MacGregor, part of Cargotec, has won an order to supply highly-specialized winches for a pilot project using an innovative system that generates electricity from waves.

Materia Inc., a leader in the development and manufacture of catalysts and advanced polymers, is pioneering the next generation of oil and gas solutions with Proxima® thermoset resins.

Proxima resins provide reliable, practical and economical solutions that solve major technology challenges in subsea thermal insulation, subsea buoyancy and downhole tools. Proxima resins are extremely easy to process due to their inherently low viscosity and controlled cure profile. The resulting durable products are ideal for use in extreme environments. Compared with commonly used polymers, Proxima thermosets withstand the most extreme hot/wet conditions and provide excellent performance.

Proxima HTI resins for high temperature subsea thermal insulation provide an effective thermal barrier between high temperature flowlines and seawater. Proxima polymers maintain structural integrity in operating environments at water depths greater than 10,000 ft., and this advanced insulation technology can be rapidly and safely applied in the factory or the field. Earlier this year, Materia was selected by Shell Offshore, Inc., a wholly-owned subsidiary of Royal Dutch Shell plc, to supply pipeline insulation materials for the Appomattox development in the deepwater Gulf of Mexico.

Brian Conley, senior Proxima product development manager, said, “Materia’s subsea thermal insulation products offer full system integrity for high temperature deepwater environments. The use of Proxima HTI polymers results in lower risk and better reliability for insulation of high temperature subsea flowlines, field joints and equipment relative to the alternative engineered solutions.”

Proxima STR thermosets are designed for use in syntactic foams in subsea buoyancy applications. These lightweight materials withstand the severe hydrostatic pressures of deepwater and ultra-deepwater environments while providing substantially improved buoyant support to critical subsea components. Ed Lehman, Proxima product development manager, said, “Proxima STR resins offer reliable manufacturing, state-of-the-art properties and improved long-term performance, delivering benefits throughout the value chain.”

Daryl Allen, Proxima product development manager, said, “Proxima HPR casting resins offer thermal stability and toughness with fast and easy polycrystalline diamond compact (PDC) or tricone drillability for many downhole applications. When long fiber composite performance is required, Proxima ACR infusion resins offer exceptional performance with fiberglass and carbon fiber. These bring improved thermal stability, corrosion resistance and reliability when compared to standard composite materials. Both the HPR and ACR systems provide superior materials that solve today’s downhole challenges.”

Materia supports its customers with application engineering services provided from its state-of-the-art prototyping and polymer testing facility in Pasadena, CA.

As an indicator of the turmoil that has hit the US oil & gas services sector the Baker Hughes rig count is hard to beat. From 1,931 rigs drilling in September 2014 the count has declined to a total of 408, dramatically reducing activity and jobs for drillers, service companies and suppliers alike.

Unconventional activity has been hit hard. Higher horsepower rigs, ever-longer laterals and costly stimulation services increased well costs by millions of dollars compared with conventional, vertical wellbores. Despite impressive cost savings across the US, non-core unconventional assets have been among the main casualties of the current energy crisis. Even core areas of the prolific Eagle Ford and Williston Basins saw market declines in active rigs.

Those declines may have finally hit bottom. The last four Baker Hughes rig count updates have horizontal rigs targeting oil at 248, 249, 249 and 257 units. Larger unconventional drillers have stated that $50/bbl WTI will be enough for them to add rigs to the fleet, albeit in modest numbers, a price now within reach. While vertical rigs continue to decline slightly, the US service sector has now reached, or very nearly reached, what appears to be the trough. This is good news for oilfield employment with data suggesting up to 200 workers are employed for each active rig, either directly or indirectly.

While the unconventional oilfield services and new equipment sectors appear to have finally hit the lowest point in the cycle, their path to profitability remains distant. The balance of 2016 is set to remain testing as the unconventional rig count grinds upward.

Matt Loffman, Douglas-Westwood Houston

Ardyne, provider of specialised plug and abandonment and slot recovery technology and services to the global energy industry, has appointed Paul Warwick as a non-executive director and Adrian Bannister as chief financial officer.

In a move that underpins the company’s drive to challenge current models for decommissioning, both Mr. Warwick and Mr. Bannister will play crucial roles in Ardyne’s ambitious growth plans.

