB. This sows the seeds for a market recovery in 2017 once gas and coal stocks normalize and natural gas prices recover.

Freight Market Outlook

Volatility in the tanker sector seems to be increasing as evidenced by wide swings in VLCC rates. Rates in the benchmark AG-Asia trade plunged from WS 115 early in January to WS 49 early in March then back to WS 97 by mid-March, only to fall again to WS 60 in April. But the daily drip feeding of new tonnage into the fleet with few offsetting deletions will ultimately result in lower peaks and deeper rate troughs in 2016 and next year. Tanker demand has also been helped immensely by a bloated supply chain, but PIRA expects this support to wane as global inventories start to decline beginning late in 2Q with the decline accelerating in 2H16.

European LPG Catches a Bid

Closed arbitrage economics from the US to NW Europe over the past months have led to reduced cargo flow between the regions. This has helped tighten supplies in local European propane markets, which is beginning to affect a price response. May propane futures added a solid 5% last week to $298/MT — a premium of over $100 to Belvieu propane, the largest since January. Butane continued to languish however, as a lack of gasoline blending hinders demand. Cash butane cargoes were at a $20/MT discount to propane futures on Friday.

Brazilian Political Upheaval

Lots of moving parts as a new trading week begins, and we’re not just talking tractors with planters attached. With that said, there’s very little in the way of surprises as the OPEC meeting in Doha yielded no agreement, the Brazilian lower house voted to move forward with impeachment proceedings against Dilma Rousseff, and weekend weather saw an awful lot of planting activity from Minnesota and Iowa east. With soybeans leading this most recent rally, the question on everyone’s mind is whether or not the real will continue to rally now that a vote has been taken and remain the force behind higher prices.

U.S. Ethanol Prices and Margins Jump

Ethanol assessments climbed to new 2016 highs for the week ending April 8 as the long anticipated reduction in output and stocks finally materialized. Strengthening corn and oil prices supported the move.

April EUA Price Bump Temporarily Camouflages Bearish Market

Despite the expected EUA price bump during the April compliance period, bearish indicators remain in the EU ETS. Power sector EUA demand is weak, with competitive gas generation, coal retirements and a downward revision in implied CO2 prices. The bearish supply picture includes incoming 2016 free allocations, higher auction volumes, and little expectation of pre-2019 policy support. Excepting the possibility of greater alignment with rising oil prices, there is little upside price potential through summer 2016.

Global Equities Resume Their Advancing Trends

Global equities resumed their broad based gains for the week. In the U.S., the banking index had a particularly strong performance. Retail and materials also outperformed. Only consumer staples posted a small decline. Internationally, all the tracking indices gained and outperformed the U.S. overall tracking index.

Crude Imports and Crude Stock Build Drive Record U.S. Commercial Stock Level

A sharp week-to-week increase in crude imports, partially driven by a recovery from fog-impeded flows the week before, contributed to a 6.6 million barrel crude stock build. This crude build drove a 6.9 million barrel build in total commercial stocks, driving them to a new record high. With a similar build last year, the surplus remained about the same. Domestic crude supply increased sharply on the week, but we think another week of data will better gauge April’s apparent production recovery.

Competing Forces Emerge in Near-Term LNG Spot Price Discovery

Don’t forget that for key LNG buyers in Japan and Korea, low spot priced cargos, as attractive as they may be, cannot always find a home owing to limited LNG storage. In the second quarter, when Asian demand is at its seasonally weakest point, this effect is exacerbated, particularly as Asian buyers emerged from a warmer-than-normal winter with stocks intact. For now it appears that current levels of spot gas are not yet low enough to trigger a substitution effect for coal, at least not in Japan.

Fuel Forwards Rally; Power Prices Lag

Influenced by mild weather, March spot power prices were down from February levels in every market except NY-A, where transmission congestion caused spreads with Ontario to expand to nearly $40/MWh. Since bottoming in late February, NYMEX winter 2016-17 gas contracts have risen, bringing the market into closer alignment with PIRA’s forecast. Wind provided over 20% of SPP and ERCOT generation in March, limiting gas burn. Fewer nuclear outages are scheduled this spring and fall than in 2015, which will also restrain gas burn.