Paul Warwick, Adrian Bannister

Mr. Warwick has many years of successful experience in the international oil and gas industry. Spending more than 30 years at ConocoPhillips, he was a regional president for Europe, Africa and the Middle East, before moving to Talisman Energy Inc. where he was the Executive Vice President for Europe, South America, North Africa and the Middle East, as well as being responsible for the company’s corporate technical functions. He was also the Chairman and interim Managing Director of TalismanSinopec and co-chair of Oil and Gas UK.

He will play a wide role in Ardyne addressing issues affecting the growing decommissioning market including guiding the company as it grows to meet the needs of both government and operators.

Mr. Warwick said: “Ardyne is a focused technology and development company that will operate in the important sub-surface decommissioning area of the global oil and gas sector. As global decommissioning activities increase, those involved are facing ongoing technical challenges to deliver the service. Lower cost and more effective solutions are needed and we believe that Ardyne’s technology and approach can offer our customers real possibilities to be more efficient and effective in areas such as slot recovery and full well bore decommissioning.”

Mr. Bannister has more than 20 years’ experience in oilfield services. Working at senior levels with a number of private equity backed companies, including Sparrows and Viking SeaTech, he brings a wealth of knowledge in M&A, change management, and internationalisation.

Commenting on his appointment, Mr Bannister added: “Ardyne is all about delivery and its ethos of faster, simpler, better is absolutely aligned to what our customers want and need. The market potential of this organisation is matched with very ambitious growth plans and a team with the experience, knowledge and commitment to redefine the current thinking around plug and abandonment and slot recovery.”

“There is a real focus on delivery and project execution at the heart of this organization,” continued Mr. Warwick. “Add to this its commitment to technology advancement and we offer a material value adding proposition. This is an organisation that has been established in the hard times currently affecting our industry so its dynamism, flexibility and absolute focus on reducing rig time, in my view, fits the demands of these times and the pressures facing all industry stakeholders.”

Having launched in early 2016 and quickly acquiring Norwegian oil services company Wellbore AS, Aberdeen-headquartered Ardyne is already working on a number of projects in the UK and Norwegian North Sea.

Ardyne chief executive officer, Alan Fairweather said: “We are absolutely delighted to welcome Paul and Adrian to Ardyne. Paul brings the operator perspective to our business, which complements the service-driven mentality and background of our management team. Adrian’s vast experience in successfully growing international organizations, plus a proven track record in delivering exceptional performance and shareholder returns gives our team considerable strength.

“Together, we will deliver on our promise to bring our customers the new technology and service approach they need to optimize operations, cut costs, reclaim rig time and unlock the long-term value of brownfield resources.”

Ardyne develops and supplies specialised technology and services to the global energy industry, focusing on reducing rig time spent on downhole casing removal in Slot Recovery and Plug & Abandonment operations. Technology advancement lies at the core of Ardyne, combined with decades of operational experience and responsive, client-focused delivery.

Dynamic Industries, Inc., (Dynamic), a leading fabrication and service provider to the global oil, gas and energy industries, announced the completion of the 500 ton production platform and 300 ton jacket refurbishment, achieved by accelerating delivery dates accomplished by utilizing Dynamic's large inventory of used structures, and in doing so the client realized significant savings in cost and time. The Nene’ field, which is expected to contain 140,000 BOE/d was discovered by ENI in August 2013. Dynamic, who maintains one of the largest inventories of offshore structures in the Gulf of Mexico, was able to reduce the schedule to first oil by as much as 60% by using a production platform and jacket from its inventory.

Jeff Clement, COO of Dynamic Industries, Inc. US Fabrication Division, stated, "In today's low commodity price environment, offshore fields that are challenged from a budget and schedule perspective can benefit greatly from utilizing our large inventory of offshore structures. Our client saw significant savings by utilizing used structures. In addition, the environmental advantages of a closed loop system, where platforms and jackets removed by Dynamic and its partners are refurbished and returned to active use, provides another example of continued commitment to both the environment and reserve replacement."

Business acquisition of EMO Marine Technologies Ltd. (EMO Marine) consolidates MacArtney’s presence on the Canadian east coast. Acquiring the sound and well-established Canadian company ensures optimum positioning of the 6th regional operation in the North American market.

Canadian manufacturer of subsea communication systems, EMO Marine, is the latest acquisition of the MacArtney Group. EMO Marine is a technology company founded in 2012 specializing in engineering and manufacturing of a range of fiber optic video/data transmission systems appropriate for various marine and subsea applications.

MacArtney sees great potential in the ever growing marine sector on the east coast of Canada which is centered around Nova Scotia. The acquisition executes MacArtney’s commitment to being a global provider of underwater technology solutions with strong local presence.