Fresh Chinese Data Release Points to Potential Coal Demand Stabilization

Seaborne coal pricing moved decidedly higher last week, aided by a firming in oil prices and newly released data showing a potential resurgence in Chinese coal demand. Atlantic Basin prices rose more than Pacific Basin pricing, with stockpiles at ARA declining last week and shipping data indicating a sizeable reduction in Colombian exports in March, particularly in Europe. Additionally, tightness has emerged for higher grades of South African coal, causing API#4 (South Africa) to remain out of sync with API#2 (Northwest Europe) and FOB Newcastle (Australia) prices.

Financial Stress Stable

The S&P 500 gained on the week after a slight decline the previous week. It has now posted gains the past eight of nine weeks. Most of the other key indicators improved. The yield of the BAA-rated corporate bond has continued to decline. Commodities, including total, energy and ex-energy, were higher on the week. The Cleveland Fed released its inflation expectations series for April, which showed a raise for all maturities.

Ethanol Manufacture Plummets

U.S. ethanol production plunged 38 MB/D last week to a six-month low 938 MB/D as more plants reduced output to perform annual maintenance.

Producer Selling Opportunity

Fundamentally there is still no reason to own these markets, but the power of money flow was on full display last week after a mundane WASDE on Tuesday. Planting conditions and soil moisture profiles were impressive for many we visited in the Midwest. Planters were starting to roll late week and should be out in earnest by the weekend. Planting in Iowa and Missouri was ahead of pace this past week while others are just biding some time while watching the impressive rally.

Japanese Crude and Product Stocks Build, with Weaker Demands

Crude runs were modestly lower and crude imports remained around 3.8 MMB/D, which built stocks 2.8 MMBbls. Finished product stocks built with increases in gasoline, gasoil, and kerosene. Naphtha stocks continued to decline. Gasoline demand fell back from strong levels with much lower yield, and stocks posted a minor build. Gasoil demand also fell back with much lower yield and a drop in exports, such that stocks built similarly to gasoline. Kerosene demand again declined seasonally. Refining margins remain good, but have eased. All the cracks gave ground on the week.

Shoulder Season Stockpiling Threatens Early Entrants

With NYMEX prices challenging $2/MMBtu earlier in the week, or ~25% higher than last month’s lows, cautious optimism might be returning to the market. Signs of slowing domestic production and recent “tightness” revealed in early April storage reports have arguably fueled more bullish sentiment than the prior month, when Henry Hub (HH) cash traded $1.49/MMBtu. The lethargic pace of restocking thus far, i.e. ~2.5-3 BCF/D less than 2012, has provided fodder to those looking to build opportunistic length. Should such tightness continue, gas prices would naturally recover to levels more aligned with lifting costs. However, extrapolating early-season tightness is probably unreasonable given looser shoulder season balances.

April Weather: U.S., Europe and Japan Warm

At midmonth, April looks to be warmer than normal (-7%) in the three major OECD markets with a net effect on oil-heat demand to be -91 MB/D. On a 30-year-normal basis, the markets are almost 17% warmer.

Upside Surprises for China, But Downbeat Data from the U.S.

In China, the first quarter GDP reading matched the market’s expectation exactly. Underlying data from four key sectors (manufacturing, housing, consumer spending, and trade), on the other hand, were better-than-expected, and indicated a strengthening in the economy’s momentum. These improvements owed significantly to the Chinese government’s recent policy stance on credit creation. In the U.S., the latest industrial production data disappointed significantly, but manufacturing is still expected to strengthen in the coming months.

Asian Demand Update: China and India Pushing Faster Growth

PIRA's latest update of Asian product demand shows improved growth due to acceleration in China and India. China and India show combined growth of over 1 MMB/D, a pickup from the last update and incorporating the latest three-month actuals through March. China posted growth of 528 MB/D (vs. 394 MB/D in last update) and India was higher by 528 MB/D (vs. 358 MB/D, previously).

Fracking Policy Monitor

President Obama has taken aim at regulating methane emissions from the oil and gas sector, announcing new EPA regulations for existing oil and gas sources but leaving follow-through to the next administration. 2016 Presidential candidates have shown predictably opposing views on the importance of fracking along party lines. The USGS released its seismic forecast, for the first time taking account of induced quakes, prompting policy discussion on the state level. Oklahoma is likely to continue with its current voluntary compliance scheme despite increased quakes, lawsuits, and a difficult business environment. Limits on local control remain a key issue in Colorado and West Virginia.

Iran Set to Lower Petrochemical Gas Feedstock Price

Iran is preparing to cut the price of natural gas as a feedstock for petrochemical plants for the next six months, the deputy minister of oil for planning and supervision of hydrocarbon reserves Mohammad-Mehdi Rahmati said on April 11. He said that the final price hasn’t been set yet, but it would be announced in a week. It will be the first time for two fiscal years that Iran has cut the gas price for petrochemicals despite falling oil prices since mid-2014.

Electric Vehicle Outlook: Tesla, Batteries, and the Transport Fuel-Power Intersect

Tesla Motors unveiled its all-new Model 3 electric vehicle on March 31, 2016, attracting a record-breaking number of pre-orders. PIRA does not view Tesla’s new vehicle and pre-order announcement alone as reasons for adjusting the short- or long-term outlook, which already models significant growth in plug-in electric vehicle (PEV) sales after 2017. Nevertheless, competitive pressures from additional PEV models, the downward trajectory of battery costs, and upcoming Environmental Protection Agency (EPA) standards review will be important trends to watch over the medium term.

PIRA Expects Record Summer Gasoline Demand, Albeit with Lower Hydrocarbon Portion

PIRA expects gasoline demand this coming summer to finally exceed the peak period of 2006-2007. Demand had fallen sharply following a period of high prices and weak economic activity. The increased use in ethanol, however, means the hydrocarbon portion of demand this summer will be down from previous peaks. From the refiners' perspective, this fact is mitigated by a significant reduction in net imports of total gasoline, requiring record production this summer to meet domestic and export demand.

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.

Secretary of the Interior Sally Jewell and Director of the Bureau of Safety and Environmental Enforcement Brian Salerno have announced final well control regulations to reduce the risk of an offshore oil or gas blowout that could result in the loss of life, serious injuries or substantial harm to the environment. The regulations represent one of the most significant safety and environmental protection reforms the Interior Department has undertaken since Deepwater Horizon, and builds upon a number of reforms instituted over the last six years to strengthen and modernize offshore energy standards and oversight.

- Final Well Control Rule

- Final Well Control RIA

- Reforms Since Deepwater Horizon

- Well Control Final Rule Fact Sheet

Bibby Offshore’s Norway division, Bibby Offshore AS, has successfully secured its first contract in the region with ConocoPhillips Skandinavia.

Managed from Bibby Offshore’s Stavanger office, the workscope involves project management, installation engineering, procurement and subsea installation works, related to maintenance activities on the Norpipe Oil pipeline.

The contract is due for completion in Q3 2016 and will utilise the construction support vessel Olympic Ares to support operator ConocoPhillips on integrity management of the Norpipe Oil pipeline between the Ekofisk area and the Teesside facility in United Kingdom.

Olympic Ares. Photo credit: Bibby Offshore

Arne Lier, Managing Director of Bibby Offshore Norway, said: "We are delighted to have secured our first Norwegian contract with a leading E&P company such as ConocoPhillips.”

This award not only demonstrates that Bibby Offshore has the necessary capabilities to provide the service and support required in the Norwegian sector. It also highlights that in a highly competitive market the company is a strong option at a time where value is paramount.