Founder and President of EMO Marine, Tom Knox: EMO Marine and all of our EMO Marine team look forward to becoming part of the MacArtney Group. The company has a strong global reputation and history of providing best-in-class subsea products, technologies and integrated systems. We therefore all expect to be able to increase business in the Atlantic Canada territory.

Along with maintaining manufacturing of the current EMO Marine product line, MacArtney Canada Ltd. will be responsible for marketing and selling the entire MacArtney product and service portfolio, including some agency products.

International expansion is part of MacArtney’s expressed strategy. EMO Marine is a sound and well-run company which is well-established in our core activity field and fits in well with the rest of the MacArtney Group, says Niels Erik Hedeager, CEO of the MacArtney Group. We see many similarities between the two companies and considerable potential for creating synergies between EMO Marine and MacArtney’s other subsidiaries and activities.

In addition to enhancing the global presence of the MacArtney Group, EMO Marine/MacArtney Canada Ltd. will significantly boost the company’s product offerings in the various markets approached so far.

Being a privately owned corporation with group headquarters in Esbjerg on the west coast of Denmark, MacArtney has supplied underwater technology products and engineering solutions for almost four decades.

Aker Solutions is making good progress in reaching a goal of boosting cost-efficiency in all areas of the company by at least 30 percent as part of a broader effort to strengthen its competitiveness amid current market challenges.

A quarter of the targeted improvement will be achieved this year, helping to achieve potential annualized cost-savings of at least NOK 9 billion by the end of 2017, based on the 2015 cost base and work volumes. The improvements are expected to speed up next year as longer-term processes take hold.

"We're simplifying how we work and standardizing our products and services to drive through savings and become more competitive," Chief Executive Officer Luis Araujo said in a presentation Tuesday to investors in Fornebu, outside Oslo. "These efforts are supporting our margins and we are winning new work through increased collaboration with customers and industry participants on key projects and technology."

Aker Solutions over the past two years formed alliances with peers including Baker Hughes, ABB, MAN Diesel & Turbo and Saipem. They span the entire subsea value chain from the reservoir, to the seabed and up to the topside. These are partnerships with leaders in their fields whose competence and technology complement Aker Solutions' subsea capabilities.

The company on Monday announced a contract valued at more than NOK 1 billion to deliver its longest-ever umbilicals system at the Zohr gas field offshore Egypt. Today it announced a three-year contract extension from Total to provide maintenance and operations services at the Elgin and Franklin fields in the UK North Sea. This work is valued at more than NOK 400 million.

"We have a healthy order backlog and solid financial position underpinned by our continuous improvement efforts and consistently strong execution on major projects worldwide," said Araujo. "We are building on all of this with key collaborations that boost our competitiveness, particularly in the subsea area."

CORTEC, a leading manufacturer of high quality API compact ball valves and manifolds, has expanded its CORTEC Manifold Systems (CMS) Lafayette manufacturing facility and relocated to new premises in Port Allen, Louisiana.

According to Stephen Corte, vice president of CORTEC, the move was necessitated to support the company’s growth initiatives and increase in customer demand. The facility now supports a full range of CORTEC’s service operations, including: sales, engineering, quality, machining, product assembly and testing, inventory and coating.

“This expansion is a testament to CORTEC’s product quality and customer service,” said Corte. “The enhancements we have made to this manufacturing facility are a direct result of our commitment to improving customer support, increasing product quality, expanding product capacity and extending market share.”

The 55,000 square-foot facility is equipped with specialized machinery capable of manufacturing high pressure metal-seated ball valves and testing equipment designed for severe service applications. The location has capacity for 35 employees, but additional acreage and building plans are in place to expand and accommodate four times that number, which will support continued growth and expansion over the next several years.

EMC has taken orders to supply VSAT equipment and services for seven platform supply vessels in the North Sea as part of a four-year fleet agreement with GulfMark (Norway).

The scope of supply for each vessel includes a 60-inch Ku-band stabilized antenna and below-deck terminal interfaced with the ship’s network and third-party GSM voice system. EMC will also provide the satellite airtime for crew welfare and mission-critical voice and data communications. The installations will take place over the next 12 months as the vessels become available.