“Over the years, Bibby Offshore’s international divisions have successfully secured regular and repeated work with a number of operators. Our goal in Norway is to grow and develop the business in a similar way by successfully delivering on projects safely and efficiently, and to develop our reputation as the go-to subsea service provider for the region,” concluded Mr. Lier.

Statoil together with operator Repsol Sinopec and partner Petrobras has completed the Gavea A1 well in the ultra-deep pre-salt block BM-C-33 in the Campos basin in Brazil.

The well encountered a hydrocarbon column of 175 meters in a good-quality reservoir of silicified carbonates of the Macabu formation.

The well reached a total depth (TD) of 6,230 meters and was successfully tested producing around 16 million standard cubic feet (scf) of gas and 4,000 barrels per day of oil (32/64” choke).

Map image courtesy: Statoil

This is the fourth appraisal well in the license, which comprises the Seat, Gavea and Pão de Açucar (PdA) discoveries. In 2013-2015 the consortium drilled and tested the Seat-2, PdA-A1 and PdA-A2 appraisal wells.

With Gavea A1 the consortium has finalized the appraisal activities in BM-C-33 and will now evaluate the sub-surface data and assess lean and cost-effective development concepts.

Repsol Sinopec Brasil (35%) is operator of BM-C-33 with Statoil (35%) and Petrobras (30%) as partners.

As announced in December 2015, Statoil will take over operatorship of the license. This is expected to happen in the third quarter of 2016, subject to the approval from Brazilian authorities (ANP).

In 2015, Russian onshore drilling bucked global activity trends and reached record highs. Depreciation of the rouble cushioned the Russian oil industry, incentivizing operators to boost activity and pay for services in roubles while gaining dollars on international markets. Last year, the global number of onshore wells drilled decreased 31%, yet the Russian market – notable for its comparative resilience – experienced year–on–year growth of 6%.

Unfortunately, 2016 is not shaping up to be a bumper year. Onshore drilling within the country is expected to fall, as major operators reduce capital expenditure to cope with a “lower for longer” price environment. As operators focus on maturing fields in Western Siberia and Volga-Urals, the industry will need to embrace new trends in drilling in order to maximize production.

DW expects any recovery in onshore drilling activity to be predominately driven by an increase in horizontal wells. Vertical wells drilled in Russia are expected to grow modestly at CAGR 3% through to 2020, however, growth in horizontal wells drilled is anticipated to be robust – CAGR 14%. Horizontal wells take longer to drill and require comparatively higher specifications (hookload and drawworks ratings). This is expected to boost demand for >1250HP rigs – sheltering both utilization and dayrates.

Indigenous contractors – led by Eurasia Drilling and Rosneft – continue to lead the market, accounting for approximately 93% of the total fleet. Low horsepower rigs (<1250HP) dominate Russia’s active rig fleet, accounting for an estimated 80% of the total identified fleet. This trend is anticipated to reverse over time as demand for >1250HP rigs increases. Current market trends suggest that contractors with greater portion of >1250HP rigs in their portfolio are likely to be well positioned to take advantage of any recovery.

Iva Brkic, Douglas-Westwood London

Amec Foster Wheeler has announced the appointment of Eoin Quirke as President, Asia Pacific. Effective immediately and based out of Singapore, Eoin will report to Roberto Penno, Group President for Asia, Middle East, Africa & Southern Europe (AMEASE) region.

Prior to his appointment, Eoin was AMEASE Project Delivery Director. Since joining Amec Foster Wheeler in 1989, his career has included a variety of roles in Country Management and Project Management. Eoin has more than 15 years of experience in the Asia Pacific region and has successfully delivered projects and solutions for a very broad range of locally based and international customers in the region.

Roberto Penno Group, President for Asia, Middle East, Africa & Southern Europe for Amec Foster Wheeler said:

“This region has vast opportunities and is central to Amec Foster Wheeler’s strategic development plans. Eoin’s deep understanding of the region and his invaluable expertise will play a key part in realizing our ambitions to become contractor of choice to owners and operators throughout Asia Pacific, and deliver growth in line with the quality of our offering.”