“GulfMark’s vessels operate in an extremely demanding market segment with rigorous requirements for uptime, connectivity, bandwidth, data throughput and content,” said Gilles Gillesen, president of EMC’s commercial marine business unit. “Our global fully-meshed network of overlapping Ku-band satellite footprints with automatic beam switching ensures continuous uninterrupted connectivity. Our unique patented technologies provide mission-enhancing communications for the ships’ business and an unparalleled Quality of Experience (QoE) for their crews. In addition, our global service organization provides rapid-response support 24/7 wherever the ships are operating.”

“We have been providing VSAT for GulfMark Norway for a number of years on a ship-by-ship basis. This new fleet contract extends and expands that business relationship,” Gillesen added. “This important win is a testimony to our uncompromising commitment to delivering value and providing unmatched customer support and service.”

ACE Winches, a leading global deck machinery specialists, has been awarded a six-figure contract with an operator to support in connecting the Hebron gravity based structure (GBS) and topsides.

The project will see ACE Winches supply hydraulic drum winch packages for the deep-water Hebron oil field located off the coast of Newfoundland and Labrador in Canada, working at depths of 95m. The contract will include all winches, ancillary equipment and skilled personnel for the project.

ACE Winches will provide ACE 40 ton WLL hydraulic drum winches, two ACE 12.5 ton WLL hydraulic drum winches, a dedicated diesel hydraulic power unit for each winch and running line monitors to provide line and load monitoring.

Alfie Cheyne, CEO, ACE Winches said: “We are thrilled to have been awarded this contract and look forward to working closely with our client in the coming months. ACE Winches has a successful track-record of projects in the region and we look forward to building on this success with the Hebron project.

“We pride ourselves on the ability to provide cost-effective and bespoke winch packages for our clients and we are delighted to have created a solution specific to their needs.”

The contract marks further work on the Hebron project for the company; in 2014 the company supplied a range of winches for use in the dry dock to tension the installation as it transitioned from dry dock into open water. The winches were then used to keep the GBS in position during the manoeuvre process.

A new branch of the Fugro Academy Training Centre has been established in Abu Dhabi. The inauguration ceremony on 25th May was led by Mr. Samir Al Gharbi, GASOS General Manager, who was presented with a plaque of appreciation by Fugro management.

Located in the heart of the Middle East, the new Fugro Academy Training Center comprises three training suites, an engineering workshop, a simulation suite, a 7-function manipulator trainer and offices. It also has direct access to Fugro’s own quayside and equipment within the base area. Hundreds of Fugro staff from around the world, along with clients requiring specific training, are expected to visit the center each year.

Presentation of plaque by Massimo Brebbia, Fugro Subsea MD to Mr. Samir Al Gharbi, GASOS General Manager with Chris Blake, Director FS

The Fugro Academy was created in 2006 as a global group-wide standardized training initiative to develop staff and support recruitment. It provides office-based and field staff with both instructor-led practical courses and online hosted e-learning modules on a variety of technical, HSE and business-related topics. To date the Fugro Academy has presented over 1,500 trainer-led courses, training more than 12,000 staff from the many countries where Fugro has a presence. “Following the success of the Fugro Academy in Plymouth, which focuses on survey training, we decided to create a subsea training centre, to work in partnership with our UK colleagues,” explains Subsea Division Training Manager, Darren Walley. “Locating the facility alongside our highly successful ROV training centre here in Abu Dhabi builds on Fugro’s close ties with the United Arab Emirates and brings us the benefits associated with an abundance of local specialist personnel and equipment suppliers.”

Video available.

Intellian Technologies, a leading provider of stabilized maritime satellite antenna systems, has opted for knowledge and experience in its latest senior appointment, in a strategic move designed to assist ship-owners during a transformative period in maritime and offshore communications.

Ken Champagne, who has more than 25 years of experience in delivering electronic technologies to the Energy sector, becomes Intellian Senior Director, Americas Sales, overseeing Intellian’s sales activities in the Americas.

With a career path including offshore specialists Datacom, Stratos, CapRock, RigNet and Tampnet, Ken will bring vital client liaison and sales support expertise in complex connectivity issues, to maritime users as they undergo a communications revolution of its own.

“Ken’s appointment comes at a pioneering moment in maritime communications,” said Eric Sung, Intellian President and CEO. “As the largest global supplier of satellite communication terminals in the marine sector, and with our close ties to Inmarsat, Marlink and others, Intellian is set to consolidate and extend its lead in this market. Ken will be instrumental in this process.”

Chet Morrison Contractors announces a new tool for cleaning drilling and production risers that is safer, faster and more cost-effective than current methods. MUDBUG is an air-actuated, self-propelled device that uses oscillating brushes to clean debris build-up inside risers, moving through the length of the riser and back out again.

“MUDBUG is a giant leap forward in deepwater riser cleaning,” said John DeBlieux, vice president of Deepwater Riser Services for Chet Morrison Contractors. “It’s not only more cost-effective and safer, it’s also better for the environment and customer’s bottom line.”

Unlike other methods, MUDBUG does not require high-pressure water to remove the rust, scale and drilling mud that builds up in drilling and production risers. Instead, MUDBUG uses only 120-psi air to operate, thus eliminating the problem of water disposal and risk associated with high-pressure washing.

MUDBUG can be operated by a two- or three-man crew instead of the usual five-man team required to clean a riser. Because the device is portable, it can easily be transported via plane or helicopter to any remote location either onshore or offshore. Its small job box (two feet by four feet) takes up very little space, making it ideal for rigs or other offshore operations. When operational, MUDBUG is approximately three feet long and 19 inches in diameter.

The “MUDBUG” name was inspired by the crawfish, which pushes back mud and debris to make its home. It has been successfully tested and used in the offshore environment by major drilling contractors. The device comes with an extra motor and all brushes, and is available exclusively through Chet Morrison Contractors in the United States, Gulf of Mexico, Caribbean and Trinidad. For more information, visit www.mudbugrisercleaner.com.

N.A. Crude Stocks Fall on Wildfires, Refiner Demand

Canadian oil sands production losses from last month’s wildfires, along with declining U.S. production, led to stock declines and higher crude prices last month, particularly for Western Canadian and Bakken grades. In addition to stock declines in Canada, U.S. crude stocks fell 10 million barrels in May, and are forecast to drop another 90 million barrels through year-end, including a 20-25 million barrel decline in Cushing.

U.S. Gas Market Heats Up

NYMEX price volatility had been muted, due in large part to residual weakness still plaguing the physical markets in all regions, particularly in the case of Henry Hub (HH) in the South. Both futures and cash prices, however, should heat up sooner rather than later with the cooling season now getting under way. While U.S. storage inventories are more akin to Labor Day than Memorial Day, especially in the South Central, seasonally stronger electric generation loads will highlight the increased structural reliance on gas-fired EG and help stifle congestion worries — for the time being at least. As a result, a stronger bid should underpin cash prices not just for HH, but across the South despite ongoing challenges facing the Midwest and Northeast.

Runoff Peaks Early…Again

Reversing recent weakness, Mid-Columbia on-peak rebounded to the mid-teens as hydro output came in below expectations. SP15 also increased, climbing back above the $20 mark as the discount to NP15 narrowed. The latter market was unchanged as California hydro output reached a three year high. Palo Verde was also unchanged as cooler-than-normal conditions again prevailed in the Southwest. Mid-Columbia summer heat rate forecasts have been revised up due to weaker runoff expectations. Unavailability of Aliso Canyon for gas supply balancing in SP15 remains a bullish wildcard for summer.

Coal Prices Move Higher on Oil Market Rally

Both physical and paper prices moved higher this month, with a strengthening oil market providing much of the stimulus for coal pricing. We look for coal pricing to continue to track the oil market over the next several months, although coal supply and demand fundamentals are expected to continue to tighten, and we retain a bullish outlook for 2017 pricing in particular.

RGGI Auction Dominated by Compliance Buying

As PIRA expected, the June RGGI auction was dominated by compliance-oriented buying and reinforced the lower pricing environment of late. In contrast to recent undersubscribed CA/WCI auctions, a strong coverage ratio of 3.1 was observed. As with the March auction, significant bid quantities were observed at low prices; however, the results demonstrated solid price support well over $4. PIRA continues to expect that the 2016 RGGI Program Review will translate to tighter caps post-2020 and provide price support.

Global Equities Post a Neutral Week

Global equities were, on balance, only modestly changed. In the U.S., the broad market was unchanged, though certain sectors posted strong gains, including utilities, consumer staples, and materials. Energy lagged and was lower by 0.8%. Internationally, the strongest performers were BRICs, emerging markets, emerging Asia, and China.

Propane Inventories Enter a Year-on-Year Deficit

Despite a modest weekly build of 1.4 million barrels, propane inventories fell into a 280 thousand barrel deficit to the previous year. Between the end of June 2014 until the week ending on May 20th, propane stocks had been in a constant annual surplus position. PIRA believes that the reversal into a year-on-year decline in stocks is evidence of a change in direction for the propane market. Not only will prices begin to rise and strengthen against broader energy markets, but exports will decline while stocks continue to fall further into deficit.

U.S. Ethanol Prices and Manufacturing Margins Rise in May

The demand for ethanol blended gasoline was robust as the peak driving season approached. At the same time, plants were shut down for spring maintenance.

New Week, New Highs

A WASDE week starts with new highs of $4.25 in new crop corn, $11.00 in new crop soybeans, and a recent Financial Times story touting “commodities (as) the best performing asset class” of 2016. While UK-based pension player Schroders said they have invested their “entire agriculture allocation” after “years and years” of negativity, U.S.-based PIMCO relayed a much more neutral view of commodities in general. As usual, comments around “free money” chasing “returns” in commodities are concerning. Regardless of investor opinion at this point, one look at the positioning of sell orders in the marketplace shows that producers are rewarding this most recent rally, specifically in corn.

Latin America Under Economic Pressure

Consumption of diesel in Latin America is expected to fall vs. 2015 while gasoline stays flat. Diesel demand is expected to contract by 50 MB/D in 2016 to reach 2,850 MB/D led by decreases in Venezuela (20 MB/D) and Brazil (35 MB/D). Imports of diesel into the region are set to be lower in 2016 while gasoline imports stay flat. PIRA projects 2016 Latin American imports of distillates to be around 915 MB/D, about 45 MB/D lower year-on-year. Regional refinery crude runs are projected to track the 2015 average of ~5,600 MB/D. Operational issues continue to affect Venezuelan crude runs: we project throughput to be 550 MB/D in May and 660 MB/D on average for the year. 2016 Brazilian refinery runs are projected to be 1,950 MB/D, down from 1,985 MB/D in 2015 as incentives to import gasoline and diesel remain attractive. Gasoline demand in the Atlantic Basin is good and should support cracks throughout the summer, but production and imports into the U.S. PADD I are high. Diesel cracks are starting to improve and are projected to gradually recover into the fall.

The Invisible Hand: Non-Core Domestic European Gas Production?

Much attention is paid to British, Dutch, and Norwegian gas production, but what is happening outside these main centers in “non-core production” does stack up and should not be ignored. Surprisingly, it adds up to a significant amount. Not surprisingly, it is slowly moving in the same direction as most other European gas production – down.

Rebound Continues Due to Fuel and Evidence of Supply-Side Response

German Calendar 2017 baseload power prices continue to move up, recovering to levels previously seen at the end of December and early January, and moving closer to the forecasts in our latest Monthly Outlook. While a buoyant fuel pricing complex is driving the price recovery, the balances in Germany and the rest of Europe are slightly tightening, as supply is starting to be negatively impacted by squeezed margins and policy intervention is starting to move directionally in favor of conventional generators.

Tighter Atlantic Balances, Higher Oil Prices Push Coal Higher

Coal prices again made sizable gains last week, with Atlantic Basin prices moving particularly higher. Rising oil prices again provided for much of the increase, although there has been some tightening in Atlantic Basin coal balances of late, which explains the relative rise in API#2 (Northwest Europe) and API#4 (South Africa) relative to FOB Newcastle (Australia). PIRA's prevailing market view has been that deferred pricing is undervalued and that backwardation in the forward curve is misplaced. Weakness in demand will keep a lid on further price increases over the near term, but as long as the oil marker keeps rising, coal prices will be pulled along.

What Does Weak U.S. Job Report Mean for GDP and Fed Policy?

The latest report on U.S. nonfarm payrolls disappointed, and a sharp deceleration in the recent pace of job growth raised two questions: what does this mean for the economic growth outlook, and what is the Fed likely to do now? Outside the U.S., the European Central Bank’s latest economic projections hinted at future monetary easing; the Japanese government directionally eased fiscal policy; and recent activity data from India, Brazil, and Russia turned encouraging.

Inventories Drop to 2016 Low

Production increased as plants returned to normal operation. There was a large build in PADD I.

Soybean Run Continues

“’Over’? Did you say ‘over’? Nothing is over until we decide it is!" Movie fans will remember this famous line from Animal House, wherein it was delivered by a seventh-year college senior named Bluto, played by John Belushi. Soybean longs seem to be channeling their most-inner Bluto this week as prompt beans have tacked on an additional dollar since the weekly low just this past Wednesday. The total gain for July beans now stands at $2.50+ in less than two months of trading.

U.S. Commercial Stocks Show Big Decline

Overall commercial inventory fell by the most since mid-February. The decline of over 2.7 million barrels was nearly equal to the combined drops over the previous three weeks. Both crude and product stocks fell by roughly the same amount, with crude down by 1.37 million barrels.

Ukraine Looks to Shore Up Future Gas Supplies

State owned Naftogaz Ukrainy is inviting companies to tender for contracts to supply gas, which will be awarded in the period from June 20, 2016, to January 20, 2017, it said on May 27. This will involve buying gas using Ukraine’s interconnections with the European Union, although it is open to companies or consortia from any country. It has also invited companies and consortia to apply for prequalification for gas supplies, by a deadline of June 10, but it says that "In order to maximize the number of qualified tenderers under this facility, new applicants may apply for prequalification throughout the duration of the facility."

U.S. Labor Market Slows

A surprisingly sluggish U.S. labor market report for May has affected expectations for future Fed policy, and the dollar weakened against most key currencies. The labor market disappointment should be directionally negative for risk assets, but reaction was apparently muted on Friday. On a weekly average basis, sensitive financial market indicators that we track (such as the S&P 500 index and the high-yield corporate bond index) registered week-on-week gains. In commodity markets, metal prices generally moved lower this week, while prices of agricultural goods moved higher.

Japanese Crude Runs Fell, Imports Rose and Stocks Built

Crude runs fell again amid turnarounds and unplanned outages that have yet to restart. Crude imports rose and stocks built 3.3 MMBbls, about half of the decline seen the previous week. Finished product stocks fell and the decline was underpinned by good draws for jet fuel and gasoil. Gasoline demand was strong, but an equally high supply side led to only a fractional stock draw. The kerosene stock build rate moved up from 75 MB/D to 93 MB/D on seasonally weaker demand. Refining margins have begun to improve a bit, but remain soft. On the week, major light product cracks firmed, while fuel oil and naphtha eased.

Supply-Side Balancing Under Way

Beyond price-induced demand growth, accelerating production declines are playing an increasingly important role in limiting this year’s stock build. To be sure, this week’s EIA Crude Oil and Monthly Natural Gas Production report validates the supply-side balancing under way. More specifically, the EIA data for March indicated U.S. dry gas production was down M/M by ~1.3 BCF/D and up year-on-year by only ~0.1 BCF/D. These figures were in line with our estimates for the month.

March 2016 U.S. Domestic Production Decline Accelerates, Now Very Close to PIRA Estimate

DOE recently released its March oil balances. Domestic crude supply, which is domestic crude production plus the balancing item, fell 56 MB/D month-on-month and shows a year-on-year decline of 381 MB/D. In contrast, the weekly data had posted monthly equivalent rise of 237 MB/D, Mar. vs. Feb. This implies domestic crude supply was reduced 131 MB/D from what the weekly data had been showing. The balancing item has been running negative the last three of four months, with March coming in at -147 MB/D, after being -97 MB/D in February. PIRA has been pointing out that the DOE monthly collection methodology tends to overstate production since its survey universe lacks full coverage of smaller producers. It is the balancing item that reflects this bias and this is why PIRA adds it to reported production to estimate domestic crude supply.

Lack of Send-Out in N.W. Europe Reflects Weaker LNG Supply Growth and More Norwegian and Russian Gas

The lack of LNG send out in N.W. Europe will continue to act as a major support for NBP prices and, by extension, spot prices around the world. Stronger NBP prices have become the benchmark for LNG netbacks elsewhere, which is a theme worth repeating no matter how many times you see us write it.

U.S. March 2016 DOE Monthly Revisions: Demand and Stocks

DOE released its final monthly March 2016 (PSM) U.S. oil supply/demand data. March 2016 demand came in at 19.62 MMB/D. Growth again was particularly strong for gasoline (+3.8%, 344 MB/D), while the barrel average was up 2%, or 378 MB/D. Distillate and kero-jet both underperformed the barrel average. Distillate was lower by 2.1% versus year-ago, while weather in March was 17% warmer-than-normal and 37% warmer than last year, so there was an apparent influence from an HDD standpoint. Even at the end-of the season, such an impact on heating oil demand is calculated by PIRA as a reduction of 280 MB/D versus year-ago.

Anadarko SCOOP/STACK: Emerging U.S. Shale Play

The Anadarko SCOOP/STACK is emerging as a leading shale play with prolific well productivity, relatively high oil content, and superior netbacks. Breakevens are currently on par with the Permian and Eagle Ford ($45-50/Bbl) and stand to improve as operators further drive efficiencies. The play is still in the delineation phase, with much of current drilling activity focused on holding acreage. Full-scale development mode will likely start by 2018 as prices improve. We believe the long-term potential of the play is promising, with liquids production reaching 800 MB/D by 2030, from the current 180 MB/D.

Aramco Pricing Adjustments for July Indicate Saudi Is Not Pushing Volume

Saudi Arabia's formula prices for July were just released. There is no indication that Saudi desires to sell more oil into the market. Differentials into Asia were tightened for all grades expect Arab Extra Light, which was left unchanged. Pricing differentials for the U.S, were also tightened for all but the lightest grade, Arab Extra Light, whose differential was reduced $0.30/Bbl. For Europe, differentials were lowered for both Northwest Europe and the Med.

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

TWMA, a global leader in the provision of integrated drilling waste management and environmental services, has been awarded new contracts with a combined value of £500,000 for EfficientC^® skip and ship and onshore processing services.

One of the projects is for Zennor Pathway Limited (Zennor) and commenced in April 2016 with a duration of 90 days. This contract includes skip and ship services on the SEDCO 704 drilling rig in the North Sea.

Another project for LR Senergy on the Deep Sea Stavanger vessel, starts in April 2016 with a duration of 70 days.

Director of business development, Rob O’Neill, said: “We’re delighted to have been selected to support Zennor and LR Senergy on these projects. These awards complement our current North Sea operations and highlight our strengths and capabilities to provide integrated drilling waste solutions both on and offshore.”

Both contracts will utilise TWMA’s integrated waste management solutions for the provision of skip and ship services, which use the company’s EfficientC^® collection and distribution system to relocate drill cuttings and associated drilling wastes into bins. The bins are then transferred to TWMA’s central onshore processing facility for treatment, reuse or disposal.

Rob added: “The contract with Zennor is also testament to the hard work of our experienced, skilled team currently working on the SEDCO 704 rig, which has allowed us to continue our skip and ship service provision on this asset. We pride ourselves on our innovative technology and integrated solutions which allow us to provide the most effective drilling waste management services.”

BP has started up a major water injection project at its Thunder Horse platform, extending the production life of one of the biggest deepwater fields in the U.S. Gulf of Mexico.

Photo credit: BP

The project, which reflects BP’s strategy of continued investment in its existing deepwater Gulf of Mexico production hubs, will boost recovery of oil and natural gas from one of the Thunder Horse field’s three main reservoirs.

Over the past three years, BP refurbished the platform’s existing topsides and subsea equipment while also drilling two water-injection wells at the site. From those wells, water will be injected into the reservoir to increase pressure and enhance production. The improvements are expected to allow the Thunder Horse facility to recover an additional 65 million barrels of oil equivalent over time.

The project is the second of five major upstream projects BP expects to bring online in 2016. It is part of BP’s plan to add approximately 800,000 barrels of oil equivalent per day of new production globally from projects starting up between 2015 and 2020.

“This project will help BP sustain high levels of oil production in the deepwater Gulf of Mexico for years to come,” said Richard Morrison, regional president of BP’s Gulf of Mexico business. “And it’s another example of BP taking advantage of targeted and cost-effective opportunities within our existing portfolio.”

The Thunder Horse platform, which sits in more than 6,000 feet of water and began production in June 2008, has the capacity to handle 250,000 barrels of oil and 200 million cubic feet per day of natural gas. The facility continued to operate while work on the water injection project was underway.

In the deepwater Gulf of Mexico, BP operates four large production platforms - Thunder Horse, Atlantis, Mad Dog and Na Kika - and holds interests in four non-operated hubs - Mars, Mars B, Ursa and Great White.

BP has two other major projects underway in the deepwater Gulf of Mexico. The Thunder Horse South Expansion project will add a new subsea drill center roughly two miles from the Thunder Horse platform. In addition, BP continues to design the Mad Dog Phase 2 project, which will develop resources in the central area of the Mad Dog field through a subsea development tied back to a new floating production hub consisting of up to 24 wells from four drill centers.

About BP

Over the past 10 years, BP has invested more than $90 billion in the U.S. - more than any other energy company. BP is a leading producer of oil and gas and produces enough energy annually to light nearly the entire country for a year. Employing about 16,000 people across the country, BP supports more than 170,000 additional jobs through all of its business activities.